PENN CENTRAL: A WRECK OF A RAILROAD

PennCentral

The Penn Central was born amid great expectations and promises on February 1,1968 by the merger of the New York Central System into the Pennsylvania Railroad on that date.
Neither railroad had been forced through the trauma of bankruptcy and reorganization.
With incompatible computer systems ,signal systems, operating styles, and personalities at the top, the new railroad remained essentially two in operation though it was one in name.

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Why did Penn Central fail?

1.) PC was forced to pay $125 million for the bankrupt New Haven, which had a negative cash flow.

2.) PC was required to operate well over one half of all the passenger service in the US, which by that time had a monstrous negative cash flow. Amtrak only partly relieved this in 1971, as PC was still saddled with commuter service in the New York and Philadelphia areas.

3.) Freight rates and abandonments were rigidly regulated, preventing PC and others from adapting to market conditions.

4.) The “red” and “green” teams were more interested in “oneupmanship” than creating a viable enterprise. No thought had been given prior to the merger, for example, on compatibility of computer reporting systems.

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The merger between the New York Central RR and the Pennsylvania RR was like a shotgun wedding. Both bride and groom hated each other. Yet, there was no other option but to join hands in unholy matrimony, and if this wasn’t bad enough, the bride and groom had to accept the New Haven RR as an unwelcome boarder in their honeymoon suite.

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Penn Central

It officially started March 19, 1962 when a merger petition went to the Interstate Commerce Commission and took until February 1, 1968 to become real. It was the merger of the Pennsylvania and New York Central into the “Pennsylvania New York Central Transportation Company” (hereafter called “PC” or “Penn Central”). It started with 19,286 route miles; assets of $4 billion; revenues of over a billion dollars; 4,202 locomotives; 194,656 freight cars; and 4,937 passenger cars.

The two railroads did things differently and always had. New York Central was the Water Level Route while Pennsylvania Railroad crossed the Alleghenys. NYC liked 4-6-4’s while PRR championed 4-6-2’s. NYC was gray while PRR was tuscan red. NYC opted containers while PRR went piggyback.

If one reasoned mergers, PRR should have taken over Norfolk & Western while NYC took Chesapeake & Ohio/Baltimore & Ohio. These didn’t work so NYC & PRR decided to join – like jilted lovers on the rebound. Alfred Perlman had become president of the Central in 1954 when Robert R. Young took over the road. He was an efficient manager but also a realist. He knew that without government help he needed a merger. He surely couldn’t count on government help – government had built the New York Thruway and St. Lawrence Seaway, both of which drained the Central’s freight revenue. Arch rival Pennsylvania was also looking for a merger without success. The option for both roads, such fierce rivals, boiled down to each other. Young and James Symes, chairman of the Pennsylvania, began talks in 1958. After Young’s death in 1958, Perlman continued talks with Symes.

Stuart T. Saunders made PC a fact. He placated both labor and government. Al Perlman contributed the ideas which might have made the merger work – electronic yards; Flexi-Van; computerization; passenger-speed freights.

One hooker in the deal was the ICC’s insistence that the bankrupt New Haven be included. Neither PRR or NYC wanted it. The New Haven had been hurt by stock raiders and by the Connecticut Turnpike. Its commuter service was huge but unprofitable.

Perlman was unhappy from the start – he didn’t hit it off with Saunders, who had replaced Symes in 1963. Penn Central started out life in financial distress. The New York vs. Pennsylvania hatred made it difficult for ex-PRR and ex-NYC people to work together. Ex-Central executives ran transportation while ex-Pennsylvania execs began to dabble in real estate and amusement parks.

The road ran in utter confusion. Freight trains were actually lost and ended up in the wrong city. Shippers left in droves. Saunders wouldn’t give Perlman money for maintenance so the condition of the line suffered.

The Penn Central Railroad went under in June, 1970. Its creditors began to hound it – some of them wanted to shut it down to get back their money. 1970 saw a stock market plunge. Based on fear of a 1929-type crash, PC got some government-guaranteed loans to keep afloat. The end was near when banks began to sell their PC stock. Washington refused more loan guarantees – leaving bankruptcy the only out. The railroad had to continue operations at a time when it could barely keep running without pouring in huge sums of money to rebuild its facilities. These sums, however, would not be available until the railroad showed it could be reorganized.

The bankrupt railroad continued to operate under a board of trustees. 1971 saw some relief as AMTRAK took over passenger routes. In the New York City area, Metropolitan Transportation Authority assumed ownership of commuter routes. The low point was 1973. The trustees set an ultimatum when operations would stop without government aid. The Rail Revitalization and Regulatory Reform Act (ultimately growing into CONRAIL) was passed.

