CHAPTER XV

1945

IN JANUARY, 1945, the Company completed its plans to dispose of the Millstadt branch, which was the last of the disposable properties of the old Mobile and Ohio.  The 8-mile branch was sold to the Columbia and Millstadt Railroad Company for $141,000.  This company had been created by citizens of the Millstadt area to acquire the line in order to keep it from being abandoned by the Gulf, Mobile and Ohio.

In the spring of 1945, at the same time that the GM&O was starting its merger proceedings with the Alton Railroad, the pressures brought on by World War II began to slacken.  Final military victory did not come until late summer, of course, but the struggle for production was definitely eased in the early months of 1945 and the railroads felt the difference.

The GM&O, like every alert business enterprise, was anxious to get busy on its postwar reconversion activities.  In the spring of 1945 the company initiated an extensive renovation program for its shops, buildings, and other physical plant? Most of the work was to he done by outside contractors in the various communities where the work was to be carried out.  This program, which cost $2,521,000, gave the railroad property a much-needed face cleaning and, in some instances, a face lifting.  Unnecessary sections of stations and other buildings were removed, the rest repainted, reroofed, or refinished, as the individual case seemed to warrant.

During 1945 the road received seven 1,000 horsepower Diesel locomotives which it experimented with quite extensively.  By the end of the year, orders had been placed for four 2,000 horsepower Diesel passenger units, for twenty 1,500 horsepower road freight Diesels and two more 1,000 horsepower Diesel switchers.  The operating department was convinced that the expected change to Diesel power would be reflected in impressive savings on operating expenses, and it was eager to make the change as rapidly as possible.

On August 1, 1945, Glenn M. White, the GM&O’s Treasurer, died.  With the passing of “Dad” White, as he was affectionately known, the road lost one of its most popular and versatile officials.  He had worked for the road since 1918 and had filled in at many spots in the Company’s operations over the years.

POSTWAR 1946

The big problem which Gulf, Mobile and Ohio faced in 1946 was the postwar inflationary pressure that mounted rapidly after the close of hostilities in 1945.  The road was caught between rapidly rising expenses and its wartime rate levels, which were not adequate to provide funds to keep the road solvent in the inflationary period.

Although the road ended 1945 with a net income of $1,444,000, this picture changed drastically when the railway employees of the country were awarded wage increases by various government arbitration boards.  Under the circumstances, the management of the road had to take prompt action to keep the assets of the Company from being drained away.  In the April 15, 1946, issue of the News, Mr. Tigrett tried to explain the road’s position to the employees.  His message said in part:

Apparently this statement by management did not appeal to some labor leaders.  The newspaper, Labor, published a long attack on the GM&O’s policy and on Mr. Tigrett.  This was reproduced in the GM&O News for May 15, as well as Mr. Tigrett’s answer or explanation.  The major items of both these articles are reproduced in Figure 18 and Figure 19.

  There was little that railway management could do to alleviate the economic squeeze in which the railway employee found himself, but the employee labor organizations continued their campaigns for other wage increases beyond those granted in late March and early April.  Finally, on May 23, all of the operating brotherhoods of the nation’s railways went on strike.  The GM&O’s employees were out for two days before action by President Truman sent the men back to work.  Unfortunately, the problems of railway labor relations had reached such a state that no road was able to handle its own employee affairs.  The national union leaders decided that their best interests dictated a strike of all the roads, and each individual road was helpless.    Since all important differences reached one or the other of a variety of government boards, only the government could handle these national problems.  In this instance the President was forced to act to avert nationwide disaster.

These labor differences could not fail to hurt any road, but in spite of them, the GM&O continued its progress in 1946.  Its plans for Dieselization of operations continued.  Orders were placed for eighty-one 1,500 horsepower Diesel freight locomotives, five 1,000 horsepower switchers equipped for road service, and five other 1,000 horsepower standard type switchers.    In addition to these orders, the company decided to buy, 1,420 new box cars, 50 covered hopper cars, 180 special box cars for automobile shipments and 4 new type roomette sleeping cars to be put in service on the St. Louis-Mobile run.

1947

One of the plans the Company had made for improving its operations was to break the bottleneck of Alto Pass hill by reducing the grade and installing new passing tracks.  When the road finally was able to consider starting this project, it was decided that the new Diesel locomotives could negotiate the grade satisfactorily; so the idea of cutting down the hill was discarded.  In order to let the Diesels perform more smoothly, however, the Company did install centralized traffic control through the hill and its surrounding area.  The entire 40 miles of line between Murphysboro and Tamms, Illinois, could henceforth be controlled by the dispatcher from his desk in Murphysboro.  The loaded trains going uphill no longer needed to fear having to stop before clearing the pass.   Traffic through the area was speeded up greatly as a result of this change.

