The CNJ was owned by the B&O???

[quote="Tom_E_Reynolds"]The Reading owned most of the CNJ stock since the CNJ's bankruptcy of 1883. And for all purposes, the Reading thought they would be included in the B&O's future plans. Instead, to their shock and horror, the B&O quickly dumped all their stock in about 1973, at a great loss.
I was told that it was about $125 000

As I understood it, after its 1967 bankruptcy, the CNJ had indeed hoped to be part of a planned C&O, B&O, N&W merger (via the Reading). That would have included them into the CSX system. Once the Reading's stock was dumped, they knew their gig was up.

Also to note, at the time, the Penn Central bankruptcy, was the largest corporate bankruptcy to date, and caused the ICC to stall on any future large scale mergers, as the CSX merger would have been.

The CSX merger didn't take place until about 1980

Tom_E_Reynolds wrote:And for all purposes, the Reading thought they would be included in the B&O's future plans. Instead, to their shock and horror, the B&O quickly dumped all their stock in about 1973, at a great loss.

Most likely aftermath from the 1972 Hurricane Agnes damage.

carajul wrote:The chart I have shows the CNJ being owned directly by the B&O but it also says the when the CNJ filed bk the B&O gave up it's ownership. Not saying that's accurate it's just what's in my book.

My original question is still why didn't the B&O (CSX) with all it's money prop up the CNJ??? It would give them access to the tri-state market. Was the CNJ red ink just way too heavy for B&O to even care anymore?

While, by far, I am no expert, I would also point out that you have to keep in mind that two major events occurred between the 1950's and into 1960's:

1. NYC's ban on using coal for heating destroyed the major import business of the CNJ.
2. Combination of the increase in Highway/Trucking capabilities and the dramatic loss of manufacturing from the NYC/Newark/Jersey Waterfront areas heavily reduced their exporting business.

Because of those two points, any hope of being considered a profit asset evaporated from the CNJ. The New York area's overall drop in shipping out manufactured goods coupled with all the railroads already accessing and fighting for what remained of that market would have made maintaining or improving the CNJ a poor business investment in the face of all the existing and well entrenched competition. B&O could better focus on their more central assets rather than their peripheral. Pennsy was trying to overcome the same problems, but NYC was considerd one of their major & central markets. Pennsy tried to overcome some of their competion problem by merging with the NYC since they wouldn't be able to get through it all by eliminating their New York Access like B&O.

How much traffic originated on the CNJ? I was under the impression that it was all bridge traffic and terminating inbound loads.

Otto Vondrak wrote:How much traffic originated on the CNJ? I was under the impression that it was all bridge traffic and terminating inbound loads.

Although I am not familiar with the specific numbers, the CNJ used to serve numerous manufacturing facilities between Newark, the Chemical Coast, out amongst Jersey City & Bayonne, and all along the Main from Elizabeth out through Plainfied, Boundbrook, Manville, to Somerville.

My own personal observation as a boy back in the 1970's was a long line of numeruous sidings next to factories along Rt 28. Of course, by that time, many manufacturers were already pulling out, closing shop, and shifting southward to cheaper labor.

Don31, you should be able to back me up on this!

It seems Reading did own 50%+ of CNJ stock in the 1950s-1960s, but looking at Moody's I can't see where B&O had 50%+ of RDG. Anybody know where I should look?

CJPat wrote:two major events occurred between the 1950's and into 1960's:

1. NYC's ban on using coal for heating destroyed the major import business of the CNJ.

When was that?

timz wrote:It seems Reading did own 50%+ of CNJ stock in the 1950s-1960s, but looking at Moody's I can't see where B&O had 50%+ of RDG. Anybody know where I should look?

There was quite a buzz in the papers, back on the early 1900s (around 1903) that I found:

http://query.nytimes.com/gst/abstract.h ... 5B838CF1D3

http://query.nytimes.com/gst/abstract.h ... 5B838CF1D3

But I am sure there is more detailed, current documents somewhere...especially when they dumped it all. That I would also like to see.

Some clarification on this thread. Reading controlled CNJ, and B&O controlled the Reading. As noted above, B&O's involvement with Reading dates to the 1880s. See Herbert Harwood's book "Royal Blue Line" for a discussion.

