The Fall of Penn Central and the Rise of Conrail: Corporate Failure and the Politics of Deregulation and Nationalization in the 1970s

This essay argues that the Penn Central merger was an ill-conceived idea that was doomed by larger economic factors, poor management, and outdated practices and regulations. Penn Central’s failure forced the government to step in to preserve the vital pieces of infrastructure contained within Penn Central. The government decided that nationalization, in the form of Conrail, was the best route to take because Penn Central could not be reorganized under bankruptcy protection. Conrail’s management, helped by railroad deregulation in the form of the Railroad Revitalization and Regulatory Reform Act and the Staggers Act, led the company to profitability and enabled its privatization. It ultimately helped to preserve railroads in the northeast United States. The story of Penn Central and Conrail serves as a case study in the process of American industrial decline, the transition from New Deal Keynesianism to Reaganite neoliberalism, deregulation and the changed relationship between government and business that accompanied it.