Chicago and North Western, 70's style

[bobwilcox]

In the 1970s the CNW had the largest PAC in the railroad industry. The money went to politicians in both parties at the Federal, state and local level.  We even gave some money to a radical elected mayor of Madion, Wis.  The money opened doors.  I remember two meetings with Hubert Humphry and George McGovern concerning branch line abandoments in MN and SD.  They wanted us to delay the abandoments but we had run out of money.

[gabe]

We cannot quantify luck into the equation.  It is there and we know it is, but to what degree? Regarding UAL, it has been well documented that they created a number of their problems.  It was a pretty militant group of "owners", particularly the pilots.  Bad luck?  Sure plenty.  But I am not here to compare UAL to LUV.

I agree with you...lets get back to the CNW.

Perhaps this has been previously stated, but here is my take on the CNW's 70's situation:

1. The ICC's handling of the Rock merger case gave CNW an opportunity.

2. Their Fremont/California Jct routing became the superior method of interchanging freight from UP to a Chicago connection.

3.  CNW got the employees on board in the 70's with the stock program.

4.  Their management had laser focus to concentrate on the Chicago - UP route.

5.  The Cowboy line, for whatever reason was not abandoned, which gave them an option for greatness.

6.  They understood the risks involved in doing what DME is trying today and took the sure bet, aligning with UP on the movement of the PRB coal.

I am sure there are things being left out or being minimized, but that is what I see.

Now, specifically, when did the Fremont routing gain importance?  Was UP interchange always done there?  Was that always a mainline or was there considerable upgrading done?

Did the CNW want to abandon the Cowboy line in the 70's or were they aware (and when did they become aware) of the coal in Wyoming?

Thanks,

ed

Ed,

I am sure you are someone's hero.  Post two or three more quality topics like this, and you will be mine.

How much do you think the decision to keep the Cowboy line was more dumb luck than skill?

Gabe

[MP173]

Bob:

Any thoughts about the Cowboy line and whether or not it was up for abandonment?  When did the knowledge about the Wyoming coal hit?  What was the attitude at that time about the PRB coal and the opportunities presented?

It would be interesting to review that whole process.

ed

[nanaimo73]

I wish this article was a lot longer-

http://www.time.com/time/magazine/article/0,9171,899667,00.html

Could someone post some thoughts on the working relationship between these great railroaders ?

[MichaelSol]

Well vis a vis the Milwuakee the "feather" was the Fremont cutoff that bypassed Omaha on the C&NW.  Getting between Chicago and Omaha, in and of itself, without the added benifits provided by the Rock Island route, meant nothing.

Saving an hour to Omaha was nothing compared to the benifits of the Fremont cutoff.

The Fremont cutoff must really have been something.

1960s averages.

Fremont Cutoff, UP to CNW 14,266 carloads annually. That's 39 carloads a day that CNW got to haul to Chicago.

Grand Island, UP to CBQ, 29,671 carloads.

At Omaha, UP to MILW, 43,998 carloads.

At Omaha, UP to Rock Island, 15,819 carloads.

Of all Union Pacific's Missouri River Gateways, Fremont accounted for, delivery and receipt,  5.6% of UP interchange traffic.

Schedules show MILW, Omaha to Chicago, 11'20"; CNW, "Freemont" to Chicago, 12'30".

 

 

 

[MP173]

The Fremont cutoff might not have been much in the 60's, but we all know what happened later.

Michael, so the UP interchanged 700 cars per day on average at Missouri River Gateway with the following interchanges:

CNW 39 cars per day

CBQ 81 cars per day

MILW 121 cars per day

Rock 43 cars per day

That is a total of 284 per day.  Where did the rest go?  Gotta figure the IC got some and the Chicago Great Western got a few and no doubt Mopac got some along with Wabash (NW).

Are all of these numbers based on interchange from UP to the carriers or between the UP and the carriers? 

