Posts Tagged ‘Penn Centrak bankruptcy’

50 Years Ago Sunday, Penn Central Went Bankrupt

June 20, 2020

It is early Penn Central (Nov. 16, 1968) at Collinwood Yard in Cleveland. Two lcomotives still wearning New York Central markings sit with one that has already been given PC markings. in front of the former coaling tower. (Photograph by Robert Farkas)

This Sunday (June 21) will mark the 50th anniversary of Penn Central Transportation Company filing for bankruptcy protection in a federal court in Philadelphia.

The enormity of that event cannot be understated. At the time, Penn Central was the sixth largest company in America and its largest railroad with 20,530 miles of track in 16 states and two Canadian provinces handling one-eighth of the nation’s freight.

The bankruptcy occurred after a last-ditch effort to secure a $200 million loan from the federal government collapsed due to opposition from Congress and the Nixon administration.

The Penn Central bankruptcy was the largest in U.S. history until eclipsed in 2001 by the bankruptcy of energy company Enron.

Although Penn Central had $6.5 billion in assets, including a vast real estate portfolio, it was cash poor.

In the first quarter of 1970 it lost $62.7 million on the heels of a $56.3 billion net loss in 1969, its first full year of operation after being created by the Feb. 1, 1968, merger of the New York Central and Pennsylvania railroads.

The merger was plagued from the beginning by management infighting triggered by cultural clashes, high losses on passenger service, and a deteriorating physical plant that suffered from years of deferred maintenance.

The bankruptcy would help spur a number of developments including the creation of Amtrak and Conrail.

Within a decade of the Penn Central bankrupty, thousands of railroad careers had been cut short and thousands of miles of track abandoned.

For many, Penn Central has come to be synonymous with failure.

Stories are told of how its track was so bad in some places that trains derailed while standing still. Freight cars and their contents were “lost” for months or years.

Passengers aboard the Spirit of St. Louis angered by the lack of functioning air conditioning, lights and water sat in front of the locomotive in Altoona, Pennsylvania, and refused to move until railroad officials addressed their complaints.

Penn Central boxcars might have been painted green, but its locomotives had a utilitarian design of a solid dark color with little more than the company herald and name.

A few years ago I was working the Akron Railroad Club table at the Lake Land College train show with the late Ed McHugh.

He quipped that he didn’t understand why people were interested in a railroad that had failed.

Yet Penn Central still has its fans and an active historical society.

I find myself at times wishing I could go back and experience the Penn Central era again.

There was much that existed then that doesn’t exist now including more passenger trains, more interlocking towers, more railroad stations, more rail lines and far more variety in freight cars and other rolling stock.

Who wouldn’t want to see again a freight train led by an F unit or a passenger train led by an E unit?

It wasn’t that I didn’t see any of that during my formative years, but I wasn’t a photographer then or even a railfan. I was just someone interested in railroads who enjoyed seeing them as I happened upon them in everyday life.

I particularly am reminded of what I missed when I look at the photographs that Bob Farkas made during that era that are posted on this website.

To be sure, railfanning in the late 1960s and 1970s was quite different than it is today.

Few would want to give up the tools of the contemporary railfan, including radio scanners, smart phones and social media sites.

Yet there is a perception that railroads were more fascinating places back then and the trains inherently more interesting compared with much of what we see today, particular on Class 1 railroads.

That perception has a lot to do with why some still find Penn Central an interesting study even if no one would hold it up as an example of how a railroad should be run.

Railroad companies today are much stronger financially than they were 50 years ago and as bad as things have been for the industry during the COVID-19 pandemic and recession, no one expects any of the Class 1s wind up broke like Penn Central.

Notice I said I wish I could visit the Penn Central era, not necessarily live in it.

But no one can’t go back there so memories, photographs, magazine articles and books will have to do to relive the Penn Central era.