I ad a276 8601993 executive research projectcs8th

1. i AD-A276 860
1993
Executive Research Project
CS8
The Channel Tunnel
-- A Case Study--
Lieutenant Colonel
Leslie Allen Veditz
U.S. Air Force EIJ.C
S LECTEMAR 0 91994
Faculty Research Advisor
F
Mr. Francis W. A'Hearn
94-07672111 III 11111l 111111til1111H1 11111 lii
The Industrial College of the Armed Forces
National Defense University
Fort McNair, Washington, D.C. 20319-6000
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UNCLASSIFIED
ABSTRACT
The Channel Tunnel - A Case Study
By
Leslie A. Veditz
Lieutenant Colonel, USAF
23 April 1993
The Channel Tunnel is the largest privately financed
engineering
project in history. Thirty-two miles in length, the tunnel
stretches beneath the English Channel from England to France.
When it becomes operational in December 1993, the Tunnel will
be a
crucial link in the emerging European high-speed rail system.
However, the Channel Tunnel project itself has beset since its
inception by financial and technical woes, blown schedules, and

5. highly public battles between the Anglo-French company
managing
the project - Eurotunnel - and its contractors.
This case study describes the history of the Channel Tunnel
project; from the earliest proposals for a fixed link across the
Channel in the early 1800s, to the genesis of the current project.
The paper examines the political pressures in Britain and France
that impacted the project and some of the major provisions of
the
Channel Tunnel Treaty which govern it. The paper describes the
major competing proposals for the fixed link, the ultimate
selection of the Eurotunnel Company to build and operate the
Tunnel, the financing arrangements and engineering design of
the
project, and the technical and financial difficulties that ensued.
1993
Executive Research Project
CS8
The Channel Tunnel

6. -- A Case Study --
Lieutenant Colonel
Leslie Allen Veditz
U.S. Air Force Accesion For
NTIS CRA&M
DTIC TAB
Unannounced
Justification
Faculty Research Advise rBY ...........................
Mr. Francis W. A'Hearn Distributionl
Availability Code,,
Avail andlor
Dist Special
The Industrial College of the Armed Forces
National Defense University
Fort McNair, Washington, D.C. 20319-6000
DISCLAIMER
This research report represents the views of the author and does
not necessarily
reflect the official opinion of the Industrial College of the
Armed Forces, the National
Defense University, or the Department of Defense.
This document is the property of the United States Government

7. and is not to be
reproduced in whole or in part for distribution outside the
federal executive branch
without permission of the Director of Research and
Publications, Industrial College
of the Armed Forces, Fort Lesley J. McNair, Washington, D.C.
20319-6000.
INTRODUCTION
The Channel Tunnel - or the Chunnel, as it is also known - is
the
largest privately financed engineering project in history. (21:35)
Thirty-two miles in length, it stretches from Cheriton, Kent in
England to the town of Sangatte in the Nord Pas-de-Calais
region
of France (Figure 1). At each terminal, it is connected to both
national highway and rail systems. When operational, the
Tunnel
will allow rail passengers to zip between London and Paris in
3 1/2 hours, compared to the 12 hours it now takes by rail and
ferry. (23:A12) The Tunnel will be a crucial link in the
emerging
high-speed rail system that will give Europe the finest transport

8. network in the world. A dramatic example of shrinking
European
frontiers, the Tunnel symbolizes the on-going economic
integration
of Europe.
The Channel Tunnel is actually three tunnels. There are two
main
rail tunnels; Northbound and Southbound, between which is a
smaller diameter service tunnel (Figure 2). Cross passages
connect the main tunnels to the service tunnel, allowing access
for maintenance, evacuation of passengers, and supply of fresh
air. It has been said that while politics have been unfriendly to
the Tunnel and finances agonizing, geology has been kind.
(22:16)
Most of the Tunnel bores through a 160 million year old layer
of
impermeable chalk marl that runs in a continuous band all the
way
from Britain to France. (17:101) This marl is soft enough to
scratch with a fingernail but holds together while the tunnel

9. TO
LON.DON ENGLAND RAIL ROUTE
/ AUTO ROUTEr
Ashford Follmstone
I Passenger Shuttl
ts1/Tenuial Tenoall
Dovcr
Shakespeare HANNEL TUNNEL
shuttle 1
(21 :36)l
Cros pasagesconact he t~i'rnhes t
as~vdyflwIi drag.
Figure 2
(217 100)
Crospasage conpec th m#%rtubei t2
linings are pressed into place - an ideal medium. With 23.6
miles
of its 32 mile length under water, the Channel Tunnel is the
second longest undersea tunnel ever built. The honor for
longest tunnel goes to the Japanese, whose Seikan tunnel
between

10. the islands of Hokkaido and Honshu is 33.6 miles long. (5:42)
Today, excavation of all three tunnels is complete. Still
remaining to be done is the laying of track and the installation
of power, signals, and other facilities. However, the opening of
the Channel Tunnel, originally scheduled for May 1993, has
been
officially postponed to December 1993 and indications are that
the
schedule may slip even further. (45:D3) The project has in fact
been beset since its inception in 1986 by financial and technical
woes, blown schedules, and highly public battles between the
Anglo-French company managing the project - Eurotunnel - and
its
contractors.
HISTORY
The story of this project goes back much further than 1986. One
could say the "concept evaluation" stage of the Chunnel began
in
the early 1800s. One of the earliest proposals for a tunnel
linking France and England was presented by a French mining

11. engineer named Albert Mathieu to Napoleon in 1802. He
proposed
the idea of twin tunnels for stagecoach travel, to be ventilated
by chimneys rising above the surface of the water. (21:77)
Mathieu's proposal, never acted upon by Napoleon, is
nevertheless
3
held to be the first in a long line of technically feasible (if
not fully specified) schemes for an underwater tunnel. The
present Eurotunnel project is said to be twenty-seventh in this
line. (31:3)
In the 1880s, tunneling actually began from the British and
French
coasts. They had dug 2,000 yards out when the prospect of a
tunnel became uncomfortably real for the British. Arguments
that
such a tunnel could provide an invasion route to England led to
the cancellation of the project. Over the next century, studies
were written, soundings taken, holes bored. What looked like a

