Deggesty Murphy SidingIt seems, that before it was decided to meet at Promontory point, UP and CP gangs had graded a lot of miles parallel to each other in that area, one going east, one going west. Murphy, please, please, please (I'm on one of my hobbies again). The official meeting place was at Promontory Summit. Promontory Point is right on the lake, and had no railroad until the Lucin Cutoff was constructed. It is sad, but even people around here believe that the Golden spike was driven at Promontory Point. It was just a slip wasn't it? Johnny
Murphy SidingIt seems, that before it was decided to meet at Promontory point, UP and CP gangs had graded a lot of miles parallel to each other in that area, one going east, one going west.
Murphy, please, please, please (I'm on one of my hobbies again). The official meeting place was at Promontory Summit. Promontory Point is right on the lake, and had no railroad until the Lucin Cutoff was constructed. It is sad, but even people around here believe that the Golden spike was driven at Promontory Point. It was just a slip wasn't it?
Johnny
Thanks to Chris / CopCarSS for my avatar.
Railway Man ........Booster groups had only small influence on railroad decision-making at the level of a Sioux Falls. The railways were grateful for any free cash or land, and the lack of a booster group would imply that the commercial prospects of the city were uninteresting, but these groups did not command enough cash to bend a railway to their will. RWM
........Booster groups had only small influence on railroad decision-making at the level of a Sioux Falls. The railways were grateful for any free cash or land, and the lack of a booster group would imply that the commercial prospects of the city were uninteresting, but these groups did not command enough cash to bend a railway to their will.
RWM
Railway ManThe end-game of the CP-UP was won by the UP, which must have deeply grated on Huntington as the UP's management of that era was not his equal in competence, aggression, knowledge, or organization. Huntington very much wanted to get at least as far as Cheyenne, Wyoming, before effecting the meeting. But the CP construction forces bogged down in the tough granite and deep snow of the Sierra Nevada, and right there, the battle was lost. At about the moment that the CP cleared the Sierra Nevada and began its race up the Humboldt Valley eastward, the UP had gotten its act together at last, and Jack Casement was grimly flogging his forces through Wyoming. Huntington knew the jig was up, and immediately refocused his attention on the Southern Pacific, which would expand the field of battle, outflank the UP, and enable him to dictate commercial terms onto the UP. Completion of the SP in fact enabled Huntington to do just that, and there were actually serious thought given to scrapping the UP or selling it to the CP because its commercial viability was destroyed. Huntington knew he was in desperate straits the moment the UP began accelerating its construction westward through Wyoming, and so did a lot of other people. The vultures were already paying visits to Huntington, asking if he wanted to give up and sell out for two or three cents on the dollar of his capital while he still could. Huntington was a very tough man, however, and decided that financial ruin was of no lasting importance to him. The story almost no one reads is the story of his building of the SP, a far more dramatic and desperate gamble than the CP-UP. Huntington's strategic position was so untenable with a CP-UP meeting point in Utah he literally had to build the SP out of cash flow, a feat no one else ever dreamed could be possible or could even dream of accomplishing. No other transcon was built without one penny of equity or debt financing! If one wants to be in awe of a railroad builder, and one's measure is the total height of the climb and not just the altiitude of the climber at the end, I choose Huntington. Almost any idiot can take $1 million dollars and turn it into $1.1 million. Huntington took $1 and turned it into $1 million.
The end-game of the CP-UP was won by the UP, which must have deeply grated on Huntington as the UP's management of that era was not his equal in competence, aggression, knowledge, or organization. Huntington very much wanted to get at least as far as Cheyenne, Wyoming, before effecting the meeting. But the CP construction forces bogged down in the tough granite and deep snow of the Sierra Nevada, and right there, the battle was lost. At about the moment that the CP cleared the Sierra Nevada and began its race up the Humboldt Valley eastward, the UP had gotten its act together at last, and Jack Casement was grimly flogging his forces through Wyoming. Huntington knew the jig was up, and immediately refocused his attention on the Southern Pacific, which would expand the field of battle, outflank the UP, and enable him to dictate commercial terms onto the UP. Completion of the SP in fact enabled Huntington to do just that, and there were actually serious thought given to scrapping the UP or selling it to the CP because its commercial viability was destroyed.
Huntington knew he was in desperate straits the moment the UP began accelerating its construction westward through Wyoming, and so did a lot of other people. The vultures were already paying visits to Huntington, asking if he wanted to give up and sell out for two or three cents on the dollar of his capital while he still could. Huntington was a very tough man, however, and decided that financial ruin was of no lasting importance to him. The story almost no one reads is the story of his building of the SP, a far more dramatic and desperate gamble than the CP-UP. Huntington's strategic position was so untenable with a CP-UP meeting point in Utah he literally had to build the SP out of cash flow, a feat no one else ever dreamed could be possible or could even dream of accomplishing. No other transcon was built without one penny of equity or debt financing! If one wants to be in awe of a railroad builder, and one's measure is the total height of the climb and not just the altiitude of the climber at the end, I choose Huntington. Almost any idiot can take $1 million dollars and turn it into $1.1 million. Huntington took $1 and turned it into $1 million.
The challenge of crossing the Sierras was enough that the first line to reach the border between California and Nevada was to get extra funds for construction. About the only way that the CP would have had a chance of beating the UP to Cheyenne was for the CP to have started work in earnest a year earlier. One incentive for doing so would have been the traffic to Virginia City, where the silver mines were rich enough for Nevada to become a state in 1864. An earlier start would have required access to financing, rail, locomotives, rolling stock and labor, all of which in short supply during the Civil War.
As for financing the SP from cash flow, it probably didn't hurt that quite a bit of construction was taking place during the Big Bonanza years of the Comstock Lode (i.e. 1873-78). The line down the San Joaquin valley tapped a lot of agricultural traffic, which presumably helped with the cash flow. Myrick's Railroads of Arizona, vol. 1 contains a nice account of the construction of the SP from LA to Texas, with obvious emphasis on construction in Arizona.
It is likely that many of the skills that Huntington needed for pushing the CP and SP came from his experience in running his store in Sacramento. A lot of what he sold had to be shipped around the Cape or through the Isthmus of Panama. I would imagine that many of the challenges of supplying the construction forces weren't all that much different from running his store prior to the Civil War.
A rarely reported aspect of Huntington was that we was a staunch abolitionist and in his later years he helped fund many of the black colleges.
Murphy SidingRailway Man ........Booster groups had only small influence on railroad decision-making at the level of a Sioux Falls. The railways were grateful for any free cash or land, and the lack of a booster group would imply that the commercial prospects of the city were uninteresting, but these groups did not command enough cash to bend a railway to their will. RWM Perhaps, but a little burg called Los Angeles, did get the attention of SP, as it was building a transcon eastward.
