CHAPTER NINE

DERAILED

Carved across the sky, the majestic mountains of the Montana Rockies at the Continental Divide displayed brute brown orogeny. Windswept blue-green ponderosa pines, mountain alders, and Douglas firs everywhere stretched toward the sun. Boulder-strewn alluvial fans draped around the slopes like gray work aprons. Glittering streams and waterfalls wove the elements together in a breathtaking tapestry, humbling all who gazed upon its beauty.¹

Few gazed upon the splendor with more wonderment than those comfortably seated in stuffed leather chairs arrayed along the brass-trimmed windows of the observation car of the Milwaukee Road’s gleaming Olympian, pride of the World War I era. Without sway, jar, or jolt, the Olympian silently snaked through the awesome river-cut passes and a network of man-blasted tunnels to traverse the high peaks. The effervescent rivers seemed to both beckon and propel.² How?

Above the elegant observation car, complete with its fine decor and tempting haute cuisine, twin connective poles saluted a pair of catenary cables that hovered over every mile of track. These cables transmitted powerful electric currents into the great General Electric engines. The motive muscle of those GE engines forced massive forged-steel wheels round and round, thus hurtling the mighty train ever forward through the daunting, rough-hewn landscape. Pushed and pulled by electricity, the Milwaukee Road’s Olympian slid through the mountains with almost insolent ease, but always high environmental respect.³

No roof-burning cinders, lung-choking soot, or nose-stinging fumes sprayed the air to mark the Olympian’s passage. Those catenary cables above connected to a network of hydroelectric plants and twenty-two substations that harnessed the energy of foaming mountain rivers far upstream and downstream. These facilities delivered three thousand volts to cause the train’s gigantic motion—all from the mass of simple water. Hence, here at the Continental Divide, man cleanly and evenly met nature, in harmony and luxury, twice daily aboard the Milwaukee Road as it sped from Chicago to Seattle, spanning five mountain ranges. Of that distance, approximately 650 miles were electrified.⁴ It was a marvel.

Sometimes electrified railways seemed to defy the laws of perpetual motion. For example, when the brakes were applied or the train traveled down a slope, the engine actually returned electricity to the grid. Regenerative braking and similar power returns helped the engines pay for themselves. In some mountain ranges, if timed correctly, a heavy downhill train could actually regenerate enough electricity to the grid to power another train passing it uphill. Thus both trains would travel in a minuet of seemingly energy-free motion. That might have seemed to violate the laws of physics, but not the rules of General Electric’s wondrous workhorses, which were designed to observe this maxim: It is better to give than receive when it comes to electrical power. Those engines lasted not for years but for decades. Their endurance was measured in millions of miles. They were monumental vehicles that created economic prosperity and environmental balance everywhere they rolled.⁵

But the magic of the Milwaukee and a potential coast-to-coast network of similar electrified rail lines were destined to fail. What happened? Was it the clean, limitless power of electricity that failed, or was it something else?

Trains changed the world. The great iron horses that could pull and push against the elements helped create the Industrial Revolution. Such machines were centuries in the making.

Germany, in the 1550s, established the first primitive “wagonways,” that is, roadways embedded with parallel wood rails along which horses lugged heavy wagons. For the next few hundred years, horses continued to pull carts and wagons along the expanding network of wagonways and tramways of Europe. In the 1700s, primitive but powerful steam engines appeared in England’s coal regions to pump water out of shafts and more efficiently move crushing loads.⁶

In about 1825, inventors in both the United States and England unleashed a revolution by making the mighty steam engine portable. Great locomotives were created by fixing massive energy-wielding steam engines atop chassis that were latched to flanged wheels that in turn gripped a pathway of iron rails. As the locomotive burned coal, it boiled water, which created steam, which moved great pistons, which made forward motion possible. This was the beginning of the modern, efficient railroad. The ability of these lumbering behemoths to haul tons of freight was nothing less than spectacular, universally redefining concepts of work, industry, time, and space. Passenger traffic was quick to follow, bringing individuals, cities, and nations together in new ways.⁷ The railroad age was born.

During the second half of the nineteenth century, the railroad industry exploded globally. Robber barons and their allies in government planted track and rail between key points and across the great empty spaces, everywhere creating and often violating national and regional identities. These new mechanized rivers carried commercial lifeblood wherever they flowed. What’s more, the very existence of a railway was both a geopolitical stanchion and a military threat. Any country that constructed a railroad could project its national, diplomatic, and economic power anywhere in the world those rails traveled. Germany embarked upon the Berlin to Baghdad railway to secure its stake in the oil-rich Middle East. Great Britain built rail lines across India to colonize the subcontinent. During the latter 1800s, the great capitals of Europe discovered that land could be conquered or occupied most easily when the front lines were two parallel rail lines. Wars and fortunes were predicated on trains. Likewise trains were predicated on wars and fortunes.⁸

Immediately, trains became indispensable to modern society. More than mere industrial machines, trains and their plaintive wail represented the lure of beyond. Trains represented adventure. Trains brought dreams. Trains inspired romance.

But people soon learned that trains also represented grime. Trains spewed ash. Trains belched coal soot. Trains brought disease. Trains provoked coughing seizures. Trains carried the spoilage of the industrial age and did so indiscriminately into the most remote corners of the world and the tidiest city neighborhoods. If trains represented the new economic soul of industrial mankind, society quickly learned that when it sold that soul, a deadly consequence was part of the bargain.

Quickly, the nineteenth century realized that trains were the filthiest machines on earth. Steam locomotives burned bituminous coal. The ever-billowing smoke of passing engines plugged lungs, coated trees, blackened windows, and darkened the day. Frequently, glowing cinders ignited nearby rooftops, causing wooden homes and buildings to burn to the ground. Unlike stationary industrial smokestacks, the airborne menace of steam locomotives was discharged not up high and not in the distance, but at housetop level and up close. There was no escaping it. Progress was literally defined by a train, and progress into everyone’s midst, big-city or rural setting, brought a deadly cinder and choke.⁹

In the era of the nineteenth-century reformers, muckrakers, and social improvers, the public’s palpable outrage manifested as the pugnacious “smoke abatement” movement. Sworn to wage war against industrial, household, and railroad smoke, along with its associated evils, the intensely popular smoke abatement movement was a force to be reckoned with, especially within the context of antimonopolist and antitrust sentiment. True, the movement targeted more than steam railroads. The reformers’ wrath was focused first on local factory smokestacks and even private household hearths. But their greatest ire was arguably reserved for the trains, because they came and went darkly, drenching all along their route. Yet the railroads supralegally seemed to answer to no one.

