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 . 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.
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.
Thanks to Chris / CopCarSS for my avatar.
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?
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.
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.
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.
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?
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 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.
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.
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.
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).
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 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.
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."
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.
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.
* - 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.
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.
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.
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.
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.
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
Johnny, Columbus discovered America and I discovered Promontory Point.
http://www.carletonwatkins.org/views/hi-res_wpr/wr0357.htm
Jumping Jupiter, where the heck is Momument Point?
http://www.carletonwatkins.org/views/hi-res_wpr/wr0352.htm
Mike
diningcarMurphy Siding Dakguy201 Let's say I'm a time traveler back in the 1860's. My job is to choose the route for the Union Pacific. President Lincoln has already decided I will take the "central route" beginning in Omaha. I dig out the works of the Army surveyors and perhaps do some of my own on the ground observation. I note that I'm going to build through almost entirely empty country until I meet the Central Pacific coming east. There is one exception to "entirely empty country" -- Salt Lake City. My location decision becomes to go north around the lake, meet the CP near Ogden and serve Salt Lake with a branch line. I've never understood why I didn't just go south around the lake to begin with. The answer to that *might* have been, at least partly, in a post on the 1880's engineering thread. It mentioned the WP line that ran on the south side of the lake as having problems with unstable ground/slides(?) and the lake trying to swallow the line in wet years. I wonder, if the determination to go north around the lake was made by Central Pacific, whose route came in from the north west, heading toward Ogden? It 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. I believe that the Mormans had significant influence regarding the location; and they certainly had sufficient influemce about the hiring of laborers. I cannot recall which historian wrote about this.
Murphy Siding Dakguy201 Let's say I'm a time traveler back in the 1860's. My job is to choose the route for the Union Pacific. President Lincoln has already decided I will take the "central route" beginning in Omaha. I dig out the works of the Army surveyors and perhaps do some of my own on the ground observation. I note that I'm going to build through almost entirely empty country until I meet the Central Pacific coming east. There is one exception to "entirely empty country" -- Salt Lake City. My location decision becomes to go north around the lake, meet the CP near Ogden and serve Salt Lake with a branch line. I've never understood why I didn't just go south around the lake to begin with. The answer to that *might* have been, at least partly, in a post on the 1880's engineering thread. It mentioned the WP line that ran on the south side of the lake as having problems with unstable ground/slides(?) and the lake trying to swallow the line in wet years. I wonder, if the determination to go north around the lake was made by Central Pacific, whose route came in from the north west, heading toward Ogden? It 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.
Dakguy201 Let's say I'm a time traveler back in the 1860's. My job is to choose the route for the Union Pacific. President Lincoln has already decided I will take the "central route" beginning in Omaha. I dig out the works of the Army surveyors and perhaps do some of my own on the ground observation. I note that I'm going to build through almost entirely empty country until I meet the Central Pacific coming east. There is one exception to "entirely empty country" -- Salt Lake City. My location decision becomes to go north around the lake, meet the CP near Ogden and serve Salt Lake with a branch line. I've never understood why I didn't just go south around the lake to begin with.
Let's say I'm a time traveler back in the 1860's. My job is to choose the route for the Union Pacific. President Lincoln has already decided I will take the "central route" beginning in Omaha.
I dig out the works of the Army surveyors and perhaps do some of my own on the ground observation. I note that I'm going to build through almost entirely empty country until I meet the Central Pacific coming east.
There is one exception to "entirely empty country" -- Salt Lake City. My location decision becomes to go north around the lake, meet the CP near Ogden and serve Salt Lake with a branch line.
I've never understood why I didn't just go south around the lake to begin with.
I wonder, if the determination to go north around the lake was made by Central Pacific, whose route came in from the north west, heading toward Ogden? It 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.
I believe that the Mormans had significant influence regarding the location; and they certainly had sufficient influemce about the hiring of laborers. I cannot recall which historian wrote about this.
Leonard Arrington did, in "Great Basin Kingdom" and other excellent histories of the Great Salt Lake Valley and the Kingdom of Deseret. Arrington was an economic historian, Mormon, and one of the best U.S. historians of the 1940-1980 period. Arrington found that Brigham Young was economically sophisticated as well as politically sophisticated and understood that once a transcontinental railway passing through or near his kingdom was a fait accompli, that his people's commercial interests would not be negatively nor positively influenced by not placing Salt Lake City on the main line. The Utah Central was funded 100% by principals of the Mormon Church, the Church itself, and the UP in partnership, as was the subsequent Utah Southern from Salt Lake City to Provo and beyond, which eventually became the stepping-off point for the Harriman counter to Clark's SPLA&SL. The Mormon Church also contracted all the labor to build the UP embankments from a point near Evanston, Wyoming, to and beyond Promontory as the two lines built past each other. The UP never paid the bill for the labor in full, and in the subsequent negotiation the UP agreed to pay in kind by providing second-hand iron rail for the Utah Central.
