On Wed, May 5, 2021 at 06:00 AM, gary laakso wrote:
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.
Thank you for this. It answers a question I've long had.
In the early years of the twentieth century, and perhaps before, it was relatively common for railroads to buy new equipment and number it in existing number series to "fill in" vacancies left by equipment destroyed by wrecks. The Soo Line did this a lot with cabooses; buy twenty new cabooses but only number 14 in a straight series, assigning random numbers to the other six. It really made the caboose roster hard to understand in the days when primary source roster material was not readily available, since these randomly numbered cars bore no resemblance to the rest of the series. Now that there is better documentation available, I can see that the practice also extended to the freightcar fleet in general, but it was more noticeable with cabooses, since there were more photos available, allowing one to see the discontinuity of the fleet.
I had always suspected the purpose was to keep the value of the installed equipment constant, i.e. I started the year with 100 cabooses, and at year end I still have 100 cabooses, plus betterments, and I always wondered if there was an incentive to do this in being able to expense the replacements immediately rather than having to capitalize and depreciate them over time. I also wondered what ended the practice, and It appears this act which separated equipment trusts from the overall value of the property is the reason.