First true mega-merger?

[Anonymous]

What was the first true mega-merger, for its day? Penn Central? Also what were the biggest mergers by decade (post 1900)?

Thanks in advance,
Tom

[coalminer3]

Here are a couple that predate PC

Erie and DL&W = Erie-Lackawanna (1960)

N&W and VGN (1959)

Then we have the combination of N&W-NKP-Wabash

work safe

[AltonFan]

QUOTE: coalminer3 informs us:
Here are a couple that predate PC

Erie and DL&W = Erie-Lackawanna (1960)

N&W and VGN (1959)

Then we have the combination of N&W-NKP-Wabash

Except for the N&W-NKP-Wabash, don't think mergers really qualify as mega-mergers. The first two mergers were basically local consolidations. N&W and Virginian basically operated in the same region. DL&W was confined to the Northeast, while Erie connected Chicago to that same region.

IIRC, Nashville Chatanooga and St. Louis merged with Louisville and Nashville in the late 1950s, but again this was a local consolidation. Some people also date the modern merger era from the merger of the Gulf, Mobile & Ohio with the Alton in 1948, but this was a merger of a Southern regional railroad with a Midwestern regional.

The N&W-NKP-Wabash could qualify as a mega-merger as NKP and Wabash were somewhat parallel railroads that connected western New York state with St. Louis, Chicago, and Omaha, and both railroads, despite their Northeastern terminals, were largely identified with the midwest. Their merger with Appalachian regional N&W changed the N&W from being a mine-to-tidewater coal road, and made N&W an Atlantic to Mississippi River frieght hauler.

In the late 1950s-early 1960s, the Minneapolis, St. Paul, and Sault Sainte Marie, the DSSSA, and the Wisconsin Central were finally consolidated into the Soo Line, but these railroads were all owned by Canadian Pacific and had been operated as a single entity for years by the time of the Soo Line consolidation.

[coalminer3]

I will agree with Altonfan, but it is kind of difficult to define what was meant by "megamerger for its day."

work safe

[CSSHEGEWISCH]

Considering the time period, the merger of the New York Central (Albany-Buffalo) and the Hudson River RR (New York-Albany) could be considered a mega-merger.

[AltonFan]

Perhaps Harriman's "Associated Lines", which included most of what is now Union Pacific, could be considered a preliminary to a mega-merger.

The Northern Pacific, Great Northern, and Chicago, Burlington and Quincy were ready to merge before World War II, but were prevented by the regulators.

I suppose the lines that were cobbled together into Southern Pacific could be considered an early mega-merger.

[Anonymous]

Thanks for the good info. I was looking to find out what/how the RR of 1900's were made up. I read alot about how the modern day RR were complied, but what were people talking about in 1940?

Thanks
Tom

[Anonymous]

Great question. A year early for your specific question and possibly considered out of left field by at least some modern standards (i.e., neither of them owned any substantial amount of actual track, if that really matters), but let me submit for your consideration the 1899 merger of the Pullman Palace Car Co. and the Wagner Palace Car Co., which consolidated the number 1 and number 2 players in the overnight travel market, as the first (or certainly one of the first) true railroad mega-merger. From a financial perspective, this was a merger of unprecedented and monumental proportions for its time and for numerous decades before and after. It resulted in Pullman's getting an effective monopoly on the national first class and tourist passenger travel market, which it never lost until the whole business went to pot in the 1950's (not a mean feat--this was the entire national commercial travel market, for all practical purposes, and believe it or not neither Pullman nor Wagner could legitimately claim an effective monopoly over it before they merged ). The merger also significantly enhanced the rolling stock manufacturing (freight and passenger) market lock owned outright by Pullman, who was the largest manufacturer of railroad rolling stock in the world at the time. Remember, in those days passenger cars were not produced sporadically as a side business for a few transit agencies. The merger was also rife with the requisite late 19th century financial shenanigans that accompanied such dealings, including massive stock inflations, double-dealing, and other such similar stuff (no SEC oversight!) that would probably make convicted Enron execs blush. I would submit that there was not another railroad merger of this proportion until Penn Central, or of such nationwide impact on a market segment until Amtrak, and the first one in 1899 obviously was far more successful than the latter two, despite Amtrak's reversal of market segment decline-something Penn Central never accomplished. John White has an extremely well-written and informative discussion of all of this in The American Railroad Passenger Car, and I heartily recommend it. People these days sometimes forget just how big that market really was in its heyday, since it seems to be so long ago. For decades thereafter, post-merger Pullman was the largest provider of overnight guest accommodations in the world., and they all rolled on steel wheels.

Hope this might be of some interest to you.

Best wishes for a safe and happy holiday season.

Dr. E. P. Hamilton III, P.E.

[Anonymous]

Good info. I did not know that (about Pullman). If Pullman owned the market on Passenger cars, how did Budd and other break in. What happened to Pullman? Why don't they make cars today?

Thanks,
Tom

[AltonFan]

During the 1920s, the government proposed merging the nation's railroads into a number of systems, meant to foster competition and viability, and "to equitably parcel out the weaker sisters". The subsidiaries of the Canadian lines were left out, and the Pennsylvania Railroad was a system by itself.

