QUOTE: Originally posted by BNSF railfan. As far as I know of,Yes the SP could have. There is a lot of Business out there,The Railroads just don't want it.
QUOTE: If you follow the money, not the paint scheme or the title on the annual report, it leads you straight to Mr. Anschutz, the guy with the cash who calls the shots. He leveraged Rio Grande's cash into a controlling position of about one-fifth of the entire railroad system of North America.
QUOTE: Originally posted by M.W. Hemphill IEric, if you step back away from this, do you realize what a remarkable thing happened? The Rio Grande -- that dinky, no-account property that everyone treated as the benighted rube in the mountains --ended up controlling the UP! And through UP, the SP, WP, MP, C&NW, Katy, and some big chunks of the Rock! Philip Anschutz is the largest stockholder in UP, with something around 25% of the stock, and how did he get there? Why, with Rio Grande's bank account -- and, granted, a lot of shallow thinkers along the way who watched him purchase SP and Rio Grande for nothing. I know, most people think UP won. Well, corporations are just shells. They're conveniences owned by people. Paint schemes and corporate names are just ego and window dressing. They're very useful to hide behind, especially when you're a billionaire and you don't want anyone to notice your moves. Only people win. If you follow the money, not the paint scheme or the title on the annual report, it leads you straight to Mr. Anschutz, the guy with the cash who calls the shots. He leveraged Rio Grande's cash into a controlling position of about one-fifth of the entire railroad system of North America. I was kinda thinking this too especially after I saw him listed on the Forbes 400 list of wealthiest Americans (he's ranked 33) a few years back. It said he was a major shareholder in UP; I didn't know that until then. Reply broncoman Member sinceFebruary 2003 From: Gateway to Donner Summit 434 posts Posted by broncoman on Sunday, January 16, 2005 11:18 AM Mark , Has there been any indication, even after the fact that this was some sort of (supposed for legal sake) insider deal with the grand plan of UP gobbling up most of its compitition? It would seem that things fell together to easily and in business that usually doesn't happen. If so few people are in control of the direction of things, if they got together to decide the fate of things they could probably do so. Dave Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Sunday, January 16, 2005 12:14 PM probably not.and in my opinion,mergers are on one scale good,and on another scale bad.first the good.they likely save the company from going under,for example declairing bankrupcy,and a lot of people loose thier jobs.on the other hand,mergers leave out competition when they join forces,and still people loose thier jobs,likely due to cut backs. Reply Edit Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Sunday, January 16, 2005 1:41 PM After reading all this, one has to wonder why the logic of merger won't eventually extend to UP + BNSF, CSX + NS, CN + KCS, and basically any other combination? If your answer is "Well, the STB wouldn't allow such a scenario, therefore it won't happen", why not? The STB under Linda Morgan during the decade of fraud has shown that parallel mergers are just fine, mergers that leave huge sections of the country under single Class I control are just fine, mergers that result in capital expenditure shifts from one section of the country to another section of the country are just fine, etc. so long as the CEO's get theirs and the regulators are promised theirs after their government gig is up. The caveat of maintaining the semblence of consumer choice and national economic security in an industry where entry of new service providers is nearly impossible has been apparently thrown out by STB overlords. Don't kid yourselves about todays railroads being this tremendous asset to the nation, only certain segments of the nation are being given the benefits of the partial deregulation. We have the remaining two railroads in the West throwing what capital improvement funds they are willing to expend on the LA - Chicago corridor, and very little elsewhere. There is no incentive to develop more logical rail corridors due to lack of political pull in these regions, along with the lack of full control by one railroad or the other over other rail corridors. The I - 15 corridor is a logical NAFTA rail corridor, except UP owns all of it from Butte MT to LA, while BNSF owns the portion from Butte to the Canadian border (and apparently is letting much of that go to scrap). Since todays railroads demand monopoly control over point to point trackage before they'll spend on those corridors, the I -15 is left to rust. Maybe a UP + BNSF merger will finally open up that corridor, if BNSF hasn't already scrapped a key link by then. Lord knows BNSF will tear up the trackage before they'd sell it to a competitor, and UP would do the same rather than sell to BNSF. Is there any other industry in the U.S. where a closed or underutilized asset is destroyed rather than sold to a possible competitor? If a Safeway grocery store is shut down, they don't tear down the building and walk away, they put it on the market and hopefully get a buyer, even if the buyer ends up being a competitor. The same exists if the buyer is a third party developer intent on reselling it to a competitor of Safeway. If Safeway tried to insert a clause in it's sale contract to a third party that they must never resell or lease the asset to an Albertsons or Tidymans, it wouldn't take long for a judge to strike down that clause. Yet today's railroads are rife with such contractual inhibitors when they decide to sell to a shortline operator. If Safeway tried to tear down the building rather than sell it, that action too would probably be struck down by a judge. Yet railroads are allowed to do that very thing when they tire of a certain section of track. How are railroads able to do this? They were allowed to do so by the regulatory bodies as a caveat of regulation. Then when Staggers came along, instead of the ICC/STB synchronizing this action into a prevailing characteristic of business law in conformity with other industries, they are allowed not only to continue the act of infrastructure destruction, they actually accellerate this destruction. Well, can affected shippers and regions appeal to the Sherman Anti-trust laws? Nope, Staggers still exempts the railroads from this protection too. If Staggers had been true deregulation, it would have forced railroads to submit to business laws that are applicable to other industries instead of exempting railroads from these constitutional protections. A true act of deregulation is not supposed to allow special rights exempting the parties from the equal protection clause of the constitution, yet that is exactly what Staggers has done, to the detriment of the nation. So I ask again, what is stopping (in the legal sense) an eventual merger of all Class I's into one big company? Nothing in Staggers. Nothing in any anti-trust laws. No one at the STB, FRA, USDOT. Right now the only thing stopping these eventual mergers is calculated PR. The predator must be patient, carefully stalking it's prey until the moment is right, only then can it envelop it's prey. Those folks perceptive enough to take "stock" in this hunt will eventually be rewarded, barring any drastic changes in the management of the wilderness. Reply Edit Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Sunday, January 16, 2005 4:26 PM QUOTE: Originally posted by futuremodal After reading all this, one has to wonder why the logic of merger won't eventually extend to UP + BNSF, CSX + NS, CN + KCS, and basically any other combination? If your answer is "Well, the STB wouldn't allow such a scenario, therefore it won't happen", why not? The STB under Linda Morgan during the decade of fraud has shown that parallel mergers are just fine, mergers that leave huge sections of the country under single Class I control are just fine, mergers that result in capital expenditure shifts from one section of the country to another section of the country are just fine, etc. so long as the CEO's get theirs and the regulators are promised theirs after their government gig is up. The caveat of maintaining the semblence of consumer choice and national economic security in an industry where entry of new service providers is nearly impossible has been apparently thrown out by STB overlords. Don't kid yourselves about todays railroads being this tremendous asset to the nation, only certain segments of the nation are being given the benefits of the partial deregulation. We have the remaining two railroads in the West throwing what capital improvement funds they are willing to expend on the LA - Chicago corridor, and very little elsewhere. There is no incentive to develop more logical rail corridors due to lack of political pull in these regions, along with the lack of full control by one railroad or the other over other rail corridors. The I - 15 corridor is a logical NAFTA rail corridor, except UP owns all of it from Butte MT to LA, while BNSF owns the portion from Butte to the Canadian border (and apparently is letting much of that go to scrap). Since todays railroads demand monopoly control over point to point trackage before they'll spend on those corridors, the I -15 is left to rust. Maybe a UP + BNSF merger will finally open up that corridor, if BNSF hasn't already scrapped a key link by then. Lord knows BNSF will tear up the trackage before they'd sell it to a competitor, and UP would do the same rather than sell to BNSF. Is there any other industry in the U.S. where a closed or underutilized asset is destroyed rather than sold to a possible competitor? If a Safeway grocery store is