Into Bankruptcy

To the 100,000 long-suffering commuters who ride in & out of Manhattan on the dependably undependable Long Island Rail Road, the line is the target of countless bitter jokes--many founded on fact. In their time, the Long Island's trains have been delayed by stray dogs, wet leaves on the tracks, and sea gulls short-circuiting transformers. Its trains sometimes take the wrong switch and "get lost." Last week the comedy was taken to court. The Long Island's officers marched into Brooklyn's Federal Court and declared the road bankrupt, the first U.S. Class 1 railroad to do so in four years.

Only the day before, the New York Public Service Commission had hastily granted the Long Island a $3.2 million-a-year boost in its commutation fares, the third boost since 1918. But the Pennsylvania Railroad, which owns the Long Island lock, stock & comic book, had decided to quit footing the bills anyway: the Long Island would have to shift for itself. With only $60,000 cash left in its till, there was nothing left for the Long Island but to ask the court to appoint trustees and reorganize it.

A New Deal. The Long Island's troubles were caused by: 1) poor management; 2) the preponderance of passenger traffic over money-making freight traffic; and 3) the recent rise in operating costs. Never a rich road (it had gone bankrupt twice before), it had nevertheless managed to make money between 1927 and 1934.

When it lost money in the next six years, its passengers darkly suspected the Pennsy of milking its stepchild by overcharging for the use of its Manhattan terminal and East River tunnels. In 1940, the Interstate Commerce Commission found some truth in this. It made the Pennsy kick back $5.6 million of these charges to the Long Island, and make a new contract that trimmed a million a year off the rents.

The Old Jokers. But the Long Island kept on losing money anyway, except for three war years, when it made $4.4 million. Last year, with record revenues of $52 million, it lost a record $6 million. It also stirred up a record outcry from commuters when it broke down almost completely under the winter's snow storms (TIME, Jan. 5, 1948). (One passenger, after 8 1/2 hours aboard one stymied train, complained of claustrophobia, sued the Long Island for "false imprisonment.")

The worried Pennsy finally appointed a general manager to run things on the spot. But there was no improvement in earnings and little in service. Passengers still had to line up for the trains, were often still packed in cars as tightly as books in a case. The railroad, which now owes the Pennsy $53 million, was far from worthless. "Even if it were sold for scrap," said a Pennsy official, "it would bring $65 million."

With hundreds of thousands of Long Islanders dependent on it, the Long Island could not be scrapped. But in bringing its stepchild into court, the Pennsy apparently hoped to be permitted to abandon some of its poorest-paying routes to busses and subways, concentrate on making money where its traffic is heaviest, and get the fares boosted once again.

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