Passenger train : Post Office

[jclass]

Murphy Siding's recent IC diversification thread discussion sparked a question for me.

Is the Postal Service's current situation close to a dead ringer to what happened with rail passenger service in the US?

I'm thinking of how the introduction of the auto and airplane technologies caused a shift in the way people lived... by making possible "freedoms not possible" that were "irresistable".  In the wake of the shift these new technologies caused, the railroads almost died from bureaucratic hardening of the arteries from numerous sources.  The passenger train went into suspended animation.  Not allowed to adapt or die.  Today, we have passenger service ill-suited to the needs it could well serve.

Recently, we've had the introduction of mobile phones and the world wide web, again making freedoms not possible... possible... like this forum. This time, it's the Postal Service bleeding all over, being restrained from moving out of the mold bureacracies have formed in and around it..

I'm wondering... will the Post Office experience the same fate as the passenger train?

I'm interested in hearing what your thoughts are.  Thanks.

[Modelcar]

.....I would say, most of what you just said is right on the mark.

But if the Post Office does close out altogether, it really will be a loss to many, and change the manner of business for many.

[henry6]

Sort of, yes.  But the passenger train was of private ownership while the Post Office is public via the Constitution.  But it was put under by private enterprise like UPS, FedEx, DHL, etc. who were able to upend the Federal law which restricted letters and other written person to person communication as the sole purview of the United States Post Office.  But lets face it,  facsimile and the internet did a lot more damage followed by cell phones, instant messaging, and texting.   If the USPS is to survive, there has to be a dedicated movement by Congress to do something about it.  Will recombining movement of mail with the need of rail passenger service help? Along with other air, rail, and highway transportation improvements and changes?    Will the threat of loss of franking priviliges do it?  Or the lobbying efforts of UPS, FedEx, etc. prevail?  Good question, jclass.  The answers, however, are years away.

[samfp1943]

   I would not bet that the US PS will survive in its current model of operation.  Go back and read how Congressional Franking" practices put a real load on the Post Office, and how Federal Use is a financial burden to the Post Office.

  Part of the financial moras that the Post Office is in is the Congressional Mandate that the Post Office Pre-Pay its projected Pension Expenses. [ Passed to protect the Union Pensions]

   My guess is that we will have a Postal Service that will be severely limited as to what it can deliver, and where.  My guess is that either together or seperately: UPS and FedEX will contract to set in and deliver mail and packages. Already FedEx is a partner/contractor with the Postal Service ( lots of larger Post Offices have Fed Ex Collection Boxes for the public to use and the drivers also pick up )items in the Post Office for the USPS as well).

 

[tree68]

UPS also partners with USPS - it's not unusual to see 'brown' at our little local post office.

I suspect that as non-computer literate folks pass on, the need to send hard-copy communications will drop to near nothing.  I can pay almost all of my bills on-line through the various vendor's websites.  Many magazines are now available on-line, as are news sources (much to the chagrin of newspapers).

I don't take issue with the idea of reduced delivery - for a long time I was only picking my mail up at the post office once a week as it was.  If they closed my post office, I'd get rural delivery at the end my driveway. 

It'll be interesting to see how it all falls out.

[jpwoodruff]

Modelcar

.....I would say, most of what you just said is right on the mark.

But if the Post Office does close out altogether, it really will be a loss to many, and change the manner of business for many.

In case the USPS should disappear, I'm concerned with a loss that has
not been widely discussed: Security

If I mail a package or envelope, it will arrive unmolested.  Federal
law protects the privacy of my letters.

The internet: not so much.  Gmail reads my email in- and out- going,
to tailor ads that I would read if I did that.  "Anonymous" hacked
Stratfor and (reportedly) got Henry Kissinger's social security
number. The banks know more about losses through fraud than they may
wish to say.  Pay my bills by my phone?   I don't think so.

John

[jclass]

Thank you all for your comments.

As I understand it, though railroads have been under private ownership, they have been subject to common carrier law, which required them in effect to provide services that by themselves weren't profitable.  As long as the railroads were the only game in town, they could offset these costs by charging captive traffic higher rates.  As the railroads lost lucrative customers to new competing technology, railroads were still required to provide the money-losing services.  A losing game.

Is this impression I have correct?

[Falcon48]

jclass

Thank you all for your comments.

As I understand it, though railroads have been under private ownership, they have been subject to common carrier law, which required them in effect to provide services that by themselves weren't profitable.  As long as the railroads were the only game in town, they could offset these costs by charging captive traffic higher rates.  As the railroads lost lucrative customers to new competing technology, railroads were still required to provide the money-losing services.  A losing game.

Is this impression I have correct?

  Actually, classic "common carrier law" didn't require railroad to provide services that weren't profitable.  There wasn't any "common carrier principle" that a railroad had to provide some services at a loss and pay for them by soaking its other customers. In fact, before the onset of regulatory law, "common carrier law" typically didn't require carriers to provide services beyond which they held themselves out to do.

The wild and wacky world of regulatory law was, however, was another matter. Courts and regulatory agencies typically played at least lip service to the notion that a rail common carrier could not generally be required to provide money losing services, and recognized that a railroad's other services should not be forced to subsidize money losing services.  

