Chicago & Northwestern Railroad

[Chris30]

"The Northwestern" by Roger Grant. Excellent book. Roger Grant is a very good author and I have read several of his books.

CC

[Murphy Siding]

I just finished the book "The Northwestern" by Roger Grant. It appears that both Heineman and Provo were strong, aggresive leaders. It sounds like Heineman was a real fireball. Ironically, CNW had considered buying UP in the 1890's,when UP's fortunes were down, and CNW's were up. That would have been interesting. Do you think CNW would have kept those American flag stickers clean?[;)]

[bobwilcox]

I don't think the potental was such a secret. However, it was obvious from the porpectus the company was very levraged (95/5 debt to equity).

When the prospectus for the IPO came out I asked Merrell Lynch their opinion. They offered to loan me an amount equal to my annual salary if I would pay them an interest rate equal to two points over prime and pledge the stock as collateral. I wish I had borrowed up to the maximum but hindsight is 20/20.

Also, we in the Marketing Department knew the revenue forecast for the next year was agressive but realistic. We knew from our fellows in the Operating Department the expense forecast was realistic if we brought in the traffic. Revenue and cost budgets at the Northwestern were a very serious affair with career consequinces if you missed by more than 2% without a plan to close the gap.

[Anonymous]

QUOTE: Originally posted by Bob-Fryml
In 1972 the C.& N.W. went "Employee Owned." Financially, during the four or five years of employee ownership, the railroad lived pretty much a hand-to-mouth existence and worked extremely hard to bring whatever pennies it could to the bottom line. When the railroad went into the power market it largely purchased second hand units. Rail and crosstie replacements were abysmally low. But here's the amazing part: a $10,000 investment on the day the company went "Employee Owned" was worth a cool million the day the company went public again. Given the generally mediocre condition of the property and all of the moribund branchlines the company was saddled with, to my way of thinking there is no way on God's green earth that any rational person could accept that the value of C.& N.W. stock could increase a hundred fold in such a short period of time. If there was ever an example of irrational exuberance, this was it!

The stock in the original "employee ownerership" was split the first time as a 60-to-1 deal, meaning that everyone that invested in the first offering made $60 for every $1 invested. Many officials (and a few in operating) invested very heavily at the beginning; there were many rumors that certain "elite" officials and their freinds were privy to insider information, and knew the split would likely happen. Many became millionares overnight.

The second split was, if memory serves, a 4-to-1 split; I believe there was another split, but I am not sure.

When word got out about the $$$ made by the officials (while the operating and other departments were working with bubblegum and string trying to hold the place together), employee morale went so low as to actually go into negative numbers.

BTW-I'm kidding about the negative numbers, but not about the rest.

[bobwilcox]

QUOTE: Originally posted by Bob-Fryml

A friend of mine who hired-on in train service with the C.& N.W. in Marshalltown, Iowa back in the late 1960s told me that one of the first rumors he heard was, "It's only a matter of time before Union Pacfic takes us over." That happened officially in 1995.

In 1972 the C.& N.W. went "Employee Owned." Financially, during the four or five years of employee ownership, the railroad lived pretty much a hand-to-mouth existence and worked extremely hard to bring whatever pennies it could to the bottom line. When the railroad went into the power market it largely purchased second hand units. Rail and crosstie replacements were abysmally low. But here's the amazing part: a $10,000 investment on the day the company went "Employee Owned" was worth a cool million the day the company went public again. Given the generally mediocre condition of the property and all of the moribund branchlines the company was saddled with, to my way of thinking there is no way on God's green earth that any rational person could accept that the value of C.& N.W. stock could increase a hundred fold in such a short period of time. If there was ever an example of irrational exuberance, this was it!

As to why the U.P. waited so long to merge, a previous contributor to this thread expressed the right idea: too many money losing branchlines. Had U.P. grabbed the railroad before the Interstate Commerce Commission liberalized its abandonment formulas, the politics of abandoning those lines would have been hysterical. Hundreds of communities and many dozens of shippers would have righteously insisted that "Certainly a rich and powerful railroad like Union Pacific can afford to keep our branch line going." Multiply that kind of pleading by dozens of highly-taxed, light-railed, worn-tied, inadequately-bridged subdivisions and industrial leads, and it's no wonder that Uncle Pete held off.

