Posted on 02/07/2009 11:11:19 AM PST by Publius
Synopsis
Dagny fails to get a straight answer from the president of the United Locomotive Works as to when she will get her diesel engines and what is the source of the delay. There is even a hint she is being impolite by asking these questions.
Upon returning to the office, Eddie Willers tells her that McNamara of Cleveland has gone out of business and disappeared.
Dagny walks home through the streets of New York, and along the way she encounters signs of the times. First, there is a shop where a radio speaker is broadcasting a classical music concert with a piece that is both atonal and pointless. Then a book store advertises a novel as “the penetrating study of a businessman’s greed.” A theater shows a movie that is trivial. A couple leaves a nightclub drunk and staggering.
Arriving at her midtown apartment, Dagny puts on a recording of Richard Halley’s Fourth Concerto, which leads to a flashback on the life and career of the composer who had disappeared eight years earlier after the triumph of his opera “Phaeton”. Reading the newspaper, she stumbles upon a picture of Francisco d’Anconia, in town at his suite at the Wayne-Falkland Hotel for the purpose of dating a hat check girl and eating at a famous deli. Dagny drops the newspaper and silently sobs.
Jim Taggart awakens past noon to the sound of Betty Pope cleaning up in the bathroom after a night of meaningless sex. He brags to Betty that at this afternoon’s board meeting he will put Dagny in her place. He is interrupted by a hysterical phone call from Mexico. The People’s State of Mexico has not only nationalized Francisco’s San Sebastian Mines but Taggart Transcontinental’s San Sebastian Line.
Jim puts the best face possible on this development at the board meeting. He takes credit for running substandard service with old equipment so that the Mexican government could not confiscate any useful assets of the railroad. Delegating blame, he asks the board to request the resignations of the consultant who recommended building the line and the railroad’s Mexican agent.
Upon returning to his office, Jim finds Orren Boyle waiting for him. Francisco has lost $15 million in the nationalization, and Jim and Orren want to find out how he plans to recover their investments. Jim asks for a meeting with Francisco only to be told that Francisco does not deign to meet with him because Jim bores him.
The National Alliance of Railroads passes an Anti-Dog-Eat-Dog Rule aimed at curbing “destructive competition”. Railroads defined as newcomers to an area serviced by a senior railroad must shut down within nine months. They can instead build in “blighted areas” where there is no need for rail service because “the prime purpose of a railroad was public service, not profit.” Major railroads, however, were entitled to public support to help survive. Dan Conway of the Phoenix-Durango Railroad, the intended victim of the rule, shuffles out of the meeting chamber demoralized.
Jim brags to Dagny that he has taken Conway out of the game, and Dagny is furious. She goes to Conway and offers to help him against the looters, but he demurs, pointing out that the majority has made its decision and he doesn’t have the right to buck it considering the tenor of the times. “Who is John Galt?” he asks. Conway tells Dagny that she needs to get the Rio Norte Line fixed up because it’s the only lifeline keeping Ellis Wyatt and the businessmen of Colorado going.
Returning to her office, she finds Ellis Wyatt himself barging in on her. He gives Dagny an ultimatum: in nine months time, either the railroad gives him the service he requires or he will take it down with him when its failure destroys him. Dagny tells him, “You will get the transportation you need, Mr. Wyatt.”
Dagny meets with Hank Rearden at his mill, asking him for a nine month delivery schedule for Rearden Metal rather than twelve, and Rearden agrees. He enjoys charging Dagny more for the rail, but Dagny has no problem with that. This is business, and she is not a moocher. The intent was for Colorado to save the railroad, but now the railroad must save Colorado. Hank sees their role as saving the country from its own lunacy, a lunacy that just has to be temporary. They understand each other: “We haven’t any spiritual goals or qualities. All we’re after is material things.” Dagny senses there will be a problem about that.