None in the nineteenth century believed the problem was new. All understood the hazard was centuries old, dating back to the coal-burning days of the Hostmen and English timber shortages. A review of the book Smoke Prevention in a March 1881 issue of American Architect and Building News opened with the reminder: “It is now two hundred and twenty years since John Evelyn called attention to the evils of the smoke of London. In 1661 he published a tractate with the title: Fumifugium, or the Inconvenience of the Air and Smoke of London Dissipated” The book review pointedly recalled that after a dismal decline in vegetation, London gardens again flourished ever so briefly in 1644. Why? The review explained, “Newcastle was besieged because but a small quantity of coal was brought to London that year.” American Architect and Building News reiterated that coal smoke, “that hellish and dismal cloud,” was “one of the foulest inconveniences and reproaches that can possibly befall so noble and otherwise incomparable a city. . . . What was bad two hundred years ago has become enormously worse in our own times.”¹⁰

American Architect and Building News readers were also given hard data about the oppressive “fogs” that had recently blanketed some British cities. These fogs were defined as “fog plus smoke,” a concept that would later be named smog. The publication explained, “The mortality in the seven weeks ending on the 21st of February, 1880, as taken from the Registrar-General’s reports, shows an addition of many thousands to the average and normal rate of death. Sufferers from asthma were the chief vietims . . . 220 per cent above the average, during the week of the most oppressive fogs. The deaths from bronchitis rose. . . . 331 per cent above the average. The number of fatal cases in pneumonia, pleurisy, and other lung diseases was largely added to; and, as may be easily understood, the mischief did not cease with the disappearance of the fogs . . . ending in early death, or in constitutions permanently enfeebled and deteriorated.”¹¹

A Saturday Review essay in October 1881 made clear that the same smoke that ate away at the lungs literally ate away at everything in sight. The smoke “disfigures our buildings and stunts our vegetation,” complained the Saturday Review. “It not only disfigures—it destroys. It eats into our textile fabrics, and slowly wears away the masonry of our buildings. Worse than all, it impedes the functions of the organism.”¹²

Organized smoke abatement commissions, committees, and societies began to appear and strengthen throughout the 1880s, in London, Montreal, Chicago, Boston, Pittsburgh, and many other cities. An 1882 smoke abatement congress in London attracted no fewer than 116,000 persons seeking both scientific and regulatory answers to the dilemma.¹³

Well into the 1890s, the notion prevailed that mankind’s newest affliction was just a more virulent version of a centuries-old suffocation. An August 1890 edition of the Chicago Tribune traced “the plague back six centuries to the time when coal was first brought to London from Newcastle.” At the same time, the proliferation of railroads helped catapult steam locomotives to the top of the offender list. Soon, local ordinances restricting railway smoke were enacted throughout the country.¹⁴

Because Chicago was crisscrossed by rail lines, that city was particularly concerned with train smoke. By December 1890, most rail lines had agreed to attempt to comply with local regulations by installing so-called smoke abatement devices. The Lake Shore line installed burners that reduced the size of the cloud wafted into the air by engines. The Erie, the Burlington, and the Baltimore & Ohio railroads were all adding similar devices to their engines, and the Northwestern promised to launch such a program soon. The public’s lack of patience with abatement delay was seen when the Illinois Central suggested some bizarre smoke reduction experiments; the Health Department dismissed those ideas as a mere ploy “to baffle the [health] officers” and demanded the Illinois Central take immediate action to reduce emissions or be dragged into court.¹⁵

But in fact, smoke abatement devices were mainly cosmetic, or the reduction benefits were too marginal to matter. Many were nothing more than grilles and restrictive burning techniques. By 1903, the Pennsylvania Railroad’s superintendent of motor power confessed, “We know of no method by which a locomotive can be fired with bituminous coal without producing smoke.” Moreover, as railroads proliferated, the magnitude of the menace only expanded, dwarfing any token amelioration by screens, grilles, or aerators. In Chicago, railroad tracks innervated the entire city. A 1908 Chicago Record-Herald article protested, “There is not a section of this city that is free from railroad tracks. They cut in everywhere; the locomotives puff their smoke into thousands of residences and across the public parks.” The problem, complained the Chicago Record-Herald in another article, was “the thousands of locomotives that enter the very heart of the city.”¹⁶

For example, the Pennsylvania Railroad, by 1910, operated 249 freight and passenger trains along 263 miles of Chicago-area track, burning 670 tons of coal daily. Moreover, the Pennsylvania constituted only 10 percent of Chicago’s daily train volume. A few years later, Cleveland recorded 3.5 million tons of coal smoke discharged into its air annually from all sources. Municipal fines incurred by culprits were merely considered a cost of doing business. The railroads became skilled in dragging out court proceedings, lobbying against regulation, and pressuring smoke inspectors. In one case, after an aggressive Chicago smoke inspector was ousted, forty-six cases of smoke pollution in Chicago were quietly settled by the Pennsylvania for court costs—about one dollar each.¹⁷

Communities understood that the commercial and industrial benefits of rail traffic were killing them. One study documented the increased mortality during two brief periods in 1909 of oppressive citywide smoke-fog in Glasgow, Scotland. During one instance, deaths rose from eighteen per thousand to twenty-five per thousand, and a second fog saw the rate raised to thirty-three per thousand; meanwhile, death rates remained unchanged in surrounding communities located beyond the Glasgow cloud. In 1910, Pittsburgh calculated the damage to its health and infrastructure as $1 per ton burned. A detailed study by the University of Pittsburgh reported that “the smoke nuisance” cost the city of Chicago $50 million annually, while the United States suffered a $500 million annual loss. A 1913 London study widely reported by newspapers on both sides of the Atlantic made clear that coal smoke brought cancer to every area in which it was burned. A typical New York Times headline read FINDS CANCER BRED WHERE COAL IS FUEL. The article added that locales that burned only peat fuel experienced almost no cancers.¹⁸

The answer was to electrify the railroads.

Smoke abatement advocates had been pressing for electrification for decades. Experimental battery-operated trains had been tinkered with throughout the early 1800s. In 1879, at the Berlin Trade Fair, the German firm of Siemens and Halske finally unveiled the first working electric train, a miniature locomotive hauling thirty passengers some six hundred meters at a top speed of 4 mph. The Siemens and Halske train was powered by generated current transmitted through a so-called third rail.¹⁹

The next year, on May 13, 1880, Edison significantly advanced the idea, constructing a genuine full-sized electric railway in Menlo Park. His narrow-gauge train achieved a top speed of 40 mph before it broke down. But the device was steadily improved, and like all trains it added whistles and bells. Soon, his newfangled train was taken seriously by the railroad industry. In 1881, Edison was commissioned by the Northern Pacific to create a great electric locomotive powerful enough to pull ten tons at 60 mph, thus replacing its dirty coal-fired steam engines. But financial problems and patent litigation prevented Edison from completing the task. In 1883, Edison incorporated the Electric Railway Company of America to develop electric trains. But the next summer he gave up the enterprise because, as he explained to a reporter in 1884, “I had too many other things to attend to, especially in connection with electric lighting.”²⁰

