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                                 CONRAIL INC.

               (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                         NORFOLK SOUTHERN CORPORATION

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                                THE REGISTRANT)

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                                [Newspaper Ad]

                      TO PARTICIPANTS IN CONRAIL'S ESOP

                           NOW IS THE TIME TO ACT.

                           [Norfolk Southern Logo]

   Dear ESOP Participant:

   Say "NO" to the CSX/Conrail deal at the shareholders' meeting
   scheduled for January 17.  Instruct the ESOP Trustee to vote your
   shares AGAINST the proposal to "opt out" of the Pennsylvania Fair
   Value Statute and the adjournment proposal.

   Your ESOP vote is very important because each ESOP share in your
   account represents a significantly greater voting interest--by our
   calculations, equal to at least seven shares.  This is because your
   instructions to the Trustee direct the voting of: 1) ESOP shares
   allocated to your account, 2) ESOP shares not yet allocated to your
   account, 3) any ESOP shares that are not voted, and 4) Employee
   Benefits Trust shares.

   Remember, the ESOP Trustee is required by law to keep your vote
   confidential.

   Here are three good reasons to instruct the ESOP Trustee to vote
   AGAINST the "opt out" proposal.

   1.   LARGE REDUNDANCIES COULD ADD UP TO LOST JOBS

        *  There is substantially more overlap with a CSX/Conrail system
           than there is with a Norfolk Southern/Conrail system.

        *  A merger between CSX and Conrail would eliminate competitive
           services in 64 cities, including Philadelphia, Baltimore,
           Youngstown and Pittsburgh.

        *  Conrail's Hollidaysburg and Altoona shops are within 70 miles
           of CSX's facilities at Cumberland, MD.

   2. NORFOLK SOUTHERN VALUES ITS EMPLOYEES

        *  Since the formation of Norfolk Southern in June 1982, we have
           matched people to needs through attrition, voluntary
           separation and early retirements and have avoided massive
           layoffs and involuntary separations.

        *  Norfolk Southern is committed to maintaining a major
           operating presence in Philadelphia, as we have done in
           Roanoke, Virginia and Atlanta, Georgia -- major operating
           centers for Norfolk Southern's two predecessor railroads.

        *  Norfolk Southern and Conrail have fully funded, healthy
           pension funds, ensuring peace of mind for both employees and
           retirees.  CSX, on the other hand, was recently named again
           as having one of the nation's 50 largest underfunded
           pensions.(1)

        *  Norfolk Southern has the best employee safety record of any
           major rail carrier.

   3. NORFOLK SOUTHERN'S $115 ALL-CASH OFFER FOR CONRAIL SHARES IS THE
      SUPERIOR OFFER

        *  Norfolk Southern's $115 all-cash, all-share offer--with
           prompt payment through use of a voting trust--is worth 18%(2)
           more than CSX's current deal.

   Your vote is important.  If you have already sent in Trustee
   instruction card in response to the Conrail solicitation, you may
   revoke it and vote AGAINST the proposals by signing and dating the
   GREEN instruction card previously sent to you and mailing it to the
   Trustee.  It's the latest dated instruction card that counts.  The
   Trustee's deadline for receiving your instructions is January 15.

   Sincerely,

   NORFOLK SOUTHERN CORPORATION

   SAY "NO" TO THE CSX/CONRAIL MERGER BY VOTING TODAY.  INSTRUCT THE ESOP
   TRUSTEE TO VOTE YOUR SHARES AGAINST CONRAIL'S AMENDMENT PROPOSAL AND
   THE ADJOURNMENT PROPOSAL.

                           [Norfolk Southern Logo]

   Important: If you have any questions, please call our solicitor,
   Georgeson & Company Inc. toll free at 800-223-2064.  Banks and brokers
   call 212-440-9800.

   1  Pension Benefit Guaranty Corporation: News Release 97-09, 12/12/96. 
   2  Based on closing price of CSX common stock on January 8, 1997.

   January 10, 1987


                                 [Presentation]

     REMARKS BY:             DAVID R. GOODE
                             CHAIRMAN, PRESIDENT AND CEO
                             NORFOLK SOUTHERN CORPORATION

     BEFORE THE:             COUNCIL OF INSTITUTIONAL INVESTORS
                             WASHINGTON, D.C.
                             JANUARY 10, 1997

          Good afternoon, and thank you for that introduction.  I
     welcome the opportunity to talk with you today.  My topic ---
     which obviously is the battle for Conrail --- is not only timely,
     but also goes to the heart of the issues you deal with every day: 
     Corporate governance and accountability to shareholders.

