I was watching an old propaganda film from WWII the other day which was boasting one of the major efficiencies of the US railroad system was the free interchange of cars amongst railroads. This allowed say a Boston and Maine car to travel all the way out to California pick up a load and maybe then head to Texas and on to other locations freely amongst the system.

I was quite an interesting notion and one I gather wasn't always possible in other countries. So the question becomes how did they track, dispatch and then get paid for freight back in the day? Say I am the New Haven Railroad. If I send a car from one end of the line to the other it is easy I would think I charge a day rate for using my car and another rate for mileage. Now say I send it up to Albany via say the Boston and Albany Railroad. Now it travels my system and up over the B&A and then comes back. I don't see that as much of an issue. It likely doesn't go too far and I can still keep track of it even if a bit more difficult. On the other hand what if it takes another load out to California via the Union Pacific and goes via 10 other lines in the process, who collects the fees and keeps track of my car for me?

Now say it gets out to California where it unloads. Do I try to get it back by picking up whatever train gets it closest to me? Maybe it can hitch a ride on to Texas, at least it is headed east bound, and hope maybe from there we will find another train going further east? On the other hand if I am getting paid day rates and it is being kept in use to I really care if it gets back to me as long as it is in use? I suppose in the day of the internet this isn't too bad but what about 1942? Is it all done via the honor system? How do they report payments back to me and who decides where my car loads up next? Even if all that is working what if the box car I own needs work, who fixes it for me if it breaks down somewhere along the way, and who decides what "broken" really is? If it does break, how do I trust the guy fixing it for me isn't price gouging me or telling me the axle broke when it never did? What if the repairs get too high in price and I just as well sell it for scrap but instead of being in my yard it happens to be 2000miles away.

If there was a good system in place like this to manage the movement of all these cars and pay the railroads money when a car is in use, why even bother owning the railroad if you can just make money on people using your cars? I believe today that is what to some degree happened say a TTX was it the case back then? On the other hand maybe I am a railroad and I don't like being in the car rental business, perhaps it is too hard for me to keep track of thousands of cars somewhere in the USA. What motivation do I have to actually build my own cars and increase the stock in the USA's overall car fleet if ample supply of cars are entering my line and being unloaded along the way? By the way what if there are no loads near by for my empty car to take who pays to send it somewhere where it is needed?

Anyone know how this was done? I have worked on various engineering projects where we can't even keep track of 10 different styles of parts inside our own building with the help of modern computers never mind 100,000's of cars somewhere over the USA with no computers?

It was called the Per Diem Agreement, and it set a standard daily rate for car hire. Each road was responsible for paying per diem on all the foreign cars on their tracks at Midnight. They didn't need computers; each road had an army of clerks. Records were kept of the date and time of each interchange, some of those clerks used that data to figure the car hire accounts. Settlement was made monthly. Of course, for the most part these were wash transactions, unless a road was deficient in car ownership.

Since the advent of computer car tracking, car hire is now figured on an hourly basis.

The free interchange of freight cars is a practice brought to us primarily by the AAR and its predecessors. The ICC also supported this effort with some rules of their own, as they felt a more efficient use of freight equipment would result in lower rates for customers. My experience with the system post dates the midnight to midnight car hire charges that Dennis refers to. I worked for the railroads in the 1970s and 1980s, when many smaller regulated railroads was giving way to just four large unregulated railroads.

The movement of freight cars was controlled by the car service rules. These explained, in great detail, how freight cars would be handled after they were unloaded. Remember this is an era when the cost of shipping a commodity from one location to another location was set by the ICC, and did not depend on the route specified. When a customer specified a route, all the railroads on the route would get paid a portion of the rate based on what the ICC had determined was fair. The empty car was to be returned on the same route as it went out on with each railroad that received money for moving the loaded car, bore the cost of returning the empty car.

Depending on the car type, the car could be reloaded and returned as a money making load, but it had to be loaded generally in the direction of the home road. There was a period of time when the car was off the clock while the receiving road could look for a reverse load for the car. The system is more complicated that this because cars were also identified for types of loads. If a car was carrying finished consumer items one way, the car could not be loaded with carbon black or fish meal the other way as then the car could never be used for finished goods again.

As for lease cars, those are cars with reporting marks end in "X" There is a different set of rules for these cars. For one the owner does not get paid as much as if it was a railroad owned car. A shipper could not use leased cars unless the railroad gave them permission. The ICC looked at leased cars as wasteful, as they could not be reloaded with a return load. The original leased cars were tank cars because they could not have commodities mixed and cleaning them every trip was not practical. Railroads get paid a rate for each hour a car is off line and for each mile it runs off line. the leased cars only get paid the mileage charge. The big battle over leased cars occurred between PFE and FGEX PFE cars were treated like railroad cars and got the extra payment and FGEX car were treated like leased cars and did not get the hourly rate. The ownership and operation of the two different companies was nearly the same. Railroads started authorizing leased cars for other commodities where the ownership of the cars was more of a drain on the railroad than a benefit. Covered hoppers for grain service is a good example, where there is a large fleet of the cars, but they are only used about half of the year. Then coal cars in unit trains became the big thing. The railroads could not afford to own large fleets of these cars when the routing might be changed to a different railroad if the rates changed. This was a really big problem after deregulation. There was also the ever increasing wages of the carmen, who had the right to maintain the railroads cars, but the leased cars could be sent to any shop for work.

