The Milwaukee Road

[greyhounds]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by greyhounds
[brThey also increased their cash flow by not maintianing the railroad. If you don't replace the ties you can keep going for years, you get slower and slower. But you can creep over the railroad for years. Eventually, you face a tremendous rebuilding cost, throw up your hands and retreat. This is what happened.

I keep asking for your actual numbers, but all I get is baloney.

The BN conditions produced approximately $500 million in additional cash flow 1970-1977. Expenses didn't increase by nearly that much.

We know that because we have specific data.

As one retired Milwaukee VPO put it, "the Milwaukee had a choice between the very good revenue from long haul traffic, or the short haul traffic that railroads were trying to get rid of because there was no profit in it Their choice made no sense. Milwaukee was the only railroad in the country that thought it could make money off the short haul."

Why do you argue that long haul was unprofitable, and short haul the way to go?

What school did you get your MBA from? You have already confused "cash flow" with "net cash flow," and this is specifically documented on this thread, and then you pretended you knew there was no difference when in fact there is a huge difference You would have flunked out of the MBA courses I took.

I keep looking for numbers here, and you keep pretending numbers are not important, only your "conclusions."

I guess this comes down to this, since you refuse to offer any support for any of your contentions.

How do you "know" so much about the Milwaukee Road, more than its employees, more than it's officers, more than the numbers, more than anybody?

Please, this time be specific.

Best regards, Michael Sol

MBA from Loyola in Chicago. MS in transportation from Northwestern in Evanston, IL. BA in Political Science from the University of Illinois at Urbana - Champaign.

[MichaelSol]

QUOTE: Originally posted by Murphy Siding

MichaelSol: Since you're never at a loss for words,could you explain why the Milwaukee Road Went Broke? If I read all your posts, it would seem impossible,but it did happen. What are your thoughts about why?

Please don't confuse the data about Lines West with the Company as a whole. Please let me emphasize that. The financial information posted on this thread is not the Company data as a whole, which is quite different and would certainly paint a different picture.

It is the difference between what was happening on Lines West vs Lines East, that puts the situation of the Milwaukee Road into an interesting light in terms of short haul vs long haul, and how this played out, 1970-1980. Particularly in regard to the fact that senior Milwaukee executives familiar with the PCE had one specific view, and senior Milwaukee executives without that specific background had a completely contrary view.

Has little to do with MBA's, but Greyhounds brought that up on his own.

It is interesting that you would be the first person on this lengthy thread to ask the question, the only guy who admits he doesn't have an MBA or that he "knows everything about railroading."

Whether or not I am at a loss for words, I have not expressed those words at all, and that is ... "the rest of the story."

Best regards, Michael Sol

[MichaelSol]

QUOTE: Greyhounds wrote:After this "Crown Jewel" of railroad lines was built just before WWI the owning corporation, vaious incarnations of the Milwaukee Road, went bankrupt three times within the following 75 years. They were reorganized three times giving them the opportunity to structure themselves to become an ongoing concern. They failed each time, 1925, 1935 and 1977. The '35 bankruptcy lasted 10 years and the "New Milwaukee" lasted only 32 years despite having this "Crown Jewel".

If the line was worth anything besides scrap value, another corporation could have picked it up. They didn't. That should tell us something.

Greyhounds' "misunderstood" the comment about "Crown Jewel", and I am sure it was unintentional although I have never seen anyone, with one exception, misunderstand so much. You might almost think it was a cult, immune to rational discourse,

But earlier, Jay Eaton wrote:

QUOTE: Originally posted by jeaton
.I know you would have seen the numbers on the MILW's short fast Chicago-Minneapolis operations. I would submit that however numbers came out, at the time the trains were running, the double track line had quite a bit of unused capacity. Jay

QUOTE: by Michael Sol: That line was the crown jewel. 135 MGT annual capacity. As of 1978, I think it was carrying about 40 MGT.

As the record clearly shows, the "Crown Jewel" I specifically referred to was the Chicago -- Twin Cities mainline, which was, in fact, acquired by another company and continues in service today.

Despite Greyhounds' insistence, against all evidence to the contrary including modern day operations of the Candian Pacific Railway, that it does not.

Greyhounds' suggestion that it was not is simply false based on an apparently characteristic misreading of text and data.

Whether this suggests anything about the credibility of Greyhounds his accuracy, or his veracity on anything, is, as usual, best judged by the reader.

Best regards, Michael Sol

[Murphy Siding]

MichaelSol: Since you're never at a loss for words,could you explain why the Milwaukee Road Went Broke? If I read all your posts, it would seem impossible,but it did happen. What are your thoughts about why?

[MP173]

I think the better question to ask is..."what school did the MIlwaukee Road management get their MBA's from?"

This is not a pissing match over who's MBA is better than who's....and by the way, just so we dont confuse anyone, I dont have an MBA.

But, I do know enough to realize that you cannot allow emotion get in the way of facts and the simple fact is the Milw folks might have had a decent franchise if they had managed it correctly. They chose not to. They did not use the cash flow properly (regardless of which definition one uses) to invest in their business. They ignored cold hard data which suggested the path that should have been taken.