And they did get the SP to make a substantial change in the route. The SP's original intent was "to build the Palmdale cut-off" first, and then run a branch line to LA. I've heard remarks that the LA boosters had used ladies of easy virtue as the primary bargaining tool.
The direct line to Colton would have been a natural to connect with the Cal Southern line to San Diego, which has the best natural harbor in southern California.
erikem Railway Man I can sum Vance. I'd like to go further but that would be plagiarism. I do you a disservice because I cannot write with the elegance or sweep of Vance. So here goes: Locational analysis apparently not performed No traffic base not already adequately served by others No significant service advantage No significant operating cost advantage No significant interline connection advantages Too much track through too much sterile territory. A minor nitpick - these are reasons why the Milwaukee PCE shouldn't have been built, but I believe the original question was why it was built in the first place despite the challenges described by Vance (FWIW, I bought a copy of his book shortly after it hit the bookshelves). Stan Johnson's book, The Milwaukee Road's Western Extension, does cover the overlap in directorship between Anaconda Copper and the Milwaukee as one of the reasons why construction was approved. This overlap was also a reason for the electrification as it was a consumer of large amounts of copper (something near and dear to the hearts of the ACM stockholders, but not necessarily to the Milwaukee stockholders). [N.B. I'm treating why a line was/wasn't built as being distinct from the question whether the line should/shouldn't have been built.]
Railway Man I can sum Vance. I'd like to go further but that would be plagiarism. I do you a disservice because I cannot write with the elegance or sweep of Vance. So here goes: Locational analysis apparently not performed No traffic base not already adequately served by others No significant service advantage No significant operating cost advantage No significant interline connection advantages Too much track through too much sterile territory.
I can sum Vance. I'd like to go further but that would be plagiarism. I do you a disservice because I cannot write with the elegance or sweep of Vance. So here goes:
A minor nitpick - these are reasons why the Milwaukee PCE shouldn't have been built, but I believe the original question was why it was built in the first place despite the challenges described by Vance (FWIW, I bought a copy of his book shortly after it hit the bookshelves).
Stan Johnson's book, The Milwaukee Road's Western Extension, does cover the overlap in directorship between Anaconda Copper and the Milwaukee as one of the reasons why construction was approved. This overlap was also a reason for the electrification as it was a consumer of large amounts of copper (something near and dear to the hearts of the ACM stockholders, but not necessarily to the Milwaukee stockholders).
[N.B. I'm treating why a line was/wasn't built as being distinct from the question whether the line should/shouldn't have been built.]
Murphy Siding, erikem, and anyone else who's interested:
Vance, in The North American Railroad, says that the Milw's PCE was built because "only their own line to the Pacific would guard their interests as they perceived them. [fn 26]" (pg. 216, bottom) - the whole discussion is only pp. 216 - 218*, and RWM (above) does it justice.
To understand that, you need to know that the infamous Northern Securities Co. arrangement included not only the commonly-known NP, GN, and CB&Q, but also the Milw, at the behest of E. T Harriman and Wm. Rockefeller. [Despite having been a casual student of this for years, this is the 1st time I'd seen anything pertaining to the Milw being involved in it.] When Northern Securities was broken up in 1904. the Milw apparently felt vulnerable to competition and being outflanked by the Hill lines, as the quote above attests. Vance cites in his FN 26 the history by August Derleth, The Milwaukee Road: Its First Hundred Years (New York: Creative Age Press, 1948), p. 165, on his pg. 335.
I find this bordering on incredible, as in "unbelievable". Essentially, the Milw "doubled down" on its commerical bets. If it felt vulnerable to the Hill lines after 1904, why quadruple your mileage with a huge extension into the backyard of the same people that you feel vulnerable to ? Why subject yourself to more of the same ? (Kind of like that joke about the young bull challenging the big old mean bull - "Just so he knows I'm a bull and not a cow !") Neither NP nor GN went any farther east than Minn. - St. Paul, so Milw wasn't vulnerable there. CB&Q did go to Chi-town, but only by swinging way to the south and then northwest. In its home territory, the MILW wasn't challenged by any of these - C&NW and others, yes, but none of them went west either. Oh yeah - by then the UP was on the Pacific Coast, so there were already 3 competitors out that way, and the UP wasn't vulnerable to the MILW's challenge. But as George W. Hilton has written, a lot of those roads - esp. the grangers - were built and intended to be nusiances, for the main purpose of being bought out by the others. No doubt the MILW had been part of that experience, and maybe decided to use that same tactic - writ large - for its own purposes. This is the only explanantion that makes sense, given the objective realities as summarized by RWM above.
From another source - Brian Solomon's Burlington Northern Santa Fe Railway (1995) - I read that by 1925 the MILW had gone bankrupt from the costs of the PCE. Self-inflicted wound, it appears. He also has an interesting quote from James J. Hill regarding Northern Securities, but that's for another time and thread.
- Paul North.
* - RWM: It took me 8 minutes, not 4, even though I'm a fast reader. But that included looking it up in the index to find it, and reading it in the poor light in my car as soon as I got outside of the library, which was closing then - and then re-reading the part about MILW being in the Northern Securities.
Railway Man . Greyhounds and I are sometimes polar opposites on matters of politics but I think we are in agreement that railway regulation had as its primary beneficiary not the public but the stockholder of certain companies, it turned fair economic competition on its head, it prematurely exhausted resources and the environment, and it destroyed trillions of dollars of wealth. RWM
. Greyhounds and I are sometimes polar opposites on matters of politics but I think we are in agreement that railway regulation had as its primary beneficiary not the public but the stockholder of certain companies, it turned fair economic competition on its head, it prematurely exhausted resources and the environment, and it destroyed trillions of dollars of wealth.
We are in full and complete agreement.
I know I've been over this before, but I think it's one of those things that can not be said enough.
Economic regulation of transportation did not serve "The Public Interest". It can not serve "The Public Interest".
The agency to economically regulate transportation, the Interstate Commerce Commission, was established to stabilize railroad cartels. The railroads had tried to establish the cartels among themselves but were generally uncessful. They didn't like competition, but they couldn't stop competition. So they turned to the Federal Government for help. The Interstate Commerce Act was written by a lawyer in the pay of the Phildelphia and Reading Railroad. Now, do you think he wrote the law so as to be unfavorable to the railroad companies?