But the actual practice came much closer to what you state than what the regulators claimed to be doing.  This is largely because Federal and State regulatory laws typically required a railroad to affirmatively justify each passenger discontinuance (and each branch line abandonment) on a case by case basis.  While railroads ultimately succeeded in the majority of these, it often took years of expensive regulatory proceedings during which the losses kept piling up.  And, the "case by case" approach made it impossible for a railroad to simply clean its decks of a whole class of money losing services in a short period of time, as a normal business would do once changes in technology or consumer preferences made an entire line of business obsolete (for example, Sears/K-Mart just announced they are closing over 100 stores over the next few months, and they don't have bring a separate, years long regulatory proceeding to justify each of them).  So, in effect, the regulatory system was requiring a railroad's other customers to subsidize these money losing services, even though the regulators would not themselves acknowledge this as a regulatory policy. 

Further, the political landscape before the Penn Central and subsequent bankruptcies made it impossible for commuter heavy railroads to shed these money losing services.  It wasn't because of some principled view of  "common carrier law"  - it just couldn't be done.  It took major railroad bankruptcies to bring an end to this silliness, since a regulator can't constitutionally require a bankrupt to continue a money losing business for any reason without compensation. 

One other observation.  It's hard to project yourself into the past and look at things the way people did back then.  But I think it very likely that, at least until the near total collapse of passenger service as a viable business in the post WWII years, many railroads didn't have a good handle on how profitable or unprofitable the service was as a whole.  They could certainly see how much revenue their passenger services were bringing in, and they could see how much they were spending just to run the trains,    What they could not see was the magnitude of the costs they were incurring to provide the services beyond the direct costs of running the trains.  Obviously, once the direct costs of running the trains exceeded the revenues (which is what happened on most RR's by the late 1950's), the case for getting out of the passenger business was clear.  But the service was likely unprofitable long before that, if you consider all of the costs that could be saved by getting rid of the service.  Trouble is, that was difficult to quantify in the days of yore.  And it was even more difficult to quantify when the regulators were forcing you to look at passenger discontinuances on a "train by train" basis rather than discontinuance of a complete line of business (for example, at what point does the recoverable investment in a passenger terminal or multiple main line trackage on a corridor become a "saveable" cost of a discontinuance if you still have some passenger service on the corridor after the discontinuance?) . 

[henry6]

Falcon, your phrase "it just couldn't be done" does not make any sense, legally or otherwise, nor does it support anything you said up to that point.  The truth is that railroads are "common carriers"  under law and chartered by various states to provide specific services.  So if a railroad wanted to stop a service, they would have a lot of ICC and state regulatory agencies to appeal to to get their way.  They were forced to provide a service to a company's siding or make an interchange at a designated location because they said they would and could not not do it becuse they didn't want to do it anymore.  They ran passenger trains because their charters said they would and could only stop doing so with the permission of the regulatory agencies.  They had to interchange traffic at a given point with another railroad and not keep the traffic for themsevles to the next interchange point or to destination if that is what the tariff's said they were to do unless the other party...railroad...agreed to the change and it was so noted in the tariffs.  Again, you younger guys don't understand the differences and complexities of railroading before Conrail and Amtrak; it is like a whole and completely different world.  No, I don't blame you for not understanding but ask that you do understand, that you read up on the business and regulatory history of railroads from 1830 to today to see the eveloutions and reveloutions.  That way we can understand each other.  Oh, and by the way, I don't really understand it all either, especially how free today's railroads are to pursue while also still shackled by other rules.

 

 

[Murphy Siding]

jclass

Is the Postal Service's current situation close to a dead ringer to what happened with rail passenger service in the US?

   More like, the Postal Service's current situation is close to a dead ringer to what happened with railroads the US.


     As the traffic patterns in railroading changed, the railroads had to change to survive, just like the Post Office had to change.

     When new technology came along, the Post Office had to adapt to things like computers, the elimination of horse drawn delivery vehicles, and jet airplane for transportaion , for example.  The railroads had to adapt to diesels, radios, computers, etc..

      When new competitors came along to cut into the railroads' busines- like trucks-  the railroads had to re-invent themselves.  When UPS and Fedex came along, the Post Office had to do the same.

     The railroads had to rationalize their business, cut their operating costs, and re-think (once they were allowed to do so)  their rate structures.  The Post Office has not been allowed to do this-yet.

    Overall,  I'd believe the Post Office will always be around.  The mission, and the execution of that mission will change- just like the railroads had to change.

[henry6]

I don't think the USPS situation of today is comperable to the rail passenger service situation of 40 so years ago.  The rail passenger situation was a private enterprise situation gone bad, the USPS is a public service gone bad.  The railroads owned the equipment, the rights of way, the oprations and the employees.  The USPS owns local delivery vans, sorting equipment, and their employees.  Railroad competition came from publicly supported highway and air equipment and traffic support.  The USPS cometition comes from private enterprise.  Yeah, somethings are similar, but not the same.

