What happen to Milwaukee Road?

[MichaelSol]

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by doghouse

QUOTE: Originally posted by farmer03

There was a ginormous heated, but very informative discussion about this a while back. Unfornately the thread was either locked and/or removed.

I remember that one. Of all the RR topics, why is this one so violent and heated? The Milwaukee Road topic; people throw civility to the wind. Never ceases to amaze me.

Probably because you get people with no knowledge of it whatsoever offering bizarre opinions contrary to published fact. Everyone seems to have a strong opinion on the Milwaukee, and they don't care if they know anything about it or not.

Nearly all the threads about The Milwaukee Road evolve into a Michael Sol vs. *you people* thread. I have come to believe the problem is not with *you eople*. Perhaps Michael Sol does know a lot about MWK. The problem is that he is unable to convince many to agree with his opinions. Consequently, any who dare to question *authority* get the "how dare you challenge me" treatment.

Actually, what I am usually looking for is even a single significant indication of a source, a knowledge, a basis for weird allegations.

I cite my sources.

Strawbridge doesn't.

Yes, I put in some time to form a basis for my conclusions. It's not "daring to challenge me" it's "where do you come up with this baloney" for which there is usually, almost always, no answer.

See every post by Ken Strawbridge.

Please offer any citations you might have as well. If you derive conclusions, you might guess that I appreciate citations and actual evidence in support of them. That is why I have always offered you the courtesy of them.

And when you offer me the reciprocal courtesy, I will very much appreciate it.

[MichaelSol]

QUOTE: Originally posted by greyhounds

QUOTE: Originally posted by MichaelSol

Revenue figures were as calculated by the Milwaukee Road, per ICC regs, not my doing. If there is a complaint about "earnings" PCE vs the rest of the system, you would have to take it up with Milwaukee Road/ICC. Uses their reporting system. The ICC Office of Rail Public Counsel was the first to bring it to the public attention that the PCE was profitable. I suppose only Strawbridge knew they were wrong.

What should be notable is Ken Strawbridge's complete lack of any data. The usual name-calling, but no data. Yet, he purports to be an expert on the PCE as well as scrap value of Electrics.

Milwaukee's market share of intermodal is from the Washington state DOT.
Milwaukee's revenue including "profit" is from the Milwaukee Road.

I have offered the published data. Strawbridge offers none, just the usual crap. Not a single published source of anything. Wasting everyone's time. There is something wrong with a self-proclaimed expert that can't seem to ever cite a source.

Judge for yourselves.

Best regards, Michael Sol

Oh, ICC Regs. Now there's a reliable source (Not!).

If you want to cite a government commission that didn't have clue, go ahead. If you want to suppor their so called "costing system", their "Rail Form A" , then your a fool.

When I worked on branch line abondoments the government idiots told us to "allocate" 50% of the revenue to the branch line. Do you seriously think they put any thought into that? No. They just picked a number out of their***and regulated us with it.

We'd move carloads of lumber from Council Bluffs to Bloomington, IL - over 620 miles - then we'd put it on a local (which had 10 cars on a good day) to Hopedale, IL. This was 23 miles from Bloomington and the asinine ICC would tell us to "allocate" half the revenue to that local serving Hopedale. Now there's more to rail costs than miles, much more. But this was flat out asinine.

That branch from Bllomington to Mason City, IL was so freaking bad that we were able to get an ICC abandonment even meeting their asinine standard of "allocating" 50% of our revenue to the branch.

If you're using ICC allocation formulas, which you way you are, then you're a biiger fool than I thought.

Anything about the Milwaukee Road, or just the usual name-calling?

[Murphy Siding]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by doghouse

QUOTE: Originally posted by farmer03

There was a ginormous heated, but very informative discussion about this a while back. Unfornately the thread was either locked and/or removed.

I remember that one. Of all the RR topics, why is this one so violent and heated? The Milwaukee Road topic; people throw civility to the wind. Never ceases to amaze me.

Probably because you get people with no knowledge of it whatsoever offering bizarre opinions contrary to published fact. Everyone seems to have a strong opinion on the Milwaukee, and they don't care if they know anything about it or not.

