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David R. Goode

Chairman, President, and CEO (retired)
Norfolk Southern Corporation
Interview Transcript

April 29, 2023

Brooks Bentz: Hi, I’m Brooks Bentz with the National Railroad Hall of Fame, and I want to welcome you to our interview with David Goode, former Chairman and CEO of Norfolk Southern Railway. We’re coming to you from the Goode home in Norfolk, Virginia.
David, I want to thank you for having us in here.  It's much more welcoming than being in some hotel room or some office; It’s a great honor to be here. 
We’re sitting in front of a Winston Link photo which is one of his iconic and probably most famous photos, and I’d ask you to maybe comment on that and the relationship and link you have (laughs) – the link you have to Link.

David Goode:  Well, It’s an interesting starting place.  I did know O. Winston Link towards the end of his life.  Over time, I was introduced to him by Bob Claytor who had worked with Winston back in the N&W days when Winston was photographing the end of the steam era.  Bob was an admirer of his work and introduced me to him, so I kind of got to know him over the years.  I have an interest in collecting rail photography.  So, I knew who he was and over time we worked quite a bit with Winston towards the end of his life and he was, of course, very interested in preserving the steam locomotives, which we had a couple of at Norfolk Southern, at the end of Winston’s life.  He was very helpful in bringing his archive to Roanoke, putting it in the old station in Roanoke, which we were interested in preserving, but we had to move the steam locomotives around a little to make Winston happy, and I went along with that at the time.  Interesting man, and I do have quite a collection of his paintings which have just been given to the Chrysler Museum here in Norfolk.

BB:  Yeah, and I think that’s important for people who want to see the collection and happen to be in Norfolk. The Chrysler Museum is now the repository of those.

DG:  And of course it’s also good for people to go to the O. Winston Link Museum in Roanoke in the old station building which we went to some trouble to preserve because it is, I think, the only Raymond Loewy-designed railroad station in the world, and of course, he’s much better known for the Studebaker and the McDonald’s arches and a number of other things but…

BB:  I didn’t realize that he had designed that when I started with the N&W in the early 70’s.

DG: He’s much better known for the streamlined, the famous streamlined locomotives, including some of our own, but we did retain Loewy to design that.  I say “we”; Norfolk & Western, in whatever time it was, retained him to design that station.  Interestingly -- we’re talking about railroads now -- interestingly, the engineering department of the railroad naturally was not exactly satisfied with Loewy’s design.  So, you can, in the archives of Norfolk & Western, which are located in Richmond at the history museum now, you can see the Loewy designs with changes made by anonymous Norfolk & Western engineers and – guess what?  The changes were made.                            

BB:  Of course.  Well, when I started with the company in the early 70’s that was office space and our training program was based in there, but I had no idea it was a Loewy design.

We’re here on April 29th of 2023, but I want to take you back to the beginning, to 1941 and specifically to January 13th, which is when you entered the world stage, and maybe have you take us through your early days leading up through college and graduate school and how you ended up on the railroad.

DG:  Well, I’ll try to do that quickly.  I grew up outside of Roanoke, Virginia, at the edge of Bedford County actually.  The house where I grew up was on a hillside up from the Roanoke River and the Roanoke River had running along it the old Virginian line.  So, I guess my first railroad experience was in the cradle, hearing the coal trains on their way to Lambert’s Point.  Which, by the way, I think you could still hear the coal trains on their way to Lambert’s Point, maybe not quite as many as there were a few years ago.  

So, I grew up in the Roanoke Valley.  My mother and father – we had a strong family, good family background.  My mother was a schoolteacher.  She was from Bedford County; daughter of a farmer, first in her family to go to college, Radford State Teacher’s College.  Her first assignment was teaching in a one room schoolhouse.  

My father, his roots were in West Virginia, in the coal fields.  His father was a miner.  He was, early on, destined to be a miner himself, but he made a decision as a young man in the Depression really, at an early time, he made the decision to leave that good paying job in the mines and set out for a new life and he came to Roanoke, Virginia; [he] went to work for Sears Roebuck.  [He] went to school at night and eventually used the Sears’ stock plan.  Sears had a very early profit-sharing plan, and my dad used the benefits of the Sears’ profit-sharing plan to buy his own small store in the small town of Benton, Virginia, which is where we lived and where I grew up.  

I grew up near the train - of course Benton’s an important place on the Norfolk & Western Railroad, so I had exposure early on to both the Virginian and the Norfolk & Western. Never dreamed that I would end up leading that railroad and had no intention of doing so until much later in life.

BB:  I want to get to that because it’s interesting how people transition from their early days to ending up in a railroad career.  Some just naturally say, “I love trains so I’m going to work in that business” and others evolve to it, and I’d like to hear how you – what light went off or what epiphany did you have that said, “That’s where I’m going.”?

Goode:  Well, it was totally accidental, it really was.  There was no early intention.  I mean, I was around the railroad in Benton, and my friends worked for the railroad.  Many of the customers in my dad’s little store were people who worked in the East End Shops and built the great locomotives and worked for the Norfolk & Western, so I certainly knew plenty of railroaders and it was part of life growing up, but I had no thought of working for the railroad.

I went to Duke and, following Duke, Harvard Law School. And the reason I ended up back in Roanoke working for Norfolk & Western was Harvard Law School.  While finishing in my last year of Harvard Law School I was, as people did in the late 60’s --  I came out in ’65 – but at that time it was sort of a standard operating practice that you went to New York, particularly if you were interested in tax law, which I was because I had an accounting background and had worked briefly for Pete Barwick in the old days.  But I was thinking of whether to go to New York and serve my apprenticeship or Washington and serve my apprenticeship which is what you did.  But a man came to Harvard Law School interviewing from Roanoke, Virginia.  His name was Lynnwood Holton, and I knew him because I had worked a summer for another law firm in Roanoke led by a very fine man who became a state senator named Bill Hopkins. I saw Linwood’s name on the interviewing board, and nobody had signed up, so I thought, “Well, here’s a guy from Roanoke; I don’t know him, I’ll interview [with] him.”  So, I didn’t recognize the name or know him, and I think I may have been the only guy that signed up to interview with him.


To make a long story short, he invited me to come back to Roanoke and take a look at his law firm, which Susan and I did.  She was from Wilmington, Delaware.  I had married Susan, and she was working hard at New England Telephone Company to put me through Harvard Law School.  We were living the traditional life of young people and students who had no money whatsoever.  She was not enthusiastic, I would say, originally, about going back to my hometown. We went because Linwood impressed me and somehow, I went back.  I didn’t know, of course, that he was looking for somebody to carry his briefcase around while he was getting ready to run for governor of Virginia, and he became the first Republican governor of Virginia.  I was too young and dumb to understand that at the time.

So, although Linwood offered me a job and I had more or less said that I would take it, he said, “Well, have you met these guys over at the railroad?”  He said, there are several Harvard Law people at the railroad, and there was a long tradition in the railroad of Harvard Law:  Stuart Saunders who was then president of Norfolk & Western, then Jack Fishwick, of course Bob Claytor.  All were Harvard Law graduates.  I didn't know any of them because I’d grown up in a small town near there but didn't have that connection.   But Lynnwood, God bless him said, “I think you should go over and introduce yourself.”  So, I did, and Jack Fishwick, who was head of Law at the time, let me in the door.  This was a Saturday.  Everyone in those days worked on Saturday with coat and tie and a full working day at the Norfolk & Western in those days.  

Fishwick was there, and he invited me into his office.   He was puffing his pipe and [he had] a table laid out of papers and maps and all, and he said, “Well, let me show you what I’m working on.” And what he was working on was Dereco, the Dereco transaction.  He was merging railroads on that table, and I looked at that, talked to him a little bit, and I thought, “This is exciting stuff! This is bigtime!”   He asked me what I was going to do, and I told him I was going to go to New York to be a tax lawyer and he told me, “Let me introduce you to Bob Claytor.”  And he did that, and Bob Claytor introduced me to a man that they had brought in from Covington & Burling in Washington named Jim Carr.  And the long and short of it is, he offered me a job.  

I had to go back to Linwood Holton and tell him what had happened with his good offices in sending me over there, and he laughed and said, “Well, there’s nothing to do.  Take the job.” Because they offered me almost New York scale in Roanoke, Virginia.  I thought I would be rich, and in fact, we felt rich for a short period of time.

I took the job, and the reason Norfolk & Western needed a tax lawyer at the time was they had just acquired Nickel Plate; Wabash; Pittsburgh & West Virginia; Akron, Canton & Youngstown.  That transaction had just occurred.  

BB:  Within the last year…

DG:  Within the last year, just before that.  Stuart Saunders was, when I accepted the job, Stuart Saunders was the CEO.  By the time I came to work, Stuart was off to Philadelphia.  That’s the story.  It was pure accident.  And I thought, “Well, I’ll try this. I’ll go back home for a while and….”.

BB:  And Susan actually accommodated the move.

DG:  Susan not only accommodated the move, she loved it.  She fell in love with the Roanoke Valley. She became very active in lots of things including political life.  She chaired the Roanoke Planning Commission.  I mean, we lived in Roanoke for 25 years with Norfolk & Western.  Although she didn’t think much about it, she loved it and we were happy there.

BB:  How did you decide to go to law school instead of business school, being interested in tax?

DG:  That’s the question to which I’m not sure I have an answer.  When I went to Duke, I was an English major, believe it or not.

BB: Practical degree.

DG:  Well, that’s precisely the conversation my father had with me after my sophomore year at Duke.  I should preface this by saying that before I went to Duke, my father, who was an entrepreneurial type, became overleveraged in business and lost everything.  So I went to Duke not as a child of a moderately rich man, but as a broke kid.  Dad had a little conversation with me about the desirability of being able to actually do something and hold a job when I got out of college.  So I switched majors -- although I finished with, in effect, a double major -- I switched majors to accounting, went into accounting and liked it.  It was good, I had a certain knack for it.  

When I graduated it was the time of the Vietnam War and staying in school was a good idea.  I thought, “Well, I’ll go to law school, then maybe Harvard Business School.”  I was accepted and had the opportunity to go to Harvard.  I had almost gone to Harvard as an undergraduate but that was too big a jump from Benton, Virginia…

BB: To Cambridge.

DG: Cambridge.  And I lost my nerve and didn’t go, and I always wondered what it would be like.  Once I was accepted at Harvard Law, I just decided to go.  I went up there for a year.  Susan and I had met at Duke and fallen in love.  She graduated a year later, and we married, and she came up.  We finished Harvard Law School and then our full intention was to -- by then, President Kennedy, God bless him, had issued an order exempting married men from the draft.  I was 1A with -- you used to have numbers and my number was in the single digits, so I was dead meat until President Kennedy issued that order exempting married men from the draft.  Susan and I had been married about a month at the time, and we said, (Laughs) “God bless President Kennedy.”

BB: Right.  Luck was with you.

DG:  So, I was in a position immediately after law school when I had this interesting set of experiences that I could go back and try it out with the railroad for a while, and I just never left.

BB:  So, you talk about Fishwick and Dereco and all of that.  What’s the, I mean I am very familiar with all of that having worked at the D&H subsequently.  What was the derivation of Dereco?  Was that a creation of N&W?

