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The Background

During the early 1970's, railroading in the northeast was in crisis. Penn Central, a product of a 1968 merger between the New York Central, Pennsylvania, and New Haven railroads, had declared what was at the time, the largest bankruptcy in American history on June 21st, 1970. Other northeastern railroads such as Ann Abor, Eire Lackawanna, Lehigh Valley, Reading, Jersey Central, and the Lehigh & Hudson River, around this same time. It was soon ruled that it would be impossible for Penn Central, and the other northeastern railroads to be reorganized in a traditional manner, so Congresses passed the Regional Rail Reorganization Act of 1973, also known as the 3R Act. The purpose of the 3R Act was to provide funding for the bankrupt roads, while also putting together a final system plan for the creation of the Consolidated Rail Corporation or Conrail. Over the next few years, several system plans where discussed for Conrail.

Preliminary System Plan

The first plan thought up by the USRA. This 1st version of Conrail would include Penn Central, Reading, Lehigh & Hudson River, Jersey Central, Ann Arbor, and the Lehigh Valley. The Eire Lackawanna, itself a product of a 1960 merger between the Erie and Delaware, Lackawanna & Western Railroads, was not to be included, as to provide Conrail some sort of competition in the northeast, more specifically the New York to Chicago Market.

Three Systems East Plan

In the Three Systems East Plan, the EL would be sold off to Norfolk & Western, which had held a controlling stake in the railroad though it's holding company DRECO until the EL declared bankruptcy in 1972. Portions of the Reading and Jersey Central would be given to Chessie System, as the Chessie had also held stakes in those two railroads until there own bankruptcies. The main problem here is that the N&W had very little interest in reacquiring the EL, thus dooming the plan.

Two Systems East Plan

Same as the Three Systems East Plan but EL would be sold to Chessie along with the Reading and the Jersey Central. The reason this fell through was the negations between Chessie's Hays T. Watkins and the EL unions ended up coming to nothing. Additionally, the cost of rehabilitating the three railroads seemed too great to the Chessie to be worth it. So the plan fell through.

Mid-Atlantic Railroad Company

Another attempt not to give Conrail a monopoly in the northeast, MARC was to consist of the Jersey Central, Reading, Lehigh Valley, and the Lehigh & Hudson River Railroads. The railroad was to work closely with the EL in order to compete against Conrail. What doomed this plan was the cost to the taxpayers was deemed too great by the government, and it fell through.

Sale of Delmarva trackage to the Southern

One of the more interesting ideas to arise out of the desire for a final system plan was the sale of PC's Delmarva trackage to the Southern Railway. Graham Claytor of the Southern wanted to purchase the Delmarva trackage as a way to gain better access to the Chemical plants of northern Deleware. The hope was to gain a quicker route via trackage rights over the Northeast Corridor, instead of using the costly Little Creek to Cape Charles Car Float. This was all apart of a plan for a merger with the Missouri Pacific Railroad, who had access to the rich oil fields of Texas. The Southern would have benefited even if they used the ferry. This had the same problem that the Two Systems Plan had, the PC unions failed to negotiate out a contract with the Southern.

Final System Plan (OTL Plan)

The Final System Plan was the plan that ended up being included for Conrail. All of the northeastern bankrupts would be rolled into one big system. The Deleware & Hudson would be given trackage rights to all of the major northeastern cities, to at least give the illusion of some sort of competition. In reality, Conrail was just one big monopoly. Conrail was created on April 1st, 1976. It turned its first profit in 1983, and that same year, the government sold it, only to be broken up between Norfolk Southern and CSX in 1999.

So what am I asking here?

Basically, I want to discuss what would have happened if Conrail wasn't a monopoly? What if one of the other system plans, or a combination of system plans, where implemented as the final system plan for Conrail? How would this effect railroad going forward? How would this affect future mergers?
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