Nearly all the threads about The Milwaukee Road evolve into a Michael Sol vs. *you people* thread. I have come to believe the problem is not with *you people*. Perhaps Michael Sol does know a lot about MWK. The problem is that he is unable to convince many to agree with his opinions. Consequently, any who dare to question *authority* get the "how dare you challenge me" treatment. Been there, done that. See MP173's post above on the subject, and you'll know exactly how I feel about being *one of those people*.
I guess that soon, we'll be debating the difference between scrapping out a locomotive, and scrapping out a locomotive.[;)]

[greyhounds]

QUOTE: Originally posted by MichaelSol

Revenue figures were as calculated by the Milwaukee Road, per ICC regs, not my doing. If there is a complaint about "earnings" PCE vs the rest of the system, you would have to take it up with Milwaukee Road/ICC. Uses their reporting system. The ICC Office of Rail Public Counsel was the first to bring it to the public attention that the PCE was profitable. I suppose only Strawbridge knew they were wrong.

What should be notable is Ken Strawbridge's complete lack of any data. The usual name-calling, but no data. Yet, he purports to be an expert on the PCE as well as scrap value of Electrics.

Milwaukee's market share of intermodal is from the Washington state DOT.
Milwaukee's revenue including "profit" is from the Milwaukee Road.

I have offered the published data. Strawbridge offers none, just the usual crap. Not a single published source of anything. Wasting everyone's time. There is something wrong with a self-proclaimed expert that can't seem to ever cite a source.

Judge for yourselves.

Best regards, Michael Sol

Oh, ICC Regs. Now there's a reliable source (Not!).

If you want to cite a government commission that didn't have clue, go ahead. If you want to suppor their so called "costing system", their "Rail Form A" , then your a fool.

When I worked on branch line abondoments the government idiots told us to "allocate" 50% of the revenue to the branch line. Do you seriously think they put any thought into that? No. They just picked a number out of their***and regulated us with it.

We'd move carloads of lumber from Council Bluffs to Bloomington, IL - over 620 miles - then we'd put it on a local (which had 10 cars on a good day) to Hopedale, IL. This was 23 miles from Bloomington and the asinine ICC would tell us to "allocate" half the revenue to that local serving Hopedale. Now there's more to rail costs than miles, much more. But this was flat out asinine.

That branch from Bllomington to Mason City, IL was so freaking bad that we were able to get an ICC abandonment even meeting their asinine standard of "allocating" 50% of our revenue to the branch.

If you're using ICC allocation formulas, which you say you are, then you're a biiger fool than I thought.

[Murphy Siding]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by MP173

Michael:

Thanks for all of the economic data.

Define, please "earnings". Are you saying the PCE had earnings of $170 million in 1974. If so, that certainly would have kept the entire company afloat, unless something completely out of control was occuring. My guess is the "revenue" was $170 million. Earnings are the net income.

Also, I dont follow how $170 million goes to $707 million. Connect the dots for me. If that is the result of inflation, so be it. If that is the adjusted gross revenue based on increased freight rates over the years then I have a problem with that number as what you have indicated in the past is that Staggers reduced freight rates.

Also, what is the accounting basis for the $170 million? Is that the revenue carried by the line in 1974 west of Miles City? Does that $170 million inclusive of all freight revenue carried? If so, discounting the revenue is necessary to correctly account for pickup and linehaul aspects of the revenue EAST of Miles City. In other words, if you had a $1000 revenue carload from Chicago to Seattle, I don't see how you can assess all of that $1000 to 1440 route miles.

Also, you are comparing system revenue per mile for the two mega carriers vs mainline selective revenue per mile. If you would compare the Milwaukee system revenue per mile, my guess it was much less than the figures stated.

Rework you numbers. Factor the freight revenue to today's figures based on rail rate increases, rather than inflationary increases.

Since I dont have a 1974 Moody's at hand, I cannot access the Milwaukee revenue, miles, net income, etc. Surely you do. I will stop at the local university library and see if I can find a Moody's.

By the way...what is the point of all of this? I think most of us here are in agreement that the PCE would be a great line to have today. I think most of us here are in serious agreement that the Milwaukee appears to have been grossly mismanaged. What exactly is all of the tension over?

ed

Ed you are the eternal optimist to believe that you'll get any straight answers.[;)]

Not much point in talking to you, is there?

[(-D][(-D]

[MichaelSol]

QUOTE: Originally posted by doghouse

QUOTE: Originally posted by farmer03

There was a ginormous heated, but very informative discussion about this a while back. Unfornately the thread was either locked and/or removed.

I remember that one. Of all the RR topics, why is this one so violent and heated? The Milwaukee Road topic; people throw civility to the wind. Never ceases to amaze me.

Probably because you get people with no knowledge of it whatsoever offering bizarre opinions contrary to published fact. Everyone seems to have a strong opinion on the Milwaukee, and they don't care if they know anything about it or not.

[MichaelSol]

QUOTE: Originally posted by Bob-Fryml
I only wish we could get both Jim Scribbins and Wallace Abby (Is the later still with us?) to throw their two cents in.

