oltmanndDisgruntled commuters started the states to take notice and provide some $$ for improvements and to keep the service going, but PC going belly up was sure a wake up call to DC.
Somebody here -- I forget just who it was, my Alzheimer's disease is setting in -- but somebody here pointed out that the Penn Central was carrying the lion's share of all the passengers in the country. You may remember just who it was. And a lot of these passengers were commuters. And then there were the New Haven commuters. It was an old, old story. Commuter roads had to hire full time employees to do a half day's work in the morning or evening rush hour. And their trains laid idle all of that time. And yes, they stopped buying new equipment. The Delaware Lackawanna and Western ran its red Edison EMU's it brought in the 1930's and strung up 3,000 volt dc power lines to operate.
And yes, everyone though the railroads were only crying "Wolf. Wolf." All to get more government money. And everyone ignored them. Until it was too late for the Penn Central, which had been the biggest and most profitable companies in the country.
John WROne thing is certain. No one, absolutely no one in Government, was concerned about was the railroads. For well over a hundred years they had been private companies taking care of them selves and providing the Government with substantial benefits in the bargain. And then, with no concern for how much it inconvenienced the Federal Government, the Penn Central went bankrupt.
Pretty much.
The railroads tried shouting from the treetops in the early 1950s about all the various ills regulation was causing....and got absolutely nowhere. Just read some of the preamble in the PRR and NYC annual reports from that era. By the mid 1950s, they'd pretty much thrown in the towel in that regard...and greatly reduced the capital budget of their railroads.
Disgruntled commuters started the states to take notice and provide some $$ for improvements and to keep the service going, but PC going belly up was sure a wake up call to DC.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
V.Payne oltmannd John WR1. Of course there are individual factors. Time is money. Once coast to cost air travel became available a business man could not afford to take the train. And of course with the massive subsidies of free highway systems driving was very popular. And it still is. In my state, for example, there is no sales tax on gasoline; there is an excise tax but that is substantially lower than the sales tax would be. Meanwhile, railroads were taxed and part of their taxes went to pay for these free roads. Competing with that was a little daunting. Yes, it was. But, the lions share of the money to build and maintain the interstate highways came from ....wait for it.... vehicle fuel tax paid into the highway trust fund - not property taxes paid to local gov't by RRs. There are indirect subsidies and ancillary costs not born by the trust fund, but the $$ to build them came from fuel tax - and it was a rather popular tax when it went in. Currently (2010 FHWA numbers) fuel taxes (state and federal) and tolls pay for 27% of all road government financial costs, disregarding the sales tax redirection by my calculation. But even this low average percentage is much higher than the number for limited access roadways. I keep a spreadsheet of FHWA numbers. The Federal fuel tax leveraged the user's indivdual fuel tax paid for use of the Interstates by a factor of 8-10 over six decades, with the balance coming from fuel taxes redirected off existing urban roads paid for by property taxes. Both longer distance trucking and passenger uses of roads are significantly underpriced, and due to this marketplace expectation rural limited access toll roads have financial difficulty recovering their costs, even with the accidents costs dumped on the government. Everyone realized this in the railroads but the times were what they were.
oltmannd John WR1. Of course there are individual factors. Time is money. Once coast to cost air travel became available a business man could not afford to take the train. And of course with the massive subsidies of free highway systems driving was very popular. And it still is. In my state, for example, there is no sales tax on gasoline; there is an excise tax but that is substantially lower than the sales tax would be. Meanwhile, railroads were taxed and part of their taxes went to pay for these free roads. Competing with that was a little daunting. Yes, it was. But, the lions share of the money to build and maintain the interstate highways came from ....wait for it.... vehicle fuel tax paid into the highway trust fund - not property taxes paid to local gov't by RRs. There are indirect subsidies and ancillary costs not born by the trust fund, but the $$ to build them came from fuel tax - and it was a rather popular tax when it went in.
