The Men Who Loved Trains: The Story of Men Who Battled Greed to Save an Ailing Industry

Preface

Although its contents are certainly meant to be absolutely accurate and enlightening and its conclusions penetrating and serious, as every serious academic work should be, The Men Who Loved Trains is not a product of traditional academic research. It is a work of journalism and is founded on scores of interviews that began more than 35 years ago. It also is based to a limited extent on my own experiences watching, recording, and even participating in the history of the Northeast’s railroads during the last half of the twentieth century.

I had the privilege of reporting on the demise of Penn Central and the creation of Conrail as an associate editor of Fortune, and I have drawn on some of my reporting from those days in writing this book. I’ve benefited as well from my experience as a consultant during the years since leaving the magazine. During that time I advised Conrail and the Norfolk and Western Railway on their annual reports to the shareholders. I also provided editorial guidance to the United States Railway Association when it was urging Congress to keep Conrail alive, and for more than 10 years before the acquisition of Conrail I consulted CSX, providing a variety of services, from economic and marketing studies to communications strategies, and even serving as CSX’s secret intelligence operative. From all those experiences I sometimes had a front row seat when the chieftains of the railroad industry were battling one another, and those memories have helped enrich this book. I was aided by the many maps, statistics, and timetables that all the northeastern railroads had provided to me over the past 40 years.

On occasion, especially when tracking a public battle, I have relied on newspaper clips and press releases to ensure accurate chronologies, and I have consulted two books on Penn Central, mostly to double-check dates. One, The Wreck of the Penn Central (Little, Brown, 1971) by Joseph R. Daughen and Peter Binzen, was published just after the company went into receivership and was very helpful. The other, The Fallen Colossus (Weybright and Talley, 1977) by Robert Sobel, was less so. Since I never had the opportunity to interview David Bevan, the chief financial officer of Penn Central, I found his own view of the bankruptcy and defense of his own actions in Stephen Salsbury’s book No Way to Run a Railroad, which was published in 1982 by McGraw-Hill. Some of his own statements made Bevan seem all the more culpable.

Many government documents provided a rich field of material. Among them were A Staff Study of the Financial Collapse of the Penn Central Company, which was issued by the Securities and Exchange Commission in 1972; a similar report in 1971 by the Interstate Commerce Commission on Penn Central’s bookkeeping scandal; Rail Service in the Midwest and Northeast Region: A Report by the Secretary of Transportation, printed in 1974; numerous system plans and reports by the United States Railway Association, and The Great Railway Crisis, a history of USRA prepared in 1978 by John E. Harr under the direction of a panel of the National Academy of Public Administration.

My account of the Conrail takeover battle in 1996 and 1997 was helped by some superb stories by my old friend Don Phillips, then of the Washington Post, and by another reporter whom I also hold in great respect, Henry Holcomb of the Philadelphia Inquirer.

All that, though, is merely a fraction of the research that went into this book. The bulk of this material came from interviews with well over 200 people, ranging from railroad chairmen to locomotive engineers. One of the greatest dividends is the rich collection of interesting people a reporter accumulates over the years. It is those people, many very close friends, who made this book work.

Although many sources spoke on deep background or on a not-for-attribution basis and cannot be named, I do want to acknowledge publicly the many others who can be mentioned and who were so helpful.

Foremost among them are two of my oldest and closest friends, Tom Hoppin and Jim McClellan. Jim’s importance to this book is obvious, for he is the continuing thread of this tale, starting in his youth at the New York Central and winding up at Norfolk Southern. He has been a rich source on all the events that have shaped the eastern railroads in the past 45 years. Of equal help, Tom has seen many of the same events from the vantage point of the corporate communications departments of Penn Central and CSX. I thank both Tom and Jim for all the time and patient assistance that they have provided.

I owe special gratitude to the late Alfred E. Perlman, who headed the New York Central and the Western Pacific and between those posts was president of Penn Central. Al gave me hours of his time, often sitting up until the early hours of the morning as we sipped cognac and smoked cigars and he recounted his life’s story and taught me the rudiments of railroad economics and operations.

Jack Fishwick, former chairman of the Norfolk and Western, and Hays Watkins, who headed CSX, were especially helpful as I labored over the manuscript and tried to ensure that it was totally accurate. Jack offered valuable suggestions on ways to market the book, and although he had no inkling of how the book would treat him, he kept urging me to finish so that he could read it. Watkins’s book of memoirs, Just Call Me Hays (R.E.B. Communications, 2001), also was helpful as I double-checked facts, names, and dates.

