1. © Copyright 2008 TTX Company : : CONFIDENTIAL 1 1

2. 2 2 The History of Car Hire ACACSO May 12, 2010 Mike Carmichael © Copyright 2008 TTX Company : : CONFIDENTIAL

3. 3 3 Agenda Track Gauge - Origins Track Gauge - History Car Hire – Origins Car Hire – History Common Phrases - Origins

4. © Copyright 2008 TTX Company : : CONFIDENTIAL 4 4 Track Gauge - Origins In order to have Car Hire, cars must interchange to other roads In order for cars to interchange to other roads the Track Gauge must be the same Today the US Railroad track width is 4’ 8 ½ “ Let’s try and determine how it got that way

5. © Copyright 2008 TTX Company : : CONFIDENTIAL 5 5 Track Gauge – Origins Theory # 1 The English built the first Railroads and 4’8 ½ “ was the gauge they used. –Why ? Because that was the gauge of the old English tramways –Why ? Tramways were built with the same tools the old wagon builders used. –Why ? Wagon wheels were built to accommodate ruts, built by the Roman, for their chariots. –Why? Romans build their chariots with that width to accommodate the width of two war horse’s rear ends.

6. © Copyright 2008 TTX Company : : CONFIDENTIAL 6 6 Track Gauge – Origins Theory # 2 The Greeks saw little reason to bother forming flat stone surfaces 10’ wide. When two narrow ruts carved into the stone, served the same purpose. They even carved crossing sections, passing lanes and sidings. Maybe it was these Greek “rut ways” that were the ancestors of current day railways

7. © Copyright 2008 TTX Company : : CONFIDENTIAL 7 7 Track Gauge – Origins Theory # 3 In England, carts on rails were used by mines, pulled by animals George Stephenson, who worked at a coal mine in 1814, built the first steam engine to pull these carts. It went 4mph The coal mine George was working at, used 4’ 8 ½ “ tracks In 1825, he built the 1 st locomotive for the Stockton & Darlington railroad, it went 15 mph Later, George is commissioned to build a railway in England. By the time Great Britain decided to plan railroad development, there were already 1,200 miles of George’s rails.

8. © Copyright 2008 TTX Company : : CONFIDENTIAL 8 8 Track Gauge - Origins The Romans build hundreds of roads throughout Europe, but did not build ruts for their Chariots. Examples of different track gauges all over Europe –The GRW in England had 7 ¼” –Russia Railway had 6’ track –Spain had 5’ 6” track –Ireland had 5’ 3” and still does today. The Greeks did developed ruts, but they were 4’ wide George Stephenson’s locomotive & track gauge is what has prevailed

9. © Copyright 2008 TTX Company : : CONFIDENTIAL 9 9 Track Gauge – Change U.S. in the 1800’s 1820’s –John Stevens builds a “steam Waggon” in New Jersey 1830’s –America pushes to explore the west 1840’s –America’s population is moving to the west 1850’s –Traffic patterns were shifting from North / South to East / West 1860’s –Several railroads had been created 1870’s –Gauge diversity was becoming a significant issue

10. © Copyright 2008 TTX Company : : CONFIDENTIAL 10 © Copyright 2008 TTX Company : : CONFIDENTIAL 10 Track Gauge – The Change By the 1870’s –U.S. Railroads have at least 23 different track gauges, ranging from 3’ to 6’ –Freight was unloaded / reloaded at interchange points –A move from Philadelphia to Charleston takes 8 “transloads” –There are a few locations where cars were: Lifted off the track Wheel sets changed to new gauge Lowered onto the new railroad –But, at this point, car hire wasn’t required, because very few cars were actually interchanged –Railroads were wanting other roads to change their track gauge

11. © Copyright 2008 TTX Company : : CONFIDENTIAL 11 © Copyright 2008 TTX Company : : CONFIDENTIAL 11 Track Gauge – The Change In the 1880’s –Railroad realized the economics of the gauge differences and began forming a plan –Transload workers, dependant on the incompatibilities, were demonstrating and fighting the gauge change. –President Cleveland signs the Interstate Commerce Act to: Combat widespread Railroad corruption Regulate –Railroads –Trucks –Water Carriers –Freight Forwarders

