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Railroad Newsline for Saturday, April 14, 2007

Compiled by Larry W. Grant

In Memory of Rob Carlson, 1952 – 2006

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RAIL NEWS

A SMALL VICTORY: BILL TO SAVE TSRR MOVES TO SENATE FLOOR

AUSTIN, TX -- Supporters of a pair of bills aimed at transferring the Texas State Railroad out of the state park system can count a small victory Thursday afternoon.

Senate Bill 1659, filed by Sen. Robert Nichols, R-Jacksonville, moved out of committee to the full Texas Senate, another step forward along the road to a vote.

"The people of Anderson and Cherokee counties have come together to save this important part of Texas history," Nichols said in a Thursday news release. "Community leaders deserve credit for developing a long-term solution for preserving the Texas State Railroad."

Palestine City Manager Dale Brown told the Herald-Press late Thursday afternoon that he'd received word from Austin of the bill's move.

In addition to his position with the city, Brown also serves as secretary for the Texas State Railroad Operating Agency, an appointed group formed of Palestine and Rusk representatives which has worked to find a way to keep the park's trains running in the face of budget cuts.

On Tuesday, representatives from the operating agency and private rail tourism company American Heritage Railways testified before the Senate Committee on Natural Resources and the House Committee on Culture, Recreation and Tourism on behalf of SB 1659 and its companion bill, House Bill 3113, filed by Rep. Byron Cook, R-Corsicana.

"We are very pleased that they approved it and looked upon it favorably," Brown said. "We're optimistic that we'll be met with the same positive results" with HB 3113.

The two bills seek a transfer of the railroad from the state to a private company for operations, with a locally-controlled railroad authority providing oversight through a contractual agreement.

Representatives from the company, American Heritage Railways, and the operating agency agreed to a contract last week, which requires state approval to take effect.

The plan is not without opposition.

A group led by Jacksonville dentist Dr. Michael Banks, Save Texas Parks, seeks to keep the trains running by persuading the state to continue funding TSRR operations through the Texas Parks and Wildlife Department.

Banks, Friends of the Texas State Railroad board member Mary Deckard and Weatherford district judge Max Bennett also testified Tuesday, telling committee members that transferring the railroad to a private company was not necessary if the state would continue to fund it.

However, state officials have told local agency members and others involved for months that no more funding would be coming to run the trains after the end of the current fiscal year on Aug. 31.

"If the railroad is closed, it will be essentially impossible to reopen," said Nichols. "Not only would the cost of restarting it be prohibitive, but needed equipment and specialized knowledge could be lost."

While Brown said that no word had come on the status of HB 3113, he said that agency members expect SB 1659 to face more committee scrutiny before being brought for a vote on the Senate floor.

The Texas State Railroad is the official railroad of Texas. A historic train running through the heart of the Pineywoods, it provides recreational and scenic trips between the cities of Palestine and Rusk. To learn more about the train, visit: www.tpwd.state.tx.us/park/railroad/. - Beth Foley, The Palestine Herald

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RUSK COUNCIL RATIFIES AGREEMENT BETWEEN TEXAS STATE RAILROAD AND AMERICAN HERITAGE RAILWAY INC.

RUSK, TX -- Rusk City Council members unanimously voted to ratify the operating agreement between the Texas State Railroad Operating Agency and American Heritage Railway Inc.

The agreement, according to Palestine City Attorney Ron Stutes, would give the operating agency more power to carryout the contract with American Heritage.

The decision to ratify ended with a strong vote, but was preceded in uncertainty with the document.

Much of City Council's Thursday night meeting was spent discussing what the operating agreement actually required Rusk to do, especially since four exhibits in the document had not been finalized.

The incomplete exhibits related to different land around the railroad, Stutes said. He drafted the contract and said time constraints along with pending railroad legislation kept the exhibits out of the agreement.

Rusk City Attorney Forrest Phifer said he didn't feel comfortable ratifying an incomplete contract.

One of council's main concerns was an approximate 80-acre portion of the Texas State Railroad campground owned by the city. Would the city lease or sell the land, council members asked. However, no discussion was allowed either way, because Rusk Mayor Suzann McCarty said it was not on the meeting's agenda.

But, Phifer added, if the land is sold to American Heritage, law dictates an election will have to be called.

The operating agency is made up of six representatives from Rusk and Palestine.

Palestine City Council unanimously ratified the same agreement at their meeting Monday.

The agreement also includes specifics including: annual payment of $100,000 by American Heritage, the power to buy the operation back for $100 if American Heritage violates the contract and American Heritage's gradual ownership of the railroad over eight years.

"This will preserve the use of the property, not change it," Stutes said.

In a separate vote, council voted unanimously to have its approximate 80-acres appraised. Ms. McCarty estimated the cost at $4,000. - Stephanie Jeter, The Tyler Morning Telegraph

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BNSF EMPLOYEE HURT IN ACCIDENT

FORSYTH, MT -- A BNSF Railway Company employee was being treated at St. Vincent Healthcare this week after a train ran over his foot at a rail yard in Forsyth, Montana.

Tim Fulton was injured Monday morning during a routine switching operation, according to a railroad spokesman and Rosebud County Sheriff Randy Allies. The incident happened at about 09:30 hours. Fulton was listed in satisfactory condition Thursday at St. Vincent Healthcare.

BNSF spokesman Gus Melonas would not release the name of the injured railway employee. He said the incident remained under investigation.

Allies confirmed reports that Fulton was injured at the rail yard. Fulton is the former Rosebud County sheriff who announced in January 2006 that he was leaving the agency after serving as sheriff for seven years. - The Billings Gazette

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CN, RAIL UNION TO RESUME TALKS, LABOR GROUP SAYS

TORONTO, ON -- Canadian National Railway Co., the country's largest railroad, will restart talks tomorrow with the union representing 2,800 striking conductors and yard workers, the labor group said.

Canadian National and the United Transportation Union will discuss possible changes to the one-year contract rejected by the union, UTU attorney Brian Shell wrote in a letter on the group's Web site. Union members resumed a strike April 11 after turning down the contract.

"While the UTU is disappointed'' that Montreal-based Canadian National hasn't confirmed its willingness to discuss "improvements'' to the spurned offer, union Vice Presidents John Armstrong and Robert Sharpe will meet the company "for exploratory talks,'' Shell wrote.