My apologies, Mr. Abby/Abbey, if I misspelled your surname.

Wally Abbey is alive and well in Boulder, Colorado. I try and keep in touch every few months.

Best regards, Michael Sol

[MichaelSol]

QUOTE: Originally posted by MP173
Also, I dont follow how $170 million goes to $707 million. Connect the dots for me. If that is the result of inflation, so be it. If that is the adjusted gross revenue based on increased freight rates over the years then I have a problem with that number as what you have indicated in the past is that Staggers reduced freight rates.

Go to an inflation calculator. They are all over the internet. Put in $170 million. Put in "Year" 1974, put in "Year" 2005. The answer is the answer.

Regarding the fact that Staggers reduced rail rates. My specific caveat was "Yes, rates have generally gone down, not all of them, and but so have expenses, dramatically so, and so this is not meant to imply that the PCE would be earning that today, or that railroads today haven't really made much progress in the past thirty years."

I do not know how I could have been any clearer.

[doghouse]

QUOTE: Originally posted by farmer03

There was a ginormous heated, but very informative discussion about this a while back. Unfornately the thread was either locked and/or removed.

I remember that one. Of all the RR topics, why is this one so violent and heated? The Milwaukee Road topic; people throw civility to the wind. Never ceases to amaze me.

[MichaelSol]

Revenue figures were as calculated by the Milwaukee Road, per ICC regs, not my doing. If there is a complaint about "earnings" PCE vs the rest of the system, you would have to take it up with Milwaukee Road/ICC. Uses their reporting system. The ICC Office of Rail Public Counsel was the first to bring it to the public attention that the PCE was profitable. I suppose only Strawbridge knew they were wrong.

What should be notable is Ken Strawbridge's complete lack of any data. The usual name-calling, but no data. Yet, he purports to be an expert on the PCE as well as scrap value of Electrics.

Milwaukee's market share of Port of Seattle intermodal is from the Washington state DOT.
Milwaukee's revenue including "profit" is from the Milwaukee Road.

I have offered the published data. Strawbridge offers none, just the usual crap. Not a single published source of anything. Wasting everyone's time. There is something wrong with a self-proclaimed expert that can't seem to ever cite a source.

Judge for yourselves.

Best regards, Michael Sol

[MichaelSol]

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by MP173

Michael:

Thanks for all of the economic data.

Define, please "earnings". Are you saying the PCE had earnings of $170 million in 1974. If so, that certainly would have kept the entire company afloat, unless something completely out of control was occuring. My guess is the "revenue" was $170 million. Earnings are the net income.

Also, I dont follow how $170 million goes to $707 million. Connect the dots for me. If that is the result of inflation, so be it. If that is the adjusted gross revenue based on increased freight rates over the years then I have a problem with that number as what you have indicated in the past is that Staggers reduced freight rates.

Also, what is the accounting basis for the $170 million? Is that the revenue carried by the line in 1974 west of Miles City? Does that $170 million inclusive of all freight revenue carried? If so, discounting the revenue is necessary to correctly account for pickup and linehaul aspects of the revenue EAST of Miles City. In other words, if you had a $1000 revenue carload from Chicago to Seattle, I don't see how you can assess all of that $1000 to 1440 route miles.

Also, you are comparing system revenue per mile for the two mega carriers vs mainline selective revenue per mile. If you would compare the Milwaukee system revenue per mile, my guess it was much less than the figures stated.

Rework you numbers. Factor the freight revenue to today's figures based on rail rate increases, rather than inflationary increases.

Since I dont have a 1974 Moody's at hand, I cannot access the Milwaukee revenue, miles, net income, etc. Surely you do. I will stop at the local university library and see if I can find a Moody's.

By the way...what is the point of all of this? I think most of us here are in agreement that the PCE would be a great line to have today. I think most of us here are in serious agreement that the Milwaukee appears to have been grossly mismanaged. What exactly is all of the tension over?

ed

Ed you are the eternal optimist to believe that you'll get any straight answers.[;)]

Not much point in talking to you, is there?

[Bob-Fryml]

Okay, I'll admit it. Threads covering anything about the once mighty Chicago, Milwaukee, Saint Paul and Pacific are my favorite topic on this website - especially The Milwaukee's finances, the electrification, and the Puget Sound Extension. I only wish we could get both Jim Scribbins and Wallace Abby (Is the later still with us?) to throw their two cents in.

My apologies, Mr. Abby/Abbey, if I misspelled your surname.

