The Milwaukee Road Strikes Back

TheBatman · Sep 12, 2016

Kevin C. Smith said:
I just stumbled onto this thread so pardon if my comments kind of skip around.
Electrification: I have always felt that this could have been a real shot in the arm at just the right time for the MILW. Some butterflies need to come out but it could have been just the thing to wake up senior management that the PCE and the MILW as a whole had potential to stand alone. The timing of proposals to rebuild/extend the electrification coincide with the 1973 Oil Embargo closely enough to make it a wank. This proposal provides the funding for the electrical system (as has been pointed out, GE proposed a locomotive replacement plan that seems to have been workable). Look at the assumption for diesel fuel cost-nine cents a gallon! Assuming this proposal, dated 1969, were adopted in 1970, with a start date of 1971, and a completion date (as proposed) of two years time...the MILW would have had a new electrification system, closed the Avery-Othello gap, and acquired a stock of brand new motive power, just as prices for fuel jumped by about half, and interest rates (well, the prime rate, anyway)went from 8 to 11 per cent. MILW would have just locked themselves in to long term agreements for cheap power, cheap locomotives, and cheap fixed plant. The inflation of the next decade would have made this an even better deal.

Indeed. My thought is that the cost savings would possibly be enough for GE to come in and do a complete rebuild, such as that TheMann suggested.

Merger(s): I don't know if MILW-C&NW would have flown. Granted, they called it off over financing but I don't know if the ICC would have allowed as much cost cutting as anticipated. Even after the Penn Central debacle, the ICC still saddled to many other roads with too much unneeded mileage. Amtrak would have relieved the passenger losses. But the UP was going to scream bloody murder about losing a friendly connection at Omaha (CNW) to a competitor (MILW). Maybe, if the UP-RI merger had been allowed to happen before the RI fell to pieces, the C&NW would have been more amenable to terms and the ICC could bless the merger as a defensive reaction to UP+RI.

Or maybe when the MILW-RI merger rolls around, one of the concessions is that UP gets access to Chicago via the RI or CNW route, depending on what works better for the two other roads.

Kevin C. Smith · Sep 13, 2016

As far as the RI is concerned, remember that from 1964 to 1974, it was already tied up in merger proceedings with the UP & SP so it would not be available to the MILW. By the time the merger was approved, the RI was in such condition that they walked away from it (though the MASSIVE conditions attached to the merger were no help). Some form of Midwestern Conrail type of solution (dubbed "Cornrail"), post 1980 might work. You'll have to be careful though, about threading the C&NW's interest in the Powder River Joint Line into this time, though. If you can get a prompt, "clean" UP-SP/RI merger by, say, 1966-1968 then a C&NW-MILW merger may just go through. The biggest problem is that it is going to be a parallel merger instead of the end-on mergers of UP-SP/RI and the 1970 merger of BN. With the loss of UP's overhead traffic between Omaha-Chicago, the C&NW may make enough of a case to merge with a stronger MILW.

TheMann · Sep 13, 2016

A "clean" UP-RI merger is ASB, as it causes too many problems for other roads. UP-RI caused the hearings mayhem it did and had the conditions it did for a reason - SP, DRGW, ATSF, CNW and MP all wanted consessions out of it, and for good reason. One of the Rio Grande's bigger jobs was moving Rock Island loads between Denver and Salt Lake where SP and WP would pick them up to haul to San Francisco, Oakland or Los Angeles, while having direct Pacific Coast access via UP to Portland and Los Angeles (and eventually San Francisco/Oakland, which was gonna happen somehow at some point) would make like real hard for MP and CNW. UP-RI would force MP into somebody else and almost certainly force Southern Pacific into buying the Rio Grande, effectively creating a game of chicken between SP and UP and eventually also resulting in ATSF and MILW having to find help someplace as well.

If you're gonna go the Conrail route, you'd be best in such a scenario simply incorporating whatever Midwestern players are involved directly into Conrail itself and expand Big Blue rather than try to have lightning strike twice - Conrail only existed because the Nixon Administration didn't do what the AAR and Penn Central management wanted and simply cut them a monster check for infrastructure repairs, knowing the company's management problems. The odds of that being politically passable twice are effectively zero. If the Rock Island is in such shape, simply including it in Conrail and dealing with the squealing from Union Pacific and Southern Pacific that will invariably result is probably a better option, or taking the RI in and then selling duplicate portions of it to interested buyers (Santa Fe would definitely buy, Burlington Northern as well).

