What evidence does anyone have to suggest that Congress can do anything right, especially in the business world of business, regardless of the party in charge?
choochoobuff What evidence does anyone have to suggest that Congress can do anything right, especially in the business world of business, regardless of the party in charge?
That is an interesting (and loaded) question given that Republicans (who have been in "charge" for the last 8 years) are said to be businessmen and the Democrats (who have been around for a while) is said to be the party of lawyers! The only answers will first bring some sparring here, then a full fledged boxing match; 20 rounds to a draw!!
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bobwilcox During the Great Depression railroads were central to our economy. In 60 years the country has moved into an information driven world. Railroads are important but they are no longer at the core of our economy. This sad fact and Don Phillips recent column about Amtrak getting decent funding because of India's bomb leads me to believe that US freight legislation will be a pawn in negotiations about much larger issues. We we are witnessing a fundamental transformation in the relationships between governments and the world economy. Obama and the Congress are going to be much more focused on how to keep China sending money to pay the governments bills than wiether the chemical plant over in Waynesboro, VA is served by the Buckingham Branch in addition to the NS.
During the Great Depression railroads were central to our economy. In 60 years the country has moved into an information driven world. Railroads are important but they are no longer at the core of our economy.
This sad fact and Don Phillips recent column about Amtrak getting decent funding because of India's bomb leads me to believe that US freight legislation will be a pawn in negotiations about much larger issues. We we are witnessing a fundamental transformation in the relationships between governments and the world economy. Obama and the Congress are going to be much more focused on how to keep China sending money to pay the governments bills than wiether the chemical plant over in Waynesboro, VA is served by the Buckingham Branch in addition to the NS.
Your conjecture about Obama and Congress is just that: conjecture. Our whole government has to look at our whole existance. We have moved toward being subservient to China simply because investors wanted to reap the most from their investment despite what it would eventually do the the ability of the United States to manufacture and compete. (Please, someone define the word "patriotic" to me and why these investor guys are more patriotic than an American who wants a job and to work?) Railroads are a major part of the American economy, a much greater part than most Americans realize. "Once the passenger train dissappeared from the local depot, so did the railroads" is how most American see it. Railroads have to be taken into considereation in balancing (or rationalizing) a transportation system which will serve industrial and personell needs in the most effecient, ecnomical, environmental, and safe manner.
Oh, I want Chinese steam locomotives, But I don't want Chinese money. (But I see the Brits have just built a new steam locomotive, maybe we should ask them to build one for us!). But it has been American bussinesses who have looked to China for manufacturing and as a new place to market Amterican products made in China!
I, by no means am trying to make this partisan. Granted Repubs are supposed to be pro business and have done a horrible job lately, Dems are supposed to be pro social issues, which are no closer to being solved than the 1960's. My point is that when government as a whole, gets in the way of the natural flow of the ecomonic cycle, things go amok. I will be the first to say, I am no longer going to get hung up on the party, only the good of this nation and it's people.
choochoobuff I, by no means am trying to make this partisan. Granted Repubs are supposed to be pro business and have done a horrible job lately, Dems are supposed to be pro social issues, which are no closer to being solved than the 1960's. My point is that when government as a whole, gets in the way of the natural flow of the ecomonic cycle, things go amok. I will be the first to say, I am no longer going to get hung up on the party, only the good of this nation and it's people.
Maybe you are right. Making a case for State's Rights that is. NYS dug the Erie Canal and PA the Main Canal all with basically fantastic economic results for their public and business constituants. But the Federal Government horned in on the UP/CP trans con and the Mississippi,Ohio, and Tennesee rivers waterway control system!
henry6 choochoobuff I, by no means am trying to make this partisan. Granted Repubs are supposed to be pro business and have done a horrible job lately, Dems are supposed to be pro social issues, which are no closer to being solved than the 1960's. My point is that when government as a whole, gets in the way of the natural flow of the ecomonic cycle, things go amok. I will be the first to say, I am no longer going to get hung up on the party, only the good of this nation and it's people. Maybe you are right. Making a case for State's Rights that is. NYS dug the Erie Canal and PA the Main Canal all with basically fantastic economic results for their public and business constituants. But the Federal Government horned in on the UP/CP trans con and the Mississippi,Ohio, and Tennesee rivers waterway control system!
