In light of the “Putting the Pacific in Chicago Rock Island & Pacific” thread, here’s a question: Let’s say the ICC allowed the Rock Island to be divided between UP and SP a lot sooner than it really took for the ICC to reach its decision. Which mid-western railroad would be the odd man out? Would Milwaukee Road persue merger with C & NW, or vice versa? Or would MILW seek merger with the component railroads that became Burlington Northern leaving C & NW to go it alone?
C&NW + MILW was a proposed merger that was being considered at about the same time as RI+UP/SP. This would have been a parallel merger of equals, both being relatively weak at the time. They were all over each other’s back yard and had a lot of low-density branches that were candidates for abandonment. The ICC would have probably allowed this merger if it had previously allowed the division of RI between UP and SP. I would also guess that the combined C&NW/MILW would have had to absorb CGW as a condition of merger.
The CGW was merged into CNW July 1, 1968, several months prior to the ICC hearing examiner recommending merger of the CNW and MILW on December 18, 1968.
Well, depending on when, exactly, the ICC might have delivered it’s “expidited” decision, the C&NW might have already had too much deferred maintenence for the Milwaukee to be interested in. If UP/SP-RI was already a done deal by the mid 60’s, I wonder if the C&NW would have tried or been allowed to absorb the CGW and M&StL. If not to the C&NW, then where? To the MILW or the UP/RI? There was a Trains “Turntable” article back in the day suggesting the the C&NW was the “one too many” in the midwest and should be abandoned to reduce the redundant trackage in the midwest.
Interesting what if…
The C&NW would have collapsed. CN might have wanted the line from Itasca, WI to Chicago but the rest would have been redundant. Since this was 15 years before Staggers the ICC, with its track record of giving shortline favorable divisions, would have made impossible the creation of many shortlines.
The astounding reasonableness of the industry proposals of the 1960s should be remarked upon.
The CBQ, CNW and RI had all gone downhill in the 1960s. MILW – Lines East – same boat. CNW/MILW created a strong transcontinental and eliminated profound redundancy in the Midwest without removing effective rail competition. RI/UP, same thing. CBQ/NP/GN, same thing.
Everyone ended up with longer hauls at a key point in time, essential mileage was preserved, no Midwest Rail Crisis need apply.
The damage that the ICC did to the rail industry, and to itself, has been remarked on in bits and pieces, here and there, but the larger picture really was one of excessive and undeserved caution, at the cost not only of a passing opportunity, but resulting in later crisis.
Thanks for all the replies to this thread so far. I too remember reading in an old Trains editorial, or something like that, how C&NW would have been the railroad to go if the UP/RI merger went through. It seems as though C&NW had more lives than a cat when it came to finding ways to outlive its weak Midwest railroad neighbors. Or at the very least, skillful CEOs who knew a thing or two about ensuring C&NW’s survival until UP came knocking in the early 1990s.
My personal opinion would have been to split up the ROCK as the UP and the SP wanted to do, letting the SP have the Denver line. Then merge the DRGW and MILW into that “new” SP, and the way the balance of the mergers have come up in history, that would have made a strong three railroad system in the West. Almost everywhere West would have been served by everyone West.
Interesting. Was RI’s Denver line direct enough to meet the competition?
For Chicago-Denver traffic Rock Island had a fine location, competitive with CB&Q and UP-C&NW. But west of Denver the Rio Grande was not competitive with UP-WP (or Santa Fe).
Nothing’s perfect.
Try this for a reasonably balanced arrangement:
CB&Q, NP, GN, SP&S, D&RGW, SP, SSW, Rock Island-South
UP, WP, MP, T&P, Rock Island-North
AT&SF, MILW, SLSF
You could put MKT, C&NW, and KCS into any of these and abandon the duplication.
Oh well.
S. Hadid
It didn’t happen, so why speculate.
Paul
Why speculate? I dunno, something to break the monotony of the day and excersize the old grey matter perhaps.
The Rock Island is one of those interesting underdog railroads where if things had gone differently, there might have been a “happy ending” for the railroad and its employees. Finding a continued use for RI’s trackage, and employees, in UP’s and SP’s systems would have been a better alternative to abandonment and the unemployment line.
The two companies, MILW and CNW, identified 36 mainline corridors where they competed, as well as the numerous branches. Studies showed a net income increase for the Newco at $53,905,682, which was an astounding figure for a merger benefit in those days. The ICC was all in favor.
