YEAR 1950 marks the financial coming-of-age of America’s newest major
rail system. In that year,
the Gulf, Mobile and Ohio had less railway operating revenue than in its
peak revenue year of 1948, but its net income, after fixed and
contingent charges, was almost two million dollars greater.
President Tigrett was quick to point out that more than one and
one-half million of this eight million dollar net income was of a
special nonrecurring nature, and for this and other reasons the Company
did not drastically increase its dividend payments.
Many of the students and observers of railroad affairs felt that
the GM&O operations for 1950 proved conclusively that the merger
program carried out by the Company during the preceding years had been
tested and found satisfactory.
evidence of the success of the consolidations of the Company, came in
the years 1951 and 1952. In
1951 the Company, showed a net income of almost $6,640,000, which
compared quite favorably with the net income of 1950, when the
nonrecurring special payments were excluded.
The net income for 1952 was $7,785,000, only $215,000 less than
the record-breaking net for 1950.
name GM&O no longer offers much of a clue to the territory served by
the 2,800-mile transportation system.
The port of Mobile, Alabama, near the waters of the Gulf of
Mexico, is still the home office for the management of the road, but the
only contact with Ohio is the crossing of that river at Cairo, Illinois. As the map shows, two parallel lines extend in a
northerly direction from Mobile through Mississippi and converge again
into one line at Jackson, Tennessee, the “spiritual home” of the
GM&O Before these lines leave Mississippi, however, several very
important offshoots occur. The
first of these to he reached after leaving Mobile is the line from
Union, Mississippi, west to Jackson, Mississippi, and then south through
Columbia, Mississippi, and Bogalusa, Louisiana, to New Orleans.
line extends from Artesia, Mississippi, eastward to Columbus,
Mississippi, thence east and slightly south to Tuscaloosa, Alabama.
From this point the line goes on down to Montgomery, the capital
city of Alabama. From
Tuscaloosa, the GM&O, as of March 13, 1952, also has trackage rights
and operates freight service over the Louisville and Nashville line into
Birmingham. This route is
now in operation instead of the one formerly used, from Corinth down to
Birmingham over the tracks of the Illinois Central and the Southern
Mississippi, is the junction point on the GM&O for a freight route
which runs west to Memphis, Tennessee.
All of this route is owned by the Southern and is used by the
GM&O under trackage agreement.
This operation is not permitted to stop for local freight at
stations not served by the main lines of the GM&O.
of Jackson, Tennessee, the road runs through western Tennessee and
Kentucky, crosses the Ohio into Illinois just above Cairo, and runs
northwestward from “Little Egypt” to St. Louis, Missouri.
This was the northern terminus of the GM&O from 1940 until
its 1947 merger with the long-famous Alton Railroad, which now carries
the GM&O northward to Chicago and west to Kansas City, Missouri.
Near the namesake city of Alton, Illinois, the track again
separates into two main lines. One
goes north and slightly east, to Springfield, Bloomington, Joliet, and
Chicago. The other line
from Alton goes north and slightly westward, to Roodhouse, Illinois.
From this important junction point, the road once more goes in
two directions. One lines
goes west to Kansas City, by way of Louisiana, Mexico, and Glasgow,
Missouri. The other line
out of Roodhouse stays entirely in Illinois.
It goes northeast to Murrayville, Jacksonville, and San Jose,
turns eastward at that point, and rejoins the main line at Bloomington.
so-called “air line” cutoff runs between Murrayville and Iles, a
point on the main line just south of Springfield.
This line was built to eliminate the Bloomington-San
Jose-Jacksonville route from the through freight service between Chicago
and Kansas City. This
outline of the territory served by the GM&O is by no means complete,
for it omits many local branches which are important feeder lines in the
system, especially, in the old Alton territory.
Seven states in the central Mississippi Valley are traversed by
the lines of the road, and Mississippi’s 906 miles of main track are
almost equaled by Illinois’ 857 miles.
The other states in order are: Alabama, with 392 miles;
Tennessee, with 296 miles; Missouri, with 255 miles; Louisiana, with 150
miles; and Kentucky, with 43 miles.
service of the GM&O does not stop with its rail offerings.
