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

[Edward H. Lybarger]

Of course the railway company had to do the maintenance...some of which was
capitalized to the account of the original underlier!

And of course it was deliberate.  The original promotors wanted to get in,
with largely other peoples' money, and back out with some of their own.  The
idea of ever-growing revenue is still prevalent in business and government;
it didn't begin and end with the electric railway industry.  Someone down
the road will pay my bills, they say.  The first PRCo didn't depreciate
equipment because they said there would be so much business that buying new
cars would be a financial breeze.  Of course it didn't work this way, but
the same thinking is present in a few government endeavors, such as Social
Security...Lyndon Johnson's War on Poverty running simultaneously with the
Vietnam action...George W's Iraq deficits (abetted by an allegedly
conservative Congress)...and so on.  Enron was a house of cards fashioned in
similar ways.

Someone always thinks they will get away with it.

Ed

-----Original Message-----
From: pittsburgh-railways-bounce at lists.dementia.org
[mailto:pittsburgh-railways-bounce at lists.dementia.org]On Behalf Of
Derrick J Brashear
Sent: Monday, June 12, 2006 5:34 PM
To: pittsburgh-railways at dementia.org
Subject: [PRCo] Re: Wha[i]t a Minute...


On Mon, 12 Jun 2006, 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.

And you may have made a mistake by not buying them outright, and instead
paying for them many times over. I bet the railway and not the underliers
had to do the maintenance, possibly reimbursing themselves out of their
payments at some rate which did not keep pace with inflation, screwing
themselves harder. Tell me I'm wrong.

Of course, maybe it was deliberate:

> 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.

Derrick