Conrail

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Conrail, or to give it its full (but rarely used) title, the Consolidated Rail Corporation, is an American railroad company formed in 1976 by the Railroad Revitalization and Regulatory Reform Act under federal government auspices to take over and rebuild the deteriorated phyical assets of six bankrupt north-eastern railroads, which were:

1. Central Railroad of New Jersey
2. Erie Lackawanna Railroad
3. Lehigh & Hudson River Railroad
4. Lehigh Valley Railroad
5. Penn Central Railroad
6. Reading Railroad

The theory was that if the service was improved through increased capital investment, the economic basis of the railroad would be improved. Although Conrail's government-funded rebuilding of the heavily run-down railroad infrastructure and rolling stock it inherited from its six bankrupt predecessors succeeded by the end of the 1970s in improving the physical condition of tracks, locomotives and freight cars, the fundamental economic regulatory issues remained, and Conrail continued to post losses of as much as $1 million a day. Conrail management, recognizing the need for more regulatory freedoms to address the economic issues, were among the parties lobbying for what became the Staggers Act of 1980, which significantly loosened the Interstate Commerce Commission's rigid economic control of the rail industry. This allowed Conrail and other carriers the opportunity to become profitable and strengthen their finances. Conrail began turning a profit by 1981, the result of the Staggers Act freedoms and its own managerial improvements.

After considerable debate in Congress, the US government sold its controlling interest in Conrail in 1987 for $1.9 billion in the largest initial public stock offering in the nation's history at that time.

With Conrail's increasing success, two eastern rail competitors of Conrail engaged in a takeover battle to control the railroad. In 1997, however, the two railroads Norfolk Southern and CSX, struck a compromise agreement to jointly acquire Conrail and split most of its assets between the two larger railroads. The buyout was approved by the Surface Transportation Board (successor agency to the Interstate Commerce Commission) and took place on June 6, 1998.

In three major metropolitan areas -- Detroit, Philadelphia/Camden, and Newark/Northern New Jersey -- CSX and Norfolk Southern restructured Conrail to serve as a terminal operating company. This smaller Conrail today serves rail freight customers in these markets on behalf of its two owners.

External links

• Conrail Web Site