John WR1. Of course there are individual factors. Time is money. Once coast to cost air travel became available a business man could not afford to take the train. And of course with the massive subsidies of free highway systems driving was very popular. And it still is. In my state, for example, there is no sales tax on gasoline; there is an excise tax but that is substantially lower than the sales tax would be. Meanwhile, railroads were taxed and part of their taxes went to pay for these free roads. Competing with that was a little daunting.
Yes, it was. But, the lions share of the money to build and maintain the interstate highways came from
....wait for it....
vehicle fuel tax paid into the highway trust fund - not property taxes paid to local gov't by RRs. There are indirect subsidies and ancillary costs not born by the trust fund, but the $$ to build them came from fuel tax - and it was a rather popular tax when it went in.
Currently (2010 FHWA numbers) fuel taxes (state and federal) and tolls pay for 27% of all road government financial costs, disregarding the sales tax redirection by my calculation. But even this low average percentage is much higher than the number for limited access roadways. I keep a spreadsheet of FHWA numbers. The Federal fuel tax leveraged the user's indivdual fuel tax paid for use of the Interstates by a factor of 8-10 over six decades, with the balance coming from fuel taxes redirected off existing urban roads paid for by property taxes.
Both longer distance trucking and passenger uses of roads are significantly underpriced, and due to this marketplace expectation rural limited access toll roads have financial difficulty recovering their costs, even with the accidents costs dumped on the government. Everyone realized this in the railroads but the times were what they were.
I'm having trouble following what you are saying. Are you saying the Federal fuel and excise taxes have never covered a significant portion of the Interstate/Federal highway network construction?
Or, are you saying that there is cross subsidization from local roads to federal roads by miles driven vs. fuel tax paid?
Or both?
localn roads may require subsidization for the general welfare. But interstate highways are part of an industry, highway transportation, including all its componants. And they occupy a lot of real-estate. Innlcuding some valuable property in downtown areas of major cities.
Without paying any real-estate taxes.
This was 1968. Lyndon Johnson was President. Vietnam was still going on. People in the street were shouting "Hey, Hey, LBJ, How many kids did you kill today" and a stream of young Americans were fleeing, seeking exile in Canada and other countries. Johnson was a master of domestic policies but with the war he was at a total loss. He had entrusted the whole war to John Kennedy's brilliant Secretary of Defense, Robert McNamara and McNamara had bought the war to this stage. Now the guy LBJ had given so much power was doing a flip flop and wanted out. The people were turning against the war and Congress was following. One thing is certain. No one, absolutely no one in Government, was concerned about was the railroads. For well over a hundred years they had been private companies taking care of them selves and providing the Government with substantial benefits in the bargain. And then, with no concern for how much it inconvenienced the Federal Government, the Penn Central went bankrupt.
John WR In 1954 Alfred Perlman come aboard the New York Central. He scrapped the steam engines and waged war on passenger service. He computerized as many functions as he could. He tore up track that was no longer needed. He didn't stop all of the leaks but he stopped many of them and bailed out a lot of water. And he came to believe that railroads themselves could solve railroad related problems.
He certainly knew what "the future" had to look like for the Central to have a chance and he went at it aggressively. He supported innovation like crazy. Flexivan anyone? The NYC likely had the best test lab of all the railroads in the country. I knew some of the guys who came from the NYC lab into the Conrail era. Really sharp guys! Did all sorts of crazy things trying to figure out how to do things faster, better and cheaper in a big way.
Unfortunately, the modernization ate money like it was going out of style. The large modern hump yards he built in Selkirk, Buffalo, Elkhart, Indy, and Toledo were terrific, but not cheap. All that double track CTC (referred to as TCS on the NYC and Conrail) weren't free, either. The money generated by the RR, including pulling up the "extra" tracks didn't come close to covering the cost. The NYC sold RE to pay for it. (Pan Am building, for example)
It was an uphill battle that the Central would have ultimately lost. Perlman knew it and that's why he was scrounging around looking for a merger partner.
