Well There‘s Your Problem - Episode 100: Penn Central (Part 2)

Episode Date: March 16, 2022

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Well, anyway, let's do a podcast. Hello, and welcome to Well, There's Your Problem, the podcast about engineering disasters with slides. I'm Justin Rosniak. My pronouns are he, him, okay, go. I am Alice Codewell Kelly. My pronouns are she and her, yeah, Liam. He's A-Sing.

Yeah. He's A-Sing. Hi. I'm Liam. How was he? My pronouns are he, him, have a guess. We do have a guess. Yes.

Hi. My name's Oday. My pronouns are he and him. And this is our, this is going to be... Oday, why are you here? Yeah, Oday, why are you here? What are you here for? Why do we bring you on for episode 100 of our podcast?

Yes. This is the 100th episode. Yeah. Wow. Congrats. How tall are you? I'm glad I can share it. How tall are you?

I am 5'11". Oh, I could fuck you up. Alright. I'm here because I do things with trains and think about trains. Yeah, we're talking there. There you go. Still about trains. We're continuing our pre-series on the Penn Central system.

Yes. Yes. Part two in our series on Penn Central and the largest bankruptcy ever until Enron. People think we're going to end the show with this and I'm like, no, no, no, no, no. I need money. Yeah, exactly. We're keeping going for as long as we can. Exactly.

Got to get that money. We're going to keep going until leftist podcasting goes out of fashion, which I don't know. I assume will be when global communism is instituted and has leftist podcasting just becomes regular podcasting because the Overton window shifted. Absolutely. Absolutely. Once revolution happens, then we'll stop podcasting. So if you do want to complain about our levels or anything else, you have to make a revolution

because it's the only way to get us off the air. Exactly. The true sign of true communism will be when, well, there is your problem with us away. Just like this. That's right. That's right. Within and against the pod. Yes.

But before we talk more about Penn Central, we need to do the goddamn news. I wanted to have the fucking Chiron go off the edge of the screen, so it seemed way longer than it was. Oh, that that probably would I, you know, I considered keeping that joke and then I forgot to. No. Anyway, it's very, very Rodney Kandtorsky energy here. Norfolk Southern managed to put 20 coal cars on the ground in the middle of the Northeast

corridor, and it's a miracle there wasn't a cello train going through at 130 right at the same time. I mean, this is wild that you can you're just so bad at car maintenance that that you cause an accident like this. Best maintained, best designed stretch of track in the U.S. and you debut your amazing folding train. Yes. This conserved space in the yard.

Yeah. As someone on Twitter said, and I've been thinking about that since they did, every time you play like Railway Empire or Transport Tycoon or anything like this, when you have a full size train, go into a depot and disappear. This is what happens to it. It just perfectly falls end on end like this. Also, why is the only photo of this been run through a kind of like Photoshop paper or fire fact?

I think that's digital zoom, but I don't know. My phone does this too when I when I zoom in. Strange. I don't know. It looked like from some of the images that a wheel had cracked and they just caused this derailment. This was right before the Bear River Bridge, I want to say, but yeah, they shut down the Northeast Corridor for three days, I think.

Right now they have bypassed it with some temporary track, but actually fixing the whole thing is going to take a long time. And this is not like bad track. This is the best track in the United States. And Norfolk Southern still manages to put a train on the ground there. Just incredible. I don't know what they're going to do with, you know, I think if you have a situation like this, you ought to inspect every coal hopper that goes over this section, make sure it

doesn't happen again. Of course, we're probably not going to do that. I'm back. I'm back. Perfect Southern. Man, if they could just run bureau car like bureau crew cars, they would. Yeah, absolutely. Not even driverless trains.

You just have a guy get in, set it to notch eight and then leave. Then leave. Right. Exactly. Yeah. It's just that movie put in real life. Absolutely. Absolutely.

You get like a runaway truck ramp at the end, but for trains and you just kind of, yeah. Which is already a thing. Saluda has that. So there you go. Yeah. And you know, if this way you're going to have one guy running 17 trains at once. Mm hmm. It's efficiency.

That's railroading. Yeah. Oh, yeah. I will say that there is a very direct connection between, well, more the out sort of wash in the aftermath of the Penn Central and this coal train ending up on the ground on the Northeast corridor. Don't try fucking tie this back to the theme of our episode. That's not what we're here to do.

This is some shit that we found on Twitter that we're going to talk about for 10 minutes while we all warm up. Yes. All right. I'll keep these facts away then. But this is, this coal train being on here was like a legacy of, you know, all the CSX stuff being shifted onto the old B&O line and then Norfolk Southern has like just some residual trains that come down Port of Baltimore by way of the Northeast corridor.

Yeah. Well, they were going to build a connection onto the former B&O line, which is currently the CSX's main line. It was actually in the original Conrail plans that they were going to do that. But well, a couple of things happened. First of all, Conrail's traffic growth projections did not pan out the way they thought they would. So, you know, as the 70s were on and as Amtrak undertook planning as a part of the Northeast

corridor improvement program or any CIP, I believe it's pronounced MESIP. I don't know if that's true. So don't quote me on that. Necap. Necap. Sure. Necap. Yeah.

Anyway, as a part of that, I think they elected to just go with, okay, we're going to keep free on the corridor because it'll stay in a manageable level. And so they chose not to build the connection. Funnily enough, one of the recommendations from the, okay, we'll keep free on the corridor, but with a few conditions, things was let's try to inspect these trains more often so they don't fail as much. Let's try to inspect trains more often. Not exactly by or com.

Yeah, just not. But yeah, in that, I think it's in the environmental impact statement somewhere, there's a line about, you know, trying to improve maintenance and inspection procedures. So failures happen less often. And this has worked out perfectly and clearly. Yeah. So as you can see, we're, yeah, I mean, I guess it's possible it actually was a track issue, but certainly from the images, it seems it was a real issue.

And in that case, you know, really, we are learning from our lessons quite well, I can tell. But anyway, in terms of the freight rerouting that in the 80s, after the chase Maryland crash, they ended up rerouting a lot of the remaining freight off the corridor, but then they still didn't build this connection. So now we have the situation where all of the freight that once ran on the corridor doesn't run on the corridor anymore, except for stuff coming off of the Port Road branch, which is the line that connects Harrisburg and from Harrisburg, Pittsburgh and points west down

to Delaware and Maryland. All those freight trains to, you know, Wilmington to Baltimore to that whole region still have to run on the corridor. And that's sort of the last main heavy haul freight operation on Amtrak lines. And it usually runs like fine, but then you have things like this that happen and that's not fine. So yeah, I guess you can thank a relatively unambitious railroad planning in American history for some of this.

I gotta say, like the general low level tolerance for derailments in the freight industry is like pretty ridiculous when this sort of thing can happen. Yeah. You know, it's wild how much U.S. freight trains derail. I mean, to the point where I have personally witnessed a freight train derail. Jesus. Do you not like get in trouble if you put a train on the ground? It just happens.

It's like our helicopter pilots feel about helicopters. The train is a machine that wants to be on the ground and everything else is fighting it to keep it off the ground. Well, in other news, it's getting more illegal to be transgender every day. Yeah. And it's it's starting with the kids, of course, as every good moral panic should. This here is a photo of from out of Iowa, where Governor Kim Reynolds is has a raid, a selection of extremely, let's say curated women.

Every every one of these women has the kind of hair that you'd find on like one of those neurotic prestige dog breeds, like a fucking Saluki or something. This this is such a like a 14 words as photo to like, it's pretty clear. Yeah. What what the point of this is in terms of like, who's femininity we're defending? And it's nice white corn fed feminine. And of course, the terror is all that like your son might turn out to be a transgender woman of trans men and anyone else for that matter.

There is no mention. So we're going back into this sort of thing where you end up with like a guy who's been on testosterone for like five years. And on pubes, he blockers for another five years before that is having to wrestle girls half his size and then getting booed for winning. And it's like, well, what did you fucking expect? You're the ones making him do it. I yeah, I don't know.

There's a lot of bad shit going down. It's happening in a lot of different states simultaneously. And today, of course, you had fucking Jacobin of all people being like, oh, well, actually it's it's not actually this is just being caught in the crosshairs of something that's really about economics. Yeah. Yeah. Exactly.

And I'm just like, yeah. So I mean, it's feeling a little bit dire, I would say at the moment. And all we can really do about it is, I guess, commiserate with you and put some links for some organizations in the description that you can that you can go to help out. Yeah. We we we support mandatory gay trans abortion at all times. Yeah. The problem is that there's only two of us plus a S.

So we need helping. Sort of abortion, doctor. Yeah. Perform abortion, perform as many abortions as you can. That's what I did was I replicated the big daddy suit for bio shock out. I always wonder that's with that, Rob. With with one of these with one of these, these these bills where they like take the kid away from the family, if they're trans, what happens if they're like a particularly

resilient, transgender kid like they refuse to detransition? Do they just keep keep taking the kid away from the foster parents? Do you become like a giant, holy terror to the foster care system? Just put every single foster parent behind bars. We kind of hope. Yeah. But no, this is this is like, obviously, this is the wedge that they're going to try and hammer in on to try and win back all of the stuff that they've previously lost,

like gay marriage and like abortion. I think Kansas, it might be just ahead of Bill introduced. I don't know if it's going to get anywhere, but it's clearly taking off of these because one of the wrinkles in the Texas guidance and some of the others that have followed it is now we can, in fact, think we can prosecute you retroactively for this. If your kid is over 18 now, but received any kind of like transaffirming care before that age, we're going to investigate you. If you take your kid out of the state to get transaffirming care, we're going to investigate

you. And the thing in Kansas is now it's being mooted to make it illegal to leave the state for the purposes of getting an abortion. So yeah, this is just it's going to get a lot worse before it gets better. And I'm thinking about the Supreme Court and who's on it. And I think yeah, the sort of like the stupid, stupid game of like originalism and textualism has like funding. Yeah.

Yeah. Ruth Bader Ginsburg should have never gone to that fucking wedding. It's true. I could have retired. Obama should have killed Scalia first like sooner. No, he should have done it sooner. He should have put a pillow over his head sooner. No, no, no, I'm saying if you're a liberal president, if you're a Democratic president,

you have both houses of Congress for like two weeks until you don't anymore. You've got to spend the first of those two weeks just with a pillow going to Supreme Court Justice's houses. You guys know that scene from a glorious passage. Oh yeah. You've got to reenact that bit by bit. You know, you've got to wonder how far these laws are going to go because, you know, it's not going to be too long before, especially if they they uphold these provisions about

crimes, what they define as crimes committed out of state. Like, are they going to start just if you're an abortion provider and you like change planes at Atlanta airport, are they just going to arrest you as you pass through the terminal? It's a genuine challenge to things like the commerce clause and the supremacy clause. Listen, I don't want to be optimistic about this, but I think this might destroy the United States. We can only hope. Trans people, we might finally do it.

Why are they holding this event and on like fucking the tile from a mid tier like chain Mexican restaurants floor? I didn't notice that. Genuinely. This has to be like the capital or something like the state capital and it looks like absolute shit. It probably retiled it back in like the 70s and there's some incredibly beautiful mosaic underneath it.

Yeah, it's like. Yeah, it's the it's the mosaic of like the land that corn built and it's like this beautiful like sunlit uplands and they're like, oh, we've put various shades of brown over this. In other news. Well, the Great Satan is getting the punishment that it deserves in the form of an airborne assault from giant spiders, giant flying spiders are coming to the US East Coast. Yeah. Yeah.

And all of you will soon be killed by these guys. So it was nice knowing you. I'll hate halving the podcast on my own. Yeah. But. Oh, I will. I will. Yeah.

Gonna get that pair of shoes I've been looking at. So yeah, this has been in the news right and the thing that amused me the most about it was that the unit of measurement they used for the size of one of these spiders, they didn't just go like, oh, it's like a three inch spider or it's like a 10 centimeter spider. No, it's a spider the size of a child's hand. Yes. But this is the Jorah spider. It is venomous.

Veminous. Veminous. Veminous. It's very big, but apparently it like several other kinds of spiders, though it has venom, it's fangs or teeth or whatever you call it. I don't know what you call it on a bug. It are too small to penetrate human skin. Yeah, it's meant to kill like bugs and shit.

Yeah. No. Liam, you're still quiet. Okay. Oh, I turned my game way down for 2000 losses. I forgot. There you go. Is that better?

That's much better. Oh, yeah. You like that? You like that? I wouldn't say that I want it maximally and moderately. No, you want maximally and shut up. So these things, these things are just going to be around. I love one of my favorite things about the United States and climate change is that now

you're just getting horrifying insects just migrating around. So just now the entire East Coast just has like weird stink bugs that just live in your house. And if you disturb them at all, all of your shit smells like absolute asshole for weeks. Yeah. Or the spotted lantern fly. Oh, they were. They were more of a bumbling nuisance than anything else.

I was doing carbs of a beast of species. Yeah, I know. They don't actually fly. They just sort of hop. We're killing so many fucking insects with climate change. And yet the survivors and the ones that are thriving are like, oh, this thing, it like eats the eyes of children or whatever. Jesus Christ.

Can we have bees back, please? Yeah. Yeah. The thing about the lantern flies is the birds figured out they could eat them. So now they're not a huge problem anymore. That's good. Yes. Birds are absolute serial killers when it comes to bugs.

I think a lot about about shrikes. If you're not familiar with a shrike, a shrike is right. It's a family of birds. They have very sharp pointed beaks and they will just impale bugs on them. And once they're done like doing that, sometimes they'll just leave them out in little like dead bug fences to mark territory, either alive so they can eat them later or just dead to, I guess, as a warning to others. Birds are fucking.

Birds are fucking wild. I love birds. That is wild. They and cats definitely have the whole like both cute and terrifying to pray. Cats are like genuinely, I mean, including two birds, like how cats kill like millions and millions of birds. Yeah. Just insanely good at killing, killing in general.

When I was much younger, I was also a little bit scared of my cat. It was mostly because she and I had a contentious relationship, not so much. What was your cat's name? What was your cat's name? Flinks. Good name. She was a great cat. She and I got along really well and sort of later years.

Yeah. That was me and my cat Wolfgang. A plus cat. Me and my cat. Great cat name. Me and my cat now, Toby. My big fat son. You guys have great cat names.

You can thank my parents for that, Alice. That includes the cats. I'm going to shout out some of my parents' cats. I'm not joking. Wow. Fantastic. Here's where I feel like I have to mention that I have a pet loser named Eero after Eero Sarnan.

Oh, nice. I had pet fish named Delaware and Hudson. All right. All right. All right. Fucking three. Get him out of here. Fucking three.

When we lived in a big house with all the formula SAET members, our cat, our house cat was named Kitty Reichenan. God, I missed her so much. That was a good cat. I missed her so much. She's not dead. She just lives in Montgomery County. Yes.

Oh, God, that's worse. Yeah. Um, anyway, that was. The God damn news. Alright. Alright. Sharks. Sharks.

All right. Udych, show me your jaw bones. Yeah. Cheap bones. Why are we inspecting Udych? I'm afraid Jay is a hard act to follow. Yeah, we got it. Yeah, got it.

You know, gotta see how you measure up to the J. We're doing like physiognomy on the guests, I see. Okay. It's like break out the couch. Yeah. We're just pursuing like the kind of ultimate Chad guests that we can get. How would you say you feel about finale?

