• What if DL&W stuck it out?

  • Discussion relating to the Delaware, Lackawanna & Western, the Erie, and the resulting 1960 merger creating the Erie Lackawanna. Visit the Erie Lackawanna Historical Society at http://www.erielackhs.org/.
Discussion relating to the Delaware, Lackawanna & Western, the Erie, and the resulting 1960 merger creating the Erie Lackawanna. Visit the Erie Lackawanna Historical Society at http://www.erielackhs.org/.

Moderator: blockline4180

  by ricebrianrice
Maybe if the DL&W had stuck it out on it's own it would have ended up like the O&W. I wonder if that played out in managements minds, they saw the O&W go bellie up, and said we don't want to be like them, so they took what they could.

One can only wonder......

  by JoeG
I don't think the DL&W would have ended up like the O&W. The O&W provided virtually no needed service. For the years before it was actually liquidated, there was lots of effort made to save the O&W but it failed because there was just no traffic.
The DL&W would have just gone bankrupt, and continued to operate, because it did provide needed service. Eventually it would have been merged into some other railroad, presumably Conrail.
But, the DL&W could not have gone it alone, especially after those fifties hurricanes that wiped out what cash it had.

The damage done by hurricane Diane took away the Lackawanna's nest egg they paid for it by selling the NKP stock. The proposition that the hurricane per say is responsible for the decline of the Lackawanna is difficult for me to buy into:

In looking over the financial statetments the Lackawanna was making money with the exception of 1955 up to 1957 which was its last profitable year. So what happened to the railroad in 1958. The St Lawrence Seaway didn't open until 1959 so diversion of traffic by the Seaway wasn't responsible for any traffic losses prior to 1960. Simply put the Lackawanna suffered serious traffic declines in 1958 which is exactly when the US was hit with a serious recession. It was the decline in traffic from the recession that put the Lackawanna into the red.

Fears of losing traffic when the Seaway opened had to figure in Shoemaker's calculations as well as loss of the anthracite trade. But Lackawanna also hauled a substantial amount of bitumonous coal as well and than there was the cement traffic. Shoemaker's fears of traffic diversion from the N&W-NKP merger while understandable don't hold up. As I said before NKP really couldn't have diverted very much in fact NKP and Wabash demanded concessions from the Lackawanna in Buffalo over connections to the Lehigh Valley as a condition of dropping their opposition to the EL merger, it would seem NKP and Wabash were more worried than EL about traffic diversion.

There were 5 railroads between NYC and Buffalo that was too many, good point. Fact is Lackawanna wasn't just a railroad between New York City and Buffalo. It had a substantial customer base in the cement district and the Bloomsburg Branch. Chrysler opened a plant on the Lackawanna's Scranton Division EL ran a Chrysler turn for years. The question is if the Lackawanna could have supplemented the traffic it would have lost with new business? Also the amount of money it would need to earn from freight traffic would have diminished by $3 million a year if the DLW went forward with getting rid of un profitable commuter trains which it definitely could have done but put on hold to reduce public opposition to the proposed EL merger. Eliminating the commuter trains wouldn't have been enough Lackawanna's fixed charges were to high it probably would have had to do a bankruptcy the Lackawanna was not a railroad that was in bad physical shape there was not that much deferred maintenance evidence of this shows up starting in 1959. The railroad would have had to change the way it operated and gotten new business in order to survive. I'll talk about the need for change in the operating department later.
  by henry6
Ah, yes! The often overlooked cement traffic. It meant a lot to the DL. But trucks were making big inroads (no pun intended) by the mid 50s and the cement traffic was going away fast.

Safely said, the problem all railroads faced in the east was that there were many problems, not just one thing, that eroded their traffic base while taxes and expenses were going up. Solving just one of the problems would never have been enough to save anyone from what eventually happened. Penn Central just exacerbated it to an end.

  by MichaelWinicki
Great thread... Very interesting conversation on the different factors affecting the Lackawanna along with all other roads.

Recently I posted a rather lengthy reply in the "Pennsylvania RR" forum concerning a topic much like this one...

If you don't mind I'm just going to copy my reply within this thread also in order to get your feedback-- hopefully no one minds me doing that-- this type of thread really intrigues me because I truly believe the railroads have to assume at least some blame for how things have turned out.

My previous reply to another thread--

And while my thoughts are specific to the PRR, I think they apply to most of the railroads.

Some folks brought out some powerful reasons why the PRR was in the shape that it was in during 60's & 70's and while I agree that I don't think it would have survived as an independent entity beyond the mid-70's I think it's important to consider a major reason WHY the railroads fell like dominoes during the latter half of the 20th century.

And obviously there are many reasons that I think we would universally agree on...

The de-industrialization of the country
The interstate highway system
High/unfair taxation at the local and state level
High labor costs tied to inflexible labor unions
Federal regulations

The one reason that I see very rarely ever brought up but one that I truly think ranks up near the top is the lousy marketing the railroads did to "sell" their service.

