The Gulf, Mobile and Ohio
By James H. Lemly

 

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CHAPTER XV

 

Postwar Years, 1945-49

 

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:

 

 

To OUR EMPLOYEES:

 

During the first three months of this year we handled more tonnage than we did in the same period in 1945 - a war year.

We had twice as much gross revenues in the first three months in 1946 as we had in the same period in 1940, yet we had net earnings in 1940 and had a net loss in 1946 after applying the last wage award.

Actually, taking the combined figures of the Alton and the Gulf, Mobile and Ohio, we lost more than a half million dollars.  This means that out of our three months’ operation we not only earned nothing to pay dividends or to pay debts or to finance new equipment or to make other improvements-but we did worse than that-we lost more than five hundred thousand dollars.

During my long years as President of this company we have never had a parallel situation.  On numerous occasions we have lost money when traffic was light, but to find ourselves straining our plant and equipment to handle peak traffic which results in an operating loss is not only discouraging but alarming.

Please let me say to you that in so far as the Management is concerned we are going to try to live up to our obligations to our stockholders who have furnished the money to make the Railroad possible.  We had planned a program of improvements and expansion.  We had planned to add another passenger train between Meridian and Mobile involving additional expense and increased employment.  These and other steps will be abandoned.  I would feel myself lacking in candor and frankness if I did not say to you that in so far as we can possibly do so we shall curtail and diminish expenses wherever it is possible and whenever it may be necessary to do so.

 

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.

ATTACK ON MR. TIGRETT AND THE GULF, MOBILE AND OHIO FROM LABOR

 Reproduced in GM&O News for May 13, 1946

Mr. Tigrett Loses His Temper

President of Mobile & Ohio, a very prosperous railroad, threatens reprisals because of modest wage increases -

We have before us two copies of “The Rebel Route News,” a sort of “house organ” prepared by the Gulf, Mobile & Ohio for distribution among its officers and employees.

One copy is dated March 15, 1946.  It fairly oozes optimism.  “Your Company has entered the post-war era in the soundest financial and physical condition in its history.” That is for the stockholders.  Management has this to say about the workers: “It is fitting at the outset, to pay tribute to our employes who served so well and patriotically in the armed forces and then to those whose almost equally essential job it was to keep our railroad running.”

All this and much more of the most cheering character is signed by I. B. Tigrett, president of the carrier. 

.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   . 

Unfortunately, the issue of April 15, 1946 - just a month later -  sounds an entirely different note.  In between the two issues, arbitration boards and an emergency board had granted railroad employes what was obviously an inadequate increase in wages, but inadequate or not, the wage increase soured the temper of President I. B. Tigrett.  So much so, that on the first page of “The Rebel Route News” for April, be prints a threatening letter addressed to “our employes” and winding up with this paragraph:

“Please let me say to you that insofar as the management is concerned we are going to try to live up to our obligations to our stockholders, who have furnished the money to make the railroad possible.  We had planned to add another passenger train between Meridian and Mobile, involving additional expense and increase of employment.  These and other steps will be abandoned.  I would feel myself lacking in candor and frankness if I did not say to you that, insofar as we can possibly do so, we shall curtail and diminish expenses wherever it is possible and whenever it be necessary to do so.”

.   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .   .  

Of course, we all know what that means.  The railroads have asked the Interstate Commerce Commission to boost freight rates so as to give them a billion dollars in new revenues.  That’s probably 40 per cent more than the wage increases so far granted.

The ICC may be interested in President Tigrett’s declaration that he is preparing to take the wage increase “out of the hides” of his employees.  At the same time presumably he will accept the rate increase which he and other railroad presidents are demanding.

Substantially the same thing happened after the first World War, A government tribunal granted railroad workers a modest wage increase to take care of the cost of living.  The ICC promptly granted rate increases which were more than double the wage increases.

Everyone thought that would make the carriers happy, but it didn’t.  Instead, they started slashing forces along the lines now threatened by President Tigrett, and later on they filled the newspapers with propaganda in favor of wage cuts.

All this helped materially in precipitating the depression of 1921, and incidentally, the worst railroad strike in this century.  President Tigrett says he must take care of the stockholders because they provide the money which makes a railroad run.  That isn’t a very sound statement.  The people who patronize the railroads provide the money which enables them to run, and the railroad workers furnish the skill and loyalty needed to make the operation a success.

