Free samplesPosted: May 22, 2023 Filed under: America Since 1945, business 1 Comment
I was in See’s Candy the other day, as I am on many a weekend, and it dawned on me that two of the classic Buffett/Munger businesses, Costco and See’s Candy, are places that offer delicious free samples.
Go to a Costco and you’ll likely get a tasty snack or two, go to See’s and you’ll get whatever the day’s sample is (yesterday it was salted dark chocolate caramel).
Buffett and Munger are all about urging people to be rational, and managing their own emotions (“I can’t recall any time in the history of Berkshire that we made an emotional decision”) but a huge part of their success and what makes them interesting is their awareness that some businesses are sort of magical. They’ve got a grip on customers that’s beyond rational, that exists in the worlds of love and nostalgia and strong emotion. Buffett raving about the iphone, for instance:
If you’re an Apple user and somebody offers you $10,000, with the the only proviso [that] they’ll take away your iPhone and you’ll never be able to buy another, you’re not going to take it
If they tell you [that] if you buy another Ford motor car, they’ll give you $10,000 not to do that, [you’ll] take the $10,000 and buy a Chevy instead.
I mean, it’s a wonderful business. We can’t develop a business like that, and so we own a lot of it. And our ownership goes up over time.
People had “taken a box on Valentine’s Day to some girl and she had kissed him … See’s Candies means getting kissed,” he told business-school students at the University of Florida in 1998. “If we can get that in the minds of people, we can raise prices.”
“If you give a box of See’s chocolates to your girlfriend on a first date and she kisses you … we own you,” the investor said in “Becoming Warren Buffett,” an HBO documentary.
(That U Florida interview is one of my favorite Buffett texts, you can see not just the sunny old grandpa but the rapacious capitalist).
There is an accounting term that attempts to quantify some of this, goodwill, but this quality is not measurable in any exact way. In Munger’s famous talk on The Psychology of Human Misjudgment, he talks about how he didn’t learn about any of this at Caltech or Harvard Law School. Being rational is wise, even a moral duty as Munger often says, but you’ll miss out on human decisionmaking if you don’t look for and acknowledge the power of essentially magical forces at work.
The gap between rationality and the way people actually behave due to romantic attachments, sentimentality, brand loyalty, etc is a source of humor, as well as an opportunity for price increases. Buffett and Munger seem to see both.
One example I can think of where free samples didn’t work: the teriyaki place at the mall. Did you have these? At the mall food court the kid at the teriyaki place would often have a plate of free samples. Yet the one time I tried a full plate it was kind of repulsive. I didn’t finish. Too sweet or something, or just not good at scale.
Coke has no taste memory. You can drink one of these at 9 o’clock, 11 o’clock, 3 o’clock in the afternoon, 5 o’clock. The one at 5 o’clock will taste just as good to you as the one you drank early in the morning. You can’t do that with cream soda, root beer, orange, grape, you name it. All of those things accumulate on you. Most foods and beverages accumulate on you — you get sick of them after a while. There is no taste memory to cola.
So says Buffett, perhaps related to “the teriyaki problem.”
Maybe the free sample method only works with a quality product. Sometimes the samples at Costco are bad. Remember when they used to give a sample at Trader Joe’s? Covid has killed that I guess. It worked on me.
Giving out free samples, in both See’s and Costco’s case, represents a strong investment on serving customers. Giving out free samples is a pain in the butt. A business that has the abundance to consistently deliver is probably confident and well-managed. Is this blog a form of free samples?
we’re all eating wood pulpPosted: May 13, 2023 Filed under: Uncategorized Leave a comment
This piece in Bloomberg by Ken Parks about a wood pulp mill in Paraguay caught my attention. In trying to learn about “tons of cellulose” as a product and measurement I learned that they really mean like plant meal, which we then eat.
