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Mutualist Blog: Free Market Anti-Capitalism

To dissolve, submerge, and cause to disappear the political or governmental system in the economic system by reducing, simplifying, decentralizing and suppressing, one after another, all the wheels of this great machine, which is called the Government or the State. --Proudhon, General Idea of the Revolution

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Location: Northwest Arkansas, United States

Saturday, September 17, 2005

Larry Gambone on the Railroads

General Motors destroyed the electric commuter railroads which flourished in the USA in the 1920's and '30's. They did this by insisting, as one of the largest shippers, that the railroads replace their electric locomotives with diesel units. Problem is diesel pollutes, the engines cost three times as much as an electric and last half as long. In 1935 there were seven times as many electric units as diesel, by 1970 there were ten times as many diesel as electric. (1)

But this was only the tip of the iceberg. After WW2 there was increasing pressure on the rail roads to convert from steam to diesel, as well. In 1945 almost all freight was transported by steam or electric.... This conversion process was a layer cake of disasters for both rail and the public.

First off, the expense for the railroad companies. Steam locomotives have a working life of about 50 years. Most of the engines were built in the 1930's, and those that weren't were from the 1920's or 1940's. Thus, we are looking at equipment that needed to be replaced from 1970 to 1990, yet they were all cut up for scrap metal by 1955! Locomotives were not the only loss. All the infrastructure created around steam, such as coaling stations, water towers, repair shops etc. either was scrapped or needed a complete and costly re-vamping. The destruction of all these locomotives and equipment is a loss that would run in the hundreds of billions of dollars. Even if much of the loss was written off in taxes, the expense was passed on to the tax-payer.

Now, while destroying all that perfectly good equipment, the rail lines would had to replace it with highly costly diesel units. Furthermore, these engines are not as durable as steam, are more complex, thus cost more to repair and need to be replaced more often....

At the very time rail made the highly costly switch over, it was losing both freight and passengers. Government built air ports were helping the airlines steal passengers. Government built highways were converting medium haul freight to trucks and train passengers to bus passengers. Thus rail was caught in a pincer - costly investment on one side, loss of revenue on the other. Note how the state helped to destroy rail. Consider the amount of tax-payer wealth that had gone into building the lines in the first place - land grants, cheap loans, cash gifts, tax-write-offs - all of these would total to hundreds of billions of dollars of OUR money. Yet our money, once again to the tune of hundreds of billions was being used to destroy this investment!

All this may seem insane, but this was planned to happen this way. The oil companies and the auto manufactures found another new way to pillage the public and using their mouth pieces in government destroyed rail. We do not live in a free market economy and we never have. We live in a planned economy, one that is organized not for the benefit of the people, but for a tiny wealthy minority.

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10 Comments:

Blogger Tex MacRae said...

I hope you posted this because you planned to make fun of it.

We do not live in a free market economy and we never have.

That sentence is true, but his argument about steam locomotives, etc. is still wrong.

General Motors destroyed the electric commuter railroads which flourished in the USA in the 1920's and '30's. They did this by insisting, as one of the largest shippers, that the railroads replace their electric locomotives with diesel units.

What? What's an "electric locomotive?" Is he talking about streetcars?


Then he goes on to steam locomotives:

After WW2 there was increasing pressure on the rail roads to convert from steam to diesel, as well. In 1945 almost all freight was transported by steam or electric.... This conversion process was a layer cake of disasters for both rail and the public.

Ridiculous! The disaster for the railroads was choking government regulation of prices and being prohibited from adapting to their strength, which was long haul of bulk commodities. It had nothing to do with the conversion to the far superior diesel-electic locomotives. This CATO article lays out the reasons for the degeneration of the American rail carriers in the fist half of the twentieth century:

However one interprets the historical record, it is clear that federal regulation of America's railroads began with the creation of the ICC in 1887. Grover Cleveland was sitting in the White House, Orville Wright was still a teenager, and Henry Ford was still a steam-engine mechanic. The Panama Canal had not yet been built, and the interstate highway system had not even been envisioned. The railroads had a strong market position in the transportation industry. The only other means of transport were horse-drawn wagons, snail- paced barges, and steam-propelled packets on rivers that were not always navigable.

In establishing the ICC, the Interstate Commerce Act gave it broad powers to regulate railway rates and various business practices of the railroads as well as the quasi- judicial authority to determine violations, damages, and legal remedies. The legislation represented the choice of "enforced competition" over government ownership and operation. In a series of additional regulatory acts passed between 1903 and 1920, Congress tried to force the railroads to behave as if they were subject to competition, even though it was generally perceived that they were not.

