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Demise of the Olympian Hiawatha Locked

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Posted by CSSHEGEWISCH on Tuesday, April 27, 2021 10:09 AM

Mail contracts made the losses tolerable, they rarely eliminated them.  The loss of RPO contracts hit harder since the PO paid a better rate than with a bulk storage mail contract.

The daily commute is part of everyday life but I get two rides a day out of it. Paul
TRR
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Posted by TRR on Tuesday, April 27, 2021 8:58 PM

By NOT having passenger service, even with Amtrak, in the way, Milwaukee Road was very successful in getting the "Mail contracts."

"The Milwaukee Road has been awarded long-term contracts to handle U. S. Mail both ways between Chicago-St. Paul, Chicago-Des Moines, Chicago-Louisville and St. Paul-Seattle. The con-tracts with the U. S. Postal Service become effective on May 4 and are for four years. The mail will move piggyback in trailers with The Milwaukee Motor Transportation Company providing ramping and de·ramping and some over-the-road services. Volume is expected to be about 1,500 trailers a week." Milwaukee Road Magazine, March-April, 1976.

Even by that date, it could do that faster than BN. "No one knew why!"

https://milwaukeeroadarchives.com/MilwaukeeRoadMagazine/1976MarchApril.pdf

 

 

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Posted by wjstix on Thursday, April 29, 2021 2:46 PM

TRR
Even by that date, it could do that faster than BN. "No one knew why!"

Maybe because BN had all those other trains to work around while the Milwaukee Road's tracks were just sitting there unused? Wink

Stix
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Posted by Vermontanan2 on Thursday, April 29, 2021 6:21 PM

TRR

By NOT having passenger service, even with Amtrak, in the way, Milwaukee Road was very successful in getting the "Mail contracts."

"The Milwaukee Road has been awarded long-term contracts to handle U. S. Mail both ways between Chicago-St. Paul, Chicago-Des Moines, Chicago-Louisville and St. Paul-Seattle. The con-tracts with the U. S. Postal Service become effective on May 4 and are for four years. The mail will move piggyback in trailers with The Milwaukee Motor Transportation Company providing ramping and de·ramping and some over-the-road services. Volume is expected to be about 1,500 trailers a week." Milwaukee Road Magazine, March-April, 1976.

Even by that date, it could do that faster than BN. "No one knew why!"

https://milwaukeeroadarchives.com/MilwaukeeRoadMagazine/1976MarchApril.pdf

 

 

Well, the article says nothing about worthiness of the revenue or how fast the service has to be.  Not all mail has to be a priority.  And sometimes low-volume, low-revenue shipments just aren’t worth it, and the article says nothing about what BN might be handling (though I admit they were handling nothing between Chicago and Louisville).
The first Milwaukee Road train into Louisville happened on March 1, 1973.  As Tom Ploss notes in his book “The Nation Pays Again” about the Louisville line: Southern proposed a through train between Atlanta and Chicago via the Milwaukee Road at Louisville; they wanted to market the train at 48 hours from endpoint to endpoint but it never happened, because, as the president of the Milwaukee responded, it would take 48 hours just from Louisville to Chicago - the track was that bad (except on the former Monon, of course).  And while the desire was to get the track up to 40 MPH, that never happened.  This couldn't've been high priority stuff.
But the article does speak volumes about what some would consider to be “successful.”  The contract was to begin May 4, 1976 for a duration of 4 years which would be ending on May 4, 1980.  By that date, the track was gone to Seattle and Des Moines.  But maybe that’s where the trucks came in?
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Posted by Vermontanan2 on Thursday, April 29, 2021 6:24 PM
TRR
And the Empire Builder is "just as profitable!" That is, yet another complete fabrication by Mr. Meyer.
Indeed, that I would say that is a fabrication.
TRR
"ABOARD THE EMPIRE BUILDER (Reuters) - Its passengers are mostly silver-haired retirees, oil-field workers and a few young families gazing out the windows of Amtrak’s least-profitable and third-longest line, rumbling from Chicago through eight states and on to the American West Coast."
I don’t know the specific purpose of this “drive-by” posting (since the thread is on the Olympian Hiawatha).  But context is in order.
The article says Amtrak has profitable routes. It doesn’t.  Some people think the Northeast Corridor is (pre-COVID, obviously), but that doesn’t include operation and maintenance of the infrastructure and the HUGE amount of needed investment just to keep the thing afloat.  Even by Amtrak standards, the Empire Builder is actually the “longest line” with more route-miles than any other (they obviously missed that the Empire Builder has two sections – each with their own 300+ miles, and that the Texas Eagle and Sunset Limited are separate trains), and other trains routinely “lose” more money according to Amtrak accounting.  In FY2019 – the last pre-COVID year, both the California Zephyr and Southwest Chief “lost” more money than the Empire Builder, and the Sunset Limited “lost” 61% that of the Empire Builder while only operating 43% of the time, and this has been pretty uniform in throughout the 2010s.  Missing basic facts aside, few have absolute faith in Amtrak accounting methods.  With the station in Miami being assigned a fixed expense for snow removal and part of the NEC electrification being assigned to non-electrified routes, this might make one skeptical of Amtrak’s figures.  For the Empire Builder specifically, it and the Coast Starlight bear the cost of all redcap and baggage handling costs at Seattle and Portland even though all the “Cascades” trains do checked baggage.  And then there’s the overall cost of the fact that Amtrak equipment is just worn out.  BNSF requires a third locomotive on the Empire Builder during the winter just because theirs are too likely to croak during cold weather, and when it’s not cold, paying BNSF for a locomotive because of an Amtrak failure is relatively commonplace.  So, the financial aspect of the Reuters article is really lacking in context and facts.  But the part in the article about the train having bipartisan support is true, and why it’s still around.  Regardless of the amount of money it “loses,” obviously, there are sufficient numbers of people who see value in retaining the service, which is pretty much what it all boils down as to whether a train or route is operating or not.

--Mark Meyer

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Posted by Vermontanan2 on Thursday, April 29, 2021 6:31 PM
TRR
Milwaukee Road was the most experienced of the "three railroads mentioned," by far. It's primary markets for the transcontinental service in 1955 were: Butte, Spokane, Seattle, Tacoma.
So "experienced" that the Milwaukee didn't offer leg rest seats in its Olympian Hiawatha until 1953, 6 years after the train's debut.  Pretty much a given for a route over 2,000 miles.
TRR
In 1955, the Milwaukee succeeded in getting the "Union Pacific" passenger contract.
And, of course the C&NW - whose line today remains the primary route between Chicago and Omaha/Council Bluffs/Fremont - might say something kind of similar but adding/changing a few words: In 1955, the C&NW succeeded in getting RID OF the "Union Pacific" passenger contract."
TRR
This gave the Milwaukee Road passenger service, over the UP, to Butte, Spokane, Seattle, and Tacoma. After that, add on Portland, San Franciso, Denver and Los Angeles.  Now, why would Milwaukee Road even "want" to offer TWO passenger routes to Butte, Spokane, Portland and Seattle, and why would it want to turn down adding passenger service to Denver, Portland, San Francisco and Los Angeles?
This, of course, is patently ridiculous.  It's only applicable if the Olympian Hiawatha only offered service to (and only stopped at) Chicago, Butte, Spokane, Seattle and Tacoma.  All told, of course, there were 42 stops in all (at the time of discontinuance), and travel was allowed between just about all of them without restriction.  And the statement is even more ridiculous after the Olympian Hiawatha was discontinued in 1961.  The Milwaukee continued to serve Butte until 1964 from its Minneapolis-Deer Lodge train, but there was never any through-car service to Spokane, Seattle, or Tacoma from Chicago involving a Milwaukee Road train after May 1961 (and to Butte after February 1964).  After the Olympian Hiawatha was discontinued, sure, you could still take a train from Seattle and Tacoma to Portland to board the City of Portland and ride the UP to Council Bluffs and the Milwaukee to Chicago, but the train you boarded in Seattle and Tacoma would have been a Great Northern train.  Indeed, in 1960 - the last year there was through car service to/from Seattle on the City of Portland, the eastbound sleeping car was handled on the GN train.  Using this logic, you could say that Great Northern served places like Perry and Marion, Iowa on the MILW, plus just about everywhere on the UP!  The reality was that the discontinuance of the Olympian Hiawatha was just that - less service.  Between Chicago and Omaha, the communities served were modified (and downgraded because the C&NW served more communities directly), but amount of service was unchanged.
TRR
Milwaukee began moving quickly to preserve and expand its passenger services, and, at the same time, clear the schedule on its own line for high speed freight service, while increasing profitability from its passenger service. The slogan was "All Freight by '58."
Moving quickly?  "All Freight by '58?"  More like: "Losing money galore through '64!"  The Milwaukee claimed loses on its Minneapolis-Deer Lodge service (May 1961-February 1964) of well over $1 million annually.  And what an embarrassment to point out that the Milwaukee Pacific Extension - one that was only running 1 or 2 through freight trains daily as it was - needed to get rid of the one passenger train it had to facilitate its "high speed freight service."  Really doesn't speak well of the operating folks or the infrastructure, especially considering that the Milwaukee had to limit its "high speed freight service" to 3,000 tons and provide 3.0 HPT to make its schedule (XL Special Chicago-Seattle) due to the Milwaukee's horrible operating profile.  When CB&Q and GN matched the Milwaukee's schedule 4 years later (train 97), their operating plan required a similar amount of locomotive power but with a tonnage limit of 5,500 tons between Chicago and Spokane, easily doable with GN’s superior operating profile.  The traffic set out at Spokane provided superior service to that city (Spokane was on a Milwaukee Road branch line), and was forwarded by GN subsidiary SP&S to Portland (the second largest market in the Pacific Northwest and unserved by the Milwaukee).  All this while GN was hosting several other freight trains and two daily passenger trains.  In short, GN didn’t need to “clear the schedule” to operate a 55.5-hour schedule.  With planning, and superior operating profile, and sufficient infrastructure, not a problem.  But as degrading as Michael’s “clear the schedule” suggestion is to the Milwaukee in general, it’s probably true.  By 1972 – when the Milwaukee was in its temporary traffic increase as a result of the BN merger – the schedule of the XL Special from Chicago to Tacoma had been lengthened from 56.5 hours to 66 hours and was averaging 72 hours.  Meanwhile, BN kept its 55.5-hour Chicago-Seattle schedule for train 97, and in 1971 added its “Pacific Zip” on a 50-hour schedule, which routinely operated 4-5 early into Seattle.  Getting back to the original topic of the Olympian Hiawatha, the "All Freight by '58” is by itself questionable, as the Milwaukee never did degrade the service.  Jim Scribbins documents the pains the Milwaukee went through to increase patronage on the train in 1958, 1959, and 1960 in his book “The Hiawatha Story.”  The railroad also touted serving Yellowstone and boasted about a speed-up of the westbound Olympian Hiawatha in its employee magazine. And, the Olympian Hiawatha always remained the first train shown in the “condensed schedules” section of timetable and Official Guides – never the City of Portland or anything else. 
TRR
Railroad service abandonments "being what they were" in that era, the abandonment could not occur until 1961, despite Milwaukee Road serving those key destinations over Union Pacific.
Again, only applicable talking about Chicago, and possibly stations really near Chicago.  I challenge Michael to show documentation of anyone choosing to go from Chicago to Butte or Spokane to Seattle on UP trains because the Milwaukee pulled out.
TRR
The Milwaukee turned the money-losing transcontinental passenger operation -- GN and NP were crying loudly about their losses -- and made it profitable.
From "an actual source:"
"The so-called "City" trains are presently being operated jointly with the Union Pacific and the Southern Pacificby the Milwaukee betweon Chicago and Omaha. These operations are covered by a contract which provides for a one-year termination notice from either party. As shown in the following Table IX, during the year 1962 the Milwaukee realized a net gain of $1,604,086 based on out-of-pocket expenses in the operation of the City trains between Chicago and Omaha. Revenues on these trains were $5,590,478, and out-of-pocket operating expenses were $3,986,392."  Report of Committee on Possible Mergers of Union Pacific-Rock Island-Southern Pacific Railroads, May 3, 1963. P. 21.
Turning a money-losing operation into a profitable endeavor was difficult for railroads in general in the 1960s. Mr. Meyer, anxious as always to discuss what he does not know, does not know that either.
Well, context matters here.  1962 is one year.  What about the other 15?  Another “actual source” is Trains magazine (and others) who wrote about the $7 million the Milwaukee spent alone for new locomotives and signaling for its Chicago-Council Bluffs route.  And then there’s the several millions of dollars spread over a variety of projects to accommodate talking on these trains: Hiring and training new people, miles and miles of new or upgraded track (especially in the commuter zone west from Chicago), tripling the number of people working in the Milwaukee’s reservations center, and painting all the equipment in the UP color scheme.
And then there’s the reality that this bonanza of business would not be all it was cracked up to be being realized in pretty short order.  The upgrading was to accommodate an additional five trains per day in each direction starting in October 1955 (for a total of six passenger trains daily each way, including the Arrow).  But already in the Spring of 1956, the Challenger and City of Los Angeles were consolidated, except during some holiday and peak seasons (and always consolidated after 1960, though the name lingered). By 1959, the City of Denver became basically just additional cars on the City of Portland.  In 1960, the City of San Francisco and City of Los Angeles/Challenger consolidated between Chicago and Ogden.  From 6 trains to 3 in only 5 years.  The Arrow was axed in 1967, and the finally “City of Everywhere” consolidation down to one passenger train by 1969.  Such expenditures or “stranded assets” I doubt were part of the anecdotal 1962 “profit.”
And such malarkey was not lost on Milwaukee Road employees on the Pacific Extension either.  Referencing the Minneapolis-Deer Lodge stub train that the Milwaukee was forced to operate from 1961 to 1964 as the “City of Deer Lodge” can sound cute, but employees were not impressed by their railroad sinking millions of dollars into basically a passenger-only operation (freight traffic did not increase substantially as a result) that by 1964 was already hosting only half of the trains originally intended by the investment.  And then to see the XL Special being launched on their railroad with a bunch of hoopla without ANY corresponding upgrades (CTC or even ABS where still missing) was indeed a slap in the face.
Being a revisionist historian can be challenging, even if you’re successful.  But if you’re trying to change a failure into a success, you’re only convincing if your story ends on a success.  Not the case here:  The traffic millions was spent on eroded quickly without backfill with the remainder diminishing pretty much in line with most passenger services prior to Amtrak.  Come 1971, Amtrak didn’t choose that route and became freight-only.  And by the end of the decade, the Milwaukee Road became the only trans-Iowa Chicago-Omaha line to be mostly abandoned (the CGW was folded into the C&NW before it mostly went away).  An epic failure, indeed.
--Mark Meyer
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Posted by daveklepper on Monday, May 3, 2021 5:40 AM