Because like, and it's futile to try and pursue the ultimate Chad guest for, well, that's your problem because Patrick Wyman hasn't been on the show yet. Hmm. Hmm. Yeah. It's funny if you know who Patrick Wyman is. I have.

I saw like he was like, I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know. I don't know.

I saw like he was on Dr. Dr. Eleanor's. Oh, yeah. Yes. Yeah. He's been on, he's been on TF. Anyway, charts charts.

Go back to the charts. Yeah. Yeah. Yeah. I guess I'll start off on this one. The story of the Penn Central's sort of unraveling, shall we say, I think begins with this exact chart here. There was a time when railroads had an essential monopoly on inland

sort of land based freight transport. You obviously had your, your barges and whatnot. But outside of river corridors, they weren't particularly relevant. And, you know, on sort of a macro scale, the whole sort of trend in the 20th century and then to the 19th century was exactly sort of the removal of sort of dominant transportation flows from river valleys instead of having like places like St. Louis and New Orleans being dominant in the Midwest and city of Chicago.

And that of course required, you know, travel patterns that were not particularly compatible. I like the idea of things like barges holding on. But I wish it was applied more broadly. I wish you had like a 0.5 of a percent of goods moved by like covered wagons still, you know. Barges did remain, I think, they actually regained some of their relevance towards the middle of the 20th century, which is actually,

I think also one of the things that's relevant to discuss relative to the Penn Central. I have a question actually about that, about the timing. And I forgive my ignorance. We had fuel rationing in the United States during the war, right? Yeah. Does that, does one have anything to do with the other? It was just a thought that popped in my head.

I have no basis for this. Yeah. So I'm sure it had something to do with it, but I believe the general historical narrative around sort of the reemergence of barges has more to do with the relative concerted effort after sort of really, I think, following the turn of the 20th century and especially after the 1930s to improve inland waterways. So, you know, in the West, you had all those dams in the Columbia built,

all of them had locks that came with them. In the East, you had lots of investment in like the Ohio River. You had lots of... DVA's South Tail, I would imagine. Yep. Yep. The Tennessee Tambighi Project, which, I mean, itself could be a whole episode of this podcast.

You had improvements in the Ohio Valley, improvements along other sort of historically important waterways like the Manongahila. All those things together really sort of pushing barge volumes back up, as did sort of the changes in this sort of spatial distribution of industry. I mean, not to go too far in the weeds here, but one thing that certainly aided the regrowth of the resurgence in barge tonnage was, you know, for example, in the Ohio Valley, the movement of power plants away from urban load centers.

So, you know, instead of putting your power plant to power Cincinnati in Cincinnati, you'd put it in some, you know, rural place in the Ohio Valley, which was, you know, close to the water that you needed to cool turbines and power turbines. Yeah. It has the advantage that you don't need to ship an open freight train full of cold, more dust over everybody. Exactly.

You just run those by the children's hospital. Yeah, exactly. Exactly. And in this case also, you know, it also meant that you could take advantage of very, very cheap barge transport. So you would, you know, either directly from the mine or via a train shuttle from the mine to a barge terminal, get your call by barge. So, you know, if you, if you like me enjoy reading mid-century sort of

electric network planning studies, you'll find lots and lots of references to, you know, Ohio Valley generation growth, a lot of which again was dependent on sort of barge transportation. And that's true of other industries too, you know, you did see a chemical plant and stuff like that start to congregate along Riverways. Which had no negative repercussions. Exactly. It was a completely optical witness.

The Kana River is perfectly fine. Very safe to drink, very safe to swim in, you know, it's okay. Bring your kids. Bring your kids, yeah. Bring your wife, meet them. But anyway, getting back to the chart. Back in the, you know, 1900 or let's say, you know, railroads really did hold control of the inland freight transportation market.

And that began to change when trucks appeared. You know, trucks gained sort of, well, first of all, they became usable and then gained sort of access to an ever-increasing network of avid roads starting about the 1920s. And as that network grew, their sort of share of inner city tonnage and inner city freight revenues grew and sort of began to sort of skim railroad traffic away from, you know, these, these carriers that had become used to and had been, I think, importantly set into a regulatory structure that was

designed for sort of a monopoly by railroads. Trucks were not regulated. So to back up on the step or two here, railroads sort of way back in the beginning era were not sort of regulated carriers, but beginning in 1907. It's called efficiency and livacy. Competition, the free market. Exactly. But beginning in 1906 and then following another set of acts in 1920,

the industry was essentially cartelized. And rates were set by a, rates, mind you, both minimum and maximum rates, were set by the Interstate Commerce Commission or ICC. And that essentially meant that, you know, railroads, you know, on the plus side, you didn't have the sort of insane destructive competition thing going on where railroads would, you know, get in these rate wars that would end up, you know, causing a bunch of financial problems for the carriers and their investors. But on the negative side, it meant that they had very little or plus side,

depending on who you asked, they could not really raise rates as easily anymore. Trucks initially did not sort of fall under the same regulatory structures. And even when they were inserted into the ICC's regulatory universe, the regulation was neither as complete because certain categories of truckers were exempted from regulation. Congress being once again, great at regulating technology. Exactly. You have a guy going, well, the dump truck is not like a system of,

it's not like a series of tubes or whatever. Yeah. Even RIP. Yeah. But so, you know, you had, you know, beyond the fact that there were some truckers that were exempted, they're also just the fundamental structure of regulation provided something of a shield for trucks against railroad competition. Back in the day, it was rather hard to determine exactly how much it cost

to move an individual carload of something from point A to point B because accounting sort of mechanisms cost allocation mechanisms and are sort of just very basic. Because of accounting mechanisms and something called the mafia. Welcome, welcome to Polly's Back of Truck Services. Come on, come all. You want a color TV? My uncle Vic got a color TV in the 40s and it fell off the back of a truck.

Jesus. Wow. Steve Adoring, it was a great job if you could get it. But anyway, but so, you know, in large part because of just the sheer difficulty of calculating sort of the operating costs of, you know, a given load and also because, you know, generally because railroads were at these monopoly carriers, they often priced based on value of service rather than sort of cost of service. The ICC codified regulation around a value of service principle.

So instead of, you know, being like, okay, here's how much it cost to move the shipment from like Toledo to Parisburg and then here's some profit margin or something along those lines. They'd be like, okay, instead it is of, you know, shipping, I don't know, diamonds. Is this much more like, has this much value to the shipper and shipping? It's more profitable to have like a truck with one diamond in the back of it than a, you know, 600 ton freight train full of coal. Basically, yes. So there was this value of service system.

And, you know, that worked okay when it was just the sort of railroads competing among, well, when I say worked okay, I mean that flexibly and relatively. It worked okay when that was just the railroads competing amongst each other. But then when you had these other transportation modes gain relevance who had different cost structures and in the case of trucks also, you know, highly subsidized network of highways that were sort of growing out before them, that became a problem, you know, because railroads could not capitalize and they're operating cost advantages. They could not.

They were to some degree restrained from, you know, like sort of implementing service innovations. And one thing I think we'll probably get to later is the rise of the unit train and the whole dust up that surrounded that. Even things like more advanced equipment. I mean, the introduction of the covered hopper car, which is now standard for, you know, carrying grain and cement and whatnot. Yes. They don't lose half of it over a bunch of commuters on the side of it.

Oh, sweet. Free apples. I always love. Oh, no, no. I'm trying like an apple. Dusted with grain like a fucking fanny. There's some freight yards and main lines in places where you'll see little sort of a nice line of weeds growing down the very center line of the track.

And then you realize that's actually a week that's been slowly leaking from hopper cars or porn for that matter. Yeah. But anyway, a point being trucks are the sort of the TLDR here is that trucks were systematically advantaged both in us being having the sort of fettets sort of fascination with road building in the U.S. And also by sort of regulatory constructs around trucks. America's special boys and they had to get everything that they wanted.

Trucks. Trucks equal freedom. I will say to our listeners who are long haul truck drivers, we love you and we appreciate the work you do. We do. Yeah, we do. And he will be shot at the end of that too. No more time, buddy. I better get it all under the wire then.

Anyway, the upshot from that sort of structural context for trucking was that trucks very quickly and rather soon after World War II began to draw significant amounts of especially high value freight away from the rails. So where you're on a radio set might have once traveled by train from factory to consumer, now you had trucks doing that because trucks could provide higher quality service because you know unlike a train which is and again we'll get to this I think in more detail at reliant on scale economies and a much more complex network where shipments are interdependent. A truck is like you put the thing in the truck and you take the truck to the destination

and you unload the truck. It gets to be more individualistic. It allows you to like help atomize the society because now you can have a radio that isn't the same as your 50 neighbors radios. Precisely. Trucks equal freedom. And needless. Stupid.

Environment destroying freedom sometimes. But you do get a cool radio. USA. Sometimes they drive all the way across the United States and chicken out right before they get to Washington DC and circle the beltway twice and go home. I love that they were defeated by just normal ass beltway traffic. Like listen if Roz and I can sit on the beltway while I play country roads take me home and he doesn't mean about the densest highway in the country.

You can do it too. You fucking fancies. Pathetic. Yeah. So you know radios other high value manufactured goods got shifted to trucks and you know from like a broad economic welfare perspective like yay the shippers are realizing you know more rational decisions about their transportation choices because now high value goods are getting adequately high levels of transportation service.

What that meant for the railroads was that you know as they became sort of cornered into a essentially this bulk sort of service period in a role where they're carrying sort of lots and lots of relatively low value goods at sometimes like rather unrenumerated unrenumerative rates. They're developed financial problems and those were of course aggravated by you know trends and various input costs labor materials what have you at that time as well as things like you know the overbuilt overbuiltness of the infrastructure around them. But again we'll get to all those things later.

But anyway general context trucks took things from trains and that was very bad for the industry's financial health and that was especially true in the Northeast where you know the railroad market was disproportionately exposed to those higher value manufactured goods where you had sort of lots of also consumer oriented shipments and you also had relatively short length of halls so you know you're not carrying things a thousand miles you're carrying things like 150 miles or 200 miles. Remember before the 1950s like what two thirds of America in manufacturing manufacturing value was produced in the Northeast and the Midwest so like we're not talking about long distance this

year especially given that most of the population or not most of the population but a rather large share of the population was concentrated in those areas too at that time. So you had actually a relatively close sort of integration between sort of production geography and consumption geography which means that railroads are you know they're both well suited to that because there was a very dense network of railroads there but they were also very much under threat from sort of high quality short range service offers precisely because you know the median shipment wasn't actually moving all that far. I've rambled for a while I'm gonna stop talking and let us go to the next slide if we so wish.

No we'll stay here forever. Nope. Don't go back. I'll go down to the next slide. Go back. Go back. Listen we promised the people ten hours of podcasting and they're gonna get their ten hours. Look at this beautiful landscape.

I can talk about rate regulation for days. Good do it. Liam what do you have a gun? So what happened to eastern industry? Yeah a bunch of shit. People stopped making radios and then they stopped making bigger things. They started making hats. The unions got greedy is what happened and not General Motors putting out the shit for

all of the fucking unions weakened the manufacturing base. And now Danbury doesn't make any fucking hats anymore. Did Danbury? I'm very excited for hats from Danbury to be one of like stealth memes that we get into the show you know. I would love that. Danbury, Connecticut should be razed. Nice train museum.

But where else are you going to dance from? I like Danbury. I get them from Phil. You lived in Danbury? No. I thought he said he never mind. I like Danbury. Oh okay well you're wrong.

But yeah eastern industry had a bit of a rough time from well really early 1900s onwards but especially after World War II. There were sort of two I think it's important to think about this as having sort of a few different parts. You know I think there's a lot of stuff in the popular press these days especially about you know offshoring and you know the global dispersion of manufacturing jobs and that's certainly like very true. And I don't think anyone's really going to disagree with that.

But it's definitely not the only thing that's happened to American industrial geographies since sort of the high point of the say the rust belts manufacturing age. So I think first what you saw happen first in most cities was a shift of industry from sort of the core of the city to the outskirts of the city. And that had everything to do with sort of transportation and trucking and factory production and sort of the modalities factory production of labor. And we have a whole episode on this the last time I was on here. So I won't like I'll try not to keep this short.

But essentially this episode though I would recommend it. Oh yeah. Yeah that was a fun one. There was a nice discussion of whales on trains and tunnels in that one. Whale by rail. But essentially as sort of production processes were electrified industrial engineers realized that sometimes it's a lot more efficient to do things. You put everything in a nice straight line which essentially massively expanded the required

sort of floor area for production processes and sort of spatial needs of those processes. So on that first level you know your cities are going to look a little bit less attractive because you can't get your gigantic site for your like half mile long assembly line as you can in like you know some farming area at the outskirts of your city. So there was that. Then there were things like you know the thing of there is trucking trucking both sort of advantaged sort of rural locations and that cities were often very congested and very sort of difficult to access with trucks especially as trucks got bigger you know your narrow urban

streets do not sort of work well with the 53 foot trailer or I guess back then it was more 30 something foot trailers but same difference honestly. And so cities got more disadvantaged in that sense. And then also these certain locations were at an advantage in so far as trucks in connection with the expanding road network meant that you could look at kind of anywhere. And so there was a huge amount of spatial flexibility imparted by trucks when they came onto the scene because they they're there's a detachment from these relatively sort of hierarchalized networks like railroads where you have main lines and yards all the stuff that has to

like sort of work in conjunction meant that you know you could really sprawl and decentralize however you liked. Then there were things like you know management's hating unions cities historically have been you know centers of labor power and especially following Taft Hartley when states began to adapt differentiated differentiated labor policies. You then saw you know production move to states that had meter labor protections because you know management's wanted to exploit workers. That's actually something that I've always found funny I suppose is like if you buy a

BMW now besides I think the M cars and I'm sure someone in the comments will correct me you're buying it out of Spartanburg South Carolina like you're paying seventy thousand dollars for non union labor because they relocated to those states on purpose. And it's just like you know the people like to get all the you know at least this car is built in America and it's like a Toyota is built in America. It's just built to the scab player. Yep. Yep.

And we recommend the documentary American Factory. Incidentally produced by Barack Obama. Yes. Yeah. We actually watched that for a class of mine. It was. At least I think it was confusing. It was something.

No no it was it was. Okay. I'm also feeling uncertain. So don't put me on it. Every movie in history is produced by Barack Obama. Yes. Yes. Yes.

All movies lead to Barack Obama. Yep. Yep. Yep. I love Barack Obama's movie Star Wars. Yeah. Barack Obama actually directed Once Upon a Time in America. Yeah.

I'm sitting down. The greatest film ever made. In the dark in the cinema giving me the AMC like you know somehow sadness feels good in a place like this and I'm like thank you Obama. Citizen Kane produced and directed by Barack Obama. That's right. That's right. I don't know why you guys are laughing.

I am. I'm going to get our 10 hours if it kills me. I'm already in podcast. The madness has begun to set in. Yeah. You can feel it. I've already been recording for two and a half hours. Is there an hour as a service limit for podcasts?

Not for you buddy. You're what we call a non-exempt. Yeah. Wow. Or exempt I guess it would be if your management now. Okay. The rebellion has begun. Yeah.