As pointed out, a CNW-MILW merger is not only a parallel merger, it also reduces competition for a large swath of Wisconsin, Iowa, Illinois, Minnesota and the Dakotas. The ICC isn't gonna like that, and they only allowed it then because of the idea that railroading was shrinking and that having that many lines didn't make sense. I still saw the Milwaukee Road is much better off merging with one or more of the granger roads of the Midwest. If you're going that route, Rock Island is your best bet.

TheMann · Sep 13, 2016

TheBatman said:
Indeed. My thought is that the cost savings would possibly be enough for GE to come in and do a complete rebuild, such as that TheMann suggested.

Yep, and huge reductions in fuel cost and a modern and paid for infrastructure will give the Milwaukee a massive advantage over BN on the Lines West, to such a degree that they could probably undercut BN's rates. Trust me, if you want to keep the Milwaukee Road alive and taking the fight directly to BN, you want them making a killing on Lines West, and this way they'll do just that.

TheBatman said:
Or maybe when the MILW-RI merger rolls around, one of the concessions is that UP gets access to Chicago via the RI or CNW route, depending on what works better for the two other roads.

That's a possibility, and it allows the Chicago and Eastern Illinois to become a conduit for Missouri Pacific to go to Chicago, thus allowing the MoPac to be a potential partner for East-West traffic for SP and/or DRGW, though that would require a line from Pueblo to Denver. That's not that big of a hardship, though.

TheBatman · Sep 13, 2016

Kevin C. Smith said:
As far as the RI is concerned, remember that from 1964 to 1974, it was already tied up in merger proceedings with the UP & SP so it would not be available to the MILW. By the time the merger was approved, the RI was in such condition that they walked away from it (though the MASSIVE conditions attached to the merger were no help). Some form of Midwestern Conrail type of solution (dubbed "Cornrail"), post 1980 might work. You'll have to be careful though, about threading the C&NW's interest in the Powder River Joint Line into this time, though. If you can get a prompt, "clean" UP-SP/RI merger by, say, 1966-1968 then a C&NW-MILW merger may just go through. The biggest problem is that it is going to be a parallel merger instead of the end-on mergers of UP-SP/RI and the 1970 merger of BN. With the loss of UP's overhead traffic between Omaha-Chicago, the C&NW may make enough of a case to merge with a stronger MILW.

the one big problem with that idea is that the MILW is left at a competitive disadvantage on all fronts, along with several smaller western class Is. Forget just the Pacific Northwest losing competition (as in OTL), but this bears the possibility of the whole west being ruled by one or two monopolies. The WP, MoPac, and DRGW are most likely screwed in this situation, as they'd be hard pressed to merge with both each other and the ATSF before the effects of a SP-UP-RI merger begin to set in.

TheMann said:
If you're gonna go the Conrail route, you'd be best in such a scenario simply incorporating whatever Midwestern players are involved directly into Conrail itself and expand Big Blue rather than try to have lightning strike twice - Conrail only existed because the Nixon Administration didn't do what the AAR and Penn Central management wanted and simply cut them a monster check for infrastructure repairs, knowing the company's management problems. The odds of that being politically passable twice are effectively zero. If the Rock Island is in such shape, simply including it in Conrail and dealing with the squealing from Union Pacific and Southern Pacific that will invariably result is probably a better option, or taking the RI in and then selling duplicate portions of it to interested buyers (Santa Fe would definitely buy, Burlington Northern as well).

I don't think I'll have to go the Conrail route simply because I plan on the MILW being under better management than OTL. Will it still struggle in the 70s? Only about as much as any other road, possibly more, but not so much that it will kick the bucket like OTL, so expanding Conrail is a very unlikely route at this point.

As pointed out, a CNW-MILW merger is not only a parallel merger, it also reduces competition for a large swath of Wisconsin, Iowa, Illinois, Minnesota and the Dakotas. The ICC isn't gonna like that, and they only allowed it then because of the idea that railroading was shrinking and that having that many lines didn't make sense. I still saw the Milwaukee Road is much better off merging with one or more of the granger roads of the Midwest. If you're going that route, Rock Island is your best bet.

