Full title:
"Derailed by Bankruptcy: Life after the Reading Railroad by Howard H. Lewis. Published by Indiana University Press, 2015.
Did you ever wonder how the assets and properties of the Reading Railroad were disposed of after Section 77 bankruptcy was declared? That question never entered my mind, nor did the mechanics involved in the transfer of assets from the bankrupt railroads to Conrail.
This is a short book that goes into detail by the primary lawyer for the Reading Railroad during the bankruptcy case. With only 130 pages, the book is a quick read and doesnt get bogged down into legal details. Lewis keeps it rather fluid and as he states…this is not a history about the Reading Railroad, but simply his memoir of a nine year (9 YEARS!) which consumed his life. Lewis states very clearly the effect this case had on his personal life (missed meals, late hours, strained relationships with family, very little personal time, dead end career at the law firm he was a partner in, and much more).
Certain rail assets were conveyed to Conrail thru the USRA, a non profit corporation which was formed to plan and finance the new adventure. Lewis goes into detail, but not too much detail as to the methodology and negotiations in determining value and finalizing the deal. USRA initially offered “net salvage value” of $27 million for Reading assets conveyed, stating there was no operational value in running a railroad in the Eastern United States (even tho their mission was to plan and fund a profitable railroad).
Finally in the early 80s, the settlement was made - $186 million with USRA which included 8% interest. Then payment was delayed by David Stockman, the Reagan budget man and finally paid.
Lewis expected a hero’s welcome at his law firm’s annual meeting that weekend but was basically shown the door. His compensation, established by the ICC, was not disclosed but the indication was that i
One of the reviews from that page (emphasis added):
“Derailed by Bankruptcy should be required reading in every law school, especially for students who aspire to become corporate attorneys. Howard H. Lewis provides valuable insights into the creation of Conrail and interesting observations of Drew Lewis before he became chairman of the Union Pacific.” —Rush Loving, author of The Men Who Loved Trains
A gentle reminder re. the prices on books, especially the small-market kind, such as those dealing with railroads. They’re priced to try to at least recover costs … no small task in today’s post-literate world.
Libraries themselves have cut way back on book purchases in favor of computer stalls for the convenience of homeless people. When they stop entirely, there will be no more books on such subjects as the Reading Railroad, from the bookstore or libraries either.
Then it’s up to people like you and I to make sure that doesn’t happen.
Hit the libraries, hit the booksellers and keep your wallets open when you do, teach your children and grandchildren to love books and READ them. Show them there’s a big world out there beyond a computer screen and beyond a TV screen, some of it being in their own imaginations.
If a dismal world like dakotafred describes comes to pass, do you want to look for who’s to blame and see the person in the mirror?
OK, so last weekend was rotten. Cold, rain, no sun. Yetch. I needed something to do so, on Ed’s tip, I bought the book. I paid Amazon $17.99 for the ebook. (A form I prefer to paper. And there’s nothing else I could have done cheaper.)
It’s interesting. It shows how this sort of thing can consume a person’s life to the exclusion of his/her family, religion, health (including mental), etc. The author even cops to once ordering a “buble dourban” in front of another law dog. Something he was not alowed to forget.
Anyway, he was “consumed” by the Reading liquidation/sale for almost a decade. Most of it was large numbers of lawyers (as in hundreds) writing down arguments with each other. But, as usual, there were totally otherwise silly moments. As in:
He writes that in 1948 the Reading had loaned a steam locomotive to “A St. Louis museum.” Well, loaning it meant it was still Reading property and some idiot wanted it back.
The author saw this as beyond silly, but it was his job to oversee the disposistion of Reading property and, after all, the locomotive was still Reading property. So he called St. Louis.
He wound up talking to the museum’s lawyer. He said he made the impression he wanted; that he was a “complete nut”. He threatened to make the 1889 loco operational and bring it back to Pennsylvania under its own power. He did get $15,000 out of the museum for the locomotive, which, I guess, was part of his job.
Greyhounds is right about the duties of the trustee and his staff in a bankruptcy liquidation. A friend of mine who was a traffic manager heard stories about trucking company bankruptcies in which the trustee’s staff would go after past customers to determine if they were billed an improperly low rate and try to get the balance if that was what happened.
Me too. Maybe for Father’s Day - doubt if I’ll have much time before then.
At the other extreme, I know of a brilliant law school graduate - Walter J. Taggart - who around 1970 who went to work as a clerk for a Federal judge in Philadelphia. One day a Section 77 bankruptcy petition was filed and assigned to his judge - the Honorable John P. Fullam. It was Penn Central, and it kept both busy until around 1978 (personal recollection, and “Debt’s Dominion: A History of Bankruptcy Law in America”, Ch. 8, pg. 212). Note that by 1975 the USRA Final Reorganization Plan had been adopted, and ConRail as the successor to both RDG and PC (and others) went into operation 40 years ago - April 1, 1976.