shut down, they don't tear down the building and walk away, they put it on the market and hopefully get a buyer, even if the buyer ends up being a competitor. The same exists if the buyer is a third party developer intent on reselling it to a competitor of Safeway. If Safeway tried to insert a clause in it's sale contract to a third party that they must never resell or lease the asset to an Albertsons or Tidymans, it wouldn't take long for a judge to strike down that clause. Yet today's railroads are rife with such contractual inhibitors when they decide to sell to a shortline operator. If Safeway tried to tear down the building rather than sell it, that action too would probably be struck down by a judge. Yet railroads are allowed to do that very thing when they tire of a certain section of track. How are railroads able to do this? They were allowed to do so by the regulatory bodies as a caveat of regulation. Then when Staggers came along, instead of the ICC/STB synchronizing this action into a prevailing characteristic of business law in conformity with other industries, they are allowed not only to continue the act of infrastructure destruction, they actually accellerate this destruction. Well, can affected shippers and regions appeal to the Sherman Anti-trust laws? Nope, Staggers still exempts the railroads from this protection too. If Staggers had been true deregulation, it would have forced railroads to submit to business laws that are applicable to other industries instead of exempting railroads from these constitutional protections. A true act of deregulation is not supposed to allow special rights exempting the parties from the equal protection clause of the constitution, yet that is exactly what Staggers has done, to the detriment of the nation. So I ask again, what is stopping (in the legal sense) an eventual merger of all Class I's into one big company? Nothing in Staggers. Nothing in any anti-trust laws. No one at the STB, FRA, USDOT. Right now the only thing stopping these eventual mergers is calculated PR. The predator must be patient, carefully stalking it's prey until the moment is right, only then can it envelop it's prey. Those folks perceptive enough to take "stock" in this hunt will eventually be rewarded, barring any drastic changes in the management of the wilderness. Hey man,...after all that I have ONE question I need to ask you: Are you my long lost twin brother seperated at birth? I like the way you think! [;)] Reply Edit Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Monday, January 17, 2005 1:13 AM QUOTE: Originally posted by TheAntiGates QUOTE: Originally posted by futuremodal After reading all this, one has to wonder why the logic of merger won't eventually extend to UP + BNSF, CSX + NS, CN + KCS, and basically any other combination? If your answer is "Well, the STB wouldn't allow such a scenario, therefore it won't happen", why not? The STB under Linda Morgan during the decade of fraud has shown that parallel mergers are just fine, mergers that leave huge sections of the country under single Class I control are just fine, mergers that result in capital expenditure shifts from one section of the country to another section of the country are just fine, etc. so long as the CEO's get theirs and the regulators are promised theirs after their government gig is up. The caveat of maintaining the semblence of consumer choice and national economic security in an industry where entry of new service providers is nearly impossible has been apparently thrown out by STB overlords. Don't kid yourselves about todays railroads being this tremendous asset to the nation, only certain segments of the nation are being given the benefits of the partial deregulation. We have the remaining two railroads in the West throwing what capital improvement funds they are willing to expend on the LA - Chicago corridor, and very little elsewhere. There is no incentive to develop more logical rail corridors due to lack of political pull in these regions, along with the lack of full control by one railroad or the other over other rail corridors. The I - 15 corridor is a logical NAFTA rail corridor, except UP owns all of it from Butte MT to LA, while BNSF owns the portion from Butte to the Canadian border (and apparently is letting much of that go to scrap). Since todays railroads demand monopoly control over point to point trackage before they'll spend on those corridors, the I -15 is left to rust. Maybe a UP + BNSF merger will finally open up that corridor, if BNSF hasn't already scrapped a key link by then. Lord knows BNSF will tear up the trackage before they'd sell it to a competitor, and UP would do the same rather than sell to BNSF. Is there any other industry in the U.S. where a closed or underutilized asset is destroyed rather than sold to a possible competitor? If a Safeway grocery store is shut down, they don't tear down the building and walk away, they put it on the market and hopefully get a buyer, even if the buyer ends up being a competitor. The same exists if the buyer is a third party developer intent on reselling it to a competitor of Safeway. If Safeway tried to insert a clause in it's sale contract to a third party that they must never resell or lease the asset to an Albertsons or Tidymans, it wouldn't take long for a judge to strike down that clause. Yet today's railroads are rife with such contractual inhibitors when they decide to sell to a shortline operator. If Safeway tried to tear down the building rather than sell it, that action too would probably be struck down by a judge. Yet railroads are allowed to do that very thing when they tire of a certain section of track. How are railroads able to do this? They were allowed to do so by the regulatory bodies as a caveat of regulation. Then when Staggers came along, instead of the ICC/STB synchronizing this action into a prevailing characteristic of business law in conformity with other industries, they are allowed not only to continue the act of infrastructure destruction, they actually accellerate this destruction. Well, can affected shippers and regions appeal to the Sherman Anti-trust laws? Nope, Staggers still exempts the railroads from this protection too. If Staggers had been true deregulation, it would have forced railroads to submit to business laws that are applicable to other industries instead of exempting railroads from these constitutional protections. A true act of deregulation is not supposed to allow special rights exempting the parties from the equal protection clause of the constitution, yet that is exactly what Staggers has done, to the detriment of the nation. So I ask again, what is stopping (in the legal sense) an eventual merger of all Class I's into one big company? Nothing in Staggers. Nothing in any anti-trust laws. No one at the STB, FRA, USDOT. Right now the only thing stopping these eventual mergers is calculated PR. The predator must be patient, carefully stalking it's prey until the moment is right, only then can it envelop it's prey. Those folks perceptive enough to take "stock" in this hunt will eventually be rewarded, barring any drastic changes in the management of the wilderness. Hey man,...after all that I have ONE question I need to ask you: Are you my long lost twin brother seperated at birth? I like the way you think! [;)] I appreciate the compliment, but I doubt we'd agree on all that much if your user name is any indication of your feelings about Microsoft. I have no love lost about Microsoft, and yes, Bill Gates is a bit of a left wing ogre, but I believe the whole Justice Department case against Microsoft was misplaced. There are no real barriers to entry into the markets of software development, computer manufactering, computer sales, et al. Besides, Linux-based systems are there to keep Microsoft in check. Contrast that with the current rail industry, where any thought toward building new lines to compete for rail-based traffic is basically a pipe dream. Even those projects that have been given the initial go-ahead face the possibility of being blocked by the regulatory mire, e.g. DM&E's PRB connection. Once rail companies have been allowed to extract predatory pricing and service denials, there is no way out for those rail shippers who are captive to these rail oligarchs. Once rail companies "achieve" such an oligarchy status, there is no competitive reason for them to take actions which involve risk. Risk aversion means no aggressive marketing and no attempts at innovation to improve market share, since the cream of the market share is already maxed. It is ironic that the Clinton JD chose to waste millions of dollars going after Microsoft while at the same time Clinton's STB was drunkenly approving just about every merger brought before it, eliminating most aspects of rail competition in much of the country e.g. the "red" states. The mega-mergers of the 1990's have had a more negative affect on average joe consumers than any of Microsofts tactics. The end result of all this will be one or both of the two major things railroaders fear the most: Either an adoptation of Canadian-style trucking regs (more LCV's, GVW's of up to 146,000 lbs), and/or a re-introduction of some aspect of pre-Staggers rate regulation. Reply Edit Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Monday, January 17, 2005 2:30 AM QUOTE: Originally posted by futuremodal I appreciate the compliment, but I doubt we'd agree on all that much if your user name is any indication of your feelings about Microsoft. I have no love lost about Microsoft, and yes, Bill Gates is a bit of a left wing ogre, but I believe the whole Justice Department case against Microsoft was misplaced. There are no real barriers to entry into the markets of software development, computer manufactering, computer sales, et al. Besides, Linux-based systems are there to