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19 “God save me from the Planners and Thinkers!”

RushJr. Loving Indiana University Press ePub

While everyone had been preoccupied with the task of creating Conrail, John W. Snow, a tall, balding 33-year-old lawyer from Ohio, had arrived at DOT. A man of innate charm, Snow had earned a Ph.D. in economics as well as a law degree, which stood as a testament to his memory and his ability to focus on specific goals to the exclusion of everything else. Although they would have little contact at DOT, the paths of Snow and Jim McClellan would be entwined for the next 25 years. Behind the scenes they would become adversaries, trying incessantly to outwit each other, and their battles would totally reshape eastern railroading.

Much like some moments in McClellan’s career, when Snow arrived at DOT he was unknowingly being made the beneficiary of adversity. He had been married for eight years to a granddaughter of former senator Burton K. Wheeler of Montana. Wheeler was known as a strong-willed man who could be a fierce adversary. When Franklin Roosevelt was trying to steer the country toward its entry into World War II, Wheeler had fought him loudly and tenaciously. Now Snow’s marriage had foundered, the divorce had turned bitter, and Wheeler was subjecting him to the same kind of seek-and-destroy campaign that he had waged against FDR.

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26 “I Think We Want to Be Seen as Somewhat Crazy”

RushJr. Loving Indiana University Press ePub

David LeVan did not resemble a railroad chieftain. Looking a decade younger than his 50 years, LeVan sported a great bushy mustache that underlay his brown eyes and glasses. The only sign of age was his receding black hair. He had come to Conrail from one of the large accounting firms and was known in the company as a cost-fixated bean counter who harbored an incredible knowledge of finance.

His personal life was also a stark contrast to those of other railroad chief executives. Married to a young, attractive ski instructor, LeVan lived in a converted fire station in downtown Philadelphia. He and wife Jennifer spent much of their time skiing and riding some of the Harley-Davidson motorcycles that LeVan had collected and parked in the fire house.

During his first decade at Conrail, LeVan moved slowly through several modest posts in middle management, but then his understanding of finance, his smooth articulation, and his ability to think on his feet marked him as a comer. Each year since 1988 LeVan had been promoted—and in the process he had moved around the company’s upper sphere learning the art of running Conrail. Although inexperienced in railroad operations, LeVan had an instinct for people and understood the importance of personal contact and leadership in such a company. Said Conrail’s vice president for corporate communications, Craig MacQueen, “LeVan would go out in the middle of the night at a crew change and talk to the men. That’s what was different. It was leadership by example.”

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12 The Dinner Debate with Graham Claytor

RushJr. Loving Indiana University Press ePub

CHAPTER 12

The Dinner Debate with Graham Claytor

ONE FIRST–CLASS PASSAGE

PENN CENTRAL WAS NOT THE ONLY TROUBLED RAILROAD IN the Northeast. Smaller lines there and in the Midwest were ill as well. By late 1972, seven of the Northeast’s eleven largest railroads were in bankruptcy, and two were tottering so badly their creditors were demanding that they be liquidated. They were suffering because trucks were draining their traffic base and they were burdened by too many routes. Worse yet, the regulators in Washington were indifferent when the roads pled to abandon excess tracks and money-losing services or to offset higher costs by raising their rates.

One night I was having dinner in New York with Graham Claytor and several of his top officers. As usual we began tossing ideas back and forth. This evening, as we began our appetizers, Claytor launched into a long spiel about the bankruptcy problem. As he went on laying out the dilemma that faced the industry, his concern became increasingly visible, for some legislators were even talking of nationalizing all the railroads, a prospect that disturbed both of us.

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10 “The Greatest Thing Since Sex and Watermelon”

RushJr. Loving Indiana University Press ePub

CHAPTER 10

“The Greatest Thing Since Sex & Watermelon”

ONE FIRST–CLASS PASSAGE

ONCE THE SECURITIES AND EXCHANGE COMMISSION AND THE Interstate Commerce Commission had verified my Penn Central exposé, I was able to take on Gil Burck’s mantle as the magazine’s transportation specialist, and I went at it with exultation. The first piece was about United Air Lines. Six months after Penn Central’s fall, recognizing they should avoid the mistakes of the railroad’s board, United’s directors had staged a coup, replacing the company’s president with the man who ran a hotel chain the airline owned—Edward E. Carlson, who became one of the best chief executives in the air transport industry. Eddie, who started as a bellhop, turned around United in a year.

It was the makings of a magnificent story, and adding to it, I was able to ferret out how the directors had come to this wrenching decision. It was a drama from inside the boardroom, a place where reporters never ventured. The story caused a sensation, stirring the directors of Pan American World Airways to oust their CEO and causing other publications to begin producing boardroom dramas.

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17 “Hays Must Not Know”

RushJr. Loving Indiana University Press ePub

CHAPTER 17

“Hays Must Not Know”

ONE FIRST–CLASS PASSAGE

FOR THE GREAT, TRANSFORMING EVENT THAT IT WAS, deregulation made a totally innocuous entrance. It tiptoed in. Few railroaders knew what to do with it, but there were some. Among those who did were L. Stanley Crane, the new chairman of Conrail, and his senior vice president for sales and marketing, James A. Hagen.

Once Staggers was passed, Conrail’s profit and loss statements began to improve. Yet deregulation was not the railroad’s total salvation. New legislation by Congress in 1981 freed Conrail from onerous labor costs left over from the Penn Central merger and forced commuter systems to reimburse the railroads for the expense of running their trains. Conrail moved into the black in a matter of months. The key to the turnaround was Stanley Crane, recently retired from the Southern, whom the board had recruited to replace Ed Jordan. Crane had worked at one time in Bill Brosnan’s research lab and was a natural innovator. He also knew how to slash costs, imposing the will of a quiet southern gentleman on the most recalcitrant of subordinates. Quickly Crane took advantage of the new legislation, collecting Conrail’s due from the commuter authorities and cutting costs by slashing the workforce and pulling up superfluous tracks. Meanwhile Hagan was exploring ways to expand the railroad’s market and its yield.

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