The Transportation Act of 1920 formally abandoned the enforced competition doctrine and prompted a major overhaul of the regulatory mechanism.(2) Thereafter the federal government attempted the anomalous feat of simultaneously maintaining a healthy national rail system and fostering the development of other modes of transportation. For the next half-century federal regulators held the rates for much of the railroads' competitive business above those charged by barge and truck lines, thus causing a steady erosion of rail traffic and revenues.

The railroads also came to be used as instruments of social policy. In some instances they were required to make distant producers competitive with local producers, to give preference to certain ports and regions, to help protect farm income, to help prevent unemployment, and to provide freight and passenger transportation at rates below their costs.


Exactly. Finally, after carriers started going bankrupt all over the country, the Feds actually granted them the right to make contracts! Enter the Staggers Act:

The most important freedom granted to the railroads by the Staggers Act was the right to enter into confidential contracts with their customers in order to guarantee certain volumes of freight and levels of service for certain periods. The confidentiality of such agreements was previously prohibited on the grounds that it would weaken the common-carrier concept. Although the ICC had begun to look favorably on shipper-carrier contracts in 1978, it required that they be open to public inspection. The disclosure requirement discouraged shippers and carriers from entering into contracts. Shippers were wary of revealing their market volumes, supply sources, and transportation costs to their competitors, whereas railroads feared that the ICC's decision would be overturned by the courts. Only after the right to confidentiality was provided by the Staggers Act did both shippers and carriers embrace the contract approach.

Mr. Gambone's lament for the demise of the steam engine infrastructure is absurd. In fact, most of the steam engine-era tracks, towers, etc. are mostly still there, though it is gradually disappearing and parts of it are still in use for rolling stock storage, switching, etc. All the Railroads did was begin to upgrade their trackage and sidings to accommodate the more profitable longer trains and heavier equipment that came into use after the more powerful diesel-electrics were brought online. To paint that transformation as some sort of cataclysmic upheaval is simply wrong. In fact, the railroads are in vastly better shape now than they were in the more heavily regulated 1950's through the seventies, mainly because the state has backed off a little and allowed them to do what they do best - long haul bulk commodities.

Now, while destroying all that perfectly good equipment, the rail lines would had to replace it with highly costly diesel units. Furthermore, these engines are not as durable as steam, are more complex, thus cost more to repair and need to be replaced more often....

Oh, baloney. Steam engines often spent half their lives undergoing maintenance and diesel-electrics are workhorses criss-crossing the country continuously, racking up millions more miles than steam engines ever did. Consider this - steam locomotives could not be hooked together for more power. That's right, it's one engine per train, which of course means that trains were short and tonnage limited. Diesel-electrics can be joined into powerful locomotive consists, which can pull astonishing tonnages. I'll give you one example from my own experience. The entire city of Houston runs off power supplied by Wyoming's Powder River Basin coal, which arrives at the power plant in trains over a mile long. Five of these trains, each of which is equipped with 110-115 rotary-coupler coal cars, can be dumped at once. Each train goes from the mine in Wyoming to Houston pulled by three EMD SD70 MAC engines, which are refueled once enroute.

Beat that with a steam engine.

September 18, 2005 10:46 AM  
Anonymous David MacRae said...

A few facts may be in order.

First, though, I'd like to a question. By the 1950s, diesel had replaced steam around the world. Is GM supposed to be at fault for the actions of Deutsche Bundesbahn or British Rail?

Now to the facts. All of this can be verified with a trip through the Wikipedia.

North American production of steam locomotives peaked in 1907 and steadily declined until it ceased totally in 1929. The first diesels appeared in 1924 and by the thirties, most passenger trains ran on diesel. Undoubtedly, the reason why the decline in steam production does not quite mesh with the rise of diesel is because the steam engines themselves were converted from coal to petroleum products, making them more efficient and reliable, giving steam one last gasp of life.

As for why they switched, "British Rail figures showed the cost of crewing and fuelling a steam locomotive was some two and a half times that of diesel power, and the daily mileage achievable was far lower. As labour costs rose, particularly after the second world war, non-steam technologies became much more cost-efficient".

September 18, 2005 11:12 AM  
Blogger Kevin Carson said...

