In the history of most relaxing vacations, Goethe’s 1775 trip to Switzerland gotta be up there:
if you don’t make a decisive break with your past did you even go on vacation??
Over his career Hunter Harrison ran four railroads: Illinois Central, Canadian National, Canadian Pacific, and CSX. His gospel was Precision Scheduled Railroading. He’s usually credited with the PSR idea, although we can’t overlook the role of “Pisser Bill” Thompson in formulating the concept. “Pisser Bill” was called that because wherever he was on the railyard, if he had to piss, he would take his dick out and piss all over the place. That’s what railroading was like when Hunter Harrison began his career oiling traincars.
Harrison kept score by one main metric: operating ratio. Operating expenses divided by revenue. He cared about other numbers of course, but only as to how they’d affect operating ratio. You want a lower operating ratio: less dollars spent for every dollar earned.
Harrison focused on the numerator: expenses. He was obsessed with smart use and purchase of assets. One of his sayings was that an unused asset is a liability. When he found unused assets he shed them. On the Illinois Central, which runs from Chicago to New Orleans, there were two parallel tracks. Hunter got rid of one of them. He wanted to save the cost of maintaining it. (Sidings were kept so two trains didn’t run into each other). He knew pricing would take care of itself because the railroad is almost a monopoly. He didn’t care much about customers. He saw some stickers once at a BNSF yard that said “the customer is always right.” He had them torn down. Ignoring customers caused him some problems politically, especially in Canada, but it didn’t stop him from getting the operating ratio down.
Harrison was a fanatic about trainyard efficiency. He rose up as a trainmaster in the Frisco yard in Memphis. Although he never went to college, Harrison had a pure mind for railroad management. When Sue Rathe introduced him to a new world of computerized data at Illinois Central, he immediately understood the potential and how to use it. (Although no one would argue Harrison could not be gruff, Rathe tells us not to miss the gentlemanly side. Harrison encouraged people with potential. His bookshelf was full of memoirs of great coaches, he viewed himself as a coach, he used coaching metaphors.)
As CEO, Harrison got the Illinois Central’s OR down from like 90% to mid 60s. The employees didn’t always like him for it. But they came to respect him. The alternative might’ve been bankruptcy.
What produced results was the approach he would preach for the next two and a half decades – what train velocity does for efficiency, what longer trains mean for efficiency, and on and one. He saw better processes for everything, base hit after base hit.
There’s not much about this point in the book, but I wonder if Harrison had one key world historical insight. Railroading had changed. The Staggers Act of 1980 deregulated railroads. After that there was some nominal oversight but really the railroads could charge whatever they wanted. (The Staggers Act was meant to be anti-inflationary, it was signed by President Carter).
The news that railroads were now, like, businesses hadn’t caught on. Railroads still acted like federal bureaucracies. Everything was inefficient. The labor force was notoriously lazy, naps and “leave earlys” were common, drunkenness not unknown.
That was in the US. Up in Canada mind, CN at this time was still nationalized! In fact not even nationalized, it was a “Crown corporation,” legally speaking it was more or less Queen Elizabeth’s personal plaything.
Harrison realized (if I understand the book right) that pricing would take care of itself. Don’t even think about it, charge whatever. Focus on cutting costs and moving cars (cars, not trains, a key point). You’d make huge gains in operating ratio. That would get reflected in the stock price, and ultimately in Harrison’s personal compensation. By the time he was done he’d personally made something like $500 million, which he used on estates for show horses in Connecticut and Florida, filling trophy rooms.
It wasn’t just having the insight though. Harrison had the combo of skills to execute. No easy job. There was a lot of what he called mud to scrape away. He was not shy about confrontation. During some lost years as a young man he once woke up in a pool of his own blood after a bar fight. He took that attitude into his railroads.
Activist investor Bill Ackman saw the possibilities. He took a big position in Canadian Pacific and fought to get Harrison appointed CEO. After some board room battling, Ackman succeeded.
When Harrison took over CP in 2012, he went up the offices in Calgary. It was the week of the Calgary Stampede. Hardly anyone was at work.
“It’s Stampede,” said one of the secretaries.
“Who gives a shit it’s Stampede? This company hasn’t made a penny and we’re worried about Stampede, having a few shooters at noon?”
Harrison turned CP around, starting with the mailroom, where he was disgusted to find a box being FedExed to a destination eight miles away. By then he’d run two railroads. He had a playbook. It was almost too easy for him. In eighteen months he brought the OR down from 81% to 65.9%. Two and a half years later, CP’s OR was 59.8%. He had the railroad using 40% fewer locomatives, he’d closed yars, he was increasing velocity and train length without sacrificing safety (although absolutely sacrificing love from the work force, which he reduced by about four thousand).
