gabe wrote: MP173 wrote: Dave:Regarding your discussion of infrastructure speed limits, for the most part those speed limitation have less effect on the overall transit time than the terminal times involved in the operations.edThank you. For a minute, I was fearful to point out the 2000 lbs, in this case pink, elephant in the room that I thought I was seeing. I really do not understand the relationship between an 80 mph speed limit and the collapse of the rail industry that I seem to observe in the 70s. Whether a steamship is hauling intermodal containers for a three week voyage that then sits in a dock for a few days, whether it is grain that might take as much as a month to transport from a farmer's silo through grain bins and what not, or merchandise freight that dwells in a yard three days regardless of transit, I never saw how the 7 hour-benefit of an increased speed limit might rescue the industry.Added speed might help capacity. But, the issue of the 70s was getting rid of excess capacity, not making room for more.Gabe
MP173 wrote: Dave:Regarding your discussion of infrastructure speed limits, for the most part those speed limitation have less effect on the overall transit time than the terminal times involved in the operations.ed
Dave:
Regarding your discussion of infrastructure speed limits, for the most part those speed limitation have less effect on the overall transit time than the terminal times involved in the operations.
ed
Thank you. For a minute, I was fearful to point out the 2000 lbs, in this case pink, elephant in the room that I thought I was seeing. I really do not understand the relationship between an 80 mph speed limit and the collapse of the rail industry that I seem to observe in the 70s.
Whether a steamship is hauling intermodal containers for a three week voyage that then sits in a dock for a few days, whether it is grain that might take as much as a month to transport from a farmer's silo through grain bins and what not, or merchandise freight that dwells in a yard three days regardless of transit, I never saw how the 7 hour-benefit of an increased speed limit might rescue the industry.
Added speed might help capacity. But, the issue of the 70s was getting rid of excess capacity, not making room for more.
Gabe
Well yes, this was pre 1960, but there was that *other* spector that haunted the rail industry - the loss of market share to OTR truckers. Instead of nipping this unnatural economic weed in the bud, the railroads bungled it by characterizing trucking companies as the "enemy" rather than as a made-for-order customer. Mastermiding an intramodel switch of freight from boxcars to TOFC trailers would have alleviated the railroads from the more mundane aspects of moving freight - consignment, dock loading and unloading, aka containerization before containerization became a buzz word - and would have allowed them to focus on the simplest and most lucrative aspects of transport.
In order for the railroads to keep the majority of trailerload traffic off highways, they'd of had to beat the between terminal transit times of OTR's to conpensate for the intermodal terminal delays.
Didn't the original Zephyr average around 80 mph between Chicago and Denver? The average trucking time was probably more around 50 mph during the same period. Thus, there seems to be more than enough of a rail speed advantage to make up for terminal transloading of trailers and still beat the OTR's dock to dock.
I'm not sure that the railroads have ever had much to gain by trying to keep every single transportation dollar. Some of those dollars come with just too high a price tag.
Let's look at a Chicago to Denver haul. That's about 1000 miles. Dock to dock, a truck that averages 50 mph would take 20 hours. Throw in some sleep and eat time, and maybe it would take 30 hours or so.
How about a TOFC attached to a passenger train? First there is the time from the dock to the RR loading platform and the time to load the trailer onto the flatcar and secure it - probably at least an hour. Then there is the wait for the scheduled train departure - another six hours? Then comes the 12+ hour trip at an average of 80 mph. At Denver, the flatcar has to get switched out and moved to an unloading platform - another couple of hours. And then the trip from there to the receiving dock. Even at optimum, maybe there have been 8 to 10 hours saved.
But at what cost? What would the RR's gain be to keep this traffic?
