In the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

, a paper railroad is a

company A company, abbreviated as co., is a Legal personality, legal entity representing an association of legal people, whether Natural person, natural, Juridical person, juridical or a mixture of both, with a specific objective. Company members ...

in the

railroad Rail transport (also known as train transport) is a means of transport using wheeled vehicles running in railway track, tracks, which usually consist of two parallel steel railway track, rails. Rail transport is one of the two primary means of ...

business that exists "on paper only": as a

legal entity In law, a legal person is any person or legal entity that can do the things a human person is usually able to do in law – such as enter into contracts, lawsuit, sue and be sued, ownership, own property, and so on. The reason for the term "''le ...

which does not own any track,

locomotives A locomotive is a rail vehicle that provides the motive power for a train. Traditionally, locomotives pulled trains from the front. However, push–pull operation has become common, and in the pursuit for longer and heavier freight train ...

, or

rolling stock The term rolling stock in the rail transport industry refers to railway vehicles, including both powered and unpowered vehicles: for example, locomotives, Railroad car#Freight cars, freight and Passenger railroad car, passenger cars (or coaches) ...

. In the early days of railroad construction, paper railroads had to exist by necessity while in the financing stage. It allowed incorporation of a company and the seeking of capital to build a proposed railroad. In the 1850s, speculation of stock of paper railroads became rampant, causing a bubble of their stocks. This led in large part to the

Panic of 1857 The Panic of 1857 was a financial crisis in the United States caused by the declining international economy and over-expansion of the domestic economy. Because of the invention of the telegraph Telegraphy is the long-distance transmission ...

. Throughout the 19th and early 20th centuries, this specific connotation of the phrase "paper railroad" was consistent: a proposed, often speculative (and sometimes wildly speculative) venture in which a company stock exists, but no physical assets to run a railroad do. In many cases, these railroads still existed as corporate entities long after plans to build them had been scrapped. In the context of recent times, the phrase "paper railroad" is still used, but generally refers to railroads which are

subsidiaries A subsidiary, subsidiary company, or daughter company is a company completely or partially owned or controlled by another company, called the parent company or holding company, which has legal and financial control over the subsidiary company. Unl ...

of larger parent railroads, or formerly existed and still have locomotives or rolling stock in the former railroad's livery. Reasons railroads are operated this way include those of internal corporate structure, tax ownership or locale, or for public relations purposes. If not actually operating, these railroads are "non-operating subsidiaries" of the parent railroad.

References

{{US-rail-company-stub

See also

References