Milwaukee Road history - Wikipedia version

[MichaelSol]

  However there seems to be a few cracks in some of the things that you have put out on these forums.  You were the one that said the Carter admin was "not going to give ANY money on railroads that happened to be in Republican states in 1979 and 1980". However that statement has shown to be wrong, no matter who authored the bill or what party they were a part of.

The statement came from representatives of the Carter Administration to the Governor of Montana that "the Carter Administration" was not going to approve any money for projects in states where Carter had little likelihood of winning the state in the upcoming presidential election. I can only assume that the gentlemen knew what they were talking about, and that they meant discretionary funds under the control of the Executive Branch -- such as the USDA loan which had been fundamentally approved, and then withdrawn.

Whether Congress showed that statement to be "wrong" in that context is up to you to second guess however you see fit. The Carter Administration and the U.S. Congress happened to be different entities.

In any case, I was not the Carter Administration, and did not make the original statement on its behalf. Your contention that I made the statement is, in fact, false, and that seems to be where the "cracks" on these forums are originating.

 

[MichaelSol]

 You notice how now one came up with a real proposal that would buy just the PCE using private funds?  That should tell you something, no one was willing to put "their" money in just the PCE. 

Quite a game for you, isn't it?

After the BAH report in May, 1979, the conundrum was that the best evidence showed that the MILW could not survive without the PCE.

On the other hand, the same study showed that "only the PCE" -- termed the "Twin Cities Transcon" -- could be viable on its own. Of eight considered options, the Lines East-only option, called the "Core", was considered the least potentially profitable -- the least likely to succeed.

The MRRA encouraged an ESOP that preserved the "Milwaukee" and gave that option a specific set of criteria to meet, a specific timeline, and imposed a specific set of considerations on the ICC in that regard.

The Employee/Shipper group was only going to get one crack at it -- and the best crack was to organize a proposal around what the Trustee's own consultants had proposed as, ultimately, the most profitable long-term configuration of a surviving Milwaukee Road -- the "Louisville Transcon" option as defined by the consulting firm.

Because the option had been proposed independently, based upon a study paid for by the Trustee himself, it was viewed within the SORE group as being the least susceptible to accusations of optimism or bias, particularly in its key finding that it was likely to be substantially more profitable than any other configuration.

It would also avoid the inevitable criticism that SORE proposed to take just the profitable traffic of the PCE and let the rest of the system collapse further and, in essence, be unreorganizable.

SeaFirst Bank and Lazard Freres announced they would handle the private financing for the venture. The Employees group committed to the ESOP -- which were private funds. Several shippers specificially committed to funding the effort. Continental Illinois and Harris Bank testified that they "supported" the proposal as the most financially viable of the Milwaukee alternatives. The proposal included borrowing federal funds under the same terms and conditions available to all railroads, including 4R Section 505 and 4R Section 511 funds.

So, no, I didn't "notice" that "no one" was willing to put their money in.

 

[n012944]

Indeed, the DOT "study" sounds exactly like the Carter Administration's "cover story" on why the "government" was not going to spend any money on railroads that happened to be in Republican states in 1979 and 1980 -- only railroads in Republican states lost money and were, under longstanding government policy -- not entitled to federal funds.

 

So when President Carter signed the Milwaukee Railroad Restructuring Act on 11/4/79 that gave the railroad 30 million dollars, did that money only go for the parts of the railroad that was operating Democrat states that the MILW served?

 

Congress was, and still is, a separate branch of government.

That is correct.  However if your theory about Carter and money not being spent on Republican states was true, don't you think that Carter would have vetoed the bill? 

 

Bert

Well, I am sure you have all sorts of "gotcha'" questions.

No "gotcha" questions here. I am not out to get anyone here, and if you feel that way I do apologize.  However there seems to be a few cracks in some of the things that you have put out on these forums.  You were the one that said the Carter admin was "not going to give ANY money on railroads that happened to be in Republican states in 1979 and 1980". However that statement has shown to be wrong, no matter who authored the bill or what party they were a part of.

 

Bert

[MichaelSol]

Indeed, the DOT "study" sounds exactly like the Carter Administration's "cover story" on why the "government" was not going to spend any money on railroads that happened to be in Republican states in 1979 and 1980 -- only railroads in Republican states lost money and were, under longstanding government policy -- not entitled to federal funds.

 

So when President Carter signed the Milwaukee Railroad Restructuring Act on 11/4/79 that gave the railroad 30 million dollars, did that money only go for the parts of the railroad that was operating Democrat states that the MILW served?

 

Congress was, and still is, a separate branch of government.

