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.
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, 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.
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, 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.
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.
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
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: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: 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.
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.
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.
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.
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.
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.
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.
bobwilcox wrote: Michael -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?
Michael -
To quote gabe
Well the question, as I saw it phrased, was what went wrong during the 60s that caused the collapse during the 1970s?
Well, what went wrong with Big Steel? What went wrong with aircraft? What went wrong with big equipment manufacturers? What went wrong with Lockheed? With GM? With Chrysler?
If ignoring the elephant in the living room justifies Gabe's accusations of "pedantic" I suppose the Clinton administration offered the appropriate response for those who think it was the Hepburn Act of 1906: "it's the economy ...". He can have his insult contest. I don't need it. The facts have to speak for themselves.
futuremodal wrote: As I pointed out, the highways and airlines did the railroads a favor by taking up most of the passenger carrying duties. Even in the heyday of passenger rail, the concept did not make money for the most part, or only marginally so. The loss of dedicated passenger rail was a godsend to railroads, allowing them to focus on the more lucrative freight markets.Agreed. Once passengers went by road and air, there was no reason for the railroads to have to maintain the passenger fleets. Perhaps some entreprenuers somewhere saw a market potential for hauling passengers, but since the rail system was of the closed integrated type, those opportunities to serve the niche markets were lost as well.The loss of the mail contracts was a direct result of faster air service. It is possible that higher rail speeds might have allowed the railroads to maintain some of the mail contracts, but not likely. However, it is interesting that when the US Post Office was ditching the railroads, companies like UPS were just starting out utilizing railroads from some of their package delivery. The private sector saw the opportunity of moving parcels by rail while the government sector didn't. Ironic.
As I pointed out, the highways and airlines did the railroads a favor by taking up most of the passenger carrying duties. Even in the heyday of passenger rail, the concept did not make money for the most part, or only marginally so. The loss of dedicated passenger rail was a godsend to railroads, allowing them to focus on the more lucrative freight markets.
Agreed. Once passengers went by road and air, there was no reason for the railroads to have to maintain the passenger fleets. Perhaps some entreprenuers somewhere saw a market potential for hauling passengers, but since the rail system was of the closed integrated type, those opportunities to serve the niche markets were lost as well.
The loss of the mail contracts was a direct result of faster air service. It is possible that higher rail speeds might have allowed the railroads to maintain some of the mail contracts, but not likely. However, it is interesting that when the US Post Office was ditching the railroads, companies like UPS were just starting out utilizing railroads from some of their package delivery. The private sector saw the opportunity of moving parcels by rail while the government sector didn't. Ironic.
Actually, passenger service was one of the big things that changed in the 60's.
Going in to that decade the industry's loss on passenger service was $485 million/year calculated on a fully allocated basis. That's a stagering number of 1960 dollars.But because it was a "fully allocated" number assigning fixed costs to specific business, the number was totally meaningless. Nobody paid any attention to it. Railroad executives and regulators alike both dealt with the direct cost of passenger trains when making decisiions. "In making decisions, railroad executives uterly ignored fully allocated costs." (Fred Frailey, "Twilight of the Great Trains", p 9. )
Instead, they based their decisions on direct costs, what could be saved by not running the passenger service. Overall, things were at about break even. Of course, some railroads had a passenger financial disaster on their hands, while others actually made a buck.
An internal study at the CB&Q produced a result that showed their intercity trains put $4.5 on the bottom line in 1964.
For the railroad industry as a whole, intercity passengers were just no big deal in the early 60's. Didn't make a lot, didn't loose a lot.
Then the Post Office diverted the mail from the passenger trains. First Class Mail pretty much went to air or truck movement. Parcel Post followed UPS and went into trailers. The USPS used high priority intermodal trains just like UPS. (There wasn't really a divergence in practice as Dave said. UPS just did it better.) "And when the mail was taken away in late 1967 and early 1968, the economics of passenger trains collapsed like a castle made of postcards." (Ibid. p 190)
Any other business could simply discontinue operations that drained their resources. But NO!. We had the ICC which could, and did, force the railroads to pour money down the passenger ratholes.
So that's one big thing that changed in the 60's.
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.’ ”
Dave:I will respond to your comments to my posting...again, from a noneconomist and very casual railroad historian view.
