Convicted One I'm saying that the problem actually started back when the PRR and NYC were allowed to gobble up so many regional concerns. \there seems to be this mindset that we owe the corporations the "freedom" to aggregate, to enjoy economies of scale, to combine and strip away the duplicity that results.... and I'm saying that there is sufficient evidence now that allowing these companies to get that big pose an unnecessary burden onto us poor stiffs who will be expected to bail them out if and when something does not go pro forma.
I'm saying that the problem actually started back when the PRR and NYC were allowed to gobble up so many regional concerns.
\there seems to be this mindset that we owe the corporations the "freedom" to aggregate, to enjoy economies of scale, to combine and strip away the duplicity that results.... and I'm saying that there is sufficient evidence now that allowing these companies to get that big pose an unnecessary burden onto us poor stiffs who will be expected to bail them out if and when something does not go pro forma.
Prior to the formation of Penn Central, The PRR sought to merge with N&W and Wabash(Pennsy held major stock in both roads) as a counter to NY Central's proposed merger with C&O(which presumeably would also have included B&O and WM). These two systems would have avoided much of the route duplication that plagued PC, and would have the advantage of significant coal hauling revenue (which was the one bright spot in the Eastern RR scene once everything started collapsing). A map of the two proposed railroads would look much like the modern Northeastern RR system.
The ICC blocked both mergers, thus paving the way for the near collapse of the industry in the Northeast...
"I Often Dream of Trains"-From the Album of the Same Name by Robyn Hitchcock
carnej1 Prior to the formation of Penn Central, The PRR sought to merge with N&W and Wabash(Pennsy held The ICC blocked both mergers, thus paving the way for the near collapse of the industry in the Northeast...
Prior to the formation of Penn Central, The PRR sought to merge with N&W and Wabash(Pennsy held
The conjecture here is multiple. First is that he ICC was protecting the highway/trucking industries as opposed to taking care of the railroad industry. Second is that perhaps the ICC was protecting investment bankers and Wall Street based on the low return on investments railroads were showing. There are probably more items of conjecture one can come up with....
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That would have been an interesting combo! However, I was referring to setting prices to shippers to be in line with what other lines charged.
C&NW, CA&E, MILW, CGW and IC fan
schlimm . AFAIK, none of those western lines sent out feelers to eastern partners about merging.
. AFAIK, none of those western lines sent out feelers to eastern partners about merging.
Well, there was George Gould, buying the Wabash and extending it into Pittsburgh, for one.
Falcon48 I think it would be well for you to step back and take a high level view of how changes in traffic patterns dictated the ideal size of the rail enterprises at various points in time and their merger objectives . The size of and "reach" of railroads has historically reflected their length of haul. The business incentive has always been to merge or construct new lines to expand the "reach" of individual rail companies as average length of haul increased.
I think it would be well for you to step back and take a high level view of how changes in traffic patterns dictated the ideal size of the rail enterprises at various points in time and their merger objectives .
The size of and "reach" of railroads has historically reflected their length of haul. The business incentive has always been to merge or construct new lines to expand the "reach" of individual rail companies as average length of haul increased.
Not really true. I'll point out the folly of speaking in absolutes, then go on to outline anti-competitive mergers such as the already mentioned NYC/NKP, the NYC/West Shore, and in more recent times when the Norfolk And Western acquired both the NKP and the Wabash (by long term lease in the case of the latter) and proceeded to pull up the former Cloverleaf paralleling the Wabash, as well as the Wabash's 4th district across Northern Indiana.
i'm sure there are many more, we've all read about them. They tend to eliminate choices for shippers, thus guaranteeing the prevailing road opportunity to control their market.
henry6 Yes, it is odd that those who cry the loudest about government and regulations are also the first ones to run to government and the courts to get a law or regulation to help them! .
Yes, it is odd that those who cry the loudest about government and regulations are also the first ones to run to government and the courts to get a law or regulation to help them! .
Not odd at all. "Can't beat 'em , then join 'em" | "monkey see, monkey do" | "What's good for the Goose, is good for the Gander", | "A dose of their own medicine" |
greyhounds . The railroads are capable of managing their own pricing. They don't need big brother holding their hand and showing them the way.
. The railroads are capable of managing their own pricing. They don't need big brother holding their hand and showing them the way.
If nothing else, this is an interesting read:
http://features.blogs.fortune.cnn.com/tag/csx/
schlimm There is a whiff here of what is known as tacit collusion, a form of price fixing, in which there is an implied agreement between participants on the same side in a market to offer a service at the same price.
