North American freight railroads constitute one of the safest, most secure lending marketplaces in the world.  Strategic Rail Finance was instituted ten years ago to bolster the industry's standing in the financial community. Spreading the word is the central theme of Notch-8.   
   When we integrate this awareness with the industry’s communication of railroads' contribution to overall transportation efficiency, we open the door to full capitalization of rail service expansion.  The rail industry no longer needs to carry the stigma of post-WWII restructuring, when it has compiled an admirable 25-year record of financial success and stability.  Communicating this positive reality has led to Strategic Rail Finance's successful financing of freight rail projects. That the rail industry is financially stable and creditworthy is a cornerstone of our message to our business partners, the lending community and all branches of government.
   Given the contribution of freight railroads to overall transportation efficiency and quality of life, public policy that supports rail development is good public policy.  If we enhance government funding programs through a clear understanding of rail assets, railroad finance, and the capital marketplace, we can “seed” private–sector lending to fully accomplish what the public sector can only partially satisfy.  After all, the Land Grant programs of the 19^th–century were effective because the government contributed land, a publicly owned asset, that railroads then leveraged into substantial private–sector capital.  Recognizing the potential for increasing private–sector lending to rail–related businesses can leverage the availability of government support into a dynamo for growth.  
    The rail industry has endured due to its inherent efficiencies and the absolute necessity that  a vibrant economy and society have a healthy rail system.  Efficiency and necessity, along with the long-lived nature of its primary assets, make railroads exactly the type of market that is attractive for capital investment.

    Victor Morawetz was General Counsel and Chairman of the Executive Committee of the Santa Fe System from 1896 to 1908.  Morawetz was the architect of one of the most admired railroad turnarounds in history.  Writing in 1915, at the occasion of long-time Santa Fe president Edward P. Ripley's 70th birthday dinner at the Blackstone Hotel in Chicago, his thoughts may be as timely as ever:   

    “All the railroad reorganizations planned at the time of the Santa Fe reorganization, and nearly all the reorganizations ever planned in the United States, have been faulty because they failed to make adequate provision for future capital requirements.  Rarely, if ever, have railroad reorganizers realized the unceasing growth of the country and rarely have they appreciated sufficiently that in the United States a railway system must develop and grow with the country which it serves – that it must ever expand its capacity and improve its service.

    Undoubtedly there will recur temporary periods of depression during which railroad earnings will fall off and railroad companies will find it impracticable to raise the new capital which they need.  But, even during these periods of depression, population increases, the development of the country proceeds and wealth accumulates, and we know from experience that after each period of depression the prosperity of the country and the demand for additional railway facilities grow by leaps and bounds. 

    Every railroad system, therefore, must be prepared, from time to time, to raise large amounts of new capital to enable it to furnish the additional facilities which the development of the country demands."