Steam Locomotives versus Diesels

[MichaelSol]

QUOTE: Originally posted by espeefoamer

Just look at how often steam engines had to stop for water.Also the extra facilities needed at each terminal.Facilities were needed at more locations,and steam engines had to be changed out more often. And many helper districts could be abandoned with diesels.All of these facilities required many more men to operate.On an economic basis alone,dieselization seems like a no brainer.

You've already posted this once.

Just what is "the economic basis" that you speak of, and how does that differ from the specific economic analysis we have been looking at on this thread?

Best regards, Michael Sol

[Anonymous]

QUOTE: Originally posted by Old Timer

TomDiehl sayeth:

"At first, I couldn't figure out why a Steam vs Diesel post would go 16 pages. This post is roll-on-the-floor-laughing hilarious.

"Blaming the railroad's downturn on the steam to diesel transition. So when does that Kalmbach book "Diesel Victory" come out?

"Michael, you should be writing comedy. Especially the way you're leading these people down the garden path.

"You're not getting a piece of the action for selling that book, are you Michael?"

At last. Somebody else who gets it.

By "getting it", you must mean the stuck-on-stupid virus that's going around..........[:D]

[TomDiehl]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by Old Timer

TomDiehl sayeth:

"At first, I couldn't figure out why a Steam vs Diesel post would go 16 pages. This post is roll-on-the-floor-laughing hilarious.

"Blaming the railroad's downturn on the steam to diesel transition. So when does that Kalmbach book "Diesel Victory" come out?

"Michael, you should be writing comedy. Especially the way you're leading these people down the garden path.

"You're not getting a piece of the action for selling that book, are you Michael?"

At last. Somebody else who gets it.

By "getting it", you must mean the stuck-on-stupid virus that's going around..........[:D]

Wow, a lame attempt at an insult.

Color me surprised. [:D]

[rrandb]

Micheal I beleive the Tele-com, the dot-com and even Enron are excelent examples of industries that made poor and simularly bad economic decisions. [#ditto] Big ditto for an excellent analagy. How long did it take for there investors to scream bloody murder to both the directors and the government?? [?] The existing directors were either replaced and new stratagies implemented to turn them around or they were bankrupted/merger and ceased to exist. This what happened to many railroads because of freight leaving steel wheels for rubber tires. I find it interesting if steam could have been revived as an alternative to diesel in this day and age no one has been able to get past the talking stage. Not even a scale working model for a prototype. I think if you could contact UP's steam dept who still has big steam on the rails they could tell you which cost more to operate in 2006 dollars. It's not the GM/GE diesel behind there Challenger. The diesels only prolonged the agony for many railroads that were the victums of poor managment. If not for the follow the laeder style of this endustry we would probably see coast to coast mergers before now. Good, bad or indiferent in business the strong eat the weak. diesel ate steam and no one was sorrier than me to see them go. [:(] I'll step down now [soapbox] as always and most sincerly ENJOY

[AnthonyV]

I am just as skeptical about Michael's findings as anybody. However, if the economic advantages of Dieselization are such a slam dunk, it should easy to prove it in the numbers. No one has yet to refute Michael's results numerically, which is why I am focusing on understanding his analysis.

Michael,

I was questioned whether inflation adjustments could be applied in the manner that I did. (Read my original post.) So I do agree with the general premise of your earlier post.

I have had numerous questions on your results that I've been meaning to ask.

How are future costs of steam maintenance and fuel calculated?

You have presented much of the data on a per revenue ton basis. I believe that using the revenue ton mile as a basis of comparison is more appropriate since transportation involves moving weight over a distance. Do you have fuel, maintenance, and finance cost data in these terms?

You have referred to locomotive maintenance costs in terms of cost per horsepower and cost per tractive effort (if I remember correctly). Shouldn't maintenance costs always be represented in terms of cost per ton mile?

There is much discussion about locomotive service lives in terms of years. Wouldn't revenue ton miles be the only relevant measure of economic service life? How does steam and Diesel compare on this basis?

