Beginners Ask Trains Why were billboard reefer cars outlawed?

Why were billboard reefer cars outlawed?

By Steven Otte | February 18, 2024

Ask MR: It wasn’t billboard reefers that were outlawed, but the practice that made them profitable

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Black-and-white image of a wood refrigerator car with large “SWIFT” lettering on the side
Billboard reefer cars outlawed: After the Interstate Commerce Commission banned billboard cars in 1937, per-diem reefers like this Swift Refrigerator Line car could display only the company they were consigned to. David P. Morgan Memorial Library collection

Q: Why were billboard reefer cars outlawed? I recently received my copy of Gerry Leone’s Model Railroader’s Handbook. It is certainly a deep well of information. I came across the “Railroad regulatory timeline” on page 111. Most of the regulations banned older, unsafe technology (arch-bar trucks, truss-rod car construction, etc.) as newer technology developed. That makes sense. But I noticed that in 1937, billboard reefers and boxcars were banned. I cannot imagine what the motivation for banning such cars could have been. Can you shed any light on this? — Chris Santy

A: Were billboard reefer cars outlawed? Well, not exactly. Just sort of. The story of the rise and fall of the billboard car is a complex one, so much so that I had to ask railroad historian Jeff Wilson for clarification several times. But I’ll boil it down for you.

A billboard car is one usually belonging to a leasing company, not a railroad, that was emblazoned with often large and splashy graphics advertising the products it carried. Usually it was a refrigerator car, but there were a few billboard boxcars, and oil tankers fell under the same rules. It wasn’t billboard reefers themselves that were banned so much as the practice that made them profitable.

When a rail car is on the rails of a railroad different from the car’s owner, the railroad must pay a daily fee, called a per diem, to the car’s owner. In addition, if the car’s owner is not another railroad, but for instance a car leasing company, the railroad also pays the car’s owner a mileage charge based on how far the car moves. Obviously, the railroads would rather use their own cars first, then another railroad’s cars, rather than one owned by a leasing company. This let them keep more of the money industries paid to ship their goods on the railroad.

Back in the 1920s, leasing companies found what they thought was a swell way to increase business. They would pay a portion of the mileage charge they got from the railroads back to the shippers as a rebate for requesting their cars. Lessors started painting their cars with big, showy advertisements for the shippers’ products, like Rath Hams, Budweiser Beer, and Land O’Lakes Butter. The shippers liked this, because it meant extra money for them, plus free advertising. The leasing companies liked it, because their cars got more usage, and therefore made them more money.

Who didn’t like it? The railroads, who were the ones paying the rebate by being forced to use mileage-rate cars instead of their own. Not to mention, shippers such as Hormel Meats didn’t like it when a reefer bearing a third-party ad like Old Dutch Cleanser showed up at their loading docks. Plus, since a lot of refrigerator car lines were associated with or even outright owned by the shippers, the shippers were essentially double-dipping at the railroads’ expense.

So the railroads took their case to the Interstate Commerce Commission, which in 1934 banned the rebate scheme and banned cars with billboard advertisements from interchange service starting in 1937. Cars could still bear the names and logos of the shipper leasing the car — such as Anheuser-Busch — but not specific products like Budweiser Beer. Third-party advertisements were also banned. With the rebate gone, the incentive for elaborate paint schemes also disappeared. Since wood-sided refrigerator cars required frequent repainting, billboard reefers were gone from the rails within a few years of the ICC’s ruling.

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