The cartels set prices so that all members could make money. They could set prices the same all around, but they couldn't equalize costs of operation over various routes. This meant they had to artificially set the collective prices high enough so that the least efficient railroad could make a buck. It was a sweet deal for the investors in inefficient railroads. They were protected from price competition through the Federal Government. Of course, it screwed up the national economy big time. But those investors in the inefficient carriers didn't have to worry.
Regulation did allow communities located on the inefficient carriers (i.e. D&RGW) to continue to have rail service. But this cross-subsidy came at a high price to the overall national economy.
When trucking developed two things happened. 1) The truckers wanted their own Federally enforced cartelization, and they got it to a significant extent. 2) The railroads were trapped in that in order to compete with the truckers they had to reduce many prices - but they couldn't do that because the ICC was protecting the weak, inefficient railroads. This caused the diversion of more freight to motor movement in lieu of rail movement than would have been the case under competition. Although strict economic regulation of rates is now gone in both railroading and trucking, we are still paying the price for that excessive diversion from rail to road today.
I don't think RWM and I disagree politically that much. But I do think there are significant differences between us regarding the current railroad business model. I'm convinced current practices place too much emphasis on operating efficiencies. This is a sub-optimization that forgoes significant profit potential when freight is left behind so that the train doesn't have to make "A Pick Up in Pasco."
Paul_D_North_Jr I find this bordering on incredible, as in "unbelievable". Essentially, the Milw "doubled down" on its commerical bets. If it felt vulnerable to the Hill lines after 1904, why quadruple your mileage with a huge extension into the backyard of the same people that you feel vulnerable to ? Why subject yourself to more of the same ? (Kind of like that joke about the young bull challenging the big old mean bull - "Just so he knows I'm a bull and not a cow !") Neither NP nor GN went any farther east than Minn. - St. Paul, so Milw wasn't vulnerable there. CB&Q did go to Chi-town, but only by swinging way to the south and then northwest. In its home territory, the MILW wasn't challenged by any of these - C&NW and others, yes, but none of them went west either. Oh yeah - by then the UP was on the Pacific Coast, so there were already 3 competitors out that way, and the UP wasn't vulnerable to the MILW's challenge. But as George W. Hilton has written, a lot of those roads - esp. the grangers - were built and intended to be nusiances, for the main purpose of being bought out by the others. No doubt the MILW had been part of that experience, and maybe decided to use that same tactic - writ large - for its own purposes. This is the only explanantion that makes sense, given the objective realities as summarized by RWM above. - Paul North. .
.
I'm going to disagree with this. The CB&Q route between St. Paul and Chicago was not "round-about". When the GN/NP bought the "Q" they acquired a fully competiive, direct route into Chicago.
Mileages between Chicago Union Station/Northwestern Station (two blocks or so apart) and St. Paul were:
CB&Q: 427
Milwaukee: 410
C&NW: 409
17/18 miles is no big deal and can easily be offset with other factors. Such as, the Milwaukee had to cross the Mississippi River twice with moveable bridges between Chicago and St. Paul (Hastings, MN and La Crosse, WI) while the "Q" stayed on one side. The "Q" provided access to the St. Louis and Peoria gateways. The MIlwaukee had niether.
PDN Jr.: I had to go find my copy of The North American Railroad and start reading again.
As far a the PCE goes, I still can't quite grasp the decision making process made by the Milwaukee directors. After doing a location survey (or whatever you would call it) to determine the reason to build the line, and the where and at what cost factor, they still voted yes? By 1906, there were already 6 transcons to the west coast sharing in that asian traffic. Was there that much traffic, and was there enough to support 1 more?
PDN, Murphy:
As I mentioned earlier, Stan Johnson had brought up Anaconda Copper as one of the reasons that construction of the PCE was approved (in addition to the reasons given by Vance). Johnson undoubtedly put a lot more effort researching the PCE than Vance did (this is not intended as a criticism of Vance), so I'm not surprised that Johnson would have details not in Vance's book.This is about the same time frame that Phelps Dodge had turned the El Paso & Southwestern into a bridge line between Tucson and Tucumcari, and the incentive there was to ensure access to more than one railroad.
erikem PDN, Murphy:As I mentioned earlier, Stan Johnson had brought up Anaconda Copper as one of the reasons that construction of the PCE was approved (in addition to the reasons given by Vance). Johnson undoubtedly put a lot more effort researching the PCE than Vance did (this is not intended as a criticism of Vance), so I'm not surprised that Johnson would have details not in Vance's book.This is about the same time frame that Phelps Dodge had turned the El Paso & Southwestern into a bridge line between Tucson and Tucumcari, and the incentive there was to ensure access to more than one railroad.
I wouldn't discount Vance. Though his work was international in scope and Johson's specific to one railway company, Vance brought to the game an international railway economic and geographic context, theoretical framework, ironclad grip on the science of economic geography, and years of research that it would be almost impossible for a non-professional to equal for lack of time, funding, and exposure to and knowledge of the available methods of inquiry. Focusing one's inquiry on one railway or one region is good for drawing out the details of a railway, but its pitfall is that the result may only be a gigantic accumulation of unorganized, meaningless data of value only to a fellow accumulator of data, but nothing that would help or inform anyone but a fellow adherent.
Looking above, I see two hypotheses advanced for the construction of the Puget Sound Extension. Both of these are actual "business plans" in which there is a projection of investment and profit. Though both business plans are unethical, they at least could have had a genuine pro forma developed, just like a drug dealer can generate a business plan projecting the cost to buy cocaine at wholesale in a foreign country, the revenue to sell at retail on the street in the U.S., deduct the costs of transportation and security, and project a profit.
One of these hypotheses says the PSE's business case was to shamelessly expropriate the investment of one class of stockholders to benefit the tangential investment of another class of stockholders (the ones holding Anaconda Copper stock), beggaring one to enrich the other. The second hypothesis says the PSE's business case was as a nuisance run on the stockholders of the Hill and Harriman systems - the investment is the construction cost, the income is the sale price to a Hill or Harriman whose systems would be devalued by the Milwaukee Road's competition, the profit is the difference.
The first hypothesis is likely only a little bit true as rates were regulated by the time the extension was built, and all that the Milwaukee Road could deliver to the stockholders holding both Anaconda Copper and Milwaukee Road stock was the profit from the rail haul of the blister copper ingots from Anaconda or the copper anodes from Great Falls, which would have been a very small fraction of the investment risk required to build the Extension. Normally this sort of ploy -- which was more-or-less rendered illegal by the Hepburn Act -- was used to drive from business the competitor of the traffic source. The classic examples of this were the anthracite coal producers, which built railways that charged very high freight rates, taking their profit not from the mining of coal but the transportation of coal, to force out the second-tier anthracite producers who did not own a railway, would have to ship on the railway owned by the first-tier anthracite producer, be bled dry, and thus monopolize the trade. But by the time of the PSE's construction the Rockefeller-Rogers-Flagler syndicate already controlled Butte so there was no second tier producer to extort from.
