In his later years, Eaton remained active in industry by becoming the chairman of the Chesapeake & Ohio Railroad and the Kaiser-Frazer Automobile Co.. The Erie crossed New York State fro
Trang 1E
Eastern Airlines The company, originally
Pit-cairn Aviation, began in the early 1920s when
civil aviation consisted mainly of barnstorming
and stunt flying Founded by Harold Pitcairn,
who shocked his wealthy family by announcing
his intention of making a business out of
air-planes, the young company entered the
market-place as a contract mail carrier
In a surprise move, Pitcairn sold the airline in
1930 to Clement Keys, who moved the airline’s
headquarters to Brooklyn, New York, and changed
its name to Eastern Air Transport As a
promo-tional gimmick, 22 women were selected as cabin
attendants—among them Mildred Aldrin, whose
nephew Buzz found fame as an astronaut
The company remained relatively healthy
throughout the depression years until Keys took
an extended trip to Europe In his absence, his
business associates diverted funds into the
still-plunging stock market, leaving Keys to face
financial ruin Keys saved the airline through
negotiation, in exchange for his resignation On
January 1, 1935, a new general manager was
named to (then called) Eastern Air Lines whose
name would forever be associated with the
com-pany His name was Edward Vernon Rickenbacker
Rickenbacker, a World War I flying ace, ruled the company with an iron fist for a quarter of a century and left a glittering record of 26 consec-utive years of profit to his successors When Rickenbacker turned over the leadership of East-ern to Malcolm MacIntyre in 1959, the airline served 128 cities in 27 states, encompassing almost three-fourths of the American population MacIntyre was an accomplished lawyer but had virtually no experience in the rough-and-tumble game of running a major airline When he left office in 1963, Eastern was headed for financial oblivion MacIntyre will be remembered for two bright spots in the company’s history—the intro-duction of the Boeing 727 and the development
of the Shuttle
The former became a workhorse of the indus-try, and the latter involved a brilliant customer relations strategy Shuttle flights between New York, Washington, and Boston required no reser-vations and guaranteed a seat to anyone who showed up The Shuttle immediately became a way of life for people moving along the heavily traveled Washington–New York–Boston corridor
In 1975, Eastern’s fortunes were entrusted to
a man who was called the real inheritor of Captain
Trang 2Eddie’s leadership mantle—former astronaut
Colonel Frank Borman As president and CEO,
Borman brought a familiar military ethic back to
Eastern He negotiated wage concessions from
the employees in an attempt to save the company
from disaster, but failed to compensate for the
exorbitant cost of the new airplanes he had
ordered or the costly effects of DEREGULATION
Borman and Eastern’s machinist unions clashed
furiously and frequently
Industry analysts blamed Eastern’s troubles
partly on poor management and partly on the
company’s uncooperative labor unions, but the
root of Eastern’s troubles lay in a poor route
structure and huge debt As a result of these
seemingly incurable financial distresses, Eastern
succumbed to a takeover bid by Frank Lorenzo
and his Texas Air empire The conflict over Texas
Air’s acquisition extended to several employee
groups and proved to be the beginning of the end
for Eastern
A period of severe employee unrest followed
In March 1989, a strike against the airline was
called by the machinists and supported by the
flight attendants and the pilots A week later,
East-ern filed for BANKRUPTCY, and its management
fought to retain control over Eastern in the face of
furious resistance from labor and rapidly
diminish-ing confidence among its investors In April 1990,
bankruptcy court judge Burton Lifland ruled that
Frank Lorenzo, the brash corporate raider who
had acquired Eastern, was unfit to run the
com-pany and appointed a trustee for the airline A
last-ditch effort for order failed, and on January 18,
1991, the company folded its wings for good
See also AIRLINE INDUSTRY; PAN AMERICAN
AIRWAYS
Further reading
Bernstein, Aaron Grounded: Frank Lorenzo and the
Destruction of Eastern Airlines New York: Simon
& Schuster, 1990.
Saunders, Martha Dunagin Eastern’s Armageddon:
Labor Conflict and the Destruction of Eastern
Air-lines New York: Greenwood Press, 1992.
Serling, Robert J From the Captain to the Colonel: An Informal History of Eastern Airlines New York:
Doubleday, 1980.