The Post Office used air and jet air services of private carriers as well as cars owned and maintained by railroads; the USPS, as I said above, has local delivery vans, but most of its bulk and interfacility  equipoment is private carrier/operator owned; I don't believe the USPS owns any planes.  And it would be interesting to know how many of the sorting centers and Post Offices are actually owned outright by the USPS and how many are leased or rental properties.

The railraod passenger train was a private enterprise operated by charter which insisted on certain levels of performance unless mutually agreed upon to change.  The private carriers saw fit to find the mutual agreements to curtail or otherwise eliminate service which led to the formation of what we know as Amtrak today.  The USPS is charged by the Consitituion and the Congress to provide the movement and delivery of messages and packages as part of the Government's responsiblity to regulate interstate commerce and business as it see fit.  Between free Franking priviliges and the Government's responsibility to a postal service, it will be around for a while longer for sure, maybe forever, too, but probably not under private ownership. 

[Modelcar]

.....Leasing is a fact.  A friend of ours owns 3 Post Offices back in Pennsylvania.  I know he is concerned re: this change...cutback, whatever that is coming to the system.

[MidlandMike]

One thing that passenger trains and the US Postal Service have had in common, is their use as political footballs.  Fed-Ex and UPS would not deliver an envelope for the price if a postage stamp, yet congress is apoplectic about raising the postal rates to a level that would sustain the service.

[dakotafred]

Agree with Mike. After 40 years, it should be one way or the other with the Post Office: Either it's independent or it's not. My opinion is, if Congress doesn't contribute support, it should butt out. The only "help" it provides these days is on behalf of organized labor -- those notorious pre-funded pensions -- and artificially cheap first-class postage stamps.

Yes, I would like to see most post offices remain open and Saturday delivery continue; I even like cheap postage stamps. But if the price of these is the Post Office going out of business, and these things I like going away anyway, what's the point?

Private enterprise, and all that, but I would not trust FedEx and UPS with the U.S. mail. They ring your doorbell once and leave the package on your front step -- to the tender mercies of whatever.

Yes, I like the U.S. Postal Service just as it is; also -- so you don't get the wrong idea from my position on the pre-paid pensions -- my local postal employees, who seem to me intelligent, friendly, dedicated and worth every penny of their salaries. (Let's not fall into the trap of thinking that just because so many are underpaid in our brutal new economy that everybody should be. Also, those UPS and FedEx drivers are doing very well, thank you.)

[samfp1943]

dakotafred

Agree with Mike. After 40 years, it should be one way or the other with the Post Office: Either it's independent or it's not. My opinion is, if Congress doesn't contribute support, it should butt out. The only "help" it provides these days is on behalf of organized labor -- those notorious pre-funded pensions --" and artificially cheap first-class postage stamps..."

NOTE: An important aspect of the USPS is providing for 'Franking Services' for The Congress and The Senate, not to mention the volume of main sent out on behalf of other Government agencies. The Elected official hold dear to their ability to reach their constituents via their ability to send out their franked mail. 

Yes, I would like to see most post offices remain open and Saturday delivery continue; I even like cheap postage stamps. But if the price of these is the Post Office going out of business, and these things I like going away anyway, what's the point?

NOTE: Free is NOT free. The price of stamps has risen each year for as long as I can remember. The tax payers are paying for those who enjoy the"FREE Services" of the USPS, via Congressional Mandates.

Private enterprise, and all that, but I would not trust FedEx and UPS with the U.S. mail. They ring your doorbell once and leave the package on your front step -- to the tender mercies of whatever.

NOTE: Don't forget that our parents and grandparents enjoyed the services of THE RAILWAY EXPRESS AGENCY, and its green delivery trucks that served small communities with freight delivered by rail 9and later OTR Trucks). REA was a vital component of 20t Century Business Commerce. As were the RAILWAY POST OFFICES. and then the OTR POSTAL BUSES that filled the gap when rails couldn't.

    Yes, I like the U.S. Postal Service just as it is; also -- so you don't get the wrong idea from my position on the pre-paid pensions -- my local postal employees, who seem to me intelligent, friendly, dedicated and worth every penny of their salaries. (Let's not fall into the trap of thinking that just because so many are underpaid in our brutal new economy that everybody should be. Also, those UPS and FedEx drivers are doing very well, thank you.)

NOTE: I would suggest that the USPS employees do work hard, but having delivered a number of loads into BulkMail Facilities and to Main Po's around the country. They are burdened with a number of individual workers who are not worth the power it would take to blow them off the curb, and rely on the Postal Workers Union to protect their positions. The same folks who five or six years ago lobbied Congress and got the provision that they USP{S MUST FUND their Pension Fund for five years in advance. A law that seems to be bringing the USPS to its financial knees.

 NOTE: And as to the Security of the FedEX system. It is at least as secure as the USPS. And I would also say that UPS is similarly secure. Yes they have some 'Bad Actors' in their systems but so does the USPS. ( ask about instances of Mail Carriers throwing mail away or hiding it, so they would not have to deliver some mail they view as worthless).

[henry6]

I may be wrong...but I think you need a Consitutional amendment to rid the government of providing postal service.  And yes, members of Congress hold franking priviliges and the postal service of the government dear despite the internet and all other electronic advances, As such, it is an internalor in house mail service and it does set the government seperate than corporate American in that respect.