How did revenue ton miles change over time?

How did the average haul distance change over time? (I suspect this had to increase since the railroad lost unprofitable short-haul traffic due to the highway as you stated earlier.)

What assumptions are made regarding steam purchases over the 18 year period?

Is railroad employment dependent solely on carloadings?

Did train length and tonnage and frequency change as a result of Dieselization?

Were there any economic benefits made possible by Dieselization that could not be realized using steam?

How did revenue/ton and revenue/ton mile change over time?

I guess this is a good starting point. I'll keep asking as long as you're willing to answer.

Thanks,

Anthony V.

[oltmannd]

Anthony-

You are barking up the right tree with your questions, but I think all the normalized measures fall short.

If a RR buys 100 locomotives to handle their traffic and the locomotives perform exactly as advertised, but 90% of the traffic goes away, the nomalized measures will show that the locomotive's performance deteriorated, when, in fact, nothing of the sort happened.

If you had assumed you'd get so many ton-mile per unit per year and you get less, it can mean that locomotives were performing poorly, OR, it could mean less traffic (think same network of trains, but 10% fewer cars on each train. Not enough to drop one unit from the consist).

There might have been the assumption that utilization would be 70%, but only 60% is achieved. This might be related to locomotive reliability, but it can also be explained if less traffic means fewer trains. Same number of units chasing fewer trains = lower utilization.

Some of the ownership cost is fixed (purchase). Some is time variable (inpections). Some is mileage variable (trucks), and some is hp-hr variable (engine & fuel).

In order to do justice to this question, we really need the ROI calculation with all the supporting assumptions made that went to the RR board for approval in order to compare to the actuals. The only way dieselization could be proven to be a bad decision is if the original ROI calculation was in error (not likely) or there were bad assumptions (there usually are some, but not usually fatal).

Approaching the question this way one can find out if it was the performance of the locomotives themselves that were the problem or some other, perhaps external factor.

As many have pointed out, there were big changes afoot in post war US, many of them not favorable to the railroads. Until these are also considered as potential drivers of the drop in RR ROI, you can't say with any certainty that dieselization was the cause - it may be an effect, or artifact of the era.

I am inclined to think that the dieselization was entirely justified and overall performance not radically different from the assumptions made in the original ROI (don't be trotting out those traffic-normalized stats, though). I'm also inclined to think that RR mgt had only one thing in mind in the 1950s and that was to cut operating costs to the bone in order to continue to pay out dividends or invest in businesses with high ROIs. I don't believe that many on RR boards thought the RRs were a going concern and anything they could reasonably do to suck cash out, they'd do.

[MichaelSol]

Well, my spreadsheet is about to collapse from too much data. I am going to have to go back and streamline the thing. A weekend project.

However, the data presented thus far is best looked at as relative. The problem that I noticed with the "diesel" costs is that they include the electrification, and that skews the data favorably in favor of the "diesel."

As you point out, Anthony, "how" it is presented makes more sense to some than to others, and there are myriad ways to measure things. Some prefer gross ton miles, other net ton miles. Some prefer a purely financial measure: % of revenue earned, etc. etc.

However, since the electrification skews Milwaukee Road figures -- it acts as a buffer to showing true changes due to Dieselization -- it is useful to separate out the electrification. The Electric fleet represented between 10.3% and 13% of the Milwaukee Road's available tractive effort during this period.

A quick way to look at 1962 numbers, using the 1944 constant dollar approach, is by creating index numbers to show improvement relative to earnings, or deterioration relative to earnings.

If the 1962 revenues represent an Index of 100, the following index numbers represents various categories:

Operating expenses exclusive of fuel, locomotive maintenance and financing charges: 108%. Now, this is the change in the relative relationships to revenue based on the relationship that existed in 1944.

Overall, operating expenses went up a bit relative to revenue. Not surprised.

Total expenses in 1962 associated with electric locomotives were 59% of the same costs relative to revenue in 1944. This was due almost entirely to the declining costs of electric power under the Montana Power/Puget Power & Light contracts.

