Adding rail capacity

[nw-mailing-list at nwhs.org]

ADM Scheer:
Certainly the railroads have been on the back burner when it came
to government hand-outs.  On the other hand, they've survived.
Eastern Air Lines and a multitude of truck lines that received  subsidies
haven't.
 
Once I understood the problem, I could understand Virginia money  going
toward CSX when Virginia Railway Express (VRE) came along.   Although
the line Richmond-Washington is double-tracked and rigged for  bi-directional
running, the plant  just couldn't cope with the stop-and-go  commuter trains.
When the public interest interferes with the day-to-day operation, then  the
public should pay.  The public shouldn't pay for the improvements  to private
enterprise, i.e.the  construction of Collier Yard, extending passing  sidings
in freight-only territory, or rebuilding the long abandoned "S"  line.

R'uh O I (Return on Investment)  That the railroads can't recoup their  cost
of capital probably leaves a great deal of doubt.  In the 70's when  money
was going for 18% or so,  N&W held a budget meeting every  September
to determine how the allotment of capital would be allocated.   Fishwick
used a rule of thumb -- if the project didn't pay for itself in five  years,
he could make a better return by putting the money in the bank.   He
didn't accept fuzzy math in the justifications, either.  There were  some
really home-grown projections introduced in those meetings.  At one  time
there was a proposal to add a wye track to one of the spurs on the  Clinch
Valley.  It would save N&W $15,000 annually if installed.   Several years
later, there was a proposal to remove the wye.  It would save  N&W
$17,000.  That's when Fishwick's memory bank came to life.   Fishwick
accepted what became known as "hard savings" only.   A  regular
contributor to this Q&A knows about allocating capital.  He is a  master
of manipulating mathmatical minutia - David Helmer - (the motto  in
the planning department became "See Dave and Save".)  He may  have
a better handle on how N&W managed improvements when money was
at 18% and why CSX can't recover capital when money is at 5.5% (?).
 
My share of CSX stock is worth about 39% of what I paid for it.  Since  then
the CSX Bored of Directors has given Dr. Snow a very fine going-away
present and they've forgiven a debt (about $30 million as I recall)  incurred
when he borrowed company money to buy CSX stock, put the stock up as
collateral for another deal, and then the stock took a dive.  As a  tax-
paying Virginian, I don't want my money going to underwrite  "Lives for the
Rich and Famous".  
                                          Whew!   Harry Bundy
 
 
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