All of the lines owned by the Company, except those from Mexico
Missouri, to Kansas City, are paralleled by the routes of the Gulf
Transport Company, the completely owned highway subsidiary.
In addition to truck service, the Gulf Transport Company offers
bus service throughout most of the GM&O territory south of St.
Louis. The Company is proud
of the fact that, in spite of the low passenger density of some of its
areas, none of its territory has been stripped completely of its rail
passenger service without making provisions to operate bus service as a
substitute measure. In
keeping with this plan of substituted service, the Gulf Transport
Company began a highway mail service in 1946 to territories no longer
reached by railway mail service. This
program has become very popular with small communities and with the Post
Office Department as a valuable method of operation in predominately
GNMO provides transportation services only in its seven-state area.
The traffic department of the road, however, has solicitation
offices in twenty-five key cities which are not on the company’s rail
lines. These offices strive
to get shippers in these scattered points to use the GM&O for their
freight when it is feasible to do so.
Other employees of the Traffic Department in the nineteen offices
on the line actively solicit business in the “home” territory of the
road and in points where there is no rail competition.
GM&O, as is true with most railroads, handles hundreds of categories
of freight. It is
obligated, as a common carrier, to transport almost anything which the
public seeks to have moved from place to place.
Like most other businesses, however, the GM&O finds that a
majority of its business is regular, repeat order business.
For instance, in 1951 the road handled twenty-five categories of
freight, each of which produced more than one million dollars in gross
revenue for the road. These
twenty-five categories which brought in almost half of the total freight
revenue, are listed in Table 4.
FREIGHT ITEMS HAULED IN 1951
WHICH BROUGHT IN GROSS REVENUES TO THE GM&O OF MORE
Lumber, shingles, and lath
14. Food products, in
packages, not frozen
15. Flour, wheat
16. Wrapping paper
Paperboard, fiberboard, and pulp-
18. Feed, animal and poultry
Manufactured iron and Steel
Iron and steel pipe and fittings
21. Manufactures and
Gravel and sand
22. Petroleum products,
23. Cotton, in bales
Sodium (Soda) products
24. Machinery and machines
Ammunition and explosives
GM&O Annual Report 1951.
the six major freight classifications of the Interstate Commerce
Commission, manufactures and miscellaneous items for the year 1951
brought in almost 54 per cent of all freight revenue.
Products of agriculture brought in about 15 per cent and was the
next most important grouping. The
other four in order were: products of mines, almost 15 per cent;
products of forests, almost 12 per cent; L.C.L. freight, just over 3 per
cent; and animals and products, not quite 2 per cent.
It should be noted that this is a breakdown of total revenue and
not profitability to the railroad.
train revenue, which includes revenue from mail and express, amounted to
a little more than $8,600,000 in 1951, which was a slight increase over
1950. The 1952 passenger
revenue of about $8,080,000 shows that the long-term downward trend of
passenger revenues has been resumed, after a temporary upturn caused by
the outbreak of the Korean War. By
far the heaviest portion of this passenger revenue was earned in the
territory between St. Louis
and Chicago, where the Alton for years has been the leader in passenger
these years, the GM&O continued to press for relief from passenger
train operations which seemingly could not be made profitable.
One passenger run in the state of Illinois was discontinued early
in 1951, and in December of that year the local trains from Jackson,
Tennessee, to Meridian, Mississippi, were removed from operation.
The road was proud of the fact that not a single person opposed
the latter removal, even though hearings were held both in Tennessee and
Mississippi before the state commissions would agree to discontinue this
Company abandoned operations on the 21-mile East Hardin branch in the
state of Illinois on December 27, 1951.
