The New York Central Railroad and the Pennsylvania Railroad, and their extensive networks of merged and leased lines, subsidiaries, and related businesses, rank among the most important railroads in the world., The Long Island Railroad, moreover, which merged with the Pennsylvania Railroad in 1900, has for many years been the largest suburban railroad in the United States. The New York Central Railroad and the Pennsylvania Railroad were pacesetters in the industrial development of the United States, and were the central factor in the settlement and exploitation of frontier territories in the nineteenth century. In 1968 the two giants merged to form the Penn Central Railroad. Subsequently, the Penn Central Railroad declared bankruptcy. The company's failure sent shock-waves through the national transportation system, and the U. S. government stepped in to restore confidence in rail transportation. Congress created two rail systems, Amtrak, for cross-country passenger service, and Conrail for long distance travel in the north-east. The suburban lines of the Long Island, New Haven and Hudson and Harlem lines were placed under the control of the Metropolitan Transportation Authority.
I. Historical Note
The development of the American Railroad Industry
During the period roughly from the end of the War of 1812 to the opening in 1869 of the rail route from the Missouri River to San Francisco, a network of horse-drawn and steam-powered railways, river steamboats, barge systems, turnpikes, roads, and canals was built which resulted in a freedom, speed, and ease of travel and shipping previously unimaginable. At the heart of this transportation revolution was the railroad. Insofar as it played a principal role in the industrial revolution and spearheaded the opening up of the western territories, the railroad can be said to have made the modern United States.
The first steam-powered railroads in the United States evolved from primitive horse-drawn quarry tramlines and coal-carriers, such as the Quincey in Massachusetts, the Mauch Chunk in eastern Pennsylvania, and the Delaware & Hudson (also in Pennyslvania) which had the distinction of being the first line in America on which a locomotive was run. The first major railroad, also originally horse-drawn, was the Baltimore & Ohio chartered in 1827 to build a line from Baltimore to the Ohio River. After a decade of trial and error in England and America, the steam railroad became a workable reality in 1829 at the Rainhill tests in England where George Stephenson's award-winning engine publicly demonstrated the potential of the steam locomotive. Some of the earliest rail lines in America, such as the Baltimore & Susquehanna and the Camden & Amboy, began as toll roads-much like canals or turnpikes-on which individual transporters could operate their own equipment. In 1830 Peter Cooper experimented with his "Tom Thumb" on the Baltimore & Ohio, and in New York City in the same year the first two American-made locomotives, built for the Charleston & Hamburg Railroad, rolled out of the West Point Foundry to carry cotton to the seaboard over rails made of iron-covered wood.
Limited capital, prohibitive construction costs, and technical problems, caused the failure of virtually all the early lines. Despite the long depression of the late 1830s and early 1840s, the railroad progressed rapidly, however, and emerged at the end of the 1850s a stable industry with uniform methods of construction, and its own technology, organizational structures, fiscal arrangements, and managerial practices. The 1850s was a growth period during which many large railroads were built, among them the great east-west trunk lines. (The Pennsylvania Railroad, the Erie, and the Baltimore & Ohio. Another, the New York Central, was created in 1853 by the consolidation of the Albany & Shenectady; Schenectady & Troy; Utica & Troy; Syracuse & Utica; Rochester & Syracuse; Buffalo & Rochester; Rochester, Lockport & Niagara Falls; and Buffalo & Lockport. Each road was built to fit in with the other roads in the line and together were known as the Central Line.) In New York State alone there were nearly 4000 miles of track, of which the young New York Central Railroad had over 650 miles between Albany and Lake Erie, and the older Long Island Railroad had 95 miles between Brooklyn and Greenport near the island's tip. Earnings up to 1858 for all roads in New York State totaled well over $20 million. By the decade's end the railroad had pretty much replaced the waterways as the nation's principal form of transportation.
