There are many people interested in former transportation companies, whether they were trucking companies, railroads, airlines or ocean lines. They are called “fallen flags,” and the term describes those companies whose corporate names have been dissolved through merger, bankruptcy or liquidation.
(Photo: Arnold Morscher/American-Rails.com)
As an independent corporation, the Chessie System, Inc. only lasted eight years. But its legacy lives on for those interested in fallen flags because several of its subsidiaries were well-known, historic railroads. Chessie System was a holding company that owned the Chesapeake & Ohio Railway (C&O), the Baltimore & Ohio Railroad (B&O), the Western Maryland Railway (WM) and several smaller carriers. As described in an earlier FreightWaves article, the Baltimore & Ohio was the first common carrier railroad in the nation; it was founded in 1830.
How the Chessie System came about
After a long struggle with the New York Central Railroad (NYC), the Chesapeake & Ohio won control of the Baltimore & Ohio when the Interstate Commerce Commission (ICC) approved the merger on December 31, 1962. This was the start of what later became the Chessie System.
At a time when many railroads were struggling financially, the C&O was generating profits. This was due primarily to the coal it hauled.
While the C&O and the NYC were fighting for control of the B&O, its management was wrestling with chronic financial problems. If it had not been acquired by one of the two railroads there was a very good likelihood that it would have had to declare bankruptcy.
While the B&O had financial issues, it offered a more southerly reach as well as its lucrative coal business. While Alfred Perlman, the NYC’s president, had been successful during the 1950s improving the railroad’s finances, he knew his railroad needed a merger partner in order to compete against its largest rival, the Pennsylvania Railroad (PRR).
Ironically, if the NYC had acquired the B&O, it would have been bankrupt just a few years later. The NYC ended up merging with its rival – the PRR – in 1968. The new railroad (the Penn Central) declared bankruptcy two years later – the largest bankruptcy up until that time and the end of two eastern railroads that were considered among the best.
Following the takeover, the C&O’s management chose not to merge the B&O into the C&O. Rather, it gradually combined the two railroads’ overlapping departments, but kept the B&O’s identity separate. Compared to many other acquisitions, the C&O’s management chose to be more of an ally than “boss.”
The C&O management made these decisions for several reasons. Two of the key reasons were that they did not want to alienate the B&O’s extremely loyal employees; secondly they wanted to retain the B&O’s tax-exempt status in the state of Maryland.
In 1968, the B&O acquired control of the Western Maryland Railway. It was a similar but much smaller version of the B&O. The WM ran between Baltimore and Connellsville, Pennsylvania via Cumberland, Maryland. It also had a southerly extension to Elkins, West Virginia and branches that ran south from Elkins.
The WM was nicknamed the “Wild Mary.” Its track often paralleled the B&O and the railroad carried a great deal of coal in the same areas as the B&O, although it did not serve as many markets as its larger rival did. Despite its regional status, WM employees were proud of their company; the railroad’s equipment and rights-of-way were well-kept.
After operating independently for several years, a new holding company was established for the three railroads. The holding company was named the Chessie System, Inc. It was incorporated in Virginia on February 26, 1973. It acquired the C&O (which controlled the other railroads) on June 15, 1973. The three railroads had been closely related since the 1960s. As noted above, the C&O had acquired controlling interest in the B&O in 1962, and the two had jointly controlled the WM since 1968.
The holding company era
As many holding companies do, the Chessie System’s management sought to reduce costs by consolidating numerous overlapping departments of the three railroads. However, the three railroads continued to operate semi-autonomously.
The Chessie System name and logo
Hays T. Watkins, Jr. became president of the C&O in 1971. He was a skilled executive with effective leadership skills. Watkins developed the idea that the three railroads needed a unique corporate identity to spotlight their affiliation.
Watkins’ team suggested “Chessie System,” which was not a new name for the C&O. During the Great Depression the railroad’s management sought ways to boost the railroad’s declining passenger business.
