greyhounds wrote:Bingo! The ICC would not allow the railroads to change to meet changing market conditions. That was its main evil.
Several railroads were playing with cargo continers and "piggybacking" in the 1920's and early 30's. The ICC basically said "No way, Jose" and the container idea had to wait until Malcolm McLean decided to try his hand at domestic shipping. Just think how different freight transport would be in the US had containerization taken off ca 1930.
tiskilwa wrote: bobwilcox wrote:To quote gabe "But, what changes hit the rail industry from the 1960s to the 1970s to make things go so horribly wrong?" Do you have an opinion you would like to share with the list?No changes hit the rail industry in 1960; rather, it was the status quo that hit the rail industry around 1960. [The following quote is from, A History of the ICC, Hoogenboom, pp. 159-160] “[In December, 1960] John P. Doyle, staff director of the Transportation Study Group (created earlier by the Senate) submitted his draft report to the Senate Committee on Interstate and foreign Commerce. … Regulatory policy, the Doyle report concluded, ‘has produced a general program of preserving the status quo which is in direct opposition to the overall objective of a dynamic transportation system which can best serve the economy and defense of the country.’ Predicting that the nation was headed for a transportation crisis, the report cited … the absolute decline in railroad traffic and revenue from 1956 to 1959. Railroads suffered, the report continued, from the great technological developments in competing modes; from enormous public investment in highways, airports, and waterways at a time when railroads had difficulty raising private capital; … and common carriers were subject to ‘inequitable and destructive ICC regulation.’ ”
bobwilcox wrote:To quote gabe "But, what changes hit the rail industry from the 1960s to the 1970s to make things go so horribly wrong?" Do you have an opinion you would like to share with the list?
"But, what changes hit the rail industry from the 1960s to the 1970s to make things go so horribly wrong?" Do you have an opinion you would like to share with the list?
No changes hit the rail industry in 1960; rather, it was the status quo that hit the rail industry around 1960.
[The following quote is from, A History of the ICC, Hoogenboom, pp. 159-160]
“[In December, 1960] John P. Doyle, staff director of the Transportation Study Group (created earlier by the Senate) submitted his draft report to the Senate Committee on Interstate and foreign Commerce. … Regulatory policy, the Doyle report concluded, ‘has produced a general program of preserving the status quo which is in direct opposition to the overall objective of a dynamic transportation system which can best serve the economy and defense of the country.’ Predicting that the nation was headed for a transportation crisis, the report cited … the absolute decline in railroad traffic and revenue from 1956 to 1959. Railroads suffered, the report continued, from the great technological developments in competing modes; from enormous public investment in highways, airports, and waterways at a time when railroads had difficulty raising private capital; … and common carriers were subject to ‘inequitable and destructive ICC regulation.’ ”
Put another way, regulation held railroads in place while the world moved out from under them.
The fundamental change to which railroads were made helpless by regulation to adapt was technological in origin, the development of practical autos and trucks circa 1910. These became vastly more economical on a total-cost basis for small-volume, short-to-medium-length movements following the decision by the public to finance the construction of roads through the public treasury and the decision by the public to not tax highway users on either a cost-of-use or value-of-use basis, only a loose fuel-consumption basis which greatly underpriced the value of the highway to trucking, and made fixed plant almost entirely a variable cost.
Blaming the ICC is superficial. The ICC did what Congress told it to do, who did what the voters told it to do. There was no independent thought on the part of either the ICC or Congress for which I am thankful.
S. Hadid
MichaelSol wrote:The fact is that the number of miles of American railroads in receivership had always numbered in the many thousands ever since the Civil War, and in the years following the financial panic of 1893 the miles of line in receivership soared to nearly 40,000 miles, representing nearly 200 railroads. How that managed to occur before the passage of the Hepburn Act is left a mystery.But, how did that compare with the 1970s?Railroads did, in fact, have their own special problem.It wasn't the Hepburn Act of 1906.
The fact is that the number of miles of American railroads in receivership had always numbered in the many thousands ever since the Civil War, and in the years following the financial panic of 1893 the miles of line in receivership soared to nearly 40,000 miles, representing nearly 200 railroads.