This branch had been operated at a loss for years before the
GM&O acquired the Alton, and it has never paid its expenses since
the GM&O assumed control. The
Interstate Commerce Commission finally authorized the discontinuance of
operations as the only solution to the problem.
order to handle all its rail services in 1951, the GM&O had a
monthly average of 10,354 employees who received an annual wage total of
$40,913,000 during the year. The
Company owned and operated 246 Diesel locomotives, 11,781 freight cars
of all types, as well as 218 passenger cars, coach chair cars, and
Pullmans. A total of 823 Company service cars were used to maintain the
road in good operating condition. The
total tax bill of the road, $11,235,000, was almost twice as high as the
1951 net income of $6,639,000.
the road may have come of age financially in 1950, this does not mean
that the Company was no longer interested in improving its operations.
On June 20, 1950, the Joliet and Chicago Railroad Company was
dissolved, with ICC approval. This action did away with the last of the subsidiary or
leased lines of the old Alton. With
this change, the GM&O and the New Orleans Great Northern became the
only corporations in existence in the whole GM&O System.
Simplification of corporate structure has about reached its
logical conclusion on the GM&O as it is now constituted.
territory development activities of the road continued throughout these
years. The Company’s
programs for happier living, territory reforestation, and better
agricultural activity were well received, as usual.
For example, a Better Living Contest for Negro 4-H Club girls
attracted 800 entrants, and the road awarded $1,000 in prizes.
The contestants were judged for: (1) improvement of the outside
appearance of farm homes, (2) improvement of outbuildings and immediate
surroundings, (3) bedroom improvements, (4) planning and arrangement of
ground, and (5) club and community activity.
woodland improvement program for 4-H Club boys, which was sponsored by
the road along with other institutions, was another example of this type
of service. The News for
September 15, 1951, reported that 90,000 pine seedlings had been planted
in Tuscaloosa County, Alabama, in the past three years under the
auspices of the GM&O and the Tuscaloosa Kiwanis Club.
Seedlings for the project were provided by the Gulf States Paper
Corporation. This county
program was one of twenty-five which were cosponsored by the GM&O
for 4-H Club and FFA boys. The
projects included reforestation, timber protection, timber harvesting
two examples of many such programs illustrate the constant interest of
the road in efforts to improve the living standards of the people along
the lines of the Company. There
will be little immediate financial return to the GM&O for these
activities, but the long run potentialities of this type of citizenship
many years the GM&O has had a program under way which endeavors to
restore some of its own employees to productive and happy living.
This is the assignment of an employee consultant whose task is to
assist employees who are in need of help in solving such personal
problems as might arise in the lives of any of us.
For a number of years, the consultant has been Mr. Biscoe Seals,
who works out of the Jackson, Tennessee office of the Company.
A complete account of this activity was published in the Jackson
(Tennessee) Sun recently, and the more important parts of this story,
are reproduced in Figure 21.
GM&O HELPS EMPLOYEES SOLVE PROBLEMS
Excerpts from a Reprint from Jackson (Tennessee) Sun in
GM&O News April 15, 1952
Gulf, Mobile and Ohio Railroad Co., employees, like other
people, have their personal troubles.
Many of their worries, as with other workers, stem from
or involve finances.
GM&O men, however, have one big advantage-they can
turn their troubles over to a company official, and sleep soundly
again. All up and down the 3,000-mile system GM&O men turn to
Biscoe Seals of Jackson, Employee Consultant, with their troubles.
The GM&O does not lend money to these men.
The man in debt who asks for help is asked first of all
to list his debts and creditors in detail. That means, every single
penny that he owes.
Seals and the man then work out a budget, setting down
every cent of necessary expense for the man and his family. (If the
man has children in school, books, lunches, clothing and incidentals
To that basic budget Seals adds an amount sufficient to
take care of the family’s clothing and incidental needs for the
period necessary to retire the debts.
The man then assigns to Seals his present and future
wages or salary-and goes on about his daily life without further
It’s Seals job then to work out an arrangement with the
man’s creditors whereby they are paid a pro rata part each month of
the man’s earning that month after deduction of the amount necessary
for the man and his family to live.
He shows them [the creditors] the budget worked out for
that particular employee, points out that the man has agreed to spend
for only essential living expenses, and that all the rest of his
income will be distributed by Seals each month to the creditors until
the debts are retired.