The PRR, for all it's flaws seemed to know that investing in the RR was a losing game and they pretty much stopped playing in the early 50s. No new rail, no new ties, no CTC, no yard improvments/consolidations. The whole thing just sunk into the swamp over the next decade and a half, unchanged. I don't think Saunders really understood the railroad, other than it produced cash - albeit in waning quantities.
Perlman wanted to transform the PRR much like he did for the Central. It would have required selling off lots more RE and other assets which Saunders opposed. Perlman did get to do some things, like complete the hump yard in Selkirk and close the one in Dewitt and build a new hump in Columbus OH (Buckeye), replacing several old NYC and PRR facilities.
Supposing Perlman got his way.... What you would have had was Conrail circa 1979/80 a half dozen years earlier. A modern railroad with new ties, rail, signalling, motive power and a solid network of yards and trains to move traffic efficiently. Unfortunately, the size of the railroad was too big for the traffic base, and the rates for a lot of the traffic didn't cover the cost. To make the whole thing go, you needed the Staggers act.
John WR A McIntosh In Rush Loving's book "The men who Loved Trains", Mr. Perlman wanted the New York Central to merge with the C&O/B&O combination So why didn't that happen?
A McIntosh In Rush Loving's book "The men who Loved Trains", Mr. Perlman wanted the New York Central to merge with the C&O/B&O combination
In Rush Loving's book "The men who Loved Trains", Mr. Perlman wanted the New York Central to merge
with the C&O/B&O combination
So why didn't that happen?
The C&O got cold feet about being dragged down by the B&O and the NYC. The NYC had a lot of the structural challenges the B&O did. Too much passenger traffic. Declining industrial base in the east. Plus, NYC had almost no coal traffic.
John WR oltmanndTrains work where they do the "time is money" thing better than the competition. Metroliner. Acela. Surfliner. As long as we're talking about business people we agree here.
oltmanndTrains work where they do the "time is money" thing better than the competition. Metroliner. Acela. Surfliner.
As long as we're talking about business people we agree here.
Pretty much everyone places a value on their time. Leisure time is not valued as highly as "work time", but people still make the trade-off. For example, should I pay the kid next door $20 to mow my lawn or take an hour or two on Saturday morning to do it myself?
With travel, the pro and cons of each mode also factor in. We took the Auto Train to FL a couple of summers ago. A big part of the equation was that it replaced a day in the car with a day in FL. The other factor was giving my teenagers the experience of overnight travel in a sleeper.
with the C&O/B&O combination, and let the PRR merge with its subsidiary Norfolk and Western. When
NS and CSX divided up Conrail, It seemed to follow those lines.
oltmanndPC was a merger of two sinking boats.
Don,
Yes, they were sinking. In 1954 Alfred Perlman come aboard the New York Central. He scrapped the steam engines and waged war on passenger service. He computerized as many functions as he could. He tore up track that was no longer needed. He didn't stop all of the leaks but he stopped many of them and bailed out a lot of water. And he came to believe that railroads themselves could solve railroad related problems. And he also believed that the only way to save the Central was to merge with the Pennsylvania Railroad. Perlman began talks with the Pennsy and persuaded them to do it. He also persuaded the government to accept it. This took years but finally he did it.
However, there was a fatal flaw to the merger. Stuart Saunders, Chairman of the Pennsy, disagreed with Perlman about the solution. Saunders saw the solution as building a conglomerate rather than in building an efficient railroad and was spending the Pennsy's scarce resources doing so. And when the merger was done Saunders was in charge. Perlman was number 2. He was never able to put his successful ideas to work on the Pennsy. And Saunders was taking the Pennsy and then the Penn Central in the wrong direction. Once again the system was sinking.