12. sure thing in the 1970s fizzled out in 1975 when Harold
Wilson's
Labour government decided it could either afford a tunnel or the
Concorde, but not both. (21:77) This cancellation took place
after 10 years of study and 14 months of digging. (16:4) Finally,
in 1984 the governments of Britain and France decided to try
again. Having agreed to set some common safety and
environmental
standards and to guarantee the project against political risks
such as war (6:21), Prime Minister Thatcher and President
Mitterrand threw open the project to bidders. Two years later, a
decision was made from among some ten major proposals and
the
Channel Tunnel project was born. Before discussing the
management
and financing of the project, it would be useful to step back for
a moment and examine the political environment in France and
Britain, out of which the Channel Tunnel emerged.
4

13. CHUNNEL POLITICS
In 1955, Harold Macmillan, then British Minister of Defense,
was
asked to what extent strategical objections still prevented the
construction of a road-rail tunnel under the Channel.
Macmillan's
response was "Scarcely at all." (31:5) There ended 75 years of
official British opposition to a fixed link across the Channel on
the grounds of national security. The fact is that the defense
argument, never very plausible in the first place, served to
obscure the fact that the very idea of a fixed link to the
continent was troubling to many Britons. The English Channel
had
served for centuries as a protector against foreign aggression -
and foreigners. Wrote one petitioner to Parliament, "I've put up
with being attached to Wales, but the thought of being attached
to
the French is beyond belief." (21:73) This merely echoed Lord
Palmerston's reaction in 1858 to the suggestion that Britain
support the building of a tunnel: "What! You pretend to ask us

14. to
contribute to a work the object of which is to shorten a distance
we find already too short?" (31:8)
Hence national identity and xenophobia had much to do with
England's reluctance to build a fixed link across the Channel
through the mid-1900s. Since then, opposition in Britain to a
fixed link has come from a number of sources. In Kent, there
was
little enthusiasm for such a project. Inhabitants of this rural
area feared the heavy traffic and ugly businesses that would
spring up along roads to the tunnel. Ferry and port interests,
5
anticipating the loss of revenue and jobs due to tunnel
competition, initially tried a ;-Kcious and xenophobic
advertising
campaign to prevent the government from giving the Chunnel
project
the go-ahead. However in recent years, cross-Channel traffic
has

15. increased so much that, even with a severely reduced share of
the
market, ferry companies now say that the Channel Tunnel is "a
challenge we can live with." (39:10) Beyond Kent, a fixed link
was viewed as a good thing by business in general, and by the
construction industry in particular, which consistently lobbied
the government in its behalf. In the end, the Thatcher
government
had much larger motives in supporting the project. A fixed link
was seen as a symbol and a means to further integrate Britain
into
the expanding economy of the European Community. And in
that era
of British privatization, the Channel Tunnel project offered a
highly visible means of proving the superior efficiency and
effectiveness of the private sector over the public sector.
On the French side of the Channel, the political environment
was
quite different. Not only do the French have a long-standing
tradition of supporting large infrastructure projects, the Tunnel
itself meshes nicely with their already successful rapid train

16. system, Train a Grande Vitesse (TGV). The French also viewed
tLe
project as a direct means to promote development in the
economically depressed Nord Pas-de-Calais region. This area,
long
dependent on the declining coal, steel, and textile industries,
had lost more than 130,000 jobs between 1975 and 1984. At 14
percent, its unemployment rate was well above the national
6
average. (21:73) The City of Calais, initially fearful of the
possible loss of 5,000 port jobs, quickly turned around and
began
to aggressively plan for future development. The Coquelles
terminal is planned to include a business park, conference and
hotel center, and warehouse depot. In addition, the French
government is pouring money into new roads and improved port
facilities. Hotel capacity in and around Calais has doubled in
the last two years (39:10) and it is estimated that inbound

17. businesses may spur a doubling of the population by 1998.
(21:73)
Nowhere is the difference in political will between France and
Britain more pronounced than it is with regard to the
construction
of railroad track for high speed trains from the coast to their
respective capitals. Whereas the French high speed trains will
be
up and running soon after the Tunnel opens, equivalent service
in
Britain may not be available until the end of century. Local
opposition and British government refusal to commit public
funding
to build a high speed link means that trains will race along at
185 mph in France, slow to 80 mph in the tunnel, and crawl at
40
mph on the leg to London. (23:A12)
GENESIS OF THE CURRENT PROJECT
In this political context, we now turn to the genesis of the
current project. In the early 1980s, interest in a fixed link
across the Channel had again begun to surface. The Thatcher
and

18. Mitterand governments danced around each other for a few
years
7
over the issue of private versus public financing. The British
were fully committed to private funding, if not to the idea of the
fixed link itself. The French, fully committed to a fixed link
for almost every year of the previous century, were
understandably
suspicious of the British, remembering the 1975 cancellation (of
which they had borne half the cost) and doubting the feasibility
of private finance.
By 1984, however, the two governments had come to an
agreement and
jointly issued an Invitation to Promoters. The British had won
the financing issue - the successful bidder would have to raise
all financing from private sources without government aid or
loan
guarantees. Four basic rules were laid down for bidders:
proposals had to be technically feasible, financially viable,

19. Anglo-French, and accompanied by an Environmental Impact
Assessment. (31:14) By October 1985, ten proposals had been
tendered by various consortia. Of these, there were four serious
contenders (Figure 3):
(1) Channel Tunnel Group/France-Manche (later to become
Eurotunnel): a double rail tunnel to accommodate both
through-trains and special car-and-truck-carrying shuttle
trains. Price: $5.5 billion (6:37)
(2) EuroRoute: a bridge/tunnel scheme. Road bridges would
stretch out about 5 miles from the British and French coasts
to artificial islands, which would be connected by a 13-mile
8
long submerged tube tunnel. A separate, bored, twin-track
rail tunnel for through-trains, would be built later, in
stages. Price: $11.0-14.0 billion (6:37)
(3) Eurobridge: bridge scheme comprising a 21-mile motorway
in an