Michael, you mentioned earlier that you worked in the office of the President. What did you do to stop the bleeding?

ed

[MichaelSol]

QUOTE: Originally posted by greyhounds
[brThey also increased their cash flow by not maintianing the railroad. If you don't replace the ties you can keep going for years, you get slower and slower. But you can creep over the railroad for years. Eventually, you face a tremendous rebuilding cost, throw up your hands and retreat. This is what happened.

I keep asking for your actual numbers, but all I get is baloney.

The BN conditions produced approximately $500 million in additional cash flow 1970-1977. Expenses didn't increase by nearly that much.

We know that because we have specific data.

As one retired Milwaukee VPO put it, "the Milwaukee had a choice between the very good revenue from long haul traffic, or the short haul traffic that railroads were trying to get rid of because there was no profit in it Their choice made no sense. Milwaukee was the only railroad in the country that thought it could make money off the short haul."

Why do you argue that long haul was unprofitable, and short haul the way to go?

What school did you get your MBA from? You have already confused "cash flow" with "net cash flow," and this is specifically documented on this thread, and then you pretended you knew there was no difference when in fact there is a huge difference You would have flunked out of the MBA courses I took.

I keep looking for numbers here, and you keep pretending numbers are not important, only your "conclusions."

I guess this comes down to this, since you refuse to offer any support for any of your contentions.

How do you "know" so much about the Milwaukee Road, more than its employees, more than it's officers, more than the numbers, more than anybody?

Please, this time be specific.

Best regards, Michael Sol

[greyhounds]

QUOTE: Originally posted by MichaelSol

QUOTE: Greyhounds: And "cash flow" is nothing approximating viability of a business. If you're "running for cash" you're running from being broke. You're not replacing your assets. As in the MILW equipment shortages cited by Sol.

However, what I specifically referred to was "free cash flow," that is, net after operating expenses are deducted, but without the artificial deduction of depreciation.

I am sure you understand the difference.

Best regards, Michael Sol

Well, there's nothing "artificial" about depreciation. And yes, I understand the difference - I did pass my MBA accounting classes. I reason you don't undestand things like depreciation,"free cash flow" and maintenance of way - which I think leads you to your PCE cult fantasies.

Let's go with depreciation. Something that you falsely say is "artifficial". There are several ways to do depreciation, but for simplicity I'll go with the "straight line'" method.

If the MILW built a building for $100,000 they'd have to pay the builder when it was built. They'd lay out the cash in one year. But they wouldn't take a $100,000 expense on their books that year. If the building was designed for a 20 year life, they'd put it on their books as a $100,000 asset and take a $5,000 expense each year. (They'd reduce it's book value by $5,000/year) This would meet the accounting pricipal of matching expenses and revenues. At the end of the life of the building, it would be on thier books at $0 value. They used the building for 20 years and each year's use was matched against that year's revenue.

But they don't have $5,000 cash going out the door each year - they paid it all up front to the builder. The $100,000 was a "sunk" cost - something that can not be recovered by selling it off.

In their ongoing operations, they've got to cover that $5,000/year. If they don't, they'll not be able to replace the building after the 20 years - they will have "lost" the $100,000. They laid it out once, didn't earn it back, and don't have it to lay out again.

That's what happened on a much larger scale. They didn't earn enough to replace their assets after the very real depreciation. They were able to keep going for some years on the "Free Cash Flow", but eventually they ran into the wall.

They also increased their cash flow by not maintianing the railroad. If you don't replace the ties you can keep going for years, you get slower and slower. But you can creep over the railroad for years. Eventually, you face a tremendous rebuilding cost, throw up your hands and retreat. This is what happened.

[MichaelSol]

QUOTE: Originally posted by greyhounds
I would think this is a cult. I will call it the PCE Cult. The Pacific Coast Extension Cult. These folks reject logic, reason, history, and facts. They literally worship the Pacific Coast Extension and "believe" in it. Well, three bankrupties from 1925 through 1977 indicate it was nothing real to "believe" in.

What is really interesting is the strength of negative feelings about the PCE by people that never had a thing to do with it, and can't recite anything factual about it, one way or another. Very strong emotions, and yet no facts to base them on.

Interesting people.

Best regards, Michael Sol

[MichaelSol]

QUOTE: Greyhounds:The MILW could not fill its equipment orders. It couldn't repair its bad orders nor acquire additional equipment

The usual strong opinions, and, as usual, not a single shred of factual data. Since I have asked you repeatedly for your data that supports your conclusions, and you can't provide it, it is reasonable to assume your conclusions are in fact unsupported by any evidence whatsoever.

However, the Milwaukee's car supply problem was probably more closely related to the 16,20 and 25% interest rates during that period. An unfortunate time to be experiencing strong demand and substantial growth.

There is some evidence to suggest that it was, in fact, Milwaukee's efforts to try and obtain equipment at that time that sunk the company. Recall that BN likewise was struggling under the same pressures and experienced 97% Operating Ratios during this period. Milwaukee was by no means unique in what was happening.