That is correct.  However if your theory about Carter and money not being spent on Republican states was true, don't you think that Carter would have vetoed the bill? 

 

Bert

Well, I am sure you have all sorts of "gotcha'" questions. And, it's not my "theory".

Montana's Congressional delegation at the time consisted of Senator Max Baucus (D), Senator John Melcher (D), Congressman Pat Williams (D).

The the bill was pushed through Congress especially by Senator Warren Magnuson of Washington (D), and strongly and vocally supported by Senator George McGovern (D), Senator Henry Jackson (D), Senator Quentin Burdick (D), Senator Ted Kennedy (D), Senator John Pastore (D) and Senator Claiborne Pell (D).

Retired, but strongly influential former Senate Majority Leader Mike Mansfield (D) lobbied for the bill.

Note the (D)'s.

 

[n012944]

the Milwaukee's own books and found that lines west of Miles City had contributed $12.7 million in profits in 1976,

     Michael-can you clarify what you mean, specifically, when you speak of the PCE?  Are you speaking of west of Minnneapolis,Ortonville,Mobridge, or Miles City?  I see a lot of references to Miles City.  Was Miles City the division point for the Milwaukee, as far as their studies and financial reports were done?

The historic PCE was lines west of Mobridge, SD. Miles City was selected by the Trustee (or the fellow who was actually trying to arrange this abandonment) for the reason that the coal traffic coming on line eastbound at Miles City threw the whole "PCE loses money" meme into a crock far too clearly. Indeed, at Aberdeen, the PCE was carrrying 14 MGT, and west of Harlow, one of the consulting engineers commented that it was carrying 11 MGT. Several studies, however, looked at lines west of St. Paul as the PCE.

   To be somewhat accurate in discussion, wouldn't the PCE, as we talk about it here, have to be considered to be that part west of what became NewMil?

The final NewMil proposal to the ICC was a transcontinental proposal, Portland, Tacoma Seattle, to Twin Cities, Milwaukee, Chicago, Louisville, Kansas City.

 

  You notice how now one came up with a real proposal that would buy just the PCE using private funds?  That should tell you something, no one was willing to put "their" money in just the PCE. 

 

Bert

[n012944]

Indeed, the DOT "study" sounds exactly like the Carter Administration's "cover story" on why the "government" was not going to spend any money on railroads that happened to be in Republican states in 1979 and 1980 -- only railroads in Republican states lost money and were, under longstanding government policy -- not entitled to federal funds.

 

So when President Carter signed the Milwaukee Railroad Restructuring Act on 11/4/79 that gave the railroad 30 million dollars, did that money only go for the parts of the railroad that was operating Democrat states that the MILW served?

 

Congress was, and still is, a separate branch of government.

That is correct.  However if your theory about Carter and money not being spent on Republican states was true, don't you think that Carter would have vetoed the bill? 

 

Bert

[greyhounds]

I just happened to be thinking about double stacks this morning.Thinking about what would have to be done on the PCE to allow sufficient clearance amounting to say 18'.I'm refering to the PCE as it was in 1979,without the electrification.Figure that about 45 tunnels would have been in need of enlargment or daylighting.Also,a lot of curvature would need to be reduced.

The PCE had a minimum 19'6" clearance throughout, with standard catenary in place. Catenary in the tunnels used up between 18" and 30" of additional clearance.

The line handled 93' autoracks on a daily basis without incident on the existing curvature.

Two 9' 6" containers stacked in a well stand 20' 2" above the rail.  So the Milwaukee's PCE, with the wire in place, would have been shut out of the container traffic without some major work.

[Anonymous]

Some questions about the PCE makeup.

1) How did the 19'6" tunnel clearances compare to BN's Cascade and Flathead tunnels?

Remember, the Cascade Tunnel was electrified from it's inception until the 1950's, so it also had double stack clearances built in.  It's the Stampede Pass Tunnel that has no such clearances, and that's why BNSF is trying to con the State of Washington into paying for increasing the clearances in that tunnel to allow double stacks. 

And when I say "con", I mean getting public financing without a corresponding public good, aka allowing UP or some other railroad to get trackage rights over this route.  Plus the eternal fact that the entire Stampede Pass line is rather convaluted, so crowing the tunnel is akin to the Biblical analogy of sewing new patches onto old wineskins.  A better option would be to revive the ex-Milwaukee Snoqualmie Pass line with it's ready made double stack clearances intact.  A second best option would be to build a brand new longer lower tunnel underneath the current Stampede Pass alignment aka Cascade Tunnel II to eliminate some of the 2.2% grades and reverse curvature.  And with either option, it would be judicious to also construct a series of short tunnels in the Yakima River canyon to eliminate all those horseshoe curves, and increase track speeds from the current 10 mph to a more reasonable 40 or so mph.