A 2014 NPR piece by Allison Aubrey sums it up with the headline: From McDonald’s to Organic Valley, You’re Probably Eating Wood Pulp
but don’t worry, the people putting wood pulp in our food say that it’s fine:
“A good way to think about it is to ask: Would our food be any better or worse if the cellulose used was sourced from another plant?” And Coupland says the answer is no. “Cellulose is just a molecule, and probably one we want more of in our diets.”
“Ah, yes, the ‘wood pulp in cheese’ stories,” Elizabeth Horton of Organic Valley responded to us when we asked her about the headlines.
Paraguay has had a rough go, something like half the country or more died in some meaningless war in the 1860s. The photos of it can look eerily like photos of our Civil War, happening at the same time.
polar bear cub with sunglassesPosted: May 11, 2023 Filed under: animals, Canada Leave a comment
pretty obvious how I found this (reading Mari Sandoz’s biography of Crazy Horse -> Mari Sandoz wikipedia page -> wikipedia page for “snow blindness”)
I’m all right on that onePosted: May 11, 2023 Filed under: America Since 1945, business Leave a comment
And there used to be a politician in Nebraska, and if you asked him some really tough question like, you know, how do you stand on abortion, he would look you right in the eye and he’d say, “I’m all right on that one.” And then he’d move next.
very Warren Buffett joke from Warren Buffett.
You know, Tom Murphy, the first time I met him, said two things to me. He said, “You can always tell someone to go to hell tomorrow.” Well, that was great advice then. And think of what great advice it is when you can sit down at a computer and screw your life up forever by telling somebody to go to hell, or something else, in 30 seconds. And you can’t erase it. …
And then the other general piece of advice, I’ve never known anybody that was basically kind that died without friends. And I’ve known plenty of people with money that have died without friends, including their family. But I’ve never known anybody, and you know, I’ve seen a few people, including Tom Murphy Sr. and maybe Jr., who’s here, (LAUGH) but certainly his dad, I never saw him, I watched him for 50 years, I never saw him do an unkind act.
And we had as much fun out of deals that didn’t work in a certain sense as the ones that did work. I mean, if you knew you were going to play golf and you were going to hit a hole in one on every hole, you just hit the ball, and it went in the hole that was 300 yards away, or 400 yards away, nobody would play golf.
I mean, part of the fun of the game is the fact that you hit them to the woods. And sometimes you get them out, and sometimes you don’t.
So, we are in the perfect sort of game. And we both enjoy it. And we have a lot of fun together. And we don’t have to do anything we don’t really believe in doing.
And it has limited magic in sort of the adjacent West. It’s gravitational, almost. And then you get to the East. And incidentally, in the East, people prefer dark chocolate to milk chocolate. In the West, people prefer milk chocolate to dark. In the East, you can sell miniatures, and dark — in the West —
I mean, there’s all kinds of crazy things in the world that consumers do.
Talking about Netjets:
CHARLIE MUNGER: I used to come to the Berkshire annual meetings on coach from Los Angeles. And it was full of rich stockholders. And they would clap when I came into the coach section. I really liked that. (LAUGHTER) (APPLAUSE)
(he doesn’t fly that way anymore)
from this CNBC transcript of the afternoon session of the annual meeting. I couldn’t find a transcript of the morning session.
OppenheimerPosted: May 8, 2023 Filed under: America Since 1945, writing Leave a comment
I watched the new trailer for Christopher Nolan’s Oppenheimer movie. Can it top Cormac McCarthy in three pages in The Passenger?
Murals of the Zimmerman library, University of New MexicoPosted: May 5, 2023 Filed under: New Mexico Leave a comment
Here we see the Zimmerman Library on the main campus of the University of New Mexico, Albuquerque. The building was designed, like so many buildings in New Mexico, by John Gaw Meem.
Meem used architectural forms such as battered walls, vigas, and stepped parapets in combination with modern building techniques and materials to evoke the past without imitating it directly. He explained in a 1966 article that he used symbolic forms to “evoke a mood without attempting to produce an archaeological imitation.”