There is a whiff here of what is known as tacit collusion, a form of price fixing, in which there is an implied agreement between participants on the same side in a market to offer a service at the same price.
Keep this in mind next time you read someone bemoaning the loss of rail "competition" because there are fewer Class I railroads today than there were pre-Staggers. From a competitive standpoint, it doesn't matter how "many" railroads there were in the good old days, if they were making their pricing decisions together by voting on them in a conference room. I'm not making this up. I was there. I saw it, and I was part of it. The rail industry today is far more competitive with "fewer" big railroads, than it was with "many" railroads making their prices through legal rate cartels
greyhoundsWell, Adams was obviously wrong.
Let me try to briefly respond to your thoughtful analysis.
I have not read Prophets of Regulaton by Thomas K. McCraw. However, I am familiar enough with CFA to recognize your description of him as correct. CFA was also a President of the Union Pacific Railroad until it went bankrupt and he returned to Harvard where, as I recall, he taught history. He also wrote on the subject of railroads.
You point to two types of competition that keep railroad prices low: Route competition and market competition. I don't dispute your description of market competition but it does seem reasonable to point out that a 19th century hog farmer did not just ship hogs to market by rail; everything he brought for his farm or home came by rail. The merchants that sold things to him had local businesses and it is not clear to me that market competition would necessarily keep their prices low. It is certainly true that railroads had very elaborate tariff schedules and price discrimination existed.
As I understand it there was not an actual railroad monopoly in the US during the 19th and early 20th centuries but there were very large systems such as the Union Pacific and Southern Pacific under E. H. Harriman and the Great Northern under James J. Hill which acquired control of the Northern Pacific.
I especially appreciate the insights from your personal and professional experience. However, I believe in your account you acknowledge that not all railroad men share your high standards.
Convicted One Falcon48 I think it would be well for you to step back and take a high level view of how changes in traffic patterns dictated the ideal size of the rail enterprises at various points in time and their merger objectives . The size of and "reach" of railroads has historically reflected their length of haul. The business incentive has always been to merge or construct new lines to expand the "reach" of individual rail companies as average length of haul increased. Not really true. I'll point out the folly of speaking in absolutes, then go on to outline anti-competitive mergers such as the already mentioned NYC/NKP, the NYC/West Shore, and in more recent times when the Norfolk And Western acquired both the NKP and the Wabash (by long term lease in the case of the latter) and proceeded to pull up the former Cloverleaf paralleling the Wabash, as well as the Wabash's 4th district across Northern Indiana. i'm sure there are many more, we've all read about them. They tend to eliminate choices for shippers, thus guaranteeing the prevailing road opportunity to control their market.
My point was that length of haul has "always" been a major, consistent driving force (not the only one) for mergers throughout the history of the railroad industry. It was the major driving force for the development of the large regional systems in the late 19th and early 20th centuries (like PRR and NYC) which were largely pieced together from smaller predecessor roads And its true of recent modern mergers like BNSF, UP-SP and NS-CSX-CR, all of which were driven primarily by the desire to expand the "reach" of the merging carriers rather than elimination of competition (as shown by the fact that the merging carriers readily agreed to conditions designed to replicate competition lost by the transaction and even to create competitive options that didn't exist prior to the merger).
henry6 A case could be made that railroads were not overbuilt. Especially in the late 19th and early 20th Centuries. There were no roads...a railroad was the only effective mode of commerce. To be connected was to be connected: goods into and out of town to other towns and locations. Even people could travel easily by train rather than walk. For the time period, railroad were not overbuilt. But as roads were built and improved, as cities grew larger and larger and further apart, the tight web of rails became expensive. By mid 20th Century it could be said that railroads were overbuilt in many areas. And by today's standards it is though that all rails laid anyplace was overbuilding because the only rich earnings are big loads between big terminals. Placing 1850, 1890, 1920, 1940, et al. needs and answers to 2013 in ridicule is,well, ridiculous. Those railroad builders and town fathers back then could not have foreseen 2013 as we see it so built to their needs and specs of their day..
A case could be made that railroads were not overbuilt. Especially in the late 19th and early 20th Centuries. There were no roads...a railroad was the only effective mode of commerce. To be connected was to be connected: goods into and out of town to other towns and locations. Even people could travel easily by train rather than walk. For the time period, railroad were not overbuilt. But as roads were built and improved, as cities grew larger and larger and further apart, the tight web of rails became expensive. By mid 20th Century it could be said that railroads were overbuilt in many areas. And by today's standards it is though that all rails laid anyplace was overbuilding because the only rich earnings are big loads between big terminals. Placing 1850, 1890, 1920, 1940, et al. needs and answers to 2013 in ridicule is,well, ridiculous. Those railroad builders and town fathers back then could not have foreseen 2013 as we see it so built to their needs and specs of their day..
