1970's Milwaukee Road and Illinois Central merger opportunity missed

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1970's Milwaukee Road and Illinois Central merger opportunity missed
Posted by Andrew Falconer on Thursday, October 08, 2015 9:12 PM

The Milwaukee Road and the Illinois Central were looking to merge with other railroads.

Looking at maps and reading about railroad mergers that should not be overlapping too much, it seems obvious that the Milwaukee Road and the Illinois Central could have merged without having too many overlapping rail lines.

The strange thing about the IC choosing to merge with the GM&O is that the later management decided that the ICG had to get rid of much of the GM&O. That means that the GM&O would have been better merged with another railroad.

How did they miss the opportunity to merge the Milwaukee Road and Illinois Central in the early 1970's?

Andrew

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Posted by MidlandMike on Thursday, October 08, 2015 11:05 PM

Their Omaha lines were redundant.  There would have been some efficency realized in a Minneapolis-New Orleans service.  However, MILW was an east-west oriented operation, and IC was N-S oriented.  It does not seem they would have much synergy

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Posted by Andrew Falconer on Thursday, October 08, 2015 11:24 PM

The combined road would have been able to move traffic more locations than barges or highways.

What MILW was missing were their own North-South lines from Fargo and Duluth to the Canadian Pacific and Canadian National. That would have made a merger with IC more useful and might have prevented the CN take-over of IC.

The MILW-IC merger would have worked if they just had a few more direrct connections to the North.

Seattle to Chicago to New Orleans trains moved all on one railroad would be a useful route for food and manufactured goods.

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Posted by daveklepper on Friday, October 09, 2015 5:30 AM

Would have been logical.   Lack of "out-of-the-box" thinking.

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Posted by CSSHEGEWISCH on Friday, October 09, 2015 10:04 AM

Both roads were relatively weak and I don't think that an end-to-end merger would have helped them too much.

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Posted by 1oldgoat on Monday, October 12, 2015 8:27 PM

Although I agree that IC+MILW would have been an interesting match with more benefits that not, the "merger movement" was focused on mating parallel roads to eliminate redundant trackage and reap savings from the combination. (Despite the fact that the savings were rarely close to what the merger partners had anticipated; i.e. Erie+DL&W or PRR+NYC). In addition, there was the unwritten rule not to extend beyond the set "gateways".  

But since we are redrawning the map, there were a number of missed opportunities. The Burlington, Rio Grande and WP were natural partners. The Nickel Plate and Western Maryland and/or Lehigh Valley (or Lackawanna) with the Wabash getting the other road would have converted these roads into latter day "trunk lines".

I've heard a bit about the 1920 plan to consolidate most Class 1 roads which had some very logical (and questionable) matchups. Nonetheless, my guess is that by now it would have settled down to a half dozen mega-carriers like we have today.

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Posted by NorthWest on Monday, October 12, 2015 9:08 PM

I've always wondered what an EL-NKP merger would have looked like. EL's problem was a lack of Midwestern feeder branches, and NKP's was that it did not reach New York City. 

Regardless, I agree that any change would have resulted in largely the same net result, though perhaps with different lines in use and abandoned.

(Edited)

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Posted by Trinity River Bottoms Boomer on Tuesday, October 13, 2015 7:08 AM

In 1965 The Katy was saved by the late great John W. Barriger III.  He also headed other railroads before his venture with the M-K-T.  In the 30s he attemped to sell the idea to merge most of the Class One railroads into a few major truck lines.  In my opinion this should have occurred then and not in later years when the mega-merger movement started in earnest in the 1960s.

We can all gripe, complain, and wish, what shudda been, til the cows come home, but look, there aren't any stock cars to move them to market anymore either....what a bummer!

Early 60 merger attemps I remember from the pages of Trains: Santa Fe bid for Western Pacific and Frisco.  Frisco bid for Central of Georgia.  Southern Railway demanded trackage rights to Tampa, Florida, as a condition for approval of the merger between Atlantic Coast Line and Seaboard.  Rock Island break-up between Union Pacific and Southern Pacific.  The list goes on and on including the Northeast and Midwest.  

We are in the year of out Lord, 2015, and still no coast to coast transcon in the US!  BNSF comes close (but no cigar) with the x-Frisco line to Pensacola, FL.  Had the famous ACL Perry Cut-Off in NW FL remained, BNSF might had received trackage rights to the Tampa Bay area which includes the ever expanding Port of Tampa!  Don't you know CSX would had fought that one big time!

Southern's demand for entrance to Tampa was regected by the ICC but Seaboard Coast Line still became reality.  SOU got CofG derailing the Frisco bid.  Florida has lost so much track in the central and west part of the state that freight destined to markets in the west and midwest must move EAST around Robin Hood's barn to Plant City, then NORTH, and then head west.  What a mess!  This is not what the slogan that SCL coined after the meger was designed to bring to the shipper: Service Customers Like.  

Item: Service got so bad after the creation of SCL that long time ACL shipper Publix Super Market stopped using rail to their Lakeland HQ warehouse and bought their own fleet of trucks.  This according to my late best railfan buddy who was a natural born Floridian from Tampa!