12. © Copyright 2008 TTX Company : : CONFIDENTIAL 12 © Copyright 2008 TTX Company : : CONFIDENTIAL 12 Track Gauge – The Change In February, 1886 –The Operating Officers of the Southern Railroads agreed the change their gauge to 4’9” Matching the Pennsylvania Railroad gauge –The South’s biggest interchange carrier –The roads agreed to convert the track on a single day May 31 st of that year The change was managed by three Railroad Committees –Transportation –Roadway –Machinery

13. © Copyright 2008 TTX Company : : CONFIDENTIAL 13 © Copyright 2008 TTX Company : : CONFIDENTIAL 13 Track Gauge – The Change 2 nd Quarter 1886 –Locomotives & cars were prepared for rapid conversion New wheels were designed to be reversed on “change day” New axles with special rings were designed. –Removing the ring would conform to 4’ 9” –The plan for “change” day included: The moving of only 1 rail Inside spikes were put in place to match the new gauge A portion of the current spikes were removed Non-mainlines were converted in advance A virtual army of workers were staged for “the day”

14. © Copyright 2008 TTX Company : : CONFIDENTIAL 14 © Copyright 2008 TTX Company : : CONFIDENTIAL 14 Track Gauge – The Change March, 1886 –Days before the conversion, roads began Clearing cars from the mainline Converting those cars to the new gauge –At midnight on March 30 th the concentrate work began. 11,500 miles of mainline track were converted Engine and car axles were shortened –The Southern Railroad conversion actually took 36 hours Their final conversion to 4’ 8 ½ “ occurred years later

15. © Copyright 2008 TTX Company : : CONFIDENTIAL 15 © Copyright 2008 TTX Company : : CONFIDENTIAL 15 Track Gauge – The Change May 31, 1886

16. © Copyright 2008 TTX Company : : CONFIDENTIAL 16 © Copyright 2008 TTX Company : : CONFIDENTIAL 16 Track Gauge – The day after the Change

17. © Copyright 2008 TTX Company : : CONFIDENTIAL 17 © Copyright 2008 TTX Company : : CONFIDENTIAL 17 Car Hire – The Beginning 1860 –Was the beginning of Car Hire, but they were all Bilateral Agreements 1876 –The first Bilateral Agreement that included a “Time Rate” was made between the UP and the CB&Q 1877 –The Association of Car Accountants was formed Car Hire rates were agreed to - 15 cents a day, ½ cent per mile Rule 5 Reclaims were actually included The system was abandoned after 6 months – Too much work !

18. © Copyright 2008 TTX Company : : CONFIDENTIAL 18 © Copyright 2008 TTX Company : : CONFIDENTIAL 18 Car Hire – The Beginning 1878 –First per diem rules were drafted Every loaded car delivered required an empty car The idea delayed loaded cars –These rules were also canceled 1880’s –After the gauge change of 1886 Cars began to interchange freely between roads Bilateral Agreement charged for “loaded miles” only Railroads started using foreign cars for storage

19. © Copyright 2008 TTX Company : : CONFIDENTIAL 19 © Copyright 2008 TTX Company : : CONFIDENTIAL 19 Car Hire – The Beginning 1890’s – More and more cars began to interchange –ICC introduced a “Rental System” for cars Loaded miles @.75 cents per mile –System still didn’t resolve the storage issue –ICC developed a “Per Diem” system Car rates are 20 cents per day Replacing the mileage system CAR HIRE WAS BORN !