keep Microsoft in check. Contrast that with the current rail industry, where any thought toward building new lines to compete for rail-based traffic is basically a pipe dream. Even those projects that have been given the initial go-ahead face the possibility of being blocked by the regulatory mire, e.g. DM&E's PRB connection. Once rail companies have been allowed to extract predatory pricing and service denials, there is no way out for those rail shippers who are captive to these rail oligarchs. Once rail companies "achieve" such an oligarchy status, there is no competitive reason for them to take actions which involve risk. Risk aversion means no aggressive marketing and no attempts at innovation to improve market share, since the cream of the market share is already maxed. It is ironic that the Clinton JD chose to waste millions of dollars going after Microsoft while at the same time Clinton's STB was drunkenly approving just about every merger brought before it, eliminating most aspects of rail competition in much of the country e.g. the "red" states. The mega-mergers of the 1990's have had a more negative affect on average joe consumers than any of Microsofts tactics. The end result of all this will be one or both of the two major things railroaders fear the most: Either an adoptation of Canadian-style trucking regs (more LCV's, GVW's of up to 146,000 lbs), and/or a re-introduction of some aspect of pre-Staggers rate regulation. Well, I guess we can differ in our opinions on computer software developers, and still enjoy the mutually cynical views we have in other areas of interest..[:D] The other observations you made struck a chord with me, since they run in contrast to the mainstream "rooty-toot" concepts that seem to advocate that the regulative body's only have OUR best interests in mind, and are there to PROTECT us,,etc etc.....under the prevailing opinion that out government wears a white hat,...which is IMHO sheer nonsense... Government protects the hand that feeds it,.. big business and the two together see US as little more than a resource... to fund their ponyshow. I found these links interesting, in a tangential way http://www.trainweb.org/utahrails/drgw/timeline.html Note remark cited as being from a Mr Mark Hemphill.....[;)] Considering he was counseling others earlier in this thread about the advisability or lack thereof in perturbing opinion by the way a subject is addressed, I found it amusing.. and http://www.trainweb.org/utahrails/drgw/tidbit.html I never knew that UP was "rolled into" the SP in the function of their merger....interesting Reply Edit greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Monday, January 17, 2005 9:30 AM QUOTE: Originally posted by futuremodal If Staggers had been true deregulation, it would have forced railroads to submit to business laws that are applicable to other industries instead of exempting railroads from these constitutional protections. A true act of deregulation is not supposed to allow special rights exempting the parties from the equal protection clause of the constitution, yet that is exactly what Staggers has done, to the detriment of the nation. OK, no act of congress can "exempt" anything from any part of the constitution. You see, the constitution defines what laws may/may not do. If it was possible to "exempt" things from the constitution by law then the constitution would be meaningless, which it isn't. I don't know what your agenda is. You seem to want economic deregulation extented to include open access. The two are vastly different concepts. Dereg removes (basically silly, ignorant and repressive) restrictions and allows natural economic activity (which will mean growth). Open access would involve confiscation of private property. Now you may argue for open access, but please don't mix it up with dereg and please don't say things like "congress 'exempted' something from the constitution." I'm of the firm beliefe that seperating the train operating company from the right of way ownership is a "BAD IDEA", and I haven't seen any resonable arguments to the contrary. (Hint!) "By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that. Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Monday, January 17, 2005 1:15 PM QUOTE: Originally posted by M.W. Hemphill You found a quote referring to a paint scheme, written for an audience that cared about paint schemes. Both the page on which it appears and your reference to the quote are out of context and meaningless to the argument you are making. I find it only faintly amusing to be accused of a malfeasance by someone who remains cloaked behind a pseudonym. For your future posts, I'll consider the source. MWH Whoa! If you're REALLY all that upset, I'l give you a sincere and public appology....."I'm sorry" More than anything else, I thought it was somewhat humorous, as all people tend to do that from time to time, so, if there was any intent on my part, it was simply to "catch" you being human. Not to "convict" your principles... I see now that the link's target has been edited, but the way the original text was written, it was not abundantly clear that your editorial assessment was limited to the referanced paintscheme. Now that you say it was, I can see where that likely was your intent . For just the addition of a few more words, that sites admin could have made the context of your comment easier to decipher. The way I originally read it , appearance was you were editorializing that stage of the railroads geneology.... being a "timeline" and all. Sorry, once again. Reply Edit Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Monday, January 17, 2005 1:44 PM QUOTE: Originally posted by greyhounds QUOTE: Originally posted by futuremodal If Staggers had been true deregulation, it would have forced railroads to submit to business laws that are applicable to other industries instead of exempting railroads from these constitutional protections. A true act of deregulation is not supposed to allow special rights exempting the parties from the equal protection clause of the constitution, yet that is exactly what Staggers has done, to the detriment of the nation. OK, no act of congress can "exempt" anything from any part of the constitution. You see, the constitution defines what laws may/may not do. If it was possible to "exempt" things from the constitution by law then the constitution would be meaningless, which it isn't. I don't know what your agenda is. You seem to want economic deregulation extented to include open access. The two are vastly different concepts. Dereg removes (basically silly, ignorant and repressive) restrictions and allows natural economic activity (which will mean growth). Open access would involve confiscation of private property. Now you may argue for open access, but please don't mix it up with dereg and please don't say things like "congress 'exempted' something from the constitution." I'm of the firm beliefe that seperating the train operating company from the right of way ownership is a "BAD IDEA", and I haven't seen any resonable arguments to the contrary. (Hint!) Greyhounds, I appreciate your arguments, but you are still simply repeating the talking points and the skewed framing of the subject via AAR. What you need to do is to step back and take a comprehensive look at the entire freight transportation spectrum, and ask yourself if there isn't something amiss in that other transportation modes are open access, while only railroads are such that the owner of the ROW has sole discretion to operate over the ROW. Why is it necessarily bad to project what the transportation picture would look like if the ROW playing field was eqalized, either all transportation ROW's in the owner-operator mode, or all ROW's in the open access mode? Isn't it possible, given the economies of scale presented by railroad technology, that the rail industry could achieve 50% or 60% of commercial freight activity in this country? As for exemptions from constitutional law, are not railroads exempted from the Sherman Anti-trust Act and other comprehensive business regulations, since railroads historically have had their own sets of rules for governence? You and others on this forum have yet to provide evidence that open access would necessarily involve confistication of property. As far as I know, a federal takeover of rail ROW's with due compensation is only one option being considered. The logical option is to split rail companies into ROW owners and rolling stock owners e.g. infrastructure companies and transporting companies, respectively. Other lesser acts would simply invoke current STB caveats of allowing one operator to access another's ROW as a condition of some merger or other operating procedure that results in a lack of rail competition in certain sectors of the country. Given the difficult nature of building new rail lines to compete for market share, the STB recognizes this anomaly and is supposed to address the competition issue whenever it surfaces. Sadly, during the 1990's the STB was lax in its enforcement and public protection functionality, allowing the creation of monopolistic and duopolistic fiefdoms out West. If the STB had been doing their jobs as dictated by their charter, then they would have made sure we had at least three rail operating companies competing throughout the entire Western U.S. (BN, UP, and one other), and would have made sure that at least three companies continued to compete in the East (CSX, NS, and Conrail). The only region of the country that has been spared from the monopolistic/duopolistic oligarchy is the Midwest, where up to six Class I's are still in effect, and the extreme Northeast, where CN and CP have made inroads into the Empire State. Deregulation is supposed to address both the supply side and the demand side of a particular industrial sector. Staggers