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View Diary: Sunday Train: The Ends of Amtrak (70 comments)

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  •  I question the implication in this sentence, (7+ / 0-)

    which I only provide the ending of for clarity:

    " so subsidy-paying freight railroads that paid full cost plus property tax for their infrastructure were placed into competition with subsidy-receiving road freight that paid only a minority share of their largely property-tax-free infrastructure."
    These railroads were built with the subsidy of a MILE WIDE swath of land along their routes (square mile blocks on alternating sides of the track, in actuality). The return from this land was surely far more overall than the return for hauling freight. Railroad companies continue to benefit from this massive initial subsidy to this day. To say that unsubsidized rail had to compete with subsidized trucking is absurd in historical context - both industries initially received massive government subsidies to create the infrastructure.

    Bringing it bact to the topic of this diary, in return for all this land, the railroads were required to provide passenger service "in perpetuity." You state:

    Amtrak involved picking up the pieces of the destruction of the foundations of the original passenger rail mandate system with an agreement that if the freight railroads would allow Amtrak to use their corridors, then Amtrak would take over their mandated responsibility to provide passenger rail service.
    and so you recognize that there was a "mandate". It was generous of the government to take over the provision of passenger service when it was no longer "suitable" (profitable) for the rail companies to comply with that mandate. It was even more generous that the government decided to pay for this passenger service with taxpayer subsidies, instead of relying on that massive land base that was to provide a subsidy for passenger service "in perpetuity."

    Perhaps if we taxpayers are expected to pay to provide pasenger service, the rail companies should return, or reimburse us for, all that land we gave them in payment for this service.

    •  the land grants (12+ / 0-)

      were generous, perhaps overly generous. Certainly there was a great deal of corruption in the process of building railroads westward from the Mississippi through land populated only by the Native Americans to California (and as the Plains Indians caused problems for the construction of the Union Pacific they were swiftly killed or herded into reservations).
           But no profit-making company could have or would have built even one transcontinental railroad as a speculative venture. The government had gigantic amounts of land and relatively little money and little experience apart from the Civil War in running a railroad. The land grant system followed logically. Since the railroads made settlement on the Plains in massive numbers and economic activity on a gigantic scale from the Sierras to the Mississippi possible, the benefits were by no means all to the railroads.
           The railroads agreed to carry U.S. troops at a reduced rate, and indeed moved millions of soldiers during World War I and II at a bargain price. So how do you do the accounting for all that?
           What is clear is that, as Bruce has written, post-World War II policy was to tax the railroads, regulate the life out of them, and then build and maintain highways with tax money. Given this, it is not surprising that the railways came near collapse by the late 70s, and that Amtrak was created as a fig-leaf to disguise the "inevitable" death of passenger rail. But despite all the attempts to kill it, Amtrak and passenger rail are still alive.

      "Something has gone very wrong with America, not just its economy, but its ability to function as a democratic nation. And it’s hard to see when or how that wrongness will get fixed." Paul Krugman and Robin Wells

      by Reston history guy on Sun Mar 02, 2014 at 07:45:24 PM PST

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      •  All this is true (4+ / 0-)

        but does not really address the core issue - rail companies have in the past, and continue to, amass huge quantities of wealth from the assets, and the profits on the assets, provided to them in exchange for passenger service. So why are they not providing this service, whether or not it makes them money?

        •  not being a legal historian (10+ / 0-)

          but rather a generalist, I cannot say with confidence that there was an explicit guarantee of passenger service in exchange for the land grants. My impression--possibly mistaken--is that the land grants were made on condition that the companies involved actually laid track. As far as I know, it never crossed the minds of anyone in the late 19th or early 20th century that a railroad company might not wish to carry passengers. Now later in the 20th century, when the railroads began to try to shed their passenger services, the ICC often prevented them from doing so. But I do not think that the ICC's rationale was a quid pro quo for the land grants, but rather the public interest. Even so, by 1971 only a handful of passenger routes remained, and had Amtrak not been created the ICC would have--sooner or later--consented to the disappearance of the rest.

