The Esch Cummins Act: US Railroad Consolidation program

[Duke Andrew of Dank]

Great TL! Is always good view a ATL about railroads. About the railroads in this TL, apart of modernization of steam fleet, ocur some kind of expansion of electrification in P.R.R./Milwaukee Road/NYC?

And about the High Speed Trains, is have curiosity for what type of models of trains used? They look like the TGV/Shinkansen? or are models completely different?

The PRR would attempt to electrify their entire mainline, but their resources would be exhausted by getting to Pittsburgh, so they would instead do HSR.

I was thinking in some cases, the HSR trains would look sort of like a mix of brightline and the TGV duplex.

 

[Duke Andrew of Dank]

Additional details, Part 1:

• When the Indiana Railroad Interurban began to be taken apart due to poor profit, the railroads began to try and secure parts of them for themselves. First, the Nickel Plate received The Indianapolis and Louisville Traction company. Enabling them a place on the Chicago- Louisville market. Next, the Pennsylvania Railroad purchased the Indiana service Corporation for its line from Ft. Wayne to Logansport, which it would link it its line to Indianapolis.
• Following its acquisition of the Indiana Railroad between Logansport and Ft. Wayne, the PRR purchased the Toledo and Indiana. Which ran from Toledo to Bryan, also in Ohio. From there it proceeded to purchase farmland the Toledo and Indiana failed to acquire in 1905, and link Ft. Wayne and Bryan. Thus enabling the Pennsy to operate Detroit- Louisville trains on an around the clock basis. Today, this is still a major corridor for Pennsy operations in the Midwest.
• The Nickel Plate Road purchased the Ft. Wayne and Western Interurban line between Ft. Wayne and Muncie, IN for their own use to make a better link between Chicago and Cincy via Ft. Wayne (which ITTL, is Indiana's largest city rather than Indianapolis). After the acquire the Chesapeake and Ohio in the EC Act, all C&O Chicago- DC trains are rerouted over this line rather than running over the New York Central via Indianapolis.
• The Soo Line eventually purchased the North Shore Interurban in 1945. Allowing them to reroute their mainline through Milwaukee, WI.

 

[Oldbill]

Years ago ((1998) when I was still sailing we stopped to load cargo at Two Harbors Minn. and I got a look at the DM&IR Yellowstone Mallet 229. What a wonderful, massive piece of history. Took a couple photos of it and some other vessels and locomotives there.

 

[Kevin C. Smith]

Well, this is a topic about which I have despaired about boring AH.comers with, but since you opened Pandora's box, punch your tickets, it's going to be a bumpy trip.

I have long been fascinated by the consolidation proposal of the Esch-Cummins Act, especially coming at the same time as the 1921 Railway Grouping Act in Britain, and the nationalization of the Canadian Northern and Grand Trunk/Grand Trunk Pacific Railways. The difference between the US/foreign versions is that, in Canada, the Canadian National Railway continued Canada's railway development of transcontinental systems (which begun with the Canadian Pacific Railway), and the British railway groupings melded together a couple of systems (LNER, and LMS) that had already been working long distance traffic (London/Scotland).

In contrast, the Ripley Plan, and the subsequent ICC Consolidation Plan were built around trying to build more balanced systems within already established geographical areas, the idea being to retain/enhance competition within those areas, and-more importantly-make sure that all carriers within those areas had sufficient size, and traffic to maintain a reasonable profitability.

I have always thought that this would have been a opportunity to propose a “Canadian” approach to the situation, and assemble multiple transcontinental US RR systems. This would better combine weaker & strong roads into more balanced systems. Since this intro has already gone on too long, let us skip additional rationales, and move (in general terms) to the systems themselves. Using 1929 as a starting point, for the reasons that: 1) It was about the time of the ICC's released Final System Plan, 2) It is the latest “normal” year before the Great Depression & WWII, and 3) That is the date of the book I had to hand with the financial numbers.