[greyhounds]

QUOTE: Originally posted by MichaelSol

QUOTE: Originally posted by greyhounds
How would you allocate the revenue from a TOFC trailer originating in Chicago and terminating in Seattle? How much to the PCE and how much to the "eastern" part of the MILW? You can pick an arbitrary method, such as allocation by mileage, but that's garbage. The MILW wouldn't have had the load in the first place if they didn't serve Chicago.

Well, the TOFC/COFC manager at Milwaukee is puzzling over this one, for Milwaukee or any other railroad.

Not much originating in Chicago. Japan just didn't seem to be doing much TOFC/COFC importing.

Odd. Ken Strawbridge thinks they did.

OK, some of you think this guy is "knowledgeable" and is hitting on all his cylinders. I don't.. He can't answer the question as to how he's allocating revenue between the PCE and "the rest" of the MILW and he's still claiming the PCE was "profitable" while the eastern part of the system was "unprofitable". That revenue allocation drives everything - you can arbitrarily "allocate" the revenue in such a manner as to make the PCE look good and the rest of system look bad. And there's no really good way to "allocate" revenue to portions of a rail network.

But he keeps procliaming there is, without specifying the method.

If there was ever a statement he's made that shows he's clueless, it's this one:

QUOTE: Not much originating in Chicago. Japan just didn't seem to be doing much TOFC/COFC importing.

Japan? What's Japan got to do with it?

There certainly was significant TOFC business from Chicago to the Pacific Northwest. I routed (as I was instructed) some of it in my very first civilian transportation job with Merchant Shippers, a freight forwarder located at 1601 S. Western Ave. in Chicago.

There were basically three railroad routes to the PNW. CNW/UP, BN, and MILW. CNW/UP and BN had dedicated intermodal trains serving the market. But Sol claims "Not much originating in Chicago." Well, what does he think those CNW/UP and BN trains handled? (He also claims the MILW was the dominant intermodal carrier in Seattle - I don't buy that for a second.)

Chicago had a strong manufacturing base then. And those products moved out TOFC to a significant extent. Schwin bikes, floor tile, paper cups, Cracker Jax, LTL, outboard motors, "Westclox", house paint, and many other products were manufactured in the Chicago area. And don't forget UPS and the US Mail. They were shipping good volumes out of Chicago.

We loaded it into pigs and sent it west on the ATSF, BN, and CNW/UP. (no, we didn't handle the UPS and Mail - they dealt directly with the railroads.) We avoided using the MILW like the plague.

In addition to its own manufacturing shipments, Chicago was a "break point" in the railroad rate structure. There basically were not any through rates on intermodal from the east to the west coast. Shippers used a combination rate over Chicago, St. Louis, etc. Two trailers would be shipped to Chicago on a plan II 1/2 rate, "cross towned" by truck and loaded on a car for the coast to be moved on a plan IV rate. The volumes out of Chicago were huge.

How huge? Well, when I went over to the ICG we could support two dedicated intermodal trains per day on the main line south through Memphis, nos. 51 & 53. It takes a lot of freight to fill up two trains per day, especially since we had minimal received interchange buisiness. It was almost all Chicago area originated lading.
A lot of freight came out of Chi-Town. (We also ran three intermodal trains/day to St. Louis, but they were limited to 15 cars by union agreement. God, did that cause problems. )

He doesn't seem to know that Chicago was a very significant freight originating area, and that's basic railroad knowledge. I hope you judge his information accordingly. But judge it as you will.

But maybe he's got an excuse. The MILW wasn't able to offer competitive intermodal service to the PNW and they got very few loads as a result. If that's all he knows, he don't know much.

I'm glad the PCE is gone. It was a cancer on the railroad industry. The MILW went bankrupt three times during its short existance. And all they did was pull down other railroads with them.

The PCE should never have been built, it was a colossal waste of money from the get go. As some othe poster said, they were never able to pay for it. "Eastern" parts of the MILW survive today either as important main lines (Chicago-Twin Cities), regional trackage (IC&E) or branch lines (BNSF in South Dakota.) But Sol keeps claiming those lines weren't money makers while the PCE was.

If that were true, which it isn't, then why was the PCE ripped out like a malignancy while the "eastern" lines have survived into the 21st Century?

And those electrics were scrapped, there was no other buyer for them. Just like the eight year old BC Rail electrics.

