Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, April 15, 1990 TAG: 9004110519
SECTION: BUSINESS PAGE: A12 EDITION: METRO
SOURCE: Leslie Zganjar Associated press
DATELINE: ALBANY, N.Y. LENGTH: Long
In those days railroads were in their heyday, already a legend of American expansion and industry. In young Williams' view, no occupation could be more romantic or more necessary than railroading.
Or more permanent. Because the railroad where his father worked, and which he later served for 40 years, was the Delaware & Hudson Railroad Co., the venerable D&H, the nation's oldest railroad. It made its first run in 1829.
It might make its last run any day now.
If no one buys the D&H in the next few weeks, men will unhook its cars and sell them off one by one. Dick Williams always thought he would be long dead before such a historical ignominy would ever come to pass.
"It's hard to see this happening to a railroad you worked on your entire life," says Williams. Now 61, Williams took early retirement six years ago because he couldn't bear to stick around and listen to the death rattle.
If no buyer comes forward, more than 400 workers who make sure the D&H keeps its schedule on runs between Montreal and Washington and between Albany and Buffalo would lose their jobs. America would lose a chapter of its folklore.
The Delaware & Hudson didn't start out as a railroad.
In 1823, brothers William and Maurice Wurtz, merchants from Philadelphia, carved out a canal from northern Pennsylvania to Kingston, N.Y., to haul coal.
Six years later the brothers began using a new technology called a "gravity line." Stationary steam engines hauled cable cars up the hills, gravity took them down, and horses pulled them in between.
D&H began using steam locomotives in 1860 and gradually expanded into the Northeast and Canada.
During the Civil War the D&H hauled coal to northern arsenals. In 1885, a D&H train carried the body of Gen. Ulysses S. Grant for a final viewing before the former president was buried in New York. In the next century American soldiers made part of their journey south aboard the D&H to fight the Mexican bandit Pancho Villa.
Before the start of World War II, Winston Churchill rode the D&H into Canada after a stop in Washington to ask Congress for money to fight Hitler's Germany.
In those days more than 250,000 miles of railroad track crisscrossed America and Dick Williams, a telegraph operator and train dispatcher as his father before him, watched it all and marveled.
Today his Albany home is a museum of D&H memorabilia, including an old telegraph "bug" his father gave him when he was 12 years old. He can still tap out words, still remembers Morse Code 30 years after the D&H stopped using telegraphs.
Williams moved on from telegraph operator to dispatcher and then fireman and eventually worked his way up to general manager in 1980.
"Railroad men were a breed all by themselves." he said, reflecting on those glory days of railroading. "They'd do anything for one another. It was like a family. You felt good accomplishing what you were supposed to do. You took pride in your work."
Railroad business began declining in the 1950s with the growth of the interstate highway system and the trucking industry.
"Trucks had a highway system that was free to them. Railroads had to own the property they ran over and in most cases had to pay taxes on that property," William says.
The Norfolk and Western Railway owned the D&H for 16 years, acquiring it in 1968 for a $1 million note and more than 400,000 shares of NW stock.
The D&H was operated by Dereco Inc., an NW subsidiary. John P. Fishwick, since retired as NW chairman, was the first officer from NW to serve as president of D&H in 1968.
By the 1970s, mergers and acquisitions were commonplace as railroads struggled to stay alive. The federal government got involved and the result was Conrail, an amalgamation of the Penn Central, New Jersey Central, Reading, Erie Lackawanna and several smaller railroads that were either bankrupt or about to be.
Conrail was supposed to provide D&H with friendly connections cut off by the mergers of several railway companies surrounding D&H, federal officials said. They said it also would allow D&H to extend into Buffalo and as far south as Washington and remain competitive with the federally subsidized Conrail.
While Williams agrees some federal action was necessary to save the railroad industry in the Northeast, he says what was done did little to help D&H. D&H had to use Conrail track to haul freight to its new destinations, at a price set by Conrail. That price wasn't competitive, Williams says.
"We had an opportunity to provide some competition and we attempted to have a profitable operation. But it didn't work," he says. "But you had to try or you were dead. Conrail was a blood transfusion for D&H, that's all."
D&H struggled to remain solvent, propped up by state and federal money. From the late 1970s to the early 1980s, D&H received almost $40 million in federal aid.
During heavy losses by D&H and years of negotiations, New York State tried to require D&H inclusion in the new Norfolk Southern.
By the 1980s, D&H as one of the Northeast's last major privately owned railroads. But it was losing money: $14 million in 1982.
Hope of continued survival came in 1984 in the form of Guilford Transportation Industries of Billerica, Mass. Guilford owner Timothy Mellon, a financier and descendant of the Pittsburgh banking family, bought D&H for $500,000 to complete a Northeast rail network made up of the Guilford-owned Maine Central and Boston & Maine railroads.
NW wrote down the value of D&H to a half-million dollars as a tax advantage in 1978. D&H owed the federal government $48 million before it was sold to Mellon.
The buyout created a system stretching from New England to Buffalo with legs north to Montreal and south to Baltimore and Washington. It was an attempt to compete with Conrail in the Northeast.
However, negotiations with D&H employees to change labor contracts faltered. Four years after it purchased D&H, Guilford put it into bankruptcy.
Guilford officials blame the railroad's demise on D&H's archaic union work rules. D&H employees, Williams says, blamed Guilford's inexperience in running a railroad.
The fate of the D&H now rests with a Washington lawyer, Francis Dicello, appointed trustee in 1988 by a federal bankruptcy court.
Dicello says he will try to find a buyer for the line within the next few weeks. If that fails, he may ask the court's permission to liquidate.
D&H President Carl Belke insists the railroad will survive.
"We intend to be here one way or another," he says.
by CNB