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Pennsylvania , New York , New Jersey , Connecticut , Delaware , Maryland , West Virginia , Illinois , Indiana , Ohio
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April 1 , 1976
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June 1 , 1999
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CSX Transportation , Norfolk Southern , Conrail Shared Assets Operations
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, leads a train westbound out of
Altoona, Pennsylvania .]]
, also known as '''Conrail''' , was formed on
April 1 ,
1976 as a federally-funded takeover of the major railroad companies in the
Northeast , all of which were financially failing. In
1999 it was divided between
Norfolk Southern Railway and
CSX Transportation , with three terminal switching districts operated by successor
Conrail Shared Assets Operations .
In the years leading to
1973 , the freight railroad system of the U.S. was collapsing. Even after the government-funded
Amtrak took over
Intercity Passenger Service in
1971 , railroad companies continued to lose money. The giant
Penn Central Transportation , formed in
1968 by the merger of the
New York Central Railroad and
Pennsylvania Railroad (and supplemented in
1969 by the
New York, New Haven And Hartford Railroad ), went bankrupt in
1970 . Under Judge
John P. Fullam , the bankrupt company threatened in mid-1973 to end all operations by the end of the year if they did not receive government aid by
October 1 , as otherwise it would have to
Liquidate .
Congress quickly came up with a bill to
Nationalize the bankrupt railroads. The
Association Of American Railroads , which opposed nationalization, submitted an alternate proposal for a government-funded private company. Fullam kept the company operating into
1974 , when, on
January 2 , after threatening a
Veto ,
President Nixon signed the
Regional Rail Reorganization Act of 1973 into law. The 3R Act, as it was called, provided interim funding to the bankrupt railroads and defined a new under the AAR's plan.
The 3R Act also formed the
United States Railway Association , another
Government Corporation , taking over the powers of the
Interstate Commerce Commission with respect to allowing the bankrupt railroads to abandon unprofitable lines. The USRA was incorporated
February 1 ,
1974 , and
Edward G. Jordan , an
Insurance Executive from
California , was named president on
March 18 by Nixon.
Arthur D. Lewis of
Eastern Air Lines was appointed chairman
April 30 , and the rest of the board was named
May 30 and sworn in
July 11 .
Under the 3R Act, the USRA was to create a Final System Plan to decide which lines should be included in the new Consolidated Rail Corporation. Unlike most railroad consolidations, only the designated lines were to be taken over; the others were to remain with the old companies along with non-rail related properties. The plan was unveiled
July 26 ,
1975 , consisting of lines from Penn Central and six other companies - the
Ann Arbor Railroad (bankrupt
1973 ),
Erie Lackawanna Railway (
1972 ),
Lehigh Valley Railroad (
1970 ),
Reading Company (
1971 ),
Central Railroad Of New Jersey (
1967 ) and
Lehigh And Hudson River Railway (1972). Controlled railroads and jointly owned railroads such as
Pennsylvania-Reading Seashore Lines were also included (see
List Of Railroads Transferred To Conrail for a full list). It was approved by Congress on
November 9 , and on
February 5 ,
1976 President Ford signed the
Railroad Revitalization And Regulatory Reform Act of 1976, which included this Final System Plan, into law.
and
Reading Company out of Conrail.]]
The Erie Lackawanna had been formed in
1960 as a merger of the
Erie Railroad and
Delaware, Lackawanna And Western Railroad . It too was bankrupt, but was somewhat stronger financially than the others. It was ruled reorganizable under
Chapter 77 on
April 30 ,
1974 (as had the
Boston And Maine Railroad ), but on
January 9 ,
1975 , with no end to its losses in sight, its trustees reconsidered and asked for inclusion. The Final System Plan assigned a major section of the EL, from northern
New Jersey west to northeast
Ohio , to be sold to the
Chessie System , which would help spur
Competition in Conrail's territory. Chessie however could not reach an agreement with EL
Labor Union s, and in February
1976 announced that it would not be buying the EL section. The USRA hurriedly assigned large amounts of
Trackage Rights to the
Delaware And Hudson Railway , allowing it to compete to the
Philadelphia, Pennsylvania and
Washington, DC markets.
On the other hand, the
State Of Michigan decided to keep the full
Ann Arbor Railroad , of which Conrail would only run the southernmost portion, operational. Michigan bought it and the whole line was operated by Conrail for several years until it was sold to a
Short Line .
