Tom McMillen was always very cordial with me, and I considered him a friend of mine, but Tom McMillen, RIP, was completely out of his mind on this.
Here’s part of his opinion:
"Now, what is the matter with abandonment? Well, for one thing it costs jobs. People are going to be out of work that were working on the abandoned transportation system or routes. Another consideration that hasn’t been, really, considered very much but was mentioned by one of the Commissioners … is the matter of national security.
…
". … I would say that once a railroad is abandoned once a piece of trackage is pulled up and the land sold it isn’t going to be replaced. It is almost irresponsible under the international situation that we are faced with today to tear up pieces of a railroad system, which is probably the best in the world, for no better reason than a few million dollars in the bidding price.
“I must say that I think that national security is a very important consideration for keeping an extensive and more viable system of transportation …”1
The Soo Line, to its own great surprise, got the Milwaukee Road with Judge McMillen’s permission, the sale closing on February 20, 1985. The Chicago-Milwaukee Corporation, among others, appealed. The United States Court of Appeals has infrequently heaped sarcasm and scorn upon one of its own district judges, but it was obviously stunned by not only what McMillen had done, but how he justified it.
The Court summarized that the primary reason for the appeal was that the investors in the Milwaukee Road – represented primarily by the Chicago-Milwaukee Corporation – did no
The Grand Trunk Western traffic consolidation agreement brought 40,000 carloads onto the Milwaukee mainline, and that was certainly the first ray of light after the PCE shutdown and things kept getting worse instead of better and that sinking feeling started to set in that the Booz Allen Hamilton studies may have been right – the system couldn’t reorganize profitably without the PCE. The GTW traffic agreement promised another 115,000 carloads, but then Richard Ogilvie dumped it to open the “bidding war” that erupted between CNW and Soo Line when they both saw the sudden uptick in Milwaukee’s fortunes. No doubt, Richard Ogilvie did not play fair with GTW in that respect.
I wondered about that (the PCE) as well and why they didn’t at least keep the portion from Ortonville (MN) to Miles City, Montana. The other one I really have in my mind is the mainline from Green Island to Council Bluffs; particularly in serving Cedar Rapids. That area was and still is a big traffic producer and the MILW had a big part in the traffic mix that came out of there. Interesting enough, the MILW in the early 80’s leased the former Rock Island mainline between Davenport and Iowa City to connect the with the Cedar Rapids and Iowa City (Crandic) to tap back into the Cedar Rapids market. Just knowing that the MILW’s sales manager in the Quad Cities at that time spent a lot of time wining and dining various customers in the Cedar Rapids area leads me to believe that some second thoughts were had there.
Off the top of my head (some would say I’ve already made a point), I’d think that AT&SF+WP wouldn’t have much to recommend itself on its own. Would there have been much business that the WP could have added to the SF’s traffic? Maybe between Oakland and Sacramento, but beyond that? And would it have been worthwhile to carry that traffic all the way to Salt Lake City to hand off to the D&RGW rather than keep it on “Santa Fe all the Way”? Inside Gateway traffic never seemed to amount to much (my impression only, correction welcomed) and I don’t know that simply changing the number of corporate entities involved from 3 to 2 would have made a difference.
Adding the D&RGW to the mix would keep northern California traffic on SF rails throughout its haul but I can’t see that the ICC/STB would have allowed that big a merger until/unless UP+SP was already in the works, and by than the WP was gone. I’ve often wondered if there was any consideration given at the time of the UP and SP marriage to “unscrambling the egg” (ala Conrail’s breakup) and requiring the combined UP/SP to divest itself of the WP/D&RGW to BNSF. (I sometimes think that UP’s monopoly of routes across the cental US was somehow a backhanded federal compensation for BN’s monopoly across the northern tier…)
Now, SF plus EL? That could have been something (though I doubt the ICC would have sanctioned a single transcontinental merger in isolation-maybe a “special case”, like FEC was for so many years?)! Only two lines to make it all the way from NY to LA. With Erie’s lack of secondary lines west of Buffalo (and AT&SF’s east of Kansas City) that could have been a real funnel for cross country doublestacks. Anyone know how the connections through Chic
I am not sure what “should” have happened. But, a comment here on what “could” happen is food for thought.
Trains magazine did a huge issue on mergers in July 2005. They basically concluded that a BNSF + NS merger would be ideal for sure. CN and UP was also favorable, as was CP and NS. I would not rule out BNSF trying to get CN again, like they attempted to in 1999. I have heard that some of the CEO’s have said that eventually, there will be a transcontinental railroad. But, the credit markets will make that difficult at the moment (i.e. CP is no longer being pursued).
How about Maine Central + Boston and Maine+Delaware and Hudson+Erie Lackawanna + Santa Fe for one transcontinental system. New York Central+Burlington Lines+Denver& Rio Grande Western+Western Pacific for another transcontinental system. Pennsylvania Railroad + Cotton Belt Route+Southern Pacific for still another transcontinental route. That would be four transcons. A fifth one would include Central of New Jersey+ Reading Lines+Baltimore and Ohio+Northern Pacific, A sixth would encompass the Great Northern+Rock Island+post 1964 Norfolk and Western. The leftovers would form some of the regional systems needed to maintaine competition and connectivity to certain areas. As for the New Haven Railroad, that would be part of a north-south system consisting of it, Pennsy’s New York-Washington line,the Richmond,Fredericksburg and Potomac, the Seaboard Railroad and the Florida East Coast. The Lehigh Valley would be merged into one of the transcons. Hows this for a possibility in maximising the number of transcontinental railroads. This way, we could have had 8 and possibly 10 true transcontinental railroads had the cards been played right.
