Rails West I'm sure the figure of $257 million is valid for the entire lines west project, which includes branches and electric traction. But where a lot of guys goof profoundly is by taking that figure of $257 million, then comparing it with the engineer's estimate that was made for only the main track to the west. Of course the two numbers are not going to be close to each other, so it isn't a valid comparison.
I'm sure the figure of $257 million is valid for the entire lines west project, which includes branches and electric traction.
But where a lot of guys goof profoundly is by taking that figure of $257 million, then comparing it with the engineer's estimate that was made for only the main track to the west. Of course the two numbers are not going to be close to each other, so it isn't a valid comparison.
Thanks to Chris / CopCarSS for my avatar.
- Rails West
The $257 Million figure correlates well with what the Woods wrote - $234 for the extension itself, plus $23 for the electrification add-on a few years later = $257.
The Milwaukee Road: Its First Hundred Years by August Derleth, University Of Iowa Press (May 16, 1969), 376 pages, ISBN-10: 9780877458012 , ISBN-13: 978-0877458012 , ASIN: 0877458014, from $15 to $26 at Amazon:
http://www.amazon.com/Milwaukee-Road-First-Hundred-Years/dp/0877458014/ref=sr_1_1?s=books&ie=UTF8&qid=1300876545&sr=1-1
- Paul North.
Here is a pregnant image from 1907 that might provoke some discussion.
Derleth's book on the Milwaukee has information on financing the western extension.
Derleth writes:
"The financing of the westward expansion was accomplished by issuing bonds and stocks to the general public; the bonds were sold until 1918 in blocks, and were in various issues, all of which were bought up readily because the credit and reputation of the management were of the soundest. There were several important issues."
Derleth goes on to describe the complicated structure of the bonds. He describes how the company "executed a general and refunding mortgage on its property", which made further bonds into mortgage bonds. Derleth then describes how the company borrowed on the mortgage to pay for additional money for branch lines and the electrification. Derleth concludes by saying that, "from 1909 to 1917, there was an increase of $266 million in the company's funded debt in public hands," due to the western extension.
Derleth states that the actual cost of the pacific extension, including branch lines and electrification, was $257 million. That figure is roughly equal to the funded debt of $266 million quoted above that the Milwaukee took on to build it.
post deleted by the author
Railway Man You talk about development of the untapped natural resources between end points. Seeing as the route skipped around most of the natural resources en route, choosing long stretches through deserts over parallel routes through arable land, traversed forests of no to low commercial viability then or now, and valleys with no known mineral resources, I don't get what they were thinking about.
You talk about development of the untapped natural resources between end points. Seeing as the route skipped around most of the natural resources en route, choosing long stretches through deserts over parallel routes through arable land, traversed forests of no to low commercial viability then or now, and valleys with no known mineral resources, I don't get what they were thinking about.
There are some pretty substantial coal fields around Roundup, though these didn't really become attractive before the 1970's. Had development of the Roundup coal mines started in the mid-70's as opposed to the last couple of years, the PCE would most likely have been kept intact east of Roundup, though would undoubtedly required quite a bit of work for heavy coal traffic. Then again, the NP line east of Forsythe needed a lot of work for handling the coal traffic.
Compared to the quarter of a billion dumped into Cue-Cat, the money invested in the Puget Sound Extension was a model of sanity...
- Erik
P.S. One reason that Wyoming (ahem) outstripped Montana in coal mining is the severance tax Montana imposed on coal shipped out of state in the early 1970's.
Paul_D_North_Jr The actual clearance required depends on the voltage of the catenary (as well as the 'type' of electricity), the shape of the tunnel 'arch' overhead, and the amount of insulation and other retrofits that the railroad is willing to install there. As an extreme, the Philadelphia area commuter agency SEPTA runs a fleet of several different kinds of commuter cars with 11,000 volts AC single-phase on the catenary - and in the ex-PRR Suburban Station tunnels, at a mere 9" from the tops of some of those cars ! That's also the voltage the PRR used, and Amtrak still uses, though the preference and trend is clearly towards higher voltages. Someplace or another I read that the 'rule of thumb' is about 1 centimeter (3/8") per KV, so for the most common higher voltages that clearance would be: 11 KV - 4-3/8"; 25 KV - 10"; 50 KV - 20", which seems to conform to oberved practice. There also needs to be a similar sufficient distance down from the top of the arch for the hanger and insulators, etc., unless an insulation panel or strip of some kind is installed there and the hanger recessed into the tunnel roof, in which case the wire can be quite a lot closer. This problem also occurs at overhead bridges . . . But even in that event, the closest distance can turn out to be the energized 'horns' out at the ends of the pantograph shoes, which are off-set from the 'high point' and out to the side 2 -3 feet where the arch is starting to come down more. Again, some insulated panels out there may eliminate that concern. - Paul North.