I guess I do. You know. Yeah. Finish the sentence. No. But getting back to industrial sprawl. So there is a there is this incentive to to decentralize away from cities because you know as as they would say so sort of dangerly back then the labor climate was often better

away from large metropolitan centers and that notably didn't take place only between you know Michigan Michigan factories moving to the south but also even within the state. So you'd move from Detroit to like Fort Wayne, Indiana or you know somewhere like that where you get the interstate highway act in 1956. I don't know if that's in the notes specifically but I feel like that probably contributed. Yeah. Definitely. Definitely again because the more you have sort of a strong network and the more sort

of trucks become a survival mode of transportation the more decentralized your production geographies can be because trucks are not again I hate how theoretical this is sounding but trucks are not dependent on one another for movement in the same way that trains are. Trains rely on economies of scale. Trains rely on economies of scale so they do well with cities and historically railroad oriented production processes were centralized in urban cores persistently because railroads congregated on urban cores and because those economies of scale are easier to realize when things are close together whereas trucks economies of scale are less relevant so you can just

spread things out over the landscape in a way that trains aren't really able to do it as much especially if you're a service sensitive shipper. So there's that and then I think that the last component of course is you know good old government policy. You know during the Cold War there were fears of things getting nuked and there were there was a general interest in sort of just decentralizing production away from the northeast and away from cities. The one sort of fascinating sub history of the New Deal is thinking the sort of the

debates among New Deal reformers about sort of rural modernization sort of the choice between pursuing you know improved sort of a reimagined and reinvigorated farming economy that could sort of resuscitate the family farm as a viable model versus things like let's try to industrialize a reality and let's try to you know put factories in the countryside to sort of get rid of to sort of mitigate urban congestion and to bring some of the wealth of industrialism towards these rural places. Doing Jeffersonism and Hamiltonism again but like this time all around lounge suits yeah. Yeah yeah so you know all put all these things together and you have a huge shift in industry

away from cities and then as we've sort of touched on in talking about that shift away from cities to the south as well. And then of course you have especially speaking in the 70s the movement of production overseas which I mean I think that's been covered plenty in the popular press but is you know one that itself has a lot to do with transportation technology specifically the rise of the shipping container which cut transportation costs for international shipping immensely like we're talking about like 90% reductions if not more. Was that book Roz you read the box or just box?

I just finished reading the box yeah. Excellent book. I love it. I did add a slide in here about containers but you know that's definitely a it's a fascinating look at how containers really ruin the ability for things to fall off a truck and get picked up by someone who just happened to be there at the right time. Yeah. Yeah.

It's a huge piece to write a different and sometimes worse kind of organized crime because then you can you can more conveniently steal an entire container or put a bunch of people in that container and hope they don't die whereas like it's a great renaissance in stowaways and human trafficking but in terms of like your ability to get a color TV not so much. That's so good. Yeah. Yeah.

But yeah important pieces of technology for understanding that global network formation nonetheless and of course that's not I don't mean to at all sort of protect technological determinism and absolve the innumerable decisions of the free trade regime. No but it's something that seems to make sense to them at the time based on the technology. Yes. Yes. Yes. But yeah I think the technology like it coincides with their sort of their ideological goals

that you can ship like an entire like carrier full of containers from Singapore to you know New York. Absolutely. Absolutely. I think one thing I've loved to learn to say studying history in college is necessary but insufficient to create exchange. I think containers are an example of that like they were definitely necessary to realize the degree of globalization that we have now but they certainly were not the only thing

that did that and were not by themselves sufficient to do that. All right. Are we good on this slide? I think so. No I want to stay here. I find it. I fully forget where that image was even. I just clicked it off Google Maps.

I think it was on the outskirts of like Bowling Green, Kentucky or something. It looks like. Yeah. It's a good little like industrial landscape of just like we just we just lift this up out of the middle of like five city blocks and then we plunk it back down. In a farm. Put it somewhere else on some guy's farm and therefore we end up with these weirdly shaped fields.

Yeah. Should I start with this one as well? Yeah. I mean you wrote the notes for it mostly. I did. I did. Yeah. I don't think I pick up until a couple slides from now.

Excellent. I'll keep lapping them. We have to we have to introduce this with a way of asking anything that make it sound smart. What is the railroad? What is the railroad? What is the railroad? What is a railroad?

What is the railroad? So what you do, Alice, is you take some metal, right? Yeah. And I'm taking it. Lay it down. OK. Yeah. Yeah.

And then you put another one and you make it so. Another one? Yeah. You lay another rail. And and then what's a rail? Shut the goddamn hell up. And guys, railroads are when you do model trains, but bigger. Oh, OK.

I got it. I got it. Where do you where do they get all of the glue? The big horse recycling plant. Actually, my my local station is actually made of styrene. Yeah, it has to get like a hot wire cutter, but the wire is like 40 feet long and you just like shave bits of it down to create some interesting like roof texture. So railroads, they do exist.

This this chart on the right, which I guess only those who are watching on YouTube will be able to see. So maybe I'll read it out in a second. It's probably one of my favorite charts of all time, because I think it does such an excellent job contributing everything you ever thought about how railroads or freight railroads in particular. It's it's also a perfect diagram of a Norfolk Southern coal hopper wheel. Touche.

I'm going to read this out loud because I'm going to read it out loud. Because I think it's important. The the figure is labored average equipment trip cycle. So essentially what it's it's doing is it's a pie chart breaking down the number of days a freight car spends doing each part of like a cycle through a freight car's life. So, you know, loading, unloading, travel and, you know, and so on. In sort of day increments. So at the time this report was written, which was, I believe, 1972,

or I think this data might have been from 71. Yeah, 71. The average freight car had a cycle time. So time between sort of successive loads of twenty five point six days. That's a very long time of those days, 11.5 percent. So two point nine days were spent loading the car. Two days were spent moving the car when it was loaded. Two or three days were spent in in terminal yards when the car was loaded.

Then you had unloaded the car three point one days. You had empty movement of the car one point seven days. Time spent in terminal yards when the car was empty four point four days. And then the time it was spent intermediate yards in both directions, eight point five days. So just to, I think, bring out the important part of the statistic, only seven point nine percent or two days of that cycle time is actually spent on moving trains. The rest of it is either spent sort of moving empty on trains or, you know, the vast majority of it about of 61 percent or 62 percent is spent in yards.

Yes, sitting down and mostly sitting there like half the time, literally half the time, it's sitting that empty. Yeah, yeah, railroad, this pie chart wedge here is the only time the train, the car is making money for the railroad. Right. Yeah. Yeah. It's it's railroading is it's not so much terribly efficient. Exactly. Railroading is it's yeah, it's it's it's a scale business,

but it's a scale business where the really like when you get down to it in the game, it's not making your sort of sleek trains around 80 miles per hour or whatever. It's getting the train out of the yard and getting those cars moving somewhere so that, you know, your your your potatoes, we go back to Penn Central. Part one, just run every train in every direction at the same time. Loose track of where everything's going. Forget a bunch of trains. They're moving. That little proportion is much higher.

Yeah. Yeah. Let me tell you. I call it low precision railroading. It will get somewhere at some point. I won't know what's on it, but it will. The train is going vaguely in the direction of a factory of some kind. Yes, send the potato chip factory a shitload of rivets. Maybe they'll know what to do with them.

I don't know. Yeah, you can send my problem. I'm a railroad man. Life is terrifying. And we just embrace it here at Penn Central. Futurist Futurist Railroad. We're sending like shipments of springs and aggregate to food manufacturers. Yeah, we got we got down at the down of the auto plant. We got our fifth shipment of Danbury hats this week. All our cars look very sharp.

Yeah, you got your BMW made in South Carolina. This is outside. But yeah, so I think, you know, the question this chart begs is, OK, so what the what on earth is going on here? I think this sort of gets back to the fundamental nature of railroads, which is that they're again, a business that's all about economies of scale. So unlike a truck where you're just dragging sort of one unit of freight and trucks, the truckload in the railroads, KC, rail car load or car load

of freight, you're trying to build trains out of them. So that means, you know, putting many of those cars together and then sending them along the way to their destination. Now, these days, we have ways of sort of short circling that problem. So there's a lot of trains that run sort of just full of one commodity for one customer. Those are called unit trains. So, you know, rather than having your load of grain travel with all the other loads of whatever that are going vaguely in the same direction,

you just buy an entire 110 car worth of trains worth of shipping space and then load that all with grain and then send it along to your destination. If you want to do this in Britain, you can do sectorization and you can come up with cool little liveries for each each kind of commodity. So you can see on the side, this is this is a train that's shipping coal somewhere. Yeah. Yeah. So you have to we do have those as days. We also intermobile trains would sort of take the unit train idea that are like, OK, what if we put trucks and containers on the train instead of filling them

with coal or grain, but sort of historically, and this is especially true in the Penn Central's era, and it's still true for a large portion of railroad traffic today, the way railroads work is that you'd pick up, you know, a few cars from like a whole bunch of different shippers in an area. You bring them all to a yard, you'd sort them by destination. So, you know, cars going north or to these yards go on this train and cars going to some other yard going that train. And then you take them on a train to that next yard.

You'd often resort them and then sort of keep doing that until the cars eventually get to their destination and then you deliver them in sort of two cars or three cars at a time to the to the receiver. So what you have essentially is this extremely complex network of of services where you have, you know, you have your trains moving between yards. But then, you know, within those trains, there might be there might be goods for 50, 60 different shippers moving. And that essentially is why yards become such a choke point in this process

and why generally, you know, even to this day, the whole sort of terminal operations make or break railroading statement really does continue to hold true. And, you know, as this relates to to the Penn Central and as to the general sort of trends we were describing earlier, the fact that railroads were were sort of interested in these economies of scale and the fact that they were so dependent on yards and the fact that these yards sort of moved traffic so bloody slowly meant that they had a very hard time competing with trucks. You know, it is possible to move a train over, you know, your railroad line

at a reasonable speed, but then if your cars are going to sit in a yard for however many days, that's kind of the ballgame. And just any improvements you make it like so marginal. Exactly, exactly. And railroads, you know, they did to their credit, do some things to resolve this, you know, yeah, the New York Central used a computer. Exactly, yeah. And things like the Selkirk Comp Yard and something like that.

Those were all in sort of investments that that did to some, oh, they did. I think it's fair to say they did improve sort of car velocities across the network. But if you look at the aggregate statistics for the whole industry, the number of sort of car miles traveled by the average car and the average day stayed essentially flat through the fifties and sixties or through the fifties. Sixties other things happened, which sort of never, I won't get into it. Through the fifties, which essentially meant that railroad sort of aggregate service offer was running essentially constant, despite them having to compete

now with a mode, i.e. trucks that was very good at offering high quality service. And that's bad. And that meant that, you know, on top of all these sort of structural disadvantages that railroads faced at that time, there was sort of this basic failure to adjust service offerings to reflect new competitive realities. So, yeah, that's sort of the long and short of the sort of relevance of this to the Penn Central. I think there's other sort of connections here that I think are important to recognize.

For example, the fact that the Penn Central was very exposed to the East Coast, which had a lot of sort of small industries and a lot of just old infrastructure meant that they spent a much higher fraction of their earnings doing things like switching trains around yards than the median railroad. But I think, you know, in terms of the general economic trends, that the sort of this this this flaw in the railroad, the general railroad offering model, I think is critical to understand. There's also like a contrast to this, I guess, the exception that proves the rule

and in this era where, you know, the Redding Railroad does its beeline service because they can like move. I mean, when you can actually move the car a long distance to the customer in one day, the economies of scale are incredible, you know, because you have a you have a train with a crew of five guys making double overtime, moving like six cars and it's still absurdly cheaper than trucking. Yeah, I think I think there's there were other things that people did around this time, too, that actually made a lot of sense.

Yeah, so going back to what was being said earlier about sort of just like put cars on train and send them in general direction of customer, like that actually was how railroads operated way back in the nineteen hundreds, where there when there was no such thing as sort of centralized sort of network planning. But in the in the twenties and thirties, there was a short period when railroads actually really made a strong and generally sincere effort to actually plan the movements of their network as sort of a unit. So you would you would give every single train

sort of a list of of destinations for which it would take cars and the train to drop off cars for those various destinations. And I'm simply lying here, but essentially these classification plans would vastly reduce the number of sort of intermediate yard handlings that traffic would have to face along the line, which meant that trains actually would move a lot faster. Problem was, is that, you know, to maintain like to maintain that that service quality, you know, you need to run all those trains because

essentially what you're doing at that point is, you know, all the trains become interdependent on each other. So, you know, if you have one train that's carrying cars that then connect to another train to avoid a yard, you need both of those trains to be running and they need to be running on schedules that work with each other. And as rail traffic begins to decline and as diesels allow sort of you to run longer trains, railroads start getting because of their historical interest in maximizing the tonnage of trains as well as given labor cost factors

and what have you, railroads begin to sort of move away from that sort of very scheduled, very networked service planning towards more just like, OK, we have enough cars, now let's run the train, which does not do anything good for the sort of performance of yards, does not do anything good for the velocity of traffic, etc., etc., etc. And then as equipment reliability problems get worse and worse, then this only compounds it and then you end up with this vicious cycle. And well, yeah, and we get the pen central.

Yes. And it's funny because this is like, if you look through railroad history, we've been fighting the exact same battles like forever. You know, PSR claims to be PSR being present schedule railroading, which is often sort of the bogeyman. And I think, you know, to the sonic set rightfully so of a lot of railroad discourse these days, one of the things that does promise to do among sort of many others is do exactly what I just described, which is

reduce the dependence on yards by sort of pre-sorting traffic as much as possible and having trains sort of swap sort of cars and destinations rather than trying to break up trains and resort trains every 200 miles or whatever. And that was very successful on the CNCP. I don't think PSR as a whole has been in any means sort of a cake walk for the American railroad industry or has necessarily been all that positive. But I think it is worth pointing out that there is sort of some parts of the basic operating philosophy that do make sense and do draw on a hundred

plus years of sort of really the same diagnosis of what one of railroads big problems are. Yeah. Trying to try to like slim down that one thing of like it just sits there most of the time. Yeah, exactly. Exactly. Yeah.

It's it's like, it's like, what was that precision scheduled railroading? Well, I think it'd be a good idea. Yeah, there's a famous Hunter Harrison story where he's like a young Hunter Harrison being sort of the guy who came up with precision schedule railroading in the first place where he's like a young roadmaster or yardmaster or some sort of young sort of officiary and the railroad bureaucracy. And he's working at some yard, I think on the Frisco it was. And his his boss asked him to look out over the yard and ask him, you know,

what do you see Hunter? Hunter says, I see good business. And the his boss is saying to effective, no, you're wrong. I see a bunch of waste. These cars are all just sitting here. They're not making us any money just sitting here. And I mean, you know, if you look at this chart, like he's not wrong. And the part of the PSR operating philosophy that's like, let's please

not make cars sit in yards for two thirds of their trip is also not entirely wrong. Um, yeah. I once again talked for a very long period of time. I apologize. That's why you're here, but that's what that's what you're here for. Yeah. Mm hmm. Reminds me of there's some study that came out recently of this is it was like, what do we need to do a battery electric freight locomotive?

