Maine Central Railroad Company Business Information, Profile, and History

History of Maine Central Railroad Company

Maine Central Railroad Company is a private subsidiary of Guilford Transportation Industries, Inc., one of the largest and most successful transportation firms operating in the northeastern section of the United States. Maine Central Railroad hauls thousands of tons of freight per year, mostly in Maine and New Hampshire.

Early History

The beginning of Maine Central Railroad dates to the early and mid-19th century when small railroad lines were established to haul lumber from inland mills to seacoast ports. Because of the large amount of timber that required transportation, numerous railroad firms sprang up throughout the New England region, especially in the dense wooded areas in Maine. Firms like the Calais Railroad Company and the Piscataquis Canal and Railroad Company owned and operated small tracks, consisting of anywhere between two- and 12-mile rail lines. One of the most important of these companies, the Whitneyville and Machiasport Railroad Company, had constructed an eight-mile rail line to ship lumber from the burgeoning mills in Whitneyville to the shipping facilities at Machiasport. Like many other small railroad lines, the Whitneyville and Machiasport would soon become part of the Maine Central Railroad.

By the early 1860s, there were so many small railroad companies hauling lumber over relatively short distances that competition began to drive out some of the firms. To increase their chances of survival and ensure their companies of being able to take advantage of the coming boom in railroad traffic, the Androscoggin and Kennebec Railroad Company decided to arrange a merger with the Penobscot and Kennebec Railroad Company. This merger, finalized in Waterville, Maine on October 28, 1862, resulted in the formation of the Maine Central Railroad. Just one year later, the newly formed company reported gross revenues of approximately $350,000. Having consolidated its operations and administration, management at Maine Central decided to purchase or lease a significant mileage of rail lines to prepare for the future.

One of Maine Central Railroad's most important leases, concluded in 1882, involved the connecting line for transatlantic liners between Halifax and St. John, Canada, and New York City. The arrangement stipulated that the Canadian Pacific Railroad would operate the section of the line that ran from St. John, across the international bridge between Canada and the United States, to Vanceboro, Maine. The Maine Central Railroad leased and would operate 163 miles of railroad track from Vanceboro to Bangor, Maine. Although the track of the Whitneyville and Machiasport was sold during the 1890s because of the decline of the lumber business in the state of Maine, additional acquisitions and leases of rail lines led to a continued expansion of Maine Central Railroad operations.

During the early years of the 20th century, Maine Central Railroad played a leading role in the development of Maine as a holiday state. Affluent families from farther south on the eastern seaboard, stretching from New Jersey to Massachusetts, chose Maine as their vacation spot. The company's parlor cars and coaches were full of visitors destined for luxury hotels operated by enterprising individuals and many of the railroads themselves. By 1910, because of the influx of ever-larger numbers of annual summer visitors, Maine Central Railroad created a fleet of steamships that extended the company's services far beyond the final destinations of its rail lines.

In 1917, Maine Central Railroad stretched across three states, including Maine, New Hampshire, and Vermont, with a total of 1,358 miles of rail lines within its continually increasing transportation system. Before the car began to alter the method of transportation in the 1920s throughout America, people were almost entirely dependent upon public transport, especially relying on the railroads to traverse long distances. Companies such as Maine Central Railroad connected larger metropolitan areas with smaller rural communities and encouraged the development of industry along the rail lines. With the resurgence of the lumber and paper industry in Maine during the 1920s, Maine Central Railroad provided access to forested land that seemed to be, at the time, an inexhaustible supply of timber for the paper mills.

The high point for Maine Central Railroad and, indeed, for the American railroad industry occurred in 1929. The company operated nearly 1,500 miles of track and reported 1,659,000 freight train miles, with 78 locomotives in service. Nearly 500 miles of rail lines were operated through leases that cost the company more than $800,000 in annual rentals. In 1929, operating revenues reached a total of slightly more than $20 million, $5 million of which was derived from passenger train and boat service revenues for transporting approximately 1,397,000 passengers.

The Great Depression

When the stock market crashed in the autumn of 1929, the company was dealt a severe financial blow. Hauling of freight over the company's rail lines decreased dramatically, and the annual visits by summer vacationers all but ended. To compensate for the loss of passenger revenue, Maine Central Railroad reduced its passenger rail service and began to lay off railroad employees. Many of these same employees were rehired, however, when the company created the Maine Central Transportation Company, a bus passenger service. This subsidiary was formed for the purpose of substituting less costly bus transportation for railroad passenger service on minor and less frequented tracks. Fortunately for Maine Central Railroad, the new subsidiary acquired both interstate and intrastate rights over its routes and, during the entire decade of the 1930s, brought in handsome profits to its parent company.

The 1940s were difficult years for Maine Central Railroad. Net income amounted to only $360,000 in 1940, but shot up dramatically with the start of World War II. Both freight and passenger revenues reached their highest point since 1930, accounting for a net income of $1,165,000. But this was the end of the good news for Maine Central Railroad. In early 1943, the company began to fall into arrears, primarily from the increase in annual leasing fees for rail lines. A lack of sound decision making by company management exacerbated the railroad's deteriorating financial condition, and Maine Central Railroad was on the verge of bankruptcy by the end of the war years.

The Postwar Period

Immediately after World War II, the company invested heavily in the future of passenger rail service by purchasing eight of the most modern streamlined coaches and two deluxe dining cars. High-speed round trips were initiated between Bangor, Maine and Boston, Massachusetts to infuse enthusiasm for the company's passenger rail service. Unfortunately, overall revenues continued to fall, with passenger revenues declining precipitously in 1948 and 1949. By the beginning of 1950, Maine Central Railroad management had decided to begin selling some of its track in both Maine and New Hampshire.

