The government created Conrail from unprofitable lines in the East, and I wonder how things would be if they did likewise in the West. If they combined MILW, CNW, ROCK, MKT, DRGW, WP and SP while deregulating the industry, the result would have been a major railroad company that could have survived in my opinion.
Another point to be made is the impact of interstate highways and trucking. Here is where the government established tough competition which took away much of the high revenue business. Highways are half funded with user fees (mostly fuel taxes). The rest of highway are paid from the general fund. Highways are part of the deficit. Anytime I tell people fuel taxes should be doubled in order to fully pay for highways, nobody agrees with me. Nobody wants higher taxes.
So, the MILW did lose some of its transcontinental business to trucking as was the case with the other railroads. Once again, bad government policy leads to bad choices.
Regarding railroads in the 1970's and early 1980's... As I said, this was a challenging period for railroad companies. I recall the GTW being unprofitable then. To increase its revenues with more traffic and longer hauls, GTW acquired some lines from Penn Central when it went out of business, and it acquired the DT&I. It was half owner of D&TSL, and bought the other half from N&W. I recall the PC tracks were in deplorable condition. DT&I locomotives had deferred maintenance, and they would sometimes fail while hauling trains. ... Basically, GTW was combining unprofitable companies in an effort to be more profitable. That is challenging. ... The DT&I was supposed to gain a connection to "friendly connections" in Cincinnati, but soon the SOU and N&W merged (Norfolk Southern) and also the L&N (with Family Lines) merged with Chessie System (CSX). ... (Later much of the former DT&I route was sold by parent, CN, to a short line operator. ).... As I said earlier, GTW did attempt to acquire the MILW Midwest lines, but as I explained, Soo Line eventually did that. ... GTW/CN entered into a coordinated service agreement with BN which was beneficial to GTW. .... (Footnote: I wrote parts of GTW's application to the ICC to acquire DT&I and the half ownership of D&TSL from N&W) . ... Of course, international business with Canada is a mainstay for the GTW. The new tunnel at Port Huron was a significant improvement. GTW, however was still a short railroad, and revenue per carload was low as a result. CN acquired Illinois Central and Wisconsin Central, and of course, the length of haul for GTW's business improved substantially after that. Now GTW is really just a subdivision of Canadian National.