That way, the PNW railroads could use the NP water level grade south of Ellensburg to Pasco for grain and coal trains, and the proposed Ellensburg-Lind rebuild of the ex-Milwaukee line can be used for primarily intermodals and eastbound empties.

But like I say, if it's soley for BNSF's use, then not one penny of taxpayer money should be used, since the WSDOT rail plan specifically calls for "increased competition".

 

[billbtrain]

Some questions about the PCE makeup.

1) How did the 19'6" tunnel clearances compare to BN's Cascade and Flathead tunnels?

2)Concerning rail weight and type(jointed or welded) at the following segments

Aberdeen to Mobridge

Mobridge to Miles City

Miles City to Harlowton

Harlowton to Three Forks

That's all for now.More later.

Have a good one.

Bill B

[MichaelSol]

I just spent the last hour looking on MSN Live Search of the mainline from Harlowton to Three Forks in 3D.Sixteen Mile Canyon looks like it was the difficult part of that line.Curvature doesn't look that bad.

Milwaukee thought about promoting the canyon more -- renaming it "Montana Canyon" -- for its rugged beauty. But, other than open air cars put on at Harlow -- there wasn't much to do directly to promote the area. Most of the residents had forked tongues, so it was never going to be a tourist destination.

In the 48 miles between Loweth and Lombard, the ruling grade was 1% -- not bad for such rugged territory. Most of the curves were between 4 and 6 degrees. There was a tight spot east of Francis Substation with six ten degree curves in a four mile stretch and some 8 and 6 degree curves to the west. This was the old Montana Railroad route, which Milwaukee just about entirely rebuilt.

 

[billbtrain]

I just happened to be thinking about double stacks this morning.Thinking about what would have to be done on the PCE to allow sufficient clearance amounting to say 18'.I'm refering to the PCE as it was in 1979,without the electrification.Figure that about 45 tunnels would have been in need of enlargment or daylighting.Also,a lot of curvature would need to be reduced.

The PCE had a minimum 19'6" clearance throughout, with standard catenary in place. Catenary in the tunnels used up between 18" and 30" of additional clearance.

The line handled 93' autoracks on a daily basis without incident on the existing curvature.

Thanks,Michael.I forgot to factor in the pantographs of the electrics when I was thinking about tunnel clearances.I'm still learning,which means I'm not dead yet!

I just spent the last hour looking on MSN Live Search of the mainline from Harlowton to Three Forks in 3D.Sixteen Mile Canyon looks like it was the difficult part of that line.Curvature doesn't look that bad.

Have a good one.

Bill B

[MichaelSol]

the Milwaukee's own books and found that lines west of Miles City had contributed $12.7 million in profits in 1976,

     Michael-can you clarify what you mean, specifically, when you speak of the PCE?  Are you speaking of west of Minnneapolis,Ortonville,Mobridge, or Miles City?  I see a lot of references to Miles City.  Was Miles City the division point for the Milwaukee, as far as their studies and financial reports were done?

The historic PCE was lines west of Mobridge, SD. Miles City was selected by the Trustee (or the fellow who was actually trying to arrange this abandonment) for the reason that the coal traffic coming on line eastbound at Miles City threw the whole "PCE loses money" meme into a crock far too clearly. Indeed, at Aberdeen, the PCE was carrrying 14 MGT, and west of Harlow, one of the consulting engineers commented that it was carrying 11 MGT. Several studies, however, looked at lines west of St. Paul as the PCE.

   To be somewhat accurate in discussion, wouldn't the PCE, as we talk about it here, have to be considered to be that part west of what became NewMil?

The final NewMil proposal to the ICC was a transcontinental proposal, Portland, Tacoma Seattle, to Twin Cities, Milwaukee, Chicago, Louisville, Kansas City.

[MichaelSol]

I just happened to be thinking about double stacks this morning.Thinking about what would have to be done on the PCE to allow sufficient clearance amounting to say 18'.I'm refering to the PCE as it was in 1979,without the electrification.Figure that about 45 tunnels would have been in need of enlargment or daylighting.Also,a lot of curvature would need to be reduced.

The PCE had a minimum 19'6" clearance throughout, with standard catenary in place. Catenary in the tunnels used up between 18" and 30" of additional clearance.

The line handled 93' autoracks on a daily basis without incident on the existing curvature.