My comment about being overbuilt which you agreed and disagreed on is based on the root of that 70's problem, the eastern roads and the granger roads. As I look at my Desk Map Systems "Railroads of the Continental United States", which I have referenced in previous threads, it is so obvious that east of the Colorado-Kansas line there was considerably more lines built than east of that line. And oh so many more abandoned. There just simply was too much track at that time for the traffic carried. Oh, one can make the piont that TODAY some of those rationalized lines could be utilized, but that is simply after the fact. During the 70's and earlier those lines were underutilized, for whatever reason.
I believe we have differing opinions regarding the "efficiencies" of trucks v rails. Sure, the cost of transporting via rail is considerably lower, but the efficiencies of trucking was (is) the flexibility it offered. LTL trucking ate into REA business, it was much more efficient and quicker. Truckload offered the ability to ship from door to door via a single carrier. Often railroad boxcar freight had to move thru several carriers...plus one had to fill a boxcar to get the rate. Trucking offered rate structures which rewarded the movement of partial truckloads or "header rates". Interchange between railroads was painfully slow, interlining between LTL carriers was much more efficient. LTL terminals "cross docked" freight in hours, rail terminals took much more time.
Passenger service ended in 1971 but the dedication of assets to that service in the 50's and 60's was a waste of money. How many depots were kept open in small towns to handle a handful of daily passengers? How many passenger cars were kept and maintained? How many ticket agents, porters, etc?
I believe that the railroads either had too many assets or those asset dollars were not deployed efficiently. Thus, when I comment about the inability to shed fixed assets such as the aforementioned passenger assets, low revenue branchlines, plus the equipment needed for the operation of those services, I am suggesting there was a very large percentage of assets which produced a very small amount of revenue. Those assets could not be disposed of during the 60's/70's and not until the wholesale abandonments began in the 80's were those finally jetisoned. One of the key measurements of a company is the return on capital. Railroad's returns have always been low, assets were very large and the margins very low.
So, as the inflationary pressures were mounting during the era and labor costs were rapidly escalating (read any good historical book on the era) and the ICC was holding back rate increases, the assets were horribly deployed. Could liquidation of certain assets helped? Dont know. I do know that Mr. Moyers of Illinois Central converted the double main to single main CTC by selling off the 136 pound rail to finance the CTC installation. Could that have happened 20 years earlier? No, lines could not be abandoned easily so the liquidation value could not been used to rebuild the mainlines that were sinking in the mud, or the communication/computer systems which were so woefully out of date.
What were the strong railroads of the 60's? Most people agree that there were a few:
1. MoPac may have been the strongest, yet it was very regional.
2. Southern (ditto).
3. Coal carriers NW and C&O
4. Transcon carriers such as UP and Santa Fe which were capable of "stretching out" and had a much longer haul.
The problem of the industry began in the east and made it's way west to the Missouri River and beyond. No one was isolated, they were all completely in bed with each other. UP depended on Rock Island and Penn Central to handle shipments. One stumbles and the system starts to fall apart.
Finally...I am not sure if the HAL's was the main factor in the deterioriation of the ROW's or simply along for the ride. Was it HAL's or the inability to maintain the track due to the deployment of assets in uncompensated endeavors such as branch lines with five member crews and 4 car trains?
It would be interesting to see what the assets were for Conrail at startup date and then 10 years later when Mr. Crane had it rolling. I dont have those numbers.
ed
bobwilcox wrote: MichaelSol wrote: 1435mm wrote: Your premise is truly 66 years out of date. It really should be, "What happened to railroads after 1906?" ....The 1906 date is very sharply scribed in railroad history. After that date railroad expansion and heavy reconstruction nosedived. (This is old hat, my friend. A.C. Kalmbach and D.P. Morgan co-authored the article “The Golden Age of Railroad Construction”: in the February 1949 issue of Trains that described and analyzed this watershed quite sufficiently. Well, at least I thought they had!) A review of relevant peer railroads, NP, MILW, GN, CBQ and CNW shows that by 1925, the average investment in property was 72% greater than that of 1906 as the result of heavy rebuilding programs and, in the case of MILW, extension. The North Western for instance, increased its physical plant investment 1906 to 1923 from $276 million to $489 million, an increase of 77%.This enormous increase in investment occured notwithstanding the 1907 Depression -- considered one of the worst in American history -- and the collapse of the European Bond Market, the historical source of American railroad construction capital, during the leadup to WWI -- a bond market that did not recover. And the 1914 opening of the Panama Canal. Too, consider that the largest percentage historically of railway mileage in receivership was during the period 1893-1903 as a result of the 1893 Depression which took out most of the transcontinentals as well as many more established companies. Miraculously, this occured without the heavy hand of ICC intervention through the Hepburn Act.By the standards of actual collapse and bankruptcy, the rail industry was in worse shape 1893-1900 than 1970-1977 -- that is, during some "Golden Age." Michael -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?
