' I'LiV /*,l ■•4 ' ✓ REPORT OF THE JOINT NEW ENGLAND RAILROAD COMMITTEE TO THE GOVERNORS OF THE NEW ENGLAND STATES MAINE: Honorable Percival P. Baxter NEW HAMPSHIRE: Honorable Fred H. Brown VERMONT: Honorable Redfield Proctor MASSACHUSETTS: Honorable Channing H. Cox RHODE ISLAND: Honorable William S. Flynn CONNECTICUT: Honorable Charles A. Templeton REHABILITATION BY CO-OPERATION A RAILROAD POLICY FOR NEW ENGLAND JUNE, 1923 A limited number of copies of this report are avail¬ able and will be sent upon written request to the chair¬ man of the committee for your state. Maine Hon. Carl E. Milliken, Chairman, Augusta, Maine. New Hampshire Lester F. Thurber, Chairman, Second National Bank, Nashua, N. H. Vermont James F. Dewey, Chairman, Quechee, Vermont. Massachusetts James J. Storrow, Chairman, 44 State St., Bos¬ ton, Mass. Rhode Island George L. Crooker, Chairman, Providence, R. I. Connecticut E. Kent Hubbard, Chairman, Hartford, Conn. Maps will be sent upon request YW^m \. AW A g REPORT OF JOINT NEW ENGLAND RAIL¬ ROAD COMMITTEE TO THE GOVERNORS OF THE NEW ENGLAND STATES TABLE OF CONTENTS Page Rehabilitation by Cooperation — A Railroad Policy for New England. 1 Appointment of Committee. 1 Advisory Technical Staff. 2 Procedure Followed by Committee. 3 The New England Railroads as a Group . 6 General Description. 6 Ton Miles and Passenger Miles of New England Rail¬ roads 1903-1922 7 Interchange with Connecting Lines. 9 Character of Traffic. 10 Importance of New England’s Water Transportation 11 Pacific Coast Lines. 12 Coastwise Steamship Lines. 13 Foreign Commerce. 14 Volume of Waterborne Traffic . 15 Coastwise Merchandise Movement. 16 Topography of New England Railroads. 17 Ton Miles and Passenger Miles of Each New England Road. 19 Freight Earnings Depend upon Keeping Cars Moving . 20 11 CONTENTS Page New Haven Railroad .. 22 Operation. 22 Average Daily Movement of Freight Cars .... 22 The Cost of Slow Movement of Freight Cars ... 24 Delays in Classification Yards. 25 Comparison with Boston & Albany. 30 Comparison with Boston & Maine. 31 Time Lost in Placing Cars. 31 Embargoes. 32 Embargo Policy of New Haven Railroad. 36 New Haven’s Large Per Diem Payments. 39 Net Ton Miles Per Car Day. 41 Passenger Operation. 42 Locomotive Repairs. 43 Constructive Mileage. 46 Overtime Pay. 48 Materials and Supplies. 49 Physical Condition. 50 Density. 51 Future Capital Expenditures. 51 Financial Condition of the New Haven. 53 Period of Expansion, 1902-1913 . 53 Amount of Investment in Outside Properties .... 55 Losses of New Haven on Outside Investments . . 57 Amount of Increase in Capitalization due to Outside Investments. 62 The Government Loans .. 63 Increase in Physical Valuation Does Not Help Road’s Earning Power. 63 Earnings. 65 (Exhibit A Condensed Income Account 1908-1922) Growth of Traffic. 65 Comparison of Years 1922 and 1912. 66 Comparative Expense Ratios 1908-1922 . 69 CONTENTS 111 Page Results for First Four Months of Current Year . . . 69 Poor Outlook for 1923 . 70 Early Maturities of New Haven Debt. 71 Restoration of New Haven’s Credit Imperative ... 73 Boston & Maine Railroad. 74 General Description. 74 Physical Condition. 75 Boston Freight Terminals. 77 Shops and Roundhouses. 77 Operation. 78 Car Miles Per Car Day. 78 Car Delays in Yards at Mechanicville, Rotterdam Junction, East Deerfield and Ayer. 79 Cars Moved Daily . .. 82 Embargo Policy of Boston & Maine. 83 Materials and Supplies. 87 Locomotive Repairs. 88 Density. 89 Financial Condition of the Boston & Maine. 90 Earnings. 90 (Exhibit B Condensed Income Account 1908-1922) Growth of Traffic. 90 Comparison of Results of 1922 with 1916. 91 Comparative Expense Ratios, 1908-1922 . 93 Results of Operation First Four Months of 1923 . . 94 Financial Outlook for 1923 . 96 Boston & Albany Railroad. 97 Freight Car Movement.. . 99 Net Ton Miles Per Car Day. 99 Percentage of Gars Moved Daily.100 Yard and Terminal Operation .100 Embargo Policy.101 Locomotive Repairs.104 IV CONTENTS Page Maine Central Railroad.-. -.106 General Description.106 Operation.108 Locomotive Repairs.110 Financial.110 Bangor & Aroostook Railroad .113 Grand Trunk Railroad.116 Central Vermont Railway.116 Grand Trunk Extension to Providence.118 Importance of Canadian Routes.118 Atlantic & St. Lawrence Railroad.120 Rutland Railroad.122 Canadian Pacific Railway.124 Passenger Traffic of New England Roads.125 Growth of Passenger Traffic.126 Commutation Passenger Traffic.128 Mail and Express.129 Motor Truck Transportation.130 New England Port Development.134 Development of Water Transportation Fundamental . 134 New England Railroads Need More Export Freight . . 135 Enlargement of Welland Canal.136 Advice of Expert on Port Development.138 Portland .138 Providence.139 New London. 140 Modern Port Development.140 Boston.142 The Cowie Plan.142 Necessity for Coordination of Boston Terminals . . . 145 CONTENTS v Page Tentative Consolidation Plan of the Interstate Com¬ merce Commission.147 Alternative New England Plans.147 Treatment of the New Haven under Trunk Line Plan . 149 Comparison Between Allocating the New Haven to (1) The Baltimore & Ohio or (2) The Pennsylvania . . 149 Coal Movement.150 Comparative New Haven Interchange with Penn¬ sylvania and Baltimore & Ohio.153 Consolidation with Baltimore & Ohio Neither Logical nor Natural.154 Position of Baltimore & Ohio as to Consolidation with New Haven.155 Consolidation with Pennsylvania Natural and Logical 156 The Proposal to Allocate the New Haven to a Possible Delaware, Lackawanna & Western — Nickel Plate Consolidation.159 Trunk Line Consolidations for Northern New England 159 The Proposal to Allocate Northern New England Rail¬ roads to the New York Central.160 Views of Trunk Line Presidents on Disposition of Northern New England Roads.162 Views of President Rea and President Willard on Im¬ portance of Maintaining Free Routing in New Eng¬ land .168 The Fear that a New England Group Would Have too Great Power in Dealing with Trunk Lines.174 Importance of Canadian Gateways.179 Trunk Line Control Would Endanger Canadian Gate¬ ways .182 President Hustis Emphasizes Importance of Canadian Gateways.183 President Pearson on Effect of Trunk Line Control upon Free Routing of New England Traffic.184 View of President Todd.186 Differential Routes to West and South Would be En¬ dangered by Trunk Line Consolidation.188 VI CONTENTS Page Boston & Maine Should not be Dismembered .... 189 Tentative Alternative — “System 7A — New Eng¬ land - Great Lakes.189 Disposition of Rutland Railroad .190 Argument for Trunk Line Consolidation.191 A New England System Preferred.192 Railroad Management in New England Must be Sympathetic to Development of New England Sea¬ ports .193 New England’s Adverse Per Diems.195 Rate Divisions, Based on New England’s Operating Disabilities, Work toward Same Benefits as Would Consolidation with Strong Roads.195 Trunk Line Consolidation a Last Resort .197 The Question of Competition.197 Transportation Act Does not Make Consolidation Com¬ pulsory .199 Interstate Commerce Commission’s “System No. 7 — New England” Best for New England.199 The Proposed New England System Compared -with Other Railroad Systems.201 New England Would be Submerged in Enlarged Penn¬ sylvania and New York Central Systems.204 Conclusion of Committee as to Consolidation .... 207 Rehabilitation by Cooperation — New Haven .... 208 Estimate of Earnings in 1925 under Normal Conditions 211 Basis of Estimate.213 Improved Operation Will Build up Traffic.216 Cooperation of Employees.217 Credit.218 Readjustment of New Haven Capitalization.220 Atchison Reorganization of 1893 222 Cooperation of the States.224 Cooperation of Federal Government.228 Early Maturities of New Haven Debt.228 CONTENTS Vll Page Other Suggestions.230 State Cooperation Not New in New England Railroad History.231 Large Public Expenditures for Highways.233 Extensive Use of Public Credit for Municipal Improve¬ ments .234 Rehabilitation of Boston & Maine. 235 Estimate of Earnings in 1925 under Normal Condi¬ tions ...236 Basis of Estimate.238 Early Maturities of Boston & Maine Debt.241 Cooperation of the States.242 No Readjustment in Capitalization Required .... 243 Cooperation of Federal Government.246 Cooperation of Shippers.246 Devotion and Courage of Executives of New England Roads .. . 247 Conclusions.248 General Findings.248 Specific Findings.250 Consolidation.251 Rehabilitation by Cooperation .252 Rehabilitation of the New Haven.253 Rehabilitation of the Boston & Maine .255 Final.256 Reservation of New Hampshire Committee.258 Statement of Maine Committee.259 Statement of Philip Dexter.260 LIST OF APPENDICES Page A. Net Capital Expenditures for Road and Equipment All New England Railroads, July 1, 1914, to De¬ cember 31, 1922 . 263 B 1, 2, 3. Interchange of New England Railroads with Connections (year ending June 30, 1922). 265 C. Description of Freight Traffic of New England Railroads.271 D. Comparative Rates to Pacific Coast.282 E. Arrivals of Foreign and Domestic Vessels at Port of Boston April 1-15, 1923 283 F. New England Coal Receipts 1916-1922 289 G. Increase in Per Diem Rates 1902-1922 . 290 H. Revenue Ton Miles and Passenger Miles 1903-1922 New Haven Railroad (chart).293 I. Volume of Freight and Passenger Traffic, Revenues and Rates New Haven Railroad 1912-1922 . . . 295 J. Revenue Ton Miles and Passenger Miles 1903-1922 Boston & Maine Railroad (chart).297 K. Volume of Freight and Passenger Traffic, Revenues and Rates Boston & Maine Railroad 1912-1922 . 299 L. Revenue Ton Miles and Passenger Miles 1903-1922 Boston & Albany Railroad (chart).301 M. Revenue Ton Miles and Passenger Miles 1903-1922 Maine Central Railroad (chart).302 N. Revenue Ton Miles and Passenger Miles 1903-1922 Bangor & Aroostook Railroad (chart).303 O. Revenue Ton Miles and Passenger Miles 1903-1922 Central Vermont Railway (chart).304 APPENDICES Page P. Revenue Ton Miles and Passenger Miles 1903-1922 Atlantic & St. Lawrence Railroad (chart) .... 305 Q. Revenue Ton Miles and Passenger Miles 1903-1922 Rutland Railroad (chart).306 R. Expenditures of Commonwealth of Massachusetts on Port of Boston 1859-1922 307 S. Extract from Statement of William S. Jenney, Coun¬ sel for Delaware, Lackawanna & Western Railroad, before Interstate Commerce Commission May 19, 1923 . 309 T. New York, New Llaven & Hartford Railroad Com¬ pany Tentative Plan of Readjustment of Capital¬ ization .317 U. Boston & Maine Railroad Tentative Plan for Extension of Debt.329 / \ LIST OF MAPS Map 1. General Map of New England Railroads. 2. Fifty Mile Zone. 3. Pacific Coast Differential Area Served by Panama Canal Steamship Lines. 4. Atlantic Coast Differential Area Served by Coastwise Steamship Lines. 5. Relief Map of New England. 6. Main Railroad Routes in New England. 7. New Haven Railroad. 8. Boston & Maine Railroad. 9. Boston & Albany Railroad. 10. Maine Central Railroad. 11. Bangor & Aroostook Railroad. 12. Central Vermont Railroad, Atlantic & St. Lawrence Railroad. 13. Rutland Railroad. 14. Export Grain Routes. 15. Transatlantic Steamship Routes. 16. Map of Boston Waterfront and Railroad Terminals with Proposed Plan for Development. 17. Cross Section of Cowie Plan for Development of Boston Waterfront. 18. Baltimore & Ohio Railroad. 19. Bituminous Coal Movement. 20. Anthracite Coal Movement. 21. Pennsylvania Railroad. 22. New York Central Railroad. 23. Canadian Differential Routes. REPORT OF JOINT NEW ENGLAND RAIL¬ ROAD COMMITTEE TO THE GOVERNORS OF THE NEW ENGLAND STATES REHABILITATION BY COOPERATION A RAILROAD POLICY FOR NEW ENGLAND Appointment of Committee A conference of the Governors of the six New Eng¬ land States was held in June, 1922, at the State House, Boston, pursuant to an invitation from the Governor of Massachusetts, to consider what should be the atti¬ tude of New England in relation to section five of the Transportation Act of 1920 (Esch-Cummins Act) which directed the Interstate Commerce Commission to “ prepare and adopt a plan for the consolidation of the railroad properties of the continental United States into a limited number of systems.” At this conference it was agreed that the Governors should each appoint a committee of five composed of citizens of their respective States, and that as the prob¬ lem was evidently one of common interest the com¬ mittees should work in harmony. August 15, 1922, upon the call of Governor Cox the thirty members of these six committees met in the Council Chamber of the State House and created an Executive Committee composed of the six chairmen of 2 the State Committees with the Massachusetts chairman as Chairman of the Executive Committee. It was also agreed that each State Committee should proceed to hold public hearings in its own State. It was further agreed that a sound conclusion as to what form of consolidation would be best for the future welfare of New England could he reached only as the result of an intensive study of the whole transportation problem of New England and that this should include sea transportation, rail transportation, sea and rail routes, rail and inland water routes, truck transporta¬ tion, differential routes and rates, interchange of traf¬ fic between New England and other States and inter¬ change of traffic within New England. It was decided that the Committee should also study the present physi¬ cal condition of our New England railroads, the addi¬ tional facilities and equipment required, including the financial condition and needs of our New England rail¬ roads, and finally a painstaking examination into the effectiveness of the present management of our New England railroads. It was agreed that when it came to the examination and testimony of the railroad officials the members should sit as one joint committee. It was also the opinion of the Committee that as trained expert assistance would be needed in the study of many of the intricate technical problems involved, the joint committee should establish an expert staff. Advisory Technical Staff Howard G. Kelley was selected by the Committee to be the head of this technical staff. Mr. Kelley has had i 3 long experience on numerous roads in different sections of this country, first as an engineer and then on the operating side and finally as operating vice-president of the Grand Trunk Railway System, and then for more than five years as President of the Grand Trunk Railway and of the Grand Trunk Pacific including the steamship lines. The members of the Committee be¬ lieve they were fortunate in the selection of Mr. Kelley and fortunate in the chance that his resignation as Presi¬ dent of the Grand Trunk because the Canadian Govern¬ ment was assuming its ownership and operation, hap¬ pened to coincide with the Committee’s need of expert advice. Mr. Kelley selected as his principal assistants J. L. White as operating statistician, C. H. Gerber as engineer, C. E. Lee as car service expert, M. J. Wise as inventory and stores expert, A. B. Fletcher as motor truck expert, and from time to time such other tem¬ porary expert assistants as the progress of the work required. The Committee has also received invaluable aid from Frank C. Wright, late “ Assistant Director of Operations ” of the U. S. Railroad Administration, and equipped by long experience to aid the Committee. Procedure Followed by Committee The public hearings in the several states were con¬ cluded in October. A joint public hearing in the State House, Boston, was then held, lasting three days, open to all and closed when it appeared that all wishing to be heard had been given the opportunity. On November 23, the Committee sitting as a whole began its first across-the-table question-and-answer dis¬ cussion with the officers of the Bangor & Aroostook 4 Railroad, first the President, and then with his hearty co-operation the General Manager, the Mechanical Superintendent, the Purchasing Agent, the General Freight Agent, Superintendent of Car Service, En¬ gineer of Maintenance, Division Superintendents and Train Masters. This first examination involved four days and occupied 448 pages of the Com¬ mittee’s record. The questions were largely asked by members of the technical staff, but many questions were asked daily by members of the Committee. In like manner the effort to collect the material facts proceeded in regard to the other New England rail¬ roads. In the case of the New Haven Railroad, our largest system, the examination of fourteen officers oc¬ cupied 19 days and extends to 2601 pages of the Com¬ mittee’s record and involved the production of scores of charts and tables of facts and figures relating to the operation of the property. All together one hundred and fifty individuals ap¬ peared before the Committee at its various hearings. The Record of the Committee comprises 6387 pages. Members of our expert staff also have been con¬ stantly gathering further information by contact with the statistical and operating departments of the several roads and from the comprehensive records of the Inter¬ state Commerce Commission at Washington and the files of the different New England state commissions. The response of the presidents and their respective staffs to the almost innumerable and often burdensome requests of this Committee for information or statistics on this or that topic of study has been painstaking and -cordial. 5 Members of the Committee and the Committee’s staff at the invitation of the President of the New Haven Railroad and the President of the Boston & Maine Rail¬ road made a three days’ trip over the main lines of traffic of each of these systems visiting the more im¬ portant terminals, classification yards, car and locomo¬ tive shops and other important points, and Mr. Kelley and his staff from time to time have examined various portions of the properties as their studies made it de¬ sirable. 6 THE NEW ENGLAND RAILROADS AS A GROUP General Description The New England railroads* comprise 8,135 miles of line. (Map 1.) The total capitalization is $976,048,743, represented by $619,657,734 bonds and $356,391,009 capital stock. The gross earnings for the calendar year 1922 were $288,961,226 exceeded in this country only by the earn¬ ings of the Pennsylvania system and the New York Central system. The number of railroad employees is approximately 83,000. The number of locomotives is 3,392; passenger cars 5,410 and freight cars 80,604. The New England Railroads have made net capital expenditures of $110,282,000 in the past eight years for the improvement of their facilities and for new equip¬ ment. Of this total $42,809,000 has been for new equip¬ ment, $16,549,000 for locomotives alone, t The total passengers carried in 1922 was 153,213,177, * Lnless otherwise noted statistics of New England railroads as a group include the following: Bangor & Aroostook Railroad Atlantic & St. Lawrence Railroad (Grand Trunk Line in Maine) Alaine Central Railroad Central Vermont Railway Rutland Railroad Boston & Alaine Railroad Boston & Albany Railroad New York, New Haven & Hartford Railroad Central New England Railroad t Appendix A. Net Capital Expenditures for Road and Equipment. All New England Railroads, July 1 1914, to December 31, 1922. 7 which translated into “ passenger miles ” is equivalent to 3,336,832,000 passengers carried one mile. The aver¬ age length of ride per passenger per road in New Eng¬ land is 21.8 miles as compared with 36.7 miles for the United States. The total revenue tons moved in 1922 was 78,845,630, and this translated into revenue tons carried one mile shows that our New England railroads in that year manufactured 8,814,777,000 freight ton miles. The average haul per ton of freight per road is 111.8 miles in New England as compared with 186.5 miles for the United States. Ton Miles and Passenger Miles The volume of freight and passenger traffic as ex¬ pressed in terms of revenue ton miles and passenger miles borne on the New England railroads during the last twenty years has been as follows: Revenue Passenger Year Ton Miles Miles 1903 . . 4,982,302,000 .... .... 2,280,968,000 1904 . . 4,991,302,000 .... .... 2,303,185,000 1905 . . 5,361,765,000 .... .... 2,376,606,000 1906 . . 5,888,051,000 .... .... 2,522,950,000 1907 . . 6,449,631,000 .... .... 2,693,965,000 1908 .. . . 6,034,634,000 .... .... 2,740,626,000 1909 . . 6,224,045,000 .... .... 2,741,803,000 1910. . 7,007,292,000 .... .... 2,969,774,000 1911. . 7,125,827,000 .... .... 3,009,275,000 1912. . 7,574,114,000 .... .... 3,090,156,000 1913. . 8,286,967,000 .... .... 3,188,580,000 1914 ... . 8,095,901,000 .... .... 3,183,184,000 1915. . 7,660,425,000 .... .... 2,937,379,000 1916. . 9,141,727,000 .... .... 