Why did Penn Central fail?

[daveklepper]

Apologies to all. I confused the date of the Conrail startup with Penn Central. So you are all correct about passenger losses. The only subsidies for passenger service in 1968 were for the commuter service in and out of Grand Central on the New Haven and New York Central, and the LIRR had already been sold to New York State. It was sold by the Pennsylvania and not by PC. So the massive passenger losses were in place. I apologize. I was visitng New York from Chicago I believe the day of the merger and so used the Hudson line. I was living in NY at the time Conrail started. It is a long time ago, but some memories ar e pretty vivid, it just that I've got to place the dates correctly. Thanks.

[ValleyX]

I suppose I thought that because it seems to me that it's human nature to think that things were better in bygone days. Beyond that, I don't really have a good reason, I was pretty young in those days.

As for our discussion of sitting on trains such as the one at Grogan, it's not terribly uncommon today to sit on a train six or seven hours and then departing the terminal, because of lack of crews or determination to get it out, regardless of how far the crew will actually get. In very recent times, with the increase in business, it can be even longer, as has been demonstrated to me very recently.

[Anonymous]

ValleyX

Why were you surprised to find the PRR Sandusky Line folks preferred the N&W after the merger? For the first time in many of their careers, they had good track to run good engines on, and supervision that cared how they did their jobs.

I was gone to the former Wabash by 1966. I'm not surprised that the NKP folks didn't like the N&W, but by then it wasn't N&W running it. The former Wabash president, Herman H. Pevler, became president of the N&W after the merger by a prior arrange ment, and the Wabash people saw to it that the NKP folks didn't do very well. One NKP superintendent, George Crews, survived; he wound up at Moberly, Mo. Another NKP operating man, Vernon Coe, wound up at the Kansas City Terminal RR, I believe. All the others took the gas pipe.

Pevler was an empty suit who'd started out on the PRR and gone to the Wabash from there.

Old Timer

[bobwilcox]

I remember at the time of PC our (CRIP/CNW) losing hudge amounts of traffic to truck from manufactues in MI, OH and IN shipping to customers in WTL (ie. IL, IA, WI, MN, etc.). Service before the merger had beed poor due to the Chicago interchange but with the PC merger it went into the tank. In addition we started seeing a lot of transcontiental boxcar traffic going to freight forwarders who whould truck to Chicago and the use TOFC to the west coast.

[ValleyX]

Eh, Penn Central came into existence on February 1, 1968. Amtrak came along May 1, 1971. Or did I miss something and you're talking about something else entirely in your points? If so, sorry.

[daveklepper]

After reading the responses so far, I would like to note that Saudners was managing the whole shebang, but there had been absolutely zero attempt to plan OPERATIONS of the merged railroad on a sensible basis, to develop computer programs so that the existing computers in their places could talk to each other, even possible in 1971 with the right computer savey, and to gardually mesh operations so that shippers needs would continue to be served. Remember that the merger took place after Amtrak had been started (May 1st of the year) and the deficits did continue on the two Valporiso trains before they too were unloaaded on Amtrak, on the Baltimore - Washington local service, on one train to Chatham, shortly discontinued, and still the whole Nerw Jersey corridor and Jersey Shore operations, also possibly commuter service in Massachusettrs, but otherwise the Pasenger defitis had largely been shifted to Amtrak, and the states of New York and Connecticut. Why didn't Sauders object to the New Haven being forced on the PC? I don't remember any objection. Perhaps he thought the value of a New England monopoly was worth it? Remember they quicly moved to shift all through traffic off the New Haven onto the Boston and Albany line through the Berkshires, thus adding to the expense of running the Amtrak and commuter service, picked up by the states and Amtrak,. so maybe the inclusion of the New Haven wasn't such a bad thing!


There was simply no operating plan for the merger. You cannot run a railroad on that basis anywhere! If any readers have eperience on how the Erie Lackawanna, still independent, but more particularly the B&O and C&O picked up some business, it might be worth considering that input!