Question for Bob Wilcox. In the last two or three years of its independence I seem to recall that the C.& N.W. acted as a sub-contractor of sorts for Union Pacific with respect to a series of Chicago - Council Bluffs high-speed container/trailer trains. The trains moved on a Chicago - West Coast tariff that specified Union Pacific the entire way. Union Pacific set the schedules and U.P. officers at Wood Street (?) managed the terminal operation for these trains. Just exactly what was the arrangement and how did it work?

I left the Northwestern in 1982 and never worked in Intermodal. However, I did the marketing on soda ash. The Northwestern gave their rate making power of attorney to the UP after the Iowa Lines (BN, CNW and IC) had crashed their portion of the revenue to their marginal costs post Staggers. The did not have a poa from the BN or IC.

[Bob-Fryml]

A friend of mine who hired-on in train service with the C.& N.W. in Marshalltown, Iowa back in the late 1960s told me that one of the first rumors he heard was, "It's only a matter of time before Union Pacfic takes us over." That happened officially in 1995.

In 1972 the C.& N.W. went "Employee Owned." Financially, during the four or five years of employee ownership, the railroad lived pretty much a hand-to-mouth existence and worked extremely hard to bring whatever pennies it could to the bottom line. When the railroad went into the power market it largely purchased second hand units. Rail and crosstie replacements were abysmally low. But here's the amazing part: a $10,000 investment on the day the company went "Employee Owned" was worth a cool million the day the company went public again. Given the generally mediocre condition of the property and all of the moribund branchlines the company was saddled with, to my way of thinking there is no way on God's green earth that any rational person could accept that the value of C.& N.W. stock could increase a hundred fold in such a short period of time. If there was ever an example of irrational exuberance, this was it!

As to why the U.P. waited so long to merge, a previous contributor to this thread expressed the right idea: too many money losing branchlines. Had U.P. grabbed the railroad before the Interstate Commerce Commission liberalized its abandonment formulas, the politics of abandoning those lines would have been hysterical. Hundreds of communities and many dozens of shippers would have righteously insisted that "Certainly a rich and powerful railroad like Union Pacific can afford to keep our branch line going." Multiply that kind of pleading by dozens of highly-taxed, light-railed, worn-tied, inadequately-bridged subdivisions and industrial leads, and it's no wonder that Uncle Pete held off.

Question for Bob Wilcox. In the last two or three years of its independence I seem to recall that the C.& N.W. acted as a sub-contractor of sorts for Union Pacific with respect to a series of Chicago - Council Bluffs high-speed container/trailer trains. The trains moved on a Chicago - West Coast tariff that specified Union Pacific the entire way. Union Pacific set the schedules and U.P. officers at Wood Street (?) managed the terminal operation for these trains. Just exactly what was the arrangement and how did it work?

[Anonymous]

It is located in Proviso township so I suppose it was named after that.

Larry

[Anonymous]

Don't know who/what Proviso was named for but it was openned in 1929. I googled it looking for some more but found nothing right off hand other than what the definition of proviso is-- "A clause in a document making a qualification, condition, or restriction." I don't think thats it.
Although their is a neighborhood/township called Proviso in the Maywood area around the yard.

[Murphy Siding]

Who, or what was Proviso Yard named after?

Thanks

[bobwilcox]

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by up829

QUOTE: Originally posted by Murphy Siding

I'm reading a good book called "The Tootin' Louie", a History of the Minneapolis & St. Louis Railway. I'm up to the part about Ben Heinneman-later to play a big part in the future of C&NW. From what I've read so far, he seems like one tough hombre. Was he good for the C&NW?

In the early years, he was very good for the Northwestern, but he was also an empire builder and deal maker. He wanted to merge the C&NW, Milw, and RI into one large midwestern railroad, well before the BN merger or the UP went after the RI. There was an aborted merger with the Milw and although he managed to torpedo UP's acquisition of the RI, afterwards IMO he became more interested in Northwest Industries, C&NW's parent and holding company for a number of diversified companies. The railroad went into decline, there were no buyers, and it was spun off to the employees.

Thanks to Larry Provo the empoyees who bought stock made a great deal of money. I can always tell if someone worked for the Northwestern at this time if they can answer this question correctly without any further information : Did you buy enough? Answer : no.