liberated the supply side, allowing railroads to function more in the free market vein, but it did nothing for the demand side, forcing more and more captivity among rail shippers. The similarities between the Staggers partial deregulation of the railroads and the California partial deregulation of the State's energy markets are striking. In both cases one side of the market was freed, while the other side was kept locked up. The consensus among both liberals and conservatives is that the California partial dereg was a bad idea. Shouldn't we judge the railroad partial dereg in the same vein? Reply Edit Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Monday, January 17, 2005 4:02 PM QUOTE: Originally posted by M.W. Hemphill Anti: No problem, and thanks. That was a long, long, time ago, when I understood a lot less about railroading. The point of the phrase was a comment on the end of the Rio Grande as something that rail enthusiasts valued -- they were in love with it as a showgirl that paraded in front of their cameras, and not much concerned about what it did, why it did it, and what that meant. Probably no one got my comment at the time, but I was pulling their leg, teasing them about their single-minded pursuit of an unreality that didn't matter to anyone else in the world. OK,...but after having spent more time than I should have reviewing linked content depicting the Kodachrome paint scheme, I guess I have SPSF on the brain... Making me wonder...Your opinion based upon what you know, do you think the marriage of SP and SF would have been a successful one, if it had been approved? And how would you speculate that such a union would have affected the rail climate of today? Reply Edit greyhounds Member sinceAugust 2003 From: Antioch, IL 4,371 posts Posted by greyhounds on Monday, January 17, 2005 5:10 PM QUOTE: Greyhounds, I appreciate your arguments, but you are still simply repeating the talking points and the skewed framing of the subject via AAR. What you need to do is to step back and take a comprehensive look at the entire freight transportation spectrum, and ask yourself if there isn't something amiss in that other transportation modes are open access, while only railroads are such that the owner of the ROW has sole discretion to operate over the ROW. Why is it necessarily bad to project what the transportation picture would look like if the ROW playing field was eqalized, either all transportation ROW's in the owner-operator mode, or all ROW's in the open access mode? Isn't it possible, given the economies of scale presented by railroad technology, that the rail industry could achieve 50% or 60% of commercial freight activity in this country? As for exemptions from constitutional law, are not railroads exempted from the Sherman Anti-trust Act and other comprehensive business regulations, since railroads historically have had their own sets of rules for governence? You and others on this forum have yet to provide evidence that open access would necessarily involve confistication of property. As far as I know, a federal takeover of rail ROW's with due compensation is only one option being considered. The logical option is to split rail companies into ROW owners and rolling stock owners e.g. infrastructure companies and transporting companies, respectively. Other lesser acts would simply invoke current STB caveats of allowing one operator to access another's ROW as a condition of some merger or other operating procedure that results in a lack of rail competition in certain sectors of the country. Given the difficult nature of building new rail lines to compete for market share, the STB recognizes this anomaly and is supposed to address the competition issue whenever it surfaces. You fail to comprehend two things. 1) Railroad transportation is fundamenally different from other forms of transporation, such as trucking. It has a different cost structure and a different operating/marketing structure. In truckload transport, the unit of sale, the truckload, is exactly the same as the unit of production, which is also the truckload. In rail transport, the unit of sale, which is a carload or a group of carloads, does not match the unit of production; which is a trainload. Big damn difference. The railroads must combine their sale units into production units. The truckers don't have to do this. As I said, big damn difference. When the unit of sale doesn't match the unit of production, five cost elements must be incurred. These are: 1: Collection - the railroads must "gather up" the shipments and bring them to a central point 2: Aggregation - the railroads must "accumulate" the individual shipments into units of production. Since not all gathered units of sale will be going to the same destination aggregation will be slow and difficult. 3: Line haul - the railroads win here big time. Once they've got a train put together they can move it from its origin terminal to its destination terminal more efficiently than any other mode. 4: Sorting - since the aggregated units of sale just don't match the destinations of each individual unit of sale, they must be sorted out for delivery. 5: Delivery - the railroads must deliver each individual unit of sale after they've been broken up from the unit of production. Now truckload carriers don't really have to do steps 1, 2, 4 and 5. It's only when the rails can overcome the inefficiencies of those steps that they are competive with trucking. That's why unit trains work - one origin to one destination, and that's why long hauls work - the line haul economics overwhelm the costs of the other cost elements. What you propose is making the rail inefficient steps (1,2,4,5) MORE DIFFICULT AND COSTLY. If you put two or more rail carriers in a small market (such as Montana Grain) you're going to make it much more costly to move the grain by rail. You're going to make it more costly to do all five rail required steps - and that ain't no good, noway, nohow. 2) "Constitutional Law" is fundementally different from "Statue Law" Within the Constitution(s) the national legislature and the state legistatures may do what they want. (Which is a pretty gosh darn scary fact when you think about it.) But they are theoretically restricted from going beyond that. In reality, they pass laws that violate Constitutional protections all the time. And it's up to the downtroden to find the megabucks required to fight in court. But regulation of interstate commerce is specifically mentioned in the US Constitution as a power of the national legislature - so they can do it pretty gosh darn as they see fit (which is, again, very scary). So please quit saying this stuff is agin' the Constitution. It ain't. Ken The Racing Dog Guy "By many measures, the U.S. freight rail system is the safest, most efficient and cost effective in the world." - Federal Railroad Administration, October, 2009. I'm just your average, everyday, uncivilized howling "anti-government" critic of mass government expenditures for "High Speed Rail" in the US. And I'm gosh darn proud of that. Reply edblysard Member sinceMarch 2002 9,265 posts Posted by edblysard on Monday, January 17, 2005 8:54 PM Ken, The raceing dog guy... In case you havent noticed, if you started a thread on why some railroads used single head lights, and others use dual beams...at some point in time, if futuremodel responded, he would some how managed to work in open access, the evils of deregulation and some form of government conspiracy to cheat the citizens. He would appear to think that somehow, business is supposed to be fair and equal to all parties...and if it is not, the the state should step in and equalize the playing field. Read every single posting he has made on any subject with in this forum, and you find the same concept hidden behind all the verbiage. Heck, he even managed to blame the rot at the SP on their "failure" to embrace open access... Which leads one to wonder how badly he was screwed over by some railroads management when he trotted this nonsense out for them to look at. Either screwed over or ignored, both work. From the content of your last reply, I gather you understand the phrase "Flogging a dead horse"... Ed 23 17 46 11 Reply ericsp Member sinceMay 2015 5,134 posts Posted by ericsp on Monday, January 17, 2005 11:08 PM So far the only map of C&EI I have been able to find is at http://mo-pac.com/history_c&ei.html . It looks like it had the following lines. Saint Louis, MO to Effingham, IL. Cape Girardeau, MO to Effingham, IL Effingham, IL to Chicago, IL. Evansville, IN to Chicago, IL. Mount Vernon, IN to Princeton, IN (connection with line to Evansville) A few other small lines. Does this sound about right? "No soup for you!" - Yev Kassem (from Seinfeld) Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Tuesday, January 18, 2005 1:07 AM Ken the Racing Dog Guy: Did I say that truck, rail, and barge are all the same? No. Your analysis of "how rail works" is essentially correct, but off the subject target. Barging and trucking are fundamentally different as well, but they both work well under the open access concept. Both barging and unit train rail have similarities in that they depend on trucking to deliver the goods. Barging and carload rail are different in that barging can't do the carload thing. Trucking and rail are similar in that they have a speed element not available to barging. Etc., etc., etc. That being said, there is no evidence that rail under open access wouldn't work better than the current proprietary ownership. The fact that carload rail has to take the "five steps" is irrelevant to the discussion. The statement that trucking's unit of sale matches it's unit of production isn't necessarily true either. Ever heard of LTL? Conversly, often trucking's unit of production exceeds its unit of sales, meaning a trucking firm has to collect