[PRCo] Re: [Fwd: Pittsburgh---PA---Trolleycar---Body---Repair]
Fred Schneider
fschnei at supernet.com
Sat Feb 21 17:44:27 EST 2004
Boris:
You might need a more in depth understanding of how corporations are
financed in the United States. We did not have a large number of tax
supported transit facilities in North America until after the Urban Mass
Transit Administration was established in the 1960s. Prior to that we had
publicly owned systems in San Francisco (Jim Holland works for the Municipal
Railwlay), Cleveland, Boston, the New York City Department of Plant and
Structures, the Independent Surface Transportation Operating Authority in
New York ... and I'm rapidly running out of examples.
Toronto, Ontario, Canada also had a municipal undertaking dating, I think,
to 1921, which shortly thereafter took over the private company.
Instead we had thousands of privately-owned corporations. Some were small
enough that they were family owned systems ... Lancaster, Ohio and
Philadelphia Suburban Transportation Company (three generations of the
Taylor family). PST, by the way, did have a few shares of stock in other
hands but very few ... I know a man who had one share and he told me he
wasn't appreciated when he appeared at a stockholders meeting one year. It
is really the Taylor family business.
Most American companies were owned by many people through ownership of
stock. For example, if the company has 10,000 shares of stock outstanding,
then each share represents a 1/10,000th interest in the company. Some
people might have owned 10 shares, others 50, some 1, maybe one or two
people owned more than 1,000 shares. Each one of them thought, when they
bought the stock, that they could make money on quarterly or annual dividend
checks or that the value of the stock would go up and they could sell it to
someone else who wanted to gamble. Each person was generally given one
vote for each share of stock. But the shareholders could own an empty
paper bag. If the debts to others ... to banks, to the power company, to
the car builders, to bond holders ... exceeds the value of the property,
then the stock holders have nothing. And that often happened.
Bonds, however, have a higher repayment liability in a bankruptcy than
stocks. In the case of a bond, the company often issued bonds saying we
will pay you back every 3 months, a share of the money we borrowed from
you. This concept is similar to a mortgage on one's house. You pay the
mortgage or the bank has a right to take your house and sell it to the
highest bidder. They higher risk to the stockholders is only fair
because, theoretically, they owned the company and therefore made the
decisions that affected profitibility, either by hiring the management staff
or establishing policy for managers to follow.
While I'm not saying that Jim made a false statement, you need to understand
his claim that Pittsburgh Railways had "an horrendous number of
underlies which siphoned off money." Pittsburgh Railways had more underlies
than any street or passenger railway in the state. I'm not sure that is
horrendous but it is a fact of corporate life. Street railway companies in
cities in the United States were often put together from many other
companies, one on this street, another that street, and so forth. It was
much easier to get money by selling stock to build a line on Perrysville
Avenue (Observatory Hill Passenger Railway) than it would have been to get
money to build an entire 600 mile railways system at once. In time it
became apparent that it only made sense to combine all of the little
companies into a bigger one.
After 1871, a total of 752 different passenger railway corporations
conducted business in Pennsylvania, although not all were in business at the
same time. There were 71 in Philadelphia and 199 in Pittsburgh. They may
have been a horrendus number, but they represented individual companies
owning track, wire, ties, real estate, and sometimes cars. They had issued
bonds and/or stocks in order to raise money for construction, and their
bondholders and stockholders had every right to receive compensation for
their property when it was rolled into a bigger company. In most cases,
those properties were not sold outright to the larger company. Instead they
were more likely to be leased on a long term basis just as you would lease a
factory or an automobile, and use it but not own it. In Pennsylvania, these
lease payments were generally a fixed and unchanging percentage of the
original construction costs ... 3% or 5% or 7% each year. Of course, we
need to consider inflation, which, over time, actually reduced the inherent
value of the money the underlies were receiving. Cost-of-living riders were
not built in. And each underlyer used these payments from the larger
company to pay off their bondholders and stockholders. I would imagine
that a lot of the major railways saw leasing a company and paying it off
with cheaper dollars to be a great way of doing business.
The larger companies were often unable to meet the contracted obligations to
the smaller underliers, particularly after World War One when the use of the
automobile because much more common. What generally happened was a
bankruptcy of the larger company, which resulted from a failure to pay its
bills (including the agreed upon payments to the underlying companies),
which in turn bankrupted the underlies. So what happens next. There is no
obligation in the United States to pay stockholders if there is no money to
pay them. But they are the true owners. The bondholders got first dibs on
the cash, and the stockholders found they owned a worthless railway.
Therefore, underlying companies tended to be dissolved and their assets
merged into the larger company as a result of these bankruptcies.
