Someone correct me if I'm wrong but I don't think either the ICC or the state regulatory commissions had the authority to require the railroads to continue what I'll call first class services on a given train. This gave the railroads an opportunity to hasten the demise of a train by eliminating sleeping cars, lounges and diners causing a precipitous drop in riders and mounting losses that would lead to approval of a discontinuance petetion.
Even if the railroads were required to continue such "amenities" they could easily downgrade their quality to achieve the objective of discouraging passenger ridership. I believe I experienced exactly this situation on the PRR's Manhattan Limited which I took from Chicago to New York early in 1962. The train's consist was a number of head end cars followed by two coaches, a miserable excuse for a diner and a single sleeper.The two coaches were filthy and shortly into the trip the heat went out in one of them. The service, menu variety and food quality in the diner was pitiful and the sleeper was threadbare and had a flat spot on at least one wheel. It was the worst train trip I ever experienced except for years earlier when I had ridden two all-stops locals with straight back, walk-over seats, one on the Frisco and the other on the ACL. I deserted the Manhattan Ltd. in Pittsburgh and continued on to NY on the Broadway.
On the other hand over the next 4-5 years I rode trains of the NYC, Southern, Burlington, KCS, Santa Fe, T&P, MoPac, IC and Wabash and found the equipment and service on all of them to be up to the standards one expected on name trains of earlier times.
Mark
schlimm Exactly, henry6! The evolution of American railroading is a complex history from its beginnings to now, involving various players, including, but not limited to the railroad corporations, customers and governments. And the present cannot be understood if that history is dismissed in absolutist language as irrelevant.
Exactly, henry6! The evolution of American railroading is a complex history from its beginnings to now, involving various players, including, but not limited to the railroad corporations, customers and governments. And the present cannot be understood if that history is dismissed in absolutist language as irrelevant.
Also, by the 20th century, the principle was pretty firmly established that a regulator wasn't bound by what might be in a contract. One place you somethimes see this principle in modern abandonments is when a city or other government entity seeks to enforce a provision in a franchise giving the city the right to require removal of a rail line from its property at the expiration of the franchise term, or for other reasons specified in the franchise. The ICC, STB and courts have all held that this can't be done unless the agency first decides that abandonment is warranted under the statutory standards governing abandonments. In other words, the regulatory authority trumps the contract.
I also read the article attached to one of the other posts saying that states originally sought seek to regulate rates and services through corporate charters and other forms of agreement. Unfortunately, no source is given for this claim. My own experience is that it was pretty unusual for a state to seek to regulate railroad services through the original corporate charter. The original charter was more in the nature of permission for a company to establish a corporation to build and operate a railroad (like "articles of incorporation" are today). There were probably some cases of this, but they would have been the exception rather than the rule. It was much more common for a state to impose substantive standards in other forms of agreements, such as land grants, franchises, financial aid agreements and the like. I suppose some states may have sought to unilaterally amend original charters at a later date to add substantive rate standards, but this is more properly treated as an early attempt at affirmative regulation.
KCSfan Someone correct me if I'm wrong but I don't think either the ICC or the state regulatory commissions had the authority to require the railroads to continue what I'll call first class services on a given train. This gave the railroads an opportunity to hasten the demise of a train by eliminating sleeping cars, lounges and diners causing a precipitous drop in riders and mounting losses that would lead to approval of a discontinuance petetion. Even if the railroads were required to continue such "amenities" they could easily downgrade their quality to achieve the objective of discouraging passenger ridership. I believe I experienced exactly this situation on the PRR's Manhattan Limited which I took from Chicago to New York early in 1962. The train's consist was a number of head end cars followed by two coaches, a miserable excuse for a diner and a single sleeper.The two coaches were filthy and shortly into the trip the heat went out in one of them. The service, menu variety and food quality in the diner was pitiful and the sleeper was threadbare and had a flat spot on at least one wheel. It was the worst train trip I ever experienced except for years earlier when I had ridden two all-stops locals with straight back, walk-over seats, one on the Frisco and the other on the ACL. I deserted the Manhattan Ltd. in Pittsburgh and continued on to NY on the Broadway. On the other hand over the next 4-5 years I rode trains of the NYC, Southern, Burlington, KCS, Santa Fe, T&P, MoPac, IC and Wabash and found the equipment and service on all of them to be up to the standards one expected on name trains of earlier times. Mark
i had a horrific trip on the Broadway Limited soon after Amtrak was established. Ever been on a sleeper that keeps bottoming out on its suspension?