Best regards, Michael Sol

[greyhounds]

QUOTE: Originally posted by MP173

arbfbe:

That was a great analysis.

ed

Yes it was.

[MP173]

arbfbe:

That was a great analysis.

ed

[arbfbe]

I got the opportunity to hear Bob Downing talk the the MILWAUKEE Road Historical Assn at their annual convention in Spokane a few years ago. The machinations of the Milwaukee protections in the original BN merger and the request for inclusion in the BN system at the later date were part of his presentation. The merger committee of which Mr Downing was a member gave the MILW a gain in business and profit from the protections and gateways that came to be from the merger. I was working on the road after the merger and can only say the increase in traffic was immediately noticable. During negotiations for the later inclusion the BN was amenable to most all of the conditions and terms the MILW board was asking for. Mostly things like labor protections and assumption of the MILW debt at the time which was substantial. The BN thought they had reached a deal but the MILW BOD then came back with a demand for a large cash payment. The BN felt the amount was unreasonable and was busy spending millions of dollars in the Powder River Basin at the time and could not raise the money if they had wanted to. So they declined the request and the MILW never returned to the table.

As to why no other railroad plucked the crown jewel of the right of way. All I can say is management can get into a mind set and ride the last successful management idea into the ground trying to make it work again. The 50's, 60's and 70's saw declines in railroad traffic. Bulk commodities were the bright spot and intermodal was easy pickings for the trucking industry if they made a serious effort. Boxcar freight was in decline and had been for years. Management was successfull if they could reduce costs during times of traffic decline and so that is what they did. With a vengence. Time and time again. The reason for the BN merger was to reduce duplicate and parallel trackage. They had two mainlines to the Pacific Northwest with the NP and the GN and they wanted to eliminate one of them at every opportunity. They did not need or want a third line to the PNW. The UP got there on their own track, the SP was financially strained, the ATSF was California focused and no eastern line was willing to jump the Mississippi and start an avalanche of other roads into their territory. The MILW's track sgtructure was in need of millions of $$ in repair and the locomotive and freight car fleets were neglected to say the least. So pick any road and try to match it to the MILW in the 1960 - 1980 time frame. Think of an SP - MILW merger and look at the route. Southern CA to Seattle with the Portland connection. Chicago via the PCE extension. Duluth to Mexico along the Mississippi, CA to KC and Omaha from the Overland Route and the MILW. CA to TX on the SP/SSW. The entire western US would have been ringed by one carrier. Perhaps that would have pulled both roads out of the malaise they were in if the could find the capital to get it all back together. Then for fun lets add the EL to the east coast and speculate upon the possibilities. Alas, it did not happen and perhaps it could not happen. The combination certainly could have maximized the potential of both carriers or it could have dragged them down with the PC the Rock Island and the Milwaukee Road. The opportunity is gone and the loss of the third transcontinental line is felt by the shippers today. The jewel was too shopworn and management was too focused on reducing the structure to take the risk of saving the MILW.

[Anonymous]

QUOTE: Originally posted by virlon

QUOTE: Originally posted by futuremodal

greyhounds,

It is astounding how incredibly and purposefully ignorant you really are,

WOW.... Who are YOU to be telling someone they are ignorant??? Quite an ego you have there.

Virlon

Ego's got nothin' to do with it. The facts and stats have been laid out regarding the PCE, yet some choose to ignore the facts and stats of their own volition. That is the essence of "purposeful ignorance". Or have you even bothered to read this thread in it's entirety?

[Anonymous]

QUOTE: Originally posted by futuremodal

greyhounds,

It is astounding how incredibly and purposefully ignorant you really are,

WOW.... Who are YOU to be telling someone they are ignorant??? Quite an ego you have there.


Virlon

[Anonymous]

greyhounds,

It is astounding how incredibly and purposefully ignorant you really are, given that the three "bankrupties"(sic) have been shown to lay more with the other factors not associated with the PCE's operation, profile, and alignment. Back when I was younger I had the same prejudicies regarding the hows and whys of the Milwaukee PCE retrenchment, because that's what the railroad press gave us. The struggles and eventual loss of the Milwaukee is properly attributed to the Milwaukee's lack of land grants and being the last line through by these historians. But to repeat the apparent falsehood that the Milwaukee is gone because it's PCE was the most "inferior" of the four PNW transcons is inexcusable given the insider information we have been blessed to receive. We have now been given a meticulously referenced accounting for why the PCE was a much, much better performer than that which the quasi-historians have laid out, yet folks like you just can't take it. It's almost as if you and your ilk are personally offended if your entrenched view of the history of the Northern Tier rail lines isn't what you thought it to be. And you call those interested in the factual details behind the PCE a "cult"? Take a look in the mirror, Jim Jones, you got the cup of kool-aid in your hands.

[edblysard]

What?
You weren’t dazzled by his brilliance, nor baffled by his bull****?