a sufficient number of trucks and drivers to meet that unit of production. It may shock you to learn this, but oftentimes trucking firms and railroads are engaged in the same match 'em up game. The fact that they have different cost structures is still not relevant to the open access argument. The truth is all modes have different cost structures, but only rail has retained the proprietary ownership setup. Open access would not increase railroading's costs, but it might result in reduced profit margins due to the onset of rate competition. It might even reduce rail's cost structure. As I've said before, open access can open the door for public investment in rail infrastructure, taking a big bite out of the cost of capital, thus the step toward equalization. It depends on what form it takes. Ed: You obviously don't read much. I only bring up open access, partial deregulation, or the shortcomings of the STB when the subject matter is appropriate. If I comment on anything else, it is within the parameters of the subject at hand. Open access, partial deregulation, and the shortcomings of the STB are appropriate interjections for this thread regarding UP's takeover of SP. Of course, the fact that you own both BNSF and UP stock doesn't taint your POV, does it? I never said SP was mismanaged because they rejected open access, I only asked if their firing of an open access advocate was a mark of wisdom or incompetence. I left it open at that point. You are competely disingenuous when you allege I have said anything about deregulation being evil. I have said that partial dereg doesn't work as intended, and usually has negative results. It happened in the California energy "deregulation", and it is happening with Staggers "dereg", because both were not truly deregulation but partial deregulation. I have been consistent on this point, but you choose to misrepresent my view. Or maybe you think California's energy "deregulation" as presented was a good thing? Reply Edit CSSHEGEWISCH Member sinceMarch 2016 From: Burbank IL (near Clearing) 13,540 posts Posted by CSSHEGEWISCH on Tuesday, January 18, 2005 2:19 PM Open access is not a panacea, and as I've mentioned elsewhere, can run afoul of the 5th Amendment. I can't see government purchasing the rights of way or otherwise investing in the existing infrastructure anytime soon in the current political climate. I also can't figure out how the cost structure would be reduced without the aforementioned government intervention. The daily commute is part of everyday life but I get two rides a day out of it. Paul Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Tuesday, January 18, 2005 2:28 PM QUOTE: Originally posted by M.W. Hemphill Anti: I'm a terrible oracle. Oh, I dunno. Sounds like a pretty good series of speculations to me..[:D] The neat thing about speculating about events that can never be, is that there is no way the future can make us regret out words [:D]. And I was just interested in hearing a learned opinion on the subject, unfettered by "heart strings". So, "thanks"....I got what I came for. The one thing that surprised me in your analysis is no mention of any benefit to be had in the gaining of advantage in access to the Gulf area. Just based upon reading in the magazine from time to time, but it seems to imply that BNSF's one true weakness compared to UP is in the chemical coast area. And though I am a complete armchair novice, it "looks" like that would be dramatically different , had SPSF worked out. Reply Edit Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Tuesday, January 18, 2005 3:01 PM QUOTE: Originally posted by M.W. Hemphill And I don't know what the ICC would have done about leaving Los Angeles with one weak railroad with most of the routes but little ability to invest in them, and one strong railroad with a single very poor route (the LA&SL) that no amount of investment would have improved. In the Central Corridor, the ICC would have had to either give D&RGW the old Central Pacific territory, or give up on any notion of two competitors in that territory with absolutely nothing to show for it in return. In the long run, there probably would still have been a BNSF merger, except in this case BNSF would be saddled with all SP's weaknesses instead of UP. They probably get down on their knees and light candles in Fort Worth every morning, giving thanks for that mercy, murmering as visions of UP congealment dance in their eyes, "There but for the grace of God go I." What few people understand, then or now, is that by 1970 SP was an albatross, a railroad with high operating costs that in most cases are still immune to being lowered, no legacy investment in the right places but a hell of a lot of it in the wrong places, and no pot of gold called the Powder River Basin to power its way out of its sinkhole. Had the SP had any inherent strength at all, we wouldn't even be having this discussion; investors would have eagerly put money into the property when we were all kids. Today it would be a strong railroad and we would be asking "Could the UP have survived without SP." Here's the bottom line: "what you see is what there is:" if a railroad is abandoned, or fails, 95-97% of the root causes are intrinsic: traffic, operating costs, strategic position, regulatory environment, tax structure. The first is a function of global economics; i.e., you can exploit but you can not rearrange to suit your fancy. The second is dependent upon the first; if you have traffic you can often (but not always) afford to lower your costs. Changing the third requires merger. The fourth and fifth are systemic. The only solution from root-cause weakness is to seek escape through merger, piecemeal sale, or abandonment. A railroad disappears because it was a weak property surrounded by strong properties, without enough profitable traffic, or both. The first modern railroader to which I can point that grasped this principal and acted with urgency was Ben Heineman at C&NW. He understood that since no white knight to save C&NW was in the offing, his only hope was to merge with and abandon his competitors as fast as possible, until as much of the profitable traffic that could be saved was all concentrated onto the lowest-cost plant. For a weak railroad such as a Milwaukee, Rock Island, SP, Katy, or Erie Lackawanna, by 1960 their only feasible salvation absent a complete reformation of U.S. transportation policy was merger with a strong road, with the full knowledge that large portions of the weak railroad were already in such poor shape that there would be no choice but to junk them the day after the merger. Leaders who understood that their true allegiance was to shareholders, not to a herald or a system map or a piece of track -- they got the plot. Those who didn't, they stood around carping about truckers, while their companies shuddered and died, and their shareholders cut their losses and fled. 1. It sounds as if the best option regarding SP would have been to split it off among SF, UP, and BN, with shared trackage rights where necessary e.g. the I-5 corridor. This would have left the West with three strong railroads serving all the major markets of the West, which would have been outstanding for the Western economy. Of course, there is no reason to think that the STB wouldn't have eventually allowed the BN + SF merger, which would have ruined the perfect harmony of the "triopoly". 2. Mark's reference to Ben Heineman and his vision of buying 'em out and tearing 'em out serves to back my argument that the real purpose of Staggers was to allow the railroads to reduce "excess" capacity to the point of coalescing into greater pricing power over shippers. Which is all good and fine for the railroads, but leaves two items untendable: (A) There was no planning in Staggers for preserving tracks to meet future growth projections once the reduced capacity became maxed out e.g. effective rail banking, and (B) Staggers left no effective way for shippers to access any competitive pricing for rail services. Many prospective rail shippers have HAD to shift to trucks, the transport mode of last resort, and as a result rail's share of commercial freight transportation has remained static. PS - notice I didn't say anything about open access in this reply! Reply Edit CSSHEGEWISCH Member sinceMarch 2016 From: Burbank IL (near Clearing) 13,540 posts Posted by CSSHEGEWISCH on Wednesday, January 19, 2005 9:58 AM A division of SP among UP, BN and ATSF could have occured only if all three roads had applied jointly before the STB to do so. Neither the ICC or the STB had the power to order such a division on their own. In a similar vein, the various consolidations proposed by the ICC under the Transportation Act of 1920 were just that as the ICC was not given any power to order these consolidations. It has been suggested that these proposals involved a combination of weak roads with strong roads in order to preserve the routes of the weaker roads. The daily commute is part of everyday life but I get two rides a day out of it. Paul Reply Anonymous Member sinceApril 2003 305,205 posts Posted by Anonymous on Wednesday, January 19, 2005 2:23 PM QUOTE: Originally posted by M.W. Hemphill Paul: Dead on. As to your second paragraph, that was the plan, all right: to apportion the weak roads among the strong roads. The map would then consist of balanced systems, each which had equal strength and weakness. The advantages touted for this were: 1. It would end the diseconomies inherent in the struggle for strategic advantage. 