How that managed to occur before the passage of the Hepburn Act is left a mystery.
But, how did that compare with the 1970s?
Railroads did, in fact, have their own special problem.
It wasn't the Hepburn Act of 1906.
Well, how many miles are in receivership now? Getting rid of the suffocating, restrictive, counter productive, economic regulation seems to have gotten rid of the problem.
Kevin C. Smith wrote:My understanding of the Hepburn Act is the "tip of the iceberg". There were enough other things that went wrong, too, no doubt. The Hepburn Act slowed (pratically froze) rates in the middle of a time of huge capital investments. The growth of auto/truck traffic in the 1920's caused problems with short haul and/or high value traffic, the depression-followed by the traffic levels of WWII-then the expansion of air travel and long haul truck traffic picked up where the problems let off. Inflation (postwar and 1970's) in a capital intensive industry with inflated labor costs on top of it and the decline of manufacturing in the NE US (which became the epicenter of the troubles) all added to it. It wasn't so much that things went good in 60's to bad in the 70's as those were just the last two chapters of the sad saga: 1) Slowing the expansion [say, 1906-1929], 2) The contraction of short haul traffic but overall expansion of traffic making up for it [say, post WWI-1929], 3) The economic dislocations of the Depression and WWII [1930-1945], 4) The loss of long distance traffic [post WWII]. First the profits dropped, then there were various economies to try and stay ahead of the game, then the losses began...then the money ran out.
My understanding of the Hepburn Act is the "tip of the iceberg". There were enough other things that went wrong, too, no doubt. The Hepburn Act slowed (pratically froze) rates in the middle of a time of huge capital investments. The growth of auto/truck traffic in the 1920's caused problems with short haul and/or high value traffic, the depression-followed by the traffic levels of WWII-then the expansion of air travel and long haul truck traffic picked up where the problems let off. Inflation (postwar and 1970's) in a capital intensive industry with inflated labor costs on top of it and the decline of manufacturing in the NE US (which became the epicenter of the troubles) all added to it. It wasn't so much that things went good in 60's to bad in the 70's as those were just the last two chapters of the sad saga: 1) Slowing the expansion [say, 1906-1929], 2) The contraction of short haul traffic but overall expansion of traffic making up for it [say, post WWI-1929], 3) The economic dislocations of the Depression and WWII [1930-1945], 4) The loss of long distance traffic [post WWII]. First the profits dropped, then there were various economies to try and stay ahead of the game, then the losses began...then the money ran out.
I would add WW1 to your list for three reasons. One was that the regulation froze rates during the time of rapid inflation (1917 - 1920). The second was the USRA that managed to mess up a bunch of railroads, put a temporary halt to new construction (one exception being the San Diego & Arizona) and basically give trucking a big boost. The third being the experience of using trucks in Europe for supplying the US forces.
The 1906 earthquake in San Francisco didn't help either - one is that the depression of 1907 was caused by the huge losses sustained by the insurance companies and the other was that he initial relief supplies arrived by truck - the first demonstration of the feasibility of long distance trucking.
nanaimo73 wrote: MichaelSol wrote: Mysteriously, none of them blamed the Hepburn Act of 1906. Michael-Would you say the Hepburn Act had little or no effect on the Chicago, Milwaukee and St. Paul ?If it had come into effect during 1904, do you believe the Directors would have gone ahead with the PCE ?
MichaelSol wrote: Mysteriously, none of them blamed the Hepburn Act of 1906.
Mysteriously, none of them blamed the Hepburn Act of 1906.
Michael-
Would you say the Hepburn Act had little or no effect on the Chicago, Milwaukee and St. Paul ?
If it had come into effect during 1904, do you believe the Directors would have gone ahead with the PCE ?
Well, do you suppose the Great Northern and Northern Pacific misread it when the elected at the same time as the Milwaukee to build the Spokane, Portland & Seattle? George Gould misunderstood it when the Western Pacific began building? William Rockefeller didn't understand it when undertaking the Milwaukee extension? E.H. Harriman didn't fathom the effect when building north into Seattle in 1906 and 1907?
