Best book on Conrail

[MP173]

I am reading Rush Loving's The Men Who Loved Trains for the second time and am really enjoying it.

Currently it is the lull between the storm, between the time Conrail went public and avoided NS taking it over and the late 90's battle.  Stanley Crain has impressed me as a great leader and a man who learned to handle himself within the Beltway. 

Just dawned on me...are there any books on the history and operations of Conrail?  I know there was a well reviewed book about 10 years ago called Conrail Commodities, which dealt with the traffic handled.  Is there anything else out there that can be recommended, either on the Conrail years or similar to Mr. Loving's book that covers the years up to Conrail and to present day?  Or was his the first?

ed

[al-in-chgo]

It's a little superficial, but you might want to take a look at the MBI Color Railroad Series, which has a voume for Conrail.

My experience with this series is that there is a good linear flow of ideas-- a strong narrative history--but also that the words and pictures often don't complement each other very well. A stable or writers contribute to the series, so their voice and story-telling abilities will vary.

It retails in the mid-thirties of Dollars but discounts are available. I saved almost half on my volume of CSX thru alibris dot com and I couldn't see that it had been used in any meaningful sense of the word. 

al 

 

[MP173]

Al:

I read your review on the CSX book and came away impressed.  I didnt know they had a series out there on different railroads.  The on-line book sellers are a great tool.  Last summer I picked up a $150 book for $10.  Yeah, it was used and had considerable markings and highlighting, but for $10...couldnt beat it.

I am looking for a general history book, without going into the distant history of each line from the time it was built.  Looking for either a history of Conrail and events leading up to it or a post WW2 look at PRR/NYC...PC/EL/etc...Conrail.  Not sure if it has been written.

ed

[al-in-chgo]

Thanks for the compliment, Ed! 

Horse's Mouth:  I went to conrail dot com and the first page contained a VERY brief history of the company that probably has nothing else to offer anyone who has read THE MEN WHO LOVED TRAINS.  It looks as though there are some archives you can electronically rummage through, but it also looks on the surface that these aren't books as much as corporate (perhaps federally required?) reports about operations. 

Post-Hitler but pre-Penn Central, I'm sure there are all kinds of thick books available about the Pennsy, the New York Central, Erie, New Haven and probably smaller lines too, with various amounts of sophistication running from coffee-table to academically serious; as well as reminiscences, dining-car cookbooks, lists of crockery and so on.  If I were you, I would cull several promising-sounding titles from one of the RR-oriented bookstores that adversise in TRAINS. (My own policy is to see if Amazon has an amateur review of such books but to buy from the guy what advertised, whenever possible.)  

And there are so many specialists about these days, I hope this post will soon contain some very specific recommendations . . .

Perhaps some brave photographer found beauty in Penn Central's basic black and copulating logo -- no accounting for tastes.  Business-wise, of course, success works better than failure.  BTW have you read THE WRECK OF THE PENN CENTRAL?

Let us know what develops, please. 

Al

 

[MP173]

I read The Wreck of the Penn Central years ago, it is just about time to re-read it. 

BTW, did you follow all the legal and financial manueverings of Conrail, CSX, and NS in the last couple of chapters of the book?  What I didnt quite comprehend was NS's manueverings to keep the stock price high...and higher.  What was the concern over the arbs?  Let em bleed.  That was the only part of the book that I didnt follow really well, I might go back and reread that portion and take notes!

I came of railfan age around 1973 and bought a camera in 1975 so I got some photos of PC, primarily at Effingham, Il.  By 1977 I was in NW Indiana and there was lots of Conrail....I got kinda sick of it after a couple of years and put the camera away for the decade of the 1980's.  Didnt pay much attention to railroads that decade.  Unfortunately that was a big decade of change.  When I returned, many of the railroads were merged, most of the cabooses were gone, as were most of the towers.  My Illinois Central double track mainline was gone, replaced by single track CTC.  Luckily I got to experience the 90's.

ed

[al-in-chgo]

 

quote by MP173:  "What I didn't quite comprehend was NS's maneuvering to keep the stock price high . . . and higher."

*********************************************************************

Why is it a good idea for a stock price to rise?  And what can cause it to rise?  I urge anyone interested to borrow or buy one or both of these books: 

  

THE ONLY INVESTMENT GUIDE YOU'LL EVER NEED

And/or

THE ONLY (OTHER) INVESTMENT GUIDE YOU'LL EVER NEED 

 

Both books were written by Andrew Tobias, who is a successful entrepreneur in his own right and a veteran business journalist; he communicates concepts and examples very, very well.  The books are designed to be easily read, and are aimed at the "little guy" like me.  They're both trade paperbacks and reasonably cheap.

