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21 Déjà Vu Once More

RushJr. Loving Indiana University Press ePub

CHAPTER 21

Déjà Vu Once More

ONE FIRST–CLASS PASSAGE

THE TURN OF THE TWENTY-FIRST CENTURY WAS LIKE throwing a huge switch that changed almost everything around us. To some of us who had lived in the 1930s it was wrenching. The culture of the land had changed, and one of the leaders of that metamorphosis was my own profession, the media.

Much to my dismay I had watched journalism change in the 1980s and 1990s. Soon after Watergate, I was asked to speak to a group of high school journalism students at the University of Richmond, and I recall warning them not to enter the profession if their sole interest was bringing down presidents. “Exposés are a crucial part of journalism but not its only function,” I said. “The task of journalists is much greater. Do not be lured by the idea you’re only going to win Pulitzers. That’s not the way journalists should think.”

In earlier times voters were left to form their own opinions and make their decisions on the stories journalists produced. Unfortunately after Watergate the profession had been taken over by people who thought their only job was to condemn and topple other people, especially those with whom they disagreed. Many journalists seemed to convey opinions rather than, as had we, report the facts. Especially in television news, reporting had become sloppy, and even top names in TV journalism were delivering erroneous reports. As one Washington news anchor put it, “There are very few fact-checkers these days.” Radio and the Internet had brought more changes. By 2000 the public was receiving much of its information from talk shows, commentators of the ultraright and ultraleft, and websites, many of them churning out rumors and unsubstantiated statements.

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11 The Merger That Worked

RushJr. Loving Indiana University Press ePub

CHAPTER 11

The Merger That Worked

ONE FIRST–CLASS PASSAGE

THE PENN CENTRAL CRASH WAS SO DEVASTATING MANY railroaders and some journalists, including this one, were wondering whether any railroad as large as Penn Central would ever work. But when the Northern Pacific, Great Northern, and Chicago, Burlington and Quincy roads all came together, creating Burlington Northern, the merger did.

I was on my way home from Chicago one afternoon in early spring of 1972 and stopped by United Air Lines to see Eddie Carlson, who had asked me to visit him next time I was in town. When it came time for my flight, Eddie offered to drop me off on his way home, and as we neared O’Hare, I mentioned I was searching for another story, preferably one on transportation. “I met a very interesting man named Lou Menk the other day,” said Eddie. “He’s president of Burlington Northern, and he’s put together a successful merger. You ought to meet him.”

A few weeks later I was at BN’s headquarters in St. Paul talking to Louis W. Menk, and what I was finding confirmed that the merger was indeed working. The company’s 1971 ordinary earnings had totaled $35 million, a healthy 34 percent increase over 1970, the year in which the roads had merged. They were saving $4.4 million a year by combining local freight trains and another $7 million by laying off duplicate office workers.

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9 The Biggest Railroad Story of Them All

RushJr. Loving Indiana University Press ePub

CHAPTER 9

The Biggest Railroad Story of Them All

ONE FIRST–CLASS PASSAGE

I HAD BEEN AT FORTUNE A LITTLE OVER A YEAR AND, although still fascinated by railroads, had not written a single word about the subject. My latest story was about one of the darlings of Wall Street, a young company called National Student Marketing. NSM had been one of the hot stocks of 1969, and my piece had been an exposé of one of the greatest accounting scams Wall Street had seen in recent years.

Even before beginning my research, I could smell possible fraud. The magazine’s Futures Department, which searched for potential stories, had invited NSM’s president and some of his vice presidents to lunch so that some of us could hear their spin on how their company was so successful. During their presentation they passed around copies of the company’s quarterly and annual financial statements, and while they were talking I glanced at the numbers. I saw that the figures in the quarterly statements and the annual report were not comparable. Also, in the year-end balance sheet there was a most unusual item, called “Unbilled Receivables.” Immediately I sensed a grand exposé.

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22 Girding for Battle

RushJr. Loving Indiana University Press ePub

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.

On November 1, 1980, just as Crane had been preparing for his new job at Conrail and only 16 days after rail deregulation had gone into effect, Snow’s Chessie and the Seaboard Coast Line had merged into a new holding company called CSX Corp. Since it invariably would be caught up in maneuverings involving the government, CSX needed someone with strong lobbying experience to run the corporation’s legal and public affairs, and the company turned to John Snow.

Having been dismissed by Crane, John Sweeney, who had been close to Snow for much of the preceding decade, moved in to run CSX’s labor relations. To both it was growing obvious that the government would soon sell Conrail. CSX enjoyed a growing business of high-yield chemical traffic stretching from the lower Mississippi to Wilmington and lower Michigan, and acquiring part of Conrail would enable them to expand that business by reaching the chemical plants of New Jersey. Conrail’s tracks through New York would give CSX access as well to the container business that the other road was building between the Hudson and Mississippi Rivers.

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28 The Day the Horse Fell Down

RushJr. Loving Indiana University Press ePub

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 uncovered the results of John Snow’s policy of recurring buyouts of workers, choking restraints on capital spending, and deferred maintenance.

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