By the early 1880s, Siemens had already established a fully functional electrified commuter line in Berlin. American railroad companies knew electrification was feasible as early as 1893 when the Baltimore & Ohio was forced by city officials to electrify its approach to Baltimore through the dank 7,000-foot Howard Tunnel; the tunnel trapped so much smoke, it was considered a gas chamber. Shortly thereafter, the electrified portion was expanded to 3.6 miles, thus reducing the line’s in-city emissions. In 1895, the Pennsylvania inaugurated a seven-mile New Jersey electric commuter line. By 1901, New York officials were demanding that the approaches to its city be likewise electrified. Within two years, the New York State legislature passed laws requiring the replacement of steam locomotives in urbanized areas.²¹

Electric was certainly superior to steam. Some of the first electrics in 1893 had accelerated to more than 112 mph, albeit without pulling major loads. In 1905, the New York Central staged a proper “race” between its mightiest steam engine and its latest electric, each pulling comparable passenger trains. For its steam contender, the company deployed Engine No. 2799, a proven behemoth capable of placing 140,000 pounds on drivers to yield 28,500 pounds of fast-moving tractive muscle. Engine No. 2799 was poised against General Electric’s Engine No. 6000, the New York Central’s forcibly acquired electric capable of routinely dashing down the track at speeds of about 80 mph. From a dead start, Engine No. 6000 required only 127 seconds to attain a speed of 50 mph. This was 76 seconds faster than the steam-driven locomotive, which was left far behind.²²

No longer could a railroad protest that electrics were inferior. In test after test, electrics outperformed steam competitors. By 1906, the New York Central had finished electrifying its section in and out of Grand Central Station and began deploying the trains on express runs—and this accomplishment also testified that electric trains could run fast as well as clean.²³

By 1909, smoke abatement officials in Chicago and elsewhere followed New York’s example, joining the demand for urban electrification. The railroads could no longer argue that the idea was technologically unfeasible. So the upgrade openly became just a matter of money. However, the companies fiercely balked at the expenditure for new infrastructure. Pennsylvania manager Alfred Gibbs was typical when he asserted, “The time has not yet come when the enormous outlay of capital for the purpose of electrification of the railways would be justified by the returns.” One estimate projected an annual cost of $14.6 million for two decades to electrify all Chicago railroads within the city.²⁴ However, reducing the documented loss of life and the $50 million annual erosion of infrastructure and environment did not provide sufficient incentive for the Pennsylvania or other railroads to undertake the fix.

By 1911, many cities pushed beyond mere demands and enacted legislation with teeth. In Chicago, for example, Chief Smoke Inspector Paul S. Bird crusaded for unwavering enforcement of the antismoke ordinance. Pennsylvania Railroad attorneys admitted, “There is no secret made by his [Bird’s] office of the fact that he intends to and does use his office to force electrification of the local railroad terminals.” In response, Pennsylvania officials called for “retaliation” against the city by tying up even the smallest smoke complaint in protracted legal proceedings. Eventually Bird was replaced with a less insistent chief inspector.²⁵

While many of the railroads declined to electrify, some did, especially when finally forced by powerful city establishments, such as in New York and Chicago. But one railroad, the Milwaukee Road, exceeded all other electrified lines in the scope of its achievement. In doing so, the Milwaukee became a mighty railroad that decided to turn the high initial cost of electrification into a moneymaking asset. How? It began by using clean, renewably generated hydroelectricity to help it conquer the rugged Rockies in a way that no steam locomotive could. It proved that long-distance electric railroading could be profitable. Once in operation, the Milwaukee’s trains quietly and almost effortlessly traversed the indomitable mountains daily, and this was a testament that the same approach could be replicated by every railroad everywhere. What happened?

The Milwaukee Railroad came into existence in 1847 as the Milwaukee and Waukesha Railroad, but by the time its first train chugged across Wisconsin in 1851, the name had been altered to the Milwaukee and Mississippi. Within two decades, following expansion into neighboring states, the company acquired its more recognizable name, the Chicago, Milwaukee, and St. Paul. Eventually, everyone called it by its shortened moniker, the Milwaukee Road, or just the Milwaukee.²⁶

In 1881, the Milwaukee became a transportation powerhouse as Standard Oil figure William Rockefeller, brother of John D. Rockefeller, joined the Milwaukee board. Others from the Rockefeller clan and the Standard Oil cartel joined as well. Soon the Milwaukee became a lucrative shareholders’ engine as it hauled freight across the Midwest. A gallery of America’s top robber barons—oil magnate Henry Flagler, meatpacking giant Philip D. Armour, and Standard Oil heir Percy Rockefeller among them—streamed in to partake of the railroad’s riches. In large part, their idea was to grow the Milwaukee to check the expanding rail interests of J. P. Morgan and James Hill.²⁷

Through the first years of the twentieth century, the Milwaukee was the picture of financial health. The line earned three times the interest on its monthly debt service and regularly returned 7 percent dividends to its wealthy stockholders. Even subordinated junior bondholders received returns of at least 4 percent. The Milwaukee’s early management functioned as a trim, experienced, and efficient cadre, often trained from the bottom up. Rank-and-file employees, in the main, stood out as satisfied and loyal even as other railroads were embroiled in contentious labor disputes. The president of the Milwaukee happily informed the Interstate Commerce Commission that his firm had gained a reputation as a “gilt-edge investment stock.” Even the Panic of 1907 was unable to blunt the Milwaukee’s stellar stock, which remained above $100 per share.²⁸

Before, during, and after the Panic of 1907, as urbanized areas expanded and the national economy broadened from the bottom up, the need for more transcontinental railroads could everywhere be heard as a clarion call to business and industry. Newspapers across the country, espedaily along the proposed route, published arpeggios of seductive analyses and reports beckoning ever more rail construction. For example, on November 8, 1905, the Seattle Post-Intelligencer declared that other railroads trekking through the Northwest during the prior month recorded “twice as many carloads of freight shipped east” compared to the previous year, adding, “The business has been so heavy . . . it is impossible to furnish cars enough to meet the demand.”²⁹

A January 1906 Wall Street Journal article crammed with statistics on multimillion-dollar shipping increases, concluded, “Seattle foreign exports in 1905 reached $27,856,285, an increase of $19,690,925. Foreign imports were $9,653,377, an increase of $4,227,575. . . . Total bank clearings were $301,600,000, an increase of $79,000,000. Builders spent during the year $6,684,784.” The Wall Street Journal concluded, “Little additional comment is needed to explain why the earnings of the Union Pacific, Great Northern, Northern Pacific, Canadian Pacific, and Southern Pacific are constantly increasing, nor to explain why the Milwaukee . . . and possibly the Northwestern are anxious to reach the Pacific Coast. . . . The aggregate value of the six leading cities of the Pacific Coast. . . will probably advance more in the next twelve months than any other aggregate of property anywhere under the sun.”³⁰