Datafever wrote: I'm not sure that the railroads have ever had much to gain by trying to keep every single transportation dollar. Some of those dollars come with just too high a price tag.Let's look at a Chicago to Denver haul. That's about 1000 miles. Dock to dock, a truck that averages 50 mph would take 20 hours. Throw in some sleep and eat time, and maybe it would take 30 hours or so.How about a TOFC attached to a passenger train? First there is the time from the dock to the RR loading platform and the time to load the trailer onto the flatcar and secure it - probably at least an hour. Then there is the wait for the scheduled train departure - another six hours? Then comes the 12+ hour trip at an average of 80 mph. At Denver, the flatcar has to get switched out and moved to an unloading platform - another couple of hours. And then the trip from there to the receiving dock. Even at optimum, maybe there have been 8 to 10 hours saved.
This is an example of what the railroads might have done in terms of wasting time and efficiency, but of course they wouldn't have had to do it in such a convaluted way. First, who says the TOFC had to be attached to the passenger consist? Run it as a second section of the passenger consist, aka a dedicated run. If you have to run both in a single consist, use the TOFC terminals as the point to point reference, and let the passenger portion be switched in and out.
In other words, someone with some brain cells could have figured it out to make it work.
Market share, increased revenues, increased dividends.........
Hello everyone!
In one of his previous post, Gabe mentions the Southern Railway as, in his opinion, one of the premier railroads. This is a company that I have followed through the years also. It always seemed to be one of the more successful companies, yet, one that you didn't hear much of, a "quiet" company. It never stood out like a New York Central or Union Pacific. And if you look at it's route structure, it didn't seem to serve an industrial region, but one that was rather rural. I once read that it was "the biggest railroad that went from nowhere to nowhere".
Any thoughts on this? I hope I'm not intruding onto the thread, but this is a question that has been in the back of my mind for some time and this thread brought it to the forefront when Gabe mentioned his observation.
G Mack
From the August 1972 Trains-
Last year these railroads lost money: Ann Arbor, Boston and Maine, CP Rail (International of Maine), Jersey Central, Fort Worth and Denver, Grand Trunk Western, Lehigh Valley, Long Island, Penn Central, Pennsylvania-Reading Seashore Lines, Reading, and Rock Island. On the other hand, Southern Railway posted record figures for revenue and net income after taxes, split its preferred and common stock 2 for 1, and reported more upward trends in the first quarter of 1972.
futuremodal wrote: Datafever wrote: I'm not sure that the railroads have ever had much to gain by trying to keep every single transportation dollar. Some of those dollars come with just too high a price tag.Let's look at a Chicago to Denver haul. That's about 1000 miles. Dock to dock, a truck that averages 50 mph would take 20 hours. Throw in some sleep and eat time, and maybe it would take 30 hours or so.How about a TOFC attached to a passenger train? First there is the time from the dock to the RR loading platform and the time to load the trailer onto the flatcar and secure it - probably at least an hour. Then there is the wait for the scheduled train departure - another six hours? Then comes the 12+ hour trip at an average of 80 mph. At Denver, the flatcar has to get switched out and moved to an unloading platform - another couple of hours. And then the trip from there to the receiving dock. Even at optimum, maybe there have been 8 to 10 hours saved.This is an example of what the railroads might have done in terms of wasting time and efficiency, but of course they wouldn't have had to do it in such a convaluted way. First, who says the TOFC had to be attached to the passenger consist? Run it as a second section of the passenger consist, aka a dedicated run. If you have to run both in a single consist, use the TOFC terminals as the point to point reference, and let the passenger portion be switched in and out.In other words, someone with some brain cells could have figured it out to make it work.But at what cost? What would the RR's gain be to keep this traffic? Market share, increased revenues, increased dividends.........
As I alluded to in my previous post, ATSF did this with the Super C, although there wasn't any 90 MPH running, I believe that there was a lot of 70+ MPH speed involved. Until they got the mail contracts, the Super C was an operating success and a marketing flop. Not too many customers were willing to pay a premium rate for the extra speed. Any increased revenues were offset by the increased costs and the the operation was discontinued shortly after the mail contracts were cancelled.
Increased market share sounds nice on paper, but a lot of airlines have put a lot of red ink on their balance sheets trying to maintain or increase market share.
futuremodal wrote: As I have pointed out time and again, coal and grain can move at 125 mph along with more time sensitive items...
