CMStP&P Transcon

[Murphy Siding]

      Message deleted by poster, who was having trouble quoting the previous post...and you can quote me on that.

[Murphy Siding]

WSOR 3801

 

MILW management at the time felt getting out of the railroad business was the course of action they should take.  The electrification was too efficient, so they got rid of it, just as the price of copper dropped and diesel fuel went up.  Then cook the books a bit, double state the expenses for Lines West, and it almost seems justified to get rid of it.  Total traffic was lower then, so the other existing lines had the capacity to handle it. 

  The electrification was too efficient, so they got rid of it?  Huh? I'm not sure I can buy into that.  This almost sounds more like a conspiracy theory, offered after the event.

[Paul_D_North_Jr]

This thread reminds me of the quote about the Carson & Colorado RR supposedly attributed to one of its financiers, Darius Ogden Mills, circa 1883:

"Gentlemen, we built this railroad either 300 miles too long, or 300 years too soon !"

- Paul North. 

[erikem]

WSOR 3801

"Also wasn't Milwaukee Road's electrification obsolete by the 70's? The cost of conversion from 3000V DC to 25kv AC 60hz involves replacing all the substations and the replacement of the electric locomotives.

The age of the box cabs, 50 years old at that time, made their replacement needed. The problem that management probably faced is they could not finance a purpose built electric railway but could finance mass produced diesels."

GE offered to pretty much replace (and finance) everything, and electrify the gap. 

GE's proposal was to keep the 3,000VDC electrification, replace the copper feeders with aluminum (more conductivity at a lower price), add rectifier substations and move the M-G equipment to where regeneration was heavily used.The locomotive fleet was to be replaced with C-C's using the same motor design as the Joe's, but with updated (kapton?) insulation to continuous current by 30%, these would probably have fit the Milw's needs better than the Joe's.

- Erik

[Geared Steam]

Murphy Siding

WSOR 3801

 

MILW management at the time felt getting out of the railroad business was the course of action they should take.  The electrification was too efficient, so they got rid of it, just as the price of copper dropped and diesel fuel went up.  Then cook the books a bit, double state the expenses for Lines West, and it almost seems justified to get rid of it.  Total traffic was lower then, so the other existing lines had the capacity to handle it. 

  The electrification was too efficient, so they got rid of it?  Huh? I'm not sure I can buy into that.  This almost sounds more like a conspiracy theory, offered after the event.

There are many who believe management , based on their actions, wanted out of the railroad business,.  Deferred maintenance, bad accounting, bad judgement, bad order cars and motors all led to two trains a day and many derailments. 

[jeffhergert]

My own .  Whether the MILW transcon could again be made viable was a moot point by 1980.  The line had deteriorated to the point where it was going to cost big bucks to rehabilitate.  Who was going to come up with the money?  After the BN merger, which the MILW kept trying to get reopened so it could be included in it, it seems the management had all but given up on the transcon traffic.  If they had changed their minds, who was going to loan them the money?  It would be a big gamble that likely no one, public or private would take.  The line was doomed.

From reading some histories of the MILW, there seems to be a disconnect between management on the eastern part of the system and those from the western part.  The proposal about saving the transcon west of the Twin Cities (originally IIRC, Miles City) originated with employees, but was also supported by some in management who thought the line viable.   One was AVP-operations planning who had resigned because of disagreeing with the trustee over the decision to abandon Lines West.  He later went to help start MRL.

The decision to abandon while officially made in 1978 after the bankruptcy, was in reality probably made much earlier.  Maybe not so much by word, but by actions taken.  Or not taken.

Jeff      

[dakotafred]

The best perspective of all is remembering what  a tough business railroading was for everybody in the 1970s, let alone the 4th and last line to the Pacific Northwest. If we could have had deregulation earlier, maybe a lot of nice things like the Rock Island and Milwaukee Road, or important parts of them, could have been preserved.