What happened to the MILW line to Omaha?  They were handling the passenger trains, I would have thought they would have handled more freight.

ed

[bobwilcox]

Well vis a vis the Milwuakee the "feather" was the Fremont cutoff that bypassed Omaha on the C&NW.  Getting between Chicago and Omaha, in and of itself, without the added benifits provided by the Rock Island route, meant nothing.

Saving an hour to Omaha was nothing compared to the benifits of the Fremont cutoff.

The Fremont cutoff must really have been something.

1960s averages.

Fremont Cutoff, UP to CNW 14,266 carloads annually. That's 39 carloads a day that CNW got to haul to Chicago.

Grand Island, UP to CBQ, 29,671 carloads.

At Omaha, UP to MILW, 43,998 carloads.

At Omaha, UP to Rock Island, 15,819 carloads.

Of all Union Pacific's Missouri River Gateways, Fremont accounted for, delivery and receipt,  5.6% of UP interchange traffic.

 

That looks about right for the 1960s.  The gateway did not grow in importance untill the 1970s which is the period we have been talking about on this thread.  Things started to break loose in the very early 70s when UP+CRIP, CNW+MILW and Northwest Industries all came off the table.

[MichaelSol]

The Fremont cutoff might not have been much in the 60's, but we all know what happened later.

Michael, so the UP interchanged 700 cars per day on average at Missouri River Gateway with the following interchanges:

CNW 39 cars per day

CBQ 81 cars per day

MILW 121 cars per day

Rock 43 cars per day

That is a total of 284 per day.  Where did the rest go?  Gotta figure the IC got some and the Chicago Great Western got a few and no doubt Mopac got some along with Wabash (NW).

Are all of these numbers based on interchange from UP to the carriers or between the UP and the carriers? 

What happened to the MILW line to Omaha?  They were handling the passenger trains, I would have thought they would have handled more freight.

ed

These were just examples -- didn't feel like posting the whole chart -- but just to show a couple of relevant tonnages for comparison to the Freemont cutoff -- CNW's spelling for some reason. These are deliveries, UP to the named carriers. The numbers are much bigger for other examples, but just trying to get a handle on why 39 carloads a day eastbound, less than one train a day, on a demonstrably longer route, constitutes a "feather".

Haven't seen any numbers post 1970. Just superlatives. Don't actually know what those mean.

 

[bobwilcox]

Well vis a vis the Milwuakee the "feather" was the Fremont cutoff that bypassed Omaha on the C&NW.  Getting between Chicago and Omaha, in and of itself, without the added benifits provided by the Rock Island route, meant nothing.

Saving an hour to Omaha was nothing compared to the benifits of the Fremont cutoff.

The Fremont cutoff must really have been something.

1960s averages.

Fremont Cutoff, UP to CNW 14,266 carloads annually. That's 39 carloads a day that CNW got to haul to Chicago.

Grand Island, UP to CBQ, 29,671 carloads.

At Omaha, UP to MILW, 43,998 carloads.

At Omaha, UP to Rock Island, 15,819 carloads.

Of all Union Pacific's Missouri River Gateways, Fremont accounted for, delivery and receipt,  5.6% of UP interchange traffic.

Schedules show MILW, Omaha to Chicago, 11'20"; CNW, "Freemont" to Chicago, 12'30".

 

 

 

Grand Island died with the BN merger.  When you say Omaha do you include Council Bluffs?  In the 1960s the CNW interchanged a lot of traffic with the UP in Council Bluffs and a small amount in Omaha. Does your data state the UP-Fremont-CNW traffic was all going to Chicago.  

[bobwilcox]

I wish this article was a lot longer-

http://www.time.com/time/magazine/article/0,9171,899667,00.html

Could someone post some thoughts on the working relationship between these great railroaders ?

 

I was told they had a good relationship but we kissed Ben, Cutty Sark Scotch and Fruit of the Loom underware goodbye with employee ownership. Ben was unable to solve the problems the CNW faced but Larry Provo was able to put the policies and people in place to get the job done.  Ben was to a great extent a victum of his times. A granger railroad president in those years was on the last leg of a succesful Kamakaze mission. 

