A properly conditioned merger with a substantially strengthened Milwaukee
will actually enhance competition in the area........ICC on the formation
of Burlington Northern,1967
It could be argued that March 3, 1970 was the most pivotal day
in the history of the Milwaukee Road. On this day the Burlington Northern
was assembled from the CB&Q, GN, NP and SP&S railroads, the "Hill
Lines", virtually surrounding the Milwaukee. What may be surprising
to many is that the Milwaukee Road actually argued in favor of the BN merger,
after having asked for and received minimal concessions to protect itself.
Why would the Milwaukee's directors do this? Had they gone mad? Standing
by while their 10,000 mile railroad was surrounded by a 27,000 mile
Goliath? Unfortunately, David had been disarmed before the fight and herein
lies the story...
During the early 1950's, under the dynamic and forward thinking of President John P. Kiley, the Milwaukee had been aggressively modernizing it's railroad, rebuilding Bensenville and St. Paul yards into state of the art classification facilities, dieselizing before it's competitors, and revamping it's electrification system. Kiley was positioning the Road for greater competitivness in the future. All this came to end , however, on October 17,1957 when Kiley resigned from the Milwaukee. His leadership would be sorely missed, as after this point the Milwaukee seemed to lose it's focus on moving forward and meeting the competition head on. From now on, merger would be the driving force behind most everything the Road did.
William J. Quinn was elected to the Presidency by the Board of Directors on November 17, 1957. Quinn was relatively inexperienced in railroad matters having only been in the railroad industry for 14 years, starting as an attorney for the Soo Line before joining the Milwaukee's legal department. Quinn was, if anything, optimistic. Unfortunately, his optimism generally was based on: the regulatory environment which railroads operated under would be revised, and that merger was the panacea for the Milwaukee and the overbuilt Midwest. Dogged pursuance of these goals would prove to be the Milwaukees undoing.
Under Quinn and Chairman Leo Crowley the big push for merger began. The Road had flirted with the CNW in the mid 50's, then the Rock in 59, but as the 60's dawned, merger with the Northwestern was the number one goal in the upper floors of Chicago's Union Station. In 1964, the Milwaukee and Northwestern drew up a merger agreement that would form the new "Chicago, Milwaukee and Northwestern Transportation Company", with stockholders of the Milwaukee owning 63% of the new railroad. In March of 1965 the two railroad's Boards of Directors approved the creation of the new 21,000 mile railroad, and, after the approval of the shareholders, it was sent on to the ICC in May, 1966. Combination of the two roads would allow the consolidation of routes and facilities in many markets they both served, with the ICC estimating savings of 36 million dollars annually, while a Northwestern study showed a total increase in net income of nearly 54 million dollars, both astronomical sums for the time. These figures must be taken with a grain of salt however, as both the MILW and the Northwestern had been deferring maintenance since the merger proceedings began to boost apparent profitability. This strategy would come back to haunt both roads in the following years, especially the Milwaukee with it's greater number of mainline miles.
While these ruminations were going on, the ICC had another merger
case before it: The Hill Lines. Merger amongst the Hill Lines had been
tried twice in the past, both times failing in large part due to the serious
ramifications a combined system would have on the Milwaukee, especially
on it's "Lines West" .With the Northern Pacific to the south and the Great
Northern to the north, the ICC had always found the Milwaukee's position
untenable in the event of a Hill Lines merger, and the Milwaukee had protested
these earlier proceedings vigorously. However, this time the Milwaukee's
directors were involved in they're own merger proceedings and seemingly
felt it was best not to ruffle the feathers of their competitors as the
BN consortium had not voiced any concerns over the MILW-CNW alliance.
