First, let me start out by saying that some of my best freinds are farmers. (and I hope none of them sees this.)
Many of us are familiar with the old joke about the Canadian prairie farmer who comes home to find his crops destroyed by hail, his barn burned to the ground, his beloved dog dead, and his wife run off with a traveling salesman. The farmer takes this all in and then turns to the sky shaking his fist and says: "GD that Canadian Pacific Railroad".
More recently, in the current Canadian farmer vs. railroad go 'round, I've heard that Canadian wheat is 13% protein and 87% politics.
It's generally the same down here in "The States". I went to a small town high school that offered four years of Vocational Agriculture classes. (I never took one.) I reason that at least one semester was devoted to Complaining About Anything and Everything.
We've had some discussions on this forum about farmer vs. railroad. After reading several of them I made up my own (very) lame joke. It goes like this: "When the first large commercial railroad in the US, the Baltimore and Ohio, was being built they initially opend service to Baltimore from 10 miles away. A farmer took a bushel basket of potatoes to the train and shipped it in to Baltimore for sale. When he got back home he immediately sat down and wrote his congressman complaining that the railroad charged too much and that congress should do something about it."
As it was it ever shall be.
But I wasn't too far off. In another thread about books for railfans BaltACD recommended "The Great Road" about the building of the B&O. It sounded interesting so I bought a used copy. These guys had to invent about everything. There was little, if any, prior experience. They had to figure out how to locate a rail line, what type of rails to use (they tried stone), etc.
They also seem to have been involved in the first farmer vs railroad political fight.
While locating their line they found that it would bypass the town of Frederick, MD. Not to worry they told the people of Frederick, we'll build a branch line to your town. And they did. At considerable expense to the railroad. I'll let the book's author take it from here:
"Flour, Frederick's, chief product, began to flow almost immediately. Four thousand barrels were shipped by the B&O in an eleven-day period in January, 1832. This represented a saving of $2,000 to the Frederick farmers, but they thought it was not enough and they appealed to the legislature for lower rates. Thomas (a B&O honcho) exploded. Was this the B&O's reward for spending $70,000 on the Frederick Branch and charging lower rates than any other U.S. railroad? 'The attack upon us from Frederick is amongst the most unkind returns for a benefit conferred that I have ever in my life witnessed.'" (page 149)
Save them money and they complain that you should have saved them more money. You can make this stuff up, but it's better to let reality tell its own story.
Had B&O paid the farmers to take the selfsame flour off their hands (over the actual sale of the flour), the complaint would have been that it wasn't enough.
And that's not just limited to farmers...
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
I would extend this observation from farmers to humankind in general. It's far easier to piss someone off than to make him happy. So in any venture get the most you can for yourself... the person you're dealing with is going to be unhappy anyway regardless of the outcome.
Also, we're all more or less like former Baltimore Orioles manager Earl Weaver, who -- in one of my own favorite stories -- explained to an umpire one day, in the heat of their dispute: "All I want is my fair advantage!"
greyhoundsand charging lower rates than any other U.S. railroad?
The author's choice of words here seems a little odd. If this was (as stated earlier in the account) America's first rail line, and among the first shipments on that line, then just how valid is a comparison to what "other US railroads" would have charged them?
Customers want their stuff moved for free. Railroads want paid to do nothing.
Somewhere between there is the balance. And neither is happy with it.
It's been fun. But it isn't much fun anymore. Signing off for now.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.t fun any
Farmers deal completely in commodities. Unless they specialize into organic or specialty products they are at the mercy of the commodity prices.
They add no or little value to their commodity (not to take anything away from farmers or their vocation). Thus, it is all about a few cents per bushel. It is in their DNA.
Recently things have been pretty good for the farmer, but that will change with time.
Ed
Convicted One greyhounds and charging lower rates than any other U.S. railroad? The author's choice of words here seems a little odd. If this was (as stated earlier in the account) America's first rail line, and among the first shipments on that line, then just how valid is a comparison to what "other US railroads" would have charged them?
greyhounds and charging lower rates than any other U.S. railroad?