But that idea that railroading was shrinking turned out to be the right one, as even to the present day you see more lines being shed by Class Is than added/built. And regarding competition, you still have the Soo Line, GBW, and CBQ in Wisconsin, Chicago Central/ IC and CBQ in Iowa (where some concessions will be made), BN, Soo, and others in Minnesota (where, ultimately, only a small chunk of the southwest would be without competition), and so many more in Illinois it's not worth counting. In the end, South Dakota is really the only state that would have a monopoly, and, being mostly branch lines, would probably regain competition once deregulation comes around.

I still agree that the RI is the best bet, but there's really nothing else the CNW can do in that situation other than merge, and I doubt the BN or IC would be better partners for that railroad.

Kevin C. Smith · Sep 13, 2016

Oops-I think I may have misrepresented the UP-SP/RI merger...The RI was to be split between UP (getting Chicago-Omaha main and lines north) and SP (getting everything south of Kansas City with, I think, trackage rights to Saint Louis. Not a merger of two companies but more of a voluntary dismemberment.

This would have given the western US: UP, now extended north and east to Minneapolis and Chicago; SP, now extended east to Kansas City and another entrance to Saint Louis; BN as is/was; AT&SF as is/was. The MILW is, indeed, down but not out. The C&NW may be down. Perhaps this may be enough to get the ICC to bless a C&NW/MILW merger...a lot depends on how you play the ICC's experience with Penn Central (parallel merger) collapsing during this period.

As you have pointed out, the regional lines (WP & D&RGW) are gonna be hurting. SP & AT&SF had filed for a joint takeover of WP in this period. I could see it happening-perhaps not an exact 50-50 split. Maybe the ICC might award majority/sole control to AT&SF as a western balance to SP's expansion east? The D&RGW is not so badly off. It really wasn't much of a through route for transcontinental traffic. It's most important function was shipping out mineral traffic, generally east, and it still has multiple, competitive connection for that. WP and D&RGW might want to merge together but I can't see that being viewed by either as a game worth the candle.

The big butterfly is merging/saving the RI. Without the RI's liquidation (and the MILW's coincident contraction), I don't know if you're going to get as friendly a federal government toward mergers and implementing Staggers Act deregulations. That may saddle the expanded western lines with many more redundant/low traffic Midwestern branch lines for far longer than OTL. Not enough to sink them in the short term but perhaps enough to cause long term financial pernicious anemia. You may have inadvertently firewalled the northeastern railroad problem, which sudden spread to the Midwest galvanized a lot of legislation that was ultimately beneficial industrywide-including more extensive mergers than, I think, we would have had otherwise.

No real problems with any of this...just some of the butterflies to consider.

TheBatman · Sep 19, 2016

Episode the next: Excerpt from March-April 1958
"President Murray Asks and Answers a Question... Is the Railroad Weather clearing?

In his first formal address, given in Milwaukee on January 30th, Leonard H. Murray gave an optimistic, if cautionary, speech regarding the future of the railroading industry. Expressing his opinion that the weather is clearing, he added: "I don't mean that the sun has come out and all the industry's problems will disappear, I am not in the least bit unmindful of the traffic trends on the railroads.

He went on to state the following reasons for the railroad's plight:
1. The industry has long been subjected to antiquated regulations and excessively burdensome taxes compared to their competitors.
While public discussion of the railroads' problems has been rising noticeably, he pointed out, "Just as Sputnik aroused the people to the dangers of a delay in the missile's field, so to will should the recent downturn in business draw the attention more sharply to need of equality in the competitive railroad field", Mr. Murray said.
The much-publicized hearings before the Senate Surface Transportation Subcommittee are another indication of interest in the railroad industry. Also encouraging was the letter sent by Guy L. Brown, head of the Brotherhood of Locomotive Engineers, to union locals suggesting that some labor agreements are outmoded and that railroad employees should consider changes.
2. The railroads have not continued to use their capacity to make improvements to keep up with changing times.
While railroads have invested over $13 billion since World War II, Mr. Murray noted that the industry has not kept up with its investments. Specifically, that progress on dieselization, improvements in classification facilities, and implementation of C.T.C. and radio systems, has stalled. However, he hopes that these problems will be worked out in the newly formed Special Committee on Railroad Research, which, with the help of seven other western railroads, will determine changes are necessary in order to keep pace with new competitive conditions.

