• 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 calorosome
What if the DL&W had never merged with Erie and stuck it out on their own?

Often wondered about this, and I think a fair assessment is it would have paralleled the LV into oblivion. End of passenger service in early 1960s, badly deferred maintenance, most of mainline single tracked to reduce maintenance costs - and probably not as much new motive power as DL&W was power hungry after deserting steam power too quickly in the 50s.

DL&W probably wouldn't have lasted into Conrail as LV was under PRR's thumb. As Conrail had no use for NYS LV trackage, they had no use for almost any DL&W trackage.

Then the imagination runs wild with "What if the Erie..."?

  by JoeG
This is an ever-interesting topic. It's been discussed in various threads in various forms. For a useful discussion, read Merging Lines by Richard Saunders, Jr.
By 1960, the Lackawanna was on the verge of bankruptcy. It was broke because of major hurricane damage, massive passenger losses, and the evaporation of anthracite traffic. Apparently, it barely made payroll toward the end. It badly needed a merger partner. From the Lackawanna's perspective, the Nickel Plate would have been the best partner, but that deal didn't work out. Saunders has an interesting discussion of some of the issues. One thing to keep in mind is, by the late fifties everyone could see that the Lackawanna was hemorrhaging cash and faced declining traffic, especially given the new Interstate Highway system that was about to be provided free to truckers. The Nickel Plate could see this problem with the Lackawanna, too.
Even though the Lackawanna and its managers were treated unfairly in the Erie merger, it may well be true that that was the best deal the Lackawanna had available. And, in the end, E-L almost survived outside of Conrail. Could it have made it outside of Conrail? I leave that to others, but I think it would have at least needed some government money for equipment and ROW improvements.
  by henry6
How much more gray hair do you want to give me! This has been argued, commented on, lamented, vented, spoken of, discussed, written about, and sworn about since 1959 at least! It is certainly worth a couple of bottles of bourbon and an all night session to get started.

Should the DL have merged with the NKP? But Perry Shoemaker had to sell the NKP stock to fix the Diane's damage so how could he? Besides, NKP people didn't want dem easterners anyway. The DL had no choice, real choice, but to go to the Erie and get married. Probably, if that merger didn't happen then, willingly, then the ICC would have demanded a shotgun wedding.

  by calorosome
I have the Saunders book - excellent reference. Sorry for the gray hairs Henry, I'll bring a couple bottles of scotch :-D
  by henry6
The Scotch and the book...to Roberson Center's Train Show, 30 Front St. Binghamton, Sun 1/14, 9a-4p. You and anybody else who wants to come.

  by Tadman
Funny how NKP got DLW anyway - after NKP-WAB-N&W, the new N&W was forced to form that Dereco subsidiary that controlled EL and D&H...

I can't believe Erie wanted DLW either, it sounds like one big money pit, and Erie already served quite a few DLW points anyway.

  by blockline4180
Tadman wrote:Funny how NKP got DLW anyway - after NKP-WAB-N&W, the new N&W was forced to form that Dereco subsidiary that controlled EL and D&H...

I can't believe Erie wanted DLW either, it sounds like one big money pit, and Erie already served quite a few DLW points anyway.

And then of course during the Conrail takeover/merger of 1999 NS, which is jointly made up of Southern and the N&W in question now operates and/or owns most of the surviving Ex-EL trackage throughout NJ, NY, and Pa. All this in my mind seems a little ironic!
  by henry6
It was said back then that the NKP was actually more enamored with the LV than the DL. As far as dumping monies, the Erie relished the DL because of it being a theoretically easier route east of Binghamton, NY. However that advantage went away when the Boonton Line near Paterson was surrendered to NJ and the Feds' for I80 to alleviate opposition to the merger. The concept of the E and L merging was good, there just was a lot of poor execution because of parochialism on both sides. Each side can tell you dirty stories about the other while remaining liley white themselves. Still, it was a much better merger than the Penn Central, the poor results of which we are still stumbling through today.

  by calorosome
That scotch didn't last long :-D

  by umtrr-author
One of the more interesting "what ifs" raised by the Saunders books (which I own, and are excellent) is "What if some of the merger plans proposed sooner had actually occurred?" There were any number of plans to consolidate rail lines that were proposed starting much earlier than 1960.
  by henry6
calorosome wrote:That scotch didn't last long :-D
Bring the books anyway, I want to borrow them, they sound fascinating.

And, UMTRR-, oh, yes, there are many stories from N&W-PRR and C&O-NYC merger plans, D&H-DL&W (with and without the Erie), DL&W-NKP, LV-NKP, to everything in the east, west, and south forming three railroads. And some of these plans go back to the turn of the last century!