Conrail was
Incorporated In Delaware on
October 25 ,
1974 , and operations began
April 1 ,
1976 . The theory was that if the service was improved through increased
Capital Investment , the economic basis of the railroad would be improved. Although Conrail's government-funded rebuilding of the heavily run-down railroad infrastructure and
Rolling Stock it inherited from its six bankrupt predecessors succeeded by the end of the
1970s in improving the physical condition of tracks,
Locomotive s, and
Freight Car s, the fundamental economic regulatory issues remained, and Conrail continued to post losses of as much as $1 million a day. Conrail management, recognizing the need for more regulatory freedoms to address the economic issues, were among the parties lobbying for what became the
Staggers Act of 1980, which significantly loosened the
Interstate Commerce Commission 's rigid
Economic Control of the rail industry. This allowed Conrail and other carriers the opportunity to become profitable and strengthen their finances, primarily by increasing rates and abandoning unprofitable lines. Conrail began turning a profit by 1981, the result of the Staggers Act freedoms and its own managerial improvements under the leadership of L. Stanley Crane, who had been chief executive officer of the Southern Railway. The
Northeast Rail Service Act of 1981 relieved Conrail of its requirement to provide
Commuter Service on the
Northeast Corridor , further improving its finances.
18065 brings up the rear of a local freight passing
Porter, Indiana , in the early
1990s .]]
After considerable debate in Congress, the
Conrail Privatization Act of 1986 was signed into law by
President Reagan on
October 21 ,
1986 . The largest
Initial Public Offering in US history came on
March 26 ,
1987 when Conrail's stock, worth $1.9 billion, was sold to private investors.
Conrail inherited the
Commuter Rail operations of its predecessor rail lines, and operated them until 1983, when these services were transferred to state or metropolitan transit authorities:
- MARC http://www.mtamaryland.com/about/transitprofiles/
With Conrail's increasing success, two eastern rail competitors of Conrail engaged in a
Takeover Battle to control the railroad and expand their systems. In
1997 , however, the two railroads,
CSX Transportation and the
Norfolk Southern Railway , struck a
Compromise agreement to jointly acquire Conrail and split most of its assets between them, with Norfolk Southern acquiring a larger portion of the Conrail network via a larger stock buyout. Under the final agreement approved by the STB, Norfolk Southern acquired 58 percent of Conrail's assets, including roughly six thousand Conrail route miles, and CSX received 42 percent of Conrail's assets, including about 3,600 route miles.
{Link without Title}
The buyout was approved by the
Surface Transportation Board (successor agency to the
Interstate Commerce Commission ) and took place on
August 22 ,
1998 . The lines were transferred to two newly-formed
Limited Liability Companies , to be subsidiaries of Conrail but leased to CSX and NS, respectively
New York Central Lines (NYC) and
Pennsylvania Lines (PRR). The NYC and PRR
Reporting Mark s, which had passed to Conrail, were also transferred to the new companies, and NS also acquired the CR reporting mark. Operations under CSX and NS began
June 1 ,
1999 .
As the names indicated, NYC acquired the former
New York Central Railroad main line from
New York City and
Boston, Massachusetts to
Cleveland, Ohio , and the former
Cleveland, Cincinnati, Chicago And St. Louis Railway (NYC Big Four) line to
Indianapolis, Indiana (continuing west to
East St. Louis, Illinois on a former
Pittsburgh, Cincinnati, Chicago And St. Louis Railroad (PRR Panhandle Route) line), while PRR got the former
Pennsylvania Railroad main line and
Cleveland And Pittsburgh Railroad from
Jersey City, New Jersey to Cleveland, and the rest of the former NYC main line west to
Chicago, Illinois . Thus the Conrail "X" was neatly split in two, CSX getting one diagonal from Boston to St. Louis and NS the other from New York to Chicago. The two lines cross at a bridge southeast of downtown Cleveland (), where the former Cleveland and Pittsburgh Railroad crosses over the NYC's former
Cleveland Short Line Railway around the south side of Cleveland.
In three major metropolitan areas - North Jersey, South Jersey/Philadelphia, and Detroit -
Conrail Shared Assets Operations continues to serve as a terminal operating company owned by both CSX and NS. The Conrail Shared Assets Operations arrangement was a concession made to federal regulators who were concerned about the lack of competition in certain rail markets and logistical problems associated with the breaking up the Conrail operations as they existed in densely populated areas with many local customers. The smaller Conrail operation that exists today serves rail freight customers in these markets on behalf of its two owners. A fourth area, the former
Monongahela Railway in southwest
Pennsylvania , was originally owned jointly by the
Baltimore And Ohio Railroad ,
Pennsylvania Railroad and
Pittsburgh And Lake Erie Railroad . Conrail absorbed the company in
1993 , and assigned
Trackage Rights to CSX, the successor to the B&O and P&LE. With the Conrail breakup, those lines are owned by NS, but the CSX trackage rights are still in place.
- Timothy Jacobs, The History of the Pennsylvania Railroad, ISBN 0-517-63351-5
- PRR Chronology
- H. Roger Grant, Life and death of Erie Lackawanna, '' Trains '' February 1992
- Bill Stephens and Craig Sanders, Cleveland: center of controversy, '' Trains '' July 1998