What happened in the 19th Century cause what happened in the 20th Century, you cannot separate the two...I don't care how you slice it.
And, neither the ICC nor any state utility could force a service beyond a train in the timetable stayed in the timetable unless properly petitioned to be removed. Whether it had a dining car or not was not ICC purview however, states via politician's screams might try to do something. And be careful in using the term First Class here. I interpret First Class as the book of rules/timetable designation for a passenger train rather than a Second or Third Class train. The level might be first class or bad, terms from dictionary and not the rule books and timetable authority..
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Sam1 This is what I said: "The railroads were amongst the first corporations to implement sophisticated accounting and finance systems in the U.S. I am reasonably sure that they had the ability to gather, process, and produce meaningful financial statements for each passenger train that they operated. I don't know how much of the information was made public, but they had it." Note that I did not say that they did not make the information public. I said that I did not know!
This is what I said: "The railroads were amongst the first corporations to implement sophisticated accounting and finance systems in the U.S. I am reasonably sure that they had the ability to gather, process, and produce meaningful financial statements for each passenger train that they operated. I don't know how much of the information was made public, but they had it." Note that I did not say that they did not make the information public. I said that I did not know!
Thats actually another incorrect presumption. They did not maintain financial tracking / accounting on a train by train basis in many cases. TRAINS Magazine covered this in one of their long ago past issues. That may have changed as they tried to eliminate trains. The railroad approach was to look at Passenger trains as a movement to fill the gaps between freight trains and help cover costs vs letting the mainline go vacant. They had that approach since they laid the first rail. It's why they developed towns around their water stops and subdivided them.....to generate both freight and passenger traffic.
Sam1 I did not say that they did not make money on passenger trains. I said that I did not know. Moreover, I did not say or imply that they should have used 1990s accounting and SEC reporting standards. That would be absurd. How could they? They were out of the passenger business long before the 1990s. What I did say or meant to say is that the standards then were not as rigorous then as now.
I did not say that they did not make money on passenger trains. I said that I did not know. Moreover, I did not say or imply that they should have used 1990s accounting and SEC reporting standards. That would be absurd. How could they? They were out of the passenger business long before the 1990s. What I did say or meant to say is that the standards then were not as rigorous then as now.
Go reread your first post because you certainly implied it.
Sam1 ou should take the time to read my posts more carefully before make assertions that have no foundation. Also, why don't you show us a sample of the railroads that made money on their overall passenger train operations with some supporting data that can be verified. One or two roads with revenues, net operating profit, net income before taxes, plus any extraordinary items and discontinued operations for the passenger department would work quite nicely.
ou should take the time to read my posts more carefully before make assertions that have no foundation. Also, why don't you show us a sample of the railroads that made money on their overall passenger train operations with some supporting data that can be verified. One or two roads with revenues, net operating profit, net income before taxes, plus any extraordinary items and discontinued operations for the passenger department would work quite nicely.
That might be true if I were the only one in the thread having troubles understanding your arguing points but thats not the case. I suspect it is your proof reading
As for providing evidence........why would I do that? Your the one that is doubting, you do your own research. Why would I waste the time to do it for you? I mentioned I had the argument before. Go do a Google Search on the former Milwaukee Road Annual Reports. They are online somewhere from 1960 to I think 1971.
My guess is that you have no idea what the railroads had for cost accounting systems or how they used the data for management decision making or reporting. You are relying on memory recall from Trains articles that appeared how many years ago? What was the source of the data for the Trains article?
As noted in another post, Fred Frailey made some assertions regarding cost of capital, depreciation, etc. He was wrong.
Your assuming that I implied that the passenger railroads were perpetrating a reporting fraud is over the top. What phrase or words from my initial post stated or implies that the railroads had engaged in fraudulent SEC reporting? And what phrase or words suggested that I believe the railroads have an obligation to restate their prior period financials using current SEC segment reporting standards? That would be absurd, especially given the fact that most of the roads are out of business.
