In 1872, the rails of the Houston & Great Northern RR reached Palestine from Crockett and connected with the east-west International railroad line. The railroad would be of great importance to Palestine for years to come.
To persuade H&GN to come to Palestine, John H. Reagan had agreed to campaign for a bond issue to provide H&GN with $150,000. In return, the railroad would bring the line to Palestine and build a new depot by July of 1873. The parties also agreed that H&GN would maintain a roundhouse, repair shop, and general office (for administrative employees) in Palestine “forever.”
Mr. Reagan was far-sighted enough to add a provision that the agreement would stand, even if the railroad merged with, or was purchased by, another railroad. The terms of the agreement were mutually accepted by Reagan and Galusha Grow, president of the Houston & Great Northern RR, in the library of Reagan’s home in Fort Houston.
Reagan’s wife, Molly Reagan, and local civic leader and banker George Wright, witnessed the negotiations and hand shake. Both Mrs. Reagan and Wright would later testify to the validity of the agreement in a 1914 lawsuit brought by the I&GN RR to remove the general office from Palestine.
This agreement has benefited Palestine for almost 150 years. Not only did the railroad provide hundreds of jobs, it also provided access to the Houston/Galveston area. Passengers could travel to and from Houston/Galveston, merchants could obtain hard-to-get merchandise, and Anderson County farmers could access more markets.
The generous people of Palestine and Anderson County agreed to give the railroad not only $150,000, but also 139 gift deeds of land to the International and the H&GN Railroads.
The land consisted of most of the current downtown and rights-of-way for the tracks. The directors of the two railroads shifted most of the land into land trusts owned solely by themselves. Proceeds from the sale of the land were divided among the directors.
In 1873, the two railroads merged and formed the International & Great Northern RR (I&GN). Later, the Missouri Pacific took control of the I&GN. Today, Union Pacific owns the line. For nearly 150 years, Palestine has defended numerous attempts by the railroad to break the agreement.
One attempt to break the contract by the I&GN RR was decided by the U.S. Supreme Court. Another attempt ended with the Fifth Circuit Court of Appeals ruling that the Interstate Commerce Commission had overstepped its authority. Every time the railroad has tried to break this contract, the city and county have prevailed.
In 1954, a new contract was shaped to provide Missouri Pacific relief for a growing workforce. Due to mergers, the employee count for the MoPac had ballooned and now totaled thousands. Palestine agreed to the change, if the MoPac maintained a certain percentage of the railroad’s total workforce in Palestine.
Through the years, the railroad has treated the agreement as a nuisance, not always meeting the required number of Palestine employees, and failing to report the employee numbers or payroll data, as required by the contract.
Now, UP wants to rid itself of this contract entirely. On Nov. 27, 2019, the city and county were served with a lawsuit filed by Union Pacific Railroad Company in the U.S District Court. In seeking to scrap the contract, Union Pacific argued that adhering to the 1954 contract would harm the railroad. Union Pacific wants to close the car-shop and eliminate at least 65 jobs, ending a 150 year relationship. Union Pacific's exit is unacceptable and unwarranted.
UP is now claiming the cost of operating Palestine’s car shop harms the railroad's net profits. Contrary to this claim, Union Pacific, has logged net profits of almost $6 Billion in each of the past two years. The CEO of Union Pacific was paid a salary of $13.8 million last year. In the past several years, he has received stock worth more than $112 million. UP certainly isn't cutting corners in the board room.
SEC filings show retired Union Pacific vice presidents were paid staggering amounts: Cameron A. Scott received $2.9 million, and Lynden L. Tennison received nearly $2.2 million in deferred compensation.
The annual payroll for the 65 Palestine car shop employees is less than the combined compensation for these two former UP Executives. That money would be better spent on the wages of hardworking car shop employees, enabling them to raise their families and contribute to the railroad and community.
Ben Campbell is Vice President of the Texas State Railroad Authority Board.