I am reading “American Railroads, Decline and Renaissance in the Twentieth Century” by Robert E. Gallamore and John Meyer.
Greyhound had earlier announced the publication of this volume and it hit the library shelves last week (impressive on behalf of the selection committee). It is a little dry early on, but necessarily covers the regulation of the rails in the early part of the 20th century. I am only 3 chapters in so far.
Comments by those who have read it?
Ed
Well, I thought the book was great. I did not find it “a little dry” at all. It is focused on the economics of railroading and the bad effects of government economic regulation. (The government was basically trying to do something that was impossible.)
I guess it’s whatever floats your boat. I like the economic analysis because it rationally explains why things happened. But some readers may find it boring. Here’s a quote from chapter 3:
“We may now apply this reasoning to the railway. The railway performs a vast number of heterogeneous services, some traveling long distances and some short distances, some moving in trainload lots and some in less than carload lots , some going at high speed and some at low speed, some moving in one direction and some in another, some possessing high value per pound and some low value . . . On what principle should the railroad fix the rates to be charged for these different services? Should it base its rates on the cost of performing each individual service . . . ? However desirable this basis might be if it could be realized in practice, the fact is that it can not be realized.”
Gallamore, Robert E. (2014-06-17). American Railroads (Kindle Locations 652-657). Harvard University Press. Kindle Edition.
I find that very interesting. Others may not.
I did put a “Review” of the book on this forum for whatever that’s worth.
As many of you may have realized by now, I am absolutely agape and agog about this fantastic book.
Here’s a slide show that author Gallamore gave at Michigan State University on the book.
And to any of you high schoolers out there, please note that the business school at Michigan State University now has a Railway Management program. If you’re really into this thing you might want to check it out and consider applying.
Greyhound:
You probably misunderstood my use of the word “dry”. The early part of the book is “dry” to me. Any type of legislation / regulatory infrastructure to me is dry. Doesnt mean it is not important…just dry.
Now, the authors are into the USRA and the creation of Conrail. I actually have my bound copies of the USRA Preliminary and Final System Plans out and a trusty Official Guide at the ready. To me, one of the great stories of railroading was the USRA’s work in developing a plan.
The authors describe the agency’s role, but only briefly and understandably so. This volume must cover well over 100 years. Their work on the subject, while brief, is informative.
My guess is as the book progresses in time (and corresponds with my personal awareness in the industry) the “dryness” will disappear. The entire consolidation and merger movement of the 70s thru 90s to me is fascinating.
What I would really like is a book which specifically deals with the USRA’s role and a behind the scenes look at how those people did what they did. Sort of an expanded “The Men Who Loved Trains” if you will.
Greyhound, you might know this. The authors touch on the IC/GM&O merger and quote Richard Saunders from “Merging Line” (another great book in my opinion)…“The studies show that six switching crews could be saved at St. Louis to handle the IC’ daily 3,500 cars and the GM&O’s daily 1,500 cars.”
Did IC really move 3500 cars daily thru St. Louis? That would be 35 trains either into or out of St. Louis on the two lines. The mainline thru Effingham wasnt handling 35 trains per day, it was more like 20 freights per day, perhaps 24. GM&O with 1500 cars daily?
Perhaps those numbers are correct…that would have been back in the day of 40 ft boxcars, but to me that quote seems inaccurate.
Ed,
No way did those volumes go though E. St. Louis.
The figures are cited as being from “Saunders, Merging Lines, 2001, pp. 315 - 317.”
I cannot locate my printed “Merging Lines”. It’s a whole lot easier for me to find something in Kindle The only thing I can suggest is that the 3,500 cars per day figure for the IC is the total for the entire railroad. (And the 1,500 cars per day figure for the GM&O was for that entire railroad.) The point being that the projected engine savings in the St. Louis area were way “misoverestimated”.
“American Railroads” says the IC-GM&O merger was a “Flop”. I came to the ICG a few years after the merger and I’d have to say it was more than a “Flop”. It was something like “Flop Squared”.