I have given a lot of thought to this. I have the financials for the DL&W. What it boils down to is this. There are definite periods in time when the future is what you make it. If a company makes enough bad decisions it reaches a point where its fate is inevitable. The question is whether the Lackawanna was at that point in 1957 when the merger was first proposed. Alfred E Perlman maintains that the Central had to merge with the Pennsylvania when B&O-C&O merged and when N&W merged the Wabash and NKP. The fact is the New York Central had the low cost route between Chicago and New York all it needed to do was maximize that advantage. Want a merger partner for the Lackawanna how about the New York Central I should point out that NYC had a controlling interest in the DL&W.

Now lets go over the Lackawanna and get to the meat of its troubles:

1) Massive commuter passenger deficits. As of 1958 any railroad could discontinue any passenger trains if they could show they were a burdon on Interstate Commerce. Perry Shoemaker intended to drop all suburban service on the Lackawanna in 1959. The NYC filed to drop its West Shore Service in 1958 and was out of it by 1960. Shoemaker says DL&W was losing $3 million dollars a year by 1959 on suburban service. So figure the DLW is out by 1960 than you can start adding $3 million dollars a year to DL&W's balance sheet.

2) High taxes in Jersey City and Hoboken Coordination with other railroads could have been worked out to consolidate terminal and Marine Facilities. Merger with the New York Central could have consolidated those facilities in Weehawken. DLW was paying Hudson County $2,540,000 a year by 1959. But mergers were not needed to consolidate facilities coordination could have been done and sooner than the cumbersome process of merger.

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.

4) NKP and Wabash favored Lehigh Valley. That is a good point but it misses an important fact. NKP and Wabash didn't connect with Lehigh Valley. They got those connections as concessions from the Erie-Lackawanna merger no merger no connections N&W couldn't divert squat to Lehigh Valley without the EL merger.

5) As a regional freight railroad without any passenger losses the sale or abandonment of every line west of Binghampton except the line to Buffalo. New labor agreements perhaps taking a strike Lackawanna might have been very attractive to the N&W and merged with them far more successfully than EL.

My point is this:
Companies fail because their management makes poor decisions seldom because they are trapped in circumstances beyond their control. When the Erie-Lackawanna did not insist on trackage rights over the New Haven and control of Maybrook Bridge. When they poured in $7 million dollars into Bison Yard with no commitment from N&W to forward traffic through it. When you operate money losing commuter service to the tune of $8 million a year on EL since 1960 and nothing is done about it until 1965. When you lose millions of dollars a year in cement business because you don't furnish cars to shippers. I saw it in the merger dockett for the Milwaukee CNW merger Cement shippers said they could not ship on EL because of car supply issues. After a while the bad decisions pile up and your company fails. I disagree that the DL&W and even the EL were destined to fail.
  by henry6
But, HSS, you are overlooking the impacat of the 1955 and 1957 hurricane's on the DL&W's infrastructure which helped lead it down hill. Also, NKP let it be known it did not want the DL&W in its family. With that, Shoemaker sold NKP stock to help defray expenses. Remember, Anthracite traffic, the backbone of many area roads, was gone, commuter costs were going up, Eisnenhower opened the St. Lawarence Seaway diverting cargo through NY harbor area and he was betting the future on the interstate highway system. Railroad stock...and railroad futures...looked very glum at that point. Since the DL&W-NKP (and some say, D&H) hook up was gone, LV did not make sense, O&W was too far gone even if it were a right fit (which it wasn't), the only thing Shoemaker could do was marry the Erie. Not all poor choices of management, but also managing inside the times.
  by amtrakhogger
I read somewhere that the Northeastern part of the US just had
too many RR's and too many route and track miles. RR's built a
main line or branch practically into every town and city and many
of those line were just marginal even in the best of times.

So you have multiple carriers all with routes to to the same cities.
For example, NY-Buffalo was a popular one, no fewer than 4 major
carriers (NYC,LV,DL&W,Erie) running between those two points (5 if you
include the PRR via Harrisburg!) In the end it was overcapacity and
cold hard economics prevailing when the traffic dried up. I can understand
why none of the mid-western roads would want to merge with a potential
partner on life support.
  by henry6
You are right...too many railroads, too much track, in too many places. And the Northeast and New England plus the granger states and many midwest industrialize state, had too much, too. But that is only part of the story. As I mentioned above, the St. Lawerence Seaway took a lot of cargo away from east coast harbors, anthracite coal was no longer the fuel of choice, the Interstate highway system as well as improved local and state roads made it easier to get around, and manufactureres were moving South and West for the cheaper labor force and where new was cheaper to build than rebuiliding the old. There was not one factor to blame above all others but a bunch of things working together that change the rail picture here. It didn't really matter how rail management reacted, if the traffic wasn't there, it wasn't there. If you have a rate of a penny a mile a ton to move cabbages overnight between two points what does it matter if there are no cabbages to move?