2. It would allow the ICC to set master rates that recognized inflationary pressures or productivity improvements that were fair to all. 3. It would allow the ICC to prescribe cross-subsidy of rail service without destroying carriers, thus avoiding the concentration of capital and preserving the desired outcome of rates based on mileage, not on volume (which is then termed a classic subsidy to small business, an unconstitutional restriction of the rights of property, a leveling of the playing field, a limit on the inherent rapaciousness of capitalism, or an inducement to economic activity, depending which personal social philosophy you subscribe to). 4. If it all worked out, all the ICC would have to do is look at the consolidated profit & loss statement for the industry, decide what a "fair return" should be, and set rates accordingly. Capital would get its return, shippers would all be satisfied that none was being cheated, and the country would have universal rail service. In short, the ICC was attempting to level out geography. Noble, if utopian, and fatally flawed by its failure to include coastwise shipping, river and lake shipping, and trucking. There were several formulas devised for this. The ICC engaged railroad economist William Z. Ripley to prepare one in 1921 (a provision of the Transporation Act of 1920, as you note). This plan was specifically repealed by the Transportation Act of 1940. Another was the Prince Plan, widely studied in the early 1930s, which unified all the railroads into either seven or eight systems (depending on which version you wanted). Plus, there were a number of independent plans submitted by various well-meaning concerned citizens. All of them ran into Constitutional issues and went nowhere. Hmmm. The Prince Plan called for seven or eight systems? And what do we have now? Seven systems! So much for Constitutional issues! What I'd like to know is this: Was the blueprint of the Prince Plan to guarantee a minimum number (3 or more) of healthy systems in all the major regions of the country, or did it allow for one or two systems to dominate in each region? What you pro-rail industry types fail to realize is that the ICC/STB has always had the power to deny any merger where there was the implication of anti-competitive consequences. The STB could have easily denied either the UP + SP or the BN + SF merger with the same reasoning they used to deny the SP+ SF merger, making any of them contingent on alleviating competition issues. It appears the industry lobbyists had there way with the STB during the 1990's, a perception of influence not limited to the railroad industry during this period. Reply Edit bobwilcox Member sinceDecember 2001 From: Crozet, VA 1,049 posts Posted by bobwilcox on Wednesday, January 19, 2005 3:48 PM Dave - concerning "It appears the industry lobbyists had there way with the STB during the 1990's, a perception of influence not limited to the railroad industry during this period." I would maintain that the railroads have had heavy influence at the ICC/STB since at least 1906. One of the root problems with ecomomic regulation, at all levls of goverment, is that the regulated get in bed with the regulators whether we are talking about Wall Street and the SEC or housing develpoers and my local zoining board. I think this goes back as long as their has been business regulation. The RR just got to go there first. Bob Reply vsmith Member sinceDecember 2001 From: Smoggy L.A. 10,743 posts Posted by vsmith on Wednesday, January 19, 2005 6:14 PM Could have the SP survived without UP? No, because of the massive deferred maintanence by their fabulous managment, all their rotted ties would have eventually turned to sawdust undernieth the trains leaving them where they stood, or the rusted crusty decrepid rot-buckets they called engines would have eventually encountered rain, washing away all the dirt holding the rust together, spontanoiusly decomposed the engines into large brown piles of rusted metals. Have fun with your trains Reply 123 Join our Community! Our community is FREE to join. To participate you must either login or register for an account. Login » Register » Search the Community Newsletter Sign-Up By signing up you may also receive occasional reader surveys and special offers from Trains magazine.Please view our privacy policy More great sites from Kalmbach Media Terms Of Use | Privacy Policy | Copyright Policy
IEric, if you step back away from this, do you realize what a remarkable thing happened? The Rio Grande -- that dinky, no-account property that everyone treated as the benighted rube in the mountains --ended up controlling the UP! And through UP, the SP, WP, MP, C&NW, Katy, and some big chunks of the Rock! Philip Anschutz is the largest stockholder in UP, with something around 25% of the stock, and how did he get there? Why, with Rio Grande's bank account -- and, granted, a lot of shallow thinkers along the way who watched him purchase SP and Rio Grande for nothing. I know, most people think UP won. Well, corporations are just shells. They're conveniences owned by people. Paint schemes and corporate names are just ego and window dressing. They're very useful to hide behind, especially when you're a billionaire and you don't want anyone to notice your moves. Only people win. If you follow the money, not the paint scheme or the title on the annual report, it leads you straight to Mr. Anschutz, the guy with the cash who calls the shots. He leveraged Rio Grande's cash into a controlling position of about one-fifth of the entire railroad system of North America.
QUOTE: Originally posted by futuremodal After reading all this, one has to wonder why the logic of merger won't eventually extend to UP + BNSF, CSX + NS, CN + KCS, and basically any other combination? If your answer is "Well, the STB wouldn't allow such a scenario, therefore it won't happen", why not? The STB under Linda Morgan during the decade of fraud has shown that parallel mergers are just fine, mergers that leave huge sections of the country under single Class I control are just fine, mergers that result in capital expenditure shifts from one section of the country to another section of the country are just fine, etc. so long as the CEO's get theirs and the regulators are promised theirs after their government gig is up. The caveat of maintaining the semblence of consumer choice and national economic security in an industry where entry of new service providers is nearly impossible has been apparently thrown out by STB overlords. Don't kid yourselves about todays railroads being this tremendous asset to the nation, only certain segments of the nation are being given the benefits of the partial deregulation. We have the remaining two railroads in the West throwing what capital improvement funds they are willing to expend on the LA - Chicago corridor, and very little elsewhere. There is no incentive to develop more logical rail corridors due to lack of political pull in these regions, along with the lack of full control by one railroad or the other over other rail corridors. The I - 15 corridor is a logical NAFTA rail corridor, except UP owns all of it from Butte MT to LA, while BNSF owns the portion from Butte to the Canadian border (and apparently is letting much of that go to scrap). Since todays railroads demand monopoly control over point to point trackage before they'll spend on those corridors, the I -15 is left to rust. Maybe a UP + BNSF merger will finally open up that corridor, if BNSF hasn't already scrapped a key link by then. Lord knows BNSF will tear up the trackage before they'd sell it to a competitor, and UP would do the same rather than sell to BNSF. Is there any other industry in the U.S. where a closed or underutilized asset is destroyed rather than sold to a possible competitor? If a Safeway grocery store is shut down, they don't tear down the building and walk away, they put it on the market and hopefully get a buyer, even if the buyer ends up being a competitor. The same exists if the buyer is a third party developer intent on reselling it to a competitor of Safeway. If Safeway tried to insert a clause in it's sale contract to a third party that they must never resell or lease the asset to an Albertsons or Tidymans, it wouldn't take long for a judge to strike down that clause. Yet today's railroads are rife with such contractual inhibitors when they decide to sell to a shortline operator. If Safeway tried to tear down the building rather than sell it, that action too would probably be struck down by a judge. Yet railroads are allowed to do that very thing when they tire of a certain section of track. How are railroads able to do this? They were allowed to do so by the regulatory bodies as a caveat of regulation. Then when Staggers came along, instead of the ICC/STB synchronizing this action into a prevailing characteristic of business law in conformity with other industries, they are allowed not only to continue the act of infrastructure destruction, they actually accellerate this destruction. Well, can affected shippers and regions appeal to the Sherman Anti-trust laws? Nope, Staggers still exempts the railroads from this protection too. If Staggers had been true deregulation, it would have forced railroads to submit to business laws that are applicable to other industries instead of exempting railroads from these constitutional protections. A true act of deregulation is not supposed to allow special rights exempting the parties from the equal protection clause of the constitution, yet that is exactly what Staggers has done, to the detriment of the nation. So I ask again, what is stopping (in the legal sense) an eventual merger of all Class I's into one big company? Nothing in Staggers. Nothing in any anti-trust laws. No one at the STB, FRA, USDOT. Right now the only thing stopping these eventual mergers is calculated PR. The predator must be patient, carefully stalking it's prey until the moment is right, only then can it envelop it's prey. Those folks perceptive enough to take "stock" in this hunt will eventually be rewarded, barring any drastic changes in the management of the wilderness.