[MichaelSol]

DOT staffers noting that the 4400 miles of the railroad between Minnesota and Washington accounted for nearly two-thirds of the system's loss in 1977,

   Just a thought:  This "4400 miles" would encompass more than just the PCE.  Perhaps 700-800 miles alone, would be just the non-PCE lines in S.D. that were sucking air badly in 1979.

I don't know if it was the Trains article, or the DOT study. One never knows on these second hand reports. But, "between" Minnesota and Washington means the Dakotas, Idaho and Montana. These were mostly "bridge" states, of the kind that UP made its money on -- just rolling freight long distances without doing a lot of work along the way. The Chamblerlain line didn't see much traffic by then, that was true. But Washngton State had become an enormous generator of traffic and revenue -- because it was sending so much of it over that long land line, on some of the longest long hauls of any railroad in the country.

I recall that the Trustee had tried to construct an odd criteria, that each line segment had to generate a minimum of $38,000 a year per mile in revenue -- nothing about operating expenses -- otherwise it needed to be abandoned. It was an odd measure, since it didn't measure the revenue obtained by overhead traffic. None of the transcontinental railroads would have survived the measure, but somehow someone dreamed this up, and it sounds a lot like the DOT study.

So, somebody was able to show that these thousands of miles of track generated just about zero, and compared that to the system average overall at $38,000 per mile. And if you "did the math" it was clear that all two thirds of the system "losses" had to occur on these miles of lines that generated little or no lineside traffic. And I have a feeling that is exactly how DOT "did the math."

And if the reader didn't know anything about "overhead" -- gee, it all kind of made sense to a bureaucrat somewhere.

 

[nanaimo73]

  To be somewhat accurate in discussion, wouldn't the PCE, as we talk about it here, have to be considered to be that part west of what became NewMil?

But the studies were done looking at what would be cut off, and that kept changing. First it was Butte, then Miles City and then Ortonville.

I would prefer all studies had been done looking at Mobridge, but transferring the Faith, SD, Isabel, SD and New England, ND, traffic to the Midwest area.

[billbtrain]

Your continued interest in the Milwaukee out west is always interesting. But, the numbers just don't back you up. And you don't seem to have any of your own. That makes it appear, as always, as argument for arguments sake. There must be a lot of railroads you could be arguing about, and might have a better perspective on.

 

Well, it was an interesting railroad.  Would the electrification have allowed double stacks?

But my contentions here have been totally based on numbers (and a federal study).  I've based my reasoning on the business each line had, cited in hard numbers.  The Milwaukee Pacific Coast Extension just didn't have the volume of business needed to stay in business.  The numbers I've cited show that.  

I just happened to be thinking about double stacks this morning.Thinking about what would have to be done on the PCE to allow sufficient clearance amounting to say 18'.I'm refering to the PCE as it was in 1979,without the electrification.Figure that about 45 tunnels would have been in need of enlargment or daylighting.Also,a lot of curvature would need to be reduced.

Have a good one.

Bill B

[Murphy Siding]

the Milwaukee's own books and found that lines west of Miles City had contributed $12.7 million in profits in 1976,

     Michael-can you clarify what you mean, specifically, when you speak of the PCE?  Are you speaking of west of Minnneapolis,Ortonville,Mobridge, or Miles City?  I see a lot of references to Miles City.  Was Miles City the division point for the Milwaukee, as far as their studies and financial reports were done?

The historic PCE was lines west of Mobridge, SD. Miles City was selected by the Trustee (or the fellow who was actually trying to arrange this abandonment) for the reason that the coal traffic coming on line eastbound at Miles City threw the whole "PCE loses money" meme into a crock far too clearly. Indeed, at Aberdeen, the PCE was carrrying 14 MGT, and west of Harlow, one of the consulting engineers commented that it was carrying 11 MGT. Several studies, however, looked at lines west of St. Paul as the PCE.

   To be somewhat accurate in discussion, wouldn't the PCE, as we talk about it here, have to be considered to be that part west of what became NewMil?

[MichaelSol]

Indeed, the DOT "study" sounds exactly like the Carter Administration's "cover story" on why the "government" was not going to spend any money on railroads that happened to be in Republican states in 1979 and 1980 -- only railroads in Republican states lost money and were, under longstanding government policy -- not entitled to federal funds.

 

So when President Carter signed the Milwaukee Railroad Restructuring Act on 11/4/79 that gave the railroad 30 million dollars, did that money only go for the parts of the railroad that was operating Democrat states that the MILW served?

Congress was, and still is, a separate branch of government.