Despite these concerns, Mr. Murray noted that there is still potential in the industry, and that there is plenty of opportunity for more traffic. The St. Lawrence Seaway should add a substantial amount of traffic to the great lakes area, and add to Milwaukee Road fright tonnage. On top of that, "war baby" crops of the early and middle forties are rapidly growing up. 200 million Americans by 1965, and a GNP of some $600 billion just naturally mean increased production and consumption of everything.

"These are the reasons for my cautious optimism," Mr. Murray said. "and I think this will pave our way going forward."

TheBatman · Nov 20, 2016

Briefly Noted:

Effective January 31, 1958, the following Divisional changes will occur:
The Spokane-Plumber Jct. and the Malden-Plumber Jct. lines will be transferred from the Rocky Mountain Division to the Coast Division. The Mobridge-Aberdeen line, the Linton-Roscoe, Orient-Roscoe, and Edgeley-Aberdeen branches will be transferred from the Hastings and Dakota Division to the Trans-Missouri Division The Terra Haute is consolidated with the Chicago Terminal, and will be under the supervision of the superintendent of the latter.
Effective March 1, 1958
The Hastings and Dakota Division and the Iowa, Minnesota, and Dakota Division will be merged into the Minnesota and Dakota Division. The Duluth Line and Twin Cities Terminal will be added to the Minnesota and Dakota Division.
These changes will result in the termination of the Iowa, Minnesota, and Dakota division, the Hastings and Dakota Division, the Twin Cities Terminal, and the Terra Haute Division. Personnel changes will be announced at a later date.

TheBatman · Nov 20, 2016

The State of the Company: Looking back on 1958 and the Outlook for 1959
In 1958, a critical year for all railroads, how did the Milwaukee Road fair? How was it affected by the national recession? And what is the plan forward for 1959? These questions, which are of paramount interest as the new year begins, are answered here by President Leonard H. Murray. In brief, here how he sums it up.
"Considering the depth and length of the recession, the year just past was a good one for the Milwaukee Road. Even though total revenues were off from those of 1957, I believe the infrastructure and equipment expenditures are well worth the price, allowing us to become more competitive when the economy bounces back."
"With the declining phase of the recession behind us and a gradual pickup underway, we look forward to 1959 with confidence that our revenues will be greater and that, despite increased costs on all fronts, earnings will also show improvement."

A Year of Expansion
Despite the recession, 1958 was a year of vigorous activity on the Milwaukee Road, emphasized by large investments in not only in new equipment, but bids for business, and, most notably, new classification facilities in Plumber, Idaho and Aberdeen, South Dakota. In March, while the economy was still declining, orders were placed for 1,200 new freight cars, which will cost $12,500,000, This was in addition to provisions in the year's original improvement budget for equipment purchases totaling $7,200,000. Of particular interest to the railroad and to the industry as a whole was the launching of Flexi-Van service before the year was out.
TO enable the traffic department to sell more economical and dependable service, the Road has established its own traffic research program to observe where better service can be provided, and how service can be expanded. At the same time, steady progress has been made on established modernization programs in the various departments which are responsible for providing and helping to maintain service.
Still further expansion along these lines is scheduled for 1959, the Road's board of directors having approved on Dec. 18 improvement expenditures for the current year approximating $30,000,000. Represented in the budget is an $8,000,000 for 800 new freight cars, and $12,000,000 to continue the work on the new Plumber and Aberdeen classification facilities.

Carl Schwamberger · Nov 21, 2016

Hate to intrude with a digression on this thread & would take a answer as a PM. Can any of the experts here give a quick explination how the South Shore passenger service has survived? The dynamics of the commuter population, & other economics escape me.

Thanks

TheBatman · Nov 21, 2016

Briefly noted:

Effective January 31, 1959
The Canton, SD-Marquette, IA line, the Plymouth, IA-Albert Lea, MN line, and Calmar, IA-Albert Lea MN Line will be transferred from the Minnesota-Dakota Division to the Iowa Division. A new Classification facility will be built at Canton, SD, and the one at Albert Lea will be expanded.
The Road's traffic research program has determined that seeking partnership with southern Granger railroads will provide mutual benefit to all parties, as combined they'll provide export opportunities from the gulf coast to the pacific northwest. They have also found that increased double track on our Chicago-Omaha, Chicago-Kansas City, and Chicago-Seattle main lines will provide greater opportunity for overhead traffic. They are also keen to expand modernization, such as the continued installation of CTC, on these corridors

Simon · Dec 31, 2016

Carl Schwamberger said:
Hate to intrude with a digression on this thread and would take a answer as a PM. Can any of the experts here give a quick explination how the South Shore passenger service has survived? The dynamics of the commuter population, and other economics escape me.