Saying that people like Hill, Rockefeller, Van Horne, Gould and Harriman were too d*** dumb to understand the Hepburn Act is too much of a stretch.
For those actually familiar with the literature, the amount of railroad surveying done, 1910-1914 was breathtaking. Everyone was in the field. The anticipated construction era promised to be one of the greatest on record. You only need to access the old newspapers. It was no secret: it was front page stuff. None of that literature mentions the Hepburn Act. However, the European bond market dried up. Interest rates began to escalate after the 1907 Panic and then more so as war loomed in Europe. Profits fell as railroads began to upgrade for heavier trains and heavier motive power, which shows in the substantial investment figures shown for key railroads after 1906.
Watch out for the politics on this stuff. Agendas with regard to regulation intentionally obscure the normal operating implications of general economic conditions.
1435mm wrote:Blaming the ICC is superficial. The ICC did what Congress told it to do, who did what the voters told it to do. There was no independent thought on the part of either the ICC or Congress for which I am thankful.S. Hadid
I don't agree.
I don't see the intent of Congess or The Public as what the ICC did. It was never their intent to stop inovation and productivity improvement (which were certainly the result of ICC actions.) Nor was it their intent to financially destroy much of the railroad system. Which is what the actions of the ICC helped do.
When the ICC stopped the development of an intermodal container system in the early 30's it did tremendous harm to the US economy. That was not the Will of The People or The Congress. It was a bunch of government lawyers who thought they knew more than anybody else. Unfortunatly, they had the power but not the ability to use it wisely. They may have been given the power, but the expectation was that they would use it well. They didn't.
greyhounds wrote: MichaelSol wrote: The fact is that the number of miles of American railroads in receivership had always numbered in the many thousands ever since the Civil War, and in the years following the financial panic of 1893 the miles of line in receivership soared to nearly 40,000 miles, representing nearly 200 railroads. How that managed to occur before the passage of the Hepburn Act is left a mystery.But, how did that compare with the 1970s?Railroads did, in fact, have their own special problem.It wasn't the Hepburn Act of 1906. Well, how many miles are in receivership now? Getting rid of the suffocating, restrictive, counter productive, economic regulation seems to have gotten rid of the problem.
MichaelSol wrote: The fact is that the number of miles of American railroads in receivership had always numbered in the many thousands ever since the Civil War, and in the years following the financial panic of 1893 the miles of line in receivership soared to nearly 40,000 miles, representing nearly 200 railroads. How that managed to occur before the passage of the Hepburn Act is left a mystery.But, how did that compare with the 1970s?Railroads did, in fact, have their own special problem.It wasn't the Hepburn Act of 1906.
Except for airlines. Apparently deregulation is not a panacea ... oh gosh, Ford's in trouble too ... to this idea that regulation explains every failure, and deregulation explains every success: baloney. It's more complicated in both directions.
MichaelSol wrote:Except for airlines. Apparently deregulation is not a panacea ... oh gosh, Ford's in trouble too ... to this idea that regulation explains every failure, and deregulation explains every success: baloney. It's more complicated in both directions.
Well, deregulation does explain every success.
It gives management the opportunity to actually manage. Try things. See if they work. Abandon them if they don't. Try something else. It's called inovation.
Very important for success in any enterprise. Very difficult, if not impossible, under economic regulation.
greyhounds wrote: Well, deregulation does explain every success. It gives management the opportunity to actually manage. Try things. See if they work. Abandon them if they don't. Try something else. It's called inovation.Very important for success in any enterprise. Very difficult, if not impossible, under economic regulation.
Well, that certainly explains fully and completely the enormous technological innovations brought forth by Bell Laboratories, as part of the most singularly regulated industry in our history, as well as the electric power industry, not only regulated, but regulated at the state level -- the ostensibly most pernicious and politically leveraged level of regulation.
How did those electric utilities always -- always -- earn better and more consistently than their railroad sistern and bretheren?