QUOTE: Originally posted by TheAntiGates QUOTE: Originally posted by futuremodal After reading all this, one has to wonder why the logic of merger won't eventually extend to UP + BNSF, CSX + NS, CN + KCS, and basically any other combination? If your answer is "Well, the STB wouldn't allow such a scenario, therefore it won't happen", why not? The STB under Linda Morgan during the decade of fraud has shown that parallel mergers are just fine, mergers that leave huge sections of the country under single Class I control are just fine, mergers that result in capital expenditure shifts from one section of the country to another section of the country are just fine, etc. so long as the CEO's get theirs and the regulators are promised theirs after their government gig is up. The caveat of maintaining the semblence of consumer choice and national economic security in an industry where entry of new service providers is nearly impossible has been apparently thrown out by STB overlords. Don't kid yourselves about todays railroads being this tremendous asset to the nation, only certain segments of the nation are being given the benefits of the partial deregulation. We have the remaining two railroads in the West throwing what capital improvement funds they are willing to expend on the LA - Chicago corridor, and very little elsewhere. There is no incentive to develop more logical rail corridors due to lack of political pull in these regions, along with the lack of full control by one railroad or the other over other rail corridors. The I - 15 corridor is a logical NAFTA rail corridor, except UP owns all of it from Butte MT to LA, while BNSF owns the portion from Butte to the Canadian border (and apparently is letting much of that go to scrap). Since todays railroads demand monopoly control over point to point trackage before they'll spend on those corridors, the I -15 is left to rust. Maybe a UP + BNSF merger will finally open up that corridor, if BNSF hasn't already scrapped a key link by then. Lord knows BNSF will tear up the trackage before they'd sell it to a competitor, and UP would do the same rather than sell to BNSF. Is there any other industry in the U.S. where a closed or underutilized asset is destroyed rather than sold to a possible competitor? If a Safeway grocery store is shut down, they don't tear down the building and walk away, they put it on the market and hopefully get a buyer, even if the buyer ends up being a competitor. The same exists if the buyer is a third party developer intent on reselling it to a competitor of Safeway. If Safeway tried to insert a clause in it's sale contract to a third party that they must never resell or lease the asset to an Albertsons or Tidymans, it wouldn't take long for a judge to strike down that clause. Yet today's railroads are rife with such contractual inhibitors when they decide to sell to a shortline operator. If Safeway tried to tear down the building rather than sell it, that action too would probably be struck down by a judge. Yet railroads are allowed to do that very thing when they tire of a certain section of track. How are railroads able to do this? They were allowed to do so by the regulatory bodies as a caveat of regulation. Then when Staggers came along, instead of the ICC/STB synchronizing this action into a prevailing characteristic of business law in conformity with other industries, they are allowed not only to continue the act of infrastructure destruction, they actually accellerate this destruction. Well, can affected shippers and regions appeal to the Sherman Anti-trust laws? Nope, Staggers still exempts the railroads from this protection too. If Staggers had been true deregulation, it would have forced railroads to submit to business laws that are applicable to other industries instead of exempting railroads from these constitutional protections. A true act of deregulation is not supposed to allow special rights exempting the parties from the equal protection clause of the constitution, yet that is exactly what Staggers has done, to the detriment of the nation. So I ask again, what is stopping (in the legal sense) an eventual merger of all Class I's into one big company? Nothing in Staggers. Nothing in any anti-trust laws. No one at the STB, FRA, USDOT. Right now the only thing stopping these eventual mergers is calculated PR. The predator must be patient, carefully stalking it's prey until the moment is right, only then can it envelop it's prey. Those folks perceptive enough to take "stock" in this hunt will eventually be rewarded, barring any drastic changes in the management of the wilderness. Hey man,...after all that I have ONE question I need to ask you: Are you my long lost twin brother seperated at birth? I like the way you think! [;)]
QUOTE: Originally posted by futuremodal I appreciate the compliment, but I doubt we'd agree on all that much if your user name is any indication of your feelings about Microsoft. I have no love lost about Microsoft, and yes, Bill Gates is a bit of a left wing ogre, but I believe the whole Justice Department case against Microsoft was misplaced. There are no real barriers to entry into the markets of software development, computer manufactering, computer sales, et al. Besides, Linux-based systems are there to keep Microsoft in check. Contrast that with the current rail industry, where any thought toward building new lines to compete for rail-based traffic is basically a pipe dream. Even those projects that have been given the initial go-ahead face the possibility of being blocked by the regulatory mire, e.g. DM&E's PRB connection. Once rail companies have been allowed to extract predatory pricing and service denials, there is no way out for those rail shippers who are captive to these rail oligarchs. Once rail companies "achieve" such an oligarchy status, there is no competitive reason for them to take actions which involve risk. Risk aversion means no aggressive marketing and no attempts at innovation to improve market share, since the cream of the market share is already maxed. It is ironic that the Clinton JD chose to waste millions of dollars going after Microsoft while at the same time Clinton's STB was drunkenly approving just about every merger brought before it, eliminating most aspects of rail competition in much of the country e.g. the "red" states. The mega-mergers of the 1990's have had a more negative affect on average joe consumers than any of Microsofts tactics. The end result of all this will be one or both of the two major things railroaders fear the most: Either an adoptation of Canadian-style trucking regs (more LCV's, GVW's of up to 146,000 lbs), and/or a re-introduction of some aspect of pre-Staggers rate regulation.
QUOTE: Originally posted by futuremodal If Staggers had been true deregulation, it would have forced railroads to submit to business laws that are applicable to other industries instead of exempting railroads from these constitutional protections. A true act of deregulation is not supposed to allow special rights exempting the parties from the equal protection clause of the constitution, yet that is exactly what Staggers has done, to the detriment of the nation.