The late Alex Bilanow, an old friend who was spokesman for the USRA, generously gave me his entire archives, including copies of all the news stories that had appeared about United States Railway Association between 1974 and 1986.

On the saga of Penn Central I was helped especially by the late Jervis Langdon, who was the railroad’s last president, Bill Lashley, who headed Penn Central’s corporate communications, and the late Basil Cole, who was Stuart Saunders’s assistant. These three men dug back 25 years to provide me with a treasure chest of details. After my story on Penn Central’s collapse appeared in Fortune, the late Stuart Saunders spent an afternoon in secret with me giving his side of the saga. It was unfortunate I did not have his views before my magazine piece appeared, for his input added important details to this book.

The late W. Graham Claytor Jr., who at that time was chairman of the Southern Railway and later headed Amtrak, helped as well, always making time available to me. Other sources for that period included the late John Barriger, a delightful man who was a walking compendium of railroad knowledge. John ran the Boston and Maine Railroad during its bankrupt years.

I’m also indebted to the late Robert W. Blanchette, who was counsel to Penn Central’s trustees and later head of the Federal Railway Administration; the late William H. Moore, who ran Penn Central until Langdon fired him; Bill Cunitz, who was Bill Lashley’s assistant in the corporate communications department; the late Robert Hamilton of the Southern Railway; Bruce Sterzing, who headed the Delaware and Hudson Railroad, and Dave DeBoer, who has rich memories of the marketing department during the first days of Penn Central.

A number of sources provided details about the personality and career of Al Perlman. One of the most valuable sources on Perlman was the late Robert G. Mike Flannery, who headed the Western Pacific and then became president of the Missouri Pacific and the Union Pacific. Another was Harry Bruce, whom Perlman and Flannery put in charge of marketing at the WP. Like other Perlman lieutenants, Bruce went on to head another railroad, the Illinois Central.

When the government stepped in and set up Amtrak and then created Conrail out of Penn Central and other bankrupt roads, a number of people played important roles, and I’m obliged to almost all of them for their help. The late Roger Lewis and his senior officers gave me an unusual insight into the early days of Amtrak.

Jim Hagen, who played a key role in the formation of Conrail and later was its chairman, has given invaluable help on the creation of that company as well as on Conrail’s latter years. I’m also obliged to the late William G. Loftus, who worked with Hagen and Jim McClellan at the Department of Transportation.

The late Frank Barnett, chairman of Union Pacific Corp., and his chief counsel, Bill McDonald, helped me piece together the events that led up to the passage of the 3-R Act.

I owe thanks to Al Chesser, who headed the United Transportation Union, and to James M. Broken Rail Brunkenhoefer, the UTU’s current legislative director, who helped me track down Chesser. I also thank Charls Walker and Phil Potter, the consultants who persuaded Jerry Ford to sign the legislation that created Conrail; John Barnum, who at the time was the deputy secretary of transportation; the late Edward Jordan, who headed USRA and then became chairman of Conrail; Leo Mullin, Jordan’s chief planning officer who later served as chairman and CEO of Delta Air Lines; Dick Steiner, who was one of Hagen’s chief lieutenants in Conrail’s marketing department; and Richard Spence, Conrail’s president and chief operating officer.

The late Stanley Crane was a valuable source and a good friend for many years, from the days when he was a vice president of the Southern Railway to the years when, as chairman and chief executive officer of Conrail, he turned that ailing giant around. I also thank Dick Hasselman, one of the best operations vice presidents in the business, who worked for Spence and Crane, and Bill Newman, Crane’s invaluable Washington lobbyist.

A number of people provided information about the merger movement of the late 1970s. Among them were John Williams, former chief of corporate planning at the Southern Pacific; Bill Shafer of Norfolk Southern; and my old friend Lew Phelps, former vice president of public relations at the Norfolk and Western.

Sources on the struggle between CSX and Norfolk Southern for control of the Northeast’s rail system include Linda Morgan, former chairman of the Surface Transportation Board, who provided rare insights into the workings of regulatory commissions. Others who provided help were Michael Driggs, who watched from the White House as the Carter and Reagan administrations dealt with Conrail; Larry Kaufman, who offered memories of his days as a reporter and insights from inside DOT; and Craig MacQueen, former vice president of public relations at Conrail, who provided valuable transcripts of unpublished interviews that Stanley Crane had given when he was chairman.

