I was wondering what it meant when people refered to railroads being leased. does it refer to one railroad buying another or just borrowing their track and rolling stock?? if say the Nickle Plate Road leased the Wheeling & Lake Erie RR would NKP loco’s and rolling stock become a common sight on the old WLE? Or would the NKP just use the WLE rolling stock already in service on the line?
any help appreciated
Leasing of an entire railroad can vary depending on the terms of the lease. The Soo Line leased the Wisconsin Central. For the most part, engines/cars were painted the same. The ‘WC’ equipment had seperate number series and many times a small ‘wc’ stenciled on the equipment. Accounting was seperate, but for the casual observer it was all the same railroad.
Jim
To lease when somebody pays someone else to use something.
So one railroad or company signs a contract to pay another railroad, or the owner of another railroad some amount of money to use all or a portion of the other railroad.
Nobody “just borrows” railroads. The terms of the lease will say what area is leased and what equipment, if any, is involved. Depending the terms of the lease the lessor may be able to repaint or reletter the equipment of the lessee. Since the NKP and WLE were connecting roads I would say that regardless of the lease, NKP equipment was common on the WLE and vice versa. If the lease included the rolling stock and engines, then the WLE cars would be considered the equivalent of the WLE cars and could be used interchangeably. If the lease or the lessor wanted to keep the two roads separated for some reason then they might operate them as separate companies.
A lease railroad could retain its identity The Chessie roads is well known example since none of those roads was merged under the Chessie banner till after the formation of CSX.Then we see NYC/B&A,NYC/P&LE,NYC/T&OC and NYC/IHB.Then there’s Southern with its family.
So,yeah,a NKP locomotive could be seen one the Wheeling and vice versa…Of course the Wheeling locomotive fleet could have been repainted to NKP’s colors with a small w&le under the number-if at all…
thankyou all. Some very usefull information that’s cleared up a few of my queries. I’m currently drawing up plans for an HO scaled, freelance, western vaginian, coal hauler and am trying to locate my RR in a specific time period and place. (around 1955-60) Im intending to model a staged mainline of an actual RR that my freelanced short line will pass over on a bridge. I found that the Wheeling & Lake Erie ran in western vaginia and at the right time but that it was leased to the NKP in 1949. And so i wasn’t sure if i needed to track down some W&LE rollingstock or go with some NKP stuff. But by the sounds of it i can just add a little W&LE under the engine and rollingstock road no# of any NKP equiptment that i might use.
Thank you again
Hello “Stu,”
What really happened with the Nickel Plate’s lease of the Wheeling & Lake Erie was that the Wheeling became an integral part of the Nickel Plate as of December 1, 1949. The W&LE’s locomotives and cars were relettered for the NKP, with no indication of their former ownership except for new blocks of numbers added to the NKP’s roster. For example, the Wheeling’s 6400-series class K-1 Berkshires became the Nickel Plate’s 800-series class S-4. The only diesels on the W&LE in 1949 were four NW2 switchers used at Toledo, the D-1 through D-4. They became NKP 95-98 during 1950 and '51. The NKP mostly dieselized the former W&LE in 1954, using new NKP diesels that had never been under Wheeling ownership. When the Nickel Plate itself was merged into the Norfolk & Western in 1964, the former Wheeling lines went with it to become part of the N&W,
So long,
Andy
If an entire railroad is leased by another railroad, and not just a particular line, it’s in effect a sale of the one railroad to the other. Sometimes for legal reasons, it works better to do a 999 year lease than it is to buy something. For example, a railroad may have been built using state subsidies like land grants or tax breaks, but with the provision that if the railroad was ever sold, it would have to pay something back or would lose it’s tax breaks etc.
Wasn’t this the case with the C&NW and the Omaha Road, the Omaha being ‘leased’ for a number of years ?
Sort of…the C StP M & O became part of the Chicago & NorthWestern System around 1900, but didn’t truly merge with the CNW until the fifties. They had their own headquarters and president in the Twin Cities (CNW’s HQ was in Chicago) and they maintained separate shop buildings and other things (like running on the right hand instead of the left). It was a bit like what New York Central had with the B&A and P&LE I believe.