How often did this happen? Here in Lancaster PA all of the underlies on
record in were dissolved in the 1898 bankruptcy, and a new company emerged
owning all the track, and the stock holders of that company owned that
company. Another 100+ miles of track was added between 1898 and 1909, and
another 12 underlying companies were created. They were rolled into a third
major company in a bankruptcy in 1931. The same thing happened in
Pittsburgh in the 1917 and 1938 bankruptcies. Philly had at least one major
failure in 1938. There were two Johnstown Traction Companies, separated by
a bankruptcy. You get the picture.
There were also some non-operating companies involved but they do not appear
in the state Department of Internal Affairs railway reports. One example is
the L. A. Thompson Mountain Railway Company, which, to use Jim's term,
"siphoned" money out of Philadelphia Rapid Transit Company. L. A. Thompson
built roller coasters; this particular railway was in Willow Grove Park. It
was dissolved in the 1938 bankruptcy. From a more pragmatic viewpoint, I
doubt that such financial gimmicks had little affect on latter transit
financing. Many amusement parks were sold off to park companies early on
because the railways rapidly found that they [the parks] put an incredible
drain on the railways' management and executive talent during the summer
months. I can only think of two parks still owned by railways in
Pennsylvania when the railways went out of business: Woodside Park owned by
Fairmount Park Transportation Co. in Philadelphia, and Dorney Park, owned by
Allentown and Read Traction Co. Hershey Park was not owned by the trolley
company but both were owned, along with the candy company, the department
store, the hotel, the theater, and the arena, by Milton S. Hershey. Hershey
and Dorney Parks are still in business.
Jim Holland wrote:
> In keeping with Fred's comments on formation of PAAC
> ({[pat]}) I searched for some info we discussed.
> This *may* be One of Many dealing with the topic.
>
> -------- Original Message --------
> Subject: Pittsburgh---PA---Trolleycar---Body---Repair
> Date: Sun, 26 Aug 2001 15:34:31 -0700
> From: Jim Holland <pghpcc at pacbell.net>
> Reply-To: pghpcc at pacbell.net
> Organization: Holland Electric Railway Operation -- St.-Petersburg
> Trams Company (SPTC) *O*--Scale Imports -- mailto:PGHPCC at pacbell.net
> To: Dennismk1 at aol.com
> CC: pittsburgh-railways at dementia.org
>
> Good Morning!!
>
> Most comments about Pittsburgh go something like
> this::::::: "excellent mechanical and electrical maintenance
> but legendary poor or non-existant body maintenance."
>
> While there is an element of truth to this, it
> seems that this statement is overly--exaggerated and to
> an extreme. This might be true of PRCo in the last several
> years of operation, but it can hardly be a good qualifier
> of the bulk of transit service rendered to Pgh. by PRCo.
>
> Here is a timeline of significant events
> affecting PRCo:::::::
>
> 1938.05.11 (May--11) -- PRCo enters bankruptcy *again*
> (emerged from previous bankruptcy in 1922.)
>
> 1952 -- PRCo emerges from 15--years of Bankruptcy
> proceedings.
>
> 1953.06.22 -- The Allegheny Conference on
> Community Development released its second citizens'
> mass transit study; it recommended creation of a
> transit authority to acquire and unify bus and
> trolley lines in the county.
>
> 1954.12.05 (December--05) -- The County commissioners made
> public proposed legislation, drafted by a seven-member
> citizens' committee, for creation of a county-wide
> public transportation authority to acquire and
> consolidate bus and trolley lines. The legislation
> required approval of voters in a referendum scheduled
> for primary election of 1956.
>
> 1964--April -- PRCo ceases to operate Pittsburgh transit and
> is replaced by the Port Authority of Allegheny County
> (PAAC) in this capacity, which agency also took over
> independent bus lines within the city.
>
> In his report below, Mr. Dennis M. Linsky indicates
> that mechanical condition of the equipment was very good and
> that the body work was good; track and overhead were quite
> good on a majority of the system. I have learned from other
> sources that Trustees during the time of the bankruptcy did
> a fair amount of track removal and essentially purchased
> all the PCCs trying to keep the system intact rather than
> to make changes.
>
> Movies taken by Mr. Roger Jenkins (ROGERTROLLEY)
> in the latter 1950s confirm this. Roger's movies are
> exceptional for their clarity, esp. considering 8mm or even
> super--8. Car numbers are crisp and distinct the majority
> of time -- usually one has difficulty seeing a fuzzy
> trolleycar let alone a trolleycar--number on 8mm!!
> The PCCs of this era, as they are seen in Roger's movies,
> appear to be in quite good condition.