[MichaelSol]

Grand Island died with the BN merger.  When you say Omaha do you include Council Bluffs?  In the 1960s the CNW interchanged a lot of traffic with the UP in Council Bluffs and a small amount in Omaha. Does your data state the UP-Fremont-CNW traffic was all going to Chicago.  

In this breakdown, "Omaha" includes Council Bluffs & S. Omaha.

Through the Fremont/Freemont gateway, "of the 14,266 cars delivered by Union Pacific, 13,961 were overhead traffic"  - pre-blocked for through train operation to Chicago.

 

[bobwilcox]

Bob:

Any thoughts about the Cowboy line and whether or not it was up for abandonment?  When did the knowledge about the Wyoming coal hit?  What was the attitude at that time about the PRB coal and the opportunities presented?

It would be interesting to review that whole process.

ed

 

The Cowboy Line was always a puzzle.  It did not have enough local traffic to support itself but we needed a way to get profitable traffic out of the Rapid City area to its markets.  We could move the traffic via Pierre, SD or Chadron, NE.  When people got interested in coal very early on that put a hold on the line untill the Powder River got resolved.  It was not a problem because we had lots of other lines to spend our time on to upgrade for multi-loaders or dump.   

Acitve interest in the Powder River started in the early 1970s.  Everyone knew the coal was there it was just having a market for the stuff and a way to get it to market cheaply.  The desire for lower sulphur emmisions solved one problem and unit train economics solved the other problem 

When the Powder River resolved itself with the UP joint venture we had spun off lines in SD to the DME.  The Cowboy Line became just another drain on expenses so the machinery was put into gear to dump it. 

[bobwilcox]

If anyone is interested in looking further H. Roger Grant wrote an excellant histroy entitiled North Western, A History of the Chicago & North Western Railway System, 1996. The ISBN number is 0-87580-214-1.

[MichaelSol]

What happened to the MILW line to Omaha?  They were handling the passenger trains, I would have thought they would have handled more freight.

ed

One thing should jump out. MILW was a competitor with UP for its very longest haul traffic. At any point where Milwaukee and UP competed head-to-head in the Pacific Northwest, UP could not provide the service to Twin Cities and to Chicago that MILW could. In Washington State, of the market share shared by MILW and UP -- MILW had 61% of it.

When MILW entered Portland, UP lost 7,000 tons a day right off the bat to MILW -- all "Long East".

This is one reason I read these hyperventilating threads about "whose line was best" Chicago/Omaha with the developing conviction people don't know what they are talking about. In the MILW/CNW merger, the consolidated plan of operation was to operate the fast trains between the two points on MILW tracks. CNW thought it could gain an hour of schedule time with upgrades, but conceded that MILW would gain the same improvement -- it was simply a faster line.

But, vis-a-vis UP -- Union Pacific was not going to prefer the MILW for so long as MILW was a competitor for UP's best traffic. Period. Didn't matter -- better line, Fremont cutoff, Larry Provo, Cowboy line, price of tea -- Union Pacific was not going to assist in any way the survivability of its primary competitor for its most premium traffic.

Then Rock Island fell apart.

Who was left? North Western was the last girl left on the bench.

How much brains and guts did it take to be the last girl on the bench?

The specific course of events that can be shown conclusively that ultimately favored the North Western as the surviving connection for UP unfolded entirely outside of the control of the North Western.

That's luck.

 

 

[bobwilcox]

...hyperventilating threads about "whose line was best" Chicago/Omaha with the developing conviction people don't know what they are talking about...

 

Why trash another good discussion?  This stuff has driven many people away. 

[MichaelSol]

...hyperventilating threads about "whose line was best" Chicago/Omaha with the developing conviction people don't know what they are talking about...

 

Why trash another good discussion?  This stuff has driven many people away. 

You complain selectively. When you see the name calling by your friends on other threads, you remain remarkably silent. Remarkably. Indeed, you take a very generalized comment directed at no one in particular, and take the effort to personalize it. I guess that's irony.