Congress specifically allocated funds to operate the PCE, even as the Executive Branch refused to extend loans under its jurisdiction through the USDA. Apparently Congress didn't think too much of the DOT report either.

Indeed, the Trustee reluctantly ordered new ballast dumped along the right-of-way -- always next to a highway, and always only on the side facing the highway -- just so everyone knew they were being sincere.

 

 

[MichaelSol]

the Milwaukee's own books and found that lines west of Miles City had contributed $12.7 million in profits in 1976,

     Michael-can you clarify what you mean, specifically, when you speak of the PCE?  Are you speaking of west of Minnneapolis,Ortonville,Mobridge, or Miles City?  I see a lot of references to Miles City.  Was Miles City the division point for the Milwaukee, as far as their studies and financial reports were done?

The historic PCE was lines west of Mobridge, SD. Miles City was selected by the Trustee (or the fellow who was actually trying to arrange this abandonment) for the reason that the coal traffic coming on line eastbound at Miles City threw the whole "PCE loses money" meme into a crock far too clearly. Indeed, at Aberdeen, the PCE was carrrying 14 MGT, and west of Harlow, one of the consulting engineers commented that it was carrying 11 MGT. Several studies, however, looked at lines west of St. Paul as the PCE.

 

[Murphy Siding]

the Milwaukee's own books and found that lines west of Miles City had contributed $12.7 million in profits in 1976,

     Michael-can you clarify what you mean, specifically, when you speak of the PCE?  Are you speaking of west of Minnneapolis,Ortonville,Mobridge, or Miles City?  I see a lot of references to Miles City.  Was Miles City the division point for the Milwaukee, as far as their studies and financial reports were done?

[Murphy Siding]

DOT staffers noting that the 4400 miles of the railroad between Minnesota and Washington accounted for nearly two-thirds of the system's loss in 1977,

   Just a thought:  This "4400 miles" would encompass more than just the PCE.  Perhaps 700-800 miles alone, would be just the non-PCE lines in S.D. that were sucking air badly in 1979.

[n012944]

Indeed, the DOT "study" sounds exactly like the Carter Administration's "cover story" on why the "government" was not going to spend any money on railroads that happened to be in Republican states in 1979 and 1980 -- only railroads in Republican states lost money and were, under longstanding government policy -- not entitled to federal funds.

 

So when President Carter signed the Milwaukee Railroad Restructuring Act on 11/4/79 that gave the railroad 30 million dollars, did that money only go for the parts of the railroad that was operating Democrat states that the MILW served?

[MichaelSol]

But my contentions here have been totally based on numbers (and a federal study).  I've based my reasoning on the business each line had, cited in hard numbers.  The Milwaukee Pacific Coast Extension just didn't have the volume of business needed to stay in business.  The numbers I've cited show that.  

It is significant, I think, in any context, that you have shown not a single number that actually showed the condition of the Milwaukee Road, nor how any of your numbers relate to the Milwaukee Road.

"Hard numbers" are generated by companies, on financial reports, not by government studies. That's the part that gets in your way -- you have referred to not a single "hard number". You have none.

In law, science, economics, or business, the general proposition always yields to the specific example -- and this is no exception.

You would not be the first person whose reliance on broad generalities foundered upon the reality of specifics, nor the last. Why you would be so interested in those generalities -- when myriad examples to the contrary exist -- is simply ... interesting, but not in any fashion that contributes meaningfully in any way to a discussion of the Milwaukee Road. But, I always get the impression, its not the Milwaukee Road that you have that much of an interest in ...

 

[greyhounds]

Your continued interest in the Milwaukee out west is always interesting. But, the numbers just don't back you up. And you don't seem to have any of your own. That makes it appear, as always, as argument for arguments sake. There must be a lot of railroads you could be arguing about, and might have a better perspective on.

 

Well, it was an interesting railroad.  Would the electrification have allowed double stacks?

But my contentions here have been totally based on numbers (and a federal study).  I've based my reasoning on the business each line had, cited in hard numbers.  The Milwaukee Pacific Coast Extension just didn't have the volume of business needed to stay in business.  The numbers I've cited show that.  

[billbtrain]

I disagree, based on evidence, that it was a viable or even potentially viable, enterprise. 

Is this enough evidence for you....?

