EL Debt Liabilities

When the Erie Lackawanna finally went bankrupt in the 1970s, how much debt did they have? This debt was a considerable driving factor in the N&W's decision to bankrupt the system rather than invest in the railroad significantly, among other issues. And, it seems that there is much discussion about the EL's debt, but never is it quantified. Does anyone know what the figure is?

I found a great website that explains much of the financial side and the operating side of the EL throughout its short history. http://rails.jimgworld.com/ELNumbers.html" onclick="window.open(this.href);return false; Between this source and Grant’s, Erie Lackawanna: Death of An American Railroad, we can see that debts reached an all-time high in 1970 of $380 million, but I haven’t found anything clear-cut that said the exact amount of debt there was on June 26, 1972. The 4th chart down on the EL webpage shows that debt in 1972 was around $360 million, with the fifth chart showing operating losses around $28 million. Norfolk and Western didn’t directly bankrupt EL, Hurricane Agnes, and high operating costs amongst other things helped this railroad go bankrupt. Hope this helps!

map193 wrote:Norfolk and Western didn’t directly bankrupt EL, Hurricane Agnes, and high operating costs amongst other things helped this railroad go bankrupt. Hope this helps!

Very good site.

Your link also shows that the economies of scale predicted prior to the merger were not realistic and that the savings incurred by the reduction of redundant routes was marginal.

I found this paper ("Erie Lackawanna: Early Warnings of Disaster in the Railroad Merger Movement") some time ago explaining how this merger was disastrous from the start. It's a good read and I'm sure the link has been posted on here before. It counters some points that the Erie and the Lackawanna made as well as exposes errors that the ICC made during the merger process. http://www.thebhc.org/publications/BEHp ... -p0119.pdf" onclick="window.open(this.href);return false;

map193 wrote:I found this paper ("Erie Lackawanna: Early Warnings of Disaster in the Railroad Merger Movement") some time ago explaining how this merger was disastrous from the start. It's a good read and I'm sure the link has been posted on here before. It counters some points that the Erie and the Lackawanna made as well as exposes errors that the ICC made during the merger process. http://www.thebhc.org/publications/BEHp ... -p0119.pdf" onclick="window.open(this.href);return false;

Well written and I have to say accurate. The idea that the DL&W and Lehigh Valley would have made a better merger is intriguing. That merger would likely have failed also.

In the end the creation of Conrail and the acquisition of Conrail by NS and CSX led the northeast to the correct railroad configuration. The two best lines: the NYC Water Level Route, and the PRR Pittsburgh Division survive and are busy.

The NS Southern Tier line survives in a perpetual limbo. Too good to abandon, too little value to really upgrade.

s4ny wrote:The NS Southern Tier line survives in a perpetual limbo. Too good to abandon, too little value to really upgrade.

Agreed, from about the last 10 years of its existence to present day this line probably could not stand on its own without much intervention due to there not being much of anything in the Southern Tier or in the rust belt for that matter. But as we could see with Conrail and then NS the tier is pretty valuable when it's linked with other rail lines.

s4ny wrote:

map193 wrote:Well written and I have to say accurate. The idea that the DL&W and Lehigh Valley would have made a better merger is intriguing. That merger would likely have failed also.

Agreed. It would not have been much different than the Lackawanna/Erie merger. My personal opinion is that the DL&W was doomed from the 1920's when it did not merge with the Nickel Plate as they almost did. It would have enabled them to at least last into the Conrail era and maybe, if certain other acquisitions were made and dropping of the commuter lines occured, beyond.

Wasn't the Erie supposed to be part of a NKP/ Van Sweringen network as well during the 1920's?

map193 wrote:Wasn't the Erie supposed to be part of a NKP/ Van Sweringen network as well during the 1920's?

The initial merger talks were in 1919 to 1921 which was prior to the Vans having controlling interest in the Erie in the mid-20's

If the Lackawanna had merged with the Nickel Plate and added the access to Pittsburgh they would have been a viable rival to the Central and Pennsylvania in the post war era.

Greg wrote:

map193 wrote:Wasn't the Erie supposed to be part of a NKP/ Van Sweringen network as well during the 1920's?

The initial merger talks were in 1919 to 1921 which was prior to the Vans having controlling interest in the Erie in the mid-20's

If the Lackawanna had merged with the Nickel Plate and added the access to Pittsburgh they would have been a viable rival to the Central and Pennsylvania in the post war era.

The Vans were trying to put together a system that consisted of the Nickel Plate, Chesapeake and Ohio, Pere Marquette, Hocking Valley and the Erie. Would have been interesting to see how everything would have worked out if it were eventually approved by the ICC, especially for the Erie seeing how it had so much parallel lines with the NKP.

One thing to remember is that although parallel, the Erie and NKP were on different routes. In that time, Ohio had SO much industry. There was enough business for everyone. This is why LV, Lackawanna, NYC, and Erie were all able to survive in the NY-Buffalo corridor.

It's too bad Mr. Fishwick saw the east as a sinkhole. At that time it was. Even after Conrail, N&W could have put more effort into D&H. He could have raped Conrail, just like Walter Rich did. It was at least a good bargaining chip.

The Southern Tier is probably the most useful since Erie days. As was said, it is a good link to New England, and eastern Canada, via rights on the D&H. I don't think this story is over. One of my bosses mentioned the possibility of a joint NS/CPR operation. If they could combine the Tier and D&H, it would be mutually beneficial..

Under Dereco wasn't the D&H and the Erie originally supposed to be paired up as a route to get N&W a foothold into Canada via D&H and then the Boston and Maine as a way to get into New England before B&M decided not to enter into Dereco?

I think N&W kept EL and D&H at arms length. The west end of EL was redundant with the NKP and Wabash lines. The east was saturated. Why would N&W want to go where PC held most everything, and had better lines. The cost of business is high in the east too. Add in the taxes, and commuter losses, and no one with half a brain would go there.

As I said, once Conrail came, the D&H could have been a good bargaining chip for N&W against Conrail. CR still held the cards, as they controlled the routes connecting N&W to D&H. With this said, Walter Rich found a way to beat Conrail, as I said before.

I like EL. It may have been able to be pared down to a lean bridge route, needing little modification for stacks and pigs. Conrail had a much better route in the NYC route. EL was still 4 out of 4 in the Chicago New York business. No matter how we dissect this, there were too many routes serving a dying traffic base. In 2014, with increases in intermodal, and unit trains, the capacity may be welcome. Things were in dire straits in 1976.

I don't think the Southern Tier is going anywhere. It is quicker to New England, and parallels the Central. It avoids the southerly leg of going via Pittsburgh, and Harrisburg. The NS has done well with it. It will never match what CSX has in the old Central, but it does give them a direct line to Boston and eastern Canada.