# If the government didn't put excessive regulations on the railroad



## GlobalistPotato (Mar 10, 2011)

At little thought occurred to me while I was reading out of a vintage clothing blog (from a girl in Portland, OR)...

If the government (particularly the ICC) wasn't so harsh on the private railroads of the post-war era, would...

1) Amtrak wouldn't have to be created to save passenger rail?

2) The passenger rail system would still be relatively intact?

3) There wouldn't be as many "fallen flags", with the exception of mergers?

3a) There would never have been a Conrail?

4) Private railroads would be able to increase train speeds to the point where we have HSR, even it is only 200 km/h?

For those who have studied the fall of passenger railroading in the US, the subsidization of the competing modes of travel (roads and airports) played a big role in the decline of the railroads, but the excessive regulations placed on the railroads arguably is the real killer.

These regulations and burdens include:

Local and state governments charging high property taxes on the railroads, while the roads were exempt from taxes.

The 79 mph-speed-limit-without-ATS-or-cab-signaling-rule enacted by the ICC after the Naperville train wreck in 1946. This rule pretty much killed the development of faster trains, and really might have been the one rule that really killed passenger railroading in the US. At the very least, the federal government or the ICC could had helped finance the installation of ATS or automatic cab signaling.

The ICC's blocking and delaying of mergers between railroads.

ICC denying railroads from dropping their failing passenger trains.

The removal of mail service from passenger trains.

And other things...

American-rails.com summed up the situation very nicely:



> It can be said (which is true) that one reason for the decline of passenger railroading and the “depression” of the railroad industry as a whole, which occurred beginning in the 1950s until deregulation in 1980, is the result of severe sanctions and regulation by the Interstate Commerce Commission (ICC). However, the railroads also, in a way, caused their own downfall by the shoddy and monopolistic practices they took part in during the 19th and early 20th centuries (which resulted in many of the regulations imposed on them)



Sounds like karma...


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## Green Maned Lion (Mar 10, 2011)

The fall of the railroads in this country is a factor of many different things... including outragously high prices, those regulations, air travel, the interstate highways, and the general attitude of the railroads themselves.


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## Anderson (Mar 11, 2011)

Blocking route drops was probably the least of the issues, though I will say that if the government was going to force routes to be carried, they should have at least subsidized _part _of the losses. On the other things, the 79 MPH speed limit was excessively low (I say this in light of what the comparable regulations look like overseas)

More damaging, IMHO, was the Penn Central fiasco: Honestly, a straight merger of the NY Central and the Pennsy might have worked, but the ICC _had_ to dump the NY, NH, & H on top of them. I have to seriously wonder if, given the choice between no merger and being forced to take on the third RR, the two RRs might have said "screw this" and remained separate.

Ultimately, I think "an Amtrak" was going to be necessary at some point, particularly with the mail contracts being cut in the 60s. That was a questionable decision, but that was also at least arguably the government (specifically the Post Office) making a decision _well_ within its rights, and I can't see the RRs making it to 2001 without _something_ giving way. If you got through the 1960s, I think the next "hard spot" was going to be under either Reagan or Clinton...and I do not want to think what a fight over Amtrak's creation would have looked like in 1985, let alone _1995_.

Of course, allow me to put on a fantasy hat for a moment: Assuming that you_ did_ get the RRs to 9/11 without a passenger industry meltdown, I think we might well have seen a "Conair" stumble out afterwards. Can you even imagine what a RR industry with the passenger capacity of 1968 or 1970 (or a substantial fraction thereof) would have done to the airlines, between the airspace shutdown and the ensuing security fiascoes?


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## jis (Mar 11, 2011)

Anderson said:


> Of course, allow me to put on a fantasy hat for a moment: Assuming that you_ did_ get the RRs to 9/11 without a passenger industry meltdown, I think we might well have seen a "Conair" stumble out afterwards. Can you even imagine what a RR industry with the passenger capacity of 1968 or 1970 (or a substantial fraction thereof) would have done to the airlines, between the airspace shutdown and the ensuing security fiascoes?