2,990,400,000 8 Revenue Ton Miles and Passenger Miles New England Railroads,* 1903 to 1922 Inclusive H M s 11000 10500 10000 9500 9000 8500 8000 7500 7000 6500 6000 5500 5000 4500 4000 3500 3000 2500 2000 1500 1000 500 * Statistics are for years ending June 30, 1903 to 1916, inclusive, and for years ending December 31, 1917 to 1922, inclusive. They exclude in all years figures for the following small lines in the Boston & Maine system for which complete statistics were not available prior to 1912: Vermont Valley Mount Washington Sullivan County Montpelier and Wells River St. Johnsbury & Lake Champlain Barre and Chelsea York Harbor and Beach This accounts for the slight difference in the statistics for 1922 in this table and those for 1922 on other pages of this report in which these small lines are included. 9 Year Revenue Passenger Ton Miles Miles 1917. . 10,084,859,000 .... .... 3,431,432,000 1918. . 10,850,628,000 .... .... 3,364,325,000 1919. . 10,202,336,000 .... ... . 3,732,770,000 1920 ....... . 10,691,283,000 ... . .... 3,970,913,000 1921. . 8,380,871,000 ... . .... 3,408,035,000 1922 . . 8,702,754,000 . .. . .... 3,320,170,000 Ton Miles Passenger Miles New England United States New England United States Percent of increase 1903 to 1912.... 52.02 50.09 35.48 54.51 Percent of increase 1912 to 1922.... 14.90 30.67 7.44 9.87 It will be seen that for tbe whole period of twenty years freight ton miles have grown faster than passen¬ ger miles and also that during the second decade the per¬ centage of growth in freight ton miles has fallen much below the rate of increase for the country as a whole. We comment on this because all our studies indicate that if New England wishes to avoid the risk of coming to a standstill it is time to take some constructive action to give our industrial development a fresh impetus. Interchange with Connecting Lines The total number of freight cars moving into and out of New England to and from its rail connections, beyond the Hudson River and also through the north¬ ern rail gateways, amounted in the year ending June 30, 1922, to 1,209,005 cars inbound and 1,209,244 out¬ bound, including both loads and empties. 1,097,391 loaded cars were received from and 443,347 loaded cars were delivered to their connections by the New Eng- land lines.* This is an unbalanced movement. Five loaded cars come into New England for every two that go out, chiefly owing to the one way movement of coal, food and raw materials. Kecord of the tons of merchan¬ dise involved in this car movement is not kept but if we take the average car loading figure of each railroad we get a total freight movement in and out of New Eng¬ land for the year 1922 of 31,500,000 tons as an approxi¬ mate estimate. Character of Traffic The traffic of the New England railroads as a group is characterized by a relatively high percentage of pass¬ enger business, including a heavy low fare suburban passenger business especially in the case of the New Haven, Boston & Maine and Boston & Albany railroads. The New England railroads originate little low grade bulk tonnage such as grain, coal, ore and the prod¬ ucts of furnaces, steel mills and other heavy indus¬ tries. t There is a high percentage of less than car load shipments. The rate on these small shipments is high, but they require rehandling by the railroad at transfer points to consolidate into cars according to destination and the average car load is light so that this traffic pro¬ duces for the originating road little net money. * Appendix B. Interchange of New England Railroads with Connec¬ tions (year ending June 30, 1922). tAppendix C. Description of Traffic of New England Railroads. 11 IMPORTANCE OF NEW ENGLAND’S WATER TRANSPORTATION Before proceeding further with our railroad study it will be well to get before us the picture of New England’s water transportation, its characteristics, the volume of traffic and the more important trade routes. No other section of our coast line either on the At¬ lantic, the Gulf of Mexico or the Pacific contains an equal number of bays and arms of the sea affording such safe and easy access to deep water. New England has always kept its face seaward even when under the new era of railroads it seemed to be permitting the ocean to play a less important part in its industrial development. More than seventy per cent of the New England population still live and the major part of our industrial activity is carried on with¬ in fifty miles of the seaboard. Within this fifty mile zone lives 97 per cent of the population of Connecticut, all of Rhode Island, 61 per cent of the people of Massa¬ chusetts, 57 per cent of New Hampshire and 77 per cent of Maine. (Map 2.) On the water New England has a great four-track railway, or, if you please, ten tracks with all the desired sidings, ready for use without the outlay of a dollar for construction or for upkeep or to guard the right of way. The practical doubling of the cost of rail transporta¬ tion since 1913 due to the rise in wages and materials has given a new and much accentuated value to water transportation. New England is well situated to profit by this new condition. It is true that soon after the opening of the great war the fabulous prices paid for steamers to go over¬ seas disorganized our coastwise traffic. Then it took time to get the steamers back and restore the service, so that it is only within the last year or two that we are beginning to realize what the new balance between water and rail transportation means to New England. Pacific Coast Lines The new Panama Canal, likewise disturbed hv war conditions, is to-day functioning with a rapidly in¬ creasing number of vessels month by month. There are now five steamship lines giving regular sailings from Boston to Pacific Coast ports through the Canal. One of these lines also gives service from Portland and another from Providence. New England has been brought nearer to the great and prosperous population of the Pacific Coast than the cities of Detroit, Pitts¬ burgh, Cleveland or Chicago. For example, the rate on shoes by Panama route from Boston to San Francisco is $1.50 per hundred pounds, while from Chicago by rail it is more than twice as much — $3.69 per hundred in car load lots and $4.41 in less than car load lots. From Detroit the rail rate to San Francisco is $3.76 (less than car load $4.74) ; from Pittsburgh $4.65 (less than car load $4.74). Cot¬ ton piece goods from Boston by water 60 cents per hun¬ dred, from Chicago by rail $1.58 (less than car load $2.95%). Pianos from Boston 75 cents, from Chicago $2.50 (less than car load $5.10). Automobile tires from Boston 80 cents, from Chicago $2.50 (less than car load $4.82).* (Map 3.) * Appendix D. Comparative Rates to Pacific Coast. 13 Coastwise Steamship Lines Nightly steamers ply from Portland, Boston, New Bedford, Fall River, Providence, New London, Nor¬ wich, Hartford, New Haven and Bridgeport to New York delivering New England merchandise at that great center of distribution intended either for local consumption or for further carriage by the many rail routes and water routes radiating from New York. The steamers of the Merchants & Miners Transporta¬ tion Company give excellent service from Boston and Providence to Philadelphia, Baltimore and Norfolk. The Clyde Steamship Company steamers maintain bi¬ weekly service to Charleston and Jacksonville. The Ocean Steamship Company has four first-class steam¬ ers which give sailings twice a week to Savannah. An all-water route to the principal Gulf ports is afforded by boat to New York and thence by the Mallory or the Southern Pacific steamers to the Gulf. The intensive manufacturing region of western Connecticut, include ing Hartford, New Haven, Bridgeport, Waterbury, Meriden and Ansonia, naturally ship from the port of New York which to the great advantage of southwest¬ ern New England flanks our western boundary. Maine and the Canadian Maritime Provinces link in to this system of coastwise transportation by steamers run¬ ning to Boston and direct sailings from Portland to New York. These southern coastwise steamer routes, running parallel to the coastline, take our merchandise around the badly car congested rail centers of New York and Philadelphia and they not only make quicker and more 14 dependable despatch but at substantially lower rates. They also afford combined differential water and rail routes to many important points in the Southeast, Mid¬ dle West and Southwest to which they supply quick and regular service. (Map 4.) The Ocean Steamship Company, for instance, con¬ trolled by the Illinois Central Railroad through its ownership of the Central Railway of Georgia, makes direct connection with the rails of that great system at Savannah so that in effect we have an Illinois Central eastern terminal at Boston offering New England the advantage of rates lower than standard, and fast service to many points in the interior states reached by that system. The Merchants & Miners line also offers differential routes which connect with fast freights leaving Balti¬ more and Norfolk on the afternoon of the arrival of the steamers, via the Norfolk & Western from Norfolk, and via the Baltimore & Ohio from Baltimore- We think our merchants and manufacturers have not yet fully taken advantage of the recently enhanced importance of our water and water-rail routes and per¬ haps the products of our industries need some readjust¬ ment to better suit these new markets. The New Eng¬ land manufacturer should revise his map; the Pacific Coast within the last thirtv-six months has been moved a thousand miles nearer to his factory door. Foreign Commerce It is not necessary now to dwell on the steamers serv¬ ing New England mostly through the port of Boston which arrive from all parts of the world bringing hides 15 and skins, wool, cotton, wood pulp, sugar, hemp, coffee and many other supplies and raw materials for our people and our industries. It is true that the port of Boston because of certain limitations has not been par¬ ticularly successful in recent years in serving as a gate¬ way for other states to the west of New England but no mistake should be made in regard to the service rend¬ ered to the people of New England. We give as a pic¬ ture of this service (Appendix E) the steamer arrivals coastwise and foreign for the first fifteen days of April. It is worth examining. Volume of Waterborne Traffic The total tonnage moving in and out of our New Eng¬ land water gateways for the year 1921 amounted to 26,158,573 tons compared with 31,500,000 tons of all-rail freight moving through our rail gateways for the year ending June 30, 1922. This waterborne tonnage was divided as follows: Port Total Tons Northern Maine—Searsport, Bangor, Bockland and smaller ports. 659,501 Southern Maine—Portland and smaller ports.. 2,522,556 New Hampshire—Portsmouth . 98,754 Boston and Northern Massachusetts ports.... 10,602,919 Southern Massachusetts—Fall Biver, New Bed¬ ford and smaller ports . 4,065,083 Rhode Island—Providence, Newport, Paw¬ tucket, Bristol. 4,432,232 Connecticut—New London, New Haven, Bridge¬ port, Hartford and smaller ports . 3,777,528 Total—New England . 26,158,573 This tonnage includes coal* and oil as well as import and export traffic and all other water borne cargoes. •Appendix F. New England Coal Receipts, 1916-1922. 16 Coastwise Merchandise Movement For the first four months of the calendar year 1923 the coastwise steamship movement of merchandise moving through our New England ports by regular coastwise steamship lines shows an increase of 59.5 per cent as compared with the same period of last year. The tonnage carried in the intercoastal service via the Panama Canal was 77 per cent greater for the first four months of 1923. 17 TOPOGRAPHY OF NEW ENGLAND RAILROADS We turn back now to our New England railroad transportation. It is well to have the general topography of our New England railroads in mind. (Map 5.) The main east and west line of the New Haven leaves Boston, and by easy grades cuts across to Narragan- sett Bay at Providence, whence it proceeds by water level route along the south shore to the Harlem River and New York City. Eight miles west of New Haven a double-track road branches off the main line in a north¬ westerly direction and passing through Danbury crosses the Hudson on the Poughkeepsie bridge and reaches the western terminal of this line at Maybrook. It is an im¬ portant freight route. The next east and west line is the old New York and New England which starting at Boston passes through Willimantic, Hartford and Waterbury to the Pough¬ keepsie bridge across the Hudson. It has heavy grades and at present is comparatively little used for either passenger service or freight. The main line of the Boston & Albany passes through Worcester, Springfield and Pittsfield to a connection with the New York Central on the east bank of the Hudson at Rensselaer.. It crosses two main divides with heavy grades, reaching the top of the first at 960 feet between Worcester and Springfield, then down to practically tidewater again at Springfield. From here the road rises until it crosses the main chain of the 18 Berkshires at an elevation of 1,410 feet, tlience clown to the Pittsfield meadows and so on to the Hudson River by reasonable grades. The main line of the old Fitchburg Railroad consti¬ tutes the fourth line across New England and encoun¬ ters the same divides as the Boston & Albany, but its two maximum altitudes of 1220 feet at South Asliburn- ham and 830 feet at the Hoosac Tunnel are substantially lower and the line is 13 miles shorter. It reaches its western terminus at Rotterdam Junction where it con¬ nects with the main line of the New York Central and of the West Shore. The two northern gateways at White River Junction, Vermont, and Newport, Vermont, where the Boston & Maine connects with the Grand Trunk and the Cana¬ dian Pacific, respectively, will be referred to more specifically later. The balance of the New England railroad mileage, except for the Boston & Maine lines paralleling the shore to Portland, chiefly follows the north and south valleys affording easier grades and representing less original cost of construction. (Map 6.) Three of the four east and west lines just mentioned were assisted by state aid in Massachusetts, granted be¬ cause of the belief that New York was getting ahead of Massachusetts and Northern New England and that unless the state stepped in and helped to build these roads New England’s industrial future was in danger. 19 Ton Miles and Passenger Miles We give the rank of the New England railroads as to passengers and freight, based upon freight ton miles and passenger miles (year ending December 31, 1922): Revenue Ton Miles Passenger Miles New Haven * . 3,020,410,000 1,857,933,000 Boston & Maine. 2,801,938,000 863,856,000 Boston & Albany. 1,089,660,000 376,178,000 Maine Central . 857,667,000 128,431,000 Central Vermont. 369,128,000 33,148,000 Bangor & Aroostook ... 267,482,000 20,580,000 Atlantic & St. Lawrence (Grand Trunk) . 206,851,000 13,133,000 Rutland . 201,641,000 43,573,000 Total . 8,814,777,000 3,336,832,000 The task of a railroad is to manufacture freight ton miles and passenger miles. If a railroad hauls a car containing 30 tons of freight 20 miles that movement will produce 600 ton miles. While the car was stand¬ ing in a yard before it began to move the railroad was earning nothing from this car or its contents. It might have stood there a year, but if it had it would not have contributed a cent to the railroad. After the car has been pulled the 20 miles, the instant it stands still it again stops earning. We all realize that we pay the rail¬ road only for the service of moving our freight from one place to another. The moment our freight stands still we are receiving no benefit, and the railroad earns nothing. * In all cases statistics for the New Haven Railroad include Central New England Railroad unless otherwise stated. 20 Freight Earnings Depend upon Keeping Cars Moving But we have not told the whole story. A car stand¬ ing still for a day not only earns absolutely nothing but it is worse than this. Under the “ per diem ” rule, if the car belongs to another railroad $1 must he paid each day for the use of the car to the railroad owning the car.* The dollar must be paid whether the car moves or does not move and whether empty or loaded; but if the car is loaded and moves 20 miles it will have earned something out of which to pay the dollar, but if this loaded car stands still for 24 hours or a week or a month it not only has earned nothing but the railroad on the tracks of which the car stands is actually out of pocket a dollar or seven dollars or thirty dollars. If the car stands on a side track for a year it will cost the railroad $365. Furthermore, it makes no difference really whether this car belongs to some other road or to the railroad allowing it to stand idle on its own tracks. If the railroad does not own the car it must pay one dollar in cash to the owning road, but if it does own the car, interest on the investment plus depreciation and upkeep amounts to practically a dollar a day—cer¬ tainly over 90 cents. So that any railroad holding a car idle for 24 hours, whether or not the car is owned by the railroad holding it, earns nothing and besides is set back a dollar. Even this is not allowing for the fact that there may be profitable business for the car to per¬ form, which is being lost to another road or a truck or boat. The car may be standing, moreover, in an ex¬ pensive terminal, representing a heavy investment of * Appendix G. Increase in Per Diem Rates 1902-1922. 21 capital, the profitable use of which may he hindered by too many idle cars. It follows from what we have said that a railroad earns money only when and while the car is actually moving, and, moreover, that it must be a nimble car as the car per diem is always eating up the net earnings. If the car moves slowly over the system with frequent pauses, a railroad may obtain no net profit or any bene¬ fit whatever for hauling the car from one end of its system to the other. The per diem will have eaten up the net, but a narrow margin at best, or perhaps eaten more than the net. 22 NEW HAVEN RAILROAD Operation Proceeding now to take up the individual roads, we begin with the New Haven as it is the largest New Eng¬ land producer of ton miles and passenger miles. (Map 7 .) Average Daily Movement of Freight Cars From what w^e have said it is clear that taking ac¬ count of all the cars on the system the average distance moved per car each day constitutes a significant test of the efficiency with which a railroad is operated. We give the figures for the year ending June 30, 1922, and in a parallel column the average percentage of bad order cars which is of course one factor that should be taken into account in making this comparison: Average Car Miles Per Cent Per Freight Car Day Bad (All Cars) Order Cars Boston & Albany. . 27.8 7.2 Atlantic & St. Lawrence (Grand Trunk Line to Portland) 21.8 7.5 Central Vermont . . 19.3 34.8 Maine Central . . 17.8 15.6 Rutland .. . 17.7 24.6 Boston & Maine . . 17.1 19.4 Bangor & Aroostook ... . 13.8 25.2 New Haven . . 13.6 24.9 The average for all the railroads in the Eastern District of the United States for the same period was 19.8 car miles per freight car day. 23 It will be noted that we have taken a period when our railroads were unaffected by the shop strike. It is true that the New Haven had a larger propor¬ tion of bad order cars than the Boston & Maine, and that this pulled down the New Haven’s average miles per freight car. This is true but not to an extent that materially changes the picture, as will be seen from the following comparison of the car miles per freight car day of the various New England roads with bad order cars eliminated (year ending June 30, 1922) : Boston & Albany. 30.0 Central Vermont .. 29.5 Rutland . 23.6 Atlantic & St. Lawrence ....... . 23.3 Boston & Maine . 21.2 Maine Central . 21.2 Bangor & Aroostook. 19.3 New Haven.18.1 It may justly be urged on behalf of the New Haven that with its many branches and consequent multi¬ plicity of junction points it is bound to show a less rapid movement than the Boston & Albany with its relatively small branch line mileage. But the discrep¬ ancy seems greater than it should be. The Maine Cen¬ tral we think has quite as large a proportion of branch lines, and yet it made an average of 21.2 miles per day compared with the New Haven’s 18.1. If we compare the New Haven performance with that of the Boston & Maine, which encounters quite similar difficulties, we find that the Boston & Maine management produced during this year ending June 30, 1922, an average of 21.2 car miles per freight car day per serviceable car to the New’’ Haven’s 18.1 car miles. 