A federal grand jury is investigating charges that the nation's major railroads, including Conrail Illinois Central Gulf RR and Chicago & North Western Ry., conspired to monopolize the use and supply of boxcars.

Under the alleged scheme, the major railroads could force the death of small railroads and firms that lease boxcars to railroads. The larger lines apparently had believed that the smaller firms' boxcars would become cheaper to use and could place them at a competitive disadvantage.

The investigation by a Washington grand jury was confirmed Tuesday by Elliot Seiden, head of the transportation section of the Justice Department's Antitrust Division. The matter was referred to the grand jury after a one-year investigation by Seiden's section.

Seiden declined to elaborate, but indicated that if indicted and found guilty, the railroads could face fines up to $1 million each. Moreover, individual executives could be sentenced to as much as three years in prison, as well as receive fines up to $100,000 each.

The grand jury is investigating whether the major railroads refused smaller firms' boxcars to force them out of business. As they were refusing those cars, the railroads were reporting shortages of boxcars. The result could be that freight shipments across the nation have been delayed needlessly and that less competition has meant greater transportation costs.

Illinois Central Gulf confirmed the grand jury investigation.