And I though I was the only one....
Ed

[greyhounds]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by greyhounds

And I certainly would appreciate it if you would quote me honestly from now on. I never said that CNW-UP was the "market" route. I said it was the "service" route. You were jumping around claiming the MILW had beter service than the GN/BN. I said CNW-UP shut 'em both down on service. You falsely turned this into a discussion of market share. The CNW-UP took the high service buisines and let the MILW haul the dead freight, which the MILW went broke doing. If you're an honest man, you won't change my words.

QUOTE: Well, if demand exceeds supply (a shortage!) then, pretty much by definition, the price is too low

So, the congestion problems today are because the price is too low. Doesn't have anything to do with the national economy and demand for service; just simply, easily, faciley, "the price is too low."

Interesting.

You are a long ways from honesty on these discussions. First it was equipment bad order ratio, not "too much business," but now, it is "too much business" but because of low rates. I admire, if nothing else, your flexibiltiy.

I have asked several times now, where's your data?

The whole point of this is your unsupported comments.

Where is your data to support your wild and baseless contentions that no one, not a single person or agency, has ever alleged?

QUOTE: Under normal conditions, the price would rise and the equipment shortage would go away.

And yet, you state this was a regulated era when no one could raise rates like that. So, you wonder why they couldn't raise rates. Yet, rates were regulated. So, they couldn't just "raise rates" to buy more equipment.

What on earth are you talking about? Your posts are making no sense whatsoever. You act like you have no idea what era this was, even as you talk about passing and flunking Econ 101.

QUOTE: The CNW-UP took the high service buisines and let the MILW haul the dead freight, which the MILW went broke doing.

Milwaukee had a 35% gross profit margin on Pacific Northwest traffic, at a time when UP had about a 25% overall gross profit margin, and CNW about 15% overall. Milwaukee made more hauling dead freight than UP, yet UP was hauling better quality.

The proof. You seem to always be lacking any proof whatsoever. Where is your data for this?

QUOTE: What are you trying to prove? Ogelvie is dead. Lou Menk is dead.

The year referenced, 1977, Richard Ogilvie had nothing to do with Milwaukee Road. Oddly enough, neither did Lou Menk.


Best regards, Michael Sol

The data is what you cited. The MILW could not fill its equipment orders. It couldn't repair its bad orders nor acquire additional equipment. Now if demand exceeds supply, under normal economic conditions, that means the price is too low. It's Q.E.D to anyone who can understand economics. Evidently, you can't or won't.

(When I say normal economic conditions, which is done in a probably futile attemp to prevent your misrepresentation of what I say, I mean to exclude situations such as a naval blockade. i.e., the British weren't under "normal economic conditiions" when the Germans were trying to sink every ship headed for the UK.)

Just as an FYI to everyone. After this "Crown Jewel" of railroad lines was built just before WWI the owning corporation, vaious incarnations of the Milwaukee Road, went bankrupt three times within the following 75 years. They were reorganized three times giving them the opportunity to structure themselves to become an ongoing concern. They failed each time, 1925, 1935 and 1977. The '35 bankruptcy lasted 10 years and the "New Milwaukee" lasted only 32 years despite having this "Crown Jewel".

If the line was worth anything besides scrap value, another corporation could have picked it up. They didn't. That should tell us something. And going broke three times in 75 years says a lot about the overall viability of the Milwaukee Road.

And "cash flow" is nothing approximating viability of a business. If you're "running for cash" you're running from being broke. You're not replacing your assets. As in the MILW equipment shortages cited by Sol.

I would think this is a cult. I will call it the PCE Cult. The Pacific Coast Extension Cult. These folks reject logic, reason, history, and facts. They literally worship the Pacific Coast Extension and "believe" in it. Well, three bankrupties from 1925 through 1977 indicate it was nothing real to "believe" in.

[Anonymous]

This was an unanticipated sight on my visit to Erie, PA, earlier
this month:

http://www.railpictures.net/viewphoto.php?id=114894

Former "16, Gold Creek (built 12/48) - CN 1903 Trinity and 14, Arrow Creek(11/48) - CN 1901 Malpeque."

Dave

[MP173]

Michael:

DId those numbers reflect the Chicago commuter service for Milw?

Also, MILW ran the majority of it's passengers between:
chicago and Milwaukee
Chicago and Minneapolis

During the 50's business travel between those pairs of cities was much more stable than the St. Paul to Seattle/Portland lane.

Back in the day, one could hop on the Afternoon Zephyr at 4pm and be in Minneapolis at 10:45pm...437 miles in 6:45 for a 64.7 average. Not bad.

Or board the Afternoon Hiawatha at 1pm and arrive in Minneapolis at 7:45...421 miles for 62.4 mph.

Interestingly the Q's Black Hawk made the overnight trek in 9:25 with about the same number of stops. Why? Perhaps the train slowed to make mail pickups, as it left Chicago at 11pm and arrived in Minneapolis at 8:45. Anyway, the 46mph average doesnt make much sense to me.

ed

[MichaelSol]

Moody's is probably the best source. I use it, but I'm not aware of it being online.

Milwaukee Road had a significantly larger passenger operation than GN, although it did get rid of its long-haul service as quickly as it could, while GN hung on to theirs.