Non-electric fleet operating costs in 1962 -- fuel, maintenance, financing -- all Diesel, were 136% of the same costs relative to revenue in 1944, when those costs represented mostly Steam.

Electrification was the big financial hero for Milwaukee Road during that era, enjoying the highest producitivty gains of anything on the railroad. Milwaukee pretty much held the line on all other operating expenses, fell behind a little, not much.

However, it is that increase relative to the revenue in the remaining motive power expense category that simply cannot be wished away as proof that Dieselization was good for Milwaukee Road. Had it not been for the ability to make substantial cuts/savings in other areas, the substantial increase in relative costs because of Dieselization would have been hugely problematic for the Milwaukee Road.

Best regards, Michael Sol

[jockellis]

G'day, Y'all,
In some book of railroad facts, the number of employees per mile was compared using 1951 and, I thiunk, in the 1990s. The numbers dropped from about 8-9 per mile to 2-3 per mile for modern railroads. But it is really the intervening years between 1951 and 1960 when the last of the steamfitters, etc. were furloughed that would really tell how much diseasels aided the railroad books. Has anyone seen such figures? While I grant that getting rid of steam was important, let's not forget that railroads were still in deep stinky until the government got rid of the ICC and all the old rules railroads had to live by thanks to excesses by the robber barons of the 19th century.
Let's also not forget that Trains magazine's circulation dropped when steam was retired. I have a feeling that a lot of passengers decided at the same time, because of the same thing, that they could go by car if they couldn't be pulled by steam.
My first rail trip was from Atlanta to Fitzgerald, GA when I was about six in the year 1954. Hopping off the train early the next morning, I turned to the head end only to be disappointed to see a lashup of diseasels instead of a steamer. What was the big deal about taking the train if it didn't have siderods and smoke?
Jock Ellis
Cumming, GA US of A
Georgia Association of Railroad Passengers

[Anonymous]

Michael Sol,

From your facts, what conclusions can be drawn about when the railroads should have dieselized?

[MJ4562]

QUOTE: Originally posted by MichaelSol
The statistical fact is that, had railroads achieved employment "efficiencies" in general that paralleled those associated with the Dieselization process, all American railroads would have been bankrupt .

That is, fortunately American railroads were able to achieve employment reductions in other areas far in excess of what they were able to achieve through Dieselization. It was that effort, not Dieselization, which saved American railroads from near certain bankruptcy as the result of the decline in carloadings.

So what are the employment reductions attributable to?

[Tharmeni]

Jeez, when you guys are finished, I guess we can all argue about the virtues of my first wife. That's history, too!

[TomDiehl]

QUOTE: Originally posted by Tharmeni

Whatever happened to the ACE3000, the computerized steam engine proposed by a group in Ohio in the 1980s? Did they ever build a prototype?

For more than you ever probably wanted to know about the ACE 3000:

http://www.trainweb.org/tusp/ult.html

[TomDiehl]

QUOTE: Originally posted by techguy57
I'm guessing that they saw dollar signs in the fact that diesels meant less crews and presumably easier maintenance (on paper it would seem easier to change out a mass produced traction motor or generator than custom rebuilding a boiler)
Mike

Therein lies one of the big differences between steam and diesel, standard (mass produced) parts. Even back in the days, you couldn't call up Baldwin and order a left piston for your 1928 Mikado and have it delivered from stock. Parts simply weren't standardized in any way. Even in cases where there were many copies of a single model, most major parts weren't interchangable to the point where you could take it out of the box and slap it on. Machining and fitting needed to be done to even the most common parts. In most cases, it was more economical to fabricate the part from scratch than try to make standard ones.

However, you could call EMD and order a new piston for your 567 type engine.

[TomDiehl]

QUOTE: Originally posted by cementmixr

This Brown is an outsider looking in. I am not particularly pursuaded by commentary from outsiders on the railroad industry. The woods are full of self-styled railroad experts. In my opinion, the place to start an analysis like this one is with primary source documents as found in a railroad company's archives. Surely every railroad made internal studies on the impact of dieselization. Where are the internal studies? I guess nobody here has read them.