What did Larry Provo do for the railroad and employees?

Thanks

IMHO Larry Provo was the strongest CEO the C&NW had in the Post War period. Without him the CNW would have gone the way of the MILW and CRIP. He got the railroad focused toward the future which meant getting rid of the losses on comuter service, getting rid of the branchlines and getting in bed with the UP. He put together a very good set of managers including Jim Wolfe and Ed Burkhart. In the process some of us made a lot of money.

Did he go on to work for UP,or retire? I can't say I've heard his name before, unless the CNW yard in Chicago is named after him? Provo Yard?

The yard is named Proviso or Beautiful Proviso to some. Larry Provo died in the 1970s after a very short bought with lung cancer. He was succeded by Jim Wolfe who also died of cancer.

[Murphy Siding]

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by up829

QUOTE: Originally posted by Murphy Siding

I'm reading a good book called "The Tootin' Louie", a History of the Minneapolis & St. Louis Railway. I'm up to the part about Ben Heinneman-later to play a big part in the future of C&NW. From what I've read so far, he seems like one tough hombre. Was he good for the C&NW?

In the early years, he was very good for the Northwestern, but he was also an empire builder and deal maker. He wanted to merge the C&NW, Milw, and RI into one large midwestern railroad, well before the BN merger or the UP went after the RI. There was an aborted merger with the Milw and although he managed to torpedo UP's acquisition of the RI, afterwards IMO he became more interested in Northwest Industries, C&NW's parent and holding company for a number of diversified companies. The railroad went into decline, there were no buyers, and it was spun off to the employees.

Thanks to Larry Provo the empoyees who bought stock made a great deal of money. I can always tell if someone worked for the Northwestern at this time if they can answer this question correctly without any further information : Did you buy enough? Answer : no.

What did Larry Provo do for the railroad and employees?

Thanks

IMHO Larry Provo was the strongest CEO the C&NW had in the Post War period. Without him the CNW would have gone the way of the MILW and CRIP. He got the railroad focused toward the future which meant getting rid of the losses on comuter service, getting rid of the branchlines and getting in bed with the UP. He put together a very good set of managers including Jim Wolfe and Ed Burkhart. In the process some of us made a lot of money.

Did he go on to work for UP,or retire? I can't say I've heard his name before, unless the CNW yard in Chicago is named after him? Provo Yard?

[bobwilcox]

QUOTE: Originally posted by MP173

Bob:

Did you buy enough?

ed

No.

[MP173]

Bob:

Did you buy enough?

ed

[nanaimo73]

Thanks

[Murphy Siding]

QUOTE: Originally posted by nanaimo73

He was terrific for the C&NW ! He saved the North Western from bankruptcy, got them into St. Louis and Kansas City and won the war with the CMSP&P and the CRI&P.

Murphy, I would really like to know when the bridge over the Mississippi at Keithsburg opened. Does it say in the book ?

No help there. It basically says the bridge was part of Iowa Central, when M&StL took it over.

[bobwilcox]

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by up829

QUOTE: Originally posted by Murphy Siding

I'm reading a good book called "The Tootin' Louie", a History of the Minneapolis & St. Louis Railway. I'm up to the part about Ben Heinneman-later to play a big part in the future of C&NW. From what I've read so far, he seems like one tough hombre. Was he good for the C&NW?

In the early years, he was very good for the Northwestern, but he was also an empire builder and deal maker. He wanted to merge the C&NW, Milw, and RI into one large midwestern railroad, well before the BN merger or the UP went after the RI. There was an aborted merger with the Milw and although he managed to torpedo UP's acquisition of the RI, afterwards IMO he became more interested in Northwest Industries, C&NW's parent and holding company for a number of diversified companies. The railroad went into decline, there were no buyers, and it was spun off to the employees.

Thanks to Larry Provo the empoyees who bought stock made a great deal of money. I can always tell if someone worked for the Northwestern at this time if they can answer this question correctly without any further information : Did you buy enough? Answer : no.

What did Larry Provo do for the railroad and employees?