[Bob-Fryml]

When the price of copper (anodes or cathodes) reaches 98-cents/lb. a pre-1983 penny contains 1-cent of copper. In the spring of 1974 I seem to recall that the price of copper reached that level and suddenly there was a nationwide penny shortage. Not only that, but some railroads, like the Missouri Pacific's DeSoto Subdivision immediately south of Saint Louis, suffered brazen thefts of signal lines because the price of copper scrap was so attractive. I was living in Missouri at the time and some of the larger banks were offering to buy two, 50-cent rolls of pennies for $1.05. I also recall that some merchants were using penny, 2-cent, and 3-cent U.S. Postage stamps as a means of handing out change as well.

Now I don't doubt that the Railroad's management had already decided to abandon the electrification months before this accelerated runup in the price of copper, and it was fortuitous to both the Railroad and the parent Chicago-Milwaukee Corporation that the price of copper scrap was so high as the trolley wires, high tension lines, and other supporting cables were being liquidated. I suppose profits from those sales postponed the Railroad's last bankruptcy for a little while at least.

After the electricification shut down in June 1974, I understand that the Railroad kept certain segments of the electrification energized for awhile so as to prevent theft. Does anyone have any details on this?

[solzrules]

QUOTE: Originally posted by cornmaze

QUOTE: Originally posted by MP173
I think most of us here are in agreement that the PCE would be a great line to have today.

the book , "the nation pays again," took the position that the PCE shoudl have been kept. That was published over 20 years ago. I pretty much agreed with the idea when I read it way back then.

I agree with you. It was an excellent read. Thomas Ploss certainly had a biased opinion but it was very interesting to read what was going on inside the corporate offices. He was one author from the period that was critical of what happened to the Milwaukee. It sure would be interesting to hear more of them.

Ryan

[Anonymous]

QUOTE: Originally posted by MP173
I think most of us here are in agreement that the PCE would be a great line to have today.

the book , "the nation pays again," took the position that the PCE shoudl have been kept. That was published over 20 years ago. I pretty much agreed with the idea when I read it way back then.

[Murphy Siding]

QUOTE: Originally posted by MP173

Michael:

Thanks for all of the economic data.

Define, please "earnings". Are you saying the PCE had earnings of $170 million in 1974. If so, that certainly would have kept the entire company afloat, unless something completely out of control was occuring. My guess is the "revenue" was $170 million. Earnings are the net income.

Also, I dont follow how $170 million goes to $707 million. Connect the dots for me. If that is the result of inflation, so be it. If that is the adjusted gross revenue based on increased freight rates over the years then I have a problem with that number as what you have indicated in the past is that Staggers reduced freight rates.

Also, what is the accounting basis for the $170 million? Is that the revenue carried by the line in 1974 west of Miles City? Does that $170 million inclusive of all freight revenue carried? If so, discounting the revenue is necessary to correctly account for pickup and linehaul aspects of the revenue EAST of Miles City. In other words, if you had a $1000 revenue carload from Chicago to Seattle, I don't see how you can assess all of that $1000 to 1440 route miles.

Also, you are comparing system revenue per mile for the two mega carriers vs mainline selective revenue per mile. If you would compare the Milwaukee system revenue per mile, my guess it was much less than the figures stated.

Rework you numbers. Factor the freight revenue to today's figures based on rail rate increases, rather than inflationary increases.

Since I dont have a 1974 Moody's at hand, I cannot access the Milwaukee revenue, miles, net income, etc. Surely you do. I will stop at the local university library and see if I can find a Moody's.

By the way...what is the point of all of this? I think most of us here are in agreement that the PCE would be a great line to have today. I think most of us here are in serious agreement that the Milwaukee appears to have been grossly mismanaged. What exactly is all of the tension over?

ed

Ed you are the eternal optimist to believe that you'll get any straight answers.[;)]

[rrandb]

QUOTE: [i]Originally posted by MichaelSol

At the time of disposition in 1974, the Joes were 27 years old. There were some discussions about sale, but ultimately the GE 750 traction motors commanded a higher price than the Company could get for the complete locomotive, and so the traction motors were removed and sold, with the remaining body shells scrapped in Seattle and Chehalis. Those traction motors are probably still working out there somewhere, but I no longer recall who bought them.



Michael Sol

If the best price you can get is to remove the traction motors and sell them to one party and send the bodies to the torcher then you have parted them out. The end result is they were only worth there scrap value and had no working value as a locomotive. They were scrapped out for parts and steel. The railroad was clever enough to scap out the traction motors first for more money.[2c] As always ENJOY And please remember there are young children who read these post who can figure out the astrics.[:(]

[MP173]

Michael:

Thanks for all of the economic data.

Define, please "earnings". Are you saying the PCE had earnings of $170 million in 1974. If so, that certainly would have kept the entire company afloat, unless something completely out of control was occuring. My guess is the "revenue" was $170 million. Earnings are the net income.