[dakotafred]

An added (and sobering) thought: The impetus for deregulation, in the Jimmy Carter 1970s, was not freedom for business so much as fear that the government would  be stuck with the cost of operating more money-losing airlines and railroads, a la Conrail (nee Penn Central).

A question, not a statement: If the same situation presented itself today, would Washington react similarly -- or regard the distress of business as an opportunity for expansion of its powers? 

[WSOR 3801]

"The electrification was too efficient, so they got rid of it?  Huh? I'm not sure I can buy into that.  This almost sounds more like a conspiracy theory, offered after the event."

The MILW employees knew of the efficiency of the electrification.  They realized when it got shut off, the end was near. 

If deregulation happened earlier, either the line would be viable today, or it might have been shut down earlier.  The regulatory process kept it open later. 

I think the tipping point was in 1973 or so, when the new P-S grain cars (hauling new traffic west to the ports) started piling up all over the place.  MILW never recovered from the frequent derailments. 

[VerMontanan]

WSOR 3801

MILW management at the time felt getting out of the railroad business was the course of action they should take.  The electrification was too efficient, so they got rid of it, just as the price of copper dropped and diesel fuel went up.  Then cook the books a bit, double state the expenses for Lines West, and it almost seems justified to get rid of it.  Total traffic was lower then, so the other existing lines had the capacity to handle it. 

The Milwaukee's horrible profile - requiring more locomotive power than the competition - would have doomed the Western Extension regardless. But getting rid of the electrification was the right move.
The efficiency of an electrified operation cannot be denied if one only looks at the cost of an electric vs. diesel from point A to point B. It's interesting that the many disadvantages and inefficiencies of electrification are usually overlooked.

The chief disadvantage of an electrified railroad is its geographic limitations. In a day when railroads are touting the advantage of hauling crude oil by train over a pipeline because railroads go most everywhere and the pipeline network is limited, much the same comparison can be made between diesel and electrified railroad operations. Except for rare instances such as the tunnels entering Penn Station in New York as an example, diesel-electric locomotives can run on any track, anywhere. Electric locomotives can only run where there is an existing power source (catenary, third rail). On the Milwaukee, this was only from Harlowton to Seattle and Tacoma, excluding the gap (Othello to Avery) which remained non-electrified. None of the branch lines, or anything east of Harlowon was electrified.

Today, locomotives run from coast to coast on numerous carriers without changing power, and the most efficient train is one that travels from origin to destination with the least number of power modifications. The limited scope of the Milwaukee electrification made this type of operation (especially considering how railroading has evolved since the demise of the Western Extension) inherently costly and inefficient.

As an example, say that both the BN and MILW were handling a unit grain train between two points common to both railroads, Great Falls, Montana and Portland, Oregon. BN would assign power in Great Falls and it would be used to take the train to Portland with the only modification likely cutting power, if needed, at Whitefish, Spokane, or Pasco. The MILW would need actually more diesel power to get the train to Harlowton than BN assigned (the grade on the MILW between Great Falls and Harlowton was actually greater than on BN from Great Falls to Portland). At Harlowton, the diesel power would come off and be replaced by electric power which would handle the train to Tacoma (receiving helpers, as necessary, at three locations, and assuming the Avery-Othello electrification gap to be filled). At Tacoma, the electric power would come off and be replaced with diesel power (again) for Portland (and a lot of it, given the three percent grade of Tacoma Hill).

In addition to the cost of physically changing power en route, a bigger expense is "locomotive dwell" and train delay. When power has to be changed, it often waits at a location for the next assignment, or if the train is delayed inbound, the planned outbound train is delayed for its arrival. There is a cost for both of these cases, and the Milwaukee would incur these costs once or more for any relatively long-haul movement. Diesel power just runs through.