24 The average daily distance of 21.2 miles travelled by a freight car on the Boston & Maine system may not seem so very different from the 18.1 of the New Haven Railroad, but let a manufacturer instruct his engineer to slow down his machinery 15 per cent and the slower speed will put his profits out the window and eventually get him into financial difficulties. So it is with rail¬ roads— the slow-mover is generally the tail-ender. The Cost of Slow Movement of Freight Cars If the New Haven by more efficient operation could have speeded up the average car movement on its sys¬ tem 3.1 miles a day, which would have brought it up to the level of the Boston & Maine, it would have reduced its total car days of serviceable cars for the year to 10,- 072,783. This would have effected a saving of 1,731,317 car days, equal to a saving of that number of dollars, namely 1,731,317 dollars. This means it would have pulled the same cars on its line and earned the same gross money, but it would have returned the foreign cars 17 per cent sooner to its connections and therefore would have to pay out for car hire a great deal less money, and its own cars to whatever extent they were employed would have either travelled that much sooner on to other lines so that the other lines would begin pay¬ ing the New Haven a dollar a day for their use, or else, in case some of the home cars remained on the New Haven system all the time, would have saved a lot of car days so that these cars could have performed addi¬ tional service for which the New Haven would have earned more money. The net result is really the same in all three cases. A freight car is worth a dollar a day, 25 and this should properly be charged against each car on any given system whether the cars belong to the system or are borrowed from some other road. Moreover, it should be borne in mind that over and above this mere saving in car days and in consequence the $1,731,317 car per diems it frees the road for just so much more additional earning traffic. Slowing down car move¬ ment has precisely the same effect as slowing down the machinery of a textile mill or a shoe factory. Less units will be produced and therefore just so much less can be sold or collected for and yet all the non-produc¬ tive employees must be paid just the same; the salaries of the executive officers, the superintendents, the ter¬ minal employees, the gatemen, etc., etc., most of the charges for depreciation of the property and also the overhead charges for interest on capital, at least so far as represented by bonded indebtedness, go on just the same. Between 1915 and 1922 the New Haven has spent about $60,000,000 on the road — bought new and more powerful locomotives and built the two great modern classification yards at Cedar Hill and Providence ex¬ pressly intended to expedite traffic and also put in many other important improvements, and yet we can see but little sign of a speeding up of its car movement. Delays in Classification Yards We have made a study of the time consumed getting freight cars through the three big classification yards of the New Haven system; in other words, the time consumed from the moment a locomotive pulls a car into one of these yards until another locomotive pulls 26 it out to go on its way. We are referring only to cars destined for points beyond the yard, so that loading or unloading these cars is eliminated and we are dealing only with cars which the railroad has entirely under its own control and for the prompt movement of which it alone is responsible. These three big 11 hump ’ ’ classification yards of the New Haven Railroad are located at Providence, New Haven (Cedar Hill), and Maybrook, at the western end of the Poughkeepsie bridge line. These yards repre¬ sent a total investment by the New Haven of more than twelve millions of dollars. Practically all this money has been expended in recent years, so that these yards represent the latest ideas for obtaining speed and econ¬ omy in car sorting or classification. The average number of cars classified daily in the year ending June 30, 1922, was as follows: Maybrook . 510 Cedar Hill . 2,389 Providence . 511 At Maybrook it is practically only the cars moving east that are classified; at Cedar Hill about an equal number are classified going each way; at Providence only a small proportion of the cars going west are classi¬ fied. Each of these three big yards is equipped with a hump ’ ’ to the top of which a locomotive gradually pushes a train. As the pushing locomotive without stopping pushes these cars successively to the top of the hump they are uncoupled and allowed to run down the opposite side by gravity in “ cuts ” of one or two 27 or three or as the desired classification may require, towards the numerous assembling tracks upon which the new classified trains are being made up. An opera¬ tor in the tower on the hump operates by key-board the switches of the assembling tracks so as to cause the 1 ‘ cuts ’ ’ to roll onto the appropriate track so that they may constitute a part of the new train. These cuts come down the hump in rapid succession one behind the other, several rolling at the same time. A brakeman at the top of the hump jumps onto each cut and regulates the speed with the handbrakes. He then makes sure that the automatic coupler has properly coupled this last cut to the one which preceded it, and then jumps on a motor car running at frequent intervals hack to the top of the hump where he takes his position ready to climb onto another cut. This operation is continuous until the train being pushed up the hump has had all its cars “ shaken out.” Then another freight train is pushed up and the work of sorting proceeds. The time which elapses from the moment any given car enters one of these big classification yards is of course not merely the time occupied in 11 putting it over ’ ’ the hump but it includes all the time which elapses from the moment a locomotive pulls the car into the yard until a locomotive pulls it out and it re¬ sumes its journey. We give below the average time it took to get a car through the Maybrook, New Haven and Providence yards during the year ending June 30, 1922, and also for the six months ending December 31, 1922. In the case of Maybrook we do not include westbound cars be¬ cause the New Haven does not move cars westbound in 28 regular trains out of the yard. At Providence only a small number of the cars moving west are classified and therefore we exclude these from consideration. The average length of time for each car entering the classification yards from the time it entered until it was under way again was Year ending 6 mos. ending June 30, 1922 Dec. 31, 1922 Maybrook (east) . -... 13.4 . 38.2 hours New Haven (Cedar Hill). 13.2 . 21.6 “ Providence . 14.8 . 19.7 “ We are informed that 9 hours in these yards is all that should be required for the average car under reasonable operating efficiency, whereas the average for Maybrook for the year ending June 30, 1922, given above is 13.4 hours, a period during which the rail¬ road was unaffected by strike conditions or abnormal weather conditions. The Cedar Hill yard where the daily average for the year ending June 30, 1922, was 13.2 hours, and the Providence yard, where the delay to car movement averaged 14.8, also showed a slow movement. The following diagrams illustrate the yard delays and line movements of the average car during the year ending June 30,1922, delivered by a connecting line at Maybrook and bound for Mansfield or some other point east of Providence, and the movement of the same car with the delays at the three big classification yards re¬ duced to reasonable operating figures: 29 Car Movement Maybrook and Harlem River to Mansfield In yards at In transit Maybrook 10 hrs. 13.4 hrs. 124 miles Present Car Movement In yards In yards at at Mansfield Cedar Hill Providence In yards 5.5 hrs. 113 miles 19 miles at In transit Harlem 68 miles River 13.6 hrs. Present total from Maybrook to Mansfield 62.1 hrs. “ “ “ Harlem River “ “ 57.8 hrs. Maybrook Possible Car Movement 9 hrs. 10 hrs. Harlem 5.5 hrs River 9 hrs. Possible total time from Maybrook to Mansfield 47.5 hrs. “ 11 “ “ Harlem River “ “ 43.0 hrs. Respective Reductions in Delay 14.6 hrs. and 14.8 hrs. 30 We turn back to the classification carried on by the New Haven Railroad in its Harlem River yard. For tlie year ending June 30, 1922, tbe average time con¬ sumed in the yard was 13.6 hours; for the 6 months end¬ ing December 31, 1922, the average time consumed was 22.9. Comparison with Boston & Albany In the case of the Boston & Albany at its western end, cars moving to the Boston & Albany are classi¬ fied by the New York Central in its West Albany yard. The largest car classification carried on by the Bos¬ ton & Albany is in the big yard at West Springfield. This yard does not have the benefit of a “ hump ’ ’ but the cars are switched onto the assembling tracks by repeated back and forth movements of switching loco¬ motives as we commonly see them in operation. For the year ending June 30, 1922, the average daily num¬ ber of cars classified in this yard was 1,220. The aver¬ age time of cars in this vard was 6.1 hours, and for the 6 months ending December 31, 1922, the average daily number of cars handled was 1,205, and the average time 8.4 hours. These are excellent records and show a high degree of operating efficiency. The 6.1 hours main¬ tained as the Boston & Albany average for the year ending June 30, 1922, also indicates that the nine hours allowed the New Haven in our previous statement was a reasonable and attainable figure. The average for 51 representative railroads of the United States was 8.43 hours. 31 Comparison with Boston and Maine Taking up next the big “ bump ” yard at the western end of the Boston & Maine railroad at Mechanicville and the big Boston & Maine classification yard at East Deerfield, we find that the average daily number of cars classified and the time required was: Mechanicville (East) .. East Deerfield (both tions) . direc- Year ending 6 Mos. ending June 30,1922 Dec. 31,1922 Cars Hours Cars Hours 595 25.0 518 30.1 1293 12.7 1136 17.3 We shall refer in more detail to these delays when we come to describe the operation of the Boston & Maine, but it will be noted that the time required at Mechanic¬ ville (25 hours for year ending June 30, 1922) showed much greater delay than in the case of the three hump yards of the New Haven during the same period. The time required at East Deerfield, 12.7 hours, was slightly better than for the New Haven yards but below the Boston & Albany’s average of 6.1 hours at West Spring- field. Time Lost in Placing Cars Another interesting comparison of operating effi¬ ciency is the time consumed by a railroad in actually “placing” or “spotting” a car after it has been brought in to the terminal yard. It shows how easy it is in railroad operation to spill time and therefore net money all along the right of way. These figures have been obtained from the official published reports of the Demurrage Bureau at Boston 32 maintained by the New England railroads for the pur¬ pose of dealing with demurrage claims against ship¬ pers. The figures of course are the railroads’ own figures furnished to the Demurrage Bureau. Average Time Placing Cars 1921 1922 Jan. 1923 Feb.1923 Hrs. Min. Hrs. Min. Hrs. Min. Hrs. Min. Bangor & Aroostook ... ... 2:53 2:38 3:22 3:22 Boston & Albany. . .. 4:19 4:19 8:10 6:14 Boston & Maine. . .. 7 :55 7:55 17:02 14:53 Central Vermont. . .. 7:41 7:12 10:34 10:05 Maine Central . . .. 4:19 4:05 6:29 6:00 New Haven. . . . 6 :43 7:55 17:02 15 :50 Rutland . ,6:58 5:46 7:26 7:12 Embargoes It is obvious that in time of business activity a rail¬ road may accept from connecting lines so many cars that it will become clogged and unable efficiently to conduct its transportation. This point has been reached many times in railroad history, but such a sur¬ feit should be headed oft long before it is reached. If a railroad permits more cars to come upon its system than it can efficiently handle it not only injures or al¬ together destroys its earning power as the result of the rapidly accumulating car per diems, but it also does its patrons no good. Railroad managers seek to guard against congestion by an embargo which in effect is notification to connect¬ ing railroads that they must cease permitting shippers on their lines to load cars for the home railroad. These embargoes are nearly always limited scT as to permit shippers to continue loading certain kinds of freight 33 varying according to conditions; generally foodstuffs, perishables, fruits, newsprint paper, and a few other classes of merchandise. Here in New England during most of the recent embargoes coal was also made an exception. The policy of the New Haven Railroad is to issue a sweeping embargo, and then the shipper applies to the railroad for permission to have a car loaded. The New Haven road undertakes to pass upon the merits of his application, and the many thousands of other applica¬ tions received from other shippers. For example, a manufacturer at New Britain may apply for permission to have a car loaded with pig iron at a furnace on the Pennsylvania Railroad. He might admit in his appli¬ cation, or during a conversation in person or by tele¬ phone with the railroad official, that he had already some stock of pig iron at his plant and the official would probably refuse his application. This sounds better in theory than it works in practice. It puts a railroad official into a thousand kinds of business on his line. Each shipper presumably is bestacquaintedwith his own business and his own needs. His only motive for seek¬ ing an opportunity to draw on his bank balance to pay some other man for raw material or merchandise is to promote the systematic and orderly running of his business and to care for his customers, or to keep his factory running smoothly. His judgment and experi¬ ence tell him that the time has come to order another car load. To forbid him to do this represents a regret¬ table state of affairs where some railroad official sub¬ stitutes his judgment for the judgment of the man eating and sleeping with his own business. r 34 In actual operation it also gives rise to much inequal¬ ity if not favoritism and unfairness. The rail¬ road cannot send an employee to visit every manufac¬ turer and count or weigh the merchandise on hand. Whatever the system of embargo may be, however, w T hether a published embargo with certain exceptions made known to all and then opened and closed from time to time or a general embargo with an occult and inevitably inequitably administered permit system, there is no doubt that embargoes must at times be put into effect. It is a question of sound judgment as to when the day and the hour arrives to declare the embargo. The best managed roads in the country, when the cars on their lines are nearing the congestion point, use the embargo to avoid the threatened overload. It may he necessary only for a day or two, or it may he longer. It may be asked why not build enough main line tracks, sidings, yards and terminals and keep in storage enough extra locomotives to be ready to care for a traffic peak, even though it may come only once in four or five years, and then perhaps lasts only for three or four months. But to go too far in this direction is unsound. In the long run the cost of the railroads of the country falls upon the people who use them, and it is not in their interest any more than in the interest of the railroads to maintain idle, enormously expen¬ sive facilities for ninety or ninety-five per cent of the time in order to care for the extra peak load which shippers would like to put on the railroads for five or ten per cent of the time. Sound manufacturers do not 35 make a heavy extra investment in plant and subject themselves to the loss of interest, upkeep, taxes, etc., necessary to meet a short abnormal rush of orders. But however this may be, the officers of the railroad charged with its successful operation this day and this week must deal with the situation as it exists today and this week. No single question involved in the success¬ ful operation of a railroad is fraught with greater con¬ sequence than the right day and the right hour for declaring an embargo and the degree of tightness with which it shall be enforced. The president of the road must have his hand either directly or through a trusted subordinate on the control lever. Once get his road jammed and it is extremely difficult to get it running smoothly again. Meanwhile no one is being benefited, and the credit of the road is being destroyed by the slow movement of cars and the piling up of adverse car per diems. The president must see the picture of his road not as it might, could, would or should be, but exactly as it is day by day. He must watch closely by the aid of daily reports the number of cars moving to¬ wards him on connecting lines, and particularly so be¬ cause an embargo does not stop the cars already mov¬ ing or loaded. The cars will keep moving up to his gateways in large number for ten days or a fortnight after the embargo is declared, and he must accept them and be responsible for the per diems involved. He must have in mind the condition of his main lines, the condition of his yards, of his unloading tracks, the con¬ dition of his motive power, the number of empties awaiting return, in winter the temperature and snow conditions, labor conditions, and any and all other con- 36 ditions affecting the actual daily capacity of his ma¬ chine to produce ton miles. Embakgo Policy of New Haven Railroad Turning now to the judgment exercised by the oper¬ ating officials of the New Haven road during the last eighteen months on this vital question, we give for the months from January, 1922 to April, 1923, the car miles per freight car day and the total cars on the system: Daily Average Car Miles Number Bad Cars on Line Per Car Day Order Cars* 1922- -January .. 41,958 ... .12.3 ... . 9,932 February . 43,260 ... .13.6 .. . 10,539 March ... 44,305 ... . 14.9 ... . 10,921 April. 43,077 ... . 13.0 .. . 11,272 May. 42,430 ... . 13.2 ... . 11,584 June . 43,092 ... .13.9 ... . 11,637 July. 43,342 ... . 12.8 ... . 11,442 • August ... 44,326 ... . 12.3 .. . 11,241 September 47,228 ... .12.0 .. . 11,151 October .. 53,314 ... .11.5 .. . 10,856 November . 55,850 ... .12.0 .. . 10,728 December . 53,586 ... . 9.7 .. . 10,080 1923- -January . 56,245 ..., . 7.5 ... . 9,865 February . 59,279 ... . 9,341 March .... 61,253 .... . 9.0 ... . 9,014 April. 57,782 ... . 11.3 .. . 8,689 It will he observed that upon the opening of easier spring conditions in March, 1922, the New Haven’s average car movement per day was 14.9 miles, and that the cars on the road during this month amounted to * The average number of bad order cars for each month is given to make clear that the falling off in car movement was not due to an increase in number of bad order cars. If they are taken into consideration the falling off in car movement would be further accentuated. 37 44,305. Then during the three following months of April, May and June the movement averaged over 13 miles a day, with about 43,000 cars on the line for each of these three months. Then came the strike of the shopmen on July 1, not affecting the efficiency of the engines much at first but bound to have a rapid cumu¬ lative effect as the need for repairs accumulated. In July the car miles per day dropped from the 13.9 miles of June to 12.8. Meanwhile the total cars on the line began to rise until by September first, they were in ex¬ cess of 45,000 and car miles per car day dropped to 12.3 for August, 12 for September and 11.5 for October. A quick halt should have been called by some restriction of the cars coming on to the system, especially in view of the patent daily difficulties at the locomotive shops and engine roundhouses in breaking in an entire, new repair force. Instead of this, cars on the line were al¬ lowed to go mounting up until by October first they had gone up another five thousand to about 50,000. Still no step was taken during the whole month of Oc¬ tober, until the last day arrived when an embargo was announced. By this time the cars on the system had reached 54,000 and the road was in a jam with ten thousand too many cars on the system, many of its locomotives out of order altogether, and many others still running but in bad condition and winter approaching. During December, the car miles per car day took a further drop to 9.7 though we think that December weather conditions were about normal for the season. So the history of the winter went until in January and February, the average car moved only about seven 38 and a half miles a day, a rate which would require two months for a car to travel from Maybrook to Boston and back. The adverse car per diems on the New Haven ad¬ vanced to ruinous figures as follows: 1922— May . $399,133 June . 