The second hypothesis is more plausible -- and there were ample recent examples of the ploy of building a nuisance railway -- but this hypothesis requires the Milwaukee Road's board to be fantastically ignorant of the vulnerability of the Hill and Harriman empires and fantastically sanguine about the potential value of the payoff for the sizeable risk they had made. I doubt that Rockefeller, Rogers, or Flagler were sufficiently ignorant or sanguine on the details of such a simple business case.
A third hypothesis, alluded to above, is that the Milwaukee Road's board was afflicted with grandiosity, self-importance, and machismo, and could not countenance a future in which they were directors of an also-ran, second-tier granger instead of barons of the transcontinental nobility, nor admit to their peers or themselves that Harriman and Hill had already won the game. They rationalized their decision (one reached by by telling each other that the economic potential of the West and trade with the Orient was only barely tapped and would grow so fast that it would overwhelm existing railways with traffic and create plenty of traffic for another, a rationalization that harmonized with contemporary ideas of American superiority over other cultures and governments, a belief that technological prowess would be showering the world with unprecedented ways to conquer nature, space and time, and that Americans were a chosen people to which God would deliver rainfall even in deserts.
It's impossible to test any of these hypotheses. However, all that the first one (interlocking directorates with Anaconda Copper) has going for it is correlation, and it requires the board to be particularly stupid if they thought there was opportunity there. The second hypothesis requires the board to underestimate Hill and Harriman, and I find it difficult to think that Rockefeller, Rogers, or Flagler could have made such a gross miscalculation because they'd have to have believed in it and acted upon it for a very lengthy period. Sure, you can underestimate a bluff on one hand in a poker game, but this was a 5-year-long poker tournament. The third hypothesis resonates strongly with a lot of other people at the same time: Rogers building the Virginian, Gould the Western Pacific, Western Maryland Connellsville Extension, and Pittsburgh & West Virginia, Flagler the Florida East Cost, William Clark (the other Butte baron) the San Pedro, Los Angeles & Salt Lake. (David Moffat was building the Denver, Northwestern & Pacific at the same time but that strikes me as a pure run on Harriman as the DNW&P had absolutely no valid business plan otherwise and was exceedingly cheaply built). It would seem that almost no rags-to-riches magnate of that period thought his life complete or his brilliance demonstrated unless he also built a railway, perhaps like rags-to-riches digital technology magnates of today also think they have the magic touch to snap their fingers and create new technological powerhouses in areas where they have little prior experience (e.g. Paul Allen turning $7 billion into $0 billion with Charter Communications).
erikemThis is about the same time frame that Phelps Dodge had turned the El Paso & Southwestern into a bridge line between Tucson and Tucumcari, and the incentive there was to ensure access to more than one railroad.
This is about the same time frame that Phelps Dodge had turned the El Paso & Southwestern into a bridge line between Tucson and Tucumcari, and the incentive there was to ensure access to more than one railroad.
I think the business case of the EP&SW was more to retain the profit on Phelps-Dodge's intraplant traffic, not interline traffic: coking coal from company mines in the Raton Field to the Douglas Smelter, copper concentrates from Bisbee to Douglas, etc. It was an intraplant railway of very large size. As a bridge line between Tucson and Tucumcari it could have been nothing but a flop as the SP would not have offered through rates for traffic moving through Tucson to points served by SP or to points at common rate gateways, only local rates. The ICC did not force railways to short-haul themselves.
About the time the EP&NW was completed, I think if I recall correctly, P-D had lost enthusiasm for being in the railway business and was already asking SP if they wanted to buy it out.
If the point of the EP&SW was to obtain access to another railway (Santa Fe at Deming would be the first possible connection point, and the best one as it had led toward the copper consumption points of the industrial states), why would P-D think it had a business case to build it, and then no longer needed the business case and sold it? Who knows -- I don't! Perhaps they were in error to build it or in error to sell it. I guess I should find their annual reports and see if they offer any clues. My unsupported speculation is that the railway was an example of Dr. Douglas's grandiosity and that once he was retired the corporation quietly undid some of his schemes that no one had the guts or the power to deny while he was in his prime.
Murphy SidingPDN Jr.: I had to go find my copy of The North American Railroad and start reading again. As far a the PCE goes, I still can't quite grasp the decision making process made by the Milwaukee directors. After doing a location survey (or whatever you would call it) to determine the reason to build the line, and the where and at what cost factor, they still voted yes? By 1906, there were already 6 transcons to the west coast sharing in that asian traffic. Was there that much traffic, and was there enough to support 1 more?
No. (I think this question is a variant of "begging the question" called "see how much RWM will do anything to avoid working tonight.")
It is almost impossible to build an additional facility in any non-expanding market for an undifferentiated commodity such as railroad transportation when demand in that market is already fully met by existing facilities, and successfully compete for a share of the market, unless one is offering some sort of new value the existing facilities cannot. The new value could be lower cost, faster service, volume discounts pushed downward to smaller volumes. The owners of previously established facilities will fight to the death to avoid loss of market share as it will probably erase their profits, the previously established facilities had first pick of scarce resources such as location, expertise, or contracts with vendors and customers, and any technological novelty introduced by the new facility can usually be emulated promptly by the old.
Suppose another lumberyard identical in all respects to your lumberyard including price, service, timeliness of delivery, inventory, and friendliness of the lumber salesman appeared tomorrow morning in Sioux Falls. Do you suppose the owners of yours would welcome them? The customers would have one reason to divert some significant fraction of their business to them? (Well, maybe if they hired Jessica Simpson and Anne Hathaway to sell their lumber. That might be a problem.)
In a rapidly expanding market there is often opportunity for a new facility to appear, compete for the new business, and establish itself. In the long-term, however, the new facility usually will have difficulty showing staying power because it is usually coping with disadvantageous location, less experience, less volume, and sketchier customers than the established facilities. Heavy earthmoving machinery, for example, by 1960 was dominated by Caterpillar. Many subsequent manufacturers have attempted to seize market share but so far none have succeeded in sustaining their runs at Cat.
Re: EP&SW
Writing my previous post prompted my getting Myrick's Railroads of Arizona, vol 1 off the shelf and browsing through it. The EP&SW made good money for P-D, and for the most part was a large scale intraplant RR. The EP&SW did buy a good chunk of CRI&P stock, with some thought that they could form yet another transcon - possibly linking up with Spreckel's San Diego & Arizona line.