For this reader, the least engaging part of Railroader: The Unfiltered Genius and Controversy of Four-Time CEO Hunter Harrison by Howard Green came as Harrison was exiting CP to run CSX for a final act of his career. The details about board politics and compensation packages just weren’t as thrilling as turning around a railroad. I can see why Green devoted so much time to this period, however. He’s an anchor on Canada’s Business News Network, and he had access to Harrison during this time. There was some resentment of Harrison’s manner at CP. Harrison himself acknowledged to Green that he’d mistakenly assumed Canada was just like the USA, and Canadians just like Americans, but the business culture there was smaller, closer, and more sensitive, less blunt.
By the time Harrison left CP and went to fix up the “spaghetti-like” CSX*, his health was in rough shape. He took over CSX in March, 2017, and died that December. His ashes were scattered in the Memphis railyard.
Green sums up Harrison’s worldview on page one:
He reshaped an industry by literally making the trains run on time. While Sir Richard Branson advised executives to focus on employees first, customers second, and investors third, Harrison reversed the priorities: investors came first. For him the game was capitalism, pure and simple. You either played it or you didn’t.
Harrison’s legacy lives on. His protege Keith Creel is now CEO at Canadian Pacific. Bill Ackman is taking another bite of that apple. The question is: has Harrison’s Insight is already played out? The operating ratios for all the major railroads now are in the high 50s and 60%s. Some of those numbers include real estate sales. The railroads were given a great deal of land to induce them and help them build, much of it indigenous land, a continued resentment.
Are these railroads just now juicing their numbers by scrapping off their parts? Is that the ultimate end of capitalism, for a corporation to achieve ultimate efficiency and then begin consuming itself, or rather allowing the shareholders to consume it in a cannibalistic ritual?
I should confess/disclose I myself am long CP and UNP and (through Berkshire) BSNF. Good luck building another transcontinental railroad. Canadian Pacific was built in five years. California will take longer than that to go from Bakersfield to Merced, although in fairness we’re not importing 15,000 Chinese laborers nor will the deaths of 600 people be acceptable. Both CP and the UNP were built with the aid of corrupt schemes. Corrupt schemes may still be rampant but they’re less effective, at least in North American railroad building.
Throughout this book are accounts of high stakes dinners and meetings at places like the Mount Royal Club in Montreal or The Breakers in Palm Beach. I know I’m not cut out to be a railroad CEO because I was reading and thinking, sure, sure this is a faceoff over control of the board but: what’s the food like? What’re people eating? I wanted the flavor! One meal that got my attention was a hasty conference at a Chick-Fil-A near Atlanta. That was the kind of food Hunter Harrison liked.
Cheers to Alex Morris, @TSOH_investing on Twitter, I think that’s how I heard about this book. I read it because I wanted to learn a bit about running a railroad, and I did!
* an example of Harrison’s mind: he could look at the map for CSX railroad and see that “stripped down, CSX wasn’t spaghetti; to Harrison it was more or less a square” with the corners being Selkirk, NY near Albany, Willard Ohio (60 miles south of Toledo), Nashville Tennessee, and Waycross, Georgia.
After marching through Georgia, Sherman convinced Grant to let him drive up from Savannah tearing up South Carolina. The Confederate general Joseph Johnston tried to intercept Sherman before he could link up with Grant, but Johnson’s forces were torn to pieces after John Bell Hood’s invasion of Tennessee and the disastrous battles at Franklin and Nashville.
Though Davis wished strongly to continue the war, Johnston sent a courier to the Union troops encamped at Morrisville Station, with a message to General Sherman, offering a meeting between the lines to discuss a truce…
The first day’s discussion (April 17) was intensified by the telegram Sherman handed to Johnston, informing of the assassination of President Abraham Lincoln. They met the following day, April 18, and signed terms of surrender.
With the fall of Fort Fisher and thus Wilmington in late January 1865, the Confederacy had no open ports. The armies could not be resupplied. The Union had achieved a version of their Anaconda Plan.
(source on that)
That top map I found over at Hal Jespersen’s Cartography:
This page offers over 200 maps I have created for American Civil War battle articles in Wikipedia, almost always for articles I wrote myself. They are available to anyone to use or publish under the Creative Commons Attribution 3.0 license, which means that if you use them—either modified or unmodified—you must abide by the terms of that license and attribute the images to me with the text “Map by Hal Jespersen, http://www.cwmaps.com.” It is not necessary for you to contact me in advance for permission to use the maps under these terms, although I always enjoy hearing about how my maps are used.
