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The Men Who Loved Trains

The Story of Men Who Battled Greed to Save an Ailing Industry

Edited by Rush Loving

Publication Year: 2006

A saga about one of the oldest and most romantic enterprises in the land—America’s railroads—The Men Who Loved Trains introduces some of the most dynamic businessmen in America. Here are the chieftains who have run the railroads, including those who set about grabbing power and big salaries for themselves, and others who truly loved the industry.

As a journalist and associate editor of Fortune magazine who covered the demise of Penn Central and the creation of Conrail, Rush Loving often had a front row seat to the foibles and follies of this group of men. He uncovers intrigue, greed, lust for power, boardroom battles, and takeover wars and turns them into a page-turning story for readers.

Included is the story of how the chairman of CSX Corporation, who later became George W. Bush’s Treasury secretary, was inept as a manager but managed to make millions for himself while his company drifted in chaos. Men such as he were shy of scruples, yet there were also those who loved trains and railroading, and who played key roles in reshaping transportation in the northeastern United States. This book will delight not only the rail fan, but anyone interested in American business and history.

Published by: Indiana University Press

Title Page, Copyright, Dedication, Quote

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pp. 2-8

Contents

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pp. viii-x

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Preface

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pp. xi-xviii

Although its contents are certainly meant to be absolutely accurate and enlightening and its conclusions penetrating and serious, as every serious academic work should be, The Men Who Loved Trains is not a product of traditional academic research. It is a work of journalism and is founded on scores of interviews that began more than 35 years ago. ...

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1. The Forrest Gump of Railroading

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pp. 1-9

Dawn was creeping up over Lynnhaven Bay as Jim McClellan walked briskly out of his kitchen, down a hallway, and out the back door. It was a perfect October morning. The air was brisk, barely 50 degrees. McClellan drove to his office in downtown Norfolk. ...

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2. Meeting the Blue-Eyed Jew from Minnesota

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pp. 10-24

Life on the Southern Railway in the mid-1960s was interesting for McClellan because this was one of the most progressive railroads in the United States. It was automating its maintenance operations, both in the shops and on the tracks themselves. ...

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3. A Cabal at the Greenbrier

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pp. 25-32

Jim McClellan was about to participate in his first merger. It was now 1966, and he had been a student back at Wharton when the marriage talks had begun in September 1957. James M. Symes (pronounced “Sims”), president of the Pennsylvania Railroad, had met with Robert R. Young, chairman of the New York Central, at his Waldorf apartment, proposing a merger. ...

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4. The Portly Virginia Gentleman

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pp. 33-47

When they met, Alfred Perlman and James Symes agreed once again that New York Central shareholders would get 40 percent of the new company and that the Pennsylvania’s owners would hold 60 percent. The “new” company actually would be the Pennsylvania Railroad, but it would assume a new name, Penn Central Corp. ...

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5. An Eleventh Hour Surprise

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pp. 48-54

As McClellan—now at the Central—watched the merger’s inevitable approach, he and the other junior officers of the two railroads grew increasingly apprehensive. Although they could not imagine its impact, they were about to be caught in the middle of the biggest debacle the transportation industry had ever experienced. ...

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6. “Where the Hell Is Harrisburg?”

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pp. 55-66

The merger started at 12:01 a.m. Thursday, February 1, 1968, a cold, rainy night in Philadelphia. The system that the marriage brought together was larger than anything American railroaders had ever seen. Penn Central was the longest investor-owned railroad in the world. ...

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7. Cooking the Books

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pp. 67-74

In the late fall of 1968, Jim McClellan and a friend from the Central rode the train together to Washington for interviews at the Federal Railroad Administration. The FRA administrator, who had been a protégé of Alfred Perlman at the Central and the Rio Grande, wanted one of them to come to FRA on a new exchange program that he was setting up. ...

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8. “That Telephone Man”

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pp. 75-80

Stuart Saunders’s lobbying of the board was paying off, and he soon had the votes he needed to oust Alfred Perlman. Unwittingly Perlman had helped by insisting that the road’s Hollidaysburg, Pennsylvania, shops build more new cars, and with dollars growing increasingly scarce, this and the constant rise in costs ...

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9. The Granddaddy of Enron

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pp. 81-93

Penn Central was about to trigger a scandal that, by the standards of 1970, equaled the disaster of Enron. The company’s consolidated assets totaled nearly $7 billion, which in 2002 money equaled between $30 and $35 billion. That was a huge compilation of assets for its day. Only seven U.S. industrial companies were larger. ...

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10. Some High Society Sex

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pp. 94-102

As the snowdrifts melted and the flowers started blooming on Philadelphia’s Main Line, Stuart Saunders was still demanding savings, but no one could find anything else to cut—except for workers, but that would have cost millions because of the labor agreement. ...

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11. “They Are Going to Run Out of Cash”

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pp. 103-115

When he arrived at the Treasury, Stuart Saunders confided to Secretary David Kennedy that commercial paper was being redeemed faster than it was being sold, and he described the tightening bind on Penn Central’s cash supply. The debenture offering appeared doomed, he said, and if he could not obtain government guarantees for further loans, ...

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12. The Scandals Unfold

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pp. 116-119

In the days just before the board took the company into receivership, 4 of the 16 directors bailed out. Immediately after the board passed the bankruptcy petition, William L. Day, chairman of a Philadelphia bank that was a substantial Penn Central creditor, resigned, too, saying his attorneys advised him that he now had a conflict of interest. ...

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13. Booted Off the Property

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pp. 120-133

As he had watched Penn Central unravel from his post at the Federal Railway Administration, Jim McClellan had continued exploring ways to relieve Penn Central of its passenger losses. He and the staff of the ICC had found that while the railroads were overstating the losses, the railroad labor unions and politicians who advocated continuing passenger trains ...

