Controversial Mergers

[BRAKIE]

QUOTE: Originally posted by whitman500

I'm definitely in the minority on this one, but I think in real practical terms the consolidation of the US railroad industry was both necessary and beneficial. After WWII, the railroads got the rug pulled out from under them through a combination of federally-funded highways, the rise of air transport and the persistence of antiquated regulation by the ICC. Several of the truly big disasters in post-WWII railroading like Penn Central and Rock Island were partly caused by the ICC's ludicrously long review periods for mergers.

The fact of the matter is that the inevitable shift in transportation revenues away from railroads in favor of trucks, cars and planes meant that there was a huge overcapacity problem in the rail system by the late 1950s. If the ICC had been more reasonable in allowing consolidation (as well as pricing flexibility, passenger route termination, etc.) prior to the Staggers Act, then we would probably have a larger, healthier railroad industry today. Instead, a lot of railroads without a future limped along for years waiting for merger approval while spending nothing on improving their equipment or quality of service and bleeding market share to non-railroad alternatives. In the long run, the mergers probably saved the industry by allowing the significant reduction in fixed costs required by the huge drop in demand that took place after WWII.

Absolutely and the best reply to this topic..That is the exact reasons the railroads had to start merging or die off one by one.After the RI died a lonely death and there was several more on the brink of bankruptcy or was bankrupt.The Milw also died.
I believe many doesn't recall the 50s,60s70s and the early 80s wasn't railroad friendly and that climate has improved much in the last 25 years.
Ever think of how many railroads would be left without mergers? Just look at the truck lines that has cease to exist over the last few years.