At Norfolk Southern David Goode, then its chairman and CEO, was most generous with his time and opened many doors for me. Also I owe thanks to Goode’s predecessor, Arnold McKinnon. Wick Moorman, then Norfolk Southern’s president and chief operating officer, was particularly helpful in providing information on life at the Southern with Stanley Crane.

Hank Wolf, Norfolk Southern’s chief financial officer, helped as well. Also I thank Mike McClellan, Jim McClellan’s son, who runs intermodal and automotive marketing at NS; Magda Ratajski, Norfolk’s former vice president for public relations; Bob Fort, Magda’s successor, and his chief assistant, Frank Brown. Special thanks go to Nancy Fleischman, who coordinated the Conrail acquisition for NS and was of invaluable help in keeping me accurate.

On the CSX side, I am most grateful to Jerry Davis, who headed CSX Transportation before becoming president of the Southern Pacific; my old schoolmate Bob Burrus, one of CSX’s directors and a close friend of John Snow; Mark Aron, who was Snow’s alter ego and CSX’s executive vice president; and Donna Rohrer, who played a critical role as an assistant to Hoppin during the Conrail merger battle. Snow declined to be interviewed. There were a number of current and former CSX employees who provided rich information under the restriction that they not be named. I give them special thanks for their candor.

I received help from a number of former Conrail officers, too, especially David LeVan, Conrail’s last chairman and CEO, who provided helpful background information, and Bruce Wilson, Conrail’s general counsel.

I’m grateful, too, to Herbert H. Harwood Jr. A prize-winning railroad historian, Herb generously shared his knowledge, helping me clarify facts and steering me out of some potentially embarrassing inaccuracies. He also loaned us photos from his vast collection.

Writing a story with such a variety of situations and so many diverse people is often difficult to structure. An old colleague, Rik Kirkland, former managing editor of Fortune, put me in touch with two experts who provided me with a candid critique of the early manuscript. As I was reshaping the book and giving the narrative more pace, my friend Fred Frailey, editor of Kiplinger’s Personal Finance magazine and a frequent contributor to Trains magazine, volunteered to serve as my editor. I owe Fred a huge debt, for he is responsible for this book’s strengths. I take sole responsibility for its faults.

My agent, Tom Wallace, had the insight to recognize that The Men Who Loved Trains had promise, and he went to great lengths to place it with the right publisher. I am truly grateful. Through Tom I met Linda Oblack, who with commendable patience shepherded me through the production process at Indiana University Press. I thank her as well.

While I express my gratitude to all these people, I must add that this book would never have been written without the support and patience of my wife, Jane Gregory Loving. As she watched me writing and rewriting and rewriting again, she never lost hope that someday a book would emerge. She also put up with my cluttered study and the endless files and boxes of a pack rat, accepting that all those ancient timetables and railroad system maps and faded government documents might be of use someday. To her I give the greatest thanks of all—and all my love.

THE MEN WHO LOVED TRAINS

1 The Forrest Gump of Railroading

Dawn was creeping up over Lynnhaven Bay as Jim McClellan walked briskly out of his kitchen, down a hallway, and out the back door. It was a perfect October morning. The air was brisk, barely 50 degrees. McClellan drove to his office in downtown Norfolk. He was going early to clear his desk of any unfinished work because he was leaving later in the week for four days of vacation in southern California.

James W. McClellan was vice president for corporate planning at Norfolk Southern Corp., one of the nation’s five largest railroads. His job was to advise NS’s chairman, David R. Goode, on a wide range of key questions that the railroad faced, issues as subtle as changes in the corporate culture or as visual as deciding which tracks to shut down or which railroads to acquire in order to keep the company viable.