If a person makes an assertion it is his or her responsibility to substantiate it. Not the other way around. If you cannot do so, there is no reason to believe your assertions. I did a search for PRR and NYC Annual Reports for 1957. They are available providing one wants to pay for them. I don't!
KCSfan Someone correct me if I'm wrong but I don't think either the ICC or the state regulatory commissions had the authority to require the railroads to continue what I'll call first class services on a given train. This gave the railroads an opportunity to hasten the demise of a train by eliminating sleeping cars, lounges and diners causing a precipitous drop in riders and mounting losses that would lead to approval of a discontinuance petetion. Even if the railroads were required to continue such "amenities" they could easily downgrade their quality to achieve the objective of discouraging passenger ridership. I believe I experienced exactly this situation on the PRR's Manhattan Limited which I took from Chicago to New York early in 1962. The train's consist was a number of head end cars followed by two coaches, a miserable excuse for a diner and a single sleeper.The two coaches were filthy and shortly into the trip the heat went out in one of them. The service, menu variety and food quality in the diner was pitiful and the sleeper was threadbare and had a flat spot on at least one wheel. It was the worst train trip I ever experienced except for years earlier when I had ridden two all-stops locals with straight back, walk-over seats, one on the Frisco and the other on the ACL. I deserted the Manhattan Ltd. in Pittsburgh and continued on to NY on the Broadway. Mark
henry6 What happened in the 19th Century cause what happened in the 20th Century, you cannot separate the two...I don't care how you slice it. And, neither the ICC nor any state utility could force a service beyond a train in the timetable stayed in the timetable unless properly petitioned to be removed. Whether it had a dining car or not was not ICC purview however, states via politician's screams might try to do something. And be careful in using the term First Class here. I interpret First Class as the book of rules/timetable designation for a passenger train rather than a Second or Third Class train. The level might be first class or bad, terms from dictionary and not the rule books and timetable authority..
But the question I was addressing wasn't how 19th century law (charters, etc) "caused" or "led to" 20th century economic regulation - clearly it did. Rather, the question was whether the 19th century law still governed in some way what railroads could and could not do in the 20th century, particulary as to abandonments and discontinuances. The answer is that the 19th century law in this area is a dead letter. It's been completely displaced by 20th century statutory law.
An analogy might be helpful. The "link and pin" coupler is historically important. It was the device railroads used to couple trains together through most of the 19th century. Experience with this coupler (particularly the danger it posed to train crews) was probably the most important factor which "caused" or "led to" Federal legislation mandating automatic couplers and the development of the knuckle coupler that railroads use today. This history is certainly relevant today. It's really helpful to know the history, particularly if you are trying to make someone (like an FRA inspector) understand what the Safety Appliance Act's provision on automatic couplers (which is still in effect) was actually trying to remedy. But the rules that once governed the design, maintenance and operation of these devices don't in any way govern what railroads can do today. The rules, like the device itself, are a dead letter. They have no current relevance to modern railroading.
With respect to regulation of passenger train "amenities", I wouldn't necessarily assume that there were no states which regulated amenities. I'm not aware of any that did, but I'm not intimately familiar with pre-Amtrak regulatory schemes in all 50 states either. Offhand, I can't think of any legal barriers which would have prevented a state from regulating amenities in the pre-Amtrak era, particularly on wholly intrastate trains. The ICC, on the other hand, didn't directly regulate this subject pre-Amtrak. However, as I mentioned in a prior post, the ICC did get statutory authority post-Amtrak to regulate the quality of intercity passenger service (both on Amtrak and on the few railroads were still prviding their own service at the time). The implementing ICC regulations specifically covered things like dining cars and other amenities.
One important caveat on "amenities". Both the states and the ICC regulated other issues (like "discrimination"). Unlawful "discrimination" could involve service as well as rates, so it could conceivably involve amenities. I seem to recall that the ICC held that "Jim Crow" service violated the Interstate Commerce Act prohibitions on "discrimination", which could have been based, in part, on the difference in "amenities".
