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The track connecting Crystal Lake and Lake Geneva hadn`t been traveled for nearly a decade. Pasture all but covered some parts, and in the more populated areas, several homeowners had confidently stretched their patios to within inches of the rails.

People all along the roadbed knew they would never again see Chicago & North Western Transportation Co. passenger cars carrying vacationers to their land of beach balls and suntan oil. Lake Geneva, like so many other American towns in recent years, had been officially rendered train dead.

But on an August afternoon in 1983, a day that many local motorists won`t forget, David Hanley and his son, Michael, sent one last choo-choo clacking up the line.

The Hanleys are among the latest individuals assigning new roles to cabooses. Those cabins on wheels have slowly been succumbing to new technology, and as surplus cabooses become available, people are turning them into all manner of quaint things. Cabooses have been transformed into restaurants, ice cream parlors, tourist cabins, hunting lodges, playground curiosities and lakeside cottages.

One became a jewelry store in Hyannis, Mass. Another, in West Wilmington, Conn., serves as an annex to the Tolland Bank branch, the main part of which is housed in a former Central Vermont Railroad station.

”It`s cozy, and the children love it,” says manager Barbara Zabilansksy, who sometimes takes her lunch in yet another caboose at the Mansfield Depot Restaurant a few miles down the road.

David and Michael Hanley dreamed about opening a caboose motel, and they soon discovered such projects don`t always roll smoothly. It`s hard to wrest shabby, 25-ton railroad cars from their native habitat and turn them into something cute.

On moving day, a Chicago & North Western station master had to precede the string of cabooses in his automobile, hopping out to halt traffic at intersections that had long since been stripped of their crossing gates.

The motorists he stopped could tell they were about to experience another one of those weird aberrations that occasionally afflict travelers in rural areas: You haven`t seen a car for miles, yet suddenly a pack of teenagers dashes across the highway directly in front of you. Pheasants always end their lives on your front headlight, instead of on the headlight 40 feet ahead. And now this. A human semaphore flags you down exactly when you need to cross railroad tracks that could have been passed without interference any other time during the last decade.

At least this version of the eternal rustic-transportation mystery apparently would not last long. That freight car looming in the distance was a caboose, the traditional tail end of a lengthy annoyance. But on that afternoon in 1983, the caboose was followed by another, then another, then yet another. Forty-three cabooses rolled past, at a maddening 4 miles per hour, pushed by two Chicago & North Western locomotives.

David Hanley, a Skokie publisher, and Michael, a 23-year-old ad salesman who had been working in his father`s business, bought their first caboose in 1982 and made it into a guest cottage at their summer home in Walworth, Wis. With the support of David`s wife, Pat, and their daughter, Kathe, the Hanley men figured they could expand on that idea, and in the spring of `83, father and son began tramping through the Milwaukee Road yard in Milwaukee and the Chicago & North Western yard in Bensenville shopping for cabooses from a depressing inventory of corroded junk.

”If we had left the choices up to the railroads, we would have had nothing,” Michael said one day last month, as he proudly led a visitor past his family`s gleaming string of yellow and orange cabooses at the Hanley`s End of the Line Motel in Lake Geneva.

”A lot of the cars we saw were burned out and in terrible shape. Even some of the ones we did buy–for $900 apiece–were dirty and cold, heated with pot belly stoves or oil burners. Most of them were built in the early 1930s, and they had been taken out of service only three years ago.”

The cars they picked were fit to ride the rails, at least. As part of the deal, officials of the Milwaukee Road (a subsidiary of the Soo Line)

dispatched 32 orange cabooses down to the C&NW yards in Bensenville, where they were coupled with 11 yellow C&NW cabooses and sent off on that strange trip north.

”They had to stop in Crystal Lake to switch to the abandoned track,”

Michael Hanley said. ”We met them there with some friends and a video camera and asked if we could get aboard. The engineer said, `No way,` but when he got back to the end of the train where he couldn`t see anything, one of the trainmen said, `Get on,` and we jumped into one of the cabooses.

”I wish we hadn`t. It was really a frightening ride. There`s an inch of slack in each coupling, so that`s 43 inches of slack in all. We could hear the engine hit the first car. Then boom, boom, boom, SMACK, and we`d fall off the seat.”

That happened a lot as the train crept over broken rail, past those back yard patios, through herds of cows and under raking tree branches that had grown unchecked for all those years. Finally, with one last SMACK, the cars came to rest on the Hanleys` 1,800-foot right of way, purchased from C&NW for $17,000.

Approximately half of the cars have been gutted and refurbished into comfortable rooms that rent for $70 a day during the week and $80 on weekends. For that, the customers get typical motel accommodations and access to a whitewashed lobby building constructed around three dormant Milwaukee Road boxcars. One car contains the front desk, another an extensive railroad-lore library and the third a gift shop that relentlessly carries out the theme with items ranging from rail line insignia patches to copies of ”The Little Engine That Could.”

On hot weekend mornings, Michael Hanley likes to walk down the line and listen to the caboose air conditioners roar. Collectively they sound like a genuine train, idling at a genuine siding. Occasionally, the young proprietor will see an adult guest–wearing one of the goofy cardboard trainman caps provided by management–sitting in the bay window of a Milwaukee Road caboose, waving signals to an imaginary engineer far up the line.

”As soon as they see me, they take those hats right off,” he said.