And they said, well, it's easy to achieve, you know, the average the average car only moves 120 miles a day. Therefore, we just need 120 miles worth of battery. And it's like, well, the average distance. Yes, but no. Moves in a day does take into account that it's traveling zero miles most days. Yeah. Next slide, please.

Yeah, I'm on the next slide now. Yeah. Should I keep talking? Yeah. I have to keep talking because you wrote the notes for this one as well. So, yeah, we have in our background, you know, trucks happened. The general sort of structural problems in the management of railroads happened, industrial decentralization happened.

And then there were these regulatory issues. So I think it's now worth going back to those regulatory issues for just a second. Written into the legislation passed in 1906, 1920 was this idea that railroad rates would be set to allow railroads a fair rate of return on their traffic. Nobody ever really thought to define what that fair rate of return was. Aside from saying that in the 1920 version of legislation, at least that railroads earned more than a 6% return on investment would have to, I think, give half of any earnings, about 6% to weak railroads.

And this is again, all part of the whole cartelization idea of railroading, where you're going to get rid of the destructive competition problems and solve the issue of weak railroads by just making rates essentially fixed across the industry. But, you know, these rates ended up being a bit of an issue for railroad managers because, you know, costs did increase, but political pressure on the Interstate Commerce Commission meant that rates did not necessarily always increase alongside them.

And this was sort of along with the general sort of service issues that railroads faced in that era meant that rates of return essentially went and stayed very low after regulations passed. What that means concretely is that they did not always have as much capital money as they would need to improve their infrastructure and physical plant. So during that era, you had this absolute fascination, even more so than there had been previously, there already had been quite a fascination. Absolute fascination, things that would improve railroad productivity.

So this was the era of the sort of electronic classification yard, the centralized traffic control system, centralized traffic control being sort of signal systems that would allow you to control all your junctions and all your signals remotely rather than having a guy sort of at each junction point. You throwing switches, you know, on site. This and as well as the era of maintenance mechanization, of course, the diesel locomotive itself was a huge labor saving device. And, you know, you put those things together and railroads did manage to

make progress and productivity and keep, you know, afloat to some degree. But as a high value traffic was drawn away by trucks and as industrial geographies changed, railroads, especially in the Northeast, began to really feel a financial pinch and they had a regulation also informed the fact they were sort of in some ways constrained from resolving the financial pinch. So, you know, the mandated provision of passenger service, which is becoming increasingly unprofitable was a relevant sort of context point at that time. But it just generally meant that, you know, they had all this infrastructure

built for an era when most American sort of production and population is in the Northeast and most of that production and population was entirely dependent on the railroads for moving traffic. They had all the infrastructure built for that era and had to maintain it or get rid of it and both of those things required spending money. And they increasingly did not have the money to do that. So they deferred maintenance and that was bad, to say the least. It was also like a sentimental aspect of this, too, right?

Because, you know, tearing up, you know, the four track Pennsylvania main line to make it more in line with the actual needs of the railroad. Well, that seems like a step backwards. Yeah, you know, you know, productivity has improved to the point where you could deal with fewer tracks. Yeah, yeah. And the Pennsylvania was sort of famous for not pursuing a lot of these productivity enhancing investments, even when they could.

You know, the New York Central spent the 50s and 60s investing heavily in modern signal systems precisely so they could reduce infrastructure and modern yards precisely so they could run more rationalized train service plans and also so they could reduce terminal costs. The Pennsylvania spent a bit on yards. So, you know, Conway and Enola, for example, the both yards in Pennsylvania were built sort of in that in that in that sort of time. But they didn't they by and large did not invest in large scale computer

eye signaling, which meant that well into the Conrail age, you had all of these four track main lines that were not sort of strictly needed, but nobody had ever bothered bothered to sort of spend the money to save the money, so to speak. And that was a problem across the entire industry. But I think, you know, me being a staunch New York Central advocate, I do feel. Get bugged. But I do feel the need to point out that they were the sort of better managed, at least on this most respects of the two merger partners.

So, yeah, just a bit of context there. But anyway, deferred maintenance is one of those things that and gets you into a bit of a vicious cycle, right? You know, as your your maintenance bill sort of gets well reduced artificially, things happen. The worst the worst it gets the worst it gets the worst it gets the worst it gets the worst it gets. Yeah, exactly. It's more expensive to fix.

Yeah. Yeah. You you're taking yourself a deeper hole and you get to sort of smile while going down because at least you're still paying dividends and stuff. But you know, but believe it or not, that it's not sort of a good long term strategy. But yeah, you essentially what happened in the northeast was you had a lot of infrastructure and they ever shrinking maintenance budget. And then you ended up with a lot of rotted track, a lot of really poorly performing terminals and big service issues because of that.

One of my favorite little pen central facts is in the 70s thing is 73. And they were they were recording a documentary to try to convince Congress to give them more money. This has made me watch this approximately a trillion time. It's a good one. You want to you want to explain it? Oh, are you talking about the propaganda film where the shit just falls over? Yeah, yeah, yeah.

The car derails on camera. Yeah, yeah. And they swear to God, it wasn't staged. So yeah, it was it was a hot mess. And it wasn't doing the real world industry any favors. I think so I think to go back to the productivity issue. And again, I'm sorry for jumping around here. But I think one thing just worth pointing out on a structural level is that

the there is a very particular way railroads often define productivity, which I think informs a lot of sort of how they ended up with the very particular sets of service issues they had, which is they always starting in well, the late 1800s, actually, they often thought of themselves as thought of sort of the fundamental equation of railroading as being like, let's try to absolutely minimize the number of trains we run while maximizing the number of tons we carry. So essentially maximizing the number of tons on every train.

And that that sort of emphasis and that emphasis and then, you know, the corollary statistics for yards, the number of cars a yard processes per day or the number of, you know, switch it like the number of cars a switch engine processes per hour. So this is like that ended up being sort of hugely important to railroad management and remain important to them to this day. But they sort of the elevator vision or productivity that's about it's it's much more about the sort of the scale economies of the individual

train or the individual yard rather than the scale economies of the network. Right. So, you know, running a like your performance metrics are going to look great if you run like one incredibly heavy train every week, like you're going to have an excellent like 10 miles, you know, per train metric. But your service is going to be absolute garbage. So you're not going to lose your shippers faster than you can blink. And that it's not a good way to run a property. And I think pretty, I think pretty concretely, and here I'm going to put

a little plug in for something I wrote a while back on this. Pretty quickly, you can show that those managerial positions had a lot to do with and that managerial viewpoint that sort of emphasizes scale economies on the level of train have a lot to do with the reasons they didn't sort of pursue better service and sort of, you know, more network thinking and more just aggressive sort of railroad reform in this era. And frankly, the reason they still don't to this day, you know, it produces an imagination of the railroad that is railroad as carrier of bulk materials

rather than railroad as something more than carrier of bulk materials. That's something that can, you know, for example, compete effectively for goods of at least medium value with trucks. So yeah, just I think something interesting. If you wanted to like maximize productivity, like I guess in terms of like car, in terms of like, you know, the amount of time cars spend loaded and moving, you'd run lots of small trains instead of a few big ones, right? Yep. Yep. And you also then are very careful about keeping, you know,

your schedules intact and making sure, you know, cars are making their connections at yards and at sort of places where trains are swapping, you know, groups of cars. If your emphasis is just on really long trains, you know, on some Friday, you don't have enough, you only have like, you know, 20 cars for your road freight train. You might just cancel the train that day and wait for the next day to run those cars on some on the next day's train. So you can up the tons per train metric.

Relax, it's casual railroad. Yeah, exactly. Exactly. Yeah, we don't feel like going today. Exactly. And it's the time to work railroads. Yeah, well, yeah, it's also terrible for crews, though, because so many engineers are extra board engineers and you just, you know, you got to call at three o'clock in the morning and they say, you got to drive 200 miles to take this train, 200 miles more.

And then you're going to have to take a taxi 400 miles back. Yeah, yeah, the world of the universe in which like sort of trains essentially are being run ad hoc as like, you know, these every day is a new sort of flavor of train. That's not a good one for labor. It's not a good one for sort of service performance. Also, it's not a good one for the overall sort of productivity and functional rowing network.

You also got to pay assloads over time. You do, you do. And also, and I think, you know, not to make everything about today, but it also is a lot of the reason why freight railroads and passenger railroads mix so poorly. You know, freight railroads have gotten a bit better about scheduling, but their schedules are still written in the at the resolution of like the hour rather than the minute or the second.

So it is very hard to run a sort of high performance. At least in theory, tightly scheduled passenger train amongst a bunch of freight trains that are appearing to some degree randomly on the infrastructure and sort of optimizing dispatching for that because it's just two fundamentally different operating models that prioritize very different things. And the sad thing about that is at this point that operating emphasis has been, you know,

for lack of a better metaphor written into the infrastructure. You know, the way we configure a passing size, we configure yards, junctions, what have you. That's all fixed infrastructure that is to some degree reflective of a much more sort of flexible operating model rather than one that sort of emphasizes, you know, schedule performance and the like. And there are real barriers to achieving that, for example, equipment reliability, as we've seen recently.

Yes, but nevertheless, it's, I think it is something to be treated as being contingent rather than just sort of a fundamental characteristic of railroads. All right, we derailed six cars. That's normal. That's fine. Whatever. We pull a knuckle on our 14,000 foot train. Yeah, the train wants to go on the ground. It wants to be free.

And who are we to stand in its way? Train and ground are besties and they must be together. So, yeah. It's just generally pay attention to the visions of reality that statistics report because they're important. There's so many examples of this in the transit space as well, but we're already an hour or 22 minutes in, so I will maybe hold off on that. I kind of put this one in as a side.

Another sort of interesting factor around this era, although I don't remember exactly when Sealand started containers. Containerization happens. Starts to happen. The box. Yeah, a box. Our favorite box. And the first thing's railroads do is

literally ignore it. Yeah, as well. You might as railroads has for a long while fought and experimented with intermodal traffic arrangements. So containers or trailers on flat cars or in any sort of way, but. And eventually, those those arrangements have become a very important part of our traffic.

In fact, today, they're over 50 percent of traffic in the US. But back in the 1960s, railroads were, especially some railroads were not too hot on it. So, you know, you have things like the, you know, the Pennsylvania or I think just under the New York Central as well, turning away international container traffic, although, you know, to their credit, New York Central did have some experimentation with container FlexiVan service concessions.

I believe you guys talked about last episode. Yes, just a little bit. Yeah, but yeah. So essentially, there were there were opportunities to integrate containers at the very beginning of our development into the railroad network, but railroads sort of, by and large, did not really choose to pursue that in a big way. You know, there were obvious situations when a container would be

on sort of a truck chassis and railroads would carry that in their trailer on flat car service and, you know, it would be a container on the train would only happen to be on a train rather than being designed to be there. But the railroads were rather late and recognized as an opportunity. And that hurt them because they did. Infrastructures have, you know, momentum to them. And the fact that the early trade linkages around containers were very much oriented towards trucks means that all the infrastructure

warehouses, the ports, the distribution centers and what have you built around sort of containers and containerization was initially very much truck optimized and that has implications to this day. But I think all ports are still like this, more or less. Like you take the thing off of the ship and you put it directly onto like a stack of containers and you take that stack of containers, you pick it off and you put it on a truck. Yeah. And sometimes you put on a train after that.

But if you're lucky, yeah, it always does. Always. Yeah, they tried. I understand they tried direct ship to train and it didn't work very well. It was very slow compared to putting it on a truck. Yeah. I think I've read and I might be wrong about this, but I believe the customs logistics also get harder when you have something on a train rather than having a truck in between it. Because all of the customs guys are massive nerds and they're like,

yo, is that a train? They have to stop to think about the train for a while. They have to like, yeah. Yeah, as opposed to putting on a truck, you can pay a drage driver a negative wage to bring it over half a mile to the train. I thought all those guys were like sort of the anti-vaccine mandate guys who took a week off work to drive around honking the horns. Well, they would if they took a week off of work, they would have more money.

That's how they can afford to do it. Yeah. And unfortunately, it's a rent to own scheme. So, you know, you wind up losing your tractor trailer. It gets repossessed in the middle of in the middle of the protest. I hope our guy from 7-Eleven is doing all right. Oh, yeah. Yeah. Liam and I get mistaken for people who know about trucking by a guy working at 7-Eleven in Washington, D.C.

And he's like, do you know anything about trucking? And I could say, don't go into a drage. Yeah, we know the absolute bare minimum guy, but don't go to a drage. You deserve a living wage. Yep. There is a great book out there. If anyone's curious, it's called Getting the Goods. It's by, I think, two people at the Cornell ILR School, where he was published by Cornell ILR School, one of the two.

But it talks about it's a bit dated at this point, but it talks about the sort of labor ecosystem around the poor Los Angeles and spends quite a while talking about just how exploitative drage is and how terrible it is, you know, not only for the drivers, but also for the environment, because, you know, when you have all these drivers earning essentially nothing, they're going to buy old, very polluting trucks to which are idling all the time anyway. Exactly.

Yeah, exactly. It's just the whole system is a disaster. And yeah, you can read about that many places. But if you're looking for a book length, we'll look at it. I do recommend that book. And if you're looking for prestige TV, which season two of the wire. Yeah, I think the funny thing about containers is, you know, in this era where the railroads were really hurting, they took one look at what would eventually become their bread and butter.

And they're like, nah. Thank you. Yeah. Yeah. Yeah. And what's interesting about that, too, is that this is something I'm still sort of trying to wrap my head around in my negligible free time. Is the is the fact that, you know, initially, and really, I think until the 80s and 90s, these intermodal services weren't actually that profitable for our roads.

Some of that, I think, had to do with the fact that it was only around then that we're really figuring out how to actually calculate the operating cost of different parts of their network. But there's I mean, there's a great study somewhere online of Conrail's Intermodal Service in 1982. And, you know, it was earning them like a one percent margin on on on on sort of fully allocated costs. So like this, you know, this this traffic was was not always all that great for them.

But they it was one of the few growth areas. They still did pursue it and very aggressively try to take costs out of it, whether that be in terminals or labor or equipment design or what have. So I think, you know, I not to absolve the various railroads of the the northeast in particular, of being having a somewhat confused position relative to intermodal traffic and containers in particular. But I think it is worth recognizing that, you know,

what has eventually become the the great sort of growth engine of railroading post regulation was, at least before deregulation, not always a terribly profitable line of business for roads if it still was a fast growing one. And I think I think from like a geographic system's perspective, thinking about what exactly it took to make that profitable is a fascinating thing. But again, I guess that would be another podcast. Oh, yeah, we should we should talk about container sometime.

We should. We shouldn't. I would love to come back for that. If you want to go to a store. Yeah, what does this have to do with the Pennsylvania Central Railroad System? Oh, my God. Perhaps we'll answer that question. In a fourth part. Yeah.

Well, I mean, we talked a lot about how the freight economics were being fucked up. But I think another thing is that the passenger economics were really fucked up. Yeah. Yeah. Hi, it's Justin. So this is a commercial for the podcast that you're already listening to. People are annoyed by these. So let me get to the point. We have this thing called Patreon, right?