429,631 July . 478,663 August . 531,594 September . 641,141 October . 901,780 November . 1,015,010 December . 970,617 1923— January.1,119,934 February . 1,077,149 March . 1,322,401 April . 1,666,707 Now while we believe that a serious mistake was made in delaying the embargo until the 31st of October and permitting the number of cars on the line to run up from about 43,000 on July 1st to about 54,000 on November 1st, an even more regrettable mistake seems to us to have occurred after the declaration of the embargo of October 31st. Under the New Haven embargo plan the embargo of October 31st was a gen¬ eral embargo, but in spite of this declared embargo, permits began to be issued at such a rate that the road instead of being cleared of the excessive number of cars became worse and worse congested until in March, the average number on the system was 61,253, and the ad¬ verse per diems for the month $1,322,400. It is true the winter turned out to be unusually adverse, but effi- 39 cient embargo control could have countered even the winter to a large extent. At any rate, conditions at the locomotive shops and roundhouse repair shops and the condition of the motive power were known and could have been given greater weight, in determining the embargo policy. New Haven's Large Per Diem Payments We give below the annual sum due for a series of years from the New Haven railroad to other roads for foreign car per diems: * 1913 .$3,102,931 1914 . 2,585,302 1915 . 2,588,717 1916 . 5,400,479 1917 . 5,835,795 1921 . 4,386,363 1922 . 5,805,879 We omit the years 1918, 1919 and 1920, as they should be disregarded owing to disturbed conditions during and following the war. During part of 1918 and 1919, under war conditions, car per diems were abolished as between railroads under Federal control. During 1920, cars had become so widely scattered as the result of the war time pooling that each line had a wholly abnormal percentage of foreign cars on its system, and but a small percentage of its own cars. It may be urged that there should be offset against the amounts due each year from the New Haven to other roads the sums due to the New Haven for car per diems. * Does not include payments by Central New England. 40 We give the figures for per diems receivable: * 1913 .$3,461,679 1914 . 2,666,342 1915 . 1,865,401 1916 . 3,143,530 1917 . 3,945,226 1921 . 3,638,418 1922 . 3,768,902 This, however, is a fallacy. If the amount due other roads is excessive by reason of slow movement, it does not make it any less excessive because the other roads owe car hire to the New Haven. The car hire due the New Haven really represents nothing but a fair re¬ turn after deducting upkeep and depreciation upon the capital which the New Haven has invested in car equipment. Any road, if it had the credit and the desire, could keep on purchasing cars until the amount due the road for car hire equalled or exceeded the amount it paid out, but this would not represent a sav¬ ing in car hire paid out, it would merely represent a return upon a large additional investment of capital, and in discussing efficiency of operation should not be credited against car hire paid out. It should be remembered also that if the number of car days piled up against the New Haven railroad for which it must pay other roads because of slow move¬ ment is excessive, there inevitably must be a further heavy loss not measured by this number of foreign car days or the sums due foreign roads. The New Haven’s own cars, which in turn were worth to it as a mere in¬ vestment at least a dollar a day, must have suffered from the same slow movement, and therefore caused a large deficiency in possible earnings. * Does not include amounts received by Central New England. 41 Net Ton Miles Pee Car Day Let us now examine the average number of freight ton miles “ net ton miles/ ’ produced by the New Haven per car day during the year ending June 30, 1922. So far as the freight traffic of a railroad is concerned, this is all the railroad is in business for, viz., to produce the largest possible number of net ton miles per car per day. Good business judgment must of course be exercised to keep the right balance between cost of per diems and cost of train service (year ending June 30, 1922) : Boston & Albany. 365 Atlantic & St. Lawrence. 347 Central Vermont . 268 Maine Central . 264 Rutland . 247 Boston & Maine. 246 New Haven . 198 Bangor & Aroostook. 186 The operating figures of the Boston and Albany sys¬ tem show that each car during the twelve months ending June 30, 1922, produced on the average each day 365 net ton miles. For the same period each car on the Boston & Maine system produced 246 net ton miles. On the New Haven system, only 198 net ton miles per car day were produced. The year referred to does not include any part of the shopmen’s strike; it does include three months of the coal strike. But the Boston & Maine and the Boston & Albany, as well as the New Haven, both carry a large quantity of coal. It may be said that the Boston & Albany is helped in 42 the production of its large number of net ton miles per car day because it has less branches than the New Haven, but the Boston & Maine has quite as large a percentage of branches as the New Haven. The Maine Central is also burdened with a heavy percentage of branches. Yet the Maine Central produced 264 net ton miles per car day during the same year. The Bangor & Aroostook railroad produced 186 net ton miles. This road also has a good deal of branch line mileage besides its main line, and is further handicapped by the fact that the potato crop in Aroostook County, which contributes a large element in its total traffic, is a seasonal crop and more¬ over requires, during most of the hauling period, spe¬ cial heater cars, which must be accumulated on the line before the crop begins to move, and besides have the disability of not being suitable to be thrown into other traffic if standing at a terminal or loading point and not needed for potato loading. Passenger Operation The discussion in this report of the New Haven’s operation has been confined to the operation of its freight service for this branch of railroad operation presents the most difficult problems. Passenger opera¬ tion is relatively simpler. The New Haven derives slightly more than half of its gross revenue (51 per cent) from carrying freight, which compares with 50 per cent for the Boston & Albany and 61 per cent for the Boston & Maine. The relative importance of freight and passenger service is very nearly the same on the Boston & Al- 43 bany as on the New Haven but the proportion of pas¬ senger train miles to freight train miles is larger on both the New Haven and Boston & Maine because of their large volume of suburban commutation busi¬ ness. It is true, however, on all of these roads that the operation of freight service is affected by the necessity for keeping freight out of the way of a heavy passenger service, particularly within the suburban zones of Boston and New York. Speaking generally, the New Haven’s passenger serv¬ ice is well conducted although during the past winter it was necessarily much affected by the bad condition of motive power, resulting from the shop strike. The New Haven is fortunate in its large volume of through passenger business at high rates. The New Haven financial and operating problem in large measure seems to be how to increase the profits to be derived from its freight traffic. Locomotive Repairs We have made a comparison of the cost of locomotive repairs on the New Haven railroad. Many factors should be taken into account in comparing these costs. It is work done bv the locomotive as measured in loco- t/ motive miles that wears out the parts and makes neces¬ sary repairs and replacements, though high speeds and heavy train loads are factors also. Switch engines have a wear and tear disproportionate to the locomotive miles produced so that the relative percentage of switching would to some degree affect a comparison between roads. The relative size of locomotives, com¬ monly measured in drawbar pull or tractive power, is 44 also a factor of importance. The repair of heavy loco¬ motives is more costly than the repair of light locomo¬ tives. The average age of locomotives also should be given consideration. We give a table showing for each New England road the average number of locomotive miles per locomotive, the average cost of repairs per locomotive mile, the average tractive power per locomotive, the average age, and the average cost of repairs per locomotive. For comparative purposes we give these figures for the years 1921 and 1922, hut as the New Haven and Boston & Maine were seriously affected by the shop strike in the last six months of 1922, we shall consider only the comparison for the year 1921. Cost Per Locomo¬ tive Mile (Cents) Year Ending Dec. 31, 1921 New Haven—Electric - 24.371 New Haven—Steam . 85.035 Boston & Maine . 30.674 Maine Central . 21.956 Boston & Albany . 23.520 Bangor & Aroostook . 24.236 Central Vermont . 26.471 Rutland . 18.191 Year Ending Dec. 31, 1922 New Haven—Electric - 18.859 New Haven—Steam . 43.965 Boston & Maine . 31.160 Maine Central . 20.577 Boston & Albany . 19.403 Bangor & Aroostook . 20.801 Central Vermont . 1S.711 Rutland . 17.273 Cost per Tractive 50,000 Miles Cost of Power lbs. Per Repairs Per Trac- Loco- Per Loco- Locomo- tive motive motive tive (lbs) Power 50,927 $12,412 38,018 $16,324 18,124 6,350 31,097 10,209 20,535 6,300 27,715 11,366 24,000 5,269 31,149 8,458 28,369 6,672 36,240 9,206 19,599 4,750 25,674 9,250 25,713 6,806 27,454 12.397 24,364 4,432 32,046 6,914 Aver. Age (Yrs.) 52,493 9,900 38,851 12,741 12.9 18,018 7,921 31,702 12,494 18.8 20,779 6.473 28,473 11,369 17.4 25,157 5,176 31,294 8,271 15.6 29,091 5,644 36,450 7,743 15.5 21,627 4,498 25,617 8,745 19.0 26,857 5,025 24,965 9,074 25.5 25,540 4,411 32,046 6,883 18.2 45 Comparing tlie four large New England roads we find as measured in cost per locomotive mile, the New Haven cost of steam locomotive repairs in 1921 was 35 cents; the Boston & Maine 30.7 cents; the Boston & Albany 23.5 cents; and the Maine Central 22 cents. On the basis of cost per locomotive, which does not take into account either tractive power or the locomotive miles travelled, the Boston & Albany is highest, $6,672 per locomotive; New Haven $6,350; Boston & Maine $6,300; and Maine Central $5,269. It will be seen, how¬ ever, that the Boston & Albany and Maine Central both get a much higher mileage out of their locomotives than the two larger roads. If the cost of repairs is stated on the basis of cost per 50,000 pounds tractive power, which takes into effect the relative size of the locomo¬ tives, the New Haven is lower than the Boston & Maine, but considerably higher than the Maine Central or Bos¬ ton & Albany. The average tractive power of the New Haven’s locomotives is greater than that of the Bos¬ ton & Maine, practically the same as the Maine Central, and much below that of the Boston & Albany. The average age of the locomotives on the New Haven was 18.8 years in 1922, as compared with 17.4 years on the Boston & Maine; 15.6 years on the Maine Central; and 15.5 years on the Boston & Albany. The difference in age of the locomotives on the New Haven, and the difference in operating conditions un¬ doubtedly explain in part the spread between the New Haven’s cost and that of the Maine Central and Boston & Albany, but the difference seems to indicate room for considerable improvement on the New Haven in reduc¬ ing the cost of locomotive repairs. This is a large item 46 in the cost of railroad operation, locomotive repairs costing the New Haven for its steam locomotives $7,- 841,916 in 1921, a year of dull business. If the New Haven could have reduced the cost of steam locomotive repairs in 1921 from 35 cents per mile to 30 cents, the saving would have amounted to $1,126,889. Constructive Mileage The figures reported by the New Haven railroad to the Interstate Commerce Commission for the calendar year 1922, show that the train employees actually ran 115,644,792 miles. These are “men miles that is, this is a sum obtained by taking the actual mileage travelled by each train employee during the calendar year 1922, and adding them together. But ‘ ‘ Construc¬ tive ” mileage is another element which must be taken into consideration in the operation of a railroad. If a freight engineer has a run of just one hundred miles and makes it in eight hours, at the average rate of 12% miles per hour, he is paid the standard day’s pay, but if because of a short division or for some other reason he runs only 50 miles and does his day’s work in 4 hours, he will be paid for 50 constructive miles and receive the same pay as the previous engineer who ac¬ tually ran one hundred miles. It is not necessary to go into the intricacies of the many rules relating to the allowance of constructive mileage. Suffice it to say that while the total miles actually run during 1922 by train employees on the New Haven railroad was 115,644,792, the road under the rules relating to con¬ structive mileage paid for an additional 42,954,502 con¬ structive miles not actually run. The road paid for 47 37.14 per cent more miles than it actually received. Other things being equal, a train crew operating a local pas¬ senger train, because they do not attain the standard passenger distance, often must be paid for twice the distance they actually travel. This same thing would be true in regard to a local freight which keeps stop¬ ping to drop and pick up cars, and therefore cannot make the standard day’s run. This general principle as applied to the pay of the men is necessary and fair. Unfortunately the distance from Harlem River to the big Cedar Hill classification yard of the New Haven sys¬ tem is only 68 miles, and this has been established as an engine run. Accordingly every engine crew and train crew that operate a freight train from Harlem River to the Cedar Hill yard actually deliver to the New Haven railroad 68 train miles, but the road must pay for 100; that is to say, it must pay for nearly 50 per cent more miles than it actually receives. Each railroad management will strive to lay out its system so as to get as many runs of a hundred miles for its freight engines and crews as possible, but this in practice can never be wholly accomplished, and still less can it be accomplished on systems like the New Haven or the Boston & Maine and the Maine Central where there are many branches of irregular lengths. Some¬ times the distance is such that a crew can be given a “ turn around ” run for the purpose of building up the distance to more nearly the hundred miles. We call attention to this heavy constructive mileage on the New Haven railroad, but we do not make any criticism in regard to it because whether a saving can here be made can only be determined by the executive 48 officers of the road who are living with it day by day and year by year. It might be thought that the constructive mileage given above was largely built up by the crews employed on switching engines, but this is not the case because their basis of pay is different. It might be thought that through freights could be operated with a mini¬ mum of constructive mileage but the figures given by the New Haven railroad for the actual mileage of the engine and train crews of through freights during 1922 amounted to a total of 26,610,378 miles. The road paid these men, in addition to these actual miles, for 10,822,275 constructive miles. Overtime Pay In addition to the heavy expense involved in adding to the miles actually run, 37 per cent more constructive mileage, the New Haven railroad paid for 2,304,772 hours of overtime in 1922. These overtime hours repre¬ sent chiefly actual extra hours on the job beyond the standard day of 8 hours. In some cases they represent probably extra compensation for a “ wide spread.” As, for example, if a man works for 8 hours continuously, other things being equal, he receives 8 hours’ pay. If he should work, however, from 8 to 12 in the morning and then from 6 to 10 in the evening, he has still worked a total of only 8 hours, but the spread of his day’s work is more than 12 hours, and the inconvenience or hard¬ ship of this wide spread is compensated for by allow¬ ing “constructive overtime.” The principle of over¬ time is fair and speaking generally, the road is actually receiving service during most of these overtime hours, 49 but overtime costs more than regular time, generally time and a half, and the skillful manager strives to keep the total hours of overtime requiring this 50 per cent bonus down as much as he can. Materials and Supplies We have had a careful study made of the handling of materials and supplies on the various New England railroads, including the amount of inventory carried. The inventory of materials and supplies on the New Haven for the past three years, with number of months the supply on hand would last, has been as follows: Dec. 31 Months’ 1920 Supply Coal .$2,151,251 1.2 Rails . 803,927 9.4 Ties . 742,882 5.3 Lumber . 1,106,565 9.2 All other stores 12,072,718 11.6 Total Inventory $16,S77,343 Dec. 31 Months’ Dec. 31 Months’ 1921 Supply 1922 Supply $2,815,377 2.1 $1,344,122 1.0 253,286 4.5 570,817 8.9 788,234 2.8 1,139,332 5.4 777,507 6.1 669,937 6.5 9,684,685 10.9 8,409,042 8.9 $14,319,089 $12,133,250 It is clear that in 1920, apart from coal, rails, ties and lumber, the balance of “ all other stores ” was quite out of hand. It represented practically a year’s supply, and instead of having over twelve millions of the road’s capital locked up it should not have amounted to more than six millions, which would have been six months’ supply. It is the opinion of experts on railroad supplies that excessive supplies cost on the average at least fifteen per cent a year, made up of interest, deterioration, ob¬ solescence, storage facilities, taxes, insurance, extra handling and accounting, so that this excess of six mil- 50 lions represented an annual loss going* on at the rate of $900,000 per year. Happily the present head of the purchasing and stores department has been cutting this down rapidly, and we have little doubt that by the end of the current year he will have his inventory of “ all other stores ” down to seven millions, and then in the year following to six millions, which would represent an average six months’ supply, and be good railroad practice. The Boston & Maine inventory of “ all other stores ” on December 31, 1922, was down to an average of six months, twenty-one days. The present purchasing agent of the New Haven came to the road about two years ago, and the depart¬ ment appears to be now w*ell organized and well con¬ ducted. Physical Condition The physical condition of the New Haven, in so far as roadbed, track, signals, bridges, ordinary buildings and other roadway structures is concerned may be con¬ sidered to be excellent, capable of handling its high¬ speed passenger trains and heavy freights with econ¬ omy and safety. In respect to the capacity of the roundhouses and their equipment, we consider many of them inadequate for the pressure of business put upon them in busy periods. This does not involve a large sum of money to be expended at any one time, but it is important that the work should be begun, because it is at the roundhouses that minor repairs (requiring less than 24 hours) are made and these should be made quickly so as to get the locomotives back at work in the minimum of time. The ability of the roundhouses to make some of the heavier repairs efficiently and 51 promptly instead of the main shops is also an im¬ portant factor in keeping locomotives in service and reducing the cost of locomotive repairs. Density Speaking of the system as a whole, all parts of it have main track and yard facilities, adequate for the present business and for from 25 to 50 per cent in¬ crease. The heaviest traffic, both passenger and freight, is between New Haven and Harlem River. From New Haven to New Rochelle there are four tracks, and from New Rochelle to Harlem River there are six tracks. These tracks are capable of carrying a considerably larger number of trains, probably 50 per cent in excess of the present number. From New Haven to Providence, where there are only two tracks most of the way, there is still unused capacity which, under efficient operation, could accommodate at least 50 per cent more trains. Between Maybrook and Devon, where the Maybrook line joins the main Shore Line, the tracks can carry at least 100 per cent more trains. Between New Haven and Springfield there exist ample track and facilities for carrying a heavier movement. Over the old New York and New England railroad, be¬ tween Hartford and Boston, there are two tracks most of the way, but the traffic reaches only about the ca¬ pacity of a single track line. It seems unnecessary to comment on other parts of the system. Futuee Capital Expenditukes As a policy in regard to further capital expenditures, we believe the New Haven should make no large capital 52 expenditures during the next few years except year by year a moderate sum to increase and improve the facili¬ ties at the roundhouses and main shop machinery, and no doubt here and there moderate amounts. It seems to us the active effort of the management should be concentrated in trying to use to the utmost advantage the things which it now possesses. The company, we are advised, with the new power now on order will have sufficient engine power to handle its present business if the engines are kept in good operating condition, and for quite a period of time capital outlay in this direction probably can be limited to the cost of re¬ placing with heavier engines some of the smaller ones as they wear out. The present excessive number of bad order freight cars, amounting to over eight thousand, should be re¬ duced to the normal figure of, say, three thousand cars. So far as the rebuilt cars may be strengthened and have attached more modern draft gear and other im¬ provements, this justifies a charge to capital account. \ 53 FINANCIAL CONDITION OF THE NEW HAVEN Period of Expansion, 1902-1913 Beginning in the year 1902, the New Haven manage¬ ment inaugurated a policy of expansion with the evi¬ dent purpose of obtaining control of most of the steam railroads in the New England states; control of trolley and interurban electric railway systems in southern New England and southeastern New York, parallel to or radiating from its own rail lines; and also control of various coastwise steamship lines as well as additional boat lines operating through Long Island Sound to New York. Pursuant to that policy the New Haven acquired during the ten years between 1902 and 1913: Steam Railroads 1. Control of Central New England Railway. 