Oh, and electric dereg was certainly a positive experience for all of us.
greyhounds wrote: 1435mm wrote:Blaming the ICC is superficial. The ICC did what Congress told it to do, who did what the voters told it to do. There was no independent thought on the part of either the ICC or Congress for which I am thankful.S. Hadid I don't agree. I don't see the intent of Congess or The Public as what the ICC did. It was never their intent to stop inovation and productivity improvement (which were certainly the result of ICC actions.) Nor was it their intent to financially destroy much of the railroad system. Which is what the actions of the ICC helped do. When the ICC stopped the development of an intermodal container system in the early 30's it did tremendous harm to the US economy. That was not the Will of The People or The Congress. It was a bunch of government lawyers who thought they knew more than anybody else. Unfortunatly, they had the power but not the ability to use it wisely. They may have been given the power, but the expectation was that they would use it well. They didn't.
You would want a country where the government and Congress not only act independently of the voters, but do so effectively? I blanch to think where that could lead.
In a democracy, at the end of the day, the people hold the power and bear the ultimate responsibility for whatever their government does. Yes, the government makes lots of small decisions that would be contrary to the wishes of the public, if they were put to the public, but that's the nature of the system we freely chose.
I think you're asking questions that are far too narrow. The decisions by government lawyers were not "Let's stifle productivity" but, "How do we deliver the mandate that public has given us, which is riven with conflicts and pretty much impossible to deliver?"
What does the public care about? Not promoting innovation per se or productivity per se. I dare you to find even one national-level election this November or November 1906 where those themes made a real difference in the race. The public cares about the amount of money in their paychecks and the amount in the check to the taxman. Groups of like employment or like location care about preserving investment in careers and locations and have no qualms about expecting America to pay for it, e.g., dairy farmers and milk price supports. Congress and the ICC delivered to the public exactly what they specified: cheap transportation, subsidies for small shippers and rural shippers, and wages marching steadily upward. This was all had to be paid for, and conveniently it didn't even require taxes, there was value in the existing investment in railroads that could be sucked out. Even if the public had been aware of the fact that its decisions were steadily grinding the railroad infrastructure and equipment into the ground, and understood it, and even cared, they'd in all likelihood have done it anyway as it would become a problem of a future generation, not theirs. And that fits very neatly with a profoundly American ethos that believes technological breakthroughs, unfolding bounty of nature, and endless economic growth, will always appear at the climax of the film and save the day.
As it turns out the public was pretty clever. They got what they wanted in the 1910s, 20s, 30s, 40s, 50s, and 60s, and they still have a railroad system! Granted they had to cough up a few billion for Conrail but that's chump change in the whole scheme of federal money. The two bad outcomes were that irresponsibility was rewarded and as a result, 100 years later, we don't have a national freight transportation policy. I keep thinking we'll pay the price for that in lost competitiveness to other countries but fortunately for us they continue to be even more short-sighted and confused than we are.
MichaelSol wrote: greyhounds wrote: Well, how many miles are in receivership now? Getting rid of the suffocating, restrictive, counter productive, economic regulation seems to have gotten rid of the problem. Except for airlines. Apparently deregulation is not a panacea ... oh gosh, Ford's in trouble too ... to this idea that regulation explains every failure, and deregulation explains every success: baloney. It's more complicated in both directions.
greyhounds wrote: Well, how many miles are in receivership now? Getting rid of the suffocating, restrictive, counter productive, economic regulation seems to have gotten rid of the problem.
Well he confined his comments to railroads ("how many miles are in receivership now"). And he does have a point, which is the health of the railroads today.
MichaelSol wrote: greyhounds wrote: Well, deregulation does explain every success. It gives management the opportunity to actually manage. Try things. See if they work. Abandon them if they don't. Try something else. It's called inovation.Very important for success in any enterprise. Very difficult, if not impossible, under economic regulation.Well, that certainly explains fully and completely the enormous technological innovations brought forth by Bell Laboratories, as part of the most singularly regulated industry in our history, as well as the electric power industry, not only regulated, but regulated at the state level -- the ostensibly most pernicious and politically leveraged level of regulation.How did those electric utilities always -- always -- earn better and more consistently than their railroad sistern and bretheren?Oh, and electric dereg was certainly a positive experience for all of us.