The years of the railroad's ripening, 1850-1880, also saw the parallel emergence of a new national ideology. A blend of economic, social, political, and cultural rationalizations of industrial capitalism, the new consciousness undercut traditional laissez-faire principles and assumptions in what was arguably a modernization drive. This transforming process was speeded up by the alliance forged between the federal government and northern industry during the Civil War.(This development helped to create the image of the railroad as less a private enterprise and more a public utility. By the time of the Civil War the interests of the industry were strongly represented in Congress and in State legislatures.) Initially sanctioned by military and political objectives, the unprecedented collaboration continued after the cease-fire, and opened the way for the rise of the big industries of the 1880s and 1890s. No industry contributed more to this process than the railroad. Nor did any industry derive greater benefits from the permissive climate that followed in the wake of industrialization. The pragmatic and liberal society of the post-Civil War era hailed the unrestricted growth of the railroad as the fundamental symbol of national unity and progress. The importance of the railroad in its prime was less as a transporter of people and freight and more as a producer of land for settlement and economic development. As a result it gained the acclaim and support of the public, and was promoted by capitalists, endorsed by scientists, favored by State land-grant policies, and protected by a grateful federal government. By the end of the 1870s the railroad industry had gained a privileged place in the nation's economy which endured well into the 1950s.
The creation and growth of the Pennsylvania Railroad
The railroad had been a factor in commercial competition since the early 1830s, and had played a key role in the plans of the merchant-capitalists of the rival cities of Baltimore, New York, and Philadelphia. In the hunt for the rich markets beyond the Appalachians, Philadelphia staked its position as the country's principal commercial and financial center, and the creation in 1846 of the Pennsylvania Railroad was the city's urgent response to the failure of the Pennsylvania public works project to provide it with a canal system to compete with New York's state-owned Erie Canal which had opened in 1825. It was also a reaction to two challenges to what remained of its western commercial empire. The more serious challenge had come from the merchants of New York who, by linking the major barge systems of the Great Lakes to the Hudson River by way of the Erie Canal and the Central Line railroads extending west from Albany, had captured much of the western trade by the end of the 1840s. Opened between 1831 and 1845, these pioneer roads, the nucleus of the New York Central Railroad, offered fast movement of passengers and freight over the lenient grades of the Mohawk Valley to and from New York City's shops and docks. Baltimore and Philadelphia had nothing to compare with this combination of rail and water transport.
The other danger lurked closer to home in the form of legislation proposed in the Pennsylvania Senate in January of 1846 authorizing the Baltimore & Ohio Railroad to expand from its base in Cumberland, Maryland, into Pennsylvania and on to the prize of Pittsburgh, which, because of its position at the point where the Allegheny and Monongahela rivers flowed together to form the Ohio River, was coveted by all three competing cities. In its bid to win the frontier markets, the Baltimore & Ohio had progressed as far as Cumberland thanks to an earlier act passed in 1828 (with subsequent extensions) by the State of Pennsylvania. The 1846 Act granted additional construction rights to the Baltimore & Ohio, but a loophole enabled Philadelphia to rush through legislation creating the Pennsylvania Railroad and by nullifying all rights previously granted by the Pennsylvania lawmakers ending the hopes of the Baltimore & Ohio's.
Begun in 1847, the railway from Philadelphia to Pittsburgh via Harrisburg and Robinson's Summit (now Altoona) crossed the Alleghenies at over 2,000 feet (only a theoretical exploit a few years earlier) and gradually descended to Johnstown and Pittsburgh. In December of 1852 a continuous, single-track line between Philadelphia and Pittsburgh was opened to trade and travel. From this start as a trunk line over the Allegheny Mountains to Pittsburgh, the Pennsylvania Railroad eventually built a network of lines ranging over 11,000 miles of rail routes from Long Island in the east, south to Louisville, west to St. Louis and Chicago, and north to Buffalo, Detroit, and Mackinaw City, Michigan. By 1875 it was the largest railroad in the U. S. and the nation's largest single employer. By the 1890s its assets were double those of any other American business. In its 122-year history the Pennsylvania Railroad incorporated hundreds of rail lines (among them the Long Island Railroad in 1900), canals, turnpikes, express companies, trolleys, ferries, bridge companies (the oldest of which was the Passaic and Hackensack Bridges dating from 1793), real estate, office buildings, coal companies, and truck and bus lines.