It was pretty clear to me, at the time, that the Milwaukee expected the interchange freight traffic, from the UP, to follow the routing change in passenger traffic.

It did not happen.

TRR
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Posted by TRR on Tuesday, May 4, 2021 8:41 AM

There is no doubt rail passenger services lost money, and Amtrak does to this day, and the Empire Builder is one of the biggest "losers." However, if "we" are going to have rail passenger service, that is likely a necessity.

When Paul Reistrup and Marty Garelick were given a stab at running Amtrak, that was their biggest headache: Amtrak was essentially two unrelated passenger services. The first, the profitable Northeast corridor, where Amtrak controlled its destiny in a high-use environment. The second, the long-distance passenger trains that nearly all lost money, and where Amtrak did NOT control, effectively, its borrowed resources. Marty, as the COO, faced the stark reality of two completely different management needs, and the inability of Amtrak to effectively do that.

Why did Milwaukee "want out?" Probably for the same reasons that everybody else did, except that Milwaukee managed to find a way to preserve "most" of its service and turn that into a profitable operation. It's UP Contract was, in fact, profitable.

Good? Bad? Well, they did what other railroads did not do in that particular instance AND opened up its freight service to offer services far superior to its direct competitors. Did they get additional freight traffic, Omaha to Chicago? According to officials, "some" but perhaps not what was hoped. Did Burlington Northern practically destroy itself in Lou Menk's drive to carry all the coal traffic that it could? Well, pretty much. The resulting 95% operating ratio at BN was shown to be "one way" to lose your job as the disaster unfolded at BN. Bringing over the "Frisco" management was another.

What is, ultimately, notable is that railroads spent heavily to upgrade their passenger services post WWII, expecting a different result from the public. Automobiles AND the Interstate Highway System dashed those expectations.

As the most experienced "passenger hauler," Milwaukee Road saw the need for change, and moved quickly to do so by 1955. And those changes moved rapidly. For anyone following the passenger operations, it is interesting to see that Milwaukee's ancillary passenger services on its Pacific Extension were also being transformed in precisely that time period. The passenger train from Harlowton to Great Falls was changed to bus service, from Roundup to Great Falls. That had nothing to do with the UP contract, it reflected a different decision, a strategic decision, to "get out" of rail passenger service. And those changes were rippling through the Milwaukee "out west" in 1955. GN and NP could not do that. "Could not" is a choice of words. "Did not" would be another choice.

And, those decisions allowed Milwaukee to offer, by the 1960s, a series of improvements to freight operations, lowering the tunnel floors to get the traffic that the Northern Pacific could no longer carry. The speed-up of freight service after the passenger trains were out of the way was unmatched by any competitor: they physically could not do it. They said so. In sworn testimony to the ICC during the frantic Northern Lines merger efforts.

The Olympian Hiawatha offered an "object lesson" for railroading. Milwaukee had invested heavily in that train, with iconic design by Brooks Stevens, innovative equipment with Superdomes and Skytop cars, a fast schedule, and even the two "passenger electrics," E-20 and E-21. Too, the route was of extraordinary scenic beauty. And, six full sets of equipment compared to GN's and NP's sets of five (delaying departure turnarounds in Seattle). Nobody did that better.

But -- and it is important to examine how that played out -- it was quickly apparent that 1) passengers were NOT coming back to the rails, and 2) passenger train schedules were a corrosive handicap to "fast freight" service.

And, as part of that "larger picture" that picture was clear by 1955. The "UP Contract" was "part" of that larger picture, but was not the "whole" picture. The innovative part was that Milwaukee not only EXPANDED its transcontinental passenger services dramatically, but could even make a profit on it, using the same equipment that it already had; that is, finding a way to make money on "sunk costs."

The development history of the "Olympian Hiawatha," which is distinct from its predecessor the "Olympian," is a compelling case study. There is no doubt that the Milwaukee Road gave that passenger service "it's best shot," but then also was much quicker to recognize the hard reality that GN and NP had failed to do: it wasn't going to work.

The "legal" department moving somewhat slower than the "operating department," Milwaukee by 1955 had embarked on a new passenger rail strategy "out West" and one that, on the whole, was successful: it turned a money losing proposition into a profitable one, and, as a key element in that, opened up the entire route to the expanded freight service that cut a full day off of transcontinental freight, and quadrupled the high-end, long haul traffic that railroads desperately needed and sought.

And notably, that success was also happening in conjunction with the veritable collapse of rail freight traffic in the Midwest, on all railroads operating there, post-1960, as the Interstate Highway System gave new speed and access for trucks, creating desperate rail industry needs that Congress attempted to address with the 3R and 4R Acts and then, finally, the Staggers Act.

 

[Edited by admin to remove personal attacks on another Forum user. In future, refrain from doing this, please.]

TRR
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Posted by TRR on Tuesday, May 4, 2021 10:45 AM
We know, factually, that the "demise" of the Olympian Hiawatha was a well-designed approach that 1) got money losing passenger services out of the way of fast freights, 2) preserved that passenger service to key locations, and 3) opened up direct passenger service to more Western locations while cutting costs! If only poor GN and NP could have been half so astute!
 
The freight speed-ups were part of that success story.
 
In 1962, GN's fastest freight (via CBQ), Chicago to Seattle, was 94 hours. NP could do it in 97 hours, notwithstanding the burdens of grades and mileage. 328 ICC 474. NP's bigger problem for the high value auto traffic was that it couldn't haul the triple level auto racks coming into service. ["328 ICC 474" is the recognized citation to volume 328, Reports of the Interstate Commerce Commission, begining at page 474].
 
Milwaukee Road's fast freight in 1962, #263, ran its schedule at 77 hours -- which already beat GN's fast freight by 17 hours.
 
NP and GN had testified in 1963 that one of the merger benefits of the proposed Northern Lines merger of a "single line haul" would have been their ability to run an 84 hour "fast freight." 328 ICC 328. This, they claimed, was a compelling benefit of the merger -- they would finally be able to offer "comparable" schedules with Milwaukee's profitable premium service out West. They could almost match #263 and the ability to do this and to offer it was an important marketing tool, they felt, for a key class of shippers.
 