The thoughts of getting out of the RR business started after the extension to Tucson was completed (1910) and the line was sold to the SP in 1923.
As for Deming, the Santa Fe connection was an important motivation for the line from Douglas to Deming.
Changing course slightly - Myrick stated that the construction of the SP was financed from several sources, one being cash flow. Another source of funding was sale of CP stock. It also didn't hurt that there was a pretty fair amount of traffic being generated in Arizona, one source being the Copper Queen mine that led to the EP&SW.
erikem PDN, Murphy: As I mentioned earlier, Stan Johnson had brought up Anaconda Copper as one of the reasons that construction of the PCE was approved (in addition to the reasons given by Vance). Johnson undoubtedly put a lot more effort researching the PCE than Vance did (this is not intended as a criticism of Vance), so I'm not surprised that Johnson would have details not in Vance's book.
As I mentioned earlier, Stan Johnson had brought up Anaconda Copper as one of the reasons that construction of the PCE was approved (in addition to the reasons given by Vance). Johnson undoubtedly put a lot more effort researching the PCE than Vance did (this is not intended as a criticism of Vance), so I'm not surprised that Johnson would have details not in Vance's book.
Railway Man A third hypothesis, alluded to above, is that the Milwaukee Road's board was afflicted with grandiosity, self-importance, and machismo, and could not countenance a future in which they were directors of an also-ran, second-tier granger instead of barons of the transcontinental nobility, nor admit to their peers or themselves that Harriman and Hill had already won the game. RWM
A third hypothesis, alluded to above, is that the Milwaukee Road's board was afflicted with grandiosity, self-importance, and machismo, and could not countenance a future in which they were directors of an also-ran, second-tier granger instead of barons of the transcontinental nobility, nor admit to their peers or themselves that Harriman and Hill had already won the game.
You've just shaken my belief in the whole system. I guess there's nothing left to do, but sell my ENRON stock, and dump in all into mutual funds.
Weren't there stockholders back then, who would question the BOD decisions at some point?
greyhounds Railway Man . Greyhounds and I are sometimes polar opposites on matters of politics but I think we are in agreement that railway regulation had as its primary beneficiary not the public but the stockholder of certain companies, it turned fair economic competition on its head, it prematurely exhausted resources and the environment, and it destroyed trillions of dollars of wealth. RWM We are in full and complete agreement. I know I've been over this before, but I think it's one of those things that can not be said enough. Economic regulation of transportation did not serve "The Public Interest". It can not serve "The Public Interest". The agency to economically regulate transportation, the Interstate Commerce Commission, was established to stabilize railroad cartels. The railroads had tried to establish the cartels among themselves but were generally uncessful. They didn't like competition, but they couldn't stop competition. So they turned to the Federal Government for help. The Interstate Commerce Act was written by a lawyer in the pay of the Phildelphia and Reading Railroad. Now, do you think he wrote the law so as to be unfavorable to the railroad companies? The cartels set prices so that all members could make money. They could set prices the same all around, but they couldn't equalize costs of operation over various routes. This meant they had to artificially set the collective prices high enough so that the least efficient railroad could make a buck. It was a sweet deal for the investors in inefficient railroads. They were protected from price competition through the Federal Government. Of course, it screwed up the national economy big time. But those investors in the inefficient carriers didn't have to worry. Regulation did allow communities located on the inefficient carriers (i.e. D&RGW) to continue to have rail service. But this cross-subsidy came at a high price to the overall national economy.
Railway Man Murphy Siding PDN Jr.: I had to go find my copy of The North American Railroad and start reading again. As far a the PCE goes, I still can't quite grasp the decision making process made by the Milwaukee directors. After doing a location survey (or whatever you would call it) to determine the reason to build the line, and the where and at what cost factor, they still voted yes? By 1906, there were already 6 transcons to the west coast sharing in that asian traffic. Was there that much traffic, and was there enough to support 1 more? No. (I think this question is a variant of "begging the question" called "see how much RWM PDN will do anything to avoid working tonight today.")
Murphy Siding PDN Jr.: I had to go find my copy of The North American Railroad and start reading again. As far a the PCE goes, I still can't quite grasp the decision making process made by the Milwaukee directors. After doing a location survey (or whatever you would call it) to determine the reason to build the line, and the where and at what cost factor, they still voted yes? By 1906, there were already 6 transcons to the west coast sharing in that asian traffic. Was there that much traffic, and was there enough to support 1 more?
No. (I think this question is a variant of "begging the question" called "see how much RWM PDN will do anything to avoid working tonight today.")
Seriously, this is wonderful, fun, and informative thread. I'm having way too much fun with it ! But I'm over my self-imposed limit for the Forum today with my lengthy post to the "FRA Inspection" thread, so I'll have to be brief here.
Last night I took a look at Charles & Dorothy Wood's The Milwaukee Road - West (Superior Publishing, 1972) [a few of those details are more correct than in my earlier post, so that's why I'm repeating it here]. Their recounting of the PSE decision by the MILW in the early years of the 20th century is a lot better than I'd expected. Short version:
1) No, I personally doubt if there was enough such traffic. But yes, apparently they did expect that much traffic to materialize out of the developing and expanding territory;
2) This was likely an outgrowth of their view of the "natural expansion" or "natural territory" doctrine of railroad building and operation - kind of like a railroad-version subset of the "manifest destiny" beliefs of the period; [you have no idea of how hard I had to rack my brain to recall that one !]
3) The Woods include several quotes and paragraphs from James J. Hill and the UP (Harriman ?) to the effect of "We don't mind if the MILW expands west - we have more traffic than we can handle now." To their credit, the Woods then explore that a further with a lot of skepticism, including a couple of funny editorial cartoons featuring Hill essentially saying one thing but doing another. I can readily see this as the railroad geo-politics version of " 'Come in to my parlor !', said the spider to the fly". Vance notes at several places that the MILW PSE was essentially where UP wanted to go - and that upon the abandonment of the PSE, UP got most of the pieces. (My impression doesn't square with the latter, but I don't hold myself out as being well-informed on that point - maybe somebody esle here can confirm or provide details, etc.);
4) It gets better: The Woods say that the MILW had a cost estimate of the PSE from 1901. Note that date - that's right around when the Northern Securities Co. trust was formed, and a good 3 years before the US Supreme Court said NorSec was a violation. That cost estimate was for $45 million. In or around 1906, the managment of the MILW upped it to $60 million to be safe. It actually wound up costing . . .
wait for it . . .
