What If: Pennsy In Operation today as Pennsy.

Discussion relating to the PRR, up to 1968. Visit the PRR Technical & Historical Society for more information.

Postby Lucius Kwok » Thu Aug 25, 2005 6:02 am

Both NYC and PRR were losing money in their core railroad operations in the 1960s, even with technological innovations like CTC. The real turnaround didn't happen until the Staggers Act of 1980 which allowed Conrail to set rates and decide where to run their trains. The PRR's investments in other industries, far from being a drain on the company, actually provided dividends which subsidized their freight and passenger railroad operations.

The PRR was on the road to modernization and would have survived the recession of the 1970s if not for the merger with the NYC. I'm not saying either railroad was better than the other, despite what some might imply, but they were two very different companies with different organizational structures and management philosophies.
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Postby LCJ » Thu Aug 25, 2005 11:50 pm

Lucius Kwok wrote:The PRR's investments in other industries, far from being a drain on the company, actually provided dividends which subsidized their freight and passenger railroad operations.

Yes! Finally someone else who understands this.
Lucius Kwok also wrote:The PRR was on the road to modernization and would have survived the recession of the 1970s if not for the merger with the NYC.

Hmmm....I don't know about this one..."on the road," perhaps, but not very far along that road. Pure speculation about survival, but I do agree that the merger pi**ed away cash at a very high rate -- a much higher rate than PRR alone could have ever done it.
and finally he wrote:...they were two very different companies with different organizational structures and management philosophies.

No argument there.
LCJ
 

Postby MC8000 » Fri Aug 26, 2005 11:04 am

Some interesting financial data from 1965 .

NYC Funded debt $640.6m
Total oper revs. $661.5m
Total oper. exps. $528.1m
earnings per share $6.06
Dividends paid per share $2.60
Share price range $81.5--$40.75


PRR Funded debt $ 595.1m
Total oper. revs. $892.6m
Total oper. exps. $699.7m
earnings per share $2.45
Dividends per share $2.00
Share price range $65--$35.12
MC8000
 

Postby LCJ » Sat Aug 27, 2005 11:42 am

Lucius Kwok wrote:The PRR was on the road to modernization and would have survived the recession of the 1970s if not for the merger with the NYC.

More about this -- PRR management, throughout the '60s, was not inclined to pour large amounts of capital back into the operation in the form of modernization initiatives. Paying the regular dividend was far too important to them. The PRR physical plant was hopelessly stuck in another era -- that of small serving yards all over the place, stub-ended branch lines that served only a couple of customers, and manned mainline towers everywhere. Much of this added up to much higher operating costs that could have been alleviated with judicial capital investment.

It wasn't until the Conrail era, with its much more liberalized legislation and rule making, that much of this old PRR was rationalized and modernized.

Perlman's New York Central, on the other hand, was much more keenly interested in modernization initiatives. They were, after all, "The Road to the Future."

Conrail and CSX have reaped the benefits of many of the decisons made by Perlman & Co. in the '50s and '60s -- which is hard to say for NS from PRR's previous practices and key decisions about where to invest capital.

This is, of course, just my own perspective.
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PRR was doomed

Postby Matt Langworthy » Tue Aug 30, 2005 5:26 pm

Lucius Kwok wrote:Both NYC and PRR were losing money in their core railroad operations in the 1960s, even with technological innovations like CTC.
Untrue for NYC, although they were hardly what I'd call "rich". Thanks, MC8000, for bringing in figures to support this.

Lucius Kwok wrote:The PRR's investments in other industries, far from being a drain on the company, actually provided dividends which subsidized their freight and passenger railroad operations.
The profits from diversification also masked the problems with Pennsy's railroad operations, which sorely needed fixing. Investors were actually shocked by the PC bankruptcy because Saunders had continued the policy of paying dividends "come H**l or high water" until the spring of 1970, even as PC sought massive loans to hide those losses. It could be argued that Saunders was the Ken Lay of his time period, for that very reason.

Lucius Kwok wrote:The PRR was on the road to modernization and would have survived the recession of the 1970s if not for the merger with the NYC.
Not in a fast way- the 4 track main was being reduced to 3 tracks near Johnstown, and the Conway yard had been modernized but that was about all the modernization PRR had completed by 1968. There was very little CTC in the system, and I doubt very highly PRR could have survived the floods from Agnes or the rampant inflation of the early '70s.

Even before the merger, PRR had hundreds of miles of light density track in Pennsylvania, southern Ohio, Michigan, New York and southern Indiana. This was a cash drain, and without the Staggers Act (or a friendly regulatory environment), would have continued. In fact, it might have been harder to get rid of these routes without parallel NYC lines.