So, the Milwaukee's XL Special, the new #261, at 55 hours in October, 1963 was just incredible by existing standards. Look at it from GN's perspective -- this was1 a 2200 mile run at almost half the running time of GN's premium service -- or nearly twice as fast. And that still included #263, which was kept to its original schedule running 17 hours faster than GN's hotshot. MILW had a hotshot and a slow hotshot both outrunning GN's flagship freight. Too, the Milwaukee's advantages in shifting passenger services over to the Union Pacific were paying off, demonstrably. GN and NP were burdened with handicaps they could not then remove. And Milwaukee, at the same time, protected its passenger services out West, and even expanded them.
 
And of course, as it became popular, #261 became #261C and #261TC, which in addition to #263 was offering daily service bracketing a variety of departure and arrival times -- it was Sprint service, except across the Continent.
 
 
The "Speed Up!"
 
TRR
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Posted by TRR on Tuesday, May 4, 2021 11:21 AM
GN and NP could not offer competitive freight service after the Olympian Hiawatha was terminated. Taking advantage of the transfer of passenger services to the Union Pacific, the acquisition of more origins and destinations, Milwaukee began turning a profit on its transcontinental passenger services. GN and NP could only whine and cry (along with virtually all operators of long distance passenger trains" Amtrak was a result, not a "suprise."
 
With the resulting progressive upgrade of freight services, the tunnel floor project in 1962, giving Milwaukee the auto traffic that could no longer use the Northern Pacific, the Kent Auto Facility finishing in 1969 taking virtually ALL of the rail auto traffic into and out of Seattle, the Stacy Street Intermodal Facility in 1969 which captured 50% all ALL intermodal traffic into and out of Seattle, were just precursors to the business caputured as the result of the Burlington Northern Merger and the ending of the long-haul discrimination fomerly practiced by the NP and GN.
 
In addition to forest products, high profit auto traffic, and containers, by 1973, "fast freights" were being increased in in numbers and, unfortunately, in tonnages as well. #261C and #261TC, as well as #263C would routinely meet both an advance #262S and a regular #262S, for instance, in addition to #264S, all within a five hour period at Avery. These were all "hotshots" and that's a lot of fast trains to be meeting. That was in addition to normal 265,266, DFW and DFE traffic. The #262 sections were up to 4800 tons. Had MILW stayed with its 3000 ton "Hotshot" limits, it would have had three sections of #262 eastbound, and probably two sections of #264 rolling into Avery in the early afternoon, trying to get around three sections of #261 westbound and two sections of #263 in addition to the "regular" trains.
 
"These were the 8-10 trains per day that the PCE averaged for the remainder of the time before bankruptcy. These were trains that were up to 60% heavier than the trains run during the 1960s, and had MILW stayed with those tonnage limits, the PCE would have been running 14-16 trains per day.
 
This was in distinct contrast to significant and sustained tonnage LOSSES on Lines East (MILW, Rock Island, CNW, CBQ, ICG), during that time period.
 
Lines West on the Milwaukee Road had become the "profit center" for the Milwaukee, the only one it had as the Company began hemorraghing money on its Lines East. The first RR to "go" was the Rock Island. The Illinois Central Gulf was suspected of going that route "any day" except that William Johnson could loan it money from his other, successful companies at Illinois Central Industries.
 
CNW had deferred so much maintenance that, by 1976, it had nearly a Billion Dollars in deferrred maintenance (twice as much as ANY other railroad in the United States) -- by then it was throwing everything it had into keeping its Omaha-Chicago line alive.
 
At BN, despite aggressive harvest of former NP timberlands, by 1979 BN's Operating Ratio was, in fact, worse than could even have been predicted by extrapolating from the declining fortunes of the 1960s. Lou Menk was sat on the catapult, and the Frisco management was brought in to "try and fix things." Boy, did they! https://www.milwaukeeroadarchives.com/EconomicStudies/ConsolidatedOperatingRatiosMILWto1980.jpg
 
 
 
 
TRR
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Posted by TRR on Wednesday, May 5, 2021 9:31 AM

"These were the 8-10 trains per day that the PCE averaged for the remainder of the time before bankruptcy. These were trains that were up to 60% heavier than the trains run during the 1960s, and had MILW stayed with those tonnage limits, the PCE would have been running 14-16 trains per day."

It is notable that, during a key point in time, 1960-1975, railroads with long-distance passenger services were complaining, loudly, that the cost of maintaining those services was "killing them." The U.S. Postal Service made the hemorage somewhat palatable, as memorialized by Arlo Guthrie, "Fifteen cars and fifteen restless riders. Three conductors and twenty-five sacks of mail. ... And the sons of pullman porters, And the sons of engineers, Ride their father's magic carpets made of steel."

And recall "why" trains like the "City of New Orleans" became an economic drag on long distance railroads in that era. Not only the Interstate Highway System, but Air travel. A passenger could travel faster, more cheaply flying than by train. And more conveniently by automobile. Passenger travel by train became an expensive, time-consuming mode of transportation compared to those two new, key features of transportation.

A third element played into the post-1947 rail passenger services: the cost of the locomotion. The new diesel-electrics had been "sold" on the basis of a 20 year depreciation life; the IRS had established that based on "studies" offered by GM. Compared to the well-established deprecation life of 30 years for Steam, it seemed plausible. In reality, the relative complexity of the new power proved an additional financial handicap. The actual economic service life was far shorter than 20 years. And, piled on top of that was something new: financing charges. Interest charges on the debt incurred -- GM's "other" big innovation, "time-pay" -- quickly outstripped every other operating cost: fuel, oil, maintenance, etc. Railroads had never even faced a problem like that before. All they could do was helplessly go to the ICC begging for rate increases, and, as that became obvious, so did the rapidly increasing cost of the diesel fuel itself. How many things "could go wrong" with an historic change in motive power?

Based on the structural changes in the industry itself at that time, the Milwaukee's decision to "get out" of the long haul passenger business was both prescient and, in the manner that it was done -- preserving long distance access to key population centers at somebody else's expense AND expanding substantially the number of those population centers served, also at somebody else's expense -- likewise proved to be a sound decision. It can be characterized as no other.

And of course, that "begs the question" as to "why" Milwaukee had made that decision, to get out of the long-haul passenger service, while retaining a key access to that service? Well, as noted earlier in its internal 1963 study, by 1962 the decision had turned a profit for the company.

The Northern Pacific, which ran a "good passenger service" was left "holding the bag" because the Milwaukee had moved first. And, as Operating Ratios began to skyrocket on the NP, GN and CBQ, so did their relative hysteria for a merger: to save themselves from what was happening to them.

Milwaukee was not insulated. As NP, GN, and CBQ struggled to convince the ICC that it was a "good idea," having been shot down by the ICC once already, Milwaukee was attempting to do the same thing with the CNW, and by 1969, the two companies had a formal merger agreement, and officer positions assigned for the new successor company.

 

Comparative Operating Ratios, Milwaukee v Northern Pacific

 

 

 

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Posted by CSSHEGEWISCH on Wednesday, May 5, 2021 10:09 AM

All of those statements about the other carriers may have been true at that point, but why are they still operating and the PCE and MILW's Omaha main are only memories?

The daily commute is part of everyday life but I get two rides a day out of it. Paul
TRR
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Posted by TRR on Wednesday, May 5, 2021 11:24 AM
CSSHEGEWISCH wrote the following post an hour ago: "All of those statements about the other carriers may have been true at that point, but why are they still operating and the PCE and MILW's Omaha main are only memories?"
 
Different question, different answers. Recall, when Bankruptcy Trustee Stanley Hillman got his "outside" studies back, including "the Big One" from Booz Allen Hamilton, he stopped speaking to the senior executives, feeling that they had misled him. As Paul Cruikshank, VP Operations, put it, "Mr. Hillman became difficult to work with." I'd bet that he did!
 
Recall Stanley Hillman's famous public statement when he got his outside appraisals back: "It turns out that the Milwaukee Road is a relatively wealthy company."
 
Not "what he had been told."
 
What were you told?
 