Saturday and Sunday delivery is another story.  It has been about 60 years since the 40 hour, 5 day work week went into effect for business (manufacturing, offices, service as opposed to retail) so it really doesn't matter much to business whether or not there is weekend USPS services.  It might actually be a great money saver from payroll to all across the balance sheet.

So the question I have is: is the concept of eliminating the USPS, reducing its powers and operating parameters really aimed at dollars and cents counting or is it another aim at weakening the Federal government?

 

[WSOR 3801]

The USPS might have had a large part in killing the passenger train. 

On many roads, the Railway Post Office revenue kept the whole passenger operation afloat, and probably covered direct expenses, if not a small profit. 

Once the USPS took the mail contracts away, passenger trains dropped off quickly.  I think speed and reliability of delivery dropped off quite a bit as well.  For a while, I would receive disconnect notices in the mail before I would receive the bill.  Now, I just pay the utilities electronically.  Less fuss and muss, bills get paid on time.   

[Falcon48]

henry6

Falcon, your phrase "it just couldn't be done" does not make any sense, legally or otherwise, nor does it support anything you said up to that point.  The truth is that railroads are "common carriers"  under law and chartered by various states to provide specific services.  So if a railroad wanted to stop a service, they would have a lot of ICC and state regulatory agencies to appeal to to get their way.  They were forced to provide a service to a company's siding or make an interchange at a designated location because they said they would and could not not do it becuse they didn't want to do it anymore.  They ran passenger trains because their charters said they would and could only stop doing so with the permission of the regulatory agencies.  They had to interchange traffic at a given point with another railroad and not keep the traffic for themsevles to the next interchange point or to destination if that is what the tariff's said they were to do unless the other party...railroad...agreed to the change and it was so noted in the tariffs.  Again, you younger guys don't understand the differences and complexities of railroading before Conrail and Amtrak; it is like a whole and completely different world.  No, I don't blame you for not understanding but ask that you do understand, that you read up on the business and regulatory history of railroads from 1830 to today to see the eveloutions and reveloutions.  That way we can understand each other.  Oh, and by the way, I don't really understand it all either, especially how free today's railroads are to pursue while also still shackled by other rules.

 

 

You've made your "charter" argument in many previous posts, and I've answered it before.  But let me try again. 

 Corporate "charters" in the 19th century were essentially what articles of incorporation are today - permission by a state to create a corporation to engage in a particular line of business.  In the 19th century, corporations were considered special things, and they required special permission, hence the "charters".  Today, this type of thing is handled by routine filings with a state agency. The 19th century "charters" essentially allowed the corporation to be formed to engage in a particular business, just like articles of incorporation do today.  They generally did not require a railroad to provide any specific services (although they might require the railroad to begin service by a certain date), or to obtain any government permission to discontinue services which were losing money.  Many enterprises other than railroads also received "charters" in the 19th century.  Those "charters" similarly described the type of business the corporation intended to engage in, but did not require it to provide any specifc services or products.

I also happen to much more familiar with "common carrier law" than you apprarently think.  Contrary to your suggestion, I'm not a "younger guy" with no practical experience.  I've worked in this area for decades - probably much longer than you - and I'm well known in rail industry legal fraternity.  I guarantee you that I fully understand the legal "complexities" of railroading prior to Con Rail and Amtrak, and I am intimately familiar with the development and evolution of state and federal rail regulatory systems - clearly more so than you.  So you will excuse me if I take some offense to your patronizing suggestion that I don't know what I'm talking about. 

Your fundamental error is that you are confusing the "charters" under which railroads were organized, and the "common carrier " law which existed at the time, with the regulatory systems that developed much later.  Prior to the creation of state and federal regulatory systems, a common carrier only had a legal duty under common law to transport what it held itself out to transport.  For railroading in the 19th century, this wasn't a big deal because most railroads intended to transport both freight and passengers, and thus didn't limit their "holding out". 

If this had remained the law, railroads would have had no difficulty getting rid of passenger services once those services became dogs.  What changed was the development of state and federal regulatory systems which regulated "exit".  This occurred  primarily in the early 20th century, long after most railroads were "chartered".  "Exit" regulation required railroads to get affirmative regulatory approval to discontinue particular services ( like passenger services) or abandon rail lines.  This was pretty much unique to railroads, as water carriers (many of which also had 19th century charters like railroad charters) and truck companies (which generally were organized under more modern state incorporation laws) usually did not have to get affirmative authority to discontinue services (unless their service was part of a rail move).  At the Federal level, the requirement that railroad obtain affirmative regulatory authority for abandonments and discontinuances goes back to the Transportation Act of 1920. which was long after most railroads were chartered and built.

An ancillary devepment was the enactment of a federal common carrier obligation, the current version of which appears in 49 USC 11101.  This is the basis on which the STB has held that railroads have an obligation to transport traffic (like toxic chemicals) that they don't want to handle.  But this was enacted as part of the 1906 Hepburn Act which, again, was long after most railroads were chartered and built.

