Penn Central filed for bankruptcy in 1970, leading to the creation of Conrail.
Penn Central Transportation Company entered bankruptcy on June 21, 1970, after a merger of the Pennsylvania Railroad and the New York Central Railroad failed to overcome declining passenger traffic, competition from highways and airlines, high labor costs, and outdated infrastructure.
At the time, it was the largest corporate bankruptcy in U.S. history. The railroad’s collapse threatened freight service across the northeastern United States and became a major issue for the federal government.
Congress created the United States Railway Association, which designed a new system from several bankrupt railroads. Consolidated Rail Corporation, known as Conrail, began operations in 1976. Conrail was later privatized in 1987 and divided between CSX and Norfolk Southern in 1999. Penn Central is therefore an important example of bankruptcy prompting large-scale public intervention in transportation.