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Posted by Vermontanan2 on Wednesday, May 5, 2021 7:39 PM
TRR
Why did Milwaukee "want out?" Probably for the same reasons that everybody else did, except that Milwaukee managed to find a way to preserve "most" of its service and turn that into a profitable operation. It's UP Contract was, in fact, profitable.
Again, not true.  The service was simply discontinued.  Gone was any through service over ANY Milwaukee Road trackage from Chicago to Seattle or Tacoma or Spokane, not to mention from Minneapolis/St. Paul.  True, one could ride the “City of Portland” from Chicago to Council Bluffs on the Milwaukee, and then the UP to Hinkle, Oregon and change trains and go to Spokane, but one could also ride the Milwaukee Road from Chicago to Deer Lodge 1961-1964 and change trains and ride the Northern Pacific to Spokane.  Or ride the Milwaukee Road from Milwaukee to St. Paul and the Great Northern to Seattle.  Not “preserving” service, but simply using the trains of another carrier.
And it’s far from a “fact” the UP contract was profitable when the entire cost of the upgrade is factored, especially considering the upgrade was designed for six passenger trains daily each way, which was halved in only 5 years.  Anecdotal “profit” (example given: only the year 1962) is irrelevant compared to sustainability.  That the Chicago-Council Bluffs upgrade ended up being “stranded assets” in a hurry is one thing, but even that wasn’t the worst part.  The Milwaukee Road ended up being the only Chicago-Omaha route mostly abandoned across Iowa.
TRR
Good? Bad? Well, they did what other railroads did not do in that particular instance AND opened up its freight service to offer services far superior to its direct competitors. Did they get additional freight traffic, Omaha to Chicago? According to officials, "some" but perhaps not what was hoped. Did Burlington Northern practically destroy itself in Lou Menk's drive to carry all the coal traffic that it could? Well, pretty much. The resulting 95% operating ratio at BN was shown to be "one way" to lose your job as the disaster unfolded at BN. Bringing over the "Frisco" management was another.
Of course, mentioning Burlington Northern is simply a deflection maneuver, which has zero to do with this thread.  And again, if you’re only running one or two freight trains on 1,500 or so miles of a transcontinental railroad and you need to discontinue the one passenger train to “open up” for “superior” service, that speaks volumes about your inherent inadequacy. 
Burlington Northern’s investment into its coal network was indeed not what it had hoped.  However, there is an obvious difference between “practically destroy(ing) itself” and actually doing it.  The Milwaukee really did it.  It is the only transcontinental railroad in the U.S. to be largely abandoned and the only trans-Iowa Chicago-Council Bluffs railroad to be largely abandoned.  If abandonment is the criteria for success, then Burlington Northern is a failure.  But the reality is that all of BN’s core routes from the day of the coal expansion remain intact, and in prime condition as part of a larger (as a result of Burlington Northern being able to have the financial wherewithal to purchase ATSF), more profitable railroad.  And with the passage of the Clean Air Act, the demand for low-sulfur coal nationwide from places like Montana and Wyoming exploded and Burlington Northern stepped up to the plate and provided the infrastructure, something that might not have been fantastically profitable for the railroad, but fantastically beneficial for the country.
TRR
As the most experienced "passenger hauler," Milwaukee Road saw the need for change, and moved quickly to do so by 1955. And those changes moved rapidly. For anyone following the passenger operations, it is interesting to see that Milwaukee's ancillary passenger services on its Pacific Extension were also being transformed in precisely that time period. The passenger train from Harlowton to Great Falls was changed to bus service, from Roundup to Great Falls.
Again, a total fabrication.  The Milwaukee simply discontinued the Harlowton-Great Falls train and then mentioned existing bus service as a possibility.  In reality, the Greyhound bus service was a Billings-Great Falls route which stopped in Roundup, and for passengers actually desiring to go to Great Falls or Lewistown from the westward Olympian Hiawatha at Roundup, the layover was well over 10 hours. (A more expedient connection to Great Falls would be with Greyhound at Butte, which offered four daily trips.)  It should be noted that the Milwaukee never showed actual times the buses operated, and the concept of through ticketing is hit-and-miss.  (There’s also no specific indication that buses would call at the Roundup Milwaukee Road station, or how that would work when having to wait for the Great Falls bus departing at nearly 900 PM, well after the Milwaukee agent went home…)  And like the bogus claim that Milwaukee’s Chicago-Council Bluffs passenger trains somehow continued serving the Olympian Hiawatha route, the connecting bus didn’t serve most of the communities that lost Milwaukee passenger service.  Lewistown, Moore, and Great Falls where the only common communities served, but all the rest except one lost their only public transportation when the Milwaukee pulled out.
The Milwaukee also did this for main line locations when the Columbian was discontinued.  Footnotes in the schedule at Terry, Forsyth, and Drummond directed patrons to use the Olympian Hiawatha to the nearest stop, and then Greyhound to the destination, which was often directly served by the Northern Pacific.  The Milwaukee could ill afford to add stops to the Olympian Hiawatha; by the time of its death, it had already slumped to being over 2 hours slower than the Empire Builder and just 25 minutes faster (westbound) than the North Coast Limited on its much longer route.
Bus service in lieu of rail hardly “transformed” anything and was no way specifically indicative of an “experienced hauler,” but rather a commonplace occurrence in place for decades.
TRR
That had nothing to do with the UP contract, it reflected a different decision, a strategic decision, to "get out" of rail passenger service. And those changes were rippling through the Milwaukee "out west" in 1955. GN and NP could not do that. "Could not" is a choice of words. "Did not" would be another choice.
The choice for the Milwaukee: “Had to.”  The acknowledgement of too much service in a sparsely-populated region was becoming a reality.  And it was especially applicable for the Milwaukee, which had little exclusivity in service, where the abundant competition provided superior frequency and amenities, and because the Milwaukee’s Olympian Hiawatha was basically a stand-alone single-train operation on a long branch line with almost no connecting service to funnel off-route passengers.
TRR
And, those decisions allowed Milwaukee to offer, by the 1960s, a series of improvements to freight operations, lowering the tunnel floors to get the traffic that the Northern Pacific could no longer carry. The speed-up of freight service after the passenger trains were out of the way was unmatched by any competitor: they physically could not do it. They said so. In sworn testimony to the ICC during the frantic Northern Lines merger efforts.
Unmatched?  The Milwaukee’s timing was 55.5 hours for the XL Special.  Great Northern/Burlington matched it with train 97 in 1968, and bested it with a 50-hour schedule in 1971.  And they did it with larger trains due to a superior profile, and while still operating more freight trains and existing passenger trains.  They did it easily, as they did with passenger and mail service.  No only was the Great Northern Empire Builder the fastest passenger train ever between Chicago and Seattle, but GN had the longstanding mail contract (handled east of St. Paul by the Milwaukee), both of which relied on speed.  Such “testimony” is not reinforced by historical fact, nor does it specifically identify any benefit for the Milwaukee, still the only transcontinental U.S. railroad to be mostly abandoned.
The NP didn’t need to lower the tunnel floors at Stampede Pass to handle the higher auto rack cars – they simply routed their traffic via their subsidiary SP&S, which they also used for their Portland traffic.  A railroad with alternate routes has options – not the case for the Milwaukee.
And it’s interesting that those “decisions” on the Milwaukee didn’t lead to redirecting the money to basic safety features commonplace on the competition, such as a continuous automatic block signal system, centralized traffic control including power switches, longer sidings, and later on continuous welded rail and lineside failed equipment detectors.
TRR
The Olympian Hiawatha offered an "object lesson" for railroading. Milwaukee had invested heavily in that train, with iconic design by Brooks Stevens, innovative equipment with Superdomes and Skytop cars, a fast schedule, and even the two "passenger electrics," E-20 and E-21. Too, the route was of extraordinary scenic beauty.
One “object lesson” about the Olympian Hiawatha:  Don’t spend a bunch of money on a service which only lasts 14 years – a very poor investment indeed.  The route was indeed scenic – a component of its horrible and expensive operating profile, as was electrification – but lacked exclusivity and utility, hence the reason for its demise.  The Skytop cars were unique, but the Super Domes were a flop, due to lack of forward visibility.  Fortunately, some were unloaded on Canadian National.  The train didn’t offer leg rest coaches until 6 years into the operation, and the train wasn’t completely streamlined for several years into its operation, despite the advertising.
TRR
And, six full sets of equipment compared to GN's and NP's sets of five (delaying departure turnarounds in Seattle). Nobody did that better.
And the Milwaukee did it that way because six sets of equipment was a necessity for their limited operation.  The other railroads were not as restricted, and therefore didn’t have to do it.  Take the 1951 timetable for instance: Train 15 arrived in Tacoma at 1145 AM and train 16 departed at 130 PM – only 1 hour, 45 minutes difference.  Hardly enough time to turn, stock, and clean the train.  Even the initial 1947 trip allowed only a 4-hour turnaround in Tacoma – not enough wiggle room.  That was the price of not having maintenance and mechanical facilities in the region’s primary city: Seattle.  Running the train to Tacoma added precious time and cost a whole set of equipment.  But in 1947, the Empire Builder’s turnaround time in Seattle was 7 hours.  And, unlike the Olympian Hiawatha, the Empire Builder got faster.  By 1961, the Empire Builder was over 2 hours faster than the Olympian Hiawatha westbound with an equipment turnaround time in Seattle of 7 hours, 40 minutes. 
After 1951, the Empire Builder was joined by another GN streamliner, the Western Star, which had a much longer equipment turnaround time in Seattle.  When/if the inbound Empire Builder was severely delayed, GN could easily substitute Western Star equipment.  GN also had streamliners to Vancouver, BC and a train (or trains) to Portland.  GN and NP also were known to loan equipment to each other in Seattle as necessary.  GN’s longer turn times and greater equipment availability created an ongoing operational flexibility that the Milwaukee simply did not have; they were one train in and one train out (the Columbian was always all-heavyweight equipment), and without the spare set of equipment dwelling for over a day, had no recourse – just an ongoing additional cost.  At Northern Pacific, the North Coast Limited maintained a 5- to 6-hour turnaround time in Seattle for equipment for 24 years with 93% or better on-time performance.
TRR
But -- and it is important to examine how that played out -- it was quickly apparent that 1) passengers were NOT coming back to the rails, and 2) passenger train schedules were a corrosive handicap to "fast freight" service.
Passenger trains are not automatically “corrosive” (whatever that means) to faster freight schedules.  They actually can be complementary since meet/pass delay is minimal with both trains operating at higher speeds.  But how it played out for the Milwaukee:  When the freight traffic increased in 1972 – without passenger trains – the “fast” schedule went by the wayside while Burlington Northern continued to maintain its fastER schedule.
TRR
And, as part of that "larger picture" that picture was clear by 1955. The "UP Contract" was "part" of that larger picture, but was not the "whole" picture. The innovative part was that Milwaukee not only EXPANDED its transcontinental passenger services dramatically, but could even make a profit on it, using the same equipment that it already had; that is, finding a way to make money on "sunk costs."
The development history of the "Olympian Hiawatha," which is distinct from its predecessor the "Olympian," is a compelling case study. There is no doubt that the Milwaukee Road gave that passenger service "it's best shot," but then also was much quicker to recognize the hard reality that GN and NP had failed to do: it wasn't going to work.
The "legal" department moving somewhat slower than the "operating department," Milwaukee by 1955 had embarked on a new passenger rail strategy "out West" and one that, on the whole, was successful: it turned a money losing proposition into a profitable one, and, as a key element in that, opened up the entire route to the expanded freight service that cut a full day off of transcontinental freight, and quadrupled the high-end, long haul traffic that railroads desperately needed and sought.
Reality check despite the claims above:  The ex-GN and ex-NP main lines are largely still vibrant components of today’s BNSF Railway; the ex-Milwaukee Road Pacific Extension – at its most useful – supports some of the Northwest’s most popular hiking trails. 
As stated in Jim Scribbins’ “Hiawatha Story,” the Olympian Hiawatha posted losses exceeding $3 million for the ten-month period November 1959 to August 1960, which equates to about $32 million in today’s money, despite measures to promote the train and its amenities never being downgraded.  Inferior equipment, lack of exclusivity in the market, few connections, and too much available alternate transportation simply made the train superfluous.  Nothing special about the Olympian Hiawatha from that standpoint and no reason that it wouldn’t have lasted longer were it a better performer.  And the suggestion that the train was specifically discontinued as the Milwaukee was proactive in ridding itself of passenger trains is countered by the railroad operating passenger trains into relatively obscure places like Aberdeen, SD, Channing, MI, and Wausau, WI into the late 1960s and early 1970s.  This followed by abandonment of both the Pacific Extension and the route across Iowa.  The epitome of “failure.”
(Scribbins had a long record of service with the Milwaukee Road, mostly in the passenger service department.)
TRR
[Edited by admin to remove personal attacks on another Forum user. In future, refrain from doing this, please.]
Interesting indeed.
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Posted by Vermontanan2 on Wednesday, May 5, 2021 7:49 PM

CSSHEGEWISCH

All of those statements about the other carriers may have been true at that point, but why are they still operating and the PCE and MILW's Omaha main are only memories?