The watchword is "fantasy hat". Purely on time spent on travel, even if passenger rail carried 100% of travelers for the week of the shutdown, the railroads would have quickly lost a preponderance of the gain back to airlines as soon as they started operating again. And in the first place, given the highway system, in the first place nowhere near 100% of the refugees from air would take a train to start with. At least not the sort of trains that were the hallmark of the 60s and 70s. If OTOH real true HSR corridors had been developed, that would be a different matter

Yes I was stuck in Toronto after 9/11 and considered taking Amtrak back, but the train was sold out, so I and a friend drove back. But except when I am riding the rails for the sake of riding the rails, or suddenly come upon an unusual amount of free time on my hands, I seldom would consider taking the Maple Leaf or even a more frequent service from New York to Toronto, given that air service is available. OTOH, if I had say a 3 to 4 hour ride from NY to Toronto, that would change the dynamics of the decision considerably.


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## CSSmith (Mar 11, 2011)

Clearly, the members of the ICC in the forties and fifties should have been shot and the buildings burnt down and salt scattered on the ground so that nothing of it could ever spring up again. What made the ICC irrelevant and clearly wrong-headed was the rise the highway system with trucks and automobiles and the rise of aviation. At that point rail had competitors and no longer needed to be forced to be a common carrier and regulated to protect its users from its monopoly status.

It may be unduly charitable to describe Amtrak as an attempt to "save" passenger rail. As Rush Loving's reporting makes clear, many of those involved regarded Amtrak as a pot into which all passenger rail activity could be consolidated and then eliminated. As Loving also reports, one of the effects of Watergate was that many railroad leaders were sadly disappointed because Nixon and company put abolishing Amtrak on hold and let passenger rail service survive.

The question of the government putting "excessive regulations on the railroad" is more complicated. When the railroads held an effective monopoly on long distance transportation, the only survivable arrangement was to treat them as regulated public utilities. Theodore Vail touched on some of this when he was inventing the concept of a regulated public utility as part of his creation of AT&T. I'm traveling so don't have my library handy to provide footnotes, but some of Peter Drucker's exegesis of these ideas still applies in particular to the arguments over the current Senate proposals for narrow extensions of STB regulatory authority.


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## George Harris (Mar 11, 2011)

One thing also being left out of this is property taxes. Remember, "The power to tax is the power to destroy." Every acre of land, foot of track, piece of equipment was taxed by every county and city they went through. One example I recall from when I was in college: The Tennessee Central, on the verge of bankruptcy and running one train a day, was not only the largest single taxpayer in Cumberland County, Tennessee, but, owning about one percent of the property in the county was paying over half the total property taxes collected in that county. Part of this was due to the state setting value of railroad and other private utility property at their full theoretical market value and the various counties valuing all other properties at a fraction of estimated market value, varying from around 50% down to 10%, and possibly less. Somewhere in this time period, all railroads operating in the state and the various private utilities got together and sued the state and the counties over this practice. Ultimately they won, but in the meantime the TC went bankrupt, was dismembered, and the final portion not abandoned taken over by the counties it ran through.

This tax factor was strongly discouraging to line relocations, adding tracks, any other improvements and resulted in the demolition of many stations simply to get the building off the tax rolls. (That is what led to the death of Penn Station, New York.)

Railroad property was also not depreciated. Replacement was considered maintenance and had no effect on the value of the property. Anything other than replacement was considered a "betterment" and put on the tax rolls at the value at the time of replacement. Due to inflation, this strongly discouraged improvements. This led to some peculiarities. Take rail relay for example:

Say at the time of the original assingment of value, 1917, the track had rail of 90 lb/yd. Then, in the late 1920's it was relaid with 100 lb/yd rail, and immediatly post WW2 laid with 131 lb/yd rail. This rail had problems so did not last too long, so in say 1960 it was replaced with 132 lb/yd rail. You now have a piece of rail in the track that is carried on the books at 4 different values: 90 lb at the 1917 cost, 10 lb at the late 1920's cost, 31 lb at the 1946 cost, and 1 lb at the 1960 cost.

Put in welded rail? Then you retire joint bars and bolts from the value and add the cost of welds to the value. If signaled, then the signal bod wires that were at the bolted joints had to be retired.


