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(erielack) What shoulda been-the facts

Ok guys...
E. F. Pat Striplin's "The Norfolk Western: A History Revised Edition", 
Nofolk & Western Historical Society, Inc, Forrest, VA, 1997

paraphrasing somewhat:

Page 182
August 31, 1965
The N&W and the C&O announced their boards had approved a plan to merge the 
2 companies. the proposal also called for the creation of a N&W-C&O 
subsidiary, DERECO, INC,  which would form 5 subsidiaries to take over the 
Delaware & Hudson, Erie-Lackawanna, Boston and Maine, Reading and Central 
Railroad of New Jersey.

"In a joint statement N&W and C&O executives said the Erie-Lackawanna, 
Delaware & Hudson and Boston & Maine are interested in inclusion in the N&W 
system and the Interstate Commerce Commission in its order approving the 
N&W -Nickel Plate affiliation recognized these roads could apply for 
inclusion providing equitable terms could be developed. In view of the 
Erie-Lackawanna's financial losses since 1958 aggregating about $100 
million, its heavy deficit from commuter operations and its indebtedness of 
$334 million, there is no way short of EL's bankruptcy or substantial 
modification of EL's outstanding indebtedness that N&W acting alone could 
acquire an interest in EL which would be fair to N&W security holders and 
give reasonable assuredness of EL's viability. Without the Erie-Lackawanna 
or another connection at Buffalo, neither the Delaware & Hudson nor the 
Boston and Maine would be attractive acquistions for the N&W, espcecially if 
the PRR-NYC merger is consumated".

the next paragraph concludes"The plan did not envison the assumption of any 
of the debt of the fives mall lines. Also, the proposal was conditioned on 
federal legislation involving tax loss carry forward of four of the small 
lines; a permanent solution was required for the commuter train losses 
suffered by EL, CNJ and Reading and finally there would be no adverse change 
in the five projected subsidiaries financial condition"

Dereco made small profits untl PC closed the Maybrook NY gateway. The 
collapse of PC killed the N&W-C&O merger (which unltimately was to include 
B&O and WM as well) and that in turn led to Chessie and Norfolk Southern.

In short, the ICC did not order EL to go into N&W, it was allowed to as part 
of the NKP mereger. N&W and C&O knew for their merger to happen, they had to 
assure the ICC that the weaker northeastern systems wouldn't be left out in 
the cold and formed Dereco in a premptive strike. No one wanted E-L. The 
western roads wanted an eastern route to NYC and given PC's troubles EL was 
the only other option to consider,  but when one considered it, as ATSF was 
reported  to have done in the late 60's and then looked seriously in 1982-83 
at Conrail, it didn't look so good after all.

Barring unforseen circumstances I think we'll see UP or BNSF split into 2 
smaller systems before we see a true transcon in this country.  Too many 
people  lose out, from management to labor to shippers when the number of 
systems is reduced.

Frank

- ----- Original Message ----- 
From: "Schuyler Larrabee" <schuyler.larrabee_@_verizon.net>
To: "'EL Mail List'" <erielack_@_lists.railfan.net>
Sent: Saturday, January 31, 2009 9:24 PM
Subject: RE: (erielack) What shoulda been


> It's my understanding, Jim, that the EL did insist that they would be 
> irreparably harmed by the
> inclusion of the NKP in the N&W, and that they should be included in the 
> combination.  This would be
> in the minutes of the ICC hearings, I'd imagine.  Naturally, N&W 
> (Fishwick) was dead set against
> that, I expect because of the commuter issues.  So, DERECO was a way to 
> mollify . . . somebody . . .
> and to NOT take in the EL.  Or the D&H.
>
> I doubt that the ICC "ordered" N&W to take on the EL or anything like 
> that.  But I also think that
> the N&W proposed the DERECO "solution" to give the ICC a way to avoid a 
> Rock Island duration series
> of hearings.  Essentially it was a way to box up a "problem" so it could 
> be basically ignored.  They
> agreed to ignore the elephant in the corner of the room.
>
> SGL
>
>> > I think Jack Fishwick dreamt up Dereco.  N&W didn't want any part of 
>> > the
>> > EL
>> > debt.
>>
>> Same challenge as to Michael:
>>
>> Find some record that the ICC decided this should happen of its own
>> initiative or in an otherwise arbitrary and capricious manner.
>>
>> Mike cited William White -- but that's already thinking on some other 
>> lines,
>> like maybe EL was insistent on being included **in some manner** in the
>> NW-NKP-Wabash merger.
>>
>> That's a far cry from the ICC simply "ordering" something because with 
>> was
>> "presiding over the destruction of the railroads."
>>
>> So -- I'm always open to learning new things, not otherwise covered in 
>> the
>> history books.
>>
>> Cheers,
>> Jim
>>
>>
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>
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