20. enclosed tube suspended in 3-mile spans from 900 foot towers;
a rail link could be provided either on the bridge, or in a
small-diameter tunnel. Price: $11.5 billion (6:37)
(4) Channel Expressway: twin very large bored tunnels,
containing
a two-lane expressway for motor vehicles and a train track.
Price: $2.9 billion (6:37)
Four Contenders for Link Between Btain aMd Fvance
Estimated cost. in billions of dollars
I.Channe[Exressway Channel Tunnel Group $5.5
eaotanrs I Consortium. including 10 Britisehce aryn
~~~~Drive-through roa! agtunnel and French companies anti
banks. veica-anv~~n
ENGLAND __ _ _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ _
EuEurorute $11-O-S14.0 IEurobnidge Si11.5 Drive-through
"" lo-French consortium Consortium of British and French
companies tube bridge
DoveBd r. Offshore islands
FRANCE Calais
Figure 3
(6:37)

21. 9
These proposals were evaluated over a two month period, at the
end
of which the Channel Tunnel Group/France Manche SA
(CTG/FM)
proposal was pronounced the winner. In many ways, the
CTG/FM
proposal was a compromise solution. However, it was relatively
safe, in that it depended on proven technology, looked
financially
viable, and was a clear extension of projects had been positively
appraised by official commissions in the 1960s and 1970s.
(31:17)
EUROTUNNEL
The winning bidder, CTG/FM, was a private consortium of 15
British
and French construction companies and banks. It quickly
reformed
itself as two holding companies, Eurotunnel PLC and
Eurotunnel SA,
which were given the job of raising finance, and an umbrella

22. holding company, the Eurotunnel Group. The company was led
by two
co-chairmen; Lord Pennock on the British side and Andr6
B~nard
on the French.
.• build the Tunnel, Eurotunnel contracted Transmanche Link
(TML),
thereby generating a proper client-contractor relationship at the
heart of the project. TML is an Anglo-French joint venture
between Translink in Britain, and GIE Transmanche
Construction in
France, these two groups in turn being joint ventures of the
construction companies originally brought together in CTG/FM.
Britain and France signed a draft treaty in February 1987. After
the successful passage of Channel Tunnel legislation in both
10
countries, the treaty was ratified in July. A concession
agreement was signed with Eurotunnel which provided for a
concessionary period of 55 years from the treaty date. At the
end

23. of that period, Eurotunnel must hand over the fixed link in full
working order to the two states. Until that time however,
Eurotunnel has the sole right to operate the Channel Tunnel.
Because both governments support the eventual construction of
a
drive-through road tunnel, the agreement stipulates that unless
Eurotunnel devises a drive-through option by 2010, the
government
may open such a project to competitors after 2020. (31:17)
The Channel Tunnel Treaty specifically states that "The
Channel
fixed link shall be financed without recourse to government
funds
or to guarantees of a financial or commercial nature." (31:30) In
return, Britain and France are prohibited from regulating prices
except in a situation of near- or actual monopoly. The
agreement
also provides for certain minimum standards of service during
off-peak periods, and maximum delays in the busiest periods.
Finally, the treaty and concession agreement establish an

24. Intergovernmental Commission (IGC) to supervise fixed-link
security, safety, and environmental impact, and to assume
responsibility for it in exceptional circumstances.
EUROTUNNEL FINANCING
To finance the Tunnel, Eurotunnel sought both equity and loan
capital, the latter being to some extent conditional on the
11
former. The initial equity interest of founder shareholders in
Eurotunnel became known as Equity I. (31:19) In October 1986,
Equity II, a private placement of E253 million in shares was
arranged. This initial test of investor interest in Eurotunnel
went smoothly in France but nearly failed in Britain. By
February
1987, lackluster sales prompted several top management
resignations from the British side of Eurotunnel. Lord Pennock
was replaced by Alastair Morton, a merchant banker with a
reputation as a strong but abrasive leader. The British shares
were finally placed, but only after the Bank of England prodded

25. major banks and corporations to buy them. (12:D4) In
November
1987, hot on the heels of the October stock market crash, Equity
III was launched. This was the main public share issue of £770
million. Difficulties were again experienced in Britain, but the
issue was eventually fully underwritten. (31:19)
Loan finance, in the initial form of a syndicated loan of £5
billion, was raised through a consortium of 206 banks world-
wide
(of which few were British). An important clause in the 1987
loan
agreement stipulated that the project had to be fully financed to
completion. (20:51) This was to have significant impact later, as
subsequent cost overruns made it necessary for Eurotunnel to
increase both equity and loan capital beyond the combined £6
billion which had been raised by the end of 1987. A discussion
of
these financial difficulties follows in the next section.
12

26. Eurotunnel's operations and proposals are subject to
considerable
external control. The Intergovernmental Commission is the main
oversight agency and under it are a number of subsidiary
commissions, such as the Safety Authority. The bank syndicate
also appointed technical watchdogs. In fact, in spite of the
large amount of regulatory machinery that has been built around
the Tunnel, real economic control is in the hands of the banking
syndicate. It is the banks which control finance at each stage,
by monitoring construction before allowing Eurotunnel to draw
on
its agreed lines of finance. (31:154)
TUNNEL OPERATION
As mentioned earlier, Eurotunnel will be the sole operator of
the
Tunnel until 2042. Three types of trains will use the Tunnel.
- Shuttle trains, owned and operated by Eurotunnel, will carry
trucks and cars through the tunnel, making the trip between
Folkestone and Coquelles in 35 minutes and exiting directly

27. onto local highways. Roughly 60 percent of Eurotunnel's
revenues will come from this shuttle service, recently
christened "Le Shuttle." (41:72)
- Passenger trains owned by British Rail and the national
railway of France, Soci~t& Nationale des Chemins de Fer
Frangaise (SNCF), will speed between London, Paris, and
Brussels.
13
- Long container trains, again owned by the railways, will
carry bulk freight between centers in Britain and main
Europe.
Payments by British Rail and SNCF for the passengers and
freight
carried through the tunnel (during the intervals between Le
Shuttle crossings) will provide the other 40 percent of
Eurotunnel's revenues. (41:72) Freight and passenger trains
using
the Channel Tunnel will stop at Fr~thun on the French side and

28. Ashford on the British side en route to more distant points