Murphy SidingDakguy201 Let's say I'm a time traveler back in the 1860's. My job is to choose the route for the Union Pacific. President Lincoln has already decided I will take the "central route" beginning in Omaha. I dig out the works of the Army surveyors and perhaps do some of my own on the ground observation. I note that I'm going to build through almost entirely empty country until I meet the Central Pacific coming east. There is one exception to "entirely empty country" -- Salt Lake City. My location decision becomes to go north around the lake, meet the CP near Ogden and serve Salt Lake with a branch line. I've never understood why I didn't just go south around the lake to begin with. The answer to that *might* have been, at least partly, in a post on the 1880's engineering thread. It mentioned the WP line that ran on the south side of the lake as having problems with unstable ground/slides(?) and the lake trying to swallow the line in wet years. I wonder, if the determination to go north around the lake was made by Central Pacific, whose route came in from the north west, heading toward Ogden? It 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.
It's a very good question, and it's been addressed by some people smarter than I, which enables me to summarize their findings. The UP and CP were 100% correct in their decision to locate north of the lake. Both railways independently arrived at that decision. The meeting point at Promontory was not by design of either, nor desired by either, and jammed down both their throats. The CP's ideal meeting point would have been Council Bluffs, Iowa, and the UP's ideal meeting point would have been Sacramento, California.
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.Note: I referred earlier to the Central Corridor route being the best location between the Missouri Valley and California's Central Valley. It was at that time. There was an alternative, however, which is a branch line constructed off a main line rom the Missouri Valley to Los Angeles, a location occupied later by the SP (first) and the Santa Fe (second). However, that alternative could become viable only as an adjunct to the Los Angeles-Missouri Valley location, piggybacking onto its traffic flow and its engineering costs and its operating volume efficiencies. The Santa Fe and SP routes between Oakland and the Missouri Valley are to this day secondaries off the main stem, from a high-level point of view, and similarly the Port of Oakland is a satellite of the Ports of Los Angeles and Long Beach, used for overflow. Thus in today's perspective the Santa Fe or SP routes between Chicago and Oakland via Los Angeles look at least the equal of the Overland Route, but in the 1800s perspective this was not possible until Los Angeles developed as a traffic source in its own right. Had Los Angeles remained a hamlet of adobe huts (let's assume we trim off all of Southern California west of the San Andreas Fault), and had the UP-CP meeting point been effected east of the Rocky Mountains, there would be no need for any Santa Fe or SP lines looping south from the Central Valley and back north into the Missouri Valley.RWM
henry6Today, investors and thier generals do not lose no matter what the outcome of their decisions and actions.
Could you clarify whether you mean that to apply as the most likely outcome, or just as an occasional aberration?
I assume you mean the former because you are comparing business outcomes of yesterday to those of today, so each one would have to be the overall trend in order for such a comparison to be meaningful.
jrbernier 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
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
And therein lies the difference in attitude, aptitude, and approach to business (and railroading in particular) between the late 19th Century and today. They were gamblers, they had to be gamblers. They were also visionaries and dreamers because there was nothing but unpopulated empty land or untapped resources out there. With religious fervor they were want to push the American way from east to west and hope to make a buck along the way; they knew there were no sure shots, no immediate 100% return on investment, no one to bail them out if they made a mistake. That is what we admire about our country and forefathers. It is what is lacking in the approach to business and investment today. Today, investors and thier generals do not lose no matter what the outcome of their decisions and actions. So in many ways we are comparing apples (19th Century) to oranges (20th Century) to pears (21st Century) when speaking of railroad building and investment.
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Railway ManI 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 performedNo traffic base not already adequately served by othersNo significant service advantageNo significant operating cost advantageNo significant interline connection advantagesToo much track through too much sterile territory.
Murphy SidingRailway Man .....................The end-game ................................ No railway system ever, for one second, envisioned the future that actually transpired, where they would all remain on the field of battle for the long term! Nor did they envision that all of track they built in order to command territory would be permanent -- they assumed that once the strategy was complete, at a tactical level a great deal of the duplicate plant would be removed. The presumption of Gould, Huntington, Forbes, Joy, et al., was that the strategic battle would quickly find one big winner and everyone else would be forgotten even to historians. The railway builders did not forsee that the body politic would not leave them be, and did not forsee the body politic would force onto them a negotiated compromise that would stop the battle and freeze every railway in position like a bug in amber. ............................ RWM That has some really eerie similarities to the Western Front in 1914/15. Maybe the reason that I seem to be thick as a brick sometimes, is that I'm always thinking there must be simple answers out there, to what in reality are complex questions. Railroad history is no different than any other history, I suppose. It's complicted, interesting, and generally written from an opinionated point of view. At least it's not full of obscure French phrases, like most books on European history.