Martha Dunagin Saunders
Eastman, George (1854–1932) businessman
Born in Waterville, New York, Eastman moved to Rochester with his family as a young boy The death of his father forced him to leave school at age 14 and find work as a messenger While working in that capacity, he studied accounting
in the evenings and gradually worked his way up
to the position of clerk in a Rochester bank But
it was not until his first planned vacation that he became interested in photography
He bought his first camera for a vacation that was never to take place The large, cumbersome camera he purchased intrigued him, however, and he decided to improve upon the design of the photographic plates that were until that time covered with gelatin By 1880, he had devised a process for dry plates and opened up shop in Rochester to manufacture them for sale to other camera manufacturers, initially operating as a partnership called the Eastman Dry Plate Co After manufacturing plates for several years, he hit upon the idea of producing film on a roll, which in turn would help make cameras smaller
He began producing film in 1885 Three years later, he produced the first Kodak camera, which was unique for being able to be operated with the click of a simple button The trademark name was registered and quickly became synonymous with photography itself
The original camera had film installed capa-ble of taking 100 pictures The price was $25 When the customer used the entire roll of film, it was returned to the factory, where the film was developed and the camera reloaded before being returned to its owner Previous partnerships gave way to the Eastman Co in 1889 and finally the Eastman Kodak Co in 1892 Eastman served as chairman of the company’s board from 1925 to 1932
132 Eastman, George
Trang 3From the beginning, Eastman emphasized
MASS PRODUCTION combined with low costs so
that he could reach as wide a market as possible
He was also much more generous to his
employ-ees than many other industrialists of the period
As early as 1899, he began distributing a portion
of his own profit to his employees He later
estab-lished a program called the “wage dividend” that
paid each employee a percentage equivalent to
the common stock dividends above his or her
salary After World War I, he gave one-third of
his stock holdings to his employees The gift was
worth about $110 million
Eastman Kodak Company became the largest
American producer of cameras and film until
challenged by the Polaroid Co., founded by
Edwin LAND, and later by imports, mostly from
Japan Eastman remained a generous
philanthro-pist throughout his life He was a major
benefac-tor to the University of Rochester, M.I.T.,
Hampton Institute, and Tuskegee Institute The
University of Rochester was the main beneficiary,
especially its Eastman School of Music He died
in 1932
Further reading
Brayer, Elizabeth George Eastman: A Biography
Balti-more: Johns Hopkins University Press, 1996.
Swasy, Alecia Changing Focus: Kodak and the Battle to
Save a Great American Company New York:
Ran-dom House, 1997.
Tedlow, Richard S Giants of Enterprise: Seven Business
Innovators and the Empires They Built New York:
HarperBusiness, 2001.
Eaton, Cyrus (1883–1979) financier and
industrialist Born in Nova Scotia, Eaton was a
member of an established New England family
that moved to Canada in 1760 He graduated
from Amherst Academy in Ontario and decided
to become a Baptist minister After graduation,
he visited an uncle who was a Baptist minister in
Cleveland, where he was introduced to John D
Rockefeller, a member of his uncle’s
congrega-tion After working at a summer job for Rocke-feller, he was persuaded to attend McMaster Uni-versity and study business He graduated in 1905 and went to work for Rockefeller after a brief series of odd jobs
Eaton began working for Rockefeller in Man-itoba in 1907 He was put in charge of acquiring franchises for power plants in Canada, although the Panic of 1907 intervened, and Rockefeller was unwilling to pursue the enterprise Eaton then assumed part of the project himself, bor-rowed money, and built a power plant in Mani-toba He soon followed this success by building other plants, and he eventually established the Continental Gas and Electric Company with holdings in the United States and Canada
In 1913, he returned to Cleveland and estab-lished a partnership in the investment banking firm Otis & Company Over the next 10 years, Eaton became one of the major investors in the
UTILITIESindustry, which was expanding rapidly
in the 1920s He merged Continental Gas and Electric with the Kansas City Power and Light
Co and the Columbia Power and Light Co to form United Light and Power, a giant utility that served more than 5 million people in a dozen midwestern states
During the late 1920s, Eaton was best remembered for engaging in a takeover battle with Samuel INSULL for Insull’s holdings in the Commonwealth Edison Company In order to fend off Eaton’s unwanted advances, Insull was forced to seek the help of New York bankers, who forced his downfall and the notable bank-ruptcy filing that followed in the early 1930s He also entered the STEEL INDUSTRYin the 1920s and merged several smaller companies into the Republic Steel Corporation, destined to become one of the country’s largest producers The same year that he created Republic, he also took con-trol of the Goodyear Tire and Rubber Company The stock market crash of 1929 reputedly cost Eaton more than $100 million in losses Three years later, he became associated with Harold Stuart of the Chicago investment banking
Eaton, Cyrus 133
Trang 4firm Halsey Stuart & Co Halsey Stuart was the
former financier of much of Insull’s utilities
empire One of the firm’s major contributions to
finance during this period was the introduction
of competitive bids for underwriting mandates
for new securities issues, especially in the
rail-road industry, which was later made standard by
the Securities and Exchange Commission
In his later years, Eaton remained active in
industry by becoming the chairman of the
Chesapeake & Ohio Railroad and the
Kaiser-Frazer Automobile Co after World War II He
also developed a close relationship with the
Soviet Union and organized a series of meetings
at his home in Nova Scotia between American
and Soviet scientists designed to ease world
ten-sions These meetings became known as the
Pug-wash Conferences He also helped develop the St
Lawrence Seaway
Further reading
Allen, Frederick Lewis The Lords of Creation New
York: Harper & Brothers, 1935.
