NO WAY TO RUN A RAILROAD: The Untold Story of the Penn Central Crisis

by Stephen Salsbury ‧ RELEASE DATE: Nov. 22, 1981

The pop title notwithstanding, this is a serious look at the Penn Central merger and bankruptcy by a highly qualified academic: Salsbury, presently teaching at the University of Sydney, has collaborated with Alfred Chandler (The Visible Hand) on studies of managerial structure and the railway industry. But that's about the only categorical statement one can make about the book. Salsbury opens with a forceful, revisionist analysis of American railroading and its collapse--to the effect that (contrary in part to Chandler) the industry didn't just mature managerially and ossify, or become technologically moribund: the threat of antitrust action, after the 1904 Northern Securities decision, prevented efficacious mergers until the 1960s; early federal regulation handicapped the railroads both in an absolute sense (19th-century cost-accounting procedures became ICC S.O.P.) and in a relative sense (vis-à-vis other carriers); the early strength of railway unions froze work rules in the steam era (on an electric locomotive, a ""fireman"" need only--one wrote in 1911!--""ring the bell for crossings, and look wise,""). Withal, management put through ""a technological revolution,"" Salsbury writes--but: ""Both the Pennsylvania's and the Central's capital needs always exceeded the supply of money."" These interesting, suggestive preliminaries accomplished (perhaps the railroads were not foredoomed?), Salsbury shifts into the Penn Central situation: ""the failure of top management""--board chairman/CEO Stuart Saunders, operating head Alfred Pearlman, chief financial officer David Bevan--""to work as a team""; and, preeminently, the role of Bevan, the public villain. . . whose exoneration soon comes to seem the major purpose of the book. Some of this does bear directly on the 1970 Penn Central cave-in. Thus, Salsbury makes a good financial case for Bevan's much-criticized support of diversification over capital improvements. He makes a good management-theory case implicating Saunders' and Pearlman's adherence to outdated (and conflicting) Pennsy and Central management styles. And his close review of the post-bankruptcy investigations does them no particular credit. Bevan, however, was also indicted on criminal charges--in two separate cases--and nearly a third of the book is occupied with that intricate sequence of events. So what starts as a weighty, controversial study of business survival becomes an angled case-study of real interest only to Penn-Central cognoscenti.

Pub Date: Nov. 22, 1981

ISBN: N/A

Page Count: -

Publisher: McGraw-Hill

Review Posted Online: N/A

Kirkus Reviews Issue: Nov. 1, 1981

Categories: NONFICTION