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Reply to "in the beginning : AMTRAK"

Sam's comments got me thinking about the Rock Island.  I've done a bit of research on that this evening.

As I see it now, the Rock's decision looks like a straight forward return on investment decision.  The cash savings would not have provided a reasonable return on the cash required to buy in to Amtrak.  Tjat's not directly related to the financial situation. -in 1970 we did not yet look at RI as one of the financially hopeless railroads.

An important clue to the situation is in the April 1971 Official Guide, last issue before the NRPC took over.  The Rock Island had only two remaining intercity passenger trains, round trips to Chicago from Peoria and Rock Island.  They had been successful in discontinuing many passenger trains in the last three years.  The three year deficit buy-in price for Amtrak would have been huge compared with the actual cash cost of the those two train pairs.

The deficit number calculated for Amtrak buy -in was on the basis of the ICC fully distributed cost formula including overhead, depreciation and return on capital invested.  Railroads had to pay that in cash or value of equipment transferred.  The actual cash cost of running those two trains was mainly crew, ticketing, fuel and maintenance expense, and there was a prospect of state subsidy.  So it made no financial sense for the Rock to participate.

 

 

 

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