Gleisser, Marcus The World of Cyrus Eaton New York:
A S Barnes, 1965.
Eccles, Marriner S. (1890–1977)
business-man and banker Born in Logan, Utah, Eccles
was the oldest of nine children After attending
Brigham Young College, he became familiar with
investments and established an investment
com-pany that acquired many of his father’s successful
business enterprises In 1924, he and his brother
joined with a prominent banking family in Utah to
form the Eccles-Browning Affiliated Banks, which
rapidly began to expand by acquiring banks in
Utah and Wyoming In 1928, he and several
part-ners organized the First Security Corporation, a
HOLDING COMPANY that managed the acquired
banks The company was one of the first
multi-bank holding companies in the United States
Eccles’s banks survived the Great Depression
without serious disruption, and he became the
most prominent banker in the West during the
1930s A Republican until the early 1930s, he shared many of the Roosevelt administration’s goals and became an avid supporter of the Democrats He helped the administration draft the Emergency Banking Act of 1933, the Federal Housing Act of 1934, and the BANKING ACT OF
1933(Glass-Steagall Act) As a result of his public service, Eccles was named chairman of the Fed-eral Reserve System in 1934 and assumed the position in 1935 after being confirmed
He was also the principal force behind the Banking Act of 1935, which reorganized the Fed-eral Reserve System Since its inception, the cen-tral bank had been criticized in many quarters as being elitist, but it lacked power in many crucial areas that would allow it to maintain control of the creation of money and credit The central bank was restructured by the 1935 act and given spe-cific powers that were lacking during the 1920s and were widely blamed for contributing to the
1929 crash The Fed was now allowed to perform system repurchase agreements Prior to the law, the branches could perform open market opera-tions, undoing board policy as the New York Fed-eral Reserve Bank had done in 1929 The Fed’s membership also was redesigned so that members
of the board would be full-time employees After World War II, Eccles helped work on the agreements drawn up at Bretton Woods, New Hampshire, that created the World Bank and International Monetary Fund In 1948, President Truman did not reappoint him chairman of the Fed, but he remained as vice chairman until
1951, when he resigned He died in Salt Lake City in 1977
Eccles is widely remembered as a successful banker with wide practical experience, which eventually contributed to the most significant reforms of the FEDERAL RESERVE since it was founded The Federal Reserve building in Wash-ington, D.C., is named in his honor
Further reading
Eccles, Marriner S Beckoning Frontiers: Public and Per-sonal Recollections New York: Knopf, 1951.
134 Eccles, Marriner S.
Trang 5Hyman, Sidney Marriner S Eccles: Private
Entrepre-neur and Public Servant Palo Alto, Calif.: Stanford
University School of Business, 1976.