Canadian National spokesman Mark Hallman confirmed the meeting while saying the session wouldn't be a resumption of bargaining. "I wouldn't characterize them as talks,'' he said today. "I would just say that we will meet tomorrow.''

The conductors and yard workers walked off the job after rejecting the proposed contract in an April 9 vote. They originally began a strike on Feb. 10, after negotiations with the company broke down on an agreement to replace the three-year accord that expired Dec. 31. They returned to work on Feb. 25 to allow time to organize the vote. - Rob Delaney, Bloomberg News

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LOGISTICS PARK GAINS DEVELOPERS

Map here:

[www.register-mail.com]

GALESBURG, IL -- The president of the Galesburg Regional Economic Development Association said the decision Thursday to enter into a development agreement for the logistics park with firms from Chicago and New York should be seen as a celebration of this community's success.

After meeting in closed session for 30 minutes Thursday morning, the Business District Development and Redevelopment Commission approved the development agreement with CenterPoint Properties of Chicago and Mercantile Companies Inc. of New York.

The city of Galesburg issued $4 million in bonds in 2003 to buy 350 acres in the U.S. 150/I-74 corridor between Galesburg and Knoxville. Thus far, there are no tenants in the park, but excited city and business officials predicted Thursday that will soon change.

"This project isn't going to develop without a developer," Galesburg City Manager Dane Bragg said after the meeting. "To have a developer is the critical element to make it all come together. It takes time and it's not as easy as people think."

The three-year contract, with up to three one-year extensions possible, calls for the city to donate the land, which is valued at $3.4 million.

"We won't actually convey the property until that project comes online," Bragg said, meaning if the developers are unsuccessful in attracting any tenants after three years, the city would still own the land or any portions not developed.

CenterPoint and Mercantile will develop the necessary infrastructure as Logistics Park-Galesburg begins to attract tenants. The value of that part of the deal is estimated at $8 million-plus.
The city will pay an infrastructure development fee of 7 percent to CenterPoint/Mercantile, which could come to $560,000 or more. The city has the option to retain 52 acres for its own development, based on a number of requirements.

Tom Schmidt, the president of Carl Sandburg College, admitted to being a novice in the economic development game.

"How big of an issue is something like this?" Schmidt asked.

"We've pursued this type of agreement for four years," answered commission member Jeff Klinck.
He said as GREDA was unsuccessful marketing the park on its own, it decided to seek out companies to handle the job.

"We've interviewed developer after developer ... and none of them were willing to bring their own money to the table," Klinck said. That changed when CenterPoint and Mercantile decided to come aboard.

Mercantile is seen as a valuable member of the team because of its relationship with the BNSF Railway Company, considered one of Galesburg's most important economic development assets.

CenterPoint is the largest Chicago industrial property owner and developer. Among its projects are the 770-acre BNSF Logistics Park Chicago, the Union Pacific Global III Intermodal development in Rochelle, and the DuPage National Technology Park.

CenterPoint was bought in March 2006 by the California Public Employees' Retirement System.
Klinck said CenterPoint "is backed by unlimited access to capital." CalPERS, the nation's largest pension fund, has $203 billion in assets.

"They are the biggest developers by far in the state," Klinck said. "They turned us down (originally). They didn't think we were ready. ... Every town in America wants this."

"Why do you think CenterPoint changed its mind?" asked Alderman Mike Spah, Ward 1, who also is a member of the commission.

"I think the railroad and their explosive expansion," Klinck said. "And I think the marketing effort of GREDA and aligning it with the railroad's story."

Klinck said the approval of intersections off Knox Highway 10 by the Illinois Department of Transportation and sewer lines run to the edge of the park by the Galesburg Sanitary District also were keys.

"This is a GREDA project and is a project GREDA has worked on for many years," said Galesburg Mayor Gary Smith. "This is one of the things GREDA doesn't get a lot of recognition for. A lot of times you can't make things like this public until it's gone away or is complete."

Likewise, Schmidt was impressed.

"This is really going to be a tool to reshape this portion of Illinois, from a jobs standpoint," he said.

The agreement still needs approval from the Galesburg City Council, which meets Monday.

"Hopefully we can convey this to the City Council and they can understand," Klinck said.

All commission members present Thursday voted in favor of the agreement, although Spah abstained, because he will be voting as a member of the City Council. - John R.Pulliam, The Galesburg Register-Mail

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BNSF TO HOST TECHNOLOGY SHOWCASE April 24

BNSF Railway Company will host its third annual Technology Showcase for BNSF's suppliers, business partners, customers and prospective employees, Tuesday, April 24, at the Fort Worth campus.

This year's theme, "The Journey to the eSynchronous Railroad," integrates all business processes and operations with technology to provide customers and employees with real-time data on all relevant aspects of BNSF's operations.

BNSF's key objectives for the Showcase are to:

. Demonstrate the value of BNSF's investment in technology and provide a vision of how technology can transform business in the future,

. Show BNSF's progress on the eSynchronous Railroad journey, and

. Attract new talent by showing college students how BNSF applies technology to achieve business objectives.

The BNSF Technology Services team (TS) will showcase its products and emerging technologies via booths, displays and demonstrations.

One of the key applications that will be displayed and demonstrated is Movement Planner, a rail-industry-first system that can proactively determine the "best" train movements across the railroad based on network velocity, train priority and performance against schedule. It provides more consistent train operations, quicker response to and recovery from planned and unplanned train events, and acts as a vehicle to capture knowledge, enhance training and offer feedback through online simulation.

Invitees include students from several North Texas universities and colleges. Suppliers include: AT&T, Aruba, Avaya, Cisco, Nortel, IBM, Infosys, Intel, Microsoft, Siebel (Oracle), RIM, Siemens, Software AG, Sun, Toshiba, Teradata, Verizon Wireless and Wabtec. - BNSF Today

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LIPINSKI WANTS LOCAL RAILROAD IMPROVEMENTS

CHICAGO, IL -- Cong. Dan Lipinski (D-3rd) told those attending the Monday rail transportation hearing in Bridgeview, Illinois that the need for improving railroad traffic through large-scale infrastructure improvements is one of 25 Congressionally designated "Projects of National and Regional Significance."

