Nostalgia & History > Why Didn't NYC Purchase the WM and VGN?

Good Morning:

Why didn't New York Central buy the Western Maryland Railway and the Virginian Railway? The WM would have given NYC access to coal fields and an entry to Baltimore. The Virginian would have provided more coal business and access to the Port of Norfolk. Both roads look like they would have fit nicely into the NYC system. Did they ever try to make a move on the roads? I sometimes wonder if these lines would have helped save the NYC.

Thank you in advance.

PRR_4859 Wrote:
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> Good Morning:
>
> Why didn't New York Central buy the Western
> Maryland Railway and the Virginian Railway?

Maybe because the NYC didn't have any money?

The
> WM would have given NYC access to coal fields and
> an entry to Baltimore. The Virginian would have
> provided more coal business and access to the Port
> of Norfolk. Both roads look like they would have
> fit nicely into the NYC system. Did they ever try
> to make a move on the roads? I sometimes wonder
> if these lines would have helped save the NYC.
>
> Thank you in advance.

C&O controlled a substantial block of the Western Maryland stock from the 1950s onward, so any New York Central deal would have to include C&O's approval. And the ICC.

That wasn't likely to happen.

Lackawanna484 Wrote:
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> C&O controlled a substantial block of the Western
> Maryland stock from the 1950s onward, so any New
> York Central deal would have to include C&O's
> approval. And the ICC.
>
> That wasn't likely to happen.

It was the B&O.

The NYC didn't physically connect with either of these two railroads, did it?

Didn't NYC's P&LE interchange with WM at Connellsville, PA ?
and NYC and Virginian at Deepwater, WV ?

I'm a little hazy on this.



Edited 1 time(s). Last edit at 09/18/17 07:16 by train1275.

train1275 Wrote:
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> Didn't NYC's P&LE interchange with WM at
> Connellsville, PA ?
> and NYC and Virginian at Deepwater, WV ?
>
Yes, they did.

Hi PRR_4859 and everyone else here:
The Western Maryland Railway was owned by the B&O for many years and then when the C&O purchased the B&O, technically the C&O would have the say about selling the Western Maryland stock. I was a shareholder of WM until the remaining outstanding shares were called in by CSX for cash. Anyhow most historians and knowledgeable people feel that since the Norfolk & Western Railroad operated trains into Hagerstown, Maryland and then their locomotives and cars continued down into Port Covington in Baltimore, that the N&W should have been able to merge the WM into their system. Even though the stock was owned and controlled by Chessie, the ICC should have made the merger of the WM go to the N&W to keep some competition, especially here in Baltimore. Trust me, if that had happened, it would be much different today. However since the N&W merged with the Southern to form Norfolk Southern, they get into Baltimore and the seaport running over Amtrak's Northeast Corridor. As rail fans go, it would have been better to have the Norfolk Southern coming into Baltimore over their own line which should have been the Western Maryland. And to prove the point, look how CSX deliberately abandoned the WM, not only on their main line that paralleled the B&O, but also the line that ran down to Elkins, West Virginia which caused towns such as Thomas, W.V. to loose rail service. Many industries lost rail service and were forced to ship by trucks. Many of us still wonder how much longer will the remaining WM operations coming into Baltimore will exist?
John in White Marsh, Maryland



Edited 1 time(s). Last edit at 09/18/17 07:54 by ClubCar.

On of my father-in-law's pet peeves was wanting people to just say they didn't know the answer instead of making something up.

There is a lot more railroad history than post-1950. Back in early 1929, the NYC looked at buying the VGN. It's easy to read about in the online newspaper archives. Basically the towns, like Newport News, felt the C&O would be a better suitor than the NYC. This was back when all the Van Sweringen railroad merger talk was happening. An NYC-VGN merger was considered too circuitous and long compared to a C&O-VGN merger on getting to the Midwest and Great Lakes.