CNJ ws the first of the Northeastern railroads to go bankrupt, in (as I recall) 1967 or so. Former New York Central officer R.D. Timpany was appointed receiver. By 1970 CNJ's plight was so dire that they received ICC permission to pull out of Pennsylvania altogether. Lehigh Valley continued operating on what is now Conrail's "Lehigh Line". CNJ and LV had combined their parallel mains through the Lehigh Valley in the mid-1960s. The bankruptcy of CNJ ended B&O's control.

Reading was still solvent after Penn Central went bankrupt, but was pushed "over the edge" by Hurricane Agnes. The assets of both were taken over by the US Railway Association, which was doing the planning for what became Conrail in April of 1976. USRA's original plan was to sell most of the former Reading to Chessie System, and the east end of E-L to Norfolk & Western, but these moves were blocked by the railroad unions, which had been given veto power by Congress. So much of the Reading became part of Conrail, and CNJ was eventually sold to the State of New Jersey.

The B&O did have a presence in New York, through its purchase of trackage on Staten Island and construction of a line from Cranford ("Excee" tower) to Staten Island. B&O operated a yard at Arlington on Staten Island and a carfloat operation in New York harbor, fed by its trackage rights trains (with through power) over RDG and CNJ.

NellieBly wrote:Some clarification on this thread. Reading controlled CNJ, and B&O controlled the Reading. As noted above, B&O's involvement with Reading dates to the 1880s. See Herbert Harwood's book "Royal Blue Line" for a discussion.

CNJ ws the first of the Northeastern railroads to go bankrupt, in (as I recall) 1967 or so. Former New York Central officer R.D. Timpany was appointed receiver. By 1970 CNJ's plight was so dire that they received ICC permission to pull out of Pennsylvania altogether. Lehigh Valley continued operating on what is now Conrail's "Lehigh Line". CNJ and LV had combined their parallel mains through the Lehigh Valley in the mid-1960s. The bankruptcy of CNJ ended B&O's control.

Reading was still solvent after Penn Central went bankrupt, but was pushed "over the edge" by Hurricane Agnes. The assets of both were taken over by the US Railway Association, which was doing the planning for what became Conrail in April of 1976. USRA's original plan was to sell most of the former Reading to Chessie System, and the east end of E-L to Norfolk & Western, but these moves were blocked by the railroad unions, which had been given veto power by Congress. So much of the Reading became part of Conrail, and CNJ was eventually sold to the State of New Jersey.

The B&O did have a presence in New York, through its purchase of trackage on Staten Island and construction of a line from Cranford ("Excee" tower) to Staten Island. B&O operated a yard at Arlington on Staten Island and a carfloat operation in New York harbor, fed by its trackage rights trains (with through power) over RDG and CNJ.

Just a couple minor clarifications:

1 - Yes...CNJ entered its 3rd (and final) bankruptcy in March of 1967.
2 - CNJ pulled out of Pennsylvania at the end of March, 1972.
3 - Reading went bankrupt in 1971 (It was EL that went over the edge from Hurricane Agnes in 1972).
4 - CNJ and LV began sharing track in Pennsylvania in 1965.

And the best part of the PA pullout of 1972?

No ICC permission. The 101 year lease of the Lehigh & Susquehanna was up for renewal, and Trustee Timpany simply said 'we can't afford to re-new, we can't afford to stay in Pennsylvania'. The ICC was not consulted on this, and every connecting railroad in PA protested. I've heard verbally what the ICC gave the LV a directed-service order to take over the PA division. I'm not absolutely sure that that was the case, but I know the LV was caught unawares as well, and had a serious motive power crunch for the next year or so.

-Micah

Interesting. I didn't know the pullout was done without permission, but as desperate as CNJ's condition was, it doesn't surprise me. Of course, the coordination of trackage had already taken place, so LV simply had to assume maintenance responsibility for the L&S pieces. But the branch lines would have been a problem.

When I worked for USRA in the 1970s, it was fun to look at the track charts for the line. The line code was alternately an -05 (Lehigh Valley) for "main line Lehigh Valley" or an -02 (for "main line L&S"). Mileposts changed as well.

One interesting side light is that the lawyers for the Lehigh Valley did attempt an independent reorganization (LVRR was leased by PRR and then PC). They argued to the bankruptcy court that, if they were paid net per diem owed to them, they could satisfy their creditors and reorganize. The judge was unimpressed.

Another story is that RDG's president, C.E. Bertrand, a well-regarded railroader, was chosen to head the Northeast Corridor Improvement Project after the creation of Conrail, but died suddenly before he could assume his responsibilities.

