(See my note 'way at the bottom!)
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 outhern acific ailroad nternal etwork 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]