This latest attempt at merger of the "Hill Lines" was precipitated by a change in tax laws in the mid-50's. The Northern Pacific and Great Northern had long used the jointly owned Burlington to prop up their own balance sheets, in essence creating "phantom" profits. The Hill Lines had manipulated their profits by transferring traffic, car hire, etc, to their Burlington subsidiary.An example of this is NP shorthauling itself by interchanging much of it's eastbound traffic to the Q at Billings Montana instead of taking the long haul to Minneapolis. Since the NP and GN jointly owned the Q, any dividends paid by the Burlington went directly to it's two owners, giving the impression that all three were doing well, while in reality only the Burlington was due to these arrangements with it's owners. With the levying of heavy corporate earnings and dividend taxes in the mid 50's, the Hill Lines were, in effect, paying taxes twice on their earnings. The new laws put a dent in the charade of healthy profits, so the Lines were forced to merge.
While the BN merger proceedings were progressing, Milwaukee's upper management was giving it very little attention as the merger with the Northwestern occupied all their time and energies. Quinn had moved over to the Presidents Chair at the Burlington by this time and had been replaced by Curtis Crippen. Crippen had risen through the ranks of the Milwaukee and took up where Quinn left off concerning the merger. A statement he made in 1967 shows the mentality in the board room at the time: "all capital improvements we make will be directed toward the ultimate consolidation of the two roads." Maintenance would suffer.......
Fortunately for the Milwaukee, the two lawyers assigned to the BN merger proceedings were General Counsel Raymond Merrill and Western Lines Counsel Warren Ploeger. These two men, with no backing from upper management, nor even traffic studies from other departments, gave the Road it's chance to compete in the west. What they did was propose 11 "Gateways", interchanges, that would allow the Milwaukee to garner the long haul on much more traffic heading to the Northwest. The Hill Lines had "shorthauled" the Milwaukee for nearly 50 years after the new Extension nearly drove them into bankruptcy. They refused to set joint rates west of the Twin Cites, forcing the Milwaukee to turn over traffic there for transport west. This was a violation of ICC interchange rules as the Milwaukee generally had the shortest route, but for some reason the Road never pursued any action over it. The "Gateways" would unchain the Milwaukee and allow it to compete fairly for transcontinental traffic to and from Tacoma and Seattle, as well as force the BN to grant trackage rights to Portland, Oregon, Bellingham, Washington, and Billings, Montana. Before this, the only traffic the Road could access was online traffic and the Ports of Tacoma and Seattle. These were to be the only tangible concessions the Milwaukee would get from the upcoming BN merger. The BN immediately set about finding a way around them.
Meanwhile, the plans of management to merge with the Northwestern were coming together nicely. The two roads already had detailed plans for integration of employees, timetables and operations, and on Dec. 18, 1969 an ICC examiner recommended the combination of the two roads. With the approval of the shareholders it appeared the goal of the past decade had finally been achieved. The addition of the Northwestern would dramatically increase the amount of long haul traffic on the Extension, traffic going to the Pacific Northwest that CNW had been turning over to UP at Omaha. Consolidating operations would save vast sums of money as the two roads often had parallel mainlines and duplicate yards in the Midwest. With the merger seemingly in the bag, the Milwaukee reaffirmed its support of the BN merger, satisfied that with the Northwestern and the "Gateways" conditions, it was positioned to" give BN, along with Union Pacific and Canadian Pacific, all the competition they wanted".
It was not to be however. The stock prices of the two corporations had changed greatly in the years since the initial merger agreement, mainly a sharp drop in Northwestern's stock. The ICC ordered the two roads to reformulate the merger terms, which would substantially increase the number of shares the CNW would be required to trade for stock in the new company. Heineman was unwilling to change the terms of the exchange agreement stating "this merger cannot now be accomplished". Crowley and the board of the Milwaukee were unable to offer alternatives, so Heineman broke off talks.
The Milwaukee was stunned. This merger had been the crowning achievement that the Board had worked for for most of the decade. Everything else had been of secondary importance. No Plan B had even been envisioned. Now it was gone. The Milwaukee was left to stand alone against the BN with no plan of attack and no real studies done that showed what the implications would be. Maintenance that had been deferred through the 60's to enhance profits was slowly starting to catch up with the Road. In 1977, William Quinn stated the the Milwaukee's board in the 60's had been a "caretaker" board. Instead of aggressively going after traffic and improving the road, they merely waited for the panacea of merger. This set the stage for what happened in the 70's.