Railway Man .....................The end-game ................................ No railway system ever, for one second, envisioned the future that actually transpired, where they would all remain on the field of battle for the long term! Nor did they envision that all of track they built in order to command territory would be permanent -- they assumed that once the strategy was complete, at a tactical level a great deal of the duplicate plant would be removed. The presumption of Gould, Huntington, Forbes, Joy, et al., was that the strategic battle would quickly find one big winner and everyone else would be forgotten even to historians. The railway builders did not forsee that the body politic would not leave them be, and did not forsee the body politic would force onto them a negotiated compromise that would stop the battle and freeze every railway in position like a bug in amber. ............................ RWM
.....................The end-game ................................ No railway system ever, for one second, envisioned the future that actually transpired, where they would all remain on the field of battle for the long term! Nor did they envision that all of track they built in order to command territory would be permanent -- they assumed that once the strategy was complete, at a tactical level a great deal of the duplicate plant would be removed. The presumption of Gould, Huntington, Forbes, Joy, et al., was that the strategic battle would quickly find one big winner and everyone else would be forgotten even to historians.
The railway builders did not forsee that the body politic would not leave them be, and did not forsee the body politic would force onto them a negotiated compromise that would stop the battle and freeze every railway in position like a bug in amber. ............................
Maybe the reason that I seem to be thick as a brick sometimes, is that I'm always thinking there must be simple answers out there, to what in reality are complex questions. Railroad history is no different than any other history, I suppose. It's complicted, interesting, and generally written from an opinionated point of view. At least it's not full of obscure French phrases, like most books on European history.
So what's wrong with obscure French phrases! Some of my favorites are:
Deck zee halls with hugs and keeses! La la la la la la la la la!
Thees ees my first affair so please be kind.
Come to me, my melon baby collie.
I must find out what zees 'pew' means every time I appear.
But more seriously, it's interesting how few people cotton onto the fact that three of the greatest railwaymen ever, C.P., Huntington, J.J. Hill and E.H. Harriman -- three men who fully grasped the nature of the opportunity and the technology and means to realize it -- did not grow up in the service. They were storekeepers and a stock broker. It would seem that perhaps the secrets to success in railways was not one's knowledge of tie spacing and tractive effort (though all became expert in details) but in more fundamental skills such as clear-thinking, knowledge of human behavior, and knowledge of how power works or doesn't work. In other words Robert E. Lee and Ulysses Grant would have been good railwaymen, and conversely great railwaymen made great military men, too.
The Panama Canal is not an excuse. The Panama Canal made traffic move only that never would have moved by rail. Other railways that should have been affected by the Panama Canal did not go bankrupt (SP, UP, GN, NP, and Santa Fe).Electrification dug the grave deeper Capital cost could not be recovered.
Branch lines were not considered until too late. Extensions such as Great Falls were horribly expensive and, once again, had to share the traffic with others already there and already more advantageously placed with the customers' already existing facilities.
This last point is crucial. The Milwaukee Road could not just jam its tracks into the shippers' facilities but needed the shippers to come to its tracks, which the shippers, having just a few years prior built facilities on the Brand X railways, were fairly loath to do.
An analogy would be this. Suppose you rent a house. It's not a mansion perhaps, but it does your family fine. You look out your front door one morning and a builder has built a new house right across the street! You look it over carefully, and while the paint color is different it otherwise looks mostly just like yours. The builder walks over and says, "Hello! I'd like you to live in my house."
"That's interesting," you reply, "but is the rent of your house cheaper?"
"No, actually it's the same."
"Is your house more roomy?"
"No, it's the same size."
"I am moved into my house, we've arranged the furniture and bought rugs that fit the rooms and unpacked the boxes and put everything away. Will you help us buy new rugs that fit your house's rooms, move us over, and make it all seamless so I go to work one morning from my old house and come home to the new, and nothing has changed but the driveway I pull into?"
"No."
<You can fill in your response here, and if you're the sort of person who would be yelling, "Marge, pack up! We're moving!" I will be sending you some interesting financial opportunities from my friend the Nigerian banker.>
I have absorbed a great number of points on this forum regarding the advisability of Milwaukee Road Pacific Extension, so I am surprised to learn that the matter can be settled in four minutes of reading Vance. Can somebody sum up the conclusions reached in these four minutes? I would like to put the matter to rest.
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