DG:  That was a creation of the mind of Jack Fishwick.  I think this all originated when this brain trust that Stuart Saunders had around him at the time at N&W --- and you know something about this yourself, because these, uh…Stuart Saunders had around him Jack Fishwick and Bob Claytor and Paul Funkhouser, for example, and a man named Bill Lashley, who he took to the Pennsylvania with him as head of Public Relations.  He had a powerful brain trust.  And Stuart was a guy that had a lot of thinking in him, a big thinker.  

My own belief, I’ve never talked to Mr. Saunders about that in this way, but I believe that when he was able to pull off the N&W-Virginian and combine all of that coal and get it approved, that it planted the idea of, Well if we can do this, we can do bigger things.  And that led to a lot of strategic thinking and made him think about the Penn Central.  Also, the N&W is part of the whole general thinking and the things that were going on then, remember this was the first start of consolidations, really, in the modern era.  And that was how the Pennsylvania, which controlled - remember Norfolk & Western encouraged this, putting together the Wabash and the Nickle Plate and the other small railroads, creating a much bigger map.  The N&W was coal, coal, and coal, and it had Ford Automobile.  People didn’t think about that much at the time, but that was an important piece of the business, too, but N&W was very much coal.  Until then, and when that happened, the system doubled in size, maybe more than that, I don’t remember, maybe more than doubled in size and became a much bigger map, particularly in the Midwest. That’s when they needed a tax lawyer.  So, I spent the first part of my career in St. Louis and Cleveland, kind of straightening out…Then, you will recall…


BB: You didn’t move.

DG:  I did not move to Cleveland.  I spent a lot of time in Cleveland, a lot of time in St. Louis.  The Wabash was headquartered is in St. Louis.  And of course, when Mr. Saunders went to Philadelphia, Herman Pevler came to Roanoke to run the Norfolk & Western.  I worked initially, in my career, [for] Mr. Pevler [who] was CEO.

BB:  And he came from the Wabash.

DG:  He came from the Wabash.  Remember that the Pennsylvania still had the stock, although it was in the arrangement to divest that over time, but they began to get into Penn Central.  Meanwhile, Jack Fishwick was thinking of Dereco, that’s the long-winded answer to your first question.  Jack Fishwick and his brain trust: Claytor and Hamilton, Redman – a very talented chief financial officer in those days – Jack Shannon, John Turbyfill; there were some powerful thinkers at N&W.  N&W punched well above its weight in those days in terms of its ambitions because that’s the kind of guy Jack Fishwick was.  

When he came back after Mr. Pevler retired, somewhat abruptly, Jack Fishwick came back to the company, and he had big thoughts. And Dereco, D&H, Erie, and all of that were part of it. And we set up Dereco in a very complex way because we were worried about the condition of the Northeast from the get-go.  So we protected, we set it all up in a way, in a complicated two-tier structure, which again, I loved working with this as a young lawyer, putting it together so that N&W would be protected if things did go bad, as indeed they did.  Dereco sort of fell apart early on.  We acquired, as you know, the Erie Lackawanna and the D & H and all of that, but at the end of the day, we were selling them off.

BB:  So, did Dereco mean anything, the name?

DG: D is Delaware & Hudson, E is Erie, R is Reading…

BB:  Ok.  So, you said Herman Pevler retired suddenly.  Can you illuminate a little bit more?

DG:  I guess I would say, Mr. Pevler was a very interesting man who’s not well known, I think, except maybe for Pevler Blue.  In the rail fan community, everyone knows that he came from Wabash, and he came back and painted these, everything that was Tuscan red for Norfolk & Western Mr. Pevler wanted to pain blue, and so it became known as Pevler Blue.  That was not popular.  

Mr. Pevler was a pure operating man and my belief as - I was a young lawyer not really in the swim of things, but I was, it was a small group and I saw a lot.  I think he was an operating man and he walked into a company that had a strong operating background, strong – Harry Wyatt from the days of ‘Racehorse’ Smith and the N&W, had always been a strong operating railroad.  But it was simply - - the operations were coal operations, and so he came in there operating...  

He was not a strong financial man, and he did not have good financial advisors.  The company was getting into trouble, and it was not in good shape.  That was not well known, but the company was not in good financial shape.  Mr. Pevler very abruptly retired and Jack Fishwick, who had been in Cleveland at the start of the Dereco transaction in the Erie Lackawanna, Jack Fishwick was brought back to run the company and came and took charge.

I remember clearly how decisively Fishwick took charge of the company when he came back.  He called the officer group into the boardroom, and I was sitting way in the back as a young, but I was there because I had a good boss who brought me to things.  He said, “Okay, the whole cost structure of this company is going to be changed as of today.”  Here’s what we’re not going to spend, here’s what we’re going to…. And he set up a number of rules.  He said, “We are not making any capital acquisitions until further notice.”  I remember clearly, the head of purchasing was a man named Ed Ginch, and Ed spoke up and said, “But we have a contract with GE for 50 locomotives and the first delivery is next week.” And Jack said, “No, it’s not.”  And Ed said, “But, it’s GE.”  Jack said, “GE is just going to have to understand that that deal is off. We’re not buying new locomotives.”  The head of purchasing was taken aback.  He said, “I don’t think we can do that.” And Mr. Fishwick said, “They will just have to understand.  We don’t have the money.  We’re not buying those locomotives.” And that was a clear message.  Fishwick was a man who ran the company decisively and, God bless him, he turned it around immediately.

BB: Was there any outfall from that decision with GE? Any litigation, any penalty payments that you recall?

DG:  They understood.  Jack was exactly right.  We were a big customer.  We were a coal hauling railroad; we were a big customer.  They got it, my understanding.  I don’t know, I wasn’t close.  I wasn’t there.  I’m sure it was an interesting day when Ed Ginch had to call his, whoever…. (Laughs)

BB:  Yeah, an interesting conversation, I’m sure.  So, things move along until you start having conversations with the Southern about joining operationally together, not a merger necessarily.

DG:  We have an interesting time because we go through this period in the late ‘60s and then in the early ‘70s the railroad industry is not – you came to work then, you remember.  Things were not exactly the way you would like them to be.   My job as tax lawyer kind of changed from tax lawyer to looking for ways to hold on, find cash, do things and work increasingly in Washington because that was when we began to get some legislation that helped the railroads through that difficult period.  Of course, you had the wreck of the Penn Central and all of that came, but N&W remained strong through that. The coal business, which is always up and down, but the coal business and the automobile business increased, and N&W strategically made the decision, which we expanded later on, to seize upon the good position in the automobile business and worked hard at that.  So the N&W through that period remained pretty strong, uh, through the Fishwick era.

Meanwhile, the CSX was being created, a lot was going on, a lot of talks were going on.  One of the early things I did was participate in talks with the C&O about an N&W-C&O merger, which would have changed the world.  In fact, I worked on a small team at the Hotel Roanoke with a young man named Pete Carpenter who was on the other side of the deal.  We worked out a good plan, but the wreck of the Penn Central made it impossible to do that.  But the seeds had been planted and Southern Railway, having not done the acquisition of the MoPac, which they wanted to do and all this, was interested in…

BB: And that came close, according to Jim Hagen, that came very close.

DG:  I think it came very close.  I don’t know the details of that or what happened, but I know what I’ve been told.  When that didn’t happen, I think with N&W looking around and having ambitions and being a strong, successful… I mean, things were going well in those days and the same was true for Southern Railway.  A lot of the strength in the industry at that time was N&W and Southern so the idea of putting together those two was a good idea.  That really is a Thoroughbred combination.  I don’t think it happened easily. I was on one side of it and you could no longer get Arnold McKinnon’s.  But I think that the negotiations were difficult.  Jack Fishwick and Stanley Crane on the Southern side of things were both, uh… 

BB: Strong.

DG: (laughs) …how shall I say it? Independent thinkers and strong leaders, and my understanding is that there were difficulties in the negotiations, but the case for an N&W-Southern merger was very strong.


BB:  Did that germinate in Roanoke or in Washington or Atlanta?


DG:  I'm not absolutely sure of the answer to that, not having been one of the key people.  I was by…at the time of that I didn't work much on the negotiations except around the planning for the taxes and the corporate structure, but you know I think that a lot of discussions went on at AAR meetings and things like that between Crane and Fishwick.  Fishwick was always very active in the AAR. He was into things, and he conducted – he would have arguments with Ben Biaggini and people.  That was a period of strong leaders in the industry, and so I'm not sure where the germ of that came from first, but once they got into it, it was difficult, but it was a compelling case because it really was a merger of equals which is very difficult to find.  And it makes things both easier and harder to merge equals. N&W and Southern were about as equal as you could get. The ultimate transaction was 50.1 for Norfolk & Western and 49.9 for Southern, so I mean that's - it was a good transaction, and the map was good. There was little or no overlap, so it was compelling from an ICC standpoint, and it just put together two strong financial groups and I think in some ways was a pivotal event.  I mean that, and the CSX happening about the same time, that was the creation of a new map, that was the end, that was a phase.


BB:  So, that leads me here to your comment about two strong financial enterprises.  They were also two strong, well-disciplined operating companies that were well maintained.  How did the cultures mesh?


DG:  The cultures eventually meshed extremely well.  I mean, the cultures were -- and in later years I thought a lot about culture.  But I think that while they were very different in the leadership that they had had, they were both built from strong operating backgrounds.  I mean you had Mr. Brosnan and that tradition of innovative operation at Southern, and you had this kind of proud Norfolk & Western where, “We can run this coal system better than anybody in the world.”  And I think arguably they did and maybe still do.   And a strong culture with Bob Claytor, with Jack Fishwick put Bob Claytor, even though he was a Harvard lawyer, in charge of operations.   But Claytor had Harry Wyatt and Dick Dunlap and strong operating people there, and so both of them were based upon this.  Both had strong safety ideas, uh, about safety as a center of, cornerstone of operations, and both had this history of financial success.  But they were also different because Southern, being headquartered in Washington, was much more politically attuned.  So, there were real differences in them, and I think there was the friction between Jack Fishwick and Stanley Crane in the creation of the merger.  But the wisdom of the equal boards - - and they decided that Bob Claytor would be the first CEO of the company.  Claytor’s role in putting that together should not ever be minimized.  Bob Claytor was scrupulously fair, and he made up his mind, with Penn Central as an example there; he made up his mind that there would be no red hats and no green hats, and I remember clearly the first meeting and Bob was absolutely clear, “We're not having this. This will not be and we’re not doing it.” He also was scrupulously fair in the way he allocated responsibilities in the company, so he thoroughly mixed in and that being Southern….


BB:  Did he have people advising him?  Because he obviously knew a lot of the players, but if you're interweaving two companies, did he have somebody who's saying, “Yeah, this is the right guy for that job and this is the right guy….”?


DG:  He had a lot of it.  He had a lot of advice from, I think from both sides.  Both sides had very strong human resources leadership.  One of the things I did when - this is a side anecdote - but I was, by that time, I was still a tax lawyer by trade, but I had become kind of an all-purpose guy for Fishwick and Claytor and the man I had worked more directly for, John Turbyfill.  And I was assigned to be the shuttle man between the head of human resources for Southern and the head of human resources for Norfolk & Western who were drawing up the organization plans and the plans for compensation, employee benefits, which were totally different between the two companies and had to be merged.   And the two independents did not want to be located in the same office.  They maintained their independence up to the moment of consolidation, and so I got to go back and forth, passing messages between Washington and Roanoke and working on it.  But they were both very strong, very good people and gave good advice.  I think the good advice was that…but you know, there were good people throughout, and the trick was making sure that they were properly utilized, and Claytor was a master at that.