The deal is you give us two bucks a month and we give you an extra episode once a month. Sometimes it's a little inconsistent, but you know, it's two bucks. You get what you pay for. It also gets you our full back catalog of bonus episodes. So you can learn about exciting topics like guns, pickup trucks or pickup trucks with guns on them. The money we raise through Patreon goes to making sure that the only ad you hear on this podcast is this one. Anyway, that's something to consider if you have two bucks to spare each month. Join at patreon.com forward slash WTYP pod.

Do it if you want. Or don't. It's your decision and we respect that. Back to the show. So. Both the Pennsylvania and the New York central considerably, you know, pruned their passenger services before they merged, right? Lots of long distances service were cut, you know, back to like one train a day, right? There's a lot of local service that was lost.

You still had you ended commuter train service and cities like Pittsburgh, Columbus, Buffalo, so on and so forth. But there were still mail contracts, right? You know, the post office would, you know, they ship mail on scheduled passenger trains rather than freight trains because, you know, they're much more reliable. They run on a schedule unlike the freight trains, which don't. And, you know, so all these trains had a reason to run, right? So, for instance, this right here is a train called the Buffalo Day Express. And that went from Washington, D.C. to Buffalo by way of York, Harrisburg, Williamsport, Emporium in Oliva. Now I see why.

We've been doing Emporium. Yes. We show off fireworks there. I do say real quickly that one thing I appreciate with co-locating a passenger and your mail traffic is that you can do this by road as well. And it leads you to one of my favorite methods of transportation. Very common in, like, the more northern reaches of Scandinavia, a bus with a big mail compartment on the back. Yes. Post buses.

I love a post bus. Post buses are cool. I like the post office should do more. Post buses, postal banking accounts. Oh, yeah. Post office should do everything. They're now trying to eliminate, incidentally. There's a rider that just went through that would eliminate postal banking.

Really? Realize we had it in the United States for a long time, in a way. Yeah. Huh. The one good thing Elizabeth Warren ever proposed is bringing it back. Yeah. I'm like, the way the Libs want the military to do everything, I want the post office to do everything. Yeah.

If we got some postmasters in there, we could finally sort out the A-Link US military. Yeah. Really organize things, you know. This Buffalo Day Express, before Penn Central, this was a train with many coaches. It had sleeping cars or didn't have sleeping cars. It was Day Express. The Night Express had sleeping cars. And this was eventually pruned back to one coach and one baggage car.

But the baggage car was carrying mail. The train was still making money, right? In September 1967, which is the year before the merger, the post office canceled nearly every mail by rail contract, right? That included services. Perfect timing. Yeah. So they still shipped some bulk mail on the Northeast Corridor.

But anything that was like a railway post office where the mail was sorted in route, that was gone. It was over. Some of the most profitable traffic for the railroads, right? And this left every railroad in a pickle, but especially the Penn Central, since they had a huge passenger network. And now all those passenger trains were going to be running at a loss because, you know, it was just a lot of times it was faster, more convenient to drive now because they

built all those interstates. And the airlines were starting to be able to compete on price, right? I'm saying to ever happen to America. Exactly. So, you know, you weren't going to be able to improve speeds and make these passenger trains competitive without just a monumental investment in, you know, high speed railroad infrastructure, right? Which Penn Central is perfectly suited to do with its huge cash reserves of several

hours worth of money. Now, this is because of there's some counterintuitive economics of passenger transport, right? It's like a guy who has just stalled a Cessna, right? And he's looking at the field he's about to auger into and a guy comes on the radio and he says, don't worry, it's fine. If you can invent a jet engine and build one independently in the next minute, you'll be fine. That's also a metaphor for climate change.

So, some of the economics of passenger transport are a little counterintuitive, right? But the faster you go, the cheaper it is, right? And sort of save for cars because you don't have any labor expenses on that because you drive the car yourself. But yeah, your railroad travel is pretty labor intensive, right? If you have a long distance train, you have an engineer, you have multiple conductors, you have sleeping car attendants, you know, you have... You have to do all the maintenance.

You got to do all the maintenance. You got to have a bunch of people in the yard to like, you know, do all the preparations for the train to travel. You got to have someone on Twitter to get complained about it. You get a lot of... Yeah, exactly. Now, if you have a train that goes overnight, right, now you need two crews, right? Or three crews so they can run, you know, in shifts, keep the train moving all the time,

right? So, yeah, if you run a train that's like 16 hours from New York to Chicago, you have two crews on that train. Instead of doing the like sleeper crew thing of you get on a sleeper train and the crew will just go to sleep with you, all of you climb into one huge bed with the length of the train, yeah. It's one flat car, yeah. Yeah, they just stop and, you know, you'll go to sleep, you wake up refreshed and you

continue your train journey. That's what a sleeper train is. So, if you run a train from New York to Chicago, right, in 16 hours, in order for that to... You need two full crews per train. And in order to run the train daily, you need four trains in total, right? And if you compare this to a plane, which has less capacity but a shorter turnaround, right, you know, I guess, for example, like in 1965, the 20th century limited, New York Central's Chicago to New York train, the one coach, seven sleeper cars that out total of

119 bedrooms and those are like a mix of single and double rooms. So, maybe it has about 260 passengers on it, right? A Boeing 727, by contrast, seats 109, but it makes it from New York to Chicago in three hours, right? And has a much smaller crew. So, you know, maybe it takes an hour to turn around, right? And then it can come back with another load of passengers before the crew shift is over, right?

So, by the time the 20th century limited has completed one set of trips, the single 727 has gone back and forth four times and transported as many passengers, right? So, this is very difficult economics for the railroads to overcome here, especially on longer distance trains and Penn Central operated dozens of them, right? The other thing is air travel was much more enjoyable back then, right? You know, nobody had thought to hijack a plane yet. So, there weren't even metal detectors. You could smoke.

You could smoke on the plane. You could sexually harass the stewardesses. Yeah, you're just hanging out. I mean, it's fine. And if you wanted to, you could hijack a plane and just be fine. They'd give you everything you wanted and you could just leave. Yeah, you could have a nice Havana vacation. Nice vacation.

I love the idea of like a movie where a guy hijacks an airliner, so he doesn't have to go home to like his shitty boomer wife and his shitty boomer kids. It just turns into like hijinks with his new Cuban friend Raul. You'd watch that. Fuck off. You'd absolutely watch that. I'd watch that. I'd watch that.

All right. I want to pitch. I want a treatment for this on my desk by Mondo. Gotcha. Anyway, I got through John Taliban. I can get there, right? I think. Who do you see in the role of Raul here?

I got to find some Cuban friends. Yeah. Maybe Cubans listening to this podcast. Be our friends. Actually, no, that's parasocial. I don't like that. Yeah, I do. Do not be our friends.

I've spent it off today arguing with the whatever podcast app that's like, be social with us. And it's like, no. These long distance trains are losing money and there's only two ways you can handle it. Either cut the cut service and combine trains or you improve infrastructure because you can't really. It was very difficult. The price 5000%. Um, no, because I think that was regulated by the ICC.

Ah, fuck you government. Yeah. Okay. And you couldn't cancel the trains because again, that was regulated by the ICC. So, you know, they would so hard. Yeah. One of the first things that Saunders in particular went to do right after the merger was trying to eliminate the passenger trains or pawn them off on the government somehow.

The federal government putting a railroad in a sort of Kobayashi Maru situation here. And Perlman, I'll note was really big on this in the New York central before the merger. And yeah, he did things like acts the 20th century limited, combine it with like a coach train. And even then you had these still these gigantic deficits and they just only got larger with time. And also as the equipment got worse as the, all these things very much sort of came together in a really nasty way deferred maintenance, passenger deficits, all of them become this

big sort of ball going down a hill in a very unpleasant and eventually disastrous fashion. Oh yeah. And one of the things is, you know, you might think these passenger trains, whether a little kind of a small section of the system, but you've required so much labor to keep them running, even when they were structure. Yeah. Even when they were comically, you know, dinky, you know, it was still a massive expense to run them.

Right. So like if you look at something like this, this train here is the spirit of St. Louis. This is this is actually in the early Conrail era. And it's a 24 hour long haul train from New York City to St. Louis. And they've reduced it to one sleeping car and one coach. Oh, Jesus, it really is one, two, three foot. Fuck. Yeah.

And I think it was, you don't even have a dining car. I think they had a little. Nothing. Yeah. They had like a little. You deserve nothing. They had a little broiler in the back of the coach, I think. Consider yourselves lucky.

They'll throw you out on the track. Yeah. I noticed that they still have two locomotives on that. I have to imagine part of that is because they were had no faith whatsoever that one of the locomotives did not sort of conk out partway across Indiana or whatever. All right. Yeah. These EU units are like, I don't know, 500 years old.

Yeah. You know, inherited from the Holy Roman Empire. The E stands for electoral. Yes. Um, you know, so combine this with, you know, holy, holy track. I want to see a holy Roman train. I really do. I think that would be cool or so.

Very nearly happened. The Holy Roman Empire only broke up in like what? 1840 something? Yeah. Yeah. Yeah. Yeah. Something like.

It's probably, uh, it probably is something, something Prussian maybe. Um, so. Oh, thank you. The, um, uh, where was I, you know, so, you know, the train train schedules are, you know, slipping, they're getting longer and longer as the trains schedules get longer, the trains become more expensive to operate. Right. So unless people ride them, unless people ride them so they're not making as much money.

Yeah. I mean, I'm sure if, you know, if you, if you ran, I don't know, if you run, if you ran these trains faster, they'd be making, they might actually turn a profit. I mean, then there we'll talk about this in the next slide. Um, but with, with all these cost cutting measures, passenger train deficits only got larger. Right. They lost a hundred million dollars on passenger trains in 1968.

Right. Five million in 1969, 131 million dollars in 1970. But again, and then the Penn Central is petitioning the interstate commerce commission to eliminate these trains, huge amounts of them. The official plan was to eliminate all passenger service west of Harrisburg and Buffalo, and they were denied over and over again. Um, as, as Uday said, the, the Perlman was famous for this. He cut all the New York central premier trains he could before the merger.

Uh, Saunders, uh, Stuart Saunders, the Pennsylvania Railroad guy was a little bit more sentimental and he was also friends with Lyndon Baines Johnson. That'll do it. Yeah. And you know, this is a, this was significant because I believe Stuart Saunders was the first person with ties to the Democratic party to head the Pennsylvania Railroad. It was very, very Republican institution for its entire existence. Sort of crew cuts kind of vibe.

Yeah. Yeah. Mainline. And so yeah, Saunders was a Southern Democrat. Um, ah, this is, this is all we needed after all was a little bit of corruption in the right places. So that great. Once again, I'm back to like a longism, but bring back Huey Long.

Bring back the wildly corrupt liberalism. Um, now Lyndon Johnson's great society program demanded high speed rail and Stuart Saunders obliged him. Great society was so fucking weird, man. That's, that's, that's a little bit of like liberal hontology there to be like, no, there was this guy who he wanted like everybody to be riding around on high speed rail. Uh, there'll be total racial harmony. Uh, everybody would be provided for and like, there'll be a strong welfare state.

And then also, uh, we'll be like Vietnam would be a napalm crater. Yeah. Yeah. Should laugh at that. Like, I mean, genuinely though, there's, there's so much liberalism where you can be like, huh, it seems like a lot of the, uh, the Atlee government's, uh, formation of the NHS was based off of us, like the laundering the proceeds of colonialism and getting out of empire as quickly as possible for the bill came due.

Uh, same with this. You could just be like, Oh yeah, we, we, we almost had in the United States, this like social, liberal, democratic society that like also depended on psychotic anti-communism. Yes. So in August, 1964, the Hikari Super Express, Shinkansen traveled between Tokyo and Osaka in four hours with a top speed of 130 mile an hour. Uh, the next year they managed to shave a whole hour off that schedule, right? Must be nice.

Yeah. Japanese national railways had gambled big and it had paid off. Uh, the Shinkansen service was very popular. It was very cheap to run. It made a lot of money, right? Um, even because Americans were too, too racist to operation, paperclip all the Japanese engineers. There you go. Um,

No, we did, we did some of them. We took some of the biological war. 731 guys. We took them to the war criminals. The guys who made like engines and shit. Uh, and like, uh, aircraft, like, um, fuselages. I didn't want those guys. Zero was terrific right until you actually hit it with something.

Yeah. No, no self-sealing fuel tanks on that one. Well, yeah. Who's going to do the fucking thatch weave on a train? You know, you never know. You're trying to get from Tokyo. So I was the kind of guy in a fucking Curtis Hellcat strafes here. Yeah.

I think one of the, one of the fun things about the Wisconsin news is actually planned before world war two and significantly delayed by that when they were planning it, you know, that the basic, uh, the basic ideas were there as the high speed train, standard gauge, probably, um, and it would, um, you know, run on, it would, you know, but they didn't know what kind of traction to use. Right. So if, if, if world war two had not happened, we might have gotten a steam power chinconson. Wow.

Anyway, so this, this, uh, this was an incredible success, even accounting for severe cost overruns and money from the service a lot was able to offset Japan national railways losses elsewhere. Let a lot of Japan keep its huge railway network in tech, you know, to a larger extent than pretty much anywhere, you know, even today. But if you have a, you live in a tiny, tiny farming community in Japan at the end of a branch line, you're probably still getting six or seven trains a day. Wow. Um, the Lyndon Johnson administration sees this and says, what, we should, we should

do this. What we should do is nuke Cambodia. Yeah. Also that, right? Um, now. Nixon did the Cambodian incursion. Leave me alone. Yeah.

LBJ is like busy stirring a big 55 gallon drum of styrofoam soaking in gasoline. And he just looks over. He's like, what the fuck is that? Um, you know, they want that, they want, maybe we could do it better than the Japanese even and Saunders, of course, he wants LBJ to approve the Penn Central merger. Right. So there's some horse trading that goes on here and Saunders agrees. All right.

We'll, we'll try your high speed rail stuff. Um, so the high speed ground transportation act was passed in 1965. The Pennsylvania railroad, now soon to be the Penn Central is going to be the gracious benefactor of the government's plan for high speed rail by way of trains called the metro liners. Oh, yes. And this, and this solves your like upcoming Penn Central problem of like all of your passenger rail is going to become catastrophically unproductive and, um, unprofitable because

you can just do the same trick that Shinkansen did. Oh, exactly. She should just go, just go faster. Now. The, the Takaito Shinkansen success was based on new infrastructure, really simple operations, reliable and proven technology. And none of those qualities applied to the metro liners. Um, the metro liners, I see, I see a little difference here between the paper and the

photograph. I was going to see there's, there's a number of these renders of the ad, the advertising copy. Oh boy. They've just taken, taken the italics off of it. Yeah, exactly. And you look at the actual metro liner, you know, and you see it's, it's this flat fronted thing.

Um, and it's going on this right of way, which is, you know, covered in dirt and boxes and shit. Yeah. You see this, this caboose back here that's slightly crooked. Oh fuck. The thick with coal. I remember the future. Yeah, this was it.

Yes. Um, and this is the, the, the metro liners would be faster. They'd be rated for 160 miles an hour. Right. And they'd revolutionize travel specifically between Washington DC and New York city. Right. Which is one of those markets where it was fairly clear to everyone that rail could be competitive with air travel.

Right. Hmm. Yeah. Especially now that you have like, um, Penn Station and ground central, you can like you arrive in the city rather than like fucking whatever bullshit outside of it. Yeah. Exactly. Idol wild field.