Railroads, Regulation and Competition
The early years of railroading saw competition that was vicious. It was not just that railroad men fought each other, they sought the aid of government in their battles. As soon as an operator of sufficient size built, operated and stabilized a line, he either acquired trackage rights over the line of a competitor, making him an ally, or acquired the competitor outright. This is how networks were built and America’s major railroads emerged.
In dealing with customers, railroads were predatory. This was standard behavior in the era after the War Between the States, a war in which American industry had defeated American plantation agriculture. Ellis Wyatt exclaims, “You expect to feed off me while you can and to find another carcass to pick dry after you have finished mine.” Wyatt is describing the world of Atlas Shrugged, but he could just as easily have been describing the second half of the 19th Century.
There is a saying in Buddhism known as the Law of Karma: “The good or bad you do in a given lifetime will come back to you in that life or a future one.” Americans prefer the pithier and more Protestant, “What goes around, comes around.” The predatory behavior of America’s railroads led to the Granger Movement which favored nationalization of the railroads. Outrage reached sufficient levels during the Cleveland Administration that Congress created the Interstate Commerce Commission to regulate the railroads.
Once a commission is created to regulate something, it takes about two decades before the regulated gain enough influence to become the regulators. This is a natural process, a revolving door that circulates executives from regulated industries, lawyers, lobbyists, politicians and regulators themselves. On occasion it also involves the passing of cash. Over time the ICC became the tool by which major railroads kept competitors out of the game by building a bureaucratic structure impossible for any but the best legal minds to penetrate. As long as railroads were the key movers of people and goods, this structure provided stability. But it failed as soon as real competition emerged.
By the early 20th Century, the internal combustion engine prompted states and counties to build roads to make space for all the cars pouring out of Henry Ford’s plant. After World War I, this began in earnest and increased exponentially during the Depression when the federal government created make-work jobs building bridges and highways.
The building of roads created space for trucks to compete with trains. At first, America’s highway network was a collection of two-lane roads, and trucks were not able to compete well for long distance hauling. But the Interstate Highway System changed all that. Antiquated work rules, featherbedding and deferred maintenance led to America’s railroads tearing out much of their physical plant in the Sixties. Wall Street believed it might even be in the best interest of investors to shut down the railroads and move everything by truck over the new subsidized freeway network. Railroads not only didn’t earn the cost of their capital, they were losing their shirts.
It was the Penn Central bankruptcy of 1970 that provided the reality check. The Penn Central, created in 1968 by the merger of the Pennsylvania and New York Central railroads, crashed so catastrophically that it took down all the railroads in the northeastern US.
The Penn Central’s (ex-Pennsylvania) Northeast Corridor was the single most important piece of transportation infrastructure in the area – just as important as the New Jersey Turnpike – and it ended up in the hands of the government’s Amtrak, which had been created to preserve nationwide passenger rail service after the railroads had given up on it. Passenger trains had been subsidized by the Post Office via the mail contract, but in 1967 that had been shifted to the airlines. Government ownership was good for the Northeast Corridor but ended up being a major policy mistake.
The rest of the railroad infrastructure in the northeastern US ended up in the hands of the government’s Conrail, which hemorrhaged money until the railroad sold off much of its branch network to short line operators. In 1986, the government sold Conrail back to Wall Street, and a decade later CSX and Norfolk Southern carved up Conrail between them.
The creation of a large number of short line railroads was one of the most important developments in railroading in the second half of the century. The Class I railroads had not been able to make money on these branch lines, but short line operators provided the kind of customer service the major railroads had long since forgotten. With short line operators making these branches profitable, the Class I’s could turn their attention to hook-and-haul operations on major rail trunks.
In 1980, Rep. Harley Staggers (D-WV) wrote a bill that would replace the ICC with the Surface Transportation Board and finally deregulate the railroads. Following its enactment, by the end of 1980 all major railroads were profitable again. This set off a wave of mergers that is still ongoing. Competition is stiff, and each railroad feels a need to chivy its competitors out of every last available scrap of cargo – while the trucking industry continues to eat the railroads’ lunch.