-As far numbers go, these are very rough, in that a number of subsidiaries are carried in different ways, so I may not have collected them entirely accurately. I also have used more recent names of some RR's, rather than list all their constituents separately (example: “GM&O” instead of “C&A”, “GM&N” and “M&O”).

System #1: Pennsylvania (with Long Island), Rock Island, Southern Pacific, Cotton Belt, Rio Grande, Chicago & Eastern Illinois, Toledo Peoria & Western, and ½ of the Northwestern Pacific.
-38,455 route miles
-$2.375 billion capitalization
-$123.8 million net income

System #2: New York Central, Pittsburgh & Lake Erie, Virginian, Union Pacific, Western Pacific, Rutland, and an expanded Chicago St. Paul Minneapolis & Omaha (see note below).
-25,642 route miles
-$2.637 billion capitalization
-$139.4 million net income

System #3: Baltimore & Ohio, Reading, Central RR of New Jersey, Missouri Pacific, Northern Pacific, Duluth South Shore & Atlantic, and a truncated Chicago & North Western (see note below).
-34,907 route miles
-$2.887 billion capitalization
-$83.3 million net income

System #4: Nickel Plate, Lehigh Valley, New Haven, Milwaukee Road, Gulf, Mobile & Ohio, Ann Arbor, Minneapolis & St. Louis, Detroit Toledo & Ironton, Duluth Minnesota & Northern, Missouri-Kansas-Texas, Duluth & Iron Range, Lehigh & Hudson River
-29,061 route miles
-$2.133 billion capitalization
-$57.4 million net income

System #5: Erie, Burlington, Boston & Maine, Maine Central, Delaware & Hudson, Great Northern, Bessemer & Lake Erie, Kansas City Southern, Monon, Green Bay & Western
-28, 685 route miles
-$2.070 billion capitalization
-$62.8 million net income

System #6: Wabash, Delaware Lackawanna & Western, Santa Fe, Chicago Great Western, Western Maryland, Wisconsin Central, Pittsburgh & West Virginia, Wheeling & Lake Erie, Frisco, Chesapeake & Ohio, Pere Marquette, and ½ of Northwestern Pacific
-31,328 miles
-$2.325 billion capitalization
-$126.1 million net income

Since the railroads of the southeastern US are out of the line of transcontinental development, and there aren't enough to divide six ways, they are in three independent groups:

System #7: Illinois Central (w/Central of Georgia), Seaboard Air Line, Clinchfield.
-13,114 route miles
-$0.908 billion capitalization
-$16.6 million net income

System #8: Southern, Florida East Coast, Norfolk & Western, (original) Norfolk Southern
-11,295 route miles
-$0.938 billion capitalization
-$55.9 million net income

System #9: Atlantic Coast Line, Louisville & Nashville (w/Nashville Chattanooga & St. Louis), Georgia RR
-12,699 route miles
-$1.0 billion capitalization
-$52.1 million net income

NOTE BELOW: As in the Ripley/ICC plan, it is necessary to split an existing Class I carrier to piece together the necessary systems. Unlike those plans, which divided the Wabash in the middle of its main line, this requires the C&NW's Chicago-Omaha main line for the Union Pacific; and the Chicago-Twin Cities line for the Northern Pacific. The terminal facilities in Chicago and Minneapolis/St. Paul are really the only places that require any work (and may simply be left as joint terminals). The only break in main lines is the crossing of the Mississippi River at Winona, WI. So, all Wisconsin & Michigan lines (including the lines to Minneapolis/St. Paul) will be “Chicago & North Western”, and the remaining lines “Chicago, St. Paul, Minneapolis & Omaha”. The mileage/financials used for each part here, are arbitrary (about 1/2).

EDIT: Added DL&W to system #6. Thanks for catching that, Joe Bonkers !

 

[Virginia Liberal]

So do the individual railroads still have there own branding or did the leading systems absorbes the rest? So example :

New York Central: Chicago, Attica & Southern; Rutland; Virginian

All now New York Central markings ?