With respect to the ongoing discussion between Sam1 and CMStPnP on whether railroads made money on their passenger services and what they said about the profitability of these services in their financial statements, I took the advice of one of them (I forget which) and looked at some of the Milwaukee Road annual reports available on the web at the following address:
http://milwaukeeroadarchives.com/AnnualReports/MilwaukeeRoadAnnualReports.htm
I looked at every fifth year from 1940 through 1970 (the year before Amtrak took over), and what I found was interesting. As far as I can tell, the Milwaukee didn't even try to quantify the profitability or unprofitability of its passenger services in its annual reports, and it can't be determined from the figures the railroad reported. The reason it can't be determined is that the reports separately show passenger operating income (passenger, mail and express), but they don't seperately show passenger operating expense. Rather, both freight and passenger operating expenses are lumped together.
I haven't looked at other RR's reports (I'm not masochistic enough to spend the evening doing that) but they are probably the same, because they should have all been based on ICC Rail Form A. I suspect (but do not know) that the reason there's no segregation of passenger operating expenses is that the ICC couldn't come up with a principled way to allocate railroad operating expenses between freight and passenger services on a system basis.
History can be useful in understanding how we got to were we are. And some people, very few in my opinion, may take a lesson from it and avoid repeating some of the mistakes that were made in the past.
At the end of the day, however, the key to solving problems, i.e. what is the best transport solution for a given problem, is to define the problem. Based on my experience as a key problem solver for a Fortune 250 corporation, few people are able to do so with clarity. More often than not they want to rush to their pre-conceived solution. In fact, having dealt with hundreds of consultants in my career, I liken them to solutions chasing a problem. If you don't have the problem that their solution is designed to fix, they will find it for you.
Once having framed the problem, an arduous task to be sure, generating solutions, testing them, choosing the best solution, with appropriate validation, are key follow-on steps. Oh, there is one more critical step.
Most solutions carry the potential for future problems, i.e. the law of the unintended consequence. Assessing the potential problems generated by the solution(s) is critical to its success and in some instances the survival of the enterprise. Sometimes, after finishing the potential problem analysis re: the proposed solution, we determined that the solutions were likely to generate a problem(s) that would be worse then the problem that we were living with at the time.
In the interest of full disclosure, I am an honors history major from Penn State with a minor in transportation economics. I love history. But it is largely irrelevant for solving today's problems.
Falcon48 With respect to the ongoing discussion between Sam1 and CMStPnP on whether railroads made money on their passenger services and what they said about the profitability of their services in theuir financial statements, I took the advice of one of them (I forget which) and looked at some of the Milwaukee Road annula reports available on the web at the following address: http://milwaukeeroadarchives.com/AnnualReports/MilwaukeeRoadAnnualReports.htm I looked at every fifth year from 1940 through 1970 (the year before Amtrak took over), and what I found was interesting. As far as I can tell, the Milwaukee didn't even try to quantify the overall profitability or unprofitability of its passenger services in its annual reports, and it can't be determined from the figures the railroad reported. The reason it can't be determined is that the reports separately show passenger operating income (passenger, mail and express), but they don't seperately show passenger operating expense. Rather, both freight and passenger operating expenses are lumped together. I haven't looked at other RR's reports (I'm not masochistic enough to spend the evening doing that) but they are probably the same, because they should have all been based on ICC Rail Form A. I suspect (but do not know) that the reason there's no segregation of passenger operating expenses is that the ICC couldn't come up with a principled way to allocate railroad operating expenses between freight and passenger services on a system basis.
With respect to the ongoing discussion between Sam1 and CMStPnP on whether railroads made money on their passenger services and what they said about the profitability of their services in theuir financial statements, I took the advice of one of them (I forget which) and looked at some of the Milwaukee Road annula reports available on the web at the following address:
I looked at every fifth year from 1940 through 1970 (the year before Amtrak took over), and what I found was interesting. As far as I can tell, the Milwaukee didn't even try to quantify the overall profitability or unprofitability of its passenger services in its annual reports, and it can't be determined from the figures the railroad reported. The reason it can't be determined is that the reports separately show passenger operating income (passenger, mail and express), but they don't seperately show passenger operating expense. Rather, both freight and passenger operating expenses are lumped together.
Thanks! Now I don't have to go there.
Another key point is that the reporting by the Milwaukee may have been an outlier. To know what the other carriers reported regarding the passenger segment, one would have to take a statistical sample from all the reports, which would be a daunting task to be sure.