Cabooses may inspire fantasy in 1985, but from the time they appeared, around the middle of the 19th Century, crew members regarded them as nasty shacks on wheels. Conductors sat on hard caboose benches at tiny desks and filled out bills of lading. They stared through cupolas or bay windows to check for wheels that failed to turn or cars that threatened to derail. They would glance through the little rear windows to make sure nothing was gaining on them.

In the early days, if an emergency cropped up, the occupant of the caboose had to walk across the top of the train and inform the engineer, face to face. Later, he could control the brakes from his post and communicate by telegraph and eventually by two-way radio. Crew members kept their tools in the caboose and used it as a mobile machine shop. They slept on narrow bunks and relieved themselves at toilets that emptied directly onto the rails.

On various lines at various times, cabooses–from the Dutch word kabuis, meaning cabin house–also were known as cabin cars, conductors` vans, accommodation cars, train cars, way cars or crummies.

Railroads certainly consider the caboose a crummy piece of equipment. A recent industry report said 12,563 are still used regularly in this country. They cost $70,000 each, when new, and run up an annual $400 million tab in fuel, heating, repair and handling expenses–92 cents a mile. The

microelectronic train-end monitors that could replace them cost about $4,000 apiece and occupy no more space than a shoe box. Sensors on the monitors feed the engineer all essential information.

Cabooses rarely serve as dormitories, offices and machine shops these days because train runs are quicker, personnel can just as easily sleep in motels, computers handle the paperwork and repair tools have become so sophisticated that no portable shed could hold them.

The United Transportation Union, fearing that cabooseless trains would lead to cutbacks in personnel, has managed to slow up their demise by working out contracts calling for slow attrition. As a further hindrance to caboose oblivion, Virginia, Nebraska, Oregon and Montana recently passed laws requiring cabooses on trains operating within their borders. (A similar law had been proposed for Illinois, but legislators defeated it during the current session.)

So cabooses won`t disappear, or turn into still more motel rooms, overnight. In 1982, the Chicago & North Western Transportation Co. signed an agreement with the union that allows the company to periodically negotiate the removal of 25 percent of the cabooses remaining at that time.

”When eliminated, the better cabooses are moved to lines where cabooses still must be used,” explained Ronald Settle, C&NW`s director of labor relations. Because the railroad`s system includes Nebraska, where cabooses are mandatory, some of the cars probably will remain as part of the rolling stock indefinitely.

After the Soo Line took over the Milwaukee Road and eliminated about 7,000 of its 10,000-mile system, Gene Beckman, Milwaukee`s assistant vice president for material disposition, had 100 surplus cabooses on his hands. He sold 32 to the Hanleys, and many of the others were cut up for scrap.

”There`s really not too much demand for cars,” Beckman said. ”Some locomotives were purchased for other railroads, and a few went to museums.”

William Hayes, Beckman`s counterpart at Chicago & North Western, however, reported a booming market for surplus rolling stock and materials. ”I`m always getting unusual requests,” he said. ”One man`s garbage is somebody else`s treasure.

”Basically, I deal in scrap steel. Scrap rail can be split in sections to make fence posts and reinforcing rods for construction. I`ve got a dealer in Cincinnati who takes railroad axles and rerolls the steel to make a lot of other items. He sent me a letter opener made from those axles. A firm in Avis, Pa., fabricates bed frames out of scrap rail. Decks off flat cars make good bridges at golf courses and forest preserves. Tank cars are used as storage containers and culvert pipe.

”And we still have uses for cabooses,” Hayes added. ”Engineering crews take them out to do work on the rails. There will be a surplus when the union work rules change, but it`s not like, all of a sudden, the cabooses are going to be gone.”

Those who want to acquire cabooses because they think they`re quaint often reconsider when Hayes points out they could be tons of trouble.

”Everybody wants them for playhouses, restaurants, hot dog stands. I get a lot of calls. But they back away when they find out how much it would cost to move. I will only deliver one to a private siding on my line. The customer must remove it from there. The Hanleys were an exception. We pushed the cars out to Lake Geneva because we wanted to take the rail out behind us after the return trip.”

Don Denlinger of Strasburg, Pa., probably would have backed off, too, but he didn`t quite understand what he was getting into when he bid on 35 cabooses during a Pennsylvania Railroad distress sale 15 years ago.

”I made the bid, and six months later, dead of winter, I get a letter saying I would be fined for moorage fees if I didn`t move the cars,”

Denlinger recalled. ”Moorage? I didn`t know if that was something you ate or something you wore.

”I went to the attic, took the caboose from a toy train set and carried it under my coat into a bank in Lancaster. I said, `I need $250,000 to finance some of these.` The loan officer said, `Is that for HO or standard gauge?` I told him, `Hey, I`m not talking model trains. These cars are 25 tons apiece and I have to move them.` I don`t know why, but he loaned me the money. I`ve been borrowing ever since.”

Denlinger`s investment became the Red Caboose Motel, a popular stopover in Pennsylvania`s Amish country. Each unit still contains bunks and a pot-bellied stove, similar to the originals, but the bunks are soft, the stoves hold little television sets and Denlinger regales guests with the kind of humor that may sweep the country if caboose use ever really catches on.

”I literally got railroaded into this business,” Denlinger tells people. ”The end of the train was just the beginning for us. And now I`ve got the only motel in the world that guarantees you`re going to wake up on the right track.”