As far as maintenance and repairs off line, that is another AAR function called the Mechanical Division Interchange Rules. First of all they set standards for all the new cars built and require many interchangeable parts. They establish condemning limits for parts, they establish who is responsible for the cost of repairs, and they set all the prices for repairs. Mostly on a flat rate bases, but there is also labor and material pricing for repairs that are not specifically covered. They also give credit for scrap if a part is not to be reused. The interchange rules also establish the value of a car based on its age, weight and original cost, so if a car is damaged beyond repair off the owners line, settlement can be made. It also has rules for sending cars home for repairs if they are damaged off line. The car service rules take damaged cars off the time and mileage charges as soon as the damage is reported. The AAR Mechanical Division has inspectors who go out to repair tracks all across the country and audit the repairs and billing to make sure everything is being done properly. These auditors have a great deal of power. If they find that a repair track is doing something wrong, they can estimate how long this improper repair has been going on, and reverse all the billing for that period of time for that repair. They have another group that just audits wheel shops. This group will come to a wheel shop and tell you all the things you are doing wrong. Then they will spend the next couple of days helping you get everything straightened out.

It sounds like an amazing system, and it was, but there were also problems. I knew gentlemen from ACF who said that the AAR freight car billing repair system was the largest organized crime in the US. Now that the railroads are deregulated and most of the traffic goes across just four railroads, I think most everything is done by contract. But there are still free running freight cars that must be dealt with. This system was not limited to the US, to some degree is also included Canada and Mexico, and several countries to the south of Mexico.

the conductor carried the paperwork, each car had a paperhold.

I think the "Free" is more a car is not restricted to one railroad and have to unload/reload between railroads to move the freight, that would be horribly inefficient. That would be necessary on some interurban freights with interurban locked freight cars, but much of the traffic was less than car load and had to run thru city streets.

A tip of the hat to David Johnston's admirably concise description of car accounting back in the days of regulation. That said, I disagree with his second paragraph's assertion that the ICC was involved in determining the fairness of divisions of revenue. Divisions remained the exclusive purview of the railroads. The ICC was not privy to the agreements between carriers. Having hired out in the industry in 1970 and then been involved in the formation of one of the early shortlines formed as a by-product of the formation of Conrail, Michigan Northern Railway Co. which shared the same birthdate as Conrail, April Fool's Day, 1976, I got an education in divisions.

Because MIGN was taking over an excluded portion of the PC, ex-PRR, nee-GR&I from Grand Rapids to Mackinaw City, MI, we had to negotiate a division of the PC's share of revenue east of the Chicago gateway prior to Conrail's startup. With the aid of an officer of the Shortline Association, the revenue was divided on a mileage pro-rate in fifty mile increments, with an extra 50 mile block for the shortline. Because MIGN was a settling carrier on traffic which terminated on its line, the newly minted shortline had to have division sheets from all carriers in a route over which a car moved from origin to destination. Division sheets show how revenue was divided on a per cent basis as mutually agreed upon by the participating railroads. In the beginning, since this was an era before the flood of shortlines, it took a little persuasion to get some major carriers to part with what was closely held information. Eventually, we got what we needed. A few sheets were noticeably musty, with the divisions written in a Spencerian hand using pen and ink. Once agreed upon, divisions prior to deregulation could only be changed with the consent of all the parties in a particular route.

As an example, back in the day, a primarily logging railroad operation owned by the White family, the Boyne City, Gaylord & Alpena connected at Boyne Falls, MI with the GR&I and its competitor, the Michigan Central at Gaylord, MI. By the time MIGN came along the BCG&A had been reduced to the Boyne City Railway, about seven miles long as I recall with a single connection at Boyne Falls. However, the divisions were still in place. BCG&A received 50% of the revenue allocated east of Chicago, MIGN and CR split the remaining 50% based on the mileage prorate. For some reason, the Boyne City folks didn't see any reason to change the split.

Deregulation changed the rules of the game. Railroads could unilaterally cancel divisions and routes and attempt to negotiate new ones. There was an economic advantage to being the bigger fish, with the smaller ones being gobbled up. New spin-off shortlines, typically did not share divisions. Instead, combination rates were applied, railroad A establishing a rate for movement on its line, railroad B doing the same. The shipper paid the combination rate. An alternative is called an Accounting Rule 11 rate, rule 11 rate for short. In this case railroad A and railroad B bill the shipper separately. This is not a preferred situation for shippers. A third alternative is the junction settlement, widely used where a major railroad leases a line to a shortline operator and agrees to pay the operator so much per car handled. The major railroad controls all pricing, quoting a through rate from origin to destination, simplifying life for the shipper.

Since this is being posted on the Railway Preservation New site, in order to stay in the good graces of the moderators, does anyone know of preserved collections of division sheets? Largely only of historical interest, they were once critical to the financial well being of the railroads.

Alex Huff

I think I have a set of the Division Sheets that ConRail would have used on April 1, 1976, that is, the last sheets issued by the bankrupt predecessor roads. I have duplicates of most of them, and don't know of a worthy organization for donation.

I'm not sure how much of those sheets would be hanging around, as they might get thrown away after a specific time.

Some of the interchange monies were somewhat a wash neither railroad really gaining anything, but its a record keeping of the action should questions come up, wheres my load etc...

The Mishawaka IN freight station which for now still holds the St Joe Model Railroad club we found in the rafters a loading ticket pad, it had a date pre-printed for it as you write the date in to make it easier to write your time/date etc/load...and it was......

___, __, 18____


Building was built in 1889, someone flinging a pad up I guess...oh well somebody might find it...