My comment that "it couldn't be done" referred to discontinuance of major commuter services prior to the Penn Central bankruptcy, which is clear from my prior post.  It describes the political reality - no regulatory agency was going to approve discontinuance of Penn Central's commuter services ( or those of its predecessors) no matter how much money they were losing on it.  If you have been around as long as you imply, you would understand exactly what I'm talking about.  It took PC's bankruptcy to stop this silliness, since govenrment action forcing a bankrupt company to continue a money losing business without compensation is a violation of the 5th amendment.

Your comments about interchange are also misinformed.  Of course, if a railroad actually stated in its tariffs that it would interchange with another railroad at a particular location, it had to perform that service in accordance with its holding out - that has nothing to do with "charters", or even with common carrier law.  After all, if Walmart publishes an ad saying that it's going to sell Widgets for $10 at its Podunk store, then it is obligated to do so.  The real issue is whether a railroad could be required to interchange with another railroad at a location where it did NOT hold itself out to interchange (in its tariffs or otherwise).  "Charters" have nothing to do with this. In fact, "interchange" wasn't even a major part of early railroading. If you go back into the 19th century, particularly prior to the Civil War, many railroads did not interchange traffic with other roads, at least not without break of bulk.  Interchange developed, not because of legal requirements, but for business reasons.  Take a look at George Hilton's book on narrow gauge railroads, which has an excellent discussion of the development of intercharge and of the evolution lf the rail industry from a bunch of local, largely isolated transport ventures into a national transportation network.  Legal requirements to interchange with other roads arose from the regulatory systems that developed after most railroads were built, not from their charters or from "common carrier" law.   The STB still has authority under its statute to force railroads to interchange with other railroads.   

 Finally, your comment about railroad's being free in some areas and shackled in others reflects the workings of the political system,  The current system does not reflect a consistent regulatory philsophy.  It is a hodgepodge of dirfferent requirements, some going back to an era when government policy was to make the rail industry into a regulated cartel, and some reflecting more recent policies to make the industry more competitive.  The various changes made over the years reflect political issues of the day, and the legislative compromises made to deal with them.  Don't look for consistency or an overarching regulatory philosophy, because it isn't there.

[henry6]

Ok.but didn't a charter require a railroad perfrom certain duties and services in order to keep the chartert?  And wasn't a published or established interchange required to be met either by taritff or other obligation unless otherwise agreed upon by the shipper, the consignee, and or the other railroad?

As for commuter services, since most of those services were within one state, state agencies were the determining force when approached. rather than the ICC.  My frame of reference is NJ where the state constructed highways, bridges, etc. to allow autombiile commuting to NYC while holding railroads to their services.  The then NJ Association of RR's led us to believe that the NJ Turnpike and other roadways were built on railroad properties which had to be modified.  The state called it an improvement and raised their taxes.  A social factor often overlooked was the changeover to 5 day rather than 5 and a half or 6 day workweeks which gave railroads a pool of equipment which was no longer used and real estete that was lyingi idyl.  This also was the time the US Post Office began cancelling or not renewing contracts, a factor that hit hard on many commuter routes.  (Note, it is easy to pin the demise of the passenger train on the elimination of the US Post Officed contracts, but that was only one of many factors causing the decline of passenger service.)

Another social factor I remember coming through people I knew..even from my father...was that the railroads were kings, rich and lofty; they could do as they pleased because of their monopolistic powers; they were still existing as part of their Robber Baron legacy, not to be trusted.  The concept of a railroad removing trains from schedules and track from roadbeds was why these people were angry at railroads and mistrusted them even further.

Railroads did not help their cause much.  One report from a train off hearing was that railroal lawyers would ask participants on the stand how they travelled to the hearing that day.  Few answered, "by train", few enough that the train off petitions were granted.

 

[jeffhergert]

samfp1943

    Part of the financial moras that the Post Office is in is the Congressional Mandate that the Post Office Pre-Pay its projected Pension Expenses. [ Passed to protect the Union Pensions]

 

 

One article I found on the internet proposes that the mandate to pre-pay the pension expenses is a deliberate attempt to sink the USPS.  Not to help union pensions, just using that as an excuse.  I'm going by memory (I'd have to find the article again) it was passed late in the session of a lame duck congress by Republicans.  The intent being that they (Republican Ideologues) would like to see the post office privatized.

Jeff     

[Falcon48]

henry6

Ok.but didn't a charter require a railroad perfrom certain duties and services in order to keep the chartert?  And wasn't a published or established interchange required to be met either by taritff or other obligation unless otherwise agreed upon by the shipper, the consignee, and or the other railroad?

As for commuter services, since most of those services were within one state, state agencies were the determining force when approached. rather than the ICC.  My frame of reference is NJ where the state constructed highways, bridges, etc. to allow autombiile commuting to NYC while holding railroads to their services.  The then NJ Association of RR's led us to believe that the NJ Turnpike and other roadways were built on railroad properties which had to be modified.  The state called it an improvement and raised their taxes.  A social factor often overlooked was the changeover to 5 day rather than 5 and a half or 6 day workweeks which gave railroads a pool of equipment which was no longer used and real estete that was lyingi idyl.  This also was the time the US Post Office began cancelling or not renewing contracts, a factor that hit hard on many commuter routes.  (Note, it is easy to pin the demise of the passenger train on the elimination of the US Post Officed contracts, but that was only one of many factors causing the decline of passenger service.)