Sounds to me like you were a lawyer involved in railroad law and regulation. Correct?
henry6First, the cars Amtrak inherited from participating railroads were anywhere from 10 to 50 years old then.
Henry,
If Jay Gould were running Amtrak he would have used those old cars and he would have made them pay a profit. What Amtrak needs and what we need today is railroaders like Jay Gould and Jim Fisk.
The key then is that the Grange in the late 1800's led to the ICC which had huge ramifications...and not all laws and regulations were cause and effect but also tradition in both management thinking and acting along with labor thinking and actions had effects,too.
John WR henry6First, the cars Amtrak inherited from participating railroads were anywhere from 10 to 50 years old then. Henry, If Jay Gould were running Amtrak he would have used those old cars and he would have made them pay a profit. What Amtrak needs and what we need today is railroaders like Jay Gould and Jim Fisk.
And Amtrak did from 1971 for at least another 30 years...some of the cars were retired at age 75+. They (ab)used them as long as they could with safety and economy.. Jay Gould and all the others should be proud!
ICC regulation of amenities on SP trains to include sleeping and dinning facilities.
http://bulk.resource.org/gao.gov/91-518/00005264.pdf
"If asked for his road's passenger service costs, for instance, a controller can provide at least three figures: out-of-pocket, long term avoidable and fully apportioned. The last named Is the one recognized by the I. C. C.; the other two are generally computed as tools of management Information." It is quite charming that the latest Amtrak costing is using the SAM_APT method I believe which pushes all costs to business activities as opposed to the FRA Direct cost of just a few years ago. Long term avoidable sounds the best but that is not what Amtrak is reporting since this summer, now it is a fully allocated total cost.
"On the basis of I.C.C. accounting, the Seaboard Coast Line Railroad lost $37.5-mllllon last year running passenger trains, but its management Is quick to emphasize the fact that the loss didn't result from operation of its luxurious long-distance streamliners to Florida, but from local train operations that no longer serve any public need. "We want to stay In the long-distance passenger business." W. Thomas Rice, the Seaboard Coast Line's president, said In a recent Interview. He told of how in the past winter season, from December to April, even with a costly four-day strike, his system carried 260,000 passengers, an Increase of 9.5 per cent over the level In the 1966-67 season."
http://bulk.resource.org/gao.gov/91-518/00005268_999475.pdf
Common Carrier law opinions, and thoughts of the Sunset from the 1968-1969 era.
http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=2276&context=dlj
http://catalog.hathitrust.org/Record/010618541
1959 Passenger Train Deficit study
http://babel.hathitrust.org/cgi/pt?id=mdp.39015018275076;seq=1;view=1up
1960 Passenger Train Deficit study (Great Information)
http://babel.hathitrust.org/cgi/pt?id=mdp.39015004568708;seq=19;view=1up
It really gets down to the FACT that the interstate system took the higher margin freight traffic from the railroads and hence undermined the business model through a cross-subsidy. The cross-subsidy being a Federal tax on all the existing roads dedicated to building the interstate alone for about two decades. For example the gasoline I use on the street, whose construction was paid for through my mortgage in front of my house, is Federally taxed though no Federal funds flow to it, the go to the HTF. The 1961 Highway Cost Allocation report acknowledged this would happen but painted it as a float all the boats on a rising tide, good thing somehow.
The investor held railroads knew this and had been battling it since the mid 1950's.
http://catalog.hathitrust.org/Record/001525365
However, the public policy winners write the history. See my paper on the marketplace thread for a lot more backup, though the link may have expired.
