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

3. A Cabal at the Greenbrier

3 A Cabal at the Greenbrier 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. Besides dominating the New York–Washington Corridor, the Pennsylvania ran from Philadelphia west through Pittsburgh to Chicago and St. Louis, crisscrossing the Northeast and Midwest and dominating some of the region’s most important freight markets . The Central stretched from Montreal, New York City, and Boston to Chicago and St. Louis. They were the country’s two biggest railroads, and in Symes’s view their combined strengths and the savings from cutting duplicate jobs, shops, and terminals would liberate them from their problems. Added to that, they would have access to the seemingly endless flow of cash from a Pennsylvania-controlled line that served the rich Pocahontas coal fields, the Norfolk and Western Railway. Young liked the idea, but when he heard about it, Alfred Perl- 26 The Men Who Loved Trains man was openly skeptical. “Do you think,” Perlman asked Symes in his disarmingly dulcet tone, “that putting together the largest railroad in the United States with the second largest and including also the most prosperous, the Norfolk and Western, and leaving the smaller roads to fend for themselves, would be in the public interest and be approved by the ICC?” “Any merger is a good merger when the stockholders want to merge,” Symes replied. Despite its lameness, his answer bespoke the Pennsylvania’s arrogant view of the world. Perlman told Symes that wasn’t the way he saw it. Perlman was convinced that the Pennsylvania was overrated and badly run. On top of that, he feared the Pennsy would dominate the New York Central if they merged. The Pennsylvania was larger than the Central, controlling much more of the region’s market, and Perlman and his management team would be ignored —if they survived at all. In addition, Perlman was annoyed that Symes had not approached him before going to Young. Regardless of all the bad chemistry and ruffled feelings, Young decided they needed the merger, and on November 1 Symes and Perlman announced they had come to an agreement. Perlman set up joint studies with the Pennsylvania to see how a combination could be carried out, but less than three months later everything changed. Young, who suffered from a chemical imbalance that gave him a bipolar personality, went into one of his deep depressions in early January, walked into the billiards room of his Palm Beach mansion, loaded a shotgun, and shot himself to death. That left Perlman in charge, and he continued to harbor doubts about the merger. Nevertheless, he did feel a marriage with someone was in order. The necessity was being driven home to him by the economy, which had sunk into a recession so bad that, even with the income from its air rights on Park Avenue and four prestigious midtown Manhattan hotels, the New York Central would earn only $7 million for the year. To Perlman the answer was merging the Central with the Chesapeake and Ohio and having the Pennsylvania merge with the Norfolk and Western. That would pair the two northeastern roads with two highly prosperous Pocahontas lines, named that because they served the rich Pocahontas fields of bitu- 27 A Cabal at the Greenbrier minous coal in southwest Virginia and southern and central West Virginia. Both carried high-revenue export coal. The C&O and N&W were self-propelled gold mines, created in essence by God, because from Bluefield, West Virginia, to Norfolk and from Clifton Forge to Newport News the trains moved mostly downhill, requiring less locomotive power. Moreover, they shipped it off to the markets overseas where American coal was in great demand and the customers had little influence with the Interstate Commerce Commission’s rate makers. With the ICC’s blessing, the two charged high rates for the service with huge profit margins that generated hoards of cash. Their profits could offset the losses that the northeastern carriers were bearing. To Perlman it would make good sense if the Pennsylvania merged with the Norfolk and Western, which it already controlled , and if the New...