Meem’s finest works all found resonance with the soft, earthbound forms and materials that were part of the vernacular architecture of the Old Southwest.
Meem also headed the committee that wrote the 1957 Historical Zoning Ordinance for Santa Fe, which locked in the city’s distinctive style. I pilfer from Wikipedia a gallery of some of his works and restorations:
A personal favorite is La Quinta, at Los Poblanos Ranch and Inn.
We poked our heads into the Zimmerman library to see Kenneth Adams’ WPA-era murals, Three Peoples. However, the librarian informed us these are now covered, because, as she put it, some people find them offensive.
(lifted from here).
Kind of get it. These murals loom over big rooms at the library of the school, whose undergrads are 46.4% Hispanic. You can arrange to see the murals apparently, but checking them out online was good enough for us.
Strangely there’s another mural, the history of which I don’t know, which remains uncovered:
Another good mural in New Mexico:
The rattlesnake gamePosted: April 22, 2023 Filed under: Texas Leave a comment
One day a man walked in the saloon carrying a big glass jar with a live rattlesnake in it. He wanted to sell it. Frank says: “Hell, no, they see snakes soon enough.”
But the man kept arguing with him. He says: “It’s big money for you if you’ll buy it. Now I’ll bet the drinks for the house there ain’t a man here that can hold his finger on that glass and keep it there when the snake strikes.”
To show you what a bonehead I was, I took him up. It was thick glass and I knew damn well the snake couldn’t bite me, so I put my finger on it. The snake struck, and away come my finger. Igot mad and made up my mind I would hold my finger on that glass or bust. It cost me seventeen dollars before I quit, but since then I’ve never bucked the other fellow’s game and it has saved me a lot of money.
Frank bought the snake and he sure made money on it. It was lots of fun to get some sucker that thought he was long on nerve to go against it; no one ever could. But one night a bunch of cowboys came in and I knew some of them. They all tried the snake and failed, and one of them got mad and busted the glass with his sixshooter, and the snake got out and they had to kill it.
that from an excerpt from We Pointed Them North by E. C. Abbott, “Teddy Blue.” In his In A Narrow Grave: Essays on Texas Larry McMurtry says:
Anticipating a road trip to the northern plains I’ve been reading up. I’m good as long as I have a coming road trip to think about.
CoachellaPosted: April 16, 2023 Filed under: Uncategorized Leave a comment
125,000 some people expected each day – would that make the concert and arts and unofficial fashion festival California’s 49th biggest city, somewhere ahead of Clovis and behind Pasadena? For two weekends anyway.
An “ARTIST A PASS” ticket costs $9,495 through a secondhand retailer.
Is it interesting that of the biggest acts at Coachella in 2023, several perform in a blended English/X language? Spanish for Bad Bunny, Korean for Blackpink? Are we evolving a new global pidgin of pop?
The Coachella event I would’ve most liked to have attended, even more than Beyoncé, might be AC/DC, 2015. When they played their first chord the ground was said to shake in the farthest parking lot. A feeling more body than sound. Felt in the bones.
Derbyshire peaksPosted: April 15, 2023 Filed under: nature, UK Leave a comment
huh, I don’t see it. will have to investigate in person some day. That from
and the photo is from Wikipedia, by Vincent.
wrongosPosted: April 15, 2023 Filed under: America Since 1945 Leave a comment
surprised to find the word “wrongos” passed New Yorker copyedit. That from Margaret Talbot’s review of the new J. Edgar Hoover bio by Beverly Gage.
can’t losePosted: April 15, 2023 Filed under: America Since 1945, China 1 Comment
A senior administration official told me that Xi told President Biden at their summit in Bali in November, in essence: I will not be the president of China who loses Taiwan. If you force my hand, there will be war. You don’t understand how important this is to the Chinese people. You’re playing with fire.