The one modern era merger that shoudda been: Southern Pacific Santa Fe.  Right or wrong?  I'd like to hear from the Peanut Gallery!

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Posted by jeffhergert on Tuesday, October 13, 2015 7:18 AM

NorthWest

 NKP's was that it did not reach Chicago. 

 

 

It sure looks like the New York, Chicago and St. Louis Railroad did go to Chicago.

http://www.nkphts.org/systemmap.html

Jeff

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Posted by NorthWest on Tuesday, October 13, 2015 7:45 AM

Meant New York City...

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Posted by MidlandMike on Tuesday, October 13, 2015 9:51 PM

Trinity River Bottoms Boomer

...

The one modern era merger that shoudda been: Southern Pacific Santa Fe.  Right or wrong?  I'd like to hear from the Peanut Gallery!

 

I think this would have led to the degradation of most of the SP lines.  I think UP-SP was a better fit.

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Posted by Trinity River Bottoms Boomer on Wednesday, October 14, 2015 5:21 AM

Indeed, SP/UP was the better way.  E.H. Harriman tried it during the WWI era and got knocked on his caboose by the "Trustbusters" of the period.  A tragic mistake.  Harriman interests also included Erie and IC.  What a system this would have made!

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Posted by CSSHEGEWISCH on Wednesday, October 14, 2015 10:06 AM

Trinity River Bottoms Boomer

The one modern era merger that shoudda been: Southern Pacific Santa Fe.  Right or wrong?  I'd like to hear from the Peanut Gallery!

 
Whoever was responsible for proposing the Southern Pacific Santa Fe merger did not consider anti-trust law.  It was incredibly anti-competitive as proposed and it would have taken a lot of concessions and spinoffs to pass regulatory muster.
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Posted by Trinity River Bottoms Boomer on Friday, October 16, 2015 5:54 AM

As I mentioned above, the biggest merger blunder in post-1960 railroading was Seaboard Coast Line, with Central and West Florida suffering the most line abandonments. 

Instead of retaining ACL's Ocala Div. line that left the mainline a short distance west of Uceta Yard and ran north to Trilby which connected with the Perry Cut-Off to NW Florida and west and midwest markets, it was lifted a couple of miles north, retained for industries.  The Wye off the mainline is still used by Amtrak to back into Tampa Union Station.  At one time, before interlocking, a manned wooden switch tower, known as Gary, (GY) protected the track in this area.

If SCL had had a vision, a new yard would have been constucted north of Tampa on the Ocala Div. and both Uceta (ACL) and Yeoman (SAL) would had been lifted with the property turned into a new industrial park.  Today both outdated yards are still there surviving under CSX ownership and aren't prepared to handle the new traffic expected to be generated at the expanding Port of Tampa when the widened Panama Canal project is completed.

No wonder CSX stands for Chicken S**t Express!

 

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Posted by Los Angeles Rams Guy on Tuesday, October 27, 2015 11:46 AM

Having grown up in my hometown in northeast Iowa (Edgewood) which was (and still is) both MILW/SOO/IMRL/ICE/CPRS and IC/ICG/CC/CN territory, I've often wondered the same thing myself.  I think strictly in terms of having single line service from the Pacific Northwest to the Gulf of Mexico made it an intriguing possibility and it certainly would have made MILW's PCE a much more viable link.  Beyond that, I'm not so sure.  When I think about it now, however, I wish that IC Industries; when it was in the process of selling off parts of ICG in the early/mid-80's, would have made a hard push to sell the ICG Iowa Divsion mainline to BN as that would have been a terrific fit for the BN.  The BN could have diverted a lot of their coal traffic from the former CBQ mainline across southern Iowa onto the ICG across the northern half of the state instead.  I have no doubt that BN would have poured a lot of money into the ICG's Iowa Division mainline as things really started to go downhill on ICG in Iowa beginning in 1981 or so.  I do know a former BN upper-management employee who told me that they had taken a hard look at the (then) CC in 1992 or 1993 and BN ultimately decided against it.  Even more ironic is the fact that the former SOO and CC looked at a merger possibility back in the late 80's that never came about.

I think a lot about the former MILW as well and what could have been had the merger with Grand Trunk gone through back in the early-mid 80's like it should have.  At the same time, the MILW "Core" system now is a part of today's CPRS and I hope the next step is to take the KCS!

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Posted by SD60MAC9500 on Friday, August 18, 2017 6:58 PM
As far as I'm concerned the Milwaukee should have been broken up among; BN, UP, and GTW. BN which already operates the current track in the Dakotas is already in place. Everything from Terry, MT west goes to the UP. Everything east of BN's ex-MILW track. To the GTW.
Rahhhhhhhhh!!!!
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Posted by MidlandMike on Saturday, August 19, 2017 9:29 PM

SD60MAC9500
As far as I'm concerned the Milwaukee should have been broken up among; BN, UP, and GTW. BN which already operates the current track in the Dakotas is already in place. Everything from Terry, MT west goes to the UP. Everything east of BN's ex-MILW track. To the GTW.
 

