How did it happen that Algol 60 was an improvement on its successors?
I always felt like the reason is expressed by Alan Kay in his OOPSLA 1997 keynote, when he talks about Dijkstra's paper. I am not taking sides here but the tension expressed there seems to be prevalent in politics of CS, when it comes to Europe vs America. Algol represents European way of doing CS, and really most of the code was written in America. So no one really wrote any big system in Algol, thus it died.

But, I am an outsider to both cultures so, take this with a huge grain of salt. Also I know that Algol 60 designers included American computer scientists as well. All in all, this is just how I feel about it, no strong arguments here.