The problem was that, as traffic patterns changed, and many rail lines and services became non-viable, the regulatory system made it very diffficult for railroads to respond to these changes with service and mileage reductions, It eventually happened as the industry descended into crisis, but it should have happened sooner.
Murphy Siding jrbernier The good news about Conrail was that the government got their money back. Once the system was pared down and rebuilt, Conrail was a profitable operation - Something the Federal government is not really accustomed to. The final sale of Conrail to NS & CSX was very successful - Now if we can get our money out of GM.... Jim Best information I can readily find, is that the government spent $7 billion to make Conrail profitable. Sale of Conrail netted about $1.9 billion.
jrbernier The good news about Conrail was that the government got their money back. Once the system was pared down and rebuilt, Conrail was a profitable operation - Something the Federal government is not really accustomed to. The final sale of Conrail to NS & CSX was very successful - Now if we can get our money out of GM.... Jim
The good news about Conrail was that the government got their money back. Once the system was pared down and rebuilt, Conrail was a profitable operation - Something the Federal government is not really accustomed to.
The final sale of Conrail to NS & CSX was very successful - Now if we can get our money out of GM....
Jim
PC went bankrupt in June, 1970. As I recall, it was hopelessly insolvent and didn't have the cash to continue operations, so the Feds covered the shortfall. The PC deficit included both freight and PC's extensive passenger operations (Amtrak took over the intercity operations in 1971, so presumably the "intercity" deficit showed up on Amtrak's books after that date, not PC's).
Conrail didn't take over freight service on the restructured northeastern railroads until April, 1976. It was initially supported by Federal funds, but eventually became viable in its own right, and got off the Federal dole.
My question is this. Is the $7 billion figure you mention all money that the Feds provided to Conrail after April 1976, or does it include money the Feds paid to keep PC's services running prior to April, 1976. I don't know the answer. But if it includes pre-1976 funding, it's not all fairly attributable to Conrail, because it would have included a lot of money for PC's passenger deficit (one of the main reasons for PC's demise).
Convicted One Murphy Siding What about Conrail? Was it neccesary for the federal government to step in, take over the railroad operations in the northeast, and infuse billions of dollars in tax money to revitalize railroad operations? Had that not been done, would the free market have taken care of the problem on it's own? What do you think? Okay, I'll rush in and take the abuse. I think that one of the main causes (requiring the massive gov't sponsored fix) was that the gov't was too lax allowing these companies to merger into oversize anti competitive behemoths in the first place. The only reason PennCentral was "too large to fail" in the first place, is decades of government apathy while the black hole gained momentum. If they had instead forced the components making up the whole to remain distinct and separate, then even if each one eventually did fail, it would not have been such a devastating collapse, and there would have been more peers extant to pick up the pieces as they fell.
Murphy Siding What about Conrail? Was it neccesary for the federal government to step in, take over the railroad operations in the northeast, and infuse billions of dollars in tax money to revitalize railroad operations? Had that not been done, would the free market have taken care of the problem on it's own? What do you think?
What about Conrail? Was it neccesary for the federal government to step in, take over the railroad operations in the northeast, and infuse billions of dollars in tax money to revitalize railroad operations? Had that not been done, would the free market have taken care of the problem on it's own? What do you think?
Okay, I'll rush in and take the abuse.
I think that one of the main causes (requiring the massive gov't sponsored fix) was that the gov't was too lax allowing these companies to merger into oversize anti competitive behemoths in the first place.
The only reason PennCentral was "too large to fail" in the first place, is decades of government apathy while the black hole gained momentum.
If they had instead forced the components making up the whole to remain distinct and separate, then even if each one eventually did fail, it would not have been such a devastating collapse, and there would have been more peers extant to pick up the pieces as they fell.
First, the PC included extensive and heavily used passenger services (primarily commuter) which were considered vital to the cities they served (NY, Philadelphia, etc). While vital, they were hopeless money losers (and were, together with PC's intercity passenger services, a major reason for PC's collapse). No private enterprise was going to step in to take them over. Now, from an economics standpoint, one can argue that, if these services didn't produce enough income to even cover their operating costs, let alone their capital costs, they should have been allowed to die and good riddance. But, politically, there was no way that was going to happen.
