Wednesday, February 3, 2016

Perlman: A Glimpse of Pre-Staggers Act Railroading In America

This late 1950s-era documentary of the New York Central shows some very interesting technology of the time. Of particular interest is the analog version of a mass spectrometer used to predict the failure of a specific part inside a locomotive before it fails. Even in the era of DDE and JFK, railroads were pro-active!



This film was made by Alfred Perlman, president of the New York Central, back in the nadir of railroad regulation. Before the Staggers Act in 1980, railroads were suffering a slow, python-like squeezed death of government-supported competition of trucking industry and airlines on one side and government regulation via the ICC. The crush of it was that the ICC told them what they could charge with rate regulation, what contracts they could write, and all the bureaucracy such government control entailed.

Further, most of what he said was essentially correct. Such regulation was born in a monopoly and made sense at the time, but by the time of trucking and airlines, such regulations were impossible to live with. What he said would come back to haunt the US economy 20 years later. His company, the New York Central Railroad, after merging with the Pennsylvania Railroad in 1968 to try to survive, eventually failed outright, forcing the Gov't to come in and form Conrail, (a CONgress consolidated RAILroad essentially). In true "closing the barn door after the horse has bolted" fashion, Congress would come to the rescue with 4R and Staggers, both passed in major election years. He was telling the truth as he saw it to the American public, and he had hoped it would make a difference in getting some regulation lifted. Not enough, apparently.

Such a debacle likely prompted Reagan to comment a few years later,
Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
In 1997, the merger of the Penn Central was essentially undone with CSX and Norfolk Southern, the two eastern US railroads, carving up Conrail between them.

[Off topic: Along with the Reagan quote, my conservative roots can't help but wonder if there's a lesson in this post somewhere for proponents of Obamacare.]

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