Seals calls attention to the fact that about 90 per cent
of railroad employees work on a “piecework” basis. That is, they
work by the hour, mile or day. If they are sick and have to lay off,
or if they are not called, their pay check will be smaller than it
will be if they are busy throughout the month.
He shows the merchant that an acceptance of the suggested
arrangement is good business, because it helps the creditor collect
his Money and rehabilitates a customer. It also prevents many
bankruptcies, garnishments and other unpleasant and costly action.
forward-looking effort of the GM&O in 1950 attracted much attention.
Since 1940, the GM&O had wanted to acquire better and cheaper
trackage rights into Birmingham, Alabama.
Some thought had been given in 1940 to the possibility of
dropping the Mobile and Ohio’s perpetual contract to use the IC’s
tracks from Ruslor (Corinth), Mississippi, to Haleyville, Alabama.
At that time, however, the management decided to hold onto the
contract in order not to create further problems for the merger program
of 1940. Once the GM&O
was formed, attention was given to acquiring a more serviceable route
for entry to Birmingham. At
one time, the GM&O was about ready to request permission to build
its own line from Tuscaloosa, or some point near that city, to the steel
center. Finally a
satisfactory lease agreement was reached with the L&N, which has a
freight service line from Tuscaloosa to Birmingham.
Armed with an agreement between itself and the L&N, the
GM&O proceeded, in 1950, to request the Interstate Commerce
Commission to allow it to cancel its perpetual contract with the IC and
its term contract with the Southern. The GM&O was using the Southern’s tracks from
Haleyville to Birmingham, but this contract was subject to periodic
revision. Its terms were
not so onerous as the one with the IC, which was made years earlier by
the managers of the M&O before it went into receivership.
for the GM&O’s request to change its route into Birmingham were
held in Birmingham before ICC Examiner Lyle.
The case was listed as Finance Docket Nos. 16989-90 and was heard
on October 11, 1950. Mr.
Hicks served as the principal witness for the GM&O He
asserted that the GM&O was not trying to injure the IC but was
attempting only to improve conditions on the GPI&O.
His testimony, showed that three alternative proposals had been
made to counterbalance possible financial loss to the IC, but that up to
the time of the hearings all three alternatives had been rejected.
Alternative No. 1 proposed that the GM&O would lease a
19-mile section of IC track from a point near Moscow, Kentucky, to
Winford, Kentucky. The
GM&O was willing to pay, about as much to the IC for this 19-mile
section as it has been paying for use of the 80-mile stretch from Ruslor
to Haleyville. By using
this sector of the IC line, the GM&O would be able to abandon its
own track, which roughly parallels that of the IC.
The GM&O’s line in this sector is between the IC line and
the Mississippi River, hence its (GM&O’s) line is difficult to
maintain, and the GM&O would be happy to abandon it if the IC line
should become available.
No. 2 was for the GM&O
to sell its Dyersburg Branch (the old Birmingham and Northwestern) to
the IC “on reasonable and satisfactory terms.” Since the IC already,
operates most of the train service out of Dyersburg, this line, if
bought cheaply enough, could supplement the position of the IC in the
No. 3 was for the GM&O
to pay the IC an amount approximately equal to rent, taxes, and interest
payments on the Ruslor-Haleyville line (about $143,000 annually) for the
next fifteen years, even though the GM&O ceased using the line
the hearings, the GM&O made it plain that, even though it were not
relieved of the Ruslor-Haleyville contract, it still wanted ICC
permission to enter Birmingham over the L&N line from Tuscaloosa. Under this arrangement, the GM&O would have to operate
only 55 miles of “foreign” lines.
The GM&O estimated that it would add approximately $200,000
in net revenues from present business if it were allowed to use the
L&N entry. Although the
GM&O confidently expects to move a large amount of iron ore from
Mobile to Birmingham no estimate of this or other added revenue was used
to strengthen the case for dropping the IC contract.
parties of the controversy filed briefs with the Commission s support of
their case after the hearings were completed.