This seems like the kind of thinking that got many US presidents into trouble? Truman losing China: did we ever have it? That from Thomas Friedman’s long thing in NYT, ht my dad.
“This is a dangerous situation. I strongly believe that Biden would like to stabilise the China relationship but both Republicans and Democrats in Congress have staked out a very strong line which complicates things for Biden. I have a concern that Congress is underestimating the relative power of China, the permanence of China, and China’s relationship with so many other countries.”
Hank Paulson having lunch with Financial Times. Very strange end to that piece:
Another small-town truism: the bill is as modest as the portions were large. Paulson and I walk around the corner to a private parking lot where he left his car. It is no longer there. “I’ve been towed,” he says, with a hint of panic. “I didn’t expect that.” What can I do to help, I ask. “No, no, you must catch your flight,” he insists. I feel a twinge of guilt glancing back at a stranded Paulson as I am being driven off in my Uber. He will have to bail himself out. I feel partly responsible for his unexpected misfortune.
That lunch at Ciao Baby! in Paulson’s hometown of Barrington, IL. Wikipedia learns us:
On November 27, 1934, a running gun battle between FBI agents and Public Enemy # 1Baby Face Nelson took place in Barrington, resulting in the deaths of Special AgentHerman “Ed” Hollis and Inspector Samuel P. Cowley. Nelson, though shot nine times, escaped the gunfight in Hollis’s car with his wife, Helen Gillis. Nelson succumbed from his wounds at approximately 8 p.m. that evening and was unceremoniously dumped near a cemetery in Niles Center (now Skokie), Illinois.
source on that photo.
Once againPosted: March 26, 2023 Filed under: the California Condition Leave a comment
Once again find ourselves thinking about Tulare Lake, appearing again.
Last time we drove up there was to look for the site of the Mussel Slough gunfight.
We were almost lost in the tule fog.
ScrapbasketPosted: March 5, 2023 Filed under: Hollywood, writing Leave a comment
I’ve been reading.
Did some deep reading about the history of Hollywood actually. Louis B. Mayer used to don diving equipment and salvage scrap metal in Boston Harbor:
Then he got the rights to show Birth of a Nation, and saw a magical new business. (He 4xed on the BoaN deal).
Keeping studios and theaters separate has been an ongoing war in the history of Hollywood. With streaming we are in a situation where they are once again the same.
In one of my Hollywood histories I found it documented that (iirc) a studio writer was expected to produce eleven pages a week, which seems like a reasonable number. However on re-searching I couldn’t find what book this was from. Maybe Genius of the System?
The exports of Saint Helena form a pleasing chart. The geography of Saint Helena is wild.
Would love to visit. Remembering Saturdays in my early mid teens when I would go to Globe Traveler Bookstore and read Lonely Planet books about practical travel to exotic places. Greenland, etc. How could a business that gave shelf space in downtown Boston to a travel book to Greenland stay? It couldn’t I guess, but the world might be poorer for it, Boston anyway, more sanded down.
I like the look of the mayor of East Palestine, Ohio. Following the train derailment with great interest. Recalling Sturgill Simpson, appearing on Trillbillies podcast, talking about how he used to work at a UNP yard. This is from memory but I believe it’s an accurate quote:
a train derailment is big boy pants
This one, a rec from Prof James, is a mind-expander:
The extent to which the demand for sugar drove slavery is troubling to consider.
Book of poems, or stories, or both. They’re really good! The cover:
Surah 109, Al-Kafirun, The Unbelievers, is one of the shortest in the Quran, you can read or listen to it here. Thomas Cleary renders it thus:
Worth listening to it recited. The tales of crowded buses in the Muslim world that calm when someone puts on a tape of Quran recitation interest me.
Tax facts from Uncle WarrenPosted: February 25, 2023 Filed under: business Leave a comment
from the Berkshire Hathaway annual letter.
If you prefer Jimmy Buffett, we have that covered too.