The Pacific Railway Act authorized the transcontinental railroad in part because the route between Omaha and the California state line was not part of any state at the time. The waterways mentioned are all involved in interstate commerce, which is the preserve of the Federal government.
henry6 Maybe you are right. Making a case for State's Rights that is. NYS dug the Erie Canal and PA the Main Canal all with basically fantastic economic results for their public and business constituants. But the Federal Government horned in on the UP/CP trans con and the Mississippi,Ohio, and Tennesee rivers waterway control system!
Sorry, my recollection and at least one authoritative source disagrees with you for the Pennsylvania "Main Line of Public Improvements. To be clear, that was the system of: 1) railroad from Philly to Columbia on the Susquehanna River; 2) the Middle Division Canal from there along the Susquehanna through Harrisburg and along the Juniata River valley to Hollidaysburg; 3) Allegheny Portage Railroad inclined planes to Johnstown; and 4) Western Division Canal along several rivers to Pittsburgh.
"It cost a monumental eighteen million dollars and had accumulated forty million in debts by the time it was knocked down [sold - PDN] for $7,500,000 to its commercial successor. What slowly replaced it, under the skilled hand of Chief Engineer John Edgar Thompson, was the Pennsylvania Railroad."
- Oliver Jensen in The American Heritage History of RAILROADS IN AMERICA, American Heritage Publishing Co., Inc. (subsidiary of McGraw-Hill, Inc.), New York, copyright 1975, ISBN 0-07-032526-X, Chapter 2. On to the Western Waters, pp. 36, 38, and 39; quote is from top of pg. 39.
To be fair, the same source says this about the NYS effort: "Meanwhile, the Erie Canal, although it continued to operate a profitable freight business, stopped carrying passengers." (pg. 36, bottom) [emphasis added - PDN.]
That the Pennsylvania government's effort was an early multi-modal technological camel ("horse designed by a committee"), slow, inconvenient, and a financial disaster, which was salvaged and superseded by the PRR of old and its legendary Chief Engineer, speaks volumes to me about who to look to - and who not - for the appropriate level of regulation of the railroad industry, and wisdom, leadership, character, and support out of the current financial crisis.
- Paul North.
I don't see inland waterways as a good example of "good" government involvement in the economy. Almost from the get go the Erie Canal had to be protected against competition to the detriment of people and commerce. First, the canal froze for around four months per year. In those four winter months people couldn't travel and freight movement halted. It quickly became obvious that private railroads did a better job.
Parallel railroads were forced, by law, to pay canal tolls on freight they handled in the months the canal was open. New York State had built an obsolete facility and resorted to punative measures to cover its mistake. It did help to make New York the premier port, but how much of that was actual growth and how much was just diversion from other ports is an open question.
Inland rivers really can't be privately owned. So we get political manipulation of investment in navigation projects.
South of St. Louis the Mississipi is a wonderful, natural transportation artery. North of St. Louis to St. Paul it requires 25 locks and dams which were built, and for decades operated, at no charge to the barge lines. In addition to this subsidy, rail rates were held artificially high by Federal regulators in order to keep business on the river. (I guess they learned to do that from the Erie Canal.) The dams and locks screwed up the environment. The subsidy and the regulation hurt the economy.
Political influence got massive, wasteful projects such as the Tennessee-Tombigbee "Canal" built. The Missouri north of Omaha handles very little cargo, but it is maintained, by law, to a 9' depth for commercial navigation. Basically, it's a waste of our money.
If you want other examples of wasteful government spending they exist in spades on the inland waterway network. That network is a very good case study on why the government should stay out of transportaiton.