 

[Kevin C. Smith]

I would think that they would all be under single, new names. But a lot would depend on how the financial structures were to be set up. The simplest way, I think, would be to just include federal charters for the new companies in the enabling legislation. This would free them from state regulatory agencies, which I think they would be glad to be done with-though, expect every state delegation in Congress to raise holy hell about that.

The names/lists I drew up are just because I did my "system building" starting in the East. If anyone wants to have a go at naming them, have at it! Keep in mind, you are dealing with 1929-era nomenclature.

 

[TheMann]

With any great set of consolidations such as this one, you run into a number of sizable issues, primarily both ownership and the financial transfers involved and the huge issues with operational standards and procedures. You'll get this problem in so many ways here its almost frightening, because you are merging dozens of railroads into several big entities, and in some cases completely re-routing traffic across large swaths of their territory.

Take for example the New York Central and the Virginian. They do touch in West Virginia, but in both cases its on lines meant to haul coal to distant places, and the route is NOT a main line by any stretch, and becoming one would be monumentally expensive and difficult particularly on the NYC side of that line. The Rutland's connection with the NYC at Chatham, NY is the south end of an operational headache and the Rutland rarely made much in the way of money. The NYC itself would love the profits from the Virginian's coal traffic, but the Rutland would probably see them ask "OK, what was the point of this, again?"

The Pennsylvania owning the N&W is a financial issue because the N&W was a rich railroad for its entire existence in the 20th Century and having it get pushed into the Pennsy, while operationally quite logical (the two meet at Columbus, Cincinatti and Hagerstown, MD, but nowhere else aside from the car ferry operations in the Newport News area) presents a financial headache of who owns what.

And that Baltimore and Ohio....Oh God where does one start. Conrail's 1970s formation was a mess when combining six railroads and with a bucket of government financial support. You have the B&O integrating with nine other railroads of totally different designs and purposes. That railroad now runs hard against the Pennsy in Pennsylvania, New Jersey and Maryland but boy would that be an operational mess to sort out.

The Seaboard Air Line presents a big problem, too. Having it be part of the Illinois Central makes no sense unless you're passing off much of its mainline to somebody else. IMO, you're best either making an South-to-New York line or simply allowing the SAL to stay independent. It's almost entirely a long-distance hauler in any case so it doesn't really present any issues to anybody else (aside from maybe the ACL) to do this.

Great Northern presents you the biggest financial issue of them all - the Great Northern, Northern Pacific and Chicago, Burlington and Quincy all had common ownership by the late 1910s, and passing the CB&Q to the Missouri Pacific results in a huge financial headache, particularly since the rest of the Hill lines all had common ownership. Better idea would be to split it between the Great Northern and Missouri Pacific, giving the northern half of the CB&Q to the Great Northern and the southern half (from Denver south on its former Colorado and Southern main line and its route through Texas) to the Missouri Pacific.

The 'Canadian-American International' isn't gonna happen either because Canadian National Railways was by 1930 owned by the Canadian government, unless you plan on having the Depression-era idea of Canadian Pacific being merged into the Canadian National come to pass, which is extremely unlikely.

 

[Kevin C. Smith]

It led me to earlier TOFC, the LCL containerization, NYCs COFC thrust (putting just the trailer body on the flatcar), and other improvements to use rail as the long distance freight mode. Reducing the trucking industry to regional and local or niche long distance, likely with less room to raise weights or increase sizes, might give the rail industry both the profitability and significance to continue with a regulatory approach, selfishly letting me keep fallen flags and merged away schemes longer.

Containerization, and trucking (and bus) subsidiaries were being looked at by RR's in the 1920's. Regulations at the time prevented the RR's from getting very much into the business. It was feared that they would simply become an extended transport monopoly, and that allowing road (and air) services to develop on their own would prove more competitive (which they did). Containerization failed when the ICC required that rates match the existing carload/LCL rates, rather than be allowed to reflect the lower cost of handling.