Another social factor I remember coming through people I knew..even from my father...was that the railroads were kings, rich and lofty; they could do as they pleased because of their monopolistic powers; they were still existing as part of their Robber Baron legacy, not to be trusted.  The concept of a railroad removing trains from schedules and track from roadbeds was why these people were angry at railroads and mistrusted them even further.

Railroads did not help their cause much.  One report from a train off hearing was that railroal lawyers would ask participants on the stand how they travelled to the hearing that day.  Few answered, "by train", few enough that the train off petitions were granted.

 

Let me try to try to answer your latest comments.  Unfortunately, since this covers so many subjects, it will be a little long.  However, if anyone reading this note has been having trouble sleeping at night, I guarantee you this will help.

1.  CHARTER REQUIREMENTS –To my knowledge, charters were not typically used by states as a lever to force a railroad to provide (or continue to provide) specific services (although it’s possible there were isolated examples of this).   As I mentioned in my previous posts, a “charter” in the 19^th century was essentially state permission to form a corporation to engage in a certain business activity, like articles of incorporation are today.  However, I am aware from secondary sources that some charters required that a railroad begin service within a certain time frame, and that they could be revoked if this were not done.

There was also another type of agreement that an aspiring railroad had to be concerned about in the 19^th century.  In that era, localities which were eager to secure a railroad might arrange for grants of rights-of-way, stock subscriptions and other forms of financial aid to induce the railroad to build through their communities.  I know that at least some of these were subject to requirements that the railroad be completed in a certain time frame, and I suspect this was pretty common (after all, why should a community go out on a limb to provide support to a railroad that is never built).

2.  INTERCHANGE – You are correct that railroads were obligated (originally under contract law principles and later under state and federal regulatory schemes) to comply with their published tariffs, including the obligation to honor whatever interchanges the tariffs provided.  But you’ve left out a step.  How did the interchanges get into the tariffs in the first place?  The answer is that interchanges were almost always established by agreement of the railroads involved.  If there were no agreement for interchange at a particular location there would never be a tariff which provided for an interchange at that location.  And this remained true even after state and federal regulatory authorizes got the power to compel interchange – the vast majority of interchange arrangements have always been the result of voluntary business arrangements between the parties to the interchange.

Having said this, the railroads did develop a vast network of interchange arrangements in the 19^th and early 20^th centuries.  At one time, railroads held themselves out to interchange traffic at virtually every connecting point where traffic could be physically interchanged (a practice sometimes called “open routing”).  This was a result of both railroads’ individual self interest and the “horse trading” that characterizes inter-railroad dealings even today.  Why, after all, would Railroad A ever agree to an interchange with Railroad B that would allow Railroad B to “short haul” Railroad A on a particular route?  The reason is that, in return, Railroad B agreed to an interchange on another route that allowed Railroad A to short haul it on that route – tit for tat. You see the same thing today in “reciprocal switching”  The “reciprocity” is in the way these deals are made.  Railroad A agrees to switch Railroad B’s traffic at a particular location, in return for Railroad B agreeing to do the same at that location or at another location.  Again, tit for tat.

There was another important feature of “open routing” during the dark ages of regulation – rate equalization.  In that era, the rates between any two points were usually the same over all possible routes and combinations of carriers between those points. This wasn’t an accident.  It was a result of railroad rate making cartels (called “rate bureaus” ) which, until the modern dereg movement, were sanctioned by the government to protect the all important and sacred rate structures.  Everytime I see someone pontificate about how the modern merger movement has made railroads less competitive by greatly reducing the number of railroads, I have to chuckle.  They have no idea how rates were made when there were “many” railroads.  In those days, rates were made by representatives of competing railroads sitting around a table and voting on their rates (I was there, and I watched it).  It was all legal and was encouraged by the ICC, again to protect the sacred rate structures..  From a competitive standpoint, it doesn’t matter how “many” railroads there may if they are all agreeing on the rates for their competing services.

One result of the Staggers Act was to put an end to both open routing and rate equalization.  In the years following the Staggers Act, vast numbers of “through routes” were closed, and both rate bureau ratemaking and collective rate equalization ended.  The rail industry today, with fewer railroads making rates independently, is far more competitive than the olden days, when “many” railroads made their rates collectively by national or regional agreements.

3.  COMMUTER SERVICES – You are correct that “exit” from intrastate commuter rail services was historically a state regulatory issue, at least until 1958.  There were, however, two major exceptions.  The first was abandonment of rail lines.  The ICC had exclusive jurisdiction over rail line abandonments, both interstate and intrastate, since the Transportation Act of 1920.  If the ICC authorized abandonment of a line over which commuter service was being provided, the commuter service went with it, regardless of whether the commuter service was intrastate or interstate, and no state approvals were required.  The other exception was bankruptcy, which was solely a Federal matter.  A bankrupt railroad could theoretically be relieved of money losing commuter services through the bankruptcy process without state approvals.  The reason I say “theoretically” is that I’m not sure it was ever done prior to the PC bankruptcy (it wasn’t done there either, but the threat of it caused public authorities to take over the services).  As a result of  the Transportation Act of 1958, the ICC gained authority to approve discontinuances of intrastate passenger services, although the railroad had to first go to the state regulatory authorities.