Edison, Thomas A. (1847–1931) inventor
Born in Milan, Ohio, to Samuel and Nancy Elliott
Edison, Edison began experimenting while still a
child Not academically talented as a child, his
mother often instructed him at home, and he
developed an early interest in chemistry He sold
sundries on trains to earn money and suffered an
accident that caused lifetime deafness After
learning how to telegraph messages from a
rail-way agent, he took a job as a telegraph agent in
Canada before returning to the United States
After working at a series of jobs as a telegraph
operator, he began inventing and patented a
stock TICKER TAPE machine While working in
New York City, he made improvements for a
stock ticker while working for the Gold Indicator
Company The patents he registered were sold to
his employer for $40,000, and he promptly took
the proceeds and opened a workshop in Newark,
New Jersey
While in Newark, Edison improved the stock
ticker and also made substantial improvements
for the TYPEWRITER Both developments helped
increase business efficiency once the devices were
put into use Shortly thereafter, he moved his
headquarters to Menlo Park, New Jersey, where
he made improvements on the telephone His
most important invention to date was the
phono-graph, which he invented as a way to record
telegraph messages, but it was the electric
incan-descent bulb that earned him the nickname “The
Wizard of Menlo Park.” In 1879, he succeeded in
placing a filament in a bulb that burned for many
hours before going out He was also one of the
first developers of the electric chair, bringing him
into direct competition with George WESTING
-HOUSE Edison’s version of the electrocution
device used direct current (DC), while
Westing-house’s used alternating current (AC) and
eventu-ally became the standard model used
In 1887, Edison moved his laboratories to West Orange, New Jersey, and continued to invent while perfecting his older inventions He also spent considerable time marketing his ideas The electric lightbulb was only a part of the process of electric generation, and Edison spent considerable time organizing power sta-tions to support his invention The first power station in New York City was at Pearl Street, near Wall Street, and J P Morgan was the first user of the power that it generated Morgan later bought Edison’s operation, freeing the inventor from business matters, and used it as the basis for the GENERALELECTRICCO Edison’s assistant at the time was Samuel INSULL, who would later build a massive UTILITIES empire in Chicago
Using research first developed by George
EASTMAN, Edison also invented the motion pic-ture camera He connected the phonograph and the camera in order to produce talking pictures
Edison, Thomas A 135
Thomas Edison and his original dynamo, Orange, New Jersey, 1906 (LIBRARY OF C ONGRESS )
Trang 6but was less interested in this development than
others During his lifetime, he also was
responsi-ble for developing the dictaphone, allowing
sec-retaries to transcribe messages from a machine
that recorded voices, and a duplicating machine,
among many other inventions
Edison’s original company, the Edison
Gen-eral Electric Company, was later consolidated by
J P Morgan with the Thompson-Houston
Com-pany to become the General Electric ComCom-pany
During World War I, Edison was president of the
Naval Consulting Board and conducted research
on torpedoes and submarine periscopes As a
result of his research, he was awarded the
Distin-guished Service Medal He died in West Orange
in 1931, the most prolific and celebrated
inven-tor of modern times
See also MORGAN, JOHNPIERPONT
Further reading
Baldwin, Neil Edison: Inventing the Century New York:
Hyperion, 1995.
Israel, Paul Edison: A Life of Invention New York: John
Wiley & Sons, 1998.
Jonnes, Jill Empires of Light: Edison, Tesla,
Westing-house, and the Race to Electrify the World New
York: Random House, 2003.
Enron Corporation An energy company
cre-ated in 1985 with the merger of the Houston
Nat-ural Gas Co and InterNorth Corp of Omaha,
integrating several pipeline companies to create
the first nationwide natural gas pipeline system
A year later, Kenneth Lay became the chief
exec-utive officer, and the company officially chose
Enron as its name
In 1987, the company began developing risk
reduction techniques to protect itself against the
fluctuating prices of gas and oil It also began
offering customers the ability to buy long-term
gas contracts at fixed prices and began
diversify-ing itself internationally, especially in Britain and
South America In 1994, it entered the electricity
trading market after the DEREGULATIONcaused by
the Energy Policy Act of 1992 As a direct result, throughout the 1990s the company continued to acquire UTILITIES companies, including the Dab-hol power plant in India and Wessex Water in Britain It also expanded into the domestic utili-ties business by purchasing the Portland General Electric Corp in 1997 in a much-contested acquisition pitting the company against Oregon’s utilities board
Jeffrey Skilling joined the company in 1989 and was elected president and chief operating officer in 1996 The company continued to make acquisitions during the later 1990s as a deliberate strategy of growing through merger In 1999, the company initiated a broadband services group and began trading energy through an on-line Web site, which quickly became the largest e-business site in the world By 2000, annual revenues had reached $100 billion, much of it provided by energy trading Within a year, the company was reported to be the sixth-largest energy company
in the world and ranked in the top 10 largest U.S companies measured by assets
In the fall of 2001, fortunes began to change
at Enron when it announced more than $1 bil-lion in charges for the third quarter and the Secu-rities and Exchange Commission began an inquiry into its affairs, including special invest-ment partnerships Enron had created over the preceding years Then it announced that it would have to restate its earnings for the previous four years It was subsequently discovered that the company had engaged in massive fraud regarding its earnings Its stock price plummeted in the market Its bankruptcy filing following these dis-coveries was the largest in U.S history at the time and prompted the SARBANES-OXLEY ACT, passed by Congress to monitor the activities of accountants and directors of public companies The company’s accountant, Arthur Andersen & Co., was also sued by the Justice Department and was subsequently disbanded for its role in help-ing Enron shred documents deemed vital for the investigation ordered by the Securities and Exchange Commission
136 Enron Corporation
Trang 7Further reading
Fox, Loren Enron: The Rise and Fall New York: John
Wiley & Sons, 2002.