Indeed, a rival Union Pacific director acknowledged it was only a matter of time before the Milwaukee “would be forced to build . . . [because] the traffic . . . will be too much for the Union Pacific.” Against a background of commercial enthusiasm, salivating civic support, and raw economic opportunity, the directors of the Milwaukee Road in November 1905 decided in principle to challenge the Union Pacific, as well as the Northern Pacific and the Great Northern, the two so-called Northern Lines controlled by competitor railroad millionaires Hill and Morgan.³¹

The challenge was not as unexpected as the method. Plotting a route that would connect the Midwest to the Pacific Northwest, yet steer sufficient miles south of the Northern Lines, took the Milwaukee directly through the Montana Rockies. Steep grades and formidable wilderness required a feat of railroad engineering. But once the tracks were laid, what would economically power the trains? The new route did not pass through coal country. Hence, traditional steam engines would require coal to be transported in at great cost and then lugged up and down the mountains in heavy coal cars, manned by stokers, and all that would add so much weight and cost to the journey that locomotion itself would be just too expensive. This realization intersected with the national demand for electrification.³²

The Milwaukee then made history by voluntarily opting for an electrical route as a competitive edge that was coincidentally cleaner, more powerful, and driven by renewable hydroelectric facilities. By this time, the Milwaukee had already installed electric lighting in three hundred cars, more than any other railroad. The company was therefore amenable to the notion of electrification. Passing through remote mountainous terrain made intermediate stops at mountain hamlets less economically important, since these sparsely populated map marks would not measurably add freight or passengers. The Milwaukee’s strategy would establish it as a long-haul freight and passenger operation—a giant transportation enterprise.³³

Until the Milwaukee board voted in November 1905 to reach for the West Coast, all railroad electrification had been coerced by government regulation as a smoke abatement mandate. The Milwaukee decision was radically different—voluntary, and based on sound economics. So even though driven by compelling self-interest and stark engineering realities, an electrified Milwaukee Road represented a bright turning point for the entire railroad industry, the environment, and the communities that endured the charred price of progress.³⁴

But a better idea was not enough to ensure success. In the wake of the Panic of 1907, the cash-lessened owners and competitors of the Milwaukee found the good fortunes of the company too tempting to resist. Now began a protracted cascade of looting, raiding, and ravaging, from both without and within, that systematically crippled and eventually dismantled the Milwaukee in the midst of its great electrified railroad revolution. It would take an entire volume to catalog the misdeeds and mistakes that killed the Milwaukee. The process was not quick. The vultures feasted for decades before the bones had been picked dry and the plug pulled on its electrification. When the soot settled, the sad case of the Milwaukee doomed transcontinental electrification for all America and propelled the nation more irredeemably toward diesel-driven passenger trains that predictably failed.

The story begins with the Milwaukee’s original estimate for its push to the sea. Company engineers who studied the Northern Lines reliably advised Milwaukee president Albert Earling that the mountains could be crossed and the Pacific reached for about $45 million. By September of 1906, with construction under way, Earling’s estimate had grown to $60 million. By the time construction was concluded, mainly before 1920, the price tag had been inflated to roughly $260 million, of which only $23 million was devoted to the actual electrification infrastructure. An Interstate Commerce Commission (ICC) investigation concluded that the total cost, more than quadruple the original estimate, could not be justified by any “adequate engineering or traffic surveys [that] were made. On the contrary, everything indicates that the project was the result of rivalry between powerful groups.”³⁵

Competitor railroads immediately began snatching up land to sell to the Milwaukee at severely inflated levels or started calculated bidding wars to drive up the price. A Milwaukee director told the ICC that the Great Northern, Northern Pacific, and Union Pacific undertook strategic land acquisitions along the Milwaukee route, forcing the line to “pay a great deal more for the property on account of competitive conditions. . . it was a very vicious competition.”³⁶

Electricity was vastly cheaper than coal or diesel fuel. But the savings never accrued to the Milwaukee. It started with the very copper needed to conduct electricity over wires. Montana’s Anaconda Copper Company was the central supplier because of both its proximity and size. Yet the cost of copper purchased from Anaconda mysteriously skyrocketed far above market prices when the Milwaukee tried to buy. Ultimately, copper price-gouging consumed some 18 percent of the total electrification expenditure, when it was originally thought to be a far smaller expense.³⁷

Who controlled Anaconda? William Rockefeller and his son Percy were pivotal directors of Anaconda. John D. Ryan was Anaconda’s president. Yet the Rockefellers and Ryan were also key directors of the Milwaukee.³⁸ The price-gouging and self-dealing became a fact of life at the Milwaukee.

At the same time, hydroelectricity from local water projects had also suddenly jumped in price due to questionable supply contracts. An ICC investigation found that those sweetheart power contracts were so burdensome that the Milwaukee spent millions more on electricity than it ever needed to, and indeed for electricity that was never even used. “The railroad practically [is] always in the position of having to pay for power which it does not use,” an ICC investigation concluded. During one three-year period, the ICC asserted, when every dollar was being scrimped from employees and operations to survive, the company paid “at least $1.5 million for power which it was unable to use.” The local hydroelectric companies involved included Great Falls Power Company and Thompson Falls Power Company, which executed disadvantageous, unbreakable long-term contracts with the Milwaukee. For example, Great Falls somehow negotiated a ninety-nine year agreement with built-in escalator clauses that virtually obviated competitive bidding for a century. In 1912, both Great Falls Power Company and Thompson Falls Power Company were combined with other local firms to create Montana Power Company.³⁹

Who controlled the power companies? Ryan, Milwaukee’s director, controlled Great Falls Power Company, and through an investment group he also controlled Thompson Falls Power Company. When Montana Power took over Great Falls and Thompson, Ryan simply exchanged his stock in those two merged companies for an equivalent control of Montana Power.⁴⁰

Milwaukee’s electrification infrastructure finally began major construction in late 1914, years after the company’s basic decision.⁴¹ Delays had given enough time for economic predators and financial highwaymen to stake out the process. Self-dealing, price-gouging sweetheart contracts and inflated costs fueled the fortunes of key directors, but it slowed the railroad’s forward motion. But the dream of electrification, cherished by the men and women of the Milwaukee Road, persevered.