In this instance, the "best line" argument -- which seems to go on and on -- is demonstrably irrelevant. Larger and more compelling circumstances controlled these outcomes -- not somebody's line being 20 miles longer than somebody else's line, or a 1.2% grade vs a 1% grade. Yet people discuss these things like they are the final controlling decisive factors -- and they weren't.

 

 

[MP173]

This is a good discussion Bob. 

I have learned quite a bit about the Midwestern operations and I appreciate both yours and Michaels input.  I have always been fascinated by the MILW, not so much the PCE but the Omaha line.  Why?  Possibly because of all of those City trains which ran on the line in the late 50's and 60's.  Did MILW handle that under contract with UP or was it a common carrier type operation.

I may not be making myself clear here, so I will attempt again.  I believe in the mid 50's UP changed routings on the trains from CNW to MILW.  Ok...that tells me they CONTROLLED the trains from Omaha to Chicago.  Were there ICC hearings to change the routing or did UP have control to do so?  I sort of compare it to contract carrier vs common carrier in trucking. 

Point well made regarding the PCE traffic.  UP competed with MILW.  Obviously they would not turn over the traffic at Omaha to a competitor.  So, in a way, getting back to the threads long ago about the necessity of the PCE...in the long run it had a negetive impact on the survival of the MILW, in a somewhat twisted offhand way.

Another fascination for MILW's Omaha line was based on standing at a couple of locations in Iowa and looking at the empty ROW, nature reclaiming the land.  It is a strange feeling that comes over me when I look at an abandoned ROW, tracks removed and think of all of the personal and business effort that went into that line which is now gone.  Such was the case at Muscatine, Iowa standing at the junction of the MILW line which ran to KC and the Rock's line.  Also a lessor degree in Central Iowa and realizing that years before all of those UP City trains once ran.

Anyway, I will attempt to keep my hyperventilating to a minimum and refrain from sipping the Fremont Connection Koolaid and simply try to understand what really happened.

ed

[MP173]

It is now oh so obvious as to why UP needed to get to Chicago in the worst way.

MILW to the north providing single line service and ATSF to the south.  In the middle you had SP/Cotton Belt crossing the Mississippi River.  UP was 300 miles short to St. Louis and 500 miles short to Chicago.  The Rock would have given them both, but a pretty bumpy ride to St. Louis.

ed

[MP173]

One more thought/question.

With the GN/NP/CBQ alliance (early to mid 60's prior to BN), wouldnt it have made sense for there to have been discussions or exploration into a UP/MILW merger?  Think about it, it would have some sense.

ed

[greyhounds]

...hyperventilating threads about "whose line was best" Chicago/Omaha with the developing conviction people don't know what they are talking about...

 

Why trash another good discussion?  This stuff has driven many people away. 

You complain selectively. When you see the name calling by your friends on other threads, you remain remarkably silent. Remarkably. Indeed, you take a very generalized comment directed at no one in particular, and take the effort to personalize it. I guess that's irony.

In this instance, the "best line" argument -- which seems to go on and on -- is demonstrably irrelevant. Larger and more compelling circumstances controlled these outcomes -- not somebody's line being 20 miles longer than somebody else's line, or a 1.2% grade vs a 1% grade. Yet people discuss these things like they are the final controlling decisive factors -- and they weren't.

But bobwilcox said exactly the opposite.  He said the shippers don't give a bleep about the grades or curvature of a line.  And they don't.

My own point has always been that the management people at the C&NW had the inteligence to figure out what was going on, realize what they had to do to deal with it, figure out a way to deal with it, then have the guts to do it all.  It does take some guts to take on the bullying politicians. 

That's good management.  And that's why the C&NW sharehoders (the employees) were rewarded well.  I wish we had had that at the ICG. 

The Fremont (and it is "Fremont" not "Freemont") cut off is a great example.  It was simply another branch.  The C&NW management realized they could develop it into a superior UP interchange.  And they did.  They didn't have a lot of money, but they got it done. 

The "Falcon" flew over that line. And the CNW/UP intermodal route became competitive with the Santa Fe.  And it became the service route to the Pacific Northwest. 