Yeah. Um, I hope we never build any massive airports and like more or less the center of the city to try and remedy this because that would be disastrous. And then we have to rebuild them like every 15 years or some crap. Name it after like a governor or something. So much fucking money on those airports. I, I, I don't know where they get it all. Oh, these, uh, I don't know the civil acid forfeiture probably.

Yeah. Yeah. We seized this drug dealers international apple. Yep. So the bud company delivered the first metro liners in September 1967. They started testing them between Jenkins town and West Trenton on the Redding railroad. Right. And it was pretty clear to everyone, these things have some bugs, right?

Yeah. Just one or two though, right? Yeah. Just a cup. The propulsion system broke a lot. Um, the controls were unreliable, not good on a train. Um, and the pantographs, the bits that dropped current from the wires above, the pantographs drew current unevenly because they were bouncing off the wires because the wires had been installed

in the thirties. Oh, yeah. I mean, that's, that's not, that's not a terrible problem. I mean, we've talked before about how like railroad electrification is good. Cause like, although it's not perfect, a lot of the infrastructure just like already exists. Um, so at least you, you have to like fuck with the wires a little bit, but at least there are still wires there. Exactly.

And, you know, if they, if they had spent a little bit of money to modernize the wires, which they're only just getting around to now comes, it would, um, you wouldn't have so much of a problem. Um, but you also had worse problems with sort of the, this is new modern equipment, but it has to interact with old busted up equipment. Right. Ah, this is familiar to me as an English person, much of that, much with the APT, the advanced passenger train where you have to do like fucking, uh, janky, uh, in cab signaling to

try and stop you riding into the back of a goods train at 160 miles an hour. Yes. Uh, oh yeah. No. Okay. I'm getting the shakes from this now. Yeah. Okay.

Well, I did some of their first high speed testing between Trenton and New Brunswick on the Northeast corridor. Right. And they hit 164 miles an hour as they went through Princeton junction. And then what happened to the neighboring train's windows, Roz? The commuter train on the next track had all its windows sucked out by the pressure drive. Jesus. I, I used to get nervous being like, I used to get nervous being like two steps back from

the yellow line on a suburban train platform when a Euro star came through. The idea that like it just sucks off your train to the extent that all of the windows go is, uh, yeah, don't care for that at all. You got that. She'd give that herbal liner dough. Yeah. They call it a spirit of Nancy Reagan. She wasn't, she wasn't even first lady yet.

I don't know. I was like, hold it. Yeah. Well, she had already, she was already well known for earlier work. Hell yeah. Legend squad. We don't miss you, Nancy, but we do miss the jokes about you. Whatever.

Moving on. We're just investigating the podcast. So anyway, after, after this incident, the trains were limited to 120 miles an hour. Plus 60 miles an hour was out. Here might be a good point to note also that, you know, despite all their flaws, the metro liner schedules are about equivalent to what the SOA does today. Yeah. It's embarrassing.

It's quite a depressing commentary on a number of things. But certainly on, on, you know, how we have, well, first, the amounts you invested in and also how you invested in and the results from which, you know, the results you've invested in. Yeah. They kind of speak for themselves, huh? Yeah. Yeah.

Well, there are a lot of reasons for that. It's not just sort of planning things. There's, you know, the primary one is being, is being too much of a pussy to suck an entire train's windows out every time you go past it multiple times a day. Fuck off. Take a joke. Anyone standing on a platform you go past. Yeah.

Absolutely. The thing, the thing about the metro liner is the United States of America engaged in a multi-million dollar multi-year program to fuck around and then refuse to find out. Yes. There was also, there was also in this era, a lot more tolerance for speeding. Yeah. Yeah. There was.

Well, sometimes not so great results. Yes. So anyway, the Johnson administration wanted these trains in service before Johnson was out of office because he had elected not to run again. Nixon was coming into office next. Right. So these were pressed into service after only six months of testing. Now, Penn Central would spend $21 million for 50 metro liner cars and they spent $23

million on roadbed improvements, right? So that's like improvement to track, right? The metro liner service was inaugurated January 16, 1969, four days before LBJ was going to leave. And at the buzzer, love it. Yeah. And the service was actually a great success, right? The cars were clean, the heating and air conditioning work.

Again, those two things that were not features on other Penn Central trains. Schedule was competitive about three hours from New York to Washington, but the cars themselves are kind of lemons, right? About 25 to 30% of the cars were out of service at any given time for maintenance and repairs, right? And of course, reduce the number of scheduled services possible. And of course, that means you sold less tickets, right? Eventually, the cars were limited to 100 miles an hour.

And that obligated the speed advantage that they had because one of the 1930s vintage GG1 locomotives could also go that speed with conventional equipment, you know, old heavyweight cars that were from 1911 or whatever, a lot of which were still around. Why? Why did they limit it again that far? I think it was just issues with at higher speeds. I don't remember exactly, but I think it was just they weren't reliable once they got over about 100 miles an hour.

So, yeah. But the Metroliner service was still, you know, it proved that if you invested money in passenger infrastructure, ridership would go up. People like to take the train if it's nice and it gets them where they need to go quickly and efficiently and safely in a way that doesn't make you want to kill yourself and everyone around you. Right. No railroad has ever learned this lesson since.

Yes. Except in Japan. Except in Japan. In the Swiss, I'd say. I mean, they make boatloads of money off the railroad. They're just transporting passengers. Oh, the Swiss? No.

I heard Swiss, I think. I couldn't know. Oh, I said Swiss. I was like, they also. Oh, okay. Yeah, yeah, yeah. You know, it's really environmentally unfriendly though because they rely on the they rely on stolen Jewish gold.

Just shoveling gold bars into a boiler. Yeah. See, Switzerland has a very low rate of cold deposits. And so therefore they had to use alternative methods such as gold powered steam locomotives. So yeah. Gold fired. Now the Metroliner. Gold fired.

Sorry. The Metroliner saw increased passenger revenue because it was the only passenger service Penn Central invested in. But I say only. I mean, only. I don't think Penn Central ever bought any passenger cars. I don't think they ever. Really?

Yeah. Damn, dude. I mean, this was this was a real bad time to be manufacturing passenger rail equipment in America. There's no one bought anything. Four states because Penn Central is also obligated to run a bunch of commuter trains. Right. Looking cool as hell.

Oh yeah. So you had a couple like really large operations in Philadelphia, New York City, Boston and some smaller operations in Chicago and Detroit actually. You know, they these all these were big complex labor intensive operations that all lost money. Right. But you couldn't get rid of them because the cities in question would explode if you did. Right.

Or be it we are now into the Nixon years where where the White House is kind of like, well, maybe. Yeah, that's true. Well, the city's had a certain amount of agency though they stepped in and prevented that from happening. Right. So like by around 1969, most of the commuter equipment was 50 or 60 years old. Right.

So this is right here is a MP54 that was probably built sometime between like 1911, 1913. These ran until the 80s. These these heavyweight cars here on the Valparaiso dummy. These were probably built about 1909. You had some newer cars, especially on the New Haven. So this Bud RDC is probably, I don't know, 50s, 60s ish. But a lot of the equipment was just really old. So it's all it's all busted.

The heating doesn't work. You're you don't have air conditioning on anything. Right. Oh, you have these sort of ratten seats with like collapsing springs. Windows are all jammed. They might be jammed open or shut. You know, the trains are unreliable. They broke down all the time.

They got delays. But hundreds of thousands of people relied on these commuter trains. And a lot of the cities wanted to improve surf service because it was intolerable. Right. Hmm. So states initially and also some newly formed agencies like Southeast, Pennsylvania Transportation Authority, right? They fund improvements to commuter rail operations.

Right. Like the SEPTA and the state of New Jersey bought new stainless steel commuter cars. New York City bought new cars for service on the Hudson line and Harlem lines. This is working out great for the Penn Central because they don't have to spend any money on this shit. They're just being subsidized. Yeah, they're just being subsidized. They can just say, well, you know, if you want better service, you got to pay for it.

Yeah. And, you know, the cities start paying for improved infrastructure, you know, and they improve stations, they improve maintenance facilities. They start contracting with Penn Central to run the trains because Penn Central doesn't want to run them on their own. Right. And Penn Central took this opportunity to grift like hell. Now we're talking.

Tell me about some grifting. All right. So take, for example, Philadelphia to Harrisburg, Mainline, right? Pennsylvania's Mainline. There were 12 SEPTA-funded commuter trains that ran in the morning and evening. A couple of state-supported trains from Harrisburg to Philadelphia, as well as a small number of long-distance trains. This is, you know, a four-track Mainline.

And they also have huge amounts of like heavy coal drags. You have heavy manifest trains carrying, you know, volume products like big coils of steel, right? You're just all this crap that, you know, pounds the hell out of the track, right? And all the cars are, of course, busted to hell. You know, so everything's, you got like flat wheels, you know, everything, which is adding extra wear to the track. Now, when the bill comes for the commuter service, who is to say whether the commuter trains

or the freight trains are doing damage to the track? Yes. Perfect. Yeah. No notes. So, Penn Central is taking the government for all it was worth there. You know, it's like all this, all this maintenance, that's the government's problem now. And, you know, it's still...

Maybe there was one extremely heavy guy on this commuter train. Yeah. He like outwade. Yeah, exactly. Exactly. Maybe we had to transport a Fat Man's bicycle now outwade all of this Bethlehem Steel. Yeah. And Saunders, Stuart Saunders, Stuart Credit, he thought, you know, if we had a well-funded

passenger train system, it might eventually turn a profit. You know, but he knew the funding was not coming. They didn't pursue it beyond what the government was willing to subsidize. And then Al Perlman, of course, he didn't want anything to do with passenger service at all. He actually went in, when Saunders showed him the numbers for the Takedo Shinkansen, he actually was like, these are all fake. Fake news.

Fake news. Yeah. When his own son, his own son commuted daily from Bucks County just outside of Trenton, New Jersey, to New York City, right? His own son complained to him about the reliability and quality of service, right? And Perlman said, well, if you don't like it, if you don't like it, walk. Okay. This is an almost British level of, like, spite here.

It's like, yeah, don't like it. There's a door. Yeah. Shit. I know it's shit. Great. Perfect. No notes.

No. No, none. All right. Ude put this in. This is a great diagram. What the fuck is this, dude? One morning, Gregor Sansa, awakes from terrible sleep to find himself transformed into a pen-central freight service guide.

This is the sort of thing I spend like hours when I should be sleeping just staring at. It's like a madness rune. Yeah. I've been podcasting now for four hours straight. It's all just gotta have to tell me what I'm like. Oh, it's a freight service guide. Yeah. Essentially what it is.

Do you have the key to this? Is there some sort of ancient and unspeakable horse? I got it. Can you read these ancient pictograms? Am I doing like 12 flavors of Hercules here? I think the answer here would have to be, I think, zoom in. There are labels on all these things, but they're like tiny. Fuck it.

Here we go. Zoom in with what? Fragile human eyes. Put your face very close to the screen. The thing you have to know about Uday Lesnar is that he is six years old, and therefore all of the various parts of his body, like his eyes still work. We, on the other hand, are all 75 years old. Dude, I am so close to my monitor right now.

All right. So this one is Cleveland. Yeah. What? This one. This one's Wilkes-Barre. Oh, it's a fucking okay. So it's like a tube map.

It's a schematic. It doesn't bear any resemblance to the geography. It's like... Yeah. It's basically... You're probably going to take your crazy pills. Yeah. So essentially what this map is, is it's a chart of all of Penn Central's scheduled mainline

freight trains, as I believe in 1968, because yeah, New Haven's not on here. And it's a lovely diagram, and it certainly suggests that they knew what they were doing, and they had this really solid plan for how they were going to operate their railroad, and they had all these fancy train symbols, and they had schedules with minutes on them. And it all is the stuff of well-managed corporations. The problem with it is it's relatively misleading. You're telling me this is like a 1944 German offensive plan. I've used my beautiful...

Yeah, yeah, yeah. I've used my beautiful, very sharp colored pencils, and I've designed... I've drawn out a perfect arc of where we're going to attack, and then you go to the actual guys who are going to do it, and it's a 70-year-old man and 412-year-olds. Yeah. It is in multiple meanings of the word manifesting. And... Thank you.

But I think what one can take away from this, or at least take away from the gap between this and reality, is that turning more towards Penn Central itself as an organization, they're even setting aside all the structural factors that constrain their ability to perform well and to operate effectively as a railroad. They were also just kind of bad at running their own railroad. It's a theme. Yeah. So the whole premise of the Penn Central merger was that by combining the Pennsylvania

and the New York Central, you would realize large cost savings by reducing duplicate infrastructure, duplicate terminal facilities in big cities, and duplicate train mileage. So rather than running two trains between, I don't know, like Indianapolis and... There's many more than two trains between Indianapolis and St. Louis. But rather than sort of running large number of trains between Indianapolis and St. Louis, you'd run a slightly smaller number of trains on one lines instead of two and thus save money. And that's sort of the whole driving principle of this merger and all the other so-called parallel mergers that happen throughout that time.

Now, the thing with these parallel mergers, though, is it's not like you just wake up one morning and all of a sudden the Pennsylvania or the New York Central railroad are just one thing. You know, you got to spend money to save money. And that, as it so happens, was not always one of the strong points of the Penn Central. They did end up spending a lot of money to make the systems work as one. But under sort of significant pressure to realize savings from the merger is completely as possible, they did things quite quickly and without a lot of planning. I believe they actually ended up sort of discarding most of their operating plan just a short while

before the merger and decided they were going to make all decisions essentially ad hoc. And that was one of the first things they did. Yeah, the expression no plan survives contact with the enemy is not typically applied to railroads. It's one of these things where you can just imagine some startup today talking about how they're having have this sort of flexible production scheme and they're going to operate synergistically or whatever. Yeah, they're disrupting what it means to be a railroad. But in this case, they're just disrupting the railroad and that did end up well for them. The consolidation you would expect you can clearly see is not working.

You can see, OK, here we've got yards in New Jersey. There's two of them, right? Then you've got a third yard in New York. And note that the box with the yards in New Jersey has like four or five different yards in the box. I guess it's illegible at this resolution, but within the box. And then if you want to ship from Potomac Yard here in Washington, D.C., of course, you have to actually go through Selkirk up here. Yeah, exactly, because that just makes so much sense.

And it's one of these things where I think first of all, it gets back to some of the things we were talking about earlier about the importance of high quality service for railroads being competitive and the importance of network planning for railroads being competitive. But also, you know, you really, there was no alternative to just spending a lot of money to get these things done. And in a cash strap situation, as they were in at that time, they really were feeling a pinch. And so you had things, you know, where you just decide to consolidate some department or some terminals and then all hell would break loose and trains would get stuck on main lines for hours and it was just bad. And you also had things where sort of pre-merger planning just wasn't done well.