I've read a lot of material put out by the railroads over the last half of the twentieth century and being a "marketing geek" myself I'm shocked how lousy of a marketing job most railroads did.

Here, regardless of the interstate highway system, they had (and still maintain) a large cost advantage over tractor-trailers. But most marketing materials I've encountered almost give an air of "Well we're the railroad and if you want to do business with us-- fine. But you're going to do it on OUR TERMS".

The railroads seemed to have this (false) perception that companies should ship with them-- just because they were the PRR or the NYC or the B&O or whatever road you wish to substitute.

While many businesses/industries today (not as many as we would like as consumers) seem to accept the term "Customer Service" as it was intended-- "to serve the customer"... most railroads would have had to improve just to have bad customer service.

I've heard stories from businesses in my area of what it was like dealing with the Pennsy, then the PC, then CR and now the NS... And honest to God it doesn't seem to have changed much.

I think much of this came from the point of view that railroads-- at least the larger ones lost their "taste" for serving small customers a long, long time ago. And the ones that did stick it out were more or less put through the "wringer" as far as how they were treated.

While we all know of the gradual de-industrialization of the the U.S. predominately in the northeast and midwest, how would things have changed if this industries were treated like partners rather than "pains" that needed to be serviced every day or every few days? You know getting deliveries made on time... at a reduced cost that the railroads could provide? How many businesses that went out of business or moved out of the U.S. entirely could have stayed in business if their transportation partner--i.e. the railroads had treated them like any business should treat a customer?

I don't know why there wasn't more of a push to service retail type customers quite frankly. Just for grins count the number of tractor-trailers that go to a Wal-Mart or Home Depot everyday. Granted this transition had to start decades ago but the fact is there are still a lot of goods being moved in this country every single day.

But I'm not suggesting there still isn't industrial business to be had still. Where I live there are numerous factors/distribution centers that see many tractor-trailers loaded and unloaded every single day--- but no railroad transport... even the ones that are adjacent to the railroad. To me this is stunning. Here these businesses could save a great deal on shipping costs by shipping via train but there is no spur... and in some cases there is a spur-- but is never used. Why?

I think the "why" is because the railroads in this country had for the longest time the misguided notion that their "crap didn't stink" to put it bluntly. They had no interest in serving the small customer or even it seems a slightly larger customer. They wanted lots of carloads every single day-- and if you as a business couldn't do that you were basically treated as the proverbial "red-headed step-child".

I think there is a lot of blame that can be handed out on why the railroads in the U.S. fell as far and as fast as what they did but I think a lot of it has to start with the mindset each railroad had as far as serving customers and marketing their service to businesses that were not yet customers.

And it's a problem that continues to this day.

  by pdman

Great insightful comments. Thanks very much for them.

I take your point about railroad marketing. Too, in pure sales forces, they did not hire the best and brightest. But, then again, the shippers' traffic managers (their customers) were even lower in life forms at until the 1970s. These were general clerical, tariff-reading, ICC rule reading clerks who loved reigning power over carrier sales people who bowed and scrapped at their desks. These traffic managers were not taken seriously within their companies. So the traffic clubs in each city became a monthly dinner event where carrier sales people bought them drinks, put them at the head tables, and rigged raffles so the traffic managers would win the sets of golf clubs. It was a dumb and dumber environment. I know, because I sold carrier service in my early 20s, and I worked in a budding traffic management office after that.

By the 80s deregulation made traffic managers disappear and they were replaced by distribution managers and today purchasing/supply managers who generally look at much more than the social stuff.

  by sd80mac
HSSRAIL wrote: 3) Okay Lackawannna is bankrupt so what? Placing the DLW into bankruptcy would have been a very good thing. The fact is DLW's leased lines were very costly, a bankruptcy would have gotten them out of a lot of those. I refer to the Syracuse and Oswego Branches. The leased lines never generated the revenue the Lackawanna paid for them.

leased?? are you saying that DLW never owned the property where track were??
  by henry6
SD80MAC: The DL&W actually incorporated all their leases, etc. in 1948 for tax reasons; I don't think there were any loose ends left by 1960.

Concerning marketing of railroads...there was none not because of lack of talent or lack of wanting to, but because of ICC regulations railroads really couldn't. Railraods were required to file tariffs with the ICC which set prices for specific commodities in specific type of cars. And these tariffs were usualy applied for after the need for the tariff arose and took up to a year or more to get approved. Trucking companies had to do this, too, by the way. But it was reactionary after the fact marketing instead of aggessive, innovative marketing that we know today. Until the ICC was desolved you couldn't have dedicated unit trains with long term contract committments. You can't blame the railroads at that time as they were asking for permission to compete with other forms of transportation by offering contract rates instead of tariffs (which the ICC held high so asa not to take away from trucks at the time). Not the Staggers Act and the Conrail era were railroads free to market as other businesses did. But don't blame the railroaders, they were handcuffed by Federal legislation.
  by s4ny
Railroads make money transporting bulk commodities. For the DL&W, that was coal. In the era before good highways, they also transported other frieght profitably, but coal was it for them.