Scores of other problems arose from a lack of money. Agonizingly for everyone on the Penn Central, there were sources of capital that could not be touched. For example, just about every abandoned mine branch in the Allegheny Mountains was chock full of PC cars destined for scrap. With the scrap prices in the early 1970’s, this was a potential gold mine. But the creditors would not allow this asset to be turned into cash that would be reinvested in the estate, since that estate was eroding day by day.

The creditor’s interest also got in the way of sensible maintenance. Between Indianapolis and Terre Haute, the former New York Central and Pennsylvania had double track, high speed main lines rarely more than three miles apart. After the merger, most traffic was routed over the old New York Central and the Pennsy line’s second track was picked up. There were still 11 miles of double track left in 1974 and the 132-lb rail was in excellent shape. It was desperately needed on the old Central line where double traffic and deferred maintenance had left much of that stretch with 10 mph speed limits. The obvious thing to do was use the good rail on the needy line, unfortunately, the rail belonged to a Pennsy subsidiary, itself in reorganization. The creditors would not permit the asset to be moved, except for “cash on the barrel”, which, of course, was unavailable.

Bankruptcy saw several sales to try and raise money. A 1973 auction sold 1,527 tarnished pieces of silverware for about $10,000. This was about equal to what the railroad lost in 25 minutes of operation. Sold at the Philadelphia auction were items such as sugar bowls, steak platters and bud vases. Most of the buyers were train lovers and collectors, some old but many too young to remember the glory days of the great trains. Penn Central’s bankruptcy was attributed by some people to mismanagement; however, the National Labor Relations Board dictated wage settlements and the ICC controlled prices. The U.S. Government told PC’s creditors they couldn’t foreclose and that PC must operate even though it was at a loss.

By 1975, Penn Central’s situation was very serious. Without Congressional aid it was unable to meet its payroll. Making things worse was the fact that the ICC kept postponing freight rate hikes. Many felt that PC got a brush off because of disbelief a two billion dollar company could simply up and quit.

What was wrong with Penn Central was politically difficult to cure. Between a quarter and a half of the 19,621 mile (1972) road was redundant; yet mention the word “abandonment” and everybody from governors to ecologists were ready for battle. Even running as few trains as possible over ill-maintained tracks, 78,752 persons were on the 1975 payroll (down from 95,772 at bankruptcy). This was 4 people per route mile as opposed to Santa Fe’s 3. Attempts at crew size reductions brought strike threats. PC also had a commuter burden in Boston, New York, Philadelphia and Washington. (you don’t really believe government subsidies covered the whole thing do you?) These distractions prevented PC from countering truck competition with high-frequency, high-speed, on-time service.

Beginning in 1973, the United States Railway Association (USRA) (formed by Congress), cut 12,000 miles of track from PC operation. By 1976, CONRAIL was born.

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Penn Central Metroliner, postcard

Metroliner was a premium express train service run by the Pennsylvania Railroad, Penn Central, and Amtrak, between Washington, D.C., and New York City from 1969 to 2006, with first-generation self-powered cars being replaced by new (although somewhat identical looking) locomotive-powered set in the early 1980s. The train offered reserved business class and first class seating. A trip between New York’s Pennsylvania Station and Washington, D.C.’s Union Station took 3 hours. Amtrak has replaced Metroliner service with Acela Express.

Some original 1969 Metroliner multiple unit cars had been converted to serve as Amtrak’s push-pull cab car fleet in the late 1980s. Some are still in use today, on Springfield, MA-New Haven, CT shuttles and push-pull AEM7 Keystone service.

The High Speed Ground Transportation Act of 1965 started a U.S. Government effort to develop a high speed train for Northeast Corridor service. The U.S.Department of Transportation worked with the Pennsylvania Railroad, Budd Company, General Electric and Westinghouse to developa Multiple unit high speed passenger train with initial service target for 1967.

After several setbacks, Metroliner service started on January 16, 1969, operated by Penn Central Transportation, successor to the Pennsylvania Railroad. The initial trip between New York and Washington took 2:59, 36 minutes faster than the previous best.The train consisted of six cars; 2 club cars and six snack bar coaches,full coaches weren’t added until October. By April 1969 the fastest scheduled train took 2:30 running at 125 mph.

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ConrailMerger

Penn Central to Conrail

USRA had three jobs. The first was to choose the bits and pieces of Penn Central, Erie Lackawanna, Lehigh Valley, CNJ, Reading, etc. that could be used to make up a viable rail system. The second was to provide rehabilitation funds to Conrail, and to ensure those funds were wisely used. The third was to value the assets selected for conveyance, pay the price to the bankrupt estates, and then litigate the value in a special court with lawyers for the bankrupt estates.

