The end of the Rock Island was a sad, drawn-out affair, analogous to a man who couldn't swim but just wouldn't drown. The Rock Island was historically important for being the first to connect Chicago to the Mississippi River, being the first to cross the Mississippi and for being involved in a court case that made Abraham Lincoln's career as a lawyer. But it was never the most healthy railroad financial, having gone bankrupt shortly after the Civil War, again in 1917 and yet again in 1933, and it faced stiff competition in Illinois, Iowa, and Colorado. It was described as "going to the right places but in the wrong way" and "one railroad too many" and major competitor CB&Q went to all the same places in much quicker fashion.
The Rock Island was at its most profitable under the presidency of John Dow Farrington, from 1948 to 1955. But, like pretty much every other railroad in the same era, the Rock Island found itself faced with declining traffic and revenues, and increasing costs. The midwest rail network had been built in the late 19th century to serve that era's traffic and was wildly overbuilt in an era when the mechanization of grain hauling gave larger reach to large grain elevatiors, reducing the need for the spider's web of track that crisscrossed the plains states such as Iowa. Despite the downturn in profits the property was still in decent shape at the time, making the Rock Island an attractive bride for another line looking to expand the reach of their current system. New president Downing B. Jenks began searching for a merger partner, and initially spoke with both the Milwaukee Road and the Chicago & North Western, who were of similar minds that mergers and consolidation were needed to survive. For whatever reasons, neither of those potential mergers went much past initial talks though.
In 1961, Jenks was replaced by R. Ellis Jenkins, and at the end of his presidency in 1964, the Rock Island began talks with Union Pacific concerning a merger. Union Pacific had long fought for its own route into Chicago, having been too late to build their own line, and had been forced to partner with first the Chicago & North Western and then later the Milwaukee Road. While the Rock Island lines to Chicago might not be the best-routed, it would still consolidate the operation under one roof, rather than UP having to hand it off to a competing railroad. It looked like a slam-dunk merger too, since it would be an end-to-end merger (the ICC viewed those more favorably than parallel mergers) and UP and CRI&P shared several interchange points, most notably Denver and Omaha, and minimal overlap. And it was a large advantage for customers, because after the merger a shipper in Iowa, for example, would now have his choice of shipping lanes all the way to the West Coast and shippers in the Pacific Northwest would now have the opportunity for single-carrier haulage as far as Chicago, St. Louis, and the Gulf of Mexico.
Instead, what followed was ten years of the most drawn-out, complicated merger proceedings in railroad history, arguably more absurd than the Penn Central merger proceedings. The first to voice their complaints was Southern Pacific. The Golden State route between Tucumcari and Kansas City, had been a solid partnership with the Rock Island and SP was concerned about losing traffic to the new UP-Rock combination, so they petitioned with the ICC to deny the merger, or to force the new railroad to sell the Golden State route to SP. SP also asked for trackage rights on the soon-to-be ex-Rock Island between Kansas City and St. Louis, which would allow for better connections for their proposed new customers in Kansas. Also, Rock Island wanted the gateway to be Denver instead of Omaha, which immediately caused an outcry from CB&Q, Wabash, Chicago Great Western, C&NW, Missouri Pacific, and C&NW who all took profitable interchange traffic from the UP at Omaha. Moving the gateway to Denver would deprive all of them of that traffic, and there were concerns that even if the gateway was at Omaha, why would the UP need them anymore, since it had it's own route to Chicago? Essentially every railroad west of the Mississippi was effected by the proposed merger. And in addition to all the demands and concessions with the UP-CRI&P merger, the ICC was also busy with the final years of the Penn Central merger negotiations (1964-1968), the failed Milwaukee Road-C&NW merger (1964-1970), the Burlington Northern merger (1965-1970), the formation of Amtrak (1971) and the groundwork for Conrail as the northeast collapsed. Milwaukee Road also tried to squeeze in on the UP-RI merger, after their merger with C&NW fell apart, only to be rebuffed by both, who had no desire for the crumbling granger-turned-transcon.