The significance may add up to as much as $1.5 billion in rail infrastructure improvements in the area over 10 years.

"Because of the antiquated system, Chicago has become a bottleneck for freight rail moving across our country, causing days of freight delay and stifling economic growth and productivity," said Lipinski. "And there are other substantial and direct impacts to the public -- Metra delays, Amtrak delays, and blocked road crossings."

Last September, Lipinski helped form a $330 million funding agreement between Congressional and federal officials, the State of Illinois, the City of Chicago, and major railroad companies called the CREATE (Chicago Region Environmental And Transportation Efficiency) program.

The private-public agreement, first of its kind, includes the $100 million in federal funds secured by Lipinksi, $100 million from the state, $30 million from Chicago, and $100 million from some or all of the six Class 1 railroad companies operating in the area.

"With a project of this level of complexity and with a diverse group of key stakeholders, the challenges involved in implementing CREATE were not unexpected," said Lipinski. "I am pleased that the freight railroads, IDOT, CDOT, and METRA have made significant progress in spite of these challenges."

The $330 million is just a drop in the bucket. According to the CREATE Web site, createprogram.org, "CREATE will invest $1.5 billion over the next six to 10 years in critically needed improvements to increase the efficiency of the region's rail infrastructure and the quality of life for Chicago-area residents."

Approximately 25 new overpasses or underpasses will be constructed in and around Chicago to alleviate traffic flow between highways and railways.

There will be six new underpasses to alleviate traffic flow between intersecting railways.
Viaducts will be improved, grade crossings will receive safety enhancements, and there will be upgrades to tracks, switches and signal systems.

"Railroad companies return 17 percent of their revenue back into their infrastructure, and it is not enough to grow to meet rising demands," said Francis Mulvey, Surface Transportation Board Commissioner. "Without infrastructure upgrade, Illinois, and the region, will find itself constrained economically."

Some estimates have freight rail service almost doubling in the next 20 years.

"There will be 17,000 jobs created by CREATE," said Mike McLaughlin, transportation director of the Metropolitan Planning Council.

CREATE's published statistics state that more than 38,000 rail-related jobs are in the Chicago region with more than $1.7 billion in annual wages.

It's estimated that the rail industry generates $22 billion in annual economic value to manufacturers and businesses in the region.

"What we are really talking about is jobs," said state Rep. Donald Moffit (74th), from Galesburg and Republican spokesperson for the hearing panel. "Ultimately, we want to expand and stay competitive."

Lipinski warned those at the hearing that the SAFETEA-LU (Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users) bill, the multi-million dollar highway and transit funding bill passed in 2005 is set to expire at the end of fiscal year 2009.

CREATE is a recipient of federal funding from SAFETEA-LU.

"With this increasing budgetary pressure, Congress may take a close, hard look at funds from projects in SAFETEA-LU that have not been spent," said Lipinski. "If there are significant federal funds that are still 'left on the table' by the time of the next reauthorization bill, Congress may act to move those funds to other critical transportation projects.

"Clearly, we must work together to move CREATE forward in an expeditious manner." - Richard Sensenbrenner, The Southwest News-Herald

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ABANDONED RAILROAD LINE IN SOUTH DAKOTA TO BE RESTORED

WAGNER, SD -- A railroad line running from west of Yankton, South Dakota at Napa Junction to Platte that was abandoned nearly 20 years ago is being restored as part of the construction of a new ethanol plant in Wagner.

The State of South Dakota officially announced on April 9 that it had reached an agreement to sell the railroad line for $1.5 million to Wagner Native Energy. Project Coordinator for construction of the plant, Bill Riechers of Volga, said the rejuvenation of the line will benefit the entire Wagner region.

"This will restore rail service to the elevators in Wagner, Tyndall, Avon, Tabor and Dante," Riechers said. "That means better prices for the farmers when they sell their commodities and potentially lower costs for products like fertilizer which could be shipped in by rail rather than by truck. That economic benefit will trickle down to farmers who patronize the elevator and for the entire region. We met with some of the elevator managers and they were excited about the opportunity to have rail service again."

According to Riechers, the plant in Wagner, because of its location in a rural area, will qualify for some tax breaks. The optimistic outlook for ethanol production, he noted, makes the project a positive development for the community.

"The outlook for ethanol is certainly optimistic," Riechers said. "We had record production last year and it will be better this year. We now produce more now than Brazil, and we're going to leave them behind in the dust in the next couple of years."

Wagner Native Energy was required to have access to railroad service before they could gain approval to construct their plant. Riechers said the requirement is a standard element for all ethanol plants.

"A lot of the distillers grain is hauled out by rail as well as having the corn hauled in," Riechers said. "Wagner is a great location for the plant because there is ample corn here for the plant and it will create jobs for this area. This is the only way to make rail service available."

It has been estimated that the cost of restoring the railroad could reach $20 million. Riechers said some of that cost will be offset by sale of the rail that is currently on the track.

"There's 60-pound rail on the track right now," Riechers said. "That's pretty light rail and they don't even make it any more. We've been able to find railroad companies who still have that kind of track and who are willing to purchase it from us. We'll be replacing the rail lines with 115-pound rail. It's a lot a heavier."

South Dakota Department of Transportation Director of Local Transportation Programs, Bruce Lindholm, at Pierre, said the restoration of the line is not necessarily unusual, but somewhat rare.

"It's not really common, but it does happen," Lindholm said. "Part of the process will be installing new railroad ties at the crossings and restoring the crossings that have been removed or covered. If there's been a grade change in the crossing the entity that did the work will have to restore the crossing. That could be a county, township, city or state office. The new rail and ties will be placed by the new owners."

Lindholm said there is one other section of railroad in the state, running from Mitchell to Kadoka, that is used very little. Overall, there is heavy usage of rail lines in the state.

"The big ones are DM&E and Burlington/Northern and Santa Fe," he said. "They ship a lot of products via rail."

Riechers said sale and restoration of the railroad line to Wagner Native Energy revives a lifeless asset for the state.

