From C&OHS Magazine
By William Howes, Jr.
I began railroading in 1960 with the New Haven. Following that road's slide into bankruptcy-for the second time-in 1961, I retreated back to college in pursuit of a post-graduate degree in civil engineering and, perhaps, a career in academia.
But, alas, railroading was now in my blood. So, in early 1963, I answered the call of numerous railroad recruiters who appeared on the campus of Purdue University. It was only weeks after the ICC's approval of C&O's bid to control the B&O and both railroads had representatives interviewing students. Each offered me a job starting in their management training program. What happened next would prove to be indicative of the way C&O would exercise its control of B&O. The C&O recruiter recommended that I accept the B&O offer, opining that its new partner had the better program. I took his advice. While there was never any doubt which railroad had financial control of the other, I believe C&O management made a concerted effort to select the best practices and personnel found on each property as the two roads, and eventually the Western Maryland as well, were integrated into a C&O/B&O system. And you are hearing that from someone with strong emotional ties to the B&O!
The C&O/B&O approach, of course, was in marked contrast to the N&W's heavy-handed swallowing up of the Nickel Plate and Wabash in the mid-60s or the contentious New York Central-Pennsylvania marriage later in the decade.
I'm going to discuss the C&O/B&O era, from 1963 to the formation of the Chessie System, in the form of a "memoir." This is not a formal history lesson, but rather some personal observations and experiences from my first decade on C&O/B&O. During this period, I was a management trainee and then served in the transportation, industrial engineering, passenger services, and casualty prevention departments.
But first, I will resort to a short history lesson to set the stage for C&O/B&O.
Some claim the modern merger movement in the railroad industry began with the Louisville & Nashville's absorption of the Nashville, Chattanooga & St. Louis in 1957. But within the Pocahontas Territory and the Mid-Atlantic states, we can peg the beginning of the movement to the N&W's successful bid for control of Virginian. This was attained in 1959.
With the American economy in recession, the late 1950s were difficult years for the railroads. Costs had been climbing since World War II and now revenues were declining. In addition, other modes of transport were steadily eating into the railroads' share of both freight and passenger traffic. Many railroaders viewed mergers as a way to control costs.
Following its success with the Virginian, the N&W went after the Nickel Plate Road in a move that also brought the Wabash and a piece of the Pennsylvania Railroad in Ohio into its camp by 1964. The New York Central's Alfred Perlman set his sights on either the C&O or the Pennsylvania. C&O's Walter Tuohy rejected his advances, knowing that the Central had serious financial problems and that the strong-willed Perlman would undoubtedly want to call the shots as the companies merged. Instead, C&O, in studies that began in 1958, was exploring the pros and cons of affiliation with the B&O.
On the plus side, B&O had a stronger industrial base than C&O, serving more industrial centers and linking them with better routes. B&O was the third largest coal hauler in the nation, after C&O and N&W
But the negatives were equally impressive. B&O carried a heavy debt load and its operating losses were growing (and would top out in 1961 at a staggering $31 million dollars). The road lacked the capital needed to correct a worsening equipment shortage. Routine maintenance was being deferred. The B&O's map was plagued with many low-density branch lines.
Talks between C&O and B&O began in earnest in 1959 and a year later C&O made its offer to B&O shareholders. The New York Central again intervened and was again rebuffed, setting in motion NYC's discussions with the Pennsylvania that would lead to the formation of Penn Central in February 1968.
The C&O/B&O proposal involved essentially an end-to-end connecting of rail routes, a form of consolidation favored by the Interstate Commerce Commission. Consequently, the proposal moved through the Commission relatively quickly and was approved on the last day of 1962.
Jervis Langdon, who had served in the law departments of the New York Central and C&O before coming to the B&O in 1956, succeeded Howard Simpson as president in 1961 and became Chief Executive Officer of the B&O in 1962. A visionary railroad executive, Langdon would prove to be both a facilitator, as C&O took control of B&O finances, and a thorn in C&O's side when he argued in defense of B&O's marketing philosophy, especially on coal traffic. Langdon's B&O was a proponent of unit coal train rate incentives, while C&O firmly embraced single car rates for this traffic.