The actual clearance required depends on the voltage of the catenary (as well as the 'type' of electricity), the shape of the tunnel 'arch' overhead, and the amount of insulation and other retrofits that the railroad is willing to install there.
As an extreme, the Philadelphia area commuter agency SEPTA runs a fleet of several different kinds of commuter cars with 11,000 volts AC single-phase on the catenary - and in the ex-PRR Suburban Station tunnels, at a mere 9" from the tops of some of those cars ! That's also the voltage the PRR used, and Amtrak still uses, though the preference and trend is clearly towards higher voltages. Someplace or another I read that the 'rule of thumb' is about 1 centimeter (3/8") per KV, so for the most common higher voltages that clearance would be: 11 KV - 4-3/8"; 25 KV - 10"; 50 KV - 20", which seems to conform to oberved practice.
There also needs to be a similar sufficient distance down from the top of the arch for the hanger and insulators, etc., unless an insulation panel or strip of some kind is installed there and the hanger recessed into the tunnel roof, in which case the wire can be quite a lot closer. This problem also occurs at overhead bridges . . .
But even in that event, the closest distance can turn out to be the energized 'horns' out at the ends of the pantograph shoes, which are off-set from the 'high point' and out to the side 2 -3 feet where the arch is starting to come down more. Again, some insulated panels out there may eliminate that concern.
Current standard is 26'6" above top of rail clear to overhead structures.
RWM
henry6 Remember, too, that the only "real" or major electric railroad in the US, the PRR, was wired with governent "stimulus" money. [snip]
One thing that tends to get overlooked when one starts to talk about electrified territory. Clearances!
As the industry has matured the stature of the cars has changed from 30-40-50 years ago. The cars have gotten both longer and higher as the carriers try to move more product with fewer cars as fewer cars equals less capital investment. The normal 'desired' clearance at present is a plate that permits the unrestricted operation of 20 foot two inch high intermodal and auto rack cars.. The National Gateway and Heartland Corridor projects of CSX & NS are being constructed to facilitate movement of these cars. To electrify would require at least another one to two feet of overhead clearance. Creating that clearance on any carriers major routes would be a rather significant cost in stringing wire for electrified operations.
Never too old to have a happy childhood!
Remember, too, that the only "real" or major electric railroad in the US, the PRR, was wired with governent "stimulus" money.
Before anyone starts yelling, I call the PRR the only "real" electric road in the US because of the route miles and the almost exclusivity of motive power used. The New Haven, the Reading, and the Lackawanna all electrified with catenary but with fewer route miles, more used by commuter and passenger traffic if only because ot the depression and lack of expansion of the wire. NYC and LI were (are) third rail commuter..and even at that a lot more was added post 1950 than back in the 30's. There were other small, short installations on the N&W and Virginian and mabye a few others. And the roads in this paragraph did the work with more of their own resources.
RIDEWITHMEHENRY is the name for our almost monthly day of riding trains and transit in either the NYCity or Philadelphia areas including all commuter lines, Amtrak, subways, light rail and trolleys, bus and ferries when warranted. No fees, just let us know you want to join the ride and pay your fares. Ask to be on our email list or find us on FB as RIDEWITHMEHENRY (all caps) to get descriptions of each outing.
Your first and last paragraphs are well-stated and need no further comment or repsonse from me.
Kevin C. Smith [snipped] Would the Milwaukee have been able to carry the PCE's construction debts if WWI, postwar inflation, auto/truck competition and finally the Great Depression hadn't happened as they did?