Thanks

IMHO Larry Provo was the strongest CEO the C&NW had in the Post War period. Without him the CNW would have gone the way of the MILW and CRIP. He got the railroad focused toward the future which meant getting rid of the losses on comuter service, getting rid of the branchlines and getting in bed with the UP. He put together a very good set of managers including Jim Wolfe and Ed Burkhart. In the process some of us made a lot of money.

[Murphy Siding]

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by up829

QUOTE: Originally posted by Murphy Siding

I'm reading a good book called "The Tootin' Louie", a History of the Minneapolis & St. Louis Railway. I'm up to the part about Ben Heinneman-later to play a big part in the future of C&NW. From what I've read so far, he seems like one tough hombre. Was he good for the C&NW?

In the early years, he was very good for the Northwestern, but he was also an empire builder and deal maker. He wanted to merge the C&NW, Milw, and RI into one large midwestern railroad, well before the BN merger or the UP went after the RI. There was an aborted merger with the Milw and although he managed to torpedo UP's acquisition of the RI, afterwards IMO he became more interested in Northwest Industries, C&NW's parent and holding company for a number of diversified companies. The railroad went into decline, there were no buyers, and it was spun off to the employees.

Thanks to Larry Provo the empoyees who bought stock made a great deal of money. I can always tell if someone worked for the Northwestern at this time if they can answer this question correctly without any further information : Did you buy enough? Answer : no.

What did Larry Provo do for the railroad and employees?

Thanks

[bobwilcox]

QUOTE: Originally posted by up829

QUOTE: Originally posted by Murphy Siding

I'm reading a good book called "The Tootin' Louie", a History of the Minneapolis & St. Louis Railway. I'm up to the part about Ben Heinneman-later to play a big part in the future of C&NW. From what I've read so far, he seems like one tough hombre. Was he good for the C&NW?

In the early years, he was very good for the Northwestern, but he was also an empire builder and deal maker. He wanted to merge the C&NW, Milw, and RI into one large midwestern railroad, well before the BN merger or the UP went after the RI. There was an aborted merger with the Milw and although he managed to torpedo UP's acquisition of the RI, afterwards IMO he became more interested in Northwest Industries, C&NW's parent and holding company for a number of diversified companies. The railroad went into decline, there were no buyers, and it was spun off to the employees.

Thanks to Larry Provo the empoyees who bought stock made a great deal of money. I can always tell if someone worked for the Northwestern at this time if they can answer this question correctly without any further information : Did you buy enough? Answer : no.

[Anonymous]

QUOTE: Originally posted by Murphy Siding

I'm reading a good book called "The Tootin' Louie", a History of the Minneapolis & St. Louis Railway. I'm up to the part about Ben Heinneman-later to play a big part in the future of C&NW. From what I've read so far, he seems like one tough hombre. Was he good for the C&NW?

In the early years, he was very good for the Northwestern, but he was also an empire builder and deal maker. He wanted to merge the C&NW, Milw, and RI into one large midwestern railroad, well before the BN merger or the UP went after the RI. There was an aborted merger with the Milw and although he managed to torpedo UP's acquisition of the RI, afterwards IMO he became more interested in Northwest Industries, C&NW's parent and holding company for a number of diversified companies. The railroad went into decline, there were no buyers, and it was spun off to the employees.

[nanaimo73]

He was terrific for the C&NW ! He saved the North Western from bankruptcy, got them into St. Louis and Kansas City and won the war with the CMSP&P and the CRI&P.

Murphy, I would really like to know when the bridge over the Mississippi at Keithsburg opened. Does it say in the book ?

[Murphy Siding]

I'm reading a good book called "The Tootin' Louie", a History of the Minneapolis & St. Louis Railway. I'm up to the part about Ben Heinneman-later to play a big part in the future of C&NW. From what I've read so far, he seems like one tough hombre. Was he good for the C&NW?

[CSSHEGEWISCH]

By the early 1970's, the CGW main in Illinois was already drying up. Overhead traffic had gone to the C&NW main and local service was down to a tri-weekly Chicago-Stockton IL turn. By the time I graduated from NIU, the CGW west of Stockton was posted for abandonment.