The best Civil War book I’ve read recently by the way is Vicksburg, 1863 by Winston Groom, who wrote the novel Forrest Gump. The book functions as a history of the Civil War in the West, where Grant with the help of the Navy bored down until the Mississippi from New Orleans up was under Union control, Vicksburg last to fall. Then he moved East to finish the job. Groom gives a very readable account of the difficult to follow campaign, much of it conducted in shifting swamp. I’ve been meaning to write a review but here is a short one: real good.
seen from the train, back in December. Maybe you’ve heard the American colloquialism, let’s get the hell out of Dodge.
That’s over at the Wall Street Journal. Am I supposed to use this information to trade stocks?
Now that one’s tradable. (Imagine being the couple chosen to illustrate this headline!) Observed this phenomenon in Santa Fe, overrun with flush Boomers on Indigenous Peoples Day weekend, threatening the very specialness they were seeking (or was it the other way round?)
I gotta check the ECG out next time I need a three thousand mile stroll. Do we need a West Coast Greenway? (obv). Idgar Sagjedev gets credit for this picture from the American Tobacco Trail segment:
Poe told us to expect [humiliation], too. When, near the end of his career, he laid out a formula for making great art, he said:
If any ambitious man have a fancy to revolutionize, at one effort, the universal world of human thought, human opinion, and human sentiment, the opportunity is his own—the road to immortal renown lies straight, open, and unencumbered before him. All that he has to do is to write and publish a very little book. Its title should be simple— a few plain words—“My Heart Laid Bare.”
There’s just one catch, Poe said: “this little book must be true to its title.” And that is why “no man ever will dare write it.”
“No man could write it, even if he dared,” Poe concluded. “The paper would shrivel and blaze at every touch of the fiery pen.”
Today is Evacuation Day in Boston, the day the British finally quit the city, giving up on the siege. Conveniently, it falls on Saint Patrick’s Day, so it’s Brits Out all around.
“Had Sir William Howe fortified the hills round Boston, he could not have been disgracefully driven from it,” wrote his replacement Sir Henry Clinton.
I thought this was interesting in this plaguey time:
Once the British fleet sailed away, the Americans moved to reclaim Boston and Charlestown. At first, they thought that the British were still on Bunker Hill, but it turned out that the British had left dummies in place. Due to the risk of smallpox, at first only men picked for their prior exposure to the disease entered Boston under the command of Artemas Ward. More of the colonial army entered on March 20, 1776, once the risk of disease was judged low.
How about Howard Pyle’s painting of Bunker Hill? (I can hear a Bostonian voice correcting me: “you mean Breed’s Hill?)
Can’t have been a fun time for British troops, half of whom were probably Irish recruits anyway. And what of the Dublin born Crean Brush, who met a sad fate for his Loyalism?
While imprisoned in Boston, Brush was denied privileges. He consoled himself with alcohol.
“Now through the very universality of its structures, starting with the code, the biosphere looks like the product of a unique event,” Jacques Monod wrote in 1970. “The universe was not pregnant with life, nor the biosphere with man. Our number came up in the Monte Carlo game. Is it any wonder if, like a person who has just made a million at the casino, we feel a little strange and a little unreal?”
quoted in The Information: A History, A Theory, A Flood by James Gleick, a nutrient-rich book I am working my way through.
During World War II, Monod was active in the French Resistance, eventually becoming the chief of staff of the French Forces of the Interior.Monod became a member of the French Communist Party after the end of the Second World War, but distanced himself from the party after the Lysenko Affair.
His quotations are intense:
- “The first scientific postulate is the objectivity of nature: nature does not have any intention or goal.”
- “Anything found to be true of E. coli must also be true of elephants.”
- “The universe is not pregnant with life nor the biosphere with man. … Man at last knows that he is alone in the unfeeling immensity of the universe, out of which he emerged only by chance. His destiny is nowhere spelled out, nor is his duty. The kingdom above or the darkness below: it is for him to choose.”
Pretty good start to a book:
Here’s how the Penguin translation warms us up:
I’ve found both editions of The Persian Expedition to be a bit of a slog. I do enjoy a work based on Xenophon, 1979 film The Warriors, which begins with a summons from Cyrus.
Here’s what Benet has to say in his Reader’s Encylopedia:
(Two Benet brothers won the Pulitzer Prize in poetry!)
Xenophon was pals with Socrates, and wrote a book about horsemanship and one about hunting with dogs.
The Greek verb exelauno, meaning “to march forth,” occurs frequently in Xenophon.