In NS's case, or in almost any share-issuing corporation, there are all kinds of reasons why corporate management would want to bolster or boost share price.  One is that it's good for the company.  Stock prices are a combination of reasoned analysis and what Alan Greenspan called "irrational exuberance."  Corporations are expected to grow so if they don't move forward, they're like sharks -- they die.  More is more in American capitalism.

On a less altruistic level, and with no reference to any particular firm, what's good for the company at large is often even better for the individual executive's personal wealth.  I've seen cases in which the CFO was paid about $600,000 but held stock options potentially worth $5 million!  Executive salaries are often tied to merit (for better or worse in our society, quarterly earnings growth), and not unlike professional athletes the gap between a rookie and Shaquille O'Neal can be astronomical.  I don't begrudge the execs their big salaries but some of these so-called "fringe benefits" are so high they're almost obscene.  IMHO the megadollars present too much of a temptation to focus on ever-increasing quarterly earnings . . . which might perhaps be to the detriment of the company's long-term growth.   

Is it a slippery slope?  Does expediency become complacency become petty cheating become "creative accounting" become Ken Lay or Stuart Saunders?  Can good people slowly become corrupt, or are the likes of Lay or Saunders pre-wired to become peculiar manifestations of evil?  I think I've wandered out of corporate finance and into ethics if not theology so I'm actually going to shut up now. 

al

 

[Murphy Siding]

    I don't think I ever got the feeling that people thought Stewart Saunders was a slippery operator.  It seems he is usually cast as someone who spent so much time schmoozing with the in-crowd, that he didn't have a clue that PC was a dead duck from the word go.  Now Beven, on the other hand, seemed to be involved in some really questionable financial deals.

[al-in-chgo]

    I don't think I ever got the feeling that people thought Stewart Saunders was a slippery operator.  It seems he is usually cast as someone who spent so much time schmoozing with the in-crowd, that he didn't have a clue that PC was a dead duck from the word go.  Now Beven, on the other hand, seemed to be involved in some really questionable financial deals.

  

******************************************************************************

The feeling I got after reading Rush Loving's THE MEN WHO LOVED TRAINS is that Stuart Saunders was an intelligent, analytical, affable guy but a classic "bean counter" who knew little about railroading but slowly taught himself how to cook the books. He was a lawyer by profession who rose through the ranks at N&W and, if I remember correctly, was tapped by the Pennsy for his position there.  But it was Saunders, the boss, who ordered Bevan, his nominal subordinate, to start getting "creative."  

Certainly Saunders had Bevan's help on matters not-quite-legal and worse: 

" . . . Saunders continued pushing for the rosiest kind of numbers that creative accounting could conceive.  He was not disappointed.  David Bevan cooperated because he, too, needed to put as good a face on things as possible so he could keep lenders and stockholders in line.  If the real numbers were ever published, the money market would shut itself off and Bevan would be left empty-handed.  While they knew operating problems were forcing Penn Central to borrow more and the company's stock price had plunged in the previous year all the way from the 70s into the 20s, the lenders and analysts still had no idea that Penn Central's position was so precipitous." (page 82, THE MEN WHO LOVED TRAINS, 2006, Indiana U. Press., © 2006 by Rush Loving, Jr.)   

The parallels to Enron nearly 30 years later are astonishing.  They included cooking the books (note above how Saunders/Bevan essentially were keeping two sets of books); threatening the career of an outside analyst if he did not regurgitate the executives' bogus figures; using shell companies to juggle assets; and, even worse, seeming to create money out of thin air.  Only the federal government can print or create money, and it adds more funds to the general economy via the open-market operations of the Federal Reserve.  Only recognized financiers can be financiers.  Saunders could no more have settled Penn Central's financial problems with paper profits than you or I could phone up VISA and explain that the next bill would be paid with Monopoly money.  There is no way Saunders (and, yes, Bevan) could not have known what they were doing was illegal.  And on some level they had to know that meltdown was inevitable.  For Saunders to be foolishly optimistic at the time of the merger is understandable.  But creating new dimensions in misleading the finance and investment world was egregious and deliberate.  And when the Penn Central crashed two years after its inception, Saunders' Main Line neighbors never forgave him for destroying their investment. Of course Bevan was culpable, too.  On a Machiavellian-corporate-maneuvering level he was at Pennsy before Saunders and better at corporate politics than Saunders, it seems.  Nonetheless, he was Saunders' subordinate at PC and did his bidding.  

 

[Murphy Siding]

     I seem to recall that Beven was investing in some companies, seperate of PC, that were making money off PC, sort of biting the hand that feeds you?

[nanaimo73]

I read The Wreck of the Penn Central years ago, it is just about time to re-read it.

No Way to Run a Railroad, by Stephen Salsbury, 1982 McGraw-Hill 0-07-054483-2, also covers that disaster.

