There are many people interested in former transportation companies, whether they were trucking companies, railroads, airlines or ocean lines. These companies are called “fallen flags,” and the term describes companies whose corporate names have been dissolved through merger, bankruptcy or liquidation.
In Part 1 of this article the early history of what became the Great Northern Railway was the focus. In Part 2, an overview of Great Northern’s history in the 20th century is the focus.
Building an even bigger railroad
James Jerome Hill renamed the Minneapolis & St. Cloud Railroad the Great Northern Railway on September 16, 1889. He planned to use the Minneapolis & St. Cloud’s charter to continue building toward Puget Sound.
With that goal, track-laying started on October 20, 1890 at Pacific Junction, Montana. Laying track westward, the railroad crossed the 5,214-foot Marias Pass (within what is now Glacier National Park), then continued to Spokane and then Seattle.
In Washington’s Cascade Mountains the rail line had to cross Stevens Pass, which required two tunnels. By the end of 1891 the rail line had reached Kalispell, Montana; then further west to Spokane on June 1, 1892. The railroad’s Pacific Extension was finished when crews working from both directions met at what is now Scenic, Washington on January 6, 1893.
The Pacific Extension ended in Everett, Washington; at that point it connected with another of Hill’s rail lines, the Seattle & Montana Railway (S&M). The S&M operated a 78-mile extension that ran north from Seattle to Blaine, Washington, at the Canadian border.
Hill established GN’s dominance in the Puget Sound region. His next action was building a rail line between Portland and Vancouver. Service to Vancouver began in 1904 and to Portland in 1908. It started as the Portland & Seattle Railway, which Hill formed in August 1905. The railroad was renamed the Spokane, Portland & Seattle Railway (SP&S) in 1908. Having reached Portland in early 1908, the rail line reached Spokane before year-end.
Hill continued to add to his railroads in Oregon. The SP&S acquired two electrified interurban railways – the Oregon Electric Railway, which ran from Portland to Eugene; and United Railways, which ran to the Oregon coast. Hill also acquired the Oregon Trunk Railway in August 1909. It was a small system that ran from Wishram to Bend when it opened on November 1, 1911.
Seattle was established as the GN’s western terminal when it purchased 60 acres for yards, shops and docks.
Back to Minnesota
Minnesota’s iron ore industry was rapidly expanding in the Mesabi and Vermillion Ranges. The area was served by two railroads – the Duluth, Missabe & Northern (DM&N) and Duluth & Iron Range (D&IR). Competitors at the time, the two railroads merged to form the Duluth, Missabe & Iron Range in 1937.
Hill began by purchasing tracts of land in the western Mesabi Range. Then the financial Panic of 1893 caused the Duluth & Winnipeg Railroad to enter receivership. The railroad ran from Superior, Wisconsin to Deer River, Minnesota. In 1896 it was reorganized as the Duluth, Superior & Western Railway (DS&W). However, it remained under control of the Canadian Pacific Railway.
Hill thought Minnesota’s pure iron ore would generate significant revenue for his railroad; therefore, he sought a deal with William Cornelius Van Horne, president of the Canadian Pacific.
Hill purchased control of the DS&W on April 26, 1897. He then bought the Duluth, Mississippi River & Northern, a small logging railroad. Hill purchased the system with his own money for $4.05 million on May 1, 1899. Because Minnesota’s iron ore was a key component in making steel, it was also a key revenue generator for the Great Northern.
Hill then acquired complete control of the Northern Pacific Railroad (NP) in late 1900 and completed the jointly-owned SP&S later that decade. These actions gave him a near monopoly in the Pacific Northwest. He then set his sights on a route into Chicago, which at that time was the railroad capital of the United States. Through the NP and GN, Hill purchased 97% of the Chicago, Burlington & Quincy Railroad (CB&Q) by November 1901.
However, Edward Harriman, another railroad tycoon, had also sought the CB&Q to provide his railroads (the Union Pacific and Southern Pacific) a direct entry into Chicago. Stymied by Hill, Harriman acquired more combined common and preferred stock in the Northern Pacific than Hill and his ally, J.P. Morgan. (To read more about Morgan’s railroad dealings, read this FreightWaves Classics article). Harriman tried to use his NP stock to control the CB&Q.
However, Hill established the Northern Securities Company on November 12, 1901. Northern Securities acted as a holding company for the Northern Pacific, Great Northern and Spokane, Portland & Seattle, and Hill retained his leverage.
However, in 1904 the U.S. Supreme Court forced Northern Securities to divest its control of the three railroads. Harriman and his colleagues had sold their NP stock in late 1902. When Northern Securities was dismantled they tried to regain their interests in the Northern Pacific. But in 1905 the Supreme Court ruled against them. Hill remained in control of the NP.
Over the next decade Hill worked to create more efficient operations, cut costs and raise profits at the Great Northern. He was 77 when he died on May 29, 1916.
World War I, government control and back in private hands
Concerned that U.S. railroads would be unable to meet the nation’s needs during World War I, President Woodrow Wilson ordered the railroads nationalized on December 28, 1917. (To read more about the United States Railroad Administration read this FreightWaves Classics article.)
