greyhoundsIf PC did, in fact, ignor shippers' routing the EL could have validly claimed the revenue without actually hauling the freight by making a "Deprived Revenue" claim. Do you have any evidencd that this regularly happened?
They did win in court twice but could never get damages because PC was broke. Courts take time and by the time they had legal remedy the shippers were long gone, and the bridge burned. You can't get blood from a turnip or cash damages from a bankrupt PC, and PC knew that so they looked out for themselfs.
If you want dates and cases, I don't have time at the moment.
Dug FinWell the shippers were paying to send their freight on Erie. They got better service from Erie. Because PC wanted the traffic was no reason the should have been able to ignor the shippers wishes. PC was having trouble getting their own traffic to the correct destination in a reasonable time as it was and can you blaime the customer for a more reliable road?
Do you have any evidence at all that PC was ignoring shippers' routing instructions? Shippers had that option.
If the route was not specified by the customer the railroad was free to choose the route. It's common sense that PC would choose the longer haul with more revenue.
If PC did, in fact, ignor shippers' routing the EL could have validly claimed the revenue without actually hauling the freight by making a "Deprived Revenue" claim. Do you have any evidencd that this regularly happened?
So then you are suggesting EHH?
If Perlman had been charge of the merger,possibly he would have started moves toward computer compatibility, rational traffic planning, reduction of unnecesary route and track duplication, as CB&Q, NP, GN, and SP&S did before the very successful BN merger. But remember, he was against the merger and was dragged into it!
In any case, over-regulation and passenger losses were problems that would have remained.
Well the shippers were paying to send their freight on Erie. They got better service from Erie. Because PC wanted the traffic was no reason the should have been able to ignor the shippers wishes. PC was having trouble getting their own traffic to the correct destination in a reasonable time as it was and can you blaime the customer for a more reliable road?
Dug Fin"Ms Golden Shifter" Are you referring to Linda Vaughn?
The one and only.
Modeling the Cleveland and Pittsburgh during the PennCentral era starting on the Cleveland lakefront and ending in Mingo junction
Paul3 FWIW, the New Haven was approx. $50 million in debt in 1970 after 10 years of bankruptcy (yes, the NYNH&H Co. was still around for many years after the PC merger, just like PC is still alive today as American Premier Underwriters). PC was required to pay off this debt as part of the merger. In contrast, PC was losing $1 million per day. The NH hastened the PC's demise by maybe 2 months? The NH Trustees had one goal, the one they were legally required to try and get: pay the stockholders and settle debts. The Trustees are the ones that forced the ICC to merge them into PC because the NH would have been surrounded by PC and cut off. Well, the NH stockholders all made out on the deal and PC did, in fact, pay off the NH's debt. The NH Trustees did their job. Personally, IMHO, the PC merger should never have happened. It makes no sense to merge two duplicate rail lines and keep both. The C&O/NYC and N&W/PRR made much more sense, and is pretty much what we have today. But some have to learn by disaster.
FWIW, the New Haven was approx. $50 million in debt in 1970 after 10 years of bankruptcy (yes, the NYNH&H Co. was still around for many years after the PC merger, just like PC is still alive today as American Premier Underwriters). PC was required to pay off this debt as part of the merger.
In contrast, PC was losing $1 million per day. The NH hastened the PC's demise by maybe 2 months?
The NH Trustees had one goal, the one they were legally required to try and get: pay the stockholders and settle debts. The Trustees are the ones that forced the ICC to merge them into PC because the NH would have been surrounded by PC and cut off. Well, the NH stockholders all made out on the deal and PC did, in fact, pay off the NH's debt. The NH Trustees did their job.
Personally, IMHO, the PC merger should never have happened. It makes no sense to merge two duplicate rail lines and keep both. The C&O/NYC and N&W/PRR made much more sense, and is pretty much what we have today. But some have to learn by disaster.
Paul3, I agree with most of what you wrote. But it's irrelevant to the topic.
We were discussing the diversion of traffic originated/terminated on the New Haven from the EL to the Penn Central after the PC was forced to take over the New Haven. That was something the PC was naturally going to do.
Both the New York Central and Pennsylvania Railroad were doomed, merged or unmerged. The government had prohibited and/or greatly restricted their use of intermodal to compete with the truckers. The operating unions didn't allow productivity improvements needed to compete with the same truckers. It was, at the time, a problem without a solution.
I agree that the forced inclusion of the New Haven had a minor effect on the in the overall PC outcome. But we were not talking about that. We were talking about the diversion of revenue from the EL to the PC after the New Haven became part of the PC.
Dug FinThough EL did not orginate much traffic they were a very successfull bridge route to Chicago. After the PC took control of the New York, New Haven and Hartford the PC management moved to stop traffic through Maybrook onto the EL. Quote: "Immediately, Penn Central sent an assistant general manager from the headquarters in Philadelphia to "Dynamite the connection at Maybrook."" according to Erie Lackawanna: The Death of an American Railroad, 1938-1992 By H. Roger Grant. As late as 1969 EL was getting 118,000 cars a year (most to Chicago) from NH in Maybrook. By 1970 PC had cut that to 48,000. EL won an ICC complant against PC in 1969 which PC largely ignored. It was time to throw in the towel when the Poughkeepsie Bridge over the Hudson River burned, cutting the line to Maybrook to Boston. It was a bridge which PC had recently removed fire protection from. Across Northern Indiana the EL had 21 freights daily as late as 1976 but the closing of the Poughkeepsie Bridge in May 1974 was the last straw for the EL line to Chicago.