During the year, the road continued its rail improvement program by putting down 52 miles of 112-pound rail and about 50 miles of 90-pound rail on the less heavily traveled section of the line.

Although the Alton acquisition was officially completed on May 31, 1947, there was much which still needed to be done to integrate the properties.  The Executive Committee of the Board met in July and discussed plans to acquire the capital stock of the Joliet and Chicago and the Louisiana and Missouri River Railroad.    The Company’s purpose in this move was eventually to dissolve these companies and thereby to avoid payment of income taxes and tile cost of paying dividends.  The plan which was later developed and put into use called for an exchange of GM&O bonds for the stock of these two lines.  At the close of 1947, the GM&O held 5,804 shares of Joliet and Chicago stock and 2,221 shares of Louisiana and Missouri River stock through this exchange offer.

Another project which was begun soon after the merger was the complete overhauling of the passenger equipment of the Alton sector of the line.  The work started with the Alton’s two fine passenger trains, the Ann Rutledge and the Abraham Lincoln, which by 1947 were both over ten years old.  This was to be a complete renovation for the purpose of adding comfort and beauty.  After these trains were finished, the other units were to be reworked as fast as the shops could do the work.

During 1947, the Gulf Transport Company acquired the franchise of the Dunbar Trucking Company.  This purchase added 790 highway miles to the lines, primarily in the area between St. Louis and Chicago.  Some of the Gulf Transport’s bus mileage which had proven unremunerative was dropped during the year so that bus highway miles dropped from 1,622 in 1946 to 1,494 in 1947.

In several other ways the GM&O was trying to make itself at home in the former Alton territory.  The road wanted to be connected with some type of agricultural development program in this area, even though agricultural production in Illinois and Missouri has been very high for many many years.  The program which was worked out was described in the News of September 15, 1947.  The announcement said:

In order to give recognition to farm men and women who have made worthy contributions to a more satisfactory living on their farms and in their communities, the Gulf, Mobile and Ohio Railroad in co-operation with the University of Illinois and University of Missouri Extension Services will institute a Farm Family of the Year award honoring selected agricultural families in the two states.  The winners will be given a five-day trip, May 9-13, 1948, in the Deep South, visiting Mobile, the Gulf Coast, and New Orleans.  .  .  .

The Gulf, Mobile and Ohio Land Company earned $32,673 in 1947, principally from oil royalties.   The Company sold 27,294 acres of its land in Wayne and Greene counties, Mississippi, but it retained 100 per cent of its mineral rights.  At the end of 1947 there were twenty producing wells on the Company’s property.

The GM&O’s equity in equipment was increased by $5,443,641 during 1947.  At the same time, the company had to issue $6,998,929 in equipment trust certificates and conditional sales agreements to help finance the flood of new equipment which arrived during the Year.

The Alton merger had hardly been consummated before new rumors began circulating about additional mergers for the GM&O Finally, in the August 15 issue of the News, Mr. Tigrett announced that talks were being carried on between the controlling interests of the St. Louis-San Francisco Railway and the GM&O which might lead to the merging of these companies.  No other announcement was ever made, but these conversations failed to develop a basis for consolidation.  The matter apparently has been shelved completely by the Frisco management, for since that time the Frisco has acquired control of the Alabama, Tennessee and Northern Railroad which connects the Frisco line at Aliceville, Alabama, with the port of Mobile.

The retirement of Vice-President and General Counsel  J. N. Flowers was announced to the Board on December 16.  Mr. Flowers had been associated with the management of the GM&O and its predecessors for forty-two years, so this action was not entirely unexpected, but it brought up sad memories nevertheless.  It also emphasized a problem which Mr. Hicks asked the Board to consider at this same December meeting.  Most of the executives of the GM&O had been with the road or its predecessors for many years.  This was also true of a majority of the salaried personnel.  The Board was asked to study ways of properly compensating these salaried employees through some type of retirement program.  A committee of Board members was selected to begin work on this problem; which would become more important as the ages of these employees increased.

At this same meeting of the Directors on December 16, the Board took a step which proved most popular with the Board and the common stockholders of the company.  A dividend of 50 cents per share was voted on the common stock of the Company and was to be paid on January 15, 1945.  This was an event that both the Board and the management had been looking forward to for thirty years.  Mr. Tigrett was the only member of the Board of the GM&N of 1917 who was still active with the company.  There were many stockholders; however, who had held on for that entire period, trusting that the decisions made in 1915-17 would someday prove to be correct.  The basic goal of the Company had never changed, although its policies and direction had been altered by the force of circumstances.  At long last the GM&O was a well-established, through rail system, operating between the Gulf ports and the nation’s biggest rail center at Chicago.