So, you know, one example that I think the men who love trains talks about, one of the books written about this era in American railroading is that one of the big sort of planning concepts for the merger was that they were going to restructure their network around a sort of a small number of very modern, very computerized freight yards in Selkirk and Elkhart, Indiana, in Conway and your Pittsburgh and your Harrisburg. There were a whole bunch of these. And part of those plans was building a few of these new yards. One in Selkirk, which the New York Central did build and it opened in 1969. And then there was also, there was going to be one new one in Columbus, Ohio called Buckeyeard. And as it's recounted in that book, the Pennsylvania Road was supposed to start building Buckeyeard

well before the merger began, so it'd be ready to go to get these consolidation plans rolling so they can realize the savings quicker and so on and so forth. Exactly. And they were like, they're like, no, no, sorry. How are you doing that? So even after the merger, like when, when, when Pearlman went to the board to get approval to build the yard, everyone on the Pennsylvania side just got real mad at him. Yeah. Like, you can't spend money.

Yeah, exactly. Especially not on our part of the railroad. Because of course Columbus was historically sort of somewhat more of a period. Yeah, it's that tough. Yeah. Exactly. Yeah. The PR executives before the merger said, oh, it's actually a bad place for a yard. I was like, no, it's not. But anyway, so you had, you had these coordination failures that just, that plagued the company and made it sort of

both ever harder to consolidate infrastructure. Also just made it dependent on a bunch of really ancient and expensive to operate lines, yards and what have you. And, you know, between that and between sort of the various planning failures that accompany the merger. And of course, the sort of the very basic coordination issues that I think you guys talked about in the last episode, like nobody really thought about how to educate the sort of clerks on how to, you know, understand the other systems geographies and how to get the computers to talk to each other properly. All these coordination failures ended up really doing a lot of bad for the system. Now, while you're on top of that, the widespread tendency at that time to sort of treat train schedules

as suggestions rather than things that really should be followed. And you have a system where, you know, aside from maybe a few high priority trains that someone actually did make some effort to run properly. Trains are just being run sort of on vibes. Yeah. And those schedules just vibes, dude. Exactly. It definitely looks like there's quite a lot of trains scheduled. And I'm sure on some days, half of these ran.

And on other days, you know, twice that many ran. Yeah. One of my one of my favorite stories from this area is actually from a different railroad, Erie, Lackawanna. There's some account I dug up some in some dark corner on the internet once about the operations that sort of the west end of the Erie Lackawanna, which sort of had a similar geography to the Penn Center, right from New Jersey to Chicago, but somehow managed to miss a lot of the population centers in between those two places. But in the west end of the railroad, they had like, you know, the campus whole fancy train plan in the 70s. And if you actually went on the railroad on many days, you'd see that train plan wasn't only not being followed,

but like dispatchers were just like making up trains. Like, oh, you know, we're not going to run, you know, NY 100 today. We're going to run this other train that goes from these two other places. We're going to call it like, I don't know. Carl. AB. Whatever. Yeah.

Yeah. We're just going, we're going to make stuff up and run the trains that way. And then it's going to be fine. And we're going to do it because we can run a longer train that way, or we can clear out this yard of cars that have been here for a week that way, or whatever else, you know, some local manager wants to do. And, you know, those managers, I guess, and some others responding to the information incentives before them. But my God, that's not a way to run a sort of railroad,

much less a organization trying to compete with trucks for relatively high value traffic. You think of the railroad as a highly structured hierarchical organization, but it's remarkable how similar it is to sort of an anarchist commune, including that no one wants to do chores. Yeah. Yeah. Yeah. My job in the anarchist commune will be boxcar appraiser.

Yes. Oh, I'm going to, I'm going to, I'm going to be the dispatcher. We can't all be dispatchers, guys. I'm going to run my train and I'm going to call it what I want, and I'm going to make it do what I want. I'm going to run my train. It's going to be big. It's going to be purple.

And I'm going to park it in the middle of the main line to get lunch for four hours. You'll be right over in South Philly. In fairness, they do still do that. Oh, yeah. As they should, frankly. It'll get there. Shut the hell up. Yeah.

So let's see people like parking the train next to a gas station. Yeah. And use the bathroom. Speaking of which, speaking of which, I'll be right back. Oh, yeah. We're, I could, I could use a bathroom break. Yeah. Oh, that sounds good to me.

All right. Empty Z stem to his west. Yeah. How's it going guys? Good. I'm pretty good. I've paid. Nice.

I got another. I also did that. Where were we? Showing. You're on the, you're on the main line and there's a bathroom. I don't even know what slide we're on anymore. Oh, we're on the. Something about railroads.

Yeah. Oh, we're looking at my charts again. Yes. I love charts. Sort of the entire theme. Fucking getting heckled. And it's not even a live show. Yeah.

Oh, you can hear them laughing in the background. That's so funny. Yeah. I am blessed with a single room and my door is shut. I guess this is something about Harvard's sound perfect policies. All right. What I want you to do. Yes.

It's take a knife. Yeah. Here's my reveal. I am deadly scared of knives, but continue. And ask. Those people. You be quiet. And if they don't, you simply.

See, I did the bleep for you, Roz. Yeah. You escalate. You escalate. You make them have a nice time. It was them to have a nice time today. Amazing. Thank you.

I will keep this all in mind. Thank you. Yeah. No, I love, I love my roommates. I'm glad they're having fun in their own way. No, I wish them nothing but pain, ill and well. I will shield them with my life. All right.

So they had an operating plan. They didn't stick to it. Yeah. Yeah. Frankly, I did most railroads at that time, but you know, this is true. Yeah. But most railroads at the time had more than like a few hours to keep the lights on for any given day.

Exactly. Yeah. And also there's they weren't this big or complicated. Yeah. Or frankly, this bad either. Penn Central really takes things to the next level. They're disrupting disruption, so to speak. And of course they had more than this going on because they had diversification.

Hell yes. That's business, baby. Our fave. Poor airlines. Yeah. We talked about executive jet in the last episode, but there was more going on. So much more. Poor and blackjack airline.

Yeah. So from the beginning of the Penn Central investors thought this is a gold plated safe investment, much like its predecessor, the Pennsylvania Railroad, which was invisible. Right. You got the Pennsylvania Railroad and then you got a whole other railroad in there. That's two railroads for the price of one railroad. That's fucking great shit right there. Cast iron dividend every year.

You can put your pension fund in this. You can do whatever the fuck you want. And a lot of people did. And it was, this was all being kept this way by our friend, David Bevan. Right. And Bevan, as we mentioned before, didn't talk to anyone about anything. No. Ever.

He didn't like Saunders. He really didn't like Pearlman. Didn't really talk to him. Social anxiety. Yeah. I mean, the way the company was set up with regard to finances essentially was that Bevan got the money and then Pearlman spent it. And Bevan was very unhappy with the way Pearlman was spending the money.

But Bevan also had his own way of spending money, which didn't look like spending money. Ah, that one of the. Oh, the corruptomatic. Yes. I was about to say, yeah, indirect methods. Yeah. The stuff he spent it on was not railroad stuff. Was it horse?

Got to be at least a little bit, right? A little bit. Dream big. So Bevan had a really great relationship with all the banks. You know, there was a whole lot of banks back then. A lot of them had board had members of their boards of directors were also on the Penn Central Board of Directors. You know, there's all this sort of interlocking Philadelphia high society thing.

Bevan was a little more active in Philadelphia high society than Pearlman. Certainly. And about the same. Why? Yeah. Well, yeah. Yeah. No.

Well, it was partially because Pearlman didn't attempt to join any of them. Okay. And also partly because. Believe in the Jew. Yeah. No. The other thing was. You want to do a program?

Yeah. All right. Yeah. Well, no. He was only Polish. We have to sit together in the camp. Pearlman had like one Philadelphia high society friend. And that was like Ann and Berg.

So sad. Yeah. Well, that's why he stayed up in New York. Understandable. Now, so he is a great, Bevan has a great relationship with the banks and the bankers. And due to archaic laws differentiating a railroad from other types of corporations, Penn Central financing came under purview of the interstate commerce commission instead of the securities and exchange commission.

And the ICC had a lot more tolerance for creative accounting. Right. On the one hand, they do make you run a shitload of unprofitable trains all the time. On the other, they do allow you to be personally very corrupt. Yes. So. Who's to say if it's good enough? Absolutely.

Diversification program gave Bevan an opportunity to hide what he needed to hide and emphasize what he needed to emphasize. Give the investors the impression that Penn Central was a strong, healthy company with great financial prospects in the future. Right. And this was because the assumption was on the Pennsylvania side. Listen, we just need to keep borrowing until the company starts making money, which it will inevitably do.

Wow. What a recipe for success. Yes. Shades of Uber. Yeah. I mean, now that's a positive aspect for it. Yeah. It's good to lose money for some reason.

It's good to lose a whole lot of money. This is before we invented startups. Bevan also had another goal, which had been reinforced by a century and a quarter of Pennsylvania bureaucracy and tradition, which any self-respecting executive of the standard railroad of the world would pursue at all costs. He's going to pay the dividend. You got him. You got to do it.

You got to pay the dividend. So subsidiaries gave the railroad a chance to earn large amounts of income on paper while not actually earning any money. For instance, one of their subsidiaries was the Great South, who has land company. They developed and sold off land. That just sounds hideously corrupt. That's the kind of thing that you would uncover in a film noir. This is a company that's responsible for like Phoenix, Arizona, existing.

Oh, I'd forgive him. They developed and sold off land, which was paid for by the buyer over a long period of time. That's how a mortgage works. But they recorded the sale in full on their balance sheet, which in turn was recorded on the Penn Central's balance sheet. Sometimes I tell it like it isn't, and that's called lying. Yeah. Some subsidiaries like Buckeye Pipeline Company, which they...

That's not real. Again, all of these sound like the most front corporation to do it. They owned both pipelines and oil refineries and I think some distribution centers. Big tanks. They earned money and they earned a lot of money. Now, they were owned through what was called the Pennsylvania Company. That's a subsidiary of Penn Central that in turn owns all the companies that Penn Central owns. During the merger, no one could actually figure out how many companies they owned.

There's something like 120, 30 of them. The Pennsylvania Company had spent $30 million to acquire control of Buckeye in 1963. Some of that was done through a stock swap. Through 1970, Buckeye Pipeline returned $37 million to the Pennsylvania Company through dividends. But because there was a stock swap, the Pennsylvania Company in turn sent Buckeye $19 million in dividend. In actual cash flow turns, by 1970, they were still... Bleeding money, a lying guy. Yeah, $12 billion in a hole on their best investment.

Lying about bleeding money. They were a lot of jail. They lost money in acquiring this incredibly profitable company because they're morons. But because you could fiddle with the numbers, Bevan made it look really great, right? So overall, this diversification program made the finances complicated enough that they were hard to make head or tail of to anyone. Hell yeah. Except Bevan. Security by obscurity, baby.

Perfect. Yes. No one really knows anything about a company's finances, including people like Stuart Saunders, who runs the organization. There's one guy who knows everything. And won't tell it to anyone. That's a plot point in mob movies. That's a plot point in The Untouchables. Great movie.

Yeah, yeah, fantastic. I believe there was a meeting at some point between Saunders and somebody in the government, maybe Volpe, who was the transportation secretary. And he was asked how much the company was actually losing. He essentially had to be like, I don't know. It's unclear. There was at least one meeting like that. And there was another meeting where they actually had to usher out every single Pennsylvania Railroad or Penn Central executive from the room. Because no one was actually supposed to know how much money the company, they can't let the real numbers be known.

This is the real number or the propaganda number. The real number is only for Bevan and maybe Saunders. Again, this is for the purpose of making the finances look better so Bevan can still go around to the banks and borrow and borrow and borrow. Get investment from anywhere he can. By acquiring control of companies like Buckeye, Great Southwest, Executive Jet Aviation. A wide variety of land holdings in New York City, including of course Madison Square Garden. And also people who have teams that use Madison Square Garden. They had a large interest in New York Knicks and the New York Islanders.

Disgusting. Yeah. $209 million float away from the Penn Central in return for about $56 million in dividends and asset sales. But you've got to pay the dividends so it's fine. We made a great deal of money last year, here is some. And if anyone asks you how much you spend or how much you lose. Don't worry about it. Yeah, don't worry about it.

That's like there's creative accounting and then there's whatever the hell fingers single column from your paper ledger and eating it. In 1969. I love the accounting technique of I can hear you. In 1969 to avoid four and a half million dollars in depreciation charges. Bevin wrote off the entire passenger division. Oh, yeah. On paper, that's $126 million loss, but it was extraordinary, right? So, you know, you weren't supposed to, you know, the investors didn't care about that, right?

Oh, the madness, the podcast madness. It is kind of beautiful in its own horrifying way. Oh, yeah. By writing off the entire passenger division because they never expected to make money off at any ever again. They avoided this four and a half million dollar depreciation charges and Bevin made that made it look like on paper. Penn Central made four million dollars. Wow. Surely this this will.

Amazing. Yeah. Well, fucking to the trash. Yeah. Yep. No depreciation today. In the meantime, yeah, he's searching for investment of any kind.

One of his friends, Richard King Mellon was like on his deathbed at this point. The Mellon family. Yeah. He was the guy he was really getting most of the money from. He's sort of his in into the banking world. So that that looks like Pittsburgh or a renewal theme. Yes. And I've been by Mellon.

If you're where I used to work and which I hope burns to the ground. Yeah. Yeah. Yeah. The Allegheny conference could be another episode of this podcast. But again. So yeah, he's searching for any kind of investment he can just keep borrowing, just keep the farce up, right? Because there are a huge amount of debts due in 1970.

Oh, up until this point, 1970. That's like 70 years away. Yeah. That's not a real year. Yeah. What year is it now? Like 1910, maybe at worst. It's 1969.

This is like a whole fucking year away. It's fine. I mean, the PRR was so stuck in its old ways. Yeah. I mean, I was still very much a growth mindset, right? You know, as opposed to a rearrangement that needed to happen. What do you say? Would you say that David Bevan was pursuing a Sigma grind set?

Yes. I would say that. I appreciate the growth at all costs mentality. Yes. Mm-hmm. Growth, but not through building infrastructure. But not the good kind. Yeah.

No. We're going to do some weird diversification and that's going to, then a miracle will occur. Yeah. Oh, yeah. It's like that. We work chart. Something happens and the line starts going up again. Yes.

Turn around. Oh, when we were excited, just like, totally rewriting their own books. Like, no, see, this is actually how we're technically making money. In the meantime, there's some boardroom plots developing, right? Yes. I love room. Yeah. Yeah.

Because I'm delirious at the point. Uh, Saunders was sick of Perlman spending all his money. Uh, so the Jews not allowed to spend any money. Yes. Oh. Bevan was sick of Perlman spending all his money and being unable to come up with basic things like an income-based budget. Um, Perlman, I guess was more of a realist here in that he thought, you know, everything's

so unpredictable, we can't work off of a budget here. Um, you know, he didn't even think it was feasible to do one. Um, well, I might expose any of the, uh, like ocean of scams. Yes. Uh, ocean of scams. If you dare add two numbers together in this railroad, the whole thing falls apart. Yes. It requires, it runs entirely off uncertainty.

I mean, the only thing that keeps this running is that no one knows how much money they have and the checks just keep being cashed somehow. This is like the adeptus mechanicus approach to running a railroad here. Yeah. Even the banks don't know how much money they have. It's weird how when these corporations get big enough, all of a sudden money no longer exists as like a number in a bank account. No, it just becomes vibes.