          My charge today is threefold: I will demonstrate the
     superiority of Norfolk Southern's offer, show why Conrail
     shareholders should vote a resounding "no" on January 17th, and
     discuss issues involved in this situation that reach beyond
     anyone's immediate economic interest --- even our own --- and
     threaten the fundamentals of our corporate system.

          Your "Shareholder Bill of Rights" observes that American
     corporations "must be governed by the principles of
     accountability and fairness inherent in our democratic system."
     While most corporations adhere to those principles, events
     surrounding the Conrail issue demonstrate the potential for real
     problems of fairness or accountability to corporate owners.

          That's readily apparent from the cavalier comment Conrail's
     CEO gave The Wall Street Journal a while ago.  Speaking about
     Pennsylvania's anti-takeover statute, he said, "If you don't like
     the law, don't buy the stock."  While a very candid comment, this
     is reminiscent of the days when railroad magnates like William
     Henry Vanderbilt could snort, "the public be damned," and get
     away with it.

          But Vanderbilt added something else in 1882.  After damning
     the public, he still insisted, "I am working for my
     stockholders."  I ask you today --- when weighing the merits for
     Conrail shareholders -- whether the days of the robber barons are
     over when Conrail and CSX claim that their deal is a good one for
     Conrail constituents.

          Many in the investment community disagree with their claim. 
     As one Bear Stearns analyst observed, nowhere in Conrail's proxy
     materials does it say that CSX's bid is in the shareholders' best
     interests.  Conrail's solicitation materials say only that the
     proposal is in the company's best interests.  This omission, the
     analyst added, is unusual --- if not unprecedented.

          To suggest that the proposed Conrail / CSX merger is good
     for shareholders ignores reality.  Indeed, it's a billion-dollar
     plus falsehood --- the difference in the value of CSX's coercive,
     front-end, two-tiered offer and Norfolk Southern's superior all-
     cash proposal of $115 a share.  As of today, the value gap for
     the shareholders is $15 per share, reason enough to support our
     bid.

          Conrail's actions have consistently sought to thwart the
     interests of shareholders.

          Consider the lock-out provision, for example.

          If the CSX / Conrail deal is so attractive to all
     constituencies, why did they find it necessary to extend the
     lock-out period from nine months to two years, preventing Conrail
     from discussing any other offers until January 1, 1999?  I submit
     that CSX and Conrail are trying to coerce stockholders into
     approving the transaction by portraying CSX as the only choice
     available.

          This raises serious questions.  Why the unusually long
     period?  What does the long vacation time for the Conrail
     directors do in the event of problems with the proposed
     transaction?   What if Norfolk Southern, the shippers or the
     various states and regions that have expressed concern are
     successful before the Surface Transportation Board?  What happens
     then to the interests of Conrail shareholders if the directors
     have tied their hands?  I'll let you decide.

          In another move disclosed last week, CSX dumped 85,000
     shares of Conrail in an attempt to avoid a requirement of the
     Pennsylvania Fair Price law that would force them to pay at least
     $110 per share for all remaining Conrail shares to investors who
     demand it.  Is this fair?  Obviously not.  

          The issue of whether they can use Pennsylvania anti-takeover
     laws against Conrail shareholders --- and at the same time avoid
     compliance with the Fair Price provision --- is now before the
     Federal Appeals Court.  Successful or not, the attempt to use
     Pennsylvania law to prevent Conrail shareholders from realizing
     the highest price sends a real message about fundamental
     fairness.

          The Conrail "shareholders be damned" attitude permeates the
     maneuvering.  Consider the date Conrail originally set for a
     special shareholder meeting to vote on a proposal that would
     allow CSX to buy the additional shares it needs to gain control. 
     If you recall, it was planned for December 23rd --- two days
     before Christmas --- at 5 p.m. no less.  Furthermore, Conrail
     said it would hold the meeting only if victory was certain.  Does
     that sound like an effort to enhance corporate democracy?

          Fortunately, the courts told Conrail that it could postpone
     the meeting only for reasons more substantial than fear of
     defeat.  As that date neared and defeat seemed imminent, CSX was
     forced to sweeten its inferior bid in response to shareholder
     complaints.  The meeting to vote on the revised offer is now set
     for next Friday.