BB: You obviously had moved from, as you said, from being the tax guy to more of an advisor, a generalist, utility infielder, resource to help along in this process.  How did that evolve?  It moved fairly quickly after that into more responsibilities.


DG:  Well, it did, and it didn't.  After the, uh…I maintained my position in the tax department.  I was promoted a couple of times but – one thing about Claytor, although I'd done a lot of work with him up to the approval of the merger on the N&W side, and I guess I had expectations about coming when the headquarters was determined to be in Norfolk and not in Roanoke or Northern Virginia or Atlanta.  I was getting ready to move, pack my bags and move, and I was very disappointed with Bob Claytor; said, “One, you're not going to move to Norfolk, and two, you're not going to get the job that I know you want.” And the reason for that was that there was a Southern Railway person who was senior to me and he, Bob, was not going to make an exception.  He was fair, and He's just going to have to understand that.  Of course, in later days, I came to understand that, but I didn't understand it at the time.  I was bitterly disappointed.  The headquarters were moved to Norfolk; that was an important thing in merging, but the most important thing was that the operating culture of the two companies was kind of the “We're going to be the best,” and that was just instilled.


BB:  But you had two very powerful operating VP’s.


DG:  Very powerful operating heads and that had to be, Bob had to work that out, and he did.  He ultimately worked it out.  The original organization was a separate Norfolk & Western, separate Southern president of each, and that made sense on paper, but operationally it needed to be… theoretically it was going to be transparent and no lines, but it had to be reorganized fairly quickly, and Bob did that.  He did it and the man who was selected to be head of it was a Southern man, which was a good thing.  I think Claytor and Harold Hall, who was president of Southern Railway at the time, get a lot of credit for the way that they were able to work together.  I'm sure Hall was disappointed not to be the CEO of the new company, but he was a stand-up guy, and I worked quite a bit with Mr. Hall.  He was an operating guy.  We hit it off early on during the planning for the merger, and he just worked well with everything.  He was a totally different guy from Bob Claytor who's, you know, his father had been head of American Electric Power, and they’d gone to Princeton and Harvard, and Harold Hall had never gone to college.  He came up in the telegraphy, he started as a telegrapher for Southern Railway and worked his way absolutely up through the operating – I mean just totally different, but they got along.


BB:  You had said that you were bitterly disappointed, and I think you said earlier to the point of putting your resume out and looking elsewhere and getting another offer.  What made you stay?


DG:  My wife.  (Laughs.)  Well, I don't know, I was disappointed and at that time Union Pacific was looking for a tax person, and Union Pacific offered me a job, and it would have been in New York at the time and paid a lot more money than I was making at Northern Southern, and I might have taken it, but my wife, uh…


BB: …helped you decide?


DG: …my wife helped me to decide otherwise.  And that was a very good decision by my wife, but it was also there…Bob Claytor, who in his later days became more than my boss, he was my friend, but Bob Claytor said, “David, go back to Roanoke.  It'll be alright, things will be okay.” And he used me, I think in retrospect, I think Bob needed a reliable…


BB: …eyes and ears.

DG:  …eyes and ears in Roanoke, which was important, particularly with the headquarters moved. Roanoke was disappointed about that, but with coal business being as key as it was - - even after the merger coal was king - - and Roanoke was an important place, and Claytor wanted to maintain it. I got to do that, which was very good for me and an interesting job early on, although I sometimes…well, actually I drove back and forth so much and exceeded the speed limit on [highway] 460, I was almost on first name basis with the sheriffs in these little towns.  It was an interesting time of putting together the two.  I think they meshed, it worked.  The legend that it was a perfectly easy, seamless, one of the best, most smoothest mergers in the history of that; I mean there was truth to that, but it wasn't all that easy.  It took a lot of work and a lot of goodwill, but it was people-based, and in a way that’s the culture, and it's a culture that continues in Norfolk Southern to this day, of sort of expecting to be, uh -- and there's an element of integrity to it.  There's an element of being fair and straight and that's deeply instilled, and I believe that.  I know it sounds corny or self-serving, but I believe that is very deeply in the culture.  It's also a belief in the strength of the company, and what the company is doing, and the early-on leadership.  After Claytor retired, Arnold McKinnon, who was from Southern Railways, and that made it…


BB:  What year was that transition?


DG:  What year was that? I can’t remember.  Well, let's see, it was ’85. ‘85 and then Claytor was CEO for five years so, if it was ‘82, so it would have been ’87, and then Arnold was CEO for about five years.


BB:  You’re in Roanoke and you're doing the bidding of Mr. Claytor.  What transpired next?


DG:  I remained in Roanoke.  I did a lot of, uh, that gave me an opportunity on a personal basis to do some things I was very interested in.  You’ve seen around the house here, I have an interest in -- my wife is more interested even than I am -- but she's gotten me interested in art and activities, and I had - being kind of in a special position with running a tax department in Roanoke, not in headquarters but in Roanoke, and being sort of a go-to guy with the community in Roanoke gave me the opportunity to know the political structure and know the community structure in Roanoke, but also in Virginia.  And that led to my relationship with two or three governors of Virginia which led to me being appointed to some things that I enjoyed.  In particular I was the, uh, part of the first group when David Rockefeller, who had formed the Business Committee for the Arts in New York, to kind of save the New York arts institutions and had set up this powerful group of New York business people to form the Business Committee for the Arts, Rockefeller decided to expand that nationally, and he assembled a small group of non-New Yorkers to join that board, and I got to do that because I had the flexibility to do it because Claytor and McKinnon let me have that flexibility.  And I had a relationship with the former Governor of Virginia who had put me in charge of some stuff that brought me to national recognition, and so I got to do that and the other people that came over, people like Eli Broad and Ray Nasher and people far beyond my scope, so it was good - - Steve Forbes.  Just an interesting thing, and then Rockefeller decided that there should be a non-New Yorker as president, and so they tapped me to be president of the Business Committee for the Arts which I did for a couple of years.  It was a great experience, kind of above what I otherwise would have had an opportunity to do, but it was made possible by the sort of flexibility that I had in the business.  All of that, I think, helped me on a personal basis.


BB:  So, you became – you’re visible now.  McKinnon takes over as CEO.


DG:  McKinnon takes over as CEO.


BB:  He says, “David's the guy I want.”


DG:  He knows me; early on he was a tax lawyer himself.


BB:  Oh, he was? Okay.


DG:  I had known him way back in the early days. We were well acquainted, and I think he was comfortable. The key factor was - but I don't think anybody had David Goode on the fast track to CEO.


BB:  Somebody did.


DG:  Claytor might have had it in the back of his mind, but Arnold told the board, I know -- and the board agreed -- Arnold said, “I didn't have enough time to do the things I wanted to do as CEO.”


BB:  Five years just isn't…


DG:  He said, “Five years is not enough.” He said, “I think we should select a CEO that has more than that.” The logical candidates for CEO of the company at that time were - - didn't have much more than five years potential to run, so the board started a process, and they looked around, they looked inside and outside, and they looked around and they found some inside candidates and I was one of them.


BB: Do you know who the others were?


DG:  I do, but I don't know that I want to say.  They were people that could have all been - but the logical candidates that the Wall Street Journal knew were Arnold's principal lieutenants who were about five years younger, sometimes not even that.  So that opened an opportunity and they - Arnold called me in Roanoke and said, “Well, I know your roots are here and you've done all this stuff and your wife…”  --  Susan was deeply involved in the political life in Roanoke at the time and [he] said, “I know Susan's deeply in all this.” And he said, “You may decide not to do this.”   And he said, “But all I can say is you have a shot, but I need you at Norfolk if you want to take that shot at it.”  He said, “Now, I know you need to talk to your wife and call me in the morning.”  This is sort of a legend in the company and it's the truth, it's a true story.  Susan and I sat down and opened a bottle of wine at dinner and sat there over our kitchen table, and I said, “All right Susan, I had a call from Arnold today and here's what the thing is.”  I said, “We don't have to do this, and I know that you're ready to make another move” and this and that.  She was president of the Mill Mountain Theater, “and you're deeply involved in all this, and we don't have to do this, and Arnold has assured me that there's a role, but if I have a shot I've got to go to Norfolk.” And I said, “What do you think?”  She looked at me straight in the eyes and said, “Who do you think you're kidding?” (Laughs) She said, “Who do you think you’re kidding? When do we leave?”  So, I called Arnold and I said, “Okay, I’m in.”

BB:  Was the wine gone by then?


DG:  The wine was gone by then. “When would you like to have me?” This was like, Thursday night, and I said, “When would you like me in Norfolk?” He said, “Monday morning.”


BB:  Yeah, at least he gave you the weekend.


DG: (Laughing). I was in Norfolk Monday morning and our daughter, who you met earlier, was in the fourth grade and so we had to move very hurriedly to this house.  And we’re still here.


BB:  So, you went back in 1990, my notes say, to Harvard Business School for the Advanced…


DG:  The board, and I guess everyone that was in the process, noticed an interesting fact and that was that I had never had any business school, or I had an accounting background, a legal background, and some miscellaneous things, but I'd never, I'd never been in the operating department, I'd never done any marketing or sale or anything, and I had no business school background so they said, “We'll send him to the Advanced Management Program at Harvard.”  Since then, we've used that a lot at Norfolk Southern, and I found that to be a great experience.


BB:  Ok, that was my next question.  Was it helpful?


DG:  It was more than helpful.  It both introduced me to a lot of people who were different and just broadened my view of things and did give me a little background and I think over 25 years I had absorbed quite a bit of business school.


BB:  Right, sure. When you go to Norfolk that's when you become EVP of administration?


DG: Came back from that and was named EVP Administration.


BB: That's viewed as a good thing, I mean, in a lot of companies it's EVP or …


DG: The way Arnold and the board decided to use that was to put, what was kind of a starting role, and we had a number of things thrown in there including information technology, human resources, and real estate, and a grab bag, uh…So, I suppose it was a test of administrative ability to pull these things together.  I mean, totally, I remember the first time I went down to see my -- and they were headquartered in Atlanta at the time -- the information technology group.  I knew nothing.  I'm not a computer guy to this day, but I knew nothing about it, and I had to go down and have first meetings, and we had a discussion about it. The big technical people, they immediately threw out a number of acronyms, and I remember saying, “Time out! Time out!” (laughs).


BB:  Speak English.


DG:  “I’m hereby establishing some rules,” and I said, “Now, I know how tempting it is to use acronyms,” and I said, “I understand that you all know that I don't know half of these, and I get it, but we're establishing rules as of today.  Use an acronym if you want to, it will cost you a dollar, and you immediately have to throw a dollar in the middle of the table, and I will disperse that to a charity of my choice over time.  I'm not saying you can't use them, but…”.


BB:  “You’ve got to pay for the privilege.”