Actually, the question is:  If these Milwaukee lines were such powerhouse money-making entities, why did no one with the wherewithal to save them, do so?  The leaders of the other railroads were well aware of the physical plant and the operating inefficiencies of the Milwaukee.  Clearly, if the Milwaukee was that superior, they would jumped at the chance to obtain it.  The reality was that BN wanted just about no part of it, and UP passed it up, too.  The Pacific Extension was the high-cost operation and the route across Iowa was superfluous.  

The underlying reality of Michael Sol's attempts to show why things turned out the way they didn't are:

The Milwaukee Road Pacific Extension is the only U.S. transcontinental railroad to be largely abandoned; and

The Milwaukee Road's route across Iowa is the only such route to be largely abandoned.  

Two impressive superlatives, indeed.

 

TRR
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Posted by TRR on Thursday, May 6, 2021 12:00 AM

I wrote: "Milwaukee was not insulated. As NP, GN, and CBQ struggled to convince the ICC that it was a "good idea," having been shot down by the ICC once already, Milwaukee was attempting to do the same thing with the CNW, and by 1969, the two companies had a formal merger agreement, and officer positions assigned for the new successor company."

From a letter from a lead Counsel in Morton Weinress v. CMC, 565 F.2d 416 (1977), October 11, 1977

"The second was Morton Weinress, a Chicago investment banker, head of Weinress & Co., who had been a director of CNW from 1954-1967. Weinress had helped Ben Heineman gain control of CNW, but he had feuded with Heineman and left the C board. Weinress saw the Milwaukee Road as an investment opportunity. He knew that t had many valuable assets and an incompetent elderly management. He knew what had been one to transform the CNW into Northwest Industries, and he believed that the Milwauke Road presented a similar opportunity. It was his hope that the CNW merger would fail and that a new group (including him) would then be able to take control of the Milwaukee. As our firm was opposing the CNW-Milwaukee merger, Weinress was eager to help our effort.

"As you know the CNW- Milwaukee merger did not happen. Quinn was brought in to take over from Crowley. We threatened a proxy contest. In a compromise, Weinress and another of our commttee were elected as directors. Chicago Milwaukee Corporation was formed, but Weinress did not like the way he was treated. He resigned as a director, but continued for the rest of his life to attempt to ihterest investors in the potential of the Milwaukee Road."

Letter, David Rosenstein to Michael Sol, July 12, 1999.

TRR
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Posted by TRR on Thursday, May 6, 2021 12:14 AM

"In 1968, with the senior partner of my firm (Eli Fink) I attended a special meeting of the Milwaukee Road's board of directors. As I looked over the group at the front of the room in Chicago Union Station it seemed that each director was older and more feeble than the next. One man sitting if front of me shaking looked so old that I said to Mr. Fink "that guy looks like he is 100 years old." In fact he was! Joshua Green served as a director until 100!

"The average age of that board was well over 80. Crowley stood up (with difficulty) and shook a finger at Eli Fink warning him that Milwaukee Road needed the merger with Northwest Industries and that we were causing great trouble by opposing it. Mr. Fink pointed out that the merger was not a certainty, and that the Milwaukee Road ought to have a contingency plan if the merger did not take place."

Under Board Chair Leo Crowley, Milwaukee did not. That underscored the vast gap between what "management" at the operating level, and "owners" at the Board of Directors level were doing and were, in fact, in conflict.

Letter, David Rosenstein to Michael Sol, July 29, 1999.

TRR
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Posted by TRR on Thursday, May 6, 2021 12:17 PM

Well, the graphic version of that is better organized by not accidentally hitting the "send" button.

And, if the "surreptitious juggling of the books" were also "unjuggled," and Miles City was properly included in the "Lines West" economic data, as it historically had been (right up until that Abandonment Petition), the data was more ... "illuminating!" It is amazing what can be done when ... passenger services "get out of the way!"

TRR
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Posted by TRR on Thursday, May 6, 2021 1:23 PM

Well, the graphic version of that is better organized by not accidentally hitting the "send" button.

According to the ICC Exhibits:

Milwaukee Road Revenue, 1976-1978

System Net Operating Income

1976  ($8,834,435)

1977  ($29,392,706)

1978  ($49,331,000)

Total System Net Three Year Operating Loss ($87,558,141)

Lines West of Miles City, Net Operating Income

1976  $10,580,676

1977  $8,051, 207

1978  $3,555,501

Lines West of Miles City, Net Three Year Operating Income $22,187,384

System, Net Operating Income WITHOUT Lines West of Miles City

1976  ($19,415,111)

1977  ($37,443,913)

1978  ($52,886,501)

System Net Operating Income WITHOUT Lines West of Miles City ($109,745,525)

Now, just to enhance the "view" of the shenanigans involved in "Exhibit K," add "Miles City" Revenues "back into Lines West."

Net Operating Income, Lines West, Including Miles City

1976  $17,632,978

1977  $15,677,061

1978  $11,177,355

Net Three Year Operating Income, Lines West Including Miles City $44,487,394.

System Net Operating Income WITHOUT Lines West Including Miles City

1976  ($26,467,413)

1977  ($45,069,767)

1978  ($60,508,335)

Net Three Year System Operating Income WTHOUT Lines West Including Miles City ($132,045,535).

And, if the "surreptitious juggling of the books" were also "unjuggled," and Miles City was properly included in the "Lines West" economic data, as it historically had been (right up until that Abandonment Petition), the data was more ... "illuminating!"

It is amazing what can be done when ... passenger services "get out of the way!"

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Posted by Vermontanan2 on Thursday, May 6, 2021 1:39 PM
TRR
In addition to forest products, high profit auto traffic, and containers, by 1973, "fast freights" were being increased in in numbers and, unfortunately, in tonnages as well. #261C and #261TC, as well as #263C would routinely meet both an advance #262S and a regular #262S, for instance, in addition to #264S, all within a five hour period at Avery. These were all "hotshots" and that's a lot of fast trains to be meeting. That was in addition to normal 265,266, DFW and DFE traffic. The #262 sections were up to 4800 tons. Had MILW stayed with its 3000 ton "Hotshot" limits, it would have had three sections of #262 eastbound, and probably two sections of #264 rolling into Avery in the early afternoon, trying to get around three sections of #261 westbound and two sections of #263 in addition to the "regular" trains.
 
"These were the 8-10 trains per day that the PCE averaged for the remainder of the time before bankruptcy. These were trains that were up to 60% heavier than the trains run during the 1960s, and had MILW stayed with those tonnage limits, the PCE would have been running 14-16 trains per day.
In 1973, Milwaukee “hotshot” train 261 was carded for 63 hours from Chicago to Seattle, and 80 hours from Chicago to Portland. 
At Burlington Northern, train 3 was still on its 50-hour schedule from Chicago to Seattle, train 97 on its 55.5-hour schedule from Chicago to Seattle, and train 197 was carded for 60.5 hours from Chicago to Portland. 
It’s hard to really understand the purpose for above posting; obviously, the tone of it and others by this author is designed to paint a picture of the sluggish Milwaukee being some super railroad fantastically out-performing its solvent competitors and their modern infrastructure – right up to the time that the Milwaukee went under.  However, this particular post does the opposite:  It shows the opposite.
First, to clarify, by 1973, the Milwaukee had dropped the maximum speed on its railroad west of Miles City to only 50 MPH.  Between Avery and Plummer, the maximum was 45 MPH, and between Plummer and Marengo it was only 40 MPH.  This is significant as the Plummer-to-Marengo segment (except for the short section from Plummer to the Sorrento tunnel) was dark territory (no Automatic Block Signals, and the Milwaukee’s Pacific Extension never achieved significant return on investment to provide this basic safety equipment).  Without ABS, the maximum authorized speed for good track would be 49 MPH – which it was at one time – but it had since been lowered, as was the case for the rest of the mainline track.  Except for the section from Sorrento Tunnel to Marengo which was dark, the Milwaukee main line was single track ABS with no power switches.  Burlington Northern – except for a very short section – was CTC, double track, or had parallel routes on its transcontinental route.  Track speed for freight was uniformly 60 MPH.
With regard to the “3,000-ton hotshot” trains – these were ridiculously small trains – even in 1973, as were those at 4,800 tons. And the quantity of trains is hardly a measure of their viability or even profitability.  The 3,000-ton limitation was the formula the Milwaukee decided was necessary to achieve their “hotshot” XL Special schedule which equated to 3.0 horsepower per ton; This would be enough to conquer (westbound) Milwaukee’s three very steep grades (Pipestone, St. Paul, Boylston) and one lesser grade (Loweth) and maintain a decent track speed.  Somewhat less would be required just to make the grade at a lesser speed.  Interestingly, the 4,800-ton limit is likely a reference to the trailing tonnage limitation on westward grades such as Pipestone Pass and Boylston, and the uber-curvy climb to St. Paul pass, though the grade was somewhat less.  4,800-to-5,000 tons is the maximum for any train with all the power on the head end; anything more would require helper or distributed power midtrain or on the rear.  It should also be noted, however, that the 9000 HP assigned to operate the 3,000-ton train over these grades would not be sufficient to handle the 4,800-ton trains.  Heavier trains = more power on grades.  In reality, train sheet records show that the Milwaukee really was running 5,000-6,000 ton trains through Avery on occasion with additional power distributed throughout the consist.  But the salient points are: 3,000-ton trains are expensive to operate and consume a lot of resources; 4,800-ton trains are simply the maximum to be operated not using distributed power of some sort.  The number of these trains is irrelevant compared to the amount of traffic handled and the profit derived from doing so.  Given that, for instance, a BN train had a trailing tonnage limit of 10,000 tons from Chicago to Portland and Chicago to Wenatchee without auxiliary power – and that GN/BN was able to modernize its route with CTC, lineside safety detectors, power switches, and longer sidings – mostly absent on the Milwaukee – shows that for all the perceived excitement over the number of trains at Avery, it didn’t allow a corresponding return on investment.  The Milwaukee continued – to the end – to be a long branch line with few hints it was the 1970s instead of the 1940s. 
And, from a dispatcher’s point of view (I’ve been one), it’s interesting to note that in the 1973 (and after WWII, really), the train-order Milwaukee Pacific Extension was not only devoid of traffic, but also telegraphers to handle that traffic.  With all that traffic at Avery, no continuous open offices between Avery and Alberton.  Between Miles City and Harlowton and Harlowton and Three Forks, also no continuous open offices – just day agents.  This suggests a lack of traffic and/or delays moving trains as open telegraph offices were how changes in train orders were relayed.  If you’re a railroad that really seeks to run expedited traffic, you keep your track well-maintained, and you install block signals, CTC, power switches, and lineside safety equipment to achieve that goal.  Or, if you’re really efficient and successful, over of the course of time, you are able to add these enhancements from the profit you’ve made by your operation.  But on the Milwaukee Road Pacific Extension, this NEVER happened.  Its cost of operation was simply too high to make a sufficient return on investment.  And as impressive as these 4,800-ton trains might be to those without knowledge of operations, four of them a day each way won’t pay the rent – especially on a particularly high-cost operation.  And not only was the Milwaukee high cost for the traffic it was able to get, there were all the other places in the Pacific Northwest and Canadian Southwest that the Milwaukee didn’t serve at all (Yakima, Pasco-Richland-Kennewick, Eugene, Salem, Mount Vernon-Anacortes) or served exceptionally poorly due to its circuity and/or grades (Vancouver, BC, Portland, Aberdeen, Spokane, Bozeman, Great Falls).
A 1973 Milwaukee timetable is available here:
The stark inferiority of the Milwaukee route compared to the BN, including grade, fuel usage, and locomotive rotation is noted here:
--Mark Meyer
 
 
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Posted by Vermontanan2 on Thursday, May 6, 2021 1:52 PM

TRR

Well, the graphic version of that is better organized by not accidentally hitting the "send" button.