The New York Central Railroad and the Triumph of New York City
The tracks of the New York Central Railroad, the Pennsylvania Railroad's great rival, have long been the principal rail route I and out of New York City. Originally seventeen miles long in 1831, the New York Central Railroad in 1853 began to build its realm by consolidating eight railroads with tracks roughly paralleling the Erie Canal between the Hudson River at Albany and Troy in the east, and Lake Erie at Buffalo, in the west. The combination of these pioneer lines, the widespread canal system, and the Hudson River steamboats, raised New York City to preeminence as a financial and commercial center. In a New York Tribune editorial, Horace Greeley, in recognition of the New York Central's colonizing potential, labeled it "the Imperial New York Central". The city's rule over trade and industry was strengthened in 1869 when the New York Central Railroad combined with the Hudson River Railroad on the river's eastern bank to create a direct rail route from New York City and tidewater via the Hudson River Valley to Albany, and on to Buffalo, the Great Lakes, and the emergent lands beyond. This merger also became the model for future takeovers which led to the fully-developed system's gaining control of the north-east, and expanding into roughly the same mid-western territory as the Pennsylvania Railroad, although it did not extend further south than central Pennsylvania. In 1898 it took over the St. Lawrence and Adirondack Railroad in northern New York and extended lines into Canada.
The Long Island Railroad
For years railroad-men had dreamed of a rail line from New York City to Boston via the most direct route along the Connecticut shore of Long Island Sound. The construction of such a rail line was delayed until the 1840s by high construction costs, and a technology not yet able to cope with the numerous hills and rivers of Connecticut. In the meantime, the New York State Legislature in 1834 chartered the Long Island Railroad to build a combination rail and steamship route ninety-four miles along the sparsely-inhabited spine of Long Island to Greenport at the island's eastern end. At Greenport passengers and freight were transferred to ferries which transported them across Long Island Sound to Stonington, Connecticut, where the railroad journey was resumed. When the æimpossible' was accomplished and a direct rail route was opened in 1848, the Long Island Railroad suffered considerable financial loss, and was forced to abandon the rail-steamship-rail route. The position of the Long Island Railroad in the middle of the island prevented it from serving the old south-shore villages. For most of the early railroads (especially the Pennsylvania Railroad and New York Central Railroad) expansion was the key to survival; and, in the case of the successful lines, which had by the 1880s achieved a quasi-public status, expansion meant monopoly by merger. (In the last three decades of the nineteenth century the Pennsylvania Railroad and the New York Central became models of expansionism, overwhelming railroad after railroad with reserves of capital. As the network of their lines grew so did their social and economic importance and with it their political influence.) This was true of the modern Long Island Railroad, which became the largest suburban line in the United States by creating a loop of new lines, and merged or leased lines, between Manhattan/Brooklyn and Montauk on the south shore, and Greenport on the north shore, using Jamaica, Mineola, Hicksville, and Riverhead as connection points. When the Long Island Railroad reached Montauk at the island's eastern tip it found itself hemmed in with nowhere to go because the New York Central Railroad blocked any hope of a western outlet, which required crossing the Hudson River. Successful expansion in a relatively small and restricted geographical area made suburban railroads, like the Long Island Railroad, vulnerable to takeover by larger railroads with special needs, deeper reserves of capital, and wider bases of operations. In this case it was the Pennsylvania Railroad, which coveted the Long Island Railroad's access to Manhattan, its facilities on Brooklyn's industrial waterfront, and its command of Long Island's recreational resources and rapidly-growing suburbs. In 1900 the Pennsylvania Railroad gained control of the Long Island Railroad by acquiring 56% of its stock, but allowed it considerable autonomy. In 1966 the Long Island Railroad was purchased by the Metropolitan Commuter Transportation Authority of New York State.