C&O had sought financial control of B&O rather than a merger because it feared that B&O's precarious financial condition could threaten C&O's excellent debt rating and, thereby, increase its cost of capital.
Also arguing for maintaining B&O's corporate identity were two factors:
B&O enjoyed a tax abatement privilege in several Maryland counties that was linked to its original charter. No more B&O; no more tax relief.
A group of dissident B&O stockholders continued to argue for an independent B&O, effectively forcing C&O to treat B&O evenhandedly, especially as to traffic solicitation and the allocation of expenses.
The C&O was also guided by promises it made during the ICC hearings. These included maintaining adequate service to the port of Baltimore, retaining the word "Baltimore" in any new name for the company, and keeping a headquarters presence in Baltimore.
As to the latter requirement, the C&O/B&O executive offices were centered in Cleveland's Terminal Tower, railroad operations were headquartered in Baltimore, and engineering and mechanical functions gravitated to Huntington.
Initially, the two roads maintained separate coal, merchandise, and passenger traffic organizations, all in their traditional headquarters. Passenger traffic was the first to be consolidated, beginning in 1965 under B&O's Paul Reistrup in Baltimore.
C&O had also promised to infuse B&O with cash by way of some $200 million in loans over a five-year period. This began even before C&O received approvalto control B&O. The monies were used to increase car supply on the B&O, to finance a major project to enlarge clearances on the Parkersburg Branch to permit piggyback traffic over that route between the East and Cincinnati and St. Louis, and for other facility improvements.
But enough background history!
C&O officially took control of the B&O on February 4, 1963. On February 28th, I boarded the National Limited in Cincinnati en route to Baltimore for more interviews with B&O officers. On July 1, I went to work. Well not exactly "to work." I began a two-year training program that exposed me to every department on the railroad and took me to the far reaches of the system. Well, not exactly the "far reaches." B&O trainees were not permitted on the C&O. Although you might say I was one of the first C&O/B&O "babies," these were still two very separate companies. In fact, throughout the C&O/B&O era, newcomers to the railroad were given either a C&O or a B&O employee identification, not both.
Just as I was arriving on the B&O, so was a fleet of 77 GP30s. This was B&O's first new road power in many a year. These were the locomotives that introduced the nose "Sunburst" paint scheme. They were also the last to have cast-metal Capitol Dome plates on their nose. They were the pride of the road!
Although Jervis Langdon had been encouraging some fresh thinking in the company, particularly in marketing, the B&O was still reveling in its illustrious past. It had its own telephone company and a steel rolling mill right out of the 19th century. It bottled its own dining car water from its spring in Deer Park, Maryland. And the ghost of president Daniel Willard, dead since 1942, was everywhere! Signs bearing Uncle Dan's signature exhorted employees to be safe, courteous, and run on time. And most employees still took these admonitions seriously, even in these hard times.
We B&O trainees wondered what it was like over on the C&O side. One of my earliest exposures to the C&O was Walter Tuohy arriving in his limousine to help decorate the B&O holly tree north of Baltimore for Christmas. The diminutive Tuohy jumped out of his car, hopped in an engineering department cherry picker, rose to the top of the tree, placed an ornament, waved, returned to his car and sped off. We of the B&O resumed our Christmas party!