As soon as the merger proceedings started, the Rock Island was so convinced that the merger would go through (and frustratingly, it really should have gone through, since it was nowhere near as market-dominating as Burlington Northern or Penn Central) that they began deferring maintenance on equipment and infrastructure and slashing back passenger service as fast as they could, all in a bid to save money and make their finances look as good as possible. Equipment expired frequently, derailments became common, the system was inundated with slow orders, 1971, and the once-proud passenger service was down to just two intercity trains, the Chicago-Peoria Peoria Rocket and the Chicago-Rock Island Quad Cities Rocket, both of which now operated entirely within the borders of Illinois. Rock Island actually opted against joining Amtrak, in part because the government assessed the Amtrak entrance fee based upon passenger miles operated in 1970. After concluding that the cost of joining would be greater than remaining in the passenger business, the railroad decided to "perform a public service for the state of Illinois" and continue intercity passenger operations. In an effort to prop up its future merger mate, UP financed the purchase of GP40s and U25Bs for the Rock Island (Rock Island had actually wanted Alco C430s instead of the Geeps, but Union Pacific did not want any Alcos on its roster once the merger went through, and instead forced them to get GP40s), and they also asked the Rock Island to forsake the Denver gateway in favor of increased interchange at Omaha. Incredibly, the Rock Island refused this, and the UP was forced to route more Omaha traffic over the C&NW to ensure it actually made it to market.
Finally, in 1975, the ICC approved the merger between Union Pacific and Rock Island. But, due to all the petitions and demands and the ICC seeing the opportunity to use the merger to reshape and rebalance the railroad network of the entire western half of the US. Almost all of the Rock Island, including the key Chicago-Omaha main line, would go to the Union Pacific. The Kansas City-Tucumcari Golden State route would be sold to the Southern Pacific, as SP had wanted, while the Memphis-Amarillo Choctaw route would be sold to the Santa Fe and the Rio Grande would have an option to purchase the Denver-Kansas City line. But the Rock Island had last turned a profit in 1964, and was now in dangerously poor condition a decade later. Union Pacific took one look and realized the amount of rehabilitation it would take to get their new trackage back in shape. Instead, Union Pacific turned and walked away and left a very decrepit Rock Island by itself.
After the merger fell through, a new president and former FRA official, John Ingram, was brought aboard to salvage the Rock Island. Ingram quickly filed for FRA-backed loans to rebuild the line, but with only $300 of cash on hand, on March 17, 1975, Rock Island entered its third bankruptcy. With its debts on hold, Ingram saw a future for the railroad as a grain funnel from the Midwest to the port of Galveston, Texas and he estimated that the Rock Island could be rebuilt and re-equipped at a cost of $100 million and sought financing for the plan. Grain trains with no caboose (to cut down from a 5-man crew to a 2-man crew) were a cost-effective method to gain market share and help finance the the rebuilding plan from the inside.
New and rebuilt locomotives rolled out of Silvis shops in gleaming powder blue and white, emblazoned with the new corporate identity of The Rock, and began replacing some of the tired, filthy power. The Peoria Rocket and Quad Cities Rocket were finally dumped, and the state of Illinois allocated funds for the Rock Island's commuter operations to replace the old 2500-series "Capone cars" and 2700-series commuter coaches with new bilevel stainless coaches, as well as putting the old E7s, single E6, and both AB6s out to pasture in favor of ex-UP E8s and E9s and brand new F40PHs. Aggressive track rebuild projects covered the system, and main lines that had seen little or no maintenance in years were pulled from the mud as track gangs attacked the maintenance backlog. By 1978, main line track improved in quality, with the entire Illinois Division having no slow orders, and freight was starting to operate at normal speeds. The sale of the Golden State Route to the Southern Pacific had been agreed to, and put some more cash back in the bank account. The Rock was showing signs of life, and slowly it inched towards a financial break-even point, despite the financial malaise that plagued the late 1970s. It almost resembled the Might Fine Line of yore.
And then it was hammered flat again. First, the FRA loans that Ingram had sought to really get his railroad back in shape were denied, thanks to aggressive lobbying by competing railroads that saw a healthy Rock Island as a threat to their existence. At the same time, while the Rock Island invested heavily into its physical plant, the Rock Island brotherhoods had been working under labor agreements that were no longer valid. The front line operating employees had not had an increase in pay since the existing contracts expired yet remained on the job during extensive contract negotiations. By the summer of 1979, the Brotherhood of Locomotive Engineers and the United Transportation Union had accepted new agreements, but the Brotherhood of Railway and Airline Clerks were demand that their pay increases be back-dated to the expiration date of the previous agreement and paid retroactively. The Rock offered to open the books to show the precarious financial condition of the road in an effort to get the BRAC in line with the other unions that had already signed agreements, but Fred J. Kroll, president of the BRAC, declined the offer to audit the books of the Rock Island and pulled his BRAC clerks off the job in August of '79. Picket lines went up at every terminal on the Rock Island's system and the operating brotherhoods honored the picket lines. Operations immediately ground to a halt.