4.  STATE TAXATION -  Prior to the 1976 4R Act (technically the “Railroad Revitalization and Regulatory Reform Act of 1976”, although nobody calls it that), it was very common for states to impose highly discriminatory taxes on railroads.  The railroads were sitting ducks for this kind of thing because, unlike most other industries, a railroad couldn’t close up shop and move somewhere else.  New Jersey was particularly extreme, and became a poster child in the legislative debates leading up to the 4R Act because of its excesses.  The result was that the 4R Act enacted a prohibition against discriminatory taxation of railroads, the current version of which appears at 49 USC  11501.  

5.  EFFECT OF POSTAL TRAFFIC – The demise of railroad post office traffic was just before my rail career started.  But you’re clearly right that passenger traffic was in serious trouble long before the postal contracts were cancelled (in 1958, for example, the ICC determined that passenger losses in the rail industry were running at a rate of $650 million annually, which equates to several billions in current dollars).  That said, I think it’s correct that the postal service kept many trains from being discontinued earlier.   The reason wasn’t that the postal traffic made the trains economically viable or attractive.  Rather, it had to do with the tunnel vision employed by regulatory agencies in passenger train discontinuance cases.  If the regulators are looking at passenger train discontinuances on a train by train basis (which is how they typically did it), the only costs they would accept were the costs that would be saved by the discontinuance of that particular train.  In other words, even if the discontinuance of one train was part of a railroad's larger  program of exiting passenger services that would ultimately save the railroad zillions (for example by enabling the RR to avoid all of the jont and common costs costs of having a passenger program and to monetize all of the recoverable investment in property, facilities and equipment that discontinuing the program would free up), the regulator would not consider anything beyond the savings that could be achieved by getting rid of the train involved in the proceeding in isolation.  This, in turn, affects the railroad’s actions.  If the railroad knows that the postal revenues prevent the railroad from showing a direct loss on the train carrying the postal traffic, it won’t even ask the regulator for permission to discontinue it – why waste resources tilting at windmills? I haven’t been involved in passenger discontinuances (which, again, were mostly before my time) but I have been heavily involved in abandonments, and the decision whether to go after a particular abandonment is very heavily determined by the railroad’s perception of what the regulator is likely to do, even if the economics justify abandonment (this, by the way, is why railroads “win” the vast majority of their abandonments – they don’t even propose abandonments they perceive as regulatory losers).  Once the postal traffic was gone, this ceased to be a factor.

6.  REGULATION AND “MONOPOLY” -   State and federal regulation of railroads in the 19^th century did not result from railroads “removing trains from schedules and track from roadbeds”.  This was the era of aggressive railroad expansion (at least until 1893).  If anything, the concern was that the railroads were overbuilding rail lines, not “exiting” services.  The concern with “overbuilding” eventually resulted in provisions of the Transportation Act of 1920 which gave the ICC regulatory authority over the new line construction and extension, with a mandate to prevent “wasteful” expansion.  While these same provisions also gave ICC authority over abandonment, essentially as an afterthought, it was not a big issue at the time, although it became one later.

The impetus for regulation in the 19^th century arose, not from abandonments and discontinuances, but from railroad pricing practices.  Contrary to your statement (and to the yellow press of the day), railroads weren’t monopolists in all of the markets they served.  In many markets, they faced competition, sometimes from other railroads, sometimes from other forms of transportation (water transport was the big one in the 19^th century).  The railroads reacted to this the same way that airlines do today.  They differentially priced their services so that relatively lower prices were charged where the railroad faced competition and relatively higher prices were charged where the railroad did not.  That’s no different than airline pricing today – compare the price of a Chicago-Des Moines ticket to that of a Chicago - Los Angeles ticket.  However, in the 19^th century, this was seen as a serious abuse (and, if you read modern history texts, they often blindly accept the characterizations by the yellow press of the day).  But, in politics as in much else, perception is reality.  And the perception that railroads were gouging the poor farmers and other unfortunates provided the political fuel for late 19^th century and early 20^th century regulatory initiatives.  You are cetainly corrent that the railroads didn’t help matters.  In an era before public relations was much of a concern, their leaders often appeared as heartless robber barrons.  And, in what may be one of the greatest acts of political stupidity by an industry, certain large railroads may have actually supported the early regulatory initiatives (at least some eminent railroad historians – like George Hilton – think they did).  The reason was that the regulatory requirements that all rates be published in tariffs (a key part of early regulatory initiatives) would prevent railroads from secretly “cheating” on cartel made rates.  If this is true, it was a disaster that’s still being felt today, as the regulatory movement soon developed far beyond anything that could remotely have been in the railroads' interests.  But, even in modern times, opportunities to sweep away the regulatory system have been lost because some railroads at the time perceived advantages in keeping a regulatory system.  This is why, when the ICC was abolished in 1996, key elements of the regulatory system survived and the STB was created to administer it.  Recall that the UP-SP merger was pending at the time.

 

   

 

[Deggesty]

As I read the Constitution, it must be amended for the postal system to be privtized, since the Consitution states that the Government shall provide a postal system.

