A Milford Commuter’s Idea
A Milford, Connecticut attorney, Joseph H. Cooper, who commutes daily to work in New York City proposed a hostile takeover of Metro-North Commuter Railroad. Along with 95,000 other commuters who normally travel between New York City and Fairfield or New Haven counties in Connecticut or Westchester, Putnam and Dutchess counties in New York, he was angered by two recent wildcat strikes.
He feels neither the unions nor management have any vested interest in keeping the commuter-customer content, satisfied – let alone happy and well-served. Commuters seem to be only funders who constitute the system’s major source of revenue (other than state subsidies).
Cooper feels that if commuters had rights as shareholders, they would have at least some say, if only through proxies. Managers and union members ($40,000/year before overtime conductors) profit even if the commuters are not well served. There are no financial penalties for poor performance.
Cooper’s idea is to get a group of train-riding investment bankers to form a syndicate that will take over Metro-North and spin off the New Haven, Hudson and Harlem lines to their respective commuter-investor groups. It would be viewed as a hostile takeover (would the Long Island Railroad act as a White Knight?) but at least the investor would get something for his or her leveraged buyout.
Monthly commutation charges would be pegged to debt-service requirements. Single fares could accumulate in a sinking fund. It might come to pass that improved reliable service would result in debt retirement. Bar-car revenues alone might pay for a big hunk of operating costs. Special transit bonds would be issued to fund the deal.
“People will pay a fair price to see history,” says owner Al Harper who, along with his wife and three sons, is hands-on in running this National Historic Landmark every day. His passengers come from around the world to the tiny town of Durango, just to take this ride.
The D&SNGR runs 3-4 steam power trains up the mountain to the tiny town of Silverton (with only one paved street) using restored passenger cars kept painstakingly in working order by dedicated craftsmen.
Unlike depressing historic rail lines in the east, which run a few cars two miles down a track then return, this is a fully working railroad with a paid, year round staff of 75 that, in the summers, swells to 200, many of them volunteers. Damn, I would pay them to volunteer on this railroad! And some folks do.
For $1,000 (one-way), you can ride in the cab of their old steam locomotives wearing authentic overalls and cap. You can even help them shovel coal into the boiler. For $134 (one-way), you can ride in an open gondola car, or for $175, enjoy the 3 1/2 hour ride sipping wine in a restored 1880 first class car.
While many who ride this line are railfans (“foamers”, as they are pejoratively called by most railroad folks, because they foam at the mouth when they see a train), history buffs or western fanatics, the D&SNGR’s owners know they have to grow their audience, so they offer discounts for kids and many other specialty excursions: Brews and Blues, a Cowboy Poet excursion and many seasonal trips. But no, they have no plans for “Reefer and Rails,” despite the legalization of marijuana in Colorado. (Durango has yet to authorize retail sales of pot.)
They are clever marketers, packaging the train ride with horseback riding, ATV’s, camping and other activities. And, importantly, they have the support of their community which recognizes how much this little railroad means to the economy. Eight years ago it was calculated that the railroad brought $100 million a year to Durango in business … hotels, meals, shopping … not to mention those employed by the railroad.
Imagine that: A railroad that people will travel thousands of miles to ride, are willing to pay high fares because they get an amazing experience, owned by people making a good return, but reinvesting for future generations of customers, while keeping the local economy thriving.
Yes, you can run a great railroad that people love and turn a profit!
Check out the WebSite for the Durango & Silverton
Durango was founded by the Denver & Rio Grande Railway in 1879. The railroad arrived in Durango on August 5, 1881 and construction on the line to Silverton began in the fall of the same year. By July of 1882, the tracks to Silverton were completed, and the train began hauling both freight and passengers.
The line was constructed to haul silver & gold ore from the San Juan Mountains, but passengers soon realized it was the view that was truly precious.
This historic train has been in continuous operation between Durango and Silverton since 1882, carrying passengers behind vintage steam locomotives and rolling stock indigenous to the line. Relive the sights and sounds of yesteryear for a spectacular journey on board the Durango & Silverton Narrow Gauge Railroad.
Visit our online version of All Aboard Magazine, the official magazine of the Durango & Silverton Narrow Gauge Railroad.