Part of the explanation lies in the B&O's original charter and early history:
C&NW, CA&E, MILW, CGW and IC fan
schlimm These conflicts intensified in the 1850s after the completion of the C&O Canal, which brought additional competition to the B&O for transport services.
I accept your explanation as likely a valid one. Nonetheless it still doesn't explain the authors seemingly self-serving choice of words.
zugmann Customers want their stuff moved for free. Railroads want paid to do nothing. Somewhere between there is the balance. And neither is happy with it.
I don't know about happiness, but this doesn't agree with what I learned from Adam Smith about capitalism: in a free market the price improves both the sellers' and the buyers' lots, it's to their mutual advantage. That is of course assuming a free market, and people understanding when they're getting a fair deal and when they might be getting cheated.
schlimm Convicted One greyhounds and charging lower rates than any other U.S. railroad? The author's choice of words here seems a little odd. If this was (as stated earlier in the account) America's first rail line, and among the first shipments on that line, then just how valid is a comparison to what "other US railroads" would have charged them? Part of the explanation lies in the B&O's original charter and early history: Operation of the railroad was hampered by its partial governmentownership. Of the thirty members on its board ofdirectors, twelve were elected by shareholders while the other eighteen were appointed either by Maryland or the Baltimore City Council. They had conflicting interests: the directors appointed by the state and city desired low fares and all construction funded from corporate revenues while directors elected by shareholders desired greater profits and distribution of dividends. These conflicts intensified in the 1850s after the completion of the C&O Canal, which brought additional competition to the B&O for transport services.
Although very early, and probably the biggest, and most useful, the Baltimore and Ohio was not the 1st US railroad. But I do wonder what bearing the rate any of the several fledgling railroads scattered around the country might have charged has to do with the rate from Fredrick to Baltimore. Did, for example, the Mohawk and Hudson actually have any rates for these farmers, or did those rates only apply to places the Mohawk and Hudson went to?
Schlimm, is that your typing, or something that you're quoting from a reference about the B&O's charter? It's hard for me to imagine an 1850's canal bringing any meaninful competition to a railroad. I thought it was the other way around, railroads decimating the canals of the time.
Patrick Boylan
Free yacht rides, 27' sailboat, zip code 19114 Delaware River, get great Delair bridge photos from the river. Send me a private message
gardendance It's hard for me to imagine an 1850's canal bringing any meaninful competition to a railroad.
Without digging deeply into freight rates of the day, I can only opine that the canals were able to haul certain bulk loads much more cheaply than the railroads. Perhaps not as fast, but more cheaply. A boxcar in 1850 had a capacity of around 8 tons. A canal boat of the era could carry upwards of 75 tons.
The sand used to build Delta Dam, north of Rome, NY (it was apparently well suited for making concrete) was carried by the Black River Canal boats, even though much of the canal paralleled the railroad. The fact that the canal passed the site of the dam probably had something to do with the decision, however.
Once the railroads got to the point that their equipment was capable of competing for bulk commodities, the end was in sight for canals as arteries of commercial transportation.
Convicted OneThe author's choice of words here seems a little odd. If this was (as stated earlier in the account) America's first rail line, and among the first shipments on that line, then just how valid is a comparison to what "other US railroads" would have charged them?
The B&O was not America's first railroad. Nobody ever said it was.
Just in case anybody missed it, yep, greyhounds qualified his "first railroad" comment.
greyhounds I made up my own (very) lame joke. It goes like this: "When the first large commercial railroad in the US, the Baltimore and Ohio, was being built they initially opend service to Baltimore from 10 miles away.
I made up my own (very) lame joke. It goes like this: "When the first large commercial railroad in the US, the Baltimore and Ohio, was being built they initially opend service to Baltimore from 10 miles away.
And I repeat, what bearing do the rates the other railroads, small and non-commercial, that existed, might have charged in their neighborhoods have on the Fredrick-Baltimore market?
It was an attempt at pasting from an article, but the formatting really got screwed up.
The B&O was the first operating common carrier and intercity freight and passenger railroad. Other early lines predated it slightly, but were strictly built to carry granite, coal or bypass a bend in the Erie Canal and later expanded.
