Wednesday, January 7, 2015

The Early CP&StL -- An Unofficial History, Part III (the L&M)

I am actually modeling the only portion of the CP&StL which the railroad actually built -- the line from Madison to Litchfield, Illinois that was transferred to the Litchfield and Madison Railway.   This portion of my history of the railroad focuses on the L&M.

When the Bluff Line formally assimilated the Chicago, Peoria& St. Louis, it retained its own route from Alton to Springfield, rendering the line from Madison to Litchfield redundant.   On March 2, 1900, one day after the formal merger of the Bluff Line and the CP&StL, the Litchfield & Madison Railway was organized to take title to the line, and the new L&M was, in turn, immediately leased back to the CP&StL, which starting looking for a potential purchaser.   Apparently finding few takers, for nearly four years the Litchfield and Madison Railway was essentially operated as a subsidiary of the CP&StL, which explains why early L&M equipment and paint schemes mirrored their CP&StL cousins, and the motivation for allowing the L&M to share the then new CP&StL facilities at Lower Yard via a 999 year lease executed on February 17, 1904.[1]  

Unfortunately, as a branch line, it appears that the L&M was a financial burden to the heavily leveraged CP&StL from the outset.  According to rail historian and author Richard Wallis, “the L&M was a heavy drain on the parent from day one, and required additional capital improvements that the CP&StL could not afford to underwrite.  That was the reason given to stockholders for disposing of the L&M,” which Wallis indicates was completed sometime between June 30, 1904 and December 14, 1904.  Finally, a group of investors, lead by John R. Walsh, James Duncan of Alton and banker Charles E. Kimball, formed the Litchfield and Madison Railway Company to acquire the Litchfield and Madison Railway from the CP&StL.   Included in the purchase were four Baldwin 4-6-0s, ordered by the CP&StL when the L&M was under its control and delivered in June, 1904 just before the sale of the line.  

Walsh was a politically connected entrepreneur with newspaper and banking holdings, but he began investing in railroads near the turn of the century.  In rapid succession, Walsh gained control of the Southern Indiana (forerunner of the Chicago, Terre Haute and Southeastern), the Illinois Southern (later the Missouri-Illinois), and, finally, the Litchfield and Madison.    For a time, it appears both Duncan and Kimball (and perhaps others) remained on the board of directors of both the CP&StL and the L&M, but Wallis notes that changed in 1907 when the previous management of the CP&StL, lead by Charles Kimball, was replaced by a new directorate, including George F. Baker of the National City Bank of New York.  From that point, both in corporate and operational structure, the L&M was an independent railroad.  

By 1907, the makeup of the L&M board was also about to change abruptly.   Under financial pressure, Walsh attempted to prop up his financial empire through a series of manipulations and was subsequently convicted of bank fraud in 1908.  Pardoned by President Taft, he was released from Fort Leavenworth only weeks before his death in October, 1911.   Prior to his imprisonment, Walsh controlled the vast majority of L&M stock, which passed jointly to James Duncan and Charles Kimball.    (The L&M was fortunate in this respect, as Walsh’s collapse triggered a reorganization of both the Southern Indiana and the Illinois Southern, which were succeeded by the Chicago, Terre Haute and Souteastern and the Missouri – Illinois Railroad, respectively.   Neither remained independent past the early 1920s, as the CTH&SE passed to the Milwaukee Road while the M-I became a Missouri Pacific subsidiary.)

For its part, the L&M settled into its role as a profitable coal hauler.  Although built as part of a route to connect Peoria and St. Louis, the Litchfield and Madison trackage served at least seven mines in Macoupin, Madison and Montgomery counties, including Mount Olive and Staunton Coal Company mines number 1 and 2, and Consolidated Coal Company mine 7, all near Staunton, the Kernes-Donnewald Coal Company mine at Worden, the Mt. Olive Coal Company Mine Number 5 in Mt. Olive and the Henrietta Coal Company and the City of Edwardsville Coal Company, both at Edwardsville.   The railroad also served the United States Radiator Corporation and the National Roofing Materials Company at Edwardsville, but by 1912, fully 90% of the railroad’s traffic was dependent upon coal, and it remained the dominant commodity even after three of the mines closed.  Most of this coal traffic was southbound to St. Louis, with empty hoppers returning north to the mines.[2]

This map shows the trackage transferred to the Litchfield and Madison -- the line to Benld, Illinois was built later by the L&M to connect with the Chicago & Northwestern.  The branch line to Williamson is also shown near Staunton.  This is the inspiration for my freelanced branch which leaves the mainline at Karnes.
When the Bluff Line controlled CP&StL failed again in the mid – 1920s, James Duncan purchased another portion of the railroad from Madison to Alton, forming the Alton & Eastern Railway to acquire the property (which is further described below).   While not a formal subsidiary of the L&M, at the time Duncan was the driving force behind both railroads, and, not surprisingly, the A&E and L&M had a close working relationship.  The two railroads shared a yard at Madison (although, interestingly, they seemed to have retained individual ownership over specific tracks), and the A&E granted the L&M trackage rights over its rails to Alton.   Duncan died shortly after acquiring the Alton & Eastern, however, and by 1930 the line was leased to the Illinois Terminal Company, which would acquire it outright (along with the A&E’s lone 0-8-0 locomotive) in 1937.
Following Duncan’s death, control of the Litchfield & Madison passed to Utilities Power and Light Corporation, a notorious conglomerate.  As Time Magazine reported in 1938, “Promoter Harley Clarke threw together this ‘scatteration’ of properties in 588 communities in 24 States and Canada in the 1920s, then floated three stock issues and two bond issues. By 1935, when U. P. & L. debentures sold as low as 20¼¢ on the dollar, Floyd Odium's big investment trust, Atlas Corp., bought up enough of them to gain control.”[3]   As a result, control of the L&M effectively passed to Atlas Corporation, which, in turn, transferred the line, along with other Utilities Power and Light Corporation properties, to Odium’s Ogden Corporation  in 1940.  It appears that Ogden Corporation controlled the railroad until it was finally sold to the Chicago & Northwestern in 1958.

During the period when the L&M was controlled by Utilities Power and Light Corporation, the line became embroiled in a bitter strike involving Leclede Gas Light Company, another UP&L subsidiary that had been rendered insolvent, causing many small shareholders, including a number of employees, to lose their savings in the process.  The union argued that Leclede Gas Light’s treasury had been systematically drained by UP&L through a series of one - sided transactions with other UP&L companies, including the Litchfield & Madison.   Specifically, local newspaper reports suggested that the coal Leclede burned to manufacture gas was shipped over the L&M at rates that were not competitive.  Although the story is an unhappy one, it does provide us with some helpful details about the movement of L&M coal during the 1930s. 
The Chicago & North Western’s involvement in the L&M began in the 1920s, when the C&NW and L&M jointly petitioned the ICC in 1926 to construct a connection between these railroads by building a short stretch of track from Benld to DeCamp.  The connection, built in 1927, generated significant traffic for the L&M, which essentially became an extension of the C&NW into St. Louis.   Two freight trains per day in each direction, plus significant shipments of iron ore, moved between the C&NW and the L&M throughout the 1920s, 1930s and 1940s, with L&M crews (with L&M motive power and cabooses) passing entire trains back and forth to the C&NW at Benld.   In 1949, C&NW motive power began running through to Madison.  The C&NW acquired the L&M from Ogden Corporation on January 1, 1958.

[1]  Paul M. Smith, Locomotive Engineers Journal, December, 1937, reprinted NWL, Spring, 1983, page 17[2]  See NWL, Spring, 1983 at pages 19 and 30.
[3] Time, August 1, 1938.

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