page_title: Conrail
section_title: Context: 1973–1976
hierarchical_section_title: Conrail / History / Context: 1973–1976
caption_attribution_description: English: Map of proposed Conrail route system. The plan does not include much of the Erie Lackawanna Railway or Reading Company, which the Chessie System was to get.
context_page_description: Conrail, formally the Consolidated Rail Corporation, was the primary Class I railroad in the Northeastern United States between 1976 and 1999. The trade name Conrail is a portmanteau based on the company's legal name, and while it no longer operates trains, it continues to do business as an asset management and network services provider in three Shared Assets Areas that were excluded from the division of its operations during its acquisition by CSX Corporation and the Norfolk Southern Railway.
  The Federal Government created Conrail to take over the potentially-profitable lines of multiple bankrupt carriers, including the Penn Central Transportation Company and Erie Lackawanna Railway. After railroad regulations were lifted by the 4R Act and the Staggers Act, Conrail began to turn a profit in the 1980s and was privatized in 1987. The two remaining Class I railroads in the East, CSX Transportation and the Norfolk Southern Railway, agreed in 1997 to acquire the system and split it into two roughly-equal parts, returning rail freight competition to the Northeast by essentially undoing the 1968 merger of the Pennsylvania Railroad and New York Central Railroad that created Penn Central.
context_section_description: In the years leading to 1973, the freight railroad system of the United States was collapsing. Although government-funded Amtrak took over intercity passenger services in 1971, railroad companies continued to lose money due to extensive government regulations, expensive labor cost, competition from other transportation modes, declining industrial business, and other factors.
  Its largest Eastern railroad, the Penn Central Railroad (PC), had declared bankruptcy in 1970, after less than three years of existence. Formed in 1968 by the merger of the New York Central Railroad and Pennsylvania Railroad (and supplemented in 1969 by the New York, New Haven and Hartford Railroad), the PC was created with almost no plans to merge the varied corporate cultures, and the resulting company was a hopelessly entangled mess. At its lowest point, PC was losing over $1 million a day and trains were becoming lost all over the railroad.
  In 1972, Hurricane Agnes damaged the rundown Northeast railway network and threatened the solvency of other railroads, including the somewhat more solvent Erie Lackawanna (EL). In mid-1973, officials with the bankrupt Penn Central threatened to liquidate and cease operations by year's end if they did not receive government aid by October 1. This threat to US freight and passenger traffic galvanized the Congress to quickly create a bill to nationalize the bankrupt railroads. The Association of American Railroads, which opposed nationalization, submitted an alternate proposal for a government-funded private company. Judge Fullam forced the Penn Central to operate into 1974, when, on January 2, after threatening a veto, President Richard Nixon signed the Regional Rail Reorganization Act of 1973 into law. The "3R Act," as it was called, provided interim funding to the bankrupt railroads and defined a new Consolidated Rail Corporation under the Association of American Railroads' plan.
  The 3R Act also formed the United States Railway Association (USRA), another government corporation, taking over the powers of the Interstate Commerce Commission with respect to allowing the bankrupt railroads to abandon unprofitable lines. The USRA was incorporated February 1, 1974, and Edward G. Jordan, an insurance executive from California, was named president on March 18 by Nixon. Arthur D. Lewis of Eastern Air Lines was appointed chairman April 30, and the remainder of the board was named May 30 and sworn in July 11.
  Under the 3R Act, the USRA was to create a "Final System Plan" to decide which lines should be included in the new Consolidated Rail Corporation. Unlike most railroad consolidations, only the designated lines were to be taken over. Other lines would be sold to Amtrak, various state governments, transportation agencies, and solvent railroads. The few remaining lines were to remain with the old companies along with all previously abandoned lines, many stations, and all non-rail related properties, thus converting most of the old companies into solvent property holding companies. The plan was unveiled July 26, 1975, consisting of lines from Penn Central and six other companies—the Ann Arbor Railroad (bankrupt 1973), Erie Lackawanna Railway (1972), Lehigh Valley Railroad (1970), Reading Company (1971), Central Railroad of New Jersey (1967) and Lehigh and Hudson River Railway (1972). Controlled railroads and jointly owned railroads such as Pennsylvania-Reading Seashore Lines and the Raritan River Railroad (1980) were also included (See list of railroads transferred to Conrail for a full list). It was approved by Congress on November 9, and on February 5, 1976 President Gerald Ford signed the Railroad Revitalization and Regulatory Reform Act of 1976, which included this Final System Plan, into law.
  The EL had been formed in 1960 as a merger of the Erie Railroad and Delaware, Lackawanna and Western Railroad. It too was bankrupt, but was somewhat stronger financially than the others. It was ruled reorganizable under Chapter 77 on April 30, 1974 (as had the Boston and Maine Railroad), but on January 9, 1975, with no end to i
caption: The 1975 Final System Plan left major parts of the Erie Lackawanna Railway and Reading Company out of Conrail
exif: {}