Even if you completely ignore his background and/or qualifications, this does bring up another question: Why did Brown do this study? Was he hired by the railroads or organization like the AAR? Was he working for a Wall Street firm to give them a stock market rating for the railroads?

[TomDiehl]

QUOTE: Originally posted by nanaimo73

QUOTE: Originally posted by Murphy Siding


nanaimo73: Was the FT diesel the Dreadnought of the railroads?[:)]

I don't know. I'm not good at that type of question.


Michael-
The theory you have put forward seems to fall completely apart when one looks at the PRR. It was THE railroad in the 1940s and 1950s. Their ROI fell quicker because they did not dieselize. Instead of buying 2 E7s in the fall of 1945 they should have bought at least 100 and not wasted all of that time and effort trying to replace their (worn out ?) steamers with T1s and the other experiments.

One of the things you need to understand to put this in perspective is the Pennsy's engineering culture (for lack of a better term). They had a reputation for testing the living daylights out of everything and documenting the tests and comparisons. For example, if a new appliance (same as accessory on a car) came out, they would buy a few, apply them to selected locomotives, and run tests comparing them to unmodified engines. After the numbers were "crunched" they would determine if the new item would actually save money, improve power or performance, etc enough to justify the added expense of buying and maintaining it.

There's an interesting display with artifacts and interpretive stations on this at the Railroaders Memorial Museum in Altoona, up on the 4th floor. It's in what used to be the Master Mechanic's Building of the Juniata Locomotive Works in downtown Altoona. On the web:

http://www.railroadcity.com/

[Tharmeni]

Hey, Tom Diehl: Thanks for the info on the ACE 3000. I was actually in several of the meetings the BN had with the ACE folks and there WAS interest by BN in the idea, but it soon faded.

[Anonymous]

QUOTE: Originally posted by jockellis

G'day, Y'all,
While I grant that getting rid of steam was important, let's not forget that railroads were still in deep stinky until the government got rid of the ICC and all the old rules railroads had to live by thanks to excesses by the robber barons of the 19th century.

This raises a very important point. What metrics were the regulators using in setting rates during this period? Some utility boards today use a target ROI in setting rates. If inflation was increasing costs during the period, but the regulators felt a 4% ROI was sufficient, not much else matters.

I also disagree with the idea that the entire industry made a hasty decision based on little experience or over-zealous EMD salesmen.. For example, at UP Otto Jabelman made that decision after the war. As chief Mechanical Engineer during the 30's he was closely involved with the Streamliners. He was also responsible for the Northerns, Challangers, Big Boys, and had plans drawn up for a Super 800. At the time the decision was made UP had almost 10 years experience with the Streamliners as well as yard switchers on the west coast. Jabelman was also well aware of the failure of the 2 GE steam turbines. The road didn't dieselize all at once, but rather west to east over the next 10 years. They also bought about equally from EMD and Alco.

UP also had a large group of gas turbines and although they weren't a partner in the project by several east coast roads and the coal industry to develop a coal fired steam turbine, they went ahead and built one using the knowledge gained from that project. That effort which resulted in experimental designs for the N&W and C&O utilized some of the brightest minds in the country, was well funded, and lasted a number of years. It would seem that what those roads felt was no longer viable was the conventional reciprocating steam engine. It would also be very hard to believe that as part of that project they didn't study the comparative operating costs of conventional steam and diesels. In the end, both C&O and N&W bought diesels.

[MichaelSol]

QUOTE: Originally posted by oltmannd
If a RR buys 100 locomotives to handle their traffic and the locomotives perform exactly as advertised, but 90% of the traffic goes away, the nomalized measures will show that the locomotive's performance deteriorated, when, in fact, nothing of the sort happened.

I think you missed your own very good point.

If 90% of the traffic goes away, so do the fuel costs and maintenance costs as well. Employees can be furloughed. With Dieselization, one big cost thereafter remained that railroads could no longer control: the interest charges on the investment.

