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

28. The Day the Horse Fell Down

28 The Day the Horse Fell Down 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. The Union Pacific’s recent acquisition of the SP had turned into an operating disaster, its system nearly grinding to a halt as cars clogged yards and main lines. Everyone, from shippers to the regulators, feared a repeat performance at CSX and NS. The Conrail merger was complicated further in October 1997, as it was awaiting the STB’s approval, when a trailer on a CSX intermodal train swung off and smashed into an Amtrak train just across the Potomac from downtown Washington. The public visibility of the accident accentuated the attention it was given by DOT. Several wrecks already had triggered an investigation, and DOT’s report was released just a few days later, providing a long and embarrassing compendium of safety faults all over the CSX system. Among other things, the report cited weeds obstructing engineers’ views of signals, deteriorating bridges, and the outmoded signal system that Jerry Davis had lamented. Most notably it 334 The Men Who Loved Trains uncovered the results of John Snow’s policy of recurring buyouts of workers, choking restraints on capital spending, and deferred maintenance. For the merger, CSX and Norfolk divided Conrail much along the lines they had discussed in November 1996. They did add a detail that Jim McClellan had devised during their battle over Conrail in 1985, keeping small sections of Conrail in a jointly owned company, so that they shared operations and tracks in markets like North Jersey and Detroit. The negotiations that led to Conrail’s division favored NS much more than outsiders ever realized. Anxious to move the merger forward and gain Norfolk’s agreement on which routes and yards they each would receive, Snow pressed his chief planner, Bill Hart, to begin negotiations with McClellan. Knowing that McClellan had spent more than 30 years prowling around the Conrail system, Hart wanted more time to prepare before going up against him. But Snow overruled him, saying all he needed to do was use his wits. When the sessions were over and they had cemented their deal, McClellan arrived back in his office grinning and declaring he had taken every route where he expected traffic to grow in the coming years. In particular he won the prize Norfolk had needed so badly, control of the rail lines in the Monongahela coal fields that would supplant the mines of southern West Virginia and give NS parity with CSX in the domestic coal market. Had CSX and Norfolk trusted one another, had NS not been so driven by fear of CSX’s size, or had any of the three railroad chairmen divined the intentions and motives of the others, Conrail might have been purchased at a far more reasonable price. Instead, the shareholders of NS and CSX paid an extra $2 billion . If Snow had shown more care for detail when the deal was negotiated, he could have discovered that LeVan was resolved to prevent a carve-up and he might have avoided being locked into a bidding war. Given the pressure from the shippers and the mood in Washington , Conrail could never have been merged intact as LeVan had desired. At the least CSX and Conrail would have been forced to sell Norfolk the former Erie’s Southern Tier route and the line 335 The Day the Horse Fell Down from Hagerstown to northern New Jersey. If Conrail had agreed early in the battle to sell those lines rather than allow trackage rights over them, it and CSX might have kept more. With his dream of combining the strongest assets of Conrail and CSX now dead, LeVan choked back tears as he informed the employees whose interests he had tried to protect that they had lost. Embittered, he presided over his railroad’s last days like the captain of a sinking ship, ultimately returning to his hometown of Gettysburg, where he opened a Harley-Davidson dealership. It had been an especially difficult ending, for LeVan had tried to keep the spirit of the workers and the operating disciplines intact while Conrail’s best officers left for jobs at CSX...