A C&O/B&O memoir

Chesapeake and Ohio Historical Magazine, Sep 2003 by Howes, William F Jr

I began railroading in 1960 with the New Haven. Following that road's slide into bankruptcy-for the second time-in 1961, I retreated back to college in pursuit of a post-graduate degree in civil engineering and, perhaps, a career in academia.

But, alas, railroading was now in my blood. So, in early 1963, I answered the call of numerous railroad recruiters who appeared on the campus of Purdue University. It was only weeks after the ICC's approval of C&O's bid to control the B&O and both railroads had representatives interviewing students. Each offered me a job starting in their management training program. What happened next would prove to be indicative of the way C&O would exercise its control of B&O. The C&O recruiter recommended that I accept the B&O offer, opining that its new partner had the better program. I took his advice. While there was never any doubt which railroad had financial control of the other, I believe C&O management made a concerted effort to select the best practices and personnel found on each property as the two roads, and eventually the Western Maryland as well, were integrated into a C&O/B&O system. And you are hearing that from someone with strong emotional ties to the B&O!

The C&O/B&O approach, of course, was in marked contrast to the N&W's heavy-handed swallowing up of the Nickel Plate and Wabash in the mid-60s or the contentious New York Central-Pennsylvania marriage later in the decade.

I'm going to discuss the C&O/B&O era, from 1963 to the formation of the Chessie System, in the form of a "memoir." This is not a formal history lesson, but rather some personal observations and experiences from my first decade on C&O/B&O. During this period, I was a management trainee and then served in the transportation, industrial engineering, passenger services, and casualty prevention departments.

But first, I will resort to a short history lesson to set the stage for C&O/B&O.

Some claim the modern merger movement in the railroad industry began with the Louisville & Nashville's absorption of the Nashville, Chattanooga & St. Louis in 1957. But within the Pocahontas Territory and the Mid-Atlantic states, we can peg the beginning of the movement to the N&W's successful bid for control of Virginian. This was attained in 1959.

With the American economy in recession, the late 1950s were difficult years for the railroads. Costs had been climbing since World War II and now revenues were declining. In addition, other modes of transport were steadily eating into the railroads' share of both freight and passenger traffic. Many railroaders viewed mergers as a way to control costs.

Following its success with the Virginian, the N&W went after the Nickel Plate Road in a move that also brought the Wabash and a piece of the Pennsylvania Railroad in Ohio into its camp by 1964. The New York Central's Alfred Perlman set his sights on either the C&O or the Pennsylvania. C&O's Walter Tuohy rejected his advances, knowing that the Central had serious financial problems and that the strong-willed Perlman would undoubtedly want to call the shots as the companies merged. Instead, C&O, in studies that began in 1958, was exploring the pros and cons of affiliation with the B&O.

On the plus side, B&O had a stronger industrial base than C&O, serving more industrial centers and linking them with better routes. B&O was the third largest coal hauler in the nation, after C&O and N&W

But the negatives were equally impressive. B&O carried a heavy debt load and its operating losses were growing (and would top out in 1961 at a staggering $31 million dollars). The road lacked the capital needed to correct a worsening equipment shortage. Routine maintenance was being deferred. The B&O's map was plagued with many low-density branch lines.

Talks between C&O and B&O began in earnest in 1959 and a year later C&O made its offer to B&O shareholders. The New York Central again intervened and was again rebuffed, setting in motion NYC's discussions with the Pennsylvania that would lead to the formation of Penn Central in February 1968.

The C&O/B&O proposal involved essentially an end-to-end connecting of rail routes, a form of consolidation favored by the Interstate Commerce Commission. Consequently, the proposal moved through the Commission relatively quickly and was approved on the last day of 1962.

Jervis Langdon, who had served in the law departments of the New York Central and C&O before coming to the B&O in 1956, succeeded Howard Simpson as president in 1961 and became Chief Executive Officer of the B&O in 1962. A visionary railroad executive, Langdon would prove to be both a facilitator, as C&O took control of B&O finances, and a thorn in C&O's side when he argued in defense of B&O's marketing philosophy, especially on coal traffic. Langdon's B&O was a proponent of unit coal train rate incentives, while C&O firmly embraced single car rates for this traffic.

C&O had sought financial control of B&O rather than a merger because it feared that B&O's precarious financial condition could threaten C&O's excellent debt rating and, thereby, increase its cost of capital.