$234 million (if I remember right) - about 4 times the already-inflated estimate ! The Woods provide a laundry list of the usual reasons - none of them were justifiable or unforseeable, in my opinion. As did RWM, the Woods also say that the costs of operating the grades on the PSE were so high that it drove the MILW to implement the electrification. [Was it above on this thread that somebody wrote that "Poverty is the mother of invention ?" Wonderful turn of phrase - "well said".] Anyway, in addition to the 1925 bankruptcy that I'd mentioned previously, the MILW found it necessary to "rinse and repeat" same again in 1935.
As RWM noted previously, this whole topic has aspects of a religious fervor to it. I suspect that is not a recent development - instead, that characteristic appears to go back to the genesis of the PSE.
Murphy Siding greyhounds [snips] The Interstate Commerce Act was written by a lawyer in the pay of the Phildelphia and Reading Railroad. [snips; emphasis added - PDN] At what point, did the ICC go from being a protector of stockholders of certain companies, to (over)protecting everybody who had a rail line nearby? Take CNW for example. The ICC not allowing them to shed non profitable grainger lines in a timely fashion had to be detimental to CNW stockholder's income and equity. Couldn't the same be said for nearly every railroad at some point in the ICC history?
greyhounds [snips] The Interstate Commerce Act was written by a lawyer in the pay of the Phildelphia and Reading Railroad. [snips; emphasis added - PDN]
At what point, did the ICC go from being a protector of stockholders of certain companies, to (over)protecting everybody who had a rail line nearby? Take CNW for example. The ICC not allowing them to shed non profitable grainger lines in a timely fashion had to be detimental to CNW stockholder's income and equity. Couldn't the same be said for nearly every railroad at some point in the ICC history?
Murphy Siding - "When they [the ICC] started believing their own press releases !" (as John G. Kneiling often said).
The actual answer may well be in one of the lengthier posts above; if not, it is in the depths of the history of transportation regulation in the U.S. It was sometime after the original ICC Act of 1887, through the Mann-Elkins Act of 1906 (?), another Act of 1914 (?), the Transportation Act of 1920, and maybe a few others as well.
If you can, you (we) really need to get and read the George W. Hilton articles from Trains of the 1960s and 1970s. He covers all this at a pretty sophisticated (post-graduate level ?) of detail. It's heavy going at places, but its the best and clearest explanation of this esoteric subject that I've seen. He said: "I write about this not because I enjoy it, but because I think it's important." (He went on to say that he'd rather write about oddball switching in Baltimore. Sadly, I don't think that ever happened, at least not in Trains.) Below is the list, from my search of the Trains magazine index a few minutes ago for "Hilton" and "ICC". Note that the sub-title for the 3rd one is "transportation is a cartel, and ICC is running it" - this is from pre-OPEC 1972, before most people outside of the world of economics had heard of the word "cartel" :
greyhounds - I understand it was a Pennsylvania Railroad lawyer, most likely from the Hilton article referenced above. Since I'm in Pennsylvania and "close to the scene of the action", Id like to run that down. Can you provide a name or reference for that ? Thanks !
Paul:Thanks for that list of George Hilton articles.
This is a fascinating thread and I appreciate everyone's input. Today we are seeing very similar instances of companies (and BOD) not correctly assessing the risk involved in major decisions. The financial industry's missteps the past 10 years are very well apparent and have affected almost all of us in a major way. No doubt there was a healthy amount of arrogance involved in these decisions.
Murphy while you question the shareholders allowing the PCE, we repeatedly see the same mistakes being made again and again. Do you think Jimmy Cayne of Bear Stearns or Richard Fuld of Lehman Brothers (I can go on and on) considered the magnitude of risk they took?
Rob Krebs (BNSF) looks pretty good right now for his "if you build it they will come" attitude regarding expanding the Transcon 10 years ago. It gave BNSF a huge head start on the UP. At the time, BNSF's shareholders spoke out questioning the expansion. What did Krebs know that UP didnt?
These lessons from 100 years ago are still important.
ed
greyhounds Paul_D_North_Jr [snip by PDN] CB&Q did go to Chi-town, but only by swinging way to the south and then northwest. In its home territory, the MILW wasn't challenged by any of these - C&NW and others, yes, but none of them went west either. [snip by PDN; emphasis added by greyhounds] - Paul North. I'm going to disagree with this. The CB&Q route between St. Paul and Chicago was not "round-about". When the GN/NP bought the "Q" they acquired a fully competiive, direct route into Chicago. Mileages between Chicago Union Station/Northwestern Station (two blocks or so apart) and St. Paul were: CB&Q: 427 Milwaukee: 410 C&NW: 409 17/18 miles is no big deal and can easily be offset with other factors. Such as, the Milwaukee had to cross the Mississippi River twice with moveable bridges between Chicago and St. Paul (Hastings, MN and La Crosse, WI) while the "Q" stayed on one side. The "Q" provided access to the St. Louis and Peoria gateways. The MIlwaukee had niether.
Paul_D_North_Jr [snip by PDN] CB&Q did go to Chi-town, but only by swinging way to the south and then northwest. In its home territory, the MILW wasn't challenged by any of these - C&NW and others, yes, but none of them went west either. [snip by PDN; emphasis added by greyhounds] - Paul North.
greyhounds - You're quite right; thanks for bringing that up. Frankly, I'd overlooked that line - I was focussing on the branch-line network instead, though looking back now on what I wrote, you wouldn't have known that either. But it doesn't affect my main point, because I'd taken it for granted that the CB&Q had a great line and was an effective eastern link for both the NP and the GN, paralleling and competing with the MILW's main line. You've reinforced and detailed that presumption.
What I intended to say was that the CB&Q didn't have enough of a branch-line network in the MILW's home territory to seriously threaten the MILW's originated traffic base (albeit mostly granger-type traffic). Aside from the main line (only) from Chicago to the Twin Cities that you describe - which once north of Savanna was away from the action, being on the east/ north bank of the Mighty Miss - the only other CB&Q main line was way to the south, along the Chicago-Galeburg-Burlington-Council Bluffs/Omaha-Lincoln-Aroura-Alliance axis. The Q's branch line network was well away from the MILW's, being mainly south and west of the Missouri, and within only a few miles of that westerly main line, except for the branches to Des Moines and Sioux City. It wasn't until much farther to the west that the CB&Q had branches heading north into the MILW's prospective territory, at Deadwood, S.D. and to Billings Mont. See the 1907 CB&Q system map at:
http://www.davidrumsey.com/maps900059-24568.html
and the pop-up enlargement at:
http://www.davidrumsey.com/luna/servlet/detail/RUMSEY~8~1~24568~900059:Map-of-the-Burlington-Route-and-con
Therefore, in 1906 the MILW shouldn't have felt vulnerable to the CB&Q in terms of the CB&Q competing for the MILW's local/ originated traffic. For the bridge or overhead traffic to & from the NP and GN at Minn.-St. Paul, sure - but that was a "done deal", already going to the CB&Q - see the map above - and was never going to be the MILW/'s anyway. So building the PSE made no sense vis-a-vis the Burlington - as objectively viewed now (from 103 years later ), the PSE wasn't going to alter that competitive equation between the MILW and the CB&Q at all.