Also, I dont follow how $170 million goes to $707 million. Connect the dots for me. If that is the result of inflation, so be it. If that is the adjusted gross revenue based on increased freight rates over the years then I have a problem with that number as what you have indicated in the past is that Staggers reduced freight rates.

Also, what is the accounting basis for the $170 million? Is that the revenue carried by the line in 1974 west of Miles City? Does that $170 million inclusive of all freight revenue carried? If so, discounting the revenue is necessary to correctly account for pickup and linehaul aspects of the revenue EAST of Miles City. In other words, if you had a $1000 revenue carload from Chicago to Seattle, I don't see how you can assess all of that $1000 to 1440 route miles.

Also, you are comparing system revenue per mile for the two mega carriers vs mainline selective revenue per mile. If you would compare the Milwaukee system revenue per mile, my guess it was much less than the figures stated.

Rework you numbers. Factor the freight revenue to today's figures based on rail rate increases, rather than inflationary increases.

Since I dont have a 1974 Moody's at hand, I cannot access the Milwaukee revenue, miles, net income, etc. Surely you do. I will stop at the local university library and see if I can find a Moody's.

By the way...what is the point of all of this? I think most of us here are in agreement that the PCE would be a great line to have today. I think most of us here are in serious agreement that the Milwaukee appears to have been grossly mismanaged. What exactly is all of the tension over?

ed

[MichaelSol]

QUOTE: Originally posted by martin.knoepfel

there is no doubt the MILW deferred maintenance on the PCE. And cashing out is indeed a legitimate strategy, if you do not see any future for your business. Managment has no obligatio to us railfans, only to the creditors and shareholders of the company. greyhounds raised a very important question, without saying it cleary. The question is: would the PCE have generated enough profit to be a viable business IF managment had invested what was necessary to keep the ROW to class-1-standard?

An interesting question would also be: where did the cash go that the PCE generated. Was it used for the branch-lines in the midwest, or paid to bondholders or shareholders?

Well, the $51 million estimated necessary to restore the line to Class IV status was less than one year's operating profit (operating revenues - operating expenses) from the line. Appendix K, Application to Abandon, August 8, 1979. That's from the deteriorated line.

No doubt once invested, equipment cycle times would have decreased significantly, unmet shipper needs (about $64 million) would have been mitigated by the increased equipment availability, hours of service problems would have disappeared.

Basically, revenue goes up and costs go down.

Now this odd "cash out" strategy. Ordinarily, cash out means cash out, not shut down the profitable side of the company so that the cash can be poured down the drain into the money losing side of the company. However, there are just enough strange people on this forum to think its a brilliant strategy for the PCE.

And of course "cash out" makes tons of sense when the rest of the company loses another $100 million next year because there's no income from the PCE. to offset at least half of it. More like "cash suicide" rather than "cash out."

However, as a matter of the record, the NewMil strategy of saving the transcon was generally supported by everyone, shippers, the Milwaukee's experienced bankers, the Consulting Engineers hired to analyze the system. It was no huge surprise to anyone at the time as to the logic of the strategy -- except Stanley Hillman.

The old core of the Milwaukee Road competed with as many as five other railroads on each corridor, had miles and miles of unproductive lines, had high taxes and too many employees, and thousands and thousands of carloads of short haul freight.

By contrast, the PCE was this streamlined, low cost operation, virtually all long haul, very profitable stuff., strong, well-established market positions. Everything a railroad manager would want if he could ask for it and get it.

[CMSTPP]

QUOTE: Originally posted by greyhounds

QUOTE: Originally posted by CMSTPP



Now I'm getting sick and tired of you. If you don't shut the **** up I"m going to go and get Bergie and he can deal with you and possibly this forum.

Gee, I haven't had anyone threaten to "go tell on me" for a lot of years. It's not like I said your sister was ugly or anything.


Ken Strawbridge

The reason I said this is because this place is like a bull rally. Why can't we just get along. Everyone has there own opinions and if there something wrong just say so. But don't come out and tell people there a know it all. Your the one that started this.
If you thought there was something not right than just leave at that but don't be so ignorant about it.
So why don't we try this again without the mean gestures and crap from everybody.
Dude you really need to settle down if you disagree that is fine but like I said keep it cool. Fighting gets you no were. You need to bring this topic back together starting with you. First tell me why you are so mad at everybody and for those reading this is between him and me now. Lets bring this topic back to shape............................... Lets try to keep this cool.

James

[MichaelSol]

QUOTE: Originally posted by greyhounds
No - there was no market for them other than scrap.