Certainly the thinks you describe so well were happening, the change in the country's economy and the harsh and rigid government policies against railroads but in support of the motor freight industry. Those factors made it impossible for both the New York Central and the Pennsylvania to continue as separate entities. Could they have continued as a single entity under Perlman's leadership? Certainly they would have lasted longer but the only truthful answer is that we will never know if they could have continued against the changes in the economy and the harsh and arbitrary Federal government.
In his own day some regarded Alfred Perlman as a hero who might have saved the system. Others became bitter opponents because of his open hostility to passenger operations and because he sent obsolete but beloved steam engines to be scrapped. But for all of that Alfred Perlman was a railroad man through and through. He started his career cleaning cars but also recognized the importance of education and wound up with a Harvard MBA. In this world hard work and clear thinking do not guarantee success but they are still the best strategy. And they were Alfred Perlman's strategy.
So I agree with the problems you describe so well. And I cannot prove that in the long run Alfred Perlman could have overcome those problems. But I sure wish he had been allowed to try.
John
oltmanndWhat's interesting is that Conrail's "heart and soul" was basically the core of the NYC plus the PRR from Cleveland to Harrisburg plus Conway yard. Everything else was the NYC that Perlman built. Conrail leveraged that double track CTC road with those modern hump yards to the max. - and it worked!
I need to think about what you've written.
Given the traffic on I 94, it could be very competitive for Chicago folks heading to Ann Arbor. Corridors like this and others are the future for Amtrak, or whoever picks up the mission.
C&NW, CA&E, MILW, CGW and IC fan
schlimm I can still remember my dad in the early 1950's, when he was still making business trips from Chicago to Detroit, had to switch over from the train ~5hrs) to flying and making it a one day trip, rather than two rides on the Twilight Limited, with an overnight in Detroit. But one time he got stuck in bad winter weather in Detroit and took it back home. The Chicago-Detroit area corridor has promise, although most businessmen would be heading for Ann Arbor or suburban Detroit. But the times will need to come down some to be competitive with air: currently 1 hr, 5-10 min. vs ~ 5 hrs. on the Wolverine.
I can still remember my dad in the early 1950's, when he was still making business trips from Chicago to Detroit, had to switch over from the train ~5hrs) to flying and making it a one day trip, rather than two rides on the Twilight Limited, with an overnight in Detroit. But one time he got stuck in bad winter weather in Detroit and took it back home.
The Chicago-Detroit area corridor has promise, although most businessmen would be heading for Ann Arbor or suburban Detroit. But the times will need to come down some to be competitive with air: currently 1 hr, 5-10 min. vs ~ 5 hrs. on the Wolverine.
Give them a decade to get a couple year's work done and they'll have it down under 4 hours. Just fast enough, I think, particularly for people making a day trip to Chicago.
John WROnce coast to cost air travel became available a business man could not afford to take the train.
It was more than that. Once you could make a round trip in a day, nobody was going to spend two nights on a train to make the same meeting.
The RRs understood "time is money" very well. CB&Q pushed speed starting with the Pioneer Zephyr. MILW had those 100 mph Hiawathas. ACL had 100 mph service to Miami, PRR and NYC pushed NY-Chicago down under 16 hours. PRR had sub-four hour Congressionals. But, they couldn't even keep up with propeller driven, fly thru the weather, not quite so safe as today, airplanes.
Trains work where they do the "time is money" thing better than the competition. Metroliner. Acela. Surfliner.
John WR3. From everything I have read it was necessary to structure Amtrak as a for profit corporation to get it to pass the Congress. And one result of this structure is that Amtrak employees can bargain over wages. However, had Amtrak been created as a government agency then bargaining over wages would not have been permitted. Federal employees do have unions; those unions just cannot bargain over wages and they cannot strike.
If Amtrak had been a Fed agency, the RR unions would have been the big losers. Remember, RRs are covered by a completely different set of labor laws than other industries - and governement. It was rail labor support for Amtrak that helped get Democrat votes. It wasn't because it was a tool needed for cost control by management.