QUOTE: Originally posted by M.W. Hemphill You found a quote referring to a paint scheme, written for an audience that cared about paint schemes. Both the page on which it appears and your reference to the quote are out of context and meaningless to the argument you are making. I find it only faintly amusing to be accused of a malfeasance by someone who remains cloaked behind a pseudonym. For your future posts, I'll consider the source. MWH
QUOTE: Originally posted by greyhounds QUOTE: Originally posted by futuremodal If Staggers had been true deregulation, it would have forced railroads to submit to business laws that are applicable to other industries instead of exempting railroads from these constitutional protections. A true act of deregulation is not supposed to allow special rights exempting the parties from the equal protection clause of the constitution, yet that is exactly what Staggers has done, to the detriment of the nation. OK, no act of congress can "exempt" anything from any part of the constitution. You see, the constitution defines what laws may/may not do. If it was possible to "exempt" things from the constitution by law then the constitution would be meaningless, which it isn't. I don't know what your agenda is. You seem to want economic deregulation extented to include open access. The two are vastly different concepts. Dereg removes (basically silly, ignorant and repressive) restrictions and allows natural economic activity (which will mean growth). Open access would involve confiscation of private property. Now you may argue for open access, but please don't mix it up with dereg and please don't say things like "congress 'exempted' something from the constitution." I'm of the firm beliefe that seperating the train operating company from the right of way ownership is a "BAD IDEA", and I haven't seen any resonable arguments to the contrary. (Hint!)
QUOTE: Originally posted by M.W. Hemphill Anti: No problem, and thanks. That was a long, long, time ago, when I understood a lot less about railroading. The point of the phrase was a comment on the end of the Rio Grande as something that rail enthusiasts valued -- they were in love with it as a showgirl that paraded in front of their cameras, and not much concerned about what it did, why it did it, and what that meant. Probably no one got my comment at the time, but I was pulling their leg, teasing them about their single-minded pursuit of an unreality that didn't matter to anyone else in the world.
QUOTE: Greyhounds, I appreciate your arguments, but you are still simply repeating the talking points and the skewed framing of the subject via AAR. What you need to do is to step back and take a comprehensive look at the entire freight transportation spectrum, and ask yourself if there isn't something amiss in that other transportation modes are open access, while only railroads are such that the owner of the ROW has sole discretion to operate over the ROW. Why is it necessarily bad to project what the transportation picture would look like if the ROW playing field was eqalized, either all transportation ROW's in the owner-operator mode, or all ROW's in the open access mode? Isn't it possible, given the economies of scale presented by railroad technology, that the rail industry could achieve 50% or 60% of commercial freight activity in this country? As for exemptions from constitutional law, are not railroads exempted from the Sherman Anti-trust Act and other comprehensive business regulations, since railroads historically have had their own sets of rules for governence? You and others on this forum have yet to provide evidence that open access would necessarily involve confistication of property. As far as I know, a federal takeover of rail ROW's with due compensation is only one option being considered. The logical option is to split rail companies into ROW owners and rolling stock owners e.g. infrastructure companies and transporting companies, respectively. Other lesser acts would simply invoke current STB caveats of allowing one operator to access another's ROW as a condition of some merger or other operating procedure that results in a lack of rail competition in certain sectors of the country. Given the difficult nature of building new rail lines to compete for market share, the STB recognizes this anomaly and is supposed to address the competition issue whenever it surfaces.
23 17 46 11
"No soup for you!" - Yev Kassem (from Seinfeld)
QUOTE: Originally posted by M.W. Hemphill Anti: I'm a terrible oracle.
QUOTE: Originally posted by M.W. Hemphill And I don't know what the ICC would have done about leaving Los Angeles with one weak railroad with most of the routes but little ability to invest in them, and one strong railroad with a single very poor route (the LA&SL) that no amount of investment would have improved. In the Central Corridor, the ICC would have had to either give D&RGW the old Central Pacific territory, or give up on any notion of two competitors in that territory with absolutely nothing to show for it in return. In the long run, there probably would still have been a BNSF merger, except in this case BNSF would be saddled with all SP's weaknesses instead of UP. They probably get down on their knees and light candles in Fort Worth every morning, giving thanks for that mercy, murmering as visions of UP congealment dance in their eyes, "There but for the grace of God go I." What few people understand, then or now, is that by 1970 SP was an albatross, a railroad with high operating costs that in most cases are still immune to being lowered, no legacy investment in the right places but a hell of a lot of it in the wrong places, and no pot of gold called the Powder River Basin to power its way out of its sinkhole. Had the SP had any inherent strength at all, we wouldn't even be having this discussion; investors would have eagerly put money into the property when we were all kids. Today it would be a strong railroad and we would be asking "Could the UP have survived without SP." Here's the bottom line: "what you see is what there is:" if a railroad is abandoned, or fails, 95-97% of the root causes are intrinsic: traffic, operating costs, strategic position, regulatory environment, tax structure. The first is a function of global economics; i.e., you can exploit but you can not rearrange to suit your fancy. The second is dependent upon the first; if you have traffic you can often (but not always) afford to lower your costs. Changing the third requires merger. The fourth and fifth are systemic. The only solution from root-cause weakness is to seek escape through merger, piecemeal sale, or abandonment. A railroad disappears because it was a weak property surrounded by strong properties, without enough profitable traffic, or both. The first modern railroader to which I can point that grasped this principal and acted with urgency was Ben Heineman at C&NW. He understood that since no white knight to save C&NW was in the offing, his only hope was to merge with and abandon his competitors as fast as possible, until as much of the profitable traffic that could be saved was all concentrated onto the lowest-cost plant. For a weak railroad such as a Milwaukee, Rock Island, SP, Katy, or Erie Lackawanna, by 1960 their only feasible salvation absent a complete reformation of U.S. transportation policy was merger with a strong road, with the full knowledge that large portions of the weak railroad were already in such poor shape that there would be no choice but to junk them the day after the merger. Leaders who understood that their true allegiance was to shareholders, not to a herald or a system map or a piece of track -- they got the plot. Those who didn't, they stood around carping about truckers, while their companies shuddered and died, and their shareholders cut their losses and fled.
QUOTE: Originally posted by M.W. Hemphill Paul: Dead on. As to your second paragraph, that was the plan, all right: to apportion the weak roads among the strong roads. The map would then consist of balanced systems, each which had equal strength and weakness. The advantages touted for this were: 1. It would end the diseconomies inherent in the struggle for strategic advantage. 2. It would allow the ICC to set master rates that recognized inflationary pressures or productivity improvements that were fair to all. 3. It would allow the ICC to prescribe cross-subsidy of rail service without destroying carriers, thus avoiding the concentration of capital and preserving the desired outcome of rates based on mileage, not on volume (which is then termed a classic subsidy to small business, an unconstitutional restriction of the rights of property, a leveling of the playing field, a limit on the inherent rapaciousness of capitalism, or an inducement to economic activity, depending which personal social philosophy you subscribe to). 4. If it all worked out, all the ICC would have to do is look at the consolidated profit & loss statement for the industry, decide what a "fair return" should be, and set rates accordingly. Capital would get its return, shippers would all be satisfied that none was being cheated, and the country would have universal rail service. In short, the ICC was attempting to level out geography. Noble, if utopian, and fatally flawed by its failure to include coastwise shipping, river and lake shipping, and trucking. There were several formulas devised for this. The ICC engaged railroad economist William Z. Ripley to prepare one in 1921 (a provision of the Transporation Act of 1920, as you note). This plan was specifically repealed by the Transportation Act of 1940. Another was the Prince Plan, widely studied in the early 1930s, which unified all the railroads into either seven or eight systems (depending on which version you wanted). Plus, there were a number of independent plans submitted by various well-meaning concerned citizens. All of them ran into Constitutional issues and went nowhere.
Have fun with your trains
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