258 Chapters
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Medium 9780253018663

• Introduction

Howard H. Lewis Indiana University Press ePub

Introduction

I am, by nature and inclination, lazy. Like many, I came to the practice of law with no great vocation but rather for its place as a refuge for the humanistically educated and verbally inclined. I had small talent and even less training. I graduated from Harvard Law School without distinction and accepted an offer from the firm for which I had clerked. After six and a half years, it became apparent to me that I needed to move on.

I was then hired by the law firm of Obermayer, Rebmann, Maxwell and Hippel in December 1969 and became a partner in 1972. I was appointed head of the Corporate Department in 1974. Under the firm’s culture, as department head I had the responsibility, or better the privilege, of assigning and supervising all corporate work as it developed, which meant I could keep the best and most lucrative work for myself while assigning the less rewarding cases to others. I had it made. Then there came the Reading.

For those of you who have forgotten your Monopoly, the Reading is, or was, a medium-sized bridge carrier centered around Reading, Pennsylvania, with lines extending south to Wilmington, Delaware, northwest to Newberry Junction (Williamsport), Pennsylvania, west to Harrisburg, Pennsylvania, northeast to Newark, New Jersey (in partnership with the Central Railroad of New Jersey), and east to Philadelphia and, in combination with Penn Central, Atlantic City.

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Medium 9780253347572

6 “Where the Hell Is Harrisburg?”

RushJr. Loving Indiana University Press ePub

The merger started at 12:01 a.m. Thursday, February 1, 1968, a cold, rainy night in Philadelphia. The system that the marriage brought together was larger than anything American railroaders had ever seen. Penn Central was the longest investor-owned railroad in the world. If coupled end to end, its fleet of cars and locomotives would stretch from New York to Laramie, and its tracks could stretch all the way around the world and then some. In one day all its trains combined traveled the equivalent of halfway to the moon. Even if their cultures had not clashed and even if their computers had blended, they were not prepared, and combining everything the first day made Penn Central almost impossible to manage.

No sooner had they merged than they were plunged into chaos. “It was just a goddamned operating mess,” said one veteran railroader. Routes were changed immediately for some types of shipments, but none of the classification clerks had been taught the 5,000 new combinations of routings. By the thousands, cars began flowing into the wrong yards. As the yardmaster at Selkirk described it: “They’d get a car for Harrisburg, which wasn’t on the old Central, and they’d say, “Where the hell is Harrisburg? I know where Pittsburgh is. Shit! I’ll send it to Pittsburgh.’”

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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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Medium 9780253337979

4. The Great War: 1914–1918

Jr.Herbert H. Harwood Indiana University Press ePub

The summertime of the Lake Shore Electric’s life was like most summertimes — reasonably fruitful but full of annoying insects and turbulent thunderstorms. In the interurban’s case, the insects took the form of more automobiles and, in the cities of Sandusky and Lorain, “jitneys” — privately-owned, unregulated motor vehicles which operated over the streetcar routes stealing passengers. As for the storms of World War I, the LSE — like most interurbans — did not see much of the huge traffic surge which eventually paralyzed the steam railroads, but it did fully experience the material and fuel shortages, the wage and price inflation, the influenza epidemic, and the first efforts at unionization. And while not yet unhealthy, the financial results began to show some instability.

On the plus side, improvements continued, with a new cutoff around Huron, extensive rebuilding in Lorain, a new fleet of steel interurbans, and (through no effort of its own) improved access to Cleveland’s Public Square. The war period also saw the beginning of a new direction for LSE traffic — freight service.