[MichaelSol]

But bobwilcox said exactly the opposite.  He said the shippers don't give a bleep about the grades or curvature of a line.  And they don't.

You don't have to invent a false contention --I didn't say he did. And he and I agree entirely on that point.

The Fremont (and it is "Fremont" not "Freemont") cut off is a great example.  It was simply another branch. 

CNW refers to it as "Freemont" for some reason on about 1000 pages of merger documents.

 And it became the service route to the Pacific Northwest. 

What does that mean?  Is there a number measuring something or is this your idea of ... something? What's a "service" route?

 

[MichaelSol]

One more thought/question.

With the GN/NP/CBQ alliance (early to mid 60's prior to BN), wouldnt it have made sense for there to have been discussions or exploration into a UP/MILW merger?  Think about it, it would have some sense.

I think there were some at MILW that thought so, but it never took hold, and for good reason. After the Wm. Wyer studies in the mid-1950s, the MILW/CNW managements realized that merger made so much sense -- so much consolidation [37 mainline routes], so much new long haul created [almost 80% of UP's PNW traffic came off the CNW] -- there was no comparable rail merger, before or since, that would have so favorably placed the surviving company.

MILW/UP, by comparison, would have created no more long hauls than pretty much already existed between the two companies -- very little opportunity for consolidation at a significant level. Duplicating routes to the Pacific Northwest without any real ability to consolidate either one to the other. They already operated a Joint Line on the far West end where the traffic was.

I think it would have been difficult to justify that merger on economic grounds. Where were the savings? Where were the benefits?

 

 

[snagletooth]

 Where were the savings and benefits in UP buying the RI or CNW? yet they made seriuos attempts there. UP-MLWK would have given UP direct access to Chicago and put it right in BN back yard, for that matter, in their front yard too. both things up wanted for a long time.

[MichaelSol]

 Where were the savings and benefits in UP buying the RI or CNW?

Good question. What's your answer?

 

[snagletooth]

I think there were some at MILW that thought so, but it never took hold, and for good reason. After the Wm. Wyer studies in the mid-1950s, the MILW/CNW managements realized that merger made so much sense -- so much consoldiation [37 mainline routes], so much new long haul created [almost 80% of UP's PNW traffic came off the CNW] -- there was no comparable rail merger, before or since, that would have so favorably placed the surviving company.

MILW/UP, by comparison, would have created no more long hauls than pretty much already existed between the two companies -- very little opportunity for consolidation at a significant level. Duplicating routes to the Pacific Northwest without any real ability to consolidate either one to the other. They already operated a Joint Line on the far West end where the traffic was.

I think it would have been difficult to justify that merger on economic grounds. Where were the savings? Where were the benefits?

 

 

This is  what I was commenting on.  where  a  MLWK/CNW  merger  would have saved alot  of money  in consolidation, in the matter of UP they were looking for expansion into chicago. If a MLWK/UP wuld have been difficult to justify, than so would UP/RI which UPwalked away from on the eve of approval and UP/CNW which they obviously got. I think UP knew that all four (nobodies mentioned IC) connections in omaha wre going down and needed to secure a Chicago connection before they went under, deteriated to the point that they couldnt provide service (IC),  or got bought up by  a competitor, i.e. the the up & coming BN. In UP's eyes, expansion, not consolidation was economicly justifiable. The UP, at the time, was looking at a possible future of getting shut out of Chicago.  

[MichaelSol]

I believe in the mid 50's UP changed routings on the trains from CNW to MILW.  Ok...that tells me they CONTROLLED the trains from Omaha to Chicago.  Were there ICC hearings to change the routing or did UP have control to do so?  I sort of compare it to contract carrier vs common carrier in trucking. 

CNW carried the UP passenger trains under a contract into Chicago. That wasn't an ICC matter as the ICC couldn't order UP to provide passenger service over another railroad. The trains were encountering increasing problems over CNW. Repeated threats by UP were unavailing. UP approached MILW to see if MILW was interested in the contract. MILW said sure, spent some money upgrading the line and on October 30, 1955, began operating the Cities trains between Omaha and Chicago.