Kevin C. Smith Will BNSF finish the Abo Canyon double-tracking in time to handle a resurgence in Asian imports-or in time to watch that particular traffic boom level off and decline, leaving them with a very expensive piece of railroad they could have done without?
Kevin C. Smith Will the first railroad to commit to large scale electrification get saddled with a huge capital cost that exceeds operating savings-or spend the next decade laughing all the way to the bank as its competitors try to cope with diesel costs doubling and redoubling?
Back in the 1970's - 80's when electrification was last discussed widely, the saying was that all of the likely candidate railroads were willing to be "the 2nd railroad to electrify" - they were all waiting for another railroad to make that huge financial commitment, and in effect raise the competitive level that they would all have to meet then. Well, none of those railroads stepped up to the electrification plate at the time, so it didn't happen for any No. 1 or any of the putative No. 2's. But I think much the same dynamic applies today, where the operational factors are similar - for example, CSX and NS coal and intermodal routes across the Appalachian mountains. And out west, I suppose BNSF's Southern TransCon and UP's Sunset Route are superficially similar enough - the worst grades are at the western end, at Cajon Pass and Beaumont Hill, respectively - that electrification will occur on both at about the same time. But up north, CN's line across the Rockies is so much flatter than CP's that while CP may well choose to hang wires through the Rogers Pass area, CN won't feel the same need for its crossing. Likewise, the profiles of the northern transcontinental routes - UP's over Sherman Hill and through the Blue Mountains of eastern Oregon, as compared to BNSF's summits further north - are sufficiently different enough that the competitive forces may not force them to act in 'lock-step'.
Finally, keep in mind that the larger the perceived risk of that cost differential, the more likely it is that a competitor will electrify as well, which will tend to re-level the playing field. Also, electrification will likely start just when the tipping point is reached, and the added capital costs are only a little more than the fuel cost savings - thus, there likely won't an opportunity for a potentially huge cost savings advantage to build up, because someone will 'jump the gun' make it happen for them before that opportunity gets to be that large.
I'll stand by my hypothisis. Financiers of the time were cutthroats out to make instant fortunes but they had to build something that wasn't there. Today's financiers ar cutthroats out to make instant fortunes by dismanteling factories, businesses, and towns which are there. Technology by 1909 was quite different than that of 1869: construction methods, size and power of engines, and the ability to start, roll, and stop a train were all advanced so that construction was different; electric propulsion was just a small part of it. Of course in the early 1900's the US was still looking at westward expansion of the country and an expansion of Pacific trade. Plus the vast empty plains and mountains would be infused with people just like happened along the Transcontental and other routes in the decades before; timber was great natural resource, but if the rest of the land out west was any indication, there had to be other minerals under that surface dirt, or so they hoped. America was an ever expanding land of people and prosperity. And as long as we breathed it would continue unabated. Could PCE break the Hill monopoly? Could it be faster and more efficient than the lines cut into the earth in the previous decades? Americans were risk takers then with little insurances and assurances, government guidelines, and investment bankers double and triple layering of risks so as not to really take a risk at all. We, in the 21st Century, don't understand how hugely different people and thinking and society and business was over a hundred years ago; we can't seem to grasp the meaning of those differences.
We sometimes think that good management is what makes a company successful-true enough, but occasionally it's a successful company that makes the management look good. Even with the best information and insight, there's always an element of plain dumb luck. Get on the right side of it and you're a genius; the wrong side and you're a bum.
No way to know; all you can do is make the most educated decision possible and covers as many scenarios as you can. Perhaps the Milwaukee's Board was simply as caught up in the seemingly magic profits that would come from "& Pacific" in the 1910's as much people were with ".com" in the 1980's (or "plastics" in the 1960's). Not a good basis for a "bet the farm" investment...
I just breezed through a general history of the West. And here is some information on the context into which the Milwaukee was building its western extension.
1) From the end of the Civil war to the close of the century was a period of consolidation between railroads. By the turn of the 20th century, the western rail net was consolidated into a few large roads under control by a few people. Ownership of the NP, GN and CB&Q by Jim Hill carried with it essentially a complete monopoly on the Northwest. Harriman had tried to gain ownership of the NP, but had failed. So, in building to the Northwest, the Milwaukee was attempting to penetrate a region under monopoly control by Hill.