It may be that 90% of the traffic goes away, but 40% of the cost remains even when the shiny diesel-electric locomotives are just sitting there. Except that it becomes 80% or 90% of your cost and there's nothing you can do about it.

However, this does fit with your comment that railroad management at this point viewed railroading as a short term enterprise. Bankers, who benefitted the most from Dieselization, sat on most railroad boards at this point.

Walter Cummings, the chairman of Continental Illinois Bank, sat on the Milwaukee Road Board of Directors 1945-1966 ... it's most senior and influential board member during that era. When he retired, he was replaced by his son Tilden "Tillie" Cummings, by then, Chairman of Continental Illinois Bank.

Best regards, Michael Sol

[MichaelSol]

QUOTE: Originally posted by up829
For example, at UP Otto Jabelman made that decision after the war. As chief Mechanical Engineer during the 30's he was closely involved with the Streamliners. He was also responsible for the Northerns, Challangers, Big Boys, and had plans drawn up for a Super 800. At the time the decision was made UP had almost 10 years experience with the Streamliners as well as yard switchers on the west coast. Jabelman was also well aware of the failure of the 2 GE steam turbines. The road didn't dieselize all at once, but rather west to east over the next 10 years. They also bought about equally from EMD and Alco.

You suggest that this was an Operating Department decision, and if so, then railroad management failed utterly, judging by the financial results. Paraphrasing Lou Menk: "If you put the Operating Department in charge of the railroad, you'd have a first class, bankrupt railroad."

UP was like most railroads. Do it, and worry about the results later. The 100-ton and 125-ton cars provide yet another illustration on this count at Union Pacific.

"Tracking heavy-car impact - effect of heavier cars on track
maintenance," Railway Age, March, 1989 by Gus Welty
...
Jerry R. Davis, executive vice president-operations of Union Pacific,
goes along with the popular assessment of the 125-ton well cars as not
having much impact. But Jerry Davis can be a bad man to get started
talking about 125-ton bulk-commodity cars operated in unit trains.
He's been with UP since the late 1950s, and he recalls unit-train
operations with 125-ton cars--with no enthusiasm whatsoever. Davis
thinks back to the railroad's experience with 125-ton covered hopper
cars hauling soda ash: "Worst experience we ever had. Those cars
literally ate the railroad up." And, it might be kept in mind, those
observations come from a railroad officer whose railroad always ranks
up-top in terms of maintenance.

Best regards, Michael Sol

[Anonymous]

Maybe you said it and I can't find it, but why were the interest charges higher on the diesels than they would have been on new steam? Understandably they could have bought them slower, but in the end the cost would be the same, would it not?

[MichaelSol]

QUOTE: Originally posted by The Duke

Maybe you said it I can't find it, but why were the interest charges higher on the diesels than new steam. Understandably they could have bought them slower, but in the end the cost would be the same, would it not?

The idea that it's "all the same" is not accurate.

There are two fundamentally different methods of financing involved here. In today's management, you would generate a "Self Sustainable Growth" model, SSG. This model permits a manager, based upon current results, to generate budget requirements for future growth and identifies with some specificity how much internal cash is generated for those future needs, and how much debt needs to be incurred to meet those future projected needs.

Any time a company expects to generate revenue, it is going to consume assets in a well-defined proportion to the revenue generated. So, any time the company expects, or wants, to generate more revenue, it has to be able to supply more assets to do so. I don't mean here, "fixed" assets, I mean everything that appears on the asset side of a Balance Sheet -- cash on hand, inventory, fixed, etc.

If the additional assets the company needs to produce the revenue costs more than the revenue produced, there's a problem.

However, the SSG model produces an identifiable point -- a "tipping point", if you will, game theorists might call it a "saddle point". One side of that polint generates internally financed decisions. The other side of that point generates outside debt.

Two different management worldviews exist around that tipping point.