[MP173]

al:

I understand why NS would want to keep their stock price up, but once they began the biddign on Conrail, they wanted to keep the Conrail stock price up.  Why?  It was simply more that they had to pay for it in the long run.

The only things I can think of is the arbs might have really taken NS and CSX to task for acting in conjunction and lowering the stock price or...NS might have wanted the Conrail stock price high in order to keep CSX off balance, by spending them into a position they couldnt afford.  In the end, NS got the routes they wanted and put themselves and CSX into a pile of debt, which NS has been able to reduce quicker than CSX.

ed

[al-in-chgo]

al:

I understand why NS would want to keep their stock price up, but once they began the biddign on Conrail, they wanted to keep the Conrail stock price up.  Why?  It was simply more that they had to pay for it in the long run.

The only things I can think of is the arbs might have really taken NS and CSX to task for acting in conjunction and lowering the stock price or...NS might have wanted the Conrail stock price high in order to keep CSX off balance, by spending them into a position they couldnt afford.  In the end, NS got the routes they wanted and put themselves and CSX into a pile of debt, which NS has been able to reduce quicker than CSX.

ed

 

***********************************

Ed, I think you have exactly answered your own question.  Just as the USA and the former USSR were locked for decades into a ruinously expensive "arms race," so NS and CSX found themselves in a "debt race."  Interestingly, Loving does not seem to portray what happened as a p***ing contest among egocentric suits, but discusses instead the irony that happened when each road said to itself:  "We simply cannot let [the other guy] make off with most of Conrail.  We've got to stick this out. . . . no matter what." 

PS: Technically we're a little off-topic as to best Conrail book; but the merits of discussing THE MEN WHO LOVED TRAINS make, IMHO, this colloquy too good to sacrifice. However, does anyone besides me think it might be a better idea to start a new thread devoted to discussing THE MEN WHO LOVED TRAINS, or perhaps even directing future posts that deal with the book to my original book review?  It just seems to me to fit better that way.  - a.s.

"Stay on the rails no matter what!"  -- from "Tootle." 

 

[oltmannd]

al:

I understand why NS would want to keep their stock price up, but once they began the biddign on Conrail, they wanted to keep the Conrail stock price up.  Why?  It was simply more that they had to pay for it in the long run.

The only things I can think of is the arbs might have really taken NS and CSX to task for acting in conjunction and lowering the stock price or...NS might have wanted the Conrail stock price high in order to keep CSX off balance, by spending them into a position they couldnt afford.  In the end, NS got the routes they wanted and put themselves and CSX into a pile of debt, which NS has been able to reduce quicker than CSX.

ed

It was because of PA's "poison pill" law. CR needed the stock holders to vote to "opt out" in order to go ahead with the CSX merger.  The arbs held the swing vote.  NS needed them to vote "no", so they wanted their all cash offer to be be more attractive to them than CSX's stock and cash - which possibly could have been worth more later.  But arbs are all about "right now", so the sided with NS and the vote never happened.

[MP173]

al:

I nominate you to start up the discussion on the book.  Personally, I am going back and taking a look at the NS and CSX financials the past few years.  NS is still carrying a huge load of LTD plus "other long term obligations" which must be cap leases.

al, if you havent done so, read the two part series in Sept and Oct 2005 Trains on The East after Conrail.  Written by Tom Murray and Fred Frailey, they give a great up to date view of both roads.

ed

 

[al-in-chgo]

al:

I nominate you to start up the discussion on the book.  Personally, I am going back and taking a look at the NS and CSX financials the past few years.  NS is still carrying a huge load of LTD plus "other long term obligations" which must be cap leases.

al, if you havent done so, read the two part series in Sept and Oct 2005 Trains on The East after Conrail.  Written by Tom Murray and Fred Frailey, they give a great up to date view of both roads.

ed   

******************************************************************

Ed, thanks for the vote of support, and I second your notion.  THIS thread will continue to be about people who want to read, research or recommend books about Conrail. 

To discuss Rush Loving's book, go to the thread called "BOOK REVIEW -- THE MEN WHO LOVED TRAINS by Rush Loving, Jr."  Loving's book came out last fall and spans roughly 1963 and the beginning of the modern merger movement to 1997, when CSX and NS took on astronomical debt to get the pieces they needed of Conrail.

The first post there is a review of the book but the thread  pretty quickly developed into an ongoing discussion of THE MEN WHO LOVED TRAINS and some of the many issues it raises about the history of railroading in the NE, what other mergers may have taken place under slightly different circumstances; and the emergence of "creative accounting" Enron style, in a company (Penn Central) that had its back to the wall ever since it was created in 1968 and only lasted 867 days before it had to go into receivership.