Merger of the Pennsylvania Railroad and the New York Central Railroad, and the financial collapse of Penn Central
Railroad passenger and freight services in the northeast had long been divided between the Pennsylvania Railroad and New York Central Railroad when the two giants formally agreed in 1962 to merge. Both systems continued to operate autonomously until 1968 when the approval of the U. S. Supreme Court opened the way for the rivals to merge as The Pennsylvania Railroad-New York Central Railroad Company. Almost immediately the name was changed to Penn Central. As a condition of the merger imposed by the Interstate Commerce Commission, Penn Central acquired as well the bankrupt New York, New Haven, & Hartford Railroad. In addition to inheriting 40,000 miles of track in 16 states, the District of Columbia, and two Canadian provinces, by the end of 1968 the Penn Central Company was faced with serious cash shortages linked to financial and passenger service problems. When Penn Central failed to reverse the critical cash situation by cutting back on capital expenditure, the company suffered a $63 million operating loss. In 1969 the name was changed to Penn Central Transportation Company, and a parent holding company was formed which took the name Penn Central Company. Heavy losses continued - $62.7 million in the first quarter of 1970 alone - forcing the company in March of 1970 to discontinue thirty-four east-west long-distance trains. After the U. S. Government withdrew a $200 million guarantee the Penn Central Transportation Company collapsed, and filed for reorganization. This breakdown culminated in the largest bankruptcy in U. S. history, with losses to shareholders, bondholders, and other investors alone, amounting to billions of dollars. (For a brief but informative history of the Penn Central affair see The Financial Collapse of the Penn Central Company. Staff Report of the Securities and Exchange Committee to the Special Subcommittee on Investigations. U. S. Government Printing Office, Washington, D. C., 1972.)
The creation of Amtrak and Conrail
In the wake of the company's failure the national transportation system itself was seriously threatened, and the U. S. Government stepped in to avert panic and restore confidence in the railroad industry. As part of an administrative slimming-down process the Long Island Railroad in 1968, the New Haven in 1971, and the Hudson and Harlem lines of the New York Central Railroad in 1972, were placed under the jurisdiction of the Metropolitan Transportation Authority. In 197l the Government established the National Railroad Passenger Corporation (Amtrak) to run long-distance passenger service; and in 1973 Congress created the U. S. Railway Association to reorganize the rail system of the Penn Central Transportation Company. Another step in the Government's bid to aid the ailing national rail system was taken three years later when the Consolidated Rail Corporation (Conrail) was formed by Congress to take over the Penn Central Transportation Company and the viable portions of six other bankrupt northeastern railroads: The Central Railroad Company of New Jersey, Erie Lackawanna Railway Company (Erie Railroad, and the Delaware, Lackawanna & Western Railroad) Lehigh and Hudson River Railway Company, Lehigh Valley Railroad Company, Pennsylvania Railroad-Reading Seashore Lines, and the Reading Company. In 1978 the Penn Central Transportation Company, which had been responsible for railroad operations, was reorganized again, this time as a general holding company with subsidiaries in real estate and manufacture. In an attempt to recoup its losses, Conrail in 1981 began a period of technological modernization, and two years later it converted solely to freight, a change that involved selling the remainder of its local passenger lines and equipment to state-run commuter authorities, and Canadian lines to Canadian rail companies. In 1987 Conrail went public, and in January of 1990, the company announced plans to buy back more than a third of its shares and to establish an employee stock ownership arrangement.
Penn Central Railroad Historical Records Project
Under pressure from the federal government to cut expenses and streamline its operations, Conrail set up a timetable for the destruction of all pre-1968 records. At the request of Conrail and the Penn Central Corporation a consortium of seven archival repositories (New York Public Library, Hagley Museum and Library, New Jersey State Archives, Pennsylvania Historical and Museum Commission, Pennsylvania University, the Urban Archives at Temple University, and the Bentley Library of the University of Michigan.) undertook in 1984 to dispose of 360,000 linear feet of what remained of the records of the Pennsylvania Railroad (including the records of the Long Island Railroad, the nation's largest commuter line) and the New York Central Railroad. These records, which comprise an exceptionally rich source for studying business and labor histories, were in line for destruction. Acting quickly to meet the disposal deadline imposed by Conrail, the unique coalition of historians and archivists created the Penn Central Railroad Historical Records Project to assess the research potential of the records. Based on a preliminary plan, a decision was made to distribute the records among the original seven members of the consortium (and later two new members, the Ohio Historical Society, and the Baker Library at Harvard University). In 1984 the Penn Central Railroad Historical Records Project was funded by the National Historical Publications and Records Commission, and the task of surveying the huge archives was begun. The survey was supervised by a steering committee consisting of one representative from each depository. The process of appraisal and selection was finished in 1986 and the consortium was disbanded.