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Re: PC: Why no money?

> WHY did PC go bankrupt?  

Because the NYC, PRR and New Haven were already on the road to
bankruptcy. Railroading in the U.S., especially the Northeast, was sick.
The only reason NYC and PRR had not been showing losses for years before
1968 was largely because of non railroad operations. (In "Wreck of the
Penn Central" the authors fault the PC executives for trying to keep
making profits from the non-railroad side to keep the railroad side
afloat.) Decades of over-regulation had taken its toll. Conrail was able
to make things work after deregulation, and still it took a massive
infusion of cash to fix things.

> Was it because of the NH?  

This was just an example of the playing field forced on railroads by the
government. It's hard to turn a profit when you have to pay a couple of
hundred million for the privilege of losing a million or so a day. New
Haven was largely a passenger road, and passenger services (especially
tightly regulated commuter services) are massive money losers.

Unfortunately, the definitive book on the Penn Central failure has yet to
be written. 

"The Fallen Collosus" is pretty good at getting to some of the problems.
This may be the best book available. 

"The Wreck of the Penn Central" is popular, but was written too close to
the events to have a historical perspective. (This book was written
several years before Conrail and deregulation/rebirth.) This book is a
good source for information on some of the day to day problems, but
should be taken with a massive grain of salt. The authors place the blame
solely on the people running the company, and ignoring the health of the
railroad industry. They dwell on relatively trivial matters, such as some
insider trading done by executives or the fact that the head of one of
the PC's minor subsidiaries dated "Miss Hurst Golden Shifter." I'm amazed
that Perlman, Saunders and Bevan were able to keep the company alive for
as long as they did; I'm certain many other executive teams would have
failed much sooner. This is a must read book for Penn Central history,
but if it's the only book you read on the subject you will not know why
Penn Central failed.

The interesting question is, "could the PC have survived?" Possibly, but
eventual bankruptcy was almost inevitable. If Amtrak had taken over
intercity passenger trains a few years earlier and the local governments
had taken over the commuter roads before the merger the PC might have
limped along for several more years. If PC had made it through to the
reforms that enabled Conrail to survive it might be with us today (maybe
split by CSX and NS!), but the sad truth was that it took a failure the
size of Penn Central to wake up the government to the illness of the
railroad industry and the fact the massive reform was needed. It's sort
of a Catch 22 - Penn Central surviving if reforms are instituted, but
reforms are not instituted if Penn Central does not fail.

Bryan Turner

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