Now where are they? Check out where to stay and what else is out there.
After your first night of lodging, get up the next morning to depart on the one-of-a-kind ride with the Durango & Silverton Narrow Gauge Railroad. This trip through time winds through the spectacular and breathtaking canyons in the remote wilderness of the two-million acre San Juan National Forest. You will relive history with the sights and sounds of yesteryear on this 1882 adventure as you ride round-trip from Durango to Silverton, Colorado. The coal-fired, steam-operated locomotives are maintained in their original 1923-1925 vintage condition as one of the last authentic operating steam train’s in the world. In Durango, take time to enjoy the Railroad Museum, located in the rail yard roundhouse featuring full-size locomotives, maps, photos, artwork, memorabilia, and authentic collectibles. While in Silverton, visit the Freight Yard Museum at the depot to learn about the history of the Rio Grande Railway as a freight line.
You will return to Durango late afternoon to enjoy some leisure time and a fabulous dinner in town. Consider staying extra days to take on more of Durango’s unique adventures like tours of the world-famous Mesa Verde National Park, whitewater rafting, jeep and hummer tours of Colorado’s wild high-country, Hot Air Balloon rides and much more!
OK,We talked about private railroads that make money, we talked about public railroads that don’t do very well. Let”s talk about public support of private railroads.
The greatest economic factor in the 19th Century was the railroad. They colonized the West with the 160 acre homesteads. They moved crude oil to market. The biggest factor in steel production was railroads. The meat packing industry was possible because the reefer car was invented.
In spite of early discrimination in favor of canals, there was public support of private railroads in New York State. Mohawk & Hudson stockholders were liable for its debt but the State could purchase it in five years. The New York & Erie got a $6.2 million donation because it could not connect with lines into New Jersey and Pennsylvania.
Johnstown contributed $175,600 for the construction of the Fonda, Johnstown & Gloversville. The Town of Queensbury donated $100,000 to the Glens Falls Road (later part of the D&H). When the long-gone road through town was built, Schoharie contributed $20,000 in State bonds which had been given to the town for an excess of volunteers in the Civil War. The common method of financing was for municipalities to purchase common stock. The Town of Theresa bought 600 shares of the Black River & Morristown (later a branch of the NY Central).
Only a few municipalities held railroad bonds. Promoters preferred they buy stock because bonds were easier to market as they could be discounted. The Troy Union Railroad issued $30,000 of common. The city issued $680,000 of 6% bonds. The Rensselaer & Saratoga, Troy & Boston, Schenectady & Troy, and Hudson River line agreed to subscribe for equal amounts of the capital stock and to guarantee payment of the principal and interest on the community’s securities. The city’s investment was secured by a first mortgage on the carrier’s property.
The Town of Delhi paid no principal on bonds it had issued on behalf of the NY & Oswego Midland. Property values in Delhi had risen 100% on rumor of a railroad. In 1893, the Town of Andes had to borrow $120,000 to pay its debt.
The NY & Oswego Midland (later the NY Ontario & Western) zig-zagged 250 miles across the State in search of municipal bonds. It bypassed Syracuse because it didn’t subscribe to bonds. It halted at the Utica line until they subscribed $200,000.
The Albany & Susquehanna had an excellent lobby organization in Albany. Some stocks and bonds were held until the 1940’s. Greene held DL&W and sold its stock in 1946. Colesville held A&S which was traded for D&H. In 1949, Syracuse was still paying on 75 year old bonds. In 1942 the Auburn comptroller discovered 5000 shares of NY & Oswego Midland in his vault.
The D&H in trying to recover from the Depression and its dwindling anthracite trade needed to reduce its debt. It sold its NY Central stock and merged its leased lines. It found that the A&S was owned by many towns as minority shareowners.
The Town of Kirkland sold NYO&W stock in 1944 for $52/share. This stock had originated from the Rome & Clinton which was leased to the O&W.
