There were proposals to merge and reorganize the other bankrupt railroads to compete with PC, but those railroads, like Penn Central, had no money for much-needed repairs to track and rolling stock. Although a Norfolk & Western subsidiary purchased the Erie Lackawanna (and also the Delaware & Hudson) in 1968, N&W offered no assistance when the EL suffered $9 million worth of damage in a hurricane in June 1972. The creation of Erie Lackawanna and Penn Central changed traffic patterns, leaving the Lehigh & Hudson River with almost no business. It entered bankruptcy on June 4, 1970, three days after Penn Central. Neither Chesapeake & Ohio nor Norfolk & Western wanted the Lehigh Valley. The Central Railroad of New Jersey had been bankrupt since 1967. PC’s western neighbors wanted nothing to do with the railroad, and its eastern neighbors had problems of their own. Penn Central’s management proposed reorganizing under certain conditions - abandonment of 45% of its track, reduction of its work force, and increased payment for operating Amtrak trains - but there was no confidence in PC management.Ĭarving up PC and parceling it out to its neighbors was out of the question. Without PC, the industries of the area would die. It operated one-third of the nation’s passenger trains and was the principal freight carrier in the Northeast. Something had to be done - Penn Central could not simply be liquidated. Conrail history starts with Penn Central’s bankruptcy in 1970, a collapse that upset the entire railroad industry.
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