Milwaukee Road helped spur Miles City’s development

Amorette Allison
History Columnist

When the Chicago, Milwaukee and St. Paul Railway arrived in Miles City in 1907, it had an enormous impact on the town. Miles City became a division point with large rail yards including a roundhouse. At its peak, the Milwaukee Road, as the railroad was nicknamed, had around 1,000 employees in Miles City.

After the Milwaukee arrived in 1907, the town went through its biggest growth spurt, adding thousands of people to the population. It led to an economic boom that has never been duplicated here, with schools, churches, public and business buildings constructed that still stand in Miles City, giving it part of its distinctive look.

Unfortunately, the Milwaukee was a railroad that always seemed to be at a disadvantage, filing for bankruptcy several times before closing up shop in Miles City on Feb. 29, 1980. 

Today, the midwestern portion of the Milwaukee is part of the Soo Line. From Miles City west, the tracks have mostly been pulled up, with walking and biking rails following the old Milwaukee route.

Founded in 1847, the Milwaukee and Waukesha Railroad was incorporated in Wisconsin to provide a rail link from Milwaukee to the Mississippi River. The name changed to the Milwaukee and Mississippi Railroad in 1850, even before construction began. The first line was five miles long and connected Milwaukee and Wauwatosa. 

The railroad kept expanding, town by town, and finally got to the Mississippi at Prairie du Chien on 1857. 

And it promptly went bankrupt.

It wasn’t the railroad’s fault. It was the result of the Panic of 1857, what we would now called a financial recession.

Several railroads were combined with M&W, creating, in 1867, the Milwaukee & St. Paul. In 1874, the name was changed to Chicago, Milwaukee, and St. Paul. By 1887, the railroad had lines running through Wisconsin, Minnesota, Iowa, South Dakota, and the Upper Peninsula of Michigan.

However, the C, M & St. P. was strictly a midwestern railroad with no connections to the west or east coasts. This put it at a disadvantage when compared to transcontinental railroads. The Northern Pacific,  one of the Chicago, Milwaukee and St. Paul’s chief competitors, had reached the coast in 1883.

The other advantage transcontinental railroads had over the Milwaukee were land grants. When they expanded into the unsettled west in the 19th century, they were granted huge amounts of lands. Every other section, creating a checkerboard of land ownership that still exists in Montana, for at least 10 and up to 40 miles from the track route itself. 

That land provided logging, mining, grazing and something to borrow against for expansion. By the time the Milwaukee decided to head for Puget Sound, the land grant program was long gone. Which meant the Milwaukee, unlike its competitors, had to buy all the land it needed for its tracks, rather than having it handed to them by the federal government. 

Miles City was generous, though. It vacated Ohio Street on the north side of Miles City, moved all the structures off the street, and gave the land to the Milwaukee.

In 1905, the Milwaukee started its Pacific Extension, The estimated cost was $60 million, equal to $1.6 billion today. Although the route was 18 miles shorter than its competitors, it had to take some rather complex routes through the mountains, which drove up the cost.

Because other railroads got places first, the Milwaukee was also forced to skip some of the major population centers, such as they were, which meant there were fewer people to use the line.

The Milwaukee tried to make up for this by heavily promoting its passenger service. The Olympian Hiawatha, the premier passenger line on the railroad, was considered by many railroad historians to be the finest passenger train ever in the United States.

The Olympian included the famous “Skytop Lounge” cars, with huge expanses of glass on the upper level for a spectacular view.

Something else the Milwaukee did that was cutting edge for its time was electrifying its route through the mountains. Using hydroelectric power and the principal that the train generated electricity when going downhill to help power it uphill, the railroad eventually had 654 miles of electrified track, from Harlowton, Montana to Avery, Idaho and a second section, from Othello to Tacoma, Wash.

The two sections were never connected because of an unfortunate flat spot along the route between the two mountainous sections.

In 1917, the Milwaukee Road was advertising in the Miles City Star about its amazing system. It was a 3,000 volt, direct current, overhead system, which meant the engines of the trains were connected to an overhead wiring system. At Harlowton, steam and later diesel engines were disconnected and electric engines attached. 

It was an innovative system and saved the Milwaukee about a $1 million a year in fuel costs but it wasn’t enough to keep the Milwaukee profitable.

The company declared bankruptcy in 1925 and reorganized as the Chicago, Milwaukee, St. Paul and Pacific Railroad in 1928. In 1929 its total mileage stood at 11,248 miles.

To further promote passenger rail, the Milwaukee opened the Gallatin Gateway Inn in Three Forks in 1927. Tourists bound for Yellowstone Park disembarked at Gallatin Gateway, stayed overnight in the luxurious hotel, and then took buses to the park.

In 1937, the railroad constructed the Snoqualmie Pass ski resort which was only accessible by the Milwaukee. The ski area was operated until 1950.

After World War II, the Milwaukee enjoyed a brief period of profitable operations, especially on its passenger routes. But the interstate highway system and the coming of the passenger airplane did so much damage to passenger rail that in 1961, the Olympic Hiawatha ceased operations.

Shortly after that, the Milwaukee started planning for a merger with another railroad. Unfortunately, the Interstate Commerce Commission turned down the merger at the same time it approved the merger of the Burlington, the Great Northern and the Northern Pacific Railroads, leading to the Burlington Northern becoming even more dominant.

The downturn became a death spiral. The Milwaukee built their own cars but to create a better financial picture as they searched for a merger partner, they sold their cars and leased them back. They were spending so much on old cars, the railroad couldn’t afford to invest in new cars.

Track maintenance also suffered. Delayed maintenance just kept adding up. Trains had to run more slowly on bad track and there were car shortages.

Diesel was becoming more efficient so the once touted electric route was given over to diesel.The final electric freight arrived at Deer Lodge, Montana on June 15, 1974.

The Milwaukee tried to force itself into the Burlington Northern consolidation but, again, the ICC turned them down. Realizing that most of the profit came from only a small percentage of the company’s track, it started abandoning thousands of miles of track.

Between 1977 and 1984, route distance was reduced to a quarter from its peak and a third from its total in 1977, shrinking to 3,023 miles. The most extensive abandonment eliminated the Milwaukee Road’s transcontinental service to the West Coast.

Operations ended west of Miles City, Montana in 1980.

In 1982, the much-reduced railroad was earning a small profit, finally making it worth buying. On Feb. 19, 1985, the Soo Line bought the last remnants of the Milwaukee.

When the Milwaukee closed up shop in Miles City, it was a huge blow to the local economy, even though the yards were much smaller than they had been at their peak. They also left behind an aquifer that was full of diesel fuel that took years to clean up.

The Milwaukee is still remembered fondly by older Miles Citians. At one time, the railroad was so stylish, it was mentioned in “The Great Gatsby” and even had a movie made that featured Miles City and the Milwaukee.

But that’s another story.

(Amorette Allison is a local history columnist.)