[PRCo] Re: Wha[i]t a Minute...

Mon Jun 12 17:29:41 EDT 2006

I am jsut recognizing some of if Not the Major Expense to PRCo was in 
paying the underlying companies  --  it took alot of cash away form the 
company.       It could be claimed that it was a bad business decision  
(999-Year Lease!!)  and created an ongoing expense.       Not pointing 
Fingers  --  just looking at where the money went  --  please don't say 
what I didn't say111
..
This topic has ended for me.

Fred Schneider wrote:

>This is an interesting concept ...
>
>Bled dry by underlying companies.
>
>It simply means that instead of PRC paying for its own property, it  
>rented its property.   It never paid to build 650 miles of track.    
>Other companies paid to build 500 or so miles of track and PRC merely  
>rented it.   It was a common way of doing it in Pennsylvania.    Bled  
>dry?
>
>Is that any different from me deciding not to own a fleet of trucks  
>for my business, but rather to rent them from Avis?   Then I go  
>broke.   Do I accuse Avis of bleeding me to death?   It's a business  
>expense.   I need trucks.   I chose to rent them instead of buy them.
>
>Or I choose to rent telephones or computers or my office...
>
>It was very common in the traction industry to have ABC Trolley  
>Company build the line from A to B to C and then lease it for 3% each  
>year of what it cost to build.
>
>What happened in 1950 was the dissolution of the underliers.   The  
>stockholders who invested in ABC Trolley Company lost everything.    
>Their company would simply be rolled over into the operating company  
>and they would get stock in the new operating company, let's, for  
>simplicity, call it PRC company.
>
>Unfortunately in 1950 this new PRC company doesn't have a really big  
>chance of making money so the stock the ABC bond holders or  
>stockholders get in the new PRC company might be almost worthless.    
>Before they at least got 3% of their investment every year.   Now  
>they have a good risk of getting zip.   Unless this PRC company can  
>sell out and reinvest in something worthwhile.   Something like  
>making aerosol cans or smoke detectors or fire alarms.
>
>Sadly, the people who made money in the trolley industry were those  
>who had enough brains to build the lines in the first place and to  
>insist on cash on the barrel head.   The dumb ones built and took  
>stock.   The really bright ones inflated the value of the property  
>the built (the old $600 toilet seat concept) and still demanded it in  
>cash.   It wasn't ABC or DEF that bled PRC but it might have been the  
>promoters and construction companies that took their money up front  
>back in the 1890s and ran with it.
>
>And there was another problem over the years ... most trolley  
>companies expect to pay off their mortgages with inflated dollars.     
>Your home mortgage takes an identical number of dollars each  
>month ... part for principal and part for interest.   But the typical  
>trolley company mortgage was not done that way.   It was simply so  
>much interest every year for 20, 25 or 30 years and then the  
>principal came due at the end.   And few companies ever bothered to  
>establish a sinking fund to pay off the principal.   So we have a  
>company formed about 1902 with a 30 year mortgage (very common  
>scenario), they paid off the interest every year, but now, in the  
>bottom of Depression, in 1932 the principal is due.   And they never  
>set aside the money.   Not the least bit uncommon.   If there was one  
>company doing that, there were hundreds and hundreds.   They all  
>planned to pay off the mortgage bonds with inflated dollars.   Or  
>they would reissue new bonds to pay off the old.   Only in 1930,  
>1931, 1932, 1933, 1934, 1935 ... no one had money to buy worthless  
>paper for worthless trolley lines.
>
>Bled to death?   I'd rather believe there were a lot of idiots out  
>there with blinders.
>
>Other than that statement, I agree completely with Holland.
>
>On Jun 12, 2006, at 4:50 PM, Holland Electric Rwy. Op. H.E.R.O. --  
>Import SPTC 1.48 Models // James B. Holland wrote:
>
>  
>
>>Yes, there were other companies who did Very Well.       But that  
>>is Not
>>The Whole Story.
>>..