Well, speak of the Devil! Mr. Grant is under challenge (by me) for his knowledge, veracity and competence in another thread. Until that gets resolved, I'm not going to spend a dime to read any book of his on the Erie Lackawanna.
The New York, New Haven and Hartford was loosing money and bankrupt when the government (ICC) odered the Penn Central to acquire it, as if that would solve the problem.
Once the New Haven was forced on to the PC it was only common sense that the PC would seek the Chicago business for itself. What did those government fools think was going to happen? The PC wasn't just going to hand over revenue to the EL out of the goodness of their heart. The Penn Central diverted traffic it now originated and/or terminated to its own routes and kept the revenue. They weren't quite crazy.
As to "All but ignoring" the ICC, good for the PC. They were in their own fight for survival and even the government doesn't have unlimited power. Fighting back is often justified.
There were just too many railroad trunk lines between Chicago and New York. This drove up overall rail cost and hurt competitiveness with motor freight. It's more efficient to concentrate traffic on a few lines. (It spreads the fixed costs over a larger base.) The EL had mostly overhead traffic which could, at that time, be readily absorbed by the Penn Central. It made economic sense to put the traffic on the PC.
This was all lost to the government regulators and also, apparently, to author Grant.
CSSHEGEWISCH Erie Lackawanna was already part of the N&W camp by way of Dereco, which was a way of keeping EL and D&H at arm's length because of their marginal financial condition. Much of EL and Reading would have gone to Chessie System in the original plan for Conrail. The deal never went through in part because of an inability to come to an agreement with organized labor. Most of the former Erie main line west of Meadville PA would have been abandoned at any rate.
Erie Lackawanna was already part of the N&W camp by way of Dereco, which was a way of keeping EL and D&H at arm's length because of their marginal financial condition.
Much of EL and Reading would have gone to Chessie System in the original plan for Conrail. The deal never went through in part because of an inability to come to an agreement with organized labor.
Most of the former Erie main line west of Meadville PA would have been abandoned at any rate.
Not so sure about that. Though EL did not orginate much traffic they were a very successfull bridge route to Chicago. After the PC took control of the New York, New Haven and Hartford the PC management moved to stop traffic through Maybrook onto the EL. Quote: "Immediately, Penn Central sent an assistant general manager from the headquarters in Philadelphia to "Dynamite the connection at Maybrook."" according to Erie Lackawanna: The Death of an American Railroad, 1938-1992 By H. Roger Grant.
As late as 1969 EL was getting 118,000 cars a year (most to Chicago) from NH in Maybrook. By 1970 PC had cut that to 48,000. EL won an ICC complant against PC in 1969 which PC largely ignored. It was time to throw in the towel when the Poughkeepsie Bridge over the Hudson River burned, cutting the line to Maybrook to Boston. It was a bridge which PC had recently removed fire protection from.
Across Northern Indiana the EL had 21 freights daily as late as 1976 but the closing of the Poughkeepsie Bridge in May 1974 was the last straw for the EL line to Chicago.
GrampToday, I wonder if it might be smarter if the Seven Sisters chose to split into several, additional, better-focused railroads rather than aim for Leviathan status.
Even better - had they been able to do so when they first wanted to make those moves. If the government had stayed out of the way.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
IIRC the Central and Pennsy were required to take the New Haven. Terminal red ink.
I think so much of 20th Century railroad history is a demonstration on many sides of Lord Acton’s, “Power tends to corrupt; Absolute power corrupts absolutely.
Today, I wonder if it might be smarter if the Seven Sisters chose to split into several, additional, better-focused railroads rather than aim for Leviathan status.
BaltACDlike the Rock Island and the Milwaukee Road.
I think the problem with the Milwaukee Road was it's bankruptcy judge was too protective of investors vs the investment itself. Had the first bankruptcy judge of the Milwaukee Road post Pacific Coast Extension given the bond holders a significant haircut and trimmed the Milwaukee of it's PCE debt, I think the Milwaukee might have lasted longer or even made it to today. Leaving the Milwaukee to carry the PCE debt through several bankruptcies and even retaining a portion of the PCE debt through the last bankruptcy was just stupid......in my opinion.
CatFoodFlambeAgreed - if anything, PC would have probably bottomed out a year and half sooner, as Perlman would never have permitted the financial shell game that took place. PC was doomed long before the merger - God Himself could not have made PC work in the pre-Staggers era.