By the Spring of 1965, we were demanding to see the C&O. The training director relented and packed us aboard the Pullmans of the George Washington en route to Huntington. My first observation: A ride over the C&O was smooth-just as Chessie had been claiming for years; whereas, the B&O was rough and I had bruises to prove it. The George dropped us in Huntington at 4:42 AM. Second observation: Huntington ain't no Baltimore (and you can take that however you wish!). We then began an intensive two-week tour of the C&O at Huntington, Russell, Raceland, and a new alignment of the Johns Creek Subdivision down on the Big Sandy territory. Third observation: Wow! So this is what money can buy! Whereas B&O wore its emotions on the soiled sleeves of its hard-working arms, C&O was a stoic, well-oiled machine. Fedoras and suits were still the dress code for operating officers on the C&O, while their counterparts on B&O had begun wearing sports jackets and venturing outside hatless. And whereas B&O still clung loyally to its Uncle Dan Willard, the flamboyant Robert R. Young was remembered with embarrassment on the C&O. Over here, M. I. Dunn, recently retired Senior VP Operations, and John E. Kusik of Finance, were the names held most in awe and, quite often, fear.
Organizationally, C&O appeared at times to actually be two railroads, with the former Pere Marquette lines still asserting a degree of independence under Regional Manager B. G. Nash.
Also, in the Spring of 1965, I had my first real working assignment. I went to Akron, Ohio, as Assistant to the Train Master for B&O's Akron-Chicago Division. The division also had a new Assistant Superintendent, Tom Jenkins, who I believe was the first field operating officer from the C&O to be assigned in B&O territory. We both learned that B&O took full advantage of the hours of service law-then at 16 hours-when working its field officers, whereas C&O officers often worked in 8- or 12-hour shifts.
In the Summer of 1965, I moved to the Industrial Engineering Department in Baltimore. Industrial Engineering had held the "power of the purse" on Jervis Langdon's B&O. Virtually every capital expenditure had to be reviewed and approved by the department. But Langdon left for the Rock Island in 1964 and "IE" was now part of a new C&O/B&O Planning Department that was orchestrating the orderly integration of the two roads, including development of their computer resources. Walter Tuohy was now president of the B&O, and Gregory DeVine president of the C&O. By early 1966, Mr. DeVine would be president of both roads and Mr. Tuohy their CEO.
Industrial Engineering still reviewed capital expenditure proposals-in fact, that was my job-but we also got into facility and service design issues. Believe me, C&O operating officers were not used to having some upstart IE in Baltimore (hotbed of B&O people) question the financial viability of their favorite project or, worse yet, suggest "a better way." I came up against K. C. Morris, Superintendent at Ashland, when I questioned his design for a major improvement for Shelby Yard on the Big Sandy. Ken was well known for his volatility, but also his willingness to keep an open mind. He invited me to Ashland to present my ideas to a meeting of his officers. This I did. They looked to him for his reaction. He signaled that the idea was worth exploring. That's the way things progressed as C&O and B&O people got to know each other.
The Industrial Engineering Department was also involved in C&O/B&O coordination projects, as well as new merger studies. In fact, it seemed like we spent most of the C&O/B&O era on the subject of railroad acquisitions and consolidations. Several significant reroutes were implemented on C&O/B&O. Coal traffic coming off the L&N at Cincinnati and destined to Lake Erie ports through Toledo that had been moving via the C&O, was rerouted over the much shorter Toledo division of the B&O. Some Cincinnati-Chicago traffic of the C&O was rerouted via Deshler, Ohio, on the B&O which, though longer, afforded easier grades. On the passenger side, the services of the B&O's National Limited and C&O's George Washington were integrated between Washington and Cincinnati in favor of the C&O route with its resorts and population centers.
Some of my most interesting tasks were in connection with new acquisition and merger proposals. C&O was exploring alternative ways to attain entry into the New York metropolitan area from the Midwest. One option was via the former Pere Marquette through Michigan and Ontario to the Buffalo gateway and then over the Lehigh Valley to New Jersey. A number of us in the Industrial Engineering Department, posing as railfans, conducted an undercover study of LehighValley's facilities and traffic patterns. In the wake of that study, we became involved in a much bigger covert operation in support of planning for a N&W/C&O merger. To improve this mergers chances for approval, it was proposed to include five financially weak roads in the Northeast-namely the D&H, EL, Reading, CNJ and Boston & Maine-through a subsidiary know as Dereco. We set out to study these roads in the winter of 1965-66 despite threats from President William White of the Erie Lackawanna to arrest anyone from C&O/B&O or N&W caught on his property. We had some close calls. In fact, I was briefly detained by an EL police officer when he discovered me scouting the road's shops at Meadville, Pennsylvania, in the wee-hours of the morning. Apparently sympathetic to my cause, he good-naturedly directed me to a spot off EL property where I could get "a great view of what was going on!"
