The PRR and New York Central Merger Is Finally Over!!

You have to subscribe to WSJ in order to read that link!

You can also read it by Googling "railroad workers 44 years".  Sorry for any confusion!

Thanks, Mike!

Amazing story.

I saved it to show to my 2 law student kids.

Peter

Penn Central was the biggest disgrace in railroading. Boring black trains and no upkeep. PC executives are below child molesters in ****'s ninth circle.

Don't forget the sick alien GREEN.

But I agree with you.

 

George

Thought I'd point out that the title to this thread refers to the fact that the settlement of this lawsuit, according to the full article, marked the end of any last vestiges of the PC RR either in the real world or on paper.   Perhaps someone with a working knowledge of the law could express this better than I, but you probably get the drift.

 

- Mike

I wonder how this works? I company that no longer exists, but now owes people money. Did the then-court case (and now debt) follow along with the company into whatever name it is now?

 

Sam

Sam, I was wondering the same thing, so I followed Mike's suggestion and Googled "railroad workers 44 years" and found several good articles.

The payments were made by a company named American Premier Underwriters, the successor to the Penn Central Company.

All the Trains Magazine news articles at the start of the 1960's said several times there was to be a C&O-B&O-NYC merger and a PRR-N&W merger.

 

What went wrong? Who changed the original plans to a PRR-NYC merger?

 

Andrew

Really???  RR execs are below child molesters?? You're bleeping clueless. 

--Greg

No kidding.  PC management may have not had the first idea how to run a railroad, but that's a lot different than those who deliberately harm children! 

NYC owned a chunk of B&O, but C&O wanted B&O and not NYC. NYC lost the B&O in a proxy fight. N&W didn't want PRR. PRR wasn't making money since I think it was 1948. The first year they lost money was their centennial year, but I cant think of what that was.

Sam

So the shell of PC lived on?  I always find that odd.  As far as the PC execs...weren't many of them former Pennsy and NYC people?  Also, the railroads disaster was partly due to government regulation of the RR industry.

The Penn Central suffered from bad management, bad labor and bad government regulations that all prevented it from successfully dealing with the technological advancements that changed the transportation industry.

 

The article is well worth reading.  It may be a fitting end to the wreck of the Penn Central.

 

Jeff Zaino, of the New York-based American Arbitration Association, which wasn't involved in this case, said the way the case was handled undermined the whole purpose of arbitration, which is to speed up the resolution of a disagreement and avoid court costs.

 

Most cases, he said, are resolved in nine months, adding, "This [case] gives arbitration a bad name."

 

 

Mr. Franz was awarded $317,139, or $182,700 after attorney's fees. Taxes will take another $50,000.

The Penn Central was a mess, it was basically the last gasp of two dying railroads, hoping the pieces would work better together than apart (they were banking on consolidation of costs, in terms of getting rid of redundancy and such, also the loss of competition would allow them to raise rates, at least in theory). The problem was that both had intractable issues, the management of the new railroad were the same people who helped the predecessor railroads run into the group, and they faced two railroads who had spent nothing on infrastructure or improvements in many years.

 

Part of the problem they faced was on railroads in general faced. The government, through the building of the interstate highway system and the subsidization of trucking in how they are paid for (compared to the damage they cause, trucks, through diesel  fuel taxes and road use taxes, pay only part of the cost, the rest is subsidized by car fuel taxes and government funding), favored trucks, and worse, the ICC deregulated truck rates while maintaining fair trade prices on trains that went back to the era of trusts and robber barons (in part, it was to prevent charging less to certain shippers and charging more to farmers)...as a result, long haul trucking offered a big advantage over trains, they could give rates much less than trains could, and had a price advantage to to the subsidies I am talking about. They looked at railroads as the big, bad wolf, ready to steal from hardworking farmers, etc, while looking at trucking as competitive and 'more honest'......not to mention that the ICC, thanks to political pressure, wouldn't allow railroads, including the Penn and NYC, drop passenger routes that were unprofitable (sound familiar?) and abandoning freight lines to lightly used rural branches (again, politics).

 

 

 

Both railroads also had been bled dry for a number of years, going back to the 1920's at least, they didn't invest in infrastructure and basically were looking to bleed value out of the company (I recall reading something in grad school, that used the railroads as an example of how not to run an industry, and there were excerpts from testimony later on, that basically the mantra was to get everything out of the trains they could, cause they were going to die, anyway.

 

The railroads also if what I read was correct, never upgraded how they shipped things, so compared to trucks they were slow and inefficient, it often required that goods be sitting idling waiting for the right consist to be made up to be able to ship them out, whereas trucks could ship quickly. They were doing things the way they had all along, and it didn't work, but the railroads as a whole resisted what later on became standard, with streamlined processing and so forth.

 

Labor had a role as well, they had an antagonistic relationship with the management of the roads (not surprising, given it was returned in spades by management), so they didn't quite wake up that the work rules and such they refused to negotiate were made in a time when a 50 mile trip was considered a long journey (today it is a commuter trip), and it certainly didn't help things, part of the reason the railroads couldn't modernize was the work rules precluded a lot of the things that might have helped, including changes to staffing, how traffic was dispatched and so forth, because it potentially would have cut down the size of the labor force required and gotten rid of the need for a lot of overtime that had been common SOP.

 

Add that together, and the merger represented a last gasp to try and keep the wolf from the door, there was nothing there to cure the root problems. I always find it ironic that the government, that had helped destroy the railroads, ended up being the one with the old NYC, Penn and other lines, being the one that ultimately changed them around under Conrail, to the point where they were sellable, took almost 20 years to do it.

Thanks for sharing that Mike.

 

The real bummer is that not a single Hudson was saved for any museum. They were so strapped for cash that they sent all of them to the scrap yard.

 

Cesar

Both the Pennsylvania and the New York Central had been poorly managed since before WWII.  And both the unions and the management had less influence in the government than they thought.

 

It is a wonderful case study of bad, bad, bad management.  There basically were no cost controls.  If it cost more to provide a service than it made, oh well.  If buying every weird locomotive Baldwin or Alco or Lima could come up with made the executives seem important to their friends who ran those companies?  That is what mattered.

 

It is interesting to note that from 1938 neither the streamlined 20th Century nor the streamlined Broadway were EVER profitable.  It was brought to the attention of the executives over and over again.  They said the appearance of success was more important than reality, these were their respective flagships.

 

Amtrak wanted to get rid of one or the other or both on day one and was told if it was the 20th Century the New York politicians would crucify them.  And if it was the Broadway it would be the Pennsylvania politicians.