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

8. “That Telephone Man”

8 “That Telephone Man” 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 were making the directors additionally skeptical of Perlman’s judgment. So Saunders stepped up his still highly secret search for a new president. After several months, Saunders heard of a possible candidate through one of David Bevan’s friends. Although Bevan was not directly involved in the search, he obviously knew—probably through an ally of Mellon—what was going on. For Bevan, Saunders’s quiet quest was an opportunity to gain more power for himself and possibly unseat Saunders, too, so he slipped his own chess piece onto the board. Saunders was about to set off on one of his periodic trips to Europe in late June 1969 when Bevan told him he was quitting and presented him with the letter of resignation. Saunders realized this could perturb Mellon and create a boardroom confrontation. 76 The Men Who Loved Trains He also knew the timing was awful, because he needed Bevan’s banking connections to keep Penn Central supplied with capital. He therefore tried to placate Bevan with a salary increase, urging him to hold off and telling him of his plan to get rid of Perlman. At one point Bevan said he couldn’t take the pressure anymore and had to get out, that he needed a good night’s sleep for a change, and Saunders quickly quipped back, suggesting he take sleeping pills. Saunders’s humor annoyed Bevan, but finally he did agree to hold off quitting, and to make Bevan feel involved in the overthrow of Perlman, Saunders asked him to give advice on presidential candidates. And he promised that, once Perlman was kicked upstairs, Bevan would regain his old seat on the board. Bevan then got involved in an unexpected way in the search for a president. His friend and—it was discovered later—secret investing partner, Charles J. Hodge, was chairman of the executive committee of the investment house of Glore Forgan. He lived in Short Hills, New Jersey, where he was a neighbor of the retiring chairman of AT&T’s Western Electric division, Paul A. Gorman. Hodge, who liked to be addressed as “General,” was a bull in the stock market and a partygoer in private. A devious man, Hodge had entered into several business ventures with Bevan and consequently been involved in at least one Penn Central acquisition. Although Bevan later tried to claim that they were not as close as outsiders thought, he and Hodge had one joint interest of particular note, and that was the companionship of “stewardesses” from Executive Jet Aviation, the little air taxi company in which Penn Central had invested. The two controlled a private investment group named Penphil, whose portfolio included Executive Jet. After Penphil had taken a stake, Bevan had persuaded the Pennsylvania board to buy control of the airline. The group also had held shares in Great Southwest, which Bevan had sold to Penn Central at a profit. He and Hodge were dining in New York with young women supplied by Executive Jet. At least once Bevan flew to Europe with one of the women at Penn Central’s expense. There were reports at the time that on at least one occasion Bevan circled Newark in one of Executive Jet’s Lear aircraft romping with one of the stewardesses . Indeed, the logs for the airline do indicate that on two 77 “That Telephone Man” occasions in June 1969 Bevan took flights in one of the airplanes without going anywhere. Soon after Bevan’s meeting with Saunders, Hodge approached him with an idea that a group of investors, presumably including Bevan, take over Penn Central now that its shares were selling at a discount. Hodge also mentioned his plan to a director who was friendly with Perlman. When he heard about it, Perlman went immediately to Saunders, accusing Bevan of being involved in a hostile takeover. Saunders met with Hodge and quashed the offer, in the process confiding to Hodge that he was seeking a candidate for Perlman’s job. He asked that Hodge send him a list of suggestions. When Hodge did, he put his...