 

[Kevin C. Smith]

With any great set of consolidations such as this one, you run into a number of sizable issues, primarily both ownership and the financial transfers involved and the huge issues with operational standards and procedures. You'll get this problem in so many ways here its almost frightening, because you are merging dozens of railroads into several big entities, and in some cases completely re-routing traffic across large swaths of their territory.

The 'Canadian-American International' isn't gonna happen either because Canadian National Railways was by 1930 owned by the Canadian government, unless you plan on having the Depression-era idea of Canadian Pacific being merged into the Canadian National come to pass, which is extremely unlikely.

Oh, yes-you are quite right about that. If you wanted to develop this into some sort of timeline, the only logical place to start something like this would be the federal control of the railways in WWI. The entire US RR system was being operated as a single entity, with many financial considerations simply being pushed aside for the duration of the war. Afterward, the Transportation Act of 1920 (which mandated the consolidation plan) marked the end of federal control-many in the industry were afraid that government control was going to go to full-on nationalization, instead.

The financial arrangements of a "forced grouping" would have been frightening, indeed!-but not without contemporary precedent. The British railways grouping involved quite a number of separate companies, along with subsidiaries, joint lines, operational differences, etc. The Canadian nationalization involved large (geographically, and otherwise) and small companies combined into larger systems. The period just after WWI would also be not long after the conclusion of the valuation of all RR properties had been completed. If the POD is the 1929 publication of the Final System Plan, the Great Depression could be the catalyst to driving everyone into acceptance.

In any case, as you point out, a helluva project!

Re: "Canadian-American International". That was unclear on my part. I merely meant that the US plan would imitate the Canadian systems in making them into fully transcontinental systems, rather than more balanced regional ones. (Though, I have toyed with the idea of a 3-system Canada, which would allow 3 of the US systems to associate with them, and the other 3 US systems to absorb the southern US systems, to match.

Then, of course, there is a pre-nationalization Mexico...

Playing with trains, and alternate history.

 

[Kevin C. Smith]

Some other considerations of any national RR consolidation plan is financial. Miles alone do not a strong RR make (two words: Penn Central). While it is impossible to make all companies exactly the same "size" financially, I did group with an eye to some similarities. Hence, all 6 transcontinental systems are capitalized at somewhere in the $2.070-$2.88 billion range, and the southeastern ones $0.908-$1.0 billion. That is something that, long term, investors will look at. Net income is more variable, with the first tier of transcontinentals earning in the $123.8-$139.4 million, the second tier $57.4-$83.3 million (a bit larger spread), and the SE systems $16.6-$54.9 million. (The outlier here is the IC/SAL system. The GofG was not a big earning company, and the SAL had recently gone through a bad financial spell/bankruptcy.)

One of the objects of the ICC plan was to ensure that the resulting systems would be, at minimum, reasonably profitable under uniform rates to common points.

 

[Duke Andrew of Dank]

So do the individual railroads still have there own branding or did the leading systems absorbes the rest? So example :

All now New York Central markings ?

I was thinking it'd mostly be just the lettering for that railroad.

 

[Duke Andrew of Dank]

Pennsylvania (with Long Island), Rock Island, Southern Pacific, Cotton Belt, Rio Grande, Chicago & Eastern Illinois, Toledo Peoria & Western, and ½ of the Northwestern Pacific.

I was actually developing my lines on the basis of consolidating the railroads of the United States into a limited number of systems to preserve competition between the railroads. That last point is extremely crucial in understanding this. Sorry I forgot to mention that.

The idea is to rearrange everything into a set number of railroads that are evenly competitive and set in their own region. And I personally believe that these systems could have worked. Would these proposals have prevented everything we saw in the course of railroad history in America? That's a hard one to answer. And because of the world we live in, we can only speculate as to what this would have looked like had it happened.

