PENN-CENTRAL MERGER: AN OPEN LETTER
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.
(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? plus What if the New Haven never merged with Penn Central?
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 (PC), 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.
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.
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 ValleyN, 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 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.