Swartz, Mimi, and Sherron Watkins Power Failure:
The Inside Story of the Collapse of Enron New
York: Doubleday, 2003.
Erie Canal The first major inland waterway
built in the United States Canals became the first
commonly used method of transporting goods in
America, especially from areas that were located
between two bodies of water They quickly
replaced the TURNPIKES that had been built
decades before but proved expensive to build and
maintain The Erie crossed New York State from
Buffalo to the Hudson River, covering 363 miles
It was completed in 1825 at a cost of $7.1 million
and completely funded by New York Some other
smaller canals were funded by private investors,
such as the Morris Canal in New Jersey
Origi-nally, the Erie Canal charged tolls of about a cent
and a half per mile, but tolls finally were
aban-doned in 1882
The canal opened New York State to
com-merce from the Hudson River to Lake Erie and
helped develop it into a major commercial and
financial center This was just as vital to the area’s
commerce as the St Lawrence Seaway would be
in the 20th century Although the idea had
circu-lated for years in New York, DeWitt Clinton
(1769–1828) was responsible for planning and
developing the canal Originally, he and
Gou-verneur Morris petitioned Washington for help
in building the canal but were denied Then he
petitioned New York, which was much more
amenable to the proposal Clinton was appointed
the head of a canal commission The canal
received substantially more support when
Clin-ton was elected governor in 1817, and ground
was finally broken for construction The canal
was completed eight years later, and Clinton was
aboard the first boat to navigate it, taking nine
days to make the journey The opening of the
canal was a national event, and news of its
open-ing traveled quickly throughout the country The stocks of canals also became popular investments
on the stock exchanges
Canals were quickly overtaken by RAILROADS
before the Civil War as a means of transportation but nevertheless remained popular throughout most of the 19th century, remaining as a symbol
of economic growth and bringing goods to mar-ket as quickly as possible The Erie was enlarged several times in order to make it more accommo-dating for increased trade and larger barges New York finally incorporated the Erie into the New York State Barge Canal System in 1918, merging
it with several other smaller canals connecting many of the lakes in the interior of the state
In addition to building the canal and serving
as governor (1817–22 and 1825–28), Clinton was also a state assemblyman, state senator, and mayor of New York City (1803–15) While mayor, he established the New York City school system The Erie Canal remains his most note-worthy achievement
Further reading
Cornog, Evan The Birth of Empire: DeWitt Clinton and the American Experience, 1769–1828 New York:
Oxford University Press, 1998.
Shaw, Ronald E Erie Water West Lexington:
Univer-sity Press of Kentucky, 1966.
Sheriff, Carol The Artificial River: The Erie Canal and the Paradox of Progress, 1817–1862 New York:
Hill & Wang, 1996.