How The World Really Works and Natural GasPosted: February 19, 2023 Filed under: America, America Since 1945, energy, Uncategorized Leave a comment
In my ongoing effort to understand how the world really works, I started listening to How the World Really Works by Vaclav Smil. Smil has a cool origin story:
Growing up in a remote mountain town in the Plzeň Region, Smil cut wood daily to keep the home heated. This provided an early lesson in energy efficiency and density.
Now he lives in cozy Manitoba. Great introduction to the man:
“I have never been wrong on these major energy and environmental issues,” he says, “because I have nothing to sell.”
How the World Really Works can be a tough listen at times, because the gist of it is there are no easy answers, anything’s gonna require tradeoffs. One big takeaway: we’re not getting off fossil fuels any time soon. Sometimes though Smil has a rhetorical flourish that’s sort of fun. Much like Paul Johnson’s Birth of the Modern, however, the book is so overwhelming, so full of information that the result can be a glum feeling as I’m reminded of how much I don’t know, how complex everything is, it can be paralyzing. I see I’m in good company feeling this way:
After reading his first Smil book, [Bill] Gates “felt a little beat up. … Am I ever going to be able to understand all of this?” But he ultimately concluded that “I learn more by reading Vaclav Smil than just about anyone else.”
Natural Gas on the other hand I found quite exciting. Methane, ethane, and propane: you can see why Hank Hill loved the stuff. Smil, impartial though he tries to be, seems to have a soft spot of natural gas.
inhabitants of large northern cities hardly ever think about having their gas supply interrupted because such experiences are exeedingly rare.
Where does this wonderful gas come from?
Methane is produced during strictly anaerobic decomposition of organic matter by species of archaea, with Methanobacter, Mathanococcus, Methanoscarina, and Mathothermobacter being the major methanogenic genera
Here’s some methanobacter:
So we’re talking about the released gases over three billion years or so from prehistoric swamps. It might seem crazy that all that gas comes from the breathing out of life forms. And indeed, some have questioned that:
But what if hydrocarbons were of inorganic, rather than biogenic, origin? That was assumed by Dmitri Ivanovich Mendeleev, Russia’s leading nineteenth-century chemist, and that has been an alternative to the biogeneic explanation offered by the so-called Russian-Urkanian hypothesis about the abiogenic formation of oil and gas in abyssal environments. … Porfir’yev (1959, 1974) had also argued that abiogenic formation of giant oil fields is a better explanation of their origins than assuming truly gigantic accumulations of organic material that would be needed to create such structures…
The American Thomas Gold got in on the act. An astrophysicist, he pointed out that methane exists on planets apparently devoid of life, and theorized that methane:
can from by combining hydrogen and carbon under high temperatures and pressures in the outer mantle, and after this mantle-derived methane migrates it is then converted to heavier hydrocarbons in the upper layers of the Earth’s crust
After giving that a fair hearing, Smil says
I will note here half a dozen of major realities that undermine the abiogenic hypothesis
Submanticular squeezing, the exhaust of ancient wetlands, either way, it’s valuable stuff! The invention of liquified natural gas and compressed natural gas are remarkable examples of human ingenuity, and there may be more to come, but Smil, as usual, notes that energy transitions take a long time, and it won’t be soon that we convert all trucks to methane.
[Energy transitions] incremental progress can be accelerated or retarded by specific policies – but only rarely do such measures result in truly revolutionary shifts; energy systems are too complex and generally fairly long-lived and hence too inertial to be rapidly redirected by deliberate action designed to change their fundamentals. Grand plans aimed at their basic redesgn thus have a very low probability of success, and we are left trying to do the best we can to nudge the process in what we think is the best direction – but we still must keep in mind that, in retrospect, we may find such actions not as beneficial as we thought them to be at the beginning.
