CHAPTER  V

DISPOSAL OF UNPROFITABLE BRANCHES

The Gulf, Mobile and Northern’s branch line to Ellisville, Mississippi, had become unprofitable well before 1920.  This town, about eight miles southwest of Laurel, was on the main line of the New Orleans and Northeastern.  Practically all passenger business out of Ellisville had traveled over the NO&NE for many years; the timberlands along this branch of the GM&N’s rails had been bare for some time; and most of the freight service into the town was handled over the NO&NE.  The GM&N applied, therefore, in the spring of 1920, to the Interstate Commerce Commission for permission to discontinue service over this line and for authority to salvage its equipment.             

The Board of Directors had decided that the road should refund to the city of Ellisville or to its citizens a $4,000 construction bonus paid to the Company prior to its entry into the town.  The ICC gave its approval for abandonment of the line, effective December 26, 1920.  This the road proceeded to carry out in spite of an attempt by certain Ellisville citizens to obtain an injunction to prevent the abandonment.               

The Hattiesburg branch had also become unproductive to the GM&N because the more direct lines of the Gulf and Ship Island and the NO&NE controlled the major share of the rail business of this lumber center.  This branch line did have some value as a local unit because it served the Tatum Lumber Company mills and ran through territory unserved by any other road.   The GM&N arranged to lease this 26 miles of line to the Mississippi Central Railroad with the provision that trains of the MSC out of Natchez, Mississippi, could also operate over the GM&N from Beaumont to Mobile under trackage rights.   This lease and contract, which was for 3 years, became effective July 15, and the MSC actually took over operations in August 1921.

Since the GM&N obtained practically no revenue out of this arrangement, when the lumber company headed by W. F. S. Tatum offered to buy the Hattiesburg branch in 1923, the GM&N was quite willing to consider the proposal.  The MSC was either unwilling or unable to meet the price of $35,000 offered by Tatum, but it tried to prevent the sale.  The Interstate Commerce Commission finally approved the transaction with a provision that the Bonhommie and Hattiesburg Southern, as Tatum planned to call his road, should make an agreement with the MSC to allow the continuation of the Natchez-Mobile service.  This approval came in January 1925, and the Bonhommie and Hattiesburg Southern became the owner and operator of the Hattiesburg branch. 

MAJOR ADDITIONS TO THE ROAD

The Chickasaw spur near Mobile, about 4 miles in length, was started in 1918, during the wartime shipbuilding boom.  The GM&N purchased the right of way from its Frascati shops to the town of Chickasaw on the Mobile River, north of the city.  This line curved to the west around Mobile.  While the road was under government control, the federal managers refused to allow funds for completion of this line because it was “unneeded duplication of existing facilities.”  The Mobile and Ohio and the Southern Railway already served this area with their lines which were in the northern section of Mobile.  Because the road lacked funds of its own, the project was not pushed to completion while the government controlled the Company’s operations.  After the road reverted to private control, the immediate value of the project decreased greatly because of the decline in shipbuilding activity at Chickasaw.

In 1924, however, when the state of Alabama began plans to build its state-owned docks along the waterfront just north of Mobile, the GM&N immediately made arrangements to complete the Chickasaw spur to serve the new docks and other industrial development in that area.  The Louisville and Nashville also desired to use the spur along with the GM&N so it, too, could serve this new activity.  Work was begun in December 1924, and the spur put in service during the following year. 

At the time that Mr. Tigrett became President of the GM&N, the already close ties between the Birmingham and Northwestern and the GM&N became stronger.  The GM&N decided not to build its own terminal in Jackson, Tennessee, but to lease facilities from the B&NW, which had adequate space in its station for both roads.  In June, 1922, the Board of Directors of the GM&N drafted a plan to purchase the Birmingham and Northwestern; but because the plan proposed to issue 3,000 shares of stock in the GM&N to the stockholders of the B&NW, the Interstate Commerce Commission refused to approve the plan.  The N&NW refused the GM&N’s next offer, and the idea of purchase was dropped

This decision not to purchase did not destroy the working arrangements between the two roads.  In July, 1923, Mr. Tigrett was authorized to negotiate for new terminal facilities, with the GM&N paying a fair share of all costs on a lease basis.  A new purchase plan was proposed in 1924, and this time all parties agreed to the transaction.  The GM&N bought the bonds of the B&NW and took an option on 2,000 of the 3,000 shares of the B&NW stock.  These shares were to be bought for the nominal sum of $5,000.  The GM&N assumed complete control over operations in 1924 but did not change its corporate setup at this time.  In April 1927, the Interstate Commerce Commission authorized the GM&N to buy 2,090 shares of Birmingham and Northwestern stock.   After this purchase, the B&NW was operated under a lease agreement until 1929.  Finally, in 1929, the GM&N was allowed to merge the B&NW into the larger company. 