It was 1996, and for nearly 20 years he had been watching the moves of NS’s archrival, CSX Corp., and its chairman, John W. Snow, who later was to become George W. Bush’s treasury secretary. The two railroads served almost the entire eastern half of the country save for a highly contested block of states in the Northeast, and both needed to get into those states for access to the rich port of New York and the chemical plants of New Jersey. The only way to do that was to acquire Conrail, a railroad that held a monopoly of the rail markets in New York, New Jersey, and most of Pennsylvania. The railroad that won Conrail would then be able to negotiate a merger with one of the western roads at favorable terms and form a system that spanned the continent. McClellan was worried because he knew that if NS lost this race, it would remain a regional line that would be at the mercy of one of those western roads. Moreover, NS had another reason for wanting Conrail, a need so crucial to the future of the company’s most critical source of revenues, McClellan and others at the top of the company kept it a closely held secret.

Up in his twelfth floor office in the Norfolk Southern tower, McClellan sat at his desk disposing of memos and reports. Outside he could see the Elizabeth River and the Portsmouth Navy Yard almost directly below, festooned with destroyers, frigates, and supply ships. He was just getting into the stack of papers when his telephone buzzed. What have they done!? What are you going to do about this!? cried a voice on the other end. It was NS’s chief of investor relations, Deborah Wyld. CSX and Conrail have just announced a merger.

Stunned, McClellan suddenly saw his career, which had always been an up-and-down affair, once again teetering on the brink.

He was hurrying into the elevator lobby when he encountered one of his top assistants. McClellan’s eyes were dark, his face grey and haggard. So shocked was his assistant at the sight, she dropped her briefcase. She thought someone had died.

When he got to the boardroom, other officers were trickling in. Some were dumbfounded. Others were ready to take charge. Known for his down-home informality and unflappable demeanor, David Goode was cool and unfazed, despite his surprise. Even though he had feared such a thing for years, McClellan remained stunned. Yet he also was beginning to conceive a plan, and the next day, in a one-page roughly hewn memo to Goode, he outlined the strategy that NS was to follow.

Fifty-seven years old, McClellan was well prepared for this crisis. Moreover, he had an advantage over John Snow: he loved trains, and he shared that love with David Goode and seven older railroaders: Alfred E. Perlman of the New York Central, W. Graham Claytor Jr. of the Southern, Robert Claytor of Norfolk Southern, John P. Fishwick of the Norfolk and Western, Hays T. Watkins Jr. of CSX, and Conrail’s L. Stanley Crane and James A. Hagen. Over four decades each of the seven had come and gone from the stage of U.S. railroading, moving from crisis to crisis, battle to battle, and as they had interacted they had reshaped transportation in the northeastern United States.

McClellan was the junior of them all, but he was the thread that wove them together. He was present as each dramatic encounter was played out. Ambling from job to job, often by misadventure and sometimes even by getting fired, McClellan had happened into the center of every major event in the railroad industry. I call myself the Forrest Gump of railroading, he said later. I happened to be there as opposed to showing up. I was part of it out of accident. Accident or not, his presence would have an ongoing impact on Norfolk Southern and on American transportation. Each in his own way, McClellan and the other railroaders created from a sinkhole of bankrupts two strong networks of rail lines that today keep the region alive, supplying food, clothing, electronics, and even automobiles to every household east of the Mississippi. It was their love of railroading that made them decisive managers, men who knew their business so well that they had no doubts about how to make it work. Moreover, they all lived by a code that set them apart from modern corporate standards: they all performed their jobs because they loved the business. Although they enjoyed all the accoutrements of office and were well compensated, they were not driven by a quest for power or riches.

McClellan and the others were born in the days of steam locomotives and deluxe passenger trains, when many young men were drawn by the romance of railroads. It was intoxicating, the mystery and excitement of great rumbling engines that seemed human, belching steam and sooty smoke and whistling mournfully as they thundered past crossings and around curves and on across the endless farmlands of America. Even today, 40 years since steam succumbed to less personable diesel locomotives, railroading is romantic to many men. Jim McClellan was one of them, a man who took any opportunity he could to ride trains, and his odyssey plunged him into the struggle to save the nation’s railroads from wholesale bankruptcies and nationalization as well as a bloody fight for control of the rail lines in America’s populous Northeast.

A tall, lanky man with the big-boned body of a Scotsman, piercing blue eyes, and a baritone drawl sprinkled with the idioms of Texas, McClellan had spent his early years moving all over the country. His father had been an officer in the Army Signal Corps. When he was three, in 1941, just as the United States was about to enter World War II, McClellan’s mother would walk with him down to a Victorian edifice called the King Street Station in Seattle, and he would watch the giant black steam engines, their great piston rods pushing in and out as their drive wheels slowly turned and they set off to carry thousands of passengers on exotic trains like the Empire Builder and the North Coast Limited to distant places with enchanting names like Missoula, Bismarck, and White Fish.