That's my story, and I'm sticking to it ! (at least until I see a better version)
Thanks for participating in the discussions.
jrbernier Murphy, The Milwaukee Road(then the St Paul Road) had built a quite extensive granger network in the Midwest. They realized two things: There was not enough traffic being generated to really support the heavy debt load. They needed a new traffic source. A 3rd factor was basic 'I want to control my own railroad'. They could see that they were not the 'Super Grainger' and would be bought out at some time(and control would be moved out of the local area). The answer was to build the 'Pacific Extension'. The line had several issues: The GN & NP were already there The alignment crossed 'one too many mountains' They had to electrify due to the grades/weather conditions It took a lot more money to build than forecast And to top it off, the Panama Canal opened and transcon traffic fell off for years They took a gamble and it did not pay off. Had they not built it, maybe they could have sold their Midwest lines for top dollar - Who knows. That is 'History'..... Jim
The Milwaukee Road(then the St Paul Road) had built a quite extensive granger network in the Midwest. They realized two things:
A 3rd factor was basic 'I want to control my own railroad'. They could see that they were not the 'Super Grainger' and would be bought out at some time(and control would be moved out of the local area). The answer was to build the 'Pacific Extension'. The line had several issues:
They took a gamble and it did not pay off. Had they not built it, maybe they could have sold their Midwest lines for top dollar - Who knows. That is 'History'.....
Jim
Hi, Jim -
Looking back over the posts on this thread re the MILW and the PSE / PCE, it seems that early on you neatly summarized most of the important points. However, in reviewing the Charles & Dorothy Wood The Milwaukee Road - West book (Superior, 1972) last night, I did note that they claimed that the MILW was financially sound and not heavily indebted before the PSE, contrary to your 1st point above. I forgot the exact numbers - I could retrieve the book and post them tonight or tomorrow if you're interested.
As to the effects of the Panama Canal on the MILW, I've seen claims both ways in the past 2 days. It certainly didn't help, anyway. Again, I'll see what the Woods say on that.
Otherwise, your post pretty much agrees with them, if you didn't already know that.
I appreciate your insights on this and the many other topics on the Forum.
Murphy Siding greyhounds Regulation did allow communities located on the inefficient carriers (i.e. D&RGW) to continue to have rail service. But this cross-subsidy came at a high price to the overall national economy. At what point, did the ICC go from being a protector of stockholders of certain companies, to (over)protecting everybody who had a rail line nearby? Take CNW for example. The ICC not allowing them to shed non profitable grainger lines in a timely fashion had to be detimental to CNW stockholder's income and equity. Couldn't the same be said for nearly every railroad at some point in the ICC history?
greyhounds Regulation did allow communities located on the inefficient carriers (i.e. D&RGW) to continue to have rail service. But this cross-subsidy came at a high price to the overall national economy.
The cartel organization always cross-subsidized rail lines that were not otherwise economically viable. It had to. Benifits of this cross-subsidy went to rail customers located on those lines. These customers litterally had someone else paying part of their freight bills. Once someone starts getting a subsidy it's like an adictive drug. They get so they can't imagin life without it and will go to great lengths to continue their adiction. Abandonment of uneconomical lines removed the subsidy drug and, as a result, was fought politically.
Government control over railroads (and other commerce) was increased greatly in the first two decades of the 20th Century. This increase culminated in the outright siezure of the railroads by the Federal Government in 1918. The Feds also siezed Western Union and AT&T. So they had complete control of all non-local transportation and communication. Gulp! (This was a very dangerous period in American History that doesn't seem to get a lot of study.)
There was a debate about returning the railroads to private ownership. Prominent socialists, such as Eastman, thought they were gurus who had the wisdom and knowledge to produce a "perfect" government run transportaiton system for the US - if only they were given the power. Such egomainia, when granted government power, is frightening. It exists today.
The railroads were returned to private ownership in 1920. But the regulated cartel structure was cast in steel by the Transporation Act of 1920, complete with its cross-subsidy of non-economic lines.
At about the same time, trucks and paved roads began to develop. This destroyed the ability of even a government enforced rail cartel to cross-subsidize anything. Removing the commercial ability to do the cross-subsidy didn't remove the political pressure for the cross-subsidy. So the railroads, such as the C&NW were forced to bleed in order to maintain service on uneconomic lines.
That's the long way around, but the answer to your question: "At what point, did the ICC go from being a protector of stockholders of certain companies, to (over)protecting everybody who had a rail line nearby?" I'd say about 1920 and after, when the rail cartel was made increasingly impractical by the rapid development of motor freight technology.
MP173 Paul:Thanks for that list of George Hilton articles. This is a fascinating thread and I appreciate everyone's input. Today we are seeing very similar instances of companies (and BOD) not correctly assessing the risk involved in major decisions. The financial industry's missteps the past 10 years are very well apparent and have affected almost all of us in a major way. No doubt there was a healthy amount of arrogance involved in these decisions. Murphy while you question the shareholders allowing the PCE, we repeatedly see the same mistakes being made again and again. Do you think Jimmy Cayne of Bear Stearns or Richard Fuld of Lehman Brothers (I can go on and on) considered the magnitude of risk they took? Rob Krebs (BNSF) looks pretty good right now for his "if you build it they will come" attitude regarding expanding the Transcon 10 years ago. It gave BNSF a huge head start on the UP. At the time, BNSF's shareholders spoke out questioning the expansion. What did Krebs know that UP didnt? These lessons from 100 years ago are still important. ed
This anology with todays bankers and investment companies must also include the very substantial influence, in some cases blackmail, by the Federal Government to make loans which were not secure.
Times have changed and government now influences private and corporate investments through tax policy and because "they know better than we what is good for us". I have very little confidance in our Congress and it is not limited to the presently constituted Congress. This has been ongoing for 40 + years.
diningcar [snip] Times have changed and government now influences private and corporate investments through tax policy and because "they know better than we what is good for us". I have very little confidance in our Congress and it is not limited to the presently constituted Congress. This has been ongoing for 40 + years.