[ValleyX]

You did? I worked there in the late sixties into 1970 and the traffic back-up I speak of was in Pennsylvania days. I never saw traffic backed up like that, either.

As for getting the crew off the train, one would think that would be the prudent thing to do but we're talking the days of the sixteen hour law and a different breed. As for the decision making process that left the crews set there, I can't speak to that.

I asked a lot of them to compare the N&W to the PRR and was usually surprised to find they seemed to think N&W wasn't as bad as PRR. I know I was working there when Penn Central filed bankruptcy and they were glad they weren't a part of that.

Now, the Nickel Platers I worked with later on had an entirely different opinion but that's another topic.

[Anonymous]

ValleyX made a comment about the coal train I mentioned whose crew and engine sat on the train at Grogan Yard in Columbus for eight hours, at least. Valley, if the road can't take the train, bust the call and get the crew off the train and off initial terminal delay, and call it later when the road can take it. Good supervision would have done that. No supervision would have had the situation my friend saw.

I worked on the Sandusky Line after the merger, and I never saw traffic backed up as you mention. There must have been other factors present. Of course, the N&W DID put some supervision in there, and a lot of the ex-Pennsy guys weren't used to it.

Old Timer

[Anonymous]

So how about that ball game...

[Saxman]

To all posters to this thread,

Thank you for a very imfomative discussion on the failure of the Penn Central All comments were to the point and well thought out. This is one of the few posts I have read recently that has styed on topic. You are all to be commended. I gained new insight into the tangled web that is the Penn Central failure and sources for more information.

Thank you all.

Saxman

[Overmod]

Erie, I think you'll find that EL was one of the necessary reasons for Conrail, rather than 'turning down being absorbed by them'. Surely you mean they turned down potential inclusion in Penn Central? The Agnes floods were four years before Conrail...

How do I remember? Lost the family homes in Kingston when the water came through the Corps of Engineers barriers. (At right about the point where our family members were buried...) That was a memorable year.

I have good memories of EL SD45s on the double-track main at the end of Dorrance Street, and of something else further over -- never found out what it was! -- that I could hear but wasn't tall enough to see -- I remember just the very tops of boxcars being visible over the EL embankment. Not old enough to remember engines at the Kingston roundhouse, but my father was. I also remember being somewhat heartbroken to find PRR 7002 being parted out in Wilkes-Barre...

[ValleyX]

Executives are probably dead, Sanders certainly is by now, as is Perlman.

It probably would have taken a Brosnan-type (legendary iron-willed Southern president) to even think of wrestling a mess like the Penn Central was.

As for the Sandusky coal train, I worked on the Sandusky District with a lot of former PRR men. They told tales of trains backed up all the way from Troyton (MP 31, Grogan being approximately MP 1, not exactly sure) and trains on up the road during lake season because they couldn't dump the coal fast enough. Perhaps that was the case here, crew sitting on the train and unable to take it. Factor in that a lot of those trains got helpers to shove them out of Columbus and they were operating on primarily a single track, manual block 35 MPH railroad

[Anonymous]

QUOTE: Originally posted by kevinstheRRman

OK So heres a Question on top of the question, where are the Executives of this RR right now?

Are they at home in a multi-million dollar mansion, did they move to other Railroads? or are most of them turning in their grave?

I asked the same question - They went down with the ship!!

[Sterling1]

Jeez after reading all of this inforamtion, what an atrocious way to waste Northeastern railroads!!! I really wander what the long term social and economic damage if any there was??!!!

[Anonymous]

OK So heres a Question on top of the question, where are the Executives of this RR right now?

Are they at home in a multi-million dollar mansion, did they move to other Railroads? or are most of them turning in their grave?

[Anonymous]

I read The Wreck of the PC a long time ago. I still remember the lost trains which were located in upstate New York.

FWIW, the weary Erie struggled for 130 years. Unbalanced traffic from the beginning. Merged with a parallel road, the Lackawanna, in 1959. Bad move. Turned down being absorbed by Conrail. Finally, Hurricane Agnes in June 1972 wiped out much of the trackage in Pennsylvania and New York. ELRR couldn't recover after that.

