Union Pacific Unification, January 1, 1936

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The unification of the Union Pacific System took effect on January 1, 1936, the day that Union Pacific Railroad formally leased the railroad right-of-way and equipment of its subsidiaries, consolidating them into a unified system of railroads. Included were the Oregon Short Line Railroad (OSL), the Oregon-Washington Railroad & Navigation Company (OWRR&N), and the Los Angeles & Salt Lake Railroad (LA&SL), along with several smaller companies that already had close operational and corporate relationships with Union Pacific.

Some historians have noted a change in locomotive lettering that seemed to begin in 1937. This change in steam locomotive lettering schemes was just a minor, but visible evidence of the changes Union Pacific went through to survive the depression of the early 1930s. Employment dropped from 54,200 in 1928, to 23,700 in 1933, allowing the company to cut costs that would have been the doom of smaller companies.

One of the measures that helped the railroad survive was this consolidation of Union Pacific with its subsidiary roads, which was first proposed by the road's Chairman, Judge Lovett who had controlled the company since Harriman's death in 1909. Lovett's proposal for consolidation was presented to the Interstate Commerce Commission just before his death in June 1932, but was not approved until July 1935, and took effect on January 1, 1936.

This consolidation brought together Union Pacific Railroad, Oregon Short Line Railroad, Oregon-Washington Railroad & Navigation Company, and Los Angeles & Salt Lake Railroad, along with several smaller railroad companies. Because of a wide variety of collateral and bonding arrangements, the component companies remained as separate corporations, and leased their railroads to Union Pacific for their operation thereby allowing much needed economies of scale that cut costs and helped the railroad's bottom line ($472,000 in the first year alone).

On January 1, 1936 as part of the overall lease of OSL, LA&SL and OWRR&N, to which Laramie, North Park & Western Railroad and Pacific & Idaho Northern Railway protested, the ICC forced UP to purchase 24,964.4 of the 25,000 shares of LNP&W, along with 100 percent of P&IN. (Moody's Transportation Manual, 1959, page 840)

(Read more about LNP&W)

(Read more about P&IN)

At the same time, UP applied for control of the St. Joseph & Grand Island Railway. (The Streamliner, Volume 2, Number 1, January 1986, page 37, Q&A 4)

(Read more about StJ&GI)

The unification of of Union Pacific and its leased companies was given ICC Finance Docket 9422, with the following actions:

May 10, 1932
The stockholders of Union Pacific Railroad, at the company's annual meeting in Salt Lake City, approved the lease of all three subsidiaries (OSL, OWRR&N, LA&SL), along with St. Joseph & Grand Island, by Union Pacific Railroad, creating what was called the Union Pacific system. (New York Times, May 11, 1932)

January 31, 1933
The federal Interstate Commerce Commission gave Union Pacific permission to consolidate its accounting system with those of the four subsidiary companies, with the stipulation that UP also purchase "certain short lines at such a time as the commission may order." The four subsidiaries included the Oregon Short Line, the Oregon-Washington Railroad & Navigation, the Los Angeles & Salt Lake, and the St. Joseph & Grand Island. This consolidation of accounting offices would result in about one-half of the accounting offices of the subsidiaries being absorbed. (Deseret News, January 31, 1933, "today")

Organizational Changes

The unification and lease in 1936 resulted in changes in the organizational structure of Union Pacific, and its three larger subsidiary roads:

(Read more about the creation of operating districts on Union Pacific in 1936-1937)

Ownership Did Not Change

Ownership of the right-of-way, track, and buildings did not change. As Union Pacific sought changes intended to reduce costs and improve operations, such as new construction and abandonments, all requests were made to financial and government agencies in the name of the subsidiary roads, with a notation that each request was being made by the subsidiary, and its lessee Union Pacific. Utah was where trackage owned by Union Pacific itself, along with both Oregon Short Line and Los Angeles & Salt Lake, came together. OSL and LA&SL met at Salt Lake City, and OSL and UP met at Ogden. The trackage between Salt Lake City and Ogden was owned solely by Oregon Short Line.

The visible evidence of the 1936 consolidation was that Union Pacific lettering was placed on the sides of steam locomotive tenders, while ownership initials were placed on the rear of the tenders and in smaller letters on the cab side below the locomotive numbers.

Railroad Leadership

The railroad's New York office had retained final approval in spending since Harriman took control of the railroad in 1898. Because they had final approval on how money was spent, New York also controlled how the railroad was being run. New York's control changed in 1934 when Averell Harriman, E. H. Harriman's son, became involved as part of the Roosevelt administration in Washington, D.C. Union Pacific president, Carl Gray, also became involved with the Roosevelt administration as early as 1932.

These changes at the top, in both New York and Omaha in 1932-1934, brought William Jeffers to the top operational position as his job title was changed from Vice President, Operations, to Executive Vice President. With Gray and Harriman otherwise occupied with public service, in 1934 Jeffers became the top man at Union Pacific by default. Jeffers became president in October 1937 and remained at the top until his mandatory retirement at age 70 in January 1946.

William Jeffers started with Union Pacific as a call boy at age 14 in North Platte, where he was born into a railroad family in 1876. By 1900 he had become chief dispatcher on the Wyoming Division and began his rise into top management from there. In 1912 he was promoted from superintendent of UP's Utah Division, to superintendent of the newly created Wyoming Division. This change created two divisions out of three, with the new Wyoming Division encompassing Cheyenne to Ogden, and the new Nebraska Division being from Cheyenne to Omaha. In 1914, Jeffers became the superintendent of the Nebraska Division, then in 1916 he was named general manager of the Nebraska Division. The next step was vice president of operations, which came in October 1928. With Harriman and Gray both occupied with national policy matters, William Jeffers was by 1934 at the center of operations.

Mechanical Department Changes

In July 1936, Jeffers named Otto Jabelmann as his Assistant General Superintendent of Motive Power, with his responsibilities being the head of the newly organized Bureau of Research. Jabelmann was to head the design of both a new freight locomotive, which became the 4-6-6-4 Challenger, and a new passenger locomotive, which became the 4-8-4 Northern.

The first Challenger, UP 3900, was delivered in September 1936 and still used the older lettering and numbering scheme. The first Northern, UP 800, was delivered in August 1937, and was the first use of the new lettering and numbering scheme on new motive power.

As for the first use of Gothic lettering on a steam locomotive, the apparent first use was on 4-6-2 2906 "in 1936" and on 4-8-2 7002 "in early 1937" when they were modernized with roller bearings and lightweight rods, prior to their being streamlined by July 1937. (for a photo of UP 7002 in the new lettering scheme, but before being streamlined in April 1937, see "The Streamliner", Volume 9, Number 3, Summer 1994, page 7)

William Jeffers became president of the railroad in October 1937, and Otto Jabelmann became Vice President of Research and Mechanical Design in May 1939, and continued to influence the design of UP's locomotives, passenger cars and freight cars until his untimely death in January 1943 while on a consulting trip to Europe.

Jeffers continued as Union Pacific's president until his mandatory retirement in January 1946 at age 70. By that time, the team of Jabelmann and Jeffers had completely changed the railroad's mechanical department, putting in place a culture that would keep Union Pacific on the cutting edge of railroad technology throughout the 1950s and 1960s.

(Sources include: "Union Pacific, The Rebirth 1894-1969", by Maury Klein; and "The Mighty 800" and "The Challenger Locomotives", both by William Kratville.)