Second, the rail industry at the time was viewed as a dying industry in the investment community. The returns produced by the industry were dismal and, on many properties, non-existent. There may have been (and probably were) railroads which, from a strategic standpoint, would have been willing to take over key PC freight routes and facilities. However, given the poor financial performance of the industry, the capital markets would not have been willing to provide the investment dollars for a private sector solution like this. In other words, PC wasn't "too big to fail". The other roads were too poor to save it. So the choice the government faced was to let the PC services die, which would likely have brought down other railroads, possibly destroyed much of the rail network and had cascading effects in other industries which used rail services, or provide the funds for a orderly transition. In my view, subsequent history shows that they did the right thing.
Revisionist history postulations always end up in urination contests. We only know the outcome of the choice that was made back in history and can NEVER KNOW what would have REALLY happened if alternative choices had been undertaken. These discussions are the epitome of beating a dead horse.
Never too old to have a happy childhood!
BaltACD . We only know the outcome of the choice that was made back in history and can NEVER KNOW what would have REALLY happened if alternative choices had been undertaken. These discussions are the epitome of beating a dead horse.
. We only know the outcome of the choice that was made back in history and can NEVER KNOW what would have REALLY happened if alternative choices had been undertaken. These discussions are the epitome of beating a dead horse.
Sometimes wrapping "what if" around a fact or set of facts are just a polite way of reminding someone they are overlooking a particular aspect of the scenario they are discussing. It's not always done out of animosity, however sometimes that aspect is less than obvious .
BALTACD- What you say about revisionist history postulations is certainly true. But, in a way, they tend to stimulate discussion about what did happen, and the context of why things happened the way they did. I figure any time I learn something because I want to, not because I have to, that it's a bonus. 'Keeps the ol' brain working
Thanks to Chris / CopCarSS for my avatar.
Falcon48 Murphy Siding jrbernier The good news about Conrail was that the government got their money back. Once the system was pared down and rebuilt, Conrail was a profitable operation - Something the Federal government is not really accustomed to. The final sale of Conrail to NS & CSX was very successful - Now if we can get our money out of GM.... Jim Best information I can readily find, is that the government spent $7 billion to make Conrail profitable. Sale of Conrail netted about $1.9 billion. I'm curious about these numbers, but I don't know the answer. PC went bankrupt in June, 1970. As I recall, it was hopelessly insolvent and didn't have the cash to continue operations, so the Feds covered the shortfall. The PC deficit included both freight and PC's extensive passenger operations (Amtrak took over the intercity operations in 1971, so presumably the "intercity" deficit showed up on Amtrak's books after that date, not PC's). Conrail didn't take over freight service on the restructured northeastern railroads until April, 1976. It was initially supported by Federal funds, but eventually became viable in its own right, and got off the Federal dole. My question is this. Is the $7 billion figure you mention all money that the Feds provided to Conrail after April 1976, or does it include money the Feds paid to keep PC's services running prior to April, 1976. I don't know the answer. But if it includes pre-1976 funding, it's not all fairly attributable to Conrail, because it would have included a lot of money for PC's passenger deficit (one of the main reasons for PC's demise).
BaltACDRevisionist history postulations always end up in urination contests. We only know the outcome of the choice that was made back in history and can NEVER KNOW what would have REALLY happened if alternative choices had been undertaken. These discussions are the epitome of beating a dead horse.
All history is an attempt to explain the events of the past. In that sense all history is beating a dead horse. We can never change our history but we hope that by understanding it we can avoid repeating the errors that were made.
Revisionist history is explaining the events of the past in a new way by understanding the events in a new way or by finding new facts to shed light on the events or both.
Perhaps what is shown best by this discussion is that the formation of Conrail is not yet far enough from a current event to be considered history.
The problem with revisionist history is that most proposals come from somebody who has an axe to grind, such as the fallacy that FDR knew about the Pearl Harbor raid in advance, or that the Milwaukee Road should have kept its electrification, Pacific Coast Extension, etc. or that American railroads were wrong in dieselizing. Too many revisionist proposals seem to hinge on conspiracy theories or a strong attitude of "I'm right and the world is wrong".
CSSHEGEWISCH The problem with revisionist history is that most proposals come from somebody who has an axe to grind,
The problem with revisionist history is that most proposals come from somebody who has an axe to grind,
Well that;s just sos once we afinish beatin' that horse, we kin chop him up and haul that carcass out of here.
CSSHEGEWISCHThe problem with revisionist history is that most proposals come from somebody who has an axe to grind
Is that any different from all history?