But, all in all, if passenger service were the answer to the OR question, Milwaukee should have been suffering equally, although it did orient its passenger operations to the shorter, less money-losing, passenger hauls.

In 1957, while Milwaukee still had its long distance train, the Olympian Hiawatha, in service, this what the relevant railroads looked like:

Overall Intercity Passenger Revenue (Chicago commuter operations not included in
MILW). This includes all intercity trains of all the named railroads.

MILW $15,415,391
GN $6,469,126
NP $7,452,974

The revenues are interesting enough, but particularly in reference to the number
of passengers carried. NP was a little road in terms of passenger service, but
it made more money at it than the GN. Carrying only 62% of the number of
passengers as GN, NP earned 15% more revenue than GN.

MILW 2,943,819 passengers
GN 1,279,099
NP 792,781

The length of haul was interesting as well.

MILW 200 miles
GN 351.01
NP 402.81

Yet, in spite of the shorter average hauls for the Milwaukee, Milwaukee
apparently was not as dependent on "special fares". GN's average fare is way out
of sinc with both Milwaukee and NP; this looks to me like purchasing market
share. These numbers are the average fare per passenger carried:

MILW $5.24 per passenger
GN $5.06
NP $9.40

Milwaukee definitely served intermediate markets; NP reflected a
transcontinental disposition. Now, what is interesting is in terms of
investment. The equipment available for intercity passenger service was as
follows:

MILW 619 cars of all types
GN 669
NP 427

Those numbers were puzzling to me, because GN didn't carry nearly the overall
passenger numbers to justify purchasing and maintaining all that equipment. NP
was even worse. Averaging out the number of revenue passengers per car, on a
daily basis, it looks like this:

MILW 13.03 revenue passengers per passenger car per day
GN 5.24
NP 5.1

The Northern Lines had just terrible equipment utilization. However, this is
because Milwaukee intercity trains were significantly more popular than GN and
NP trains. The economic impact of that is equally interesting in terms of
revenue that this equipment was generating: These numbers are dollars of
revenue, annually, per passenger car in service:

MILW $24,904 annual revenue per passenger car
GN $9,670
NP $17,454

The revenue earned per passenger mile is interesting as well:

MILW $0.03 per passenger mile
GN $0.01
NP $0.02

The subject of access to national parks and vacation usage by passengers of the
three railroads was controversial. Here are some numbers that may shed a little
light on it. These represent the revenue low spots and high spots of each
railroad, by month (season), and the percentage variation between the peak
travel month and the minimum travel month.

MILW March $1,019,000; July $1,792,000 43%
GN October $689,000; June $1,279,000 46%
NP April $426,000; July $849,000 50%

>From these numbers, it appears that Milwaukee Road was the more "regular"
carrier of passengers, whereas GN was more dependent on seasonal traffic than
Milwaukee but NP was definitely a tourist road. From the standpoint of costs and
maintaining excess capacity nine months of the year, heavy tourist traffic
wasn't so good for a railroad. One of the correspondents has suggested that it
was good to have a national park located on line. I would suggest the opposite:
it was not something that did the railroads any good economically. It meant
excess equipment capacity sitting in a coach yard most of the year while
maximizing operating expenses 3 or 4 months of the year..

Making a seasonal adjustment per railroad passenger car available, in the winter
months, GN's utilization factor would have been about three persons per car in
the winter months, and about 7 in the summer months. I am sure they took off
cars in the winter, and didn't have all of their equipment on the rails even in
the best of times, but equipment costs money and is supported by the passenger
base, regardless of what the equipment happens to be doing.

Even during its best month, GN was carrying less than half the number of
passengers per passenger car as the Milwaukee Road was carrying during a typical
summer month, and less than a third the number of passengers as the Milwaukee
would carry during a typical winter month.

However, it also suggests that Milwaukee served a "need" to a greater extent
than its competitors; that its carriage of passengers was based on a genuine use
rail passenger services as part of a regular lifestyle and that Milwaukee was
used between intermediate destinations far, far more than GN or NP was, hence
the 200 mile passenger line haul number cited above.

>From these figures, it is clear why in 1957 the Great Northern had one of the
worst passenger service operating ratios of any Class I railroad in the country:

MILW 161.6%
GN 202.9%
NP 199.2%

Best regards, Michael Sol

[MP173]

From 1950 thru 1970 the GN was running passenger trains, which no doubt contributed to the lower OR.

As I recall reading MILW had the motto "all freight by 58" or something to that effect.

It would be interesting to see what the impact on OR was due to The Empire Builder, Western Star, Winnipeg Limited, Dakotan, The Gopher, Badger Express, et. al.

The OR would have also been impacted by the costs involved to fund the improvements to the line. Granted, the costs of such improvements were capitalized, but still, it would have impacted OR.

And we all know by now...MILW's OR and FCF were obviously illusions based on the lack of investment in property.

