Hunter Harrison harkens back to Bill Deramus III

Posted by Kevin Keefe
on Monday, January 23, 2017

For this news junkie, last week was a roller coaster, and not for the reasons you might think. Instead of getting sucked into all the drama in Washington, D.C., I found myself more mesmerized by a sideshow of another kind, the latest turn in the career of railroading’s bad boy, E. Hunter Harrison.

The story is complicated, as reported by the staff over at Trains magazine, but to boil it down to its essence, Harrison was suddenly released from his obligations as chairman of Canadian Pacific and turned loose, at first, it seemed, to go to pasture. Then, in a stunning followup, came speculation he’s actually positioning himself to take over at CSX, working with activist investor Paul Hilal.

As this is being written, the situation is fluid and inconclusive. But if you want to have some fun seeing people go apoplectic, go to any Facebook discussion about Harrison’s comings and goings.

None of this should come as a surprise when you look back at Harrison’s career. He’s made history by shaking up huge railroads and wringing from them much better financial results. He started his career with Frisco and BN and eventually landed the top jobs at Illinois Central, Canadian National, and, most recently, Canadian Pacific. Everywhere he’s gone he’s left in his wake a trail of distressed employees, bereaved railfans, and ecstatic investment analysts.

A lightning rod like Harrison is nothing new in railroading, of course, and all the hue and cry on social media last week got me thinking: which railroad boss of the past few decades compares? What other CEO made his mark by moving, like a hungry shark, from company to company?

A few names came quickly to mind. The first I thought of, and discarded, was the great “railroad doctor” John W. Barriger III, at one time or another president of Monon, Pittsburgh & Lake Erie, Missouri-Kansas-Texas, and Boston & Maine. Barriger built quite a résumé, but he ran rather small railroads, unlike Harrison. And he became a beloved figure in the industry and academic community, something Harrison will never achieve.

Other names came to me. One was Patrick B. McGinnis, the swashbuckling president of New Haven and B&M in the 1950s. But McGinnis was a crook and ended up serving time in federal prison for graft. No matter what you think of Hunter Harrison, he’s not a crook.

I also thought of Al Perlman, the Rio Grande and Burlington engineering whiz kid whose daring leadership of New York Central came to grief with the Penn Central debacle, only to win back a measure of his reputation late in life on Western Pacific. In my mind, though, Perlman’s accomplishments at NYC were heroic, and I wouldn’t apply that adjective to Harrison.

But here’s a name to consider: William N. Deramus III, a railroad executive who loomed large over the Midwestern landscape in the 1950s and ’60s, and didn’t make a lot of friends in the process. 

Bill Dreams III, pictured during his time as KCS president, left a mixed legacy. Fred W. Frailey photo
Deramus was a son of railroad royalty. His father, William Deramus Jr., was longtime president of Kansas City Southern. As a consequence, Deramus III got a solid start, getting an education at the University of Michigan and a law degree from Harvard in 1939 before stints at the Wabash and KCS led him first to the presidency of the ailing Chicago Great Western in 1949.

Deramus moved quickly to improve the Great Western’s fortunes and fatten it up for takeover by Chicago & North Western. He promptly dieselized, pushed piggyback, improved the physical plant, cut back on passenger service, abandoned low-density branch lines — the classic moves of the era. He also vigorously cut the payroll, sparking a difficult 1953 strike by the operating unions.

To shed some additional light, I called my friend H. Roger Grant, professor of history at Clemson University and author of The Corn Belt Route: A History of the Chicago Great Western Railroad Company (Northern Illinois University Press, 1984).

As Roger explains, Deramus could seem brutal. “As I point in my CGW book, he fired Rosalie O’Hara, a receptionist and switchboard operator, because she didn’t have a big smile on her face.

“But he really made a name for himself at the Katy. Yes, he sought to upgrade and modernize the railroad, but he took draconian steps. Employment was slashed to the bone. All ‘frills’ ended, including the Katy’s monthly employee magazine and abolishment of its public relations department.”

Roger recalls one infamous incident at Missouri-Kansas-Texas. “In March 1957, without notice to Katy employees, Bill ordered the closing of offices in St. Louis and Parsons, Kans. Under the cover of darkness, records and equipment were placed in moving vans and hauled off to Texas. Needless to say, office morale sank. There was this memorable response: the St. Louis Chamber of Commerce expelled the Katy from its membership. Its executive committee unanimously made this unprecedented decision.”

And Deramus wasn’t finished. In 1961, he succeeded his father as president of KCS and stayed for 12 years. “He was not especially popular on that road either,” says Roger. Among Deramus’ “accomplishments” on the KCS was his reinvention of the company as KCS Industries, which shifted its emphasis from the railroad to financial services.

It’s risky to make comparisons of important people who come from starkly different eras. Sort of like asking whether the 2015 Golden State Warriors could beat the ’83 Boston Celtics, or if Babe Ruth could hit Max Scherzer. There’s no way to know. The speculation is fun, but pointless.

But one thing you can believe: if Bill Deramus was around today, he’d be lighting up the internet just like Hunter Harrison, drawing the same nasty comments on Facebook and Twitter, sending people into fits of rage. And, like Harrison, probably not giving a damn.

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