As I have pointed out time and again, coal and grain can move at 125 mph along with more time sensitive items...
Gee, I wonder how far from a signal I would have to apply the brakes to safely stop an 18,000 ton coal train, much less a mixed manifest train?
Even with cab signals, EP brakes, and full dynamics, the entire signal system would have to be redone to accomodate such speeds, along with huge investments in track structure and perhaps even redesigning the basic freight car.
futuremodal wrote:Market share, increased revenues, increased dividends.........
Let's just say that I have yet to see anything that would convince me that there would be much profit in such an operation.
Without wading through all of everyone else's theories....I'll present my personal observations....
The regulation provided by the ICC prevented the carriers from running their operations as a business...The carriers did not have pricing power as the ICC had to approve any rate changes and the carriers could not eliminate money losing operations (both passenger and freight) without ICC and other regulators approvals, which when granted took several years of continued mondy losing operations from request to approval.
The second strike against the carriers was the relative downturn in basic industry within the US with the eventual virtual demise of the US steel industry....the raw materials and finished products of the steel industry were a floor of steady business that the rail industry counted on and the floor was continually sinking.
Strike three was the building of the Interstate highway system that was conceived by the Eisenhower administration in the middle 50's but hit full construction stride in the 60's. The Interstate system made long haul trucking a vialable alterative to rail for the high value cream of rail traffic, thus skiming the most profitable of rail traffic.
Put all three strike pitches together in the same plate apperance and you have the rail industry striking out.
Never too old to have a happy childhood!
Have fun with your trains
BaltACD wrote: Strike three was the building of the Interstate highway system that was conceived by the Eisenhower administration in the middle 50's but hit full construction stride in the 60's. The Interstate system made long haul trucking a vialable alterative to rail for the high value cream of rail traffic, thus skiming the most profitable of rail traffic.
If you have some data to support this, I would like to see it.
I don't have enough data to make a definitive conclusion, but at least some data. The Sixth (later, Fourth) largest RR in the country was virtually enveloped along its profitable routes by I-90 and I-94. Absolutely, it lost traffic to the Interstates. I testified before the ICC on carloading losses during that era. I recall that I used the word "hemorrhage."
What I hadn't looked at, and didn't know, was that as it did so, its Operating Ratio continually improved.
Now, how about that?
Apparently, it lost expensive short haul traffic in a greater proportion than it lost long haul traffic. There was a lot of expensive short haul stuff to haul around. Good riddance.
For long haul, admittedly, the Company had a Hotshot that beat the long haul trucks on time and price, and so perhaps it did not suffer the losses that other companies did. I can't extend the analysis any further than that observation for that particular Company except to note that my control railroad, the CBQ, suffered a declining OR during the same period, 1956-1969, but I am unaware of whether or not it had something comparable to Milwaukee's #261/262 to go against the long haul truckers.
MP173 wrote:Operating ratio improved?
Well, one of those things that happens when a person actually sits down and examines data in Excel and does a linear regression analysis: discovery. I ran that one past three Business School colleagues -- all PhDs -- including a member of the GN Historical Society. Indeed, I presented these results in a graduate seminar -- seemed like a good example of the seminar series, "The Strategic Value of Mergers" -- "OK, I am seeing that GN, NP and CBQ had deteriorating Operating Ratios during this period, and MILW's was improving.
"This isn't what I've heard."
Warning: you can kill Graduate Students with lectures about Railroad Operating Ratios. I was charged with three negligent homicides.
Double checked the data against Moody's, Transport Statistics of the United States, and company Annual Reports. I can post a Power Point presentation on the lecture -- it was actually on the proposed MILW-CNW merger -- the OR was an accidental discovery when I tried to make an exhibit showing that MILW's position was deteriorating, necessitating the merger.
On that basis, I long ago gave up believing a word coming from "conventional wisdoms".
