Friday, June 29, 2012

Colorful Locomotives and a Birthday Party!

I am going!

It's probably going to be a long, hot, crowded day, but figuring out how to get a peak at all of these any other way would be difficult, at best....even with "inside" information.  I just hope my camera battery is up to the task.

Here's the scoop:

Here's the participants:

There is some irony here, however. 

Norfolk  Southern is 30 years old and is the product of a period of large railroad mergers.  Railroad have been around since the 1830s and just about every railroad company whose paint scheme is represented here was founded over 100 years ago.  Railroads were the "high tech" companies of the 19th century.  Most of the stock market crashes and recessions in the second half of the 19th century were the result of "issues" related to funding railroad construction.  In fact, the very long and deep recession of 1893 was the result of a railroad "bubble" collapsing.  (It has many similarities to the current housing bubble induced recession, in fact...)

Railroads were such a good idea, that the government did their dead, level best to kill them.  At first railroads were monopolies, pure and simple, so they wound up being regulated in just about every manner possible.  Rates were public and tightly controlled.  Partnerships and mergers were controlled.  Routes were controlled.  Intermodal activity was forbidden.  (A railroad couldn't own and control a trucking company or an airline, for example).

The monopoly ending with the coming of highways in the early 20th century, but the regulation continued.  And, the world changed.  Manufacturing left the north and moved south.  Global trade increased.  People left the cities for the suburbs.  Home heat changed from coal to gas, oil and electric.  The railroads were left with 19th century regulation in a 20th century world.  The railroads needed to merge to better serve changing markets. They couldn't.  Railroads needed to have flexible pricing and contract pricing.  They couldn't.  Railroads needed to shed unprofitable lines of business, like passenger trains.  They couldn't.  Railroads needed to shed branch lines with dwindling or non-existent traffic.  They couldn't.

Finally, the industry almost collapsed.   The two biggest railroads in the northeast, the Pennsylvania and the New York Central merged after a decade of pleading their case to the government.  The merger was quickly followed by a surprising, but predictable (in hindsight) bankruptcy.  The other railroads in the northeast that had made their living haul coal for heat, raw materials for manufacturing and finished good away from factories found themselves overbuilt for the remaining markets.  They followed PC into bankruptcy.  The railroads in the south and west had these same problems, but to a lesser degree.  They were surviving but had to frequently sell other assets in order to keep the railroad going.

The result of the collapse in the northeast was Conrail - a government sponsored merger of all the bankrupt northeast railroads.  The thought was a larger, more efficient railroad with fixed-up track and equipment could do better.  It did.  But, not enough.  After four years, it was clear Conrail could not survive.  This led to a push to modernize the hopelessly outdated government regulatory scheme.

This worked!  Mergers happened.  Branchlines shed. Markets were better served and more profitable.  By the 1990s the industry was close to making enough money so that it could stay in business for the long haul.

All of the railroads whose locomotive paint schemes that are part of NS's heritage only existed because the government regulation kept them from merging well into the diesel era of the 1950s.  They are very colorful and varied and perhaps the best positive legacy of government regulation that nearly killed an industry.

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