Sam1 Falcon48 With respect to the ongoing discussion between Sam1 and CMStPnP on whether railroads made money on their passenger services and what they said about the profitability of their services in theuir financial statements, I took the advice of one of them (I forget which) and looked at some of the Milwaukee Road annula reports available on the web at the following address: http://milwaukeeroadarchives.com/AnnualReports/MilwaukeeRoadAnnualReports.htm I looked at every fifth year from 1940 through 1970 (the year before Amtrak took over), and what I found was interesting. As far as I can tell, the Milwaukee didn't even try to quantify the overall profitability or unprofitability of its passenger services in its annual reports, and it can't be determined from the figures the railroad reported. The reason it can't be determined is that the reports separately show passenger operating income (passenger, mail and express), but they don't seperately show passenger operating expense. Rather, both freight and passenger operating expenses are lumped together. I haven't looked at other RR's reports (I'm not masochistic enough to spend the evening doing that) but they are probably the same, because they should have all been based on ICC Rail Form A. I suspect (but do not know) that the reason there's no segregation of passenger operating expenses is that the ICC couldn't come up with a principled way to allocate railroad operating expenses between freight and passenger services on a system basis. Thanks! Now I don't have to go there. Another key point is that the reporting by the Milwaukee may have been an outlier. To know what the other carriers reported regarding the passenger segment, one would have to take a statistical sample from all the reports, which would be a daunting task to be sure. Sounds to me like you were a lawyer involved in railroad law and regulation. Correct?
I did a cursory review of the various documents listed in V. Payne's post. This is really interesting stuff, and I would commend it to anyone interested in further information on the passenger isues that led up to Amtrak.
At the same time, I have to point out that some of this information is more authoritative than others. For example, the quote about the "controller" asked for his road's passenger service costs is from a New York Times article that a congressperson read into the Congressional Record. That's not very authoritative, On the other hand, the various passenger train studies listed are by the ICC and are very authoritative.
Here are a couple of things I gleaned from this material which are relevant to the prior discussion in this thread (again, based on a cursory review).
1. Costing - ICC used fully allocated costs in various studies it made and statistics it issued of overall passenger deficits over the years (the 1960 study, however, computed an avoidable cost figure for selected railroads). That's certainly true. But that doesn't answer the question of what costing measure the ICC used in individual train off cases, and none of the other materials seem to answer that either. I believe they used avoidable costs, but I would have to research some individual train off cases to verify this (which I can't readily do from home).
2. Downgrading - The 1960 study, in particular, seems to confirm that the ICC did not believe it had authority at the time to directly regulate the level of service on passenger trains. What they did believe is that they had the authority to deny a "train off" if they believed that the passenger volume had been depressed by downgrading, and apparently did so in some cases. The Duke law review article is essentially an argument that the ICC should more broadly try to regulate service levels. Based on the 1960 study, the ICC didn't take the bait.
henry6 Amtrak did from 1971 for at least another 30 years...some of the cars were retired at age 75+.
None, actually, I misstated. But many worked 50 or so years before being retired....well beyond many's expected useful life span
Sam1In the interest of full disclosure, I am an honors history major from Penn State with a minor in transportation economics.
In another Passenger Forum thread ["subsidies"] you said: "I graduated from Penn State, Columbia, and SMU with degrees in economics, accounting, and finance. " While that's the case, you have to admit that the numbers of institutions, degrees and majors seems to be approaching a rather large number. What's next" Mechanical Engineering? Physics?
C&NW, CA&E, MILW, CGW and IC fan
Falcon48 With respect to the ongoing discussion between Sam1 and CMStPnP on whether railroads made money on their passenger services and what they said about the profitability of these services in their financial statements, I took the advice of one of them (I forget which) and looked at some of the Milwaukee Road annual reports available on the web at the following address: http://milwaukeeroadarchives.com/AnnualReports/MilwaukeeRoadAnnualReports.htm I looked at every fifth year from 1940 through 1970 (the year before Amtrak took over), and what I found was interesting. As far as I can tell, the Milwaukee didn't even try to quantify the profitability or unprofitability of its passenger services in its annual reports, and it can't be determined from the figures the railroad reported. The reason it can't be determined is that the reports separately show passenger operating income (passenger, mail and express), but they don't seperately show passenger operating expense. Rather, both freight and passenger operating expenses are lumped together. I haven't looked at other RR's reports (I'm not masochistic enough to spend the evening doing that) but they are probably the same, because they should have all been based on ICC Rail Form A. I suspect (but do not know) that the reason there's no segregation of passenger operating expenses is that the ICC couldn't come up with a principled way to allocate railroad operating expenses between freight and passenger services on a system basis.
There you go but you will notice the Passenger Revenue numbers are positive. How they allocated costs is another issue. As stated earlier you can't apply 1990 standards to back then. I believe their approach was as I stated earlier. Infrastructure was a fixed cost they had to pay regardless of if they were running Passenger Trains or not.