DG: “…you have to pay for the privilege.” By the end of that meeting, I had about twelve dollars in spite of it.  Everybody got the idea and they responded to it and eventually figured out a few things. I also figured out that you better understand your people, which is a basic lesson of leadership, of course. You get interviewing a lot of CEOs and that's it, you got to have the people and understand how to use them and that's the name of the game.


BB:  So, it's a short hop from EVP Administration to president.


DG:  Well, president - that brings operations and marketing into the picture of the – operations of marketing were run by two very talented, experienced people, both of whom could have, and probably wanted to, run the company.


BB:  Who was that?


DG:  Henry Watts and Paul Rudder.  Of course, I was working at the time for John Turbyfill who would also have been a candidate to run the company, but they were all - - I wouldn't say too old, certainly at my age now, but based upon the way the board was looking at it.  So, that gave me an opportunity to have Paul Rudder and Henry Watts reporting to me which was…


BB:  How did that go?

DG: …which was both a test and an education.  It went extremely well because - I will go to my grave extolling the virtues of people like Henry Watts and Paul Rudder.  Talk about the culture of the company.  Culture is - - in different ways they both said to me, “You tell us what you're looking for” from [us]. “Just tell us what you want us to do; we'll do it. I'm here….”


BB: Yeah, team players.


DG:  “…I'm here and as long as you want me, and I'm going to do this; we'll do it.”  Henry and Paul both were there, and of course, one of the other candidates for CEO -- you asked me to name them, and I declined to do so -- but clearly Steve Tobias, who was Railroader of the Year is the best, I mean widely known as the best operating person in the rail industry in his day, which Steve absolutely was.  Paul, of course, knew that Steve was waiting in the wings, and Steve and I had both come from the Roanoke Valley about the same age, same time, and so he knew that that was there and even, but he was able to take Steve in and work.  Railroad operating cultures are tight, cultures with a lot of pride. That's the good thing about railroading is that strength in that culture, but it also requires a lot of ability to work within it.  And the thing that has made Norfolk Southern strong over time, maybe compared to some other railroads that I have seen in my career and that you could look at, is the ability of the people to link together and work together and not create the friction. I mean, Norfolk Southern's culture really has been very strong in that way, I believe.


BB:  From president you move up to the CEO role in about a year or so?


DG:  Yeah, about a year.


BB:  No surprise, right?


DG:  No surprise, by then.  I was a total surprise to Wall Street when I was named president, that was a …shock.


BB:  Bolt out the blue.


DG:  That was a shock.  That was a bolt out of the blue.  The Wall Street Journal said, “Goode has toiled in obscurity in Roanoke for many years.”  (Laughter) When I came back after that article was in the Wall Street Journal, I came back to Roanoke to see my department and my former friends, they had put an enormous sign up over the door, “Obscurity.”


BB:  Obscurity reigns.


DG:  Everyone was toiling in obscurity in Roanoke.  It was a surprise.  Everyone had to get over that and get the idea.


BB:  Now that you're the boss of everything, you get to sort of chart the strategy for the company going forward.  Did you have a vision going in?  Did you develop it?


DG:  Well, I did, yes.  Remember where we were then.  I'm sure we're going to talk about other mergers and things like that at some point here, but if you remember then, I was…Arnold McKinnon, God bless him, handed over to me a strong, well-running, powerful railroad.  I mean arguably the best managed.  We were known for our bench.  We were known for the people, many of whom I've mentioned and a lot that I haven't mentioned, who were there.  It really was a good team.  We were known as a well-managed railroad.  We were financially rocking and rolling then.  Coal business was good, automobile business was good; I mean, things were good.   So, I was able to step into a…I didn't step into a crisis situation.  I stepped into it and that was a good thing.  It didn’t last long.  It didn't last long, and what happened was the export coal market just disappeared, um, factors entirely out of our control. Australia, South Africa, the dollar -- all of the things that affect export coal hit and the market just…Well, we had almost built a very expensive additional facility just outside of Norfolk.  We had had difficulty getting environmental approval and some difficulty getting neighborhood approval for the facility.  It was going to be very expensive, the largest export coal facility in the world, by far.  I think Lambert's Point is anyway, but this was going to greatly increase it.  We were going to spend a lot of money on it, and the market collapsed.  


The delays, environmental delays, in building are usually a very bad thing.  That was an angel on our shoulder because we had not done that.  The market really…and that forced us to, forced me, it forced the group that I was assembling around me (and we should talk about that in a minute, too) but it forced us to stop because the Norfolk Southern, with Norfolk & Western and Southern, had a lot of - it was a very thorough… but coal was King and export coal was a very profitable business and that forced us to stop and say, “Wait a minute, what is the future?” We thought about this before, but this was to me a real shock because I was suddenly coming in with a big chunk of the revenues disappearing almost overnight.  We convened our strategy thinking and that's when Intermodal…Intermodal wasn't born there, but two things came out of that necessary strategic thinking of Where are we going to take this company?  What are we going to do?  And there were two factors that became very important in my tenure as CEO and that was, “What do we do if coal ends? When coal ends?”  Because everybody knew that coal was going to end, you just didn't know when.  We had to suddenly think, “Maybe we'll never get back in the export market” or “How will we get there?” or “What or how profitable will it be?” That's when we decided that the economy was changing, the whole structure of the U.S economy.  

If you go back and look at the early 90’s, which is when we're talking here, everything was changing. The industrial economy was changing, the consumer economy.  We were figuring out the consumer economy.  If you go back, we were worried about Japan in those days and the strategic thinking was that we have got to be a transportation system that is able to deliver the goods to the people where the people are.   And that forced us to look at the map again, which we knew how the map was, we knew where we didn't go.  One of my close [unintelligible 1:11:24] had referred to us as a railroad to nowhere, and I’m not mentioning any names, but you know who I'm talking about.  But we had to think hard about that and that strongly influenced our whole view of the Northeast and ultimately Conrail and all of that.  The strong thinking was we have got to build the world's best Intermodal system.  And we had some advantages in that we already had the start of it, and we had a little advantage that we didn't fully understand until late in the game and that was we had learned a lot from owning North American Van Lines which we were in the process of divesting.


BB: I want to talk about that.


DG:  I got praise for divesting North American and sort of the lore is that it didn't work out.  Well, there's some truth to that because there were parts of the business that we didn't run very well, we didn't understand.   And there was less synergy than we thought there was when we acquired the company.  But we learned a lot because there were a lot of things that that trucking company did better than we did from a customer standpoint, and we were smart enough to look at some of that and use the learning.  Also, we learned that they have very good technology which we immediately absorbed and kept.


BB:  And at least one of the people.


DG:   And at least one of the people.  Well, more than one of the people, a couple of important people. So, we had a start in the Intermodal business, but we made this strategic decision and the decision was - and that's when we began to think of the corridors in scope and distance and expansion and we had to re-look at our relationship with the Western railroads and how we how we can - but the early strategic imperative just in a nutshell was, we had to remake the railroad in a new image reflecting on the decline of coal. Now, we got lucky too because coal came back and lasted a lot longer than I would have told you, in 1993 or -2, that it would. That was important to us because it gave us a lot of resources that we were able to use in developing out the other pieces of the business.


The other thing we did, early on, strategically, was recognize the value of the automobile franchise that we had. We had, going back to those early days when Ford was N&W’s biggest single customer, even beyond coal, and we had the relationship, and we made the decision to set up a very strong effort to be the automobile carrier of choice in the Eastern path of the country and we were lucky because the new automobile plants were being built, foreign makers were coming here. They were locating plants and where did they want to plant them? In the Southeast. So, we invested in a gangbusters of economic effort to make sure that those plants - and if you look at the track record, I've forgotten the numbers but, [an] overwhelming majority of the plants were built on Norfolk Southern lines, and we built that into a big business which by the way tied in with Intermodal and other things and we came up with the concept of Triple Crown. I mean [there were] just a lot of strategic decisions but they were all about remaking the structure of Norfolk Southern around what we thought to be and what ultimately has turned out to be a new changing economy. Now, it may be changing again today, but during my tenure, the hallmark of the economy was that it shifted from the old industrial base which everyone understood how that worked, and we were strong in it, to a new consumer-driven -- and among other things that said to us, “You gotta be where the people are.” And we weren't.


BB:  Which prefaces a deeper conversation upcoming about the whole Conrail situation, but I wanted to touch on Triple Crown for a minute and also, so Triple Crown was basically a retail operation, right?


DG: Yeah.

BB:  You didn't have third parties in it.  I'm curious about why, when you had North American, you had the household goods piece of the business and you had commercial transport which was the over-the-road trucking piece of it, was it ever considered to use that as a mechanism to create a retail marketing strategy in Intermodal?


DG: Well, this is a whole day-and-a-half conversation, a Harvard Business School case on North American Van Lines. What we found at North American Van Lines was that the business was different.  The money was made in different ways than we thought it was and could we have thoroughly integrated that? I don't know, but it would have taken a lot of new management and total reorganization to do that because the pieces of it, and the decision we made was to take the learning and the strength that we got from it and a lot of that went into the creation of Triple Crown and we borrowed a lot from North American, but we never really thoroughly integrated the commercial operations of it.  I mean, what we learned was that the money in trucking was made in trading the truckers and selling them insurance and selling them trucks and running truck stops, things that…


BB: Not hauling freight.


DG: …things that we didn't really want to do, but that's where the money was made and that's one reason that it's so hard to be competitive with trucking because there are a lot of other ways the truckers can make some money, but we weren't good at that. We weren't managing it.  North American, if you go back and look at the numbers, the money was made running a rail transportation system, making that rail transportation system have all the pieces that it ought to have, and the strategic imperative is we didn't think that was in running trucks as such. We could argue whether there are pieces of it that we should have, that we should even today pick up, but that's another matter.


BB:  How did Triple Crown germinate?


DG:  Oh, I'm not sure I remember where it came from.  Originally, we had the truckers and the railroaders thinking together and we - I've forgotten who and, honestly, we’ll to go look back at the record to see who invented the absolute concept of it.  Somebody sitting in the next room might remember that but…


BB: Another topic for another day. So, the N&W culture was almost military style.  It was very disciplined and hierarchical.


DG: Well, that's the legend.

BB:  Well, I lived part of it, and there was part of the legend is true. (Laughs.)  The Southern was a very disciplined operation, as well. You sort of changed that to be more collaborative and collegial without creating a revolution.  It was more of an evolution, right?  Can you talk a little bit about…


DG:  I think Norfolk - I think really – One, I do think there was truth in that legend.  There's at least a grain of truth, maybe more than a grain of truth.  When I became CEO, anyway, I think Arnold may have started this, the change that occurred over my career in railroading was that…You know, remember us, we started out regulated and the Staggers Act came, and we were thrown into the competitive world.  We had to understand how to compete and how to pay attention to customers and figure out pricing and things like that, which was hard, originally.  But in a regulated structure being really tight and really good and “military” is a real advantage. I think that the N&W, in my experience, was good at that and I think so was Southern Railway.  You know the things that N&W, going back to the N & W, things that N&W did well, it did really well. Nobody built those great locomotives better than Norfolk & Western. The people that I grew up with, and went to high school with, and worked in the East End shops, were the best in the world. That's a discipline, and that's not a loose operation.