MP173 Farmers deal completely in commodities. Unless they specialize into organic or specialty products they are at the mercy of the commodity prices. They add no or little value to their commodity (not to take anything away from farmers or their vocation). Thus, it is all about a few cents per bushel. It is in their DNA. Recently things have been pretty good for the farmer, but that will change with time. Ed
However - in recent years the farmers and the grain elevators have greatly increased their storage. The Wall Street Journal had a couple articles* in the past 2 months or so (Oct. 30, Nov. 2, Dec. 2) about how many farmers (or their elevators) have over 1 year's crop worth of storage. That has enabled them to hold out for a better price at other times of the year than the fall, and indeed refuse to sell for prices that they deem unacceptable - instead, the buyers (grain mills) are more desperate to get the grain they need. It has turned the farmers from "price takers" into "price makers".
*"Grain Companies Likely Face Slowing Crop Sales, Says Bunge CEO" (Oct. 30+/-)
http://www.wsj.com/articles/farmers-foil-investors-that-bet-on-corn-soybean-price-drop-1417558033
Pain in Trains Falls Mainly on Grain
http://www.wsj.com/articles/pain-in-trains-falls-mainly-on-grain-1414972402
- Paul North.
Paul_D_North_Jr Until recent years ... the crops came in at the end of summer / early fall, and the farmers - lacking significant storage on the farm - had to sell it pretty quickly to the local grain elevators. Said grain elevators had some - but not a huge amount - of storage, so they had to move it along pretty quickly, too. This led to the annual "grain rush" on the railroads. All of this can be summarized as a huge surge or increase in supply against a relatively constant demand (bread is bought and eaten at about the same rate throughout the year). That's the supply vs. demand formula for lower prices. However - in recent years the farmers and the grain elevators have greatly increased their storage. The Wall Street Journal had a couple articles* in the past 2 months or so (Oct. 30, Nov. 2, Dec. 2) about how many farmers (or their elevators) have over 1 year's crop worth of storage. That has enabled them to hold out for a better price at other times of the year than the fall, and indeed refuse to sell for prices that they deem unacceptable - instead, the buyers (grain mills) are more desperate to get the grain they need. It has turned the farmers from "price takers" into "price makers".
Yes, and I'm as happy for the farmers as I am for the railroads, who have also become "price makers" in recent years.
However, the railroads are still expected to cough up the "Easter Sunday" cars on demand, with the difference that now the demand is not even predictable, as it was in the old days, and the rails have tighter capacity, with a lot of newer customers who, like Earl Weaver, also demand their fair advantage.
If the farmers don't like taking their turn, at least there's a 40,000-mile interstate highway system at their disposal.
What's kind of weird is that according to the last WSJ article that I cited above, the rail delays are in effect creating an artifiical shortage - thereby enabling at least some farmers to get higher prices for their crops ! (the reverse of the usual situation)
greyhounds The B&O was not America's first railroad. Nobody ever said it was.
Well, the way you claimed in your initial post " These guys had to invent about everything. There was little, if any, prior experience. They had to figure out how to locate a rail line, what type of rails to use (they tried stone), etc." It really looked as though you were giving them credit for being the new next big thang.
ndbprrIn the same vein I once had a customer call and say that a truck just left with his part for repair and when would he get it back. I asked when would I get it and he said," how the #@$# would I know". I said," good answer" and he got mad!
Definitely a case of letting concern over the need for the part to override certain realities of the matter.
Johnny
greyhoundsAs it was it ever shall be.
So I guess the REAL item of significance in this thread is, discontent over being a captive rail shipper has been endemic ever since LARGE COMMERCIAL u.s. common carriers have existed?
Convicted OneSo I guess the REAL item of significance in this thread is, discontent over being a captive rail shipper has been endemic ever since LARGE COMMERCIAL u.s. common carriers have existed?
No, not at all. In 1832 the farmers of Frederick, MD were in no way "Captive" to the B&O.
"Captive Shipper" is a term that gets loosely used quite a bit. It's often falsely claimed by an organization that simply wants the government to force the railroad(s) to charge them less.
Before I take your bait and get into a throw down with you I'd like to ask you some questions. There are three criteria that must all be met before a rail customer can begin to claim they are "Captive".