2. Control of the Boston & Maine Railroad which at the time carried control of the Maine Central Railroad. 3. One-half of a controlling interest in the Rutland Rail¬ road with an agreement to buy the other half from the New York Central (subsequently enjoined by the New York Court and never carried into effect). 4. Agreement with the New York Central to share equally in the profits or losses of the Boston & Albany road. Agreement, made in 1911 and ter¬ minated early in 1914, resulting in a small loss to the New Haven, about $168,000.' 54 5. During the same period the New Haven acquired the control of the New York, Ontario & Western Rail¬ road. This road is wholly in the states of New York and Pennsylvania. Street Railways Nearly all the street and interurban railways in the state of Rhode Island and in the state of Connecticut, and a large mileage in Massachusetts, including the Worcester System, the Springfield System and the Berkshire Street Railway System. The two street railways operating through the sub¬ urban territory along the Sound in New York State (Westchester Street Railroad and New York & Stam¬ ford Railway). The New York, Westchester and Boston Railway, financed by the New Haven, a rapid transit line from 129th St., New York, to New Rochelle and White Plains, connecting with the elevated and subway systems in New York. Steamship Lines Merchants & Miners Transportation Company. Eastern Steamship Company. Hartford & New York Transportation Company. The above investments were for the most part ac¬ quired at high prices, representing in many cases, and particularly in the case of the trolley properties, a cost much in excess of physical values. This policy of expansion outside its own railroad system practically terminated in the year 1913, except 1 . 2 . 3. 55 as to the expenditures necessary to complete certain of the acquired properties. The legal conflicts of the company with the United States Government and the State of Massachusetts, re¬ sulting from some of these transactions, are a matter of record and need not be dwelt on. At the time this campaign of expansion was under¬ taken, trolley and interurban railway properties were in good credit, with increasing earnings, and were re¬ garded by many as potential competitors of the steam railroads for passenger traffic. The Boston & Maine was then earning substantial dividends and the New York, Ontario & Western was paying sufficient divi¬ dends to carry the New Haven’s investment in the stock. The Committee believes that it would not be helpful or constructive to comment in this report on the policy of the former management in undertaking this expan¬ sion program. Nevertheless, no intelligent diagnosis of New Haven’s financial problem can be made without taking into account the results of this expansion policy and the extent to which it has impaired the New Haven’s financial resources. Amount of Investment in Outside Properties The annual report of the New Haven Company to its stockholders for the year ending June 30, 1915, states that during the period from July 1, 1903, to June 30, 1915, there was acquired additional prop¬ erty with book values aggregating $393,071,491. 56 Included in that total were the following outside in¬ vestments : Boston & Maine and leased line stocks.$31,079,668.75 New York, Ontario & Western Railroad stock . 13,108,397.62 Rutland Railroad securities. 2,514,977.15 Total outside railroad investments.$46,703,043.52 New York, Westchester & Boston Railway.$ 38,850,150.09 Various other trolley lines and securities . 100,527,389.53 $139,377,539.62 Various Steamship Lines 14,242,718.81 Total of above investments between July 1, 1903, and June 30, 1915. $200,323,301.95 Since June 30, 1915, there have been large further increases in the cost to the New Haven of some of these outside properties, because they have produced little income for the New Haven, and in some cases have received considerable further cash advances. For a number of years after the New Haven made most of these outside investments the results of its own railroad operations, and the income received from its street railway and other outside properties, except the New Y r ork, Westchester & Boston, which was under construction, enabled it to maintain its credit and con¬ tinue to pay 8 per cent dividends. But about 1913 began the decline in earnings of a large proportion of the street railway companies in the L T nited States, due 57 to automobile and jitney competition, and especially to increases in wages and other costs, and inability to in¬ crease fares promptly. Then came the failure of tbe New York, Westchester & Boston Railway to fulfill the estimates that within two or three years after the opening of the line it would earn its fixed charges. That property up to 1915 represented a cost to the New Haven of over $38,000,000, and during ten years of its operation it has not been able to earn in full even its operating expenses and taxes, the deficit before de¬ ducting fixed charges having been $351,539, and the deficit after fixed charges including interest due the New Haven having been $16,369,835. Last year (1922) it earned a small margin (about $50,000) applicable to interest charges. The Boston & Maine was obliged to discontinue dividends on its common stock in 1913 and has paid none since. The New York, Ontario & Western has paid dividends in 12 of the 18 years of New Haven control. The Rutland Railroad has taken care of itself and gradually improved its property, but only two dividends of 2 per cent each have been paid since the New Haven’s investment in the stock. Losses of New Havex ox Outside Ixvestmexts The New Haven has written oft its books a large amount of losses sustained through some of these in¬ vestments. It has liquidated its holdings in the Rhode Island trolley properties and in the Eastern Steamship Company, New England Navigation Company and Merchants & Miners Transportation Company. The 58 loss on these four investments, already written oft, amounts to $40,546,840. This has been written oft and is net. The New Haven has also charged to its income account a large amount of interest on guaranteed or as¬ sumed securities of these outside properties and has, in effect, written off considerable further losses by omitting to charge on its books interest on some of these outside investments that have failed to pay such interest. The losses thus already written off by the New Haven, including the definite loss above of $40,546,840, aggregate approximately $53,000,000, divided as fol¬ lows : The Rhode Island Co. (Trolley properties in Rhode Island)... $29,729,656 Merchants & Miners Transportation Co. 3,594,500 New England Navigation Co. 6,275,809 Eastern Steamship Co. 946,875 New York, Westchester & Boston By.: Advances (written down) .... $9,983,899 Discount on bonds sold. 1,265,295 Liquidation of Millbrook Co. . 1,163,084 12,412,278 $52,959,118 Besides this amount already charged off, over three-fourths of which represents loss on the original investment already realized upon the sale or final liqui¬ dation of the assets disposed of, there is a present sub¬ stantial shrinkage in the value of various important investment items still retained by the company. 59 These remaining “ outside investments,” after the above write-offs, were carried on the New Haven’s books on December 31, 1922, at the following valua¬ tions : Outside Steam Railroad Investments Book Valuation Boston Railroad Holding Company $26,350,400 This investment comprises the entire Common Stock ($3,106,500 par value) and $24,493,900 out of $27,293,000 4 per cent Preferred Stock of the Holding Company. The remaining $2,800,000 Preferred Stock is held outside and is guaranteed by the New Haven as to prin¬ cipal and dividends. The investments owned by the Holding Company consist of Boston & Maine securities as follows: Common Stock $21,918,900 (par value), Preferred Stock $654,300 (par value) and a $1,000 4 per cent Bond. Boston & Maine First Preferred Stocks B, C, & D, par value $415,100. 816,544 Various Railroad Stocks and Securities (chiefly Boston & Maine leased lines) par value $608,123 . 743,809 New York, Ontario & Western Stocks, $29,162,200 par value or 50.2 per cent of total outstanding . 13,108,397 Rutland Railroad Preferred Stock $2,352,050 par value or 25.4 per cent of total outstanding 2,364,977 Total Outside Steam Railroad investments. .$43,384,127 60 Street and Suburban Railway Properties Book Valuation Connecticut Company (entire stock and certain securities owned, par value $45,568,916).$45,568,916 New York, Westchester & Boston Railway Company (entire capital stock and certain securities owned, par value $22,670,342) .. 13,813,923 New England Investment & Secur¬ ity Company 5 per cent Notes due 1924 (par value $13,115,000).... 13,037,750 (representing equity in Worces¬ ter Consolidated Street Railway and Springfield Street Railway, etc.) Berkshire Street Railway Co. (en¬ tire capital stock and certain securities owned, par value $9,990,600) . 9,931,156 Vermont Company (entire capital stock and certain securities owned, par value $1,496,000)... 1,417,664 New York & Stamford Railway Company (entire capital stock and certain securities owned, par value $1,396,432). 1,415,396 Westchester Street Railroad Com¬ pany (entire capital stock and certain securities owned, par value $1,193,043) ...... 1,398,609 Shore Line Electric Railway Co... 117,000 United Electric Railway Co. 300,000 Total Street and Suburban Rail¬ way properties . $87,000,414 61 Total outside steam railroad and street railway investments .... $130,384,541 It has not seemed to the Committee useful or indeed possible to estimate what has been or may be the ulti¬ mate loss to the New Haven upon these other assets. Such estimates are at best unsatisfactory. That the losses will be heavy, if the investments should be dis¬ posed of in the near future, is beyond question. For the most part they are bringing in little if any income, while to the extent that they were acquired with the proceeds of New Haven bonds or notes their owner¬ ship represents a permanent fixed charge upon the company. Anyone interested may consider, for ex¬ ample, the book valuation of the New York, West¬ chester & Boston as of December 31, 1922, of $13,813,923 (after already writing down $12,412,278), consisting chiefly of stocks, notes and advances, held in the New Haven’s treasury and representing, with the exception of $2,190,000 of these bonds owned by the New Haven itself only an equity, subject to $19,200,000 4% per cent first mortgage bonds in the hands of the public, guaranteed principal and interest by the New Haven. These bonds are quoted on the New York Stock Exchange at about 42% of face value, and to this price the New Haven guaranty of course contributes something. How can the value of the stock and notes coming after these bonds be figured? For the $73,186,491 book value of December 31,1922, of various trolley securities other than New York, West¬ chester and Boston still held by the New Haven, it seems impossible to suggest any basis for an intelligent estimate of present value. Apparently little income has been derived from them for several years. 62 It is clear that to the $52,959,118 of capital already written off as lost there must be added a large sum, impossible at present to calculate, and that these past and probable future losses taken together constitute a most important factor in the New Haven’s financial condition and credit position today. Amount of Increase in Capitalization due to Outside Investments On December 31, 1922, the New Haven’s outstand¬ ing capitalization was: Funded Debt (including guaranteed bonds of Central New England Railway).$317,239,595 Capital Stock (par value). 157,117,500 Total .$474,357,095 If it had no investments in these outside steam railroad and street railway properties, which on that date amounted to. 130,384,541 The total capitalization on December 31, 1922, would then have been only about. 343,972,554 If the New Haven were not burdened with these outside investments and thus had total capital liabili¬ ties of only $344,000,000 instead of $474,357,095, the company would be in comfortable financial condition. Our best estimate of what would have been the divi¬ sion of these $344,000,000 capital liabilities between funded debt and stock is as follows: Funded Debt Capital Stock $344,000,000 $220,600,000 123,400,000 63 It seems conservative to estimate that because of these outside investments there has been an increase probably of at least $96,000,000 in the funded debt alone. We estimate that these outside investments cost the New Haven in interest charges alone at least $3,840,000 for the year 1922, against which the New Haven received income of only about $422,000 in that year. The Government Loans The company on December 31,1922, owed the United States Government $83,946,500,* carrying interest at 6%, and secured by collateral consisting of $93,068,000 First and Refunding Mortgage 6% Bonds of the New Haven Railroad and, in addition, by other stocks and bonds owned by the New Haven. It is evident from the above recitals that the financial condition of the New Haven Company would have been acute before this if the government had not loaned this $83,946,500.* Further loans from the government since December 31, 1922, have brought this total up to $88,646,500,* and $3,400,000 additional have been authorized by the United States Treasury Department but not yet taken down by the company. Increase in Physical Valuation Does Not Help Road's Earning Power It is true, as the officers of the company urge, that the tentative valuation of the Interstate Commerce Commission, swelled by the gain in market value of * This does not include $1,186,800 Equipment Trust obligations held by the Director General of Railroads, and subject to resale. 64 the real estate, and by the increased cost of replacing at present prices road construction, bridges and other structures and equipment, may be said to have re¬ stored these losses, and may some day, somehow, re¬ ceive recognition. But the writing up of book value does not extricate the road as a going concern from its present financial difficulty. If the terminals in Boston have doubled or trebled in value this does not reduce the cost of operating the Boston terminal or result in more net money to meet fixed charges. On the con¬ trary, it involves higher taxes and therefore less money to meet fixed charges. It is akin in some respects to the situation in which a manufacturing plant finds it¬ self with perhaps fifty acres of land which has become extremely valuable. The fact that the fifty acres have greatly increased in value does not help the’ manufac¬ turer to turn out his product more cheaply or to meet the competition of another plant located upon fifty acres of land worth farm prices. Rates in New England must keep step with rates else¬ where and especially with the rates of other competi¬ tive regions. If the New Haven Railroad attempts to substitute the enhanced valuation of its property for the $53,000,000 capital lost and for the large losses not yet determined in its outside investments and to raise correspondingly its charges, the cost to traffic will be greater than can be borne. The industries on its system are likely to wither, and new industries to locate elsewhere. If a general country-wide raising of rates is put into effect by the National Government in order to recognize the rise in values, then New England can move up with the rest of the country and the security EXHIBIT A Yeah Ending June 30 1908 1909 1910 1911 1912 1913 1914 1915 1916 Yeah Ending Dec. 31 1916 (6mos.) 1917 1918 A 1919 1920 1921 1922 NEW 10RK, NEW HAVEN & HARTFORD (INCLUDING CENTRAL NEW ENGLAND) CONDENSED INCOME ACCOUNT 1908 TO 1922 Railway Opera tinq Revenues *56,992,162 58,900,937 65,939,695 67,677,51S 70,S33,9S0 73,930,320 70,998,422 69.434,310 81,182,586 44,756,488 91,262,181 10S,357,36S 113,302,52S 131,330,785 124,7S8,023 130,037,392 Railway Operating Expenses $40,539,866 38,4SS,276 41,337,285 43,704,S38 44,919,702 50,159,367 51,565,237 46,700,638 53,715,S64 29,003,333 65,58S,54S 93,257,298 99,027,570 134,744,057 112,424,782 105,206,092 Percent Expenses to Revenues 71.13 65.34 62.69 64.58 63.42 67.S5 72.63 67.26 66.17 64.80 71.87 86.06 87.40 102.60 90.09 80.90 3 Railway Net Operating Revenues $16,452,296 20,412,661 24,602,410 23,972,6S0 25,914,278 23,770,953 19,433,185 22,733,672 27,466,722 15,753,155 25,673,633 15,100,070 14,274,958 -3,413,272 12,363,241 24,831,300 4 Taxes $3,406,055 3,523,143 4,088,252 3,744,217 3,910,610 3,839,270 3,695,023 2,883,162 3,024,697 1,673,000 3,557,566 3,496,526 4,29S,833 4,736,792 4,739,943 4,874,487 Uncollec¬ tible Railway Revenues $7,866 5,961 2,493 6,317 16,271 28,946 17,131 47,141 30,840 6 Hire op Freight Cars (Net) 7 Other Equipment Rents (Net) -Italics indicate Deficit $740,462 E 514,570 205,102 Note E $41,529 -101,184 -200,356 -204,160 -102,784 B -78,560 -92,339 -13,162 b 174,512 B 384,600 2,513,191 -269,348 B 152,679 306,152 1,120,966 2,433,346 1,073,649 238,626 341,714 -74,988 614,6S0 2,73S,904 1,677,576 7,S3S -37,121 -290,185 2,880,235 10S,5S8 -Italics indicate 8 Joint Facility Rents (Net) $1,445,425 1,789,701 1,477,456 1,634,321 1,927,046 2,153,994 2,394,212 2,598,939 2,739,904 1,409,426 3,000,874 3,209,344 3,498,535 3,698,718 4,151,400 9 Total Taxes and Rents (Cols. 4 to 8) $5,591,942 5,86S,943 5,669,626 5,099,622 5,541,157 5,877,318 5,994,399 6,027,246 8,589,905 4,444,511 9,339,817 7,720,802 10 Net Rail¬ way Operat¬ ing Income $10,860,354 14,543,718 18,932,784 18,873,058 20,373,121 17,893,035 13,43S,7S6 16,706,426 1S,876,S17 11,308,644 16,333,816 7,379,268 A 8,448,832 5,S26,126 A 11,154,424 -14,567,698 A 10,325,875 2,037,366 4,111,110 12,005,260 12,826,040 Percent Column 10 to Column 1 Credit A Federal and Corporate Accounts combined for columns 1 to 10. B Estimated for Central New England. C — Includes Central New England dividend of $149,SSS over 99% of which is included in Non-Operating Income. D — Central New England dividend over 99% of which is included in Non-Operating Income. E - S T Q rr t ° f ® qU i pment rents between Hire of F ™gkt Cars and Other Equipment Rents not reported for 1906 Net total of equipment rents is shown under Hire of Freight Cars. F - Excludes from Non-Operating Income annual rental from Connecticut Company account lease of Connecticut Railway and Lighting Co., and same amount from Rent for Leased Roads. G — Guarantee account Boston Railroad Holding Co. dividend eliminated from Other Deductions and same amount deducted from Non-Operating Income, leaving net income from this stock in Non-Operating Income. 