How did mergers work? Specifically in the first half of the 20th century 1920-1960 to be exact… if three class Is wanted to merge into one large system what would be the obstacles??? If railroad execs got unions and shippers on board would that help??? I’m kinda trying to write the “history” of my railroad… thanks in advance…
Mergers and acquistions were controlled by the Interstare Commerce Commision until railroads were deregulated with the Staggers Act of 1980. (ICC was created by Congress in 1887.) … There were not very many mergers and acquistions before 1980 because of the lengthy and costly process required in order to gain ICC approval. … After 1980, the companies combined into the large railroads of today.
I’m not sure that they’d be considered mergers, but roads like the New York Central or Southern Pacific, for example, were comprised of many smaller roads. And don’t forget Penn Central and later, Conrail. The links will take you to brief histories of both, showing some of the early components of both roads
Wayne
The Brotherhoods will want job security but,the ones that have the most say is the shippers/receivers because they want ensured rail service and don’t forget other railroads may insist on trackage rights to some Cities and the short lines wants to be ensured their inbound cars will arrive in a timely fashion and empty car request will not go unheeded.
And after that you meet with the Feds and they can ok the merger or axe it for any just concern from the involved States and the shippers/receivers .
You can read about real life ones on the internet. Just go to company websites and read about them. Without a “Business Law Degree,” your eyes will glaze over after the first paragraph.
Check Wiki for the short and sweet explanations. No two mergers are the same and they fill rooms with documents.
What shape are rocks and how many sizes do they come in is the same kind of question. The devil is in the details and those are extensive in business.
i had read that the Reading had control for a period of time of the New Jersey Central and Lehigh Valley, later loosing it presumablyby simply buying stock in the those RRs. It later became controlled by the B&O for a period of time.
not the same as a merger, but is there much difference?
Deregulation didn’t really impact the ability to conduct mergers and acquisitions. Staggers was almost entirely over the railroad’s ability to set their own freight rates. Mergers and so on would have been outside the ICC’s pervue anyhow and been in the SEC’s world.
Thankfully Trains Magazine does a good job covering mergers in simple layman’s terms.
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Steven, don’t get too hung up on the details when writing your railroad history.
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When I was your age I wrote an extensive history of the SRATTON & GILLETTE that I would have thought was the be-all-end-all of the SGRR story.
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Back then it was an N scale Appalachian Coal Hauler set in 1968. Oh how things have changed…
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Now the only history the SGRR has is “It is a class 1 railroad that runs through this town right here, and by the way, it is August 3rd, 1954.”
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Your railroad will change. Having a history set in stone will stagnate your creativity.
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Be flexible. In 30 years you will have a better handle on what you want to model. Write the detailed/final history then.
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At least wait until you have a permanent layout.
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-Kevin
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In the old days railroads easily merged small railroads to form larger ones. The Santa Fe was pretty much built by buying out short lines.
From Wikipedia, Northwestern Pacific Railroad history, “The Southern Pacific and Santa Fe entered into a joint agreement in 1906 and merged 42 railroad companies between Marin and Humboldt Bay to create one railroad line stretching from Schellville, California to Eureka.”*
I agree. It seems like getting bogged down in the minutea of a fantasy RR is just one more distraction from working on real physical trains.
More paralysis of analysis. Steven. Write that down in big letters as a mantra to help you and hang it in your room:
STOP PARALYSYS OF ANALYSIS
Better to stop with the new tangents of distraction that have been the plague of the last 6 months and get out there and work on real model trains.
Nittanny Lion … It is true the Staggers Act greatly changed how railroad freight rates are determined. … The big change was a shift towards contract rates instead of common carrier rates with the railroads previously belonging to groups which controlled interline rates and divisions of revenue for interline shipments.
Regarding mergers and acquisitions, the ICC was responsible for approving applications for them. The process was long and costly. When I worked for CN’s GTW, I wrote portions of the applications to the ICC to acquire the DT&I and also to acquire 100% ownership of D&TSL. (GTW previously owned 50% of D&TSL.) . It was quite a chore. It even included an environmnetal impact study to comply with regulations. The DT&I acquisiton was in 1980 following the old ICC rules. Staggers was enacted in 1980 also.
