A City's Long and Successful Ride on the B&O

January 18, 1992|By JAMES D. DILTS | JAMES D. DILTS,James D. Dilts is writing a history of the B&O Railroad.

Despite its serious impact on the local economy, last week's announcement that CSX Corporation was transferring 350 management jobs from Baltimore to Jacksonville -- thereby ending Baltimore's status as a railroad headquarters town -- had about it the feeling of deja vu and historical inevitability. There have been so many goodbyes in recent years.

Hardly any city now has a railroad it can call its own. Indeed, the survival of the Baltimore and Ohio Railroad as a corporate entity until 1987 was an anomaly. Its competitors, the Erie, the Pennsylvania and the New York Central, the three other major eastern trunk lines of the 19th century, succumbed to bankruptcy years ago. They now form the heart of Conrail, one of the three giant rail systems in the east, along with Norfolk-Southern and CSX Corporation. The situation is the same throughout the country. Fifty years ago, there were 100 Class 1 railroads in the United States. Now there are 13, and just 7 really large ones on the scale of CSX.

Nevertheless it is disconcerting, in the city that for all practical purposes invented the railroad in America, to surrender control over part of its destiny. In Baltimore, situated 150 miles closer to the Midwest than its East Coast competitors, that has always meant transportation. It was the city's strategic position, on the nation's economic hinge that swung between the inland producers and consumers and their seaboard and overseas markets and suppliers, that defined Baltimore almost from the beginning. To a large extent, it still does.

''No nation or district,'' wrote Philip E. Thomas in 1828, ''ever enjoyed the advantage of being carriers without becoming rich, and all experience shows that the dealers in, and carriers of either merchandize or agricultural productions, gain more nett profits than the growers or manufacturers.'' Thomas was the first president and co-founder, with George Brown (of Alex. Brown and Sons), of the Baltimore and Ohio Railroad. Their vision paid off for roughly 150 years.

Automobiles began to give the rail lines serious trouble in the 1930s. World War II intervened and renewed the rails' reason for being and their profitability in the 1940s. But in the following decade, trucks operating over the federal interstate highway system deprived them of a great deal of freight while commercial airlines relieved them of most of their passengers. The real beginning of the end for the Baltimore and Ohio occurred almost 29 years ago, at 12.01 A.M., February 4, 1963, when the Chesapeake and Ohio Railroad assumed control of it in a well planned stock acquisition.

''We couldn't have survived very long because we didn't have the money to keep the railroad going -- we would have had to join the others in bankruptcy,'' said the late Howard Simpson in a private interview some years ago. Mr. Simpson, the B&O president at the time, engineered the takeover. It was prompted by merger talks between the Pennsylvania and the New York Central in the mid-1950s. The asset-rich but cash-starved B&O felt that it had to join forces with another railroad to survive. The C&O, a wealthy coal-hauler, proved to be the best answer at the time. Certain promises were made then to retain the B&O name and to have Baltimore remain a headquarters city. But times change, and when you surrender control, you accept the consequences.

The C&O was headquartered in Richmond and Cleveland, and as it was the dominant partner, the combined railroads' center of gravity soon shifted to those places. A primary reason for the affiliation, as it was formally known, rather than a full-scale merger, was the B&O's very valuable tax exemption, which Thomas, Brown and the others had thoughtfully written into its original 1827 Maryland charter. The combined B&O and C&O subsequently took the name Chessie System.

In 1980, prompted by another large-scale merger of eastern railroads between the Norfolk and Western and the Southern, the Chessie System joined the Seaboard Coast Line, (traditionally controlled by Baltimoreans), to form CSX. By 1986, the necessity of maintaining separate accounting systems and payrolls for the three different lines outweighed the $3 million annual value of the B&O's tax exemption and in 1987, the Baltimore and Ohio Railroad was terminated as a corporate entity. It was finally and fully merged into CSX. That was goodbye number one. Later that same year, CSX announced that it was eliminating several hundred management jobs including some of the 630 managerial posts in Baltimore: goodbye number two.

Now the last 350 management jobs have been shifted to Jacksonville, the Seaboard Coast Line's headquarters, and the 9,000 Baltimore and Ohio Railroad jobs that existed in Maryland 30 years ago when the B&O was an independent railroad have shrunk to 3,000 currently.

But it's been a long and successful run for the city was the first to begin a railroad and the last to lose one. The trains will continue to operate in Baltimore; this newspaper will soon occupy a new plant built on land vacated by the railroad in Locust Point; Baltimoreans in 1992 will watch baseball at Camden Yards, adjacent to a restored historic B&O train station; and the B&O Railroad Museum is one of the three finest in the nation.

As W. Arthur Grotz, an astute observer, put it more than 30 years ago when the B&O-C&O affiliation was first being discussed, ''In the long run, Baltimore's success will depend on its natural advantages, the wisdom and aggressiveness of the people.''

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