The first equipment contracts were finally let on November 24, 1914. A year later, electrified service was inaugurated in Montana and quickly earned kudos. At 9:05 A.M., November 30, 1915, current was switched on between Eustis and Butte. Some ninety minutes later, mighty Engine No. 10200 began the first movement eastward. During the next several days, more trains began operation. On December 3, Milwaukee proved that its regenerative braking system worked wonderfully. A 1,600-ton train climbed a slope beyond Butte and then controlled its descent down the mountain with power braking supplied by the engine that fed current back into the trolley connection—in other words, Engine No. 10200 controlled its descent without drawing extra electricity and actually returned current to the system.⁴²

Several days later, near Janney, Montana, the Milwaukee Road staged a test of its electric engines versus its most powerful steam locomotives. The Butte newspaper reported the contest this way: “A 48-car train weighing 3,000 tons [was] pulled by two electric motors. . . quietly and apparently with the utmost ease at a speed of 16 mph. . . . The steam horses [coal-fired locomotives] toiled up the grade and the engines actually groaned under the strain . . . and only managed to go through Janney at a speed of nine miles an hour. There was something almost pathetic in the game fight which steam put up against its new rival in the transportation field, but it was so visibly and completely outclassed that even a child could have picked the easy winner at a glance. Not one of the half hundred spectators could help feeling he had witnessed the overwhelming triumph of a new power over an old and tried friend that had faithfully served mankind for many decades past.”⁴³

Another test at Erie, Pennsylvania, staged a brute-force sumo-style wrestle between Engine No. 10251, an electric freshly rolled off the production line at the nearby GE factory, and a top-notch steam-powered locomotive. The two beasts were positioned nose-to-nose to determine which could force the other down the track. The shoving match began when the steam engine huffed, puffed, and billowed muscular clouds as it scored a few feet against the electric. But then electric Engine No. 10251 opened its throttle. The coal-burning engine’s forward motion was abruptly stopped. Then, despite its maximum effort, the steam engine was nudged into a retreat. The nudge became an unstoppable assault. The humiliating scene worsened as the steam engine’s wheels continued lurching forward, even as electric Engine No. 10251 pushed it farther and farther backward. Finally, the steam crew conceded the lopsided bout.⁴⁴

While electrified locomotives could scale steep mountain grades, traverse daunting gorges, almost magically run on some stretches of track “free of charge” on regenerated electricity, and outshove any coal-fired engine, the Milwaukee’s electrified service could not overcome the financial drags.

A chief obstruction to the Milwaukee’s success was the so-called Gap. The Milwaukee ran traditional steam locomotives from the Midwest to its electrified section, which began at Harlowton, Montana, and extended to Avery, Idaho, a mainly mountainous distance of approximately 440 miles. At Avery, the line resumed regular steam service over mainly flatlands to Othello, Washington, then proceeded west by electric power another 216 miles to Tacoma, Washington, on the West Coast. The approximately two-hundred-mile nonelectrified portion was infamously called the Gap. The most difficult terrain through the Rockies and the Cascades was understandably electrified first to save money, the intention being to extend the system to the flat middle miles later.⁴⁵

But when funds dwindled due to the inflated cost of electrification and general operation, the Milwaukee was simply unable to complete the Gap. As a result, a cumbersome, costly, and incongruous handoff occurred daily as westbound Milwaukee trains switched from steam to electric at Harlowton, Montana, then back to steam at the Gap, and then back again to electric at Othello, Washington, until the ocean. Eastbound trains repeated this process in reverse. Any financial savings electrification could have conveyed were blocked by the operational and economic nuisance of engine switching at either end of the 200-mile Gap.⁴⁶

Transit across the western United States was made even more unprofitable because the competitor Northern Lines, that is, the Northern Pacific and Great Northern, refused to set joint rates where shipments interlined. Hence, shippers that used either of those Northern Lines to start or complete a shipment were not permitted to seamlessly utilize the Milwaukee’s tracks anywhere along the way. This anticompetitive measure violated ICC rules. The Milwaukee suffered because it had counted on such cross-continental interline shipments to make its electrified routes profitable. Ironically, the Milwaukee management declined to lodge a protest with the ICC, thus acquiescing to and perpetuating the damage.⁴⁷

When the Milwaukee found its cash position so strapped, it did not issue additional stock. That the Milwaukee could have done, since its directors were expert at floating shares, and its financial officers knew a ready market existed in spite of financial difficulties. Instead, the company, mainly during the electrification planning and construction years—that is, from 1909 to 1917—issued a series often- and fifteen-year bonds and other debt measures, totaling more than an astounding quarter billion dollars. Maturity dates, that is, payouts, were bunched up one upon the other in the twenties and thirties, creating an impossible-to-sustain cascade of seven- and eight-digit multimillion-dollar deadlines. Interest itself sapped more than $10 million annually, and unlike stock dividends, interest payments were an unavoidable expense requiring prompt, regular payment. Milwaukee director and finance expert Donald Geddes, when challenged on the unwise financing, admitted, “Unquestionably, you are right. Our financial structure is very much weaker than if we did not have those serial maturities. . . . You are entirely right in saying that if these maturities had been further off, we might have been better off.” The real beneficiaries were of course the investment banks and syndicates, such as Kuhn, Loeb and Company and National City Bank, which scooped up the high-yield bonds. Geddes himself was closely associated with both Kuhn, Loeb and National City Bank. Indeed, in some cases, Geddes was selected by the railroad’s bankers to head up a “common stock protective committee.”⁴⁸ It was said that Geddes was the bank’s man in the company.

Outside factors helped compound the problems of internal and external pummeling. The Panama Canal opened in 1914, providing a new route for shippers sending freight coast-to-coast, and this hurt all railroads. Automobile and truck ownership exploded, reducing both passenger and freight rail traffic, especially as railroad-encouraged, government-financed roads, once thought to simply connect shipper markets to train depots, began to connect instead to other roads; these roads quickly created a growing automobile highway system, and this too hurt all railroads. America’s entry into World War I on April 6, 1917, led to the government’s nationalization of all railroads, which battered the finances of many lines. In 1922, the Milwaukee’s peaceful labor relations eroded, and a protracted strike cost the line millions. Rate reductions imposed by both the regulatory and competitive environment further hammered at the Milwaukee’s financial strength.⁴⁹

Aggravating every other deterrent to the Milwaukee’s survival was a series of monumental management errors. The company’s once sharp-eyed management ultimately gave way to a coterie of cronies and personal surrogates endowed with the power to commit millions in Milwaukee dollars to questionable pursuits. Not infrequently, conflicts of interest lined insider pockets to the detriment of the Milwaukee.⁵⁰

For example, the company’s president Harry E. Byram was appointed as a surrogate for leading Chicago-based stockholder J. Ogden Armour. Beginning in 1920, Byram embarked on a perilous acquisition campaign. For reasons that bewildered government regulators concerned with the railroad’s health, Byram insisted on long-term leases for several failing and virtually useless Chicago-area rail lines. These lines were known within the railroad industry as “orphans,” and a director even denigrated one of the two small lines as “two tails without a middle.” Byram, who had never been involved in such acquisitions, or transactions of such magnitude, was instructed to lease 360 miles of the Chicago, Terre Haute, and Southwestern Railway for an astonishing 999 years, assuming $19.5 million of the failing railway’s debt. Only the Terre Haute’s bankers benefited from this dubious transaction.⁵¹

Chicago banker Frank O. Wetmore, the Terre Haute’s banker who oversaw the sale and lease to the Milwaukee, openly conceded to government regulators, “We had been struggling with that property . . . for ten or eleven years. . . . We had been sweating blood.” Indeed, a prior bank officer running the failed Terre Haute suffered a nervous breakdown trying to make headway. His replacement endured “sweating of six or seven long, weary years.”⁵²

