Fallen Flag - Background

Background

The U.S. railroad industry has been consolidating since the 1950s, and almost every year sees the list of operating roads shrink. Most railroad companies that once existed have either closed, been assimilated by a larger company, or participated in a "merger of equals" in which neither company's name survived unaltered (an example of the latter being the Burlington Northern / Santa Fe merger, which produced the Burlington Northern and Santa Fe Railway). At one time there were over 140 Class I railroads operating in the U.S. (at the time a railroad was given Class I status if it earned at least $1 million in revenue annually).

As an indication of the level of consolidation that has taken place, only four Class I railroads (then, railroads with over a million dollars in income per year) from before the Great Depression still exist under their original names, these being the:

  • Union Pacific Railroad
  • Kansas City Southern Railway
  • Canadian National Railway
  • Canadian Pacific Railway

However, as railroads merge or buy each other, duplicate and less profitable rights of way often are sold to new short line railroad companies. Yet, even these short lines themselves merge and buy each other, creating even more fallen flags. For example, many of the former Milwaukee Road branch lines in southern Wisconsin were sold to a railroad called the Wisconsin and Calumet Railroad (WICT). The WICT is now itself a fallen flag, its rights of way now operated by the Wisconsin and Southern.

Read more about this topic:  Fallen Flag

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