[Deggesty]

As I read the Constitution, it will have to be amended before the postal system can be privatized, since the Constitution states that the Government shall provide a postal system.

[Dakguy201]

Deggesty

As I read the Constitution, it will have to be amended before the postal system can be privatized, since the Constitution states that the Government shall provide a postal system.

From Article I Section 8 of the Constitution:

"Congress shall have the power ...To establish Post Offices and post Roads ..."

Having the power is not the same thing as requiring it be exercised.  Also the means for accomplishing this end is not prescribed; there is no prohibition against hiring Fed-Ex to achieve some part of the mission, just as intercity transportation of mail today is commonly done by private truckers

[henry6]

First, Degesty, since the government elected to establish the post office and post roads, it accepted the responsiblity as per the Consititution, therefore, it will take an amendment of some kind to eliminate what has been practiced since 1776.

Falcon, I really appreciate your explanations and postions.  Two points I wonder about yet.  I was under the impresson that if one received a charter it defined what you were going to do and you had to do what you said.  If it stated you were to service freight and passenger needs you would have to provide those services unless you could prove the lack of need or excessive cost and could renegotiate the terms of a charter; you couldn't just say "no more passenger service" and stop.

As for interchange and tariffs.  One of the problems often was that even if there was a published tariff a shipper or consignee could request a specific routing.  If one of the carriers of that routing wanted to carry the merchandise to another interchange in order to get a longer haul, he was out of line and could be penalized if any of the parties realized the mistake.  If a car was to go RR A to RRB to RRC to RRD an RRA took it directly to RRC or RRD, RRB and RRC would lose itheir share of the tariff rate.  Sometimes it was loyal agents and crews which would give thier own road the long haul despite published or stated routing.  When the Poughkeepsie Bridge burned, PC wanted all Maybrook interchange be elminated and given them at other terminals thus shorting the haulage of the likes of the EL for instance.  The EL objected and the ICC made PC establish interchange at BInghamton with PC trains coming from Utica to Binghamton over the EL branch but still squaring up as at the Maybrook interchange.  When the EL merged, they stopped running Corning, NY to Newbury Jct., PA over trackage rights on NYC for Reading interchange and instead won the right to run over their own tracks via Scranton to Rupert, PA  eliminating the need of trackage rights and gaining the long haul share. I am sure there are hundreds of other stories about how interchanges and tariffs were avoided wherever and whenever possible.

Another thing to remember, elimination of a passenger train or service did not mean abandonment of any given line.  It just meant that there was another step and maybe another year before it could be abandoned.  Also, as to monopolies in the Grangert states, it was apparantly true in that with the over building of railroads each town had a railroad an was at the mercy of that railroad for a rate; the concept of a wagon ride consuming half to a full day to another town did not sit well with the locals, thus the group, the Grange was formed to fight railroad rates in the name of monopoly .

A question arises in this mass of rhetoric.  Were railroads really overbuilt?  Were there more lines laid down when there was no need for them?  Or did that only become true once the automobile came along and demanded paved roads bringing towns 1, 2, 5, miles so much closer together that the railroads became redundent trackage unto itself.  It was industried insided each town that then made the railroad line what it was and became: important line or empty track.  So when did these lines actually become  "over built:?

 

[CSSHEGEWISCH]

When you define overbuilt, a map of CNJ and LV in New Jersey and eastern Pennsylvania comes to mind.  Also consider NKP and NYC between Cleveland and Buffalo, six paralleling railroads between Chicago and Omaha, etc.

[henry6]

Actually my question is more offbeat: when did the system become overbuilt?  When built and propsering or when traffic dissapeared and rust appeared?

 

[Murphy Siding]

henry6

Actually my question is more offbeat: when did the system become overbuilt?  When built and propsering or when traffic dissapeared and rust appeared?

 

   The system became overbuilt when the market changed, and government regualtions would not allow the system to scale back operations to profitably deal with those market changes.

[Murphy Siding]

henry6

First, Degesty, since the government elected to establish the post office and post roads, it accepted the responsiblity as per the Consititution, therefore, it will take an amendment of some kind to eliminate what has been practiced since 1776.

 

     I disagree with your  line of thinking.

"Congress shall have the power ...To establish Post Offices and post Roads ..."

   If the government is given the power to do something, it also has the power not to do the same thing. 
It doesn't seem to say, that the government WILL establish a Post Office and Post Roads, and maintain them in their most recognizable form forever.

[henry6]

Murphy Siding

henry6:

First, Degesty, since the government elected to establish the post office and post roads, it accepted the responsiblity as per the Consititution, therefore, it will take an amendment of some kind to eliminate what has been practiced since 1776.

 

 

     I disagree with your  line of thinking.

"Congress shall have the power ...To establish Post Offices and post Roads ..."

   If the government is given the power to do something, it also has the power not to do the same thing. 
It doesn't seem to say, that the government WILL establish a Post Office and Post Roads, and maintain them in their most recognizable form forever.

Yes, but once the Government acts and continues a practice for 235 years it is not easy to change. I could actually take a Constitutional amendment (read: many years) to make the change.