9.9.06

THE SECRET SUCCESS STORY.

The idea of comparing the travails of higher education to the troubled years of the regulated railroad occurred to me some time ago, when I brought to readers attention two books by Clemson historian Richard Saunders, Merging Lines and Main Lines, about the twentieth-century decline and transformation of the railroads. Merging Lines is a revision of The Railroad Mergers and the Coming of Conrail, which I read long ago and do not consider it sporting to claim a book review for browsing a second edition. Main Lines is relatively new. I dug into it before my trip to the Semmering Pass, and was sufficiently versed with its argument to be able to use some material in contrasting the problems of the European railroads with our own. (Short form: passengers and freight don't mix. Longer form: it might be possible to make money hauling freight.) I recently picked up and finished the book and suggest in Book Review No. 31 that it's a readable summary of the transformation of the regulated competition among numerous smaller railroads into the deregulated competition of two Canadian-based, two eastern, and two western railroads (with a little participation from some emerging "regional" carriers that do more business than some of the old-style trunk lines.)

The transformation of the railroads will give pause to devotees of Four-R Acts and 10-point programs, although, in fairness, deregulation was a bipartisan effort spanning the Carter and Reagan administrations. Main Lines focuses first on the evolution of public policy, from the nationalizations of the passenger service and of Penn Central (and the anthracite roads other than Delaware and Hudson and Erie-Lackawanna) through the Staggers Act and the privatization of Conrail. Next comes the business history, in which consolidations worthy of the House of Morgan lead to the emergence of what Professor Saunders calls the Super Seven (there is something magnificent in calling the roll of Conrail, CSX, Norfolk Southern, Union Pacific, Santa Fe, Southern Pacific, and Burlington Northern) and that morphs into a North American Final Six (BNSF, CSX, CN Rail, Canadian Pacific, Norfolk Southern, Union Pacific. At least three of them still have names that sound like railroads!) There are still stories to tell about the business strategy, and the re-creation of the Kansas City Mexico and Orient is a tale in progress.) The ending refers to the "invisible revolution" in railroading (no more cabooses to wave to, fewer shiny streamliners calling at fewer towns, but plenty of coal and especially containers) as well as the inevitable transition troubles: discriminatory pricing against captive shippers, staffing difficulties (the industry may be invisible, but too many train crews are subject to short rest and arbitrary call times); raising capital (there has been some progress in doubling and trebling the Transcontinental on the old Santa Fe, but Union Pacific and CSX face lawsuits from Amtrak over dispatching delays); and providing passenger service (fragmentation has worked better here than it did in Britain, but suburbanization and rising gasoline prices are going to aggravate the pressure on the network).

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