Michael...where would you suggest pulling financials on GN and others from that era? An old Moody's? Is there anything on line?

thanks,
ed

[MichaelSol]

What underscores VerMontanans lengthy perambulations is that GN was frantically spending millions and millions of dollars attempting to re-engineer its line, and at that point in time at which the railroads were comparable, 1960-1970, still could not match Milwaukee Road's fast freight transit times to the Pacific Northwest.

Yet further, and this underscores my contention that the highly exagerated economic costs of "vastly inferior" this or "vastly inferior" that, are, in the larger context of railroad operations, a negligble consideration compared to broader management concerns and strategic policy.

Review VerMontanan's lengthy posts. A lot of thrashing around with numbers and improvements and this and that. In my view, more public relations than anything, since he always conveniently omits any evidence to the contrary.

But, take a look at the ultimate results sometime, 1950-1970, Great Northern Railway.

You have read his posts.

Would you expect, therefore, that the GN suffered a continually deterioriating Operating Ratio over that 20 year period? Where was the improvement from all of these strenuous efforts?

Union Pacific had a much better Operating Ratio than GN during that entire time. Milwaukee and even CNW's Operating Ratios actually improved during that time.

Why was GN going downhill for a long, long period of two decades if all these improvements were supposed to be so important, or these operating details of paramount concern?

I don't have an answer to explain GN's oddly deteriorating performance over such a lengthy period of time, but I think it does put all of this in an important context. The highly exagerated importance that VerMontanan attaches to these things is not nearly as important as the larger economic context of railroading and that is what determines, ultimately, the life and death of railroad companies.

Best regards, Michael Sol

[MichaelSol]

QUOTE: Originally posted by VerMontanan who forgot about the role of the ICC

[Again, I would ask the question: Why, when the MILW petitioned to join BN after the merger didn't BN jump at the chance to include this superior railroad?

During an early negotiation to fold Milwaukee into BN, Industry analysts concluded that the high labor costs of protecting the Milwaukee Road's 14,000 employees would have provided no benefits at all for BN. Mergers & Acquisitions, "Burlington Northern is Fine as it is," 9:3, Fall, 1974, p.44.

Two years later, BN reconsidered a Milwaukee offer in the form of an inclusion Petition. The Burlington Northern responded affirmatively, indicating that the only subject that needed to be discussed at that point was price. "We are not opposed to the idea of control," BN President Robert Downing stated. Everett (Wash.) Herald, "BN Considering Purchasing of Milwaukee Road Operations," July 19, 1976, p. 6B.

The ICC turned down the Petition. "The overriding purpose behind these protective conditions was to strengthen the Milwaukee to enable it to become a more effective competitor with BN in the northern tier of states. Authorizing inclusion of the Milwaukee in the BN would run directly counter to that purpose." Interstate Commerce Commission, "Great Northern Pacific -- Merger," 348 ICC 821, 830.

Best regards, Michael Sol

[VerMontanan]

QUOTE: Originally posted by nanaimo73

Mark, thank you. Everytime I've looked for the length of Flathead i"ve only seen 7 miles.
I would enjoy reading a Great Northern and/or Northern Pacific thread on this forum.
Could you start one please ? You could include SP&P, Oregon Trunk and Oregon Electric as well. I think we could agree GN was better than NP, but was NP worth more because of the land grant property ? Would NP have bought some F45s if the merger had not happened in 1970 ? Do you prefer GN BSB or green and orange ? Can you drive over Lookout Pass on the former NP ?

Nanaimo,
Why not start your own thread(s) on this? You need not ask someone else to do it! Knock yourself out!

[VerMontanan]

QUOTE: Originally posted by futuremodal

The point to consider is this: If the Hill lines had been forced to include the Milwaukee in the BN merger (BMN?), anyone care to ponder which line(s) would have been used by BMN as the primary route between the Twin Cities and Seattle? Try the Milwaukee line from the Twin Cities to Lombard, the NP line from Lombard to Garrison, and the Milwaukee from Garrison to Seattle. This would have been the shortest routing, shorter than the current GN/NP/GN route used primarily today by BNSF by about 25 miles, assuming no major line relocations ensued. It is likely the Milwaukee/NP/Milwaukee routing would have been the primary route for intermodal and fast freights, while the current GN/NP/SP&S route via the Columbia Gorge would have been more suited for the long slow heavy trains BN likes to run on that route. Furthermore, if such had happened it is likely much of the NP line would have been abandoned, perhaps from Laurel to Bozeman, certainly the Ravalli line, and most certainly the Stampede Pass line. I also wonder if BMN would have kept a dual main between St. Regis and Garrison, or would have favored abandoning the original NP line between those two points? Perhaps even GN's Stevens Pass line would have bit the dust as there would have been no need to retain that line with the Milwaukee's Snoqualmie Pass line in place.

Again, I would ask the question: Why, when the MILW petitioned to join BN after the merger didn't BN jump at the chance to include this superior railroad? But had it happened for whatever reason, with the possible exception of the Snoqualmie Pass line, I would guess that the part of the MILW that would exist today under that scenario would be pretty much exactly that which exists today.