The advantages for the Milwaukee was that it got all of the pro-rated passenger revenue over the distance, it permitted some cost cutting through consolidation of some of its own trains with UP trains, and permitted continued utilization through per diem, of equipment coming off of discontinued MILW passenger trains elsewhere. Indeed, MILW was able to offer transcontinental service over UP to Tacoma and Seattle -- where UP and MILW already jointly operated the passenger station -- justifying its efforts to abandon its own expensive long haul passenger fleet to those cities. About $4 million in extra revenue for MILW. UP got better service and schedules for its flagship fleet, a reliable operator, and MILW was able to avoid writedowns on a good deal of equipment that might otherwise have been scrapped.

 

[MichaelSol]

Another fascination for MILW's Omaha line was based on standing at a couple of locations in Iowa and looking at the empty ROW, nature reclaiming the land.  It is a strange feeling that comes over me when I look at an abandoned ROW, tracks removed and think of all of the personal and business effort that went into that line which is now gone. 

Lots of history. John Stevens worked for the Milwaukee Road long before he was found Marias Pass for Jim Hill, and surveyed many of those Iowa lines for the Milwaukee.

[Anonymous]

 

Ok, so the reason I said a case could be made that C&NW had some better "brains" than other roads is based on some things I read about the stand out people at C&NW.  I really don't know whether any of that is true or not, so I will let it go, and defer to others here who know more.

Now back to the C&NW... and the interesting analysis of the Moody's data. 

 

[MP173]

Been gone nearly 24 hours, glad to see the thread is still moving along

Regarding the cost savings/benefits of MILW/UP...I am not sure what the ICC's postition was son mergers at the time.  Your wording indicates it was more about cost savings.  Were not most of the mergers overlapping rather than end to end at the time?

I go back to my original premise that it would have made sense, for both carriers to merge, particularly in light of the BN merger.  UP tried for years to get to Chicago, they were obsessed with it, rightfully so.   That would have justified the merger.

The Mopac/C&EI merger had already established that such an end to end merger to reach a market would be allowed.  Had there been a problem with UPMILW having two routes to the PNW, then a sale of the Twin Cities/PNW line to Soo would have solved that.

ed

[MichaelSol]

Parallel mergers look to cost savings, end-to-end mergers look to increasing haul length and productivity. A sale of the PNW line to Soo or someone else wouldn't have solved UP's problem that MILW was the better line for the PNW premium traffic to Twin Cities and Chicago. In Soo's particular case, it would have meant paralleling trackage with parent CP. The BN merger managed the best of both worlds -- end to end, and parallel line consolidation.

Not sure what to think about UP needing to get Chicago. Nobody was going to shut UP out of Chicago, no matter what. It would have violated the requirement for through routes under  1 (4) of the Transportation Act of 1940, which prohibited the maintenance of discriminatory "combination rates."  Under the terms of 15 (3), the ICC establishes connections and through routes whenever "necessary or desirable in the public interest." How could anyone lock out UP?

Or want to?

MILW might have considered one option -- the sale of its Omaha line to Union Pacific.

The ICC Hearing Examiner on the UP/RI case noted one thing: merger was not going to provide effective access for the UP -- given the tonnage exchanged at the Missouri River Gateways, the Examiner noted that UP needed just about five lines to Chicago to handle everything.

Mergers take on much of the quality of a "Risk" (TM) game. They become self-perpetuating. Get bigger, get bigger. Every general merger study done shows the failure rate of mergers to exceed 50%, and the failure of mergers to obtain their stated goals exceeds 80%. When Department of Transportation came out with their seminal 1968 "Western Mergers" study, and found that they could find almost none of the promised gains in post merger companies, didn't phase anyone.

Other than meeting a psychological need, did Union Pacific really need to take on financial risk in order to reach Chicago?

Using standard financial indicators, was the Union Pacific better off after it reached Chicago?