John WR3b. John Volpe was Richard Nixon's Secretary of Transportation. His job was to represent the transportation needs of the country. Yes, there were staff members who disagreed with him. Ultimately Richard Nixon found Volpe's position persuasive and signed the Railpax legislation.
Let's try "politically palatable". I don't think Nixon cared a wit whether there were passenger trains or not....
John WR2. Of course the interstate highway system was popular. It was pork barrel legislation for just about every single Congressional district. Why wouldn't passing out free money all over the country be popular?
It was WAY bigger than that! Cars became a big part of our culture. People wanted, new flashy cars. They wanted to move up from Chevy to Pontiac to Olds to Buick to the ultimate...a Caddy (unless you were a Ford, man...) They wanted, new, fast, highways! People didn't want highways because they brought money (pork) to their town. They wanted highways to DRIVE on!
People took driving vacations on crappy highways in the early 50s even when the driving was slow, the hotels and motels were sketchy and there was no A/C. They could have taken a faster, smoother, air conditioned streamlined train - but they didn't. Why? Because they could go in their shiny new Chevy!
Of course, there were (are) unintended consequences that were unknown or poorly understood at the time. But, that's now - not then.
John WR oltmanndNo. Not even close to true. PC with good leadership = Conrail pre-Staggers. Still lost tons of money. Could you perhaps expand on your ideas, Don? To say that the Penn Central was left in disarray is to understate the situation. Conrail had a lot of pieces to pick up and not just to put together but also to create some kind of coherent organization. But I don't want to take a hard line; I'd just like to know more of your thinking. John
oltmanndNo. Not even close to true. PC with good leadership = Conrail pre-Staggers. Still lost tons of money.
Could you perhaps expand on your ideas, Don? To say that the Penn Central was left in disarray is to understate the situation. Conrail had a lot of pieces to pick up and not just to put together but also to create some kind of coherent organization. But I don't want to take a hard line; I'd just like to know more of your thinking.
Sure. PC was a hot mess, but that isn't the root cause of what went bad. Conrail was basically just PC with money, at the start. EL, CNJ, LV, RDG et. al. weren't all that hard to fold in. They were all really small compared to PC.
PC was a merger of two sinking boats. The boats sprung irreparable leaks starting right after WWII. The base traffic just dried up. Manufacturing started moving out of the northeast. The traffic that was left was increasingly imbalanced - loads east, empties west, and/or PC was short hauled - traffic to/from the south - where they got a lousy rate (it was incremental traffic once upon a time). The high-value/high rate finished goods were diverted to highway and attempts at intermodal succeeding in volume but failed in profitability (once this was incremental traffic, too). Both roads had passenger traffic that dried up, too. The NYC made the single largest purchase of coaches right after WWII only to see ridership plummet.
The savings from the merger were just at the staff level. There really weren't many overlapping facilities to be combined and the best "new" service was to extend that low-rate north/south traffic up to New England.
Both roads had pretty much put their capital investment in the RR on hold in the early 1950s. The notable exception was Al Perlman trying to modernize the Central with double track CTC and fewer, more modern hump yards. The Central had to shed other assets like crazy to do this. From a RR operational point of view, this was exactly what needed to happen. From a financial point of view, it was suicide.
The Red/Green team in fighting was true, but, in the end was more good story than cause of any major trouble. The same guys were still in the same postions for most of Conrail's history. Conrail's management was nearly exactly the same as PC's well into the 1980s except for the very top spot.
Conrail got enough money to complete Perlman's modernization and get rid of all the deferred maintenance. By late 1979, all that work was done, there was harmony in management but Conrail was still losing money. They still had imbalanced traffic, low rates to/from the south and intermodal that didn't pay it's way.
This was what caused the Staggers act to get done. Conrail took hold of it's provisions and righted the ship rather quickly. By 1983, they were making enough money to pay for basic capital reinvestment (track and equipment replacement).