A lot of good people went down in the northeast bankruptcies -- but not Bob Timpany, who ended up as VP Law at AAR.

I think this is a great discussion.

This period of railroading is very interesting to me. The chain of events of how Conrail was created by the US Government to absorb the assets of the bankrupt railroads (and some not so bankrupt railroads) is a facinating story.

The US Congress passes the "Regional Rail Reorganization Act" of 1973 to help get Federal money to the bankrupt railroads. It must be noted that some of the local states (like New Jersey) were already giving the railroads money or resources. I am not sure about PA or NY. This act also created the first concept of a government funded consolidated railroad.

The Regional Rail Reorganization Act authorized the creation of the USRA, the United States Railway Association.
The USRA had more authority and power over the ICC with respect to the bankrupt lines, but did NOT replace the ICC. (I know this because the ICC actually disagreed with the USRA in 1975 regarding the RRRR takeover, but that is a different discussion for another day)

The USRA wasn't official until February 1, 1974. The USRA, with a lot of help from the American Association of Railroads (AAR), produced the first draft of a Consolidated Railroad Plan in February 1975. The "Final System Plan, as it was called, was finalized in July of 1975, and named all the railroads and lines that were to be included or excluded in Conrail. President Nixion signed this into law in February of 1976, and 2 months later, ConRail was born.


Timeline:

1972 Most (but not all) railroads already bankrupt by this point.
1973 Congress passes Regional Rail Reorganization Act (3Rs Act) to get money for the railroads
1974 United States Railway Association is created
1975 The Final System Plan is created and publicly discussed.
1976 The President of the US signed the "Railroad Revitalization and Regulatory Reform Act" (4Rs Act), which made the Final SYstem Plan into law (which created Conrail)

Once Congress got involved in 1973-74, it seems like there was little or no chance of any of these railroads from getting out of the spiderweb called Conrail. The LV story sounds like a few others I have heard. In fact, I believe that the US Supreme Court was involved to some extent with some of these lawsuits. Once the Supreme Court backed the creation of Conrail, the lawyers, the unions, and the railroads (profitable or not) had no choice.

Bertrand died at the helm of the D&H after his Amtrak stint, at least from what I've read.

And the LV still assumed operation of quite a bit of mainline mileage as well that wasn't part of the 1965 Joint Facilities agreement..

I definitely like this thread. Behind the scenes is as interesting to me as operations..

-Micah

Tom Reynolds:

Your chronology shortens the process and leaves out some steps. Before there was a Final System Plan, there was a Preliminary System Plan, which was circulated for review and comment by interested parties. AAR wasn't involved, but FRA was. They helped USRA in the development of the PSP, but after that there was no love lost between the two organizations.

You, or someone, said "most but not all of the railroads were bankrupt". I'm not quite sure what was meant there. CNJ was bankrupt in 1967, PC in 1970 (including New Haven), RDG in 1971, E-L in 1972. LV never was actually bankrupt, but was owned by PRR (and thus PC), and therefore was drawn into the process. The Michigan Central, which was leased (not owned) by NYC, also tried to escape the Conrail process, but also lost a battle with the bankruptcy judge. Providence & Worcester, another leased line, did escape. D&H was still solvent, and was never planned for inclusion in Conrail. Neither was B&M, which believed it could manage a successful reorganization.

The 1974 bankruptcy of Rock Island and the 1975 bankruptcy of Milwaukee made it clear that the problem was not restricted to the Northeast (which was implicit in the 1973 "Regional Rail Revitalization" Act), so that brought the "Railroad Revitalization and Regulatory Reform" Act of 1974, which included a number of deregulation provisions. The ICC wasn't happy with that, and wasn't happy with the authority given to USRA, either, but it was pretty clear at that point which way the wind was blowing. ICC was given a bone in the "Rail Services Planning Office" (RSPO) which had some Amtrak oversight responsibilities, but otherwise was left out of the Conrail process. At that point, it was pretty clear to Congress that the regulatory process was broken and not fixable. The 1975 ICC decision in the UP-Rock Island merger case pretty well confirmed that, and then when Conrail didn't make much progress toward financial viability in the next several years, Congress got spooked at the prospect of an entire industry going down in flames, and produced the Staggers Act. That, and Stanley Crane, fixed Conrail's problems. It also fixed the industry's problems.