TELECOM Digest OnLine - Sorted: Re: Penn Central

Re: Penn Central

Tony P. (
Thu, 5 Jan 2006 19:00:37 -0500

In article <>, says:

> (See my note 'way at the bottom!)

> <> wrote in message

>> Seth Breidbart wrote:

>>>> The Penn Central Railway, just to name one example, ran so well "by
>>>> itself", that it drove itself into bankruptcy, and liquidation. The
>>>> vast sums that they lost on passenger rail service were a direct
>>>> contributing factor.

>>> Actually, it didn't do so badly until it was looted by corrupt
>>> management.

>> A close look at the record does not support that. A key book is "The
>> Wreck of the Penn Central". The authors, two newspaper reporters,
>> took a muckraking approach and clearly felt the bankruptcy was totally
>> management's fault. However, they at least included details of other
>> circumstances that were actually the real reasons for bankruptcy.
>> (The authors chose to emphasize different issues).

>> Note that:

>> -- The key PC personnel didn't get rich. The head guy, Saunders, lost a
>> lot of money and prestige.

>> -- The bankruptcy was aggresively investigated and no criminal
>> wrongdoing was found.

>> -- As a result of the bankruptcy laws were changed to eliminate the
>> problems the PC had. Passenger service, both local and long distance,
>> was transferred to govt agencies. (PC lost a tremendous amount of
>> money on psgr service). Abandonments of unprofitable segments and
>> better rate making was deregulated by the Staggers Act.

>> -- Keep in mind there is a big difference between bad decisions and
>> criminal decisions by management. Bad decisions is not "looting".

>> -- Unlike modern corporations where assets are mostly paper and the
>> guts are hidden, the physical plant of the Penn Central was wide
>> open for everyone to see, and it was obvious it was lousy.
>> Everybody was stuck on the legends of the Pennsylvania Railroad and
>> New York Central and ignored the reality that both railroads were
>> in terrible physical condition and were losing money at the time of
>> the merger. It amazes me how Wall Street ignores -- good and bad
>> -- the actual condition of a company. (A friend told me a utility
>> was undervalued by Wall Street and to buy it. He was right, the
>> stock doubled soon after I bought it.

>> Too bad I only bought a little so even though I doubled my money my
>> actual gain wasn't that much.)

>> As an aside, the Pennsyslvania Railroad had a sophisticated telephone
>> system, with its own toll test switchboards. I believe railroads were
>> one of the types that were allowed to own their own telephone gear and
>> maintain it themselves and still connect to the Bell System. After
>> Amtrak and Conrail came in the system was replaced with modern stuff.
>> Tiny modern brown 2554 Touch Tone wall sets replaced big old style
>> phones and Teletype 40 series CRTs replaced the old green impact
>> printers. Amtrak used Control Data computers and CRT screens.

>> [TELECOM Digest Editor's Note: Baltimore & Ohio and Santa Fe Railroads
>> each had their own telephone network as well. PAT]

> And let's not forget about the Southern Pacific Railroad (or was it
> the Southern Pacific Railway?)... As the story has it they were the
> ones who thought up SPRINT!

> Al

> [TELECOM Digest Editor's Note: The *S*outhern *P*acific *R*ailroad
> *I*nternal *N*etwork *T*elecommunications Department of that railroad
> -- or S.P.R.I.N.T. for short -- did a major re-build of their
> trackside telephone system in the late 1960's. They did such a good
> job of it, they had a huge anount of left-over capacity and decided
> to lease it out to other businesses and companies. That was the
> original Sprint, which a few years later got into residential telecom
> service as well, and has now -- 2005 -- gone through many changes in
> ownership and management. About 1998 or so, Sprint bought the United
> Telephone Company which serves a lot of northern Kansas among other
> territories. PAT]

They also serve a good chunk of central Florida too.

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