Of course, the Milwaukee could have "simply" electrified every route to fix this problem, but that's another huge cost to do that. Also not considered by electrification proponents is that the Milwaukee really didn't have a lot of electric power. Their newest electrics - the "Little Joes" - were over a quarter-century old when electrification was discontinued, and there were only 12 of them. Considering the size of today's trains, if would take 8 of the 12 Little Joes (each one would pull about as much as a C44 does today) to move a standard "shuttle" grain train west of Harlowton to the West Coast (assuming no auxiliary helper power), or 75% of the existing locomotives. To completely handle the number of trains that would be necessary to made the Pacific Extension viable (relatively speaking) would take literally hundreds more locomotives, which would be a huge expense for locomotives that would be limited to electrified lines on the Milwaukee alone, because no other railroads could accommodate this power.

The Milwaukee did mix their electric and diesel power, with the diesel power running through (again because that is most efficient, but also because of the "gap"), but the electric power was basically extra power for use over the steepest grades. In this scenario, you lose the primary benefit of electrification, and there are still the dwell and connection costs between assignments.

The potential scenarios on "what if" are numerous, but in the end you get the same result. Too much cost for additional electrification, too much cost for additional electric locomotives, too much cost for electric and diesel locomotives dwelling at the power change location awaiting the next assignment, too much cost for trains dwelling at the power change location awaiting a delayed inbound train.

[Uncle Jake]

What if they had had something like the ALP45DPs?

[VerMontanan]

dakotafred

The best perspective of all is remembering what  a tough business railroading was for everybody in the 1970s, let alone the 4th and last line to the Pacific Northwest. If we could have had deregulation earlier, maybe a lot of nice things like the Rock Island and Milwaukee Road, or important parts of them, could have been preserved.

The Rock Island and Milwaukee Road are often lumped together in this category, but they're hardly comparable.  First of all, the Milwaukee abandoned the western part of its railroad on purpose; the Rock Island was basically liquidated in its entirety.

 

The Milwaukee's "transcontinental" route from Chicago to Seattle/Tacoma was abandoned in 1980 west of Miles City, Montana.   That's about half the total distance, and west of Miles City, remarkably little was retrained, a tribute to the lack of online business.

 

Rock Island's core routes were retained, and are valued, mostly-UP routes today, notably the Twin Cities to Texas, and the Golden State route between Herington, KS and Santa Rosa, NM.  Additionally, the Rock's Chicago-Council Bluffs route remains intact (Iowa Interstate).  Most missed is the abandoned Tucumcari-Memphis line, which is mostly abandoned and would be superior route to what BNSF uses now between Amarillo and Memphis.

 

Both the MILW and CRIP had many weak routes (like most railroads) that were abandoned, but Rock Island's core routes were acquired by other entities who saw their value.  That no one correspondingly stepped in to acquire the Milwaukee Western Extension also speaks volumes about its value, too.

[Murphy Siding]

Geared Steam

There are many who believe management , based on their actions, wanted out of the railroad business,.  Deferred maintenance, bad accounting, bad judgement, bad order cars and motors all led to two trains a day and many derailments. 

     That sounds more like simple bad management,  or an  evolution of circumstances than a deliberate move to get out of the railroad business.  Why would any railroad management team want to 'get out of the railroad business'  anyway?  Once they got out of the railroad business, what were they going to do?

[KBCpresident]

All good answers, and I appreciate it. However considering MILW's circumstances, why did they send a train to Portland OR? I  am from Portland, and my Dad works at the museum where the 4449 lives, so I've seen a historic map of the city. I can say with a good deal of confidence that if there is one place MILW was late in arriving to, and likely had little to do in, it was Portlnad...

[cp8905]

Murphy Siding

That sounds more like simple bad management,  or an  evolution of circumstances than a deliberate move to get out of the railroad business.  Why would any railroad management team want to 'get out of the railroad business'  anyway?  Once they got out of the railroad business, what were they going to do?

They believed, incorrectly, that railroads were a senile industry, and wanted to get out. They wanted to do what Penn Central did before them: become a non-railroad financial services and real estate company.  The C,M, St.P.&P became Chicago Milwaukee Corporation. They used the funds they received from selling the railroad to CP/ Soo LIne to pay off their debt, and together with the real estate holdings that weren't part of the sale they became an investment firm until they merged or were bought out in the nineties. As I recall the Rockefellers owned the railroad at the time of the PCE and financed its building but I don't know if they still owned any of it by the end or gained anything by the sale. Here is a news story I dug up:

"Chicago Milwaukee Corp., a closed-end, non-diversified...