With the merger of the "Hill Lines" in March 1970, Quinn, pushed
out of the BN boardroom, returned to the Milwaukee as Chairman, replacing
the retired Crowley. Soon after settling into his office in Union station,
Heineman of the Northwestern called offering to sell the road to the Milwaukee.
Heineman had decided that he wanted Northwest Industries out of the railroad
business, and the company accountant had suggested selling the company
for half it's book value to the employees. Heineman knew that the Milwaukee
had been counting on the merger and had commited all its energies to it,
so he offered to sell the Northwestern for as little cash as possible,
with Northwest Industries guaranteeing the CNW's $340 million in debt.
The Milwaukee would be free to do what it pleased as there would not be
a merged board of directors to contend with as happened at Penn Central.
Amazingly, the Milwaukee's board rejected the offer. After touting
the benefits of the merger for the past decade, and with studies that showed
huge savings in reducing duplicate facilities while revenues would increase
sharply, they stated that even if the merger could" proceed on reasonable
terms, it provided no solution to the problems of the two companies". The
Company had decided that to survive it must " become part of a larger,
financially strong transportation system". The next day, April 3,1970,
the Milwaukee filed a petition to be included in the Union Pacific-Rock
Island merger. Nothing would come of it, but the mission in the boardroom
had obviously become one of finding a savior.
What is most troubling about this move, and later ones to be included in Burlington Northern, is that the Milwaukee wasted precious resources and time in trying to be forced upon another railroad that had no need or want of the Road. These actions would lead Ben Heineman to state, Quinn was pleasant enough to deal with, "but he failed his ultimate test for his own firm, for Quinn by nature was indecisive. He would not take risks."
With the BN merger, 10 of the 11 "Western Gateways" were opened. The Gateways had an almost immediate effect on the Milwaukee's revenues, but the full effect would not be realized until the access to the SP was secured in Portland. For the first half of 1970, the road, as a whole, had lost $6.7 million dollars, dropping to $1.1 million for the last six months while the country was in a mild recession. After the opening of the Portland Gateway in 1971, traffic from the SP further strengthened the Milwaukee's position. Soon, three trainloads a day were flowing out of SP's Brookland yard for points on the Milwaukee, much of it eastbound to the midwest. This access to Portland is something the Milwaukee had been trying to get since 1931, and it was paying off. The Portland Gateway gave the Road access to Oregon and Northern California by way of the Southern Pacific. SP was happy to work with the Milwaukee, as the UP was a natural competitor in it's own territories, and the BN predecessors had never been fair with rate divisions out of Portland to points east. The increase in traffic out of Portland often saw trains sitting at Brooklyn yard waiting for power, with SP units occasionally leading trains out to Chehalis Jct. to clear the yard.
Traffic was building, with container loads alone showing an increase of 60% over 1970, which had doubled the volume of 1969. The Milwaukee commanded nearly 80% of the traffic out of the Port of Seattle and nearly 50% of the total container traffic out of the Northwest. The Milwaukee ,if anything, had innovative people in the operations and marketing departments, as they moved quickly to embrace the new technology. A new 133 acre auto reload facility,largest in the area, had been opened in Kent Washington in 1969 which served much of the Northwest. Unfortunately, since this new yard was on the MILW/UP Joint line, UP had the option to purchase half of it, which it did. Even at that hundreds of carloads of new autos were flowing out of the Midwest factories over the Milwaukee's route west. Traffic from the "Gateways" was increasing at this time also, causing one retired BN dispatcher to state "The MILW was having BN for lunch"
Interestingly, during this period, 1971 and 72, the Company as a whole had lost 66,000 carloads, while traffic on the Extension was increasing prodigiously. The Eastern lines of the Milwaukee, with it's multitude of branchlines and short hauls were succumbing to the same forces that would drag the other Granger roads into financial uncertainty. The Rock had no one and would go down. The Northwestern had the UP to help keep it afloat. The Milwaukee had the Pacific Extension, and now was the time to take full advantage of it. The era of profitable granger roads was long over, giving way to long haul carriers. With the shortest, fastest, and lowest cost route from Chicago to the Northwest, the Milwaukee was ideally suited to compete in this marketplace. Instead, something strange happened. They threw in the towel.