According to the ICC Exhibits:

Milwaukee Road Revenue, 1976-1978

System Net Operating Income

1976  ($8,834,435)

1977  ($29,392,706)

1978  ($49,331,000)

Total System Net Three Year Operating Loss ($87,558,141)

Lines West of Miles City, Net Operating Income

1976  $10,580,676

1977  $8,051, 207

1978  $3,555,501

Lines West of Miles City, Net Three Year Operating Income $22,187,384

System, Net Operating Income WITHOUT Lines West of Miles City

1976  ($19,415,111)

1977  ($37,443,913)

1978  ($52,886,501)

System Net Operating Income WITHOUT Lines West of Miles City ($109,745,525)

Now, just to enhance the "view" of the shenanigans involved in "Exhibit K," add "Miles City" Revenues "back into Lines West."

Net Operating Income, Lines West, Including Miles City

1976  $17,632,978

1977  $15,677,061

1978  $11,177,355

Net Three Year Operating Income, Lines West Including Miles City $44,487,394.

System Net Operating Income WITHOUT Lines West Including Miles City

1976  ($26,467,413)

1977  ($45,069,767)

1978  ($60,508,335)

Net Three Year System Operating Income WTHOUT Lines West Including Miles City ($132,045,535).

And, if the "surreptitious juggling of the books" were also "unjuggled," and Miles City was properly included in the "Lines West" economic data, as it historically had been (right up until that Abandonment Petition), the data was more ... "illuminating!"

It is amazing what can be done when ... passenger services "get out of the way!"

 

 

And of course, there were other "accountants" who showed the opposite.

Which to believe?

The answer: Instead, check the operational characteristics of the railroad and ask if it's worth saving compared to abundant solvent, modern competition.  

That's what happened.

--Mark Meyer

TRR
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Posted by TRR on Thursday, May 6, 2021 2:02 PM

Mark Meyer: “TRR [Edited by admin to remove personal attacks on another Forum user. In future, refrain from doing this, please.]”  Interesting indeed.

The “personal attacks” were a listing of prior “Mark Meyer” comments over the years, including his odd attack on Northern Pacific Railfans and his perception of their inferiority complex, and his extended paen to the Great Northern Railway route so he could visit his Dad.

Part of a larger picture of ... the poster. And yes, I get private communications from various of his former colleaques from time-to-time. They ARE interesting, but, go more to "the person" than "the subject." It is a glass house.

Meanwhile, Midwestern Railroads were struggling desperately for survival, and those with transcontinental business, not so much, although by 1979, Burlington Northern management at "Burlington Northern" were having as much difficulty as Burlington Northern management at Milwaukee Road!

The Operating Ratio there was over 95% that year. The "Hill era" was over. Say Hello to ... the Frisco!

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Posted by TRR on Thursday, May 6, 2021 8:33 PM

Vermontanan2
And of course, there were other "accountants" who showed the opposite.

Who?

 

TRR
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Posted by TRR on Saturday, May 8, 2021 4:20 PM

The problem with the tendentious diatribes of Mr. Meyer are ... manifold. His obsession, which is what it has become, is intense and, by now, long lasting. He deluges any on-line commentary on Milwaukee Road with his ... theories.

The problem?

The complete lack of any expertise whatsoever. And that stands in marked contrast to the genuine expertise offered by people ... "who were there."

As the Milwaukee was surrendered to BN Management with the appointment of former CBQ President/BN Vice Chair William J. Quinn, and his bringing officers of the Burlington Northern with him, "to run things," it is true that Milwaukee Road quickly succumbed to that management. The same thing (devastating Operating Ratios) that happened at MILW under former BN VP Worthington Smith, happened at BN under Smith's former boss, Lou Menk at BN.

Coincidence?

As Stanley Hillman found out after his appointment at Trustee for the Milwaukee, things were "not as they seemed," and certainly NOT as he had been led to believe by the former BN officers now in charge, Worthington Smith and Paul Cruikshank.

Indeed, the prolonged rumor-mill perpetuated by people like Mark Meyer was entirely false: as Hillman publicly stated after his "outside appraisals" came back: "It turns out that the Milwaukee Road is a relatively wealthy company."

Why does that contrast so dramatically with what Mr. Meyer ... claims?

Well, "knowledge, experience, and being there" is just a part of it.

Compare Mr. Meyer's expertise (non-existent) with that of ... Curtiss Crippen: "That line is the life blood of this Company."

Compare Mr. Meyer's entirely false claims that the Milwaukee Road lost money on its Pacific Extension, when, in fact, the Milwaukee showed, under oath, in documents filed with the ICC and the Bankruptcy Court, that it was the only part of the railroad that made money. And, that "the rest of the railroad" looked like Mr. Meyer's other favorites, the "Rock Island," -- bankruptcy, 1976 -- the CNW -- the largest record of deferred maintenance of any railroad in the nation -- the former CBQ -- that Menk did in fact, collapse under an ill-conceived drive for coal traffic (and coal fines wrecking the roadbed) -- Illinois Central Gulf -- which knowledgeable observers were convinced "should have been" in bankruptcy but for the desires and resources of William Johnson and Illinois Central Industries.

And, we know for a fact that Hillman felt, in his abandonment Petition, that he had been completeley misled by Smith and Cruikshank. As Mr. Cruikshank admitted to me (he was not discussing any of this with Mark Meyer), "Mr. Hillman became difficult to work with."

He had been lied to, that's why. And, he could not go back and undo the decisions that wrecked the Pacific Coast Extension AND he was now committed, by that error, to try and rely for survival on that part of the railroad that the well-respected outside economists at Booz Allen Hamilton had determined could not likely survive.

Of the eight alternative configurations that BAH looked at, two considerations were notable: 1) they did not ask Mark Meyer for his opinion and THEREFORE 2) they were able to conclude that, of the eight possible configurations, the four that had at least a propsect of success included the Pacific Coast Extension, and the four that likely never could achieve a successful reorganization, all were built around Lines East.

Booz Allen delivered their report May 2, 1979. By then, Hillman had pretty much destroyed the traffic base of Lines West. And then, he got the BAH Report. Based on 1977 data, the configuration that BAH estimated had the best long-term chance of profitability was "the Louisville Transcon," by a factor more than double that of any other proposed configuration.

That was when Hillman stopped speaking to Smith and Cruikshank and, by the way, got his ulcer.

Milwaukee Road Strategic Planning Studies, Booz-Allen-Hamilton Consulting Study, May 2, 1979 Volume 1: Overview

Milwaukee Road Strategic Planning Studies, Booz-Allen-Hamilton Consulting Study, May 2, 1979. Volume 2: Analysis

Milwaukee Road Strategic Planning Studies, Booz-Allen-Hamilton Consulting Study, May 2, 1979. Volume 3: Confidential Appendix and Traffic Study 

As any reader can note, those are my personal copies, including the "Confidential Appendix."

As Mr. Hillman pointed out upon the arrival of other outside valuation studies, the Milwaukee Road was NOT what its senior BN staff, and Mr. Meyer, claimed it was, it was, instead, a "relatively wealthy company."

Where was that wealth? In the Milwaukee Land Company. A separate, but wholly-owned company, the vast, rich timber holding, virtually all of the industrial properties, were held by THAT company, and not the Milwaukee Road. And the bulk of the value of THAT company were at acquisition values dating to before 1915.

As "knowledgeable and educated observers" could, and did, note, the "value" of the Milwaukee Road was found in its extensive portfolio of investment properties. And that was what Curtiss Crippen was exploiting, 1966-1972 with the rebuilding campaign, the quartzite ballast, the welded-rail plants, the new Tacoma Yard, the Kent Auto Facility that cornered that market, and the Stacy Street Intermodal Facility which left BN and UP struggling to obtain minority shares of that rapidly growing market.

 And, as "icing on the cake" of who understood what was happening at the time, in contrast to those like Mr. Meyer who do not, we have Leon Levy's published account, in his book "The Mind of Wall Street." There, he describes in detail what he found when he visited after the Bankruptcy was declared, to see what kind of "investment potential" the stock, trading for almost nothing, the bonds, trading at pennies on the dollar, actually had. From Smith and PFC, Milwaukee would be lucky to liquidate at a small loss. At CMC, which owned most of the stock, "the accountants there carried Milwaukee on their books at "$1.00." There was nothing there."

Levy describes, in detail, why people like Smith, Cruickshank, Quinn and, yes, Mark Meyer, didn't know what they were talking about. It was a fundamental lack of expertise, in people entirely devoid of the kind of business experience that would allow them to see what Levy saw: grossly outdated accounting valuations in the books, magnificent timberlands, controlling positions in key transcontinental markets, the highest grades of transcontintental traffic.

To Levy, it wasn't that the value was not there, it was entirely that "they did not know it was there."

As the result, Oppenheimer Fund got control of Milwaukee Road stock and bonds, peeled off the railroad to Soo Line for values that Mark Meyer claims it did not have (neat trick, eh?), and kept the bulk of the value in the control of the separate company, the Milwaukee Land Company.

The value of that company made Leon Levy fabulously wealthy.

Milwaukee Road stock, taken all together, became the most valuable railroad stock in the nation.

