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

15. The Unsinkable Chief Wawatam

15 The Unsinkable Chief Wawatam 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. Certainly its operations needed to be made more efficient, but that could never happen in the environment in which Penn Central and the other northeastern railroads existed. “When I went to Penn Central, I was terribly concerned about two things,” Langdon said. One was the crushing passenger deficit, which he and Judge John P. Fullam immediately attacked. While they did succeed in passing the intercity passenger trains on to Amtrak, they still were saddled with expensive commuter services. Next Langdon attacked the ICC’s misregulation of the freight business and the erosion of the market. “Penn Central dominated the freight business in the Northeast. But freight was down. The policies of the ICC and competition from trucks were lethal,” he said. “The railroads were bound to lose. The ICC 145 The Unsinkable Chief Wawatam would go out of its way to protect the motor carrier industry. The railroad was the cheaper mode. The truck was faster, particularly on shorter hauls. It was more efficient. That’s why I was worried.” Those questions led to even broader issues, and Langdon began to realize they were the key to the survival of not just Penn Central but all rail transportation in the Northeast. Now, two and a half years after Penn Central had gone into receivership, 6 of the 11 major northeastern railroads were bankrupt. The Jersey Central and the Boston and Maine were so drained their creditors were asking the courts to halt their trains and liquidate them, selling their assets from the courthouse steps. Although few outside the railroad industry seemed to recognize it, the region was in a crisis. “It’s as if you were in an auto, driving to the edge of a cliff at high speed,” said the Norfolk and Western’s John Fishwick. The heads of neighboring railroads, such as Fishwick and the Southern’s Graham Claytor, were growing concerned that the cancer not metastasize to their own properties. “It’s time to ask what we are going to do,” Fishwick told a Fortune writer. “Are we going over the cliff, or will we put on the brakes or turn in the opposite direction?” Sometimes a railroad would go to ridiculous extremes to grab just a little more revenue from its neighbors. The little Jersey Central had run from Jersey City to Wilkes-Barre, Pennsylvania, but the bankruptcy court had ordered that it shut all operations west of the Delaware River, leaving that business to the ailing Lehigh Valley, which paralleled its lines so closely that the two sets of tracks often lay in sight of one another. Now, to capture just a little bit more of the division on the freight rate, the Jersey Central negotiated a deal with the Erie Lackawanna, which ran west to Chicago on a track further north. Rather than haul a daily Chicago-bound train to the Delaware River and hand it over to the Lehigh for a miserably small division of the rate, the Jersey Central refurbished a muddy little track that snaked from High Bridge for roughly 20 miles through the wooded hills of western New Jersey and ran the trains west to that rail line and up it to a junction with the Erie Lackawanna. The line was so rickety the 100-car trains had to creep up it, and at the north end the entire train had to be backed into position onto the Erie Lackawanna’s 146 The Men Who Loved Trains main line. There the EL picked it up and hustled it off to Chicago. For those efforts, the EL divided the revenue much more handsomely than could the Lehigh, which went only to Buffalo and would have had to share its revenue with a third railroad in order to get the cars to Chicago. The smaller lines were dwarfed by the Penn Central, and they all knew that every ton of new freight it captured must be diverted from them. “Personally I’d like to see the goddamn...