[Anonymous]

It's been a really long time since I read the Wreck of PC, but weren't there also some corporate shenanigans where the profitable assets, real estate, mortgages, were spun off into a seperate company which ended up siphoning off what little revenue there was?? I don't remember the name, but the practice was common at the time - i.e. Northwest Industries from CNW and a really interesting one - Alleghany Corp(NYSE:Y) from the remains of the Jay Gould empire(C&O?).

[oltmannd]

QUOTE: Originally posted by daveklepper

One point however. In both the New York and Philadelphia areas, state and local governments were already starting to subsidize commuter service to some extent. This began in the PRR days in Philadelphia with the Operation Torresdale, Operation this, operation that, where the new Budd Silverliner cars were paid for by the City or State and some money given to subsidize operations. The theory was that highway expansion costs and traffic control police expenses would not increase so rapidly, just like rail expansion today. And it worked. And it saved the quality of the Philly commuter service during this terrible period. Meanwhile, the trustees of the New Haven threatened to just shut down the Connecticut and Westchester commuter service if the states did not come up with subsidies, becuase there would otherwise be simply zero money to pay any employees. So Nelson Rockefeller, the NY State Governor, came to the resuce and demanded that Connecticut share in the burden. And they did. And then the New York Central under Perlman demanded equal treatment and got it. The quality of the Phily service remained pretty high during this period, with the new Budd mu cars that generally did not have the problems that some later equipment had. The MP-54's still running were undermaintained, but their generaly rugged design kept them going OK. The mu's on the Central were in fairly good shape and the subsidy came along quickly enough to keep that way. But the New Haven's had already suffered from undermaintainance, and one saw things like FL-9's pulling strings of New Haven MU's with pantographs raised for lighting and heat only since the motors had already expired and may have been removed. After Penn Central took over, one saw the junk used primarily in the New Jersey service because that state started subsidizing commuter service later than the other three, even seeing Trenton trains being handled by a GG-1 pulling those "trailered" ex-New Haven mu's. But it was possible to find vestibule floor with holes where one could look to the trackbed below because of rust on any of these commuter operations.

I do remember riding the Hudson Division the day after the merger and seeing all the ex-NYC mu's of all types in service having the "New York" painted out and "Penn" (or was it Pennsylvania?) substituted, with the "Central" left alone. The lettering matched pretty well but the new green was a bit different than the old. Aging I guess.

The subsidies helped, but weren't carrying the full cost. Getting out from under commuter operations helped Conrail's profitabilty a great deal. A good chunk of Conrail's payroll of 100,000 at the start, that was reduced to 25,000 near the end was devoted to commuter operations.

[Rick Gates]

The only subjective obsevation I can add to this since I didn't hire onto PC until 1973 is that the PRR side paid us alot in OT and arbitrary pay. When we got to the NYC side, we didn't make out as well pay wise despite more commuter traffic on the mains. That is in the case of frieght trains. On passenger trains, I made out better on my pay on ther NYC side though we still ran ontime.[2c]

[Anonymous]

Here are a couple of factors nobody has addressed.

Because of its own merger and N&W's, in 1964, PRR had to divest itself of its N&W stock which it had held since 1901. After 1964 PC was left with a small amount of N&W stock which had to be divested by 1974. If you don't think this was important, from 1901 to 1964 N&W paid PRR $406.6 million. From 1946 to 1964 the amount was $193.8 million, and in 1963 the figure was more than $17 million. So a sure source of income was lost (N&W paid its common stockholders $1.97 Billion {that's with a "B"} between its first common stock dividend in 1901 and the Southern merger in 1982). (It was rumored that one year during the Depression PRR paid its stockholders the same amount of money the N&W paid PRR, because PRR made no money on its own operations.)