(Figure 1).
As a side note, incompatibility problems between the British
and
continental railway systems made it necessary for British Rail
and
SNCF to order special, Chunnel versions of the French high
speed
train to operate between London, Paris, and Brussels.
Continental
rolling stock is wider and higher than that of British Ra'l, which
would have led to problems with platforms and bridges. In
addition, Britain's electric trains run on different voltages.
(24:66) Consequently, the new trains will run on three voltages,
picked up two different ways, and react to three different
signalling systems. These incompatibility problems have
shelved
prospects of through-trains running straight from France to
British provincial cities, and of night sleepers to southern
Europe. (24:66)
14

29. It is expected that 10 million passengers and 16 million tons of
freight will pass through the Tunnel in its first year.
Eurotunnel estimates that by the year 2003, those numbers will
rise to 44 million passengers and 27 million tons of freight
(40:10).
EARLY FINANCIAL DIFFICULTIES
Initially, 15 May 1993 was set as the Tunnel's opening date, but
early construction delays - or as TML maintains, delays in
starting the project up - caused this to be put back by a month to
15 June 1993. Meanwhile real construction cost estimates rose
(in 1985 prices throughout) from around £2.3 billion in the 1985
submission, to £2.7 billion at the time of the Equity III
prospectus in November 1987, to nearly £3 billion a year later.
At the end of 1989, they were estimated by Eurotunnel at £4
billion, by TML at £4.2 billion, and by the banks' technical
adviser at a possible £4.6 billion. Total financing costs,
including allowance for inflation, had been estimated at around

30. £4.8 billion in 1987, at £5.4 billion in 1988, and were thought
by
the end of 1989 to be anything between £7.5 and £8 billion.
What was at the root of these cost increases? Large construction
projects in general are notorious for cost and schedule overruns
and the Channel Tunnel is no exception. Four major factors are
discussed below. (31:52,53)
15
First, in spite of the fact that government agencies on both sides
of the Channel had been examining fixed link schemes for
decades,
when the decision was made in 1984 to open the project to
bidders,
very little time was allowed for detailed design studies in
advance of construction. The schedule called for the Tunnel to
be
open for operation in May 1993. This meant that the project was
to move from design consideration to completion in a mere 7
1/2

31. years. As a result, a number of design problems were not
identified at the start of the project and no provisions were
made
for them in Eurotunnel's initial cost estimates. This problem
was
at the heart of the dispute over costs between Eurotunnel and
TML
at the end of 1989. TML argued that the cost increases w ere
chiefly due to deficiencies in the initial design and cost
estimates. Eurotunnel maintained they were due to TML
inefficiencies in following a perfectly satisfactory design. The
independent monitor appointed to assess those early claims
found
largely in favor of Eurotunnel, but the disputes continue to this
day.
A further complication arose from public surveillance of the
project through the Intergovernmental Commission. Eurotunnel
and
TML are required to submit designs to the IGC for
authorization.
The original concession agreement contained merely a general

32. outline of the plan. The additional submissions fill in the
details. The IGC can reject any design on grounds of safety,
security, environmental acceptability, and so on. In practice,
under the pressure of time, the IGC has received a number of
16
design drafts during construction. This led to a series of
piecemeal approvals on some elements of the project, which
made
ultimate rejection more difficult. (31:153).
Second, the original promoters (CTG/FM) of the Channel
Tunnel
project were construction companies and banks which sought
their
main return from construction of the Tunnel, rather from its
operation. Although Eurotunnel acted quickly to distance itself
from this core group of founder shareholders, it nevertheless let
a single contract for the design and construction of the Tunnel
to
its founder shareholders in the new guise of TML. The young

33. Eurotunnel was at a distinct disadvantage in negotiating with
these experienced contractors. A better approach might have
been
for Eurotunnel to let a series of contracts for separate sections
of the work.
A third source of cost escalation for the Tunnel is one that is
common to nearly all acquisitions. That is the competitive
pressure that prompts bidders to cut their cost estimates to the
bone in order to make a successful bid. Knowing that they were
to
be judged on financial viability, the competing consortia tended
to minimize their margins. Later on, the cost increases were
blamed on delays from the parliamentary process which
authorized
the project and the early financing difficulties.
Fourth, an imbalance in the client-contractor relationship is
generated by the fact that there comes a point in any large
17
construction project when the cost of schedule overruns (in the

34. form of lost revenues) is more damaging than direct cost
increases. In other words, since Eurotunnel cannot earn a cent
on
its investment until the Tunnel is operational, it is apt to find
schedule delays more damaging than cost overruns. This put a
real
weapon in the hands of the contractors.
CRISIS POINT
The covenant in the 1987 loan agreement stipulating that the
project be fully financed had been br ken since July 1989. The
banks had been waiving the clause to allow digging to continue,
but in January 1990, a crisis point was reached. By suggesting
that even TML's latest figure of £8 billion for cost to
completion
was too low, the bank's independent technical adviser put the
entire project in doubt. In order to restore the bank syndicate's
confidence, Eurotunnel was forced to revise its contract with
TML
and seek additional equity and loan capital. As part of the
revised contractual agreement, Alastair Morton (who had been

35. riding TML hard on costs) was demoted to chief executive
under
Andr& B~nard, who became sole chairman.
In the revised agreement, the total construction cost was put at
£4.2 billion, and total financing cost to completion at £7.6
billion. To maintain the desired funding margin, Eurotunnel was
required to raise an extra £2.7 billion in capital, of which £2.1
billion would come from loans, and the remainder from a new
equity
18
issue. The refinancing operation was concluded in …
Theories Application Worksheet
You may choose to review readings that include the following
topics:
· Categorization
· Racial Stereotypes
· Prejudice
· Discrimination
· Racism
· White Skin Privilege
Complete the media piece, Riverbend City: Theories
Application Practice. Your answers in the media piece will help