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Please, Greyhounds, if you have the time, give us the particulars of this “flop squared.”
Greyhound…let’s talk Illinois Central Gulf and flop squared!
I can pull out my Moody’s and throw considerable financial data but the numbers probably will not tell the story, only the results.
My guess, and only a guess is that ICG was Penn Central north/south. Too many branch lines, not enough revenue to support branch lines, five man crews, commuter losses in Chicago, etc.
Off to church, more to follow.
BTW, just finished the chapter on Conrail…OUTSTANDING review. I wish they would have written an entire volume on the transition from PRR/NYC to PC to Conrail to NS/CSX. That story needs to be told in detail.
Ed
No wonder their treatment of USRA was brief: Gallamore was Deputy FRA Administrator, and the two agencies meshed about as well as oil and water.
The question (for which we will hope for insights by Greyhounds) is whether the merger was flawed because of the kind of physical issues raised by MP or because of execution. IC + GM&O was seemingly the kind of merger of parallels favored in the '60s and '70s.
We know one of the problems of Penn Central – besides the well-publicized cultural clash – was chronic shortage of the cash needed to fix things. (The same problem inherited at NYC by Al Perlman 15 years before, which he managed to overcome – sort of.) Did this hinder ICG?
Another big merger of parallels was BN, which struggled for a while but blossomed after the ICC was gotten out of the way.
In theory, ICG should have been good: reduction of redundancy, Amtrak about to relieve it of passenger losses. Wha’ hoppen?
Ed & Fred,
I do not have enough years left in me to do justice to the ICG “Flop Squared” story.
It wasn’t quite Penn Central north-south. The ICG did not go broke. But it never was financially successful. The GM&O was a turkey in need of a home. The old C&A lines north and west of St. Louis had very little freight. Their Chicago operation originated only one through freight per day. It went to Kansas City. That train, or a local, took the St. Louis and beyond loads to Bloomington, IL where a through freight originated for St. Louis. Everything else north and west of St. Louis was a local. (There were some unit coal trains from near Tayloville to Chicago.) The Kansas City line was 90 pound rail which the ICG eventually tried to run unit coal trains over. Chicago-Joliet had good freight originations due to the refineries.
Eventually everything ex C&A except Chicago-Joliet was sold to the start up Chicago, Missouri and Western. The CM&W didn’t last a year.
South of St. Louis the GM&O found some tough grades in Illinois over Alto Pass. After using the IC’s Cairo bridge over the Ohio the GM&O had two decrepit light rail parallel lines south through Mississippi to Mobile. An indirect branch went through Jackson, MS to New Orleans. (Mississippi being the poorest state in the union.) A good chunk of the GM&O’s business in the south was pulpwood. Short hauls and low rates.
When I got to the ICG the turkey had found a home but there had been precious little effort to integrate the turkey into the home. That one Chicago originating train was still running out of the GM&O’s Glenn Yard instead of IC’s Markham Yard. So if the ICG received a car for Kansas City they would have to hump it twice at Markahm. (Glenn cars went over the north hump but had to go over the south hump first if received from east
Thanks, Greyhounds. That was excellent!
I’ve been wondering what the railroad system would look like today had the ICC encouraged end-to-end mergers over parallel mergers. Great thought provoking piece.
Well the subject book goes into the parallel vs end-to-end merger discussion to a good degree. Gallamore wrote his doctoral dissertation under Meyer’s guidance about the results of parallel rail mergers. They did not produce the projected savings and did result in the Penn Central disaster.
End-to-end mergers, such as the UP-Rock Island, would have upset the intra-railroad competitive balance and resulted in the needed creative destruction required to invigorate the industry and the US economy. If the ICC did one thing well, it prevented change. But it prevented needed change. And that hurt the railroads and the people of the United States.
If you think what I wrote was through provoking, you should read “American Railroads” by Gallamore and Meyer. I don’t hold a candle to their work.