Until recently, America’s railroads had been loath to accept government money to fix up their infrastructure because of a terrible fear of Open Access, which the government might demand as its price. This would require the railroads to dispatch the trains of competitors on their tracks for a fee.
However, Norfolk Southern has accepted government money to crown-mine the tunnels on its Norfolk-to-Chicago route so they can handle double-stack containers, the latest innovation in railroading. NS is also looking at government money to expand the capacity of its I-81 line from Harrisburg to Chattanooga to take trucks off that saturated interstate, and CSX is looking for money to fix up its lines that parallel I-95 and I-85 in the South. (It’s fascinating that the states of the Old Confederacy are far ahead of their brethren in understanding the role of rail in hauling cargo efficiently.)
Today there exists the Association of American Railroads, which lobbies before Congress. It has none of the monolithic power of the National Alliance of Railroads, but there is a sentence in the book that refers to laws enacted by the National Legislature that the alliance appears to be enforcing. Much like the old ICC, its practical goal is to protect current operators against upstarts, but it’s a voluntary association. Dan Conway was a signatory, and he believes that he must, if necessary, sacrifice himself for the greater good.
Some Discussion Topics
If you are interested, I have it in .rtf form, which can be read with Word, uBook or most other word processing software.
Let me know, and I can shoot you a copy.
K
It is a dreary story, no doubt about it. The protagonists have no friends (at least not at this point in the story); that is, there’s no one understanding enough in whom they might confide, outside the office. They’re very solitary people.
I’m not so surprised, though. Successful businesspeople do make their jobs their entire lives, 24 hours per day. Also, once a certain point in life is reached, the job becomes your whole life, especially if you don’t have children. We didn’t start a family until our thirties, and I can honestly say our 20’s consisted mostly of work and study, up to that point. We spent so much time with our coworkers that they were our friends and family. It seems to be that way for most people, doesn’t it?
But, there are other details missing from this story, too. She’ll write on and on about a single glance or a single thought, in order to explain her philosophy, I suppose, but there’s no word about the things that would worry a normal person in real life... especially beginning in the next chapter. ;-)
You can find the pdf & audiobook version of AS and other Rand books at http://gigapedia.com/ for free.
I am not sure that people focus on friends or children in a time of revolution. I would think they are concentrating on survival either off the government dole or trying to work without being persecuted.
They do if they have children. The lead characters in this story don't, so lack of concern for children doesn't surprise me. Something else about children surprises me in the story. IMHO, something is missing in this story. It's interesting, but it's not safe to discuss it yet. I didn't notice it until the next chapter. Waiting for the next chapter to address the issue further...
It was formative in challenging me out of my Roosevelt Democrat upbringing.
Reading it this time is painful. So much of what was dreadful is now the accepted norm.
My timing of this project was fortuitous.
Very good timing! I fear that current events could make AS look like an unremarkable story.
Hey - are we having the chapter 4 book club today?
oh wait.....I thought we were on chapter four this week (2/14).
Well, anyway, how about the bookclub today - or has it been suspended so we don’t spend all our time on the computer and hangout with loved ones on Valentines Day?
Be patient. The thread is going up.
I am getting ready to start reading chapter 5 now, so I should be caught up with all of you by tomorrow. I have been reading each chapter and then reading through the discussion on the chapter on the FR threads, so I will know what has been discussed on the earlier threads when I join the discussion.
I would like to let you all know that I am very impressed with the level of discussion on these threads as well as the great job our host is doing setting up these threads. None of my college literature class discussions ever had this high a level of insight and discussion, and I went to college a long time ago, when teachers did a far better job than they do today. As my children would say, Freepers Rock!
“And whatsoever ye do in word or deed, do all in the name of the Lord Jesus, ... This may sound impossible but with God all things are possible. Lord ...” Colossians 3:17
Personally I aim for this. Even in the small things. What better way to appreciate our life than in having God as my witness at all times and places?
Of course I fall short of being the best; however, to do things as if God is at my side. It is a goal ... I attain to living.
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