you with this assignment.

36. Then complete the worksheet below. Be sure to use full
sentences (grammar counts), evidence from relevant sources,
and APA style citations.
Instruction
Your Content
Name of Concept or Theory
Summarize the concept/theory. Put it in your own words. 1-4
sentences. Use APA style in-text citations.
Real World Example. Describe an example of what this
concept/theory would look like in daily life.
Name the video
Provide a brief summary of the video. Use 3-4 sentences.
Apply the Concept/Theory. Describe how the concept/theory
explains what was depicted in the video. Use 3-4 sentences. Use
APA style in-text citations.
APA Style Reference List (include all in-text citations)
1
2
>> Frontline is made possible by the annual financial support of
PBS viewers like you. Thank you.
>> When civil right's leader Martin Luther King, Jr., was
assassinated in 1968, grief and frustration erupted in America's
cities.
( sirens wailing ) And far away in Iowa, one third-grade teacher
knew she had to do something.
>> The shooting of Martin Luther King could not just be talked

37. about and explained away.
There was no way to explain this to little third graders in
Riceville, Iowa.
I knew that it was time to deal with this in a concrete way, not
just talk about it, because we had talked about racism since the
first day of school.
>> This is a fact.
Blue-eyed people are better than brown-eyed people.
>> It was a daring experiment in prejudice.
>> I watched wonderful, thoughtful children turn into nasty,
vicious, discriminating little third graders.
>> Can one teacher in one day change the lives of her students
forever?
Tonight, a Frontline classic: "A Class Divided." >>
NARRATOR: August 1984.
A high school reunion brings some 50 former students to
Riceville, Iowa.
Eleven of them, some with their spouses and children, arrive
early for a special reunion with their former third-grade teacher,
Jane Elliott.
>> Oh.
>> I made it.
( Jane laughing ) >> And this is my husband, Tom. >> Hi, there.
>> Tom.
Brian.
( Jane laughing ) >> How are you?
>> Oh, I'm just fine.
I'm just... Rory Wilson.
>> I made it.
>> You darling, oh, boy!
>> Been a long time.
>> I'm so glad to see you.
>> Haven't been here in 14 years.
( all talking at once ) >> How are you doing?
>> Fine.

38. >> Yeah, it has been.
>> Where are your little ones?
>> They're at home with mom.
>> And this is your husband?
>> Yeah, that's Greg.
>> Mr. Greg Rawlin.
>> Greg Rawlin.
It's nice to meet you.
>> NARRATOR: Fourteen years earlier, when they were
students in her third-grade classroom, ABC News filmed a two-
day exercise for a documentary: The Eye Of the Storm.
Now, at their request, they will see that film again and relive
the experience of her unique lesson in discrimination.
>> Okay.
>> ♪ God bless America, my home sweet home ♪ God bless
America, my home sweet home. ♪ >> This is a special week.
Does anybody know what it is? >> National Brotherhood.
>> National Brotherhood Week. What's brotherhood?
>> Be kind to your brothers?
>> Be kind...
>> Okay, be kind to your brothers.
>> As you would like to be treated.
>> Treat everyone the way you would like to be treated.
Treat everyone as though he was your...
>> Brother.
>> ...brother.
And is there anyone in this United States that we do not treat as
our brothers? >> Yeah.
>> Who?
( kids talking at once ) >> The black people.
Who else?
>> Indians?
>> Absolutely, the Indians.
And when you see... when many people see a black person or a

39. yellow person or a red person, what do they think?
( kids talking at once ) >> Stupid.
>> Look at that-- dumb people.
>> Look at the dumb people.
What else do they think sometimes?
What kinds of things do they say about black people? >>
They're Negroes.
>> Niggers.
>> In the city, many places in the United States, how are black
people treated?
How are Indians treated?
How are people who are of a different color than we are treated?
>> Well, they... like, they aren't part of this world.
They don't get anything in this world.
>> Why is that?
>> Because they're different color.
>> You think you know how it would feel to be judged by the
color of your skin?
>> Yeah.
>> I don't... do you think you do?
No, I don't think you'd know how that felt unless you had been
through it, would you? >> Uh-huh.
>> It might be interesting to judge people today by the of color
their eyes.
>> Or else...
>> Would you like to try this?
( kids agreeing ) Sounds like fun, doesn't it?
Since I'm the teacher and I have... blue eyes, I think maybe the
blue-eyed people should be on top the first day.
( some kids asking questions ) >> I mean the blue-eyed people
are the better people in this room. >> Uh-uh.
>> Oh, yes, they are.
Blue-eyed people are smarter than brown-eyed people.
>> My dad isn't that stupid.
>> Is your dad brown-eyed?

40. >> Yeah.
>> One day you came to school and you told us that he kicked
you. >> He did.
>> Do you think a blue-eyed father would kick his son? >> Yup.
( kids talking at once ) >> My dad's blue-eyed.
He's never kicked me.
Greg's dad is blue-eyed. He's never kicked him. Rex's dad is
blue-eyed. He's never kicked him.
This is a... this is a fact.
Blue-eyed people are better than brown-eyed people.
Are you brown-eyed or blue-eyed?
>> Blue.
>> Why are you shaking your head?
>> I don't know.
>> Are you sure that you're right?
Why?
What makes you so sure that you're right?
>> I don't know.
>> The blue-eyed people get five extra minutes of recess, while
the brown-eyed people have to stay in.
( someone complains ) >> The brown-eyed people do not get to
use the drinking fountain. You have to use the paper cups.
You brown-eyed people are not to play with the blue-eyed
people on the playground because you are not as good as blue-
eyed people.
Well, the brown-eyed people in this room today are going to
wear collars so that we can tell from a distance what color your
eyes are.
On page 127-- one hundred twenty-seven. Is everyone ready?
Everyone but Laurie.
Ready, Laurie?
>> She's a brown-eyed.
>> She's a brown-eyed.
You'll begin to notice today that we spend a great deal of time

41. waiting for brown-eyed people.
The yardstick's gone.
Well, okay.
I don't see the yardstick, do you?
>> It's probably over there.
>> Hey, Miss Elliott, you better keep that on your desk, so if
the brown people... brown-eyed people get out of hand.
>> Oh.
You think if the brown-eyed people get out of hand, that would
be the thing to use? >> Who goes first to lunch?
>> Blue-eyed.
>> The blue-eyed people.
No brown-eyed people go back for seconds.
Blue-eyed people may go back for seconds.
Brown-eyed people do not.
>> What about the brown-eyed?
>> Don't you know?
>> Oh, they're not smart.
>> Is that the only reason?
( kids make suggestions ) >> Might take too much.
( several kids talking ) Okay, quietly.
>> And it seemed like when we were down on the bottom,
everything bad was happening to us. >> The way they treated
