TWO errors: First, I mentioned Overton because the original post stated "You
don't read that one in the general histories"(effects of the post-WWI recession
on NW rail traffic). Historians in general (not just RR historians) point to
Overton's work as the pre-eminent business 'history'. At least 2 of his 4
books on the Burlington Lines & it's Presidents, remain in print as softbounds
and copies are readily obtainable on the 'used' market & in any sizeable
library. Harvard-educated Dr. Overton's national fame as a objective historian
is seen in the annual Overton prize conferred by the Lexington Group, a North
American society of historians, railroad execs and serious railfans.
Secondly: As for Overton just being a 'P.R. Dept' employee, his actual title
was in terms of his overseeing the Q's Relief Dept. (I have one of his original
business cards as well as hand-written personal correspondence to me which I
shared at a BRHS 'clinic' yrs ago) Although during this time he was also able
to access Q archives and their Emps from Budd on down, the work I cited
"Burlington Route", was written & published LONG after his employment by the Q
(1965).
I could cite any # of sources praising Richard 'Dick' Overton's education,
scholarship and writing ability but here's a personal one: The late Dr. Wm.
"Steamboat Bill" Peterson, Prof. Emeritus of History @ the U. of Iowa AND long
time Editor of the Palimpsest, the State of Iowa's Historical Society's
publication, was a frequent guest @ luncheons I attended while a grad student @
the U. of Ia (I should say I was the guest courtesy of the Prof I worked for as
a grad asst). He cited Overton as the epitome of an objective historian due to
his unyielding commitment to finding TWO primary sources before putting words
to paper AND for using extensive peer review before printing same.
Dr. H. Roger Grant, scholar & author, was the compiler of a tribute to Overton
after his death; he never has suggested Overton was merely a Burlington P.R.
employee! Nor would our own Alfred Holck who also labors long & hard in his
well-researched Q books.
And as an aside to Q fans, Bernie Corbin commented several times if he could
only take one Burlington book to a desert island it would be Burlington Route
(Overton's Burlington West, a history of Lines West & the Q's growth thru
immigrant settlement efforts was the book he wrote while employed by the
Burlington; publ. 1941) Burlington Route, Gulf to the Rockies (C&S/FtW&D) and
Perkins/Budd came long after his Q tenure.
Lastly, invoking Buffet was meant to confirm that the fact that BNSF is around
today for him to buy is a testament that the early 'leaders' of said roads,
esp. Hills, Perkins, Forbes, et al, must have done a lot more right than wrong
over the yrs. GN/NP's purchase of the Burlington reaped dividends literally &
figuratively.
As a last aside, NP did have a flirtation with CM&stP, also documented by
Overton, post-1901, that led some of their trains to route over the Milw to &
from Chicago rather than the Q. I invite Mr. Sol to become a mbr of this yahoo
group as I sure he could put a Milw perspective to that era.
Lastly, lest anyone doubt the depth of objective scholarship that went into any
of Overtons' books - just read the bibliographies & footnotes; to use the
vernacular - "awesome"! (you might also google old Trains magazines; Morgan was
a great admirer of Overton's due to the high bar Dick set for RR history,
indeed, business histories in general.
Gerald
> To: cbq@yahoogroups.com
> From: nrmmtclf@gmail.com
> Date: Mon, 15 Mar 2010 17:09:32 -0600
> Subject: Re: [CBQ] Re: [MILW] Re: The Board of Directors
>
> Michael Sol wrote:
> > Wow, I almost feel like I'm reading Overton himself -- Overton, the
> > former Public Relations Dept. employee of the Q, who wrote a darn good
> > PR book when he set his mind to it!
> >
> > I am always interested in how Warren Buffett predicted the condition of
> > the railroads in 1921.
> >
> > In any case, Mr. Edgar states what is true: the Q was a good investment
> > because it pooled the eastbound traffic (which was typically 2:1
> > compared to westbound for transcontinentals) from two transcontinentals.
> > In the long run, that saved the Q.
> >
> > So, yes, the Northern Lines got decent dividends -- from their own
> > traffic -- but did not benefit much from the Q as the Q's westbound
> > traffic was divided by two; which made little difference to the NP since
> > it was already bound to the Q through the Billings traffic agreement.
> >
> > And, while Warren Buffet's views in the 21st century are interesting, it
> > didn't resurrect much of the NP. In 1908, the NP had higher revenues
> > than the Milwaukee Road. By 1921, the NP earned $69 million in total
> > revenues, Milwaukee earned $105 million.
