The Milwaukee began to encounter annual deficits beginning in 1921 (from that year through 1940, the railroad was to have only three years of deficit-free operation, annual deficits in those years reaching as high as $20 million). In 1924, some sizeable debt came due and, with the weak state of the railroad’s finances, this could neither be paid nor financed. Only one answer was possible: bankruptcy. It came, by vote of the board of directors, on March 17, 1925.

On March 31, 1927, the Chicago, Milwaukee, St. Paul and Pacific Railroad Company was organized to acquire the property of the previous company, which it bought that November in an auction held in Butte, Mont.

After Interstate Commerce Commission approval of the corporate transfer, the reorganized company took possession of the former’s property at midnight, January 13, 1928. Elected president was Henry A. Scandrett, a former Union Pacific vice president.

The company hoped that reorganization would leave it financially strong enough to survive. However, the Depression of the 30’s followed on the heels of reorganization.

Bankruptcy...

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