The discussion on C&NW v. Milwaukee is interesting, but slightly off topic. It seems to me that the ideal mergers would have resulted in end-to-end lines that would cover several regions, rather than near monopoly lines in a region that hand off freight to another monopoly in an ajoining region. I believe that competition is better for consumers (shippers, etc.) than is monopoly or a cozy oligopoly of giants that can be unresponsive to the marketplace. There is room for at least 5 nationwide lines that cover most or all of the US and Southern Canada. Afterall, there are that many airlines, that many phone providers, and that many major networks on cable or broadcast. Let’s hear it for antitrust!
While “There is room for at least 5 nationwide lines”, they should not all serve the same areas. I don’t believe Cedar Rapids, for example, could sustain more than 3. Parallel mergers were necessary in overbuilt areas like Iowa.
Hey Norris, what do you think ? Ready to listen to AM radio ?
What should have happened? In the context of moving from the anything-goes wild-west to the current hyper-litigious environment, the railroads should have been free to incorporate other modes of transportation into their operations as they developed. They should have been free to abandon operations and routes as conditions changed. Weak lines should have been allowed to fail rather than strong lines been required to subsidize the weak by fiat.
Here’s one that could have (and maybe should have) happened back in the 50’s or 60’s (surprised nobody mentioned this one before:
UP + CNW + PRR
To me, this seems like a natural. True, UP now has CNW in its fold anyway but adding the PRR to it; particularly PRR’s New York-Chicago main of Broadway LTD fame would have made a powerhouse RR, IMOH anyway.
Also, I wonder about these possible combos:
NYC + MILW + ATSF or
MILW + ICG
The NYC/Milwaukee/Santa Fe combo would seem like a natural response to a possible UP/CNW/Pennsy combo. I’ve always wondered why the Milwaukee never looked at the IC/ICG as a possible merger partner. A bit of overlapping track in both Illinois and Iowa but still an interesting one to ponder nonetheless.
Now, in my mind, here’s what SHOULD happen with what’s left:
The ICC would not have allowed that. However, during the 1950s, the PRR did connect with UP through control of the Wabash. If the PRR had merged the Wabash during the early 1950s, they would have reached Kansas City and Council Bluffs. And they would have been to busy to stop Heineman from adding the TP&W to his Minneapolis and St. Louis. That would have stopped Heineman from rescuing the C&NW from a 1956 takeover by the CMSP&P. That would have led to a Hill Lines merger in 1960 instead of 1970, and then the UP and the SP would have split the CRI&P during the late 1960s. Leaving the ATSF to merge with MP, or perhaps the SLSF ?
MILW and ICG didn’t interchange much, and there was little opportunity of line consolidation to improve traffic density. The MILW/CNW merger offered line consolidation in 37 traffic corridors – a simultaneous reduction in redundancy and maintenance cost with improved utilization and traffic density, while shifting heavy long haul traffic from the Union Pacific to the Milwaukee Road’s Western lines as well as from the GN and NP – which both interchanged more with CNW at Minnesota Terminals than they did with their own CBQ – to the Milwaukee line to the West Coast. In addition, SP traffic eastbound SP/UP from Oregon was highly vulnerable to diversion over the MILW – indeed, estimated during the merger hearings to potentially be the largest diversion of traffic to the MILW/CNW combination.
This was unlike the BN merger where the parallel lines were so far apart that actual consolidation would have lost as much traffic as efficiencies gained, and where the end-to-end traffic already existed. While BN was a successful merger from an implementation standpoint – it didn’t fall flat on its face and so qualifies by rail industry standards as hugely successful – the efficiencies gained were incremental, not transformational.
Similarly, end-to-end mergers after a certain length of line haul had diminshing returns as cost per mile generated generally stabilized at about 1400 miles, and end-to-end mergers of lines longer than that generated little marginal return from the longer hauls that might – might – be gained. This is seen by the Union Pacific which, prior to the Staggers Act, operated a system with lines hauls that approached maximum profitability, but since then acquisition of even longer hauls served to re
The best think in the long term would have been to consolidate/merger anyone who would have been able to provide true uninterrupted service from one side of the USA to the other.
With all the possibilities there could have been at least two competitors providing service to both coasts.
Imagine no interconnection in the midwest – speed of service would be days less without interchange or trackage rights problems…
The shippers that would like true transcontinental service would be the container shipping lines. Having a single load/service from the port of LA to New York, Halifax,has become the norm. There may be other shippers on the Gulf that brong produce from points south to the breakfast table.
An easy connection exists from ATSF’s Corwith Yard to CN/GTW’s Elsdon yard. PRR’s panhandle line offers another good connection to East ports, avoiding some downtown lines traffic.
“…aye, there’s the rub.” So much of our speculations are filtered through the perspective of the longer haul traffic such as Pacific Rim doublestacks and PRB coal. But as S. Hadid pointed out (was that in the WP thread some time back?), average lengths of haul used to be much shorter. Depending how far back we go to cut the pieces that we are using to put together our puzzles (or empires) there may have been very little reason for any transcontinental RR in the US despite the magical appeal that it seems to hold.