[SALfan]

Don't know when it started, but for a long time C&NW seemed to have a policy of "buy the weaker competitors, abandon the parts we don't need, and concentrate the traffic on our lines". Given the regulatory climate at the time, and the overbuilt nature of railroading in that part of the Midwest, I think it was the perfect policy. Weak railroads desperate for cash flow tend to bid down the rates to the point of starvation. C&NW was trying to eliminate competitors and gain some pricing power.

For a parallel in another line of business, look at International Paper. For several years they have been buying every paper company they could, then shutting down the outdated or poorly located mills. I guess they got tired of the cyclical nature of the paper business - in downturns when everybody was desperate for business, paper got really cheap. IP has bought and shut down a whole bunch of mills.

Don't know if it's true or not, but I read somewhere that at one time almost no point in Iowa was more than 6 miles from a rail line. That's way too many rail lines for today's environment.

[Chris30]

QUOTE: By: Murphy Siding:
Did railroads do anything different concerning a line they *wished* they could abandon? like discourage traffic? Or, conversely, if a certain line wasn't getting enough traffic to pay for itself, would a railroad try harder to pick up new business?

First, most lines that any railroad wished to abandon had very little traffic to discourage. If they had traffic, then the railroad probably would want to keep, or sell, the line.

In the 1960's and 1970's a lot of excess trackage suffered from deffered maintenance (or, perhaps no maintenance) while wating to be officialy being abandoned. The CNW was one of many railroads that didn't have the money to rehabilatate branch lines that would never turn a profit for the railroad again.

CC

[Murphy Siding]

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by Murphy Siding

What took CNW so long to rationalize it's branchlines?

Basically it was the ICC. In the early 1970s a money losing line with traffic would take 4-5 years to abandon in the face of opposition. Within ten years that time frame had been cut to two years and the ICC allowing "oppurtuinity" costs into the process.

I was thinking that CNW had been slower than some contemporaries at abandoning branchlines. After checking it out a little bit,they all appeared to take a long time to abandon a line-for the obvious reason you listed,the ICC.
Did railroads do anything different concerning a line they *wished* they could abandon? like discourage traffic? Or, conversely, if a certain line wasn't getting enough traffic to pay for itself, would a railroad try harder to pick up new business?

Thanks

[Anonymous]

Those of you seeking more info and a great magazine on the C&NW (North Western Lines), come check out the CNWHS at www.cnwhs.org.

The website's photo section is worth the trip...

Paul August

[jeaton]

Sometime in the very early 1960's, I was rooming at my Aunt's home in Chicago suburban Bellwood. The IHB/CGW interchange tracks were about a couple of hundred yards away on the other side of the street. IHB transfer jobs would drop cars in the yard all day long and then late in the afternoon, the CGW would pick up the cars and make their daily drag freight even longer. For all I know, that afternoon westbound may have been the only departure for the day.

Someone once told me that the CGW dispatchers had an interesting method for getting the OS's at various unmaned locations. Appearantly they could open up microphones situated near certain grade crossings and when the engineer sounded the horn for the crossing, the dispatcher sould have an up date on the train's location.

As Chris30 notes, they were running 6th in a 5 man race.

Jay

[Chris30]

One additional note on the CGW... there were too many graingers - too much track in Iowa. In the mid 1960's you had the CB&Q, Rock Island, Chicago & Northwestern, Milwaukee Road, Illinois Central & CGW with east/west main lines through Iowa to Omaha. The CGW was the little guy and their trackage roughly parrelled the IC trackage all the way from Chicago to Omaha.

In Illinois very little of the CGW was kept. What was kept and used by the CNW/UP is slowly fading into history.

CC

[bobwilcox]

QUOTE: Originally posted by nanaimo73

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by nanaimo73

They also abandoned a lot of the CGW fairly quickly.

How did CNW abandon a lot of CGW fairly quickly? See bobwilcox post above.

Most of the Iowa trackage was abandoned between 1980 and 1984. They acquired the CGW in 1968 so it would seem quickly is the wrong word.

The process speeded up about 1980. The ICC responded to CRIP and MILW liqudations.

[nanaimo73]

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by nanaimo73

They also abandoned a lot of the CGW fairly quickly.

How did CNW abandon a lot of CGW fairly quickly? See bobwilcox post above.

Most of the Iowa trackage was abandoned between 1980 and 1984. They acquired the CGW in 1968 so it would seem quickly is the wrong word.