The Downward Spiral
Worthington Smith became President of the Milwaukee Road on June
15,1972, replacing Crippen who moved up into the vice-Chairman's seat.
Smith came over from BN and knew Quinn well from his short term at the
CB&Q. Smith was brought in to revitalize the Milwaukee's marketing
efforts and he seemed an excellent fit as he had been both regional vice
president in Seattle and vice president of marketing at BN. However, some
odd things happened shortly after his arrival. Things that would put the
final nails in the Milwaukee's coffin.
Traffic systemwide would rebound to the tune of 47,340 cars for the year 1973, with Lines West and the new Louisville gateway, added as a condition of the Monon/Louisville & Nashville merger with trackage rights trains operating as of March 1, leading the way. Revenues for the first six months of 1973 showed a $23 million increase over the first half of 1972, the largest increase of any railroad in the country. The Milwaukee was pulling itself out of the abyss, however nothing was being done to sustain and continue this growth. Maintenance was still being deferred with derailments becoming more common. Branchline trackage that had been bleeding red ink for years were being operated as usual with few abandonment petitions being filed. By comparison, the CNW, no model of health itself, was aggresively attempting to trim its system map noting that 60% of it's trackage contributed 90% of its revenues.
In March of 1973, the Milwaukee filed a petition with the ICC requesting inclusion in Burlington Northern. This ran directly counter to what the ICC had envisioned for the Northern Tier of states. The Milwaukee was to be a competitor to the BN in this region, strengthened by the "Gateways" provisions of the BN merger agreement, not become a part of it. One has to think that Quinn and Smith's old friends at BN gave little more than lip service to this proposal, a point made by Mergers & Acquisitions magazine after BN broke off talks a year later, stating that merger "wouldn't be in the best interests of Burlington Northern or it's stockholders". The high costs of protecting the 14,000 Milwaukee employees would offset any benefits of a merger between the parallel lines.
During this period of merger talks, some statements were made and actions taken, and not taken, that seriously put into question what the motives of the management of the Milwaukee were at this time. President Smith was quoted as saying, shortly after the BN merger proposal, that the elimination of "redundant and unnecessary rail facilities is an absolute must for the future." The timing of this statement, coming as it did within a couple months of the Milwaukee's merger proposal, seems to show that Smith felt his railroad was redundant, while the traffic charts were showing otherwise. Granted, the Midwest was seriously overbuilt with mainlines, secondary mains and branches seemingly penetrating every corner of the region. To illustrate this, at one time, you physically could not be more than 12 miles from a railroad in the state of Iowa.This area was ripe for trimming, but merger with a larger road wasn't necessary for this as CNW was proving. Interestingly, the Milwaukee's transcontinental mainline, which every year since the early 60's had seen increasing traffic, really taking off after the BN merger in 1970, and added importance to the well being of the Road, was paralleled by only one other railroad. The proposed merger partner, Burlington Northern.