          Indeed, Conrail used this rescheduling to further
     disenfranchise shareholders.  While Conrail reset the meeting
     date for its shareholder vote in hopes of gathering the necessary
     support, they did not change the original record date.  So,
     unless you purchased stock in time to be a record holder on
     December 5th, you cannot vote at the January meeting.  CSX and
     Conrail understand that they maximize their chances of success by
     minimizing investor participation.  While this may be acceptable
     under the law, ask yourself again whether this is in the spirit
     of encouraging corporate democracy.

          It's clear to me that Conrail and CSX must believe that they
     can succeed only by limiting the ability of shareholders to
     participate in a crucial decision affecting the future of the
     company owned by these shareholders.

          Fortunately, Conrail cannot exclude all of its shareholders
     from the decision process.  The January 17th meeting still offers
     a critical opportunity to express their distaste for Conrail's
     abusive strategy.

          By rejecting Conrail's proposal to allow the two-tier CSX
     offer to proceed, Conrail shareholders can send a clear message
     that the current offer is inadequate.  They can urge CSX and
     Conrail to work with Norfolk Southern to address their investment
     needs in the context of our $115 all-cash offer.  Only a loud-
     and-clear rejection from Conrail shareholders will open Conrail
     and CSX's eyes that a three-party, $115 solution is the only
     solution.

          Your "Shareholder Bill of Rights" makes the point.  It says:
     Shareholders "are entitled to participate in the fundamental
     financial decisions which could affect corporate performance and
     growth and the long range viability and competitiveness of
     corporations."

          Given the opportunity for real participation, I'm confident
     Conrail shareholders would choose Norfolk Southern's offer. 
     That's because our offer is not only better for them, but also
     for shippers, employees, and the public.  We have pointed this
     out before, but let's run through it again.

          For shareholders, our all-cash offer has the highest value
     and the lowest risk.  It offers immediate and obvious benefits.

          It will give current Conrail shareholders a premium of $15
     per share, or 15 percent over the blended value of CSX's
     proposal, based on yesterday s closing price for CSX stock.  With
     our offer, shareholders know the value they'll receive.  They
     don't have to guess.

          Norfolk Southern shareholders will benefit, too.  Through
     improved operating efficiencies and market share gains, a Norfolk
     Southern / Conrail combination will add significantly to earnings
     per share.  It will produce a growth rate nearly 50 percent
     higher than we could have achieved on our own.  The earnings
     impact will be accretive following STB approval in the second
     year, but will be accretive from a cashflow standpoint in the
     first year.

          All other constituencies --- from employees to shippers to
     the public --- should prefer Norfolk Southern's offer.

          A glance at the railroad map shows how Conrail employees
     benefit.  CSX's routes and facilities overlap Conrail
     considerably.  There's a lot of duplication.  I wish Conrail
     employees could hear the extensive list of yards and shops
     presumably being considered for consolidation in the event of a
     CSX purchase.  Conrail and CSX overlap, which means redundancy. 
     For the most part, Norfolk Southern and Conrail do not.

          From a job security standpoint, if I were in the safety
     shoes of a Conrail employee, I'd welcome Norfolk Southern with
     open arms.  I'd welcome a merger with a company whose physical
     plant extends and complements --- rather then duplicates --- the
     Conrail system.

          For shippers and Conrail-served communities, the choice
     should be clear, too.  Unlike a combined Norfolk Southern and
     Conrail, CSX and Conrail would leave large, important areas --- 
     such as Philadelphia, Pittsburgh, Baltimore, and Youngstown ---
     with a rail monopoly unless the Surface Transportation Board acts
     to avoid it.  Economic development and plant location experts
     will tell you that growth will not be encouraged by limiting rail
     service.

          Conrail and CSX means market dominance in the East unless
     the STB acts to prevent it.  Consider this: 75 percent of the
     electric generation capacity and almost 70 percent of Norfolk
     Southern, CSX and Conrail total rail traffic would be controlled
     by a single railroad unless the STB steps in to fix the problems. 
     Does this sound good to you for the general public and other non-
     shareholder constituencies? 

          With Norfolk Southern, no such competitive problems exist. 
     There is virtually no overlap, and we have offered up front to
     end the long quasi-monopoly Conrail has enjoyed in the New York
     metropolitan area.  This is relevant to Conrail shareholders
     because it shows what a hard case Conrail and CSX would have
     before the STB and how great the risks are in terms of the CSX
     stock value they would get.