Here is what the US Congress says in its summary of Staggers regarding mergers and acquistions. … "Sets forth procedures by which the Commission shall approve applications for consolidation, merger, and acquisition of control of and by rail carriers. " … That is on the summary page. The Act, of course, is a very long document . The ICC was later replaced with the Surface Transportation Board.
The railroads would have to figure out what they wanted to do.
They would file an application with the ICC.
Then the other railroads would file comments on the merger, the shippers would file comments on the mergers, the unions would file comments on the mergers.
The ICC would take years and years to hold hearings and reviews etc., etc. etc. and maybe 5-10 years later the merger might be approved, with conditions.
There are two types of mergers, end to end or parallel. An end to end merger is where the railroads touch but don’t operate on the same routes. The UP/WP merger was end to end. A parallel merger was where the railroads operate between the same cities. Penn Central was a parallel merger.
End to end mergers are easier than parallel mergers. Parallel merger are generally made to eliminate redundant facilities and routes. Unfortunately with the ICC rules, eliminating those redundant routes was next to impossible. The IC and GM&O merged to form the ICG and ended up with 4 or 5 parallel N-S routes across Mississippi. Unions generally fight parallel mergers tooth and nail because it generally means fewer jobs. Shippers are normally mixed, some fight mergers and some like mergers. Other railroads generally oppose mergers unless they can get something out of it, like trackage rights.
If you think that you got the unions and shippers “on board” that probably means everybody showed up at the meeting in chariots pulled by flying unicorns that traveled across rainbows.
What the railroads did was to buy interest in the other railroads as to assert control without an out right merger. That’s why there were “Lines”, New York Central Lines, Missouri Pacific Lines. Those were collections of railroads that coor
On my layout, the Great Northern continued on into the 21st century but was the majority owner of my branch line- The Minnesota, Sioux Lake & Western, which was based in St. Cloud, MN. This bit of alternate fiction allows me to have GN engines appear on the tracks as well as several other railroads, as my Sioux Lake maintenance facility handles repair jobs on an overflow basis from other locations.
You are the author of your railroad’s story- it goes in any direction you want it to- that’s part of the fun!
Cedarwoodron
For my layout set in the middle 50’s with both steam and desiels - I have advanced the merger of C&O, B&O and WM to that time period and any of those could and do run on my Western West Virginian. Along with an occasional visit by the West Virginia Northern, the Buffalo Creek & Gauley, and a stray Pittsburgh & West Virginia loco that continued down the Western Maryland.
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Well… All these years as a Model Railroader, and I never knew what “Lines” meant, in fact, I never even thought about it.
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Again, this brings up the questions… Just how much don’t I know? Everytime I read this forum I find out something else I did not know.
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-Kevin
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Sigh…Glad that’s in your HO world seeing the C&O,B&O and WM was merged under the CSX banner in '87.First the WM into the B&O then the B&O into the C&O then the C&O into CSX.
State laws also affect mergers. For instance Texas
https://tshaonline.org/handbook/online/articles/eqr01
“When the Texas Legislature passed the Law to Regulate Railroads in 1853, it required that the railroads operating in the state be headquartered in Texas. … Some, such as the Southern Pacific, Missouri Pacific, and the Santa Fe, retained the corporate names of Texas railroads they had acquired.”
The Southern Pacific bought the Texas and New Orleans in 1881 but because of Texas law the railroads were not merged until 1961.
The merger that created Burlington Northern was first attempted c.1905 but was nixed by the ICC. It was attempted several times thereafter, and was refused each time until finally being approved and taking place in 1970.
There were several proposals in the 1930’s to "rationalize’ the railroads in the NE, but they never came to pass.
The Reading controlled the Lehigh Valley in the late 1800’s, it lost it, then the PRR gained control, eventually the B&O gained control of the Reading.
The “robber baron” finaciers of the 1800’s controlled vast interlocking groups of railroads, but anti-trust filings ended up splitting them apart. Harriman controlled the UP, SP and IC, but had to divest the UP and IC ater an anti-trust suit against him.
Gould controlled dozens of railroads, the MP, IGN, Wabash, MKT, and DRGW.