Sam1 My guess is that you have no idea what the railroads had for cost accounting systems or how they used the data for management decision making or reporting. You are relying on memory recall from Trains articles that appeared how many years ago? What was the source of the data for the Trains article? As noted in another post, Fred Frailey made some assertions regarding cost of capital, depreciation, etc. He was wrong. Your assuming that I implied that the passenger railroads were perpetrating a reporting fraud is over the top. What phrase or words from my initial post stated or implies that the railroads had engaged in fraudulent SEC reporting? And what phrase or words suggested that I believe the railroads have an obligation to restate their prior period financials using current SEC segment reporting standards? That would be absurd, especially given the fact that most of the roads are out of business. If a person makes an assertion it is his or her responsibility to substantiate it. Not the other way around. If you cannot do so, there is no reason to believe your assertions. I did a search for PRR and NYC Annual Reports for 1957. They are available providing one wants to pay for them. I don't!
Your guess would of course also be incorrect. I live in a Railroad town in Texas and I have done quite a bit of research on the railroad that created the town I live in. Further I openly dispute this accounting approach has anything to do with the ICC. The ICC did not exist in 1872 and it was the accounting practice then as well to look at physical plant as a fixed cost the railroad had to pay regardless.
The Accounting Practice predates the ICC and I do not believe it's an outlier for the Milwaukee Road either. Nice attempt to discredit. Refer you to the historical documents of the Houston and Texas Central Railroad circa 1872 -1880. Gosh your from Texas and you never looked at them?
Did you know that Central Expressway (Hwy 75) was actually named after the rail line? Did you know some of the towns along the line were named for Officers of the line or their kids? Anyways, look at their financial reports next and you will find they are somewhat similar to the Milwaukee.......although a little bit more detailed in that in a few cases they did keep profit and loss on each train. They used to run a Passenger Train north of Dallas called "The Dallas Morning News", it's main purpose was to deliver the newspaper and I believe the newspaper paid for part of it's operating costs.
The Houston and Texas Central was credited with settling a good portion of Texas as it's line started in Galveston and ran North to the Red River border with Oklahoma (Dennison, TX). It had a ticketing agreement with JP Morgan Steamship lines which docked in Galveston and ran steam ships to points East including New York.
H&TC station points were initially approx 7 miles apart because back then I do not believe (although here I am guessing) they had telegraph repeaters so that was the general distance that a telegraph signal would travel. They would use also the telegraph line to keep the station clocks up and down the line roughly in sync. Initial Locomotives for the H&TC were wood burners and I used to remember the distance between water stops but memory slips in that area. H&TC became part of Texas and New Orleans / Southern Pacific before it was abandoned North of Dallas and partly taken over by the DART Red Line. They used the railroad telegraph to also communicate between communities and call for help as in the case of the first train robbery in the Texas by the Sam Bass gang. Interesting history reading about the building of the line and the initial years of traffic and the money it produced. Not very good record keeping but enough was written down to see how they were managed financially.
Oh and the last known use of the railroad telegraph in railroad operations was by the Milwaukee Road on it's Chicago to Twin Cities main, again from memory but I believe they were using it up until 1985.
CMStPnP Falcon48 With respect to the ongoing discussion between Sam1 and CMStPnP on whether railroads made money on their passenger services and what they said about the profitability of these services in their financial statements, I took the advice of one of them (I forget which) and looked at some of the Milwaukee Road annual reports available on the web at the following address: http://milwaukeeroadarchives.com/AnnualReports/MilwaukeeRoadAnnualReports.htm I looked at every fifth year from 1940 through 1970 (the year before Amtrak took over), and what I found was interesting. As far as I can tell, the Milwaukee didn't even try to quantify the profitability or unprofitability of its passenger services in its annual reports, and it can't be determined from the figures the railroad reported. The reason it can't be determined is that the reports separately show passenger operating income (passenger, mail and express), but they don't seperately show passenger operating expense. Rather, both freight and passenger operating expenses are lumped together. I haven't looked at other RR's reports (I'm not masochistic enough to spend the evening doing that) but they are probably the same, because they should have all been based on ICC Rail Form A. I suspect (but do not know) that the reason there's no segregation of passenger operating expenses is that the ICC couldn't come up with a principled way to allocate railroad operating expenses between freight and passenger services on a system basis. There you go but you will notice the Passenger Revenue numbers are positive. How they allocated costs is another issue. As stated earlier you can't apply 1990 standards to back then. I believe their approach was as I stated earlier. Infrastructure was a fixed cost they had to pay regardless of if they were running Passenger Trains or not.