Yeah. The money is a vibe-based budget. Um, but Bevan was so sick of Perlman, he was threatening to resign. And that would mean his creative accounting, his skill at finance and his relationships with the banks would be gone with them. In which case, of course, everyone would be fucked even more than they already were. Hell yeah. Um, and Saunders doesn't like either Perlman or Bevan, but he knew, uh, given, given the

choice between them, he'd rather have the guy who makes the money than the guy who spends the money. Right. So he starts, he starts looking for a replacement. Um, you know, I, cause he had. Perlman spent too much money on things like railroad investments, you know, yards, road to bed equipment, physical plant, maintenance facilities. Not enough on horror airlines.

Yeah. Yeah. Also, also anti-Semitism. Yes. And that money could, of course, instead be spent on scams, right? Um, I, I am at awe. I am truly at awe. Yeah.

So he told the board, quietly informed the board who agreed. Perlman had to go. They bring in Paul Gorman of Western Electric as the new president of the railroad. Right. They had no experience with railroading, but lots of experience with business. Right. Plus he shut on August 26, 1969 Saunders called Perlman into his office and told him the bad news.

He was being picked upstairs to be vice chairman of the board, which was, you know, a powerless position. Um, at, at Perlman was mad, but there's nothing you could do about it. Um, That's cool. Perfect. Yeah. I mean, he's not as creative as the guy from executive jet who came in with armed thugs.

Uh, Gorman took office December 1st, 1969, and a full breath of the Penn central financial disaster was presented to him. Uh, Bevin just told them, you listen, you got to cut the hell out of expenses, right? They were going to bleed this railroad. You know, just cut everything they could. It's like, it's like the sort of corporate raiding thing of a hostile takeover, but from the inside. Right.

Yes. Yep. Just eats itself. Yeah. Yeah. I will say. Maybe. Yeah.

I will say one thing on the, on the resistance to invest is that that wasn't actually all that uncommon of a viewpoint. At that time, um, I remember correctly, um, when the Burlington, Northern, one of the Western railroads at this time was trying, was thinking about building there a new line into the powder of a basin, just the big coal production area in Wyoming that became just an absolute money printer for railroads in the decades to come. Um, when, when the BN was initially considering that, um, and eventually decided to do it, one of their members of their board, I think resigned in protest because they were so convinced

that railroads were a dying industry and this sort of decision to invest in not just the railroad, but expansion railroad was just completely sort of hair brained. They are a dying industry, but they're our dying industry. God damn it. Yeah. It's a dying industry and I'll be damned if we do anything to change that. Exactly. We're going to, we're going to, we're going to make sure the ship sinks faster with more

money for me left in it. We're bailing, but we're bailing into the boat. So, so Paul Garmin worked with Bevan to build a budget that he liked. Um, Bevan was happy. He finally found a guy he could work with 1970. He looked like it could be the year the Penn central turned a real profit instead of one that was just on paper. As long as the banks kept lending ludicrous amounts of money to them and there are no

catastrophe. Uh-oh. What, what, what year is those debts to 1970? Okay. What year is it now? 1969. Okay. Now it's 1970.

Oh, no. Oh, shit. Oh, shit. Oh, fuck. That's the feet of the boat now we're going down. The winner of 1969 and 1970 was one of the worst the railroad ever faced. Snowdrifts covered the railroads entire area of service until April. Um, look, switches, froze, yards were jammed.

Selkirk yard didn't move a car for three weeks. Oh, what'd they do? Just sat there? They just sat there. They jerk each other off. Yeah, exactly. So literally running a train, yeah. In the first quarter of 1970, the railroad was losing on average a million dollars a

day. That's not good. That's not good. I mean, that pales in comparison to like whatever Uber loses today, but you know, back then money meant something. But despite this, the banks kept lending because nothing could break the railroad. Right? No, it's the Pennsylvania Railroad sort of still, and that means it has to pay a dividend

every year and it has to live forever. Like, yeah, the reputation is in this case worth more than money, which will prove to be I think a fatal mistake. Yeah. Well, in April 22nd, the numbers that they had to report came out. The railroad had lost a hundred and two million dollars. Paul Gorman didn't know what to make of it. That kind of loss was unheard of and impossible, right?

And once these numbers were reported, Penn Central Stock, of course, plunged, you know, and almost caused a recession. Oh, damn. Yeah, single-handedly. Single-handedly. Yeah. One guy. One guy almost caused a recession.

I'm going down. I'm taking all you fuckers with me. Disappoint me from your horror airlines conference, will you? And this is when the banks got mad and the board of directors finally got the message. Their finance committee, which was for mostly of railroad outsiders, called Bevan Saunders and Gorman in for a chat, right? John Seabrook, owner of International... You imagine being a proman right now, just like, hey, hey, hey, hey, hey, hey, fuck you.

I'm not my problem anymore, the throne clear of the wreckage. John Seabrook of International Utilities Incorporated, owner of 500,000 shares of the Penn Central outlined on behalf of the other five members of the finance committee what was going to happen. They were going to come clean on the finances. Penn Central was going to get bailed out by horror of horrors, the government. Now, Seabrook implied that Penn Central needed to undergo a reorganization, as he said in his words, but he was speaking in such patrician terms that neither Bevan nor Saunders understood

what was happening. Bevan thought they wanted Saunders out, and Saunders thought they wanted Bevan out. And in fact, the board wanted both of them out, but took no action to remove them or demand their resignation. Oh, these fucking country club idiots. Yeah. So you had a tweet today that said, y'all are the dumbest motherfuckers alive. And I think that's applicable here.

Oh, yeah. So Bevan and Saunders just went to business as usual trying to bail out the railroad themselves. Same way the Confederacy lost the Civil War, every officer, every general officer is like doing like five paragraph order that like has a bunch of literary illusions and nobody fucking knows what to do with it. Yes. Excuse me. Oh, jeez.

Very nice. I also have a recording. Oh, no. I'm not mad at you. I'm not mad at you. We are approaching a complete breakdown. I'm impressed more than anything. Love you.

See, this isn't the part. This is the part of the long podcast you always do, where by complaining about how long the podcast is, you extend the time you have the podcast for. Can I tell you something that's really fucked up? I was going to be mad if we didn't make it to three hours. Ten hours is my coup de grâce, Ross. This is my Mona Lisa. This is my PA.

So Saunders and Bevan at this point, they're frantically working the government and all their lines of credit, respectively, to come up with some money to get truly just these two dudes doing it. Like just these two dudes, no one from Penn Central is like, Hey, assholes, do you want some help? It's just these two dudes. That's just two guys. Yeah.

We need a treatment for a buddy cop movie about this now. Absolutely. A buddy cop movie where the two cops hate each other. Yeah. That's what makes it good. Saunders is fucked up because his buddy Lynn and Baines Johnson is no longer president. Nixon administration doesn't want to bail out the railroads. And despite a huge interlocking of the boards of directors between the banks and the Penn

Central and the massive investment in Penn Central debt the banks had, Bevan just couldn't get any money out of them anymore. Try going abroad, going to foreign investors. Doesn't get anywhere. Right. And the board is fed up with them. They're fed up with Bevan Saunders and even Perlman, who didn't have any power at this point.

They're just mad at him in general for being like tainted by association and also being Jewish. Yes. Papas are the best of us. Now, what the theory under which they were going to get bailed out by the government is that Penn Central was a defense contractor. Technically. What?

Well, because they were. Sure. OK. Yeah. They moved lots of shit for the military. I mean, it worked for the interstate highway system. It should work for these guys, right? Yeah, exactly.

So there is they can go to the Department of Defense and they're going to bail out directly by the Department of Defense without having to go through Congress. But again, no one can seem to get this moving, right? On June 8th, 1970, you know, the penny drop, right? The board fired Bevan. Is that a phrase? The penny dropped? Is it the other shoe drop?

Yeah. The other shoe dropping is like when you expect something to happen and then it finally happens. The penny drop is like something you realize something. I think you could apply either here. The other shoe dropping is like, say you live in an apartment with thin walls, right? And above you, you hear a guy take off one of his shoes and it falls to the floor. They're really loud. Thank you.

And then you're just you are sitting there and you know the other one is going to happen. The other shoe is dropping. And you're waiting for the other shoes to drop. That's right. Yeah. Anytime. You're waiting for the other shoe to come flying at you and you duck twice. George Bush, you son of a bitch.

So the board wound up firing Bevan and they fired Pearlman for good measure. He didn't even he was in a sinecure. He had a certain job where he couldn't do anything. Oh, oh, Pearlman got really mad because his contract still had him as a as a guaranteed employee of the Penn Central for another like three months in which case they could renew it or they could not renew it. But if they terminated it early, they'd have to pay him for 10 years. Oh, God.

Shoot. Shit. Hell yeah. And they decided to pay him for 10 years. It's actually the agreement all of us have on this podcast. Oh boy. No, that's why we can't fire each other. Yeah.

The board initially wanted to kick Saunders upstairs, make him a vice chairman of the board because there's a lot of debate about what to do with him because Saunders goes to all the same social clubs as the rest of the board. And I think one guy from like US Steel speaks up something like that and he says, look, just fire him. And then they just fire him. US Steel, you cold-hearted bastards. Yes.

Now, yeah, Pearlman pointed to his contract and said his lawyers would be in touch. Paul Gorman became CEO. Bevan, you know, he took his fate with grace and dignity, right? Actually. Yeah, I have to merely raking them off for like everything down to taking the carpet from his office. I would do that too. Both middle figures up as I did it.

He went home and just spent that afternoon relaxing in his pool with his family. Average American boomer. Yes. Just like I work defrauding my company. I have done this successfully to the tune of tens of millions of dollars. I am now emptying out the entire contents of my office bar into a bucket, drinking all of it, drunk driving home to my family and living in my pool for a couple of weeks. Hell, yeah.

Saunders. I think I heard of horror airlines, did you? Saunders was crushed initially, but said to have recovered over the next couple of weeks. Now, with renewed confidence from the banks, the board sought a way to get money from the government early, some loan guarantees, right? And as I mentioned before, the strategy was get it from the Department of Defense, you know, but this still wound up with some congressional hearings when Congress got wind of the fact the railroad was in bad shape and all their constituents, they were worried their constituents

would lose passenger service, right? Because that's all the public cared about was the passenger service. Not that every single item that you use goes by rail, passenger trains that are important. So once these congressional hearings happened, the Department of Defense got cold feet. They said they wouldn't guarantee a loan unless a railroad aid bill also goes through and that failed in Congress. The money was not coming. So on June 21, 1970, the Penn Central Board authorized the petition for reorganization under

Section 77 of the Bankruptcy Act. Section 77 is a special kind of bankruptcy for railroads where the trains keep running because trains kind of have to keep running, right? But the largest corporation in the world was now under receivership. Just insane. Something that should never have happened. It's completely essential to the transportation system. And there was no clear way out of that situation.

Save for something unthinkable, which was nationalization. I mean, madness. But that's that's a story or another episode. Road safety third. We're going to hit three hours. God damn you. Oh, no, we got a little bit more here. Motherfucker.

One more thing. Yeah, one more thing. We got to tell the truth about a long forgotten historical thing. This is true. And the next part we'll talk about, you know, Conrail nationalization without socialism, deregulation and how Penn Central jumps. Jump started the career of one Donald John Trump. Yeah.

Richard Nixon, America's most left-wing president. Yes. Things of this nature. EPA. Yeah. Yeah. Title nine. Famously pronounced.

We're all Keynesians now. See, he was right. We will mess him when he's gone. Now that we don't have Nixon to kick around anymore. Yes. Nixon's back. On November 24th, 1971, an unidentified man hijacked a Boeing 727 aircraft operated by Northwest Orion Airlines, who's flying from Portland, Oregon to Seattle,

Washington, right? That was a needless fucking flight. Yeah. And back in the days when, again, you could just hijack a plane and they'll give you everything you wanted. Yes. He identified himself as D.B. Cooper. So he extorted $200,000 in ransom money.

That's about a million, two hundred seventy eight dollars. Now he has to be flown to Reno, Nevada, and he parachuted to an uncertain fate over Southwestern Washington. Partway through the flight. Dad, they found his cash. My man, like, jumped super low. Parachuting super low in the like in the dark, in the cold, into trees. My man at best broke like both legs and died of exposure at worst.

He was killed instantly. Eatin' by bears, eatin' by bears. But they found some of his cash. So that's what happened. Well, a recent theory is that D.B. Cooper was William J. Smith, who was a yardmaster at the Lehigh Valley Railroad Oak Island Yard in New Jersey. It was essentially a Penn Central subsidiary. I mean, it was like 99% owned by Penn Central, I think.

And he was supposedly disgruntled at the airlines bankrupting Penn Central, you know, because passenger service being uncompetitive, right? You know, and also the bankruptcy took his pension with it, right? Ah, of course. Yes. So this was reported by, I think, the Oregonian a while back. Some evidence here is that, well, number one, he looked similar. He had some...

Very OK there, buddy. Oh, yeah, I'm good. He had... He's never gone over three hours exactly. He had some prior experience in naval aviation and the clip-on tie that he left on the plane had metal particles consistent with working in a railroad yard. Right? So this is one of those weird things.

Now, William J. Smith died in 2018. Oh. But he was known to disappear for like weeks at a time around that time, because, you know, furloughs are pretty common, right? So who knows? My man's dead. Yeah. My man's dead.

Also, did he get fucking rhinoplasty before he hijacked the plane? Because that's... It's not the same nose. It's not the same nose, yeah. Similar hairstyle though. Very similar hairline, yeah. But like, I don't know, I don't know. You know what I think?

I think that guy on the right is the Zodiac killer. Oh, that could be the case, yeah. But yeah, that was bankruptcy of Penn Central. Oh, my God. Possibly causing an airliner hijack. Possibly, possibly so. I'm holding my head up with my mic standing. We're going to talk about Conrail next time,

except we're not because next time, next time, the next recording we're going to do, we're going to talk about Y2K. That's going to be fun. What did we learn? That it's been three hours and we should forego safety third to put that on the next episode. I do like this guy just lying.

Like, just absolutely like old school ass corruption. He's going to cook the fucking books. And who's going to stop me? Stupid diversification program. I'm going to side these checks with my nuts. I love the 160 mile an hour train with a totally flat front because aerodynamics is for pussies. A good suck train.

Pennsylvania Railroad just takes over and subsumes the New York Central and drags it into the grave. Don't get the New Haven tail. My hat railroad. I don't know what happened to any of the New Haven executives. They all created definitely not horror airlines, LLC. Well, Uday, thank you so much for coming on. Thank you for having me.

We're sticking this out. If the people want more Uday, where can they find it? Twitter. What's your Twitter? My Twitter is A320LGA. I recently put it under my name. So if you search my name, it should show up. I also have a blog called home signal.

I post very sporadically and usually at great length. I'm sure you guys have noticed a bit of a TLDR problem. It's good information that the viewers need to hear. That's right. But yeah, I am on those two platforms. Check that out. Check out 10,000 losses. Lions up by Donkeys.

I would say I would advertise the kill James Bond live show, but we sold out in two hours. Yeah. Good for you. I'm nervous as hell about going now. But yeah, I'm looking forward to it and hopefully next time we'll do one with a slightly larger capacity and I'll be able to advertise that.

Congratulations, Dallas. Thank you. Everybody stop listening now. Boston molasses disaster. Good night, everyone. Good night. Thanks again for having me.