 

[Joe Bonkers]

I like @Kevin C. Smith 's ideas. Very original to group the Lehigh Valley with the New Haven. Since you've got the L&HR in System #4, I'd throw the New York, Ontario & Western in there too. Scranton, Pennsylvania would then become the connecting point between the LV and NYO&W/NYNH&H for traffic to and from New England.

One question: I notice you missed the Delaware, Lackawanna & Western. Does that go with System #5 (since it includes the Erie and D&H)?

Since this is alternate history, there's no right or wrong answers. Kevin and Andrew are taking different approaches to solving the problem of overbuilt and too-regional railroads with different emphases, which by definition leads to different results.

 

[Kevin C. Smith]

I like @Kevin C. Smith 's ideas. Very original to group the Lehigh Valley with the New Haven. Since you've got the L&HR in System #4, I'd throw the New York, Ontario & Western in there too. Scranton, Pennsylvania would then become the connecting point between the LV and NYO&W/NYNH&H for traffic to and from New England.

One question: I notice you missed the Delaware, Lackawanna & Western. Does that go with System #5 (since it includes the Erie and D&H)?

Since this is alternate history, there's no right or wrong answers. Kevin and Andrew are taking different approaches to solving the problem of overbuilt and too-regional railroads with different emphases, which by definition leads to different results.

Yeah, I had the O&W in there, I just didn't add it here.

Oops! The Lackawanna is part of system #6, to extend the Wabash into a New York trunk route. (In real life, the DL&W was the NKP's preferred connection east but this was never formalized. The LV would work as well for the NKP, and the DL&W had a beltline around Buffalo/Niagara Falls that would allow direct connection to the Wabash's route through Canada.)

And, yes, I like Andrew's ideas, too! I have just been playing with this for some years, and have a data dump handy.

 

[Joe Bonkers]

For System #1: Given 1929 naming conventions, how about "Penn, Rock Island & Pacific"? Thus pulling in the biggest component lines; and "Penn" would have been an acceptable abbreviation by 1929 (the PRR's holding company, for example, was dubbed Pennco).

 

[Kevin C. Smith]

I was actually developing my lines on the basis of consolidating the railroads of the United States into a limited number of systems to preserve competition between the railroads. That last point is extremely crucial in understanding this. Sorry I forgot to mention that.

The idea is to rearrange everything into a set number of railroads that are evenly competitive and set in their own region. And I personally believe that these systems could have worked. Would these proposals have prevented everything we saw in the course of railroad history in America? That's a hard one to answer. And because of the world we live in, we can only speculate as to what this would have looked like had it happened.

I think they would have worked, too. Would that have changed much? A couple of reasons why "Yes":
-The gap between strong and weak systems would have been narrower. Whether that makes an overall industry more able to weather the changes ahead, is problematic.
-Accompanying regulatory changes (intermodal freedom, pricing flexibility, etc.) could have been enough to change the game.

A couple of reasons "No":
-More equal systems could have just all held on, slowly sinking together, with no one (or more) companies able to keep their heads above water. The whole thing would have just collapsed together.
-If the regulatory environment is unchanged (or even more restrictive), the same problems that affected the industry as a whole will still affect the whole industry. Corporate organizations will be just as irrelevant.

Your timeline, your decisions!

 

[Kevin C. Smith]

I was thinking about this today, when I should have been working, and came up with some interesting butterflies.

In OTL, the US RR industry began having problems in the northeastern US. There, the loss of branchline traffic, passenger patronage, and high value freight put the major trunk lines in a squeeze by the 1960's. There was a movement within the companies to effect some mergers that would strengthen the industry as a whole in the area. It did not go well, to say the least. Even if it had, it may not have been enough. But...if consolidation had already been accomplished in 1920-1930, would things have played out differently? The ICC, Andrew, and I have all put forth our theories on balanced, roughly equally viable systems. Would there have been a big enough business failure (as happened with Penn Central) to catch the public's, and Congress' attention? There would be differences in how soon, and how badly, the various carriers would be affected. Would things have limped along until the Reagan administrations deregulation spree? Another butterfly: would there be an Amtrak? If not, would there be passenger service at all?