The Louisville Gateway was never really exploited. The Southern Railway was a willing participant in interchange traffic at Louisville, much as Southern Pacific was in Portland. However, Louisville was reached via the Milwaukee's "Southeastern" line, accessing the L&N trackage rights at Bedford IN. The Southeastern had never been much more than a branchline serving some coal mines in southern Indiana, and as such, was maintained like a Milwaukee branchline: Not very well. The Southern started sending a good volume of traffic the Milwaukee's way, but nothing was done to improve this line which had a capacity of only 9 million gross ton miles per year with some pretty shaky track. Track so bad that the Milwaukee refused to operate a circus train jointly with the Southern, afraid that the animals would run wild in the event of a derailment. The final straw would be when the Southern approached the Milwaukee about running a 48 hour train between Chicago and Atlanta. The Milwaukee, once famous for speed, could not enter the bargain as it took 48 hours for a train to travel the 343 miles between Chicago and Bedford alone. The Southern would seek out other alternatives and a golden opportunity for the Milwaukee was lost for want of pulling 343 miles of track out of the mud.
The most infamous descision, was made in February of that year. In that month, with copper prices at over a dollar a pound and 10 million pounds of it hanging over the Milwaukee's right of way in the west, the decision was made to shut down the electrification. The directors of the Milwaukee had decided that instead of spending money to maintain and improve the mainline through Montana, they would consolidate, either through merger or trackage rights, trackage with Burlington Northern. The ten million dollars they expected to garner from sale of the overhead trolley was a bonus. This fact was confirmed by Lines West General Manager Quentin Torpin stating that the directors felt that a fixed system such as the electrifcation would be an impediment to their consolidation plans. Note that this decision was made even before the petition for inclusion was presented to the ICC in March of that year.
Of interest is the fact that both the Milwaukee and an independant group called the "Northwest Rail Improvement Commitee" compiled studies that showed for the cost of $39 million the system could be renewed with new locomotives, power supplies, and also close the "Gap" between Avery ID and Othello WA, improving efficiency. Full electrification would have allowed $21 million dollars worth of diesel locomotives to be transfered to the eastern lines of the road, reducing the net cost to $18 million dollars. GE even formally proposed financing the project, understanding the Milwaukee's precarious position, but Chairman Quinn declined, stating that the company had "more immediate needs". He did admit however that at current traffic levels and fuel prices, the "re" electrification would have paid for itself in 11 years. Instead the company would end up spending $39 million, yes, an equal amount, to completely dieselize Lines West while receiving only about $5 million dollars for the copper scrap as prices had dramatically fallen. What is most incredible is that the system was shut down during the Arab oil embargo, which had caused the costs of operations of diesel locomotives to skyrocket while the costs for electricity stayed relatively stable.
On June 15, 1974 when the last electric run was made, diesels cost twice as much to operate as the electrics. In a study done by Michael Sol it was found that if the electrification, as it existed in 1972, operating at maximum capacity, with no additional locomotives, the savings would have amounted to $32.6 million at the end of 1977 and $67.8 million by 1980 factoring in the increases in diesel fuel costs. Renewing the system would have paid for itself in 4 years.
The final, and probably most damaging change made during this time period was the decision to turn away what the road termed "noncompensory" traffic. This traffic hasn't been specifically identified, but the company was known to refuse to supply cars to customers, as atested to by many agents that were "called on the carpet" for soliciting business and had cars refused them that were sitting in storage. By the end of 1974, the transcontinental line was down to two trains a day, down from 6-8 in 1973. The refusal of traffic would continue beyond the bankruptcy filing on December 17, 1977 under the direction of the trustee. This came to bear in 1975 when the company suffered a staggering loss of $25.4 million after carloadings dropped by 832,000 from 957,000 the year before. The actual loss for the year was $37.9 million, but the company took 12.5 million in profits from the Milwaukee Land company to cushion the blow.
The company had long taken profits from the Milwaukee Land Company to prop up profits in lean years. MLC, a wholy owned subsidiary of the railroad, had vast holdings in Idaho and Washington and in lean years stumpage rights would be sold to tide the company over. Examples are $8.9 million in 1973 to show a profit of 3.4 million and $21.9 million in 1974 to show a profit of 13.1 million. Instead of using this money to improve the railroad and it's competetive position, it was shown as profits and some of it was used to finance purchases of the Chicago Milwaukee Corporation, a holding compny formed in 1972. These sales were not reported to stockholders and would lead to trouble with the Securities Exchange Commision.
