Re: PC: Another Penn Central Book.

["Michael Worrell" <worrelmr@xxxxxxxxxxxxxx>]

[Managed to forget to post this; if I forget to mention someone for bringing
up a point, please accept my apologies in advance.]

Whoah, a regular author from the Post. I really enjoy your articles, Mr.
Farmer. Say hello to Clarence for me, will you? To wit:

I said, "the one thing" when I probably should have said "one of the major
things".

 I don't begrudge them the failure of the railroad. From what I can
understand, the whole notion of the Penn Central was the long shot to beat
all long shots when you take into consideration the regulatory picture, the
lending climate/cost of money, the operational circumstance, and the
economic outlook for railroads prior to the Staggers Act. What I _do_ hold
against these men is their failure to be working out of the same book, much
less working off the same page. I also am not very fond of the Penn
Central's board of directors---I got the sense that they weren't paying a
whole lot of attention. Perhaps this is the best that they could do, not
being experts on the cutting edge of railroad transportation in the late
1960s and early 1970s.

It may have been "Colossus" that suggested that the merger would be risky
under the best of circumstances, and would have required the leadership to
pull in a single unified direction in order to have any chance of success.
That didn't happen, unfortunately. Saunders was building the conglomerate,
Bevan was making money off of Penphil, and Perlman was busy building _his_
railroad. Like someone else has now said, the Big Three were professionals,
and should have acted like it instead of playing Empire Builder. If the
situation was so intolerable to Al Perlman that he was going to stay in New
York City, then perhaps Mr. Perlman should have had some class and gone to
the Western Pacific in 1969. In the alternative, perhaps Saunders should
have been retired once he completed the merger, which was apparently the
primary reason for which Symes recommended him as his replacement.

I didn't understand Saunder's seemingly evident unwillingness to
get into the gory details of the railroad and I am floored by the Penphil
thing. Had I been Saunders and in a position to do so, I would have told
Bevan to choose either Penphil and a call to the U.S. Attorney covering
Philadelphia or the railroad and being on board. Sure Bevan beat the rap in
a court of law, but it certainly doesn't _look_ good in a situation like
this where questionable diversification[2] (i.e. the properties that
required
significant investment for long-term gain) is going on. With regards to
Perlman, the details of his budgeting practice---as reported in some books;
not necessarily the whole truth---confuses me. I basically had to leave that
one where it lay, and just shake my head wondering what he must have been up
to. It doesn't look good from the outside.

I don't know that any other management could have done better in terms of
pre-PC resumes---I would have voted for Saunders, Perlman, and Bevan---and I
certainly don't question their professional competence. I doubt Robert R.
Young would have put up with a fool at the Central and I doubt the board at
the N&W would have hired a boob to follow 'Racehorse' Smith. I would have
also considered Bevan's close personal ties to the Philadelphia and New York
City financial houses to be of supreme value. However, I am inclined to
think that men of lesser stature but with a better sense of team and the
ability to communicate it might have just made it, or at least stayed out of
bankruptcy past 1970.[1]

At the same time, I don't absolve the Government of responsibility here with
its policies. I generally choose to personify my objections to the
Government in the form of Wright Patman. Had I been in a position to testify
in front of him, I probably would have lost my temper and started screaming
about antediluvian and confiscatory regulatory policy along with the
underlying mindset for regulation being one that was hinged on market
conditions that existed in 1920, not 1970. I've often wondered what would
have happened had Railpax come into existence in 1969 instead of 1971---it
might have helped. Of course, I bet the impetus for Railpax/Amtrak was
spurred along in large part due to the fact that half the passenger traffic
in the country was threatened for annihilation by order of a bankruptcy
court.

I know very little of Paul Gorman, but the picture I saw of him in "The
Wreck" now serves as my mental picture of the guy overall: Good man
blindsided by events. "Congratulations, Mr. Murdoch. Captain Smith is in
retirement following this collision and R.M.S. TITANIC is yours. We salute
you on your promotion!"

Saunders-Perlman-Bevan as the sole cause of the problems? Absolutely not. As
part of the problem? Absolutely. I kind of wish they'd been able to pursue
an integration on the order of the C&O/B&O; I figure if Walter Tuohy and
Jervis Langdon could do it, so could others. Admittedly, I hear that the C&O
won that fight outright, instead of having a PC negotiated settlement.

Didn't one of the books on the subject suggest that Perlman basically buried
a merger plan that was given to him? That's another thing that I find
astonishing---from my staggering inexperience, I would have thought that
there would be something like a single integrated merger plan, the bible for
the merger, with all officers being expected to implement it without
unwarranted deviation to the best of their abilities, or else. Maybe
Saunders is to blame for the lack of that, since he was reportedly "Merge
now, save $80M now, figure out what to do once merged later".

Enh. Time to make another post and try to respond to the good points brought
up in subsequent discussion. Thanks to all!

Michael Worrell

[1] I think this might still doom the railroad; economic conditions
reportedly only got worse as the 1970s wore on, so the point may have been
moot.
[2] That is to say that there were good ideas for diversification. Indeed,
it's the perfect strategy to protect a corporation's revenue stream, and I
wholeheartedly endorse its theory. I do, however, think that the whole
Executive Jet notion was a stinker of an idea, as was trying to get into
entertainment. What do railroad men know about theme parks? More than that,
I'd like to know why the legal department didn't red-flag the EJA acqusition
as sure to catch the eyes of the ICC, FTC, or DOJ.
"You think you know what I'm doing, so obviously you don't."---Aeon Flux