"This rail line was pretty much a dead asset," Riechers said. "Reaching the agreement to purchase the line was a divining moment for our project. It's actually been a bigger undertaking than the development of the ethanol plant. But we're not backing away from that. The purchase agreement is done and now we just need to follow through with the restoration when we take possession." - Loretta Sorensen, The Yankton Press & Dakotan

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CITY, RAILROAD STRIKE A DEAL ON PARKWAY RAIL CROSSINGS

GRAND JUNCTION, CO -- After wrestling for months with Union Pacific Railroad, the city of Grand Junction, Colorado has obtained the permits it needs from the railroad giant to finish building four railroad crossings for the Riverside Parkway project.

Union Pacific recently signed construction and maintenance agreements for the pedestrian bridge south of the Grand Avenue viaduct that will connect the Riverside neighborhood to downtown, the viaduct from the parkway to 25 Road and two crossings near the Fifth Street interchange in south downtown. The agreements will enable contractors to complete work that started months ago but was halted while the city waited for Union Pacific.

Riverside Parkway Program Manager Jim Shanks said the city initiated conversations with Union Pacific in 2003 -- the year voters approved issuing $80 million in bonds to build the parkway -- about its plans to build crossings over various portions of the railroad tracks.

He said those negotiations picked up "in earnest" after the Colorado Public Utilities Commission approved construction of the crossings last July. Workers with SEMA Construction, the contractor on the parkway, began piling dirt and erecting abutments for the 25 Road viaduct and the Riverside pedestrian bridge, and the bridge structure itself was delivered in December. But construction on those sections came to a standstill while city officials waited to hear from Union Pacific.

Shanks said city officials checked in weekly by phone and met several times with railroad representatives in Denver.

"We just called all the time," Shanks said. "There was always something in the process that wasn't finished yet."

Union Pacific spokesman James Barnes said Thursday the company has a "process of due diligence" it goes through before signing any agreement.

"We did review the documents very carefully and signed them," Barnes said. "We're very pleased that the work can proceed as planned."

Shanks said the delay affected construction by forcing workers to stop building the railroad crossings and begin work on another aspect of the project. But he said because construction on the parkway was ahead of schedule, he doesn't believe the holdup with Union Pacific will hamper the overall timeline. The parkway still is projected to be completed in the summer of 2008, nearly a year and half earlier than originally expected.

The city and Union Pacific are working to resolve two outstanding issues.

The two groups will appear in front of an administrative law judge for a three-day Public Utilities Commission hearing beginning Monday to determine how the cost will be split to build the 25 Road viaduct and the bridges over the tracks near Fifth Street. The city has asked the railroad to pay half the estimated $17.4 million cost.

Shanks said the city also is waiting for Union Pacific to sign a construction and maintenance agreement to replace the railroad spur crossing near CoorsTek west of 24 3/4 Road. - Mike Wiggins, The Grand Junction Sentinel

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ETHANOL: THE OTHER CORN-FED PORK

"You shall not press down upon the brow of labor this crown of thorns," said William Jennings Bryant, on July 9, 1896, in the most famous political speech in American history. "You shall not crucify mankind upon a cross of gold."

The proximate target of this gush of oratory was the gold standard. But look deeper. Behind the scene were millions of farmers who had made an age-old mistake. They had gone too deeply into debt in order to increase production. In short, they had overdone it. The burden of today's cogitation is that they overdo it regularly.

Judged as a businessman, the typical farmer would make a good veterinarian. Over and over, he walks into the same trap. When prices go up, he borrows in order to expand his holdings. He buys more equipment. He leases more land. And he plants more crops to take advantage of the high prices.

Of course, the extra production soon causes prices to fall. Then, all of a sudden, he is ducking his creditors and running up the phone bill to his congressman. Save our Farms.Spare Us from the Evil Bankers. Give us subsidies, tariffs, he asks.

Farm products - especially corn - have played such a large role in American history that like the odor of lemon madeleines in Proust, they recall for us a whole series of debacles. When the farmer gets into a jam, the entire nation feels the pinch. The earliest settlers in the New World learned how to grow corn; it saved their lives. Then, farmers settled in the rich bottomlands.and planted corn. Soon, they were spreading out beyond the Appalachians growing corn everywhere they could turn the earth.

The trouble in the early days was not growing the corn, but moving it. There were no roads, no canals, no railroads. So, the pioneers figured out that they could pack the energy of corn into a denser form that made it easier to store and easier to transport - corn whiskey.

No market is an island. Each one is connected to the mainland of human economy by tracks that bear a constant, and often curious traffic. After the American Revolution, the Founding Fathers attempted to pay off the nation's war debts by imposing a tax on whiskey. But the nine-cents-a-gallon tax on small producers was enough to set off another revolution - the Whiskey Rebellion of 1794, centered in Monongahela, Pennsylvania. The insurgents got their hands on one tax collector, for example; they sheared his hair, tarred him and feathered him. More comedy than tragedy, George Washington sent out 13,000 troops, who managed to round up 20 whiskey rebels. Two of them were convicted of insurrection, but soon pardoned; Washington said that one was a simpleton and the other was insane.

With the rifles back over the fireplace mantles, farmers went back to making whiskey and produced so much that the price of the elixir collapsed. This was probably America's golden era, when corn liquor was so cheap anyone could get drunk any time of day or night. The wild Irish slums of New York and Boston were soon blighted by booze while, out on the frontier, even Abraham Lincoln passed around a jug of 'corn.'

Then, a national epidemic of alcoholism gave way to a worse case of sobriety. The sour Temperance Movement arose - citing the many evils of @#$%& Rum and Cruel Corn Whiskey as Public Enemies No. 1 & 2. This infection of public improvement festered for nearly 100 years and finally broke out in a Constitutional Amendment completely outlawing alcoholic beverages in the United States of America. This was not without political consequences of its own; rum-runners, mobsters, and the Kennedy family all got rich.

But it was not temperance that changed the lives of the corn farmers; it was transportation. In the mid-1800s, first canals, later railroads, made it possible to deliver un-distilled corn all over the country. Suddenly, growing corn was more profitable than ever. The price of farmland west of the Mississippi soared. Kansas farmland went up four to six times between 1881 and 1887.
The price of an acre of land on which you could grow corn rose as high as $200.