Agree and if we could turn back the clocks the ICC should have rejected the merger until both railroads improved their balance sheets significantly.
narig01 I asked this question in another thread and someone suggested I start a thread on this. So I ask: What if Al Perlman had run Penn Central with or without the support of Blevens (the CFO) and other money people? Could his management team have made it work? Mr Perlman had been and had developed a lot of 1st rate talent. And when he left the Rio Grande he left a railroad that certainly was hustling for a living. When he was at the New York Central Mr Perlman had immediate impacts. Thx IGN
I asked this question in another thread and someone suggested I start a thread on this. So I ask:
What if Al Perlman had run Penn Central with or without the support of Blevens (the CFO) and other money people?
Could his management team have made it work? Mr Perlman had been and had developed a lot of 1st rate talent. And when he left the Rio Grande he left a railroad that certainly was hustling for a living.
When he was at the New York Central Mr Perlman had immediate impacts.
Thx IGN
My answer is NO the merger was doomed from the start. Had the merger been limited to NYC and PRR and been given expedited ability to abandon or rationalize freight and passenger routes.........then maybe. With regulatory agencies involved and the wait times to get these items done. I think the railroad would have failed anyway. Both NYC and PRR were far to marginal for a merger to achieve savings fast enough to keep the combined entitty afloat.
Also, remember, didn't the ICC force PC to take on additional railroads it did not want to be part of the merger?
Agreed - if anything, PC would have probably bottomed out a year and half sooner, as Perlman would never have permitted the financial shell game that took place. PC was doomed long before the merger - God Himself could not have made PC work in the pre-Staggers era.
I don't think Perlman could have made a significant difference. He would have made some difference, but not enough.
The problems were too great and largely beyond management control. The government strangled the railroads in many ways.
For example, they blocked the adoption of intermodal container service and took away the railroads' best avenue of competing with motor freight. They held rail rates artificially high to effectively allocate business to barge lines. These actions had very negative effects on the American economy.
The unions, with government help, were able to block needed productivity improvements. This kept rail cost higher than need be and bled the railroads of money for service improvements and captial.
The government forced operation of passenger services at a huge loss was a sharp, dirty knife that further cut deep and wide to bleed the railroads.
Perlman had little or no ability to fix any of this. He would have made things better, but not better enough.
What you would have had is basically what Conrail was in 1980.
He would have had to get permission to erase lines from the map and do the TCS install on the former PRR. The folk who put together and ran Conrail included quite a few Perman protoges.
He also would have still needed Staggers to make it all sustainable.
The one advantage of he would have had was the the corridor would still be under his control - a cheaper and faster way to move freight traffic from NJ to Harrisburg and DC.
A slim, trim and functioning PC plus Staggers would meant bad news for EL, RDG, LV et. al.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
GrampI wonder what today's railroads would look like if the knee-jerk reaction of the 60's had been to not merge, but have the focus on better organizaction of the firms' resources, and developing and serving customers to the hilt.
I suspect, had there been no 'merger mania', there would have been very little railroad mileage still in existance today. The mergers that happened were mostly done to stave off bankruptcy by one or more of the partners. What made PC so bad was that you had two partners that were already on the express lane to bankruptcy trying to save themselves, each featuring they could pick their partner clean - thus the red-green wars within the merged company.
The successful mergers were where one of the partners had the financial ability to overcome the weak sisters financial needs as well as implement organizational changes, technological changes and route rationalizations to keep the new organization operating in the black at the bottom line. Without the mergers, many of the weak sisters would have just disappeared - like the Rock Island and the Milwaukee Road. Those companies without financial resources could not have focused on better organization and/or serving customers better - their full focus was on trying to have the finances to exist the next day, let alone next month or next year.
Never too old to have a happy childhood!
I wonder what today's railroads would look like if the knee-jerk reaction of the 60's had been to not merge, but have the focus on better organizaction of the firms' resources, and developing and serving customers to the hilt.
Whats ifs are great exercises in conjecture. What if Hurricane Agnes had never happened?
PC was already indelibly on the road to oblivion but this was still an era of railroads "crying wolf" although it was becoming increasignly difficult to dispute the regulatory shackles. I wonder that if the storm-created financial catastrophy to not only PC but neighboring roads that fell into Conrail had not occurred to such a uniform extent, whether the situation might have lingered for much longer.
I do not believe Perlman could have done much better with the regulatory structure then in place, only forestalled the inevitable. All too often it takes a big crash of one sort or another to get any attention, as you say.
I believe E-L was a condition of the N&W-Nickle Plate-Wabash merger and Derco was used to shield N&W from EL's finances
Perlman could have delayed the rapid crash of PC, but there was no way that PC + NH never had chance of generating the capital needed to make the railroad operationally sound. In someways, perhaps it was best that PC crashed in such a spectacular fashion - it certainly got everyone's attention and led to the resolution of the entire industy's restrictions. Had PC limped along for decades, the rest of industry might have suffered the same fate, such as did Southern Pacific.
So to be clear, the EL was created in 1960 well before PC. This in knew.
Dereco was created March 1968, just after PC.
The Erie merged with the DL&W, the Lackawanna in mid Oct. 1960, way way way before PennCentral.
So post PC.
According to info at the ELHS, Dereco was incorporated March 1, 1968. At the same time the Lakawanna and Erie merged.
So dereco began when?
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