> >
> > In 1915, NP earned $26 million in NROI and received $6 million from the
> > Q. In 1917, NP earned $34 million in NROI, $31 million in 1918. Q
> > dividends plummeted from nearly $8 million in 1917 to $5 million in 1918.
> >
> > In 1921, the year of interest, NP's NROI was $10.8 million. Interest on
> > its funded debt, including the Q bonds, amounted to $15.3 million. This
> > was also the year that the Q bonds were due, and that's what you have to
> > go to the bankers with for refinancing. Not good.
> >
> > In 1921, GN's NROI was $12.9 million. Total fixed charges, including
> > interest on the Q bonds, $16 million. And the Q bonds were due. Not good.
> >
> > The Q on the other hand had a good year -- $29 million in NROI, with
> > fixed charges of only $6.6 million. That was one of the advantages of
> > being the purchase rather than the purchaser. Looked pretty rosy on the
> > surface. $22 million in dividends paid to the GN and $22 million more
> > paid to the NP. Paid nearly twice the amount in dividends than it
> > earned. Nothing "healthy" about that. The Q was forced to lose nearly
> > $27 million to its owners that year in direct losses. But, notice what
> > happened to its accumulated surplus: it declined from $214 million in
> > 1920 to $134 million in 1921. An $80 million treasury raid. Ouch.
> > Nothing "healthy" about that either.
> >
> > Complicating matters was the fact that the other investment, the SP&S
> > had in 1921 a NROI of only $1.7 million, with fixed charges of $3.4
> > million (over half of that of the mighty Burlington). After fixed
> > charges and other expenses, it lost nearly $2 million, having lost money
> > continually since its construction, with accumulated losses by 1921 of
> > $19.6 million -- looking like it was never going to make any profit.
> >
> > As of 1921, very few people were as able to see the past as clearly as
> > Warren Buffett or Mr. Edgar. Things looked pretty shaky for Northwest
> > railroads and I am not sure what the point is of ringing defenses
> > because of something Overton wrote as a former PR agent, or what Warren
> > Buffet was looking at in 2009. The fact is, 1921 was a very bad year. As
> > Mellen observed, "they were going to pieces," and that was based on what
> > actually happened as opposed to the public relations version or what
> > happened in 2009.
> >
> > best regards, Michael Sol
> >
> >> Gerald & Virginia Edgar wrote:
> >>> With all due respect to Mr. Sol (who was on the Milw payroll during
> >>> their 3rd & final bankruptcy), the "20's recession & GN/NP problems
> >>> re: CB&Q purchase in 1901 is well documented in the best selling
> >>> "Burlington Route" by Richard Overton. Perkins had indeed exacted a
> >>> premium price from Hill in 1901 (Perkins & Forbes also considered
> >>> buying Hill's holdings as they had the $$$ to do so; read about it in
> >>> Overton). Both GN & NP profited greatly over the yrs by having a) a
> >>> captive & highly dependable partner to/from the Chicago, K.C. & St.
> >>> Louis gateways; b) an ownership that gave them generous dividends
> >>> from 1901 right thru BN merger time - especially important in the
> >>> 30's! & c) today the most trafficked route from Chicago to the
> >>> Pacific NW is the former Q/Hill Roads combo. There are reasons why
> >>> Buffett bought BN and NOT U.P. despite he & Uncle Pete both having
> >>> hdq in Omaha.
> >>>
> >>> As for that Milw line to the west coast, it's of course gone AND GN &
> >>> NP (nee BN) became transcontinentals ONLY because they purchased
> >>> CB&Q; they only got as far as Duluth, Twin Cities & Sioux City prior
> >>> to 1901 whereas the Q was already west to Denver, Billings, etc.
> >>>
> >>>
> >>>
> >>> Gerald
> >>>
> >>>> Michael Sol wrote:
> >>>>>
> >>>>> --- In MILW@yahoogroups.com <mailto:MILW%40yahoogroups.com>,
> >>>>> "hiawatha101" <mcnorton41@...> wrote:
> >>>>>> Haven't seen it mentioned here before, but maybe I missed it. Anyway,
> >>>>> there was a very serious but short recession in 1921, which caused
> >>>>> problems like the one described in this quote. That's why the train
> >>>>> delivering a bunch of SP 2-10-2s from Baldwin in 1922 was called
> >>>>> the "Prosperity Special."