By South Shore you mean the one running in northern Indiana? I have some friends out that way which I might be able to hit up for some background information if it is.

Carl Schwamberger · Jan 1, 2017

Simon said:
By South Shore you mean the one running in northern Indiana? I have some friends out that way which I might be able to hit up for some background information if it is.

Yes. I tried to sift thru some web sites & Wiki, but it was not at all clear. Some how a passenger rail link between Chicago & three modest cities still exists.

TheBatman · Jan 1, 2017

If you look up "Northern Indiana Commuter Transportation District" you'll probably get some more info, also the Chicago, South Shore, and South Bend Railroad, which built the line and currently runs freight operations. and I WILL see if I have a book on it lying around, haven't had a chance due to near-constant travel and finals.

Ron Loge · May 31, 2017

Very interesting thread.

The Milwaukee in my opinion had two major problems by the 1970s. One being a large network of unprofitable branch lines in the upper midwest and two a senior management who thought railroading was a dead industry (due to the 1956 Interstate Highway Act) and were trying to sell the railroad to someone else.
On the CNW-MILW merger I fear that the worst case on this the ICC is slow in allowing abandonments of the large light density branch line network. Though the Milwaukee and the Union Pacific did have a few connections in the Pacific Northwest.

I am working on an Alternate History where the Milwaukee and the Rock Island merge in the mid to late 1990s. I start adjusting the timeline in the late 1970s.
I have the Milwaukee take the Existing lines minus light density lines option instead of the Core option they took. (Kind of after the ICC turned down the BN-MILW merger the management changes their mind and goes into survival mode). The Milw starts winding down operations on around 30% of the railroad instead of the 65% they did. Some lines are sold to Wisconsin, Iowa and South Dakota provide low interest loans to the Milwaukee. Which uses them for track rehabilitation. A modest USRA loan is obtained also. This USRA loan is used to eliminate additional slow orders and to order 30 SD40T-2s to replace SD40-2s that were being shifted to the growing coal business and the 10 SD45s which will be swapped to the CNW for SD45s with automatic train control. I have the Milwaukee spend the rest of the 1980s growing the coal, grain and container traffic and continue rebuilding it's mainlines. In 1987 I have the Milwaukee refinance the last of their debt and exit bankruptcy protection and start buying new locomotives (14 SD60s and 7 C39-8s). 1988 sees some more SD60s and C39/40-8s and a look at GE's super 7 series rebuilds. 1989 sees B32-8s and GP59s added and a GP40 rebuild program started based on the GP59 electrical system.
With the Rock Island I have the clerks go back to work around Christmas of 1979. This calms fears that the Rock Island was going to bust the unions ala the Florida East Coast and allows Mr Ingram to gain some more time from the bankruptcy judge. The BN-SLSF merger in Nov 1980 gives the RI a second chance to get overhead traffic from the ATSF. Which the RI works very hard to keep the Santa Fe happy. Then I have the sale of the RI's Golden State Route to the Cotton Belt happening in the first half of 1981 instead of mid 1982. This gives the RI $57 million to do rehab work and to carry them thru the 1981-83 recession. The 1982 merger of the MP-UP-WP gets the DRG&W working closer with the RI. The Rock Island spends the rest of the 1980s rebuilding their routes and working on growing their traffic base.
The first half of the 1990s sees the Milwaukee and the Rock Island continue to strengthen themselves. Then in 1994 the UP merges with the CNW and shortly thereafter the BN and ATSF announce that they are going to merge. Now the MILW and RI find themselves being very close to being left out and seeing the SP-DRG&W struggling. The MILW and the RI propose a three way merger with the SP.