Maine Central Railroad entered the 1950s heavily in debt. An attempt by company management to refinance its growing financial problems failed in 1953. Making matters worse, in 1954 one of the most devastating storms ever to hit the northeastern United States, Hurricane Edna, brought the entire operation of Maine Central Railroad to a grinding halt. Tracks were washed away, and the loss of both passenger and freight traffic was incalculable. Repair costs were enormous. Realizing that money for repairs must come from somewhere, management decided to sell the Maine Central Transportation Company, its bus passenger service, to the Greyhound Bus Company during the same year.

Troubles piled upon troubles during the mid- and late 1950s for Maine Central Railroad. In 1956, losses from the company's passenger service exceeded the net income of the entire railroad. In an attempt to rectify a rapidly declining situation, management decided to discontinue the Farmington train in 1957, eliminate the Bangor-Calais train during the same year, and cease operations for the scenic trip to St. Johnsbury in 1958. By the end of the decade, with a decline in passenger travel of more than 65 percent between 1949 and 1958 and disappointing earnings of only $754,000 in 1958, Maine Central Railroad terminated passenger service on all Maine Central Railroad routes.

In the early 1960s, the company barely avoided deficit spending on operations, and average net income during these years was a disappointing $600,000. In December 1965, prospects for the company seemed to brighten with the construction in Maine of a new pulp and paper manufacturing facility by International Paper Company. International Paper Company soon became Maine Central Railroad's largest customer, and by 1966 the company's net income jumped to more than $1.1 million. Yet operating costs continued to surpass income, despite the financial windfall from the arrangement to transport lumber for International Paper Company, and the railroad was forced to sell many of its long-held branch lines.

The 1970s and 1980s

The years 1973 and 1974 were arguably two of the best in the company's history. Net income had risen to more than $6 million during 1974, the highest in the company's entire existence. But high debt still plagued management at Maine Central Railroad. To sustain profitable railroad operations, company management chose to abandon or sell many miles of unprofitable rail lines. Some of these abandonments included the 57-mile run from Quebec Junction, New Hampshire to Beecher Falls, Vermont, once one of the railroad's most profitable lines. The company's 16-mile Farmington branch was also abandoned at the same time. In 1976 a 16-mile stretch of the North Anson to Bingham branch was abandoned, and the Eastport branch was abandoned in 1978.

During the late 1970s and throughout the 1980s there was a concerted attempt to revive the fortunes of railroad companies through a process of merger and consolidation. The majority of railroads across the United States had ceased passenger service altogether, having been forced by economic necessity to concentrate their operations on hauling freight. Yet with the construction of modern and convenient superhighways, the trucking industry began to take over a large part of hauling freight, which had always been the mainstay of the railroads. One of the most important mergers to occur during these years was the arrangement among Great Northern, Northern Pacific, and the Burlington to merge and consolidate their operations into the Burlington Northern. These three railroads, with extensive rail lines in the western and northwestern areas of the United States, decided the merger was in their combined interest, since the elimination of duplicate services, the lowering of freight charges, and the pooling of resources and personnel to repair locomotives, for example, improved the financial condition of the newly formed Burlington Northern.

Maine Central Railroad was not immune from the movement toward merger and consolidation within the industry. On January 5, 1984, Maine Central Railroad was purchased by Guilford Transportation Company, a large and extensive transportation firm with holdings throughout the northeastern section of the United States. Along with Maine Central, Guilford Transportation also purchased two other major northeastern railroads, including the Boston and Maine Corporation and the Delaware and Hudson Railway Company. The ostensible purpose of the acquisitions was to coordinate the operations of the three railroads and thereby heighten their efficiency through the consolidation of equipment and facilities, the sharing of data, the improvement of freight car utilization, and the use of run-through train services. Such a combined system would lower costs and expedite the handling of freight.

Yet there was more to the merger than a consolidation of railroad operations and services. Management at Guilford Transportation anticipated a comprehensive regeneration in the economic activity of the northeast. The combination of the three railroads, therefore, was intended to create a highly competitive railroad system within the northeastern transportation market. With greater viability working together rather than as independent operations, the new rail system would provide quick, efficient service to those companies wishing to haul freight, as well as maximizing the long-term profitability of the combined system. Together the railroads either owned or leased more than 4,000 miles of rail lines, stretching from Montreal, Canada to Washington, D.C., and from Calais, Maine to Buffalo, New York. With a combined work force of about 4,500 employees, and with approximately 400 locomotives and 12,000 freight cars, the new system would result in an improved opportunity to haul and route more freight more easily than ever before.

Throughout the late 1980s and mid-1990s, management at Guilford Transportation was proved correct. The combined operations and services of the three railroads, under the administration and direction of Guilford Transportation, developed into a highly successful regional railroad system that attracted significant amounts of new traffic with each passing year. By the mid-1990s, Guilford Transportation had achieved the goals of the merger: the railroad system had grown large enough to establish a strong presence in the northeastern market for hauling freight, in spite of the difficulties brought on by deregulation within the industry, yet remained small enough to provide the kinds of services usually reserved for small local railroad companies.

The 1990s and Beyond

By the mid-1990s, Maine Central Railroad was thriving under the management of Guilford Transportation. Profits and earnings continued to increase in the extremely competitive market of handling and hauling freight. Although Maine Central Railroad had not resumed passenger service in the mid-1990s, it continued to hope that passenger service would once again develop into an economically viable form of transportation.