The Gulf, Mobile and Ohio
By James H. Lemly

 

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Introduction

The roads you travel so briskly lead out of dim antiquity, and you study the past chiefly because of its bearing on the living present and its promise for the future.

 

                                                            --Lieutenant General James G.  Harbord

 

Burlington Ill Shop YardsTwo main purposes of this history of the rise of a rather small but significant segment of America’s major rail systems are clearly and concisely emphasized in the quotation repeated above.  The first purpose of this analysis of the Gulf, Mobile and Ohio (GM&O) was to “study the past” in order to gather together the basic facts about the growth of the Company.  The second objective was to examine the collected information in an effort to discover the main factors which were responsible for the growth of the Company in order to determine “its bearing on the living present and its promise for the future.”

The GM&O system increased from 409 miles of decrepit main line in 1920 to a comparatively strong road with 2,800 miles of main line in 1952.  Most of this mileage was added by acquiring neighboring or connecting lines which appeared to be as devoid of basic value as the parent road.  Somewhere in its growth program the GM&O tapped seemingly invisible sources to secure strength which enabled the company to develop into a major unit in the railroad network of the United States.

Many people have held the belief that consolidation of competing   or connecting lines offered the brightest hope for improving the operating efficiency and profitability of a number of the sick railroads of the country.  Since the GM&O was one of the most successful followers of the consolidation idea, its growth was discussed often when the problems of weak railroads came under consideration.   This analysis of the growth of the GM&O was designed to shed light on the importance of consolidation as one factor which strengthened the road in the period from 1920 to 1952.

In a period when many older and presumably stronger rail systems either were making slow progress or were losing ground financially, the GM&O was creating, out of bankrupt pieces of rail lines, a strong coordinated rail system, which, up through 1952 was successful financially.  Another of the unusual features of its growth was that this program developed out of a company whose assets were excessively weak.  The parent road was in such wretched shape in its early days that the major banking houses of the territory served by the road did not consider it a safe place even for operating capital.  In spite of this, in spite of the greatest depression known to American railroads, in spite of the opposition of some of the strongest railroad systems in the country, a merger program took shape and progressed to the position in which we found the GM&O in 1952.

For these reasons it was felt that an analysis of the factors which influenced the growth of this road might prove of interest, and be valuable, to students of the rail transportation systems of the United States.  Critics will be quick to point out that, because the circumstances surrounding the growth of the GM&O were unique, the growth of this system has no lessons for the majority of railroad enterprises in the nation.   This would be a valid criticism if the purpose were to hold up the GM&O as a specific example for other roads to follow.  Such, however, is not the plan of attack for this study.  Instead of the GM&O’s being used as an example, it will be used much as a guinea pig for experimental purposes.  The plan is to try to discover the factors which led to the success of this carrier so that those who are working on other railroad problems can determine whether or not they face similar situations.  Thus it will be the duty of others to determine for themselves whether or not the experiences of the GM&O may be of value in solving other specific cases.  

The Gulf, Mobile and Ohio Railroad Company was, relatively speaking, a very new railroad.  Its corporate operations began in September, 1940, when the old and famous Mobile and Ohio (M&O) merged with the younger and less famous Gulf, Mobile and Northern (GM&N).   Although the M&O was much the older of these two southern lines, the GM&N must be considered the “parent” road in this merger.  The M&O was in bankruptcy, and it had no effective corporate leadership.  The GM&N, although young, was financially sound, and it had a corporate management team which was determined to continue to provide its territory with the best transportation service commensurate with the ability of its shippers to pay for improved service.  Practically all of the effort in planning and executing the merger came from the management of the GM&N.  For this reason, a study of the growth of the GM&O must go back to the growth of the GM&N for its foundation.

The GM&N began its operations on January 1, 1917, as the result of a lengthy and drastic reorganization of the older New Orleans, Mobile and Chicago Railroad.  Because the railroads of the United States went under control of the Director General of Railroads in December, 1917, the GM&N had little time to improve on the predecessor road’s activities.  The company stayed alive during the years of World War I, but it had almost no control of its own affairs.  When the federal government turned the railroads of the country back to private management in March, 1920, the GM&N was, in effect, still a new, untried operating organization.  Since a new management was chosen to assume control of the affairs of the company at this same time, the date of March, 1920, was taken as the time at which this study of the growth program of the GM&N-GM&O should begin.

The early history of the lines which preceded the formation of the GM&N has not been ignored, but it was subordinated to the growth of the GM&N per se.  This was done in a conscious effort to devote the greater part of this study to the period of the greatest growth of the Company.  The early history of the road is not unimportant, but its later history holds more interest to students of railroad corporate affairs.

The history of other roads which entered the GM&O system was treated in a manner similar to the early history of the parent GM&N.  At least two of these roads, the M&O and the Alton Railroad, the latter of which was merged into the GM&O in 1947, had longer and more important careers than the Company which directed the merger program.  Both of these companies deserve to have separate studies made of their early years because both were major pioneer roads of great importance in their respective sections.  For various reasons, however, both roads failed to achieve and maintain a strong corporate position, and both passed under the control of the management team which had grown up through the smaller, but more aggressive, GM&N.

The study proceeds from March, 1920, through the formative years of the GM&N to the position of the GM&O in 1952.  The historical portion of the study is contained in Parts I through III.  Part IV, an analysis of the importance of consolidation in the growth of the GM&O, contains a summary of the factors which seem to have been most important in the development of the road.   Part V is composed of short histories of the “predecessor” roads prior to the time of their entry into the GM&N-GM&O System.      

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