Revisionist histories, especially about the near past, are often written by non-historians who may have been participants in the event under consideration. or written by a trained historian with some connection to the event. Often very thin on documentation and long on contentions. For example, Rush Loving. His book is a good read, but he does not pretend to be a historian.
schlimmRevisionist histories, especially about the near past, are often written by non-historians who may have been participants in the event under consideration
The ones you describe may not even be history.
CSSHEGEWISCH The problem with revisionist history is that most proposals come from somebody who has an axe to grind, such as the fallacy that FDR knew about the Pearl Harbor raid in advance, or that the Milwaukee Road should have kept its electrification, Pacific Coast Extension, etc. or that American railroads were wrong in dieselizing. Too many revisionist proposals seem to hinge on conspiracy theories or a strong attitude of "I'm right and the world is wrong".
So, aliens didn't build the pyramids?
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
CSSHEGEWISCH The problem with revisionist history is that most proposals come from somebody who has an axe to grind, such as the fallacy that FDR knew about the Pearl Harbor raid in advance...
The problem with revisionist history is that most proposals come from somebody who has an axe to grind, such as the fallacy that FDR knew about the Pearl Harbor raid in advance...
If you limit the fallacy to FDR knew the exact date of the attack and that Pearl Harbor was the specific target, then I wouldn't have an argument with the statement. OTOH, Churchill did send a message in late November that caused FDR to dramatically change his approach to negotiations with Japan and on December 3rd, the Army intelligence branch, G-20, sent a message to the listening posts on Guam and the Philippines ordering the destruction of the radio and cryptology gear as war was thought to be a few days away. This latter bit may be what drove the rumors that FDR knew about the attack in advance - though indications are that he wasn't aware that Pearl Harbor was to be attacked on December 7.
As for the Milwaukee, the developers of the coal mines near Roundup probably wished that the line between Roundup and Miles City was still intact as it would be a shorter and better profile to the east than what the BNSF has recently built to serve the mine. BTW, one of the first things that my grandfather did after he came to the US was helping with the building of the Puget Sound Extension around Terry.
- Erik
Journalist Robert B.Stinnett's thesis, apparently. A critique by Adm. Young: http://www.artbarninc.org/REY/Stinnett.pdf
schlimm Journalist Robert B.Stinnett's thesis, apparently. A critique by Adm. Young: http://www.artbarninc.org/REY/Stinnett.pdf
Interesting stuff....
[edit] dropping s's wherever we go here...[/edit]
another edit...sigh...
Any argument carried far enough will end up in Semantics--Hartz's law of rhetoric Emerald. Leemer and Southern The route of the Sceptre Express Barry
I just started my blog site...more stuff to come...
http://modeltrainswithmusic.blogspot.ca/
I am very late to the party...it is one that is of interest to me. A few points:
1. Take a look at Penn Central in 1970 Official Guide. The problem is obvious in the map.
2. Industry was leaving the Northeast.
3. PC and others were left with short hauls into the region at unfavorable divisions of rates.
4. Labor contracts were brutal - 4 and sometimes 5 men crews.
5. New Haven.
6. Forced passenger and commuter service.
7. Very difficult marketing obstacles (ICC).
8. Poor infrastructure within the PC due to deferred maintenance.
9. Green team/red team.
10. Low historic returns in the industry, even outside the territory in question. This would have kept "strong" railroads from entering the market.
These and other reasons are listed in the above replies, but I thought a summary was necessary. There are other issues also. So, was the government needed for the rescue? I think reason #10 above basically says no one would have invested in the area without the other 9 issues being addressed.
Staggers and other factors cleaned up the mess. Yes, jobs were lost and lines were abandoned, but what is left (CSX and NS) is pretty darned good.
Ed
I somewhat remember the interim between the Penn Central bankruptcy and Conrail. The newspapers carried articles on the wrangling of what to do with rails in the Northeast.
As the process dragged on, the area effected and railroads to become Conrail became clearer. Management of the railroads involved were not happy.
It has been so long ago, but I recall the ailing railroads themselves proposed merging and produced a route map. Areas facing abandonment howled. Their congressmen said it was unworkable. The government had to take over to maintain vital rail service.
The railroads' merger proposal naturally went nowhere. Conrail abandon more trackage in its start up than the railroads themselves had proposed in their merger plan.
If merging the ailing railroads, giving them a free hand and providing them capital would have produced a different result than Conrail is something we will never know.
schlimm The ones you describe may not even be history.
All too often, "the victors get to write the history"
And victors generally having a vested interest, objectivity frequently suffers.
Often the much maligned "revisionist" is the first critic to revisit the accounts of events with any shred of objectivity. Much to the chagrin of those who prefer the victor's version of the story.
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