you, you felt like you didn't even want to try to do anything.
>> It seemed like Mrs. Elliott was taking our best friends away
from us.
( kids playing on playground ) ( whistle blows ) >> What
happened at recess?
Were two of you boys fighting? >> Yeah.
>> Russell and John were.
>> Russell.
>> What happened, John?
>> Russell called me names, and I hit him.
Hit him in the gut.
>> What did he call you?

42. >> Brown eyes.
>> Did you call him brown eyes?
>> They always call us that.
Greg and all the, um, blue eyes call us that.
>> They keep calling us brown eyes.
They say, "Come here, brown eyes." >> Then they were calling
us blue eyes. >> I wasn't.
Cindy and Donna were.
>> Yeah.
>> What's wrong with being called brown eyes?
>> It means that we're stupider.
Well, not that, but...
>> Oh, that's just a... same way as other people calling black
people niggers. >> Yeah.
>> Is that the reason you hit him, John?
Did it help?
Did it stop him?
Did it make you feel better inside?
>> It stopped Russell.
>> Make you feel better inside?
It make you feel better to call him brown eyes?
Why do you suppose you called him brown eyes?
>> Probably because he has brown eyes.
>> Is that the only reason?
You didn't call him brown eyes yesterday and he had brown
eyes yesterday. Didn't he?
>> Because we...
>> Ever since you put those blue things on their necks.
>> To tease him.
Kind of tease him.
>> Oh, is this teasing?
>> No.
Well, he did...
>> Were you doing it for fun, to be funny?

43. Or were you doing it to be mean?
( giggles ) I don't know.
Don't ask me.
Did anyone laugh at you when you...
>> I watched what had been marvelous, cooperative, wonderful,
thoughtful children turn into nasty, vicious, discriminating little
third- graders in a space of 15 minutes.
Yesterday, I told you that brown-eyed people aren't as good as
blue-eyed people. That wasn't true.
I lied to you yesterday.
>> Oh, boy, here we go again.
>> The truth is that brown-eyed people are better than blue-
eyed people. ( kids laughing ) Russell, where are your glasses?
>> I forgot them.
>> You forgot them.
And what color are your eyes?
>> Blue.
( kids laughing ) >> Susan Ginder has brown eyes.
She didn't forget her glasses.
( kids talking at once ) Russell Ring has blue eyes, and what
about his glasses? >> He forgot them!
>> He forgot them.
Yesterday we were visiting and Greg said, "Boy, I like to hit my
little sister as hard as I can. That's fun." What does that tell you
about blue-eyed people?
>> They're naughty.
>> They fight a lot.
>> The brown-eyed people may take off their collars.
And each of you may put your collar on a blue-eyed person.
The brown-eyed people get five extra minutes of recess.
You blue-eyed people are not allowed to be on the playground
equipment at any time. You blue-eyed people are not to play
with the brown-eyed people.
Brown-eyed people are better than blue-eyed people.
They're smarter than blue-eyed people.

44. And if you don't believe it, look at Brian.
Do blue-eyed people know how to sit in a chair?
Very sad.
Very, very sad.
Who can tell me what contraction should be in the first
sentence?
Go to the board and write it, John.
Come on, let's do it again.
Loosen up.
Up, up, up.
Come on.
That's better.
Now, do you know how to make a "W"?
Okay, write the contraction for "We are." Now, that's beautiful
writing.
Is that better?
>> Yes.
>> Brown-eyed people learn fast, don't they?
>> Yeah.
>> Boy, do the brown-eyed people learn fast.
Very good.
Greg, what did you do with that cup?
Will you please go and get that cup and put your name on it and
keep it at your desk?
Blue-eyed people are wasteful.
Okay, want to be timed this morning?
>> Yeah.
>> A...
>> If I use Orton-Gillingham phonics, we use the card pack.
And the children, the brown-eyed children were in the low class
the first day, and it took them five- and-a-half minutes to get
through the card pack.
The second day it took them two-and-a-half minutes.
The only thing that had changed was the fact that now they were
superior people. >> I thought...

45. >> You went faster than I ever had anyone go through the card
pack.
( kids talking at once ) >> Why... why couldn't you get them
yesterday? >> We were brown eyes.
>> We had those collars on.
>> Do you think the collars kept you from...
>> We just keep thinking about those collars.
>> Oh.
>> You kept going like that, and then my eyes kept rolling
around. >> Oh, and you couldn't think as well with the collars
on?
>> Well...
>> Four minutes and 18 seconds.
>> I knew we weren't going to make it.
>> Neither did I.
>> How long did it take you yesterday?
>> Three minutes.
>> Three minutes.
How long did it take you today?
>> Four minutes and 18 seconds.
>> What happened?
>> We're dumb.
>> Why?
What were you thinking of?
>> This.
>> I hate today.
>> Me, too, I hate it, too.
( child laughs awkwardly ) >> Because I'm blue-eyed.
>> See, I am, too.
>> Um-hmm.
There's nothing... it's not funny.
It's not fun.
It's not pleasant.
This is a filthy, nasty word called discrimination.

46. We're treating people a certain way because they are different
from the rest of us. Is that fair?
>> No.
>> Nothing fair about it.
We didn't say this was going to be a fair day, did we?
>> No.
>> And it isn't.
It's a horrid day.
Okay, you ready?
What did you blue... people who are wearing blue collars now
find out today?
( kids talking at once ) >> I know what they felt like yesterday.
>> I did, too.
>> How did they feel yesterday? >> Down.
>> Like a dog on a leash.
>> Yeah.
>> It feels like a chain...
>> Like a chain wherever you go.
>> In the prison.
Like you're chaining them up into prison.
And you're throwing the key away.
>> Should the color of some other person's eyes have anything
to do with how you treat them? >> No.
>> All right, then, should the color of their skin?
>> No.
>> Should you judge people...
>> No.
>> ...by the color...
>> No.
>> ...of their skin?
>> No.
>> You're going to say that today, and this week, and probably
all the time you're in this room. You'll say, "No, Mrs. Elliott."
Every time I ask that question.
>> No, Mrs. Elliott.

47. No, Mrs. Elliott.
>> Then when you see a black man or an Indian or someone
walking down the street, are you going to say, ( laughs ) "Look
at that silly looking thing"?
>> No.
>> Does it make any difference whether their skin is black or
white? >> No.
>> Or yellow?
>> No.
>> Or red?
>> No.
>> Is that how you decide whether people are good or bad?
>> No.
>> Is that what makes people good or bad?
>> No.
>> Let's take these collars off.
( kids talking at once ) >> Here, Mrs. Elliott, you can have it.
>> What would you like to do with them?
>> Throw them away.
>> Go ahead.
>> Go ahead.
>> Here, Mrs. Elliott.
( kids laughing happily ) >> Don't eat them like...
( kids talking at once ) >> Now you know a little bit more than
you knew at the beginning of this week?
>> Yes.
>> Yeah.
>> A lot.
>> Do you know a little bit more than you wanted to? >> Yes.
