Financial History Issue 112 (Winter 2015) | Page 12
EDUCATORS’ PERSPECTIVE
“Big John” Rides the Rails
The Southern Railway Corporation’s
“Big John” grain hopper car, like the hero
of the ballad “Big Bad John” after which it
was named, was enormous. Small 40-foot,
weevil-infested box cars had been used to
haul grain before Big John was introduced
in 1961. Railroads hauled very little grain at
the time because it was inefficient to do so.
The process of loading and unloading box
cars was labor intensive and inefficient.
Furthermore, box cars tended to leak grain
along the tracks, much to the delight of
vermin along the way. The disadvantages
and the expense of using box cars meant
that most grain was transported by truck.
The Big John, in contrast to the lowly box
car, was an innovative marvel. It loaded
quickly from the top using grain spouts
and unloaded just as quickly through the
four hoppers at the bottom of each car. The
lightweight, rust-proof aluminum design
of the cars meant that they were, for all
intents and purposes, maintenance free.
Moreover, Big John could carry twice as
much grain as a box car. The higher capacity and increased efficiency of the new car
meant that Southern could slash its rates
by two-thirds, win business from its competitors in the trucking and barge industries, and still realize significant profits.
In modern financial parlance, this
was a positive net present value project
that would clearly increase the value of
the company; it was a no-brainer. D.W.
Brosnan, president of Southern Railway,
invested $12.5 million and ordered 500 of
the new cars, but there was a big problem.
Implementing the new lower rates
required the approval of the Interstate
Commerce Commission (ICC). The ICC
was established in the late 19th century to
monitor railroads and prevent them from
establishing a transportation monopoly.
The Transportation Act of 1920 gave the
ICC authority to establish minimum rates
for interstate shipping in order to prevent
ruinous competition among the railroads
and to protect the trucking industry from
unfair competition. Brosnan applied to
Ev’ry mornin’ at the mine you could see him arrive
He stood six foot six and weighed two forty five
Kinda broad at the shoulder and narrow at the hip
And everybody knew, ya didn’t give no lip to Big John
— Lyrics to “Big Bad John”
© Mark Reinstein/Corbis
By Brian Grinder and Dan Cooper
Burlington Northern Santa Fe train hauling “Big John” hopper cars towards Kansas City.
the ICC for permission to publish the
lower rates, but he was denied.
The ICC justified its decision to suspend
the new rates by claiming that the lower
rates would simply allow Southern to put
competitors out of business and then raise
its rates again. According to railroad historian Richard Saunders, Jr., “In 1961, the
ICC denied the Big John rates saying, in
effect, that the