And that process began with the realization, at Milwaukee, that transcontinental passenger rail service was doomed to be unprofitable but, in 1955, embarked on a clever plan to 1) preserve service to key transcontinental locations, 2) add service to other major West Coast locations, 3) terminate or convert ancillary transcontinental services such as the Great Falls train, 4) opened up transcontinental freight service to trains that not only beat the competition by 1-2 DAYS, but 4) managed to turn a profit on it all, and finally make the transcontintal portion the only part of the railroad that made money, and, at the end, according to BAH, the only part that likely ever could make money.

TRR
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Posted by TRR on Saturday, May 8, 2021 6:28 PM

Booz Allen Hamilton estimated that "the Louisville Transcon," had the highest likelihood of success, and prospective proffitability by a factor more than double that of any other proposed configuration."

Did that meet approval? Well, yes, after Max Baucus put together the legislation that provided a venue for reorganizing the Milwaukee Road under the newly created law, the "Milwaukee Railroad Restructuring Act," a consortium of experienced railroad executives, major shippers, and the States of South Dakota, Montana, and Idaho put together "the Plan" and submitted it, as required, to the Interstate Commerce Commission.

It is everything that Mr. Meyer claims did not exist. That too was a false claim.

Dated December 1, 1979, the detailed reorganization plan was submitted.

It is "the Louisville Transcon" alternative, the most probable identified by BAH as likely to be successful -- at a time when even solvent railroads were struggling.

New Milwaukee Lines Reorganization Plan, December 1, 1979

TRR
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Posted by TRR on Saturday, May 8, 2021 6:55 PM

The New Milwaukee Lines proposal not only relied on the Booz Allen Hamilton Econometic Study -- the one that gave no credit Mark Meyer at all -- but the Milwaukee Road's own Planning Department internal study which had been a thorough examination of, and plan for, reorganization of the company through key abandonments.

Completed just before the Bankrupcty Petition was filed, the detail plan was presented in the Fall, 1977 Milwaukee Road Magazine.

"What can be done about our low density lines?"
 

TRR
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Posted by TRR on Saturday, May 8, 2021 9:06 PM

And, of course, what was MISSING in those analyses was the key that Curtiss Crippen and knowledgeable investors understood. The "BN Management" at Milwaukee Road was doing what "BN Management" was doing at BN, with one key difference. The "BN Management" at BN was hobbled, crippled, by the 100 year bonds that encumbered all of the Northern Pacific Bonds from the bankruptcy of 1893, and issued in 1896.

All those assets and, they were locked up.

At Milwaukee, "all of those assets" were titled in the Milwaukee Land Company, and not "just" free and clear, but the Land Company had ceased making dividend payments to the Milwaukee from its "fat kitty of retained earnings," but instead, making loans to the Railroad. That had two net effects: that method avoided the high taxation on corporate dividends to stockholders and, for the Land Company, put it into the position of a creditor.

In Bankruptcy, technicaly it had become ... a creditor. Indifferent

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Posted by Vermontanan2 on Monday, May 10, 2021 11:30 PM
TRR
And that process began with the realization, at Milwaukee, that transcontinental passenger rail service was doomed to be unprofitable but, in 1955, embarked on a clever plan to 1) preserve service to key transcontinental locations, 2) add service to other major West Coast locations, 3) terminate or convert ancillary transcontinental services such as the Great Falls train, 4) opened up transcontinental freight service to trains that not only beat the competition by 1-2 DAYS, but 4) managed to turn a profit on it all, and finally make the transcontintal portion the only part of the railroad that made money, and, at the end, according to BAH, the only part that likely ever could make money.
NONE of this is true, nor is any of it anything but speculation without any documentation to support.  Again, reiterating:
It’s interesting that “transcontinental passenger rail service was doomed to be unprofitable,” but evidently only on the Milwaukee Road – but not on the Union Pacific?  Unlikely indeed.  The reality is that the Milwaukee Road offered a quality service on its Olympian Hiawatha right to the end, and made numerous attempts to attract riders through 1960.  The train was simply losing too much money to warrant continuing the service.  Another reality is that the ICC allowed the train to be discontinued because of the operating deficits and lack of patronage, not because the Milwaukee want to rid itself of passenger trains to operate priority freight service.  There was no correlation between the two in the petition to discontinue the service.  It’s also interesting that the Milwaukee spent a huge sum of money to upgrade its Chicago-Council Bluffs route, add locomotives, repaint equipment, and add employees, but no such substantial investment correspondingly occurred on the Pacific Extension for the “new, high-speed” freight service.  While the route across Iowa was CTC or double track with power switches, the Pacific Extension remained a long branch line that didn’t ever receive basic block signal protection for the entire route.
I challenge anyone to provide documentation that the takeover of the UP trains between Chicago and Omaha in 1955 had any link to the petition to discontinue the Olympian Hiawatha starting in 1960.
Handling the “City of Portland” between Chicago and Omaha by the Milwaukee Road did NOTHING to “preserve service to key transcontinental locations.”  This is a total fabrication.  Other than Chicago, the Olympian Hiawatha and City of Portland served no common cities, nor did the City of Portland offer any through car service to any location served by the Olympian Hiawatha.  The discontinuance of the Olympian Hiawatha was simply one fewer train between the Upper Midwest and Pacific Northwest, and South Dakota lost its only service in this lane.
Taking over the “Cities” (and Challenger) trains between Chicago and Omaha was even a questionable move at the time.  But there is also no reason to believe the intent was part of a “clever plan” to “add service to West Coast Destinations.”  As the Milwaukee Road president Wiley stated in 1955, “Many people have probably wondered why our railroad, which takes a realistic view of passenger service as a modest revenue producer, should have been interested in the Union Pacific's proposal. The main thing to remember is that the trains involved represent a great deal more than ‘passenger service’ in the usual sense of the phrase. They are among the world's very best. We are happy to work with the Union Pacific and Southern Pacific in attempting to make these fine trains even finer and more popular. Passenger service advertises a railroad as nothing else can. When that service is really good, it builds both passenger and freight revenues by keeping the company name and the quality of the service uppermost in people's minds. This, combined with the tremendous traffic potential and modern freight facilities of our three railroads, can mean a lot to all of us.
Obviously, the intent was to attract corresponding freight traffic as a result of handling the passenger trains.  Since the UP could not show preference in a connecting carrier east of Council Bluffs, this intent could not be specifically stated, but Mr. Wiley comes quite close here.  But rather than the Milwaukee being “clever,” it was the C&NW who lost the “Cities” trains; UP was unhappy with the C&NW’s performance of the trains in general, and went shopping for another way to get to Chicago.  Rock Island had the best route, but was much slower and needed capacity upgrades; Burlington was also considered as they had the infrastructure in place and could match the running time; but they didn’t have the room on the south side of Chicago Union Station to accommodate this many extra trains.  The Milwaukee – the sole entrant to Union Station from the nonrth end, and the one willing to fork out millions – was the basically the only remaining option, despite it having the worst route as far as accessing online communities.  For all the money spent on upgrading the route, the number of passenger trains was halved within 5 years, and freight business was insufficient to warrant the expense.  The Milwaukee did gain some freight business initially.  In 1962, the MILW led the railroads receiving tonnage from UP at Council Bluffs with 33% versus 24% for the C&NW, but westbound, the C&NW delivered 40% of the traffic, versus only 22% for the Milwaukee.  Even the IC handled 20%.  By the mid-1960s, however, UP started run-through trains with CB&Q at Grand Island to avoid the Omaha-Council Bluffs terminal altogether.  And this was the one thing that the “clever” people at the MILW evidently never understood:  The Omaha terminal was a bottleneck, and the best candidates for interchange would be those railroads that could avoid it, such as the CB&Q and the C&NW at Fremont.  The MILW, IC, and CRI&P were doomed to interchange at Council Bluffs.  By 1970 on the eve of Amtrak, the MILW was interchanging just two trains daily at Council Bluffs.   The BN was getting just as much at Grand Island, and C&NW was receiving three daily trains, with one each to IC and CRI&P.  That was hardly the amount of traffic the MILW expected given its significant investment.  In addition to the 2 through trains and scattered local service, passenger service was down to one train daily (the “City of Everywhere” consolidation).  Just prior to Amtrak, the best the Milwaukee could do was 8 hours, 50 minutes on its Chicago-Omaha passenger train with 5 intermediate stops.  The BN route – though 8 miles longer – still hosted the Denver Zephyr in 8 hours flat (westbound) with 13 intermediate stops.  Westbound on BN, the remnant of the Nebraska Zephyr made the Chicago-Omaha trek 4 minutes faster than the Milwaukee “Cities” train with 25 intermediate stops!  Obviously, it was the BN route – not the sluggish MILW – chosen for the basic Amtrak system.
 But the UP was unhappy having to interchange to the BN which it viewed as a competitor; the IC was too circuitous, and the MILW and CRI&P were in disrepair – as was the C&NW, but again, with the superior route (superior routes survive no matter what – the primary reason the MILW’s Iowa and Pacific Extension routes didn’t) and its own bridge over the Missouri River, the UP again looked to the C&NW as the best way to Chicago, - especially since by 1972 after Ben Heineman (who fought the UP and SP acquisition of CRI&P) was out at C&NW beginning a much better relationship between John Kenefick at the UP and Larry Provo at C&NW.  The rest is history as C&NW shed much of its branchline and got back into shape with government grants and focus on the Fremont gateway.  Its “Falcon” service began in 1973 and by the mid-1970s was carded westbound from Chicago to Fremont in just over 9.5 hours with a maximum speed of 70 MPH – only about an hour more than Amtrak’s San Francisco Zephyr from Chicago to Omaha on BN.  Meanwhile on the Milwaukee, the deterioration continued, and after a Milwaukee train derailed on the C&NW diamonds at Tama, the Milwaukee began using the C&NW from Clinton to Tama.  So, the reality is that the MILW got the UP passenger trains by default, then spent a lot of money to get track capacity to the point that was never needed, culminating largely in abandonment.
The Harlowton-Great Falls train was hardly “converted” when it was terminated.  The service was simply discontinued, with a reference to existing bus service.  Unlike other routes, such as in South Dakota and Wisconsin, the “clever plan” didn’t bother to give actual times the bus was operating.  In reality, the “connections” were quite poor.
There is zero evidence that discontinuance of the Olympian Hiawatha “opened up” anything to allow shorted freight schedules.  Again, given that the Milwaukee was operating only 1 or 2 freight trains in each direction, it’s an insult to Milwaukee employees to even insinuate this couldn’t be done without the passenger train.  And it should be noted that the passenger service between Deer Lodge and Chicago was still being operated when the XL Special was launched in 1963, with passenger service lasting east of Aberdeen until 1969 and east of the Twin Cities until….now.  There’s absolutely zero evidence of the XL Special being “beat(ing) the competition by 1-2 DAYS” anywhere.  When initially launched in late 1963, the train bested the published GN schedule by 21 hours, but this was only for a few short months when NP and GN sped up their fastest train to only 5 or 6 hours slower than the Milwaukee,  By 1968, GN matched the Milwaukee, and in 1971, the BN best the Milwaukee by over 5 hours.  In 1972, the Milwaukee lengthened the schedule of the XL Special by about 10 hours, but the “faster” schedule continued on BN well after the Milwaukee Pacific Extension was history.  It should also be noted that GN didn’t need to “open up” its railroad by discontinuing passenger trains to match the Milwaukee (but its Empire Builder bested the Olympian Hiawatha by over 2 hours by the time of the latter’s demise), and it also ran significantly heavier trains than the Milwaukee with the same amount of locomotive power due to its superior profile.  And it’s not only that the Milwaukee could only hold the exclusive title of “fastest” for four years that’s unimpressive;  it’s the unsustainability.
The “make the transcontinental portion the only part of the railroad that made money, and, at the end, according to BAH, the only part that likely ever could make money” shows that Booz Allen Hamilton wasn’t too good at prognostication.  That the much smaller Milwaukee Road in 1985 was finally an entity that another railroad WANTED to buy (contrary to when it included the Pacific Extension) notwithstanding, it is undeniable that parts of the Milwaukee Road’s transcontinental route are indeed profitable, such as St. Paul-Duluth (continued trackage rights), River Jct./La Crosse-Dubuque-Sabula, IA, Chicago-Savanna-Sabula-Quad Cities-Kansas City (a major route should the CP-KCS merger come to pass), Marquette-Mason City-Sheldon, and most of the ex-MILW routes in service in South Dakota, including the former “transcontinental” main line that isn’t used as such today.  As for “managed to turn a profit on it all” is debatable.  The Iowa route, possibly, considering that it did handle a fair amount of freight business at one time and that the Chicago-Sabula portion is still well-used today.  The question remains, however, whether the millions to spent to accommodate all the passenger trains that vanished in short order was worth it compared to some of the freight traffic the MILW might have received regardless?  As for the Pacific Extension, if you’re a railroad that is planning for the future, yet you can’t afford basic operational and safety upgrades (largely achieved by the competition), was your ”plan” profitable in the long run?
The reality is that none of this rises to status of “clever,” especially in light of the fact that in the end the MILW Pacific Extension was the only “transcontinental” U.S. route to be mostly abandoned, and the MILW route central Iowa was the only trans-Iowa route to be abandoned.  And trying to present these epic failures as clever clearly isn’t.
--Mark Meyer
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Posted by Vermontanan2 on Monday, May 10, 2021 11:33 PM
TRR
Booz Allen Hamilton estimated that "the Louisville Transcon," had the highest likelihood of success, and prospective proffitability by a factor more than double that of any other proposed configuration."
Did that meet approval? Well, yes, after Max Baucus put together the legislation that provided a venue for reorganizing the Milwaukee Road under the newly created law, the "Milwaukee Railroad Restructuring Act," a consortium of experienced railroad executives, major shippers, and the States of South Dakota, Montana, and Idaho put together "the Plan" and submitted it, as required, to the Interstate Commerce Commission.
It is everything that Mr. Meyer claims did not exist. That too was a false claim.
Dated December 1, 1979, the detailed reorganization plan was submitted.
It is "the Louisville Transcon" alternative, the most probable identified by BAH as likely to be successful -- at a time when even solvent railroads were struggling.
 
