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

[Fred Schneider]

Yes, it was a major expense just as the largest expense today is  
platform labor.




On Jun 12, 2006, at 5:29 PM, Holland Electric Rwy. Op. H.E.R.O. --  
Import SPTC 1.48 Models // James B. Holland wrote:

> 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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