Discussion relating to the PRR, up to 1968. Visit the PRR Technical & Historical Society for more information.
  by KillerB
...indeed, why? After reading Rush Loving's "The Men Who Loved Trains," it's clear that in the two decades prior to the PC merger, dividends from the Pennsylvania's stake in the Norfolk & Western were providing the majority, if not all, of PRR's profits.

It's clear from the book (as well as from other sources) that the New York Central wanted to merge with the C&O, as the Virginia coal roads were far more profitable than the northern trunk lines. Obviously, they failed in their efforts, but the Pennsylvania would have had no such problem - they controlled the N&W. Perhaps the revenue from the N&W wouldn't have been enough to keep the Pennsy going through the 1970s, but they had to have known that the NYC, while in a better state in terms of overcapacity than the PRR, was not a healthy road.

Much has been written about the Pennsy's poor management before and after the merger, but it's hard to see why they wouldn't have preferred to merge with a profitable road. Was the ICC vehemently opposed to the PRR getting any larger? It seems as if they were not by the the 1950s and 60s - they let the PC merger happen, after all. Was it just the hubris of the Main Line management, figuring that by essentially being the senior partner in a merger with the NYC that they had "won" the battle with their long-time rival? Again, the NYC's logic is obvious in the matter - they were locked out of the merger they really wanted - but the PRR controlled the N&W. Or was their control not as solid as has been often said?

  by pennsy
I seem to remember that the deciding factor was the US Govt. They had to approve the merger and kept dragging their feet for years. Without the Govt organization's approval, nothing could happen.

  by Conrail Quality
In the end, what would have been the point? Merging with the Central, many duplicate yards and trackage could have been(with ICC approval, of course) eliminated. Remember- one of the Pennsy's biggest problems was it was burdened with far too many yards and branch lines than it really needed. Any elimination would have been beneficial. In merging with the N&W, all that would have happened was that the N&W would have been feeding the Pennsy's deficits while not actually solving any of the root problems. Merging with the Central, the Pennsy could have had it's cake and ate it too, getting N&W dividends while slashing its own expenses. Of course, it didn't actually work out that way, but that might have been the Pennsy management's logic.

  by KillerB
Well, one always talks of eliminating duplication and excess capacity as if it's free - it's not. Eliminating duplicate yards and lines still requires investments in the ones that remain, reconfiguring them for different traffic flows and routings. Cash got so short for PC that it couldn't even afford the improvements necessary to allow the paring down of the NYC's and PRR's duplicate facilities - assuming the ICC would have allowed it.

Speaking of the ICC - perhaps it's hindsight helping us out, but it seems that the ICC had established, by the 1950s, a pattern of refusing to allow railroads to pare down duplicative or revenue-poor trains and lines. Merging with a highly parallel road in order to save money sure seems like a losing game when facing a regulatory body that is openly hostile to reductions in service and capacity. In addition, acquiring a road with much property in states with highly unfavorable tax situations - New Jersey is only the most famous example - as well as intensive commuter operations, simply does not seem to offer any prospect of a positive result. Counting on the ICC to assent to *ANY* cost-saving measure - especially on the scale the PC would have required, ranks as one of the worst business decisions in US corporate history.

It seems to me, at least, that the only real benefit of the merger to the PRR was eliminating its largest competition - except that the truly dangerous competition came from the trucks on the Interstates. Accepting a merger that the regulators forced to include a moribund property that spent the greater part of a decade in bankruptcy - the New Haven - borders on a criminal act by management. It almost seems like management wanted the railroad to fail, forcing the government to blow up the ICC's power and take the whole pile of scrap off the hands of the holding company - which is actually what happened, but I'm sure management counted on a bailout. Instead, they got bankruptcy.

It was also made clear very early in the process of merger talks that the ICC would make divestiture of the N&W a condition of the merger of the NYC & PRR. Once that became obvious, PRR management was foolish to continue with the merger with NYC.
  by 2nd trick op
We've speculated a lot on the thought of Pennsy "going it alone" in the sticky above, so let's turn things around.