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14. A School Band on the Railroad Tracks

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pp. 134-143

While McClellan and the others had been creating Amtrak, Judge John P. Fullam, who was presiding over the Penn Central bankruptcy, had named four trustees, three to serve part-time as the equivalent of directors. The fourth was Jervis Langdon Jr., who became the chief trustee and served full-time. ...

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15. The Unsinkable Chief Wawatam

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pp. 144-152

Bill Moore and everyone else had believed Penn Central could be saved simply by raising its revenue base and cutting costs. But by the fall of 1972, Jervis Langdon, his general counsel, Bob Blanchette, and one or two other people had begun to realize that the railroad would never be fixed without an unprecedented amount of help from the courts or from Washington. ...

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16. Donning the Mantle of Moses

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pp. 153-164

On January 2, 1973, Jervis Langdon and the other trustees sent John Fullam a report declaring the railroad could not be turned around without government help. The report caught the attention of Washington and the railroad industry, but it did not precipitate any immediate reaction. Nevertheless, it was the warning shot for a series of events that would shake the leaders of government, ...

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17. Merging Railroads over Bourbon

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pp. 165-175

Claude Brinegar had been wasting no time. Just a few months after the 45-Day Report, knowing that the new bill would require an even more detailed study of the problem by DOT, he had put to work a team of analysts, Jim McClellan among them. Viewing his brief March report to Congress as merely the forerunner of more advice and counsel, ...

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18. Selling the Shiny Silver Sphere

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pp. 176-191

Still pushing his scheme, William T. Coleman approached the chairmen of the Norfolk and Western and the Chessie System. The N&W’s John Fishwick already had some idea of what was to be proposed. Some time earlier at a Washington dinner he had sat next to one of Jim McClellan’s old friends from the New York Central, David DeBoer, ...

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19. “God Save Me from the Planners and Thinkers!”

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pp. 192-207

While everyone had been preoccupied with the task of creating Conrail, John W. Snow, a tall, balding 33-year-old lawyer from Ohio, had arrived at DOT. A man of innate charm, Snow had earned a Ph.D. in economics as well as a law degree, which stood as a testament to his memory and his ability to focus on specific goals to the exclusion of everything else. ...

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20. Son of Penn Central

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pp. 208-221

Just as Penn Central’s woes had spawned Amtrak and the government-run passenger system, Conrail brought on rail deregulation. The new railroad could not turn a profit, and while there were a number of causes, the nation’s strangling regulatory system was at the heart of them, dooming any chance for success. ...

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21. “Why the Hell Do We Need Four Tracks Out Here?”

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pp. 222-235

Switching his support for deregulation had been one of Stanley Crane’s last acts as president of the Southern Railway. In September 1980 he turned 65 and under the railroad’s retirement rules was forced to step down. Having been in the post only three and a half years, Crane wanted to stay, for he had only just begun to have fun. ...

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22. Girding for Battle

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pp. 236-247

By mid-1982, as Stanley Crane continued to inject health into Conrail, his progress was catching the attention of Jim McClellan and John Snow. Until then both men had been diverted by mergers at their own railroads and had given little thought to Conrail. Now they were watching with increasing interest as it grew more alluring. ...

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23. “We Will Fight with Every Means at Our Disposal”

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pp. 248-260

There were 14 bidders in all, each offering more than $1 billion for 85 percent of Conrail. Two railroads were in the race; the others ranged from a hotel magnate to the owner of several TV stations. Most offers were for paper, but Norfolk and several others made cash bids, each for roughly the same amount—$1.2 billion. ...

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24. John Snow, CEO

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pp. 261-276

Norfolk Southern may have lost the round, but the war was by no means over, and while NS licked its wounds, McClellan assessed its mistakes. Quickly he concluded that in the next confrontation he and the others would concentrate on the media and geographical targets that were important and try not to spread themselves so thin. ...

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25. A Catalog of Blunders

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pp. 277-291

While John Snow continued to carve his own mark on CSX, McClellan was making plans for an alliance of some sort with Conrail. If it could not buy the railroad, Norfolk Southern might worm its way into Conrail’s bed by setting up joint ventures. One potential vehicle for those alliances was the Triple Crown intermodal service ...

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26. “I Think We Want to Be Seen as Somewhat Crazy”

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pp. 292-311

David LeVan did not resemble a railroad chieftain. Looking a decade younger than his 50 years, LeVan sported a great bushy mustache that underlay his brown eyes and glasses. The only sign of age was his receding black hair. He had come to Conrail from one of the large accounting firms and was known in the company as a cost-fixated bean counter ...

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27. In the Betrayal Suite

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pp. 312-332

Merging three railroads into two was a far more hazardous task than some had imagined, and there were some costly mistakes. The merger was complicated by rising anxieties at the Department of Transportation and the Surface Transportation Board about the smoothness of the marriage process. ...

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28. The Day the Horse Fell Down

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pp. 333-348

Merging three railroads into two was a far more hazardous task than some had imagined, and there were some costly mistakes. The merger was complicated by rising anxieties at the Department of Transportation and the Surface Transportation Board about the smoothness of the marriage process. ...

Index

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pp. 349-360

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About the Author

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p. 382-382

Rush Loving Jr. has written for Fortune magazine, served as assistant director for public affairs of the Office of Management and Budget under President Jimmy Carter, and worked as a consultant specializing in transportation economics, issues before Congress, ...


E-ISBN-13: 9780253000644
Print-ISBN-13: 9780253347572

Page Count: 384
Publication Year: 2006

Series Title: Railroads Past and Present

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Subject Headings

  • Railroads -- United States -- Biography.
  • Capitalists and financiers -- United States -- Biography.
  • Railroad companies -- United States -- History.
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