Page 38: of Maritime Reporter Magazine (February 15, 1985)

AWO (continued from page 37) our industry? The answer is that the government dispenses its largesse selectively, and that is not always proper.

While on the subject of govern- ment largesse, let us consider the case of the railroad industry. Con- sider specifically, Conrail. I am hap- py to report to you that things are going fine. Things are going so well, in fact, that Conrail has emerged from the protective warmth of mother government's apron and— with a little push from mom—has decided to go out into the world and seek his fortune on his own.

The next time someone tells you how much it will cost to send your children to college, remember and be thankful that you were not called upon to raise baby Conrail to his majority. Or perhaps more accurate- ly, try to forget that you actually did help raise the little railroad to man- hood—despite the fact that mother government claims full credit for

Conrail's performance. And make no mistake about it, his perform- ance has been remarkable. A straight "A" student, if you will.

Certainly baby Conrail concen- trated in one of the more marketa- ble disciplines on his way to matura- tion. So marketable is baby Conrail that he is now up for sale—at the

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Mother government is consider- ing only selected bids for baby. At present, there are only three re- maining bidders for Conrail: the

Marriott Corporation, the Allegany

Corp. and the Norfolk and Southern

Railroad. This last bidder, the Nor- folk and Southern Railroad is con- sidered by the same mother govern- ment who is offering baby Conrail for sale—different branch—as a "revenue inadequate" railroad.

Mother government is really pull- ing a fast one on the American pub- lic in the whole Conrail episode. The total federal bailout of the previous- ly strapped railroad cost 7.2 billion dollars—you paid.

What's more, last year Conrail showed a profit of one half billion dollars. This money was not re- turned to you in consideration of the 7.2 billion dollars you earlier provided baby Conrail for his up- keep, maintenance and basic busi- ness education.

Despite baby Conrail's profitabil- ity last year mother government gave our boy an allowance of 300 million dollars.

And here is the real kicker: For whichever bidder ultimately is suc- cessful in obtaining baby Conrail, there is a bonus that in the world of business is really too good to be- lieve. Conrail comes without liabili- ty, without debt, without obliga- tions of any kind to the purchaser.

Without any program for repay- ment of your 7.2 billion dollars.

Mother government can really dole out the goodies when it comes to her favorite son.

But enough of the saga of Conrail.

Let's have a look at some other rail- roads which also receive a fair amount of consideration, not to say largesse, from the federal govern- ment. All four are deemed by the federal government as revenue inad- equate. Keep that in mind as we examine the real financial condition of these companies. Financial data on these companies is readily avail- able—they are publicly held. What that data reveals makes for a hard case for those who suggest that these railroads are not revenue ade- quate. The data reveal them to be highly profitable enterprises by any conventional business yardstick.

Witness the financial condition of

CSX Corp. in taxable years 1981- 1983, CSX Corp not only paid no federal tax whatsoever, on profits of 1.75 billion dollars, but received re- bates of taxes paid in earlier years or sold "excess" tax benefits to the extent that the corporation actually got money back from the federal government. Even more difficult to substantiate in light of the govern- ment's position on the revenue in- adequacy of CSX Corp., is that sup- posedly strapped corporation's near magical ability to come up with 1.06 billion dollars to purchase Texas

Gas Resources, parent company of one of the nation's largest indepen- dent barge companies with which

CSX Corp. directly competes—an acquisition which I believe is in direct contravention of the Panama

Canal Act which expressly forbids such monopolistic mergers. (continued on page 40) 38 Maritime Reporter/Engineering News