No other line would bail out the beleaguered Terre Haute orphan. We “tried to get everybody,” Wetmore confessed. “The New York Central, the Pennsylvania, the Big Four, the Chicago Grand Trunk. We could not get any of them to even turn around and look at it. They would not pay any attention to it.” Wetmore quipped in one court proceeding, “It is difficult to get rid of an old dog.” Until the Milwaukee mysteriously came to the rescue, the banker testified later, “We had to squirm along, do the best we could.”⁵³

The Interstate Commerce Commission arrived at the conclusion that the Terre Haute “was a distressed property controlled by . . . bankers who wanted to liquidate and who had written the securities off the books of their banks as losses.” When Byram was asked by ICC commissioners to explain the irrational move, he provided no answers. The ICC noted in a report, “Upon examination in this proceeding, Byram’s mind was a blank as to all phases of whatever negotiations he had with the bankers.”⁵⁴

The Terre Haute was just one of several inexplicable “orphan” acquisitions engineered by Byram that caused the Milwaukee’s debt to tower ever higher. Moreover, such acquisitions were just part of a string of bizarre management moves that favored bankers at the expense of the Milwaukee.⁵⁵

While many railroads were able to weather the ups and downs of external events, such as war, strikes, new technology, and management missteps, the Milwaukee was already mortally weakened from within when the first major adversities began in 1914. One Milwaukee director, calling on his meatpacking background, explained why the line had no chance of survival while competitors did. The Milwaukee, he stated, “did not have the bacon in the cellar that the other roads had.”⁵⁶

Insidious self-dealing, manipulated expenses, massive artificial cost overruns, ongoing restraint of trade, looting, raiding, and the imponderables all combined to bring the railroad and its magnificent electrified transcontinental showcase to a slow but screeching halt.

In 1925, $47 million in bonds were set to mature. For years, the Milwaukee had worried about that due date. Now it was upon them. Unable to pay, the once healthy Milwaukee Road was thrown into receivership and then bankruptcy. At the time, the failure of this half-billion-dollar behemoth glowed sadly as the largest bankruptcy in American history. In the run-up to the collapse, the largest shareholders and security holders controlling the largest blocks of stock all sold their well-appreciated holdings at fifty cents on the dollar and therefore escaped financially unscathed. This group included William Rockefeller with 150,000 shares, }. Ogden Armour with 125,000, E. S. Harkness with 100,000 shares, as well as leading insurance companies and investment groups. Consequently, it was the masses of junior bondholders, smaller creditors, and little investors who were smitten by the bankruptcy.⁵⁷

ICC commissioners investigating the monster failure focused on how the Milwaukee’s assemblage of powerful millionaire directors systematically ran the line into the ground. There were few answers. Commission attorney Daniel Grady asked Percy Rockefeller if he could recall a single beneficial decision taken for the railroad—even one.⁵⁸

Mr. Grady: Now, Mr. Rockefeller, after fifteen years as a director of this railroad, what do you now recall as being the most beneficial thing that was ever accomplished during your period of service in behalf of the stockholders of this company? Mr. Rockefeller: I dorít know as I ever thought of it.

Mr. Grady: Can you think of a single thing that was accomplished, that was really for the benefit of the stockholders?
Mr. Rockefeller: Everything that I did was in my judgment for the benefit of the stockholders.

Mr. Grady: But now looking back over fifteen years, can you recall a single achievement of the board of directors that was to the real benefit of the stockholders?

Mr. Rockefeller: If it were to be done over, I do not know how it would be done differently.

Mr. Grady: I am not asking you that. I am asking you a question. Just read the question again. (Question repeated by the Reporter.) Mr. Rockefeller: They [directors] always used their best judgment, and I think that their judgment, if it had not been as good as it was, the situation might have been worse.

Mr. Grady: That is the only answer you would care to make to that question, is it? I will have it read again if you care to answer it. (Question repeated by the Reporter.)
Mr. Rockefeller: They always in my judgment acted in the best interests of the stockholders.

Mr. Grady: Is that the only answer you care to make to that question?
Mr. Rockefeller: That is the answer I think.

Mr. Gradγ: But you cannot recall a single thing that has proven to be of benefit to the stockholders, can you?
Mr. Rockefeller: The situation has been unfortunate.⁵⁹

Ironically, a combination of the Milwaukee’s bankers seemed to be most eager to trigger the receivership and bankruptcy. Months before the railroad defaulted on its bonds, the company’s own attorneys teamed up with its leading bankers to prepare a blank creditor complaint in search of a collaborator. In March 1925, the obscure Binkley Coal Company, due a relatively tiny debt from the Milwaukee, was selected to do the honors, filling in the spaces and functioning as a proxy for the bankers, such as Kuhn, Loeb and National City Bank and leading mortgage holders. Binkley’s reluctant president later testified that he had always been paid by the Milwaukee in the past and never wanted to sue. “We did not feel insecure . . . about our claim against the railroad,” he admitted. Indeed, he confessed some twenty months after filing that he was unaware of all the legal paperwork and details done in his company’s name. Not to worry. A bank attorney functioned as Binkley’s lawyer. He handled all the petitions and motions. Bank attorneys also colluded with Chicago bankruptcy judge Charles H. Wilkerson, privately meeting with Wilkerson in advance to discuss receivership appointments and even ensuring that the judge would be ready and available on March 18, 1925, to hear the petition. Binkley’s legal bills and all but a token $200 of its overdue debt from the Milwaukee were later paid through the action of the bankers. That $200 was left unpaid precisely to allow Binkley a pretext to file against the Milwaukee and remain a continuing creditor. By this means and the power of a $200 matchstick, the biggest American bankruptcy scandal to that date—a half-billion-dollar failure that threw thousands of ordinary people out of work and swept the bread from their tables, deprived payments to a long roster of small creditors, many of whom were economically vanquished, and evaporated the stake and savings of thousands of small heartbroken investors—by this $200 was the great Milwaukee debacle consciously ignited.⁶⁰

ICC attorneys probed the incongruity of Milwaukee directors being associated as either directors or leading stockholders of the very banks that benefited from the railroad’s bankruptcy by gaining control over the remaining assets.

Walter Fisher, a commission attorney, grilled Jerome J. Hanauer, a senior partner of the investment bank Kuhn, Loeb, which functioned as a principal financial firm for the Milwaukee’s stocks and bonds.

Mr. Fisher: Was Mr. Percy Rockefeller at that time closely associated with the National City Bank?
Mr. Hanauer: I cannot testify as to that. . . . I don’t remember.

Mr. Fisher: Well, was it not your understanding throughout this entire series of transactions that Mr. Percy Rockefeller was largely interested in and closely associated with the National City Bank?
Mr. Hanauer:. . . There was absolutely no reason—no legal restriction on a director of a railroad company also being a director of a banking house or a bank with which that company did business.