Saunders was a lawyer who became president of N&W in 1957. He was no dummy, but ambitious. On the N&W he didn't have to know anything about operations - he had a superb team who ran the railroad for him while he went shopping for merger partners.

When he got to PC - it was agreed that he'd be president - he had no such unified team; instead he had the reds and the greens at odds with each other. He found himself without anybody under him who really wanted the combined road to succeed.

PRR paid great attention to passenger operations, evidently, but freight was subordinate, and when one got to outlying points and less important lines, they were left to run themselves.

A case in point: A friend of mine was an Assistant Road Foreman on the N&W and came into Columbus on a freight train. He noted a Sandusky coal train over in Grogan Yard, with a 2-10-4, pumping air.

He went and got his rest, and something to eat, and came back and the same train was still there, same crew still on it, still pumping air. Nobody cared that the crew was on overtime before it left the yard, and was not likely to make it to Sandusky. Where was the supervision that was supposed to see that the trains ran?

You tell me.

Add these things to the overbuilt plant, the regulation, the shift of industries from the Northeast, and neither Central or Pennsy had a chance. Merging them was not going to help unless some way was found to get the two factions to work together.

Old Timer

[robscaboose]

I have a friend who worked for the PRR in Terre Haute IN. The day of the merger he was taking a train from Terre Haute to Indy (approx 50 miles). The train never made it to Indy that day, nor the next day. Finally 3 days after the train left Terre Haute he was reassigned to to that very same train & finally was able to reach the yard in Indy.

Rob

[Anonymous]

QUOTE: Originally posted by M.W. Hemphill



Kenefick didn't really explain in his talk why Perlman didn't take an active role; in fact, Kenefick sort of talked around that key fact. The consensus from most people that I've talked to is that Perlman was tired and ill by that time, and had just burned out. I'd like to see better evidence for that, because without that evidence I still regard this as an unexplained mystery of railroading history.

Not that I am claiming to know anything about anything at all, but I do recall reading a little about this, in a book specific to NYC history. Though I cannot recall the title, so if you wi***o impeach the validity of the claim,..I haven't a leg to stand on.

But anyway, as I recall from the book, one of the big head bumpings between the two (Perlman and Saunders) was over the purchasing policy of new motive power. According to the book, Perlman during the last days of NYC autonomy was of a conservative perspective on the matter, convinced that the "worker bees" always asked for more than was actually needed, and consequently he made a practice of shearing off the size of whatever quantity was requested.. When the two great minds were forced to ponder such an ocassion for the merged entity, a conflict so intense ensued that ultimately Perlman threatened to resign.... Saunders, allegedly in response, insisted that is exactly what he should do.

Pondering,....but if the balance of power after the merger were such that Perlmans ultimate last resort was merely a threat to resign, a threat that his adversary was only too happy to be "prey" to,.... it appears that Perlman may have been "compliant" because he had no other real choice?

I'm guessing of course, but that seems to take the mystery out of it....

[egmurphy]

Another good book on the subject (at least in my opinion) is:

The Fallen Colossus, (The Great Crash of the Penn Central), by Robert Sobel, 1977, Weybright and Talley pub.


Regards

Ed

[CSXrules4eva]

I think the PC failed because the PRR failed in the first place. In the late 1800s and eairly 1900s they invested tons of money into new routes like the NEC and new projects. The electrification of passanger service was a huge step and PRR underestimated how much it would cost them for this project. The Philadelphia renovation project is a prime example. Broad Street station was torn down and 30th Street station was constructed. This improved eyesores like the "Chinese Wall" near 11th street in Philly. PRR ceased opperations of the eleavated tracks near Vine St which lead straigt into Broad Street Station. The also built other new stations like Market East and Suburban Station which were underground. The underground rail from Market to 30th Street improved the eyesores, reduced theft, and increased service. Local lines in Philly like the Chesnut Hill East and West lines were upgraded significantly. Other lines in the area that were upgraded were the Norristown line, and Paoli lines. (These today are owned my SEPTA) The NEC by far was the bigest project. They had to invest time and money into excivation, new power stations, locomotives, cars, and rail infastructure. I guess all of these reasons led PRR to bankrupcy, then lead them to merge w/ New York Central. Then PC was born and fell because of the enormous debt PRR was in. THIS IS MY THINKING.. . .. . .