The rationale behind PRR+N&W is usually that pairing an Eastern trunk line with a "Pocahontas" road would have allowed both to survive, albeit at reduced profitability, since the coal revenue would have sustained the general-service losses. An NYC+B&O+C&O merger was proposed around the same time.

But this leaves unanswered the question of the true "have-nots" - Lehigh Valley, Jersey Central, Lackawanna, Erie and New Haven - Reading would likely have found it's way into the NYC/B&O camp, and quickly. It was far healthier than the other minor eastern players.

PRR had maintained an interest in LV for many years, and Jersey Central would have been palatable to NYC/B&O/RDG once the drain on the finances due to commuters had been addressed. Erie-Lackawanna would have merged and struggled along until Hurricane Agnes gave it more than it could handle 1n 1972.

But New Haven and, by extension, L&HR would have been too much of a burden to be forced on any other road. My guess is that, along with E-L, the operation would have been carved up post-Agnes, jettisoning the Maybroook/Poughkeepsie gateway. The two larger systems would have held on until the industry-wide revival post-1985, leaving something not far removed from what actually exists today.

Another sidelight is the fate of roads in the anthracite region. With control of LV, PRR/N&W might have diverted its Harrisburg-Buffalo service to the Valley to aviod the Keating Summit grade in Northwestern PA. The PRR-D&H Wilkes-Barre connection to New England and Atlantic Canada would have survived, but the fate of the Lackawanna in and around Scranton is uncertain with allternatives now available for much of its business.
Last edited by 2nd trick op on Tue Dec 11, 2007 5:53 pm, edited 1 time in total.

  by JimBoylan
N&W had enough control of Erie-Lackawanna stock that they filed consolidated Federal tax returns. N&W used E-L's losses to avoid Federal income tax on some of N&W's profits. After ConRail, the E-L trustee liquidated, partly because, without unused losses to carry forward against future profits, there was little incentive to go into another line of business. Early 1970s reorganization schemes did contemplate an independent E-L as a competitor to a much smaller ConRail. So, a non-bankrupt E-L might have gone wherever N & W did.
  by Engineer Spike
N&W got control of EL, and D&H BECAUSE OF the PC merger. I have read "Wreck of the Penn Central, and all this was in preparation of the merger. D&H bridged lots of PRR traffic to New England. In this case, let's try another what if. Buck Dumaine had proposed a BAR-MEC-B&M-D&H combinatin. He may have tried for EL too, especially if he got some concessions from any combination of PRR, NYC, Chessie, or N&W. Those concessions being given redundant lines (due to the merger) to strategic locations.
I agree that there were too many other stragglers namely, LV, CNJ, NH, L&HR, RDG, etc. Although PRR-N&W and NYC-Chessie finally happened (Conrail split), mind this was after the laws changed. This allowed the excess lines to be heaved.
  by rrfoose
It would have been nice to see a PRR-N&W (including Wabash and NKP, of course) merger, and NYC-Chessie. I have one concern on this what-if though - the Reading. It seems "logical" that the RDG would have jumped on with NYC due to the B&O connection. However, one of the good factors in the creation of Conrail was allowing trains from PRR in Harrisburg to travel over Reading trackage to Allentown, then onto LV/CNJ track to New York. It would seem logical to me then, that PRR would need the Reading to effectively compete against the Central in Chicago-NYC traffic. Am I wrong?
  by KillerB
After having read Richard Saunders' Merging Lines, I find it even more appalling that the PRR under Symes allowed the N&W to slip through its grasp. According to the book, the ICC essentially gave the PRR a choice - N&W or NYC. Considering the interests in the Nickel Plate and Wabash, and the fact that the PRR had been approved for control of the Lehigh Valley, allowing it to use the LV/NKP connection to run the EL out of business - I still just don't understand what happened here. The ICC might not have allowed full merger, but the PRR controlled enough profitable roads through the Pennsylvania Company and Pennroad that throwing it all away for NYC just looks like an awful, awful decision.