Tag Archives: conrail

Then Penn Central Became Conrail

A while back we wrote about Penn Central Railroad.

Then we got some great information from Victor Cyunczyk

PC was a flop, but the Erie-Lackawanna wasn’t. They all ran in the same area. Hurricane Agnes was what really killed the E-L. When the Erie and Lackawanna merged, it was a good idea. Erie didn’t reach New York City, and, alone, they didn’t stand a chance against the PRR or NYC. PC’s computer systems were not integrated well enough for proper car routing, so you might have, say, a car from Chicago to D.C. If it left from the NYC yard in Chicago, it would get misrouted when transferred to the former PRR and potentially end up back in Chicago or even in some other city. Lehigh Valley? Forget it. I agree that PRR should have bought the Reading and then sold off the NEC. NYC should have just held out and fixed its physical plant. NYC and/or PRR would be a cash machine today with the railroad renaissance.

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Can The United States Postal Service Be Saved?

Pictured above represents a Supply Chain Management Control Tower. Don’t expect to currently find one in back of your local post office. Look for lots of them at company called DHL which is the German Post Office.

Jim O’Reilly, writing in EBN, presented a very good discussion on saving the USPS.

Yes, his ideas are good and I encourage you to read his article. Other countries, like Canada, have postal cost problems and are following a deliberate path to shed unneeded buildings, cut home delivery, etc.

But out there is a winner: Germany, the owner of DHL Express, a division of the German Post Office.

 

The United States government, and the sometimes-awkward Congress have surprisingly “thought out of the box” a couple of times in the last forty years in a very successful way. First in 1976 with CONRAIL, then more recently with General Motors.

 

Now is the time to REALLY think out of the box! Let’s get all the great financial wizards on Wall Street together and engineer a buy-out of either Fed Ex or UPS. Maybe just convincing one of them to sell out their domestic division for some tantalizing “financial instruments” would be enough?

 

Now let’s at the same time solve the long-time problem of AMTRAK by bring back mail trains. Maybe we could pick up a couple of bankrupt airlines for a song to handle the REAL need for airmail (not all these 200 mile flights)

Little things like the postal pension can be thrown in with a massive restructuring of Social Security which the now-grateful Wall Street community will gladly help us with.

 

 

 

 

Penn Central Transportation Company – Lehman Brothers Collection – List of Deals

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Penn Central Rider Car: I found a bunch of photographs from a long time ago. Some of them were from Charlie Gunn which I purchased from him at train shows in Connecticut. I have always been interested in “head end” trains, so this “rider car” really interests me. Incidentally, many of the “Connecticut Stations” photos I have were bought from Charlie.

1971 $100,000,000 trustees’ certificates

Penn Central Transportation Company filed a petition for its reorganization that was approved, and following legal steps, the court authorized the issuance of the certificates by Trustees. The certificates were to be treated as an expense of administration and received the highest lien on the Penn Central’s property and priority in payment under the Bankruptcy Act.

Penn Central was formed in a 1968 merger between the Pennsylvania Railroad and the New York Central Railroad. The ambitious conglomerate collapsed into bankruptcy two years later. The Penn Central’s collapse has been called the biggest business failure in American history. In their book The Wreck of the Penn Central, Joseph Daughen and Peter Binzen claim that 100,000 creditors and 118,000 stockholders were affected by the 1970 bankruptcy.

Both the Pennsylvania Railroad Company (PRR, “the Pennsy”) and the New York Central Railroad Company (NYC) had long histories starting in the early days of railroads. Pennsylvania Railroad was founded in 1846, eventually controlling 11,000 miles of track throughout the Northeast and the nation. The New York Central Railroad was founded in 1853 and stretched from Pennsylvania to as far as Ottawa. The companies were financed and run by robber barons like Erastus Corning, Chauncy Depew, J.P. Morgan, and Cornelius Vanderbilt, who manipulated prices and transportation to freeze out competitors and consolidate their control. Both the PRR and the NYC were highly complex companies controlling land and real estate, transportation routes of many kinds, and commodities like coal and steel. The Penn Central also incorporated the New York, New Haven, and Hartford Railroad, a fiscally unsound railroad that the Interstate Commerce Commission (ICC) required the new company to acquire and support.

The Penn Central merger germinated from a 1957 idea of the PRR’s president, James Miller Symes, to consolidate the railroad industry. PRR and NYC’s boards approved the merger in 1962. Judicial wrangling delayed the merger until 1968.

The railroad’s collapse stemmed from many business problems. Executive infighting plagued the new company. The Penn Central CFO, David Bevan, was later tried and acquitted for $4 million in embezzlement. Penn Central executives sold almost 40,000 shares of stock just before the bankruptcy. Interstate trucking and air flights were cutting into railroads’ freight and postal market. The ICC also required the Penn Central to continue running unprofitable commuter and passenger trains. Service on both passenger and freight lines was poor. Inflation crippled the company just as the 1969 winter delayed the system. Despite its $4.6 billion in assets, the new company went bankrupt on June 21, 1970.

Federal regulators reorganized Penn Central and a few smaller railroads as the Consolidated Railroad Corporation (Conrail) in 1976.

Note: There are a number of books describing the collapse of Penn Central: Joseph Daughen and Peter Binzen’s The Wreck of the Penn Central (Beard Books, 1971); Michael Gartner’s (ed.) Riding the Pennsy to Ruin (New York: Dow Jones, 1970-1971); Stephen Salsbury’s No Way to Run a Railroad (New York: McGraw Hill, 1983); and Robert Sobel’s The Fallen Colossus (New York: Weybright and Talley, 1977). A variety of Securities and Exchange Commission and Senate reports also deal with the Penn Central’s collapse.