It’s not that we haven’t tried to occasional big swing. Smil notes about natural gas extracting:
one of the methods that was not just proposed, but actually tried several times in the United States is truly incredible (an adjective used with restraint).
That was the Plowshare Program, where we detonated underground nuclear bombs to try and loosen up natural gas.
Source on that. Here they are loading up Gasbuggy:
Reading this four decades later has only increased the sense of incredulity: how could these frequent detonations be ever justified in net energy terms, and how could regular detonation of powerful nuclear bombs underneath the grassland, fields and forests of the American West be accepted by the public as routine means of producing gas used for heating and cooking?
More Sappho fragmentsPosted: February 12, 2023 Filed under: writing 2 Comments
[I] never met anyone more irritating, Eirana,
Stanley Lombardo of University of Kansas has that one as
having never found her more annoying
than you, Irana
of fine Lydian make, straps rainbow-dyed
covered her feet
says the footnote:
A scholiast (an ancient commentator who wrote notes in and around the main text) preserved this fragment in the margins of a manuscript of Aristophanes’ play Peace.
My favorite of all might be fragment 57
What farm girl has seduced you?
Draped in burlap,
she doesn’t even know to pull her rags
down over her ankles.
That line quotes by Antheneus, a second- to third-century BCE writer in his The Learned Banquet.
Diane J. Rayor and André Lardinois set that one as:
What countrywoman bewitches your mind…
wrapped in country dress…
too ignorant to cover her ankles with her rags?
The way the less complete bits lay out on the page:
That from an Oxyrhynchus papyrus.
Spooky! A call from the distant past. In their introduction Rayor and Landinois paint a picture of Sappho as something like a 600 BCE Lana Del Rey, gathering a circle around her on Lesbos (closer to Turkey than to Greece).
Tree RootsPosted: February 12, 2023 Filed under: art history Leave a comment
Van Gogh’s last painting.
a personal VVG favorite is Enclosed Field with Ploughman, the view from his room at the mental asylum. Currently at the MFA in Boston.
Sappho, againPosted: February 5, 2023 Filed under: heroes, women Leave a comment
There is so little of Sappho that the reader with beginner’s Greek can read the substantial fragments in an afternoon.
so says Guy Davenport.
Translated into English the fragments constitute fourteen hundred words* or so, less than the menu at Musso & Frank. Yet we know her name two thousand six hundred years after she died. Fragments of Sappho were found in the wrappings of mummies and in the great trash heap of Oxyrhunchus.
The Sappho mystique is further confounded by later testimonies such as the 10th century Byzantine encyclopedia called the Suda (or the Stronghold), which chronicled the history of the ancient Mediterranean. In one of two entries on Sappho, readers are informed that she was in love with a ferryman by the name of Phaon whose rejection of her caused her to leap to her death from the Leucadian Cliff.
This apocryphal history, which emerged in antiquity, went on to inspire artists, poets and playwrights for hundreds of years, despite the strange origins of Phaon as a figure of myth and legend. In the second entry on Sappho in the Suda, it is stated that Sappho was married, had a daughter by the name of Cleis, and was also a lover of women.
That from here.
Hang on a second Guy, what’s the Greek original here?:
If you know where my copy of Mary Barnard’s translation is, let me know, I couldn’t find it, but luckily some fragments are preserved here, by me, on my own website. Ever thus. As for the paper copy? I hope it’s with you.
* I think that’s about right, might be a little off
Railroads: A Reader WritesPosted: January 29, 2023 Filed under: railroads Leave a comment
In the pile of mail that strained our transom after our post on why high speed passenger rail is a madman’s dream or an idealist’s delusion here in the US, this from Andrew Alexander stood out, we print it in full:
Public Railroads Monopoly
Some of the best investments in history have been railroads. Buffet had a masterstroke in buying Burlington Northern, paying $26B. Ackman’s made billions off these types of investments and Hunter Harrison is lionized as a railroad operator. He would take railroads and get them to 40% operating margins. For some reason, every railroad network with sufficient scale in America is fabulously profitable, except for Amtrak. The only real difference is the type of load they carry and the ownership/management quality. Let’s compare Amtrak and Burlington Northern Santa Fe.