19.06 24.69 2S.71 27.89 28.76 24.20 18.93 24.06 23.25 25.27 17.90 6.81 5.14 Def. 1.63 9.86 -Italics indicate Deficit 11 Non- Operating Income $7,659,525 9,120,956 9,037,467 8,805,606 9,701,140 G 9,352,57S G 5,957,761 H 4,080,571 ?H 4,712,518 F 2,642,226 F 5,297,889 F 4,381,600 F 5,502,786 F 4,866,920 F 6,859,543 F 5,474,090 F 12 Government Guarantee Adjusted $9,675,543 I 8,820,556 I 26,315,477 I 13 Total Income Available for Fixed Charges (Cols. 10,11,12) $1S,519,879 23,664,674 27,970,251 27,678,664 30,074,261 27,246,213 19,396,547 20,786,997 23,589,335 13,950,870 21,631,705 21,430,411 20,149,468 16,614,701 8,896,909 18,300,130 14 Rent for Leased Roads 4,673,005 4,890,297 5,225,571 4,570,164 4,597,840 4,678,623 4,890,538 5,083,493 F 5,008,812 F 2,501,737 F 5,008,955 F 5,032,923 F 5,056,983 F 5,054,281 F 5,056,026 F 5,055,717 F 15 Interest ON Debt $7,733,546 11,001,238 11,295,657 11,324,866 11,008,905 11,525,896 12,393,888 11,696,471 11,858,696 5,595,223 12,473,776 13,321,634 13,750,613 14,099,816 15,473,874 16,408,228 16 Other Deductions $348,689 222,845 237,268 243,902 268,2S0 G 1,205,040 G 1,613,437 H 1,289,772 H 1,427,655 703,918 1,507,068 1,647,810 1,626,582 1,737,330 1,970,663 1,825,642 17 Total Fixed Charges ,Cols. 14,15,16) 18 Net Income Applicable to Dividends (Cols. 13 to 17) 19 Dividends Paid 20 Balance of Income Year Ending June 30 $12,755,240 $5,764,639 $8,279,046 -$2,514,407 1908 16,114,380 . 7,550,294 7,883,842 -333,54S 1909 16,758,498 11,211,755 9,759,081 1,452,674 1910 16,138,932 11,539,732 12,454,852 -915,120 1911 15,875,025 14,199,236 14,315,540 -116,304 1912 17,409,559 9,836,654 13,486,563 -3,649,909 1913 18,897,863 498,684 2,506,657 C -2,007,973 1914 18,069,736 2,717,261 320,826 D 2,396,435 1915 IS,295,163 5,294,172 320,80S D 4,973,364 1916 Year Ending Dec. 31 1916 (6moa.) 8,800,878 5,149,992 149,876 D 5,000,116 18,989,799 2,641,906 256,398 D 2,385,508 1917 20,002,367 1,434,044 1,434,044 1918 20,434,178 -284,710 640,684 D -925,394 1919 20,891,427 -4,276,726 -4,276,726 1920 22,500,563 -13,603,654 -13,603,654 1921 23,289,587 -4,9S9,457 320,322 D -5,309,779 1922 —Italics indicate —Italics indicate Deficit Deficit H - Dividend from Boston Railroad Holding Co. stock eliminated from Non-Operating Income and same amount deducted from Other Deductions, leaving net loss from this stock in Other Deductions. I Government Guarantee Adjusted represents the difference between the Net Railway Operating Income guar- n eed by the Government and the Net Railway Operating Income earned by the United States Railroad Administration during Federal control and by the corporation during the Guaranty Period after adjustment for Revenues and Expenses prior to January 1 , 1918. J 65 holders and especially the stockholders of the New Haven Railroad may reap a substantial benefit. To a certain extent the relative price paid for trans¬ portation by different sections or communities is more important than the actual price. Earnings A study of the Income Account of the New Haven Company (including the Central New England) for each of the 15 y 2 years from June 30,1907, to December 31, 1922, is given in Exhibit A on the opposite page. This statement shows that the company’s net revenue from railroad operations (column 10) as well as its in¬ come over fixed charges (column 18) reached the peak in the year ending June 30,1912. It should also be ob¬ served that the years 1918, 1919 and 1920 include the period of government control and government guaran¬ ties, and are therefore not properly comparable with other years. Growth of Traffic The volume of traffic on the New Haven has shown a steady growth in both freight and passenger business. In 1921 and 1922 there was a falling off from the war time peak of 1918 and 1919, but this decline was gen¬ eral on all the railroads of the country. Revenue ton miles in 1922 were 17 % higher than in 1912 and pas¬ senger miles 18.1% greater.* * Appendix H. Revenue Ton Miles and Passenger Miles. New Haven Railroad 1903-1922 (chart), and Appendix I. Volume of Freight and Pas¬ senger Traffic, Revenues, and Rates. New Haven Railroad 1912-1922. 66 Comparison of Yeaes 1922 and 1912 The following comparison of Income Accounts of tlie New Haven (including Central New England) for the year ending June 30,1912, with the year 1922 gives a significant picture of the financial decline of the New Haven Company, and indicates some of the rea¬ sons for that decline. Year Ending Year Ending June 30,1912 Dec. 31,1922 Increase Decrease Railway Operating Revenue $70,833,980 $130,037,392 $59,203,412 Railway Operating Expenses 44,919,702 105,206,092 60,286,390 Railway Net Operating Rev¬ enues .$25,914,278 $24,831,300 $1,082,978 Taxes and Rents Taxes . 3,910,610 4,874,487 963,877 Equipment rentals (net) ... 296,499 cr. 2,988,823 dr. 3,285,322 Joint Facility Rents (net) 1,927,046 4,111,110 2,184,064 Uncollectible Railway Reve¬ nues . . 30,840 30,840 Total Taxes and Rents 5,541,157 12,005,260 6,464,103 Net Railway Operating Income . 20,373,121 12,826,040 7,547,081 Non-operating Income (net) 9,701,140 A 5,474,090 B 4,227,050 Total Income Applicable to Fixed Charges .... 30,074,261 18,300,130 11,774.131 Fixed Charges Rentals of Leased Roads.. 4,597,840 5,055,717 B 457,877 Interest on Debt . 11,008,905 16,408,228 5,399,323 Other Deductions (Guaran- ties, etc.) . 268,2S0 A 1,825,642 B 1,557,362 Total Fixed Charges .. 15,875,025 23,289,587 7,414,562 Net Income Applicable to Dividends . 14,199,236 4,989,457 Def. 19,188,693 Dividends paid . 14,315,540 320,322 C 13,995,218 Balance of Income 116,304 Def.5,309,779 Def. 5,193,475 67 A — Excludes $148,741 from Non-Operating Income and Other Deductions in 1912 in connection with operations of Boston Railroad Holding Co., leaving $818,943. net dividends from this property in Non-Operating Income. B — Excludes $1,049,564 from Non-Operating Income and also from Rentals of Leased Roads, representing annual rental from the Connecticut Co. account lease of Connecticut Railway and Lighting Company. C—‘Central New England Dividends paid to New Haven and included in its Miscellaneous Income. During the 10-year period covered by the above state¬ ment a net profit of $14,199,236 (before dividends) in 1912 was changed to a net deficit of $5,309,779 in 1922, representing a decrease in net income of $19,509,015. Attention is especially directed to the following items: 1. Increase in cost of rental of equipment. $3,285,322 2. Decrease in Non-operating Income chiefly due to cessation of revenue from outside in¬ vestments (trolley properties, steamship properties, Boston & Maine stock, New York, Ontario & Western stock, etc.). 4,227,050 3. Increase in Guaranties, etc. (chiefly New York, Westchester & Boston guaranty and other losses through guaranties) . 1,557,362 4. Increase in taxes. 963,877 A total of. $10,033,611 The decrease in non-operating income (Item 2) is due chiefly to the collapse in earnings from investments in outside trolley and steamship properties, and in the Boston & Maine Railroad, which occurred in the years 1913 and 1914. The increase in charges for guarantees of securities G8 of outside companies (Item 3) is largely due to the investment in the New York, Westchester & Boston. Had it not been for the above items of loss in net revenue (resulting from increased cost of equipment rental, decrease in income from outside investments, and increase in guarantees), the company would have shown last year a surplus of about $3,760,000 over fixed charges instead of a deficit of $5,309,779. But the losses from the above causes are only a part of the picture. The increase in annual interest charges in the year 1922, as compared with 1912, was $5,399,323 of which approximately $3,500,000 or two- thirds was due to an increase in debt and about $1,900,- 000 was due to an increase in the average rate of in¬ terest paid. The increase in debt was as follows: Funded and Floating Debt June 30, 1912 . $248,909,846 December 31, 1922 . 317,239,595 Increase . $68,329,749 This increase in debt was to pay for additions and improvements to the road and equipment during the ten years. In spite of the large amount invested in its operated railroad properties during the last ten and one-half years, the company showed an actual decrease of $1,082,978 in railway net operating revenue * in 1922 as compared with 1912. Before charging taxes, rental of equipment, and joint facility rents. 69 Comparative Expense Ratios 1908-1922 The following statement shows the ratios of expenses to total railway operating revenue each year from 1908- 1922 inclusive: -Opi CRATING i Expenses- Year Way & -Maintenance Equip- Total Transpor- Other tation Ex- Total Operat- Taxes and Total Operating Expenses ending Struc- ment Mainte- Ex- penses ing Ex- Rents Taxes and June 30 1908 tures 11.33 12.65 nance 23.98 penses 43.01 4.14 penses 71.13 9.81 Rents 80.96 1909 11.14 10.45 21.59 39.64 4.11 65.34 9.96 75.30 1910 11.59 10.21 21.80 36.14 4.74 62.68 8.60 71.28 1911 11.22 11.03 22.25 37.63 4.70 64.58 7.53 72.11 1912 10.35 11.74 22.09 36.87 4.46 63.42 7.82 71.24 1913 11.43 13.46 24.89 38.14 4.82 67.85 7.95 75.80 1914 13.26 15.29 28.55 39.81 4.27 72.63 8.44 81.07 1915 12.29 14.66 26.95 36.39 3.92 67.26 8.68 75.94 1916 11.42 13.91 25.33 37.04 3.80 66.17 10.58 76.75 Year ending Dec. 31 1917 10.92 13.95 24.87 42.05 4.95 71.87 10.23 82.10 1918 13.56 20.28 33.84 47.08 5.04 85.96 7.04 93.00 1919 13.97 20.04 34.01 47.85 5.18 87.04 7.18 94.22 1920 17.24 24.52 41.76 54.90 5.94 102.60 8.49 111.09 1921 15.18 22.95 38.13 46.27 5.69 90.09 8.28 98.37 1922 13.76 21.15 34.91 41.23 4.77 80.91 9.23 90.14 Results for First Four Months of Current Year 4 mos. 4 mos. 1922 1923 Increase Decrease Railway Operating Revenue... . $39,704,059 $44,220,448 $4,516,389 Railway Operating Expenses . . . 30,763,024 37,486,093 6,723,069 Ratio of Expenses to Revenues . 77.48 84.77 7.29 Railway Net Operating Revenues $8,941,035 $6,734,355 $2,206,680 Taxes and Rents Taxes. Rental of Equipment (net). Joint Facility Rents. Uncollectible Railway Revenues, 1,632,067 550,130 1,325,340 6,786 1,722,792 2,913,967 1,370,105 46,974 $90,725 2,363,837 44,765 40,188 Total Taxes and Rents. $3,514,323 $6,053,838 $2,539,515 Net Railway Operating Income. Non-operating Income (net)* .. $5,426,712 1,903,000 $680,517 2,035,000 $4,746,195 132,000 Total Income Applicable to Fixed Charges. Fixed Charges *. $7,329,712 7,703,000 $2,715,517 7,715,000 $4,614,195 $12,000 Net Income (deficit). $373,288 $4,999,483 $4,626,145 * Excludes $350,000.00, being one-third of annual rental on account of lease of Connecticut Railway and Lighting Co. 70 There was an increase of $3,438,443 in expenses for Maintenance of Equipment, caused by the necessity for heavy repairs to cars and locomotives. (Bad or- der freight cars were reduced by about 1,100 during the four months.) Further large increases in Main¬ tenance of Equipment will be required before the freight cars and locomotives are brought into good operating condition. The increase of $2,363,837 in rental of equipment was due, in part, to the large number of unserviceable cars on the road and in part to the fact that the road was still flooded with foreign cars that it was unable to move promptly,—because the number of freight cars on its line exceeded its capacity for prompt move¬ ment. It will be seen that the above two causes alone more than account for the increase of $4,626,000 in the deficit for the four months. Poor Outlook for 1923 The management has estimated that the calendar year 1923 will show about the same deficit as in 1922. In order to fulfill this estimate the company will have to earn in the last eight months of 1923 nearly $5,000,000 net more than it earned in the same eight months of 1922. In view of existing conditions as regards car per diem costs and the necessity for further large increases in costs of repairs and renewals of equipment, it seems almost inevitable that the year 1923 will show a con¬ siderable deficit. It is evident, therefore, that with the present rates 71 and volume of traffic the New Haven cannot reason¬ ably hope to show any surplus over fixed charges un¬ less and until a radical improvement occurs in its per diem costs and in its costs of maintenance; and even if and when those two handicaps are removed, we believe there is little hope that the company can show for many years to come a margin of earnings suffi¬ cient to restore its credit unless a reduction can be made in its fixed charges or unless a considerable in¬ crease can be obtained in its division of freight rates with connecting lines, or other important sources of in¬ creased revenue can be developed. Early Maturities of New Haven Debt The New Haven must pay or refund the following indebtedness during the next 12 years: Interest Principal Year Name of Security Rate Amount 1924 Meriden Horse Railroad Co., Cons. mtg. 5% $415,000 New Haven Station debenture . 5% 100,000 Hartford, Manchester & Rockville Tram¬ way Co., first mtg. . 5% 200,000 ♦Equipment Trust certificates .Various 1,531,900 Real Estate mortgages . 6% 160,000 U. S. Government loan (Treasury) - 6 % 100,000 Total in 1924 . $2,506,900 1925 European loan of 1907 (extended) .... 7% 24,431,251 ♦Equipment Trust certificates .Various 1,434,900 Danbury & Norwalk general mtg.5% 150,000 Pawtuxet Valley Railway 1st mtg. 4% 160,000 U. S. Government loan (Director General of Railroads) . 6% 4,290,000 U. S. Government loan (Treasury) - 6% 100,000 Total in 1925 . $30,566,151 ♦Includes $98,900 due U. S. Government (Director General). 72 Interest Principal Year Name of Security Rate Amount 1926 ♦Equipment Trust certificates .Various $1,189,900 U. S. Government loan (Treasury) .... 6% 100,000 Total in 1926 . $1,289,900 1927 *Equipment Trust certificates .Various $939,900 U. S. Government loan (Treasury) .... 6% 100,000 Total in 1927 . $1,039,900 1928 *Equipment Trust certificates .Various 763,900 Meriden Southington & Compounce Tramway 1st mtg. 5% 175,000 U. S. Government loan (Treasury) .... 6% 100,000 Total in 1928 . $1,038,900 1929 *Equipment Trust certificates .Various 592,900 U. S. Government loan (Treasury) _ 6% 100,000 Total in 1929 . $692,900 1930 *Equipment Trust certificates .Various 426,900 Hartford Street Railway 1st mtg. 4% 2,500,000 Hartford Street Railway Debentures .. 4% 165,000 Consolidated Railway Debentures 3, SV 2 & 4% 969,650 Naugatuck Railroad. 3234,000 U. S. Government loan (Director General of Railroads) . 6% 60,026,500 U. S. Government loan (Treasury) .... 6% 100,000 Total in 1930 . $64,422,050 1931 *Equipment Trust certificates .Various $426,900 Greenwich Tramway, 1st mtg. 5% 320,000 U. S. Government loan (Treasury) _ 6% 8,160,000 Total in 1931 . $8,906,900 1932 *Equipment Trust certificates .Various $426,900 U. S. Government loan (Treasury) - 6% 2,560,000 Total in 1932 . $2,986,900 1933 *Equipment Trust certificates .Various $426,900 New Haven & Centerville Street Railway 5 % 283,000 U. S. Government loan (Treasury) - 6% 4,360,000 Total in 1933 . $5,069,900 •Includes $98,900 due U. S. Government (Director General). 73 Year Name of Security 1934 *Equipment Trust certificates . Interest Principal Rate Amount Various $426,900 U. S. Government loan (Treasury) _ 6% 160,000 Total in 1934 . 1935 * Equipment Trust certificates .Various $426,900 U. S. Government loan (Treasury) _ 6% 8,290,000 $586,900 Total in 1935 $8,716,900 Total 12 years—• 1924 to 1935, inclusive $127,824,201 “Includes $98,900 due U. S. Government (Director General). It will be noted that during the two years, 1924 and 1925 alone, there will mature $33,073,051 of debt. Of this amount $4,490,000 are maturing obligations to the IT. S. Government and $28,583,051 are obligations due others. In addition the Company will have to make arrange¬ ments to pay off or refund, during the next 12 years, $12,819,505 obligations of leased lines and subsidiary corporations (including trolley properties). Of this $12,819,505, $8,598,000 are Old Colony R.R. 4% bonds maturing in 1924 and 1925. Restoration of New Haven’s Credit Imperative It is evident that the financial credit of the New Haven must be restored within the next 18 months (or before the year 1925) in order to put it in a posi¬ tion to borrow money at reasonable rates to take care of $33,000,000 of debt maturing within the years 1924 and 1925. 74 BOSTON & MAINE RAILROAD General Description The Boston & Maine system comprises 2,515 miles (Map 8). It has 1,819 passenger cars, 20,546 freight cars and 1,134 locomotives. It produced during the year 1922, 863,856,000 passenger miles and 2,801,938,000 revenue ton miles. Of the passenger cars 43 are steel, 679 are steel underframe and 1,097 wooden. The Boston & Maine has been gradually evolved from the consolidation of 160 or more small roads. The last important consolidation was the lease in 1901 of the Fitchburg railroad. In 1919 in connection with the receivership, the Fitchburg Railroad, Boston & Lowell, Connecticut River, and Concord & Montreal became an integral part of the system by the exchange of the Boston & Maine first preferred stock for the guaran¬ teed stocks of these roads. Since 1901, the system as an operating unit has comprised substantially the pres¬ ent mileage. The main line of the Fitchburg extends from Boston to Mechanicville, New York, a distance of 187 miles, where it connects with the Delaware & Hudson. Here the company’s big western classification yard is located. It then has an extension west for 22 miles to Rotterdam Junction where it connects with the main lines of the New York Central and West Shore in the Mohawk Valley. In addition it has an extension from Johnson- ville to Troy, a distance of 16 miles, the distance from Boston to Troy being 190 miles. The Boston & Maine, 75 like the Boston & Albany, has two heavy grades, though less in altitude by 130 and 220 feet respectively. The distance from Boston to the Hudson River is 13 miles less than by the Boston & Albany. The line carries a very heavy freight traffic, but practically no through passenger business, these trains having been taken off during Federal management, though a through sleeper to Buffalo has just been restored. The system has two important lines running from Boston to Portland, the old Boston & Maine line and the old Eastern, carrying quite a heavy passenger traffic, especially during the summer, and also con¬ siderable freight. An important line extends north from Boston through Lowell to Concord, New Hamp¬ shire, from where the line continuing north for 197 miles reaches a connection with the Canadian Pacific at Newport, Vermont. From this line at Concord a branch running northwest reaches the Connecticut Val¬ ley at White River Junction, where it connects with the Central Vermont, part of the Grand Trunk system. The Boston and Maine has other lines of lesser im¬ portance and numerous branches. It serves the north¬ ern half of Massachusetts, practically the entire State of New Hampshire, sections of Vermont, and is the only outlet for the State of Maine except via the Grand Trunk or Canadian Pacific through Canada. Physical Condition In general the road is in fair physical condition, adequate for the traffic offered. It is obvious outlay must bear some relation to traffic. A branch line, for 76 example, with traffic inadequate to pay operating ex¬ penses must be accorded the minimum outlay of capital and only enough upkeep to secure safety. A substantial handicap is found in the light bridges on the Fitchburg Division, east of the Connecticut, which are not stout enough to carry the heavy Santa Fe engines used west of the Connecticut. They can be strengthened for about $125,000, completely renewed for $500,000. The line from Concord, connecting with the Central Vermont at White River Junction, should have the bridges strengthened to carry more powerful locomo¬ tives, and the passing tracks should be lengthened to care for longer trains. Probably $700,000 ought to be expended on this line. At the present time the road, we understand, has under order ten Santa Fe engines, and when the bridges on the Fitchburg Division, east of the Connecticut River, have been strengthened some of the consolidation engines, now in use on the Fitch¬ burg Division, can replace the light engines now in service between Concord and White River Junction. The limited dimensions of the Hoosac Tunnel pre¬ vent hauling through it the largest furniture and automobile cars. This is not of great consequence at present, but will be the cause of increasing embarrass¬ ment. More third track on the heavy grades of the Fitchburg Division would assist in the movement of freight trains, but it can be put in gradually from year to vear. A large number of wooden passenger cars should be replaced with steel as soon as possible. This will in¬ volve a substantial outlay as steel passenger cars at 77 present prices cost from twenty to twenty-five thousand dollars per car. Boston Freight Terminals The present Boston freight terminals are inadequate and expensive to operate. They consist of the four small freight yards of the old Boston & Maine, Eastern, Boston & Lowell and Fitchburg railroads. It is im¬ portant that a modern unified yard should be created as soon as possible in the interest of economy and good service. This would involve probably several million dollars. Apparently, the purchase of little new land would be required. The Grand Junction Railway, run¬ ning from Cottage Farm around the northerly side of the city to East Boston and belonging to the Boston & Albany railroad, cuts across the Boston & Maine yards and hampers efficient operation. These tracks prob¬ ably should be elevated. Shops and Roundhouses The company has large and comparatively new loco¬ motive and car shops at Billerica. The lesser shops on the line require only gradual strengthening from year to year. The big engine roundhouses and at¬ tendant repair facilities at Mechanicville, East Deer¬ field and Concord, N.H., are well adapted to the needs of the road. The Boston roundhouse facilities are in¬ adequate and should be taken in hand as soon as possible. Apart from the new steel passenger cars and the antiquated Boston freight terminals, the Boston & Maine requires only a limited amount of immediate 78 capital expenditure to put the system into reasonable condition to care for its present traffic. Operation We have already referred in our discussion of the New Haven to various operating factors of the Boston & Maine. Car Miles per Car Bay We give again for the purpose of studying the per¬ formance of the Boston & Maine the average freight car miles per day for the year ending June 30, 1922, for all the New England roads, for all cars, and in a parallel column for serviceable cars (bad order cars excluded). Average Car Miles Average Car Miles Per Freight Car Day Per Freight Car Day (Bad Order Cars (all cars) Excluded) Boston & Albany. _ 27.8 30.0 Atlantic & St. Lawrence .... _ 21.8 23.3 Central Vermont . . 