USRA valued the conveyed rail assets at roughly $500 million. The litigation was ultimately settled for about $7 billion, so some shareholders of the bankrupt estates (depending on when they bought the stock) made out quite nicely. In addition, USRA provided about $2.5 billion in financial assistance to Conrail, in return receiving stock and bonds which were held by the government until Conrail was sold in a public stock offering in 1984.

All of the rail assets not selected by USRA for conveyance, along with all of the non-rail assets (Buckeye Pipeline, Sperry Rail Service, non-railroad real estate, etc.) remained with the bankrupts to be disposed as they saw fit. Some rail trackage not conveyed was operated as “subsidized light density lines” (LDLs) for a few years under a transitional Federal program administered first by USRA and later (until ended by the Reagan administration) by FRA. States would nominate LDLs for continued operation, and in most cases a private “designated operator” provided service.

What is now Amtrak’s Northeast Corridor was conveyed to Conrail in 1976, but with the understanding that it would go to Amtrak as soon as USRA put a value on it. This was done, and it was transferred to Amtrak in late 1977. Amtrak paid Conrail by simply forgiving trackage rights charges Conrail would have otherwise paid. This period of free use ended in 1982, at which time Stanley Crane re-routed most rail freight off the NEC and ended electric freight operation.

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Anybody remember the story of the “lost PC box cars???

They were taking boxcars from large railroads, repainting them and assigning new numbers. They were presumably counting on the larger railroad losing track of their cars.

It all revolved around a little railroad called the Lasalle & Bureau County.
Penn Central was the unwitting source of most of these cars; they looked like old NYC 40-foot box cars, primarily. It took place in 1971. The whole episode didn’t cover much time, as far as I can tell, and the Equipment Registers I have from that era don’t seem to have anything.

The scheme seemed to revolve around a “repair shop” located on the LS&BC and owned by another, related corporation. This company contracted with PC to “rebuild” boxcars.

Once the cars arrived, a fair percentage of them were deemed to be “un-repairable”. PC was notified and the company offered to scrap the cars out for a fee. These “un-repairable” cars (they actually were quite servicable) were then hastily restenciled for LSBC and put back on the road, earning car-hire charges for the new owners.

The game was over when one of these cars was damaged and came to a PC shop for repair. The original car number was discovered stenciled on the underbody.

Oh yes … the La Salle and Bureau County’s nickname? LSBC = Let’s Steal Box Cars!

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Penn Central Amtrak Stock

In addition to some neat items, like Grand Central Terminal, the successor to Penn Central owns much of the stock in Amtrak!

When Amtrak was formed in 1971, some railroads got stock for joining Amtrak or giving it equipment. The law that established Amtrak set it up as a for-profit company with stockholders entitled to dividends!

Amtrak stock is owned as follows:
American Premier Underwriters (insurance sub. of Am. Financial Group) 53 %
Burlington Northern Santa Fe Railroad 35 %
Canadian Pacific Railroad 7% (through acquisition of the D&H)
Canadian National Railroad 5% (through acquisition of Illinois Central)

(Note that American Premier Underwriters is the corporate successor to Penn Central.)

It is true that Amtrak stock is not routinely traded; you won’t find Amtrak shares on any stock exchange (i.e. NYSE, NASDAQ) – it would be considered an OTC stock, but given the sparsity of trades, you’d probably have to just deal with one of the four above entities directly.

However it is not to say that Amtrak stock cannot be traded – obviously American Premier Underwriters has purchased the shares formerly owned by numerous other railroads – Union Pacific doesn’t own any Amtrak stock anymore, for example; nor does Norfolk Southern or CSX. “Anything’s for sale at the right price” – and if someone offered the right price, they’d gladly unload their Amtrak stock. The question is, why would you want it; knowing that you have no voting privileges, no representatation on the Board of Directors, no hope for a dividend (publicly traded companies are NOT required to issue a dividend), a stock that cannot be easily traded nor has significant value.

From Amtrak annual report:
“At September 30, 2009 and 2008, 10,000,000 shares of $10 par value common stock were authorized, of which 9,385,694 shares were issued and outstanding. The common stockholders, who acquired their stock from four railroads whose intercity rail passenger operations Amtrak assumed in 1971, have voting rights for amendments to Amtrak’s Articles of Incorporation proposed by the Board of Directors. The Act also required Amtrak to redeem at fair market value the shares of common stock outstanding as of December 2, 1997, by the end of fiscal year 2002. Amtrak has discussed the redemption of the shares with the owners, but there has been no resolution of this matter between Amtrak and the owners. Amtrak believes that the fair market value of the common stock is zero. Nevertheless, in an effort to comply with the Act, Amtrak has made an offer to redeem the stock for cash at a price of $0.03 per share to the stockholders. By a letter dated November 2, 2000, counsel for the four common stockholders responded to Amtrak and rejected the offer as inadequate. Amtrak is considering various courses of action. In May 2008, American Premier Underwriters (APU, formerly known as Penn Central) filed a lawsuit in federal court in Cincinnati, Ohio, asserting that Amtrak has “eroded” the value of common stock and is seeking $52.0 million. APU owns 55% of Amtrak’s common stock.