As his family moved about, McClellan fell more and more under the spell of railroads. When he was five or six, the family’s backyard in Florida abutted the tracks of the Atlantic Coast Line Railroad, and the boy stood transfixed as the Coast Line paraded its first diesel engines past the house. Soon he was drawing pictures of trains, and as he grew older he began painting them, a pastime he would continue as an adult. When he was 11, he took his first ride on a locomotive. His grandmother in Dallas had a friend who was an important freight customer of the Texas and Pacific Railroad, and he arranged for McClellan to ride a steam switch engine. It was unforgettable, but the boy broke what on some railroads is a cardinal safety rule, climbing off before the engine had come to a full stop. He fell flat on his face and remembered the fall more vividly than the ride.

He was soon begging rides on the steam locomotives that pulled the Colorado and Southern Railroad’s Texas Zephyr between Ft. Worth and Dallas. His pleas got him aboard until he was in his teens. Begging seemed to work when I was small, McClellan said. I guess I stopped being a cute kid when I reached high school. By the time he was ready for college, he was living in San Antonio. Fewer trains went by there, but he remained transfixed nevertheless.

So badly had the bug bitten him that he chose to major in transportation economics at the University of Pennsylvania’s Wharton Business School. His studies there offered him a unique marriage between his romantic love of trains and a foundation in the practicalities of railroading, a business that had economic rules and a management personality all its own.

While in college McClellan discovered that if he wrote to the railroads they often would let him on their locomotives, and he rode more engines, including the cab of the crack California Zephyr. The same day the Soviet Union disclosed it had sent Sputnik, the first satellite, up into space, the Baltimore and Ohio Railroad announced it was discontinuing all its passenger trains north of Baltimore. I thought it was worse news than the fact that the Russians were first in space, said McClellan. The B&O’s announcement symbolized much of McClellan’s adult life. It was the beginning of an era when trains, rail lines, even entire railroads would be wiped out, and McClellan was to be involved nearly every time.

After college, McClellan went off to the navy as an officer on a destroyer, the USS Decatur. He waited impatiently to conclude his military obligation and to work for a railroad, and as soon as he was released he sent letters out wholesale to every railroad he could think of. Some never responded; the rest rejected him. But on a visit to Washington, he walked into the headquarters of the Southern Railway System and told the security guard he wanted to talk to someone about a job. He was ushered upstairs and on the basis of his boyish face, résumé, and personality, he was hired as a trainee in the Southern’s marketing department.

McClellan’s boss was Robert Hamilton, the Southern’s colorful vice president for marketing. Unlike most railroaders, Hamilton possessed a bright, creative mind and encouraged originality and innovations. He saw similar traits in McClellan and did whatever he could to help him. Armed with passes from Hamilton, McClellan spent every available day and weekend riding the sleepers and observation cars of passenger trains all over the South and in the Northeast. He talked to the crews, learning the routes, the ways they operated their trains, and all the basics of railroading.

It was easy to be in love with trains. They had built American society. Railroads had been the adhesive that had bound together the U.S. economy and its society, enabling the nation to spread from the Atlantic to the Pacific.

When the first train made its inaugural run outside Baltimore in 1830, other railroads already were being built. Less than three decades later, on the eve of the Civil War, rail lines crisscrossed the eastern United States and were even spreading across the prairies toward the Pacific. Railroads quickly became the logistics tool of the generals, and entire campaigns were waged around rail lines. The first battle of the Civil War, at Manassas, outside Washington, was fought for control of a rail junction.

The nation’s industrial economy owed itself to trains because they carried the ore, the coal, and the coke to the steel mills and the steel to the plants that built goods from it. And the American people as a whole depended on the railroads’ vaunted sleepers, diners, and coaches to carry them from town to city and even across the continent.

By 1900, railroad tracks sliced across the farmlands and meandered up and down almost all the river valleys. In the Northeast, many river valleys had two competing railroads paralleling one another on opposite banks. Railroads soon became the nation’s high-tech industry. More than a million Americans were working for the railroads by 1900. The industry’s annual revenues totaled nearly $1.5 billion, or three times what the federal government spent each year.

