This is a complex situation. Even before Penn Central and the N&W expansion, N&W was controlled by PRR. There was a discussion about those roads merging. The topic of NYC and ChessIe System merging was also floated. In this case C&O was a wealthy company. NYC was sick, due to its passenger burden, and especially its vast commuter obligations in Boston and New York. NYC was loosing traffic due to the factory closures in the rust belt. C&O didn't want to take on the burden.
N&W did in fact take over D&H and EL. This was done because of the impending PC merger. EL did not have nearly the market penetration of the northeast that PC did. In hindsight this may have been a good thing because it was more of a basic core between New York and Chicago. D&H had lost much of its online coal traffic. One of its strong suits was as a bridge route between PRR, LV, O&W, Erie, and Lackawanna in the south, and Boston and Maine, CN, and CP in the north. Much of the PRR traffic was destined to be eliminated when PRR merged with NYC, since NYC itself had direct connections to the Canadian roads, as well as Boston and Maine and its New England traffic funneled from primarily MEC and BAR. This lead EL and D&H to seek inclusion in a large system in response to Penn Central.
N&W bought the two railroads. EL did compete with the western end of the N&W's Nickel Plate and Wabash to an extent. Both EL and D&H were primarily focused in the east. N&W was nervous about the eastern railroad financial problems., and didn't want to get dragged in. Through DERECO N&W controlled EL and D&H indirectly. Through DERECO N&W was able to still benefit from the losses of EL and D&H on the combined taxes. They also did run som joint trains to the east coast. Some senior guys from when I hired out on D&H said that N&W cleaned out some of our good equipment.
As said, EL went bankrupt, and was saved by joining Conrail. D&H was N&W, and later NS controlled until Guilford bought it in 1984.
I have a few friends who like to talk about the merger movement of the 1960s-90s. Sometimes topics range from the proposed mergers, and what could have been done better in the ones which did happen. I sometimes wonder if the supposed economies of scale of large merged carriers give the customers the choices which they once had. This comes to mind more in light of the present railroad meltdown. N&W had no choice to merge in light of the other mergers which happened around it. Sometimes I think about the Billy Joel song We Didn't Start the Fire. It's about all the newsworthy events which happened in his lifetime, most tragic, which will keep on happening. In doing family research I found out about a relative who was an attorney in Connecticut. He helped found and did the legal charter work for Connecticut Western. This company was merged with its neighbors, and eventually the New Haven, Penn Central, Conrail, NS and CSX. The industry is a chess match on who is going to control what, and what the competition might do next.
