First, the rating fifi rms may have feared that their sales of rating manuals would suffer from the consequences of the high-speed photocopy machine (which was just entering widespread use), which would allow too many investors to free ride by obtaining photocopies from their friends. Second, the bankruptcy of the Penn-Central Railroad in 1970 shocked the bond markets and made debt issuers more conscious of the need to assure bond investors that they (the issuers) really were low risk, and they were willing to pay the credit rating fifi rms for the opportunity to have the latter vouch for them (Fridson, 1999)