Although it was as late as 1962 when McClellan joined the Southern, he was entering an industry that retained many of the vestiges of those early years. The railroads’ way of doing things was a museum piece of how corporations functioned in the nineteenth century and how the people who worked for them conducted themselves and related to one another. The railroad culture had enshrined many beliefs and habits that had slipped away from most Americans after World War II.

Many people today are unaware of it, but most Americans born as late as the mid-1930s spent their formative years in a society of nineteenth-century ethics and principles where people took pride in work and were driven by a sense of honor to their commitments. Most of the men and women of that day had been born at the turn of the century or earlier. Some older citizens even remembered the Civil War. It was a simpler society where revival meetings and the ethics lectures of the Epworth League still influenced many American homes. Honor meant something; so did the work ethic and allegiance to friends and fellow workers and a firm adherence to principles. They were paid their wages or their salaries in return for work, not because the company was there to make them rich.

It was a different world from the one that has produced Enron, WorldCom, and the like. The men who ruled the railroads and many other portions of American business as late as the 1980s were inculcated to some degree in the mores of the nineteenth century. They did not take home the multimillion-dollar bonuses so common today.

While most were not driven by greed, many did suffer the stupidity, the arrogance, the hubris, and all the other weaknesses of many executives today. When McClellan went to work for the Southern, the industry’s leaders were driven by unsurpassed egos. So strong-willed and unwavering were some of these rail barons the board meetings of their trade group, the Association of American Railroads, often turned into shouting matches, and on at least one occasion one chief executive threatened to punch another.

These were the days of Wayne Johnson of the Illinois Central, Stuart Saunders of the Pennsylvania Railroad, Alfred Perlman of the New York Central, Tom Rice of the Seaboard Coast Line, Ben Biaggini of Southern Pacific, Downing Jenks of the Missouri Pacific, and Bill Brosnan of the Southern Railway. They all knew how to run things better than anyone else, and each expressed his infinite wisdom to the group, whether the group was listening or not, recalled Hays Watkins, who as a young officer at the Chesapeake and Ohio sat in some of those meetings with his boss. When you are that good, you have to make sure that everyone realizes it. When honesty and modesty conflicted, these gentlemen always thought honesty was the best policy.

Since its beginnings, the industry had been a military system. Many of its early presidents were former army officers. Since the early engineering schools in America were military institutions and it took engineers to build and oversee the early rail lines, many senior managers came from schools such as West Point and the Virginia Military Institute. Thus a culture grew where subordinates always addressed their superiors as sir and called them by their formal names. And, although he disobeyed the rule to his peril, McClellan and other young officers often were discouraged from speaking up.

Operating departments, which maintain the tracks and run the trains, were dominated by bands of tough, stubborn men, many of them civil engineers, who believed fixedly that people should function with the same certainty as machines. Astoundingly, much of that culture still prevails today at some railroads. Their way of thinking fostered a conservative view of the world outside. Since the minds of the engineers were governed by the laws of science, where everything is presumably known, they distrusted the unknown. Thus change often was resisted assiduously.

Like an army division, all the officers in each railroad viewed their own company as special. It was inculcated into every young officer that all the other railroads weren’t as good as his. Each railroad had its own way of doing things, almost as if it had to be different to survive. If another railroad came up with something better, its idea was commonly dismissed as inferior. For instance, each had its own specifications for fitting out its steam engines. No two lines’ locomotives were exactly the same, even if they had come from the same builder.

Signal systems, which control trains like the standard traffic lights that grace America’s streets, differed from railroad to railroad. Some companies used semaphores; others used oblong signal boards with colored lights one above the other. The Pennsylvania used yellow lights spread horizontally, diagonally, and vertically on a round backboard. The neighboring Baltimore and Ohio used a round backboard with the same pattern, but its lights were red, green, and yellow and there were only two across rather than the Pennsy’s three.

Senior managers—and most who aspired to higher posts— viewed people like McClellan as aberrations and often fired them if they took risks that led to mistakes. Since the culture demanded such a high price for change, the men who ran the railroads stuck by the traditional military style of leadership. Even when other industries began to profit by fostering innovation and promoting risk-takers, the railroads continued to distrust more creative managers.

