Who owns Amtrak?

The name Amtrak comes from a combination of “American” and “track.” The USA does not have a national passenger rail system, let alone a publicly-owned system.

The National Railroad Passenger Corporation (Amtrak) is a government-owned corporation established as a product of the Rail Passenger Service Act of 1970, to provide intercity passenger train service throughout the United States. It was created by the Richard Nixon presidency largely to protect the private railroads (today’s Class I freight railroads) from their obligation of having to run money-losing passenger routes. The U.S. government owns the preferred stock while private rail companies, including Canadian Pacific and Canadian Rail, own the common stock. Later the Congress stripped preferred shares of voting rights and any liquidation preference, effectively leaving common shareholders in control. Curiously, there has never been a shareholder’s meeting.

Railway Age Magazine informs that the real owners of Amtrak are members of the financial oligarchy, including Warren Buffet, Bill Gates, and insurance conglomerate American Financial Group, which is a 53 per cent majority common stockholder looking to cash in on its holdings. The owners include Canadian Pacific and Canadian National (a Crown Corporation until it was privatized in 1995), which have substantial holdings in the US as part of the drive for continentalism and annexation.

In 1970 the Nixon regime awarded the private railways federal tax credits, but four companies, arguing they were unable to use them, were instead awarded 9.4 million shares of Amtrak common stock created for them. They were Penn Central (53 per cent), Burlington Northern (35 per cent), Chicago, Milwaukee, St. Paul and Pacific (7 per cent), and Grand Truck Western (5 per cent). American Financial Group purchased the common shares from the estate of the bankrupt Penn Central for $52 million. It has been in litigation with the U.S. government for over a decade to recoup its investment.

Burlington Northern was merged into BNSF Railway (Burlington Northern Sante Fe), now owned by Berkshire Hathaway Inc. (Buffet), the largest in the U.S.and  one of the world’s largest transportation companies. (Union Pacific is the second largest rail company in the U.S., owning 8,500 locomotives that operate over 32,100 route-miles in 23 states west of Chicago and New Orleans.)

Grand Truck Western is a subsidiary of Canadian National Railway Co., of which Cascade Investments, controlled by Microsoft Oligarch Bill Gates who is CN’s biggest shareholder, owns 13.3 per cent through his holding company. He also controls another 2.3 per cent through the Bill and Melinda Gates Foundation. New legislation of the Liberal government, the Transportation Modernization Act (Bill C-49) introduced on May 16, 2017, proposes to increase maximum voting shares that can be held by one person from 15 to 25 per cent.

As for Milwaukee, its assets were acquired by CP. * CP Rail was recently taken over by a U.S. hedge fund which put in charge former CN Rail President E. Hunter Harrison, under whose tenure relentless attacks against rail workers and public safety are increasing.

In fact, Amtrak owns the trains, but freight rail companies own virtually 100 per cent of the track in the USA, a situation arising from the its origins. But while that law put hundreds of passenger lines under Amtrak’s control, it did not give them ownership over the vast majority of country’s railroad tracks, meaning that unlike nearly every other country in the world, the American government largely does not own its own intercity rail infrastructure.

Fully 97 per cent of its route miles are run on tracks owned by private railway monopolies, a circumstance which, among other consequences, means that there’s little incentive for those that do own the tracks to build new ones that might improve passengers’ experience or the safety of the workers, including trains that run on time. Instead, their focus is on moving freight. Most of the US’s railway network, which totals some 200,000 miles, is single-tracked and non-electrified – as opposed to those of countries in Europe and East Asia – and Amtrak trains frequently have to wait for hours on end to let freight trains pass.

Amtrak operates 44 routes on 21,000 miles of track in 46 states. A Pew Research Center analysis promoting privatization and neo-liberalism found that the system loses money on 41 of its 44 routes, with an average loss-per-passenger of $32.