20. © Copyright 2008 TTX Company : : CONFIDENTIAL 20 © Copyright 2008 TTX Company : : CONFIDENTIAL 20 Car Hire – The Beginning 1902 –The “Committee on Car Hire” was created Arthur Hale, of the B&O, penned the 1 st car hire rules Rules 5, 7 and 8 Reclaims were born Cars were 20 cents a day and ½ to ¾ cent per mile –Railroads created the Car Accounting function Developed processes to: –Record interchanges –Record wheel movements –Calculate days and miles traveled on-line –Audit Car Hire Receivables

21. © Copyright 2008 TTX Company : : CONFIDENTIAL 21 © Copyright 2008 TTX Company : : CONFIDENTIAL 21 Car Hire – The Beginning Operationally –Railroad employees met at the interchange point –Exchanged paper Interchange Reports Used seven part carbon paper –The delivering road listed all delivered cars and signed it –The receiving road verified cars received and signed it –Two copies of the documents were mailed to Car Accounting When Car Accounting received the reports Kept one copy for their records Cut one copy into strips –A strip for each car

22. © Copyright 2008 TTX Company : : CONFIDENTIAL 22 © Copyright 2008 TTX Company : : CONFIDENTIAL 22 Car Hire – The Beginning Car Accounting would process the strips –Sort them into groups by car owner –Hand write them into leather bound books –Enter them into junction reports & mail them to the car owners Conductors also mailed movement reports for mileage and tonnage calculations That was the early Car Accounting process

23. © Copyright 2008 TTX Company : : CONFIDENTIAL 23 © Copyright 2008 TTX Company : : CONFIDENTIAL 23 Car Hire – Rates Since the 1800’s car hire rates have changed –In 1920 the daily rate went to $1.00 per day –In 1951 the daily rate went to $2.00 per day –In 1964 the daily rate changed to include a “Car Type” distinction –In 1970 the ICC imposed an “Incentive” rate for cars in short supply In 1979 per diem was changed from a Daily rate to an Hourly rate –Was officially indentified as “Car Hire”

24. © Copyright 2008 TTX Company : : CONFIDENTIAL 24 © Copyright 2008 TTX Company : : CONFIDENTIAL 24 Car Hire – Rates In 1982 –Deregulation occurred Trailers & containers went to bilateral rates Railroads could enter into freight contracts 1993 –Deprescription was approved by the ICC Allowing railroad car hire rates to be negotiated 1996 –The ICC was abolished and railroad review was given to the Surface Transportation Board

25. © Copyright 2008 TTX Company : : CONFIDENTIAL 25 © Copyright 2008 TTX Company : : CONFIDENTIAL 25 Car Hire – Current Look We’ve come such a long way since cutting Interchange reports into strips. Deprescription has allowed us to simplify car hire. Now, to calculate car hire correctly, you need to know –Is the car a System car? Foreign car? Private car? TTX car?

26. © Copyright 2008 TTX Company : : CONFIDENTIAL 26 © Copyright 2008 TTX Company : : CONFIDENTIAL 26 Car Hire – Current Look What’s the cars: – Car type? –LCS interchange times? –CHARM rate? For that car? For that owner? –Number of loaded hours? –Number of empty hours? –Number of loaded miles? –Number of empty miles? –Loaded time rate? –Empty time rate ?

27. © Copyright 2008 TTX Company : : CONFIDENTIAL 27 © Copyright 2008 TTX Company : : CONFIDENTIAL 27 Car Hire – Current Look What’s the: –Loaded mile rate? –Empty mile rate? –States the car travel in? Is there a: –Rule 5, Rule 15? –Reclaim ? Is the car moving: –To shop? –As a revenue empty? –Under a car hire free freight contract? –Under Haulage? –Under Trackage Rights?

28. © Copyright 2008 TTX Company : : CONFIDENTIAL 28 © Copyright 2008 TTX Company : : CONFIDENTIAL 28 Car Hire – Current Look Does it carry Hazardous Material? Is there a Car Service Directive? Does the car have a “D” code? Is Tank Car Equalization involved ? So, we may have car hire better, but certainly not simpler !

29. © Copyright 2008 TTX Company : : CONFIDENTIAL 29 © Copyright 2008 TTX Company : : CONFIDENTIAL 29 Phrase Origins I found some phrases that we have may have heard, but do we know where they came from?

