B&O Control of RDG, RDG Control of CNJ

On the PC forum, they talked about the proposed merger of NYC into Chessie Sys. Why didn't they do more to retain the CNJ and RDG? Why were they allowed into Conrail? Did Chessie feel that it did not have anything to gain by being in the Northeast market?

The story I heard at the time is that B&O management let the RDG and CNJ go bankrupt figuring to pick them up afterwards cheaply, but when they were added to Conrail, the plan backfired.

I am guessing the same reason that NKP passed on acquiring DL&W, both CNJ and RDG were saddled with extensive money-losing passenger operations and Chessie wanted no part of those.

Phil

polybalt wrote:The story I heard at the time is that B&O management let the RDG and CNJ go bankrupt figuring to pick them up afterwards cheaply, but when they were added to Conrail, the plan backfired.

That's the way I remember it too, although I don't know whether they specifically intended to get the properties back or just decided to let them go regardless. There's a funny story about how, after the new CNJ management adopted the red color scheme for locomotives, complete with Coast Guard-style diagonal band, a personage from the B&O operating department had to visit Eport about something and raised hell about the new paint scheme--"you can't do that without permission from Baltimore!" The CNJ people cheerfully informed him that since the B&O let them go into bankruptcy the B&O had no further say in any part of the CNJ's operations.

I would think that by 1976 NJ Transit was subsidizing the commuter operations on the CNJ. I'll bet the Commonwealth of PA was doing so as well for the RDG's Philly commuters. Might it have had something to do with the wage scale, which is why Chessie dropped the EL merger proposal?

The State of New Jersey was making token subsidy payments to the CNJ by 1962 or 63. Nothing close to covering the actual losses the CNJ was incurring on the commuter operations. They went into receivership in 1967, and both C&O/B&O and the N&W loaned (and sold) older power to them.

In 1972 the Chessie System sold their interest in the Reading to three businessmen from Chicago. They basically wiped their hands of the whole northeastern mess with that move, and at the same time, the CNJ came out with the Timpany red scheme (named for the new trustee).

The Commonwealth of PA had no direct rail-assistance programs at the time. The Passenger Service Improvement Corporation (formed in 1965, owned by the City of Philadelphia) was the only safety net for the RDG and PRR/PC in SE PA.. The PSIC had by 1976 turned into SEPTA, but whether or not they were covering the full losses of the two railroad serving the city, I don't know (but I doubt it!).

MJK

Engineer Spike wrote:On the PC forum, they talked about the proposed merger of NYC into Chessie Sys. Why didn't they do more to retain the CNJ and RDG? Why were they allowed into Conrail? Did Chessie feel that it did not have anything to gain by being in the Northeast market?

NYC proposed merger with the B&O as early as 1960, and the B&O was receptive to the idea, but by 1961 the C&O had gained control of B&O, and the C&O was NOT interested in merger with the NYC at all... So NYC returned hat in hand to the Pennsy.

Chessie System did not come into being until 1972.

-otto-

psoyring wrote:I am guessing the same reason that NKP passed on acquiring DL&W, both CNJ and RDG were saddled with extensive money-losing passenger operations and Chessie wanted no part of those.

Without getting too far off-topic, NKP+DLW made great sense on paper, but financially, the NKP could not assume DLW's debt load if the two companies merged.