Accounting for Steam Locomotives (ex Flying Scotsman thread)

And with the same principle a number of old small locomotives might be withdrawn and replaced by a smaller number of larger locomotives for the same net capital value on the books.

I suppose you could say that rebuilding was something that happened in the works, and renewal was something that happened in the books. At least one Star was rebuilt as a Castle out of the maintenance budget, not the renewals account, but in the 30s, the renewals fund was healthy and the revenue funds were definitely not. I get the impression that if you renewed a locomotive that was due for a really major repair you saved the cost of the repair in the maintenance budget. But renewed large prairies, for instance, lasted significantly longer than their former class mates, it was more than an accounting job.

 

From "Swindon Steam", page 50:

"Contemporarily, Collett was designing the Castles. There was a definite need now for a more powerful express passenger locomotive to relieve the Stars which had been at work for fifteen years......."

 

I think this was also true of some T9s. A number were converted to oil firing after the war but were withdrawn and laid up at Eastleigh when the short lived oil burning scheme was abandoned. In the 1950s when some of the older surviving T9s came in for shopping their frames were found to be life expired so good (or rather, better?) replacement frames were sourced from the laid up oil burners. But, contrary to popular mythology, the overhauled locos were outshopped with the number they came in with and not the number of the withdrawn donor loco.

I always have a feeling that had Eastleigh been involved with the frame swap between S15s 30841 and 30825 the former would have kept its identity and not been outshopped as (30)825, especially as the flatsided tender is historically wrong for an earlier S15 - but hey, its not my loco so I have to respect the owners choise.

Peter

 

You appear at risk of allowing yourself to be too focused on narrow engineering and operational considerations, and insufficiently focused on how the financial economics of the railway worked. The question of what counts as "capex" and what as "opex" remains as vexed today as it was a century ago, even if the terminology has changed.

I incline to the views expressed by @Jamessquared and @Jimc of the financial justification for rebuilding Stars into Castles, even if there was a different underlying operational reality

 

The first Star to Castle rebuild was in 1930. Given that the Stars lasted until 1956, if the reason for rebuilding was financial, why were more Stars not rebuilt as Castles?

In fifteen years, starting in1930, there were thirteen rebuilds of Stars to Castles. If the case for doing so was financial, it wasn't exactly overwhelming was it.

 

Indeed. Which makes the argument that it was about accounting all the more plausible as a way of eking more out of limited budgets.

 

I thought that was gnerally the norm everywhere. Only railway enthusiasts subscribe to the idea that the identity was according to the frames.

 

I suspect you can only answer that question by doing a longitudinal study of what the renewal programme was year by year. The priorities would change over time and also different locos would rise up the list of needing renewal.

Some years ago, @Jimc was kind enough to send me a minute from the GWR Loco Committee, outlining the plan for just one year - 1936. In summary it ran:

"Particulars of the rolling stock to be condemned and the vehicles to be constructed in lieu thereof:"

Condemned
15 * 4-4-0 'Bulldogs'
10 * 2-6-0 '26xx class'
10 * 0-6-0 'Standard Goods'
10 * 4-4-0 'Bulldogs' (valued at less each than the first 15)
50 * 0-6-0T 'Old shunting engines'
-----
Est. replacement cost - £264,860

Reconstructions - condemned
20 * 4-4-0 'Bulldogs' without tenders
20 * 2-6-0 '43xx class'
10 * 4-6-0 'Star class'
20 * 4-4-0 'Dukes'
-----
Est. replacement cost - £259,540

To be built (i.e. new)
15 * 4-6-0 'Castle class'
10 * 4-6-0 '49xx class'
10 * 0-6-0 'Standard Goods'
10 * 2-6-2T '41xx class'
50 * 0-6-0T '97xx class'
-----
Est. cost - £345,100

Reconstruction - built
20 * 4-4-0 'Engines for yellow route services without tenders' (i.e. the Dukedogs)
20 * 4-6-0 'Engines for blue route services' (i.e. Manors Granges)
10 * 4-6-0 'Castles'
-----
Est. cost - £219,480

If you sum it up, you have a net loss of 20 locos and 20 tenders (essentially the remaining bits of Dukes and Bulldogs that didn't get transformed into Dukedogs); and everything else condemned has resulted in the same number of new locos of more modern design. The overall build cost to construct 145 locos is £562,580 but of that, £524,400 would come from the renewal fund.

