The legend of ‘Chief Wawatam’

Posted by Andy Cummings
on Wednesday, February 03, 2010

Chief WawatamBy Andy Cummings, Associate Editor

I touched base yesterday with my friend Alex Huff, who recently retired from the railroad industry after a career with Missouri Pacific, Michigan Northern, and Dakota Southern. I wanted to see how he was doing in retirement (fine, thanks), and in the course of conversation, he told me a story that I found fascinating. With his permission, I tell the story in hopes you’ll enjoy it, and perhaps learn something about pre-Staggers railroading.
 
The Chief Wawatam was a 1911-built railcar-carrying coal-fired ferry that connected Michigan’s lower and upper peninsulas. At the north end (St. Ignace), it connected to Duluth, South Shore & Atlantic (Soo Line after 1960); at the south, cars went to Pennsylvania Railroad at Mackinaw City. When Conrail chose not to operate the far-flung Mackinaw City line, the state of Michigan leased the line from the PRR’s trustee and then let Michigan Northern operate it at a lower rate, effectively subsidizing the line.  
 
In the late 1970s, “we had a real run in inflation in the U.S.,” Alex says. “With that kind of inflation rate out there, everything kept going up. To try and keep pace, the railroad industry would go to the Interstate Commerce Commission would ask for an ex parte (across the board) rate increase.” The rate hike generally ran 3-4 percent, and occurred every three months or so; the commission rubber-stamped the hike time and again.
 
“But, as part of the fig leaf for saying there weren’t antitrust issues involved here, any individual railroad could elect to decline to take a rate increase,” Alex says. Most took the hikes, however; he describes the industry as an “old boys club” at that time. But Michigan Northern decided to decline one. As a result, its rates ran 4 percent below that of other railroads. But here’s the catch: In an interline move, the 4 percent reduction applied to the whole rate! So if a shipper routed, say, a boxcar of canned goods from California to New York over Michigan Northern for a portion of the haul, it would pay a rate 4 percent lower than if the car missed Michigan Northern, no matter how convoluted the routing.
 
Soon, shipments crossing the country began detouring northward from Chicago through Wisconsin to the Upper Peninsula via the Soo Line, across the Strait of Mackinac aboard the Chief, down the Michigan Northern to Grand Rapids, then to Conrail or Chessie for the trip east.
 
And it didn’t end there. “What I did not learn until much later,” Alex says, “was that there were a lot of rates established from Point A to Point B that had a provisional clause in them: ‘Lowest through rate applies.’” So effectively, Michigan Northern’s little game not only led to five daily crossings of the Mackinac Strait for the Chief Wawatam; it resulted in lower rates for shipments that never even entered the state of Michigan!
 
Class I railroads across the nation were understandably upset, and asked the commission to end the short line’s 4 percent discount. The commission held hearings, and representatives of the Class Is, one by one, explained the laughable routings that were resulting from the short line’s rate practices. In the middle of the hearing, a powerful Senator (Alex didn’t tell me who it was) walked into the hearing room, something that never happens. “It was just unheard of for a sitting U.S. Senator to attend something as lowly as a hearing by a lower-level examiner within a government agency,” Alex says. “They just didn’t do that.”
 
The Senator was friendly to the short line’s cause. “The attorney we had hired to do the ‘junkyard dog’ portion of the presentation had been [the Senator’s] campaign manager,” Alex recalls. “Translated into plain English, his statement was, if you screw with [Michigan Northern], you’re going to have a very miserable life up here.”
 
On such short notice, none of the Class Is were able to conjure up a Senator to press their case. Not surprisingly, Michigan Northern got to keep its rate — and the Chief Wawatam kept shuttling cars back and forth between St. Ignace and Mackinaw City, as busy as it had ever been.
 
Of course, as soon as the Staggers Act came into being, the whole house of cards came tumbling down. Gone now are Michigan Northern; the Mackinaw City line north of Petoskey, Mich.; the Soo Line’s Trout Lake to St. Ignace route; and, of course, the Chief Wawatam. The ship was sold and cut down for barge service in 1988.  
 
Alex says without the state subsidy, Michigan Northern would have gone out of business. Thus, it wasn’t surprising the line was closed. “It made me very skeptical of subsidies,” he says. “Generally speaking, it’s been my experience that subsidies can put off the day of reckoning, but they don’t prevent it.”

Photo information: Michigan Northern RS3 No. 2037 (ex-Southern Railway) pulls a car of lumber from the Chief Wawatam on May 5, 1974, at Mackinaw City, Mich. Photo by Emery Gulash


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