MichaelSol wrote: Datafever wrote: Mr. Sol,If I can try to recap what you have said:Part of the problem that some railroads had (in the 60's/70's) was a lack of debt - debt that in a period of high inflation is paid back with cheaper dollars. Those railroads that had encumbered themselves with debt in order to rebuild infrastructure found themselves in a cozier position than those railroads that had delayed infrastructure expense and had cash instead.Well, the "cash" mght have gone out the door to dividends. Every railroad in serious trouble 1965-1980 had been engaged in very serious merger efforts during the 1960s. While I would agree that by and large the ICC's efforts to "get it right" backfired into time-consuming, time-wasting, proceedings, I also note that the rail industry itself bore a large burden for time-consuming objections, appeals, and argument, often based purely on obstructive litigation tactics rather than honest participation in the process.But, your point is, I think, accurate.So if the 70's had not been a time of high inflation, one could posit that the results would have been significantly different. In that case, capital investment in infrastructure may have been an undesirable use of monies.I think railroads would have benefitted from infrastructure investment no matter what. High inflation was a boon to discounting debt, but an enormous obstacle to railroads genuinely growing during the 1970s, such as Milwaukee. Recall, railroads themselves were "investing" heavily in merger efforts during the 1960s. Infrastructure had to wait until the merger was resolved.Econometric studies -- Kent Healy -- suggested that mergers would harm the industry, rather than help it. Penn Central proved it. Burlington Northern threaded the eye of a needle with a camel. It was close. Had it not been for the extraordinary planning by Robert Downing and Worthington Smith, the outcome could have been considerably different and almost was.Were there indications that inflation was going to be as bad at it ended up? Could a savvy management team have foreseen that inflation was going to go "out of control" and acted accordingly? The argument about "Guns and Butter" starting with the Great Society and Viet Nam War of Lyndon Johnson in 1965 brought about exactly such predictions from the Chicago School Monetarists. The accuracy of their predictions -- shown conclusively with a vengeance during the 1970s -- fundamentally changed American political and economic thinking. Railroads, however, did not employ "economists" -- not a useful tool in that industry's mindset at that time.But, what does any of that suggest about "regulation" during that time? In 1981, it gained its "freedom." It merged, it gained market share, it created captive shippers, it abandoned useless lines, it consolidated traffic into high utilization corridors. It did everything that deregulation permitted.Union Pacific Railroad earned a 12.2% operating profit in 1965 in an anemic economy operating underutilized track with multiple inefficient interchanges and running a large transcontinental passenger train service.Forty years later (2005), after deregulation and historic productivity achievements, it earned a 7.6% operating profit in a booming economy.
Datafever wrote: Mr. Sol,If I can try to recap what you have said:Part of the problem that some railroads had (in the 60's/70's) was a lack of debt - debt that in a period of high inflation is paid back with cheaper dollars. Those railroads that had encumbered themselves with debt in order to rebuild infrastructure found themselves in a cozier position than those railroads that had delayed infrastructure expense and had cash instead.
Mr. Sol,
If I can try to recap what you have said:
Part of the problem that some railroads had (in the 60's/70's) was a lack of debt - debt that in a period of high inflation is paid back with cheaper dollars. Those railroads that had encumbered themselves with debt in order to rebuild infrastructure found themselves in a cozier position than those railroads that had delayed infrastructure expense and had cash instead.
Well, the "cash" mght have gone out the door to dividends. Every railroad in serious trouble 1965-1980 had been engaged in very serious merger efforts during the 1960s. While I would agree that by and large the ICC's efforts to "get it right" backfired into time-consuming, time-wasting, proceedings, I also note that the rail industry itself bore a large burden for time-consuming objections, appeals, and argument, often based purely on obstructive litigation tactics rather than honest participation in the process.
But, your point is, I think, accurate.
So if the 70's had not been a time of high inflation, one could posit that the results would have been significantly different. In that case, capital investment in infrastructure may have been an undesirable use of monies.
I think railroads would have benefitted from infrastructure investment no matter what. High inflation was a boon to discounting debt, but an enormous obstacle to railroads genuinely growing during the 1970s, such as Milwaukee. Recall, railroads themselves were "investing" heavily in merger efforts during the 1960s. Infrastructure had to wait until the merger was resolved.