FIRST FULL YEAR WITH THE ALTON ROUTE-1948

The year 1948 opened on a note of continuing progress on the GM&O.  During 1947 the road had almost completed new teletype and telephone systems for the entire territory.  These systems, finished in the first weeks of 1948, were put in service immediately.  The teletype system was put in to speed the flow of information on traffic moving over the road.  Because of this speedier service, the traffic department was able to give much more complete information as to the handling of shipments, their time of arrival, etc.

The year’s operations brought added proof of the value of the Alton-GM&O merger.  During 1948 and later years, the amount of interchange business between the Alton sector and the former GM&O sector exceeded the conservative predictions of the GM&O Traffic Department.  Assistant Vice-President De Villiers summarized this phase of the Company’s operations in hearings before the Interstate Commerce Commission in 1950.  The pertinent part of his testimony is reproduced in Figure 20.

PROPOSAL TO SELL THE KANSAS CITY LINE

On March 4, 1948, the GM&O filed a petition with the Interstate Commerce Commission asking for permission to transfer its ownership of the Kansas City, St. Louis and Chicago Railroad to the Chicago, Burlington and Quincy and the Atchison, Topeka and Santa Fe (Santa Fe).  This was the outcome of the negotiations which began before the GM&O asked to merge with the Alton.  Mr. Budd of the Burlington had been interested in this Kansas City line of the Alton from the start.  The plan was an involved one, but basically the GM&O would turn over control of the line from Rock Creek Junction to Mexico, Missouri, to the Burlington.  The GM&O would retain traffic rights over the line under the plan.  The Burlington and the Santa Fe were proposing to spend millions of dollars to improve the line in order to make it suitable for high-speed passenger and freight service.  The Santa Fe was to use this line and the Burlington’s line from Francis to St. Louis for the purpose of entering St. Louis with both passenger and freight service.  The Burlington and the Santa Fe were to run joint passenger trains over the line, but their freight service would be handled separately.

Because of its help in getting the Santa Fe a high-speed line into St. Louis, the Burlington was to get trackage rights over the Santa Fe from Bucklin to Birmingham, which is just outside of Kansas City.  This would improve the Burlington’s Kansas City to Chicago service immensely by reducing its total mileage and by eliminating a 40-mile stretch of rough, crooked track between Cameron and Birmingham.  In effect, the Santa Fe was helping the Burlington get a more competitive line to Chicago in exchange for getting into St. Louis over lines the Burlington would control or own.

As one might expect, there was much discussion over this three-cornered proposition.  The GM&O’s prime interest was to divest itself of the Kansas City line, which did not seem to fit in with the north-south character of the GM&O’s main operations.  At the same time, it was keeping the right to solicit and haul freight from Kansas City to Springfield, Bloomington, and Chicago, as well as St. Louis.  The Alton’s Kansas City line was known by all operating men to be rolling and crooked, and therefore expensive to operate.  The Santa Fe and the Burlington proposed to remedy this at their own expense and still let the GM&O use the line for through freight.

The principal opposition to the whole plan came from four of the carriers which served St. Louis.  The Missouri Pacific, the Chicago, Rock Island and Pacific (Rock Island) the Frisco and the Cotton Belt Route seemed to think that the entry of the Santa Fe into St. Louis would bankrupt all of them.  These roads apparently did not object to the Burlington’s use of the line or to the Burlington’s getting a better line into Chicago.

The attorney general of Illinois opposed the proposal because he felt that the GM&O would lose business to the Burlington, and that the agreement would imperil the profitable operation of the GM&O through Illinois, which might lead eventually to abandonment of some of the GM&O’s mileage in southwestern Illinois.

The case was fought primarily on the question of the Santa Fe’s entry, into St. Louis, and on July 6, 1948, the Commission ruled against the entire proposal because of the prospective loss of business by the southwestern lines.  It was felt that the potential injury to these lines would do excessive damage to the general rail structure in the area.  The entry of the Santa Fe would not greatly improve service into St. Louis; therefore the petition was denied.  Three of the commissioners dissented, however, and stated that the potential losses were exaggerated, that the Santa Fe entry into St. Louis would improve transportation service, and that the proposal should be granted.

Because all of the phases of the proposal were interlocking and each was dependent on ICC approval for the entire project, the plan collapsed when the Commission rejected the Santa Fe’s entry into St. Louis.  The Burlington, however, was still interested in using the Kansas City, St. Louis and Chicago line to speed up its service into St. Louis.  The GM&O agreed to rehabilitate the line as soon as possible so that the Burlington could run 5 ½-hour schedules from Sock Creek Junction to Francis.  The Burlington agreed to pay (1) 50 per cent of the interest on the $2,093,800 of the Kansas City, St. Louis and Chicago bonds which were outstanding, (2) 2 per cent per annum on the cost of additions and betterments on the line, (3) 50 per cent of the joint taxes on the line, and (4) the Burlington’s share of joint maintenance with a minimum annual payment of 30 per cent of the total.

