The P&WV Hi-Line

Rich_S · Joined: 23 Aug 2011 Posts: 253 Location: Baden, PA

In 1964, the N&W purchased the Wabash and the NKP but only leased the
P&WV, does anyone know what the reason was behind this decision?
Why didn't the N&W also purchase the P&WV?
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Regards,
Rich S.

jayrod · Joined: 19 Oct 2007 Posts: 494 Location: Akron, OH

Never saw it in writing, but, simply put, I surmise that N&W didn't really want the P&WV as it would effectively be a stub end branch without a large amount of traffic to add to the entire system and had a higher than average maintenance expense. However, the cheap lease price and favorable terms were attractive enough to give it a go.
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Eric Schlentner
Aka, jayrod

Rich_S · Joined: 23 Aug 2011 Posts: 253 Location: Baden, PA

jayrod · Joined: 19 Oct 2007 Posts: 494 Location: Akron, OH

When the N&W proposal to ICC was put together to acquire NKP & Wabash in 1961, P&WV wasn't even considered.

Purchasing P&WV outright would likely have not gotten a return on their investment. The AJs were what barely kept P&WV's lights on. Nothing but red ink in their future. When P&WV proposed the lease, apparently that was attractive enough to N&W to try it.
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Eric Schlentner
Aka, jayrod

Rich_S · Joined: 23 Aug 2011 Posts: 253 Location: Baden, PA

[quote="jayrod"]When the N&W proposal to ICC was put together to acquire NKP & Wabash in 1961, P&WV wasn't even considered.[/quote]

Hi Eric, According to the P&WV Railway book, I don't think that is a true statement. Under the section "1961" (page 239) the book states "Continuing a search for a compatible merger partner, the railroad found a likely candidate in the Norfolk & Western." "Serious negotiations got underway as the N&W was trying to complete it's rail unification project and found the High and Dry property to be of more than a passing interest."

Then in the 1962 section (page 240) the book states "After much discussion with the Norfolk and Western Railway Company, a tentative lease agreement was formulated in March. It was to be one of the most significant documents in P&WV History." "Details of the lease proposal called for a cash rental of $915,000 per year for 99 consecutive years".

Now yes I agree there is one paragraph that states on page 241,
"When the plan for this new system was first made public (The book does not give a date of when this first plan was made public), the P&WV was not a part of it and filed information with the ICC opposing the consolidation on the grounds that it would be detrimental to the P&WV"

To me this contradicts the statement indicating the P&WV had found a merger partner in 1961.

Until this point in the book, it seems like the P&WV had found a dancing partner with the N&W in 1961, but the above paragraph makes it sound like the P&WV had to force the N&W to the bargaining table? And then I still wonder why a lease of the Right of way when the lease agreement specified and outright sale of the equipment to the N&W? I have to wonder, if you're not that interested in the property, why purchase the locomotives and cars? Why not just lease the right of way? This is just something I've never fully understood.
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Regards,
Rich S.

jayrod · Joined: 19 Oct 2007 Posts: 494 Location: Akron, OH

I've seen the actual 1961 N&W proposal to the ICC. P&WV was not a part of the original document. I would imagine that P&WV opposed the merger to buy time to pitch a deal to N&W and petition the ICC for inclusion in 1962 since the logical merger/buyout partner would have been NKP and P&WV would not have survived on its own. Keep in mind that N&W was very tight with a penny and that P&WV had to get the best deal they could for their stockholders. The alternative was bankruptcy, especially with how long the ICC took to rule on anything - four years in this merger case. AC&Y found itself in the same position of being a small fish surrounded by whales and successfully petitioned for outright inclusion. In hindsight, I bet NS wishes N&W bought P&WV outright.

If I could find who has the documentation again - it's in a library collection somewhere - we could answer the question definitively.

As for the book, sometimes authors wax a bit poetic. If N&W was eager to acquire P&WV and AC&Y, they would have been included in the initial proposal.

All IMHO, mind you.....
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Eric Schlentner
Aka, jayrod

jayrod · Joined: 19 Oct 2007 Posts: 494 Location: Akron, OH

More thoughts and info on the subject:

AC&Y got included into the final petition of N&W as a merger candidate since it had access to all the major rubber companies in Akron, OH and was profitable at the time.

P&WV was in the red and originating traffic was nothing to get excited about. All it really offered was access to Pittsburgh (for what it was worth given the routing) and a bit of bridge traffic. But it was cheap to lease.
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Eric Schlentner
Aka, jayrod

jayrod · Joined: 19 Oct 2007 Posts: 494 Location: Akron, OH

Since there is a lot of misinformation that floats around dispensed by armchair "experts", the 1964 N&W merger went down like this:

The NKP was merged outright.

N&W bought PRR's Sandusky line to reach the NKP.

Control of the AC&Y was purchased. AC&Y existed on paper until the 1982 merger of N&W and SOU at which time AC&Y was also merged.

The Wabash was leased from PRR whose Pennsylvania Co. owned a controlling interest. As a leased line, Wabash stock was still traded until 1991 when it was finally merged.

P&WV Railway was leased. The Pittsburgh & West Virginia Railroad was formed to own the property and collect rent. The lease was transferred/subleased to the new W&LE in 1990. The P&WV Railroad is now a subsidiary of Power REIT.

I still haven't found the original merger application but I know it's out there somewhere....
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Eric Schlentner
Aka, jayrod