If you go back pre-Depression, you probably can find talk of most railroads thinking of merging with one another. Some gain little traction. You don't hear talk of the proposed SP-SCL merger anymore.

As for the NYC & WM, if you go back to 1911, you can read about the NYC not being satisfied with their traffic agreement between the WM and P&LE and wanting to look into direct ownership of the WM. Back then everything is fickle. Soon after, the NYC decided they might look at the L&N instead, which upsets the WM.

The B&O acquired control of WM with ICC approval that had to be secured beforehand. Therefore, it would be completely unheard of for the ICC to force divestiture. However, if the ICC did nevertheless order divestiture, the courts in all probability would have reversed their order because it would have benn contradictory.

The VGN was more valuable to the N&W than to the NYC. Given N&W's financial strength and the advantages offered through a VGN acquisition, the NYC would not have prevailed in a bidding war.

In reality, NYC's acquisition of WM and VGN was out of the realm of possibility.

ALLEN

If you can find it train shows or used book stores, pick up a copy of Frank Wilner's Railroad Mergers History Analysis, Insight. This book covers all proposed and actual mergers, and will answer any questions about the why where for why some merger proposals went nowhere, and others came into being.

krm152 Wrote:
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> The B&O acquired control of WM with ICC approval
> that had to be secured beforehand. Therefore, it
> would be completely unheard of for the ICC to
> force divestiture. However, if the ICC did
> nevertheless order divestiture, the courts in all
> probability would have reversed their order
> because it would have benn contradictory.
>
> The VGN was more valuable to the N&W than to the
> NYC. Given N&W's financial strength and the
> advantages offered through a VGN acquisition, the
> NYC would not have prevailed in a bidding war.
>
> In reality, NYC's acquisition of WM and VGN was
> out of the realm of possibility.
>
> ALLEN

Actually the ICC wouldn't allow the B&O to exercise control of the WM and as a result, had to hold it's shares in a trust.  This changed in the 1970's.

krm152 Wrote:
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> "...it would be completely unheard of for the ICC to
> force divestiture. However, if the ICC did
> nevertheless order divestiture, the courts in all
> probability would have reversed their order
> because it would have benn contradictory....in reality,
> NYC's acquisition of WM and VGN was out of the realm of possibility.">

Allen you hit the nail on the head - ClubCar's post, and believe me, he's made this same point many, many, many times on TO.com, just isn't valid. Apparently "knowledgeable people and historians" on the subject choose not to accept this reality. For arguments sake, let's say that somehow, someway, N&W would have ended up with the Western Maryland. It would still have ended up as it is today - a hiking and biking trail.

Owning shares in a trust was an old time blocking technique. The target couldn't be bought by someone else (since you owned the key shares) but you couldn't direct operations or exercise control.

Pennsylvania Railroad had a similar deal with N&W and the dividends were Pennsy's life support for years.

Posted from Android

Lackawanna484 Wrote:
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> Owning shares in a trust was an old time blocking
> technique. The target couldn't be bought by
> someone else (since you owned the key shares) but
> you couldn't direct operations or exercise
> control.
>
> Pennsylvania Railroad had a similar deal with N&W
> and the dividends were Pennsy's life support for
> years.
>

And deals/agreements/understandings -- whatever -- with Wabash & Lehigh Valley also, IIRC?

Pat from Littleton, Colorado

Xtra276West Wrote:
-------------------------------------------------------
> Lackawanna484 Wrote:
> --------------------------------------------------
> -----
> > Owning shares in a trust was an old time
> blocking
> > technique. The target couldn't be bought by
> > someone else (since you owned the key shares)
> but
> > you couldn't direct operations or exercise
> > control.
> >
> > Pennsylvania Railroad had a similar deal with
> N&W
> > and the dividends were Pennsy's life support
> for
> > years.
> >
>
> And deals/agreements/understandings -- whatever --
> with Wabash & Lehigh Valley also, IIRC?
>
> Pat from Littleton, Colorado


Lots of old strategies to keep your friends close...