He just knows these things.

[greyhounds]

QUOTE: Originally posted by CMSTPP



Now I'm getting sick and tired of you. If you don't shut the **** up I"m going to go and get Bergie and he can deal with you and possibly this forum.

Gee, I haven't had anyone threaten to "go tell on me" for a lot of years. It's not like I said your sister was ugly or anything.


Ken Strawbridge

[MichaelSol]

Another way of looking at Milwaukee Road's PCE and it's importance to the Company.

West of Miles City, the PCE consisted of 1440 route miles.

If the earnings of the PCE in 1974, about $170 million, are converted to 2005 dollars, the Pacific Extension earned $707,000,000. That gives us something to compare with today's modern high capacity, high volume, high efficiency railroads in terms of 2005 numbers.

Per route mile, the PCE earned $490,000 per mile of line.

For 2005, BNSF earned $406,000 per route mile of line.
Union Pacific earned $497,000 per route mile of line.

Yes, rates have generally gone down, not all of them, and but so have expenses, dramatically so, and so this is not meant to imply that the PCE would be earning that today, or that railroads today haven't really made much progress in the past thirty years.

However, simply from the standpoint of "a" perspective, there is simply no support in the statistical record for the idea that the Milwaukee PCE was not a strong revenue generator for the Milwaukee Road.

Best regards, Michael Sol

[martin.knoepfel]

there is no doubt the MILW deferred maintenance on the PCE. And cashing out is indeed a legitimate strategy, if you do not see any future for your business. Managment has no obligatio to us railfans, only to the creditors and shareholders of the company. greyhounds raised a very important question, without saying it cleary. The question is: would the PCE have generated enough profit to be a viable business IF managment had invested what was necessary to keep the ROW to class-1-standard?

An interesting question would also be: where did the cash go that the PCE generated. Was it used for the branch-lines in the midwest, or paid to bondholders or shareholders?

[greyhounds]

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by MichaelSol
overlooking nearly 50,000 miles of 3 kv Electrification, including two other railroads that specifically ran Joes -- including one in Chicago -- and presupposing, with zero knowledge, that they would not want a machine proven superior to just about anything else on the rails.

Did another railroad buy the Little Joes?

No - there was no market for them other than scrap. As far as I know two have been preserved here in the US. A MILW unit on display in Montana and a South Shore unit at the Illinois Railway Museum.

The same thing happened to the BC Rail electrics only they were scraped when they were about eight years old. That's one of the problems with electrics - if the traffic dries up or the railroad fails it's hard to "rehome" them. The BC taxpayers got quite an "electric" shock from that little misadventure.

[MichaelSol]

QUOTE: Originally posted by Murphy Siding
Given the information you provided above, it appears that greyhounds was correct about the scrap value of the Little Joes.

Milwaukee was offered a sum above scrap value for the locomotives. The traction motor offer was higher than that. Had it not been, the Joes would have been sold intact for a value above scrap. Milwaukee Road did not receive scrap value. It got a pretty good chunk of change out of the deal.

[MichaelSol]

QUOTE: Originally posted by greyhounds
2) The "gateways" were never going to be successful. Unless it was MILW originated/terminated freight, this amounted to cutting the MILW into a haul for no good reason.

As an example, take a load originating in Ohio destined to a BN served receiver in
Montana. Using a "gateway" the load could be routed through Chicago to the MILW for BN delivery in Montana. This would give the majority of the money "West of Chicago" to the MILW, and the BN would never sit still for such a thing.

This is why I am beginning to genuinely suspect that the gentleman has no idea what he is talking about in general, or the Milwaukee Road in particular.

First, he offers a completely incomprehensible and thoroughly incoherent definition of Gateways. By his definition, of course they would never work. But, that's not how they worked. His detail description of them shows that he doesn't know.

The two Northern Tier carriers, NP and GN, ruthlessly shorthauled each other and the Milwaukee by refusing to set joint rates west of the Twin Cities. Milwaukee originated a considerable volume of traffic destined for the West Coast or Pacific Northwest destinations, but always got the shorthaul because of the lack of joint rates if the destination was on either the NP or GN. Milwaukee would originate the traffic, carry it to the Twin Cities, and if the destination was located on the NP, GN or SPS, turn the traffic over to NP or GN at the Twin Cities. A good deal of GN and NP's transcontinental line hauls was Milwaukee Road originated traffic.