I didn't bother to check the mileage by this routing, but the chance that BN or anyone else would consider it preferable to the current GN routing is unlikely. Even if shorter, it would not be faster. While trains on such a route would be winding through Sixteen Mile Canyon and along the Missouri River near Lombard (even if a suitable connection could be built), this pales in comparison to the trains on Montana's Hi-Line where maximum track speed is maintained all the way to near the foot of the Rockies at Browning. And, again, even for intermodal or high speed freight trains, grade matters. Why BN or any merged company would consider a route (MILW, NP or combination) that had a steeper grade in Central Montana (in this case Loweth) than the GN route encountered cresting the Continental Divide. If speed matters, the heavier the grade, the more power you need to maintain the a higher speed. This route not only includes the grade at Loweth, and Mullan Pass, but also the Milwaukee's main Achilles' heel....St. Paul Pass.

Running a high speed railroad is expensive, and this is similar to the argument of Mr. Sol thinking that the Milwaukee not using helpers along its route (after 1974, as he claims) somehow negates the costs of its vastly inferior route. Of course, regardless of whether helpers are used or not, it does not change that more power is needed to traverse a route than one with a less severe grade. This is applicable in the claim that the NP or MILW or combination would be or would have been a palatable alternative to the GN route. As trains grow larger, another disadvantage of routes like the NP and MILW across Montana is trailing tonnage limitations for non-helper trains. Probably the "hottest" general freight train which BNSF operates on its route across Montana is the H-CSXPAS train which can be as heavy as 10,000 tons. Not only does the current route allow such a train to crest the Continental Divide with much less power than could be done on the NP or MILW line, the train can so without being restricted by trailing tonnage. On BNSF's line across Marias Pass, BNSF's trailing tonnage limit is 10,800 tons (anything heavier, unless a unit train requires a helper or distributed power). Meanwhile, on Montana Rail Link, the trailing tonnage limit for such merchandise train is only 5,500 tons. In other words, you can pile on all the power you want, but you can only build the train to 5,500 tons....or you have to help it. Either way, more time consumed, greater cost. While not a lot of high priority intermodal trains reach 5500 tons (though some have), many stack trains exceed it, making a routing such as this very inefficient. So, when Mr. Sol makes a special point to tout that the MILW had no known helpers along its route, it only emphasizes the inefficiencies thereof. With no helper, not only would a westward train from Harlowton to Tacoma need to be powered from origin for the steepest hill...the Saddle Mountains, it also was likely restricted to only about 5,000 tons due to trailing tonnage restrictions (unless locotrol, which was limited) was used. It was a double whammy....more power needed, and then a limit on the size of the train. This was less applicable with helpers, and westbound on GN, especially for traffic destined for California, Portland, Longview....it was not even a consideration. And, when taking about the route from the Twin Cities to Seattle, don't forget that even though GN's had the best profile by far across the mountains, it had best on the prairies: .65 percent maximum west of Minneapolis to Havre while the MILW had a nasty 12-mile long one percent climb at Summit, South Dakota.

As for the NP being abandoned from Laurel to Bozeman, this suggests that traffic (which is substantial) that goes west of Laurel off ex-CB&Q lines would not exist. How would it move? On the ex-GN to Slayton (no interchange) then west on the MILW? Why bother?

quote]Originally posted by futuremodal

Here's another point to consider: The Milwaukee PCE was kept pretty much intact from it's construction to eventual abandonment, while the GN had several major line relocations in the intervening years from it's completion - the Haskill Pass bypass (late 1890's?), the Kootenai River realignment east of Bonner's Ferry Id (1900's?), the new Cascade Tunnel (1920's), the Chumstick Cutoff (1920's), and (after the BN merger) the new Latah Creek Bridge, the new Sandpoint cutoff, and the Flathead Tunnel reroute. I do not know if Milwaukee officials over the years had planned or hoped for any realignments of their original route (assuming they had ever had the ca***o do so), perhaps MIchael Sol might know if such was contemplated. Since the Milwaukee did simply electrify their mountain routes rather than building new realignments, from this perspective it does provide positive testimony of the suitability of the original alignment of the PCE.

[MP173]

Part of the free cash flow equation is capital expenses. Obviously, their problem was they were not investing into the system, but draining cash.

One can make the argument that they were drowning in too much business, or one could make the argument that they FAILED to develope and protect the franchise they had.

Either way, a railroad should not fall to pieces running 8 to 10 trains a day, should it?

One thing is very obvious...the management had a great opportunity right under their noses and were so occupied with the midwest operations they let it slip away.

Superior route? I have no clue, never been past Wyoming.

Inferior management? There seems to be plenty of arguments for that.

ed

[MichaelSol]

QUOTE: Originally posted by nanaimo73

Michael-
Are you at all involved with the two Milwaukee Road PCE books that will soon be coming from Hundman/CTC Board ?

I have been recently advising heavily on a book about the PCE, purely a construction history, being written by a good friend, but haven't asked who the publisher might be. I did answer some questions briefly to another author about a Milwaukee Road history, but, again, no idea who the publisher might be.

Best regards, Michael Sol

[nanaimo73]

Michael-
Are you at all involved with the two Milwaukee Road PCE books that will soon be coming from Hundman/CTC Board ?