2) The Milwaukee started planning its Western extension in the 1890's at the same time as an economic depression that was triggered by "The Panic of 1893." That depression lasted through the 1890's and had serious consequences for railroads, so I read. Big western railroads went into the hands of receivers in the 1890's, including the NP and the UP. What came out of those receiverships was evidence of excessive expansion and over-capitalization by western railroads. Interestingly, however, the Granger roads as a group remained solvent during that depression.
My question is this:
Given that other roads which built west to the Pacific found themselves in receivership during that 1890's depression, why did the Milwaukee, which was a strong Granger road, choose to build to the west in the face of that? It seems to me that those bankruptcies with western roads should have convinced them that building west was a sure road to bankruptcy. It also seems to me that building a new route that competed with the existing northwestern roads that were consolidated under Hill was also a risk.
I guess it did turn out to be the road to bankruptcy. Three bankruptcies in fact: 1925, 1935, 1977. So it looks like the Milwaukee's western extension was another case of excessive expansion and over-capitalization by a transcontinental road.
It's hard to understand why they decided to build it.
This message was edited (3/21 at 08:30) for clarity and to provide a link.
henry6 Business thinking and models were different than what we have today. Today investors invest for today and the end of next week rather than for the next 20, 50 or a hundred years. Yesterday they were empire builders working to build and nourish a new country rather than merely lining their own nests and working for their own self interests,
Business thinking and models were different than what we have today. Today investors invest for today and the end of next week rather than for the next 20, 50 or a hundred years. Yesterday they were empire builders working to build and nourish a new country rather than merely lining their own nests and working for their own self interests,
henry6 The PCE was built in part with the belief that there would be a continuous expansion and growth of population and commerce and, thus, the need for a good railroad. And the one with the better grades, more modern applied technologies coupled with filling the gaps between the other roads, would be a winner. Remember, too, that unlike today, the endpoints were not the end all but the untapped natural resources and undeveloped land in between the end points were as important if not more so. Business thinking and models were different than what we have today. Today investors invest for today and the end of next week rather than for the next 20, 50 or a hundred years. Yesterday they were empire builders working to build and nourish a new country rather than merely lining their own nests and working for their own self interests,
The PCE was built in part with the belief that there would be a continuous expansion and growth of population and commerce and, thus, the need for a good railroad. And the one with the better grades, more modern applied technologies coupled with filling the gaps between the other roads, would be a winner. Remember, too, that unlike today, the endpoints were not the end all but the untapped natural resources and undeveloped land in between the end points were as important if not more so. Business thinking and models were different than what we have today. Today investors invest for today and the end of next week rather than for the next 20, 50 or a hundred years. Yesterday they were empire builders working to build and nourish a new country rather than merely lining their own nests and working for their own self interests,
You cite a belief of the management in continued Western Expansion. What evidence do you have for this belief?
You cite improved grades and technology. What is the technology you refer to? Electrification? I don't see how a technology that can't possibly pay for itself, but requires a bankruptcy to wipe out the investment, is a great idea. What are the improved grades? How do the grades break down into lower operating costs? I don't see it, and I've looked at it pretty closely from a professional viewpoint, so what am I missing?
You talk about development of the untapped natural resources between end points. Seeing as the route skipped around most of the natural resources en route, choosing long stretches through deserts over parallel routes through arable land, traversed forests of no to low commercial viability then or now, and valleys with no known mineral resources, I don't get what they were thinking about. If you drive the route, like I have, the single thing that jumps out is the lack of traffic potential. Do you build the railroad in the valley where the farmer can haul his grain 6 miles to a station? Or up in the hills where there are no roads, no farms, and no likelihood of either? From Mobridge to Miles City, the Milwaukee Road chose the former, then repeated it from Harlowton to Three Forks, then again from Malden to Ellensburg. Meanwhile the NP hewed to the banks of the Yellowstone, Clark Fork, and Yakima where the farms, towns, and people wanted to be. Given the choice between Lookout Pass leading to the mineral weath of the Couer d'Alene district, or St. Paul Pass, the Milwaukee chose St. Paul. As for the forest wealth, the Bitterroots where penetrated by the Milwaukee Road have never been a happy forest for the lumbermen. Weyerhaeuser, the major timber operator in the region, lost money on its investments and shipments were small in comparison to its Puget Sound, Klamath, and Columbia River watershed operations.