> >>>>> ---------------------------------------
> >>>>> Seattle and Tacoma experienced depressions after World War I, and
> >>>>> "the water front properties of the company in the two ports have to
> >>>>> a large extent been lying idle." The Milwaukee had carried 457,515
> >>>>> tons of export and import traffic through the ports in 1918. By
> >>>>> 1925, this had diminished to 42,656 tons. The worst year for the
> >>>>> Milwaukee, 1921, demonstrated the Milwaukee's reliance on the giant
> >>>>> Anaconda mines in Butte. A "copper depression" had struck in 1920,
> >>>>> and by the April 1, 1921, the Butte mines had shut down entirely,
> >>>>> causing successive shutdowns of auxiliary services, coal mining,
> >>>>> and timber across Montana and Idaho, and, of course, a huge drop in
> >>>>> shipments on the Milwaukee Road, Anaconda's preferred railroad.
> >>>>>
> >>>>> International Harvester's Cyrus McCormick recalled that the 1920's
> >>>>> were a terrible time for American agriculture. To him, the "whole
> >>>>> economic mechanism of American life was crippled; and the business
> >>>>> of farming -- together with everything dependent upon it --
> >>>>> suffered most of all." The price of wheat, "held down" during World
> >>>>> War I to $3.00 a bushel, collapsed on its own in 1921 to a dollar a
> >>>>> bushel. Corn remained unharvested in fields. "The price of cattle
> >>>>> and hogs fell until every animal was a liability."
> >>>>>
> >>>>> Milwaukee's NROI in 1921 was only $9.8 million, which translated
> >>>>> after fixed charges into an $11 million deficit.
> >>>>>
> >>>>> The misery was shared. Former N.P. President C.S. Mellen told
> >>>>> Clarence Barron that by 1921 that the Northern Pacific and Great
> >>>>> Northern were "going to pieces." In that particular year, the
> >>>>> Northern Lines found themselves desperate for funds to refinance
> >>>>> the mortgages they had incurred to purchase the Burlington in 1901.
> >>>>>
> >>>>> That purchase had greatly improved the performance of the
> >>>>> Burlington ? it had become the key link for two transcontinental
> >>>>> railroads and, uniquely, was the "long haul" link for Northern
> >>>>> Pacific traffic. This had resulted in tremendous growth for the
> >>>>> Burlington. But, the cost to the Northern Lines had been
> >>>>> substantial. The Great Northern and Northern Pacific had each
> >>>>> issued $115 million in "Joint 4" bonds, $230 million total, to fund
> >>>>> their purchase of the Burlington. These were falling due in 1921.
> >>>>> Although the Burlington had profited greatly , the Northern Lines
> >>>>> themselves, ironically, had seen few benefits accrue from the
> >>>>> purchase. Indeed, their growth collapsed after the Milwaukee's
> >>>>> Pacific Extension opened. The Northern Pacific, in particular, was
> >>>>> already bound to the Burlington by the Billings traffic agreement,
> >>>>> that had made it, in essence, a short haul transcontinental,
> >>>>> handing the longer hauls over the Burlington.
> >>>>>
> >>>>> With an additional $115 million in debt, in addition to its own
> >>>>> construction debt, the NP gained only an additional fixed expense.
> >>>>> The only way past the 1921 "Joint 4" refinancing was to raid the
> >>>>> Burlington treasury to the tune of $60 million in cash and stock.
> >>>>>
> >>>>> Milwaukee almost made it, but by 1925, still succumbed. In large
> >>>>> part, this was because the ICC, pressured by bankrupting farmers to
> >>>>> reduce rates, did so at compelling losses to railroads. A reduction
> >>>>> in livestock rates following National Livestock Shipper's League v.
> >>>>> A.T.&S.F.Ry. Co. reduced the income of the Milwaukee approximately
> >>>>> $1,400,000 annually. A rate reduction following Rates on Grain,
> >>>>> Grain Products, and Hay took another $3,400,000 from the Company's
> >>>>> annual revenues. Granger commodities kept receiving special
> >>>>> treatment from the ICC, and this particularly hurt the most
> >>>>> prominent of the Granger Railroads: the Milwaukee Road. Finally, a
> >>>>> general rate reduction in 1922 of 10 per cent following the Reduced
> >>>>> Rates Case took another $14,000,000 out of the Railroad Company's
> >>>>> bottom line. Wall Street "insider newsletters" put the St. Paul
> >>>>> Receivership squarely at the door of the government rate-makers.
> >>>>>
> >>>>> You don't read that one in the general histories.
> >>>>>
> >>>>> best regards, Michael Sol
> >>
> >
> >
>
>
>
> ------------------------------------
>
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