Nature was rarely kinder to the Great Plains than in the years following the War Between the States. It rained out on the prairies, raising crop yields to levels rarely seen before or since. And the new railroads made it possible, for the first time ever, to ship a bushel of corn - inexpensively - from the western prairies to the major cities in the East. Between 1880 and 1887, Kansas doubled the mileage of rail lines. In that same decade, railroad mileage quadrupled in Nebraska and rose 11 times in the Dakota Territory.

All over the Midwest, farmers planted corn, corn, and more corn.

What happened next could have been predicted -- by anyone but a farmer, an investor or a banker.
The years that followed were dry.and as the crops withered, so did the credit available to farmers. In the last three years of the decade, mortgage lending fell to only 10% of the previous three years' activity. Land prices fell. And farmers went bust.

Today, it has been 35 years since a debtor was last crucified on a cross with any trace at all of gold content. But, in 2006, you could still go out to Kansas and buy an acre of farmland for only about $1,000. Adjusted to 1880 prices, that is only about $25, or barely 15% of the peak prices set 120 years ago.

But now, there's a new bubble out on the plains.and a new political scam to go with it. In Martin County, Minnesota, says Fortune Magazine, six new ethanol plants are either in operation or being built. In the last eight months, the price of corn has doubled, from $2 a bushel to $4.

Corn is not just a crop in America; it is a currency. Corn is used to feed pigs and cattle. Corn syrup is a main ingredient in Coca Cola, candies, cakes, ice cream, hamburgers and many other products. When the price of corn changes, every calculation changes with it. The price of land, for example. An average acre in the mid-west produces 180 bushels. At $2, that puts the gross yield per acre at only $360. After costs, farmers had little left over - only about $30, according to Fortune.

But at $4 a bushel, corn farming becomes much more profitable.with net yields 10 times higher than they were two years ago. With that kind of money rolling over the plains, farmers grow bold. They begin to cast an eye over the "Property for Sale" section of the newspaper and stop in at the John Deere dealership. In fact, Citigroup is expecting a 25% increase for John Deere shares.

In Martin County, Minnesota, an acre of farmland is already up to $4,000 -- a price it hasn't seen in 25 years. What happened after the last peak? Corn went down, and farmers who had stretched to produce as much as they could, went broke. Land fell back to $1,500 per acre, where it stayed until the current boom.

Part of the trouble with this boom is that it depends on ethanol. Thirty-one new ethanol plants have been built in the United States since 2005. When corn was $2 a bushel, and oil was $70, they could make more than a dollar per gallon. But at $4 a bushel, their profits have fallen to 3 cents per gallon, on average. And if corn continues to rise, or ethanol prices fall, even with their subsidies, they will be losing money.

Graphic here:

[www.freemarketnews.com]

Meanwhile, farmers are eager to take advantage of these high prices; they are doing what farmers always do - they are overdoing it again. The US Department of Agriculture estimates that 90 million acres of corn will be planted this year - the most in 63 years. In other words, as corn rises in price, nature seems to wake up. Farmers plant record amounts. And the biggest consumers - particularly ethanol plants, which are expected to take up more than a quarter of this year's crop - cut back. Supplies increase. Demand falls. How long will it be before corn falls again?

Of course, this time could be different. Ethanol may be a fraud, but it's got the U.S. Congress behind it. Corn-fed pork might not be good for you, but there are 3 billion Asians yearning for more of it. On those facts alone, we wouldn't bet the farm. But at least we'd be doing our sums on the subject. Could we sell forward enough corn to pay for a few more acres? Or how about a new air-conditioned tractor?

Whether corn will go down soon, we don't know. But even if the price continues to go up, many farmers will still find a way to over-do it.and ruin themselves.

Joel's Note: So how does one sort the wheat from the chaff when it comes to trading ags? Where along the curve of underdo and overdo are the farmers and just how artificial or fleeting is demand for certain crops? Well, one way to find out is to go straight to the source. Last week our own Kevin Kerr, editor of the massively successful Resource Trader Alert, took a field trip to see what is really going on.

"I'm all set with my Indiana portion of the trip," Kevin wrote to us. "I'm going to follow the corn from the farm to the feedlot and even the ethanol plant, all in the same day."

When people in the industry inquire as to just how Kevin manages to hold up such a stellar track record, I can't help but think his dedication to studying real market forces and his boots-on-ground approach has something to do with it. Certainly the folks who enjoyed an average gain of 96% on his trade recommendations last year are not complaining. - Commentary, Bill Bonner, The Free-Market News

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TRANSIT NEWS

REGIONAL LIGHT-RAIL TALK GAINS GROUND

KANSAS CITY, MO -- Mayor-elect Mark Funkhouser wants to put Kansas City's light-rail plan on a new set of tracks.

Ever since voters approved a light-rail proposal in November, the city has been locked in a struggle over how to make it work. Clay Chastain, the plan's author, who was in town this week, maintains it should happen now with no revisions. Federal and local officials say it needs at least some revamping.

Funkhouser has his own plan: Take the tracks beyond Kansas City, and take the time to make that happen.

"We do need light rail, and it has to be regional," Funkhouser said. "You have to be able to get a train across the state line and north and south of the river."

And regional means perhaps a third bistate tax election, he said.

Although Chastain strongly opposes changes and delays to his plan, area officials said this week that Funkhouser's good-government, frugal image could help open some doors on both sides of the state line, particularly to bistate tax talk.

"We are going to have a whole lot better cooperation in the metro area," said Johnson County Commission Chairwoman Annabeth Surbaugh. "I think the most important issue facing the metro area today is some form of metrowide transportation system."

Even with Funkhouser in office, Surbaugh thinks political issues in Topeka probably would derail another bistate tax effort. That's because a bistate tax would require Kansas lawmakers to revise the wording so it could be used for transportation. Now bistate funding can go only for sports, arts and cultural activities. Missouri legislators have already made the revision.

Some other regional funding for transportation is possible if bistate doesn't work, Surbaugh said.

"I am not sure Johnson County would want to get into the light-rail business," she said.

But she said layering state-of-the-art buses with Kansas City's light-rail system is a possibility.

A $1 million study of transit options for Interstate 35 between Johnson County and downtown has already ruled out light rail as an option because of high cost, said Alice Amrein, Johnson County's transportation director.

Early study results released Thursday show that a rapid bus line similar to Kansas City's Metro Area Express, which runs from the Country Club Plaza to downtown, is the transit option most likely to get federal funding.