You claim they were empire builders with long-range vision. Interestingly, the business press of the era denounced the railroad builders as stock promoters seeking instant rewards. And in contrast, you claim today is short term. That's interesting in light of the fact that the improvements the railroads are making today are investments with lifetimes of 25-40 years (rolling stock) and 100 years (track and bridges). Do you have evidence to support your celebration of then and condemnation of now?
What you've posted above is a hypothesis. It's a very old hypothesis. It's been around for at least 100 years. But I haven't seen enough evidence to make me want to buy it, and reject all others.
Not bad, henry6, as a partial, albeit psychological, explanation. The rails didn't know, at the time the PCE was conceived and built, that we were at the end of the era of railroad expansion (usually put at 1916 or thereabouts).
Victrola1 I remember reading the C&NW Cowboy Line was considered for expansion to the West coast. The CB&Q did surveys on a line from Denver to Salt Lake City. Why did these Grangers not expand farther west? Are there corporate records on the subject?
I remember reading the C&NW Cowboy Line was considered for expansion to the West coast. The CB&Q did surveys on a line from Denver to Salt Lake City.
Why did these Grangers not expand farther west? Are there corporate records on the subject?
Because they determined there wasn't sufficient traffic to support the lines. Or at least, that's what they told investors, investment banks, and the railway press at the time.
Murphy Siding One hundred plus years ago, I'm sure most big businesses, railroads included, did some serious investigation before investing in a major business expansion. I've been trying to find the justification the Milwaukee Road envisioned for it's Pacific Coast Extention built in 1909. By then, there were 5 American transcons: UP(1869), ATSF(1882), SP(1883), NP(1883) and GN(1893). There was also a true Transcontinental north of the border. CP(1889) went from Atlantic to Pacific. If there was a big need to get freight to or from the Pacific coast, it would seem like there was ample railroad capacity already in place. I'd have to believe, that a fair amount of heavy, low paying fright still went to the west coast by ship. The trade coming from the orient was what?- tea, silk and spices? Given that the Chicago, Milwaukee & St. Paul didn't have a crystal ball, what did the directors use as justification to extend a midwest Granger railroad to the Pacific?
One hundred plus years ago, I'm sure most big businesses, railroads included, did some serious investigation before investing in a major business expansion. I've been trying to find the justification the Milwaukee Road envisioned for it's Pacific Coast Extention built in 1909. By then, there were 5 American transcons: UP(1869), ATSF(1882), SP(1883), NP(1883) and GN(1893). There was also a true Transcontinental north of the border. CP(1889) went from Atlantic to Pacific. If there was a big need to get freight to or from the Pacific coast, it would seem like there was ample railroad capacity already in place. I'd have to believe, that a fair amount of heavy, low paying fright still went to the west coast by ship. The trade coming from the orient was what?- tea, silk and spices? Given that the Chicago, Milwaukee & St. Paul didn't have a crystal ball, what did the directors use as justification to extend a midwest Granger railroad to the Pacific?
Beats me. I can't figure it out either.
Ulrich The purpose of the Pacific Coast Extension was ostensibly to compete more effectively with NP and the GN for west coast traffic. The supporters of this project no doubt saw a competitive advantage in having a line from Chicago to the west coast...GN and NP only went as far east as the twin cities and had to transfer to other roads to reach Chicago.
The purpose of the Pacific Coast Extension was ostensibly to compete more effectively with NP and the GN for west coast traffic. The supporters of this project no doubt saw a competitive advantage in having a line from Chicago to the west coast...GN and NP only went as far east as the twin cities and had to transfer to other roads to reach Chicago.
I have no idea what the purpose and need was of the PCE. There are many reasons that have been suggested but I see none that are either supported by evidence nor logical.
