On 1/14/2016 11:28 AM, JK public@redtower.net [CBQ] wrote:
Why were there so many
in-corporations that changed every few years? A lot of the
changes are not listed, so it makes me wonder if they were all to
bankruptcy? Or what? I'm guessing that some of the incidents were
the result of swindlers preying upon towns who were willing to
throw cash to anyone who seemed like they could promise a
railroad...and a lot of cash was being thrown around.
- In the book, Corbin talks of some rivalry between the Wabash
and CB&Q for new territory. I'd be interested in hearing
how some of this worked, as it appeared that railroads were
started on behalf of other railroads with the sole purpose of
being under them. Was there a purpose for this? Federal
law?
- Why were there so many bankruptcies in this early industry?
Miscalculation of funds required to build a railroad?
Miscalculation of railroad usage?
Jan,
These answers based on my past reading. Many of these railroads
depended heavily on European investment to be successful. European
investors were lured to fund railroads in the "new world". If a
railroad did not have a big financial backer from back east
(remember the main original financial movers behind the CB&Q
were from Boston) or European investment, it was difficult to
survive on the traffic level generated. Most all of the early
railroads overestimated their rate of return and underestimated
their cost to build to and then operate.
Various financial panics had a big effect. The financial panic for
1873 caused economic problems until 1877. Part of the cause of the
panic was overbuilding of railroads and inadequate return on
investment. Many railroads went bankrupt during this time. The panic
of 1893 is considered by some historians as a extension of the 1873
panic and caused for the same reasons. Many of the same railroads
went bankrupt again. Other panics of 1901 and 1913 (railroad
investment again among the causes) is one of the reasons the Federal
Reserve came about in the 1910s to try to mitigate such panics (the
success or failure of which is another topic of debate).
The Interstate Commerce Commission was formed in 1887 due to
Congressional legislation as the farmer Grange movement was
protesting rail rates for moving agricultural products. This was
prevent further state legislation which had already come about.
However, the ICC never felt they had the authority to regulate
freight rates until additional legislation was passed until 1910. So
government regulation in the most formative years of the railroad
growth in the U.S. was minimal or non-existent.
Railroads would build branches to keep out competitors out to allow
them to monopolize service in area. If you read Richard Overton's
Burlington book, there are number of small railroads funded and
backed directly and indirectly by Q to help keep out interlopers.
The Hannibal & St Joseph was also a point of contention between
the CB&Q and Wabash until the Q gained ultimate control of it.
The Wabash in the late 19th century was controlled by Jay Gould
whose big effort was to amass railroad properties to give him
control of a coast to coast system. His son George Gould continued
his father's quest. The D&RGW funded the construction of the
Western Pacific. He also controlled the Missouri Pacific, the
Wabash, and several of the smaller eastern railroads. Most of these
railroads collapsed in the various financial panics during Jay
Gould's time with the final collapse being the Great Depression in
the 1930s. The MP stayed in receivership until 1956 as a result of
this.
At one time, there was no place in Iowa said to be more 6 miles from
a railroad line. In central place theorem, this was about the
distance that a horse drawn cart could be reasonably be expected to
cover in day. As an aside, that same theory is why counties in the
granger belt are the size they are and where the county seat was
located. Obviously as transportation advanced, all this trackage,
most of which was at best marginal in covering it's cost to begin
with, became financial drags to the railroad and hence the
abandonment and disposal of branch lines began as early as Word War
I.
Bill hirt
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Posted by: Bill Hirt <whirt@fastmail.com>
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