Amtrak: One Man's Opinion

[oltmannd]

John WR

But had the Penn Central had decent leadership or even any leadership the bankruptcy might have been avoided.

No.  Not even close to true.  PC with good leadership = Conrail pre-Staggers.  Still lost tons of money.

[John WR]

Thanks for this insightful article.  

Don Phillips begins much earlier than Christian Wolmar.  He summarizes the events which led up to the bankruptcy of the Penn Central.  In a book, The Wreck of the Penn Central, Joseph R. Daughen and Peter Binzen describe all of the post merger problems.  A few:  the two men in charge, Alfred Perlman, President of the New York Central, and Stuart Saunders, Chairman of the Board of the Pennsylvania, not only worked in different cities, New York and Philadelphia; they disliked each other to the point of not speaking to each other.  No one ever bothered to unify the two computer systems for keeping track of freight cars.  As a result freight cars would get lost for many weeks.  Money was stolen from the stockholders of the Pennsylvania, money the railroad could not afford to loose.  Of course, Don Phillips cannot in an article go into these issues as deeply as a book can.  But had the Penn Central had decent leadership or even any leadership the bankruptcy might have been avoided.  

Don Phillips does cover both sides of an argument that erupts on this forum.  Were 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?  What is clear to me is that the Federal Government built two hugh highway systems that were not needed for transportation.  In the 1930's FDR used the Works Projects Administration (WPA) to build a system of highways in order to counteract the Great Depression.  In the 1950's Dwight Eisenhower built our Interstate system in order to strengthen our defense.  Alfred Perlman has pointed out that doing so has given enormous subsidies to the automobile industry.  Railroads could not possibly compete with such subsidies, especially when fettered by the ICC.   

Don Phillips gives a lot more detail about the events leading up to Amtrak's formation than Christian Wolmar does although they do agree about the basic points.  Both of them say that a basic problem stems from setting up Amtrak as a for profit corporation.  Don Phillips argues that although this has led to problems it was necessary.  Christian Wolmar points to a lot of back room negotiating where there is no record of what was said or agreed to.  What strikes me is that although Amtrak is clearly set up as a for profit corporation there is nothing in the legislation that says it will, in fact, make a profit.  That seems to be something that came out of all the back room deals.  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.   

[jclass]

More on the subject.

http://www.transportation.northwestern.edu/docs/2011/2011.07.22.Phillips_RoadtoRescue.pdf

 

[John WR]

Christian Wolmar is a British writer who is fascinated with railroads.  In 2012 his book The Great Railroad Revolution:  The History of Trains in America was published.  (By "America" Wolmar means the U. S.  He does not consider railroads in any other of the Americas).  Chapter 12, The Renissance Without Passengers, is about Amtrak.  

Wolmar begins by pointing out the Federal subsidy for rail passenger service was in place when Amtrak was created.  It began an 1964 under President Lyndon B. Johnson and it did not just subsidize existing service; it was intended to create high speed service between Boston and Washington.  And "The experiment ... showed that federally supported passenger rail could be successful."

Then the Penn Central went bankrupt and Richard M. Nixon was elected President.  "There were fierce negotiations behind the scenes involving the railroads, Congress, the federal government and the states."  The negotiations included "back room deals" and "considerable horse trading."  Out of that President Nixon announced Railpax (Amtrak) in January, 1970.  There was little public debate and Amtrack passed both houses of Congress in the fall of 1970.

The private railroads had 259 intercity passenger routes at that time.  On May 1, 1971 Amtrak began with 149 of those routes.  The new law provided that the 20 existing passenger railroads could join Amtrak 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.  Amtrak was given $40 million and loaned $100 million and expected to be self sufficient within 5 years.  

The idea that Amtrak could be self sufficient Wolmar calls a "big lie" that haunts Amtrak to this day.  But he finishes this section saying "Profitability was, after all, never a requirement for the road network."

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Wolmar's analysis fascinates me because he views Amtrak from the outside.  I may not agree with everything he says in his book -- for example, he describes Jay Gould as a regular church going Christian and I believe Gould was not -- but neither is he limited by looking at Amtrak from the inside of the US as I am.  For example, it is hard for me to accept that in 1970 any member of Congress would seriously expect any creation of the U. S. Government to become self supporting.  To my mind that idea was part of the rhetoric for anti Amtrak people back home while a Member of Congress was also seeing that his own state got a share of Amtrak funds.  The technique is called "working both sides of the street."  But that is my view, not Christian Wolmar's.  And he is the man who wrote the book.