Wonderful read, Greyhounds. Thank you indeed for taking the time. I am printing out your post for cross-reference with my pre-merger Official Guide.
Nothing beats the view of one who was there. I’m afraid my high estimation of the GM&O was based on those gorgeous red and maroon passenger trains I used to see at train changes in Chicago 50 years ago. Four pairs of them between Chicago and St. Louis, as I recall. Sorry I was never going that way and missed riding them.
Now I wonder what in the world made this “turkey” attractive to the IC in the first place!
Okay, I’ll try to find a copy!
GM&O had that great Chicago - St. Louis line…for passenger service. Interesting there was very little originating freight other than the refineries and the power plant at Joliet.
Neither carrier was in great shape at the time of the merger.
GM&O had 2734 miles, handled 527,000 carloads of freight, $97,000,000 in freight revenue, ($184 per carload) with an average haul of 294 miles. Revenue ton miles was $1.17. It’s largest commodity hauled by revenue was pulp. Their operating ratio was 76.2%
IC was larger at 6766 miles and handled 1.56 million carloads, $302million in freight revenue ($193 per carload), with an average haul of 270 miles. Revenue ton miles was $1.32. Coal and food were IC’s main commodities…both about 15% of revenue.
I believe IC saw the writing on the wall and the Chicago freight was rapidly moving away. In the late 60’s the Chicago and Eastern Illinois lines to Evansville and Southern Illinois went to L&N and MoPac with both carriers now gaining access to Chicago. Personally I saw the freight dwindle on the branchline from Evansville to Mattoon from close to 100 cars per day each way in the late 60s to 30 car trains a few years later. I believe a big reduction was the elimination of L&N freight at Evansville which went up the C&EI line. Birmingham and Southeastern freight had to have been dropping.
Missouri Pacific now had access to Chicago and interline freight from the Southwest thru St. Louis must have dried up. Both L&N and MoPac began the stranglehold on the Mainline of MidAmerica.
Who was left? GM&O or Southern. Southern was looking at Santa Fe in the mid 70s, What would have happened if Southern Pacific had grabbed GM&O and had the St. Louis line? Oh crap.
My little branch line had horrible rail and went from 35mph to 10mph and less. It was typical of the many branch lines in Illinois. Lig
I’m not too sure of this but I remember reading that the IC repurchased the Iowa line as a way of maintaining their independence by making them less desirable as a merger partner. Not that it worked.
I loved that merger (CN). My IC stock went to CN and has split a number of times.
Before his death, I was friends with Doug Hagestad. Doug had been VP Marketing for the ICG.
One day we were talking about the IC and the Iowa line. Doug said to me: “I’ll never understand why Hunter bought it back.” Doug moved in more elevated circles than I did.
I can’t see why they bought it either. They certainly don’t seem inclined to use it very much.
Greyhounds…
Can you briefly describe the pricing models used by ICC and post ICC? I am not an economist and am getting lost a little. I am reading the chapter on Staggers and the coal pricing. In particular, can you explain the theories involved with pricing of coal?
Ed
The only explanation I ever got as to why the IC wanted to merge with the GM&O was that they didn’t want anyone else to get the GM&O. It was defensive. There apparently was significant concern that some other railroad could get the GM&O, rehab it, and compete with the IC for the export grain movement from the Midwest to the Gulf Coast and the paper traffic out of the south.
The GM&O was looking for a merger partner. So the IC took it in to keep someone else from getting it. Or so I was told.
You’re right about those passenger trains. Back in “The Day” they were high class and good speed. Parlor cars, observation parlor cars, diners, lounges and coaches. Through Chicago sleepers to/from Texas via St. Louis and the MP. The “Alton Limited”, “Abraham Lincoln”, “Ann Rutledge”, “Prairie State Express”, and the “Midnight Special” with overnight service and sleepers between Chicago and St. Louis. But the railroad couldn’t earn a living off those passenger trains.