Despite this patronage and other favorable developments on the operating side of the railroad, financial troubles continued to pile up. In June of 1935, the Milwaukee again filed a bankruptcy petition and then was operated under a trusteeship, not coming out of bankruptcy through reorganization until December 1, 1945.

During the early 40’s, the Milwaukee Road—and other railroads—did an awesome job of moving troops, materials and supplies for World War II. After the war came the relative prosperity of a postwar period.

In 1950, the Milwaukee celebrated its centennial, dating its history to that first train that ran in Wisconsin in 1850.

Not long afterward, the company embarked on a program of rebuilding freight yards into new, completely m o d e r n gravity-type freight classification yards, where most switching is done by a combination of hump and retarders. The Airline Yard in Milwaukee was opened in 1952, the huge Bensenville yard west of Chicago was rebuilt in 1953 and the St. Paul yard opened in 1956.

In 1955, the Milwaukee began operating the famous “Cities” trains over Milwaukee trackage between Chicago and Omaha, in an operation reminiscent of such famous— but by then vanished trains—as the Pacific Limited and others. The “Cities” are the City of Los Angeles, City of San Francisco, City of Denver, City of Portland and the coach train, the Challenger.

It also was in 1955 that the Milwaukee ran its last regularly scheduled steam locomotive, although the final steam run wasn’t to be made until March 16, 1957, since a few steam locomotives were kept for standby service after 1955.

Again, the Milwaukee was to find that property improvements and progress came side-by-side with financial problems—although the 50’s brought not disaster, but a decline. This was true in general of the entire railroad industry, not just the Milwaukee.

Several related reasons were behind the decline. One was that railroads, completely regulated and completely unsubsidized, were competing with modes of transportation that were mostly unregulated and that received direct or indirect subsidies from government funds. This competition grew in almost direct ratio to the rising level of Federal spending on airways, waterways and highways. For example, in a period when Federal waterway spending increased by four times, the ton-mile volume of barge lines also quadrupled.

It should be recognized, too, that the railroad industry had some other built-in problems that had largely been ignored during the postwar prosperity. This was shown in the railroad industry’s share of total intercity freight traffic, which fell from nearly 70% in 1944 to only 41% in 1962.

The passenger traffic decline continued in the 40’s and 50’s, primarily because of the inroads of automobile travel, partly because of the airplane. The family car’s share of intercity passenger travel rose from a wartime low of 58% in 1944 to about 90% in 1962.

From the late 50’s to 1961, railroad industry employment was cut by one-third, industry net income fell by 58% and the industry’s freight revenues dropped significantly, even though these were years when the nation’s overall freight traffic volume was growing strongly. Then the Milwaukee—and other railroads—began to fight back.

the 1940's ...

... and 1950's

Photograph:

- Milwaukee's other early diesel

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