Econometric studies -- Kent Healy -- suggested that mergers would harm the industry, rather than help it. Penn Central proved it. Burlington Northern threaded the eye of a needle with a camel. It was close. Had it not been for the extraordinary planning by Robert Downing and Worthington Smith, the outcome could have been considerably different and almost was.
Were there indications that inflation was going to be as bad at it ended up? Could a savvy management team have foreseen that inflation was going to go "out of control" and acted accordingly?
The argument about "Guns and Butter" starting with the Great Society and Viet Nam War of Lyndon Johnson in 1965 brought about exactly such predictions from the Chicago School Monetarists. The accuracy of their predictions -- shown conclusively with a vengeance during the 1970s -- fundamentally changed American political and economic thinking. Railroads, however, did not employ "economists" -- not a useful tool in that industry's mindset at that time.
But, what does any of that suggest about "regulation" during that time?
In 1981, it gained its "freedom." It merged, it gained market share, it created captive shippers, it abandoned useless lines, it consolidated traffic into high utilization corridors. It did everything that deregulation permitted.
Union Pacific Railroad earned a 12.2% operating profit in 1965 in an anemic economy operating underutilized track with multiple inefficient interchanges and running a large transcontinental passenger train service.
Forty years later (2005), after deregulation and historic productivity achievements, it earned a 7.6% operating profit in a booming economy.
Your comparing Dick Davidson to John Kenefick? Give me a break Dick Davidson never met a merger he couldn't screw up. In 1965 UP was using the slogan Dependable Transportation, and they meant it. The City of Everywhere didn't often get in the way of fast freights. I suspect that the UP had the longest or second longest average haul in 1965. Try comparing the PRR in 1965 vs. the NS in 2005!
Progress?GN in 1968 -- 12.38%, operating at about half capacity, running a transcontinental passenger train service.BN in 2005: 12.27%.
Progress?
GN in 1968 -- 12.38%, operating at about half capacity, running a transcontinental passenger train service.
BN in 2005: 12.27%.
Note that BNSF still has 3 Transcontinental Passenger trains to avoid.
I thought you were saying that the GN doing wasn't very good. What were the MILW's numbers over the same time periods.
It is simply stunning what these companies achieved when the artificial burden of regulation was removed and they were finally unshackled to permit their creative management abilities to soar to new heights of corporate profitability.
MichaelSol wrote: MP173 wrote:Operating ratio improved? Well, one of those things that happens when a person actually sits down and examines data in Excel and does a linear regression analysis: discovery. I ran that one past three Business School colleagues -- all PhDs -- including a member of the GN Historical Society. Indeed, I presented these results in a graduate seminar -- seemed like a good example of the seminar series, "The Strategic Value of Mergers" -- "OK, I am seeing that GN, NP and CBQ had deteriorating Operating Ratios during this period, and MILW's was improving."This isn't what I've heard." Warning: you can kill Graduate Students with lectures about Railroad Operating Ratios. I was charged with three negligent homicides.Double checked the data against Moody's, Transport Statistics of the United States, and company Annual Reports. I can post a Power Point presentation on the lecture -- it was actually on the proposed MILW-CNW merger -- the OR was an accidental discovery when I tried to make an exhibit showing that MILW's position was deteriorating, necessitating the merger.On that basis, I long ago gave up believing a word coming from "conventional wisdoms".
I assume that in all your comparisons of then and now you take into consideration the intracies of betterment accounting vs. depreciation accounting.
"We have met the enemy and he is us." Pogo Possum "We have met the anemone... and he is Russ." Bucky Katt "Prediction is very difficult, especially if it's about the future." Niels Bohr, Nobel laureate in physics
MichaelSol wrote: Warning: you can kill Graduate Students with lectures about Railroad Operating Ratios. I was charged with three negligent homicides.
ROFLMAO!!!!
I'd carry a copy of that just for self defense on a college campus.
You ever think of letting people take out contract "hits"? (An Ivy League version of "The Sopranos".)