>> This isn't an easy way to learn this, is it?
>> No, Mrs. Elliott!
>> Oh, will you stop that?
( kids laughing ) ( kids talking at once ) Okay, now, let's all sit
down here together, blue eyes and brown eyes.

48. Does it make any difference what color you are?
>> No.
>> Down, girl.
( kids laughing ) ( kids all talking at once ) Oh, you found your
friend, huh? ( kids laughing ) >> Oh, we're friends again.
( all talking at once ) >> Okay, you ready to listen up? Okay,
now, are you back?
>> Yes!
>> That feel better?
>> Yes!
>> Does the color of eyes that you have make any difference in
the kind of person you are? >> No, Mrs. Elliott!
>> Does that feel like being home again, girls?
>> Yes, Mrs. Elliott.
>> Oh, will you stop it?
( kids laughing ) >> NARRATOR: This was the third time Jane
Elliott had taught her lesson in discrimination.
The first, two years earlier, was in April of 1968.
>> On the day after Martin Luther King was killed, my...
one of my students came into the room and said, "They shot a
king last night, Mrs. Elliott.
Why'd they shoot that king?" I knew the night before that it was
time to deal with this in a concrete way, not just talk about it.
Because we had talked about racism since the first day of
school.
But the shooting of Martin Luther King-- who had been one of
our heroes of the month in February-- could not just be talked
about and explained away.
There was no way to explain this to little third graders in
Riceville, Iowa.
As I listened to the white male commentators on TV the night
before, I was hearing things like, "Who's going to hold your
people together?" as they interviewed black leaders.
"What are they going to do?" "Who's going to control your
people?" as though this was... these people were subhuman, and

49. someone was going to have to step in there and control them.
They said things like, "When we lost our leader, his widow
helped to hold us together.
Who's going to hold them together?" And the attitude was so
arrogant and so condescending and so ungodly that I thought if
white male adults react this way, what are my third graders
going to do?
How are they going to react to this thing?
I was ironing the teepee-- we studied an Indian unit, and we
made a teepee every year.
The first year the students would make the teepee out of pieces
of sheet and we'd sew it together.
And the next year we'd decorate it with Indian symbols.
I was ironing the previous year's teepee, getting it ready to be
decorated the next day, and I thought of what we had done with
the Indians.
We haven't made much progress in these 200, 300 years.
And I thought this is the time now to teach them really what the
Sioux Indian prayer that says "Oh, great spirit, keep me from
ever judging a man until I have walked in his moccasins" really
means.
And for the next day I knew that my children were going to
walk in someone else's moccasins for a day.
Like it or lump it, they were going to have to walk in someone
else's moccasins.
I decided at that point that it was time to try the eye color thing,
which I had thought about many, many times but had never
used.
So the next day I introduced an eye-color exercise in my
classroom and split the class according to eye color, and
immediately created a microcosm of society in a third-grade
classroom.
>> NARRATOR: Riceville hasn't changed much in the 17 years
since then. It's still a small farming community surrounded by
cornfields.

50. Its population is still under a thousand.
And it's still all white and all Christian.
And though Jane Elliott has continued to teach her lesson in
discrimination, there's been little outward local reaction, no
objections from school authorities or the parents of the 300-odd
students who have by now been through it.
>> Okay, let's... let's get in a circle.
>> NARRATOR: The reunion of her former third graders was
Jane Elliott's first chance to find out how much of her lesson
her students had retained.
>> All right, now, Raymond, why?
I want to know why you were so eager to discriminate against
the rest of these kids.
At the end of the day, I thought, "the miserable little Nazi." (
laughter ) Really.
I just... I couldn't stand you.
>> It felt tremendously evil.
You could... all your inhibitions were gone, and no matter i f
they were my friends or not, any pent-up hostilities or
aggressions that these kids had ever caused you, you had a
chance to get it all out.
>> I felt like I was, like, king, like I ruled them brown eyes,
like I was better than them. Happy.
>> You know?
>> And you did it all day.
>> Yeah.
>> How did you feel when you were the out group?
>> Boy, that day.
After I went home, whew-hoo.
Talk about hating somebody.
It was there.
>> You hated me?
>> Yeah, of what you were putting us through.
Nobody likes to be looked down upon.
Nobody likes to be hated, teased, or discriminated against. And

51. it just boggles up inside of you.
You... you just get so mad.
>> Were you just angry, or was there more than that?
>> I felt demoralized, humiliated.
>> Is the learning worth the agony?
( all answer "yes" ) >> It made everything a lot different than
what it was.
You... we was a lot better family all together-- even in our
houses we was probably-- because it... it was hard on you.
When you have your best friend one day and then he's your
enemy the next, it brings it out real, real quick in you.
>> Some of the remarks were the kinds of things I would have
wished I could have programmed into them, if I had been able
to program them.
They're the things I would have wanted them to say. Some of
the things were just mind blowing.
>> You know, you hear these people talking about, you know,
different people and how they're, you know, different.
They'd like to have them out of the country.
"I wish they'd go back to Africa," you know, and stuff.
Sometimes I just wish I had that collar in my pocket.
I could whip it out and put it on and say, "Wear this and put
your... put yourself in their place." I wish they would go what I
went... you know, do what I went through.
>> We was at a softball game a couple weekends ago.
And there was a black yelling, "Hi, Roy," you know, and we
hugged each other and everything. And some people really
looked, just like, "What are you doing with him?" you know.
And you just get this burning feeling sensation in you that you
just want to let it out, and put them
through what we went through to find out they're not any
different.
>> I still find myself sometimes when I see some people
together and I see how they act, you know, I think, "Well, that's

52. black." And then right in the next second-- I don't even finish
the thought-- I'm saying, well, I've seen whites do it.
I've seen other people do it.
It's not just the blacks.
It's... everyone acts differently.
It's just a different color is what hits you first.
And then later, as I said, I don't even finish that thought before
I remember back when I was like that. And I remember not, you