 
I don’t know who the plan “met approval” with, but it wasn’t with ANYONE who had the financial wherewithal to save the railroad.  Period.  The railroad ceased to exist as a “transcontinental” route in 1980 and was largely abandoned west of Miles City, Montana.
 
Indeed, the “plan” had support – notably from politicians, but outside of South Dakota, there was little actual monetary buy in.
 
More links from the same website:
 
Hearing on the Milwaukee Road Restructuring Act:
This link is invaluable to give multiple perspectives.  It’s clear that the politicians are mostly supportive of retaining the service.  Again, there is an inordinate amount of focus on grain and coal movements by the South Dakota and Montana congressmen.  The ICC and railroad people generally give the best actual operating data, including how little actual grain is handled by the Milwaukee.  The testimony of Charles Swinburn, Acting Assistant Secretary of Transportation for Policy and International Affairs at DOT is most interesting.
 
ICC Opinion on “New Milwaukee Lines” proposal:
 
A few excerpts from the ICC about the NewMil:
 
*The plan was not sustainable and the amount of projected traffic growth was unreasonably optimistic.
*The plan relies on capturing a large amount of business from existing carriers (and that any failure to achieve these overly-optimistic gains in traffic would result in a huge financial shortfall) which was unlikely to occur.
*The plan projects an unreasonable operating ratio: 75.4, which was significantly better than industry-leader Union Pacific.
*Liability for labor protection as projected by NewMil would not be likely to occur as projected.
*Funding for operation and rehabilitation would not be available as projected.
*The NewMil’s “operations would be only marginally profitable even assuming achievement of the unprecedented performance contemplated by the NewMil.” 
*Not a quick fix: “an ambitious seven-year program of rehabilitation will be undertaken to return the track structure and equipment fleet to truly competitive levels.”
 
Basically, the ICC didn’t believe that the traffic would materialize, nor could NewMil draw much if any away from the remaining carriers due to their superior infrastructure.  It also didn’t accept the overambitious projected traffic growth that NewMil claimed would happen.  Just on that point alone, the ICC was correct:  Those of us railroading in the 1980s in the Northwest know that this was a lean time for all the railroads, and traffic would not fully rebound until the 1990s.
 
Beyond that, the really interesting thing about the NewMil proposal is that there is very little for actual new capital expenditures.  A new yard at Fife is specifically mentioned, but nothing else.  Missing are funds for longer sidings, CTC, power switches, and lineside detectors – things that – by the 1980s – would be a given to be competitive.  This omission alone shows the lack of foresight in the plan, especially considering the pending cabooseless operation; Power (or Spring) switches are a necessity for fluidity for even a moderate amount of traffic. 
 
Keeping the railroad in place for burgeoning coal traffic is mentioned, referencing the Tongue River Railroad and coal deposits.  History tells us: a.) the Tongue River Railroad was never built, nor will it be; b.) The major coal mine near Roundup didn’t materialize until 30 years after the end of the Pacific Extension; c.) The U.S. didn’t and still doesn’t have a West Coast coal export facility.  The one that is used for U.S. coal exports in British Columbia is directly accessible from BN/BNSF, while the Milwaukee would need to interchange to BN in Washington State or interchange with a shortline at Sumas, BC via a cumbersome, grade-ridden route which would require significant capital to achieve. 
 
The NewMil proposal also makes no mention of the pending deregulation, or even the prospect of such.  Very important for potential coal and grain shipments where tariffs are not fixed, but are adjusted for competition.  Due to the Milwaukee Road’s vastly inferior operating profile, as heavier unit trains evolved, the Milwaukee (or NewMil, if it got that far) would be effectively shut out of this business, or would be forced to interchange the trains to another railroad somewhere in Montana, Marengo, Washington, or at Tacoma (basically due to St. Paul Pass, no water-level route through the Cascades, and/or Tacoma Hill).  Not acknowledging this operational reality could be due to believing numerous misstatements about the comparative characteristics of the railroads involved, such as that the Milwaukee was “providing the shortest mileage to the west coast, the least grade and the best curvature of all of the northern railroads.”  (“West Coast” is unspecific.  The Milwaukee could be shorter from Chicago to Seattle and Tacoma by a fraction of 1%, but to all other “West Coast” destinations, including major ones like Vancouver, BC, Vancouver, WA, Anacortes, Everett, Longview, Kalama, and Portland – not remotely true; least grade and best curvature, not remotely true.)
Curvature: James J. Hill’s Legacy to Railway Operations by Earl Currie, pages 154 through 157.
 
Like the NewMil plan, this plan from the Montana Department of Agriculture fails to acknowledge how little grain production is affected by the Milwaukee (though some of the congressional testimony covers it), but at least it acknowledges the shortcoming of not having a water-level route across Washington State and the growing importance of Columbia River ports as well as other realities:
 
 
This plan retains the main trunk of the Milwaukee only as far west as Marengo, Washington, where all traffic then goes to the UP.  It does state that “Montana continues to support the New Mil plan as its preferred solution; however, Montana is not particularly optimistic that this plan will be successful” and acknowledges the uselessness of the Milwaukee main line west of Marengo for unit grain train shipments by stating the plan “eliminates unproductive mainline trackage in Washington.”
 

--Mark Meyer

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Posted by Vermontanan2 on Monday, May 10, 2021 11:36 PM
TRR
Meanwhile, Midwestern Railroads were struggling desperately for survival, and those with transcontinental business, not so much, although by 1979, Burlington Northern management at "Burlington Northern" were having as much difficulty as Burlington Northern management at Milwaukee Road!
The Operating Ratio there was over 95% that year. The "Hill era" was over. Say Hello to ... the Frisco!
 
 
Which (if true) begs the question:  Well, why didn’t the Burlington Northern then go the way of the Milwaukee Road?  Because railroads with strong route structures survive, regardless.  Those with weak route structures (the Milwaukee Road) are largely abandoned.  Even if you’re a weak railroad like the Rock Island with worthwhile routes, most survive bankruptcy – lines so attractive, the even railroads with minimal financial resources stepped up to the plate to save it: C&NW, MKT, and SP.
 
But for the Milwaukee Pacific Extension: No suitors for 90% of it.
 
But back in the reality zone, the operating ratio for BN in the late 1970s mostly showed the cost of building and upgrading thousands of miles of track to accommodate huge coal demand necessitated by the Clean Air Act (while the Milwaukee was about to abandon thousands of miles of track!).  1979 was just a snapshot in time, not indicative of the entire history of the railroad.  Kind of like the short-lived “fast schedule of the XL Special” was not indicative of the Milwaukee Road Pacific Extension over its short 71-year lifespan.  And snapshots do not freeze time (unless you’re an abandoned railroad):
 
16 years after 1979, BN had the financial wherewithal to purchase ATSF to become BNSF.
30 years after 1979, BNSF purchased by Berkshire Hathaway, its largest acquisition ever.
36 years after 1979, BNSF cumulative profit since acquisition matched its Berkshire Hathaway purchase price.
1979 on the BN?  Now only remembered for its substantial contribution to American infrastructure.
 
 

--Mark Meyer

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