Dont know if I want to sit thru a Power Point, but it would be interesting to see the operating ratio data. Also, what time frame are you referring to?
BTW, anyone know where one can pickuup old Moody's? I have checked a couple of times at EBAy...nothing. Or, is there a database of railroad financials?
MP173 wrote: Dont know if I want to sit thru a Power Point, but it would be interesting to see the operating ratio data. Also, what time frame are you referring to? BTW, anyone know where one can pickuup old Moody's? I have checked a couple of times at EBAy...nothing. Or, is there a database of railroad financials? ed
A little pricey, but considering the size of these bound volumes:
MOODY'S STEAM RAILROADS/TRANSPORTATION MANUAL - Moody's Investors Service, HD: (ask about other dates)
.1915, 1666p, interior complete but spine plate missing and covers separated, $165.
.1916, 1602p, good, $150.
.1931, 2006p, good, $120.
.1933, 2148p, good, $120.
.1935, 2161p, good, $120.
.1937, 2326p, good, $110.
.1940, 1922p, good, $110.
.1942, 1766p, good, $100.
.1944, 1590p, good, $100.
.1946, 1546p, good, $95.
.1948, 1491p, good, $95.
.1950, 1448p, good, $95.
MOODY'S MANUAL OF INVESTMENTS, TRANSPORTATION: RAILROADS-AIRLINES-SHIPPING,TRACTION,BUS AND TRUCK LINES - HD:
(ask about other dates)
.1951, 1436p, good, $90.
.1955, 1523p, vg(ex lib.), $90.
.1958, 1472p, good, $90.
.1960, 1462p, good, $90.
.1962, 1405p, good, $90.
.1964, 1374p, good, $90.
.1966, 1386p, good, $65.
At http://railpub.com/
pp. 42-43 of the current catalog.
I've purchased historical materials from this source over a number of years, and he's very high quality.
The 1960s were quite the paradox for railroads. On one hand you had technological improvements in the way freight was transported, to advances in bookkeeping through use of computers, to early ways of tracking a railcar's whereabouts (remember the ACI lables?), and of course, the advancements made by EMD and GE in diesel locomotives. And on the other hand the was all the federal regulations, state property tax issues, railroad employee wage hikes, unprofitable passenger train routes, and competition from other modes of transportation, that bled the railroads.
For some railroads, it was the begining of the end, while others held their own in that decade. I don't have access to company records or such, but it seemed to me, that two railroads that actually did well (or at least gave the impression of doing so) were Santa Fe and Southern Pacific. Granted, Santa Fe had one thing that no other western railroad ever had: its own line from Chicago to the Pacific Coast giving it the long haul without having to worry about a second railroad forwarding its freight to Chicago. Perhaps that helped Santa Fe's fortune during the '60s. In the coming decade, I know SP's fortunes took a turn for the worst, but I do not know how Santa Fe fared, other than I think it did all right, when compared to other railroads.
MichaelSol wrote:A little pricey, but considering the size of these bound volumes:At http://railpub.com/pp. 42-43 of the current catalog.
Another source is abebooks.com. They have several of the years that railpub.com was missing (and they are missing several of the years that railpub.com has), and the prices are consistently lower.
G Mack wrote: Hello everyone!In one of his previous post, Gabe mentions the Southern Railway as, in his opinion, one of the premier railroads. This is a company that I have followed through the years also. It always seemed to be one of the more successful companies, yet, one that you didn't hear much of, a "quiet" company. It never stood out like a New York Central or Union Pacific. And if you look at it's route structure, it didn't seem to serve an industrial region, but one that was rather rural. I once read that it was "the biggest railroad that went from nowhere to nowhere". Any thoughts on this? I hope I'm not intruding onto the thread, but this is a question that has been in the back of my mind for some time and this thread brought it to the forefront when Gabe mentioned his observation.G Mack
Southern Rwy had a couple of advantages over the Northeastern railroads, at least in my opinion. Don't claim to be a great expert, but here goes.