In 1975 the SEC would file charges in federal court charging that the management of the Milwaukee had "defrauded the company and it's shareholders by selling assets without informing the stockholders or the SEC, with deferring maintenance on the track facilities without proper disclosure, and of otherwise falsifying the company books." During the investigation, it was found that the MLC had "purchased" 12 million dollars in land from a company owned by Chicago Milwaukee Corp. as an investment. However, this land could not be identified. While the railroad was struggling and needed money to right itself, CMC was pulling money out of its subsidiary for its own use.
Possibly the most important information to come to light during the investigations was provided by testimony by Worthington Smith concerning financing of the Milwaukee's car fleet. The Milwaukee was justly famous for its huge fleet of homebuilt boxcars and the equipment trust certificates had long been paid off on them. Since there were no finance charges on these cars, they provided a higher return of net revenue. Starting in the early 60's however, the Milwaukee had started using these cars as a means of generating cash by rebuilding a portion of the fleet and reselling them to a financial institution. They would then lease them back with the cars never actually leaving the property. What started out small, in 1961such lease charges only amounted to $3 million, quickly grew to over $20 million in 1969. Each year more and more of the fleet would be rebuilt, sold, and leased back while new car purchases dropped accordingly. In 1974 the Road was spending more on it's old, rebuilt fleet than it was on new cars and by 1977 it was spending an astounding $65 million dollars per year for it's rebuilds while spending less than $20 million on new. It became a viscious circle where the company had to rebuild and sell cars to be able to pay the charges on it's existing fleet. This practice was likely the biggest single downfall of the company, as it deprived it of both money and an adequate, modern car supply.
The directors of the company entered consent decrees concerning the SEC's charges, pursuant to which the company agreed to pay contingent bond holders $3.9 million, with additional sums payable according to the future profitability of the railroad. The total settlement of $4.1 million was to be paid January 8, 1978.
Into the Abyss
1977 would be the year in which everything caught up with the
Milwaukee. Deferred maintenance had 4,000 miles of the railroad under slow
orders. The mainline through Montana was averaging a derailment a day.
Shippers routed their freight over rival lines as schedules became nonexistant
and transit times soared. Trains that once took 55 hours to get to Chicago
from the Coast were now taking 140 or more. Damaged freight totaled just
under $10 million for the year, compared with $3.6 million for much larger
BN. Derailment costs approached $4 million per month. Shippers were being
denied cars due to an equipment shortage, partly due to the Roads practice
of refinancing it's old car fleet, and partly due to a policy of parking
any cars needing more than $500 dollars in repairs. The locomotive fleet
was dying fast due to a "run to failure" policy where any locomotives with
a major failure were simply parked. Lack of maintenance and a brutal winter
soon had half the fleet stone cold dead. The company was out of cash and
a long, cold winter loomed ahead. On December 19,1977, the Chicago, Milwaukee,
St. Paul & Pacific Railway filed for reorganization with the Federal
Bankruptcy Court in Chicago IL.
The final chapter of the Milwaukee's history would seem to be simple and straight forward. The Road slimmed down to a 3200 mile Midwestern line, embargoing and abandoning all theunprofitablelines, and was taken over by the Soo Line in 1985. But were all the lines abandoned unprofitable? Was the company viable in it's Milwaukee II form? The answer in short is: No.
The ICC carefully auditted the Milwaukee's own books, which none of the auditors commisioned by the trustee had done, for the years 1976 through 78 and the findings were startling. They found that for some reason the Milwaukee had been double entering expenses on "Lines West". It has never been discovered who authorized this or who was doing it, but the ICC auditors found it and were able to derive accurate figures for profits on "Lines West". What they found was that instead of the terrible cash drain the trustee said it was, the Extension had actually contributed profits of $12.7 million in 1976, $11 million in 1977, and $2.9 million in 1978. It should also be noted that these three years were well into the decline of traffic on the western lines due to deteriorated trackage and transit times and the refusal by the company to supply cars to western customers. The ICC was so startled by these findings, they had another group of auditors go over the books just to be sure the figures were right. They were.