Lucius Kwok wrote:I'm not saying either railroad was better than the other, despite what some might imply, but they were two very different companies with different organizational structures and management philosophies.
NYC might have survived alone under Perlman, although the corporation would have been far stronger if Robert Young hadn't entered the picture.
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Some Thoughts on PRR Towers

Postby 2nd trick op » Sat Sep 03, 2005 4:10 pm

Granted, Pennsy is associated with a tower alonside a four-track main in the minds of many, but there is much more to the story. Poor planning and lack of foresight are at least as much to blame.

Two cases of which I am personally aware; (1) PRR installed several remote-contolled sidings, operated from EYE Tower in Corry, (Pa) on its Buffalo-Oil City (Pa.) Chautauqua Branch around 1960. Within a few years, the PC merger diverted almost all ex-PRR Buffalo-Pittsburgh traffic and made the infrastructure redundant (2) when the Northern Region Main Line was (partially) CTC'd and single-tracked in the late 50's, plans were made to include the Wilkes-Barre Branch, closing three towers. PRR reportedly balked at the $750000 price tag and settled for closing one of the towers, the one with a usable 3-mile siding located precisely between the end-points (and still interlocked to the closed, emergencies-only tower at one end, so that meets were a rarity).

In fairness, PRR did replace almost all its manned interlockings on the Philadelphia Division with a handful of super-towers such as THORN (Thorndale) CORK(Lancaster) and COLA(Columbia) when the lines were electified in the late 1930's. West of Pittsburgh, interlocking consolidation was often precluded by the crossing of a second railroad at grade. And even the Middle Division saw interlockings consolidated at Mifflin, Lewistown and Huntingdon. (With the exception of a few miles at the points previously cited, the Middle Divy was down to three tracks between VIEW at Duncannon and GRAY west of Tyrone by 1962.) PRR also co-operated with Union Switch and Signal to interlock both ends of long sidings, particularly on the freight-heavy Panhandle Division, and reduced the hours of operation of some towers west of Columbus as early as the late 30's.

Drastic reductions of towers in the Pittsburgh area began as soon as the Conrail bailout made funds available in the mid-70's, and the Middle Division followed suit about ten years later, PORT at Newport being the last to go in 1985.
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Re: PRR was doomed

Postby MC8000 » Mon Sep 05, 2005 2:43 pm

When you take a good look at the financial data from the mid sixties for both the PRR and the NYC, it soon becomes apparent that the PRR was in deep trouble. Although the Central had more funded debt than the PRR, it had already completed most of their all important modernization program under Perlman, and they were seeing some very real results.
The PRR on the other hand had yet to undertake the painful process of rationalization of outdated facilities and would have to go deeply in debt to take on the enormous task that survival of the Company itself depended on.
Centrals track rationalization, modernized yards and CTC had put it on a fairly solid track for the future.
In hindsight, if the PC merger hadn't happened, much of the old PRR probably would have been eventually abandoned or would have ended up sold off piecemeal to other companies.
To validate this statement, you need look no further than the shape that Conrail eventually assumed towards the end of its existence. Most of the main routes that survived (with the exception of the old PRR main east of Pittsburg) belonged to the old NYC. Conrail had basically rationalized away much of the PRR physical plant, and morphed into a clone of pre merger NYC. A very successful clone indeed.
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PRR's survival in doubt

Postby Matt Langworthy » Tue Sep 06, 2005 5:35 pm

Bevan (PRR's Chairman) did not want PRR to reinvest its revenue into track or other modernization. Indeed, the only modernization pre-merger was some CTC installation (which also included the Buffalo-Harrisburg line) and Conway yard. In the case improvements to the Oil City-Buffalo line, it was really a waste because the route had become redundant almost immediately.

CR took the painful steps that should have occurred 10-20 years earlier under Bevan-Saunders-Symes. And even if PRR had surivived, some of its western lines would have been rationalized in favor of those of a potential merger partner like N&W or NS.
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Postby catfoodflambe » Sun Sep 18, 2005 2:48 pm

I agree with the previous posters that PRR would have merged with another railroad had PC merger not taken place. However, if we are going to consider Pennsy as a stand-alone entity, I firmly disagree that PRR would have survived the 1970's recession. Of all the NY-Chicago carriers, they were by far the most imperiled.

Pennsy's heart and soul was industrial traffic. which virtually disappeared in PRR territory in the tenyears following the merger. The enormous infrastructure built to support it became a liability in an era where it was almost impossible to abandon a major line.

They would have either lost their direct NY entry to Amtrak - or worse, would have been required to maintain the NY-WASH corridor at passenger-service standards for Amtrak

Central was in far better shape to become a intermodal carrier - they hit a major traffic center every two hundred miles or so all the way from Chicago to Boston/New York. They simply were not in the position to take such a huge hit from de-industrialization. The one such industry in which NYC held a clear advantage - automotive - continued to hold up.