Mr. Fisher: Pardon me—
Mr. Hanauer: And whether he was a director at that time—

Mr. Fisher: I have no objection to your anticipating a possible interpretation of your answer and making an argument against it. You may be wrong in your anticipated interpretation, but I would like to get an answer to the question first, because we are off and down the road on some other issue.
Mr. Hanauer: I cannot testify from actual knowledge of the dates on which Mr. Rockefeller was a director of the St. Paul Railroad or of the National City Bank.⁶¹

In the decade after the Milwaukee was thrown into bankruptcy, its rail service, including its electrification, stagnated. The company’s assets were continually eroded, its routes were undermined, its equipment allowed to decay. Ironically, some found splendid profit in the Milwaukee’s evisceration. Every time the steed tried to rise, the predators swooped in.

During its painful reorganization, the Milwaukee struggled to restore its financial health. The twenties were an era of growth and increase for most railroads—but not for the Milwaukee. The ICC observed that the Milwaukee “became bankrupt at a time when general railroad conditions had greatly improved.”⁶²

But improvement became impossible for the Milwaukee when its bankers continuously gnawed at the firm’s cash. For example Kuhn, Loeb, which headed up the reorganization, assessed the company $6.5 million in so-called expenses including more than a million for its own fees. A Senate investigation found the charges hard to believe. Senator James Couzens (R-Michigan) asked pointed questions of Kuhn, Loeb senior partner Hanauer.

Senator Couzens: You put in a statement. . . of the expenses . . . $5 million to $6.5 million. I would like to ask if you consider those reasonable charges for the service that has been performed?
Mr. Hanauer: 1 should consider it, Senator, the minimum—that is, it is very reasonable. . . . It is really unfortunate that in any reorganization the expenses are so high. . . .

The Chairman: How much do Kuhn, Loeb and Company get out of it?
Mr. Hanauer:. . . We get twenty-five cents per bond, and twenty cents per share, which amounts, altogether, for the National City Company and ourselves, to $1,044,000. . . . It is not all profit by a long ways.

Senator Couzens: How do you arrive at this figure $1,044,000 for your services?
Mr. Hanauer: Of course, it is very difficult to say how one aπives at anything.⁶³

By 1935, battered again by the Depression, and again weakened underfoot, the Milwaukee collapsed once more. In the summer of 1935, the Milwaukee filed for bankruptcy a second time. Once again, the same bankers and even the same judge—Wilkerson—controlled and oversaw the failure.⁶⁴

In its second reorganization, numerous interests competed for a piece of the Milwaukee’s continued existence. Among them was the Electro-Motive Division of General Motors. The same company that finally became a pivotal contender against Ford’s vehicles was also a powerhouse in other forms of internal combustion. This included diesel locomotives, that is, electric locomotives that lugged their own petroleum-burning onboard power plants to generate electricity. Rather than receive current from overhead wires and third rails fed by hydroelectricity and existing utilities, diesel electrics compressed air and oil until the oil exploded or expanded in the piston. Those pistons turned the massive generators that sent electricity into the traction motors moving the train forward. In essence, diesel electrics were hybrids, half powered by oil, half by electricity.⁶⁵

General Electric invented the first diesel electric in 1918 for the Jay Street Connecting Railroad in New York. By the 1930s, GE was greatly challenged by General Motors’s Electro-Motive Division, which built the sleek, awesome-looking Pioneer Zephyr. The futuristic Pioneer Zephyr, resembling the wind itself, packed twin boxcar-styled engines with dual 900 hp diesel engines that combined to forge 3,600 hp of raw power. On May 26, 1934, the Pioneer Zephyr set a long-distance record from Chicago to Denver, dashing from dawn to dusk at an average 77.7 mph for thirteen hours and five minutes.⁶⁶

In 1939, the Electro-Motive Division unveiled its FT series, which exceeded the speed records of the Milwaukee’s aging electric EF2 and EF3 engines. The only difference was that the diesels burned petroleum instead of using renewable hydroelectric or the excess capacity of nearby electric utilities. Quickly, the Milwaukee’s Mechanical Division fell in love with the faster FT diesels.⁶⁷

In 1941, the Milwaukee purchased its first FT diesel and, by the end of World War II, became determined to eliminate its electrified network. After the war, oil seemed cheap and abundant. The FTs were fast and powerful. New, more capable electrics were still being manufactured by General Electric, but those were being exported overseas to Europe and Russia where the clean-running locomotives became the stalwarts of rail.⁶⁸

The fight to destroy the Milwaukee’s electrification amounted to an internal company war between Kiley and Wylie.

J. P. Kiley was a Milwaukee vice president determined to eliminate all electric lines. The reasons, Kiley presumed, would be cost, technological obsolescence, and lesser capability.⁶⁹ This was the assumption.

Laurence Wylie was an electrical engineer devoted to clean, electric trains. Wylie was appointed by Kiley in 1948 to oversee the dismantling of all electric. Having worked with electric rail since 1919, Wylie balked. On his own volition, Wylie ordered comparative studies of electric versus diesel. His findings contradicted Kiley’s theories. The old electric could outpull the new diesels and run cheaper, dollar for dollar. In fact, on one typical run to the West Coast, three diesels were shown to annually cost more than $104,000 extra. In mountainous terrain, diesels fared even worse. Newer electrics constructed by GE in the 1950s for the Soviet Union showed still better results. These powerful new GE electrics, nicknamed Little Joes for Joseph Stalin, were almost twice as economical and powerful as GM’s diesels, especially on long runs.⁷⁰

For example, six Electro-Motive Division F7 diesels were needed to haul 3,330 tons, and five Electro-Motive Division GP9s were required for about the same chore. But that same tonnage was easily pulled by just four old GE freight electrics. The electrics also beat the gas-burning locomotives on flatter terrain. Kiley dismissed Wylie’s findings and instead relied on his own engineering tests, in large measure provided by the Electro-Motive Division. Wylie, who had worked his way up from a Montana trainmaster to a district superintendent, could not understand why the engineering reports did not jibe. In his campaign to replace electrics with General Motors diesels, Kiley was constantly buttressed by GM’s glowing engineering reports. Finally, Wylie realized the newest diesels were being compared not with the newest high-speed electrics, but thirty-year-old electrics. Moreover, other data from General Motors Electro-Motive Division was constantly being skewed in favor of diesel.⁷¹

Who was heading up General Motors Electro-Motive Division efforts in the late 1940s? It was Dana Kettering, the son of Charles Kettering, the same inventive genius who’d helped Gray and Davis Electrical Engineers develop the starter and battery array that mysteriously undercut Thomas Edison’s attempt to create an electric vehicle with Henry Ford. In that instance, the testing had also been challenged as disingenuous.⁷²

Eventually, Wylie was forced to concede defeat at the hands of Kiley. Kiley had the power. Wylie did not. By the fifties, it was clear that Wylie would be compelled to oversee the abandonment of the nation’s only proven electric route, and the system was permitted to continue deteriorating. Repairs were not initiated. Upgrades were compromised. Electric was forced into a slow, painful decline. Wylie retired in 1956, his dream of sustaining a world-class electric railway shattered.⁷³

