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To read Part 1 of this article, follow this link.
World War I
Despite going into receivership in late 1911, the Wabash did well because of its key corridors, which carried a diversified traffic base. Its network was slightly over 2,000 route miles and served Detroit, Chicago, St. Louis, Kansas City, Omaha and Buffalo.
In 1912 the company adopted the slogan “Follow The Flag.” It was a simple marketing tactic that earned the Wabash one of the most innovative logos and slogans of all time.
To exit receivership the Wabash was sold at foreclosure and reorganized as the Wabash Railway on October 22, 1915. At that time the railroad had 2,033 route miles of track, 321 miles of secondary track mileage, and 476 miles of trackage rights.
President Woodrow Wilson nationalized U.S. railroads during World War I. (Photo: Library of Congress)
The Wabash did well prior to World War I. It achieved operating revenues of more than $40 million just prior to the war, due in part to Detroit’s growing auto industry. The railroad utilized some of its income to improve its infrastructure and to acquire new locomotives.
The United States entered World War I on April 6, 1917. Before the end of the year President Woodrow Wilson ordered the nationalization of most of the nation’s railroads. He feared the potential of gridlock in the railroad sector as men and war materiel were moved.
The United States Railroad Administration took control of the railroads at noon on December 28, 1917. (To read about this chapter in U.S. railroad history, read this FreightWaves Classics article.)
The federal government did not solve the railroads’ issues; it was no better at “maintaining fluid operations” than the private sector. Moreover, during the tenure of the United States Railroad Administration locomotives, rolling stock and infrastructure were inadequately maintained.
The U.S. Congress passed the Transportation Act, which returned the nationalized railways to private ownership on February 28, 1920.
A Wabash Railroad boxcar. (Photo: State Historical Society of Missouri)
The 1920s were generally positive for the Wabash. The railroad achieved net operating income of $12.2 million in 1925. It also acquired stock control of the 292-mile Ann Arbor Railroad in 1925. The Ann Arbor Railroad’s most important asset was a linear route between Detroit and the Lake Michigan car-ferry terminal in Frankfort, Michigan. The auto industry was booming, and by 1930 the Wabash owned more than 99% of the Ann Arbor Railroad’s stock.
Wabash board chairman William Williams and Leonor Loree, president of the Delaware & Hudson Railroad sought to create the “Fifth System,” a Midwestern carrier to compete with the largest railroads of that time – the Baltimore & Ohio, Pennsylvania and New York.
Similar plans had been tried earlier (for example, by both Jay Gould and his son George). It actually tracked a plan by the Interstate Commerce Commission (ICC) “to merge all eastern systems (outside of New England) into a handful of large mega-railroads.”
The Williams-Loree plan included the Wabash, Delaware & Hudson, Ann Arbor, Lehigh Valley, Pittsburgh & West Virginia, Western Maryland, and Buffalo, Rochester & Pittsburgh to create a 7,000+ mile network. Their plan was derailed when the ICC turned down the Delaware & Hudson’s bid to control the Buffalo, Rochester & Pittsburgh Railroad.
The Pennsylvania Railroad (PRR) acquired stock in the Wabash in 1927. It bought the stock through its Pennsylvania Company. In 1929 the ICC charged the PRR with violating the Clayton Antitrust Act. The ruling was appealed, and in 1933 a Circuit Court ruled that the control was for investment only and did not violate the act. The PRR won on March 19, 1934 when a deadlocked Supreme Court stayed an earlier Third Circuit Court of Appeals decision that the PRR’s takeover would not lessen competition.
The PRR generally did not interfere with the Wabash’s activities, which enabled the Wabash’s rise to prominence as an “important and profitable Midwestern bridge line.” It remained a PRR subsidiary until 1964.
During the first half of the 20th century, the Pennsylvania Railroad was an industry leader.
The Great Depression
In 1928 the Wabash generated net income of more than $11.9 million. However, like many U.S. railroads (and companies in general), the Wabash was hurt badly by the Great Depression. The Wabash went bankrupt on December 1, 1931, the year its net loss reached $7.05 million.