1. Management Quality: D. W. Brosnan, IMHO, is one of the most under-appreciated RR presidents this country has produced since 1900. Someone once said "There was no status quo with Brosnan. You either moved up or moved out." He and his management team were great innovators and they ran a very tight ship. Southern was also small enough to be managed more easily than PRR or NYC.
2. Location/Operating Environment: Southern in the 1960's ran basically between Washington, DC, New Orleans and Jacksonville, FL. South of Richmond, their main competitors were ACL (double track along the Atlantic Coast with a line west to Birmingham) and SAL (weak, and single-track thru inferior country, with basically a long branch to Montgomery, AL). ACL was too far east of the Southern to be much competition except for Atlanta traffic, and SAL wasn't a strong competitor. Southern's territory wasn't as overbuilt with railroads as the Northeast, the road system wasn't as good (which hurt the truck competition), and Southern wasn't burdened with a huge amount of shorthaul or passenger traffic.
Comments or corrections are welcomed.
Some points that have yet to be mentioned in this thread
1) Saying that while railroads were regulated in the 1960s and 1970s while other competitive industries (trucking, airlines) were unregulated is simply not true. Since the 1930s every industry in the U.S. has been regulated to a certain extent. All industries have to follow minimum wage/maximum hours laws, for example. All public companies have to follow SEC regulations. Plus, both those "competitive industries" were in fact regulated. While regulation of the trucking industry started later than regulation of the railroads, they were regulated starting in the 1930s (which marked the origins of the interstate trucking industry). In fact, the ICC also had jurisdiction over interstate trucking and busing during that time period (the Surface Transportation Board retains limited jurisdiction over trucking and busing). Thus blaming regulation and the ICC is simply not the full story. Perhaps the rail regulations were more stringent than the airline or trucking regulations, but to pretend that only the railroads were regulated is to ignore history. Don't forget that interstate trucking and the airlines were in fact deregulated at the same time that the railroads were deregulated.
2) In the period from the 1950s to 1970s there was really no such thing as coordinated transportation planning. While today, the federal and state governments have Departments of Transportation, at that period, you'd have a Bureau of Public Roads in charge of roads, the ICC and railroad departments with jurisdiction over railroads, and the Civil Aviation Authority with authority over air. Most of these agencies were under the Department of Commerce which meant that they were often run by economists or lawyers and not transportation planners. In other cases, the "regulatory/planning" agencies were run by representatives of the regulated industry - so the Bureau of Public Roads, for example, was composed of people from the automotive, construction, and oil industries. There was no attempt at reaching a rational transportation policy across the industries to use the stregths of rail, barge, ship, highway, and air.
3) While railroads were no longer directly or indirectly subsidized by the government by the 1950s, highway and air transportation were at least indirectly subsidized by the government. While pay as you go plans funded by tolls or the gas tax were rejected by Congress, the government instead decided to fund the construction of highways through a highway trust fund from the general treasury and a very low gas tax. Additionally, the oil prices in the United States have effectively been subsidized and artificially low. The U.S. government has never charged the oil companies anything close to market rate for drilling rights on federal land - effectively subsidizing the use of oil because that holds down the market price for oil in the United States. The United States also has refused to follow European practice and use the gas tax to reflect the true cost of driving. In economics, gas prices have long been used as the example of a price that is too low in that the cost of driving is less than the social cost of driving and thus results in over consumption. Aviation also was subsidized in the sense that the government paid for air traffic control, airport construction, and other necessary expenditures through the general revenue. Of course, it helps to remember that many of the raillines were constructed using direct government subsidies - at the very least they were given eminent domain power where they could take private land for public use (railroad construction) which lowers land acquisition costs. But those subsidies had stopped. Going back to the Romans, its hard to find any self sufficient transportation system/means that exists without some sort of government subsidy.