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PennCentralStock

Penn Central gobbled up the stock of New York Central, Pennsylvania and New Haven Railroads. But what ever happened to the company and the stock? Is it worth anything?

Ever hear of American Premier Underwriters?
Find the answer and find out a lot of interesting facts.

What ever happened to my Penn Central stock?

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pcflexivanridercar

Penn Central Rider Car: I found a bunch of photographs from a long time ago. Some of them were from Charlie Gunn which I purchased from him at train shows in Connecticut. I have always been interested in “head end” trains, so this “rider car” really interests me. Incidentally, many of the “Connecticut Stations” photos I have were bought from Charlie.

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New York Central Merchants Despatch

Merchants Despatch was owned by the New York Central System.

They entered the refrigerated transit business around 1880 and also constructed a manufacturing facility near Rochester, New York. Despatch Shops).

After a reorganization in November and December 1936, Merchants Despatch Transportation Corporation and Despatch Shops, Inc. became separate wholly-owned subsidiaries of the New York Central Railroad Company. Despatch Shops built and rebuilt freight cars. The car shop was closed down in 1970. MDT owned and operated refrigerator and special service cars. From 1961 to 1966, the company acquired nearly 1,200 autorack cars. MDT also entered the Intermodal freight transport business, and purchased 572 container flats (intended mainly for use in mail service on passenger trains) between 1958 and 1965.

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PennCentralPropertiesSign

When Conrail took over, Penn Central had a LOT of property to get rid of.

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PennStationInterior

Penn Station in New York City. This beautiful station got “trashed” just before the PC merger.

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Penn Central: Poughkeepsie Bridge, Cedar Hill versus Selkirk

The bridge was strong and very useful but Penn Central wanted the action shifted to the Selkirk hump. The Guys working the New Haven Hump beat the Selkirk computer night after night with cars humped which upset the powers to be. Not until the fire on the bridge deck did the word obsolete remotely fit the bridge. With the bridge gang laid off the previous summer so no one maintained the fire lines in winter allowing the fire to rage pushing the bridge toward scrap. A fire was alowed to burn a good deal of the deck ruining alot of steel. As a result the PC had the excuse they needed to rip out the New Haven west end Hump. Because carloads were diverted to the newer Selkirk humpyard for classification. This in the eyes of the PC railroad made the bridge further obsolete and unworthy of repair.

The distance between Boston and Chicago using the New York Central/Boston & Albany routing was 1,026 miles. The distance between Boston and Chicago using the New Haven’s traditional routing via the Maybrook Line and a connection with the Erie-Lackawanna Railroad was 1,226 miles. In other words, a freight car hauled between Boston and Chicago using the routing favored by Penn Central after M-Day instead of the New Haven’s traditional routing to the west saved 200 miles of running.

Penn Central’s favored western routing was an all-PC operation between Boston and Chicago. The traditional New Haven Routing via Maybrook was a partnership between the NHRR and the Erie-Lackawanna. When Penn Central took a car from Chicago to Boston via the old NYC/B&A routing, it kept 100% of the transportation revenue. When the Maybrook routing was employed, the revenues had to be split up between Penn Central and the Erie-Lackawanna.

Furthermore, on the Maybrook routing the Erie-Lackawanna got a more favorable proportion of the revenues due to its portion of the haul being greater (956 miles between Chicago and Maybrook) than the New Haven’s (270 miles between Maybrook and Boston).

There were control issues as well. Penn Central had a reputation for providing poor service and for not knowing where all its freight shipments were at any given time but generally speaking PC had more control over shipments that ran 100% over its tracks than shipments that ran 75% or more of the distance using the tracks of another railroad. The latter case, of course, what what happened when shipments were routed between Boston and Chicago using the old Maybrook Line.

As you can see, Penn Central had a number of sound business reasons for disusing the Maybrook gateway. In fact, the only reason that Penn Central continued to use the Maybrook routing at all after M-Day was that the I.C.C. forced them to do so on behalf of the other railroads (i.e. the Erie-Lackawanna, Lehigh & Hudson River, etc.) that depended upon traffic routed through the Maybrook freight terminal.

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What if the Penn Central Merger Did Not Happen

PENN-CENTRAL MERGER: AN OPEN LETTER


If we had foresight and if only a few important things had been different, the course of history could have been changed”.

Yes, I understand why it came about. I have looked at all the factors many times.