BB:  I have asked a number of people, “How long do you think it takes to build a freight car?”  It came out of my time going through the shops when we were building gondolas for pipe loading with bulkheads on the ends of them, and we were turning out eight a day in one shift.  So, the answer was 58 minutes from start to finish.  Now some of it was pre-fabricated and so forth, but people's answers would be, “I don't know, a week?” or “A month”, or whatever.  But the shop ran like a Swiss watch in producing cars, not just locomotives.


DG:  I remember early on, and this came by me very early on when I became CEO, I went into these end shops in Roanoke.  I played baseball in the little park that's right behind those shops.  I knew them well.  I went in and I was going around and we were in the freight car shops and I saw a guy that I'd gone to high school with, and um, so I went over and talked to him, and I said to him, “Tell me what we could do to improve this thing. How could we do it?” And he said, “David, do you really want to know?” (Laughs.) I said, “Well, yeah.  I’d kind of like to know,” and he said, “Could I just talk to you sometime?” And I said, “Yeah, let's go.”  He showed up with a little list of the simplest, most reasonable things that you can imagine.  I said “Well, why can't we?”  He said, “Well, some partly because Union rules.”  He said, “You know, I've got to deal with that.” He said, “But partly because that's the way we've always done it.” (Laughs.)  So, I undertook to see if we could - and you know what?  We got a lot of that done, and we had to work a lot with the union rules to do it, but got a lot of simple things done that could just…


BB: They're just old habits.


DG:  But that's the downside of the “Yes, sir. No, sir.” Because here, we aren’t gonna change this. That's the part of that you need to adjust, to change. The other, the big change of course was our – we decided that, early on, Arnold really led this before my time. There were two cultural things that were really important at Norfolk Southern in my tenure and the one was the safety culture.  We really did live with that safety culture. We cared about it, we genuinely cared about it. I know the world has changed and I know everything…Well I don't know everything, but some things that are going on now but that was an absolutely sincere and thorough goings [on] throughout the organization and what I learned, what we learned, is that it helped operations. We ran the railroad better because of the discipline and the thing.  That's the good side of the discipline. There were rules there and not everybody enjoyed them and liked them, and it was controversial, but it did make the railroad a safer place and it made the railroad run better.  One of the goals that I used to set, that I said when I was CEO had to do with, we had goals on the revenue side which were based upon industrial production indexes and things like that.  We had to exceed standards, but early on I said we're going to improve the operating ratio one percent a year, which then was thought of as a big change. We did that and we did it by...And I became convinced that Steve Tobias lived and died the safety program, that the safety program helped us get the discipline in operations that…they were not incompatible.  They were very compatible and that's the cultural thing that I think was important to the railroad when I ran it.

Now your question was, “Did we?” and I guess we did. I guess I'm not a very military personality and I believe in my theory of leadership, to the extent that that means anything, was to find the very best people at their jobs as you could find, preferably people that are better than you are, and give them the ability and what they need to do it and let them run.  And that kind of moved through the organization, I think, as a management philosophy and that loosens things, I think.  You know, everything has an upside and a downside, but that may have happened.

BB:  Okay.  So, the big elephant in the room I guess, from a career standpoint, would be all of the actions and reactions around access to the Northeast and the filleting of Conrail.  There’s a lot of drama there.


DG:  You know, I hate to go to my grave, but I will, somehow known for only two things. One was terminating the Norfolk Southern excursion and mothballing the 611 and the second one will be Conrail.  That's it.  I mean that's kind of David Goode.  I smile at that, but I also hate it because I really do think that I worked during a great pivotal period in the rail business and saw the transformation of a national rail map which the people around me, and I in some ways, I had a lot to do with, to the betterment of the country, I would argue. I like to think that I left Norfolk Southern a better company than when I came there, in a lot of ways, and we've talked about some of them, customer service, and other things.  But I'll always carry Conrail and the 611 around my neck. (Laughs.)


BB: Well, I wasn't going to mention the 611, but I think the Conrail thing is such a huge story.


DG:  That's a big part of things that we've been talking about because of our conviction that we, which was a key factor in Norfolk Southern for the last few years, that we need to be in the populist Northeast.


BB:  It's interesting because Dereco strategically was positioning you to be in the Northeast and that didn't go quite the way you envisioned and yet a few years pass, and I guess deregulation happens, and then you move into revitalization and strategy of getting into the Northeast.


DG: You raise a good point because it's not that Conrail or the Northeast strategy kind of mushroomed up at a point in time.  It was indeed part of the strategy of the Dereco was structured…Jack Fishwick's vision I believe -- sorry you weren't able to do this interview with Jack -- but I believe his strategy was that he saw a way of getting the pieces that would be important in order to reach the Northeast. He didn't have Intermodal on his mind as we do today and a lot of other…and we were in the industrial economy, but the Northeast was still important, but Jack wanted the pieces that he wanted.  And D&H was an important piece of that and Erie was an important piece.  Dereco was a step in that direction, but then the Penn Central just wrecked everything including Dereco, and it made that strategy impossible but then we came to another form of it.


BB:  So, you've done a deal with Conrail for Triple Crown, a joint venture.  Was that a sort of a - it’s a precursor, I don't know if it was intentional or not, but it was a precursor to a closer relationship…


DG: Well, the Conrail story goes back to pre-Conrail and our efforts when Elizabeth Dole was Secretary of Transportation, our efforts to buy Conrail before it was Conrail, in effect.  And the effort that we made and the offers that we made and that we convinced the Secretary of Transportation to recommend that and go towards that way but then [we] came up against opposition from several angles, including the people in -- that had created and made the investments in the structure who really didn't want to be part of Norfolk Southern and that was a factor.  And then we came up against the political realities and the man named John Dingle.  We could never get the hearts and minds of labor and John Dingle.  And so, we failed in that regard and that was a disappointment and so we had to move on from that after the sale of stock, and Conrail was an independent entity. You've talked to Jim Hagen about those days, I think, and a lot of it is probably on record.  But we knew that we needed to have some form of relationship with Conrail early on and we always had our eye on that, and we approached that in different ways. During the period, Bob Claytor was the original originator of that, but then Arnold McKinnon was very much into it, and of course he and Jim Hagen had known each other in Washington in the old days, and we knew that we just had relationships there and we entered into all kinds of talks about buying Conrail. Arnold and Jim negotiated and didn't get to a deal, really.  We, uh….


BB:  What stopped that then?


DG:  I think it was a combination of money and not a real desire on the part of Jim and the Conrail board, I guess then, to do a deal.  I think a willingness, but not a real necessity or desire to - I’m speaking from second-hand knowledge, in this case.  We also had a very strong culture of buying things at the right price, or what we thought were the right price, and we were working from that. We had a number in mind, and we negotiated, and of course, the upshot of that is Arnold retired and I became…We were in the middle of these discussions, and we had already started our relationships with Conrail, moving traffic and the partnerships.  I don't remember when Triple Crown, the agreement with Conrail, was reached, but we were doing these things then, and when I  had the meeting with Jim, which I think Jim may have reported when you interviewed him, when Jim and I finally had the meeting and we finally decided to pay the price that Conrail was asking and I had to call Jim, and we met in the airport hangar in Philadelphia, at Atlantic Aviation in Philadelphia, and I said to Jim, in effect, “Jim, you’ve won. Congratulations, you've won. We're going to pay your price. You can have the satisfaction of having out negotiated…”  And that was when he looked me straight in the eye and he said, “It's too late. I've already decided and the board’s decided, that I'm retiring and turning it over to David LeVan. I promised David LeVan he can be chairman as of”, whatever the date was, “and it's too late.”


BB:  It’s in other hands.

DG:  “I hereby reject your offer.”  I got on the plane, flew back, and reported to my board exactly what had happened, and we were astonished.   And of course considered very seriously whether to put an open letter in the Wall Street Journal the next morning, going to make a bear hug offer publicly.  That was a hard decision and a difficult decision, but the board decided, and I agreed with this, but the board decided not to do that, which was of course a pivotal – a pivotal decision.


I don't know, we’ll never know what would have happened had we gone that way but, right or wrong, we concluded that there'd never been a truly hostile takeover in the rail business, and we had the STB to deal with and approvals and all of this, and the likely opposition of the board.  We concluded that we did not want to make a hostile offer at that time and that we would try to pursue our strategy of cementing business relations with Conrail in order to tie the two roads together short of that, in various intermodal transactions, like Triple Crown, where we could have joint operations and sort of almost a partnership without mergers, which have subsequently been very successful for Norfolk Southern in other areas like the Meridian Speedway, which we could talk about later if you want to.


BB:  Sure.


DS: We just decided we would go that route and that was where we went.  We created a lot of them, but they didn't work.


BB: Did CSX factor into the equation in terms of, you know, what are they gonna…


DG:  Well, we had had a lot of…John Snow, and actually John Snow, Jim Hagen and I had -- we'd all had lots of discussions about this. We’d talked about dividing Conrail early on and had all these carefully orchestrated, fully cleared by the legal department conversations about various forms of it.  I could go back and read the notes of lots of meetings, but the short of it is that we never came up…The CSX and Norfolk Southern wanted to, I think John Snow and I both wanted to, find a way to make a division, but we never came up with anything that would be acceptable, that was mutually agreeable.  By the time David Levan got in, he had the bit in his teeth, I believe, to run the thing, and it was much harder to do. It would have been harder for Norfolk Southern and CSX together. If we could have gotten together, we probably could have worked it out, but the bottom line is, we never quite got to, until much later, we didn't get to what we thought was a reasonable division of the company.

BB:  It got a lot more expensive as time went on.


DG: Well, it got more expensive, sure it did, yeah. That's the story of -- our belief was twofold.  One, that we could do partnerships with Conrail and make them work.  We were wrong about that. I think we were wrong about that because it was not an imperative for Conrail as it was for us.  It was not as important - I'm putting myself in David Levan's head now - but I just don't think it was that important for David, and Conrail didn't give the run-through train the importance that we did and so we didn't have a service product that was acceptable.  We were hopeful that we could make it work.  I had several meetings with David about purchase, about things short of purchase, about further business deals. He got interested in the Southern Pacific, you will remember, and I remember we had a strategy for making the money available for Conrail to do that.  It involved certain rights and pieces of Conrail that would have, kind of like the old Dereco deals, that would have given us enough access. I made this offer to Dave.  He turned it down, to my surprise because it was a lot of money.


BB:  Any notion as to why? Too much of an obligation?


DG:  Uh, I think he… I would be speculating, yeah.


BB: It's okay.


DG: I'd be speculating.


BB: You're allowed to speculate.


DG: I think, one, David genuinely thought he could do the deal he wanted to do with Southern Pacific differently, and I think he may have had CSX in his mind.  For whatever reason, we couldn't do it.  But Snow and I continued to have meetings and thoughts about how to do it.  We even had our teams working on it and we came up with, our teams came up with a strategy for dividing Conrail -- in a way that we could have lived with anyway -- but it was not something that CSX would accept.  At the end of the day, John and I couldn't come up with the strategy that exactly worked. That then meant we were continuing to work, and it was just a lot of the dialogue going on during this period leading up to CXS’s successful deal with Conrail.  When John called me, we were surprised by that.  


