What do a Philadelphia legal loophole, the Interstate Commerce Commission, and the largest bankruptcy of its day have to do with each other? They all play an important part in the Northeast’s railroad history.

Penn Central was one of the largest railroad corporations in the northeast in its time. But how did it come to be?

One of its original companies, the Pennsylvania Railroad, was originally created to keep the New York Central Railroad and the Baltimore & Ohio Railroad from expanding into Pennsylvania. The Baltimore & Ohio Railroad was already working in the Pennsylvania legislature to approve expansions into the area. In fact, Baltimore & Ohio had been approved in the 1846 Act to expand their Pennsylvania operations when a loophole allowed lawmakers to rush through legislation and create the Pennsylvania Railroad, voiding the previous approval.

The New York Central Railroad covered most of New York State and was one of the reasons New York City became such an important financial center. The Hudson River Steamboats, Erie Canal, and the railroad lines crossing the state made it easier to transport goods and people to NYC than ever before. When New York Central Railroads combined with Hudson River Railroads to make a direct rail connecting New York City, Albany, and Buffalo, NYC’s hold on industry and trade became – and New York Central Railroad became the backbone of New York State travel.

In 1962, the Pennsylvania Railroad and the New York Central Railroad agreed to merge. It wasn’t until a Supreme Court decision in 1968 that they were officially able to merge, becoming the “Pennsylvania Railroad-New York Central Railroad.” For brevity’s sake, the name was changed almost immediately to Penn Central Railroad. However, this merger was not as simple as it seemed. As a requirement of the merger by the Interstate Commerce Commission, Penn Central acquired a bankrupt railroad company as well. The New York, New Haven, & Hartford Railroad Company added on to an already tenuous merger. Penn Central gained 40,000 miles of track in 16 states, as well as a large amount of debt. By 1968, Penn Central was rife with financial and service issues.

Eventually, this led to collapse for Penn Central. In 1970, they filed for bankruptcy, unable to turn around their financial troubles. It was the largest bankruptcy in U.S. history at the time, with losses to shareholders and investors alone reaching billions of dollars.

This is where the U.S. government stepped in, and where the largest number of mergers and name changes happened. In 1973, Congress created the U.S. Railway Association to reorganize the Northeast’s plethora of bankrupt railroad systems. This included not just Penn Central but also Erie Lackawanna Railroad, Central Railroads of New Jersey, Lehigh & Hudson River Railroad, Lehigh Valley Railroad, Pennsylvania Railroad-Reading Seashore Lines, and the Reading Company. In 1976, these lines were all combined into the Congress-created Consolidated Rail Corporation, also known as Conrail. Conrail eventually sold all passenger lines and in 1983 became solely a freight company.

Although Penn Central became a part of Consolidated Rail Corp, the Penn Central still existed as a company until 1994. Penn Central Corporation contained all of the non-railroad investments that the company had made, including real estate and insurance. In 1994 they changed names to American Premier Underwriters. It was bought by the American Financial Group and remains as a subsidiary.

The experienced attorneys at Doran & Murphy have represented thousands of railroad workers under the Federal Employers’ Liability Act (FELA). If you believe you were exposed to asbestos, diesel exhaust, silica, creosote, welding fumes or other harmful chemicals during your work for the railroad and have been diagnosed with cancer but are worried about how all these different company transitions affect your claim, contact us to discuss your legal rights.

Sources:

“Guide to the Penn Central Transportation Company Records.” Guide to the Penn Central Transportation Company Records, The New York Public Library: Humanities and Social Sciences Division: Manuscripts and Archives Division , 2006,
https://www.nypl.org/sites/default/files/archivalcollections/pdf/penncentral.pdf

“A Brief History of Penn Central.” A Brief History of Penn Central, Penn Central Railroad Historical Society , www.pcrrhs.org/proto/corporate/brief-history-penn-central.