February 27, 1992

Chicago Milwaukee Corp., a closed-end, non-diversified management investment company, said net assets for 1991 rose $29.1 million. Net investment income totaled $17.5 million, down from $19.8 million in 1990. The results for 1990 included real estate operations that were transferred to Heartland Partners L.P. Net realized gains on sales of investments for 1991 totaled $8.2 million, up from $2.6 million in 1990. Net assets on Dec. 31 totaled $281 million, or $151.49 a common share."

The Rock Island did the same thing, becoming Chicago Pacific Corporation. Funny thing, they used their surplus after the sale of railroad assets to first buy Hoover, Maytag wanted Hoover and so bought Chicago Pacific, and Maytag was part of the group of companies that bought the old Rock Island main and leased it to Iowa Interstate, so the Rock Island is technically in the railroad business still.

[carnej1]

Redundant Post deleted by user

[Murphy Siding]

cp8905

They believed, incorrectly, that railroads were a senile industry, and wanted to get out. They wanted to do what Penn Central did before them: become a non-railroad financial services and real estate company.  The C,M, St.P.&P became Chicago Milwaukee Corporation. They used the funds they received from selling the railroad to CP/ Soo LIne to pay off their debt, and together with the real estate holdings that weren't part of the sale they became an investment firm until they merged or were bought out in the nineties.

     I realize that rail fans wish the Milwaukee Road had not disappeared, and that makes it easier, in hindsight, to see a conspiracy by the management to get rid of the railroad.  In the end though, didn't they make the right decision for their stockholders?

      If they had managed the  railroad differently in the last couple of decades, would the outcome have been any different?

[Murphy Siding]

     Awe man.....now the software is playing pick and choose on the font size in my post.  I tried changing it all to the same size, but nooooo......

[Anonymous]

Murphy Siding

If they had managed the  railroad differently in the last couple of decades, would the outcome have been any different?

 

That's a very interesting questions.  Using todays management know-how, and with todays technology, how do you imagine the Milwaukee Road running to the northwest would be run?

Would it be a bridge route of hot-shot double stacks...or perhaps perishable fruits from Washington and Oregon?

How do you believe it would have been utilized?

 

 

[schlimm]

Murphy Siding

cp8905

They believed, incorrectly, that railroads were a senile industry, and wanted to get out. They wanted to do what Penn Central did before them: become a non-railroad financial services and real estate company.  The C,M, St.P.&P became Chicago Milwaukee Corporation. They used the funds they received from selling the railroad to CP/ Soo LIne to pay off their debt, and together with the real estate holdings that weren't part of the sale they became an investment firm until they merged or were bought out in the nineties.

     I realize that rail fans wish the Milwaukee Road had not disappeared, and that makes it easier, in hindsight, to see a conspiracy by the management to get rid of the railroad.  In the end though, didn't they make the right decision for their stockholders?

      If they had managed the  railroad differently in the last couple of decades, would the outcome have been any different?

It is a good point, as a business, not just nostalgia.   Soo Line managed to make money using some of the former MILW lines (not the Pacific extension).  Perhaps if MILW management had not milked the cash flow to go into non-rail endeavors, and had been competent, they could have been successful and eventually sold self to CN or CP.

[PNWRMNM]

schlimm

It is a good point, as a business, not just nostalgia.   Soo Line managed to make money using some of the former MILW lines (not the Pacific extension).  Perhaps if MILW management had not milked the cash flow to go into non-rail endeavors, and had been competent, they could have been successful and eventually sold self to CN or CP.

You all seem to be forgetting that Congress made it impossible to make money in the railroad business starting in 1906. By the late 1960's every railroad in the country was a financial wreck.

Management has a duty to the stockholders, the owners, to protect the assets and maximize income. Most rail managements looked at the situation and concluded that the only way the stockholders would get anything out of their railroads was to diversify into other lines of business where profit was still legal.