The legend is, I was driving -- it's a true story -- I was driving in the first car with a car phone that I ever had which I had gotten from Ford Motor Company because they were such a big customer, and I always had the latest Ford product that I was driving in.  And I got the call driving down Hampton Boulevard, where you have recently been, and it was John on the phone and he told me that they had successfully made the deal, and he knew I would be unhappy about it and perhaps upset, but he said, “We've done the deal.  We're very comfortable with it,” and “Please don't do anything until I have the chance to talk to you.”  That was a very courteous call.  John and I were good, were and are, good friends. Even after all of the stuff we've been through, we're still - could go out tomorrow and play a nice round of golf together. I thanked him for his courtesy and immediately called my group together, and called the board and decided that this was not going to happen.  We were not going to let this happen and we would react to it.


BB:  Did he really think that you would just say, “Oh, okay. I guess we lost.  We're going to go away?”


DG:  I don't know.  You'd have to ask John.


BB:  We will.


DG:  (Laughs.)  You’ll have to ask John that.  I suspect John thought we could make a deal in some fashion, because we'd been very close to a deal.  But there were two things, a couple of things working, maybe more. We did not think, we really did not believe, that CSX could acquire all of Conrail.


BB: Politically speaking.


DG: …Politically speaking, legally. We just thought that that would be a behemoth in the Eastern United States and leave it in totally unbalanced competition.  I had a couple of legal opinions to that effect, internal and external, and a lot of thinking went into that. We did not believe that. We believed that we probably could, because CSX was already there, CSX was a good deal bigger than Norfolk Southern, and we believed that we could, but we didn't want to do a hostile deal and we couldn't get Conrail to agree. So, that's the context of all of this.  We knew…we knew, and I knew because some calls that I was trying to make to David Levan suddenly I had more difficulty finding David than I used to, so it was not that we didn't think that…but we really did not believe that CSX would do, would come forth with a strategy to buy all of Conrail.  John had a different set of legal opinions and a different view and was able to make a deal with David, to do it and announce it.  He did invite me to come to Washington and, after consultation with the board, at first we prepared the balanced competition approach which we sort of published.  We didn't do it as thoroughly as we did, but we let it be known in our initial reaction to it that a CSX acquisition of Conrail would create unbalanced competition and be bad for customers and bad for the…


BB: …the nation.

DG: …bad for the nation and unpatriotic.  And uh, meanwhile we prepared the balanced competition strategy which McClellan, Bill Woolridge, and the law department.  Bill Woolridge wrote some brilliant documents on this -- and Jim of course.  We were working on that as an opposition strategy to it.  But I did go to the meeting, as John invited me to the meeting.  We held a meeting in our offices in Washington, and I went up with a couple of key lieutenants.  But John and I met one on one.  We agreed that the two of us would meet and the short of that meeting is that John emphasized that the deal he had was “bulletproof.”  That's John's term, “bulletproof.”  His approach to me was, “David, I know you don't like this, but the deal we have is bulletproof. Under Pennsylvania law, the board has the power, it has the complete power, to do what it wants to. The board has voted for this, the board has endorsed the deal, and you can't reverse that, and I have a very strong opinion that under Pennsylvania law, you can't interfere with the activities of the board, and you shouldn't think you could, and here is what we are willing to give you because we do understand that we'll have to go to the to the Surface Transportation Board and get this approved and that you need to have and here's what we'll give you…”  It was a nickel and a dime.


I was fully prepared to see a version of the map that he and I had almost agreed on and we had thought about that.  I thought he would come back with that, but he didn't, he came back with a very modest concession, and so I terminated the meeting.  I more or less said, “John, thank you very much,” and that's that.  We then held the board meeting in New York and determined to launch the counteroffer.  We determined to do that.  We made a key – the board and I -- but the board made a key decision and that is that we should consider what our advantages were.  We thought that we really did have the better argument in the end on the balanced competition strategy.  We believed that.  We knew that we had the better financial structure to do a deal than CSX did.  Norfolk Southern at that point was a financial powerhouse:  had a very low debt-to-equity ratio, we had cash, we were rocking and rolling, our business was good, it was a good financial time for us. We had that strength, and we believed we had a certain reputation.  We also believed we had some influence in Washington.  I’m sure that John, being the Washington guy that he is, thought he had more influence in Washington.  He probably did.  We thought we had some, but the big thing we thought we had was the financial ability to do the deal, and we decided that the hearts and minds of shareholders are emotional and there's a big, very strong, “Let Conrail be Conrail,” and all of that, but that in the final analysis, a higher all-cash offer --- and the CSX offer, you may remember, was part stock, part cash, and a lot on the come.  So, we decided, we made the pivotal decision to make an all-cash offer and higher than their offer, and we went public with it and the battle was on.


BB:  Were they shocked by your response; do you think?


DG:  I don't know.  I really don't know.  I don't see how they could have been, but they may have been surprised we were willing to put up that much cash.  And the number, you know, was high then.  We thought it was high, it got higher.  We then launched the effort to get a shareholder vote, to win the shareholder vote that they had to get to approve the offer.  We launched our effort to win, which we ultimately succeeded in.

BB:  What tipped the balance there, with shareholders?

DG:  Money.


BB:  Oh, just money. Okay. 


DG:  Well, the shareholder base…The interesting thing is, the shareholder base of Conrail immediately changed because with competing offers in a merger, the arbitrage people and the hedge funds and the players in the stock market immediately come in, and we could see the Conrail ownership changing before our very eyes. I mean, we were well represented.  We had one of the two principal merger and acquisition law firms in the world were [sic] on either side of this transaction, Skadden Arps for us and Wachtell Lipton for CSX.  And we were well represented by – I mean, this was a big-time deal.  But the card we had was financial strength.  We decided that we had been building financial strength for a reason, and the future of the company was at stake, and that it was the time to use our financial strength.  That’s kind of the story of what happened.  


At the end there were a lot of movements and back and forth and I believe that, when John and I began to talk again about, particularly after we had won the shareholder vote which threw a monkey wrench into their ability to go forward with the transaction.  And that was a day that’s been published when we sat in the hotel across from the Academy of Music with the proxies in a box in front of us, and we went there, and the speeches were all made by Conrail employees and the pickets were outside. That was a famous day when my security force said, “Mr. Goode, we’ve arranged for you to go in the back door here and avoid the picket lines at the front door of the Academy of Music and we worked out a way to go around,” and I said, “No, we’re going to walk through the picket line, and I'm going to shake hands with everybody that will shake my hand.”  And I walked over there.  We left early for the meeting, and we walked over there, and I began to shake hands with the, uh  – and the newspapers were there. (Laughing) It was a great day. (Laughs)


BB:  Way better than sneaking.


DG:  I had my picture taken with all these signs of “Norfolk Southern is evil,” (laughs) but we went in.  Of course, we won that vote.  And then it was more or less ordained that we would have to work out a deal with CSX, and so we began to discuss that again, and John and I…I thought John and I had worked out a deal.  We were going to meet, without going into the incredible detail, we were going to meet in New York.  That was the meeting where John didn’t show.  He sent Pete Carpenter.  Pete was there, and Pete was very uncomfortable, obviously.  And Jim McClellan and I were there, and Hank Wolf, my chief financial officer who was a brilliant strategist throughout this.  You ought to interview Hank Wolf sometime.  We were there, and we just knew something was wrong, and at a certain point our lawyer, who’s now deceased so I guess I can tell this story, said, “Well, let me call Marty Lipton on his cell phone.”  We were sitting around waiting for John to show up.  The story was that John was held up by bad weather in Richmond.  Well, I had just flown up from Norfolk, I knew that was…

BB: Yeah.

DG:  So, we didn’t know what the story was, and Pete Carpenter left to go back to his hotel.  We were there, and our lawyer said, “Well, let me call Marty.” So, he called Marty, and he came back to me, and he said, “David, it’s all over.  It’s all over.”  And I said, “How do you know it’s all over?”  He said, “Because Marty didn’t answer the phone.”  I said, “Well, maybe Marty’s….”  He said, “No.”  He said, “When Marty doesn’t answer this phone, it means something is bad.”

BB:  And Marty, for clarity’s sake, for our folks, Marty is…

DG: Marty Lipton.

BB: Yeah, but how does he fit in to the…?


DG: Well, he was a lawyer for CSX.  He was CSX’s lawyer.


BB:  Not the time you don’t answer.


DG:  It’s not the time you don’t answer the phone right in the middle of a deal like this.  Morris Kramer was our lawyer.  I had gone to law school with Morris.  At the time the two pre-eminent merger lawyers in the world were Morris Kramer and Marty Lipton.  Marty Lipton is still alive.  Morris is not.  But anyway, he said, “David, what’s the move?”  And our next move was to increase the offer and publish it in the Wall Street Journal.  This was Sunday, so we went ahead and prepared the press release and that’s when our head of public relations called her counterpart at CSX and said, “Well, John let David know about this.  I’m letting you know right now that we’re going to up the offer tomorrow morning, and it’s going to be in the Wall Street Journal.”  And he said, “For God’s sake, don’t do it.”  Said, “Please, please don’t do it,” and begged.  And Magden, our Chief Financial Officer, and Jim McClellan conferred with our lawyer, and we decided that that was our strategy, and we should go ahead and release it.  So, we upped the offer, all-cash offer, and got the number up and released it in the Wall Street Journal the next day, and that was what finally tipped the balance.  And what we found out was, when John called and said, “Alright, we’ve gotta meet.” So that’s what he and I did, and what we found out was he had entered into a deal with David Levan, and David Levan had to approve anything that was done.


BB: Why would he have done that, do you think? Again, I know you're speculating but…

DG: I'm speculating.  How much would you pay to do a deal? (Both laugh.) I don't know what was in the agreement.


BB:  So, we've discussed this internally in the Hall of Fame and we think there's a mini-series in this drama about the…

DG: Oh, this would make a movie.


BB: Yeah.  Well, I figured a mini-series would be, you'd get eight two-hour episodes, but I want to know who would play you and who would play John Snow?


DG:  I don't know, that would be fun.  Anyway, what we learned was that John could not do what John wanted to do because of the agreement that he had, and he and David then had to negotiate and that of course cost both of us money, but it had to be done.


BB:  There was a lot of merger activity west of the Mississippi around this time.  Did that play a role in this at all?


DG:  Well, it did, and it didn't. We knew it was going on; there wasn't much we could do about it. It confirmed my view that we needed to have the Northeast. One of the things that Norfolk Southern obviously, maybe not obviously, but early on in this when CSX made the – our board said, “Well, do we pursue another option?”  I mean there were two other options out there, Union Pacific and Burlington.  I don't believe that Drew Lewis would have done a deal with us.  I could be wrong.


BB:  Why do you think?


DG: Close relationship with CSX. I could be wrong about that, but I do believe that, and Bob Krebs has confirmed that, I do believe that we could have done a deal with Burlington, but our conclusion was that we needed to have the Northeast to complete the Norfolk Southern system before we did anything in a transcontinental way. That was a - we spent a lot of time thinking that through and doing it. Reasonable people may argue whether that was the right strategy or not.  I mean, you can argue that both ways. I have, in my own mind and with others, argued it both ways. That was - we proceeded from that belief and our actions were largely structured on that belief that we needed to complete the Conrail deal. The result of that was that Snow was able to work out the flexibility to do a deal with David.  So, he and I, with our advisors, worked out the 58/42 split that ultimately came.


