A Wild Ride: From a 1970 Bankruptcy to NS’ Move to Atlanta

A Wild Ride: From a 1970 Bankruptcy to NS’ Move to Atlanta

May 2019Norfolk Southern has changed so rapidly it can make one’s head spin. The latest change (but not the only one) is well known. NS CEO Jim Squires saved the reputation of the railroad industry by running the Marine Corps’ Toys for Tots train in New York when Amtrak President Richard Anderson stupidly refused to do so. Squires’ email enthusiastically agreeing to run the train and praising everyone except himself is a classic.
“Norfolk Southern is proud to participate in the 2018 Capital Region Toys for Tots Holiday Train,” Squires wrote. “As a leading transportation provider, we believe in giving back to communities where we operate, and programs such as Toys for Tots allow us to do just that. Really, we are giving back to our neighbors, because we not only work in these communities, we live there as well. I extend Norfolk Southern’s gratitude for the team effort that has moved this year’s train forward and to the United States Marine Corps, the Bennett Levin family, and the volunteers who give tirelessly to make the season a little brighter for so many.”

Squires’ latest change is something I thought would never happen. Squires is moving NS’ headquarters to Atlanta. I remember why the headquarters was never moved to Atlanta or Roanoke after Southern Railway and Norfolk & Western merged — Norfolk was considered neutral territory in that it was never a headquarters city for either railroad. The big merger, which came later, split Conrail between Norfolk Southern and CSX in 1999. Nonetheless, the headquarters remained in Norfolk. What I overlooked was that the two railroads have been merged for decades, and hardly anyone is around now who remembers the old days. Why shouldn’t the railroad headquarters move?

I hope someone is writing down all these moves. Sometimes history gets left behind and we don’t remember everything that happens. Someone once wrote that those who forget their history are condemned to repeat it. Many books have been written about the formation of Penn Central and what happened afterward, almost up to the present day. But now it’s time to start over with this new era, beginning just before the move to Atlanta.

Rush Loving’s classic book The Men Who Loved Trains is the history book of the most active four decades of change in the railroad industry, and in the federal regulation of railroads. If you have never read it, find it. You will not be able to put it down. The book explains with damning facts the phony process that led to what became the greatest bankruptcy to that point in American history, Penn Central in 1970. It will explain how one man managed to pull the wool over the eyes of everyone from top government officials to his auditors to his own board of directors, who seemed to believe everything was going fine until one major snowstorm shut down the railroad. He was fired, not right away but just ahead of the bankruptcy. It will tell how one brilliant federal judge, John P. Fullam, kept the heat on bankruptcy trustees to form a new railroad. Finally, it will tell the story of the final merger that divided Conrail between CSX and Norfolk Southern, with both NS and CSX given access to the New York/New Jersey area through a small joint railroad called, oddly, Conrail.

Wright Patman, a congressman from Texas and a committee chairman, played a key role in bringing down Penn Central by refusing to provide funding for keeping the railroad going temporarily. Patman was so adamantly opposed that the bureaucracy was taken aback. Why was Patman so stubborn? I knew why, but I couldn’t tell. Someone had slipped Patman a series of photographs of naked women posing in a Penn Central executive airplane. It was difficult to determine whether Patman was more offended by naked flight attendants or by the fact that Penn Central had a private airplane. I couldn’t tell anyone about it. I knew only because one night I got restless watching a dull debate on the House floor. (One of us from United Press International and one from the Associated Press had to be present in those days whenever the House was in session.) Bored, I walked over to Patman’s offices where I knew his press secretary kept a few bottles of bourbon in his desk. We were drinking the night away when the press secretary said he wanted to show me something. From a locked desk, he pulled out a file folder with pictures of the naked flight attendants. Patman never told anyone, and the press secretary swore me to secrecy. The only reason I can tell it now is that everyone from that era who had anything to do with it is dead except me.

One of the heroes in Loving’s book is former Norfolk Southern Executive Vice President Jim McClellan, who died about a year ago. Loving wrote two versions of his book before his editor gave him some solid advice — build the book around McClellan, who seems to be there at every event throughout the book. That is what became the final version of the book.

I miss McClellan, too. We spent many memorable days and a few evenings together over the years, and I was present for many of the events in Loving’s book. McClellan was one of my best sources, although I had to be careful about what I could attribute to him and what I could not quote him on. NS’ vice president for press relations was out to get McClellan at one point, and I almost got him in trouble. I quoted McClellan in a column without using his name, but the press relations guy came at him, saying McClellan had a distinct way of talking and that no one else at the railroad would say that in the same way. McClellan lied coldly to him, simply saying he was wrong. There was nothing the press guy could do. I wish I could remember the language, but the press guy was right. After that, I was a lot more careful about direct quotes.

There are so many stories that I could go on and on about. McClellan was only a year older than me (and we have the same birthday a year apart). McClellan died from a case of stubbornness. He refused to use a walker while recovering from an injury, and he fell and hit his head. I have the same sort of stubbornness, and I’ve taken a few falls, but I’m lucky. At least for now.

—DON PHILLIPS is a veteran newspaper reporter and a magazine columnist writing about railroads and transportation policy for more than 40 years.

May 2019This article appeared in the May 2019 issue of Railfan & Railroad

This article was posted on: May 1, 2019