A long term lease is in effect a sale. If say a small railroad in Wisconsin leased itself to the Milwaukee Road for 999 years in 1885, it really ceased to exist at that point. It can get confusing with the different deals and mergers. Sometimes a railroad is leased to itself. [%-)] IIRC for many years the Duluth Winnipeg and Pacific Railroad was a Minnesota corporation, which was entirely leased to the Duluth Winnipeg and Pacific Railway, a corporation set up in I think New Hampshire (for tax purposes I guess).
The Omaha Road wasn’t leased to the North Western, it was purchased. According to The Historical Guide to North American Railroads, Second Ed., the C&NW bought a majority of the stock of the CSt.PM&O in 1882. The Omaha Road maintained a separate although closely allied corporate identity under C&NW ownership until 1972, when it was merged into the Chicago & North Western Transportation Co.
So long,
Andy
Andy makes a good point and I am not familiar with the Omaha Road’s transaction but the distinction of outright ownership and leasing of railroads can sometimes get hazy. For example, if you study a New York Central annual report in the early 1950’s you’ll see that over half the route mileage was leased railroads but in most cases (but not all) the NYC owned a majority of their stock. These are often referred to as “paper railroads”. A seperate corporate identity still exists and annual stockholder meetings stipulated (though sometimes not attended) and dividends paid out to stockholders (or a specific group of stockholders) from the source of revenue being the lease payments. Often the one leasing the RR would pay all the maintenance, property taxes and any organization costs for the lessor but operate the railroad and collect revenue derived from the operation of the RR. It is interesting to note that I far as I can tell, these entities did not pay income tax! Usually this stock was not listed in the major exchanges and could be a good return on investment if you could get your hands on it, perhaps paying as much as 8% of par value. In 1970, the bankruptcy judge put a stop to this with Penn Central as it was obligated to pay lease payments to a number of paper railroads, though many were unprofitable lines. (Many of these entities were eventually absorbed in a Penn Central entity and liquidated.) For another example, the Wabash was leased to N&W in 1964 and finally absorbed into Norfolk Southern many years later.
Historically, paper railroads go back some years. Often they were owned by astute financiers and bond holders that determined as an operating RR, their RR could not survive or make a decent return on investment in the environment they were in. This was especially true when railroad barons with bigger properties were duking it out and driving freight rates down. Therefore, the owners of the smaller entities worked up a long term lease with
New York Central corporate history can get pretty complicated, because it was an amalgam of many small railroads - some dating back to the 1830’s-40’s. Some of the railroads it “owned” were really quite independent, had their own president, shops, trackage etc. For example the current issue of the NYC Historical Society’s “Headlight” talks about how if the NYC proper wanted to use a CCC&St.L (“Big Four”) engine in the forties or fifties, it had to clear it with the Big Four - even though the engine said “NEW YORK CENTRAL” on it, it was still a Big Four engine. That’s why in steam days some engines had “NEW YORK CENTRAL SYSTEM” on the tender, because the engine was actually a Big Four or P&LE etc. engine, not directly an NYC engine.
On the C&NW, engines carried C&NW or CSt.PM&O (Omaha Road) initials on the cab side with a big engine number on the tender until sometime in the thirties. After that, the CNW System herald was on the tender, with the number on the cab. Omaha Road engines had the RR initials under the engine number on the cab side; CNW engines just had the number. The Omaha sublettering continued into the diesel era, ending around 1960.
Interestingly enough, not too long ago UP (who took over CNW in the nineties) bought some hopper or bathtub gondola cars and used the Omaha’s later shortened “CMO” freight car reporting marks instead of “UP”. I believe CNW had used “CGW” and “MSTL” reporting marks on new cars in the eighties-nineties; many of those cars may still be around now sporting UP shields??
In terms of railroad leasing, could this apply to the Missouri Pacific and the Gulf Coast Lines?