Without doing an Internet search, can you cite these three criteria? If you can, please do so. Or are you too just using the term "Captive Shipper" loosely?
I believe the three criteria are a lawyer/bureaucrate bad joke. But thems the rules.
http://www.justice.gov/atr/public/eag/255003.htm
schlimm http://www.justice.gov/atr/public/eag/255003.htm
Were you supposed to give it away? I thought greyhounds was testing Convicted One on whether he knew something simple about the subject ... you know, like Winston Churchill saying "I'll make a bet she doesn't even know how many toes a pig has..." It was a fine opportunity, but now we won't know what the comeback might have been.
But the report you posted has four 'criteria' in it, and greyhounds only mentioned three. greyhounds -- which one is the ringer?
Not to "steal greyhounds' thunder" on this - and having been "beaten to the punch" by Overmod, who posted some of my thoughts while I was researching and typing up this post - but from the paper cited by schlimm above, I noted the following in support of greyhounds' Original Post:
"While such complaints have a long history in the railroad industry, . . . " (1st full para. on page 1 of the paper = page 3 of 22 in the 'PDF" version).
I extracted 4 conditions from the paper:
"Under existing statutes and STB jurisprudence, the STB may intervene in the rate set by a railroad to a particular shipper only if four conditions are met: a) the rate exceeds 180 percent of the variable cost of carrying the traffic; b) a "qualitative" STB assessment determines that there is no feasible, economic transportation alternative for the traffic involved, c) the rate is found to cross-subsidize other traffic on the railroad, and d) the railroad company overall is earning a rate of return greater than its cost of capital. The variable cost measure is defined precisely in STB jurisprudence, as is the cross-subsidization test – the latter using a complex regulatory construct called the "stand-alone-cost" test.7 " (1st full para. on page 3 of the paper = pg. 5 of 22 in the 'PDF" version).
However, from an STB decision, I extracted the "Three Benchmark method" for a "simplified" rate case:
"Under the Three-Benchmark method, the reasonableness of a challenged rate is determined by examining the challenged rate in relation to three benchmark figures, each of which is expressed as an R/VC ratio. The first benchmark, the Revenue Shortfall Allocation Method (RSAM), measures the average markup over variable cost that the defendant railroad would need to charge all of its “potentially captive” traffic (traffic priced above the 180% R/VC level) in order for the railroad to earn adequate revenues as measured by the Board under 49 U.S.C. § 10704(a)(2). The second benchmark, the R/VC>180 benchmark, measures the average markup over variable cost currently earned by the defendant railroad on its potentially captive traffic. The third benchmark, the R/VCCOMP benchmark, is used to compare the markup being paid by the challenged traffic to the average markup assessed on other comparable potentially captive traffic." ( http://www.stb.dot.gov/decisions/readingroom.nsf/WebDecisionID/42418?OpenDocument , section "2. Three-Benchmark" about in the middle of the document)
You might have to be demented to actually like wading through this stuff . . .
All this kind of reminds me of the conclusion to one of my favorite "Calvin & Hobbes" cartoon strips: "Careful! We don't want to learn anything from this."
http://www.corvetteforum.com/forums/off-topic/2155733-ignorance-is-bliss-calvin-and-hobbes.html
http://i30.photobucket.com/albums/c310/Stud666/CHignoranceisbliss-1.jpg
I too tried to wade throught the documentation in the link, and saw the same paragraph you saw. I don't see where it defines what a captive shipper is, but only that the board may intervene when a shipper complains about a rate only if those 4 conditions occur.
Farmers really want the carriers to pay for the privledge of moving their products to market.
Never too old to have a happy childhood!
greyhounds Or are you too just using the term "Captive Shipper" loosely
I was using it "loosely", more or less as a metaphor for "served by one LARGE COMMERCIAL railroad only" , I mean considering that the B&O was the only LARGE COMMERCIAL railroad available at the time it didn't appear that open access would fix anything in your example.
I still think that the author of your article has some comprehension issues, what other rail rate was available to these shippers to form any basis of comparison?
BaltACD Farmers really want the carriers to pay for the privledge of moving their products to market.
add water to your next bowl of fruttie pebbles instead of milk
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