Lionel Probert was the C&O’s public relations officer in the 1930s; he saw a newspaper advertisement that featured “a cuddly sleeping kitten.” Probert saw the kitten as a symbol to promote the C&O’s new air-conditioned sleeping cars and to revive the declining passenger count.
According to Thomas Dixon, Jr.’s, “Chesapeake & Ohio Railway: A Concise History And Fact Book,” Probert purchased the artist’s sleeping kitten artwork for $5; he then developed the slogan “Sleep Like a Kitten and Wake Up Fresh as a Daisy in Air-Conditioned Comfort.”
The kitten was named Chessie (after the railroad); the first advertisement appeared in the September 1933 issue of Fortune magazine. The new logo was an immediate hit; it propelled ticket sales as well as merchandising for the railroad.
Many consider “Chessie” as “the greatest marketing idea ever conceived by a railroad.” For those old enough (and railroad enthusiasts), it is remembered in advertisements with a simplified slogan – “Sleep Like A Kitten.” After passenger rail travel declined in the years following World War II, the Chessie the kitten logo was discontinued; by the late 1960s it had been forgotten by most of the public.
Some 40 years after Chessie was first used in the railroad’s advertising, Watikins charged Howard Skidmore, a successor to Lionel Probert, to lead the effort to design a new corporate logo and paint scheme. Skidmore assigned the task to Franklyn Carr, who led the company’s creative team.
Several factors went into Carr’s work – the Chessie System had to have a bright paint scheme to attract attention for “safety reasons,” while “bold lettering would show strength and also catch the eye.”
Using the “C&O’s famous kitten as a template,” Carr “overlaid the design within a large letter ‘C’ as a silhouette.” The design was liked by all, and was quickly approved by the C&O board of directors.
The new paint scheme for the three railroads used blue, yellow and vermilion along with the new Chessie System logo.
Until 1976, the railroads continued separate identities by using sub-lettering on their equipment to continue their identities – B&O, C&O and WM. Then, in 1976 Chessie began to operate the three railroads as a more unified railroad system.
(Photo: Rob Kitchen/American-Rails.com)
Chessie System operations
The Chessie System was headquartered in Cleveland, Ohio. A key revenue source for the company was West Virginia coal. Another major revenue source for the railroad was the transportation of auto parts and finished motor vehicles.
The Chessie System maintained the majority of its subsidiaries’ original networks in the beginning – except for that owned by the Western Maryland. The Chessie System abandoned the WM’s Connellsville Extension in 1975. Over time it removed or sold other WM segments. Very little of WM’s rail network remains intact.
During the first half of the 1980s, various segments of the C&O and B&O were no longer used. One segment that was severed was the B&O’s main line to St. Louis.
Acquisition and loss of identity
The Chessie System merged with Seaboard Coast Line Industries, creating CSX Corporation on November 1, 1980. The Chessie System logo continued to be applied to locomotives, railcars and other equipment until mid-1986, when CSX introduced its own paint scheme.
The former Seaboard Coast Line railroads were folded into the Seaboard System Railroad on December 29, 1982. The Chessie System railroads continued to operate separately until the WM was merged into the B&O on May 1, 1983. The Seaboard System Railroad was renamed CSX Transportation on July 1, 1986.
After CSXT came into existence, the B&O and C&O remained as “paper companies” for nearly a year. The B&O was incorporated into the C&O on April 30, 1987. Then the C&O was formally dissolved as a corporate entity when it was merged into CSXT on August 31, 1987. The Chessie System name was retired.
Legacy of the Chessie System
The Chessie System was an integrated railroad for only eight years; as a corporate entity its lifespan was 15 years. However, the Chessie System continues to live in books, with hobbyists who build/buy/sell/trade locomotives and railcars with its colors and logo, and with those who honor fallen flags.
Author’s note: This article would not have been possible without the resources made available by Adam Burns of American-Rails.com. Those interested in learning more about the railroads operating in North America – and those that are now “fallen flags” – should explore the American-Rails site.
(Photo: Jack Kuiphoff/American-Rails.com)