BB: It's been 25 years or so since all that happened. Looking back on it now, do you have any observations you'd want to share about [it}?


DG:  My basic observation is that; this will sound self-serving, I guess, but my basic observation is that I think subsequent events have proven that it was the right thing to happen.  It was the right thing to do. I believe the structure of transportation, which is a much better structure than it was when I, certainly when you and I started at the N&W. I mean, if you look back at the structure of Eastern - of the national transportation, rail transportation system is much better than it was.  I think it was the right thing to do.  It has worked out well financially for Norfolk Southern, it's worked out well financially for CSX. John Snow and I said to each other, I think we were both being honest about this, we said, when we've completed our negotiations on how to split it, we said, “Who won?”  We said, “Well we both lost a lot of money by not having been able to get this done five years ago,” which is true, but what we said was, “It'll be years before you know and even then, you won't because a lot will happen.” We came out of the transaction with the heft and strength and the system that is a fully competitive, I would argue the best Eastern rail system.  I wouldn't trade us for CSX today.  My conclusion is that overall, it was a good deal to do, and it was the right deal, and it was what we had to do.  I'm sorry it cost as much as it did.  In the scheme of things today you look at the market value of both companies today…  We wanted to achieve relative parity to CSX; for a brief period, we had it.  Now they have gotten going again, a little better, but roughly you have two big guys in the East and two big guys in the West and the Canadians and you've got the new merger that's going on here. I don't know what the final structure will be, but overall, it has achieved what I think needed to be done. I'm comfortable with how it came out and where it went and I'm sorry we had as much - we haven't talked about our difficulties in executing once we did the deal and now the…


BB: Well, I did want to touch on the…


DG: …the trouble we had. We planned.  We had the benefit of looking at the UP.  [We] went out to the UP.  They spread everything out on the table for us and we had their learning, and we studied the hell out of it.  I had team after team - and we still didn’t - I have a theory. I've seen, being on other boards, I have seen other big mergers done and I've seen, you know, Hewlett-Packard and AOL, Time Warner, when a lot of things – I have a theory that there is a law of big merger transactions and that is that something is always going to happen.


 BB: That you can't anticipate every…


DG: You think, “Oh why did we have to…”, and we made mistakes and misjudgments but the mark of Norfolk Southern, I would say to you, is that if you look back at it and see, we recovered pretty darn well. Our people didn't get - I mean the mark of Norfolk Southern people is that they expect to do well and they’re not willing to….


BB: They don’t stop.

DG: ...they won't quit, they won't stop, and they won't get down. I spent a lot of time because when we did have difficulties and the stock plummeted and all of that, I had to deal with discouragement and disappointment. I realized that I'd seen that there were a lot of people that had never really seen the downturns or the difficulties and the hard times and having been 40 years in the business I watched the roller coaster go and I was on the roller coaster, more than once. You just have to stick with it and be there and do the right things as you see them and be willing to make a mistake and recover from it.


BB: How was the board through all of this?


DG: The board – I learned, if I didn't know it already, the value of a good board because the board stuck there. The stock went way down. I never after, I've said this before, I never doubted because I knew, when we were at the low, we were having real trouble doing things…I knew that we knew how to get out of it. I believe that my operating people and my marketing men and that, I believe that I had the team to do it.  I'm convinced that I had the best executive team, and we haven't talked about this either, but I was convinced that I had the best executive team, one of the best in American business at the time, and I knew we would get out of it. I went to my board and said, “Okay we're - trouble with the stocks, you can see where the stock is,” and it really was.  I never doubted that we could get out of it, what I worried about was whether we would have time to get out of it. I could look at the stock and find more money that I could have produced in a month or two to pay for the company and you have a railroad for free and I always worried that somebody would seize that opportunity and I would walk into my office one morning and find somebody sitting there at my desk and say, “David, welcome. Would you like to put your stuff in one box or two because we own you now?”


BB: Ever any inclination or any evidence or any…


DG: No, I don't think anybody at that particular time – you’ve got to remember that we ran into that, sort of the bubble exploding in the recession, and I don't think anybody wanted a railroad at that time because if they wanted to, they could have sold our coal and timber reserves and they had a railroad for free.  I knew that because private equity people came to me and said, “David, how would you like to be owner of your railroad?” [Laughter] I said, “No, I got this company and its shareholders where we are today. These were decisions that I made, and my shareholders have suffered from this.” This was a period when I was going to retire.  Had you asked me when I started how long I had, I was going to retire, but my conviction was, “No I'm going to retire when I see us out of this, and we've paid off the debt and we've gotten this company back where it should be.”.


BB: Back on track.


DG:  I mean, better or worse, that's where we were and I said to the board, “Look, if you want new leadership, fine. I'm prepared to help you get that any way you want to, and I'll walk out the door tomorrow.”  And the reaction of my board was, “Jesus Christ!” [Laughter]


BB:  “We didn’t mean that!”


DG:  “We didn't mean that!” I mean, God bless them, they said, “You know, just tell us what you need and we have confidence and we would like to have frequent meetings and we would like to hear about how the operations are going and we would like information and we need to…”,  then that was mother's milk to me because I was reporting the hell out of everything to the to the board during this period so we got  --  and the good news is that our operating and marketing and everybody else figured it out.  Got us out of it.


BB: Yeah, right, just took a little time.


DG: I didn't do it. I didn't do it. I went to every seven o'clock, 7 a.m. meeting that we had in Steve Tobias's office, and I listened to every phone call that I heard, and I knew what was there, but I didn't do it.  The operating guys and the marketing guys did it because that – there was a - and the good side of having difficulties and coming out is that you do build bonds.


BB: Right, through difficult times.


DG: …internally, through difficult times. There's no question about that.  It's no question that Norfolk Southern is a better company for having been through that and let's don't forget for a moment the people from Conrail that joined us, and we got the people from Conrail that we needed, that we wanted, and that and were willing to come down and jump into this and…


BB: Well, and they'd earned their stripes through the debacle of Penn Central.


DG: They understood it. You know, a lot of people were key to it.  The mark of the company - and then we came out and then, the last piece of my story is the transition to new leadership, and we came up with a structure for doing that and as a result of all the things that had happened, we had a really powerful executive group and the board and I ask ourselves, “Well should we - is this a time to go outside and look for new and different leadership?”  We had a lot of outside advice on that, and we looked, and the answer was no.  We had the best, we had more than one of the best candidates in the transportation business.  A couple of them could have run any company in the Fortune 500, in my opinion.  So, we started the transition process that led to a decision on that and then I was -- it happened that here came my 65th birthday so it was…


BB: Did anybody ever at any time talk about just changing the rule to say it's not 65?


DG: There's no rule.


BB:  There is no rule?

DG:  There’s no rule.  Tradition.


BB: Tradition? Did anybody ever talk about changing the tradition?


DG: Yeah.  (Laughter)


BB:  But nobody did.


DG: I think Arnold, had his health been better, would have loved to stay on, but he - I think Arnold also felt that he was comfortable with me as a successor.  I had been there 13 years and I had planned to retire when I was 62, but we were in the middle of the dumps then and I just couldn’t do it, it wasn't right.  It was the wrong time.  I didn't feel comfortable doing it.  I wanted to make sure that the company was better when I left than when I came, and I believe it was.  I believe it is, but I turned 65. I had actually more than one successor who was ready and fully capable and wanted it and was ready and I believe that in leadership, in corporate leadership, you need to step aside at the right time because that frees the organization to flow the way it should if you've built a good succession plan and that, we had that, we did. The board, you asked me about the board earlier, and the board – we had really good leadership in the board who had seen this done and knew how to do it and were willing to step in and be part of the process.   And we had known quantities because we had had, in the midst of all this, there was total exposure of the senior officers to the board - a lot of senior officers that were not so senior -- to the board.  The board knew them and so that helped the process. The short of it is, when I had my 65th birthday, it was time.  Wick Mormon was there and ready to go and had a lot of plans, and the only  decision that was out there was, do I remain on the board?  I remained as executive chairman for about three months, four months only.  There was discussion about whether I'd stay on as executive chairman. That was the only post-65 thing that was considered, really, once we had made the decision on a CEO.  My conclusion was that's wrong, I don't want to do it.


BB:  You didn’t want to stay on the board?


DG:  I concluded that it was better for me not to stay on the board.  I'd been CEO for too long. To continue on the board….

BB:  So, was it hard to step down?

DG:  Oh, it was terribly hard to step aside, terribly hard to step aside.  I didn't want to, but it was… but I believed, and I believe now, that it was the right thing because I had seen it both ways, being on several other -- I had seen it both ways and I believed… I knew that Wick wanted to do some things differently…


BB:  But that was okay?

DG:  It was okay with me.  I wanted him to.  He wouldn't have been the right successor if he didn't want to make some changes and do things differently.  I mean, that's part of taking charge.


BB: Can you comment on what some of those were?


DG: I think that's another conversation.


BB: Okay.

DG:  I'm not sure I knew them all.

BB:  Yeah.


DG:  I’d put myself in Wick’s mind, but we were close and worked together closely at the end.  Well, we worked together closely a lot.  I think it's just better and cleaner and easier. I mean, I think I could have been disciplined and not interfered, and all of that, but I would always have been sitting there…it's just, I don't know, that’s my belief.


BB:  I had the fella who was the founder of the last company I worked for, Breakthrough, he stepped himself up from CEO to chairman and he finally, it was a very short time afterwards, he said, “I'm out of here.”  He said, “I can't do a part-time role. I'm either in it or I'm out of it, but I can't do this sort of work.”


DG:  That's right.  One, I'd been CEO for a long time. Two, Susan and I thought we'd do a lot of travel; we did some.   And you know, I thought, “Oh, I’ll work on my golf game.”  Well, that didn't work out.  (Laughs.)  That hasn’t worked out at all but it also gave me the opportunity, gave me the personal opportunity, to be more active on some outside boards which I had gone on in order… because the board and I discussed this a lot and concluded that it was good for me and the company to see some different corporations, different ways of doing things and bring that learning back.  And that worked, I'm convinced.  I mean it took time and required me to put together the structure to do that without it hurting Norfolk Southern, but I'm convinced it was a good thing.  My retirement at a time when I was strong and healthy and had a lot that I thought I could do enabled me to be more active with some of the other corporations which I think benefited them.  I think benefited them.  You have to ask them.


BB:  So, a few more things I want to touch on.  One was the Meridian Speedway because that was a...


DG:  How did we miss that?

BB:  We didn’t miss it.  We're just doing it now.

DG:  That's a key part of this whole strategy that we talked about which changed the face of the company.  What became clear was that you needed scope and expanse for the intermodal business, the long run.  And we had good deals with the western railroads, but we had this wonderful line that was our arrow to the West, and we knew that that would get us where we needed to go and give us the right…But we also knew the Kansas City Southern owned it, and it was,  you know, and we had some discussions about acquiring the Kansas City Southern which nearly came to fruition, but didn't.


BB: Because?