          "Something has gone very wrong with America, not just its economy, but its ability to function as a democratic nation. And it’s hard to see when or how that wrongness will get fixed." Paul Krugman and Robin Wells

          by Reston history guy on Sun Mar 02, 2014 at 08:07:08 PM PST

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          •  I believe that some communities on Granger lines . (4+ / 0-)

            ... had to fight to retain passenger service in the late 1800's ... that was one of the issues that made the High Plains populists later supporters of reforms like the ICC.

            And in the turn of that century and early 20th century, it was an ongoing issue with interurbans that had been established to sell property in a development, which was more in the nature of the developers moving on and the interurban that had originally been established as a property-selling loss leader sometimes struggling to survive.

            The nature of rail is that there is a lot of scope to conserve on cash flows by skimping on maintenance of way ~ the practice that underlay the poor state of repair of the NEC when Amtrak took it over ~ and often the fact that the interurban was not running on a financially sustainable basis took a decade or more to become evident.

            Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

            by BruceMcF on Mon Mar 03, 2014 at 10:32:48 AM PST

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        •  i'd expect those land grants were long ago sold (3+ / 0-)
          Recommended by:
          thanatokephaloides, BruceMcF, Woody


          The Railroads of the 19th century had billions in land grants.

          They spent them.

          Hence the phenomenal wealth of the Gilded era.

          we can only plan with what we got today.

      •  If you haven't read Stephen Ambrose's (2+ / 0-)
        Recommended by:
        elfling, thanatokephaloides

        Nothing Like it in the World get a copy sometime.  It's quite the history.  The skulduggery around the project would rival Halliburton.

        If you think you're too small to be effective, you've never been in the dark with a mosquito.

        by marykk on Mon Mar 03, 2014 at 10:31:19 AM PST

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    •  Most if not all railroad operating companies (10+ / 0-)

      have been separated from their land grants by reorganization in bankruptcy. I certainly believe a railroad with the right of eminent domain, priority at crossings, etc., does need to be regulated as a common carrier, including providing or funding passenger service where sensible, but the land grants are so long ago as to be meaningless when talking about late 20th century truck competition.

      It's also worth noting that passenger rail was rarely profitable without external benefits, such as development of suburbs (usually related to streetcar lines, not land grant railroads) or advertising (bigwigs rode the trains and were more likely to ship their product using a company they received good service from).

      warning: snark probably above

      by NE2 on Sun Mar 02, 2014 at 08:01:38 PM PST

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    •  So you are saying that ... (2+ / 0-)
      Recommended by:
      terrypinder, thanatokephaloides

      ... post WWII, freight railroad operators received MORE benefit in terms of Right of Way than road freight shipping companies?

      IOW when making a relative comparison, a benefit that both sides of the comparison received in equal measure, the relative comparison does not change whether it is included or set to one side to focus on the differences.

      Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

      by BruceMcF on Sun Mar 02, 2014 at 08:57:22 PM PST

      [ Parent ]

      •  No, the railroads obviously received the subsidies (2+ / 0-)
        Recommended by:
        Bisbonian, thanatokephaloides

        much earlier.

        But the financial benefits of those subsidies - the land, the timber, the return on the profits they earned selling these resources - continue to this day.

        Even if the assets were later separated from the liabilities.

        •  Actually, by now most of the ... (5+ / 0-)

          ... financial benefits have been bundled into prices paid to acquire the railroads, so the remaining benefits from land distributions are primarily in the form of inherited wealth of the heirs of those who sold out.

          This is especially the case of the eastern Class I's, Norfolk Southern and CSX, where even if there were some corridors that were originally owned by the railroad upon which the Class I was built, the large majority of their track was acquired as part of a process of corridor buyouts and railroad mergers.

          Its like the taxi medallion problem, where issue of taxi medallions lagging behind demand lead to an increase in the value of taxi medallions, but that is not a windfall gain to the person who buys into a taxi company after the increase in medallion value ... from their perspective, they paid a market price for the medallion, and it is included as part of their cost of operations.

          Support Lesbian Creative Works with Yuri anime and manga from ALC Publishing

          by BruceMcF on Mon Mar 03, 2014 at 10:26:39 AM PST

          [ Parent ]

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