          All told, a Norfolk Southern / Conrail combination is better
     for competition, better for shipper service, better for
     industrial development, better for economic growth, better for
     job security, and better for the financial stability of the
     employee retirement picture.

          On this last point, let me suggest that Conrail employees
     should want their strong and overfunded pension fund combined
     with Norfolk Southern's overfunded pension fund.  They should not
     want it to become a part of CSX's, which a few weeks ago again
     landed on the Pension Benefit Guaranty Corporation's list of most
     underfunded pension funds.

          I won't belabor the differences between the two offers. 
     You've studied them, and you know the merits of Norfolk
     Southern's proposal.  That's obvious from the letter your
     organization wrote Conrail last month expressing concerns about
     the fundamental fairness of the CSX deal to shareholders.

          You are not alone in your criticisms.  Institutional
     Shareholder Services, a consultant to Conrail's largest
     institutional holders, has also called CSX's bid "coercive and
     unfair to shareholders" and advised their clients to reject the
     proposed "opt out."

          By voting against CSX's offer at next Friday's meeting,
     shareholders can force one of two actions that will benefit them.

           First, a vote "no" could force CSX to bump up their offer -
     -- if, of course, they can afford to do so.  Or second, by voting
     no, shareholders could force Conrail and CSX to work out a
     solution with us which incorporates our superior, all-cash offer
     --- an offer that we have more than enough bank commitments to
     fund.

          The vote does make a difference.  Look at what's happened.

          From the outset, CSX and Conrail have dismissed Norfolk
     Southern's offer as unreal --- a "non-bid," if you will --- a
     phantom offer that could never be realized by the shareholders. 
     At the same time, CSX nominally increased its own offer by,
     first, approximately $628 million on November 6, and then another
     $870 million on December 19 --- a total of $1.5 billion dollars. 
     They know our offer is very real and our prospects are very good. 
     Believe me, they did not put an extra $1.5 billion on the table
     in response to a phantom offer with low prospects of success.

          Shareholders can influence the future of the company they
     own by acting now and voting no.  The other side will tell you
     that the litigation should end this.  Don't believe them.  We're
     in this strongly --- Norfolk Southern is not going away.  We'll
     pursue all legal options to succeed with Conrail, including the
     Surface Transportation Board, which yesterday reminded everyone
     that it does have the power to override a Conrail / CSX contract
     and to approve an application from another party or make changes. 
     A "no" vote will have a powerful influence.

          I know the dangers of believing one's own press, but in the
     case of Conrail I'll make an exception.  Experts are virtually
     unanimous in their opinion that our all-cash offer is superior to
     CSX's.  They have concluded that CSX and Conrail are using every
     trick in the corporate raiders' playbook to force a bad deal down
     shareholders' throats.

          The Wall Street Journal observed that "Conrail and CSX are
     using arguably coercive takeover tactics reminiscent of the
     1980s-style corporate raiders, exploiting a tough anti-takeover
     law adopted to shield companies from such raiders." 

          Business Week said:  "The 1989 anti-takeover law was designed
     to thwart raids on local companies by foreign slice-and-dice
     artists out to kill jobs for quick market gains.  It was never
     aimed at efficiency-driven bidders such as Norfolk Southern."

          And Harvard Business School Professor Michael Jensen and
     others have noted that CSX's two-tiered, front-end loaded deal is
     "a classic maneuver in which you railroad people into taking a
     deal they don't want."

          Today, I thank you for your support and ask that you
     continue to express your concerns.  Tell the media, tell the
     directors, tell the shareholders, tell the employees that you do
     not want the CSX deal to become a template for other coercive
     mergers down the line.  And, of course, vote against the opt out
     proposal.

          Remind them that the battle for Conrail goes beyond the
     companies involved, even beyond the future of the railroad
     industry. It is about who owns a corporation, and the rights of
     those owners.  Insist that Conrail's shareholders be allowed to
     decide for themselves which offer is best.  This transaction may
     well be a tactical textbook for years to come.  If so, it's
     important that the right moral be drawn from the lesson.

          This transaction is not only important for Conrail
     shareholders, Norfolk Southern, and the future of transportation
     in our country, but also important for setting the tone for
     corporate governance in the future.  You --- and those who listen
     to you --- have a heavy responsibility.  I'm working as hard as I
     can on this --- a lot of people are --- but we need your help.

          With that, I will be happy to take your questions.