By the mid-1950s, railroads in the United States were entering a phase of decline, as passenger services lost ridership to airplanes and automobiles and freight services lost profitability due to the rise of trucking, greatly helped by the creation of the Interstate Highway system. At that time, the vast majority of railroad companies were struggling, as their large fleet and extensive infrastructure began to be a financial burdern, now carrying a fraction of the traffic they were originally built to handle.
A further difficulty to the slew of problems many railroads were having came in the form of the ICC, the Interstate Commerce Commission, wich hampered the attempts of companies to curtail their unprofitable services or to raise ticket prices and shipping rates.
After the second world war, in an attempt to save each other, via the rationalization of trackage, rolling stock and administrative costs, many railroad companies attempted various mergers such as between the Erie Railroad and the Delaware & Lackawanna Railroad, forming the Eire Lackawanna Railroad or acquisitions, such as the acquisition of the Baltimore & Ohio Railroad by the Cesapeake & Ohio Railroad and the acquisition of the Wabash Railroad and the Nickel Plate Railroad by the Norfolk & Western Railroad.
Talks of a merger between the struggling New York Central and Pennsylvania Railroads, then two of the largest railroad companies in the United States, began as early as 1957, however the actual merger was delayed several times, due to the interference of the ICC. The Interstate Commerce Commission only gave it’s approval for the merger in the mid-60s, with a condition being that the company resulting from the merger would have to directly acquire as well the New Haven Railroad, wich had been in-and-out of bankruptcy several times, and the New York, Susquehanna & Western Railroad, while the Leigh Valley Railroad had to be acquired by either the Norfolk & Western or the Chesapeake & Ohio Railroads, subsidiaries of the Pennsylvania and the New York Central Railroads respectively.
Eager to finally conclude the merger, almost out of desperation, the two companies accepted the ICC’s conditions, and the merger became effective on the 1st of February 1968, with the new company being named the “Pennsylvania New York Central Transportation Company”, commonly shortened to Penn Central.
The merger was botched, to say the least, as either of the two “constituent” companies still insisted in keeping each other’s independence: both companies were still very proud of their, now-gone, identity, and feared that trough the merger and the formation of Penn Central, the “other” company would’ve taken over, “erasing” the the other.
In addition, the management and operational practices of the two companies remained radically different, with either “constituent” company seeing the other as nothing more than a rival. Almost no attempt was made to unify the two companies, nor, most importantly, to rationalize the inherited trackage of Penn Central, that as a result of the Pennsylvania and the New York Central Railroads paralleling each other, had duplicated routes over the vast majority of it’s served areas. Furthemore, most of these duplicate routes were oversized for what was the traffic at the time, in particular on the ex-Pennsylvania Railroad lines, wich usually had double, or triple the track amount of what was actually needed.
Instead of being a relief, the merger between the PRR and the NYC only excarberated the financial issues of the two companies, and with the ICC still stubbornly denying any attempt at cost-cutting, the Penn Central quickly fell into the oblivion of unprofitability, losing up to one milion dollars per day in early 1970s. Attempts to attract investors or even to obtain loans were futile, with the upper management having to resort to several tricks, including outright pubblicly lying about the status of the finaces of the troubled company, to make the situation look less dire than what was in reality.
The commencment of high-speed electrified Metroliner services on the North-East Corridor, between New York and Washington D.C. was also a pressing issue for the Penn Central, as the long-awaited start of regular service had been delayed several times, hampered by the trains’ unreliability. The Penn Central quickly became synonymous with decaying infrastructure, lacklustre maintainance and an unreliable overall service, further driving away passengers and freights from the railroad.
In 1970, Penn Central had a deficit of 325 milion dollars (equivalent to 2.17 billion dollars today), a third of wich was caused by the company’s many passenger services, wich had a near-zero ridership. Later that year, the stuggling company officially informed the US Government of it’s impending doom.
On the 21st of June 1970, Penn Central offically declared bankruptcy, being the largest company ever to do so in the world at the time.
To rescure railroad operations in the North-East, the US Government stepped in, with Amtrak, the National Passenger Railroad Corporation, taking over Penn Central’s (and many others) long and medium-distance passenger services on the 1st of May 1971. The remaining assets of Penn Central, such as lines, freight trains and commuter services (later eventually transferred to their respective states’ transportation agencies), were transferred in 1976 to the specially-formed Conrail company, a pubblicly-owned company (made to the likes of Amtrak) formed to prevent railroad services in the northeastern united states from an all too probable collapse.
After the collapse of Penn Central, trough de-regulation laws the ICC was stripped of it’s powerful authority over railroad companies, with Conrail being able to enact the much needed rationalization in infastructure and cost-cutting the Penn Central was unable to make. Conrail, initially subsidized by the federal government, became profitable in the late 1980s, and in the end was privatized and split up between CSX transportation and the Norfolk Southern Railroad, wich still own the vast majority of ex-Penn Central lines and trackage to this day.
Electric Multiple Units