If the SSG model tells you that if the company is going to grow (either expects to or wants to) 8% next year, then there is a tipping point of a certain percentage. If the SSG model generates a 10% SSG, then the company is home free for the additional investment needed to generate next year's expected revenue. The 10% SSG is greater than the 8% projected growth: the company will generate sufficient internal ca***o finance the growth and the assets needed to achieve that growth. However, if the model generates a 6% SSG number, then management has to make a decision. The 8% growth is greater than the 6% SSG. The company cannot generate enough funds internally to finance the growth.

That is where the world views come into play.

Management needs to decide if its want the extra 2% growth. It can achieve that extra growth in one of two ways. If it does not finance the 2% growth by incurring external debt, it generates it the only other way possible: by consuming internal assets. Railroads typically do that usng a "deferred maintenance" account and/or a "deferred capital investment" account. You might also see it as an increasing "accounts payable" account. When you see those accounts start to fill up, without even generating the model you instantly know three things: 1) the railroad is operating past its SSG number, 2) it has insufficient free cash flow to finance its current operating activities, and 3) it was unable to finance the growth that was beyond the SSG number.

Or the company can accept the 6% growth rate and incur no debt and preserve its assets.

What is clear is that, prior to WWII, railroads by and large purchased motive power on one side of the SSG number. A cautious, conservative world view. After WWII, their purchasing decisions were made on the other side of the SSG number. A much riskier and more problematic approach.

And there was nothing driving the need to adopt that approach except the perception of the need for Dieselization.

The problem with operating on the far side of the SSG is, of course, it is the inherently risky side. You had better get the growth. If you don't, then the additional debt reduces the SSG number with each successive year, and debt begets more debt. And by the way, reduces the ROI with each successive year. That is exactly what happened in the rail industry.

You can only exceed the SSG number if you expect growth. But 90% of the Dieselization process occured during a period of decline. You cannot beat the SSG model, but with Dieselization that is exactly what the rail industry attempted to do.

Once that process starts, it takes a very long time to turn it around.

Milwaukee Road happens to represent a textbook example of this.

After its PCE opened in 1909, between 1909 and 1925, growth was extraordinary. Milwaukee Road was one of the fastest growing railroads in the country. It exceeded its SSG and did not obtain sufficient financing. By 1925 it was in receivership.

After Dieselization, by 1970 Milwaukee Road's SSG number was dismally low. Virtually any new growth had to be financed. The boom came, by 1974: "the fastest growing railroad in America." How could it grow? It's Board had decreed to Worth Smith that they weren't going to borrow any money. Growth was financed by exactly the way the SSG model predicted, consuming internal assets: rail, ties, ballast, maintenance, and brand new diesel-electric locomotives at $18 million a year.

Ironically, railroads that did not grow past their SSG number could survive. Railroads that grew faster than their SSG failed.

Best regards, Michael Sol

[Anonymous]

So...uhh are you guys still arguing about steam engines..? Or the BNSF and produce shippers..? or what...

Lots a flaming goin on here... [|)]

[Anonymous]

QUOTE: Originally posted by rgroeling

So...uhh are you guys still arguing about steam engines..? Or the BNSF and produce shippers..? or what...

Lots a flaming goin on here... [|)]

It's just 18 pages of dribble, move along, nothing to see here, they lost the point a long time ago and are now ego boosting only.

[espeefoamer]

For more on this subject,you should read"Black Diamonds,Black Gold",a two volume book on the how and why of dieselization on the Pennsylvania Railroad.It is a very interesting and informative read.

[Murphy Siding]

QUOTE: Originally posted by espeefoamer

For more on this subject,you should read"Black Diamonds,Black Gold",a two volume book on the how and why of dieselization on the Pennsylvania Railroad.It is a very interesting and informative read.

Can you tell the author of this book?Thanks.

[TomDiehl]

QUOTE: Originally posted by SteamerFan

QUOTE: Originally posted by rgroeling

So...uhh are you guys still arguing about steam engines..? Or the BNSF and produce shippers..? or what...

Lots a flaming goin on here... [|)]

It's just 18 pages of dribble, move along, nothing to see here, they lost the point a long time ago and are now ego boosting only.