DG: I think because they didn't really want to sell it at the time.  But George Edwards went out, and Mike Haverty came in.  Mike understood intermodal business.  Mike was a man of action, and a guy we got along with very well and had good business relationships with.  So, we had talked about our joint business and done some work.  I think Mike called me and said, “Come down, and let's talk about that.”  So, we came down, and Mike McClellan and I went down and met Steve Tobias.  Steve was somewhere else.   We did this just overnight almost and got on the train and rode along.  I don't remember who Mike had with him. Carl Ice probably, I don't remember.  We could look and see, but it wasn't a big group.  It was on one car, and we were riding the train, and Mike and I went in the back room and just said, “You know, we can do business together.  This is something we both need.  It's growth.  It's development...”

BB:  But you plowed a lot more money into it.

DG: “...We could take this business.”  Steve Tobias was riding on the train.  I could see Steve's thinking, Oh God, this is….

BB:  More of that Intermodal stuff.


DG: He was thinking, This is not a Speedway.


BB: Yeah, right

DG: This is the Meridian pothole.

BB:  So, what was track speed back before you invested?

DG:  I don’t remember.  It needed some work, and they needed the money to do it, and we had the money.  But we also believed that we could do a deal with Haverty. We were careful to negotiate it well and it was carefully negotiated and locked up and we didn’t - it was more than a handshake, but Haverty and I just shook hands on the train and said, “Okay, we got a deal. Let's do it, and we'll tell the guys to get it done.”  By the time we got to the end of the trip...

BB: You were ready to go.


DG: We had it and it just took Mike McClellan. I don't know how much he worked on the agreement with the lawyers, but I would argue that the Meridian Speedway has been a pivotal piece of the, of rail history in a way, because it's been really – it works, it's really successful, and it got attention. I mean we did other corridors and we've got the corridor idea and we've developed a lot of them, and we spent a lot of money clearing tunnels so we can double stack everywhere and  put together all kinds of things, but the Meridian Speedway has gotten the attention it got for good reason, because it works. It's going to be part of something different now.

BB: Right. I was going to ask you what you thought the impact of that might be, if any.

DG:  You know, my honest answer to that is, “I don't know,” but it has impact and it's got to be an important part of the value.  I mean, we believe it was a good deal for us, but I believe it was a really good deal for Kansas City Southern because it changed the value of Kansas City Southern. We would have bought Kansas City Southern at the right price had they really wanted to, but I don't believe they really wanted to sell. I think it's an important part of ongoing rail history.  We're going to look back on the Meridian Speedway kind of as an index of what the next phase of the transportation business will be.

BB: The other thing I wanted to touch on, since you brought it up, not me, was the steam program.

DG: (Laughs) The great albatross around my neck.  Where's the photo of my daughter?  We could pull it down.  It’s up on the shelf up there, [the photo] of my daughter at about age 10 in front of the 611 in Roanoke, at the office in Roanoke.  I love the big machines as much as anybody and there is a quote that's in a book that’s going around, and I noticed it in the notes that you prepared for this, that I when I was riding back from the rebirth of 611, I went down to Charlotte to ride it back to Roanoke and I'm quoted by somebody in that as saying, “Boy, it was a mistake to stop this.”  That's almost an accurate quote, but there's a word left out that somehow I'll never be able to change on Wikipedia and get it through.  What I said was, “It was a public relations mistake.”  I would stand to this day by the fact that it was something that I hated to do.  I really didn't want to do it, but at the time we did it we had to do it for several reasons. One, it was costly.  And it was costly at a time that we needed to make investments in the growth of the business.  Fighting the steam program was big bucks and it was fighting in ways that I didn't believe should be fought.  I knew everyone loved it, I loved it, I took as many of the rides as I could.  I didn't love it as much as Bob Claytor did. I also knew how it had weighed on Bob Claytor when that locomotive derailed in the Dismal Swamp and what a price he paid for doing that, but the fact of the matter is we found that none of the organizations that wanted to run it could buy insurance.  We would have had to run naked on that and the security was an issue.  I would go to the gatherings, and I would see the crowds and I would know that the train was coming, and I would think, Oh, God.

BB:  Don’t get hurt.

DG:  It was a burden that nobody could – I mean, we would have had to tremendously overstaff it and the localities couldn't handle it.  There were problems involved with it, there just are, which is the expense of operation. Therefore, I made the decision, and it was my decision.  I made it. There's a legend out there that the operating department forced me to do it, which is not true.  Although it is true that the operating department for the most part hated it because it put the burdens on.  But it was my decision.  I made the decision, and I think it was absolutely the right decision.  I love to see the 611 running, but I wouldn’t want to run it.


BB:  Okay, fair enough.

So, two other things I wanted to touch on. One is, you made a decision at some point that you’re going to go into the railroad business, and you’ve talked about that.  I asked Rob Krebs this, too, when we were interviewing him.  Did it get in your blood over time so you can't imagine doing anything else? The question I think I asked him was, with the level of intensity [with which] you approach your job, would it have been the same if you were making toaster ovens at Sunbeam as it was running Southern Pacific?  What's your reaction to that?

DG: This is an interesting question. I've thought about this some. The Wall Street Journal once wrote a profile on me and they said, “Goode is probably…”, could be right or wrong, this will sound self-serving too, but here it is, you could look it up. They said something to the effect of, “Goode is perhaps the only rail CEO who could run any company in the Fortune 500.”  That was a great compliment.  I appreciated that, and I loved it.  I put it up on the wall!  (I didn't really.)  I thought about that, and I thought, You know, what would I rather do than run a railroad?  After having been part of it early on and getting around and doing it, I thought to myself, I can't think of anything I would rather do than be CEO of a rail company.  When Jerry Grinstein asked me to join the Delta board I said, “Jerry, Delta Airline?” and he said, “David, you ought to do this because…,” he said, “…serving on an airline board you will see how easy it has been to be CEO of a railroad.” (Laughter) We laughed about that.  He was not wrong.


BB:  Right, right.

DG:  He was not wrong.  I don't know whether it's the, I mean, it is the rail business, because there is something…I believe that because it's a 185, or whatever it is now.  I used to say we're 175 years old and we're the future of transportation.  And whatever that number would be from the ‘Best Friend of Charleston’ to today, I still believe that is true because we had something that nobody else has in the world and that is the straight rail transportation network which is a key national advantage. We don't understand it, we don't pay attention to it, we don't invest in it enough publicly, but it's true.  It is something – the Germans, I remember once, came and spent God knows how long in Atlanta looking at our systems, our operating system, because they said, “We need a freight network and you've got the best.”  And I think that's right.  So, did that get in my blood when I heard the locomotives of the Virginian at age, uh…

BB: Subconscious…

DG: … at age 10 when I was walking down to the river with my dog?  I don't know.  I don't think so, but if you spend any time with a company like Norfolk & Western and Norfolk Southern - you spend 40 years in that environment and you see the people that we have out on the line and I used to - the best thing, the thing I miss most about my job, is that I could call my assistant today and say, Fred was my last assistant, I could call him up and say, “Fred, let's go somewhere Monday.  Pick a place, pick a maintenance crew.  Let's go out and have lunch with the guys or let's go to the…”  I remember when we were in the depths of - we couldn't get a train through Cincinnati after…the Conrail thing just surprised us in a lot of ways.  Couldn't solve the problem in Cincinnati and I said, “God damn it, I'm going to Cincinnati.”  So, I flew out there in the morning and I went into the break room, and I sent - I think Tony Ingram went with me, as a matter of fact, still worked for us in those days.  I said, “Tony, go out and I'm just going to sit here in the break room and talk to people.”  I sat there and people would come in and they wouldn't talk to me for a while, but I sat there and drank a cup of coffee and another cup of coffee. Finally, they began to sit and talk to me, and I said, “You know guys, what the hell's wrong? You can tell me.  Tell me what's wrong.”  And they, you could see that and finally they began to say, “Mr. Goode, do you really want to fix this?”  And I said, “You're damn right I do!”  (Laughing) They said, “Well here's what we need to do.”  [Laughter] So I got on the phone and, I think it was Tony, and I said, “Tony, get the hell back here and listen to this!”  You know, the conductors and the engineers, they knew it! They knew exactly what to do, and Tony knew enough to listen. (Laughter).  Now, I'm not sure that happens everywhere.


BB:  No, no.


DG:  These are people that care about it.  They care.  They genuinely care about, not so much the company perhaps, but about what they do and the business they're in and there's an aura about it. That is a long-winded answer to your question.

BB:  But it’s a good answer.


DG:  What would I rather do than be [railroad CEO]?  Nothing!


BB: One last one for you and then we'll wrap up is: What do you see for the future? We've got electronic vehicles, we've got autonomous vehicles coming, we've got all kinds of technology galloping along. What do you see?


DG:  I'm sorry I probably won't be here to see a lot of it.  I'm not sure I know the answer to the question but there is nobody, nothing is better equipped to utilize that technology than rail. I mean it's just – to me it's obvious.  I could see the legislation that requires two-man crews, and you think, Well, come on. Don’t do it.  Can I explain this to you? Let's go and we'll see it.   All of that will work out and there is nothing that is more adaptable. There will be a lot of technological changes to - our system is run a totally different way than it was when you and I were at N&W in the early ‘70s. You go to Atlanta, it astonishes you.


BB:  Well, I recall of being out with a division engineer one time and he had - we were in a high rail vehicle, not on the rail - and he pulled out a calculator called the Bowmar Brain that would add, subtract, multiply, and divide, and it had cost $500, and that was modern technology then. You think about what is now compared to that.  It's just remarkable.

DG:  You asked me about the special thing about being a rail CEO.  One time I took one of these. We went out to a track crew, and we had a brown bag lunch or something that we took out and we had lunch.  And then after that I was talking to one of the operators of the machine, and he said, “Mr. Goode, let me show you my machine.  Let me show you my new machine.” So, I looked at it. Everything of course was totally new.  And I looked at it and his hands were twice the size of - because he was, you know, he was up from the ground, and these enormous fingers were punching these things, and he said, “Look what I can do! Look what I can do!”  And I thought, This is great!  (Laughing) Our people get it.


BB:  It's an amazing business.

DG:  It’s an amazing business. I don't know what the next step is, but I think, my conviction is that the rail business is just poised for a next great leap. We have been in our conversation through about four, uh, several different stages, and we didn't even discuss much the Staggers Act and competition and how all of that changed and that - in the period since I joined the railroad in 1965, it's been through multiple changes and the mark of it is that it has been able to adapt and move through that.

BB: And improve.

DG: In the early 70’s, when the interest rates were high and things were not going well, you could have gotten a lot of bets that we'll have a fully nationalized rail system and that probably would have been a good bet to take, but it didn't happen.  And there's enough resilience and determination in the system that, aside from Conrail and a few others, that it got through that period and on to the next stage and we made the end. The mark of management during my period when -- I was head of the AAR more than anybody's ever been, I believe, unless somebody's broken my record now -- the mark of it was that private investment was willing to make those capital Investments over that period when it was possible to get the money and do it. But the decision was made to do it.  By and large, unlike other industries, it was not all stripped out.  More investments were made in this business, I think, than in most and it has shown the resiliency over time to adapt to whatever the next phase is and be strong.  As I've said before, I argue that it is a key national asset, and we ought to regard it as such.


BB: That's a perfect concluding remark. Thank you very much. This is a treat.

DG: Thank you. I'm sorry I made you miss your plane.

BB: No, I didn't.

DG: But you got to get the hell out of here.

BB:  Oh, pretty soon, yeah, I guess.

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