BSNF’s network is about 32,500 miles of network, and they have 35,000 employees. In the quarter ended 9-30-22, Burlington had $6.6B of revenues against $4.6B of expense for a 30% operating margin. So today, on a conservative multiple, BSNF’s annual $10B earnings is worth about $100B, or 4x what Buffet paid. They are a financial powerhouse.
Amtrak, by contrast, is a financial disaster. On revenues of $3B, they have $4.8B of expenses, losing almost $2B a year. They have 21,400 miles of network and 17,100 employees.
So, just roughly speaking, what explains this? Is it due to poor management? Was Amtrak just cursed with a poor railroad network and BNSF’s is better? Is it really better to carry freight as opposed to people? I guess you could say that since humans are much more valuable on a per tonnage basis than freight, they are a better customer for railroad, but at the same time, because it’s much more valuable on a per tonnage basis, its less expensive on a per unit basis to fly, so the railroads have to compete with airplanes and cars. That could be one explanation.
It is also possible that a pound of coal is just a better customer because it does not care when it arrives at the power plant and does not need to be cared for and fed while enroute to be burned up.
I don’t think that these dynamics explain the shocking disparity in productivity per employee. It is tough to compare the activity levels of freight vs passengers, but just on a high level, it seems like Amtrak has roughly the same number of employees per mile of track, but BNSF has revenue of about $800,000 per employee and Amtrak has about $175,000 of revenue per employee. BNSF’s cost per employee is about $600,000 and Amtrak’s are about $300,000.
I think the most plausible explanation is that BNSF simply has better management. My instinct is that if competent management took over Amtrak, they would have it profitable within months. For example, the CTA in Chicago should be super profitable. There is no way that a monopoly of the commuter train lines in a city of millinos should run operating losses. If you look at Japan rail, my cursory review is that it is printing money.
No reason for the Amtrak, or CTA, to be losing money. They should be fantastically profitable. Prove me wrong.
We had some jovial back and forth with AA. We think it’s pretty hard to make Amtrak “fantastically profitable,” that’s just not how it’s built, nor should it be the goal. Is there enough rail demand in the USA to make passenger rail profitable, or is it just not our vibe? We drive. We’re not Japan, in geography, culture, or organization. In the NE Corridor rail makes sense (and is often packed). Not sure what other routes we could guarantee. Even LA to Vegas or LA to SF might not pay out: it’s cheap and fast to fly. Burbank to OAK to BART and you can be in the Mission in time for lunch.
Profit aside though, for the rail fan who feels the spiritual power of the train, power not captured on the P/L statement, a few more reliable routes might create connection, and value immeasurable.
Do write if you have fire or insight to offer: a diablog is better than a monoblog.
RailroadsPosted: January 22, 2023 Filed under: railroads 2 Comments
What distinguishes America’s railroads from those railroads elsewhere in the world is that American railroads were constructed and owned by entrepreneurs. It was a rare American railroad that was owned by local or state government – exceptions being the Alaska Railroad, once federally owned, but now owned by the state), Amtrak (officially, the National Railroad Passenger Corp.), and Conrail (which was created out of numerous bankrupt railroads, but subsequently returned to the private sector and then divided between CSX Transportation and Norfolk Southern Corp.) …
By 1906, some 85 percent of the bonds and 50 percent of the stocks traded on the New York Stock Exchange were those of railroad companies.
Santa brought me this book, published by Simmon-Boardman of Omaha, publishers of Railway Age, MarineLog, SignBuilder Illustrated and other “B2B” publications. This one is dense with information, much of it too technical for me, but it’s healthy to read above one’s level.