CNW moved into a variety of non rail businesses and sold the railroad to employees. They got out completely. IC diversified extensively and sold the railroad off in pieces. SP turned its private microwave system into the beginings of Sprint. UP went into oil in a big way. MILW management was far from the only one to figure that there was no future in the railroad business, they simply failed to get out of the railroad before it collapsed.

Dumb acts of Congress have consequences, some just take longer to show up than others.

Mac

[BaltACD]

Even after the enactment of Staggers in 1980, you had senior railroad management that had no idea how to operate a minimally economically regulated railroad property - for profit - they had NO EXPERIENCE in such a form of operation.  I took nearly 20 years for senior managements to come to realization of what could and could not be done in operating a railroad for profit, in developing services and pricing for those services that can bring results to the bottom line of the balance sheet and return to the stockholders..

[SALfan]

Milwaukee Road had two big problems that either caused or hastened its demise, IMHO. Management and the board of directors were obsessed with the notion that merger with CNW would be the RR's salvation, and slashed maintenance for at least a decade to raise the stock price to assure their control of the merged entity. The track and rolling stock was about to the point of complete collapse by 1980, and management's shenanigans with sale and leaseback of cars didn't help. At least most of management was similarly obsessed with the midwestern granger branch network and did everything they could to hobble and handicap the Pacific extension. Would the RR have survived long-term without these problems? I do not know, but am convinced it would have survived longer than it did. If the track and rolling stock had been in decent shape, the extra traffic SP was feeding it toward the end along with profits from the long hauls to Louisville (obtained as a condition of the MP/L&N division of C&EI), along with deregulatíon, might have been enough to keep it alive if it had dumped th granger branches.

[Murphy Siding]

SALfan

Milwaukee Road had two big problems that either caused or hastened its demise, IMHO. Management and the board of directors were obsessed with the notion that merger with CNW would be the RR's salvation, and slashed maintenance for at least a decade to raise the stock price to assure their control of the merged entity. ..........

      It seems to me, that all the ailing railroads about that time were looking at merger with a bigger, more financial healthy railroad as being their only chance at not going away.  Where would the Milwaukee have gotten money to bolster the maintenance costs for traffic that wasn't there, and at the time, seemed to be getting thinner and thinner?

[cp8905]

I am with SALFan, it may be that the management was doing the best they could at the time but the decisions they made have turned out to be wrong. Think about cost of entry into railroading (i.e., building new rights of way), and then think about cost of entry into financial services: the amount of new competition that you face from new railroads is infinitesimal. Go into the service business and you can expect major competition and low margins, and that is what they found. MILW already had the track, but decided that the amount of business that track would see would continue to fall as it had post-WWII with interstates and truck competition. Could MILW management have guessed that pricing would be deregulated, that energy/fuel prices would rise, that regulation of truck drivers (long needed in my opinion) would cause driver shortages and thus make railroads far more competitive?  I don't know, but I just saw a report on the Trains news wire that UP had the biggest profit in its history last quarter even though the US/ world economy is still down.  Traffic is at all time highs, railroads are turning away business. No doubt revenues for BNSF and UP (and probably CP and CN) would fall with the MILW still intact, but the overall economy  would likely be better off. But that is my opinion, which is: the more railroads, the better.

[dakotafred]

SALfan

Milwaukee Road had two big problems that either caused or hastened its demise, IMHO. Management and the board of directors were obsessed with the notion that merger with CNW would be the RR's salvation, and slashed maintenance for at least a decade to raise the stock price to assure their control of the merged entity. The track and rolling stock was about to the point of complete collapse by 1980, and management's shenanigans with sale and leaseback of cars didn't help. At least most of management was similarly obsessed with the midwestern granger branch network and did everything they could to hobble and handicap the Pacific extension. Would the RR have survived long-term without these problems? I do not know, but am convinced it would have survived longer than it did. If the track and rolling stock had been in decent shape, the extra traffic SP was feeding it toward the end along with profits from the long hauls to Louisville (obtained as a condition of the MP/L&N division of C&EI), along with deregulatíon, might have been enough to keep it alive if it had dumped th granger branches.