Unfortunately, while as the stronger of the two roads, MILW had been able to uphold its end of the agreement on share price – maintaining a certain value, which was the basis of the stock exchange agreement between the two companies – Ben Heineman had been unable to do the same and CNW’s stock price had collapsed.
ICC simply ordered a reformulation to protect Milwaukee shareholders, but otherwise the merger was a go.
The reformulation would have made the deal much less of a “merger” of equals and too much of a takeover by Milwaukee. Heineman couldn’t come up with an answer and North West Industries refused to proceed with the merger if reformulated terms were a condition.
I hauled out my five bound volumes of the UP/RI merger proceedings, including three volumes of the Administrative law judge’s final report, a volume of Milwaukee Road related pleadings, and a volume of Milwaukee Road exhibits to the proceeding. About 4,000 pages in all. In review, I had forgotten how complex that merger had become from a litigation standpoint.
I note the UP/Rock Island merger was approved by the ICC in February, 1973. I see a Milwaukee Road engineering note that estimated at that point that UP would have to spend $250 million to make RI viable again.
Michael,
Would the Milwaukee Road haved gained anything if the UP/RI merger had gone through ?
Everybody and their brother asked for protective conditions in that merger, but few were granted.
SP got the southern lines of the RI, and UP got the old Central Pacific portion of SP. CNW was probably the most aggrieved by the merger, but ALJ Nathan Klitenic didn’t seem too concerned about the CNW.
Milwaukee’s intervention was primarily protective – to make certain that some of the proposed conditions by other intervenors were not granted. By and large, MILW did not oppose the merger.
CNW’s intervention was much more aggressive – control of the RI, or else conditions galore – but it didn’t get any of its requests granted.
I wasn’t aware of the SP’s spinoff of that line. It seems odd that SP would part with what was seemingly a “core” line for access to Kansas City, a second route to Saint Louis and some additional lines in Texas. What about traffic from Oregon & Northern California? Were they just planning on making more of the rate division with a longer haul or were thay looking to get rid of the mountain lines?
Well, let me make sure I got that right. I note that I got it wrong on the CNW.
This is from page 1375 of the ALJ opinion.
Terms and Conditions Applicable to the Union Pacific-Rock Island Merger.
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Concurrently with the Union Pacific-Rock Island merger, Union Pacific shall (1) sell to the Southern Pacific the previously described southern portion of the Rock Island, pages 481-483, and (2) grant trackage rights to the Santa Fe over the acquired Rock Island lnes between Kansas City and St. Louis …
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Concurrently with consummation of the merger transaction, inclusion of the North Western into the Union Pacific system. Page 1354.
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Terms and Conditions Applicable to the Southern Pacific Purchase of the Rock Island Southern Lines.
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Concurrently with consummation of the Southern Pacific’s purchase of described Rock Island lines and properties, it shall sell to the Santa Fe the Rock Island lines between Amarillo and Memphis, Geary and Homestead, Okla., Mesa and Des Arc, Ark., and Mesa and Stuttgart, Ark., including related facilities …
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Concurrently with consummation of the purchase transaction, inclusion into the Southern Pacific system of the Katy.
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Upon filing of an appropriate petition, inclusion of the KCS-L&A into the Southern Pacific system.
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…the Southern Pacific shall sell its acquired one-half interest in the Joint Texas division of the Fort Worth & Denver …
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Terms and Conditions Applicable to the Santa Fe’s Acquisition of the Rock Island Lines.
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Inclusion into the Santa Fe system of the Western Pacific and Rio Grande.
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Inclusion into the Santa Fe system of the MoPac-T&P system, subject to concurrent sale of the T&P line from El Paso to Fort Worth to the Southern Pacific …
Conditions Relating to … the above, Individually or Collectively.
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- The San Francisco-Ogden line … as a condition to the m
Holy fright! I always thought this was just about the UP and SP gaining access to Chicago and Saint Louis-but it turns out to have developed into a wholesale reorganization of the almost everything west of the Mississippi River! Given that there would have been a 3 system west (south of the PNW transcons), were there any rumblings about the MILW, GN and/or NP looking to join up with the expanded AT&SF, SP or UP?
Fascinating…
In the early '60s, there were three mergers pending, all of which would have been a net plus:
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the GN-NP-CBQ
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MILW/CNW
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UP/RI
The first two were straightforward and well-planned. The stock price glitch sunk the MILW/CNW.
Administrative Law Judge Klitenic was widely viewed as having made the third merger described too complex to achieve, and he took too long to make his decision, although the record of interventions is itself complex.