Of course the passenger revenue numbers in the MILW annual reports are "positive". They show only the revenues that MILW earned from the service, not the costs. The passenger related costs - both operating and fixed - are lumped in with the railroad's non-passenger related costs and not separately stated. Since there's no separation of passenger costs, there's no "allocation" of costs to passenger service either. Even the most hopelessly unprofitable undertaking will produce "positive" revenue.
I'm sure that MILW had internal measures of passenger profitabiliy (both on an individual train basis and on a system basis) which it used for management purposes. But, based on the annual reports, tthose measures were not used in the railroad's financial reporting.
Finally, your speculation that railroads historically didn't take their infrastructure into account in determining passenger profitability seems reasonable, but I don't know that as a fact. I think, however, they probably started taking a harder look at this in the last years of the service. There was lots of money tied up in infrastructure which was used almost exclusively for passenger service (in city terminals are one example).
Yeah right you know better.
So again here is what you stated in your first post: "my impression is that most of the railroads rarely if ever made any money on their total passenger operations"
What is an impression based on factually? I stated that if that was true then the annual reports to the SEC had to be fradulent becaiuse they reported profitable passenger departments. I think that was an opinion just like your "impression" was.
You keep implying, rather arrogantly that your more competent then others to pronounce judgement here but I for one think your as qualified as anyone else and that in a lot of cases your just guessing.
Look, I am cleaning up after a state paid public accountant mess created at University of Texas BY a state paid Accountant that thought they knew what they were doing. While I appreciate the training, experience and perspective one brings to the table with that background. I don't necessarily suspend all independent judgement and turn into a drone after someone brings up that background.
As for providing proof I disagree with you. Your the one doubting it is your responsibility to seek out what you believe to be the truth and present a counterpoint. Lets not be lazy here. This is not my only Internet Forum I know how this game is played. Your going to keep forcing me to do the legwork until I get exhausted disproving some of what is posted here. I'm just not going to do it. If I raise a point you disagree with THEN you counterpoint. Thats how it works on a civil discussion forum......ask the Moderator. Heck I can tell you because I am a Moderator on another website. If I go running around to various people on here and say "prove it" it's what I would call being disruptive and likely they will get PO'd. Again, an opinion forum. If you disagree with an opinion, your right to say so with a counterpoint.
Also, on the Annual Report issue most large libraries have them. If you can find one that offers digital editions online your set. Otherwise you have to go visit a large city library. There was a place online somewhere that had them all together including Auto Train Corporation. So will have to search again for that.
I found some more railroad annual reports on-line - the PRR's for 1946, 1950 and 1954 . They are available at the following web address:
http://kc.pennsyrr.com/docs/index.php#annualreports
The financial exhibits in these reports are the same as the Milwaukee Road reports with respect to the profitablility of passenger service (i.e., passenger, mail and express). They break out the income received from these services, but they don't break out the expenses incurred. Rather, the expenses for both freight and passenger are lumped together (1946 - p. 5, 1950 - unnumbered sheet 2, 1954, p. 4), This probably reflects ICC financial reporting formats.
However, the PRR (unlike MILW) discusses its overall passenger service profitability in the narrative of the 1950 and 1954 reports (but not in the 1946 report). The 1950 report (p. 11) states that passenger service (including commuter) produced a deficit of $48,895,000. the 1954 report says that the passenger deficit according to the "ICC formula" was $43,700,000. This report also says that the ICC formula involves an allocation of a portion of overheads and joint expense to the passenger service. That confirms that the ICC was using some kind of fully allocated cost formula in determining a railroad's overall passenger profitability/unprofitability. But it doesn't answer the question of how the financials were handled in individual train off cases. Since these PRR reports were made before the Transportation Act of 1958 (which greatly expanded the ICC's juridiction over passenger train offs), most of the "action" on passenger train offs would have been at the state level.
Please note that I'm just presenting this stuff as information.
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