Washington is one of a few states including California, Illinois and even some “red states” which fund their own Amtrak routes and track improvements. Those states reportedly have better equipped faster trains that run more frequently and California for one has posted record ridership numbers year after year in the last decade, as has the Pacific Northwest. BNSF owned the Portland-Seattle track on which the Amtrak Cascades train derailed on December 18, 2017. The crash happened on a bypass route owned by the state, on which the despatch services are now being operated by BNSF.

The Northeast Corridor is the only major portion of tracks actually owned by Amtrak (and some state and commuter rail entities) and as such trains are faster than elsewhere, reaching 150 mph on some stretches (the trains are capable of more, but the track, which is in dire need of investment, can’t support it) and thus almost playing in the same league of high speed rail as the Shinkansen (from Japan) or TGV (from France) (200 mph max. speed in daily operation).

After 2015’s deadly Amtrak crash in Philadelphia, former Amtrak CEO David Hughes put the problem in stark terms.

“What Amtrak has is among the poorest I’ve ever seen given the level of use they get,” he told CBS News. “The accumulated deferred maintenance and lack of attention really makes it almost a Third World operation.”

And that’s on its own tracks in the most popular region for the rail service in the country, where, in places like Philly and D.C., upwards of 80 per cent of its trains show up on time. Most Amtrak lines service what’s known as the Northeast corridor ,

A postcard for the Rock Island, a private passenger train provider that predates Amtrak. LOCO STEVE/CC BY 2.0

But expand beyond that, and the numbers are often depressing. The Auto Train, a bring-your-vehicle ride between Virginia and Florida, had an on-time performance rate of roughly 35 per cent in March. The Empire Builder, which starts in Chicago and makes it way up to the Pacific Northwest, has a rate that’s even worse – it’s on time just 30 per cent of the time.

Rational Wiki notes: “Said subsidy however has been perpetually sub-optimal, and Amtrak has always fought hard for the meager grants it gets whereas cars and planes receive princely sums in comparison without much asking. This results from the vision that is common in the twentieth century that the United States was a country of the automobiles. Consequently, ‘deferred maintenance’ and trains dating from before the foundation of Amtrak may be found even today, in the twenty-first century. Unfortunately, the inability to upgrade deteriorating infrastructure when it has reached the end of its useful lifespan will only add to the total costs of operation, maintenance and repairs. Delays will be all too common.

“Since 2000 however, onerous security for planes (a result of 9/11 and security theatre), rising gas prices, and continued popularity of both the Acela Express (the only high speed train in the US; it connects D.C. to Boston via New York City) and Auto Train (a unique, nonstop train line between Lorton, VA and Sanford, FL. It allows passengers to bring their cars with them on the overnight trip) lines meant rising ridership year after year; with total rise of 50 per cent in 2013 compared with 2000. California subsidizes its (hugely popular) Amtrak routes and has also seen record ridership year after year.

“Amtrak has proven its financial viability in the densely-populated Northeast, hence the line of attack is now not ‘defund Amtrak’ but rather ‘Privatize the (money making) Northeast Corridor and defund the rest.’”

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To say rail transport and all parts of the transportation sector are important for the U.S. economy is to repeat a truism given the size and the abundance of resources that the oligarchs covet. As well, any modern nation-building project outside and in opposition to empire-building requires an efficient internal transportation system to serve an economy of industrial mass production completely socialized and interrelated.

The issue is not to state the obvious but to renew the system in favour of the actual producers and nation-building. This requires not just regulations or funding of Amtrak but actual restrictions on the power of the oligopolies to deprive Americans of their power to control those affairs that affect their work, lives and nation-building.

The Trump budget which plans to slash approximately $700 million from Amtrak increases the power of the financial oligarchy to deprive Americans of a nation-building project that serves their interests and opens a path forward. It specifically subordinates U.S. transportation needs to the demands of the oligopolies and empire builders further depriving the American people of control over those affairs that affect their work and lives.

Endnote

*Much of this information is drawn from an article by Frank Wilner, “Want to Privatize Amtrak? Not So Fast,” Railway Age Magazine, January 2013.

With a file from Atlas Obscura