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Conrail (Consolidated Rail Corporation)

It is hard to think about Conrail as a fallen flag. Indeed, it lasted longer then a least one other famous fallen flag in the 20th century: Penn Central (8 Years). And the well-known Erie Lackawanna lasted only 15 years.

While the story really began much earlier, Conrail’s conception was in 1973. During this year, the Regional Rail Reorganization Act was passed. Following the bankruptcy of eight North Eastern railroads, the federal government felt compelled to take action. This act was designed to protect the lines of the Penn Central, Erie Lackawanna, Lehigh Valley, Lehigh & New England, Jersey Central, Ann Arbor, Reading and Boston & Maine.

Following evaluation by the courts, all but the Erie Lackawanna and Boston & Maine were deemed to weak to attempt a recovery on their own. However, the economic situation in the North East and the Midwest rust-belt, continued to drain at the Erie Lackawanna. It too threw in the towel, and joined the pack on January 9th, 1975. Thus the stage was set.

Conrail was born on April 1st, 1976 in the middle of the Bicentennial celebration. Its death came on June 1st, 1999. In its birth, it consumed seven bankrupt North Eastern Railroads railroads mentioned above. Other short-lines and terminal roads were later included. And the Boston & Maine would suffer problems later and become part of Guilford. Sometimes, the Lehigh & New England is included here, but the LNE closed its doors a decade earlier.

It was not simply a coincidence that all but the Ann Arbor had trackage in New Jersey and Hudson County. Hudson county for many years made a habit of taxing Railroads at several hundred times similarly assessed values. This in conjunction with money losing commuter operations on the Erie Lackawanna & Penn Central pretty much guaranteed the financial situation would always be tricky.

The yearly losses started mounting for all of the major railroads. Non-essential repairs were deferred. Service levels started to drop. This drove more shipped away from the railroads to trucks. Once the slow down in North East industry started, all the dominos that had been positioned over the years fell. One by one all the major railroads in New Jersey had declared bankruptcy.

The Penn Central was made up of two of the largest and most powerful companies of its day, at one time the Microsoft & Oracle of the Transportation industry. Once they declared bankruptcy, the Federal government finally understood the risk and stepped in.

By creating the system plan and allocating federal funds, Conrail was born. In the beginning, Conrail ran the railroad pretty much intact. Little by little, changes were made. It started shaking off money losing, redundant trackage. One prime piece of real-estate, the Lackawanna main-line, was picked up by New Jersey transit. And, the Crown-Jewel of the North East rail scene, the Penn Central North East Corridor, went to Amtrak. However, even among all the properties that were retained, Conrail trimmed down the duplicate miles…based on 1976 traffic levels.

A mere 5 years later, Conrail did what many believed unlikely (Amtrak has never even come close), they turned a profit. Federal investment in Conrail stopped in June, 1981. A few years later, in 1987, the government sold off its interest in the company and Conrail was a true private corporation. When this stock offering was made on March 26, 1987, it was the largest public stock offering in history.

In New Jersey, most of the main-line trackage used by Conrail consisted of secondary lines from the previous owners. Only the former Reading main-line remained in a similar role. The Penn-Central lines in Middlesex counties along with the former Lehigh Valley trackage became two of the main east-west routes through the Garden State.

Although a lot of stories about how biased the mostly Penn-Central management was when choosing the routes to retain, it is hard to fault these decisions based on the information of the time.

In the 13 years that Conrail existed, it went from being a money losing government operation to a profitable success story for the railroad industry. Conrail’s end came with two major railroads, CSX and Norfolk and Southern fighting each other in a bidding war and eventually agreeing to split most of Conrail. The primary exception is the assets in New Jersey. Almost all of the Conrail trackage in New Jersey will remain jointly operated.


Conrail Cyclopedia


Coming soon:

All Time Conrail Roster

(c) 1999 - Phil Paone