Why Didn't NYC Purchase the WM?

Because it was not for sale.

The capital expenditure required to complete the Connellsville Extension, one of the last components of George Gould's dream of a true transcontinental railroad, triggered the Gould Syndicate collapse, which forced the Western Maryland Railroad into bankruptcy. After it was reorganized as the Western Maryland Railway, the Baltimore and Ohio acquired 43% of the outstanding shares of common stock. As was previously mentioned, the ICC required B&O to put their ownership shares in a non-voting trust and did not allow B&O to control WM.

B&Os ownership preceeded the Western Maryland "Alphabet Route" operations by decades, so the child WM became a direct competitor to it's parent B&O. That condition lasted until the Chessie merger. Since N&W had acquired most of the midwest Alphabet Route connecting railroads, there was no way B&O was going to let N&W get control of WM and a pathway to the Port of Baltimore.

Almost immediately after the merger, Chessie started the elimination of redundant Western Maryland track. One of the 1st segments to go was the Connellsville Extension. The only consolation N&W got was trackage rights over the B&O (Alphabet Route, now CSX) from Connellsville to Hagerstown. Those trackage rights remain to this day.

Lackawanna484 Wrote:
-------------------------------------------------------
> Xtra276West Wrote:
> --------------------------------------------------
> -----
> > Lackawanna484 Wrote:
> >
> --------------------------------------------------
>
> > -----
> > > Owning shares in a trust was an old time
> > blocking
> > > technique. The target couldn't be bought by
> > > someone else (since you owned the key shares)
> > but
> > > you couldn't direct operations or exercise
> > > control.
> > >
> > > Pennsylvania Railroad had a similar deal with
> > N&W
> > > and the dividends were Pennsy's life support
> > for
> > > years.
> > >
> >
> > And deals/agreements/understandings -- whatever
> --
> > with Wabash & Lehigh Valley also, IIRC?
> >
> > Pat from Littleton, Colorado
>
>
> Lots of old strategies to keep your friends
> close...

The Lehigh Valley was acquired to give the PRR some sort of access to the anthracite coal business and the Wabash was to make up for the PRR's rather poor exposure to Detroit's auto business.  The later is also why they became involved with the DT&I.

NYSWSD70M Wrote:
-------------------------------------------------------
> Lackawanna484 Wrote:
> --------------------------------------------------
> -----
> > Xtra276West Wrote:
> >
> --------------------------------------------------
>
> > -----
> > > Lackawanna484 Wrote:
> > >
> >
> --------------------------------------------------
>
> >
> > > -----
> > > > Owning shares in a trust was an old time
> > > blocking
> > > > technique. The target couldn't be bought by
> > > > someone else (since you owned the key
> shares)
> > > but
> > > > you couldn't direct operations or exercise
> > > > control.
> > > >
> > > > Pennsylvania Railroad had a similar deal
> with
> > > N&W
> > > > and the dividends were Pennsy's life
> support
> > > for
> > > > years.
> > > >
> > >
> > > And deals/agreements/understandings --
> whatever
> > --
> > > with Wabash & Lehigh Valley also, IIRC?
> > >
> > > Pat from Littleton, Colorado
> >
> >
> > Lots of old strategies to keep your friends
> > close...
>
> The Lehigh Valley was acquired to give the PRR
> some sort of access to the anthracite coal
> business and the Wabash was to make up for the
> PRR's rather poor exposure to Detroit's auto
> business.  The later is also why they became
> involved with the DT&I.

Lehigh Valley also served as a flanking movement for Pennsy against both Lackawanna and Reading Company.

Not unlike the "Great Game" among Turkey, Russia, and the United Kingdom in obscure places like the Khyber Pass, Afghanistan, Mesopotamia/Iraq, Iran etc in the 1800s. We still feel echoes of that today...