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8 The Times That Try Men’s Souls

Howard H. Lewis Indiana University Press ePub

8

The Times That Try Men’s Souls

The meetings we had of counsel for all the transferors, where we sat around trying to feel each other out, did not occur in a vacuum. Prior to our getting together, the Special Court had made a strong suggestion as to what it did and did not wish to hear, and we had already had the two rounds of briefing and oral argument described above, one on the constitutional minimum value and the other on the unconstitutional erosion. It was clear at this point that if the public remained the buyer, the price it would have paid was limited; perhaps, as the court suggested, it might have paid original cost less depreciation and deterioration (OCLDD), but reconstruction new was out of the question. At any rate, our first line of attack had to be to value the operating properties as an operating profit-making enterprise, not as a public service, or, if valued as a public service, as a key ingredient in an overall rail transportation network. The net result of this conclusion led all but one of us to make up a hypothetical universe in which there were a number of buyers competing for our properties, and, with respect to a public buyer, a number of competitors to provide the service offered by the railroads.

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11 End Game

Howard H. Lewis Indiana University Press ePub

11

End Game

In the fall of 1980, as we finished the cross-examination of the government’s witnesses, we all turned to writing our briefs, though I, and I think many others, had already started drafting portions of what we wanted to present. Since the court had heard no testimony and had not been given the written evidence, let alone the discovery and cross-examination transcripts, both our cases and the government’s consisted entirely of these briefs and the excerpts of evidence each side wanted to present in the form of appendices. Our briefs were due on January 12, 1981, and the government’s some six weeks later. In the midst of the frenzied assembly of the summary of six years of intense work which consisted of the careful sifting and organizing of the mass of evidence and forming it so that it told a coherent story, two cataclysmic events occurred.

First, Ronald Reagan was elected president, and Drew told us all that he was quitting as trustee to become secretary of transportation. In short, he was switching from being our leader to leading the opposition. The problems of conflict of interest—of how we could get an unbiased hearing before the court or even the appearance of an unbiased hearing—appalled me. I tried as much as I could, since we were never really intimate, to urge him to take another post. “How about Commerce,” I said. “You have an extraordinary record as a business doctor, a fixer of troubled companies. Or how about Treasury—you at least can read a balance sheet, which is more than many of your predecessors could do.”

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Medium 9780253020635

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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Medium 9781574412383

“Legends of the Trail”

Kenneth L. Untiedt, editor University of North Texas Press PDF

LEGENDS OF THE TRAIL by Francis E. Abernethy

[A legend is a traditional prose narrative that has a historical setting and real people as characters. It deals with extraordinary happenings, even supernatural events, in a realistic way. Legends are folk history which document heroic or dramatic events of a culture’s life.—Abernethy]

The following happened in August of 1886 on the Camino

Real de los Tejas, where the Trail crosses Onion Creek southwest of Austin.

1886 was the drouthiest year in over a generation, and the wells had dried up, and the black land on Tobe Pickett’s farm had cracks in it wide enough to swallow a jackrabbit. María, who with her husband Pablo were Tobe’s hired help, walked alongside a great wide crack on her way to cut prickly pear for the hogs. As she looked into the depths of the crack, thinking to see a trapped jackrabbit, her eyes caught the gleam of old metal. A closer look revealed a crack’s-width view of a large chest with an iron chain around it.

María had found the chest of gold the Spaniards had buried on the Camino Real when they were attacked by bandits a hundred years earlier—before Spaniards became Mexicans. María marked the spot and told her husband, and they waited and planned how they would get the chest out when nobody could see them.