Erie Railroad Company In 1851, the first unit of the later Erie Railway System opened under the corporate banner of the New-York & Erie Railway Company At the time, this 447-mile, broad-gauge (six feet) line between the “ocean and the lake” was touted as the “technological marvel of the age.” Specifically, the Erie built across the rugged “Southern Tier” of New York counties from the village of Piermont, located on the Hudson River about 25 miles north of New York City, to Dunkirk, a small community on Lake
Erie Railroad Company 137
Trang 8Erie southwest of Buffalo While likely a routing
mistake, the company subsequently strengthened
its position with entry to the Port of New York at
Jersey City, New Jersey, and also at Buffalo
Because of bad management and other factors, the
“first” Erie fell into BANKRUPTCYin 1859 The
reor-ganized company, the Erie Railway, never became
the profitable property that its leaders had
expected, and this led to a battle for control
among speculator Daniel DREW, “Commodore”
Cornelius VANDERBILTof the New York Central &
Hudson River Railroad, and the stock traders
“Jim” FISK and Jay GOULD The so-called Great
Erie War, which erupted in 1867, created
addi-tional financial problems, but when the victorious
Gould took control, he made it a much better
property “[Before Gould] its iron was worn and
its roadbed in bad order,” reported the Railroad
Gazette in 1871 “There is now no better track in
America Then it was scarcely safe to run twenty
miles an hour; now the road is as safe at forty-five
miles as human precaution can make it.”
Unfortunately for both the Erie and Gould,
the “scarlet woman of Wall Street” image forever
haunted them In the early 1870s the talented
Gould left the Erie, and the road limped along
under ineffectual leadership until entering its
sec-ond bankruptcy The widespread depression
trig-gered by the Panic of 1873 caused the property to
experience serious financial woes By the end of
the decade a better day had dawned for the Erie,
reorganized in 1878 as the New York, Lake Erie &
Western Railroad Modernization of rail and
rolling stock, standardization of gauge at four feet
8.5 inches, and creation of an expanded albeit
patchwork system that featured a nearly
1,000-mile mainline between Jersey City and Chicago,
Illinois, encouraged investors, employees, and
cus-tomers But hard times returned in the wake of the
catastrophic Panic of 1893, and once again the Erie
stumbled A third bankruptcy followed
Then in 1895 a “new” Erie emerged The New
York, Lake Erie & Western moniker gave way to
simply the Erie Railroad Even though the road
experienced a relatively rapid reorganization, the
reconcentrated firm lacked a financial structure that would have truly enhanced its chances of avoiding future difficulties By the early 20th century the Erie had become a “Morgan prop-erty,” controlled by the giant J P Morgan & Company Generally, this relationship with the
“House of Morgan” worked to the advantage of the Erie Its debt sold well, making possible a substantial upgrading of its physical plant Per-haps the capstone of this rehabilitation work was
an impressive line relocation in southern New York And the Erie acquired modern steam loco-motive and freight and passenger equipment The old vaudevillian wheeze, “I want to go to Chicago the worst way Take the Erie!” seemed less apropos than ever The Morgan con-nection brought to the presidency a “manly man,” Frederick Underwood, who did yeoman service for the company during much of his 26-year tenure “He sparked growth and confidence
in the Erie,” observed a latter-day official But in the 1920s the Erie underwent a major change of ownership and management Begin-ning in 1923 the emerging rail titans from Cleve-land, Ohio, O P Van Sweringen and M J Van Sweringen, two reserved bachelor brothers who already controlled the Nickel Plate Road, began buying large blocs of Erie stock The “Vans” par-ticularly liked the Erie’s low-grade, double-tracked speedway between Ohio and Chicago As they “collected” other RAILROADS through clever stock arrangements, the brothers attempted to receive regulatory approval to unite their proper-ties into a great system Twice, however, the
INTERSTATE COMMERCE COMMISSION refused to bring the Erie under control of their Chesapeake
& Ohio Railroad The Great Depression of the 1930s sent the Vans’ empire into disarray, result-ing in still another receivership for the Erie Yet at the end of 1941 the railroad emerged from court protection and prospered from heavy wartime traffic Reduced interest payments and robust wartime earnings prompted the Erie Rail-road (its name after the reorganization remained the same) to declare a modest dividend in 1942,
138 Erie Railroad Company
Trang 9the first in 69 years and a proud moment for
management The press release, orchestrated by
its image-conscious president (1941–49) Robert
Woodruff, said in part: “ Wall Street tradition
was shattered and Brokers were dazedly groping
for reliable replacements for the immemorial
dic-tums—When Erie Common pays a dividend,
there’ll be icicles in hell—and three things are
certain—Death, Taxes, and no dividends for Erie