Tom

 

I was going to suggest something similar. IANAA but the real reason why something was capitalised or not was to do with which column of the spreadsheet the accountants wanted the money spent to go in and that was essentially related to taxes payable. If you could put it in the revenue column, it could reduce your tax bill for that year but there were rules about such things. Perhaps a real accountant can say more?

 

"20 * 4-6-0 'Engines for blue route services' (i.e. Granges)" - These would have been Manors, 7800 - 7819. Granges were Red restriction locos.

 

Was it just a tax thing or was it also that the railways were generally not remunerating their capital properly so anything on the capital account was to be avoided if possible?

IANAA either but it seems a bit of a dodge to me. You start out with a Star. You run it for thirty years depreciating it fully. You employ the residual value in a new Castle (sensible). Then you say that only the betterment element goes on the capital account. Effectively you are charging most of a new asset with a thirty year life to revenue. Or have I misunderstood?

 

Thanks (Corrected).

Tom

 

Post WW1 the railways were starved of new investment apart from what they could generate from their own recourses and the Loans and Guarantees act hence I suggest some of the accounting

 

But that wasn't the case that was being made. Jamessquared and Jimc were claiming that there was an advantage in rebuilding Stars as Castles because of a saving on boiler maintenance. If that was the case, why were so few (13 out of 73) rebuilt and at such a funereal pace (13 over 15 years). Rebuilding them didn't exactly give them a new lease of life. They had all been withdrawn by the end of 1954 and were outlasted by the last Stars.

The saving on boiler maintenance would only apply if the two classes were used on similar duties. But they weren't. If they were, as an example, you would be able to show me a photo of a Star hauling the Cheltenham Flyer!

 

From K.J. Cook's book "Swindon Steam", in a discussion about the renewal fund:

We converted ten Star class to Castles, having made a case that on account of the larger boiler, which was working at a lower evaporation rate we could maintain Castles for one penny a mile less than Stars. We had obtained agreement to convert odd engines as they required heavy cylinder renewals, actually 4000, 4009, 4016, 4032 and 4037 but I think these were actually done against revenue. Then Collett decided that it would be better to do any further conversions on relatively newer engines in which naturally the framing would be in better condition, hence ten Abbeys, 4063 to 4072 were done on a c case made out for Capital Renewal, It involved extending the frames by one foot at the trailing end, new cylinders and saddle casting and new boiler.
​

It's there in black and white - the case was made on the basis of reduced boiler maintenance cost of the larger boiler.

As far as I can see, the history was:

4000 - Built 1906, rebuilt 1929, withdrawn 1957, age at withdrawal 51 years
4009 - Built 1907, rebuilt 1925, withdrawn 1950, age at withdrawal 43 years
4016 - Built 1908, rebuilt 1925, withdrawn 1951, age at withdrawal 43 years
4032 - Built 1910, rebuilt 1932, withdrawn 1951, age at withdrawal 41 years
4037 - Built 1910, rebuilt 1927, withdrawn 1962, age at withdrawal 52 years
4063 - Built 1922, rebuilt 1937, withdrawn 1959, age at withdrawal 37 years
4064 - Built 1922, rebuilt 1937, withdrawn 1962, age at withdrawal 40 years
4065 - Built 1922, rebuilt 1939, withdrawn 1964, age at withdrawal 42 years
4066 - Built 1922, rebuilt 1937, withdrawn 1958, age at withdrawal 36 years
4067 - Built 1923, rebuilt 1940, withdrawn 1963, age at withdrawal 40 years
4068 - Built 1923, rebuilt 1939, withdrawn 1962, age at withdrawal 39 years
4069 - Built 1923, rebuilt 1939, withdrawn 1964, age at withdrawal 41 years
4070 - Built 1923, rebuilt 1939, withdrawn 1962, age at withdrawal 39 years
4071 - Built 1923, rebuilt 1938, withdrawn 1964, age at withdrawal 41 years
4072 - Built 1923, rebuilt 1938, withdrawn 1963, age at withdrawal 40 years

So the first locos (4000 - 4037) typically lasted 40+ years, in some cases lasting over fifty years. The second lot (4063 - 4072) lasted slightly less, but several made over 40 years; and no doubt in some cases withdrawal came on account of the removal of steam on the Western Region, rather than because the locos were worn out. 40 - 50 years for a front line express loco is not completely unusual, but I'd say the GWR got their money's worth from their investment.

