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PC: Re: PC, Conrail and the Facts of Life



A brief history lesson...
Conrail stock had been held in a trust from 1976, was a private corporation
from the beginning, and was Never "the government".  The feds bought
securities in the corporation to provide cash, but NEVER had a hand in the
management decisions that ultimately lead to the successful public offering
in 1987.   (Incidentally, the stock was originally offered at $35, and sold
to NS and CSX at over $70.  Yeah, Conrail was a real flop.)   The boards
were comprised of railroaders and business people, and even Congress was
held at arm's length.  (Read the legislation that enabled Conrail to form,
and you'll understand that.)
If the government had any role in anything, it was the 19th century
regulations that led to the collapse of the Northeast rail system, and dern
near the whole nation's railroads.
When the northeast industrial economy started to evaporate after the war,
the regulations forced the railroads to change at a glacial pace, if at all,
and at the same time, poured billions of dollars into highways and airports.
If they had the de-regulated environment you have today, the survivors would
have likely been a solid pairing of the PRR and NW, the NYC and C&O, and the
weak sister would have been a grouping of EL, B&O and Reading.  The Lehigh
would have been absorbed either by the PRR or NYC, and CNJ probably would
have ended up on the scrap heap, as it pretty much did anyway.  The Southern
probably would have ended up paired with one of the northeast systems.  (It
is interesting to note that this is more or less what we now have following
the "divorce" of Conrail.)

The reality is, in an unregulated environment, these probable combinations
would have still led to layoffs, line abandonments, and facilities closures
a helluva lot sooner than 1976.  And probably without the plump pensions and
labor gaurantees that Conrail had to honor.
A lot of these sensible merger talks were underway in the 1950's, and most
were squelched by the ICC, or killed by useless and draconian conditions
(can anyone say New Haven?).  That's how NYC and PRR ended up in bed
together in the first place.
Instead of creating regional systems that competed with each other, they
created virtual monopolies in each region, which led to disaster.  Despite
its 44,000 mile system, there was virtually no line-haul advantage to the PC
merger.  New York to Chicago is New York to Chicago.  PC created an
overlapping system that only added overhead to traffic that was still going
to basically the same places.
PRR-NW would have made considerably more sense, because it would have opened
the southeast to the Pennsy, and the northeast to the NW.  It also would
have been of tremendous business advantage, because the Pocahontas Coal
fields would have provided the cashflow for the PRR to recover from the
beating provided by the war traffic.   For some reason, this type of
combination scared the bejesus out of the regulators, even though the
interstate system was providing the same kind of regional and national
advantage for the trucking companies.
Don't get me wrong, I miss railfanning my favorite roads as much as the next
guy, but the economics of the time and the government regulators led to
their demise, not Conrail.
Look it up in your Funk and Wagnalls.
Lee




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