Last revised: May 9, 2023
By: Adam Burns
"What If..." is a short volume by Brian Holtz and Brian Sigstad published in 2022, which discusses the possibility of a Milwaukee Road and Rock Island merger in 1958, directly after the national recession of 1957-1958 and before both companies began their slow decline into bankruptcy.
The proposal, of course, is based on sound managerial and railroading principals which would avoid all of the pitfalls experienced by both companies, especially the Milwaukee Road.
It is an interesting thesis and a very thought-provoking title. It also makes one wonder how much different the nation's present-day rail map would look if not only the book's proposed Milwaukee-Rock Island union had occurred but also many other railroads which suffered from poor and outdated management practices in the immediate post-World War II period.
Mr. Holtz and Mr. Sigstad, both experienced railroaders with years of service, make their case for the Milwaukee-Rock Island merger based on historical precedent (the two roads were actually within 1/10 of a share of merging, detailed in the book, "Rock Island Requiem: The Collapse Of A Mighty Fine Line," by Greg Schneider) and line density.
Both railroads suffered the lowest million tons per mile of all western carriers. In fact, the Milwaukee's was even lower the Chicago & North Western, which maintained a greater volume of light density branch lines in the Midwest.
The book's primary purpose, outside of efficiently operating a newly merged company, was to pare down both railroads into a group of "core lines." In doing so the new management would enjoy much higher line density, lower operating costs, and ultimately higher profits.
The core system system would essentially boast key corridors from Louisville, Kentucky - Chicago - Twin Cities Seattle, Chicago - Kansas City - El Paso, Chicago - Denver, and Chicago - Kansas City - Fort Worth/Dallas - Houston/San Antonio.
In the pre-Staggers Act era it is generally believed the Interstate Commerce Commission was against, and typically openly hostile, towards the abandonment of any rail line, no matter how insignificant.
I asked author Brian Holtz how they planned to tackle this tricky issue. His response was the following:
"In Chapters 7 and 8, we divided each railroad into core lines and marginal branch lines. Internal organizational reporting structures for railroads are not subject to ICC control so we split the merging organizations at the presidential reporting level.
This gives us the opportunity to develop financial reporting for each marginal branch line and address costs and a multitude of solutions prior to ultimate abandonment.
I was licensed to practice before the ICC (grandfathered to the STB) and found the ICC more reasonable than portrayed in the 1960’s when given good economic logic, efforts to succeed and alternative use of resources. As proof, I submit the many successful passenger train off petitions prior to Amtrak.
Railroad managers post World War Two only operated what was there, never rethinking the need, purpose and improving route structures."
One of the most interesting concepts I found in the book was the reuse/repurposing of abandoned rights-of-way. Instead of allowing the property to be written off, the authors propose retaining these corridors for land-lease purposes thereby not only providing continued revenue from them but also retention for possible future use.
The book states: "Our organization will maintain land ownership and lease the land under branch lines that are sold or abandoned. Maximizing revenue of all current and sold corridor development could be a high margin revenue contributor.
With this in mind, our newly formed Real Estate Group, will go about developing a branch line valuation plan of our excess right-of-ways [sic] (ROW's). This will assist us in establishing lease payments, fixed or continuous, and lengths of contracts.
Demand for this excess ROW would come from longitudinal users, adjacent property owners, or other potential non-contiguous users. Utility and communication companies would most likely prefer trenching their lines in the ROW, which provides security and safety to their investment."
In my many years of studying rail history, and abandonments, I have never read of such a radical concept. Had companies conceived such strategies, even as late as the 1970s and 1980s, it would not only have provided an additional (and lucrative) revenue stream but also retained ROW's for future rail use.
If this proposed Chicago Pacific Corporation had been created (the bankrupt Rock Island of 1977 created a similarly named company, used only to sell the company's assets), there is little doubt it would have been successful.
Brian Holtz worked in transportation and distribution at Kansas City Southern, A.E. Staley, Joseph Schlitz Brewing, Universal Foods, New Zealand Dairy Products, Kingsley Consulting, Southern Pacific, Arkansas Midland Railroad, and Creative Railroading.
Brian Sigstad spent time at the Milwaukee Road directly out of high school to put himself through college. He later retired at Northwestern Bell at the age of 47 where he was head of land, structures, and rights-of-way.
The two others also had help with the book from longtime friend Dennis Opferman who began his career at the Rock Island and later worked for BNSF before retiring. As a former employee he always had great interest in the company and wondering if it could have avoided its 1977 bankruptcy and eventual liquidation.