Reorganization of the Wabash took more than a decade. But it slowly gathered strength as the nation’s economy recovered. Its 1931 operating income was $31.691 million; it reached $46.133 million in 1937; fell to just over $40 million in 1938; and then generated net income of $1.067 million during the first quarter of 1942.
The Wabash Railroad, controlled by the PRR, was reorganized in July 1941 and bought the Wabash Railway on December 1. The railroad was officially reorganized as the Wabash Railroad Company on January 1, 1942.
World War II and its aftermath
Many U.S. railroads did very well financially during World War II. At the Wabash, both freight and passenger traffic increased dramatically. In 1943 the company generated net income of $8.758 million. The Wabash’s strong financial results continued in the postwar years; net income in 1948 was $10.997 million. The Wabash had become a high-speed Midwestern artery with a very diversified traffic base ranging from auto parts to produce,
U.S. Army Air Corps cadets arrive at Millikin University via the Wabash Railroad from St. Louis in February 1943. (Photo: millikin.edu)
The Wabash introduced its City of Kansas City streamliner on November 24, 1947. It was a daytime train between Kansas City and St. Louis with new lightweight equipment that included a standard baggage car, a baggage-mail car, a dining car, coffee-shop coach car, two standard coach cars, and an observation parlor car.
The railroad’s management used the company’s earnings for infrastructure improvements and to replace its steam locomotives with diesel-electrics, a process completed on July 28, 1955.
During the 1950s railroads struggled to sustain profitability due to increased competition (airplanes, cars and buses for passengers and trucks for freight), government regulation and an inability to shed unprofitable branches and secondary lines.
The Wabash spent the decade continuing to provide high-quality freight service while seeking to cut money-losing passenger trains whenever possible. The railroad industry was navigating in increasingly uncertain times (particularly in the eastern U.S.), and the management of the Wabash suddenly realized the railroad’s future was in doubt.
The map shows the expansion of the Norfolk & Western Railway with the Nickel Plate Road merger and the lease of the Wabash Railroad. (Image: railsandtrails.com)
Merger discussions and more
Merger negotiations among various railroads began in the mid-1950s and continued over the next several years. In 1957, discussions between the Pennsylvania Railroad and New York Central Railroad were the most watched. (The merger did not take place until 1968, and the new Penn Central went bankrupt in 1970.) As a consequence of the merger proposal, the PRR had to divest control of its Norfolk & Western stock, which was then in merger discussions with the Nickel Plate Road.
It was agreed that the Wabash would be part of the Norfolk & Western-Nickel Plate Road merger, which was announced on December 1, 1960.
On December 31, 1960, Wabash reported 6,407 million net ton-miles of revenue freight and 164 million passenger-miles. As part of the agreement, the Wabash sold its stake in the Ann Arbor Railroad.
A Wabash Railroad passenger train near St. Louis Union Station. (Photo: Wabash Railroad Historical Society)
On October 16, 1964 the New York, Chicago and St. Louis Railroad (Nickel Plate Road) merged into the Norfolk and Western Railway, and the N&W leased the Wabash and Pittsburgh and West Virginia Railway. Because it was only leased, instead of being part of the merger, the Wabash Railroad’s stock continued to trade on the New York Stock Exchange.
Some 18 years later, the Norfolk & Western and the Southern Railway merged in 1982, creating the Norfolk Southern Railroad. The Wabash continued to exist on paper until Norfolk Southern formally merged the Wabash into the N&W in November 1991.
The Wabash Railroad was a Class I railroad that operated in the mid-central United States for more than 100 years. The railroad served a large area, including Illinois, Indiana, Iowa, Michigan, Missouri and Ohio and the Canadian province of Ontario.
The Wabash’s key freight traffic advantage was its direct line from Kansas City to Detroit, which meant that its trains did not have to travel through St. Louis or Chicago.
Author’s note: This article would not have been possible without the resources made available by Adam Burns of American-Rails.com. Those interested in learning more about the railroads operating in North America – and those that are now “fallen flags” – should explore the American-Rails site.
In addition, those who want to know more about the Wabash should visit the Wabash Railroad Historical Society (www.wabashrhs.org).
A Wabash Railroad locomotive and rolling stock poster. (Image: antiquesnavigator.com)
This article first appeared on www.freightwaves.com
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