American railroad company Penn Central Transportation Company declared bankruptcy on June 21, 1970, two and a half years after its formation by the merger of the New York Central Railroad and the Pennsylvania Railroad. At the time, this was the largest bankruptcy in American history.[1] Penn Central was responsible for a third of the nation's passenger trains and much of the freight rail in the Northeastern United States, and its failure would have devastating impacts on the Northeast's economy.
Factors leading to the bankruptcy included incompatible corporate cultures among the merger partners, excessive and duplicative rail assets, the departure of industries from the Rust Belt, and the Interstate Commerce Commission–mandated absorption of the bankrupt New York, New Haven and Hartford Railroad at the end of 1968.[1]
Along with other failed railroads in the Northeast, Penn Central was absorbed by government-formed Conrail in 1976, with a mandate to profitably operate the assets of its bankrupt predecessors. Redundant or unprofitable assets were abandoned or sold, and Conrail succeeded in turning a profit.[2]
- ^ a b Drury, George (May 1, 2023). "Penn Central history remembered". Classic Trains Magazine. Retrieved August 12, 2023.
- ^ "Conrail history remembered". Classic Trains Magazine. April 7, 2022. Retrieved August 12, 2023.