If he really wishes to safeguard the interests of his stockholders, President Tigrett will stop talking about starting a rebellion over a modest wage increase and settle down to the job of getting more people to patronize the Gulf, Mobile & Ohio, which is a great railroad, and under proper direction, can become greater. 

 

Figure 18

 

 

REPLY OF MR. TIGRETT TO ATTACK BY LABOR

GM&O News, May 15, 1946

To OUR EMPLOYEES:

 

The fine spirit with which our effort to reduce expenses has been met is a distinct tribute to the men and women who work for this Railroad.

For more than twenty-five years, the “GM&O Family” has struggled to build a worthwhile transportation agency.

As our credit standing has improved, fixed charges (primarily interest on debt) have been materially reduced.  They are now, in proportion to size and gross revenues, among the lowest of all the railroads in the country.

We have never paid official and supervisory forces excessive salaries.  On the basis of hours worked, many organized employees are better compensated than their immediate superiors.

We have furnished as good service and as much employment as our means would permit, and I think we have been reasonably progressive.

At the end of last year we had, in fact, reached the “soundest financial and physical condition” in our history.

Last month, however, “arbitration boards and an emergency board” made a wage award which, on the basis of payrolls for the first quarter of 1946, would cost us this year $3,400,000.

Our net earnings the last five years-years of peak prosperity have averaged only $3,000,000 per year.  This is, of course, all we have with which to pay debts, finance new improvements or to pay some return to our stockholders.

In addition to the wage increase, supplies we have to buy are costing this year fifteen per cent more than last year, when they were already high.

In other words, our operating result changed almost overnight from one of reasonable profit to a net loss.  Our problem was and still is real and serious.

When and what the decision of the Interstate Commerce Commission will be as to a rate increase no one knows.

In the meantime, we could not icily wait and indefinitely permit the further jeopardy of our solvency and usefulness.  We have, therefore, materially reduced expenses and shall continue to do so.

I am sure that the resulting hardship is of as much concern to me as to anyone except the affected employees themselves.  I know many of them personally.

But to continue to pay out more than we take in would be both unsound and untrustworthy.

We are ever mindful of the importance of the employees and the public to the success of this Railroad, and we would not minimize this importance any more than we would belittle the benefits which the employees and the public both derive from this Railroad.

I know a good deal about the desires and problems of the laboring man.  My Father, who was a country preacher of limited means, thought that the laboring man was misused, and my deep sympathies for labor were acquired at an early age.  Nothing has happened so far to change these sympathies, and I doubt that there ever will - not even the fact that the laboring man is now so frequently misled.

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.

Because the Interstate Commerce Commission gave rate increases to the railroads after labor’s wages were raised and because the GM&O was cautious in its incurring of expenses, the road ended 1946 with a net income about $90,000 greater than 1945.   By the end of the year, the Company could see its way clear to continue with some of its intended improvements.

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.

EXCERPTS FROM TESTIMONY OF E.  B.  DEVILLIERS
IN HEARINGS ICC FINANCE DOCKET

Nos.  16989, 16990

Prior to July, 1938, the interchange at Jackson, Tennessee between the GM&N and the M&O ran from 150 to 300 cars per month, but when the route into Paducah was discontinued the interchange with the M&O at Jackson, Tenn.  shot upward at a rapid pace, and before the end of the year 1938, practically equaled the previous interchange between the GM&N and its connections at Paducah, Ky.  I mention this particularly to show that we were successful in influencing the routing, not only via the junction that we chose but also via a particular carrier beyond the junction in spite of the fact that there were two other carriers operating from Jackson, Tenn.  competing for the traffic .  .  .  in connection with our recent acquisition of the Alton R.  R.  We made a study of the traffic of both the GM&O and the Alton, the purpose being to forecast what added traffic and revenues the combined lines could secure; what traffic then being received from or delivered to connections other than each other, could be secured for a longer haul, and what traffic would be lost in the event of the acquisition .  .  .  We estimated that the added revenue to the combined lines from a longer haul on traffic they were handling would amount to $2,729,000 annually.  This estimate was based upon the ability of the two lines when put together, to influence a longer haul on approximately 47,000 cars annually, .  .  .  During the first 6 months of 1948, or less than 1 year after the merger, we handled 27,707 cars from one segment of the line to the other, or at the rate of about 55,400 cars annually as compared with a total of 9,610 cars interchanged between the two lines during the whole year of 1945 .  .  .  In May, 1950, .  .  .  even with the drop in business we handled 4,575 cars from one segment of the line to the other, or at the rate of 54,900 cars annually.

 

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.

 

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