Actually, I posted this because I liked it. And since I didn't know any of the stuff you guys pointed out, I guess I also deserve to be made fun of.

September 18, 2005 7:11 PM  
Blogger Kevin Carson said...

BTW, you should also check out some of the info Larry has in the comment thread for his railroad post.

September 18, 2005 8:35 PM  
Blogger Larry Gambone said...

Funny the hostility that anything positive about steam generates from some corners. People just don't want to admit that most "progress" is actually social engineering do they?
It would take up too much room here to deal with a rebuttle, but just one example of the poor documentation offered by my detractors is the statement that steam loco production ceased after 1929. Obviously this guy has never been to a train museum or looked at a book on locomotives. Sorry, fella but tey were buil;ding them right up into the late 1940's. My suggestion is that if anyone is interested to google a bit on new steam technologies.

September 18, 2005 8:56 PM  
Blogger Tex MacRae said...

Kevin,

Hey, I'm an anarchist who was a member of the United Transportation Union for over ten years, the American Train Dispatchers Association for over ten years and my father, mother and grandfather all worked for railroads - in fact, my father worked for the now-defunct Rock Island RR which died in the 70's just the way Ekelund wrote about in his CATO piece. I went to work for a major carrier at the beginning of the coal boom in the late seventies, so I've seen this stuff played out in the real world all my life.

Larry, I have no "hostility" to steam - that's ridiculous. I do think you've conflated alot of arguments and terms here in a manner that makes it obvious that you don't know much about railroading. Explain this, for example:

General Motors destroyed the electric commuter railroads which flourished in the USA in the 1920's and '30's. They did this by insisting, as one of the largest shippers, that the railroads replace their electric locomotives with diesel units.

What are you talking about here? How was GM a "major shipper" on a commuter line? See, you're mixing up streetcars with freight operations. When you say "electric locomotive" to what do you refer? Can we have some linkage or something? Also, did you know steam engines ran on diesel as well? Are you arguing that GM also destroyed coal and wood burning steam operations by insisting that steam engines run on diesel?

All the infrastructure created around steam, such as coaling stations, water towers, repair shops etc. either was scrapped or needed a complete and costly re-vamping.

I explained why this was wrong. I worked on coal trains in the eighties that were running on the exact same tracks steam engines once ran on. The roadbeds never changed. Gradually the RRs replaced lighter track with heavier steel and then welded rail. I watched that happen over the years.

Your main point seems to be that GM destroyed the railroads in some nefarious plot but your evidence doesn't prove it at all.

By the way, if we went back to steam as a superior technology, where would the energy that makes the steam come from?

People just don't want to admit that most "progress" is actually social engineering do they?

You seem to want to prove that we're being fooled by some fake "progress," which I suppose can mean anything you want it to. With that premise, it's no wonder you've gone looking for a perpetrator for your imagined scam. Who fooled the farmers when they traded their plow horses for tractors?

September 19, 2005 7:43 AM  
Blogger Larry Gambone said...

General Motors destroyed the electric commuter railroads which flourished in the USA in the 1920's and '30's. They did this by insisting, as one of the largest shippers, that the railroads replace their electric locomotives with diesel units.

“What are you talking about here? How was GM a "major shipper" on a commuter line? See, you're mixing up streetcars with freight operations. When you say "electric locomotive" to what do you refer? Can we have some linkage or something? Also, did you know steam engines ran on diesel as well? Are you arguing that GM also destroyed coal and wood burning steam operations by insisting that steam engines run on diesel? “

This is a quote from The Dark Ages by Marty Jezer, Southend press 1982. It is a reference to local electric trains not trams, Freight was hauled on such lines. I know about oil burning stream locomotives and think it was a mistake as well, no doubt the oil companies encouraged them to do so

All the infrastructure created around steam, such as coaling stations, water towers, repair shops etc. either was scrapped or needed a complete and costly re-vamping.

“I explained why this was wrong. I worked on coal trains in the eighties that were running on the exact same tracks steam engines once ran on. “

I am obviously not talking about track but infrastructure around steam.

“Your main point seems to be that GM destroyed the railroads in some nefarious plot but your evidence doesn't prove it at all.”

It doesn’t have to be a “nefarious plot” but business as usual. Do you really suppose that GM and the oil companies didn’t benefit from the switch over and wouldn’t encourage this? Would it not have made more sense to develop advanced steam technology rather than become chained to petroleum? Look what is going to happen when we reach Peak Oil. Look also to the cost to the public of all of this, including first building the railroads, disgarding useful equipment, buying new equipment, and then having the state build up the comepetition thru highway construction. Who won? Who lost?