The N&W was to be the surviving company in this merger with the C&O. But as we all know, the marriage was called off in 1971, a victim of the complexities of putting the two rival companies together and the collapse of the Penn Central.
I moved over to the C&O/B&O Passenger Department in May 1967. Here, C&O and B&O supervision and headquarters staff were well integrated, but C&O employees still manned and maintained C&O trains and equipment, while B&O personnel did the same on that road. One could still detect differences in the passenger services of the two roads. C&O's focus remained on serving the upscale West Virginia and Virginia resorts. Elsewhere, its once popular Pere Marquette services were in steep decline as construction of the Interstates progressed across Michigan. Meanwhile, B&O still fielded a fleet of overnight long-distance services, short hauls, and commuter runs. There was also a contrast in the dining car services of the two roads. C&O's Superintendent of Passenger Food Service, Ken Cox, was a proponent of modern institutional food service technology, while B&O's recently retired Manager of Passenger Food Service, Jim Martin, had been more traditional in his thinking.
With executive power concentrated in Cleveland, those of us headquartered in Baltimore began to feel like orphans. To deal with this, a luncheon was held on a regular basis attended by Baltimore officers and one or more emissaries from Cleveland to bring us up to date on big policy issues. Frequently, this emissary was John Kusik, now Vice Chairman. Apropos of C&O's heavy focus on financial management, Mr. Kusik was truly a giant in that field. And he was not shy about telling you so, and also how to run your department.
Well, in the late 1960s it was becoming fashionable in the railroad industry to venture into other, hopefully more profitable, lines of business. C&O/B&O officers were not immune to this line of thinking, at least not until Mr. Kusik caustically reminded us at one of our luncheons that since we had yet to master the railroad business, what made us think we could successfully manufacture widgets or whatever. Unfortunately, we eventually ignored Mr. Kusik's advice, only to take it to heart again in the 1990s.
With the coming of Amtrak in 1971, I transferred to the newly formed Casualty Prevention Department. This was truly an integrated C&O/B&O organization, although one could still detect lingering differences between the two roads. For example, certain police officer ranks on the C&O were covered by a union contract, while comparable positions on the B&O were not.
And what happened, you ask, to the cat during the C&O/B&O era? Except for her regular calendar appearances, Chessie faded into the background. Management seemed determined not favor one road's logo over the others. However, surveys of both C&O and B&O employees confirmed Chessies continuing popularity and suggested that maybe balance could be achieved by having a B&O cat named-you guessed it-Bessie. This line of thinking got a bit carried away during the N&W/C&O merger discussions when a cat named Newton joined the brood. Happily, both Bessie and Newton soon passed from the scene. By the end of the 1960s, Chessie was making a bit of a comeback in C&O/B&O passenger service promotion.
Shortly after moving to Casualty Prevention, I became involved in a project that led to the new corporate image for the affiliated C&O/B&O/Western Maryland. Seeking a more visible color scheme for our locomotives, I teamed with the Mechanical Department and Franklyn Carr of Public Relations in the development of the yellow, blue, and vermilion "Chess-C" image that was introduced on a 1972 delivery of GP40-2 locomotives from EMD. It was the end of the C&O/B&O era. Chessie was back!
These have been just a few snippets from the C&O/B&O era, but I hope they give you some feel for how these two proud railroads-actually three proud railroads when we include the Western Maryland-evolved into the Chessie System.