I have to agree with Michael Sol that the Milwaukee could again have been a viable railroad.Container traffic out of Tacoma,coal from the Roundup,Montana mines,forest products from Washington,the SP connection at Portland,the connection at the Canadian border,grain from the Dakota's and Montana,etc prove to me that it could have worked.Better than the midwest lines in an area overrun with failing economies and lack of rail customers to keep at least 7 systems going.Plus the facts that the ICC,FRA,Democrats,Republicans,and the Supreme Court were willing to dump all kinds of money into the midwest,Conrail,and Amtrak,but not save the Milwaukee Road as a transcon system.Then you have the Milwaukee Executives deferring maintenance on physical plant and equipment and driving away business,just to prove their statements that the railroad would not/could not/should not make money on its own.Looks to me like a lot of the wrong people in the wrong places.I think they should be put out to pasture and bring back the Milwaukee Road as a transcon.

Bill does a nice job of summerizing just some of the evidence that the Milwaukee was predicated for success through the Northern Tier, probably in a better position than GN, definitely in a better position than either NP or UP.  But due to assorted malfeasance (mostly political) it was terminated unjudiciously.  If the Milwaukee PCE had been allowed to continue, it would probably be the dominate line for intermodal, although the likelyhood is that it would have been merged into UP or BNSF by now.

It should then be a shock to Ken that many parts of his so-called "unviable corpse" are either alive and well (Miles City to Twin Cities, South Dakota core lines, St. Maries River Railroad), have been seriously considered for return to service (Snoqualmie Pass line, Ellensburg to Lind, St. Regis to Spokane) or are currently being seriously considered for rebuilding (State of Washington rail plan. 

In addition, it doesn't take a genius to realize that BNSF/UP/MRL would be doing themselves a favor by rebuilding certain sections of the former Milwaukee ROW that are superior to those railroads' current alignments (Sixteen Mile Canyon vs Bozeman Pass, Missoula west, Marengo to Puget Sound, et al).

What Ken will never acknowledge is that oftentimes the best don't survive, while the lessers stay alive.

BTW - regarding total tonnage as the primary indicator of success:  Didn't the SP historically have more tonnage than the SF?  Yet the SF portion of BNSF is flying higher than the SP portion of UP!  Moral - it ain't tonnage, it's net revenue that counts the most.

I learned all that from Michael Sol.I think Michael also mentioned not too long ago that BNSF might be looking to get into the coal mines in the Bull Mountain area?Higher grade of coal than from the PRB.I'd like to see how they would intend to get into the area.It would be interesting.I'm also going to try to look up some of the reports about the Milwaukee's proposed abandonment.Should be interesting reading.Also need to find a copy of 'The Nation Pays Again'.I saw a copy a few years ago at the Public Library.Haven't been back lately because it's a pain to get in and out of.

Have a good one.

Bill B

[MichaelSol]

No, volume is important to any business.

Naturally, this explains why Toyota, with at one point half the volume of GM, earned three times the profits. Sure, it plays a role, but it is not determinative of profitability which is the position some people here take based on looking at lines on a map.

Volume is particularly important in the railroad business.  There are high fixed costs and the railroads need a high volume of sales to cover them.  This is brought out in the side bar to the map on page 76 in the March 2005 issue of Trains

With all due respect for the magnificent job that Trains does, it is not an economic publication.

"3:2:1 for BN:UP:MILW" ... and of course BN was more profitable than UP, right?

Well, the UP had much more tonnage than the BN over much of its system. 

That's my point ... a line on a map says nothing about context.

  One reason the UP was so healthy financially was that its main line across Nebraska and Wyoming had highly concentrated traffic with over 60 MGT.

Profit plummeted when it had to gather and distribute that traffic -- the gross tonnage provided little explanation -- just as it didn't on Penn Central.

And the BN had yet to fully implament its merger, which would concentrate the old NP line's light density traffic on the GN and bring it's costs down.

I don't think you have much to go on here.

I see things as the Milwaukee had absolutely no hope of doing something like this and, at the very least, doubling its business to reach the 20 MGT threshold.  It's Pacific Coast Extension was doomed by low volume.

Your continued interest in the Milwaukee out west is always interesting. But, the numbers just don't back you up. And you don't seem to have any of your own. That makes it appear, as always, as argument for arguments sake. There must be a lot of railroads you could be arguing about, and might have a better perspective on.

 

[greyhounds]

Just as volume is irrelevant to financial condition, so are Lines on a map meaningless from a financial perspective.

No, volume is important to any business.  In the 1930's A&P smacked the mom and pop grocery stores.  An important reason was that they had volume and could sell at a lower mark up - make less on each sale, but make more sales.  A few decades latter, Wal-Mart did a similar thing.  (Volume also gives a company power with its suppliers and can keep the suppliers in line with regard to their own prices.)