>
> But there was still a very heavy Black Cloud
> hanging over the Railways Company (pollution abatement
> removed the same from the rest of the city but was not
> successful in removing that Black Cloud from over the
> Railway!) Fifteen years of bankruptcy, a city government
> generally hostile to PRCo, a widely scattered system mostly
> through low-density neighborhoods, an horrendous number of
> underliers which siphoned off money (this was rectified in
> the 15--year bankruptcy,) a recommendation for a public- and
> county-wide transit system in 1954 which surely had been
> discussed locally not long after WW-2, the formation of
> the Port Authority of Allegheny County (PAAC) in 1956 as
> a legal entity, hostility towards trolleycars in general,
> and a very uncertain future certainly combined to discourage
> PRCo from investing any more than necessary in a system which
> would be wrested from it in short order.
>
> PRCo equipment and infrastructure was in quite
> good condition in 1950 and remained such with minimal
> maintenance through this decade. But once a system like
> this starts going bad in a big fashion, it is near impossible
> to stop. Such was the decade of the 1960s and this was only
> accelerated by the attitude of PAAC which wanted to rid Pgh.
> of the unwanted notoriety as the larges operating trolleycar
> museum in the nation -- and unfortunately, PAAC succeeded.
>
> Thus the horrible image of body maintenance on
> trolleycars in Pittsburgh is from the 1960s -- a time
> after which PRCo knew for certain that its days of operating
> transit were over. While PRCo certainly did not have
> the best in body maintenance, it probably was not the worse,
> either. The poor body maintenace on PRCo equipment reflects
> on the very, very end of PRCo--transit and is hardly
> representative of the bulk of PRCo service to Pgh.
>
> -->-->-->-->-->-->-->-->-->-->-->-->-->-->-->-->-->-->--
>
> From: Dennismk1 at aol.com
> To: Dennismk1 at aol.com
>
> Re: "SMOKY CITY" AND PHILLY NEWS AUGUST AND SEPTEMBER, 1953
>
> Good Afternoon, Trolley Folks:
>
> It was 48 years ago when the mechanical and
> electrical maintenance of Pittsburgh's PCC cars seemed
> to be excellent. Most PCC's rode extremely smoothly,
> even on PRW; only one PCC was extremely bouncy.
> Apparently, a few of the older PCC's have been
> rebuilt with drum brakes, as cars 1231, 1249, and 1272
> were seen with this equipment. Body maintenance was good,
> but the exterior paint didn't look as good as in Washington,
> St. Louis, or even Philadelphia and the cars were extremely
> dirty inside. The most frequent comments HEADWAY RECORDER
> has heard from passengers was about the dirtiness.
> The old cars seemed to be in fairly good condition,
> although most appeared to leave the barn for their rush-hour
> runs without having been cleaned inside and were very dirty.
> The large number of shuttle routes converted to buses
> since Pittsburgh Railways emerged from bankruptcy plus
> declining patronage have permitted all base service, except
> on 2 lines requiring double-end cars (and which were soon
> to be bustituted), to be operated by PCC cars. But 20%
> of the rush-hour service was operated by single-ended,
> high-speed conventional cars (the 3800's)-->>-->
> [incorrect -- please see notes above.]
> The track on a typical line seemed to be in good or
> excellent condition on over two-thirds of the line, but
> in fair or poor condition on the remainder. Two routes were
> exceptions: 88-Frankstown operated entirely over street track
> that was in excellent condition and appeared to have been
> recently rebuilt while 31-Sheridan-Ingram operated entirely
> over track in poor condition despite some patchwork.
> The most unique route, aside from the scenic
> 21-Fineview, was 65-Munhall-Lincoln Place, which operated
> almost entirely over single track on city streets with meets
> controlled by Nachod signals.
>
> Very Sincerely,
>
> Dennis M. Linsky
> 1350 East 5th Street, Apt. 3P
> Brooklyn, NY 11230-4686
> email: Dennismk1 at aol.com
> 8/26/01
>
> -->-->-->-->-->-->-->-->-->-->-->-->-->-->-->-->-->-->--
>
> ¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤
>
> James B. Holland
>
> Holland Electric Railway Operation
> "O"--Scale St.-Petersburg Trams Company Trolleycars &
> "O"--Scale Parts mailto:pghpcc at pacbell.net
> Pennsylvania Trolley Museum (PTM) http://www.pa-trolley.org/
> Pittsburgh Railways Company (PRCo), 1930 -- 1950
> N.M.R.A. Life member #2190; http://www.mcs.net:80/~weyand/nmra/
>
> ¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤¤
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