However, the government was no better at managing the railroads than the private sector; during government control neither the railroads’ rolling stock nor infrastructure were adequately maintained.
On February 28, 1920 the nationalized railroads were returned to private ownership. During the 1920s, GN made its last major expansion, which was known as the “Inside Gateway.” It was an extension of its rail line from Bend to Bieber, California, where it met the Western Pacific Railroad, which had continued its line north. The Inside Gateway opened in September 1931. It provided the two railroads a profitable partnership; they jointly handled traffic from Oakland/San Francisco to Chicago in competition with the Southern Pacific.
The GN also built an improved grade over Stevens Pass in Washington’s Cascade Mountains. The original Cascade Tunnel was a 2.63-mile tunnel opened in 1909 that eliminated grades as high as 4%. Going back to 1912, Hill had wanted to improve that part of the line. However, the solution was a tunnel that would run for 17.5 miles and was very expensive. Other projects, the onset of World War I and Hill’s death pushed the project to 1925. The plans were overhauled (the tunnel was only 7.77 miles long); once construction began, it took more than three years.
On January 12, 1929 a ceremony was held to dedicate the new tunnel. It is still in use today. However, just months later the stock market crashed and the Great Depression began. Like many other U.S. railroads, the Great Northern suffered its worst traffic slump in its history as the economy collapsed.
The Great Depression and World War II
The Great Northern lost money for the only time in its corporate existence; it had a net loss of $13.4 million in 1932, a net loss of $3.2 million in 1933 and a net loss of $1.074 million in 1934. By 1935 the GN was earning money again; it reported net income of $7.139 million in 1935. Although this was a difficult period, the GN never slipped into receivership like so many other railroads did during the Great Depression.
The onset of World War II caused railroad traffic nationwide to rebound strongly. The GN’s income climbed to $29.1 million in 1942. For the next several years GN continued to post steady growth; its net annual income ranged between $18 to $37 million.
The 1950s and 1960s
Like many other railroads, the Great Northern began offering intermodal/trailer-on-flatcar (TOFC) service in 1954 between Duluth/Superior and the Twin Cities. By 1963 TOFC was generating about $4 million annually for the railroad.
In 1955 talks began between the Northern Pacific, Great Northern and Chicago, Burlington & Quincy regarding a merger of the “Hill Lines.” The negotiations led to a formal merger application that was filed at the Interstate Commerce Commission (ICC) on February 17, 1961.
If approved by the ICC, the new railroad would have 24,500 miles of track, and would also include the lease of the Spokane, Portland & Seattle Railroad for 10 years (when it would become part of the new railroad). The ICC review of the request took more than five years; and then, on March 31, 1966, the ICC commissioners voted against the merger by 6-5.
The three railroads continued their effort to merge. They made an agreement with the Chicago, Milwaukee, St. Paul & Pacific Railroad; their only transcontinental competitor was provided with 11 new western gateways in an effort to neutralize the railroad’s opposition to the merger. This offer gave the Milwaukee Road new sources of interchange traffic, particularly with the Southern Pacific in Portland.
With this issue resolved the ICC reopened hearings on the proposed merger on January 4, 1967. On November 30, 1967, the merger was approved by an 8-2 vote of the commissioners.
The four railroads finally became Burlington Northern on March 2, 1970.
When James Jerome Hill began what became the Great Northern Railway it primarily hauled agricultural products. Over time, the railroad’s freight traffic became highly diversified.
As noted earlier, Hill was a very savvy businessman. He built his railroads in stages; he created profitable lines before expanding further, and avoided excessive debt. Moreover, his railroads sold homesteads to immigrants and they paid to ride his trains to reach their new homes. The Hill-controlled railroads also solicited additional immigration by advertising in European newspapers and hiring agents who sought out immigrants looking for their own farmland.
Hill’s railroads reinvested profits back into the companies to improve infrastructure and also fueled expansion. The railroads also actively sought industries to locate along its lines. This pattern continued throughout the 1880s as Hill expanded the railroads across Wisconsin, Minnesota, North Dakota and Montana. In addition, the Great Northern’s flagship passenger train was the Empire Builder, which provided service to the West Coast via Glacier National Park.
While the Supreme Court’s antitrust ruling forced Hill to sell his other railroads, the Great Northern weathered economic hardships and was profitable for most of the 20th century.
In addition, the GN and other western railroads are often overlooked for their part in creating several U.S. national parks. As noted in the book “Great Northern Railway: Route Of The Empire Builder,” GN company president Louis Hill (son of James Hill) and George Grinnell, a magazine publisher, lobbied the federal government for years to establish a national park to protect western Montana’s natural beauty. Finally, legislation establishing Glacier National Park was signed into law by President William Howard Taft on May 11, 1910.
Of course the GN had an ulterior motive for the park’s creation – to increase its passenger base by marketing these natural wonders.
Finally, the same railroads that Hill was forced to divest in the early 20th century merged with the Great Northern in 1970 to form the Burlington Northern. In turn the Burlington Northern merged with another historic railroad, and key segments of the Great Northern are now part of BNSF Railway.
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.