The Union Pacific was basically a political enterprise to tie California with the rest of the US. No knowledgeable person invested in the UP itself when it was built. It went through undeveloped country and much of that country had little or no prospect for development. The railroad itself went bankrupt. Now, do I think the UP should have been built with land grants? Yes. It was important to tie California to the eastern US to prevent another secession and the land grants really didn't cost the government anything. But it is not an example of successful government involvement in commerce.
greyhounds I don't see inland waterways as a good example of "good" government involvement in the economy. Almost from the get go the Erie Canal had to be protected against competition to the detriment of people and commerce. First, the canal froze for around four months per year. In those four winter months people couldn't travel and freight movement halted. It quickly became obvious that private railroads did a better job. Parallel railroads were forced, by law, to pay canal tolls on freight they handled in the months the canal was open. New York State had built an obsolete facility and resorted to punative measures to cover its mistake. It did help to make New York the premier port, but how much of that was actual growth and how much was just diversion from other ports is an open question. Inland rivers really can't be privately owned. So we get political manipulation of investment in navigation projects. South of St. Louis the Mississipi is a wonderful, natural transportation artery. North of St. Louis to St. Paul it requires 25 locks and dams which were built, and for decades operated, at no charge to the barge lines. In addition to this subsidy, rail rates were held artificially high by Federal regulators in order to keep business on the river. (I guess they learned to do that from the Erie Canal.) The dams and locks screwed up the environment. The subsidy and the regulation hurt the economy. Political influence got massive, wasteful projects such as the Tennessee-Tombigbee "Canal" built. The Missouri north of Omaha handles very little cargo, but it is maintained, by law, to a 9' depth for commercial navigation. Basically, it's a waste of our money. If you want other examples of wasteful government spending they exist in spades on the inland waterway network. That network is a very good case study on why the government should stay out of transportaiton. The Union Pacific was basically a political enterprise to tie California with the rest of the US. No knowledgeable person invested in the UP itself when it was built. It went through undeveloped country and much of that country had little or no prospect for development. The railroad itself went bankrupt. Now, do I think the UP should have been built with land grants? Yes. It was important to tie California to the eastern US to prevent another secession and the land grants really didn't cost the government anything. But it is not an example of successful government involvement in commerce.
You're missing my point. NYS built the Erie Canal and it was a success in that New York City became a better harbor and the growth of eastern New York and the City flourished because of it. Despite what was said abou the Main Line Canal, it was a catalyst for the growth of the economy in Eastern PA. Both projects were done at the behest of the named states, NY being 100%, PA being participatory, projects that could not be acomplished by private enterprise. But, in the context of the comments was made in relation to the posts that the bigger the government, the more costly and more opportunity for boondogling or whatever you want to call it. Yes, the Transcontinental Railroad was rife with it. And so has the inland waterway systems and even highway project been boondogled through earmarks, etc. I am not debating the rights and wrong, nor the politics of it, just stating the appearances and results.
greyhounds henry6 Maybe you are right. Making a case for State's Rights that is. NYS dug the Erie Canal and PA the Main Canal all with basically fantastic economic results for their public and business constituants. But the Federal Government horned in on the UP/CP trans con and the Mississippi,Ohio, and Tennesee rivers waterway control system! I don't see inland waterways as a good example of "good" government involvement in the economy. Almost from the get go the Erie Canal had to be protected against competition to the detriment of people and commerce. First, the canal froze for around four months per year. In those four winter months people couldn't travel and freight movement halted. It quickly became obvious that private railroads did a better job. Parallel railroads were forced, by law, to pay canal tolls on freight they handled in the months the canal was open. New York State had built an obsolete facility and resorted to punative measures to cover its mistake. It did help to make New York the premier port, but how much of that was actual growth and how much was just diversion from other ports is an open question. Inland rivers really can't be privately owned. So we get political manipulation of investment in navigation projects. South of St. Louis the Mississipi is a wonderful, natural transportation artery. North of St. Louis to St. Paul it requires 25 locks and dams which were built, and for decades operated, at no charge to the barge lines. In addition to this subsidy, rail rates were held artificially high by Federal regulators in order to keep business on the river. (I guess they learned to do that from the Erie Canal.) The dams and locks screwed up the environment. The subsidy and the regulation hurt the economy. Political influence got massive, wasteful projects such as the Tennessee-Tombigbee "Canal" built. The Missouri north of Omaha handles very little cargo, but it is maintained, by law, to a 9' depth for commercial navigation. Basically, it's a waste of our money. If you want other examples of wasteful government spending they exist in spades on the inland waterway network. That network is a very good case study on why the government should stay out of transportaiton. The Union Pacific was basically a political enterprise to tie California with the rest of the US. No knowledgeable person invested in the UP itself when it was built. It went through undeveloped country and much of that country had little or no prospect for development. The railroad itself went bankrupt. Now, do I think the UP should have been built with land grants? Yes. It was important to tie California to the eastern US to prevent another secession and the land grants really didn't cost the government anything. But it is not an example of successful government involvement in commerce.