[MichaelSol]

QUOTE: Originally posted by greyhounds

And I certainly would appreciate it if you would quote me honestly from now on. I never said that CNW-UP was the "market" route. I said it was the "service" route. You were jumping around claiming the MILW had beter service than the GN/BN. I said CNW-UP shut 'em both down on service. You falsely turned this into a discussion of market share. The CNW-UP took the high service buisines and let the MILW haul the dead freight, which the MILW went broke doing. If you're an honest man, you won't change my words.

QUOTE: Well, if demand exceeds supply (a shortage!) then, pretty much by definition, the price is too low

So, the congestion problems today are because the price is too low. Doesn't have anything to do with the national economy and demand for service; just simply, easily, faciley, "the price is too low."

Interesting.

You are a long ways from honesty on these discussions. First it was equipment bad order ratio, not "too much business," but now, it is "too much business" but because of low rates. I admire, if nothing else, your flexibiltiy.

I have asked several times now, where's your data?

The whole point of this is your unsupported comments.

Where is your data to support your wild and baseless contentions that no one, not a single person or agency, has ever alleged?

QUOTE: Under normal conditions, the price would rise and the equipment shortage would go away.

And yet, you state this was a regulated era when no one could raise rates like that. So, you wonder why they couldn't raise rates. Yet, rates were regulated. So, they couldn't just "raise rates" to buy more equipment.

What on earth are you talking about? Your posts are making no sense whatsoever. You act like you have no idea what era this was, even as you talk about passing and flunking Econ 101.

QUOTE: The CNW-UP took the high service buisines and let the MILW haul the dead freight, which the MILW went broke doing.

Milwaukee had a 35% gross profit margin on Pacific Northwest traffic, at a time when UP had about a 25% overall gross profit margin, and CNW about 15% overall. Milwaukee made more hauling dead freight than UP, yet UP was hauling better quality.

The proof. You seem to always be lacking any proof whatsoever. Where is your data for this?

QUOTE: What are you trying to prove? Ogelvie is dead. Lou Menk is dead.

The year referenced, 1977, Richard Ogilvie had nothing to do with Milwaukee Road. Oddly enough, neither did Lou Menk.


Best regards, Michael Sol

[greyhounds]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by MP173

Michael:

Back off on the "free cash flow" comments to Hegewich. He never brought it up...you did.

As far as him "ignoring" it, you are getting way too wrapped up in semantics. He didnt have the financial data and thus he couldnt "ignore" it.

Ed, Greyhounds said this, and the point was how can he say the company wasn't making any money off the traffic, when the prior post of mine pointed out a free cash flow, after variable and a number of fixed costs showing substantial profitablity .

If the traffic isn't making money, then, where is the money come from? He had the numbers in front of him, he just ignored them.

In order to make his comment, he had to ignore the financial data that said the opposite of what he decided, apparently out of the blue, to argue.

And I don't know why anyone would be selective on data like that; the free cash flow is a significant measure of the profitability of the traffic, despite his contention that it means nothing.

And, since he throws these challenges down about "poor Sol," I would like him, for once, to be simply answerable for his wild and baseless contentions. He made a variety of assertions about Milwaukee rates and profitability. I gave you my evidence. Where's his?

Best regards, Michael Sol

Oh, I'm around. I just have other things to do (work, take a nap,etc.) besides spending my time in the equivalent of the "Area 51" of the railfan internet.

The Milwaukee wasn't making money. "Free Cash Flow" is not making money. It doesn't matter that they had a positive cash flow. You can keep going for a few years on cash flow, but eventually when you haven't replaced your ties and haven't repaired the equipment, you have to shut down. That's pretty much what happened now, isn't it?

You specifically quoted Crukshank as saying they couldn't fill all their orders for equipment - there was a shortage. Well, if demand exceeds supply (a shortage!) then, pretty much by definition, the price is too low. Why didn't they acquire more equipment? You see some kind of conspiracy. I see simple economics. Under normal conditions, the price would rise and the equipment shortage would go away. Some of the shippers would find alternatives to the higher price. And some of the shippers would benifit by being able to use additiional equipment acquired by the railroad to take advantage of the additional revenue opportunity.

That's what happens now under deregulation - but it couldn't happen then. The price was held too low by the regulators. Now any rational being who has passed economics 101 with at least a "C" will understand this. I explained it. You don't seem to understand it. Whether you are rational or if you failed econ 101 is beyond my knowledge.

I don't know where you are going with this. What are you trying to prove? Ogelvie is dead. Lou Menk is dead. Are you trying to hang a corpse? Maybe you're out for money through some kind of class action against the BNSF?

And I certainly would appreciate it if you would quote me honestly from now on. I never said that CNW-UP was the "market" route. I said it was the "service" route. You were jumping around claiming the MILW had beter service than the GN/BN. I said CNW-UP shut 'em both down on service. You falsely turned this into a discussion of market share. The CNW-UP took the high service buisines and let the MILW haul the dead freight, which the MILW went broke doing. If you're an honest man, you won't change my words.