McClellan brought a rare addition to railroading, an ingredient that is all too uncommon in corporate management: a high standard of intellectual honesty. One or two industry leaders of 1960s and 1970s had it and occasionally paid for it at the hands of their peers. So did McClellan. Sometimes his allegiance to the truth would not work because his ideas were impractical and even naïve, making him so ineffectual that those seniors who were more enlightened than the rest and who appreciated his talents had to step in and save him from his folly. Nevertheless, his vision, his love for trains, and his unswerving search for the perfect railroad network propelled him into a major role in the development of a national passenger rail system, the government’s consolidation of all the Northeast’s rail lines, and a 14-year war that led to the creation of two giant freight railroads that now dominate transportation between the Mississippi and the Atlantic.

2 Meeting the Blue-eyed jew from Minnesota

Life on the Southern Railway in the mid-1960s was interesting for McClellan because this was one of the most progressive railroads in the United States. It was automating its maintenance operations, both in the shops and on the tracks themselves. McClellan’s boss, Bob Hamilton, had outraged his competitors at all the other railroads by developing a new jumbo hopper car that enabled the railroad to cut the price it charged for hauling feed grain from the Midwest to the chicken farmers of the Southeast. The marketing department was building the first computer system for tracking the movement of freight cars, three giant IBM computers in a massive operations room atop an old freight warehouse in downtown Atlanta. Overseen by a former air force colonel, the computer system was based on the one used by the Strategic Air Command to track its bombers. The computer center was tracking thousands of freight cars so that any shipper could call the Southern and find out where his carload of merchandise was, right down to the train it was on and the station it had just left.

For all that, McClellan was getting bored. The Southern was relatively well-heeled, basking in the affluence of the Sun Belt, where new plants seemed to be opening every month and transportation companies were sitting on markets they had never dreamt of. This was actually a drawback for someone like McClellan, because profitable railroads tend to be highly disciplined and comparatively predictable. A less affluent company seemed to harbor more venturesome people, and in 1966, after four years at the Southern, McClellan took a job as an analyst at the New York Central System. His boss, marketing vice president Bob Hamilton, had adopted McClellan, sometimes breaking the railroad’s rules to get him special passes to ride trains, and McClellan was showing no appreciation. Hamilton was so angry when McClellan resigned that he threw an ashtray at him.

The lure that really made him decide to move had nothing to do with his job or the working atmosphere. He went because the New York Central promised he would have an engine pass that would get him not merely onto passenger trains but into the cabs of all the Central’s locomotives, from its fastest passenger train to its slowest freight. It was a senseless reason for a job change, but it was a fitting prelude to the odyssey upon which he was embarking.

He was joining a company known for its free-wheeling marketing department, thanks to its president, a Jew from Minnesota with piercing blue eyes named Alfred E. Perlman. A man who did not hide his impressive brilliance, Perlman, like McClellan, had fallen in love with trains as a child. He had worked his way through the Massachusetts Institute of Technology as a summer section hand on the Northern Pacific, and after he was graduated he went back to the NP, eventually becoming a maintenance supervisor. Now he was one of the first Jews ever to lead one of those bastions of WASP America, a major railroad.

Perlman had taken charge of the Central in 1954 after a flamboyant Wall Street maverick named Robert R. Young had won a seven-year takeover battle for the line. At the time the Central was one of the world’s most vaunted carriers, the gold-plated legacy of Commodore Cornelius Vanderbilt and his family. When he found he was going to win the proxy fight, Young had begun looking for an innovative operating man to be the Central’s president. He quickly sought out Perlman, who had turned around the bankrupt Denver & Rio Grande Western Railroad, and on the evening of May 25, 1954, they met at Young’s apartment in the Waldorf Towers.

Young, who had controlled the Chesapeake and Ohio Railway, had annoyed the other industry executives by running ads attacking the fact that U.S. railroads failed to offer coast-to-coast passenger service. He cited the claim that a hog could move all the way across the country without changing cars but a person could not. As soon as they started talking, Perlman swept aside any small talk about their careers or the New York Central and abruptly challenged Young’s claim about the passengers and the hogs, declaring, That’s a damn lie. You’ve got to take the hog out and water it every 36 hours.

Taken by Perlman’s directness, Young invited him for a walk up to Central Park and back while they discussed their business philosophies. The two quickly forged an alliance, and Perlman agreed to become president of the Central. In the process he told his new boss not to expect him