Even the Erie Lackawanna would have been better suited to compete in the post-Staggers indermodal market - they had a lean, focused operation between the two end points, and would have evolved into virtual intermodal conveyor belt between the two points (and little else).
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PRR in the intermodal era

Postby Matt Langworthy » Tue Sep 20, 2005 4:34 pm

EL also had the necessary clearances to handle double stacks, which PRR lacked in Pennsylvania. Barring major investments in the line (which were implemented under CR and NS), EL would have become the more profitable operation.
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What if the Pennsy were still alive today?

Postby Pat Livingston » Thu Sep 29, 2005 3:54 pm

Having first hand knowledge of what the road was like prior to the NYC merger several changes would have had to occurred for it to survive.

First and foremost was replacement of the top management. Mr. Saunders and several other officials wanted to drain assets from the railroad to invest in other non-rail endeavors which they did do. It was that investment that cost the PRR. The PRR was mamed the "Standard Road of the World" for one reason. They were originally willing to take the strides for new innovations which proved beneficial them. This is why many of the foreign railroads modeled what they saw on the PRR. The trouble was that when the upper management became non-railroading oriented, the PRR image and legacy began to deteriorate.

Second, the railroads profits needed to be kept and used on the physical plant as well as equipment. To blame passenger service as the reason the road had troubles was absurd. The railroads have always made money hauling passengers. As the condition of the equipment, service and speed at which the trains travelled as well as safety factors went down hill, so did ridership which is why the airlines to took over. This country could not have survived the war effort had it not been for the railroad moving both goods and people. If they could do it then, they could have continued to do after the war but they chose not to.

Thirdly, the PRR would have to expanded the plant structure of the West end of the road between Indianapolis and Rose Lake, IL. While most of the major plant east of Indianapolis was double track, the west end was basically single track with sections of double track in spots, but mostly with controlled sidings. Had the PRR expanded the roundhouse and modernized the yard facilities at the Hawthorne Yard on the south side of Indianapolis combined with the track expansion to the west, the PRR could have given the NYC stiff competition for westbound traffic and would have been in great shape to acquire more trackage to the west which with the proper planning could have resulted in a possible trans-continental railroad.

Finally, the PRR sufered from the same ailment that today's railroads suffer from which is too many long trains. When the railroads including PRR were operating in their so-called "hey-day," they remembered one important point. That point is that "time is money." Very seldom did you see 100+ car trains because most of the sidings were not made to hold the longer trains with longer cars. The railroads wanted to move things as fast as they could to generate more business by out-doing the other guy. This was accomplished by running 60-70 car trains. Keep it moving was the motto. In fact the PRR on the side of their 40ft box cars used to have the saying "Don't Stand Me Still." The PRR as did all the others and those roads still in existance today have lost that frame of mind but haven't quite figured it out yet. Keep it fast and simple.

I submit that if the PRR would have done all these things and would continue to do them they could have survived yet today.
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Another Possibility

Postby 2nd trick op » Mon Oct 03, 2005 12:37 pm

Continuing on the hypothesis that it would have been in the interest of both PRR and NYC to be paired with a "Pocahontas" road, (as eventually evolved), and the likelihood that EL would have collapsed after the flood of 1972, one of the two majors, proabably PRR, could then have acquired the EL main west of Youngstown in the late 1970's.
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PRR merged

Postby Matt Langworthy » Tue Oct 04, 2005 8:59 pm

If PRR had merged with N&W, it is entirely possble that the entire EL system and D&H would have been absorbed into that RR as well. It would have provided better access from Buffalo east to New Yor City / northern NJ market.
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Re: PRR merged

Postby MC8000 » Wed Oct 05, 2005 9:00 am

Matt Langworthy wrote:If PRR had merged with N&W, it is entirely possble that the entire EL system and D&H would have been absorbed nito that RR as well. It would have provided better access from Buffalo east to New Yor City / northern NJ market.


If this scenario had taken place, which line (or both perhaps) would have survived west of Massilon, EL or PRR? I suggest that the old Erie was more adapted to modern car clearance requirements and would have been the logical choice of the two. Logic,of course, doesn't necessarily mean that this would have been allowed to take place. Even in its weakened state, the PRR still thought of itself as an equal to the other systems that were operating at a profit.
What are your thoughts on this?
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PRR+Erie=survival

Postby Matt Langworthy » Sun Oct 09, 2005 10:16 am

I doubt that either line would have been completely removed east of Ohio, for each system had a customer base (albeit dwindling). The line to "die" would have been the old Buffalo & Southwestern, which would have been rendered superfluous by the nearby (and vastly superior) ex-NKP line. BS&W probably would been sold off to a shortline, just as NYLE and BSOR control segments of it now.

As you suggest, the former Erie line had better clearances, so it would habe dominated once the stack boom began. In any case, this theoretical system, which I call NE&P (Norfolk, Erie & Pennsylvania), would have dominated by former N&W management. PRR may have had a reputation and Saunders, but N&W had the real financial clout and Jack Fishwick. The latter two were the trump cards, and N&W would have dominated, just as NS does today.
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