Conrail for sale
Uncle Sam bought himself a railroad in 1976. Now, with Conrail operating slightly in the black, he wants to sell it - maybe. Before any of the 13 bids for the giant rail system stretching from Boston to St. Louis and from Charleston, W.Va., to Montreal can be accepted, Congress will have to pass enabling legisation.
The conditions and the timing of the sale should be very carefully considered. Since becoming the major stockholder in a new system authorized by Congress and formed from six bankrupt railroads, the government has put more than $7.5 billion into Conrail. The huge line, serving 15 Eastern and Midwestern states, lost $1.5 billion between 1976 and 1980. But in 1981 it made $39 million , and last year profits totaled $313 million.
Why sell a system that is providing essential freight service to a wide area and commuter service in some Northeast cities, especially just as it begins to pay back some of the billions of taxpayers' money invested in it?
Economic philosophy is a major reason. The Reagan administration doesn't believe the government should control a major part of what has traditionally been a free enterprise in America. Indeed, some critics have seen Conrail as a step toward eventual nationalization of US railroads. Such was not intended either by Congress or the White House when Conrail was formed. And it doesn't make sense for Uncle Sam to retain control and management of the system while the rest of the railroads, apart from Amtrak, remain in private hands. Also, the trucking industry, a significant competitor of the railroads, should not have to contend with a government-run line.
What must be guaranteed is that the government obtain the best possible deal from the eventual buyer and that responsible management of the line be assured. The 13 bids range from $1 billion plus proceeds from tax- benefit sales to $7.6 billion (but only $1.35 billion immediately) for a rail system with more than $5 billion in assets.
Conrail management has put three conditions on the sale: that essential service be maintained, financial strength ensured, and the best return obtained for the government's investment. No deadline has been set, but a bid could be accepted by the end of July.
Congress should take a hard look at any proposal put before it. One influential congressman suggests that, with profits rising, Conrail might bring a much better price next year.
That's an idea worth considering. A little marketplace thinking wouldn't hurt.
Is hope for passenger service next?
