• DL&W Merger with the Nickel Plate Road

  • Discussion relating to the Delaware, Lackawanna & Western, the Erie, and the resulting 1960 merger creating the Erie Lackawanna. Visit the Erie Lackawanna Historical Society at http://www.erielackhs.org/.
Discussion relating to the Delaware, Lackawanna & Western, the Erie, and the resulting 1960 merger creating the Erie Lackawanna. Visit the Erie Lackawanna Historical Society at http://www.erielackhs.org/.

Moderator: blockline4180

  by XC Tower
 
Years ago, I talked to an old NKP engineer friend about this. He said that he could tell something was up with this at the time, saying "Things were being streamlined for a merger with the DL&W as it was the dominant railroad."....How actually close did this come to be?....It is something that is definitely in the "What if?" category of imagination....
Thank you for any insight on this.



XC
  by Cactus Jack
 
It is a bit subjective and confusing but basically it came pretty close. It is reported that it was NKP President John Davin that approached DL&W President William White sometime in the late 1940’s. NKP and DL&W were natural partners as DL&W needed a western extension and NKP needed an eastern outlet.
By the late 40’s or early 50s DL&W had purchased a substantial block of NKP stock. Of course ICC approval was needed among other regulatory issues and of course internal politics. Davin, a much unremarked manager was at the helm of NKP during it’s best years but died of cancer on January 17, 1949. Some NKP BOD and major shareholders did not want DL&W acquisition of their road and it is said they actively recruited Lynne L. White (no relation to William) from C&NW to kill the prospect. It is also recorded that Bill White met with the NKP BOD and was perhaps a little arrogant or pushy or in some way alienating to them and the die was cast for NKP to resist. It seems a bit odd if that happened as White did not make too many of those kinds of mistakes. White soon moved on to the NYC and Perry Shoemaker came in as President of the DL&W. Shoemaker tried, maybe half heartedly to woo NKP to no avail and I think the ICC made DL&W put the NKP shares in trust.
About 1958 Shoemaker sold off the substantial NKP holdings to help their terrible cash flow position, especially after Hurricane Diane and mounting commuter losses. White, who was by that time President of the D&H chastised him for that, or so it has been reported.
Shoemaker then tried the three-way with DL&W – D&H-ERIE that D&H backed off from and which resulted in Erie Lackawanna. White later became President of the EL (1963-1967) and Shoemaker went to CNJ.
Lynne L. White died in 1964 before the N&W takeover, by lease of Wabash and purchase of Nickel Plate.
In my mind it was a merger DL&W/ NKP that should have happened, it was possible but likely the NKP shareholders made out better with N&W in the long run.
  by XC Tower
 
Thank you for the insight on this....I will try to look up my ex-NKP engineer pal to ask him his feelings on this....He is at least in his late 80's now...This will serve as a catalyst to visit which I have no excuse to not have done sooner...



XC
  by edbear
 
The DL & W owned about 629,000 shares of NKP stock, 15.27%, in 1956. It paid a $1.50 a share dividend. The NKP probably would not even have been lukewarm to merge with the DL & W by this time as it had quite a bit of mileage in high tax New York (which NKP had on a smaller scale) and high tax New Jersey plus a sizeable commuter operation. The NKP stock sold for as much as $33 per share in 1956. DL & W sold the NKP stock and joined up with the Erie.
  by Greg
 
The DL&W missed its chance in the 1920's when the NKP was more receptive. It may have survived further into the CR era if this had manifested and would have potentially alleviated a merger with the Erie.
  by Cactus Jack
 
Hard to say about a 1920's DL&W NKP merger.

The Transportation Act of 1920 required the ICC to look into consolidations of railroads. The report didn't come out until something like 1929 but when it did, both the NKP and DL&W fell under the C&O umbrella. In fact NKP would actually fall in with the C&O in as part of the Van Sweringen Allegheny Corporation (or maybe it was Van Ness?).

NKP was owned by the LS&MS until anti-trust reared it's head and NYC spun it off to the Van's in 1916. With it went J.J. Bernet a brilliant railroader. BY 1922 Bernet had picked up the Clover Leaf and the Lake Erie & Western. The Van's wanted to create a super Nickel Plate by merging C&O, NKP, Erie and Pere Marquette in the mid 1920's. In 1926 the ICC denied the merger.

Hard to say what could have happened but likely NYC would have pitched a fit before the ICC among others and it would probably not have been the DL&W in the driver's seat. NYC had some sort of minority ownership in DL&W too if I recall and had a member seated on the DL&W Board of Managers. That era and the Van's financing and interrelated companies still leave me confused so sorry if I misrepresented something here. It sure is fun to think about.
  by Greg
 
Cactus Jack wrote:Hard to say about a 1920's DL&W NKP merger.

The Transportation Act of 1920 required the ICC to look into consolidations of railroads. The report didn't come out until something like 1929 but when it did, both the NKP and DL&W fell under the C&O umbrella. In fact NKP would actually fall in with the C&O in as part of the Van Sweringen Allegheny Corporation (or maybe it was Van Ness?).

NKP was owned by the LS&MS until anti-trust reared it's head and NYC spun it off to the Van's in 1916. With it went J.J. Bernet a brilliant railroader. BY 1922 Bernet had picked up the Clover Leaf and the Lake Erie & Western. The Van's wanted to create a super Nickel Plate by merging C&O, NKP, Erie and Pere Marquette in the mid 1920's. In 1926 the ICC denied the merger.

Hard to say what could have happened but likely NYC would have pitched a fit before the ICC among others and it would probably not have been the DL&W in the driver's seat. NYC had some sort of minority ownership in DL&W too if I recall and had a member seated on the DL&W Board of Managers. That era and the Van's financing and interrelated companies still leave me confused so sorry if I misrepresented something here. It sure is fun to think about.
Thhe Lackawanna/Nickel Plate talks were in the early 20's. From what I recall in the article the DL&W was to join the NKP and another road. The articleis now behind a pay wall.
  by s4ny
 
Just prior to WWI the DL&W had the best balance sheet of any railroad in the United States. It had the lowest debt to equity ratio and built both the NJ Cutoff and the improvements north of Scranton without borrowing any money.

Coal was such a great business that the magnate, Arch A McLeod was assembling his empire: Lehigh Valley, Reading, CNJ and the line over the Poughkeepsie Bridge (Central New England) and the Boston and Maine. He went bust in 1893.

In 1880 they built the extension to Buffalo. Jay Gould was on the DL&W board and he already controlled the Wabash, MoPac, and Union Pacific. The DL&W was to have completed Gould's coast to coast system, but he was already ill.

Gould's empire didn't survive his death in 1892 and the Panic of 1893.
  by Greg
 
s4ny wrote: Tue Apr 20, 2021 1:07 pm Just prior to WWI the DL&W had the best balance sheet of any railroad in the United States. It had the lowest debt to equity ratio and built both the NJ Cutoff and the improvements north of Scranton without borrowing any money.
The DL&W was about to embark on a costly grade separation program that would take place during the Depression. After WW2 coal traffic began to decline precipitously. The DL&W was a doomed road but did not even know it hence the inability to take action to stave off an unnecessary side by side merger with the financially unsound Erie.