It could probably be shown by facts and figures that there is no distinctly native American criminal class except Congress.- Pudd'nhead Wilson's New CalendarIt is the foreign element that commits our crimes. There is no native criminal class except Congress.- More Maxims of Mark, Johnson, 1927
[emphasis added - PDN]
Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself.- Mark Twain, a Biography
All Congresses and Parliaments have a kindly feeling for idiots, and a compassion for them, on account of personal experience and heredity.- Mark Twain's Autobiography; also in Mark Twain in Eruption
From: "Freeing Yourself From Government - Mark Twain's Congress:" at:
http://www.commonlawvenue.com/Misc/250-Twain'sCongress.htm
- PDN.
MP173 [snip] Rob Krebs (BNSF) looks pretty good right now for his "if you build it they will come" attitude regarding expanding the Transcon 10 years ago. It gave BNSF a huge head start on the UP. At the time, BNSF's shareholders spoke out questioning the expansion. What did Krebs know that UP didnt? These lessons from 100 years ago are still important. ed
UP may have known it then, too (I have no inside knowledge, though). But back then UP was still dealing with the results and fallout of:
" . . . the railroad's meltdown of 1997- 98 that followed Union Pacific's $5.4 billion merger with the Southern Pacific Rail Corp. in 1996" from "Union Pacific Finally Appears to Be Out of Financial Danger", Knight Ridder/Tribune Business News, dated November 21, 1999 [emphasis added - PDN], at:
http://www.encyclopedia.com/doc/1G1-57775267.html
So even if UP saw the opportunity that could be gained by adding capacity, and even if it wanted to, it probably couldn't - it was still too busy and tied up with untangling the merger fiasco. In contrast, the BN-SF merger went much smoother - it was more of an "end-to-end" merger, anyway - and so BNSF got past that and was able to look to the future that much sooner.
You are correct Paul. Sometimes you are too distracted by what you need to do that you cannot do what should do.Not to hijack the thread...but why did certain mergers in the 90's, primarily UP/CNW, UP/SP and Conrail/NS/CSX have so much difficulty when compared to BN/ATSF and CN/IC/WC?
Paul_D_North_Jr diningcar [snip] Times have changed and government now influences private and corporate investments through tax policy and because "they know better than we what is good for us". I have very little confidance in our Congress and it is not limited to the presently constituted Congress. This has been ongoing for 40 + years. It could probably be shown by facts and figures that there is no distinctly native American criminal class except Congress.- Pudd'nhead Wilson's New CalendarIt is the foreign element that commits our crimes. There is no native criminal class except Congress.- More Maxims of Mark, Johnson, 1927 [emphasis added - PDN] Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself.- Mark Twain, a Biography All Congresses and Parliaments have a kindly feeling for idiots, and a compassion for them, on account of personal experience and heredity.- Mark Twain's Autobiography; also in Mark Twain in Eruption From: "Freeing Yourself From Government - Mark Twain's Congress:" at: http://www.commonlawvenue.com/Misc/250-Twain'sCongress.htm - PDN.
Sounds like an endorsement of despotism over democracy to me.
Just a thought here on the successful and non-successful mergers. I'd credit the success of the mergers at CN-etc. and BN-SF to the quality of management at the those companies, and, in the latter case, perhaps to it being more of a merger of equals in financial strength, with quality leadership in both companies. That may be a simplistic explanation, but those companies showed that it could be done well.
By contrast, UP did NOT learn from its mistakes in the should-have-been-easy CNW merger, and, after failing to do its homework on just how desperate SP's situation was, jumped into that huge merger and proceeded to throw out the baby with the bath water. It's easy for me to sit here and be critical a decade later, but UP's merger work in the 1990s (which reeked of arrogance) looks like a textbook case of how not to do it. It should become good material for some B-school case studies.
So sorry - I wasn't endorsing the views of that website, nor did I intend to give that impression. I was merely giving credit for my source of that collection of quotes, responding to diningcar's comments.
But I did just look at it briefly, if only to "see what I'd gotten myself into this time" (albeit inadvertently). Actually, it seems to me to be more of a "rant" promoting a form of anarchy rather than despotism.
It's also something of a truism among the American populace that "All Congress-critters are crooks" - except, of course, for the 3 that represent me (2 Senators and a Representaive).
MP173 [snip] Not to hijack the thread...but why did certain mergers in the 90's, primarily UP/CNW, UP/SP and Conrail/NS/CSX have so much difficulty when compared to BN/ATSF and CN/IC/WC? ed
garyla's reply (above) sums up a lot of the conventional wisdom on this, and I don't have a huge amount to offer in addition, though I will submit the following for consideration:
Configuration: BN & ATSF was essentially an end-to-end merger, as was CN & IC, and then CN & WC. UP & C&NW was also, but UP & SP had a lot of overlap and divestiture and grants of rights, mainly to the then-also-new BNSF and also to KCS. ConRail to NS & CSX was much different - a "split the baby" kind of thing. For all of the time that the latter had to plan, it should have gone off much better.
Financial Condition: The railroad being acquired was pretty good shape physically & financially in the case of ATSF, IC, WC, and ConRail, but not so much with C&NW, and not at all for SP.
Corporate Culture: Supposedly UP really threw its weight around in the SP merger with the take-over of the SP's facilities and people, and did not consider anything that the SP people had to say or tell them. I can't think of a worse business to do that in than railroading - it's way too easy then to just keep your head down, say nothing more than the required minimum, do exactly what you are told, and no more or no less - and stand back and watch the resulting non-operation self-destruct (melt-down) all over the territory. At least in military combat situations, the primal need for physical survival will usually overcome the natural human impulse to just let some arrogant jerk - at whatever level - get what's coming to him. Out on the railroad, aside from rules violations, there's no such self-preservation imperative to offset that urge for psychological revenge.
Network Operational Planning: Others who are more knowledgable will have better and more accurate comments on this, but here goes. I believe that both BN & CN were using fairly high-level computer-driven planning and studies, often through outside consultants - Multi-Modal and ALK (?) come to mind - before or during those mergers. In contrast, I don't believe that UP, SP, NS, CR, or CSX had gotten into any of that very deeply at the time. Since then, NS has; I'm not sure about the others. This is a case where "failing to plan is planning to fail"; if you don't at least look at the situation, how can you possible know how it's going to turn out ? Also, I recall that some of these mergers were rushed and implemented far more quickly than others, most likely without adequate thought and consideration given to all of the far-ranging effects elsewhere on the systems. Largely as a result of this, for any such mega-mergers the Surface Transportation Board adopted rules and now requires - among many other things - very extensive and detailed network operations planning, submissions, documentation, and analysis, of "before - during - after" scenarios and how to mitigate any adverse impacts or effects that may develop. Again, there are others here more qualified than me who can expand on this if they wish.
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