19.3 29.5 Maine Central. _ 17.8 21.2 Rutland. . 17.7 23.6 Boston & Maine . . 17.1 21.2 Bangor & Aroostook. . 13.8 19.3 New Haven . . 13.6 18.1 The Boston & Maine, although much below the Bos¬ ton & Albany, exceeded the New Haven’s performance, but we believe that there is room for improvement, es¬ pecially in the movement of cars in its classification yards. 79 Car Delays in Yards at Mechanicville, Rotterdam Junction, East Deerfield and Ayer The lack of prompt despatch of cars at the Rotter¬ dam Junction, Mechanicville, East Deerfield and Ayer Yards seems to us quite unreasonable. At Me¬ chanicville, a large modern “hump” classification yard was installed while the Boston & Maine was un¬ der the active control of the New Haven railroad. This yard corresponds to the Maybrook hump yard at the western end of the New Haven system. The aver¬ age daily number of cars classified at Mechanicville is 595 eastbound. Practically none of the cars west¬ bound are classified. Eor the year ending June 30, 1922, the daily average delay for an eastbound car classified at Mechanicville was 25 hours. This is a poorer showing than the daily average at the three big hump yards of the New Haven system:— Year Ending June 30,1922 Mechanicville . 25.1 hours Maybrook . 13.4 “ New Haven (Cedar Hill) .. 13.2 “ Providence . 14.8 “ For the six months ending December 31, 1922, the daily average delay at Mechanicville was 30.1 hours; comparison with the New Haven shows the following: 6 months ending Dec. 31,1922 Mechanicville . 30.1 hours Maybrook . 38.2 “ New Haven (Cedar Hill) .. 21.6 “ Providence . 19.7 “ 80 The Boston & Maine receives directly into its Me- chanicville yard from the Delaware & Hudson rail¬ road a movement which during the twelve months ending June 30, 1922, averaged 432 cars per day. But this is not the whole story. The Boston & Maine during the 12 months ending June 30, 1922, received an average of 226 cars from the New York Central at Rotterdam Junction. The cars entered the Rotter¬ dam Junction yard but practically no classification was carried on there. These cars were pulled for classi¬ fication 22 miles further to the Mechanicville yard, yet the daily average detention in the Rotterdam yard of these eastbound cars coming off of the New York Central and West Shore roads in trains and simply awaiting further movement to the Mechanicville classification yard was 11.1 hours for the year ending June 30, 1922, and 14.0 hours for the 6 months ending December 31, 1922. This means that the average car coming off the New York Central system at Rotterdam Junction was first delayed 11.1 hours at Rotterdam Junction and then at the Mechanicville yard, 22 miles further on, 25.0 more hours, a total delay of 36.1 hours at the western end of the system for each car coming off the West Shore or New York Central road before the car moves out of Mechanicville for its first regu¬ lar engine run of 84 miles to East Deerfield. At East Deerfield the daily average for the year end¬ ing June 30, 1922 was 10.7 hours, and for the 6 months ending December 31, 1922, 18.2 hours. (Eastbound \ movement only.) During the year ending June 30, 1922, an average of 653 cars moved further east out of the East Deer- 81 field yard, and during the 6 months ending December 31, 1922, 580 cars a day. A large proportion of these cars moving east out of Deerfield go into the classifica¬ tion yard at Ayer, where there was a daily average de¬ tention for the year ending June 30,1922, of 18.2 hours, and for the 6 months ending December 31, 1922, 24.0 hours. Ayer classified during the year ending June 30, 1922, a daily average of 339 cars, and for the 6 months ending December 31, 1922, 344 cars. (East bound only.) We show in the form of a diagram, the time consumed by the average car coming oft the New York Central or West Shore road at Rotterdam Junc¬ tion and moving to a point east of Ayer. Car Movement Rotterdam Junction to Boston Present Car Movement. In Yards In Yards at at Rotterdam Mechanic- Junction ville In Yards at East Deerfield In Yards at Ayer Point East 11.1hrs. 2 hrs. 25.0 hrs. 7 hrs. 10.7 hrs. 6 hrs. 18.2 hrs. 3 hrs. In transit In transit In transit In transit 22 miles 85 miles 67 miles 36 miles Possible Car Movement Total Present time = 83 hours Rotterdam Mechanic- East Junction ville Deerfield Point Ayer East 6 hrs. 2 9 hrs. 7 hrs. 9 hrs. 6 hrs. 9 hrs. 3 hrs. hrs. Total Possible time =51 hours Possible Reduction in Delay 32 hours 82 Erom the Ayer yard some of the cars move to Boston. Many go north by the old Stony Brook railroad destined for Lowell or beyond to Portland, or points on the Maine Central system or on the Bangor & Aroostook. Cars Moved Daily Another measure of effective operation for which figures have been compiled from the records of the respective railroads is the percentage of cars moved each day compared with the number ready and waiting to be moved. Cars standing upon the tracks of the railroad on any one day may be classified as coming under one of the following heads: Cars under load at stations or terminals to be unloaded. Cars at stations or terminals being loaded. Empty cars awaiting loading orders. Bad order cars. Stored cars. Cars ready for movement. The last named cars are in service ready to be moved. The average cars moved, out of all ready to be moved as reported by 51 representative railroads outside of New England for the year ending June 30, 1922, was 74.0 per cent. Any percentage moved below that is be¬ low the average efficiency of the United States, and any percentage above is above the average efficiency. Applying this test to the Boston & Maine railroad, we find that for the twelve months ending June 30, 1922, the average percentage of cars actually moved 83 daily of the total ready to be moved was 61.5 per cent, and for the six months ending December 31, 1922, was 56.2 per cent, and for all New England railroads as follows: Year Ending 1 6 months ending June 30,1922 Dec. 31,1922 Boston & Albany. 80.3 percent 77.2 per cent Rutland . 78.4 “ n 80.0 a a Maine Central . 76.6 “ n 71.7 a a Central Vermont . 76.1 4 4 tt 69.9 a a Bangor & Aroostook. 75.8 44 tt 75.8 a a New Haven. 69.2 44 i t 58.7 a a Boston & Maine. 61.5 44 i i 56.2 a a Atlantic & St. Lawrence .. 58.3 44 tt 63.1 a a If the Boston & Maine had attained the 74.0 per cent of the 51 important railroads mentioned above, there would have been left over daily an average of 3,119 cars in place of the 5,548 actually left standing, or a daily saving in car days of 2,429. This converted into one year’s performance repre¬ sents a saving of $886,585.00. Embaego Policy of Boston & Maine In the case of the Boston & Maine system, as in the case of the New Haven, there is a point in the accumu¬ lation of cars on the system where more cars mean rapidly mounting adverse per diems and few or no more ton miles manufactured. Indeed the jam can easily be carried to the point where the ton miles produced are seriously cut down. We give the average number of cars on the system during 1922 and the first four months of 1923, and also 84 the average car miles per car day: Car Miles Number Daily Average Per Car Day Bad Cars on line (all cars) Order Cars January . . 30,211 15.1 5,934 February . .. 31,675 17.1 5,906 March . . 31,677 18.7 5,818 April . . 30,054 16.9 5,642 May . . 30,466 17.1 5,599 June . . 31,045 16.8 5,659 July . . 29,772 16.2 5,153 August . . 29,972 16.8 5,645 September . . 32,000 17.5 5,259 October . . 34,811 18.5 4,748 November . . 36,833 17.7 4,499 December . . 36,663 15.1 4,234 January . . 39,324 11.4 8,976 February . . 41,469 11.1 3,956 March . . 41,538 13.8 3,952 April . . 41,079 16.6 3,795 We believe the Boston & Maine would have been much better oft if it had limited the cars on its system during these last eight months to 32,000. Perhaps in summer, when weather conditions are favorable, and if other conditions are also favorable, the road can maintain a satisfactory daily car movement with a larger number on the line, but, with a strike on its hands and winter weather coming on, we think it would have been much better policy and would have saved a large sum of money, and would have resulted in just about as many ton miles for the system if it had kept the number down to 32,000. The Boston & Maine uses the straight embargo method as con¬ trasted with the New Haven permit system; in other words, under the Boston & Maine plan if the road is in danger of being blocked an embargo with certain specified exceptions is put on, it may be only for a few days, then taken off, and then again restored, 85 according to the number of cars on the system and the number reported moving towards the system. In the month of September the road averaged 32,000 cars on the line, and the daily average movement was 17.5 miles. During October the number rose to an average of 34,811, meaning probably about 33,000 at the beginning of the month and probably close to 36,000 at the end of the month. The daily distance per car went up to 18.5 miles. This was a good spurt, and represented hard work by all hands to move the traffic and keep the road clear, but the condition of the locomotives was poor and winter coming on. In No¬ vember the number of cars on the line was allowed to rise substantially further to an average of 36,833, and the average daily movement per car dropped to 17.7. In December the number of cars on the line was about the same, and the daily movement dropped to 15.1. In January, February and March, 1923, as will be seen from the preceding table, the number of cars on the line averaged considerably over 40,000, and the daily distance dropped to 11.4 for January, 11.1 for Febru¬ ary, and 13.8 for March. In April, with an average of 41,079 cars on the line, the road did well to maintain an average daily car travel of 16.6, but still in our judgment, in April, in spite of more favorable operat¬ ing conditions, the road was attempting to carry a load beyond its strength, and April net earnings were cor¬ respondingly affected. If the number of cars on the system had been kept down to 32,000 from October 1st to May 1st, the sav¬ ing in per diems would have aggregated $1,436,908 in the seven months ’ period. 86 If kept down to 33,000 cars tlie saying would have been $1,224,908. The following table shows the saving by months on the basis of 32,000 cars on line: 1923 — 1922 Cars on Line Adverse Car Per Diems Decrease in Adverse Car per Diems if Cars had been kept down to 32,000 cars January . . .... 30,211 $327,398 February . .... 31,675 349,171 March ... .... 31,677 392,049 April .... .... 30,054 309,076 May . .... 30,466 330,810 334,408 June . .... 31,045 July . .... 29,772 330,543 August ... _ 29,972 369,359 September .... 32,000 443,212 October .. .... 34,811 576,000 $87,141 November .... 36,833 647,444 144,990 December .... 36,663 652,970 144,553 Total 12 months ... $5,062,440 $376,684 January ... .... 39,324 $727,221 $227,044 February . .... 41,469 730,727 265,132 March ... .... 41,538 831,172 295,678 April. .... 41,079 796,222 272,370 Total 16 months ... $8,147,782 $1,436,908 As we pointed out in considering the New Haven Railroad the car per diems received by the Boston & Maine system for the use of its cars on other systems constitutes no compensation to be balanced against this outgo. The car per diems received from other roads merely represents upkeep, depreciation, and a return upon the capital invested in the cars which these other roads are using. 87 The Boston & Maine car per diems receivable for the same period were: Per Diems Receivable 1922 — January . $106,232 February . 98,499 March. 113,889 April . 108,140 May . 111,688 June . 103,882 July . L25,385 August . 152,362 September . 168,541 October. 195,162 November . 212,896 December . 227,332 Total 12 months .$1,724,008 1923 — January . $228,081 February . 206,197 March .. 238,141 April. 240,210 Total 16 months .$2,636,637 Materials and Supplies Condensed Inventory Dec. 31 Months’ Dec. 31 Months’ Dec. 31 Months’ 1920 Supply 1921 Supply 1922 Supply Coal .$2,836,844 2.1 $1,562,499 1.4 $1,210,173 1.3 Rails . 600,253 9.2 899,837 7.4 669,706 14.1 Ties . 637,770 6.4 1,196,022 6.3 673,715 4.5 Lumber . 1,330,763 8.5 570,196 3.2 497,849 5.0 AU other stores 7,305,268 8.5 5,696,857 7.5 4,755,714 6.7 Total Inventory $12,710,898 $9,925,411 $7,807,157 88 Total materials and supplies on hand December 31, 1920, were excessive and the unnecessary surplus was costing the road about $325,000 a year, but the surplus has been well pulled down during the last two years and the inventory on December 31, 1922, stood at a reasonable figure. Locomotive Repairs In our discussion of the New Haven we have already shown the comparative costs of locomotive repairs in considerable detail for all the New England roads, and we have noted that the cost per locomotive mile in the year 1921 on the Boston & Maine was 30.7 cents, as compared with 35 cents on the New Haven, 23.5 cents on the Boston & Albany, and 22 cents on the Maine Central. If comparison should be made of the cost of repairs on the Boston & Maine with the cost on the Maine Cen¬ tal, consideration should be given to the fact that the Maine Central locomotives average 15.6 years of age, as compared with 17.4 years on the Boston & Maine. On the other hand, the Maine Central locomotives are about 10 per cent heavier than the Boston & Maine locomo¬ tives. The Maine Central was able to maintain its loco¬ motives in better condition than those of the Boston & Maine for a smaller expenditure per locomotive, and at the same time obtain greater mileage per locomotive. The net result was a cost per locomotive mile of 22 cents, compared with 30.7 cents on the Boston & Maine. This wide difference in cost indicates the necessity for careful attention on the part of the Boston & Maine operating officials to the possibilities of materially re- ducing tlieir costs on this large and important item of expense. Density Examination of the train movement on this system shows that the only portion where the density of train movement is approaching capacity is on the main line of the Fitchburg between South Ashburnham and Boston where, however, there still remains capacity for a 25 per cent increase. Between Ayer and Lowell for a portion of the distance there is only a single track for about 9 miles. This in summer sometimes carries a train density practically up to capacity. Between South Ashburnham and Mechanicville, there is easily room for 40 per cent increase over and above the density shown by the train reports for April and September, 1922. In the suburban territory immediately surrounding Boston the traffic upon some sections, particularly in respect to suburban passenger trains, is heavy, and the train density has reached a point where consideration must be given before long to additional track facilities. 90 % FINANCIAL CONDITION Earnings The income account of the Boston & Maine railroad for each of the 151/2 years from June 30, 1907 to De¬ cember 31, 1922, is given in Exhibit B on the opposite page. This statement shows that the company’s net railway operating income (column 10) as well as its net income after fixed charges (column 18) reached the peak in the year ending December 31, 1916. The years 1918, 1919 and 1920 include the periods of gov¬ ernment control and government guaranties, and are therefore not properly comparable with other years. The fact that the company’s fixed charges were reduced by $2,725,862 through the reorganization and consoli¬ dation on December 1, 1919 should also be taken into account in comparison with the years preceding. Growth of Traffic A study of the traffic statistics of the Boston & Maine shows that the growth of the Company’s freight business, between 1912 and 1922, has been relatively small as compared with the growth for the entire East¬ ern District and for the entire TTnited States.