Tom

 

Funding on renewals certainly goes back before WW1.

Reading the SE&CR Locomotive Committee minutes, each six month period the Locomotive, Carriage and Wagon Superintendent brings a report to outline the locomotive, carriage and wagon programme, and that includes how much of it is to be funded by renewals. It's fairly clear in that period that the SE&CR was basically managing things "at a steady state", i.e. more or less one new loco built and one withdrawn - the locomotive stock stays steady at just under 750 for many years. As an example, in the February 1903 minutes, it is recorded in the report from the Locomotive Superintendent:

With regard to engine renewals I intend that the number of engines to be built and charged to Renewal Account during the current Half year shall be 11 - the same as the previous Half year. I have suggested to the General Manager that it might be advantageous to charge 10 of the 20 engines which are now being obtained from contractors to Renewal Account, say 5 this Half year and 5 in the following Half years and thus ease the pressure at Ashford during the time we are working shorter hours.
​

That reads to me that Wainwright has reduced hours at Ashford (presumably to cut wage costs, from the revenue account) but is making up the shortfall in capacity to build engines by going to external contractors and funding from Renewal Account, which is a separate pot of money. There is no mention in the minutes, incidentally, of which locos are being funded that way, nor which locos it is proposed to withdraw - that seems to have been a level of detail below which the locomotive committee did not get involved in.

To finish the point, after further discussion about carriages and wagons, the committee agrees the following sums to be spent from the Renewal Account for the half year:

• Locomotives: £24,700 (comprising 10 locomotives from contractors and one at Ashford)
• Carriages: £18,800 (comprising 10 passenger brake vans from contractors, 10 passenger brake vans from Ashford, 4 second class saloons, 10 bogie firsts)
• Wagons: £8,500 (comprising 60 opens, 10 road vans and 10 brake vans, all at Ashford)

Tom

 

The lower evaporation rate would only apply when a Castle and Star were pulling comparable loads. But the Castles were built because there was a need for more powerful locomotive than the Stars to handle the increasing traffic after WW1. So Castles were built because they were more powerful than Stars but Stars were rebuilt as Castles because economies were possible in boiler maintenance? As intended, Castles were used on more demanding duties, such as the Cheltenham Flyer. Even when handling comparable loads, the claim implies that the drivers would have restrained their locomotives in order to save money on boiler maintenance? Boiler maintenance was probably the last thing on a driver's mind, if at all. It would only have made any sense if the locomotives had dedicated crews, as in France, otherwise there was little or no incentive. In short, economy in boiler maintenance might have been the aim, but was unlikely to have been achieved in any meaningful way.

 

Again, it is worth quoting Cook. The GWR did a lot of things to improve boiler life - it wasn't just down to reduced evaporation rate - but they undoubtedly did see reduction in maintenance, and in particular longer boiler life:

By this continuous progress of treatment and improvement of supplies and by the natural blending as locomotives moved from area to area, great benefits accrued and greatly assisted in the improvement in boiler life. By the sum total of this and improved processes and techniques in the boiler shops, our maintenance needs and costs were very considerably reduced and helped us to prolong boiler life.

A few years earlier, 400,000 miles was regarded as about the life of a boiler and teh number of boilers at or above this mileage influenced our requests to the CME for orders for new boilers. Now this mileage was being reached in some cases before the boiler had been taken off the frames for its first heavy repair, and we began to talk in terms of a million miles. Our monthly tabulations of teh condition of our spare stock now showed the number of boilers above 800,000, 900,000 and a million miles in order to anticipate what might be condemned next time in shops.

[...] Whereas it used to be regarded as necessary to provide two boilers to cover the life of an engine, it was now reduced to about one and a quarter.
​

So they absolutely did get - through various means - a major economy in boilers.

My reading of Collett's tenure as CME is that his real defining quality was not in the new locomotive types he introduced - which were, in the main, just incremental advances on Churchward - but in how he worked relentlessly to improve the reliability of locos and thereby both reduce and systematise the overhaul requirement.

Tom