It’s illuminating when studying the Civil War to make reference to a map of the railroads of the Confederacy. Here’s West Points map thereof:
New Orleans, Pensacola, and Norfolk were in Union hands by the end of 1862, with Jacksonville disputed, so that left Wilmington, Charleston, Savannah and Mobile as sea-rail hubs. But Mobile wasn’t much use once Grant had cut the rail lines in northern Mississippi, and Sherman would tear up the tracks to Savannah soon enough. You can see the importance of Wilmington in supplying the Army of Northern Virginia.
Note too all those different gauges:
In the early years of United States railroading, several different gages were in use. In 1863, however, President Lincoln designated 4 ft 8 1/2 in. as the gage for the railroad to be built to the Pacific Coast. This, then, became the standard to which all U.S. railroads conformed. Thus, the railroads south of the Potomac and Ohio Rivers that were mostly 5ft gage until 1887 changed to a standard virtually over a single weekend.
Discussions of high speed rail in the USA sometimes ignore the crucial points:
1) The UK, Japan, Germany, France all at some point nationalized their rail lines. In the US track is still owned by corps who are not in the business of passenger traffic (in fact actively fight it)
2) we use our rail much more for freight than they do in Japan/UK/France/Germany etc. Our whole economic model based it being cheap enough to ship Asia to West Coast (Long Beach) and then train to wherever. Does just the vastness of the US helps why freight rail matters so much more here? Our trains are also hauling coal and stuff
A radical agenda for a president could be nationalizing the railroads, but that would never happen: imagine taking BNSF away from Warren Buffett/Berkshire Hathaway, or UNP away from the shareholders. KC Pacific is international.
BUT the federal government did subsidize all this building through land grants, why should all the benefits be in private hands?
Canada for awhile had an interesting hybrid system: federal Canadian National and private Canadian Pacific. Opponents of socialism can point to the inefficiencies of CNI, while opponents of aggressive capitalism can point to the costs put on rural Canada once CNI was made private (all of Newfoundland’s railways were shut down!). These are losses where the full impact can’t be measured, it might really erode the core of a nation.
CNI was privatized in 1995. Today the largest single shareholder is Bill Gates.
The political problems of building high speed rail are daunting, which is too bad. The nationalizations in Japan, the UK, Germany and France took place during crucial moments of national transition (in France it took the dictatorship of Napoleon III, in Germany Bismarck played a role, Japan was going through a radical modernization, etc).
The federal government has decent power to make life difficult for railroads. They could use that to squeeze out some new high speed lines along existing track. Would be great to have LA to SF, for example. But imagine the political will and might it would take to wrench that concession out from an enormous company that’s in the business of hauling freight, not people.
Big changes in the US seem to take place only during rare periods of crisis when opportunity and power is for a moment consolidated: Lincoln in the Civil War, FDR during the Great Depression and World War II. Maybe if FDR had lived we would’ve gotten to national health care; maybe if Lincoln had lived we would’ve nationalized the rails.
The Railroad: What It Is, What It Does further describes the Amtrak situation: in 1971, Amtrak was created by Congress to take over passenger services on freight railroads that were losing money. The bankruptcy of Penn Central in 1970 freed up some track along the Northeast Corridor, which Amtrak acquired.
Since its creation, Amtrak has struggled financially, owing to a congressional failure to provide Amtrak with a consistent source of federal funding. Annually, since Amtrak’s first year of operation, it has had to fight for a congressional appropriation that its officials and supporters consider insufficient. This inconsistent and inadequate funding has preoccupied Amtrak officials, adversely affected operational improvements, and slowed acquisition of a modern fleet.
The book concludes, somewhat glumly:
Under present conditions it appears that, whatever their overall ecological, congestion-relief, or other social benefits, proposals for high speed rail systems in corridors of North America must first demonstrate financial feasibility founded primarily (if not wholly) on credible private-sector support.
We have our Amtrakiest president in awhile, but time is running out on Railway Joe.