The Meridian and Memphis Railway was for all practical purposes a part of the GM&N in 1920, since control of the M&M had been acquired by purchase of all stocks and bonds in 1918.  The two roads were operated so much in common that in 1920 they issued joint tariffs, but no legal merger had taken place.  In 1921 the Board of the GM&N was advised that approximately $1,000 could be saved each month if a merger were completed.  Approval for the merger could not be obtained from the Interstate Commerce Commission, however, because the ICC was not allowing any mergers until the national rail consolidation plan was completed.   In 1923, separate operation of the Meridian and Memphis ceased and the GM&N operated this mileage under lease as a direct part of its own lines.  Finally, in 1929 the Interstate Commerce Commission gave its approval, and this small company was merged into the GM&N along with the Birmingham and Northwestern and the Jackson and Eastern.  

S. A. Neville, leader of the group of Meridian citizens who had developed the Meridian and Memphis, was also interested in the formation of the Jackson and Eastern.  A charter was secured to build from Union, Mississippi, to Jackson, Mississippi, and by November, 1916, the road had built the first 13 miles to the sawmill town of Sebastapol.  This short line served valuable timber interests, but it could not really be classed as a common carrier.  Sporadic efforts were made from time to time to extend the line, but little was accomplished before 1920.  As early as April, 1922, however, the Board of the GM&N showed its interest in seeing the Jackson and Eastern extended.  Because of this, the officers of the GM&N were authorized by the Board in September 1923, to lend the Jackson and Eastern up to $25,000 for building purposes.

The GM&N continued to advance funds for building and to buy Jackson and Eastern bonds up to a new maximum of $100,000.  In the first part of 1926 the GM&N worked out a purchase plan with the owners of the Jackson and Eastern to assume complete control of their road with its franchise to build into Jackson.  The objective of the GM&N was to rebuild the mileage already constructed and also to extend the line to Jackson, some 40 miles from the end of the Jackson and Eastern at Lena, Mississippi.   With this entry into Jackson, Mississippi, secured, the GM&N would be able to open up an entirely new phase of its operations.  Jackson was the northern terminus of the New Orleans Great Northern Railroad, which extended south to the city for which it was named.  The NOGN was eager to enter into a reciprocal traffic agreement to allow its freight to be hauled on north of Mississippi’s capital city by a partner other than the Illinois Central.  Through this combination, the GM&N expected, finally, to reach New Orleans and its extensive north-south freight movement.

Coupled with this extension to Jackson, Mississippi, and the New Orleans arrangement, was a plan to effectively extend the road northward beyond Jackson, Tennessee.  An agreement was reached with the Nashville, Chattanooga and St. Louis Railway which permitted GM&N trains to operate into Paducah, Kentucky.  The GM&N was to pay a specified price for each car of freight moved over this 145-mile stretch of NC&StL line.  GM&N’s own engines and crews would make this run.  Thus, the service capacity of the road would extend north to Paducah, even though the GM&N did not own or lease the trackage over which it was to operate.

This provision for freight movement to Paducah was only part of the story.  The new service pattern was to reach much farther because one of the Midwest’s stronger carriers, the Chicago, Burlington and Quincy had a line into Paducah which reached St. Louis, Chicago and almost all of the central Midwest.  A cooperative preferential traffic agreement would thus open New Orleans and the south to the CB&Q and the midwest to the burgeoning GM&N.  The struggling lumber carrier of 1920 thus would became a junior partner but still a major player in the rail systems of the great Midwestern part of the United States by these activities at the end of 1926.

All of these arrangements for expansion of the operations of the GM&N were made prior to approval by the Interstate Commerce Commission.  Actually, none of them could go into effect until the commission gave its assent to the plans.  Fortunately, the approval of the ICC was forthcoming and at the same time the Commission approved the acquisition and rebuilding of the Jackson and Eastern.

The GM&N—N&STL—CB&Q arrangement went into effect on August 1, 1926.  Operations to Jackson, Mississippi, and New Orleans were authorized to begin on July 1,1927.  Because of construction difficulties, it was July 17 before regularly scheduled freight service began over the new part of this line.