The New York Central (NYC) had had problems over the last several years, but it had recently turned the corner. Some of this recovery was the result of initiatives begun by the Robert Young / AE Perlman administration, beginning in 1954. Income was on the rise in the 1960’s. Key initiatives were new, more efficient yards; passenger service improvement programs like the “Empire Service” ; freight service improvement programs like Flexi-Flow, Flexi-Van , and a common sense to Less-Than-Carload (LCL).

The Pennsylvania Railroad (PRR) might have been the “Standard of the World” before WW2, but the state of their facilities by 1968 was far below that of the Central.

Nationwide, all railroads were experiencing problems with the decline of passenger traffic as airlines and personal cars siphoned them off; yet passenger trains could not be easily discontinued.

WHAT IF?


(1) Relief came for the losses of commuter operations. NY Governor Nelson Rockefeller had found a solution to the Long Island Railroad issue and was finding a solution to Robert Moses. He wanted to be a “national level” politician. A solution for other railroads is something he might have done. Connecticut was concerned too, just took them a while to act. New Jersey didn’t know and didn’t care: they just assumed somebody would buy more busses, the Port Authority would build an even bigger bus terminal in Manhattan, and residents could just leave for work a little earlier.

(2) Mail and express business. President Johnson killed the railway mail service, supposedly to reward airlines that supported his campaign. Too bad President Kennedy got shot. REA was stuck on old ways and could not compete with forward-thinking companies like UPS. Head End business was crucial to the railroads.

(3) National initiative to rationalize travel between airlines, trains, busses would have been a really futuristic idea. Could have been something like promoting busses for distances under 300 miles. Allocating trains for distances of 100 to 500 miles. Promoting air travel for distances over 400 miles. Yes, there would be a lot of exceptions. Yes, there would be differences because of population density. Commuter rail in close proximity to large cities being one of them. Then there was an excellent rail leadership that could have helped: John W. Barriger, Alfred Perlman, W. Graham Claytor Jr.

(4) Deregulation: not until 1980’s. Why so long? The Interstate Commerce Commission had a place in life when highways were dirt roads and the Wright brothers were still selling bicycles.

Then there was the airport subsidy. Why did every town need an airport? Let’s take a look in Central New York at Albany versus Utica. A distance of about 100 miles. In addition, Syracuse was even closer to Utica, and on the same excellent rail line. What if a high-speed rail line existed between the three cities? France implemented this concept over the last, at least, 50 years. They did not abandon their rail network, but supported it. In the meantime, the major network was electrified.

One thing we did not consider until recently was Global Warming: people who had these abstract thoughts were “kooks” until Al Gore lent true credibility to reality.

Now, what about the other Eastern railroads? Could the New Haven have survived? 

What about the Erie-Lackawanna (EL), Baltimore & Ohio (B&O), Reading (RDG), Lehigh Valley (LV)?

Perlman (a leader like Harry Truman: not liked when he was in office, but considered great well after he left), put in some of the most advanced ideas ever in the railroad industry. When he got into Penn Central, his hands were tied by the “finance types” from the Pennsylvania Railroad.

Here’s a what-if: The merger gets called off by NYC, and the PRR and New York, New Haven & Hartford Railroad(NYNH&HRR or NH) merge without NYC? Think about this: shared connection over New York Connecting/Hell Gate Bridge. Now, I don’t know what Penn Station was like then as far as congestion, but what if this enables the NH to divert its traffic from NYC owned Grand Central Terminal (GCT), where it pays fees to use, to Penn? After all, one of the NH’s downfalls was its lack of its own access to NYC. That’s why they tried to push off traffic on the New York, Westchester and Boston Railway (NYW&B), after all.
Pros:
1. No fees to access GCT over Harlem Line.
2. Common infrastructure with PRR (catenary) and no need for dual-mode equipment.
3. Additional (revived) stations on Harlem River line.
4. Gain west-side access for commuters (already running LD trains there)
5. Connections to Long Island.
Cons:
1. Lose GCT access (east-side)
2. Congestion issues.
3. Lose stations at Pelham, Columbus Av, and Mt. Vernon (or have to run shuttle trains to New Rochelle).

Maybrook traffic declined after January 1, 1969 because Penn Central wanted to carry the freight from Chicago or whereever rather than share it with the EL or the B&O or any other railroad. The NYC Boston and Albany route via Selkirk was the best way into New England. The former New York Central east – west mainline was far superior to the former Pennsylvania east – west mainline with a better track structure in better shape, much less grades resulting in less cost to move a car of freight and very modern yards and terminals. The decline in operations in and out of Maybrook was not immediate but it was steady and yes by 1974 there was only one round trip to handle traffic with both the EL and Lehigh & Hudson River (L&HR). I know a lot of people liked the Erie Lackawanna but its freight route was far inferior to the New York Central.

If the NYC and NH had worked so well together, than why not a merger between those two, without PRR? That saves the fees the NH had to pay NYC for GCT, and would have allowed the NYC (as it did Conrail) pretty much access anywhere in New England while getting rid of inefficient routes.

