In the wake of June 21, 1970

Monday, June 22, 1970, was a busy news day, judging by the front page of the New York Times. Any of a half-dozen stories could have led the paper: revelations the U.S. was bombing insurgent trails in Cambodia; 220 killed as the “Indochina War” intensified; Attorney General John Mitchell heralding drug raids in 10 cities; protest groups descending on an American Medical Association meeting in Chicago.

But all of that was pushed aside for the top spot, the upper-right corner of the front page. There, the Times put railroading in the spotlight. “Penn Central is Granted Authority to Reorganize Under Bankruptcy Laws,” went the main headline, referring to events the day before.

There it was, the long expected but still shocking news: the largest railroad in the country was going down in history as the nation’s biggest bankruptcy. It came after the railroad’s last-ditch attempt to secure $200 million in government-backed loans was turned away by the Nixon Administration. Stuart Saunders, Al Perlman, David Bevan, and the entire team of rivals known as PC management had run out of options.

With that unraveled the short, unhappy marriage of the Pennsylvania Railroad and the New York Central. Caught up in the moment, many saw endless trouble ahead, especially after regulators forced the two principals to take on the beleaguered New Haven as well. Indeed, the days seemed desperate. Penn Central’s financial troubles leached into just about every corner of railroading, leading to fears of nationalization, labor unrest, and, certainly, more bankruptcies. That self-described “capitalist tool,” Forbes magazine, said as much in its October 15, 1969, cover story — months ahead of the bankruptcy — when its headline asked, “Is it Endsville for the Railroads?”

Secretary of Transportation John Volpe, working feverishly to try to prop up PC, sounded similar alarms. “If the Penn Central goes down, others will suffer and possibly bring about a complete collapse of our railroad picture,” he said. 

Scarcely more encouraging was Trains Editor David P. Morgan: “Whether Penn Central was mismanaged into Section 77, as a majority of pundits contended, or the system became unmanageable, as Stuart T. Saunders responded, was academic,” he wrote. “U.S. railroads operate 27,000 motive-power units; when the line that has its name on 4,400 of them can’t pay its bills, all the industry is in trouble.”

This week, on the eve of the 50th anniversary of PC’s bankruptcy, I found myself reaching for two favorite books, The Wreck of the Penn Central, a sizzling 1971 exposé by Philadelphia newspapermen Joseph R. Daughen and Peter Binzen; and The Men Who Loved Trains, Rush Loving’s masterful 2006 account of some of the people who presided over railroading’s halting but ultimately successful resurgence in the wake of PC. 

Both books recount the often astounding events leading up to June 21, 1970: the familiar story of PC’s Red vs. Green teams; the jealousies and intrigues that infected top management; the desperate effort to get money out of the Defense Department by invoking the obscure Defense Production Act of 1950; the fateful June 8 directors meeting at Philadelphia HQ in which most of top management was fired, only to have an angry Al Perlman — “seething with anger,” wrote Daughen and Binzen — refuse to accept his fate, storm out of the building, and return alone to New York aboard his business car.

Reading either book is a powerful reminder of just how much railroads still seemed to matter in those days. Of the two, Daughen’s and Binzen’s has more of the juicy details; these guys were not railroad writers, they were investigative reporters, relentless in chasing one of the biggest stories to ever hit Philadelphia. In Loving’s account, the PC mess is more of a prelude to the heart of his book, which follows the birth, death, and legacy of Conrail. 

To be honest, my memories of PC’s financial demise are hazy. I was 19 on Bankruptcy Day, home from my freshman year in college and getting used to my summer job working on a public works department dump truck ($1.50 an hour!). I lived in a Penn Central town in Michigan and I’m sure our two local papers put the story on the front page, but I don’t recall reading about it.

What I do recall, though, is the effect of all this on the railroaders I had gotten to know around town, all of them former New York Central men. I knew them to be proud of their work and proud of their heritage, despite all the signs of decrepitude surrounding them — the bad track, the bad-order diesels, the bad news from 700 miles away in Philadelphia. They had wanted to believe all the fanfare when Penn Central debuted little more than two years before, and now they were deeply disheartened.  

Dark as those days were, a half-century of hindsight manages to bring a little light and a cheerier assessment of June 21, 1970. Perhaps it’s not too perverse to record Penn Central’s bankruptcy as just what the doctor ordered, a way to violently clean the slate and give better angels — the heroes of Rush Loving’s book — a chance to write a different history.

It’s not a stretch to say the Penn Central debacle begat the U.S. Railroad Association, which begat Conrail, the Railroad Revitalization and Reform Act of 1976, the Staggers Act of 1980, and just about everything good that’s happened to the industry since.