Attorney D. Lott’s
brief so clearly illustrates the position of the GM&O that one
paragraph is quoted below:
Gulf, Mobile and Ohio and Mobile and Ohio have performed
under the IC Contract for more than 45 years.
Nevertheless, IC relies largely not exclusively upon contractual
provisions which may well have violated public policy, when written and
which certainly are inconsistent with present needs resulting from
vastly changed circumstances. Surely
perpetual obligations were treated by our common law courts as inimical
to the public interest, they must be so regarded today.
Such contractual provisions seeking to freeze in perpetuity
important areas of railroad operation violate the spirit and purpose of
the act, since such provisions if enforced, would prevent the railroads
themselves from making changes necessary to the needs of a still rapidly
GM&O asked the Commission to take an action, in this case, which it
had never yet performed. GM&O
requested the Commission to arrange a cancellation of a “valid”
contract between two solvent and competing roads.
The GM&O felt that it should not be forced to live in
perpetuity with a situation which is not desirable from the standpoint
of its own best interests. The
contract was specially onerous to the GM&O because the IC operates
deluxe passenger trains over the line at speeds which often amount to 90
miles per hour. All railroad operating officials know that high-speed
passenger trains require a superior type of roadbed and track. Since the GM&O by contract, paid a pro rata share of
expenses determined by the IC, the GM&O felt that it is subsidizing
passenger service for its rival line.
Under the contract, the GM&O could not operate passenger
service of any kind over the line, nor could it operate local freight
service. The Company was limited to “bridge” traffic moving from
Ruslor, or beyond, to Birmingham. Under
the contract the GM&O was paying to maintain a track which the IC
operating department admitted to be expensive, because it is used its
crack Florida-Chicago passenger trains.
IC, on the other hand, said that the line from Ruslor to Haleyville was
not built by the IC until the M&O contract was signed.
It as implied that if the contract had not been executed the IC
probably never would have built the line; therefore, since it was built
partially for the purpose of serving the M&O the M&O’s
successor should continue the contract in full force and effect, in
perpetuity, The IC was not willing however, to allow the GM&O to
determine what use would be made of the line.
The GM&O was tied to a position similar to that of a junior
partner or a minority stockholder, with no chance to dispose of its
holdings or to be relieved of expenses except by going bankrupt.
the issues in this argument were so vital, the Commission was very slow
to act on this matter. The
hearing was closed in October, 1950, and the briefs were presented soon
thereafter. In September,
1951, Examiner Lyle submitted his proposed report, in which he supported
the desire of the GM&O to shift its operations.
On March 13, 1952, the Commission announced its decision, which
approved the request of the GM&O to cease operations over the
IC-Southern line and allowed the company to enter Birmingham over the
tracks of the L&N. The
Commission refused to accept jurisdiction in the matter of forcing the
IC to cancel or change its perpetual contract with the GM&O The
Commission disclaimed any authority over problems of this type and
stated that the courts were the proper agencies to adjudicate and reach
equitable settlements in such disputes.
The GM&O in keeping with this order, began use of the L&N
tracks immediately and also filed court proceedings seeking to adjust
the IC contract.
example of the GM&O’s forward-looking policy has been its shift in
freight facilities in the Chicago area.
The Alton operated its freight terminal at its Harrison Street
station, which was close to the Loop and near the center of downtown
Chicago. The GM&O has
changed its freight facilities to Brighton Park, which is some miles
farther from the heart of the city.
L.C.L Freight will henceforth be handled at Brighton Park; then
it will be trucked into the commercial houses of downtown Chicago
instead of being worked in the center of the city.
This will give faster service at a much lower unit cost than the
former operation. At the
same time, all freight switching operations have been transferred to
Glenn Yard, which is about twelve miles from the heart of Chicago.
This will force greater reliance on motor truck pickup and
co-ordination than the older operation.
The Chicago terminal superintendent and his operating superiors
feel, however, that any possible losses will be more than offset by
speedier and more efficient handling under the new system
of the main reasons that this change in Chicago operating procedure was
worked out at this time was the desire of the GM&O to sell its
Harrison Street property while real estate prices were high.