Actually Jay, that's refered to as "hijacking a thread."

[MJ4562]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by The Duke

Maybe you said it I can't find it, but why were the interest charges higher on the diesels than new steam. Understandably they could have bought them slower, but in the end the cost would be the same, would it not?

The idea that it's "all the same" is not accurate.

There are two fundamentally different methods of financing involved here...................................

That's great but how about answering his question??? I've noticed you conveniently ignore relevent questions or go off on tangents hoping to confuse readers. Fortunately most of us are too educated and intelligent to fall for it.

[MichaelSol]

QUOTE: Originally posted by APG45

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by The Duke

Maybe you said it I can't find it, but why were the interest charges higher on the diesels than new steam. Understandably they could have bought them slower, but in the end the cost would be the same, would it not?

The idea that it's "all the same" is not accurate.

There are two fundamentally different methods of financing involved here...................................

That's great but how about answering his question??? I've noticed you conveniently ignore relevent questions or go off on tangents hoping to confuse readers. Fortunately most of us are too educated and intelligent to fall for it.

Well, just because you didn't understand the answer, that's not a basis to assume I'm "hoping" anything.

Steam $120,000. Equivalent diesel, $160,000, financed. Steam paid out of internally generated funds. It costs $120,000. Diesel, financed at 5%, costs $207,207 dollars, at 10% $260,392.63. Ultimately, that is three times the cost of the steam, because the funds are borrowed, not internal.

Answered?

I appreciate that you feel both educated and intelligent and look forward to that approach to the conversation.

Best regards, Michael Sol

[Anonymous]

Eighteen pages and counting . . .

MichaelSol, TomDiehl is right; you've hijacked this thread and have posted at least fourteen pages worth of your endless discourses trying to impress the unwary.

APG is right, too. You do conveniently ignore relevant questions and go off on tangents hoping to confuse readers.

If we all get together and tell you how impressed we are with you, will you let this thing go?

Old Timer

[Anonymous]

QUOTE: Originally posted by APG45

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by The Duke

Maybe you said it I can't find it, but why were the interest charges higher on the diesels than new steam. Understandably they could have bought them slower, but in the end the cost would be the same, would it not?

The idea that it's "all the same" is not accurate.

There are two fundamentally different methods of financing involved here...................................

That's great but how about answering his question??? I've noticed you conveniently ignore relevent questions or go off on tangents hoping to confuse readers. Fortunately most of us are too educated and intelligent to fall for it.

Sounds like you're just plain confused. I'll "diseducate" it down for you with an analogy you can understand.

You have a 5 year old car. It's probably good for another 5 years, but you want a brand new hybrid, it's all the rage now, gotta keep up with the neighbors. Normally, a person would simply trade in the old one to get cash off on the new one, and then you are making payments for the rest out of your future income (debt servicing). Just what you've always done previously.

Except.....

Imagine if your 5 year old car has no trade-in market with which to wedge down the price of a new car (which is analogous to the railroads' lack of a trade-in market for steam). You have a choice of either (1) running your old car another 5 years until you can accumulate enough ca***o buy (or at least make a substantial downpayment on) the new hybrid, or (2) you can go ahead and just scrap the 5 year old car and go into deeper debt to get that new hybrid.

What do you think will happen to your future cash flow if you do #2 as opposed to #1? Frankly, it wouldn't matter if the new car you covet was just another spark-ignition auto (analogy = steam locomotive) or a new "technologically advanced" gas-electric hybrid (analogy = diesel locomotive), if you scrap an auto with another 5 years of useful service life to get that new car (along with a much higher debt obligation), you're going to have cash flow problems in the future.

If instead of scrapping not-so-old steam locomotive and going all out for wholesale dieselization, the railroads had instead done the same thing for all new steamers, the future drop in ROI would probably followed the same drop over the years. What compounded this unnecessary debt load increase was the first generation diesel's relatively short service life, forcing even greater debt accumulation for those second and third generation diesels.