The Schenectady & Troy was a municipally owned railroad. There was a rivalry between Albany and Troy. When Albany capitalists financed a railroad between Schenectady and Saratoga, Trojans countered by building the Rensselaer & Saratoga. But it needed a western connection so the Schenectady & Troy was proposed. When private interests didn’t come up with the cash, the city of Troy did. It was authorized in 1836 but not started until 1840 by the Whig mayor of Troy, Jonas C. Heartt. There were strikes, late delivery of rails and trouble getting the right of way. It was one of the best roads of the day-utilizing T shape iron rails and having easy grades. It was much better than the Mohawk & Hudson with its inclined planes. Finally, the M&H borrowed from the Utica & Schenectady and from the City of Albany and used the money to remove the inclined planes.
The biggest problem for the S&T was negotiating fair treatment from the Utica & Schenectady (which was closely allied with the Mohawk & Hudson). Erastus Corning was on both U&S and M&H boards. The M&H tied up all the immigrant business. Utica trains started before Troy trains reached Schenectady. Lack of favorable eastern connections was a problem. They built a line to the Western Railway at Greenbush (6 miles).
The Troy railroad tried to circumvent the U&S by building a road along southern bank of the Mohawk to Utica (Mohawk Valley). The tax burden in Troy was high because of its railroad.
In 1851 the Hudson River Railroad leased the Troy & Greenbush. If the Mohawk Valley were to be built, then there would be a true rival to the Mohawk & Hudson and the Utica & Schenectady. When the Hudson River RR failed to press its advantage, Troy tried to get the Harlem to extend to Troy from Chatham. Russell Sage chaired a committee that concluded city should sell its railroad. Also involved was Edwin Morgan, the president of the Hudson River RR. The net result was a sell-out to the New York Central.
The people of Troy had hoped to share in the prosperity of a state-wide rail route and gave liberally to make it a fine system, yet it never paid a dividend and hovered on the brink of bankruptcy. It was finally sold to the interests that were responsible for its failure. The victory of the M&H was because of a far-sighted management, bribery, ruthless competition and an effective alliance between business and politics.
Many municipalities (Hancock on the Erie for example) repudiated their bonds and there were many court cases. In 1875, 20% of municipal indebtedness was for railroad construction. There were many problems because of the Panic of 1873.
Transportation development of the last quarter of the 19th Century was characterized by the combination of many short, disconnected lines to form the great railroad systems of the State.
The 1851 Legislature chartered the Albany & Susquehanna to build 142 miles between Albany & Binghamton. It was designed to be broad gauge to interface with the NY & Erie. The A&S was hard to capitalize because of the barren area it passed through. Communities along the route subscribed $2 million plus there was $750,000 in state aid. The Erie was controlled by Jim Fisk and Jay Gould. They wanted to control the A&S. Stock price of the A&S went from $10/share to $90. Opposition to Fisk and Gould was led by Joseph H. Ramsey. Many municipalities sold their stock to one side or the other. Much of the money behind Ramsey was from the D&H. Lots of legal and illegal tricks were employed on both sides. Violence near Bainbridge led to State seizure. Of the 22 towns, 17 sold at par or better. Cobleskill and Colesville retained their stock.
Utica invested $500,000 in the Utica, Chenango & Susquehanna Valley (100 miles to Greene-completed in 1870) which was leased to the DL&W. In 1871 they also subscribed $200,000 to the Utica, Clinton & Binghamton. It was leased to the NY & Oswego Midland (later O&W). Utica also lost $250,000 on the Black River & Utica.
Albany was a successful lender. They lent $1 million to the Albany & West Stockbridge and to the Albany & Susquehanna. There was a $225,000 loan to the M&H. However, they lost $300,000 to the Albany Northern.
When the NY & Oswego Midland went broke, its obligations were assumed by the D&H and the DL&W.
State or municipal aid to railroads was banned in an 1874 amendment to the New York Constitution. Most railroads in the state were built between 1865 and 1875. Shown below is a list of the railroads in the state in 1852:
· Mohawk & Hudson
· Utica & Schenectady
· Schenectady & Troy
· Schenectady & Saratoga
· Rensselaer & Saratoga
· Troy & Boston (to Eagle Bridge)
· Troy & Greenbush
· Hudson River RR (to Greenbush)
· Albany & West Stockbridge
· NY & Harlem
· Hudson & Berkshire (to Chatham)
· (projected) Catskill & Canajoharie
· (projected) Mohawk Valley (Utica to Schenectady)
Find out about Contracts and Fairpromise