On its face value, building the PCE to complete with the GN and NP for West Coast traffic to me seems illogical. There wasn't much to speak of flowing through the Twin Cities. For example, lumber traffic moving east primarily dropped to destination in Montana and the Dakotas. Minnesota lumber supplied the Minnesota market, Wisconsin lumber the Wisconsin market, and both together with Michigan lumber and southern yellow pine the Chicago market. Also, GN and NP owned the CB&Q, which got their Twin Cities traffic to Chicago just fine.
Traffic is what makes or breaks railroads. The PCE had very little relative to its cost of construction, operation, and maintenance, thanks to its astonishingly bad location.
In part the Milwaukee chose to locate parallel to existing railroads that had virtually identical cost structures and equal or better access to gateways and seaports. Existing railroads had fully developed branch-line networks feeding traffic to the main line while the Milwaukee Road had a very poor network. The industries and commercial relationships and investments had already grown up around the existing railroads. These industries were hardly going to tear down their brand new grain elevators and sawmills and rebuild next to the Milwaukee Road, nor were they going to build duplicative structures that doubled their fixed investment in the hope it would eke out a fractionally better freight rate some of the time.
In other parts the Milwaukee Road chose an independent path that was sterile of traffic.
Traffic in the era that the Milwaukee Road was built was dominated by local traffic. Lumber milled in Idaho was largely consumed in Montana and the Dakotas. Grain harvested in the eastern Dakotas was milled in Minneapolis-St. Paul. If you look at the waybill samples from western railroads in the 1910s, 20s, and 30s, you will see that the overwhelming preponderance of loads terminated within 125 miles of origin station. Lumber as late as the 1950s on average moved less than 150 miles from origin to destination.
Bankruptcy might eliminate the fixed debt but it will do nothing about a bad location.
As to reasons why the Milwaukee Road's senior officers chose to build the PCE, we can't at this point give them truth serum nor examine their psychology. Perhaps they were caught up in an investment bubble. Perhaps they were seeking to goose their stock holdings. Perhaps their ego couldn't tolerate being "just a Granger." Perhaps they were using it to enhance the value of their Anaconda Copper traffic and pressure the Hill roads to lower rates. Perhaps they were making a run at Hill himself and hoped he would panic and sell his roads to them cheaply, or buy their road expensively. Perhaps they were simply incompetent and never bothered to build a proper business plan and bet on the come. I think to start to know what they were up to, I would start by seeing if I could find out when the large investors came into the stock, when they left the stock, and what the difference was in the purchase and sales prices. If they bought high and sold low, I think I would start looking at ego and bubbles. If they bought low and sold high, then I would start looking at the whole thing as a stock promotion scheme.
Not a problem, Kevin (on either point). To supplement your data just a little: The Woods concurred with that $23 Million total cost for the electrification, broken down as follows: $16 Million for the Rocky Mountain Division completed in early 1917, and $9 Million for the Coast Division completed in late 1919 (yes, I know - they add up to $24 Million, not 23 - but's that's how it appears in the book). As of 1924, the electrification was calculated to have saved a total of $12.4 million in operating expenses.
As to the higher construction costs: The Woods wrote that two of the chief causes were much higher ROW costs - no land grants available, and speculators and competitors driving the prices up; and higher labor costs due to both booming railroad line construction elsewhere at the time, and generally busy economic conditions. But I'd agree that the Board was either lax or too optimistic in its oversight . . .
As to the higher operating costs, it seems to be more that the expected traffic - mostly lumber - did not materialize, thus the revenue wasn't there.
Paul_D_North_Jr I can look that up tonight in the Woods' book. Meantime, I'm recalling that it was not that huge - the figure of $17 million is coming to mind - and had a fairly rapid 'payback', so that on the whole, the MILW's PCE was much better off with and after the wires went up than without. Yes, the debt load from that construction is what turned the MILW from prosperous to a beggar and forced the 1925 receivership and 1935 bankruptcy. The effect of the electrification was only to slow down the rate of the hemmoraghing (sp?) of money (what's today called the cash "burn rate" down in the Silicon Valley and other such places) from what it would have been otherwise. So it now appears all that did was to buy the MILW some more time and prolong the agony . . . - Paul North.
I can look that up tonight in the Woods' book. Meantime, I'm recalling that it was not that huge - the figure of $17 million is coming to mind - and had a fairly rapid 'payback', so that on the whole, the MILW's PCE was much better off with and after the wires went up than without.