Though it would have been interesting to see where the Milwaukee would have ended up. Had they took GE's proposal to rebuild the electrification and close the gap. And had the Milwaukee started a major tie replacement program in 1972 when they started seeing the traffic growth from the BN Gateways. I have a couple E33C models I want to convert to E50Cs with the idea that when the Milwaukee accepted the rebuild proposal they had GE build a handful (6 to 10) of the E60Cs with E50C style bodies to be used as heavy switchers and Patrol/way freight units. It seams to me that the regenerative brakes made up all of the power every eighth train needed (meaning no fuel costs for every 8th train). And by staying with electric operations that might have slowed down the locotrol operation expansion and maybe allowed the Milwaukee to avoid the derailment disaster in the fall 1973. Which drove away a lot of the overhead traffic. Then the Milwaukee could have continued building their traffic base and maybe delayed bankruptcy into the 1980s. It would have been great to have seen Milwaukee GM6Cs and GF7C electric locomotives pulling coal trains or double stacks.

TheBatman · May 31, 2017

Ron Loge said:
On the CNW-MILW merger I fear that the worst case on this the ICC is slow in allowing abandonments of the large light density branch line network. Though the Milwaukee and the Union Pacific did have a few connections in the Pacific Northwest.

That was an issue for most railroads at this time. Deregulation would lead to a lot of them being spun off as regionals, but until then, they'd have to suffer.

Some lines are sold to Wisconsin, Iowa and South Dakota provide low interest loans to the Milwaukee.

As those happened/are happening IOTL in South Dakota, it's certainly possible other states would take it up as well. I'm not sure if it'd be to the same extent, though. If you have a subscription to Trains Magazine, this was their cover story on one issue.

A modest USRA loan is obtained also. This USRA loan is used to eliminate additional slow orders and to order 30 SD40T-2s to replace SD40-2s that were being shifted to the growing coal business and the 10 SD45s which will be swapped to the CNW for SD45s with automatic train control. I have the Milwaukee spend the rest of the 1980s growing the coal, grain and container traffic and continue rebuilding it's mainlines.

30 seems kind of small to me, IDK. I assume by coal you're talking about the Powder River expansion? If it is, keep in mind BNSF is the largest coal hauling road because of that area, so major rehabilitation of the Cowboy Line would be necessary. I think the cost estimate was in the range of $500-600 million. That number is what caused the CNW to enter partnership with UP for the traffic OTL.

In 1987 I have the Milwaukee refinance the last of their debt and exit bankruptcy protection and start buying new locomotives (14 SD60s and 7 C39-8s). 1988 sees some more SD60s and C39/40-8s and a look at GE's super 7 series rebuilds. 1989 sees B32-8s and GP59s added and a GP40 rebuild program started based on the GP59 electrical system.

Not sure what the MILW had for dash 7s, so it might be better to stick with all new dash 8s. They also had a heavy favoring for EMD, although a lot of roads did until the 90s. IDK, seems solid.

With the Rock Island I have the clerks go back to work around Christmas of 1979. This calms fears that the Rock Island was going to bust the unions ala the Florida East Coast and allows Mr Ingram to gain some more time from the bankruptcy judge.

Easiest way to do that is to have the BRAC follow Carter's back-to-work order.

The BN-SLSF merger in Nov 1980 gives the RI a second chance to get overhead traffic from the ATSF. Which the RI works very hard to keep the Santa Fe happy. Then I have the sale of the RI's Golden State Route to the Cotton Belt happening in the first half of 1981 instead of mid 1982. This gives the RI $57 million to do rehab work and to carry them thru the 1981-83 recession.

IIRC most of the Rock's overhead traffic came from UP and SP. I believe ATSF gave MoPac most of their overhead, but the UP merger would leave the RI as the last option

Then in 1994 the UP merges with the CNW and shortly thereafter the BN and ATSF announce that they are going to merge. Now the MILW and RI find themselves being very close to being left out and seeing the SP-DRG&W struggling. The MILW and the RI propose a three way merger with the SP.

That would leave a BNSF-UP merger as the final consolidation, leaving the MILW/RI/SP at a seemingly disadvantageous position. There again, I'm sure people said that about BNSF when the western mergers went through IOTL

And by staying with electric operations that might have slowed down the locotrol operation expansion and maybe allowed the Milwaukee to avoid the derailment disaster in the fall 1973.

I've never heard of this. What happened?

TheBatman · Jul 20, 2017

ANNUAL REPORT 1959

A brief account of the Milwaukee Road's operations in 1959, prepared for employees
During the first six months of the year, traffic and income were maintained at a level appreciably higher than the previous year, with freight revenues increasing by $5,800,000. Traffic during the second half of the year, however, was slightly below average, not only due to the steel strike during mid-July, but also a severe drought in a wide area served the The Milwaukee road, causing significant decline in grain carloadings. Despite this, net income for 1959 was still one of our best years in the past 10 years.