If the Milw did this, they were just like the RI waiting on the UP. Of course, there was not a lot of spare money to spend on maintenance in any case, between the competition for freight traffic and the passenger-train drain.

Amtrak and Staggers cured a lot of ills. Just too late for Milw and RI. 

[SALfan]

My uderstanding (and corrections are welcome if I'm wrong) is that SP started feeding MKE a considerable amount of traffic after the BN merger (1970?). The track and locomotives were already suffering from deferred maintenance, which led to service problems, which led SP to give the traffic to BN or UP. If the track and locos had been in better shape, MKE could have held on to that traffic.

Correction to my earlier post: believe it was the L&N/Monon merger that got MKE into Louisville. That gave MKE the opportunity for some very profitable long hauls from the Pacific NW to Louisville, and Southern wanted to feed Chicago traffic to MKE at Louisville, but MKE's track south and then east out of Chicago couldn't handle it. If MKE hadn't cut their maintenance so deeply for the CNW merger years before, they could have taken advantage of these opportunities. They also wouldn't have needed to spend so much on fixing track and rolling stock.

If MKE could have taken advantagle of those opportunities, I believe they could have lasted until after Staggers, when it would have been easier to shortline or abandon unprofitable branches.

[Murphy Siding]

     Does anyone know if the Milwaukee even had the money to do routine maintenance?   I'm guessing it took all they had, just to keep their heads above water.

[greyhounds]

Aw, man!

I don't know what it is about the Milwaukee Road and its unfortunate Pacific Coast Extension that brings out the conspiracy types.

If you understand economics and commerce it's evident that the decisions made by the railroad's management were logical and thoughtful when they were made.  They didn't make perfect decisions.  But no one makes perfect decisions.   (Including Big Brother, the government)   Milwaukee Road management got things wrong.  They underestimated the cost of the PCE and overestimated the business they would get from the PCE.  Big Deal!.  There is no certainty.  You pay your money and you take your chances.

There just wasn't enough business to support a 4th railroad into the Pacific Northwest.  When they built the line they thought there would be enough business.  They didn't see the oncoming advent of motor transport.  No one did.   But nobody can see the future.

When it came time to adjust to the advent of motor transport the stupid fools with the government jobs would not allow them to do so in a timely manner.  So they went bankrupt 3 times in 57 years.  To me, that's a pretty good indication that the enterprise is not viable.  Basically, no one could run it without consuming more resources than they produced.  So get rid of the dang thing.

It's gone.  It's ripped up.  Get over it.

[MP173]

Great points Greyhound.  In 1970-1980 era there just wasn't enough traffic for MILW and RI to be profitable, particularly with the regulatory environment at that time.  It is interesting to note, as has been pointed out, the evolution of the MILW and RI lines.  Many of the RI lines are still in use.  Not so much the MILW.  There is a reason for that.

There is a reason that the RI line from Chicago to Council Bluffs is still in use but not the MILK line, except to Sabula.  That portion of the line exists today simply as an alternative route for Chicago to KC and Twin Cities, plus KC - Twin Cities traffic.  It is a desirable route, but it is an alternative and as the economy grows, it will see small growth, unless something BIG happens (oil, more corn, drying of Mississippi River).

 

Investors cannot efficiently hold large capital investments awaiting a "BIG" event, unless there are indications it will occur.  Would the PCE be efficient today?  My guess (and only a guess) is that it would have very small levels of traffic.  Why?  There are better routes available.  More efficient, quicker, and cheaper.  At some point the PCE might have been viable, when all capacity is filled and there is no room at the inn.  

Today's railroading environment suggests that expansion will result in a more unorthodox manner.  Instead of building new lines, the rails will simply prune off the less desirable and profitable business.  Thus, growth will be more of a higher return on investment rather than true volume growth.

ed