The plan never worked out, in part due to the fact some of the major lines went bankrupt, and in part because the PRR owned substantial stakes in many eastern railroads.

QUOTE: ...but what were people talking about in 1940?

"The Pennsylvania Railroad is big enough already."

QUOTE: What happened to Pullman? Why don't they make cars today?

I believe Pullman is still in the freight car business

Budd made its mark in the stainless steel passenger car business. (I believe they built the car bodies for the original Burlington Zephyr.) If I recall correctly, one of the owners of Budd was a director (possibly president) of the CB&Q.

[Anonymous]

Really good questions, guys. Pullman owned the first class passenger car market because they only bought from themselves (Boeing tried it too--that's where United Airlines came from!). This was a neat and immensely profitable little business strategy untiil Budd brought a Federal antitrust suit in the 1940's that resulted in a ruling against Pullman in 1947. As a result of the ruling, Pullman had to dump either the car manufacturing business or the sleeper operation, and they chose to dump the sleepers (they were allowed to contract with the railroads to operate them, which they did for many roads until the 1960's). Mixed review: probably great for Pullman in the "long" run, but there is a legitimate debate as to whether it put the knife in the passenger business. This does not mean that the Pullman breakup killed most passenger trains all by itself--it's a far more complex matter--but it had all sorts of long-term and global effects, but that's a topic for another day. Pullman's freight car business was immense at the turn of the century.

Budd and Michelin built a bizarre rubber-tired railcar in the late 20's, that had little (read, zero) impact on the market. Budd built primarily truck wheels. They figured out how to weld stainless steel economically and reliably (the Shotweld process), which they patented-this was a quantum leap in technology and no one else could come close. CB&Q President Ralph Budd, no relation (as I recall) to Edward G. Budd of Budd. Budd #1 was looking for a way to reverse the effects of the Great Depression on CB&Q's passenger business, and Budd #2 was trying again to get into the railcar market. Sounds like a marriage, and the Zephyr was the offspring-Dan, you're completely correct on this. Where Budd and Pullman got crosswise was when Budd built the original stainless steel first-generation articulated Zephyr sleepers for the DZ, and then tried to expand into the rest of the streamliner market. By the time the Budd shotweld patent ran out, the passenger car business was in serious decline. Pullman built some all-ss cars starting in 1954-55 for the Texas Special and Meteor (the charter car J. Pinckney Henderson is the first one, and it's still running), but the fastening technology didn't even come close to Budd's.

Tom, like a lot of other railroad suppliers, P-S got absorbed, split up and parceled out by its owners, primarily due to market-related profitability problems. An unsolicited commercial: this month's Trains has a very good piece on why the freight car market is as volatile as it is, and it profiles all of the remaining players in the US market. Good reading, but it is somewhat technical and some of you might think it's dry, but I strongly recommend it as being extremely informative if you want some good insight into why things happen the way they do today.

Hope this helps. Cheers.

Dr. E. P. Hamilton III, P.E.

[CSSHEGEWISCH]

The proposed mergers of the 1920's were the outgrowth of amendments to the Interstate Commerce Act in 1920. As a whole, they were a case of connect the dots and pairing off weak carriers with stronger carriers, which would have been to the detriment of all concerned.

The president of Budd and the president of the CB&Q had the same surname but were not related.

[jamesedwbradley]

You've all overlooked the first true mega-merger as the term is understood today - reach back into the 1890s (I think the year was 1894 but not sure) when the Richmond & Danville/Richmond Terminal was consolidated with the East Tennessee, Virginia and Georgia and other lines to form the Southern Railway Company; that Company in turn controlled several others better known in the modern era
( Alabama Great Southern, Cinncinnati New Orleans & , operating timetables, and other official documents for decades afterward as they were officially operating companies),
forming the Southern Railway System. This first mega-merger I believe was at the behest of J. Pierpont Morgan and was one of his many, many financial manipulations.
James E. Bradley Hawk Mountain Chapter National Ry. HIstorical Society

[jamesedwbradley]

Missing language in above post: "Cincinnati New Orleans & Texas Pacific, New Orleans & Northeastern were among the better known ones, quoted in tariffs and operating timetables for decades after as they were official operating companies..."

[Anonymous]

Guys - thanks for all the great info. I learned a ton of stuff. With the creation of Southern, when did Seaboard and ACL come about?

[Anonymous]

Another big early merger that no one's mentioned yet is the creation of Canadian National Railways in 1923. It was formed from the Canadian Northern, Grand Trunk Pacific, Intercolonial and other smaller lines that were part of the Canadian Government Railways.

[Anonymous]

according to my records, Penn Central was formed in 1968. In 1964, four years earlier, Seven Seperate lines formed a larger Norfolk & Western These lines were:
Norfolk & Western
Nickel Plate
Virginian
Wabash
akron, canton & Youngstown
Wheeling & Lake erie
Pittsburgh & West Virginia

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1963 Southern got the "Central Georgia" and the "Cinncinati, New Orleans & Texas Pacific"
in 1982, the N&W merged with Southern to form the Norfolk Southern.
Seaboard air line & Atlantic Coast Line formed the Seaboard coast line in 1967.
Chessie was formed in '73 from B&O, C&O, WM, & Pere Marquette
and in 1970, Burlington Northern was formed from 6 lines.