What would have happened without the merger? I find it hard to imagine any big railroad in the Northeastern U.S. making it in the long term without the Staggers Act regulatory reforms which were in part a response to the Penn Central collapse, but the New York Central would have been able to struggle along better than the others . But it was struggling: nowhere near as much deferred maintenance as on the PRR.

Pre-PC merger plans of both PRR and NYC were more realistic. Specifically how NYC wanted to merge with C&O and B&O and PRR sought merger with N&W and Wabash (WAB). One of his contentions is that these mergers would have created far more successful railroad systems and in fact, would have created a situation in the Northeast akin to what we have now in the post Conrail era with the routes absorbed by Norfolk Southern (NS) and CSX respectively.

N&W got control of EL, and Delaware & Hudson (D&H) BECAUSE OF the PC merger. I have read “Wreck of the Penn Central, and all this was in preparation of the merger. D&H bridged lots of PRR traffic to New England. In this case, let’s try another what if. Buck Dumaine had proposed a Bangor and Aroostook (BAR)Maine Central (MEC)Boston & Maine (B&M)-D&H combination. He may have tried for EL too, especially if he got some concessions from any combination of PRR, NYC, C&O, or N&W. Those concessions being given redundant lines (due to the merger) to strategic locations. I agree that there were too many other stragglers namely, LV, Central Railroad of New Jersey (CNJ), NH, L&HR, RDG, etc. Although PRR-N&W and NYC-C&O finally happened (Conrail split), mind this was after the laws changed. This allowed the excess lines to be merged. Perhaps these smaller lines could exist as “short lines” and work with others to create efficient “alphabet routes”.

It would have been nice to see a PRR-N&W (including Wabash and Nickel Plate (NKP), of course) merger, and NYC-C&O. I have one concern on this what-if though – the Reading. It seems “logical” that the RDG would have jumped on with NYC due to the B&O connection. However, one of the good factors in the creation of Conrail was allowing trains from PRR in Harrisburg to travel over Reading trackage to Allentown, then onto LV/CNJ track to New York. It would seem logical to me then, that PRR would need the Reading to effectively compete against the Central in Chicago-NYC traffic.

After having read Richard Saunders’ Merging Lines, I find it even more appalling that the PRR under Symes allowed the N&W to slip through its grasp. According to the book, the ICC essentially gave the PRR a choice – N&W or NYC. Considering the interests in the Nickel Plate and Wabash, and the fact that the PRR had been approved for control of the Lehigh Valley, allowing it to use the LV/NKP connection to run the EL out of business – I still just don’t understand what happened here. The ICC might not have allowed full merger, but the PRR controlled enough profitable roads through the Pennsylvania Company and Pennroad that throwing it all away for NYC just looks like an awful, awful decision.

It seems it was a reality that long distance passenger (and for the matter commuter trains) was a money loosing business. When the merger “buyout” happened why then did the goverment allow this to happend instead of taking over the long distance and commuter trains like they did less then 10 years later? Would this have saved PC and inturn save the EL?

Nothing would have saved the PC. It was the wrong merger of the wrong railroads in the wrong place at the wrong time. It took Amtrak to save the intercity passenger trains ( which, in spite of its present troubles, it actually accomplished) and Conrail to save the freight service in that area. By 1968, the PRR was a shell of its former self, financially– the NYC may have been in better shape, but the New Haven was a financial basket case. The PC was doomed before it was born.

For the most part, the service and trains were “pretty shabby”. The sleepers were not too bad and the service in them was fairly decent too. The trains themselves, terrible. Probably the best trains were the former “Empire Service” trains between New York – Albany – Buffalo. They generally terminated in Buffalo at the old Central Terminal at that time. The New York Central fixed up some coaches with new seating or at least new upholstry on them and the AC and heat were quite good too. Probably the best trains other than maybe the Metroliners.

 

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Empire Service

“THE CENTRAL” was going broke due to the giganic passenger operating cash deficit. Therefore, after much discussion with the various unions, they ALL agreed to the changes based on the following:

A. No initial reduction in passenger crew starts;

B. No changes in T&E operating territories;

C. No mixing of “M&E” (Mail & Express) equipment IN ANY of THE EMPIRIE SERVICE TRAIN consists.

The new operating agreements were silent as to “new” passenger train starts which is why “new” M&E trains began running. The bulk mail business was too profitable to give up to the highway carriers.

The architect of this plan and the main figure on Perlman’s management structure who made it happen, i.e., Mr. R.D. Timpany, assistant vice president of operations, 466 Lexington Avenue, New York, NY 10066.