Yes, the debt load from that construction is what turned the MILW from prosperous to a beggar and forced the 1925 receivership and 1935 bankruptcy. The effect of the electrification was only to slow down the rate of the hemmoraghing (sp?) of money (what's today called the cash "burn rate" down in the Silicon Valley and other such places) from what it would have been otherwise. So it now appears all that did was to buy the MILW some more time and prolong the agony . . .
Whoops! I seem to have posted over the top of you, earlier. Hopefully you're not up at this hour...
According to a study quoted in John Droege's Freight Terminals and Trains (pg. 515-517), "...the capital investment required...aggregates in round numbers $23,000,000 against which is credited $7,000,000 as the investment in steam power replaced and retired, making a net capital investment of $16,000,000 or at a rate of $24,600 a mile." An accompanying table shows the operating savings of the electrification minus the carrying charges on the additional investment required. Interestingly, the annual savings for the Harlowtown-Avery segment averaged $1,396,264/year (8.5 years); from a low of $658,651 in 1921 up to $1,888,037 in 1919. The savings were usually between $1,000,000-$1,600,000 per year. On the Othello-Tacoma segment, though, the average saving was only $111,949/year; from a low of only $12,363 in 1921 to a high of $249,003 for the nine months of 1920.
I miss Michael Sol.
Probably in the minority, but we certainly had some interesting conversations...definately not milk toast. Also futuremodal.
Ed
IIRC from one of the livelier posts on this subject...the $234 million amount was not strictly the construction cost but was "total investment in plant" or something like that-at any rate, it was the total (as of the 1920's, I believe) of all the capital investment since construction. I believe the example given was if you added in the replacement of appliances or of adding carpet, etc. to your house. They are all capital expenditures but aren't properly considered part of the cost of building the house in the first place. Taking that out, the final construction cost of the PCE was nearer $100 million. I don't vouch for the figures but if someone finds the thread (I'm off to work soon) they can check the citations.
As for the Milwaukee's debt load, the ICC's proposal for "Consolidation of the Railroads of the United States Into A Limited Number of Systems" listed the NP with a debt to capitalization ratio (as of 1919) of 44.9%, the GN of 39.5% and the Milwaukee of 61.9%. This was up by almost half again from where it was in 1910.
Yes, the debt load from that construction is what turned the MILW from prosperous to a beggar and forced the 1925 receivership and 1935 bankkruptcy. The effect of the electrification was only to slow down the rate of the hemmoraghing (sp?) of money (what's today called the cash "burn rate" down in the Silicon Valley and other such places) from what it would have been otherwise. So it now appears all that did was to buy the MILW some more time and prolong the agony . . .
Not to split hairs, but I believe that the PCE debts were typically largely wiped out or converted into something less burdensome (such as a stock of some kind) by one or both of the 1925 - 1935 reorganizations. Plus, a lot of intervening/ supervening events occurred and changed things between then and the ultimate demise of the line in the mid-1980's - so I doubt if that massive debt load can be traced to have directly "killed" the line then. Crippled it and stunted its growth and prosperity in those early years - yes, without a doubt - and perhaps also 'set the stage' for the future difficulties. But the MILW needed other forces against it to eventually 'do it in' . . .
Murphy Siding If the ininial cost estimate was $45 million, then $60 million, but the finished line cost $234 million, plus the electrification cost, then it appears to me that the directors weren't paying enough attention to at least some aspects of the business. I've read several times on these forums that 100 years ago, the average line haul was a couple hundred miles. Was there really that much traffic moving to and from the Pacific Northwest?
If the ininial cost estimate was $45 million, then $60 million, but the finished line cost $234 million, plus the electrification cost, then it appears to me that the directors weren't paying enough attention to at least some aspects of the business. I've read several times on these forums that 100 years ago, the average line haul was a couple hundred miles. Was there really that much traffic moving to and from the Pacific Northwest?
Anyone know how much the electrification cost above that $234 mil.? Sounds like massive debt load killed a rail line that probably had a fairly high expense ratio.
C&NW, CA&E, MILW, CGW and IC fan
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