In 1978, lines west of Miles City MT had generated $150 million in revenues, but what is even more staggering is that the Road turned away $64 million in business due to a "lack of car supply" according to Paul Cruikshank, Vice President-Operations. If an adequate car supply would have been provided, "Lines West" revenues would have equalled those of "Lines East" while having only about 25% of the total route miles and 20% of the employees of the system. The Bankruptcy Court found that, on average, a carload of transcontinental freight contributed $1000 towards overhead while the same carload, handled only on "Lines East", contributed only $100. The ICC concluded that the drop from 1977 to 1978 was due to the trustee's practice of "discouraging traffic", which the Milwaukee's own management had started doing in 1974.
Unfortunately, this information was found too late as by now it was the end January, 1980. A group called SORE, Save Our Railroad Employment, had been formed by employees of the road and had considerable shipper and financial support. They proposed a railroad of 3550 miles out of the ashes of the Milwaukee, running from Louisville to Portland and including the Kansas City line. The ICC discovery that "Lines West" was profitable, even in its rundown state, was a relief to the SORE group as it would help their cause. Inexplicably, the ICC rejected the "NewMil" plan forwarded by this group as it felt it did not meet the 11% return on investment threshold that the ICC felt was necessary to attract capital. Nevermind the fact that two large banks had voiced their support for the proposal and the Milwaukee's main creditors supported either the "NewMil" plan or outright liquidation. Or the fact that it was the only plan to meet virtually all the Congressional mandates of the Milwaukee Road Restructuring Act and Section 77 of the Bankruptcy Act.
The Milwaukee would be restructured the way the trustee, first Stanley Hillman, later Richard Ogilvie, saw fit as the Milwaukee Restructuring Act had removed much of the ICC's authority over the matter. The Milwaukee II had been touted by the trustee as the profitable "core" of the railroad, however a study conducted by Booz, Allen & Hamilton at the trustees request found that the "core" was not viable. As it would turn out, this analysis was correct as in 1981 Milwaukee II would lose $82 million dollars, more than it had ever lost while it was only operating about 1/3 the total mileage. Not until the Grand Trunk entered the picture in 1982 did things start to look better, with loses dropping to $38 million, as the GT started putting traffic on the Milwaukee at Chicago for carriage to Duluth and interchange with it's fellow Canadian National sibling Duluth Winnipeg & Pacific. Not until CN decided it would be a good idea to have an "Iron Lariat" around the Great Lakes did Chicago & Northwestern or Soo line take notice. Not wanting an outsider in their territory, the CNW and SOO quickly bid the price far above what GT/CN was willing to pay, with the Soo being awarded the remnants of the Milwaukee on February 20,1985. CNW, which had offered $210 million more than the Soo was stunned by the decision. In a strange twist that could seemingly only happen with the Milwaukee, Judge McMillen, the Bankruptcy Judge in charge of the Milwaukee's reorganization proceedings, who had allowed the Milwaukee to be dismembered and reduced to a shell of it's former self, stated that he preferred the Soo's purchase plan because he had heard that CNW planned to abandon 1100 miles of track if they proved unprofitable. So ended the strange history of the Milwaukee Road. A history that began in Milwaukee WI in 1848. And ended on January 1,1986 as the Milwaukee Road was absorbed by the Soo Line.
The legend of the Chicago, Milwaukee, St. Paul & Pacific lives on. This article is dedicated to her employees who toiled against the odds, and in the end, were let down by their company.
The author would like to thank Michael Sol and David Sprau , without whom this article would not have been possible.
Copywrite 2000 Todd R. Jones
Do not reproduce this document without the express consent of the author.
(You may print copies for your own use. Not for distribution)