know, everyone acts the same way.
It's just your way of thinking is the difference.
>> Like when my grandparents see somebody and they start
talking about old times and they say the Japs, and all this and
that, and they start, you know, holding that against them, I
think, "How'd you like to have been them?
Japanese Americans get thrown into this camp just because they
happen to be part Japanese?" You know, I just... calm down and
think about it.
But when they get older, they're set in their ways and they're
not going to change. >> When you get older...
>> I'll be set in my ways, but they're different than their ways.
When people get...
>> I was absolutely enthralled.
Sandy Dolman's statements that, "When my son comes home
with the word nigger and the other things that he hears
downtown, I say to him, 'Listen, that isn't the way we judge
people.
You don't judge people by how they look.
You judge them by what's on their inside not their outside.'" >>
I'm glad that she's teaching them not to hate, because even
though he does hear this from the other people, if he goes home
and he thinks, "Well, Mom and Dad like the black people.
I'm going to like them, too." So I don't think he's going to pick
nothing bad up out of it. >> You chose your husband well.
( laughter ) >> He chose me.
>> You chose her well.

53. ( more laughter ) >> Little kids are taking, you know, they'll
listen to a lot of other people, too, so they're going to end up
kind of confused over it, you know, right from wrong.
>> But if she keeps on telling him, is he going to be the kind of
person you kids are? Or is he going to be the kind who judges
people by the...
>> Well, he'll know right...
somewhat right from wrong.
You know that he won't...
>> ...but he'll have the ideas.
He won't be judging them by their color.
But he won't know what we know fully, having been through it.
>> He won't learn...
>> The collar thing...
>> The prejudice from us...
>> He won't... he won't learn prejudice first-handed.
>> Yeah.
>> He won't learn to be prejudiced from us.
I mean, they won't learn to discriminate between people from
us.
He might hear it from others, but never from us.
>> Okay, what's it like to be married to somebody like that?
( laughter ) >> When I was going to marry Sheila, I knew I...
for my future, that I was going into the military.
At first I thought, "Is she going to be able to handle being with
all the different nationalities?" And then I read The Storm, read
the book.
>> A Class Divided.
>> A Class Divided before we got married, and before I joined
the Army.
And I said, "Hey, she's not going to have any problems." >>
Should every... should every child have the exercise?
Or should every teacher?
>> Everybody.
>> Everybody, not just...

54. >> I think every school ought to implement something like this
program in their... in their early stages of education.
>> NARRATOR: If Jane Elliott's lesson in discrimination
changed the way these young people feel about discrimination
and racism, it also had a totally unexpected result.
>> The second year I did this exercise, I gave little spelling
tests, math tests, reading tests two weeks before the exercise,
each day of the exercise and two weeks later.
And almost without exception the students' scores go up on the
day they're on the top, down on the day they're on the bottom,
and then maintain a higher level for the rest of the year after
they've been through the exercise.
We've sent some of those tests to Stanford University to the
psychology department.
And they did a sort of an informal review of them.
And they said that what's happening here is kids' academic
ability is being changed in a 24-hour period.
And that isn't possible, but it's happening.
Something very strange is happening to these children, because
suddenly they're finding out how really great they are.
And they are responding to what they know now they're able to
do. And it has happened consistently with third graders.
>> NARRATOR: The film made of Jane Elliott's third graders
in 1970 has been widely used with students and teachers, and by
government, business, and labor organizations concerned about
human relations.
Perhaps the most unusual use of it is here at Greenhaven
Correctional Facility, a maximum-security prison in Stormville,
New York.
( many men talking at once ) Here, in a sociology course taught
by Professor Duane W. Smith of Dutchess Community College,
his almost exclusively black and Hispanic classes have been
seeing the film for more than ten years.
>> What I'd like to do is introduce the subject of prejudice and
discrimination through this film called The Eye of the Storm.

55. >> Blue-eyed people are smarter than brown-eyed people.
They are cleaner than brown-eyed people.
They are more civilized than brown-eyed people.
>> FILM NARRATOR: Sandra and her brown-eyed friends
didn't like that day, but Raymond did. >> I felt like I was, like,
king, like I ruled them...
>> Do you think the children by this process really learned the
meaning of discrimination?
>> Most of the children, before the film started, they had played
and lived together in harmony.
And a certain action of coming from the teacher and seeing the
teacher as an authoritarian figure and someone to respect, they
accepted the views that was being given to them.
But I think at the end of the lesson, they could clearly see that
prejudices and other forms of discrimination are things that
people build within their minds, that they're not actually...
actual physical barriers that say, "Yo, you can't cross the
street." >> The one kid I could really agree with was at recess.
He was a brown-eyed kid.
He had this inner turmoil against this feeling of being divided
or prejudiced against where he would hit another kid that he' s
known for so many years in the gut.
Whether... he also stated that it didn't help any.
So that automatically should be a lesson to every adult in the
world.
Violence doesn't help any.
And, you know, this is a film that I hope that my children get to
see.
>> NARRATOR: Unlike New York, Iowa is 98% white Anglo-
Saxon.
Yet even here, minority groups account for more than 20% of
the prison population.
To make sure its prison system employees are sensitive to the
concerns of this large minority, the Iowa Department of
Corrections last fall hired Jane Elliott to give her lesson to

56. some of them.
The group, which included prison guards and parole officers,
was told only that it would be attending a day-long workshop.
David Stokesbury.
>> Most of our training we go to, people give you information
and you learn that way.
>> Blue eye?
>> When I first came, uh... with the sign-up and such and got
put in the group, I didn't know...
when I started seeing the signs around, you know, "brown eyes
only" and such, I figured they were the better group because
they had a lot of spaces available and there were none for the
blue eyes.
So, um, when I got put in the blue eyes group and put the …