North Kansas City Mayor Gene Bruns said he was eager to talk to Funkhouser about mass transportation because there has been much confusion since Kansas City voters approved a 25-year sales tax starting in 2009 to fund a light-rail system.

Chastain's plan calls for a 27-mile light-rail line from Swope Park to Kansas City International Airport. It includes electric shuttle buses and a gondola tram linking Union Station and Liberty Memorial across Penn Valley Park.

Bruns says mass transit, including light rail, is the perfect opportunity for a bistate tax.
He says Union Station is the right vehicle for the first bistate tax. Bistate II -- an overhaul of the Truman Sports Complex with arts funding -- was rejected.

Independence Mayor Don Reimal thinks light rail might be a tough sell in a bistate vote, but he'd like to see some funding for it. Lines could run from eastern Jackson County to the airport and to downtown, he said.

Wyandotte County's Unified Government mayor, Joe Reardon, says that he is open to a bistate tax discussion, but that a candid discussion about all funding options is crucial.

He said Funkhouser's commitment to transparency will be key to the discussions and to gaining areawide support.

"Financing across state lines is ultimately the right way," he said. "This is truly something. If we can come together as a region, then I think it will lift up the economic prospects of all the Kansas City metropolitan area."

But Funkhouser's efforts to delay implementing the light-rail plan while he gets a regional consensus on mass transportation will face stiff resistance from light rail's biggest proponent: Chastain.

Chastain spent much of the past week in Kansas City. He held news conferences and attended forums and meetings, including one at the downtown library sponsored by a local architectural group that drew almost 300 residents.

Chastain wants the Kansas City Council to immediately move ahead with designing the light-rail plan so construction can begin in 2009. He says the main "spine," from the Plaza area north through downtown and across the Missouri River, should be done first.

Chastain agrees with Funkhouser that the metropolitan area needs a regional transportation plan, and he wants to see heavy rail commuter trains from the suburbs into Union Station.

But he vehemently disagrees with Funkhouser's plan to concentrate first on renewing next year a tax for the Kansas City Area Transportation Authority, the local bus company, before moving on with light rail and regional transportation.

Kansas City officials worry because the voter-approved light-rail plan will be funded with a 3/8 -cent sales tax that now pays for most of the bus company's operations.

But Chastain dismisses criticism of his plan.

"These are bogus technicalities and they're unproven and they're not flaws," he said.

During his visit, Chastain verbally sparred with Mark Huffer, the head of the local bus company.
Chastain thinks the ATA cannot be trusted to oversee construction, while Huffer continues to maintain that Chastain's plan is unfeasible and must be overhauled to get crucial federal funds.

"It's the voters' way or no way," Chastain said.

For his part, Funkhouser said he looks forward to meeting with Chastain later this spring. He commended him for keeping the issue visible.

"He should keep stirring the pot," Funkhouser said. "That's a good thing."

However, he and his staff declined an opportunity to meet with Chastain while he was in town.

The mayor-elect says that it's too soon to hammer out details with Chastain and that he remains open to all ideas.

"This is a high priority," Funkhouser said. "And I want to move with alacrity but not in haste." - Deann Smith, The Kansas City Star

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UW LIGHT RAIL STATION AN ISLAND UNTO ITSELF: NO QUICK CONNECTION FOR METRO USERS; NO ROOM FOR PARK AND RIDE

SEATTLE, WA -- None of the Evergreen Point Bridge replacement proposals has a single site where bus commuters could connect smoothly to light rail at the future University of Washington station. And if you're in a car, forget it -- there likely won't be a park and ride or transfer point.

That issue is a sticking point as Sound Transit's plans for light rail forge ahead and the Seattle City Council plans to vote Monday on a replacement resolution, which lists "connectivity"
with the UW station as a priority.

"There will probably not be a direct connection," confirmed John Milton, state Route 520 project manager for the Washington State Department of Transportation.

Still, state transportation officials are working with Sound Transit to ensure proximity between the light rail station and HOV travelers coming off and on Route 520.

Ron Endlich, deputy director for Sound Transit's University Link light rail project, said that although there is collaboration, the light rail line is further along and the site for a light rail station is "pretty much set." It will be beneath a current UW Medical Center parking garage, southwest of Husky Stadium, roughly below where Montlake Boulevard and Pacific Street meet.

It's is a long-range hope that the 520 bridge someday will accommodate light rail.

But the already-squeezed and congested university is worried about efforts to create a transit hub on campus -- and has made those concerns known to transportation officials and the Governor's Office, UW spokesman Norm Arkans said.

"You can't look at the University of Washington as an intermodal exchange or station area. It doesn't work," Arkans said. "You can't have people driving here to get on a (light rail) train, because there's no park and ride -- and there's zero chance of putting one here. There's no space."

Nor is there adequate space for buses to load and unload passengers making light rail connections, Arkans said. "There's no room for that."

Because some replacement proposals would decrease Husky Stadium parking, current space could shrink further, university officials say.

Milton confirmed that the state would have to replace parking displaced by the Route 520 project, but state lawmakers also said Thursday that they still are working on the language of measures that aim to solve the transit hub and other 520-related issues.

The Pacific Street Interchange proposal calls for a new Union Bay bridge with ramps (general purpose, HOV and bike path) dropping down through what is now the Husky Stadium south parking lot and into a new, lidded Pacific Street-Montlake Boulevard intersection. Buses would progress under the lid to a point east of Husky Stadium.

Although the exact 520 transit stop isn't cited, it is likely that those who want to transfer from 520 to light rail would walk about 1,500 feet to reach the UW link station.

Digging a tunnel in the area, a feature of proposals such as a translake "tube tunnel" and the Union Bay Alternative (formerly called the Arboretum Bypass plan), presents significant transit-link engineering challenges, Milton said.

Still, City Councilman Richard Conlin said the council expects to vote on the resolution, which includes calls for the Route 520 project to:

· Ensure that bus service connects to the planned light rail station at Husky Stadium and that a bus station is nearby.

· That the Route 520 project be "coordinated" with the UW station and "be consistent with the Sound Transit long-range plan."

· That the state Department of Transportation, Sound Transit and Metro work to "optimize the development" of the station "for ease, speed and convenience of bus-to-rail transfers for transit users."