On September 13, 1951, the old freight house and its adjoining
property were sold to the federal government for $6,717,582. The site was purchased by the Post Office Department to
supplement existing facilities. In
addition to the cash which was received from the government, the road
expected to be in a position to take a large income tax deduction from
the sale. This one
transaction, for a piece of property which the road no longer needed,
will probably net the GM&O about one sixth of its purchase price of
the Alton. The funds so
obtained were immediately used to reduce the large equipment obligations
which the Company has had to assume because the Alton was so lacking in
equipment at the time of its purchase.
GM&O thought that the equipment which it had in operation or on
order at the close of 1949 would be sufficient for the needs of the road
for some years to come, but when the Korean crisis erupted, the Company
found that additional freight cars would be necessary.
As a result, the Company placed orders for about $8,000,000 in
new equipment before the end of 1950.
In the same year, the GM&O leased 100 of the new type
damage-free box cars for special use.
Deliveries of conventional freight cars totaled 356, which left a
substantial number on order. By
the end of 1951 the Company had received 544 new cars and still had
1,450 more cars on order to be delivered as soon as possible.
Even these units were not considered sufficient, however, for in
1952, additional orders were placed for more 70-ton hopper cars and more
pulpwood cars. The Board of Directors of the road were advised in July,
1952, that the GM&O, since its organization in 1940, had purchased
$74,000,000 worth of equipment. This
total included 160 Diesel road locomotives, 86 Diesel switching units,
19 passenger cars and about 11,000 freight cars of different types.
Thus, all but 2 of the Diesel locomotives of the Company have
been purchased since 1940, with all of the road Diesels being delivered
since 1944. Of the freight
car fleet, only 15 per cent, or about 2,000 cars, were purchased prior
to 1940. The GM&O feels
justly pleased by the newness and excellent condition of its rolling
Gulf Transport Company is still eager to try new operating procedures in
the search for more business. In
October 1, 1951, Gulf Transport’s busses began to serve Memphis,
Tennessee, in conjunction with the Dixie Greyhound Company.
The Gulf Transport buses continue to operate along Mississippi
Highway 15 to New Albany, Mississippi, and they go into Memphis over the
franchise route of Dixie Greyhound.
By this arrangement, Memphis was given direct bus connections
with Mobile for the first time in the history of the Gulf Transport
outward appearances, the GM&O of 1952 had little to remind one of
the Gulf, Mobile and Northern of the early twenties.
Time and the improving technology of the rail industry had caused
great changes. Most of the
physical plant had been either rebuilt or replaced with new equipment. The shops, stations, docks, and other buildings had been
scrapped or sold or so reconstituted that one would not recognize them.
Maintenance and improvements to roadbed and track had removed
many of the landmarks of twenty-five years ago.
New Diesel locomotives had supplanted all of the old “iron
horses” and new and bigger cars had replaced the rest of the rolling
the end of 1952 a major shift took place in the Executive Department of
the Company. On November 7,
Mr. A. C. Goodyear, for many years Chairman of the Board of Directors,
moved to the less arduous position of Chairman of the Executive
Committee. Mr. Tigrett, who
had served as President since 1920, stepped into the new post of
Chairman of the Corporation. As
Senior Executive Officer of the Corporation he is still in direct
control of the affairs of the GM&O Frank Hicks, the former Executive
Vice-President, assumed the presidency, and Glenn Brock became Executive
Vice-President and General Manager.
spite of the changes in physical appearance and in official titles, the
aims and objectives of the GM&O of today are quite similar to the
objectives of twenty-five or thirty years ago.
Mr. Tigrett, talking to all the executives of the Company,
recently stated that his personal ambition was “no less keen than
twenty-five years ago to help lead the railroad into being an
The men who have spent the last quarter-century in building the GM&O
into a railroad of national importance do not desire to see their
handiwork destroyed. It is
their desire to see the Company continue in the forefront of
transportation development for the great Mississippi Valley which has
given the railroad a reason to exist and to expand.
These men want the GM&O like Ole’ Man River, to “just
keep rolling along” as long as transportation services are needed.