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<DIV><FONT size=4>Fred</FONT></DIV>
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<DIV><FONT size=4>Obviously the promoters of the Harmony Route were not
futurists. They were in good company in the industry.</FONT></DIV>
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<DIV><FONT size=4>That said, I think your comparing home mortgages to railway
bond financing is not apt. It would be very rare in my experience to find
railway bonds with sinking funds, any more than there were sinking funds to buy
back stock certificates. Bonds or stocks—just another way of raising money
for capital investments, the major difference being the amount of risk
involved. In the case of interurban railways, often in the end there
turned out to be very little difference in risk—both classes of investors lost
all or virtually all.</FONT></DIV>
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<DIV><FONT size=4>Bonds were normally meant to be refinanced at their
expiry. In the case of steam railways, at least profitable ones, this is
what was done, sometimes at higher interest rates and sometimes at lower.
But in the case of interurbans, as you rightly stated, because of lack of
earnings (and the Great Depression) there was no potential for
refinancing.</FONT></DIV>
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<DIV><FONT size=4>Dwight</FONT></DIV>
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<DIV style="font-color: black"><B>From:</B> <A title=fwschneider@comcast.net
href="mailto:fwschneider@comcast.net">Fred Schneider</A> </DIV>
<DIV><B>Sent:</B> Friday, 08 November, 2013 16:04</DIV>
<DIV><B>To:</B> <A title=pittsburgh-railways@mailman.dementix.org
href="mailto:pittsburgh-railways@mailman.dementix.org">Western PA Trolley
discussion</A> </DIV>
<DIV><B>Subject:</B> Re: [PRCo] First Harmony Car Enters
Pittsburg</DIV></DIV></DIV></DIV>
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<DIV
style="FONT-SIZE: small; FONT-FAMILY: 'Calibri'; FONT-WEIGHT: normal; COLOR: #000000; FONT-STYLE: normal; TEXT-DECORATION: none; DISPLAY: inline">The
scary thing is that they were set up to haul a maximum of 52 passengers per hour
and we know they didn't even accomplish that.<BR><BR>What would they have had to
have charged each rider in order to amortize all the fixed and variable
costs? My guess is somewhere in the 4 to 8 dollar range back
in 1908 and they were probably charging a few cents a zone because that was what
they could get. <BR><BR>Rather than have mortgages like you and I do
on our houses where you pay back part of the principle and interest every month,
the interurbans deferred the principal until one huge balloon payment at the
end. They simply paid interest for 25 years (or whatever the term of
years), and then had to come up with the principle and interest at the
end. They bargained on cheaper dollars thanks to
inflation. But when the time came … usually about 25 years later ….
we were in the Great Depression and almost none of them had the money because
they had never established adequate sinking funds to pay off the mortgage bonds
and the fares were probably never high enough for the inadequate
riding. They also could no longer sell refinancing bonds because the
public was not buying streetcar bonds to help broke interurbans in the
1930s.<BR><BR>So if we begin building the Harmony in 1906 and open in 1908 and
then 25 years later the bonds are due (I'm speculating that was the cause
because it was in so many similar cases), we get to 1931 and we are in
bankruptcy. <BR><BR>Of course it sure didn't help that all the major
highways had been paved between 1920 and 1930 and we now had over 1.5 million
cars and light trucks on the state highways. <BR><BR>Glad my
grandparents didn't invest in those bonds for their
retirement.<BR><BR><BR><BR>On Nov 7, 2013, at 2:54 PM, Bob Rathke
wrote:<BR><BR>> Attached is from the Ross Twp. Historical Society - a scan of
a newspaper article dated 11/2/1908. <BR>> <BR>> <BR>> <BR>>
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