The year would have been better if it not for the drought, indeed, even with a prolonged steel strike replacing the drought the company would have still done much better, because carloadings in most other commodities held up well for the year. As late as early June, crop and weather reports made it appear that an excellent harvest could be expected. Starting in early July, however, hot dry winds and inadequate rainfall destroyed nearly 1/3 of the crop in the Dakotas. Wheat and small grains in South Dakota took the hardest hit.

Thus during the last 6 months of the year, a period when traffic is normally it's heaviest, freight revenues and net incomes were rather disappointing, despite only being slightly below average. Although 1959 did not live up to it's potential, a number of basic improvements were completed or started which will have favorable effects in the future. The expansion of Flexi-Van operations, inaugurated earlier last year, has been gratifying. A new method of shipping automobiles has been developed which combines the best features of highway and railroad facilities. It has been instrumental in recovering an important source of business that previously had been lost to truck competition. Aside from the additional income this plan provides, it is hoped that it will pave the way for regaining other important traffic lost to highway competition. We have also gained and have begun exercising trackage rights to Louisville via the Louisville and Nashville. It is hoped that this bypass will give us greater interchange opportunities with eastern roads in the future.

Since the settlement of the steel strike, that industry has been operating at near-capacity, and The Milwaukee Road can expect larger shipments of raw materials and finished products from this source. There is every reason to expect that more normal conditions will prevail in the Dakotas and Montana than in 1959, and consequently, there should be an uptick in shipments from that area.

The economy of the nation as a whole is expected to maintain a level somewhat higher in 1960 than in 1959. It is anticipated that this will have a favorable effect on our carloadings.

The railroads are also pressing for passage of legislation that would end the artificial restraints on rail services preventing them from expanding into other markets. Removing these restraints would alleviate an inequitable situation - that railroads have to pay heavy taxes to help build highways, airways and airports, and improved waterways for their competitors. This injustice should not be compounded by denying railroads equal opportunity to use facilities their taxes help create and maintain.

There is a growing awareness on the part of the general public, government officials and others, of the legislative, regulatory, and labor problems that have seriously handicapped railroad operations in recent years. With increased recognition on the part of lawmakers that the railroads must have equal treatment with other forms of transportation, there is every reason to be confident that far-reaching and beneficial changes in those regulations and in public policies will result. - Marie Hotton, March/April 1960

RESULTS OF OUR OPERATIONS IN 1959

We took in: . . . . . . . . . . . . . . . . . . . . . . . . . . increase + or decrease -

Railway Operating Revenues: . . . $247,685,606 . . . . . . . . . . +$3,422,798
Other Income, Net: . . . . . . . . . . . . . . 4,740,136 . . . . . . . . . . . +1,851,962
TOTAL: . . . . . . . . . . . . . . . . . . . $252,425,742 . . . . . . . . . . +$5,274,750

-------------------------------------------------------------

We paid out:

Railway Operating Expenses: . . .$199,586,324 . . . . . . . . . . +$174,477
Taxes and Rents: . . . . . . . . . . . . . . 29,540,970 . . . . . . . . . .+1,561,002
Interest: . . . . . . . . . . . . . . . . . . . . . 11,823,459 . . . . . . . . . . . +443,349
TOTAL: . . . . . . . . . . . . . . . . . . . . $240,950,753 . . . . . . . . .+$2,178,828