4) Don't forget the reason why the airline bankruptcies occurred after deregulation, not before. Because the airline regulations were largely designed to prevent competition by limiting which airlines could fly on what routes. Airlines prior to the 1980s generally had very high fares because they had little competition due to the requirement to get government approval before serving a route. Also, the airlines had to make multiple stops - a flight from Chicago to Washington in that period might make 2-3 intermediate stops - to satisfy the regulations. There were fewer centralized airports - prior to deregulations for example, both Greensboro and Winston-Salem had airports served by commercial airlines. The airlines when exposed to competition after the deregulation saw many legacy carriers (Pan Am, TWA, Eastern, etc.) go bankrupt. Airline fares have decreased, but many smaller cities have less extensive air service than they did under deregulation because the airlines are no longer forced to follow their licensed routes.
5) Road building declined after the 1970s dawned as well - for around that period, the Federal Highway Administration decided to build I-40 through Overton Park in Memphis, TN. The resulted Supreme Court decision (Committee to Save Overton Park v. Volpe) led to having many urban interstates to get blocked because it required the FWHA to actually follow their regulations in siting interstates and enabled community opposition groups to sue in federal court to block construction. Very few new interstates/interstate quality highways have been approved since the 1970s (and not just due to environmental concerns since the EPA was formed in 1970 leading to the requirement of an environmental impact statement for new roads) - by that point, many of the original interstates had already reached capacity (in fact, original design capacity for the interstates was based on woefully inadequate estimates for traffic in 1975). Many of the interstates were obsolete before they were even completed in that they were overcapacity. This actually led to a return towards mass transit rail projects like the Washington Metro system (today badly over capacity itself) and to more comprehensive transportation planning to finally appear.
So this is really about like asking what caused the Civil War. You have a simple answer which is too simplictic and you have a complex answer which if you ask 10 people about it, you'll get 12 different opinions.
jeaton wrote:I assume that in all your comparisons of then and now you take into consideration the intracies of betterment accounting vs. depreciation accounting.
Michael did you?
Answer the question.
GP40-2 wrote: jeaton wrote: I assume that in all your comparisons of then and now you take into consideration the intracies of betterment accounting vs. depreciation accounting.Michael did you? Answer the question.
jeaton wrote: I assume that in all your comparisons of then and now you take into consideration the intracies of betterment accounting vs. depreciation accounting.
Yes, GAAP dictates the result, including the "intracies".
I do expect, in the event I similarly command an answer from you in the future, that you will respond just as appropriately.
Thanks to Chris / CopCarSS for my avatar.
Murphy Siding wrote: What effect did the effect of the drying up of business on branchlines in the 60's have on railroad profits? That seems to be about the time that most railroads were trying (unsuccesfully, mostly) to shed unprofitable branch lines.
Two points:
1. Did traffic "dry up"?
2) Did the 60s really represent a "movement" about branchlines?
You created several presumptions in your comment. Is there a basis for them?
MichaelSol wrote: Murphy Siding wrote: What effect did the effect of the drying up of business on branchlines in the 60's have on railroad profits? That seems to be about the time that most railroads were trying (unsuccesfully, mostly) to shed unprofitable branch lines.Two points:1. Did traffic "dry up"?2) Did the 60s really represent a "movement" about branchlines?You created several presumptions in your comment. Is there a basis for them?
I read that more as a question than comment - and read "drying up" as refering to a general reduction in branchline traffic (which had been going on well before the 60's.
erikem wrote: MichaelSol wrote: Murphy Siding wrote: What effect did the effect of the drying up of business on branchlines in the 60's have on railroad profits? That seems to be about the time that most railroads were trying (unsuccesfully, mostly) to shed unprofitable branch lines.Two points:1. Did traffic "dry up"?2) Did the 60s really represent a "movement" about branchlines?You created several presumptions in your comment. Is there a basis for them?I read that more as a question than comment - and read "drying up" as refering to a general reduction in branchline traffic (which had been going on well before the 60's.
Michael: I think erikem perceived this more the way it was intended-as a question, not a definitive statement by any means.
To be more general: It seems the railroads had been trying to thin out their unprofitable branch lines from about WW II on. The shippers involved, and the ICC seemed to resist this. Did this greatly effect the fortunes of railroads in general,during the period we are discussing in this thread?
Our community is FREE to join. To participate you must either login or register for an account.