“THE CENTRAL” passenger services were broken down as follows:

1. M&E – bottom line profit

2. Intercity – Passenger Svcs., i.e., beyond Buffalo, NY – breaking even on an out of pocket basis (Operating Profit/Loss) , but a loser on a fully allocated basis (Net/Net).

3. Commuter Services – a Total Loss any way you looked at it. The only reason “NYC” had not tried like hell to eliminate the service north of “GCT” were the feelings of Mr. Perlman and Mr. Walter Grant, chief financial officer, which were “our commuter trains carried the most important people in the World, i.e., those corporate executives who routed freight traffic over our lines.” Enough said.

4. Local or Regional Passenger Svcs – Basically a loser except for the The James W. Riely,between Cinti, OH and Cgo, IL (Illinois Central Central Station, Chicago’s Lake Front on South Michigan Avenue.
Sadly, the service between Chicago, IL and Detroit, MI was barely breaking even on an avoidable cost basis. But again freight revenues, ( 49% of “CENTRAL” profits can from the Greater Detroit, MI Area in the form of autos and auto related traffic) dictated that we cater to the wants and the needs of the auto executives because they routed the freight business.

5. The Empire Service – we began to finally break even since the opening of The New York Thruway.

6. On a totally allocated basis “THE CENTRAL” began showing a very small profit. The next big challenge was to get state aid and subsidies for the New York “GCT” commuter service along with labor relief.

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This is the movie commissioned by the Penn Central Railroad bankruptcy trustees to try to convince members of Congress that the railroad desperately needed a cash infusion or some other federal intervention if the railroad were to survive.


Think of it as the social media of its day, a corporate movie commissioned as a way of educating elected officials who had little time or inclination to actually visit the railroad to find out what was going on.

In fairness, there are some anecdotes I’ve heard about the making of this movie, including the fact that some of the really bad conditions just wouldn’t cooperate with the filmmakers. So instead of showing actual “standing derailments” (derailments caused by crossties so rotted that the rails just spread apart under the weight of the freight cars), they actually had to stage some of them.

There is a scene of a car derailing as it moves down the “hump” track in a classification yard, and I’m told it took more than one take to get it to derail.

Despite these moviemaker tricks, the facts were pretty bleak for Penn Central.

And the movie did help convince Congress to do the only right thing.

Take control of the company and the other bankrupt railroads, and make something new. Conrail. And considering what the car companies are asking for as an INTERIM solution for just the next three months ($15 billion), Conrail was a bargain at $7.6 billion — all in.

That’s pretty much where the auto industry should be headed. Even as I was preparing this blog entry, I came across the daily agenda in the previous entry showing that GMAC is still taking folks out for expensive breakfast meetings, even as its owners go begging the taxpayers for a handout.

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Penn Central: Decline of Intercity Passenger Service

It was bad and got worse.

The NYC side had already really lopped off a lot of service in the Fall of 1967 and established Empire Service, NY-Buffalo, with a bunch of refurbished cars. A few trains with amenities, sleepers and more than snack service for food, were still available. But the remnant of the NE States, #428, when running very late, dropped the sleeper at Springfield for preparation for return trip on #427, proceeded to Boston and left when equipment was serviced and ready.

The PRR side was probably worse. Ever hear the story about the passengers on the Spirit of St. Louis who were so exasperated about the lack of working ac in any of the cars blocked the tracks at Columbus, Ohio or thereabouts and were not arrested. Someone was eventually summoned and got things workings. Wash. Union Station was pretty bad and so were some of the other stations. On the New Haven, big service reductions took place 2/2/69, a month after NH’s inclusion in the system. Springfield service was generally RDC-ized with a shuttle operation between Hartford & Springfield, sometimes a GP-9 and coach. The NH’s silver cars were generally moved to New Haven or beyond and were put into commuter service. Same for FL-9s. PRR E-units generally operated New Haven-Boston. EP-5s were relegated to freight and then the boneyard. GG-1s did run through from New Haven to Washington. Black diesels, redone letterboards on equipment, PC logo on stations, a general appearance of everything being rundown, broken, falling apart, dispirited employees. It was a bad time.

For the most part, the service and trains were “pretty shabby”. The sleepers were not too bad and the service in them was fairly decent too. The trains themselves, terrible.

Probably the best trains were the former New York Central Empire Service trains between New York – Albany – Buffalo. They generally terminated in Buffalo at the old Central Terminal at that time. The New York Central fixed up some coaches with new seating or at least new upholstry on them and the AC and heat were quite good too. Probably the best trains other than maybe the Metroliners.

I know for a fact that in 1962, there was a big difference in the service and equipment between the New York Central and the Pennsylvania. I rode to Chicago from the east on the New York Central and the train was clean, well maintained and on time. I returned east on the Pennsylvania and the train was dirty, falling apart and hours late into New York. During the period, the former NYC generally had less through line service than the former PRR but the trains were generally better on the former NYC.