 

[Joe Bonkers]

I was thinking about this today, when I should have been working, and came up with some interesting butterflies.

In OTL, the US RR industry began having problems in the northeastern US. There, the loss of branchline traffic, passenger patronage, and high value freight put the major trunk lines in a squeeze by the 1960's. There was a movement within the companies to effect some mergers that would strengthen the industry as a whole in the area. It did not go well, to say the least. Even if it had, it may not have been enough. But...if consolidation had already been accomplished in 1920-1930, would things have played out differently? The ICC, Andrew, and I have all put forth our theories on balanced, roughly equally viable systems. Would there have been a big enough business failure (as happened with Penn Central) to catch the public's, and Congress' attention? There would be differences in how soon, and how badly, the various carriers would be affected. Would things have limped along until the Reagan administrations deregulation spree? Another butterfly: would there be an Amtrak? If not, would there be passenger service at all?

I may be biased because I like timelines with happier endings, and for probably anyone reading this thread more trains rather than fewer represents a happy ending, so let me take a shot at this:

The railroad crisis was not regarded as a major priority in the 1960s. Many people thought the railroads were just bellyaching. But there was some acknowledgement that things were going wrong - I remember seeing a LIFE magazine article from 1961 on the "railroad problem." The public was at least aware that service was deteriorating, even if it led to conspiracy theories like that silly book To Hell in a Day Coach.

Granted, Congress and the White House wouldn't act until it hit the fan - as in OTL when they didn't do anything until Penn Central exploded in everyone's faces. But part of the reason Congress was able to rationalize pushing the problem away was that mergers were seen as a panacea. "The railroads have a problem, but mergers will allow them to fix it by eliminating duplication and blah blah blah," was the logic at the time.

But in TTL, the mergers already happened, long ago. So that's not the problem, obviously. And as nationwide transcontinental systems, even the threat of the failure of any of the big systems in your TL would affect far more communities, and across more of the country, than was the case with Penn Central. Possibly, then, a severe downturn at one of the big companies that was enough to have it ask for Federal aid - maybe at the level of Chrysler in the 1970s, short of a Penn Central-like bankruptcy as such - might have been enough to stir Congress into creating an Amtrak analogue, or some sort of passenger solution, around the same time or maybe even earlier, and also to move toward deregulation possibly during the Nixon administration (assuming no change in the presidential succession through 1972 or so, I can't see LBJ getting behind deregulation, but Nixon might have gotten on board with it.)

 

[Kevin C. Smith]

Always a fan of happy endings! And more trains! Let's throw a couple of butterflies in...

If we can get these wholesale consolidations in place (whether regional, as Andrew is working on TTL, or larger, as I have just been playing with), with the collaboration of the industry, we might get some favorable regulations regarding road/air competition, and some stronger anti-union legislation. Both of these would be advocated along the lines of, "You forced us to merge to be more efficient, so let us be more efficient". That is going to remove a lot of competitive disadvantages, and allow major cost savings (especially after WWII). National politics were more likely to bring this about in the mid-later 1920's, and the first couple of years of the Depression. If things fall just right, some federal financing (RFC loan-type) might be available in the early 1930's (the argument being, "You made all the strong lines absorb weak ones, and now we're all going broke").

Also, especially with larger, transcontinental lines-but equally available with the regional plan-is the use of federal charters for the new companies, thereby practically eliminating state regulatory agencies from control. With the whole situation dumped into their lap, maybe the ICC adopts more of a "You guys know what you're doing, leave us out of this mess" posture.

Now, shall we throw in ASBs, such as no federal highways, higher gas prices, restricted air travel? Or massive federal aid for electrification, or passenger service? Oh...be still, my beating heart!

 

[Duke Andrew of Dank]

Don't forget too.

ITTL, an oil crisis in the 40s means that the railroads become the preferred alternative to the automobile.