The university understands the need for a new bridge and is trying to work with state and local officials, Arkans said.

"We just want the impacts on the university acknowledged and mitigated, so our programs don't suffer because of the need to solve a transportation problem," he said.

Some question whether such a link is really needed.

"Why would you drive to the UW, get off here and then take light rail to downtown or south to the airport? It would be an extra stop. If you're already in a car, you could just drive there," Arkans said. - Debera Carlton, The Seattle Post-Intelligencer

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LAGNIAPPE (Something extra, not always railroad related, for Saturdays only)

MEMORIES FROM SAN BRUNO: OF SP COMMUTE TRAINS AND POLICEMEN IN WHITE GLOVES

Once upon a time, (mid fifties) I was assigned to my company's headquarters in South San Francisco. Sometimes I would leave shortly after 17:00 hours, proceed two miles to beautiful downtown San Bruno and watch the commute fleet come thru. Six trains left 3rd Street at 3 minute intervals, with the first gate closing at 17:20. Five of these trains arrived at their first stops between 17:52 and 17:55. (Railroad museum libraries should have this schedule) All power was steam, but with not long to go. Cars were Harrimans and CNW design Pullman bi-levels. (IRM has a short train of these cars, with a matching E unit - in regular weekend service in the Summer)

Back to San Bruno: The key grade crossing in town was also the crossing of two key streets. No gates, not much in the way of "protection". Locals learned to respect the SP. But weekday evenings, 17:00 to 18:00 got a little messy, so the Chief assigned an officer to clear the intersection just before each train came thru. The officer was in proper black uniform, so in the Winter he was nearly invisible. For most of our readers, be advised that street lighting then was incandescent -- of little value. I watched the officer and it became obvious that the officer needed some help. I thought of white gloves. Sent a note to the Police Chief. He and the officer apparently liked the idea, so the gloves became part of the uniform for that assignment. Sure could see the officer's instructions to drivers.

What brought these memories out of the past was observing two local police officers reporting to a collision a few days ago, Miracle of miracles; they were wearing highway-construction-legal reflective vests with POLICE on the wide back belt. From my view, it took police a half a century to graduate from white gloves to safety vests. - Dick Seelye, Kirkland, WA (ED. NOTE: Many thanks to Dick for sharing his original anecdote - lwg)

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RAILS HELPED WIN WORLD WAR II

Photo here:

[chair.islocal.com]

Caption reads: In World War II Don Jacobson served as a member of the Military Railroad Service, making sure that the front-line troops got their supplies. (Photo by Bill Thornley/Spooner Advocate)

SPOONER, WI -- Don Jacobson, 87, of Hayward, until recently a resident of Stone Lake, has an interesting story to tell about his service during World War II. And despite the fact that many stories have been told about the war, this is one that many people may not have heard before.

“I entered the military in 1942,” said Jacobson. “I was drafted into the Army and served until 1946 under the U.S. Army Transportation Corps because I had worked for the Soo Line Railroad in civilian life. They picked out personnel from all over the country. So, they saw I had railroad experience, and ‘boom!’ I was in.”

Jacobson lived in Southern Minnesota but for 32 years had visited his cabin in Stone Lake, just recently relocating to Hayward. The cabin is still in the family, owned now by his daughter.

“I got interested in Spooner because it was organized by the railroad, especially the Soo Line. Spooner owes its existence to the railroad. And I thought people would be interested to know how the railroad operated in war time – and boy, did they ever perform. They did miracles.”

Military Railroad

“I have always felt that the public knows very little of the vital role the MRS [Military Railroad Service] played in WWII,” said Jacobson. “We were always behind the boys.

“My service started in the Black Hills Ordinance Depot near Hot Springs, SD. I also served at Fort Frances in Wyoming and in Alabama. I served stateside. My role was to assist in the planning of MRS activity – utilizing it to the fullest extent, which was certainly done by those brave soldier-railroaders. These soldiers were experienced railroaders and enjoyed doing their regular work and still serving in the Army.

“I’m no linger with the civilian or military railroad, but the railroad is still in my blood.”

The MRS served in many places during World War II, including North Africa, Alaska, Italy, France, Iran, India, Burma, and the Philippines.

“Most of the effort was in the European Theatre, eventually resulting in the collapse of Italy and Germany,” said Jacobson.

The MRS has a long history. The first effective use of the railroad occurred during the American Civil War. President Lincoln ordered government takeover of the railroad and telegraph lines.

“That was the first authorized conscription of personnel and property in the U.S.,” said Jacobson. “They can convert from civilian to military railroads awful fast. That’s nice to know. They benefited from WWII.”

MRS membership

Who belonged to the MRS? Like Jacobson, men with railroad experience from most all U.S. major railroad lines constituted the working core.

“In civilian life, I, for example, had previous employment with the Soo Line Railroad at the Shoreham Shops in North Minneapolis. Northwest Wisconsin owes a great deal to the railroad, as it played a major role in its development. Old Soo Line depots still exist. Towns along the Soo Line route included, among others, Hayward, Stone Lake, Spooner, Ashland and Ladysmith. Just as the railroad was so instrumental in this area, it also, in a big way, led the Allies to victory in WWII.”

Organizing the MRS

“My first assignment in the MRS was with MRS headquarters, stationed at Fort Snelling,” recalled Jacobson. “I could not serve overseas because of a hearing problem. The men stationed there constituted the ‘brains’ of this essential was component, and its job was to operate in combat zones and occupied area, as well as supply troops and vital war supplies to the front line armies.”

The Director General was brigadier General Carl Gray, Jr. who, prior to his military service, was Executive VP of the CS & PNHO Railroad in civilian life.

“It was my good fortune to work in the headquarters office with General Gray,” said Jacobson. “In fact, my desk was but 20 feet from his office in the Commerce Building, downtown St. Paul. Did you ever see soldiers marching in downtown St. Paul during WWII? We soldier railroaders lived in barracks at historic Fort Snelling, right alongside the river, and were bussed daily into the headquarters, marching from trucks, in military cadence, up elevators to the sixth floor offices in the Commerce Building.