Sad but fact, there’s nothing to romanticize about Penn Central.

What was obvious was that the railroad wanted out of the passenger business, and went out of their way to prove it. They made EVERYONE regret having taken the train for any length of trip.

These recants of NO heat, NO AC, NO working toilets. It’s all true. I have to say that I’ve seen better attempts at service and on-time performance on railroads in Communist countries than what I witnessed on Penn Central. No wonder, the crew might have been taken out and shot for exercising Penn Central standards.

The best example of Penn Central “Quality” that held over through Amtrak was how Penn Central/Conrail/MTA ran the Harlem and Hudson lines, preceeding the 1983 inception of Metro North.

No food, but there was always someone eager to sell you a beverage and nuts to keep you thirsty for the ride. NO AC, NO HEAT in the seasons you needed it most. NO LIGHTS, NO AIR. Shot suspension. “NO-SHOWS” in the AM during cold weather, and after 8 PM departures from GCT. Water sloshing out of AC vents onto passengers in the ends of the cars. NO drinking water from the coolers. NO working plumbing, ice build-ups in the vestibules during winter storms with no effort made to clear them….. How many of you remember the “Penn Central Aquarium”? That was when there was water between the two panes of glass in the windows, which lazily sloshed back and forth, like that “Sea In A Tube” novelty.

When I see people restoring locomotives and rolling stock to Penn Central, I scratch my head and wonder why for the expense they are bothering. When I see model railroad cars available in Penn Central, I snort and turn the page. Want to “prototypically” run a Penn Central Empire Region train in the “Hey-Day” of PC? Weather a NYC E-8 to the max with rust and grime, simulate peeling paint, put a “Worm” on the nose, add two PC lettered coaches or a coach and a combine and adversely weather them similarly. VOILA!

Speed of such a model? Make sure it doesn’t go any faster than what could be described as a “Limp”, and put weights to the right side of one coach, and the left of the other, to accurately simulate the kind of totally shot suspension I described.

Types of travellers who used Penn Central? Travellers of CIRCUMSTANCE.
1. People who couldn’t get a flight at the last minute.
2. People who were afraid to fly.
3. People travelling to places where you couldn’t get to by air.
4. People who hadn’t caved in to slumming it by taking the bus.
5. People who couldn’t afford an air ticket.
6. People who weren’t aware of how bad conditions had become.
7. Heartbroken Railfans.

The bus was and still is the pits unless you’re utterly stranded or broke. Take note that the callibre of Rail Traveller went down as well through the 60’s. It went from the well dressed family of multiple socio-economic backgrounds and serious businessmen, to students, trust-fund hippies and people looking for a cheap way to get there. People regularly commented during those times that the crowd on Penn Central was just one cut above the bus crowd!

Every opportunity Penn Central had to regain ridership, say during a blizzard, or whatever, they blew it. They might add coaches during a busy season, but they didn’t bother to clean them, nor confirm the operationality of the heating system. Like I said before, they clearly wanted OUT of the passenger business and if the government wouldn’t allow them to pull the plug, they became determined to drive off patronage themselves.

There was a lot of frustration in the management re the passenger trains. They weren’t making money, yet the cost of going to the ICC to discontinue many of them was greater than the loss incurred by the train. So, this led to some games like the following:

* The Washington-Buffalo Day Express. In Harrisburg, passengers were required to get out of the train. The coach was taken out into the yard to sit. Later it was brought back and everyone was allowed to reload.

* Several trains were actually delisted from public timetables from time to time. This was a great tactice to lower the passenger count so the company could show the ICC that there was no demand. It was only railfans who would alert the ICC over this tactic.

* Passenger department switched to a type of floor cleaner that smelled so obnoxious you couldn’t breathe in the car. They kept it, though, to drive away the passenger count.

Another point we have yet to cover here, is the marked difference in riding Penn Central EACH YEAR as it declined to it’s death with the salvation of the creation of Amtrak. For you see, each year, it was like riding a different, horrible railroad. In 1969, it was a state of confusion without amenities. By 1971, there were dark cars with no lightbulbs, and missing floor tiles, like in the third world.

Penn Central was like riding a railroad in a country which had lost a war, and been steadily stripped down to the bone by the conquoring army. It wasn’t so much that things were being carried off, as they were breaking or even FALLING OFF, and not being maintained or replaced.

To put it simply, the PC was a railroad that was always in decline. It had no “golden era” (THAT belonged to the PRR & NYC). It only lasted 18 months, before going into bankruptcy, and, obviously, was in bad shape from the day it was created.

The Metroliners: These experimental high-speed trains, the first U.S. trains to achieve 125 miles per hour in revenue service, served on the Penn Central’s Northeast Corridor between New York and Washington. The Metroliners – February, 1970

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