By the way, I think your suggestion that UP and CP couldn't attract private investment when they were being built is incorrect. It's been awhile since I delved into the history of this enterprise, but I believe the land grants enabled both railroads to raise private capital, and that was one of their main purposes. The Lincoln article in the latest Trains Magazine also shows that private capital was involved, when it tells about how the Pacific Railroad Act was changed in 1864 to make the government's mortgage secondary to the private mortgages, in order to attract investment. UP's bankruptcy in the 1890's had a lot more to do with the financial machinations of its promoters (remember Credit Mobilier?) than with the actual viability of the enterprise. The proof of that is that UP did very well after it emerged from bankruptcy with new owners.
Falcon48 Actually, the UP/CP was probably a good example of successful government involvement in transportation. The reason was that the government not only gained significant political benefits (as you recognize), but the government actually made a boatload of money as well. The "checkerboard" pattern of land grants (the government retained alternate sections along the railroad) allowed the government to sell the retained sections after the railroad was completed for much more than the entire property had been worth prior to the enterprise. And, as a condition to the grants, the railroads had to move government traffic at bargain rates (it may have even been free, but I'm not sure about that), a measure which stayed in effect through two world wars. Today's policy makers would be well advised to look at what their predecessors did in the 19th century rather than simply throwing money at politically favored infrastructure projects as we do today (e.g., the inland waterway system). By the way, I think your suggestion that UP and CP couldn't attract private investment when they were being built is incorrect. It's been awhile since I delved into the history of this enterprise, but I believe the land grants enabled both railroads to raise private capital, and that was one of their main purposes. The Lincoln article in the latest Trains Magazine also shows that private capital was involved, when it tells about how the Pacific Railroad Act was changed in 1864 to make the government's mortgage secondary to the private mortgages, in order to attract investment. UP's bankruptcy in the 1890's had a lot more to do with the financial machinations of its promoters (remember Credit Mobilier?) than with the actual viability of the enterprise. The proof of that is that UP did very well after it emerged from bankruptcy with new owners.
Actually, the UP/CP was probably a good example of successful government involvement in transportation. The reason was that the government not only gained significant political benefits (as you recognize), but the government actually made a boatload of money as well. The "checkerboard" pattern of land grants (the government retained alternate sections along the railroad) allowed the government to sell the retained sections after the railroad was completed for much more than the entire property had been worth prior to the enterprise. And, as a condition to the grants, the railroads had to move government traffic at bargain rates (it may have even been free, but I'm not sure about that), a measure which stayed in effect through two world wars. Today's policy makers would be well advised to look at what their predecessors did in the 19th century rather than simply throwing money at politically favored infrastructure projects as we do today (e.g., the inland waterway system).
I agree. The UP was an example of "good" government involvement in transportation. An example of a type that can not be replicated today. The UP served its purpose. It greatly improved communication with California and provided a powerful political symbol that California was linked with the rest of the US. It also helped get the Great Plains settled which was necessary if the US was to hang on to the Great Plains.
As you stated, the government did well financially because it could provide a lot of the financing by selling land that was otherwise virtually useless. (Corn and hogs from Nebraska were of little value unless they could be moved to market.)