Volume is particularly important in the railroad business.  There are high fixed costs and the railroads need a high volume of sales to cover them.  This is brought out in the side bar to the map on page 76 in the March 2005 issue of Trains:

"One federal study in the '70's noted that routes below a threshold of 20 MGT (Million Gross Tons) had signifcantly higher maintenance and operating costs per ton-mile.." 

Volume doesn't tell the whole story, but it's certainly not "irrelevent to finacial condition", particularly in railroading.  And the Milwaukee's Pacific Coast Extension was less than half that important 20 MGT figure.  My question is why.

"3:2:1 for BN:UP:MILW" ... and of course BN was more profitable than UP, right?

Well, the UP had much more tonnage than the BN over much of its system.  Its line from Green River to the Northwest was just part of its picture.  One reason the UP was so healthy financially was that its main line across Nebraska and Wyoming had highly concentrated traffic with over 60 MGT. 

And the BN had yet to fully implament its merger, which would concentrate the old NP line's light density traffic on the GN and bring it's costs down.

I see things as the Milwaukee had absolutely no hope of doing something like this and, at the very least, doubling its business to reach the 20 MGT threshold.  It's Pacific Coast Extension was doomed by low volume.

As an interesting piece of information from the map, The UP had more tonnage going to/from the Pacific Northwest than it did to/from L.A.

[MichaelSol]

You are right.  The study was done in 1979, not 1977.  Former Southern Railway and future Amtrak boss W.Graham Claytor, who was Acting Secretary of Transportation, had the DOT do the study in the summer of 1979.  

What is the name of the study and the date of publication? Who are the authors?

I don't have all the information available this weekend, but here is an excert from an article that I do have on the situation.  From the 11/1979 issue of Trains: 

The messenger with the bad news was former Southern Railway chief W. Graham Claytor Jr, who served briefly last summer as Acting Secretary of Transportation in between being Secretary of the Navy and taking his newest Carter Administration post as Deputy Secretary of Defense.  He dispatched to Capitol Hill a DOT study of Lines West, commissioned at the request of an interested onlooker, Senator John Melcher(Dem., MONT.).  DOT staffers noting that the 4400 miles of the railroad between Minnesota and Washington accounted for nearly two-thirds of the system's loss in 1977, predicted that losses would continue on the lines, even excluding the cost of a 115-million-dollar rebuilding.  Claytor declared DOT opposed to any freeze on the existing railroad or Federal investment in it (systemwide rehabilitation is pegged at 1.092 billion dollars).

Well, news reports are one thing .... there is absolutely no basis for this in the documented record. Claytor held the position less than three weeks! One fast study.

The ICC acknowledged as much in its decision three months later: "The ICC also acknowledged the Trustee's error regarding the profitability of the Milwaukee Road's transcontinental operations. Instead of the terrible cash drain that Trustee Hillman [and DOT] had alleged, the ICC carefully reviewed the Milwaukee's own books and found that lines west of Miles City had contributed $12.7 million in profits in 1976, $11 million in 1977, and $2.9 million in 1978, while the railroad as a whole had been losing $100 million in those years." United States Government Interstate Commerce Commission, "Richard B. Ogilvie, Trustee of the Property of the Chicago, Milwaukee, St. Paul and Pacific Railroad Company -- Abandonment -- Portions of the Pacific Coast Extension in Montana, Idaho, Washington and Oregon" Docket No. AB-7 (Sub-No. 86), decision dated January 30, 1980, p. 57.

Note the date. I am curious, since you seem to use Trains as your source of history -- did Trains report that the Milwaukee Western Extension had been found by the ICC as profitable in its February, 1980 edition? I mean, compared to the DOT report, and the wide variation -- that would be real news!

Apparently, no one in a position of responsibility treated the DOT report as credible in the slightest. I don't think the mere passage of time has made it more credible -- especially considering that losses shot up, and did not go down, when DOT got what it wanted -- the shutdown of Lines West. Which is exactly what Milwaukee's own planning staff said would happen, if it was not sufficiently implied for you by the ICC opinion -- because the losses were on Lines East not Lines West.

I can tell you just about exactly who DOT spoke to at MILW -- as opposed to doing any actual research -- and why they got that story. Perhaps you place no weight in the ICC's understanding of railroads, as opposed to DOT's, at that time. If credibility is a guide, DOT was charged with railroad safety, and otherwise had little expertise in railroad economics as a whole.

Indeed, the DOT rehab number for the system is approximately double what the FRA estimated for total system rehab. Now, why was that? And who was DOT's "expert"? FRA hired Tom Dyer. I know who he is. Where did DOT's figures come from? Why wouldn't they use FRA's numbers? There are some enormous variations in numbers from the same government department here -- somebody's throwing some stuff around there, and it's not clear why.