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Owasco River Railway

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Shay Locomotive Picture (from KC Jones) on the West Side Freight Line. Some of these went to the Owasco River Railway.

I found some information on the Owasco River Railway. It was 4 miles long and located in Auburn, NY.The RR was controlled by the NY Central. They had their own power early on eventually having the NYC supply its engines, most noteably the shroaded shays from New York City (also served on the Genesee Falls Railway). In diesel years it was a small GE 70 ton centercab engine and then regular NYC power. The road also provided interchange with the Lehigh Valley in Auburn.

When Penn Central conveyed much of its rail property to Conrail in 1976 there were some segments, such as the Metro-North Hudson Line from MO to CP75 above Poughkeepsie, that were not conveyed as they were subject to long term leases. Those properties were conveyed to the Owasco River Railway, Inc. Thus Owasco is the fee owner of the Hudson Line and the New York & Harlem RR is the owner of the Harlem Line. Both, of course, are leased to MTA and operated/maintained by Metro-North.

Some interesting things (to me anyway) about NY Central/Penn Central land stuff.

Timetable West from Poughkeepsie, Conrail didn’t just take ALL the land. NY Central had bought a lot of land both sides of the main and the Hudson River Connecting Railroad (those tracks that connected to the B&A and Castleton Bridge). Conrail didn’t take them and there used to be a lot of Penn Central FOR SALE signs on them. Owaso was the actual owner.

Yes there was an attempt to separate rail versus nonrail.  Was difficulty especially in NY City. Hard to separate land that carried one of the busiest 4-track mains from land that had extremely expensive value (like Waldof Astoria hotel plus a lot of Kentuky Fried Chickens equaled a lot of money)

New York & Harlem Railroad Co. is responsible for $7.8 million in (redeemable in gold) 3 ½ bonds due in 2043. These bonds are legally secured by the 127-mile right-of-way from New York City to Chatham AND by GRAND CENTRAL TERMINAL!  Currently, these borrowings are rated “Baa1” by Moody’s (not too bad since Penn Central seems to have sold off some of this property).

American Premier Underwriters, Inc. is now the direct descendant of the Pennsylvania Railroad Company which was founded in 1846 and the New York Central Railroad Company, founded in 1853, but tracing its roots back to 1826. They merged in 1968 to form the Penn Central Transportation Company and developed into a highly diversified conglomerate. In March, 1994,
Penn Central dropped its well known rail-related name in favor of a title that more accurately described its business activities – property and casualty insurance. Today it employs 5,400 people, has sales of $1.8 billion and is publicly traded on five stock exchanges.

American Premier Underwriters is part of American Financial Group.  which, as the successor entity to Penn Central,  is the largest holder of common stock in the National Railroad Passenger Corporation (“Amtrak”). American Financial holds roughly 55% or 5,200,000 shares of outstanding Amtrak Common Stock, out of a total of about 9,000,000 shares.

In 1994, the Metropolitan Transportation Authority gained long-term control of Grand Central Terminal in the form of a 110-year lease from American Premier Underwriters, Inc.,
In 2004, American Premier Underwriters sold 1.3 million previously issued and outstanding American Financial Group common shares. These shares were held for the benefit of creditors of APU’s predecessor, The Penn Central Transportation Company. Proceeds from that sale ($41.5 million) were placed in escrow to be used to pay APU environmental claims related to its former railroad operations.

Have heard that something like Midtown TDR Ventures, LLC purchased Grand Central Terminal from American Financial in December, 2006. Midtown TDR Ventures, LLC is, in turn, controlled by Argent Ventures (Andrew Penson, President). But frankly, all these corporations that followed Penn Central sound more like AIG or Bernard Madoff. We are unable to find out how much any of these corporations received in Federal Bail Out Funds (except AIG). NOTE: Mr. Madoff needs BAIL not bailout.

I don’t think you can necessarily say that one company “owns” the entirety of GCT. GCT and its various appurtenances and buildings constitute one large property “block” (no. 1280, if you care to look it up on the nyc.gov ACRIS search divided into a handful of lots. The two biggest lots (nos. 1 and 10) take up the entire west half of the GCT block.While it gets complicated — particularly given various exceptions to title, consent agreements, leases, assignment of leases, easements, subterranean rights, and air rights — to suss out anything that might resemble ownership of these lots as a whole, looking at the deeds for the two large lots gives an overview of ownership history.

This funny company that resulted from Penn Central is extremely wealthy. Read more about the Owasco River Railway and other interesting shortlines.

 

Ft Wayne Union Railway

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October 11, 1922 The Ft. Wayne Union Railway is incorporated to serve the International Harvester plant on the east side of Ft. Wayne. It is jointly owned by the Pennsylvania, Nickel Plate, New York Central and Wabash railroads, each with a 25% share in the new company.
Corporate Genealogy of Fort Wayne Union Railway

Originally the Fort Wayne Union Railway, the curvy Union Belt runs between the NS Huntington District and Piqua Yard on the east side of Fort Wayne.  The connection to the the Huntington District is next to the old Gladieux Refinery.  A long time ago the Union Belt actually crossed underneath the Huntington District and ran into the Chicago District near the Maumee River.  The bridge underneath the Huntington District is still there today and you can see it just east of the State Road 930 Cloverleaf.  The line runs along Meyer Rd. near the old International Harvester plant then curves west towards Piqua Yard.  Here the track runs across the old Piqua Yard hump and then into the Triple Crown Yard.  Norfolk Southern operates the Union Belt to switch out several shippers along the line.  The western most end of the track is used by roadrailer trains switching the Triple Crown Yard.  NS refers to the line as “the belt.”  NS used to run roadrailers in and out of Triple Crown using the Union Belt on a regular basis but now predominately uses the Piqua Wye near Winter St. instead.

Find out more on what railroads the New York Central owned all or part of.