Comparing rail power in war (cont.)

We see from Victory Road the Rails two reasons that military business was so odious to Southern railways.

First, the Montgomery Convention set rates that could be charged for government business. I assume they were not particularly generous rates and being fixed at the outset of an inflationary economy, they must have been destructive.

Second, more damaging, the Rebel government was directed to pay for rail services in bonds not cash.

Meanwhile the railroad's vendors wanted payments in cash, not bonds, which Victory shows lost the Southern railroads considerable railroad grade steel on the open market. In fact, the bond-earning railroads were competing against the cash-paying Rebel government for all commodities in those markets.

And so, when we find, as we did, Pemberton bargaining down the price paid for standby railcar service to the level of cost, we understand that cost, lousy a deal as it is, will be paid for in bonds that mature in the middle/distant future

We also start to share some of the sensitivity felt by Robert E. Lee, who limited Pemberton's displacing of cash-paying railroad customers with dead-head sentries up and down the overloaded daily runs of the Charleston & Savannah.

Interesting to note (in Railroads of the Confederacy) the Provisional Government dropped tariffs on railroad steel in February 1861 only to impose a 15% tariff on it a month later.

Apparently, they felt the railroads were growing rich enough on government bonds (paid to cover government-set service rates) to afford a premium on the steel they needed to keep trains running.

Politically, these outcomes show a railroad business with insufficient influence in Montgomery and Richmond. Militarily, they box the South's railpower into an early version of the procurement spiral of death.

Earlier posts here and here.