MichaelSol wrote: 1435mm wrote: Your premise is truly 66 years out of date. It really should be, "What happened to railroads after 1906?" ....The 1906 date is very sharply scribed in railroad history. After that date railroad expansion and heavy reconstruction nosedived. (This is old hat, my friend. A.C. Kalmbach and D.P. Morgan co-authored the article “The Golden Age of Railroad Construction”: in the February 1949 issue of Trains that described and analyzed this watershed quite sufficiently. Well, at least I thought they had!) A review of relevant peer railroads, NP, MILW, GN, CBQ and CNW shows that by 1925, the average investment in property was 72% greater than that of 1906 as the result of heavy rebuilding programs and, in the case of MILW, extension. The North Western for instance, increased its physical plant investment 1906 to 1923 from $276 million to $489 million, an increase of 77%.This enormous increase in investment occured notwithstanding the 1907 Depression -- considered one of the worst in American history -- and the collapse of the European Bond Market, the historical source of American railroad construction capital, during the leadup to WWI -- a bond market that did not recover. And the 1914 opening of the Panama Canal. Too, consider that the largest percentage historically of railway mileage in receivership was during the period 1893-1903 as a result of the 1893 Depression which took out most of the transcontinentals as well as many more established companies. Miraculously, this occured without the heavy hand of ICC intervention through the Hepburn Act.By the standards of actual collapse and bankruptcy, the rail industry was in worse shape 1893-1900 than 1970-1977 -- that is, during some "Golden Age."
1435mm wrote: Your premise is truly 66 years out of date. It really should be, "What happened to railroads after 1906?" ....The 1906 date is very sharply scribed in railroad history. After that date railroad expansion and heavy reconstruction nosedived. (This is old hat, my friend. A.C. Kalmbach and D.P. Morgan co-authored the article “The Golden Age of Railroad Construction”: in the February 1949 issue of Trains that described and analyzed this watershed quite sufficiently. Well, at least I thought they had!)
Your premise is truly 66 years out of date. It really should be, "What happened to railroads after 1906?" ....The 1906 date is very sharply scribed in railroad history. After that date railroad expansion and heavy reconstruction nosedived. (This is old hat, my friend. A.C. Kalmbach and D.P. Morgan co-authored the article “The Golden Age of Railroad Construction”: in the February 1949 issue of Trains that described and analyzed this watershed quite sufficiently. Well, at least I thought they had!)
A review of relevant peer railroads, NP, MILW, GN, CBQ and CNW shows that by 1925, the average investment in property was 72% greater than that of 1906 as the result of heavy rebuilding programs and, in the case of MILW, extension. The North Western for instance, increased its physical plant investment 1906 to 1923 from $276 million to $489 million, an increase of 77%.
This enormous increase in investment occured notwithstanding the 1907 Depression -- considered one of the worst in American history -- and the collapse of the European Bond Market, the historical source of American railroad construction capital, during the leadup to WWI -- a bond market that did not recover. And the 1914 opening of the Panama Canal.
Too, consider that the largest percentage historically of railway mileage in receivership was during the period 1893-1903 as a result of the 1893 Depression which took out most of the transcontinentals as well as many more established companies. Miraculously, this occured without the heavy hand of ICC intervention through the Hepburn Act.
By the standards of actual collapse and bankruptcy, the rail industry was in worse shape 1893-1900 than 1970-1977 -- that is, during some "Golden Age."