“Following that experience, I became an officer and was assigned to Camp Claiborne, Louisiana where I was a Company Commander for a time. These soldiers were all formerly employed by American railroads and received their basic training before being shipped out to overseas destinations to such places as Iran, Alaska, North Africa, Sicily and Italy. Following that, more units were sent to South France and would make their marks on the beaches of Normandy and the race across Northern France. I personally was to become Transportation Officer at the Black Hills Ordinance Depot in South Dakota, Anniston Ordinance in Anniston, Ala., and at Raritan Arsenal in New Jersey. Overseas armies rarely complained about a shortage of vital supplies.”

Tough railroading

Was there a feeling of excitement in belonging to the MRS?

“You bet,” said Jacobson. “It was tough railroading — like nothing they’d ever seen in the United States. They operated over some of the toughest and highest track in the world. MRS crews took their blacked-out trains of troops and high explosives, tank, and gasoline, roaring through the night without headlights, shooting through the tunnels and across trestles, not knowing whether the track was still there or not.

“They would be streaking down grades of 2 percent and even higher, without air breaks, depending on sleepy Arab s to man the hand brakes at the right time. And many was the time the Arabs kept right on sleeping. So successful were these operations that at all times the railroads were able to keep up with the armies, laying down food, clothing, ammunition and gasoline at dumps but a few miles behind enemy lines of combat.”

The work of the MRS may have been exciting, but it was also very, very dangerous.

“Hauling gasoline and ammunition is hazardous work even with all peacetime precautions,” said Jacobson. “When sabotage, land mines, bombing and strafing come into the picture, the hazard is enormously increased. Dozens of MRS railroaders have been cited and decorated for bravery in fighting fires on munition and fuel trains, isolating burning cars, at the risk of their own lives.”

The Purple Heart decoration for wounds received from enemy action is by no means rare among the men of the MRS. General Mark Clark himself congratulated the MRS on more than one occasion.

Allied wounded

Another function of the MRS involved evacuating allied wounded from the fighting front on the “Mercy Special,” hospital trains assembled by the MRS. Many times, crucial material and reinforcements would not have been brought into action except for the outstanding performance of the MRS, stated Jacobson.

Advancing quickly

Enabling the Fifth Army to advance quickly, the maintenance-of-way outfits of the MRS cleared wreckage from the tracks, bridges and tunnels, swept mines and removed bobby traps, without the aid of the Corps of Engineers, which was busy elsewhere, said Jacobson.

“They constructed a 237 foot single span bridge over the Garglano River in just 17 days,” said Jacobson. “It was the largest single span bridge in the entire European Theatre of operations.”

A route to the front was opened by the MRS with the least possible delay. Within a short time, 42 bridges had been rebuilt, 800 miles of track and four tunnels repaired, plus 4000 miles of track were put in operation.

“Another problem,” recalled Jacobson, “was the narrow gauge track over there compared to the standard gauge in the United States, creating lots of problems from time to time. Not so intended, but MRS men took over the front lines on occasion — once when the Allies were advancing their battle lines, men of the 727th MRS unit helped repair the rail lines and rebuilt bridges in some sectors even ahead of the Army, always under hazard from bombing, strafing and mines. Heroes again!”

Short-wave radio

Short-wave radio played a vital part in keeping the trains moving during WWII. To begin with, operating without the “life saver” General Gray’s term for the short-wave radio) caused many trains to be non-operative.

“Walkie-talkies were put in cab and caboose, enabling perfect communication,” said Jacobson. “As is well-know, amateur ‘ham’ radio has come to the rescue during many emergencies, wartime or otherwise. As having been in ‘ham’ radio operation myself once, I was especially happy to learn of their great importance during the Big War, also.”

Off-duty time

Did the MRS railroad-soldiers have any time off-duty?

“Yes, they did,” said Jacobson. “Sports were popular. A fine male chorus was organized, and they would sing weekly over Radio France in Algiers.
When soldier musicians were able to find instruments, they entertained with everything from Brahms to Boogie-Woogie. There was also hobby-participation such as the draftsman who built a model of a bridge, putting it together in perfect scale with bits of cardboard, match sticks and glue. Artists were also busy painting.”

Innovative troops

The MRS troops were also innovative. For instance, a T/4 Sergeant gained immortality in his unit by constructing an ice cream freezer out of a worn out gasoline generator, some scrap aircraft parts and an old milk can. To satisfy men who messed at road kitchens out on the line, the freezer became a traveling ice cream plant.

A cook craves doughnuts, rolls the dough with a wine bottle, cuts them out with a sawed-off C-Ration can, and punches the holes with a bottle cap.

A washing machine suddenly materializes out of miscellaneous drums, scrap gears and pipe, and abandoned Rolls-Royce and the teeth of a defunct camel and was christened “Hoffman’s Invasion Machine” after its inspired inventor.

“Sometimes this railroad equipment itself became a problem, but MRS ingenuity was common, as the time a car developed a hot-box and in the absence of orthodox ‘dope,’ the box was repacked with a mixture of diesel fuel oil and GI soap,” said Jacobson. “The journey completed, its run was done in a state of exemplary coolness.”

After the war

When WWII finally came to an end the troops came home.

Jacobson made a career of entertaining on piano and is an active registered piano tuner-technician.

“I’ve tuned pianos for 58 years,” said Jacobson. “I’m going to be 88 this year, and there are 88 keys on the piano.”

He and his wife, Claire, have been married for 58 years.

Recently Jacobson combined his love of piano and railroading when he composed the song “Railroad Boogie,” which became an award winning song for him.

“I got notified by the Veterans Administration that they were having this contest,” he said. “So I wrote the song and incorporated railroad sounds. ‘Railroad Boogie’ won two blue ribbons and one red, and it is going on to national competition in June.”

So the old railroader just keeps chugging along, writing his book, playing his music, and recalling a time when he and the work he did helped win WWII.

“I am proud to have been a part of the MRS,” he said. “I have great memories and the Transportation Corps MRS insignia yet. They say the railroad ‘moved America,’ and now we can say equally that they ‘moved’ the Allied forces onward to victory in WWII.

“I was so lucky to have been stationed at Fort Snelling when they started the MRS. Those guys had guts, no question. Something had to go on behind the lines to make the front lines effective, and these are the boys who were doing it. They were risking their lives and proudly serving their country. I am very honored to have been a part of that.” - Bill Thornley, The Spooner Advocate

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THE END