The Gulf, Mobile and Ohio
By James H. Lemly

 

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CHAPTER IX

Other Railroads Interested in the Gulf, Mobile and Northern, 1920-30

 

First Issue of GMN NewsIt is axiomatic that major railroad systems strive to reach as many important transportation centers as possible.   Deep-water seaports have always been considered among the best termini which railroads could possess, since the rails thus have access to waterborne commerce.   Because of this fact, the Gulf Mobile and Northern, with its southern anchor at Mobile, has always had an attraction for several rail systems.   Although the Company was in such shape financially in 1920 that no outside road seemed to be interested in saving it, this condition changed as soon as a measure of prosperity returned to the line.

The Illinois Central began to show its interest in the GM&N soon after the GM&Nís Jackson extension was opened for service in 1919.   Not only did the GM&N serve the port of Mobile, but it also served a section of Mississippi which the IC could not easily serve over its existing lines.   For these reasons, the IC was willing to help the GM&N in several ways.   The GM&N received its best offer of rate divisions from the IC, in the years from 1920 to 1925.   This was especially true for lumber moving to northern markets.   As a result, during the early years of the 1920ís, most of the GM&Nís northbound traffic moved over the IC north of Jackson, Tennessee.   The IC also gave the GM&N the benefit of low rates for coal shipped over the IC from the Kentucky coal fields.   This exchange worked very well for both lines: the IC thus secured the haul beyond Jackson of the GM&Nís lumber, and the GM&N secured the south-end  haul  on IC coal.

When H.  G.  Sparks died in 1922, it was to the IC that Mr. Tigrett turned for his new operations chief.   When P. E. Odell came to the Company, he brought a number of assistants with him.   These men rapidly became important elements in the GM&Nís operations.   Such contacts, of course, strengthened the friendly ties between the two roads.   Soon the GM&N was buzzing with rumors that the IC was planning to buy the smaller road.   In 1923 such talk apparently reached a climax.   Mr. Tigrett reported that he knew of no plan for such action.   Before the attendant gossip quieted down and the employees again turned their minds back to improving the GM&N, Mr. Tigrettís statement had to be given wide publicity in the newspapers of the region.

The close operating and traffic ties between the two lines continued, however.   As has been mentioned earlier, when the GM&N went into its fuel conservation program, the IC loaned its technical experts to help teach better operations to the men of the smaller line.   The GM&N availed itself of IC specialists on safety programs.   In several instances, the GM&N News commented on the fine work which the IC safety engineers were accomplishing in GM&N territory.

For reasons best known to its own management, the IC never did exert itself to acquire control of the GM&N, although it did proceed, in the early years of the 1920ís, to buy control of both the Gulf and Ship Island and the Alabama and Vicksburg, two other small lines which operated in Mississippi.

When, in 1926, the GM&N announced its intention to seek access to New Orleans by way of Jackson, Mississippi, the friendship of the IC for the smaller road ceased at once.   After this date, the two roads became bitter rivals in their quest for additional traffic, even though the IC still thought of the GM&N as an upstart log line which had no place in through freight movement except at the consent of the IC.

Under the circumstances, it was only natural for this change in relationship to take place.   The IC had long looked upon itself as the principal mover of New Orleans freight, east of the Mississippi River.   Moreover, prior to the entry of the GM&N into the growing city of Jackson, Mississippi, the IC had no competition in that area.   When the GM&N invaded both Jackson, Mississippi, and New Orleans through its arrangements with the New Orleans Great Northern, the IC looked upon this action as an affront and an injustice.

The GM&N, of course, had long known that it had to secure new tonnage from some source to offset its timber losses.   The managers of the Company knew that nothing could have suited their needs better than to open up a new territory and at the same time reach New Orleans under conditions which would cause the Chicago, Burlington and Quincy to make a reciprocal traffic agreement for north‑south traffic.

The interest of the Burlington in the GM&N dates from the time such a reciprocal agreement was reached.   Its cause was the desire of the Burlington to see a friendly road soliciting freight in the central Gulf ports.   Much of the Burlingtonís Midwest freight moved to one of the southern ports.   Any increase in this movement of freight either north or south would help the revenues of the line into Paducah which the Burlington owned.   Since both the Burlington and the GM&N had everything to gain and not much to lose, this tie‑up was a very natural development.

In order to be in a position to know what the GM&N was planning to do, the Burlington decided to start buying an interest in GM&N stock.   There was no apparent intent during the decade of the 20ís for this interest to be increased to control of the GM&N.   Perhaps the main reason for this restraint, however, was the fact that GM&N stock was not selling at depressed levels in the years between 1926 and 1929.   The Burlington may have felt that acquisition of the GM&N would have been too costly at that time.

The only other major railroad which had a direct monetary interest in the GM&N between 1920 and 1930 was the St. Louis-San Francisco.   This road had begun stock purchases in the old Mobile, Jackson, and Kansas City in 1906. A few years later, it owned about 56 per cent of the stock of New Orleans, Mobile and Chicago.   In 1911, it had sold one-half of its interest to the Louisville and Nashville, and for a short period these two companies dominated the operations of the smaller line.   As all New Orleans, Mobile and Chicago stock was wiped out in the reorganization of 1915-16, the Frisco lost its investment and its control.   This financial loss, however, had not ended the Friscoís desire to gain access to one or both of the Gulf ports of Mobile and New Orleans.   As a result, in 1929 the Frisco once more began to buy stock in the GM&N. Its purchases were not sufficiently large to get representation for the Frisco on the GM&Nís Board, and the advent of the depression effectively blocked further Frisco buying after about 10 per cent of the GM&Nís stock had been secured.   Actually, the Frisco had never openly acknowledged its purchases, which had been made by a broker.   In the years following 1930, this activity by the Frisco was to be strongly condemned by the Interstate Commerce Commission because most of the directors of the Frisco had been unaware that the stock was being bought.   Finally, a lawsuit was resorted to in an effort to see if the Frisco or the broker actually owned the stock.   After much litigation, the stock did pass to the control of the Frisco, which still held it in 1952.

In spite of these evidences of stock ownership by other roads, the GM&N charted its own course in the years before 1930.   The Directors were always free to choose the course which they felt was to the best interest of the GM&N.   This does not mean that the GM&N acted without regard to the wishes and interests of other roads.   For instance, only the Companyís great need for more revenue would have caused it to anger the IC by ďinvadingĒ its territory in 1926.   Its desire to stay alive was greater than its desire to live peacefully with its neighbors.   Again, the GM&N was quite ready, and even eager, to do anything reasonable which the Burlington felt might improve the traffic for either line.   The same situation was true with the New Orleans Great Northern, which was a vital link in the three way agreement which connected New Orleans with Chicago and the Midwest.   None of these roads, however, had representation on the Board of Directors of the GM&N, and the road was truly a free agent during the decade.

 

 

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