September 19, 2005 8:36 AM  
Blogger Tex MacRae said...

It is a reference to local electric trains not trams, Freight was hauled on such lines.

Uh, you need to prove that GM was a "major shipper" on those lines, which I doubt as no serious freight lines ever used "electric motors," whatever those are. Marty Jezer sounds like a nice man, but he's wrong here. (Nitpick: Amazon says the book was published in 1981, not 1982 - the title is The Dark Ages: Life in the U.S. 1945-1960, so it was hardly an authoritative work on the transportation industry.)

I am obviously not talking about track but infrastructure around steam.

Trackage would be the only significant investment in railroad infrastructure. Everything else was converted into something useful - even the roundhouses (where engines are maintained - trivia: it used to be where they were turned around in the olden days - now they use tracks called wyes instead of turntables, damned progress!) from the turn of the century still exist and are in use, I've been in plenty of them.

Do you really suppose that GM and the oil companies didn’t benefit from the switch over and wouldn’t encourage this?

Of course they benefitted - so? John Deere benefitted when farmers switched from horses to tractors. Did he destroy the plow horse business? Did Abraham Gesner destroy the whale oil industry? Is Gesner a "social engineer?"

September 19, 2005 10:10 AM  
Anonymous Anonymous said...

It is a reference to local electric trains not trams,

Unlike steam, both diesel and electric are perfectly viable technologies for powering railroad locomotives and both are used throughout the world. Electric engines are more efficient, cleaner and quieter. They are also capable of higher speeds. The disadvantage of electric is that it requires a much higher investment in infrastructure. Thus, it makes greater sense for commuter traffic. In particular, all subways in the world are electric. The Bullet train and the TGV are both electric. Freight, which is hauled long distances, is normally diesel. There are exceptions both ways. Many commuter trains are diesel and almost all track in Switzerland, both freight and passenger, is electric.


Freight was hauled on such lines.

There is no local freight trains traffic of any kind these days. Local freight is hauled on diesel trucks. Local freight trains are as obsolete as steam engines.


I know about oil burning stream locomotives and think it was a mistake as well, no doubt the oil companies encouraged them to do so.

I'm sure the oil companies did encourage them. So? That's not why they converted. They did it because it is both cheaper and better. Oil is far more "energy-dense" than coal. It doesn't require an fireman. The heat can be kept at a more constant temperature.

You didn't answer my question. "By the 1950s, diesel had replaced steam around the world. Is GM supposed to be at fault for the actions of Deutsche Bundesbahn or British Rail"? Face it, the steam engine is obsolete technology. Nobody uses steam for anything anymore, not just railroad locomotives.

September 19, 2005 11:17 AM  
Blogger buermann said...

I'll just say that it seems ludicrous to discuss this without discussing extraction costs and energy density, upon which all claims to "efficiency" are essentially based in terms of long haul transit.

Coal has low extraction costs and low energy density, oil has low (but rapidly rising) extraction costs and high energy density, nuclear is the only fuel at all comparable to oil, all three have similar levels of externalized pollution costs, except that nuclear waste could be feasibly more easily controlled.

The political manipulations to subsidize transition costs are fascinating (and expensive, if taken as told), but given the basic coal vs. oil argument, between 1940 and 1970 - when oil was this incredible exportable resource for the US and the Hubbert peak hadn't yet become scientific orthodoxy and global warming was still some ways in the future - it seems strange to suggest that it blocked some serious historical alternative to fossil fuel use when the apparent alternative was the less costly, long term transition to the same deisel based engine and the same fossil fuel intensive transit system.

Perhaps I'm missing some larger point: as I think someone noted already but if not, the railroads were created much the same as the airlines and the highways: state intervention with a great deal of public investment, the product of which was sold or handed off to the control of private interests

I have a hard time objecting to the advancement of choo choos: am I misreading this discussion if I take from it the objection to public investment? Or just how it's utilized?

If the investment is the objection would I be a jackass if - alternative means of basic research funding I'm open too, sure, direct me henceforth! - I pointed out that if not for a century or so of public investment in IT I'd have to pay for private postage to ask this question, whether or not I'm a simple jackass?

September 20, 2005 3:11 AM  

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