After reading through a pile of Gibbon’s correspondence from the Rock Island failure, I would have been interested WPG’s remarks after his 9+ year long nightmare (75-84).
The situation described above about bankrupt trucking companies going after former customers for incorrect freight charges is accurate. I recall handling those back in the 1980s. Not much fun. Often the carrier would “give a discount” to a customer in order to secure or maintain their business. But…the discount would not be filed with the ICC thru the appropriate tariff, thus the discounted rate was not applicable. As long as the trucking company was in business, no problem as they needed all the business they could secure, but once they went bankrupt, it was a different story.
Regarding the library situation, I know a person on staff who asks me for recommendations for new railroad books. So far three have been placed in service and the new Rush Loving book has been ordered. Always helps to have friends in the right places. The public libraries are a great resource. I read 40 - 50 books a year and purchase a few at garage or book sales (usually less than a buck apiece) and use the library for the rest. I did purchase a pretty good collection of railroad books, manuals, and other neat stuff from a railroad enthusiast a few months ago. Otherwise it is the library about every 2 weeks.
I hope this books gains a little traction. It is an unusual look into the legalities of the railroad industry. Mudchicken has offered tons of insite into that aspect, particularly ownership of ROW, etc.
The book provided motivation to pull out a 1970 Moody’s Transportation Manual and review the bonds and securities of Reading. Another interesting aspect is the ownership of other railroads, usually terminal operations and the leases of lines.
I spent the summer of 1967-68 working in a gas station on U.S. 309 next to the Reading mainline on the southwest side of Allentown. I was teaching at Lehigh University, but not getting rich at it, so I got my hands dirty and made enough to keep food on the table until the fall semester. Anyway, every day I’d see the Reading Alcos with a “Bee Line” logo on the side heading east around mid-afternoon. There was also a switch run that would show up every day to work the waffle factory across the tracks from us. A lot of other “quaint” railroading in that era around the Lehigh Valley, including the remnants of the Lehigh and New England. the PB&NE (mostly, a captive property of Beth Steel), and the Northampton and Bath short line, another Beth Steel property, as I recall.
The ore trains came up from the docks along the Delaware River through Quakertown. That line is long since severed, although there is occasional talk of restoring it with commuter service.
Waffle factory? That must have been a great smell.
My wife’s father lived in Bethlehem (actually Hellertown) until his passing a couple of years ago and we made a few trips out there. What a fascinating area. The Reading “ore” line was long gone, but the signals still were there by the LV Passenger station. I regret not going for a hike up the old CNJ ROW trail at Jim Thorpe. Not sure if we will ever make it back there or not.
Reading, LV, and CNJ had valuable properties as these were carved into Conrail and eventually into NS.
That line from Bethlehem to Philly would be a great commuter line. Reading used to run quite a few passenger trains on that line in the 50s.
Somewhat surprisingly (at least to me), there’s still heavy commuter traffic to/ from Philly on that (and other) lines in this post-industrial, suburban-sprawl era.
I doubt if the inner end of that line - say, from Jenkintown towards Center City - could handle much more traffic without a serious upgrade and increase in capacity.
As to the rest of this thread: If I get started on the Reading RR and associated topics, it’ll be too long until I stop.
I will say this: Law school graduates and the legal profession have a terrible attrition rate, in considerable part because it is no longer an honorable profession (some should look in a mirror to see why). After law school, many decide to not enter the traditional practice/ business, which would typically be as a young overworked ‘associate’ attorney. One reason is the truth behind this jibe: “Lincoln freed the slaves; who will free the associates ?” The compensation levels are extremely unequal, despite what you may hear or read - again, the associates are the ‘sweatshop’ labor. A cynical joke used by many who have left is that they are ‘recovering lawyers’ (not from any substance abuse or addiction, other than being involved in the legal profession). About 15 - 20 years ago a New York Times reporter who covered the Pacific Northwest said that “in Seattle, there’s a serious sub-culture of lawyers turned carpenters”. [Insert favorite lawyer joke here.] And further I sayeth not.
What I’m seeing here in the Chicago area is a relocation of companies towards the city center. Either by just moving there or by opening satelite offices there. This enables them to draw the talent they want from a much larger area and keeps the commuter trains full. i.e., A person with a masters degree in computer science has good choices and multiple opportunities. He/she is not going to choose a two hour drive each way to/from work. Letting such people work in a more accessable location (and work from home over the Internet two days/week) makes the job offer more attractive.
OK.
“Lawyers are like nuclear weapons. I got 'em because the other side’s got 'em. But once you use them they screw everything up.” -Danny DiVito in the movie “Other People’s Money.”