Indeed, the DOT "study" sounds exactly like the Carter Administration's "cover story" on why the "government" was not going to spend any money on railroads that happened to be in Republican states in 1979 and 1980 -- only railroads in Republican states lost money and were, under longstanding government policy -- not entitled to federal funds.

Interestingly, MILW's estimated Lines West income, if restated in proportion to a modern railroad the size of BNSF, would have represented net annual income of $789,000,000. That's the same rate of return as the modern Union Pacific under deregulation, and less than was predicted by NewMil and Booz Allen Hamilton.

And I happen to think the ICC understated income for a variety of technical reasons, but in a modern context and without adjustment, MILW Lines West was doing quite well. That is the basis for my contention that the ICC decision was quite an anomoly, as it would condemn most prosperous modern railroads, at some point, to shutdown as the results did not represent a "viable" profit.

 

[n012944]

You are right.  The study was done in 1979, not 1977.  Former Southern Railway and future Amtrak boss W.Graham Claytor, who was Acting Secretary of Transportation, had the DOT do the study in the summer of 1979.  

What is the name of the study and the date of publication? Who are the authors?

 

I don't have all the information available this weekend, but here is an excert from an article that I do have on the situation.  From the 11/1979 issue of Trains: 

The messenger with the bad news was former Southern Railway chief W. Graham Claytor Jr, who served briefly last summer as Acting Secretary of Transportation in between being Secretary of the Navy and taking his newest Carter Administration post as Deputy Secretary of Defense.  He dispatched to Capitol Hill a DOT study of Lines West, commissioned at the request of an interested onlooker, Senator John Melcher(Dem., MONT.).  DOT staffers noting that the 4400 miles of the railroad between Minnesota and Washington accounted for nearly two-thirds of the system's loss in 1977, predicted that losses would continue on the lines, even excluding the cost of a 115-million-dollar rebuilding.  Claytor declared DOT opposed to any freeze on the existing railroad or Federal investment in it (systemwide rehabilitation is pegged at 1.092 billion dollars).

 

Bert

[Anonymous]

I disagree, based on evidence, that it was a viable or even potentially viable, enterprise. 

Is this enough evidence for you....?

I have to agree with Michael Sol that the Milwaukee could again have been a viable railroad.Container traffic out of Tacoma,coal from the Roundup,Montana mines,forest products from Washington,the SP connection at Portland,the connection at the Canadian border,grain from the Dakota's and Montana,etc prove to me that it could have worked.Better than the midwest lines in an area overrun with failing economies and lack of rail customers to keep at least 7 systems going.Plus the facts that the ICC,FRA,Democrats,Republicans,and the Supreme Court were willing to dump all kinds of money into the midwest,Conrail,and Amtrak,but not save the Milwaukee Road as a transcon system.Then you have the Milwaukee Executives deferring maintenance on physical plant and equipment and driving away business,just to prove their statements that the railroad would not/could not/should not make money on its own.Looks to me like a lot of the wrong people in the wrong places.I think they should be put out to pasture and bring back the Milwaukee Road as a transcon.

Bill does a nice job of summerizing just some of the evidence that the Milwaukee was predicated for success through the Northern Tier, probably in a better position than GN, definitely in a better position than either NP or UP.  But due to assorted malfeasance (mostly political) it was terminated unjudiciously.  If the Milwaukee PCE had been allowed to continue, it would probably be the dominate line for intermodal, although the likelyhood is that it would have been merged into UP or BNSF by now.

It should then be a shock to Ken that many parts of his so-called "unviable corpse" are either alive and well (Miles City to Twin Cities, South Dakota core lines, St. Maries River Railroad), have been seriously considered for return to service (Snoqualmie Pass line, Ellensburg to Lind, St. Regis to Spokane) or are currently being seriously considered for rebuilding (State of Washington rail plan. 

In addition, it doesn't take a genius to realize that BNSF/UP/MRL would be doing themselves a favor by rebuilding certain sections of the former Milwaukee ROW that are superior to those railroads' current alignments (Sixteen Mile Canyon vs Bozeman Pass, Missoula west, Marengo to Puget Sound, et al).

What Ken will never acknowledge is that oftentimes the best don't survive, while the lessers stay alive.

BTW - regarding total tonnage as the primary indicator of success:  Didn't the SP historically have more tonnage than the SF?  Yet the SF portion of BNSF is flying higher than the SP portion of UP!  Moral - it ain't tonnage, it's net revenue that counts the most.