Re: Accuracy Of The Official Railway Equipment Registers


Robert J Miller CFA
 

Technically, they were known as Equipment Trusts. As such each trust would have a trustee, who was responsible for receiving and disbursing the interest payments on the bonds. Unlike a mortgage, the borrower typically did not have the right to pay the bonds off early, except in cases where damaged equipment was scrapped.

There were two common types of equipment trusts. Under one type the borrower acquired title to the equipment only after the full term of the bonds, which was normally 20 years, and the principal of the notes was paid in full. Under the second type the borrower acquired partial title after each year’s interest and a partial principal payment were made. Full title came at maturity of the bonds, again the typical term was 20 years. The equipment also had to be insured against loss.

I spent most of my working life managing investments for trusts and individuals. I recall buying an equipment trust bond for an account I managed, which held some locomotives acquired by the Santa Fe. A year or two into the life of the equipment trust one locomotive was wrecked and subsequently scrapped. We received a payment from the trustee of the equipment trust representing the value of the locomotive because the trust no longer owned the stated number of locomotives.

I can’t speak to the OPER’s accuracy, but the trustees of equipment trusts would have had serial numbers, etc. for everything each trust owned. Failure to keep adequate records and do audits could expose the trustee to significant financial liability.


From: main@RealSTMFC.groups.io <main@RealSTMFC.groups.io> on behalf of gary laakso <vasa0vasa@...>
Sent: Wednesday, May 5, 2021 9:00:47 AM
To: main@RealSTMFC.groups.io <main@RealSTMFC.groups.io>
Subject: Re: [RealSTMFC] Accuracy Of The Official Railway Equipment Registers
 

The use of equipment trusts to finance rolling stock and locomotives followed the Transportation Act of 1920 and the re-financing of existing mortgages to carve out rolling stock and locomotives from the mortgages.

 

Gary Laakso

Northwest of Mike Brock

 

 

 

From: main@RealSTMFC.groups.io <main@RealSTMFC.groups.io> On Behalf Of gary laakso
Sent: Wednesday, May 5, 2021 5:40 AM
To: main@RealSTMFC.groups.io
Subject: Re: [RealSTMFC] Accuracy Of The Official Railway Equipment Registers

 

The number of freight cars, passenger cars, work equipment and locomotive would have been reviewed by potential buyers of mortgage bonds since they were part of the collateral supporting the bonds along with the physical plant.  The need for cash really helped record keeping and reporting.  Plus, when collateral was destroyed, it had to be replaced and there were periodic reporting requirements for equipment under the mortgages.  I suspect that the mortgage agents visited the railroads to make sure that equipment pledged was in fact there. 

 

Gary Laakso

Northwest of Mike Brock

 

From: main@RealSTMFC.groups.io <main@RealSTMFC.groups.io> On Behalf Of akerboomk
Sent: Wednesday, May 5, 2021 5:24 AM
To: main@RealSTMFC.groups.io
Subject: Re: [RealSTMFC] Accuracy Of The Official Railway Equipment Registers

 

  1. They were only as accurate as the data the railroads supplied
  2. I have noted a couple times where an intermediate line was removed but the following line’s “CLASS” field (using “dittos”) wasn’t fixed for an issue or 2
    (but now I can’t seem to find the specific examples, so the example below is “made up”)

 

e.g.

-------------------

1-100     BOX, SPECIAL

101-200 BOX

201-300 “

--------------------

 

Became

-------------------

1-100     BOX, SPECIAL

201-300 “

--------------------

 

And then

-------------------

1-100     BOX, SPECIAL

201-300 BOX

--------------------

 

 

  1. Once they claimed there were 110 cars in series 12500-12599

 

But, as Ed said – it is remarkable the accuracy they had

(but then again, how would we know if they are wrong? – in particular the car counts)

 


--
Ken Akerboom

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