Great thread. Glad to see everyone back. There sure was a flurry of activity late yesterday. I guess we all had enough Christmas and was ready to resume the great discussion.
Now, I am going to add this to the "what went wrong list"...the forced inclusion of the New Haven into the Penn Central merger. Looking back, PC had a very slim chance of success, but that chance was completely whisked away with the addition of the New Haven.
I have read several books on this topic including Saunder's two "Merging" volumes. Also I read "The Men Who Loved Trains."
What other books would you suggest as the required reading of this topic?
ed
tiskilwa wrote: MichaelSol wrote: greyhounds wrote: Well, how many miles are in receivership now? Getting rid of the suffocating, restrictive, counter productive, economic regulation seems to have gotten rid of the problem. Except for airlines. Apparently deregulation is not a panacea ... oh gosh, Ford's in trouble too ... to this idea that regulation explains every failure, and deregulation explains every success: baloney. It's more complicated in both directions.Well he confined his comments to railroads ("how many miles are in receivership now"). And he does have a point, which is the health of the railroads today.
A point made in a vacuum. And that's the only way that point can be made.
Look around. Is nearly all American business healthier than in the 1970s? Do you really, really think that when businesses failed in all directions -- and it included railroads -- and that when businesses enjoyed record success in all directions -- and it also included railroads -- that regulation/deregulation is a better explanation than documented general economic conditions?
Did Mr Derleth cover the Hepburn Act in much detail in his 1948 book ? Were his views of its effect on the CM&StP similar to yours ?
Kevin C. Smith wrote: My understanding of the Hepburn Act is the "tip of the iceberg". There were enough other things that went wrong, too, no doubt. The Hepburn Act slowed (pratically froze) rates in the middle of a time of huge capital investments. ....Vastly oversimplified, I know.
My understanding of the Hepburn Act is the "tip of the iceberg". There were enough other things that went wrong, too, no doubt. The Hepburn Act slowed (pratically froze) rates in the middle of a time of huge capital investments.
....
Vastly oversimplified, I know.
Not just oversimplified. This is dead wrong.
Where do you read that railroad rates were rising during that era? The answer is fundamental to your entire proposition.
We are not used to the idea in our current lifetimes, but the American economy, post-Civil War was a deflationary economy. Rates declined all during that period. Historian Gabriel Kolko documented how the origins of the ICC Act lay with the railroads themselves asking the government to regulate "destructive competition" and plummeting rates. The Panic of 1893 brought down more railway mileage than any time before or since -- an occurence related more to general economic conditions than regulation or deregulation but due in part to the corrosive effects of deflation on organizations that required substantial capitalization.
But, what does a "Panic" do to price pressure? It pushes them down. Even for railroads.
Now, what happened after the passage of the Hepburn Act? Well, the Panic of 1907, the most severe in some estimations of any aside from the Great Depression itself.
What happened to railroad rates after the passage of the Hepburn Act?
They continued a decline that had been occuring for a half century. And they also did what prices do when economic depressions occur. There is absolutely nothing remarkable about what happened. To the contrary -- what happened should have happened based on economic principles, not a regulatory event.
You say the Hepburn Act "froze" rates. If actually true, that would have been a huge plus. If true, railroads should have bowed in homage to the Hepburn Act. Railoads would have loved to have the rates "frozen" for the first time in their history.
Indeed, the only thing that should cause anyone to sit up and take notice is if somehow the Hepburn Act had repealed the general rate conditions which had always been one of decline.
What is remarkable is the effort, entirely misleading I think, to attribute prices that were clearly and manifestly the result of general economic conditions to some favorite "evil" regulatory boogeyman. To believe that, however, requires the complete suspension of general economic principles, or to adopt a belief that railroads operate independently of them.
nanaimo73 wrote: Michael-Did Mr Derleth cover the Hepburn Act in much detail in his 1948 book ? Were his views of its effect on the CM&StP similar to yours ?