I wish that ICC had required that the NP had to be spun-off in the proposed BN merger, to preserve meaningful competition in the northern corridor.  At that point NP probably would have merged with MILW for a Chicago entry.  Then they probably would have been merged into UP in the final round of western mergers.

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Posted by BLS53 on Sunday, August 20, 2017 7:47 PM

I never understood the IC/GM&O merger. All that happened, was that they ended up either abandoning or selling off most of GM&O's routes. The only thing GM&O had, was the most direct route between Chicago and St. Louis. And as it turned out, the only value of that route, was to Amtrak.

Some cite the elimination of competition, but if one compared the IC main with the condition of the GM&O from southern Illinois southward, it's was obvious little competition existed. I can't recall GM&O even having any thru trains from Chicago/St. Louis to the Gulf coast, in the years just before the merger. Mostly a series of locals servicing small industries along the line, which the IC soon determined weren't worth the effort, and ripped up the track.  

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Posted by BLS53 on Sunday, August 20, 2017 8:10 PM

Los Angeles Rams Guy

Having grown up in my hometown in northeast Iowa (Edgewood) which was (and still is) both MILW/SOO/IMRL/ICE/CPRS and IC/ICG/CC/CN territory, I've often wondered the same thing myself.  I think strictly in terms of having single line service from the Pacific Northwest to the Gulf of Mexico made it an intriguing possibility and it certainly would have made MILW's PCE a much more viable link.  Beyond that, I'm not so sure.  When I think about it now, however, I wish that IC Industries; when it was in the process of selling off parts of ICG in the early/mid-80's, would have made a hard push to sell the ICG Iowa Divsion mainline to BN as that would have been a terrific fit for the BN.  The BN could have diverted a lot of their coal traffic from the former CBQ mainline across southern Iowa onto the ICG across the northern half of the state instead.  I have no doubt that BN would have poured a lot of money into the ICG's Iowa Division mainline as things really started to go downhill on ICG in Iowa beginning in 1981 or so.  I do know a former BN upper-management employee who told me that they had taken a hard look at the (then) CC in 1992 or 1993 and BN ultimately decided against it.  Even more ironic is the fact that the former SOO and CC looked at a merger possibility back in the late 80's that never came about.

I think a lot about the former MILW as well and what could have been had the merger with Grand Trunk gone through back in the early-mid 80's like it should have.  At the same time, the MILW "Core" system now is a part of today's CPRS and I hope the next step is to take the KCS!

 

Concerning BN and IC further south. When the PRB coal first started running down to the barge terminals on the big rivers in far southern Illinois and western Kentucky, BN worked out trackage rights with the IC. The IC was a more direct route than BN's Beardstown Sub south of Centralia. This went on for almost 30 years, until CN bought the IC. CN instituted bi-directional running on the IC main and Edgewood cut-off, and ended BN's trackage rights. BN and UP now share a line that was once a combination of the C&EI and CB&Q. UP upgraded the line about 20 years ago.

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Posted by BaltACD on Monday, August 21, 2017 6:21 PM

Andrew Falconer
The Milwaukee Road and the Illinois Central were looking to merge with other railroads.

Looking at maps and reading about railroad mergers that should not be overlapping too much, it seems obvious that the Milwaukee Road and the Illinois Central could have merged without having too many overlapping rail lines.

The strange thing about the IC choosing to merge with the GM&O is that the later management decided that the ICG had to get rid of much of the GM&O. That means that the GM&O would have been better merged with another railroad.

How did they miss the opportunity to merge the Milwaukee Road and Illinois Central in the early 1970's?

You misunderstand what the purpose of mergers are, especially in overlapping territories.  The purpose is to get rid of a much physcial plant as possible and the expenses of operating and maintaining it so as to maximize profits and minimize costs.

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Posted by CSSHEGEWISCH on Tuesday, August 22, 2017 10:18 AM

The point is well-made especially when you consider the poor financial performance of the Gulf & Mississippi after it was split off from ICG.

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Posted by RME on Tuesday, August 22, 2017 1:43 PM

NorthWest
I've always wondered what an EL-NKP merger would have looked like. EL's problem was a lack of Midwestern feeder branches, and NKP's was that it did not reach New York City.

The problem here is that some of the post-EL merger decisions would have had to be made differently for this to work.  Compare the 'fifth system' discussions of the mid-Twenties, which understood some of the potential of DL&W/NKP as a high-speed bridge connection.  Then look at the early EL decision to transfer through freight to the ex-Erie line and eliminate the high-speed line via Garret Mountain completely to build the I-80 cut.  Arguably the presence of established high-speed through traffic via the Nickel Plate -- within very recent memory with the Berkshires! -- would have given a reason to retain and perhaps improve the Cutoff and other parts of the DL&W line specifically for New York traffic, just about the time that pig and then container traffic opportunities were developing.

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Posted by Trinity River Bottoms Boomer on Sunday, September 03, 2017 12:16 PM

Anyway you look at it, the US rail map today is a mess.  Competition has been eliminated in so many cities and states and left with only one railroad in town like CSX who has the Public Be Damned attitude, "You can ship with us or take your freight and shove it in a rusted potbelly stove of a caboose in some railroad museum".

Thank goodness for the mother truckers!

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