When oil and natural gas replaced coal in residential furnaces the game was over for the Lackawanna.

The process was efficient. The best trackage for hauling freight in NY/NJ/PA remains in use.

  by Dieter
What killed all of these lines aside from taxes and a unsympathetic government before Conrail? Parallel Lines.

What would have made The Lackawanna or any other railroad survive? Extended territory. I really think the Erie just took advantage of getting hold of the competition and shutting it down. Waterfront resources and terminals were consolidated, DL&W didn't go past Buffalo, so outside of a faster route to Buffalo, what good was that merger outside of eliminating "The Other Guy"?

A Central merger would have been a white elephant. With a cheaper route all the way to Chicago, once the Seaway was opened, Central would have been stuck with even more useless port facilities on the Hudson River than it already had.

A surviveable merger? DL&W/Wabash/C&NW?



DL&W/NKP/GN, Burlington or NP?

These may sound rediculous to you, but the only survivable future was the unconventional, reaching ever westward or south, NOT to merge with anything on a parallel route. If the New York Central had merged with Santa Fe, it would still be more or less intact today than what it is.

  by henry6
Parallel lines had less to do with these railroads than the times: the interstate highway system, the St. Lawrence Seaway, the migration of industries to the south and west, the loss of mineral traffic including anthracite coal and cement. It is easy to say, too, it was an unsympathic government and taxes. Railroads came out of the 19th Century needing to be harnessed by the ICC like bad boys sent to their rooms and not allowed out. Not being able to come out and play on an even playing field (rails couldn't just stop running, but had to petition their way out, a truck just stopped; they couldn't make long term or volume contracts with their customers, truck and barges could; etc.) hampered their being able to survive; in short they couldn't adjust quickly to changing conditions. In addition, I believe, there were many managers and upper level white collars who were just a few years away from retirement, so they hid behind thier desks beause they knew they would be gone so soon and someone else would have to pick up the mess. The other hit taken by the DL&W were Diane and Hazel, hurricaines which dealth expensive blows to the railroad; the EL had Agnes in 1972. There wasn't just one or two reasons the rails got into trouble, but many working together, some unseen, that ate away at the structure until it was too late.

  by JoeG
in the late 50s, when the Lackawanna and Erie were both facing bankruptcy (from the reasons Henry6 enumerated), the ICC made it very difficult for any railroad mergers to be done. The Lackawanna may have waited too long to get merger partners; for instance, while the Nickel Plate would have made a good merger partner from the Lackawanna's point of view, the NIckel Plate didn't want to do the merger because of the Lackawanna's debt, declining traffic, and commuter traffic which was bleeding cash--not to say its ruinously high New Jersey tax bill. As for the Santa Fe and other western roads, the ICC would not have approved a transcontinental railroad merger; in fact, it's not clear one can be approved even now, when we have 2 big Eastern trunk lines and 2 big Western ones.
In hindsight, if the Lackawanna had pursued a merger with the Nickel Plate in 1946, and if that merger had somehow been approved by the ICC--that might have had a chance of allowing the Lackawanna/NKP to survive till Conrail--but I think Conrail would have doomed it then anyway.

  by Otto Vondrak
The logical connection would have been a NKP-DLW merger. Imagine that- another Jersey City-Buffalo-Chicago hauler! I think the Lehigh Valley had friendly connections with the CN and the WAB. Would have been interesting, and Erie would have been "surrounded." I think one of the biggest reasons that DLW and NKP didn't get together was DLW's opressive debt. There was no way the NKP board of directors could justify a purchase of DLW and assume all that debt. Economics of the time dictated this would not be a good investment for anyone. And would NKP retain the DLW or carve up what they wanted and abandon the rest? Would NKP need a branch to Syracuse or Utica? Could NKP establish connections in Scranton? Would it be comforting to see NKP PA's at the bumping block in Hoboken (I know I'd like that!)? Could an expanded NKP compete with Erie for the Chicago long-haul? Would NKP+DLW contemplate an expanded merger with Erie?

What if DLW and Erie got together right after World War II (like the GM&O merger of 1947)? Would there have been more cooperation or would the combined EL meet the same fate?

What if Lackawanna stuck it out? What if they somehow assumed operation of the NYS&W instead of a private investor? What if they got expanded trackage rights like those that were awarded to D&H upon creation of Conrail?

Lots of interesting questions.


  by gawlikfj
I agree with alot of responses on this subject.
I think the biggest killer for all the railroads was the changing times & drying up of the coal.
The more trucks on the highways & the public using their cars & flying more didn't help the railroads & the passenger service that the railroads offered.

  by Spin
Well the railroads may not have been able to market themselves before deregulation. But since then, we all know that the big railroads have tired their best to get rid of the small shipper.

All they want to do is pick up a train here, and take it there. With no locals clogging up the mainlines, eating up the payroll. And they'll do anything they can to sabotage their own (small) business.