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Medium 9780253355485

13 The End

Jr., Herbert H. Harwood Indiana University Press ePub

So things stood as the twentieth century rolled around. Although inert, overgrown, and mostly forgotten, the South Pennsylvania Railroad still existed with its original charter intact, and thus still potentially dangerous to the Pennsylvania should some outsider manage to get his hands on it. While Jay Gould himself was no longer a threat, having died in 1892, his son George was proving to be a large piece of loose artillery, with grandiose dreams of expanding his father’s holdings into a coast-to-coast empire. By the early 1900s the junior Gould and his allies were building a railroad into Pittsburgh from the west, acquiring the Western Maryland as a future connection to the East Coast at Baltimore, and were also maneuvering to get into Philadelphia. Even forgetting Gould, the age of competitive railroad building was not quite over, and some other poacher might always show up for a try. (And in fact, the dream of a new trans-Pennsylvania railroad was still alive in 1925, when Delaware & Hudson Railroad president Leonor Loree proposed building a “super railroad” across the state, although on a different route from the South Penn’s.) Still, the Pennsylvania Railroad could do nothing on its own to put the company out of its misery. The best it could do legally was to claim ownership of the two segments just mentioned, but even that was not assured protection; the PRR’s subsidiaries had done nothing with the properties, and if a revived South Penn came back, it might be able to reassert its charter rights.

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Medium 9780253353832

5 Sprague and the Electric Elevator

William D. Middleton Indiana University Press ePub

As American cities grew rapidly during the nineteenth century, so did the need for a better form of urban horizontal transportation. That need was finally met by the development of the electric street railway thanks to the work of Frank Sprague and others during the 1880s. And much as the need for improved horizontal transportation was met through the application of electricity, so was it through the use of electric power that the development of increasingly tall buildings was made possible, to satisfy the needs of the growing density of urban cities. Once again, Frank Sprague played an important role, this time in the application of electricity to vertical transportation.

Hand-powered elevators or hoists had been around for centuries, but it was not until the mid-1850s that the modern elevator began to make its way into common use. In 1852 a Yonkers, New York, manufacturer, Elisha Otis, developed a simple and innovative apparatus that provided a reliable and automatic safety device for vertical hoists. The most common accidents with these lifts were the breaking or failing of the lifting rope, or an overloaded platform. Otis fitted notched vertical hardwood guide-rails alongside each elevator. A flat-leaf spring was fastened to the roof of the elevator car and connected to the hoist rope so that it was under tension and arched, and the end springs were drawn in. If the rope broke or otherwise failed, the spring would immediately flatten and shoes on the end of the spring would be driven into the notched rails, bringing the car to an immediate stop.1 Otis was persuaded to bring his device to the 1854 New York World’s Fair, where showman P. T. Barnum had Otis climb onto his elevator, raise it high above the ground and then sever its lifting rope. The automatic safety kicked in, and Otis stood right where he was in perfect safety to the amazement of spectators.2

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Medium 9780253011275

Chapter 3 A Rocky Road

Bill Marvel Indiana University Press ePub

The great era of railroad-building was ending.

On July 12, 1893, historian Frederick Jackson Turner addressed a distinguished gathering of colleagues at the World Columbian Exposition in Chicago’s Jackson Park. Many of those present had ridden Rock Island trains to the fair, where they could stroll the grounds and view the railroad’s exhibit of the agricultural bounty being grown along its line.

Turner’s paper had far-reaching implications for the road’s future. In it, he declared that the western frontier, the possibilities it entailed, and the energies that it had called forth had made America unique among nations. But that source of uniqueness, of greatness, Turner told the assembled historians, was at an end. The West was being settled. The frontier, he announced, was closed.

Within a few years, the Los Angeles & Salt Lake laid rails across Utah and Nevada toward southern California. David Moffat began his final assault on the Rockies with construction of the Denver, Northwestern & Pacific. In 1905 Milwaukee Road’s directors approved extension of that line west to Seattle.

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Medium 9780253337979

11. Passenger Services

Jr.Herbert H. Harwood Indiana University Press ePub

The historical text of this book broadly described the Lake Shore Electric’s interurban services. But for those more specifically interested in the subject, this chapter takes a more detailed look at these schedule and general service patterns. Even so, it should be remembered that the LSE’s passenger schedules were often adjusted for traffic peaks, valleys, and shifts in riding patterns — sometimes on an ad hoc basis. This was especially so in the summer, when hordes would head for Cedar Point and the numerous parks and resort communities lining Lake Erie’s shore.