During the fifties and sixties, the Milwaukee continued to teeter on the edge of yet another failure. But the electrified operation, even though weakened, was never a factor in the railroad’s crumbling economics. In fact, “The new electrification paid for itself by 1930, returning 9 percent annually . . . in savings over comparable steam operation,” according to an independent cost analysis by rail experts. It continued to make money well into the fifties and sixties. No wonder executives from railways across Europe traveled to the Milwaukee line to marvel at the clean and efficient power of its famous western route. In fact, the Milwaukee’s electrification was emulated on forty-one thousand route miles across Europe. Eventually, twenty-six nations worldwide copied the system, adopting Milwaukee-style electric as a standard.⁷⁴

During the postwar decades, the truth about diesel versus electric on long distance hauls was obscured. But slowly information began seeping out. For example, electrics were found to be 40 to 60 percent cheaper to maintain and simply lasted longer. The Internal Revenue Service agreed and refused to accept the notion that diesels possessed a twenty-year life. A study by the Chesapeake and Ohio completed in 1955 demonstrated that diesels could not reliably last the advertised twenty years, but rather about a dozen. So the IRS reduced the permissible diesel engine depreciation first for the C&O, and then for the entire rail industry, to just fourteen years.⁷⁵

In the late 1950s, British engineer Harry Farnsworth Brown risked the wrath of General Motors by widely publishing his findings that diesel was no better than coal. One independent engineering study reported Brown’s work this way: “In his effort to verify several claimed advantages of diesel locomotives over steam, Brown found all of them spurious, having been based on invalid comparisons, faulty statistical methods, incomplete and biased data, and various forms of misinterpretation. His results and conclusions were presented before the Institution of Mechanical Engineers of London on November 30, 1960, in a paper entitled “Economic Results of Diesel Electric Motive Power on the Railways of the United States of America.” Mr. Brown’s conclusions were devastating.⁷⁶

Brown’s summary explained, “This study simply states that the all-embracing economies claimed for diesel motive power on the Class I railways of the United States, as a whole, do not appear in the statistical record. The diesel locomotive has not ‘revolutionized’ American railway economics. In road service, diesel motive power has added to the financial burden of the railways. The comparative analysis made in the paper showed the economic performance of diesel motive power to be about on par with that of steam on its overall application on the United States railways—no better, no worse. . . . In line haul, or ‘road’ service, the paper showed it to be more expensive than equivalent modern steam might have been. . . . The capital costs had just about cancelled the operating savings.”⁷⁷

Moreover, electrics required no petroleum, which even during the postwar period was known to be a diminishing resource. Canadian Pacific Railway senior executive officer Keith Campbell spoke bluntly to a 1972 Railway Systems and Management Association seminar. “As diesel locomotive operators,” Campbell insisted, “we are the prisoners of a single fuel, a fuel that is fast becoming a pawn on the chessboard of international politics. It is a fuel, too, for which many users—truckers, for example—have no alternative at the present state of technology. One does not need sophisticated techniques for predicting the future to form the view that, whatever else happens, its price is bound to rise.”⁷⁸

On February 20, 1973, the Milwaukee Road issued a press release:

“The Chicago, Milwaukee, St. Paul and Pacific Railroad Company will phase out its remaining electrified operations in Montana, Idaho, and Washington in favor of fully-dieselized service throughout the railroad system, according to an announcement by William J. Quinn, chairman of the board, and Worthington L. Smith, president. The decision came after exhaustive studies carried out by the company over the past several years. . . . ‘From a dollars and cents point of view, the railroad had no alternative, but for other reasons it was a difficult decision to reach,’ they said. ‘Even though electrified operation has actually been in an unofficial phase out stage in recent years, the fact remains that it has been an important part of the Milwaukee Road image, and there is a tremendous amount of sentimental interest in it. When first installed, the Milwaukee’s electrified system was vastly superior to steam operation, and even to the diesel power of several years ago. It served us extremely well. Given 1973 facts, however, with highly efficient and versatile diesel locomotives available for both main line and branch line service, compared with the aging electric locomotives confined to main line only, the decision was inevitable.’ “⁷⁹

The press release went on, “The Milwaukee Road has 656 miles of electrified main line, the longest in the United States. . . . Between the two sections is a 212-mile segment of main line which for a variety of reasons was never electrified. The ‘gap,’ as it is known, has been operated by conventional power, a fact which severely limited the versatility and efficiency of the over-all electrified system.” Milwaukee officials added that company experts “observed that continuing electrified operation indefinitely wo.uld mean not only electrifying the gap but also replacing the entire complex with a modern, high-voltage system and purchasing new electric locomotives. Ίn effect,’ they said, ‘it would be like electrifying from scratch and our studies indicated that such an undertaking would be unwise.’⁸⁰

“ ‘Because of the extent to which electrified operations have already been cut back, the decision to phase out the system completely over a period of time is of negligible significance from the environmental point of view and will have relatively little impact on the company’s system-wide diesel fuel requirements,’ the officers stated. Employees now working in electric power substations or engaged in the maintenance of electric locomotives and the overhead power supply system have been notified of the phase out decision. A task force will meet with affected employees within the next 30 days to explain the move and the adjustments that will be required. The task force will also make the remaining decisions with respect to maintenance and operation, locomotive requirements, disposal of electric facilities and related matters.”⁸¹

Milwaukee officers were positive their oil supplies would continue. Eight months later, in October 1973, as a consequence of the Yom Kippur War, Arab exporting countries briefly shut off the spigot, creating the first so-called Oil Shock. Lines to fill up at the gas station were long. The Western world was rocked. By that time, it was too late for the Milwaukee to reverse course. Nearly five years later, rising fuel prices and other costs finished the decades-long destruction of the Milwaukee. It took almost a decade to liquidate the railroad. That was finalized in 1986. Most of its skeleton was sold for scrap.⁸²

In the twenty-first century, American railroads consume more than four billion gallons of fuel annually. Electrified railways virtually do not exist outside a few select commuter trains coursing along the Northeast corridor. The gift of renewable, sustainable, and clean electrically driven long-distance rail service is vanquished in the United States. But the legacy of the Milwaukee’s great electrified steeds can still be seen elsewhere in the world. In Europe, Asia, Latin America, and Australia, the lands are crisscrossed with electric routes. The Eurostar whisks passengers under the Channel from London to Paris. Japan’s high-speed bullet trains exceeding 300 mph are the envy of the world. France, Germany, Switzerland, and the other leaders of Europe have all established a future of electrified rail to move people across borders and bring the Continent together. Russia is ordering new electrics from American manufacturers to span the Siberian frozen expanse. The Milwaukee’s legacy lives on everywhere in the world.

But the legacy does not live on in America. In the United States, oil is the fuel of choice for the railroads. In America, electric was derailed.