August Derleth was a Poet and a writer of Gothic Mysteries. Apparently he felt well prepared to write about the Milwaukee Road.
From his notes, Company notes, and the records of his publisher, Creative Age Press, I see that "his views" were primarily those of F. H. Johnson, Milwaukee Director of Public Relations.
In turn, Johnson's views were no doubt strongly influenced by his background at the Burlington, from whence he came, and by Charlie Buford, a Milwaukee VP who at the time was President of the American Association of Railroads.
Without going back to read Derleth, I can bet we don't agree.
Is this book informative ?
"A History of the ICC, From Panacea to Palliative," Ari and Olive Hoogenboom, W.W. Norton & Company, 1976
MichaelSol wrote: tiskilwa wrote: MichaelSol wrote: greyhounds wrote: Well, how many miles are in receivership now? Getting rid of the suffocating, restrictive, counter productive, economic regulation seems to have gotten rid of the problem. Except for airlines. Apparently deregulation is not a panacea ... oh gosh, Ford's in trouble too ... to this idea that regulation explains every failure, and deregulation explains every success: baloney. It's more complicated in both directions.Well he confined his comments to railroads ("how many miles are in receivership now"). And he does have a point, which is the health of the railroads today. A point made in a vacuum. And that's the only way that point can be made.Look around. Is nearly all American business healthier than in the 1970s? Do you really, really think that when businesses failed in all directions -- and it included railroads -- and that when businesses enjoyed record success in all directions -- and it also included railroads -- that regulation/deregulation is a better explanation than documented general economic conditions?
Yes, very much so, and I think that is Greyhounds' point.
When the economy has natural crests and nadirs, the ability of unchackeled management to make decisions in reaction to the natural ebb and flow of the economy--which by no means was limited to the rise of economic activity surrounding the Korean War or the decline of economic activity during the 70s--is essential for an industry to both survive and prosper. This is especially true when that industry is competing with another industry that does have such freedoms and is being indirectly subsidized out of the general fund.
Gabe
P.S. How many lines went under in the most recent recession?
gabe wrote: MichaelSol wrote: tiskilwa wrote: MichaelSol wrote: greyhounds wrote: Well, how many miles are in receivership now? Getting rid of the suffocating, restrictive, counter productive, economic regulation seems to have gotten rid of the problem. Except for airlines. Apparently deregulation is not a panacea ... oh gosh, Ford's in trouble too ... to this idea that regulation explains every failure, and deregulation explains every success: baloney. It's more complicated in both directions.Well he confined his comments to railroads ("how many miles are in receivership now"). And he does have a point, which is the health of the railroads today. A point made in a vacuum. And that's the only way that point can be made.Look around. Is nearly all American business healthier than in the 1970s? Do you really, really think that when businesses failed in all directions -- and it included railroads -- and that when businesses enjoyed record success in all directions -- and it also included railroads -- that regulation/deregulation is a better explanation than documented general economic conditions? Yes, very much so, and I think that is Greyhounds' point.When the economy has natural crests and nadirs, the ability of unchackeled management to make decisions in reaction to the natural ebb and flow of the economy--which by no means was limited to the rise of economic activity surrounding the Korean War or the decline of economic activity during the 70s--is essential for an industry to both survive and prosper. This is especially true when that industry is competing with another industry that does have such freedoms and is being indirectly subsidized out of the general fund.GabeP.S. How many lines went under in the most recent recession?
Well, how many other Fortune 500s went under?
Interesting how this is viewed -- through a prism of preordained conclusions.
Railroads respond as other industries do to general economic conditions -- and regulation is blamed in one instance, and deregulation cheered in the other -- even though the results track almost identically the performance of capital-intensive deregulated industries under both circumstances.
To suggest that the reason that regulated railroads suffered the same fate as other capital intensive but deregulated industries under identical economic conditions was because railroads were regulated is simply a non-sequitur. It does not, cannot, follow from the premise.
This to me represents a "Belief System," not a genuine analysis of either regulation or deregulation.
nanaimo73 wrote: Is this book informative ?"A History of the ICC, From Panacea to Palliative," Ari and Olive Hoogenboom, W.W. Norton & Company, 1976
Yes.