>>PRCo came out of its second Pro--Loonngggeeed Bankruptcy in the Very
>>Early 1950s  (Nearly Fifteen (15) Years!!)  and it may have been  
>>its 3rd
>>bankruptcy.
>>..
>>PRCo was bled dry by all the underlying companies it bought out in  
>>1910,
>>before and after.       Some of these had  999--Year  Leases  (that is
>>Not a typo  --  yes 999-year leases!!!)  which had to be honored with
>>Payments  In  Money!!       This was   <apparently>    totally
>>eliminated when they emerged from Bankruptcy in early 1950s;  don't  
>>know
>>how this issue was addressed in the previous protracted bankruptcy but
>>these payouts did persist until the 1950s, or until the bankruptcy
>>started in 1937.
>>..
>>PRCo did not have the cash to go forward  And  Regardless__Of__Reason,
>>1950s saw flight to Private Auto which saw massive decreases in  
>>transit
>>ridership, Even In Pgh.       This, Not Surprisingly, resulted in even
>>less Cash for PRCo.
>>..
>>By  About  1955  the vote came in to form a County Wide Transit System
>>which meant the end of PRCo  --  this wasn't realized, of course,  
>>until
>>1964    ----    but when ones head is put into the gallows, one  
>>doesn't
>>spend much money, especially when money is not on hand in the first  
>>place.
>>..
>>To make Any Kind Of Valid Comparison to Other Systems,  We would  
>>need to
>>compare many facts about Income, Expenses, Assets, Liabilities,
>>etc.       I don't have that info  --  Ed might have some.
>>..
>>The Trustees during the 1937 bankruptcy Did The Railway Well.        
>>Most
>>of the PCCs were purchased during this time frame  --  had this Not
>>Occurred, we wouldn't have had any PRCo to talk about after WW2   
>>--  it
>>would have folded or been incorporated into a County Wide Transit  
>>System
>>Much__Earlier  than 1964!!!!       According to some accounts,  
>>there was
>>substantial track renewal during bankruptcy as well.
>>
>>Boris Cefer wrote:
>>..
>>
>>    
>>
>>>But there were transit companies in the US that did better.
>>>
>>>B
>>>
>>>      
>>>
>>>From: "Fred Schneider" <fwschneider at comcast.net>
>>>
>>>
>>>      
>>>
>>>>We simply need to understand that this was a private company,   
>>>>separated by 1950 from the Philadelphia Company, totally  
>>>>dependent on fares for revenue.   Furthermore they were operating  
>>>>in a political climate that could, in its best sense, be  
>>>>described as adversarial.    If PRC did anything to make money,  
>>>>such as investing money in other areas (gasoline stations on its  
>>>>property, for example), the city came down on them like a ton of  
>>>>bricks because that might increase the condemnation costs to the  
>>>>city.    There was nada that PRC could do that was correct in the  
>>>>city's eyes.   And the Pittsburgh Post Gazette didn't make life  
>>>>easy either; they habitually showed Charles Palmer frowning.
>>>>
>>>>I'm afraid, Boris, that you you are attempting to compare what  
>>>>you saw in your youth in Europe with Pittsburgh.   What was run  
>>>>as a communist or socialist venture for the good of the party and  
>>>>the needs of the public.   The other was operated to squeeze the  
>>>>last ounces of money out of a system on behalf of the investors  
>>>>and subject to state regulators.  The goals and operations are  
>>>>totally different and cannot be compared.
>>>>
>>>>Under those conditions, it was a miracle that the cars ran at all.
>>>>
>>>>
>>>>        
>>>>
>>    
>>
>>>>On Jun 12, 2006, at 12:37 PM, Boris Cefer wrote:
>>>>
>>>>
>>>>        
>>>>
>>>>>They also did not waste money on wiring cosmetic. They simply  
>>>>>laid a fluff of wires.
>>>>>
>>>>>B
>>>>>
>>>>>          
>>>>>
>>    
>>
>>>>>From: "Fred Schneider" <fwschneider at comcast.net>
>>>>>
>>>>>
>>>>>          
>>>>>
>>>>>>They also repaired the cars; they simply did not waste money on  
>>>>>>body cosmetics.   In general, PRC cars ran pretty well and  
>>>>>>suffered few in service breakdowns.
>>>>>>
>>>>>>
>>>>>>            
>>>>>>
>>    
>>
>>>>>>On Jun 11, 2006, at 2:41 PM, Boris Cefer wrote:
>>>>>>
>>>>>>            
>>>>>>
>>>>>>>They did, but did not repair the cars!
>>>>>>>
>>>>>>>              
>>>>>>>
>>    
>>
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