-------------------------------------------------------------

Net Income: . . . . . . . . . . . . . +$11,474,989 . . . . . +8,971,108

Ron Loge · Sep 28, 2017

In response to a couple replies.
The coal traffic I was thinking about was Montana coal and not Wyoming coal. 5 coal mines in Montana were located within 50 to 70 miles of the Milwaukee's mainline. Plus the Tongue River Line/Railroad was to be build south from Miles City, MT.
When the Milwaukee decided to end the electrification they started using Locotrol radio control equipment. Initially there were some bugs, like losing radio signals in tunnels.
After the BN merger the Milwaukee gained several gateways as concessions. As a result the Milwaukee saw an increase in traffic on lines west to about 4.5 trains each way on average. In the fall of 1973 the Milwaukee and a lot of other railroads started discovering that the new jumbo covered grain hoppers did not like to be operated in the 25 to 40 mph range. The hoppers almost act like they are at a resonance frequency and almost bounce off of the tracks. The Milwaukee was ending electric operations (because some in management viewed the electrification as a difficulty to give a merger partner) and track speed on some of their mountain grades were 35 mph. So in a little over a months time in the fall of 1973 the Milwaukee dumped 31 trains. The service disruptions resulted in the electric operations being started up again and a lot of bridge traffic finding a different route.
The Milwaukee had zero dash 7 locomotives in real life. Due to the electric Boxcabs and Little Joes being built by GE the Milwaukee bought some GE locomotives and until the late 1970s mostly kept them on lines west. Plus the dash 8 model was not offered until 1989 or 90. So I figured that the dash 7s and 8s would be replacements for the U boats. Though trying to get the U boats to the late 1980s might be a daunting task.
I picked the number of 30 SD40T-2s for a couple of reasons. Under the Existing Lines Minus Light Density Lines option about 30% of the Milwaukee would be abandoned. I'm figuring the units freed up from the branch line abandonments would allow for the retirement of all remaining non EMD or GE locomotives. The Milwaukee served coal fired power plants in Ortinville, SD, Granite Falls, MN, Bayport, MN, Portage, WI and Weston (Wausau), WI plus maybe one or two more. The coal plant construction boom didn't happen until after the Three Mile Island accident which happened in 1979. I think I saw that the MILW reballasted 20 some SD40-2s for coal service. So 20 units reballasted and 10 SD45s loaned to the CNW to payoff horsepower hours gets me to the thirty number. Plus I figure the units freed up from the line abandonments would help the motive power shortage for a little while. Plus 1981-82 was difficult on corn shipments in Iowa because of the Soviet grain embargo because of the 1980 Olymipics and the Soviet Afgan adventure.
A former Milwaukee Road employee stated that the BN was only able to handle 80% of the Montana grain shipment in 1980 let alone the Milwaukee traffic.
I am confused where the notion that only one line can survive in a certain corridor. Do to the longer haul of the PCE the Milwaukee's Lines West was breaking even with one or two trains each way in the late 1970s (though they were deferring most of their maintance at the time on that line). If the Milwaukee could make more than it cost to operate and maintain the line I think it could still be operated.
My father (a former MILW lineman) told me that he had heard a story that Sealand wanted the MILW to operated a container train for them and the MILW turned them down. Due to the electrification the MILW already had quite a bit of clearance in their tunnels.

My Rock Island theory is still a work in progress. The September 1979 back to work order is the point I am going to start the diversion from the real timeline for the Rock Island and have the clerks return to work. After some discussion with a Modern SP modeler I'm shifting my theory slightly. After the BN-SLSF merger and the MP-UP-WP merger. I'm thinking a still operating Rock Island would become very interesting to the Southern Pacific. With the RI and SP possibly merging in the 1984 to 86 time frame instead of the attempted SPSF merger.

Why would the BNSF and UP merger have to happen and why can't their be more than 2 western lines? Other than the Overland Route what benefit would the BNSF get out of that merger. BNSF would already go to just about everywhere the enlarged SP would go other than Nevada and Utah.

Some general comments:
From what I have discovered the Milwaukee built the PCE in response to James Hill buying the CB&Q for the GN and NP which he already owned and that the MILW (or St Paul at the time) received quite a bit of interchange traffic from. Fearing that the GN and NP traffic would all be shifted to the CB&Q. The Milwaukee had two options: 1) stay a granger line and be dependent on farm crops or 2) build their own line to the west coast even though the Panama Canal was being built. The Milwaukee took the gamble expecting that frontier town growth would continue like it had since the 1870s. Town growth in reality slowed not to long after the PCE was built and overhead traffic didn't grow as much either because of the Panama Canal.

The CNW needed the UP to survive a lot more than the UP did. The CNW seemed to be merging with compeditators just to eliminate them (In my opinion). The CNW's purchase of GM&O stock appears to have been the thing that caused them to approach the IC for a merger.

martinroberts · Nov 29, 2017

Andras · Nov 29, 2017

You guys might like this old 50s promo film for the Milwaukee Hiawatha SuperDome train from Chicago to Seattle.

For comparison, Santa Fe's SuperChief and the California Zephyr (over three railroads)