However, the rail venture left a lot to be disired when it came to commercial success. The UP was the ultimate "developmental railroad". These were lines built into undeveloped, largely unpopulated, areas with the hope that business would develop with the provision of good transportation. These were common in the US and usually financed by private capital. The hope was that the business developed before the money ran out. Sometimes it worked, sometimes it didn't. The UP project was so large that few investors were willing to take a chance. I didn't question UP's success as a political transportation venture. I questioned its commercial success. I think that's accurate. It took a while, but after the development did occur, over several decades, the venture became a commercial success.
I do maintain that the venture had a lot of trouble raising private funds due to the risk cited above. (I never said they couldn't attract investment, but they did have trouble attracting it.)
It was found necessary to split the venture into two corporations in order to attract investment. These were the UPRR and the Credit Mobiler of America. The latter was the construction firm. The construction firm was easier to finance because investors could be reasonably sure of payment (Even the government bonds had to be sold to people with money.) because payment for construction was ongoing as work was completed. In contrast, an investment in the developmental railroad known as the Union Pacific was a risky bet on the future development of the frontier.
It was messy, but it worked out.
Of course there was a scandal, or at least reports of a scandal. It was alledged that the Credit Mobiler inflated construction charges. I don't doubt this happened. You can't do these "government involved" projects today without someone trying to get a few extra dollars. But there was a lot of mud slinging aimed at defeating U.S. Grant for a 2nd term and his oponnents weren't above some exaggerations.
More than you ever wanted to know about what I think of the UP construction.
My comment was in response to curruption, effectiveness, and public value as insinuated by other's comments and not about private investments in such projects. .
Falcon48 Actually, the UP/CP was probably a good example of successful government involvement in transportation. The reason was that the government not only gained significant political benefits (as you recognize), but the government actually made a boatload of money as well. The "checkerboard" pattern of land grants (the government retained alternate sections along the railroad) allowed the government to sell the retained sections after the railroad was completed for much more than the entire property had been worth prior to the enterprise.
Actually, the UP/CP was probably a good example of successful government involvement in transportation. The reason was that the government not only gained significant political benefits (as you recognize), but the government actually made a boatload of money as well. The "checkerboard" pattern of land grants (the government retained alternate sections along the railroad) allowed the government to sell the retained sections after the railroad was completed for much more than the entire property had been worth prior to the enterprise.
I question if the government made any money on the retained lands of the checkerboard. My reason is that the same Congress (1862) that passed the Pacific Railroad Act also passed the Homestead Act and the Morrill Act (land grant colleges). I've never seen numbers, but I suspect the lands were given away under those programs.
I frequently dispair at the actions of the current Congress. At such times, it helps to remember the permanent achievements of that Congress of 1862, which I suspect was comprised of the same kind of individuals who inhabit it today.
Railroads appear to be like parks. There is great excitment and pressure on government to create them. Once built, everybody loves to use them, but nobody wants to pay for them.
Artifical rate reduction by regulation will give euphoria for the term of those putting it in place. When deferred maintenance comes due, most will be long out of office. That will be left for somebody else to deal with.
Will any of those cable tv ads eastern railroads are now running start warning people that all that feel good, green, warm and fuzzy stuff will go away if the railroad can not make its services pay?
Dakguy201 Falcon48 Actually, the UP/CP was probably a good example of successful government involvement in transportation. The reason was that the government not only gained significant political benefits (as you recognize), but the government actually made a boatload of money as well. The "checkerboard" pattern of land grants (the government retained alternate sections along the railroad) allowed the government to sell the retained sections after the railroad was completed for much more than the entire property had been worth prior to the enterprise. I question if the government made any money on the retained lands of the checkerboard. My reason is that the same Congress (1862) that passed the Pacific Railroad Act also passed the Homestead Act and the Morrill Act (land grant colleges). I've never seen numbers, but I suspect the lands were given away under those programs. I frequently dispair at the actions of the current Congress. At such times, it helps to remember the permanent achievements of that Congress of 1862, which I suspect was comprised of the same kind of individuals who inhabit it today.
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