30. © Copyright 2008 TTX Company : : CONFIDENTIAL 30 © Copyright 2008 TTX Company : : CONFIDENTIAL 30 Phrase Origins – Dead Ringer Meaning –A person that looks exactly like another Origins –England Original Meaning –Some scoundrels would run a slow horse until the betting odds were at the desired level, then substitute a “ringer” look alike, that could run much faster.

31. © Copyright 2008 TTX Company : : CONFIDENTIAL 31 © Copyright 2008 TTX Company : : CONFIDENTIAL 31 Phrase Origins – A Tinker’s Damn Meaning –Something that is insignificant, worthless or not worth caring about Origins –England Original Meaning –A small paper dam designed to hold hot solder. Used by Tinkers or plumbers, when mending pans, then thrown away

32. © Copyright 2008 TTX Company : : CONFIDENTIAL 32 © Copyright 2008 TTX Company : : CONFIDENTIAL 32 Phrase Origins – Mad as a Hatter Meaning –Someone who is very upset Origins –England Original Meaning –Mercury was used in the making of hats, eventually having an affect on the hat makers nervous systems, causing them to tremble and appear insane

33. © Copyright 2008 TTX Company : : CONFIDENTIAL 33 © Copyright 2008 TTX Company : : CONFIDENTIAL 33 Phrase Origins – Saved by the Bell Meaning –An event occurs that stops an inevitable conclusion Origins –Europe Original Meaning –When people were dying of in large numbers from disease, there was a rush to bury them before the disease spread. Some were not dead, they were only in comas. String was tied to the hand of a buried person hand and attached to a bell above ground. –Someone had to stay in the grave yard all night to listen for the bell, coining the term “Graveyard Shift”

34. © Copyright 2008 TTX Company : : CONFIDENTIAL 34 © Copyright 2008 TTX Company : : CONFIDENTIAL 34 Phrase Origins – Scot Free Meaning –Escaping punishment Origins –Scandinavia - 1300’s Original Meaning –Scot is a Scandinavian word for tax or payment that the UK had levied. If one got away without paying the tax, it was said that they “got off Scot free”

35. © Copyright 2008 TTX Company : : CONFIDENTIAL 35 © Copyright 2008 TTX Company : : CONFIDENTIAL 35 Phrase Origins – Rule of Thumb Meaning –A standard of action or measure Origins –England Original Meaning –Old English law declared that a man could not beat his wife with a stick any larger than the diameter of his thumb. –When brewing beer, the temperature at which to add yeast was important. The brewer would use his thumb to determine the correct temperature

36. © Copyright 2008 TTX Company : : CONFIDENTIAL 36 © Copyright 2008 TTX Company : : CONFIDENTIAL 36 Phrase Origins – Son of a Gun Meaning –A rouge or a scamp Origins –England - The Royal Navy 1800’s Original Meaning –The British Navy used to allow women to live on naval ships. Any child born on board who had uncertain paternity would be listed in the ship’s log as a “son of a gun”

37. © Copyright 2008 TTX Company : : CONFIDENTIAL 37 © Copyright 2008 TTX Company : : CONFIDENTIAL 37 Phrase Origins- Caught Red Handed Meaning –To be caught in the act of committing a misdemeanor, with the evidence there for all to see Origins –Ireland Original Meaning –There was a boat race to Ulster, in which the first person to touch the shore of Ulster, become the province’s ruler. One contestant secured his win by cutting off his hand and throwing it to shore, just ahead of his rival. –The red hand is still on the Ulster flag

38. © Copyright 2008 TTX Company : : CONFIDENTIAL 38 © Copyright 2008 TTX Company : : CONFIDENTIAL 38 ANY QUESTIONS ? ? ? ? ? ? ? ? ?

39. © Copyright 2008 TTX Company : : CONFIDENTIAL 39 © Copyright 2008 TTX Company : : CONFIDENTIAL 39 © Copyright 2008 TTX Company : : CONFIDENTIAL