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## Greg (Mar 11, 2011)

I personally think in the middle of the century the power of the oil lobby and the Big 3 automotive lobby are what changed the public policy direction in this country effectively deminishing passenger rail service to almost non-existance.


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## GlobalistPotato (Mar 11, 2011)

Geez, the point of excessive regulation and taxes destroying an industry sounds like an argument the tea party would use!





Overreaching government much?

After over-monopolistic and greedy railroad barrens...

hahahaha


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## George Harris (Mar 11, 2011)

GlobalistPotato said:


> Geez, the point of excessive regulation and taxes destroying an industry sounds like an argument the tea party would use!
> 
> 
> 
> ...


There were also some railroad builders and promoters that have real visions of benefiting the area where they were building. These should not be forgotten. Many of these were hurt worse than the "robber barons", who generally had much better political connections.

By the way, that is *"barons"*, as in a form of nobility, not "barrens" as in an area with nothing on or in it, or a plant that produces no seeds.


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## Anderson (Mar 12, 2011)

A good rule is that there's "good" regulation (requiring transparency and honest business practices, safe working environments, and so forth) and there's "bad" regulation (doing most of the former in ways that swamp smaller businesses with compliance costs or that shut them down). Railroads were a victim of the latter, though the regulations were indeed well-intentioned.

I'm left to wonder: Did the railroads ever seriously try to get the speed limit repealed? I'm particularly thinking the NY Central in this regard, but the Pennsy would also have had an incentive here (outside their "core", at least), as would most of the others for whom the RR business didn't completely collapse.


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## George Harris (Mar 12, 2011)

Anderson said:


> . . . the regulations were indeed well-intentioned.


Outstanding example of the old saying, "The road to Hell is paved with good intentions."


> I'm left to wonder: Did the railroads ever seriously try to get the speed limit repealed? I'm particularly thinking the NY Central in this regard, but the Pennsy would also have had an incentive here (outside their "core", at least), as would most of the others for whom the RR business didn't completely collapse.


NYC and PRR would not have had much to say as they had all the required jewelry in place anyway. It hit hardest against the lower traffic volume railroads.


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## I AM A MOO (Mar 13, 2011)

What surprises me is that the railroads never tried to fight the competitors or try to keep their monopoly of ground transport, like we've seen with the airlines and the automakers. I guess that by the time the automobile came around, politicians didn't want to listen to the RRs, because they weren't trusted.

I would think that the RRs tried to protest the ICC's rulings, but their success would be limited by 1) the ICC would probably threaten the railroads if they spoke out and 2) The railroads were strapped on cash to pay for lobbyists' wages.


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## jis (Mar 13, 2011)

GlobalistPotato said:


> Geez, the point of excessive regulation and taxes destroying an industry sounds like an argument the tea party would use!


The issue of massive subsidies from public funds for competitive modes cannot be more uderstated than it so far has been in this thread. Unbalanced investment policies on infrastructure, brought on to some extent by the railroads upon themselves by their desire to preserve their fiefdoms independent of government interference, brought along government interference in other forms and destruction of franchises in the process. Excessive taxation and regulation was but one side of the coin in the whole dynamic.


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## George Harris (Mar 13, 2011)

I AM A MOO said:


> What surprises me is that the railroads never tried to fight the competitors or try to keep their monopoly of ground transport, like we've seen with the airlines and the automakers. I guess that by the time the automobile came around, politicians didn't want to listen to the RRs, because they weren't trusted.


They did fight. They lost.

Several railroads started up bus and trucking operations as feeders. The ICC told them to sell the off or discontinue. At least two bus operations did manage to keep going for a while, I don't know how, but apparently both are now dead. That of the Missouri Pacific and the Gulf Mobile and Ohio.


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## Anderson (Mar 14, 2011)

George Harris said:


> Anderson said:
> 
> 
> > . . . the regulations were indeed well-intentioned.
> ...


Did the NYC have stuff in place? I know that the Pennsy had stuff in place from NYP-WAS, but I didn't know that NYC actually had anything in place anywhere.

And on reading through _The Men Who Loved Trains_...good grief, was there _anything_ that didn't go wrong with that merger?


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