Better yet, but hard to find, is the ICC's own 2-volume history of itself, as it delineates all the key dates of decisions, authorities, etc.
I can think of at least three Fortune 500 Companies--not counting asbestos-related companies and airlines--that filed for bankruptcy during this time, and I am a long way from being knowledgeable about such things. I can think of several more that were on the ropes and taking serious hits.
By the way are you suggesting that the less regulated trucking industry suffered during the last recession!?!
But, most importantly, you have yet to answer the initial question of this thread. Why did the rail industry collapse in the 70s when it did not during other recessions, panics, or economic slow downs? Yes, lines failed during such times in the past, but the sky was not falling in the past like it was during the 70s?
MichaelSol wrote: Kevin C. Smith wrote: My understanding of the Hepburn Act is the "tip of the iceberg". There were enough other things that went wrong, too, no doubt. The Hepburn Act slowed (pratically froze) rates in the middle of a time of huge capital investments. ....Vastly oversimplified, I know. Not just oversimplified. This is dead wrong.Where do you read that railroad rates were rising during that era? The answer is fundamental to your entire proposition.
You're right. I was thinking along the lines of the difficulties that were encountered in the 1910 (date?) rate hearings. Good point-even though they couldn't increase rate the way that was asked for just removing the volatility and general downward pressure on rates (in real terms) must have been helpful. Thanks for clarifying.
gabe wrote:By the way are you suggesting that the less regulated trucking industry suffered during the last recession!?!
I didn't say anything about trucking. Make your own conclusions, but please don't put words in my mouth.
But, most importantly, you have yet to answer the initial question of this thread. Why did the rail industry collapse in the 70s when it did not during other recessions, panics, or economic slow downs?
Well, you have stated your own premise -- that similar "collapses" have never occured.
When you posit a controlled condition that presupposes your desired conclusion, I guess that conclusion is inevitable and you are unlikely to recognize the alternative that more miles of railroad were in receivership in 1895 than in 1975. More miles of railroad were in receivership in 1935 than in 1975. Oh wait, that's not an alternative -- that's actually true! But, since you have already determined that similar collapses have never happened, relevant history is simply irrelevant to what you wish to conclude.
Your ahistorical approach also begs the question -- why did the auto industry collapse in the 1970s when it did not during other recessions, panics, or economic slowdowns? Why did key players in aircraft manufacturing collapse in the 1970s when they did not during other recessions, panics, or economic slowdowns? What happened to the steel industry that literally muscled its way through earlier recessions?
I haven't answered your question? Please read the earlier comment: "High capital industries got clobbered -- legacy physical plants? Change in business climate? Inflation? Unions? Wage and price controls? Soaring taxes? "Japan, Inc."? Skyrocketing fuel costs? Yes, yes, yes, yes, yes, yes, yes, and yes."
But, you propose that regulation was, instead, the culprit.
I think that represents an incurable optimism about the impact of general economic conditions.
I propose that the economy was the problem. Regulation may or may not have been a burden -- but your question was not the general proposition but rather, what happened to railroads in the 1970s.
Admittedly, you imposed a premise on your question -- a pre-arranged and I think erroneous set of facts -- proposing that such a collapse never happened before. Dramatic, but the assumption is insupportable. However, if that particular assumption is necessary to support some observation or conclusion about regulation and deregulation, I can only assume you will make the conclusion your assumptions have made inevitable.
Rates, if you wish to be confused on the matter, were at historic highs by 1979; substantially higher we are enthusiastically reminded, than post-Staggers.
Railroad revenue, if you wish a context, was the greatest in industry history in 1979, substantially higher, we are not so loudly told, than post-Staggers.
MichaelSol wrote: A point made in a vacuum. And that's the only way that point can be made.Look around. Is nearly all American business healthier than in the 1970s? Do you really, really think that when businesses failed in all directions -- and it included railroads -- and that when businesses enjoyed record success in all directions -- and it also included railroads -- that regulation/deregulation is a better explanation than documented general economic conditions?