I'll take an educated guess: 1960 - 1970 corresponded with heavier axle loads = more track damage.
nanaimo73 wrote: futuremodal wrote: Fuel efficiency of OTR trucks - 60 ton/miles per gallon.Fuel efficiency of carload rail - 200 ton/miles per gallon*Fuel efficiency of unit trains - up to 800 ton/miles per gallonIt is that carload vs OTR truckload where the efficiency arguement is pronounced. It is true that OTR trucks are more efficient in the short haul than carload due to dock to dock flexibility. It is also true that OTR trucks are more efficient than carload in the less than boxload catagory, regardless of length of haul. Beyond that, rails beat highways hands down due to the efficiencies of bulk movements, aka aggregation. And also note that normally OTR LTL trucks can and do move much more efficiently by rail where the service is provided.And unit train efficiency beats OTR truckload hands down, even in the shorthaul lanes. Dave-What about interchange and differences in mileage ?If you were shipping lentils from Moscow to Pocatello, a truck could go straight south down to Boise, and the east on I84/I86. By train the PCC would have to go west to the UP interchange, then UP would classify the cars at Hinkle, before they headed east. Even with open access, could rail compete ?
futuremodal wrote: Fuel efficiency of OTR trucks - 60 ton/miles per gallon.Fuel efficiency of carload rail - 200 ton/miles per gallon*Fuel efficiency of unit trains - up to 800 ton/miles per gallonIt is that carload vs OTR truckload where the efficiency arguement is pronounced. It is true that OTR trucks are more efficient in the short haul than carload due to dock to dock flexibility. It is also true that OTR trucks are more efficient than carload in the less than boxload catagory, regardless of length of haul. Beyond that, rails beat highways hands down due to the efficiencies of bulk movements, aka aggregation. And also note that normally OTR LTL trucks can and do move much more efficiently by rail where the service is provided.And unit train efficiency beats OTR truckload hands down, even in the shorthaul lanes.
Fuel efficiency of OTR trucks - 60 ton/miles per gallon.
Fuel efficiency of carload rail - 200 ton/miles per gallon*
Fuel efficiency of unit trains - up to 800 ton/miles per gallon
It is that carload vs OTR truckload where the efficiency arguement is pronounced. It is true that OTR trucks are more efficient in the short haul than carload due to dock to dock flexibility. It is also true that OTR trucks are more efficient than carload in the less than boxload catagory, regardless of length of haul. Beyond that, rails beat highways hands down due to the efficiencies of bulk movements, aka aggregation. And also note that normally OTR LTL trucks can and do move much more efficiently by rail where the service is provided.
And unit train efficiency beats OTR truckload hands down, even in the shorthaul lanes.
Dave-
What about interchange and differences in mileage ?
If you were shipping lentils from Moscow to Pocatello, a truck could go straight south down to Boise, and the east on I84/I86. By train the PCC would have to go west to the UP interchange, then UP would classify the cars at Hinkle, before they headed east. Even with open access, could rail compete ?
You're not going to ship lentils to Pocatello from anywhere because no one there would know what a lentil is, but for the sake of discussion we'll let it pass.
A cargo load of lentils from Moscow to Pocatello by road will go east to Missoula (either via US 12 or north on US95 then east on I-90), continue east on I-90 to Butte, then south on I-15. Most truckers bound for SE Idaho from North Central Idaho tend to avoid US 95 through Riggins at all costs.
A cargo load of lentils from Moscow to Pocatello by rail will go west via the PCC to Hooper Junction and the UP Washy line, then via UP to Hinkle, where the car is reclassified, then on down to Pokey via the OSL. There are two lentil processors in Moscow, one on ex-UP and the other on ex-BNSF. If the latter wanted that move, they'd truck the load a few blocks to the nearest reload onto UP bound hoppers. BNSF would not provide a rate from Moscow to Silver Bow for interchange with UP.
Whether the load would go by truck or rail depends on the willingness of the railroads to provide the service. If they are of the affirmative, it'd go by rail.
Vastly oversimplified, I know.
MichaelSol wrote: Objectively, the "70's" happened to the railroads, just like it happened to everybody else. 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.Given that list, what would you honestly expect?GM and Ford suffered huge losses. LTV Steel. International Harvester. The Anaconda Company. Chrysler and Lockheed had to be "bailed out." The list of failures and near failures is lengthy for that decade. Mysteriously, none of them blamed the Hepburn Act of 1906.Ironically, the industry that survived those particular circumstances the most intact was the electric power industry -- the most highly regulated of them all.
Objectively, the "70's" happened to the railroads, just like it happened to everybody else.
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.
Given that list, what would you honestly expect?
GM and Ford suffered huge losses. LTV Steel. International Harvester. The Anaconda Company. Chrysler and Lockheed had to be "bailed out." The list of failures and near failures is lengthy for that decade.
Ironically, the industry that survived those particular circumstances the most intact was the electric power industry -- the most highly regulated of them all.