[csxns]

And dont forget the Trucking industry it did not help.

[Anonymous]

Poor managerment.

[MP173]

I have read Richard Saunders two books on railroad mergers and both are excellent. The first volume covered til 1970 and pretty much focused on the eastern mess.

PC failed for all of the above reasons. It was overbuilt and it ran too many passenger trains. Look at the Official Guides from the 50's and 60's to see how many passenger trains the NYC and PRR ran. Think of all of the depots and clerks for each of the communities.

The ICC basically did not allow lines to be abandoned, until after PC failed. Trains ran with 5 crewmembers (and cabooses).

You also have to remember the marriage of PRR and NYC quickly became a shotgun marriage when the New Haven was added, then Conrail had to take all of the other fallen eastern lines.

the 70's were an ugly time in railroading.

ed

[daveklepper]

One point however. In both the New York and Philadelphia areas, state and local governments were already starting to subsidize commuter service to some extent. This began in the PRR days in Philadelphia with the Operation Torresdale, Operation this, operation that, where the new Budd Silverliner cars were paid for by the City or State and some money given to subsidize operations. The theory was that highway expansion costs and traffic control police expenses would not increase so rapidly, just like rail expansion today. And it worked. And it saved the quality of the Philly commuter service during this terrible period. Meanwhile, the trustees of the New Haven threatened to just shut down the Connecticut and Westchester commuter service if the states did not come up with subsidies, becuase there would otherwise be simply zero money to pay any employees. So Nelson Rockefeller, the NY State Governor, came to the resuce and demanded that Connecticut share in the burden. And they did. And then the New York Central under Perlman demanded equal treatment and got it. The quality of the Phily service remained pretty high during this period, with the new Budd mu cars that generally did not have the problems that some later equipment had. The MP-54's still running were undermaintained, but their generaly rugged design kept them going OK. The mu's on the Central were in fairly good shape and the subsidy came along quickly enough to keep that way. But the New Haven's had already suffered from undermaintainance, and one saw things like FL-9's pulling strings of New Haven MU's with pantographs raised for lighting and heat only since the motors had already expired and may have been removed. After Penn Central took over, one saw the junk used primarily in the New Jersey service because that state started subsidizing commuter service later than the other three, even seeing Trenton trains being handled by a GG-1 pulling those "trailered" ex-New Haven mu's. But it was possible to find vestibule floor with holes where one could look to the trackbed below because of rust on any of these commuter operations.

I do remember riding the Hudson Division the day after the merger and seeing all the ex-NYC mu's of all types in service having the "New York" painted out and "Penn" (or was it Pennsylvania?) substituted, with the "Central" left alone. The lettering matched pretty well but the new green was a bit different than the old. Aging I guess.

[CG9602]

If you're still looking for Richard Saunders books, try this link: http://www3.niu.edu/univ_press/index.html

Northern Illinois University Press is the publisher, & one can order directly from them.

[rrnut282]

QUOTE: Originally posted by Dick_Lewis

for PC died of self-inflicted wounds......


Rather, some genius put a ruler on a map, drew a line from west to east that roughly divided the merged system into North and South, and decreed that all stations north of the line would use Pennsy's Univac system and all stations south of the line would use NYC's IBM system.

I think the same genius used a similar line when choosing which lines to downgrade. The Pennsy Panhandle had just spent millions on a grade separation of their line across Indiana to Indianapolis (think fast, no interlockings or grade crossing accidents to slow you down) a few years before the merger. It was one of the first to go, nevermind that it hadn't been used long enough to get any return on the investment. They downgraded three double-track mains across Indiana that were ex Pennsy in favor of two NYC routes that didn't travel through as many towns (to generate traffic). It's decisions like this that I question.