The Ingram management team operated as much of the Rock Island as they could, and trains slowly began to move, with more traffic being hauled every week that the strike, even as president Jimmy Carter issued a back-to-work order that BRAC dismissed. According to Ingram, "by the end of the sixth week, the Rock Island was handling about 30 percent of its pre-strike tonnage with 5 percent of the pre-strike onboard train operating personnel. Projections indicated that by the end of November, the company would be handling about half of its pre-strike tonnage and earning a profit of about $5 million per month. In other words, the company was winning the strike." Seeing the trains rolling and the company making money, despite the strike and fearing a strikebreaking situation similar to the Florida East Coast, the unions appealed to the FRA and ICC for relief. Despite the fact that Rock Island management had been able to move 80% of pre-strike tonnage, at the behest of the Carter Administration, the ICC declared a transportation emergency, somehow coming to the conclusion that the Rock Island would not be able to move the 1979 grain harvest to market. This decision came despite the railroad's movement of more grain out of Iowa in the week immediately preceding the order than during any week in its history.
This claim may be contributed to creditors, particularly Henry Crown, who had loudly advocated for the shutdown and liquidation of the property since 1960. Crown declared that the Rock Island was not capable of operating profitably, much less paying its outstanding debts, while at the same time Crown was investing as much as he could in Rock Island bonds and other debt at bankruptcy-induced junk status prices. Following the railroad's reorganization in 1948, for the next 15 years, Crown did everything possible to minimize investment in equipment and maintenance, although railroad men like former Rock Island president Downing Jenks valiantly tried to upgrade the line. In 1960 Crown forced Jenks's ouster and began bringing in financial hatchetmen to run the railroad, its cash flow going increasingly toward nonrailroad and unproductive expenditures. Crown knew that in the event of liquidation, as an accredited bondholder, he would be first in line to be paid and would receive the full issued value of the bonds. Also his coal interests in southern Illinois also made Crown the biggest shipper on a major Rock Island competitor, Illinois Central Gulf, which meant he also stood to gain appreciably from the Rock Island's demise.
The ICC issued a Directed Service Order authorizing the the Kansas City Terminal Railway to temporarily take over operations. The Directed Service Order enabled one-time suitors, via KCT management, to basically test operate portions of the Rock Island that had once interested them, while a reorganization plan was submitted for the potential to revive The Rock. On January 24, 1980, Judge McGarr reviewed that the Rock Island's final plan of reorganization, which proposed cutting the Rock back to an "X" with endpoints at Chicago, Omaha, Minneapolis and Kansas City, and keeping the branches to Peoria, Muscatine, Cedar Rapids and a good chunk of the grain-gathering "Bow and Arrow" branches in northwest Iowa. The plan made little sense as it basically called for them to retrench into the portion of the country where the most redundant rail mileage existed. And the conclusion that almost all that grain out of Iowa was going to the Gulf coast, so cutting the line haul in half got better turnaround on cars and engines made little sense. After all THE CARS STILL HAD TO GO TO TEXAS TO UNLOAD. Did they think shippers were going to pay to transload their grain into UP or MKT hoppers at Kansas City? There is a theory, and probably not an incorrect one, that Henry Crown influenced the reorganization plan to make it as nonsensical as possible to get it thrown out by the judge and force liquidation.
McGarr reviewed the reorganization plan, determined it was not feasible, and he initiated the shutdown and liquidation of the Rock Island. Not wanting to preside over an asset sale, Rock Island president John Ingram resigned, and receiver and trustee William Gibbons took over as president of the bankrupt railroad. Kansas City Terminal began the process of embargoing in-bound shipments in late February, and the final train battled three days of snow drifts to arrive in Denver on March 31, 1980. Cars and locomotives were gathered in 'ghost trains' that appeared on otherwise defunct Rock Island lines and accumulated at major terminals and shops and were prepared for sale or scrap.
The railroad's locomotives, rail cars, equipment, tracks, and real estate were sold to other railroads or, primarily, to scrappers. Gibbons was able to raise more than $500 million in the liquidation, paying off all the railroad's creditors, bondholders and all other debts in full at face value with interest. Henry Crown and other bondholders who had purchased Rock Island debt for cents on the dollar during the low ebb in prices did especially well. Gibbons was released from the Rock Island on June 1, 1984 after its estate expired. With all assets sold and all debt retired, the Rock Island found itself with a large infusion of cash. The name of the company was changed to Chicago Pacific Corporation to further distance itself from the defunct railroad, with one of it's first purchases being the Hoover Company, and was eventually purchased by Maytag in 1988.
Through the megamergers of the 1990s, the Union Pacific ultimately ended up owning and operating more of the Rock Island than it would have acquired in its attempted 1964-1975 merger. Ironically though, the one line it currently does not own is the Chicago-to-Omaha main line that drove it to merge with the Rock Island in the first place. This line now prospers under the Iowa Interstate Railroad.