I admit, I am over my head here in my knowledge of this subject--hense my reason for asking. I could give some pedantic rambling as to my view of causation, but it just does not compare to the more learned view of others that have already been posted, such as Mssrs. Hadid and Mosser.
And, to my discredit, though a coxcomb, Mr. Sol knows more far about the rail industry than I--although some of his polemic but droll uses of law lead me to believe his knowledge of the rail industry is less than what is reflected in his above-stated bombastic ranting.
But, I mean really, despite my inferior knowledge of the industry, I can spot when someone is hopelessly over his head.
Even assuming Mr. Sol's premise is accurate--that no one mentioned the Hepburn Act during the 1970s--I can name four American "panics," to say nothing of a depression, that would meet or exceed the economic downturn of the 70s. Yet, the rail industry did not experience the collapse it faced during the 70s. Assuming no one blamed the Hepburn Act, the absence of such during the 70s downtrun is more likely attributable to myopia on the part of the industry as it is the absence of causation.
However, as to Mr. Sol's premise that no one was blaming the Hepburn Act, when Staggers was proposed--during the 70s no less--I would be willing to bet any amount of money that there was more than one reference to the Hepburn Act in the Congressional sessions that led to the signing of Staggers. So, as an initial matter, I suspect Mr. Sol's argument is flawed in its nascent stages.
Gabe
MP173 wrote: I am not an economist, nor am I consider myself a railroad historian, but as I have read there were a number of factors which lead to the great meltdown in the 70's:
I am not an economist, nor am I consider myself a railroad historian, but as I have read there were a number of factors which lead to the great meltdown in the 70's:
Okay, I'll bite!
1. Too much ROW due to build ups in earlier eras.
Yes, and no. Too many branchlines in granger country, yes. But to say that there was too much mainline capacity flies in the face of normal economic growth, which on average has consistently risen during the same time that railroads were retrenching. The business was there, but for whatever reason the railroads didn't grow with it. Blame it on the ICC, blame it on the integrated model, blame it on the Panama Canal, whatever.
2. Movement of freight from the rail systems to much more efficient truck transportation.
3. Loss of revenue in passenger service.
4. Inability to rapidly discontinue the passenger service. The end of the mail contracts was the final bullet.
5. Full crews which gained significant wage increases during the 60's/70's which were not recovered in the rate making process.
Agreed.
6. Inability to reduce fixed costs, which coupled with a rising variable cost factor and flat revenue led to squeezed margins.
?? Can you clarify?
7. Inflationary era of the 70's.8. Migration of manufacturing from the Northeast to other regions. This led to a rapidly reduced Northeastern rail system (NYC and PRR plus many others). Once the dominos began falling, others fell.
7. Inflationary era of the 70's.
8. Migration of manufacturing from the Northeast to other regions. This led to a rapidly reduced Northeastern rail system (NYC and PRR plus many others). Once the dominos began falling, others fell.
There is a correlation between your #5 and your #8. The unions miscalculated the ability of capital to migrate to lower labor cost areas in both instances.
9. Paradoxically, even tho railroads could not easily abandon assets (light density lines), they could not maintain the heavily used lines, thus leading to slow orders and reduced service. It was an ugly time for railroading. I became "aware" of railroading in 1972 with the purchase of the May issue of Trains Magazine. I watched the industry reach rock bottom, never witnessing it at full or even partial strength until the revolution began in the 80's.
9. Paradoxically, even tho railroads could not easily abandon assets (light density lines), they could not maintain the heavily used lines, thus leading to slow orders and reduced service.
It was an ugly time for railroading. I became "aware" of railroading in 1972 with the purchase of the May issue of Trains Magazine. I watched the industry reach rock bottom, never witnessing it at full or even partial strength until the revolution began in the 80's.
Remember that this was also the advent of heavier axle loads, you know, to make the railroads *more efficient*. It is interesting how the introduction of the HAL's corresponded with the increased degradation of the tracks.
gabe wrote:What happened at 12:00 on December 31, 1969 that caused such a decline in railroading? (realize that this statement is in jest, but I am interested in understanding why railroads could survive in the 1960s, but not the 1970s)Gabe
What happened at 12:00 on December 31, 1969 that caused such a decline in railroading? (realize that this statement is in jest, but I am interested in understanding why railroads could survive in the 1960s, but not the 1970s)
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