The primeval Sandusky, Milan & Norwalk’s earliest known timetable is dated December 1, 1893, and shows not only the line’s service but the specific car numbers for each run. Cars 9 and 11 alternated, with runs every two hours between Sandusky and Norwalk; the 18-mile trip took an extremely leisurely one hour and 50 minutes, a terminal-to-terminal average of ten mph. (For some SM&N riders the specific car numbers were relevant, since combine No. 9 carried baggage; coach No. 11 did not.) Virtually every run connected with one or more steam railroad local trains, which also were shown on the timetable. SM&N cars regularly exchanged passengers with trains of the Lake Shore & Michigan Southern and the Wheeling & Lake Erie at Norwalk, the W&LE’s Huron branch at Milan, the Nickel Plate at Avery, and no less than five railroads at Sandusky — the LS&MS, Big Four, Lake Erie & Western, Baltimore & Ohio, and Sandusky & Columbus Short Line (later Pennsylvania Railroad).

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Medium 9780253347572

23 “We Will Fight with Every Means at Our Disposal”

RushJr. Loving Indiana University Press ePub

There were 14 bidders in all, each offering more than $1 billion for 85 percent of Conrail. Two railroads were in the race; the others ranged from a hotel magnate to the owner of several TV stations. Most offers were for paper, but Norfolk and several others made cash bids, each for roughly the same amount—$1.2 billion. Yet that was not an impressive sum, because—even though Conrail still could show no five-year record of consistently strong earnings—the company was worth more than that. It had $800 million in the bank, which was more than half what Norfolk and the others were offering. To keep Norfolk Southern from getting the entire company, CSX had sent in its own bid, but it consisted of a promise to pay off Conrail’s debts and provide some stock.

The battle lines now were beginning to form between NS and CSX, but neither Hayes Watkins nor Bob Claytor wanted war. CSX still hoped that NS would agree to a split, and John Snow was telling reporters that he was certain the other side would ultimately see good sense. NS remained paranoid about CSX’s size, hoping the other company would keep nursing its idea of a partnership and refrain from any open combat while Norfolk bought up Conrail and sold any duplicate routes to small regional railroads, thereby keeping CSX out altogether and establishing NS’s ultimate supremacy.

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Medium 9780253011817

6 What Happened

H. Roger Grant Indiana University Press ePub

6

BLUE RIDGE RAILROAD

Building schemes during the Railway Age did not always work out as planned. The goals of bold, long-distance lines made by some promoters, including those who backed the Louisville, Cincinnati & Charleston Rail Road (LC&C), were not achieved, but other energetic proposals succeeded. The much publicized New York, Pittsburgh & Chicago Railway was one notable flop. This grandiose project, organized at the turn of the twentieth century, was intended to be a high-density, low-grade freight line that would compete directly with the busy main line of the Pennsylvania Railroad between Gotham and the Windy City. But construction never began. On the other hand, backers of the transcontinental Northern Pacific Railroad embarked on building that difficult route through tamarack swamps, desolate badlands, rugged mountains and mostly unpopulated country between Lake Superior and Puget Sound. “You can’t build a railroad from nowhere to nowhere,” quipped Cornelius Vanderbilt about the Northern Pacific. But that monumental struggle, begun in 1864 with aid from a federal land grant, ended successfully in 1883, and claimed to be the nation’s single greatest corporate undertaking of the era. Then there were those projects that started, sputtered along after completing some mileage, but never achieved their objectives. A good example involved the tireless efforts made by Gilded Age entrepreneur and visionary Arthur Stilwell, who sought to push his Kansas City, Mexico & Orient Railway from Kansas City, Missouri, to Topolobampo, Sinaloa, Mexico. He succeeded in creating a much smaller road, connecting Wichita, Kansas, with Alpine, Texas, and completing modest sections in Mexico under the banner of the Kansas City, Mexico y Oriente Railway.1

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15 The Unsinkable Chief Wawatam

RushJr. Loving Indiana University Press ePub

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 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.

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