You seem to be off topic here. The subject is not the 70's. (read the thread title) It's the decade preceeding that lead to the financial collapse of much of the US railroad network.
When Ford, GM, etc. were doing just fine in the 60's, a large part of the railroad industry was being strangled by economic regulation.
The absense of economic regulation does not gurantee success, but its presence sure prevented the railroads from adapting to rapidly changing market condiditons. Since they were not allowed to adapt, they died.
greyhounds wrote:You seem to be off topic here. The subject is not the 70's. (read the thread title) It's the decade preceeding that lead to the financial collapse of much of the US railroad network.
Ouch. Kind of a backwards point there, greyhounds. Gabe makes it very clear in his initial post that he is saying that the 60's were a time that the railroads "made it", while they failed in the 70's. While the groundwork for failure may have been set up in the 60's (or not), it was the 70's that the failures occurred.
greyhounds wrote:The absense of economic regulation does not gurantee success, but its presence sure prevented the railroads from adapting to rapidly changing market condiditons. Since they were not allowed to adapt, they died.
I will agree that the lack of ability to adapt (regardless of regulatory restrictions) was a large contributor to the industry meltdown. The same would also apply to many of the other mega-corporations that failed. Large corporations are just not able to adapt as quickly as the smaller ones are. And sometimes it just happens to be entire industries (regardless of size of individual companies) that get caught up in the inability to adapt.
Datafever wrote: greyhounds wrote: You seem to be off topic here. The subject is not the 70's. (read the thread title) It's the decade preceeding that lead to the financial collapse of much of the US railroad network.Ouch. Kind of a backwards point there, greyhounds. Gabe makes it very clear in his initial post that he is saying that the 60's were a time that the railroads "made it", while they failed in the 70's. While the groundwork for failure may have been set up in the 60's (or not), it was the 70's that the failures occurred.
greyhounds wrote: You seem to be off topic here. The subject is not the 70's. (read the thread title) It's the decade preceeding that lead to the financial collapse of much of the US railroad network.
Nope, Penn Central (aka, "The Big One") went under in the 60's and its predicessors had been going downhill for a long time before that. As others have said, it took a long time to destroy the New York Central and Pennsylvania. They were financially sick in economically good times. Edit: Missed it by six months - PC filed bankruptcy in June 1970.
Most industries and companies go through lean times - but then they get good times. The regulators never let the railroads prosper.
And the title of the thread is "1960 to 1970".
greyhounds wrote: MichaelSol wrote: A point made in a vacuum. And that's the only way that point can be made.Look around. Is nearly all American business healthier than in the 1970s? Do you really, really think that when businesses failed in all directions -- and it included railroads -- and that when businesses enjoyed record success in all directions -- and it also included railroads -- that regulation/deregulation is a better explanation than documented general economic conditions? You seem to be off topic here. The subject is not the 70's. (read the thread title) It's the decade preceeding that lead to the financial collapse of much of the US railroad network.
Had the 70s not occured, and instead prosperity had ensued, most likely the dire results for railroading would not have occured. That is my contribution -- the premise is insupportable that anything that happened during the 1960s to railroading led to unique and independent results during the 1970s that were different than the economy as a whole -- because it wasn't.
The problem with the "regulation" argument is that it absolves the industry of responsibility for its own mistakes. Something GM, Ford, Chrysler, Lockheed, IH and others did not have the luxury of doing when they suffered the identical results financially during the 1970s.
Identical results -- completely different premises. Doesn't fly. The "reality" is that the railroads' "collapse" in the 1970s was because the railroads collapsed in the 1970s.
The point of the "70s" shows, clearly, that both regulated and deregulated industries respond to economic conditions, and that regulation had little to do with the "collapse" because the identical circumstances enveloped non-regulated industries which were free to innovate, invest, buy trucking companies, and do whatever they **** well pleased. And they collapsed just the same as railroads. Therefore, regulation was not the cause of collapse. QED.
Railroads made some mistakes. Big ones. Regulation has always been the foil. Why not? It's the standard refuge of the irresponsible to blame something else.
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