Common.” Paying dividends did not mean that
the Erie was splurging; it was “a penny-pinching
property.” Early on the company correctly
recog-nized that substantial savings could be derived
from dieselization Even before the war ended,
powerful General Motors road units pulled long
trains over the hilly main line between Marion,
Ohio, and Meadville, Pennsylvania
Yet savings derived from this replacement technology could not “save” the Erie By the late 1950s a variety of factors, including increased highway competition, steep property taxation, high labor costs caused by union “featherbed-ding,” and unprofitable commuter trains in the metropolitan New York City area prompted the road to seek a merger partner After numerous studies and negotiations, the Erie found a mate, the faltering “Road of Anthracite,” the 940-mile Delaware, Lackawanna & Western Railroad On October 17, 1960, the new couple met the cor-porate world as the 3,188-mile Erie-Lackawanna Railroad (EL) But by the early 1970s the EL had become the “Erie-Lack-of-money,” and failed In 1976, portions of the property entered the quasi-public Consolidation Railroad
Erie Railroad Company 139
This cartoon shows Cornelius Vanderbilt and James Fisk in a race for control of the Erie Railroad, 1870 (LIBRARY
OF C ONGRESS )
Trang 10Corporation (Conrail), and by the early 1990s,
the remaining assets were liquidated
Further reading
Gordon, John Steele Scarlet Woman of Wall Street: Jay
Gould, Jim Fisk, Cornelius Vanderbilt, the Erie
Rail-way Wars and the Birth of Wall Street New York:
Grove/Atlantic, 1988.
Grant, H Roger Erie Lackawanna: Death of an
Ameri-can Railroad, 1938–1992 Stanford, Calif.:
Stan-ford University Press, 1994.
Hungerford, Edward Men of Erie New York: Random
House, 1946.
H Roger Grant
euro A basket or composite currency
devel-oped by the European Economic Community
(EEC) in the 1970s and 1980s as the community’s
accounting currency The currency then became
used in commercial transactions, although it did
not exist in note or currency form It was used by
members of the community to offset the often
volatile effects of the U.S dollar, the world’s major
reserve currency As the EEC became larger, the
need for currency stability against the dollar and
for a common transaction currency prompted the
development of the contemporary euro
The common currency of the members of the
European Union was created on January 1, 1999,
not only to provide the European Union with a
common currency, but also to provide some
insu-lation against movements in the U.S dollar,
which had caused distortions in the past against
the individual currencies of its members It
included Austria, Belgium, Finland, France,
Ger-many, Ireland, Italy, Luxembourg, the
Nether-lands, Portugal, and Spain Greece joined in
2001, while the United Kingdom and Sweden
have kept open their option to join In a fall 2000
referendum, Denmark decided not to join
Since 1999, the exchange rates of the
partici-pating countries are fixed Capital market
trans-actions (including the bond and equity markets,
the foreign exchange markets, and the interbank
market) were run exclusively in euro, while retail transactions with notes and coins were con-ducted in national currencies In the first two months of 2002, national currencies disappeared completely, replaced by euro notes and coins With the introduction of the euro, the national central banks became part of the pean System of Central Banks (ESCB) The Euro-pean System of Central Banks comprises a European Central Bank (ECB) located in Frank-furt (Germany) and the national central banks of each country participating in the euro The gov-erning council of the ESCB formulates the mone-tary policy It is made up of the governors of each central bank participating in the euro and of the members of the executive board of the European Central Bank The executive board implements the monetary policy, giving the necessary instructions to the national central banks The creation of the euro cannot be separated from the Single Market Program, another part of the February 1992 Maastricht Treaty on the European Union The 1992 program provides for the free flow of goods, capital, and persons Resistance to the creation of the single market was reduced by the single currency as it prevents
“beggar-thy-neighbor” type of competitive deval-uations The European Monetary Union (EMU)
is therefore the cement of the single market, which by integrating previously fragmented mar-kets allows firms to realize gains in productivity and competitiveness
Four major benefits of a single currency were identified: reduction in transaction costs (esti-mated at 0.4 percent of gross domestic product), reduction in foreign exchange risk, increased competition in a more transparent market, and emergence of an international currency compet-ing with the U.S dollar A potential cost of the EMU mentioned by several economists, is the sacrifice of national monetary autonomy and the possibility of controlling interest rates or adjust-ing exchange rates to restore competitiveness
In its first year of existence, the replacement
of national currencies by the euro had a
signifi-140 euro