The specific purpose of the Gateways was to open Milwaukee interchange to the northern lines at points west of the Twin Cities. As the originating carrier, Milwaukee could then obtain the long haul on its traffic going West and instead of turning the traffic over to NP or GN at Twin Cities if the final destination were located on their lines, Milwaukee could now turn the traffic over to NP or GN at Fargo or Linton, ND, Miles City, Judith Gap, Great Falls, Billings, Bozeman, Butte and Missoula, MT, Spokane, Tacoma or Seattle, WA. and Portland, Oregon.

That resembled not at all the convoluted scenario posted by greyhounds.

Primarily, the Milwaukee Western Gateways were designed with westbound traffic in mind.

There is no doubt they were successful. Historically, the three carriers, NP, GN, and MILW carried 2/3 of their transcontinental traffic eastbound, and only 1/3 traveled westbound. There was a historic imbalance in PNW traffic to and from the Midwest. Nothing much the carriers could do about it, it was just always there.

After the Gateways opened, Milwaukee's traffic was evenly balanced in both directions; the first time for any of the three competitors that this situation existed. Trains got heavier, and went from 2-4 per day to 6-10 per day. This represented, for the first time, normal traffic on the Milwaukee Road PCE that the Milwaukee itself generated to destinations in the Pacific Northwest. It changed everything. Thousands of carloads of traffic that Milwaukee had always carried went from short haul to long haul.

The Gateway Conditions resulted in the following annual revenues by 1974:

Fargo $243,098.88
Linton $35,114.24
Miles City: $2,999,260.16
Bozeman $32,492.80
Butte $1,443,281.92
Great Falls $253,443.84
Judith Gap $25,043.20
Missoula $93,035.52
Spokane $2,625,789.44
Seattle $6,604,725.76
Tacoma $439,040.00
Portland $12,791,784.96

Total: Gateway Revenue, 1974. $27,586,110.72

As you can see from Seattle, the fact that Milwaukee wasn't turning this traffic over at Twin Cities, but could carry it all the way to Seattle and then turn it over to BN for final delivery to Boeing, or SeaLand or whomever, was significant.

It should be noted, at this point Milwaukee had 76% of the Port of Seattle's overall traffic. For intermodal in the Puget Sound, Milwaukee had a 50% market share, UP had 32%, and BN 16% (2%, "Other"). Milwaukee dominated the auto market through the new Kent facility. Milwaukee was generating nearly twice as much revenue per mile of line in Washington state as from any other state on the Milwaukee system.

Portland was a somewhat different Gateway as it generated a considerable amount of Eastbound traffic to the Milwaukee -- as you can see, it was the most profitable of the Gateway conditions [$53 million in 2005 dollars].

There were other economic consequences of the Gateway Conditions which showed up at the Gateways, not as traffic through the Gateways, but as additional originating or terminating traffic.

Billings $1,586,480.64
Great Falls $772,220.16
Butte $1,729,383.68
Spokane $1,100,688.64
Kent $ $9,401,943.04
Seattle $4,947,276.8
Tacoma $4,980,704
Portland $12,604,263.68

Total: $37,102,960.64

The total overall impact, just in 1974, of the Gateway conditions was $65 million in new revenue. To add a little perspective, that's $270 million per year of new revenue in 2005 dollars. The Milwaukee Western Gateway Conditions were among the most effective and successful merger conditions ever granted by the ICC in a merger proceeding.

This is why, when Ken Strawbridge says ridiculous things like "the gateways were never going to work," he does so out of a complete and stupendous ignorance of the facts and circumstances of the situation and in this instance, he doesn't even know how the gateways worked.

Michael Sol

[Murphy Siding]

QUOTE: Originally posted by MichaelSol

Twenty Joes were originally built by GE. CSS&SB bought 3, Paulista RR bought five, and Milwaukee bought 12. If you took the equipment nameplates off and looked at the other side, the original Russian designation was there in Cyrillic alphabet.

At the time of disposition in 1974, the Joes were 27 years old. There were some discussions about sale, but ultimately the GE 750 traction motors commanded a higher price than the Company could get for the complete locomotive, and so the traction motors were removed and sold, with the remaining body shells scrapped in Seattle and Chehalis. Those traction motors are probably still working out there somewhere, but I no longer recall who bought them.

Here they are just before moving out to Chehalis.



Michael Sol

Given the information you provided above, it appears that greyhounds was correct about the scrap value of the Little Joes.

[wallyworld]

Good thread-just keep sarcasm at bay. I am as guilty as the next. Two sides to every coin. A more interesting topic than most. One of my problems with forums is my own problem- in that I have been into trains for 50 years-At my age, most you have heard it all before or say to yourself theres not much more to this than I already know-this is an interesting topic from one who gets bored pretty easily.