In keeping with these plans to improve the line, the GM&O in October, 1948, applied to the Commission for authority to acquire directly all of the properties of the Kansas City, St. Louis and Chicago and to dissolve that company.  It was not until 1949, however, that the Commission gave its permission to dissolve the company and to execute the Burlington trackage agreement.

By the end of 1948, the GM&O had received two more Diesel road switchers out of 16 units ordered that year.  With these units in service the road was moving 96.68 per cent of all road-hauled freight by Diesels, 76.35 per cent of all yard switching was being done by Diesels, and 99.50 per cent of all passenger service was Diesel powered.  Only one small combination passenger and freight run was steam powered, and so only .50 per cent of “passenger” service was not Dieselized.

The Gulf, Mobile and Ohio Land Company had 33 producing wells on its land by the end of 1948 and showed a net profit of about $95,000.  The GM&O was still making much more out of hauling oil over its rails than it was from its producing wells.  There were few, if any, indications that the GNMO would ever become another Union Pacific or Northern Pacific with fabulous oil lands producing tremendous wealth for the benefit of the railroad treasury.

1949

Operating revenues of most railroads moved downward in 1949, and the GNMO was no exception.  Its revenues dropped almost $8,000,000, but its expenses declined by only a little over $4,000,000.  The result was a rise in the operating ratio from 73.77 per cent in 1948 to 76.26 per cent in 1949.  It is interesting to note that it was not transportation expenses which forced the operating ratio up.  The transportation ratio in 1948 was 32.11 per cent; in 1949 it was held to the close figure of 32.30 per cent in spite of declining revenues.   This performance must be credited partly to the further expansion of Diesel operations and partly to the tight system of operations control which the GNMO had developed over the years.

The operating department had learned somehow to hold transportation costs down when revenues were down.  Probably one of the best devices in this effort was the elaborate and speedy system of reporting operating expenses to the Mobile office.  With this information constantly before him, General Manager Brock usually was able to find some way to keep expenses in check.

After much delay, the road in 1949 finally, received most of the equipment it had ordered in 1947 and 1948.  Twenty Diesel road switchers, 14 Diesel road freight units, and 1 Diesel passenger unit were received.  This enabled the road to convert all of its lines and operations to Diesel power.  On Friday, October 7, 1949, the last steam locomotive on the road was replaced with one of the new Diesel units.

The road also received 450 gondolas of 50-ton capacity, 50 mill type 70-ton gondolas, 300 box cars, 500 open hopper cars and 50 covered hopper cars.  The 4 light-weight roomette sleeping cars were still undelivered at the end of 1949.  In the annual report for 1949, management pointed out that 73 per cent of all the GNMO freight handling equipment was ten years or less of age, a truly remarkable situation for a major railroad.

The operating department experimented with head end-rear end radio by installing equipment on five locomotives and seven cabooses.  This equipment was to be used primarily on the run between Roodhouse and Kansas City, because of the great length of the trains on this part of the line.  All of the GM&O’s business between St. Louis and Chicago and Kansas City was consolidated on the trains through this section, and this resulted in very heavy movements in most instances.

Additional work was done on the telephone lines of the road as 787 miles of new circuits were installed.  Forty-six miles of 90-pound rail were laid in track, along with 20 miles of 112-pound rail and 28 Miles of 115-pound rail.  The 115-pound rail in reality was not much different from the 112-pound but was a new pattern with approximately the same strength.  The road has finally adopted the 115-pound style for regular use on all of the heavily traveled sections of the line.

The Gulf Transport Company decreased its miles traveled by about 12 per cent, but its revenues decreased by approximately 16 per cent.  It also was feeling the downturn in transportation business which was so evident in 1949.

The Gulf, Mobile and Ohio Land Company kept its revenue up, with a net of $100,357 earned from 37 producing wells.

After receiving ICC approval, the GM&O made final plans to start the Burlington trackage agreement on August 1, 1949.  It was estimated that the GM&O would receive approximately $375,000 per year under the agreement after the line between Kansas City and Francis had been improved.  Also with ICC approval, the GM&O dissolved both the Kansas City, St. Louis and Chicago and the Louisiana and Mississippi River railroads.  This left only the Joliet and Chicago Railroad of the three former subsidiary companies in the Alton system.

Even though the road did not earn as great a net income in 1949 as it did in 1948, the Board felt justified in continuing the dividends of 50 cents per share on the common stock of the Company.  This indicated that the management of the road was not too disturbed by the turn of events during this “recession” year.