What's interesting is that Conrail's "heart and soul" was basically the core of the NYC plus the PRR from Cleveland to Harrisburg plus Conway yard. Everything else was the NYC that Perlman built. Conrail leveraged that double track CTC road with those modern hump yards to the max. - and it worked!
PS.
To try to add a little context to our discussion, we are talking about history, here. If we disagree we disagree about something that happened in 1970. These issues, though, really do not have anything to do with how Amtrak should operate today.
oltmanndHalf the passenger train in the US prior to Amtrak were operated by PC. Half! Counting RRs is a sloppy, misleading statistic.
Here I have to disagree with you. No one suggests all railroad companies are identical in the number of passengers they carried. And if you go back and look at Don Phillips' article he doesn't just use the statistic. He lists the railroads by name and puts an asterisk next to those that did not join Amtrak. And, while it is true that the Penn Central prior to Amtrak operated half of the passenger trains in the country it is also true and should not be ignored that another group of railroads got out of the passenger business altogether. And it is also true that many of the PC passenger trains were commuter trains and not long distance trains. So I think the statistic needs only to be seen for what it is. No statistic can capture the whole truth of anything. But it is not sloppy. And it is absolutely not misleading to any thoughtful reader.
1. Of course there are individual factors. Time is money. Once coast to coast air travel became available a business man could not afford to take the train. And of course with the massive subsidies of free highway systems driving was very popular. And it still is. In my state, for example, there is no sales tax on gasoline; there is an excise tax but that is substantially lower than the sales tax would be. Meanwhile, railroads were taxed and part of their taxes went to pay for these free roads. Competing with that was a little daunting.
2. Of course the interstate highway system was popular. It was pork barrel legislation for just about every single Congressional district. Why wouldn't passing out free money all over the country be popular?
3. From everything I have read it was necessary to structure Amtrak as a for profit corporation to get it to pass the Congress. And one result of this structure is that Amtrak employees can bargain over wages. However, had Amtrak been created as a government agency then bargaining over wages would not have been permitted. Federal employees do have unions; those unions just cannot bargain over wages and they cannot strike.
3b. John Volpe was Richard Nixon's Secretary of Transportation. His job was to represent the transportation needs of the country. Yes, there were staff members who disagreed with him. Ultimately Richard Nixon found Volpe's position persuasive and signed the Railpax legislation.
John WRAmtrak by providing their old passenger equipment and paying one year's losses to the new company. Interestingly, 6 railroads, almost a third, declined to do so and choose to continue their own passenger service for at least 4 more years.
Half the passenger train in the US prior to Amtrak were operated by PC. Half! Counting RRs is a sloppy, misleading statistic.
John WRWere people simply abandoning trains because they preferred flying and especially driving as the Hosmer report suggests? Or have they not abandoned trains as Claiborne Pell suggests?
Businessmen abandoned trains that weren't competitive with flying. Everyone else abandoned trains that weren't competitive with driving. Those trains that remained competitive were not abandoned.
John WR In the 1950's Dwight Eisenhower built our Interstate system in order to strengthen our defense.
Yeah, of course, wink, wink, nudge, nudge. Building new roads was a hugely popular enterprise - not because people were thinking of the defense application!
John WR It also led to giving Amtrak employees the right to bargain over wages through their unions, a right Federal employees do not have. There is a paradox here: While the intent in setting up a for profit corporation was clearly to limit the power of Amtrak employees in fact that act empowered them in a way no other Federal employee is empowered.
Do you think an Amtrak bill could have passed in w/o union rights being protected? It had zippo to do with whether or not it would or would not contribute to profitability. It was all politics.
Do you think an Amtrak bill could have passed w/o at least paying lip service to profitability? Politics, again. Even the most rose-colored-glasses view was that more LD trains would have to come off, even after the slashing at the start. The only hope was corridor development.
Also, Amtrak was Volpe's baby. He shoved it through the White House over the objection of Nixon's close staff by writing the "White House" version of the bill w/o asking permission.
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