* It will also be noted that the number of passengers carried was 6.1 per cent less in 1922 than in 1912. While there has been an encouraging gain in both freight and passen¬ ger business during the first four months of 1923, the normal annual increase in traffic on the Boston & Maine will probably continue to be comparatively small. This is chiefly because a large part of the road’s mileage * Appendix J. Revenue Ton Miles and Passenger Miles, Boston & Maine Railroad 1903-1922 (chart), and Appendix K. Volume of Freight and Pas¬ senger Traffic, Revenues and Rates, Boston & Maine, 1912-1922. EXHIBIT B BOSTON & MAINE RAILROAD CONDENSED INCOME ACCOUNT 1908 TO 1922 Year Ending June 30 i 1908 1909 1910 1911 1912 1913 1914 1915 1916 Year Ending Dec. 31 1916 1917 1918 A 1919 1920 1921 1922 1 Railway Operating Revenues 839,445,444 39,999,622 43,849,191 45,363,663 46,630,746 49,241,948 Railway Operating Expenses Percent Expenses to Revenues $29,361,115 28,651,365 31,781,080 35,629,046 35,584,254 3S,641,952 48,155,179 38,851,712 46,673,049 35,909,772 52,075,428 36,197,959 55,3S3,544 59,450,779 70,157,584 72,935,146 86,652,745 78,477,418 79,800,123 38,251,715 47,164,940 64,779,651 67,144,063 90,989,432 73,15S,8S5 67,054,397 74.43 71.63 72.48 78.54 76.31 78.47 80.68 76.94 69.51 69.07 79.33 92.33 92.06 105.00 93.22 84.03 3 Railway Net Operating Revenues $10,084,329 11,348,257 12,06S,111 9,734,617 11,046,492 10,599,996 9,303,467 10,763,277 15,877,469 17,131,829 12.2S5.839 5,377,933 5,791,083 -4,336,687 5,318,533 12,745,726 Taxes Uncollec¬ tible Railway Revenues $1,712,272 1,789,933 2,076,S80 2,OS9,905 2,0S6,864 2,025,629 2,059,017 1,978,223 1,986,267 2,091,089 2,156,650 2,317,524 3,043,387 3,001,OS7 2,728,224 2,580,677 6 Hire of Freight Cars (N et) 7 Other Equipment Rents (N et) $5,944 2,624 3,769 3,791 124 1,062 48,126 7,281 5,094 §1,303,744 649,279 763,884 888,655 1,078,561 1,817,232 1,583,774 1,196,325 2,074,248 2,561,723 2,954,175 1,526,911 877,363 4,416,809 3,178,427 3,740,974 -SIS,987 -33,856 -11,214 -40,074 -14,666 -68,917 -48,370 -10,823 -20,309 -34,871 -21,038 -47,618 -97,620 -10,237 -117,744 -18,350 8 Joint Facility Rents (Net) -SI 0,392 -26,360 - 24,206 -24,684 89,635 74,933 68,905 82,645 54,866 65,737 50,038 77,698 217,591 125,748 110,713 -38,409 9 Total Taxes and Rents (Cols. 4 to 8) $2,986,637 2,389,996 2,805,345 2,913,S02 3,240,494 3,848,877 3,663,326 3,252,314 4,097,696 4,687,447 5,143,616 3,S74,739 4,041,783 7,581,533 5,906,901 6,269,986 10 Net Railway Operating Income Percent Column 10 to Column 1 $7,097,692 8,958,261 9,262,766 6,820,815 7,805,998 6,751,119 5,640,141 7,510,963 11,779,773 12,444,3S2 7,142,223 1,503,194A 1,749,300A -11,918,220k -588,368 6,475,740 17.99 22.26 21.12 15.04 16.74 13.71 11.71 16.09 22.62 22.47 12.02 2.14 2.40 Def. Def. 8.11 11 Non- Operating Income 12 Government Guarantee Adjusted $642,213 570,314 673,017 788,453 779,079 1,316,773 1,460,063 833,685 711,100 747,018 753,953 486,436 490,346 803,795 968,193 797,209 13 Total Income Available for Fixed Charges (Cols. 10,11,12) $6,355,562 B 5,775,820 B 17,9S9,554 B $7,739,905 9,52S,575 9,935,783 7,609,268 8,585,077 8,067,892 7,100,204 8,344,648 12,490,873 13,191,400 7,896,176 8,345,192 8,015,466 6,875,129 379,825 7,272,949 14 Rent for Leased Roads $5,183,515 5,246,433 5,265,498 5,385,054 5,176,879 5,312,700 5,4S7,629 5,5S9,406 5,626,029 5,659,634 5,695,962 5,562,924 928,550 927,845 923,180 920,376 15 Interest ON Debt $1,769,905 1,859,357 1,783,910 1,834,171 2,083,703 2,604,223 3,572,778 3,003,721 2,700,045 2,651,844 2,523,024 2,522,374 4,428,307 5,291,080 6,033,428 6,004,691 16 Other Deductions $6,204 6,397 6,969 5,270 5,462 5,959 10,700 8,178 17,104 12,274 11,467 1,994 1,086 41,474 35,639 17 Total Fixed Charges (Cols. 14,15,16) 18 Net Income Applicable to Dividends (Cols. 13-17) $6,959,624 7,112,187 7,056,377 7,224,495 7,266,044 7,922,882 9,071,107 8,601,305 8,343,178 8,323,752 8,230,453 8,087,292 5,357,943 6,260,399 6,992,247 319,890 C 7,244,957 $780,281 2,416,388 2,879,406 3S4,773 1,319,033 145,010 -1,970,903 -256,657 4,147,695 4,867,648 -334,277 257,900 2,657,523 614,730 -6,612,422 27,992 19 Dividends Paid $2,080,621 1,817,361 1,868,520 1,958,971 1,767,951 1,374,138 2,035,716 1,227,948 20 Balance of Income -$1,300,340 599,027 1,010,886 -1,574,198 -448,918 -1,229,128 -1,970,903 -266,657 4,147,695 4,867,648 -334,277 257,900 621,807 -613,218 -6,612,422 27,992 Year Ending June 30 1908 1909 1910 1911 1912 1913 1914 1915 1916 Year Ending Dec. 31 1916 1917 1918 1919 1920 1921 1922 -Italics indicate Deficit - Italics indicate Credit -Italics indicate Deficit -Italics indicate Deficit -Italics indicate Deficit This Condensed Income Account does not include the figures for the following small lines in the Boston & Maine System for which complete information was not available for the entire period. The Railway Operating Revenues of these small lines in 1922 were only 3% of the Railway Operating Revenues of the Boston & Maine System. Vermont Valley York Harbor & Beach Sullivan County Mount Washington St. Johnsbury & Lake Champlain Montpelier & Wells River Barre & Chelsea A — Federal and Corporate accounts combined for cols. 1 to 10. B — Government Guarantee Adjusted represents the difference between the Net Railway Operating Income guar¬ anteed by the Government and the Net Railway Operating Income earned by the United States Railroad Administration during Federal control and by the corporation during the Guaranty Period after adjustment for Revenues and Expenses prior to January 1, 1918. C — Includes $280,462 representing net of Revenues and Expenses prior to January 1, 1918, due U. S. Government leaving a balance of $39,428 of ether deductions applicable to corporate operation in 1922. 91 is in the states of Maine, New Hampshire and Ver¬ mont, where the growth in population and business has been relatively light during the last decade. Unless a much larger volume of interchange business or ex¬ port business can be developed through the northern gateways via Canada, the Boston & Maine can hardly hope to keep pace with Southern New England, or with the country as a whole, in growth of traffic. Comparison of Results of 1922 with 1916 The following comparison of income accounts for the year ending December 31,1916, with the year 1922, gives a significant picture of the decline in net income, and indicates some of the reasons for that decline. Year ending Year ending Dec. 31,1916 Dec. 31,1922 Increase Decrease Railway Operating Revenues $55,383,544 $79,800,123 $24,416,579 Railway Operating Expenses 38,251,715 67,054,397 28,802,682 Railway Net Operating Revenue 17,131,829 12,745,726 $4,386,103 Taxes and Rents Taxes . Equipment Rentals (net).... Joint Facility Rents (net) Cr. Uncollectible Railway Revenues 2,091,089 2,526,852 65,737 3,769 2,580,677 3,722,624 38,409 5,094 489,588 1,195,772 1,325 104,146 Total Taxes and Rents. 4,687,447 6,269,986 1,582,539 Net Railway Operating Income Non-operating Income . 12,444,382 747,018 6,475,740 797,209 50,191 5,968,642 Total Income Applicable to Fixed Charges. 13,191,400 7,272,949 5,918,451 Fixed Charges Rentals of Leased Roads .... Interest on Debt . Other Deductions . 5,659,634 2,651,844 12,274 920,376 6,004,691 319,890 3,352,847 307,616 4,739,258 Total Fixed Charges. 8,323,752 7,244,957 1,078,795 Net Income after Fixed Charges 4,867,648 None 27,992 None 4,839,656 Balance of Income. $4,867,648 $27,992 $4,839,656 92 It is to be noted that in spite of an increase in Rail¬ way Operating Revenues of $24,416,579, or 44 per cent in 1922, as compared with 1916, Operating Expenses in¬ creased $28,802,682, so that there wa^ a decrease of $4,386,103 in Railway Net Operating Revenue in 1922, as compared with 1916. The increase of $1,195,772 in net Equipment Rentals (chiefly per diem charges for use of freight cars of other roads) is also an important cause of the relatively poor showing in 1922. The in¬ crease of $489,588, or 23.4 per cent in Taxes is also an important factor. The decrease of $1,078,795 in Fixed Charges is more than accounted for by the reduction of $2,725,000 in Fixed Charges effected by the reorganiza¬ tion in 1919. The difference is due to increase in in¬ terest-bearing debt incurred for additions and im¬ provements since 1916. In considering the above comparison it must not be forgotten that the year ending December 31, 1916, was the best year in the company’s history, both as regards net earnings and as regards expense ratios. If pres¬ ent labor costs, rentals of equipment, transportation rates, and divisions of freight rates on business inter¬ changed with western connecting lines, remain un¬ changed, the company cannot expect to equal the record of 1916 in the near future. 93 Comparative Expense Ratios, 1908-1922 Tlie following statement shows the ratios of expenses to total railway operating revenue each year from 1908 to 1922, inclusive: .Operating Expenses _—* Total Transpor¬ tation Ex¬ penses Other Ex¬ penses Total Operat¬ ing Ex¬ penses Taxes and Operating Expenses Taxes and Rent Year ending June 30 Way & Struc¬ tures Equip¬ ment Total Mainte¬ nance Rents 1908 11.74 11.09 22.83 47.49 4.11 74.43 7.58 82.01 1909 10.72 11.88 22.60 44.86 4.17 71.63 6.11 77.74 1910 12.06 12.48 24.54 43.85 4.09 72.48 6.40 78.88 1911 13.37 13.77 27.14 46.80 4.60 78.54 6.42 84.96 1912 12.49 13.75 26.24 45.71 4.36 76.31 6.95 83.26 1913 11.01 15.78 26.79 46.90 4.78 78.47 7.82 86.29 1914 13.59 16.06 29.65 46.08 4.95 80.68 7.61 88.29 1915 15.42 14.34 29.76 43.23 3.95 76.94 6.97 83.91 1916 11.50 12.65 24.15 41.75 3.61 69.51 7.87 77.38 Calendar Year 1916 11.07 12.80 23.87 41.69 3.51 69.07 8.46 77.53 1917 10.41 14.78 25.19 50.39 3.75 79.33 8.65 87.92 1918 14.33 20.28 34.61 53.62 3.93 92.16 5.36 97.58 1919 13.18 20.96 34.14 52.70 4.12 90.96 4.67 95.63 1920 17.42 23.27 40.69 59.26 5.05 105.00 8.75 113.75 1921 16.43 20.30 36.73 51.50 4.99 93.22 7.53 100.75 1922 13.88 20.19 34.07 45.67 4.29 84.03 7.86 9.S9 Expenses for Maintenance took 34.07 cents out of every dollar of gross revenue in 1922, as compared with 23.87 cents in 1916, an increase of about 10 cents, of which increase about three-fourths was in Maintenance of Equipment. Transportation Expenses in 1922 took 45.67 cents out of every dollar of gross revenue as com¬ pared with 41.69 cents in 1916, an increase of about 4 cents. It will be observed, however, that the ratio of transportation expenses (45.67 per cent of gross rev¬ enue) in 1922 was not materially greater than the average of the 8 years prior to 1916. 94 Results of Operation First Four Months of 1923 Results for the 4 months ending April 30,1923, com¬ pared with the same 4 months of 1922, were as follows: 4 Months 4 Months 1922 1923 Increase Railway Operating Revenues. . .$24,833,466 $27,300,482 $2,467,016 Railway Operating Expenses. . . 21,588,527 26,533,676 4,945,149 Ratio of Expenses to Rev¬ enue. 86.93 97.19 10.26 Decrease Railway Net Operating Rev¬ enues . $3,244,939 $766,806 $2,478,133 Taxes and Rents: Taxes. $701,411 $948,864 $247,453 Rental of Equipment (net) .. 1,020,415 2,275,800 1,255,385 Joint Facility Rents (net) . .. 55,433 cr. 20,466 75,899 Uncollectible Ry. Revenues .. 688 99 589 Total Taxes and Rents.... $1,667,081 $3,245,229 $1,578,148 Net Railway Operating Income $1,577,858 $2,478,423 Def. $4,056,281 Non-operating Income. 238,820 238,266 554 Total Income Applicable to Fixed Charges. $1,816,678 $2,240,157 Def. $4,056,835 Fixed Charges: Rental of leased Roads. $306,792 $306,792 Interest on Debt. 1,973,943 2,056,667 $82,724 Other Deductions. 282,157 28,855 $253,302 Total Fixed Charges. $2,562,892 $2,392,314 $170,578 Net Income (Deficit). $746,214 $4,632,471 $3,886,257 95 The principal items of increased transportation revenue during the four months were: Freight revenue increased.$1,320,210 or 8% Passenger revenue increased.... 544,025 or 8% Express revenue increased. 284,079 or 39% Milk revenue increased. 69,701 or 12% If operating conditions had been normal, these ex¬ cellent increases in gross revenue should logically have resulted in increased net revenue. But operating expenses increased so heavily that net operating rev¬ enue was $2,478,133 less than in the same four months of 1922. Furthermore, rentals of equipment increased $1,255,385 or 123%, and accrued taxes increased $247,453 or 35%. The total deficit for the four months was $4,632,471 or $3,886,257 worse than in the same period of 1922. Analyzing the increases in operating expenses it appears that: Maintenance of Way and Structures increased.. $530,250 This increase is more than accounted for by the fact that the cost of removing snow and ice was $1,063,998 in the four months of 1923 as com¬ pared with $339,531 in 1922, an increase of $724,467. Maintenance of Equipment increased.$1,698,760 This increase is chiefly accounted for by the fact that Repairs of Steam Locomotives cost $3,480,762 in the four months of 1923, as com¬ pared with $1,990,410 in 1922, an increase of $1,490,352. Transportation Expenses increased $2,780,628 96 The principal increases in Transportation Expenses were: 1. Increased cost of Fuel for Locomotives, $1,129,488 or 38% 2. Increases in wages of Enginemen and Train¬ men, on roads and in yards, $1,306,209 or 39% A relatively small part of the increased transporta¬ tion expenses is accounted for by increased traffic. A considerable part of the increased cost of fuel is un¬ doubtedly due to the higher prices, caused by the coal strike. The remainder of these increased expenses re¬ sulted from delays to traffic caused by the severe winter and from the unusually poor condition of locomotives and equipment resulting from the shopmen’s strike. Financial Outlook foe 1923 In the year 1922 the Boston & Maine reached May 1 with a deficit for the four months of $746,214. By the end of 1922 this deficit had been overcome and the road showed the small balance over fixed charges of $27,992. This year the deficit on May 1 was $4,632,471, a sum too large it seems to permit the road to escape a substantial deficit for the year 1923. \ 97 BOSTON & ALBANY RAILROAD The Boston & Albany system comprises 393 miles (Map 9). It has 444 passenger cars, 7,412 freight cars and 351 locomotives, and produced during the year 1922, 376,177,887 passenger miles and 1,089,660,257 ton miles of revenue freight. 163 of the passenger cars are steel and 126 wooden with steel underframes. The main line comprises 51 per cent of the total mile¬ age of the system and extends from Boston to its connec¬ tion with the New York Central Railway at Rensse¬ laer, a distance of 200 miles. It is in good physical condition, well suited to the volume of traffic moving.* The main stem has two tracks throughout its entire length and considerable third track to help the freights in their slow movement up the heavy grades and four and five tracks within the Boston suburban area. As compared with the Shore Line of the New Haven, it is handicapped by two extremely heavy grades. The first reaches its summit of 960 feet at Charlton; thence the line descends again to practically tide level at Spring- field in the valley of the Connecticut. West of the Connecticut the road rises finally by heavy grades to an elevation of 1,440 feet, where it crosses the backbone of the Berkshires. Again the line descends to the val¬ ley of the Housatonic at Pittsfield 950 feet above ocean level. Prom here by easier grades the road continues to its western terminus at Rensselaer. * Appendix L. Revenue Ton Miles and Passenger Miles, Boston & Albany Railroad, 1903-1922 (Chart). 98 The movement of freight upon this line is very heavy. The Boston & Albany has a practical monopoly of the through passenger business between New Eng¬ land and the West, and as on the Shore Line of the New Haven the movement of freight is complicated by the necessity of caring for frequent high speed pas¬ senger trains. Ten through express passenger trains daily in each direction travel between Boston and Al¬ bany and also in addition a number of New York express trains pass over the main line for 100 miles to Springfield. The road has established the trans¬ portation policy of moving its freights relatively fast as compared with the practice on the main line of the New Haven Railroad. This policy is probably partly to keep the freights out of the way of the passenger trains or, to put it another way, in order to permit a freight train to make a good run between the move¬ ment of two passenger trains before it is overtaken by the second. This is not altogether an operating dis¬ advantage. A heavy freight of 3,000 tons moving at an average speed of 8 miles an hour manufactures the same ton miles per hour as a train of 2,000 tons moving at 12 miles an hour. 99 Freight Car Movement The Boston & Albany, as we have already noted, stands at the head of the New England list in the aver¬ age daily movement per car for all cars on the system. The following are the figures for the year ending June 30, 1922: Car Miles per Bad Order Freight Car Day Cars (All Cars) Eliminated Boston & Albany. . 27.8 30.0 Atlantic & St. Lawrence .... . 21.8 23.3 Central Vermont. . 19.3 29.5 Maine Central . . 17.8 91 9 tmJ Rutland . . 17.7 23.6 Boston & Maine . . 17.1 21.2 Bangor & Aroostook. . 13.8 19.3 New Haven . . 13.6 18.1 Net Ton Miles per Car Day The Boston & Albany also stands at the top in the average net ton miles per freight car day: Year ending June 30, 1922. Boston & Albany . 365 Atlantic & St. Lawrence. 347 Central Vermont . 268 Maine Central. 264 Rutland . 247 Boston & Maine. 246 New Haven . 198 Bangor & Aroostook. 186 100 Percentage of Cars Moved Daily The percentage moved each day of the average num¬ ber of cars ready to be moved, for the year ending June 30, 1922, was the highest in New England. Dur¬ ing the six months ending December 31, 1922, it was the next to the highest. We give the comparison for the year ended June 30, 1922, and for the six months ending December 31, 1922. Year Ending 6 Mos. Ending June 30,1922 Dec. 31,1922 Boston & Albany . .... 80.3% 77.2% Butland . .... 78.4 80.0 Maine Central. .... 76.6 71.7 Central Vermont. .... 76.1 69.9 Bangor & Aroostook ... .... 75.8 75.8 New Haven . .... 69.2 58.7 Boston & Maine . .... 61.5 56.2 Atlantic & St. Lawrence .... 58.3 63.1 Yard and Terminal Operation The classification at the western end of the Boston & Albany is performed for it by the New York Central in its West Albany yard. The Boston & Albany maintains a large flat classi¬ fication yard at West Springfield, but it is hardly fair to compare the results attained in this yard with the time consumed at Maybrook or with the Mechanicville yard of the Boston & Maine. West Springfield is more nearly comparable to the East Deerfield yard of the Boston & Maine system. For the year ending June 30, 1922, including cars moving in both directions, an average of 1220 cars daily were 101 handled. The average delay was 6.1 hours, an admir¬ able record, less than half the time consumed (12.7 hours) at the East Deerfield yard of the Boston & Maine for the same period. At Springfield the New Haven and Boston & Maine also operate freight yards. The Springfield yard of the New Haven railroad is small and is not a classification yard. The cars handled here during the year ending June 30, 1922, averaged 143 a day and were delayed an average of 17.4 hours. The yard of the Boston & Maine is also a small yard, and handled an average daily, for the same period, of 97 cars and the average delay was 7.2 hours — a good record. It is not necessary to go into further detail in regard to the operation of the Boston & Albany road. It has arduous grades on its main line instead of the nearly water level route of the New Haven line from Boston to New York, but with a relatively high percentage of main line and small branch mileage it presents a simpler operating problem than the New Haven, or the Boston & Maine. It certainly maintains a high standard of operating efficiency, and makes the most of every favorable condition. Embargo Policy The Boston & Albany management does not believe in the permit system, and no permits are granted. The officials watch the condition and performance of their road and the loads coming towards them far back on 102 the connecting lines, and if they fear congestion put on a general embargo with the usual published exceptions, perishables, foodstuffs, etc., and then in a few days, or as soon as possible, withdraw the embargo. We give for the period from January, 1922, to April, 1923, the daily averages by months of total cars on the system and the car miles per freight car day: Average Car Miles Per Cent of Cars per Moved of Month Cars on Line Freight Car Day Total to be Moved 1922 — January . .7,948 24.9 80.6 February .... .8,503 27.6 84.4 March . .8,533 28.5 83.0 April . .8,069 26.2 81.3 May . .8,236 27.0 79.4 June . .8,782 26.9 79.7 July . .8,139 25.2 75.5 August . .7,738 28.0 78.1 September ... .8,198 27.1 76.3 October . .8,970 28.8 78.1 November ... ___9,455 29.6 77.5 December .... 25.4 78.4 1923 — January . .9,878 21.8 71.7 February .... .9,907 24.2 74.1 March . .10,678 27.8 76.6 April . .11,051 29.7 78.7 This table seems to indicate that in spite of the un¬ expected and wholly abnormal adverse winter condi¬ tions reducing drawbar pull of locomotives and hin¬ dering operation of trains over the Berkshire Hills and impeding switching in yards, the management at all times kept the flow of traffic under control. The figures reflect of course to some extent the ad¬ verse w T eather conditions of last winter, but it is clear a sound and adaptable judgment was at the control lever, and at no time so far as we can see did the road become over-congested or get out of hand. 103 The daily car miles were well maintained and the percentage of cars moved of cars ready to be moved was kept high. Adverse per diems were kept under control: 1922 — January . $106,441 February . 116,994 March . 137,318 April . 124,096 May . 114,908 June. 118,103 July . 118,533 August ..... 131,296 September . 151,410 October . 198,885 November. 203,588 December . 220,065 Total 12 months.$1,741,637 1923 — January . $230,938 February .... 204,414 March . 269,176 April . 266,246 Total 16 months. $2,712,411 This favorable result was not obtained because New York Central operating officials were favoring the Boston & Albany, for per diems are charged by the New York Central against the Boston & Albany ex¬ actly as against any foreign road. It may be urged that the Boston & Albany reached an amicable adjustment with its shopmen and that it was not embarrassed in its operation by the necessity 104 of recruiting a new force. This should not be disre¬ garded, but the embargo policy of the operating officials of any given railroad should not be related to their road as it could be, or might be, or should be, but as it actually is. An embargo can be declared, suspended, modified, or restored, as is often done, from day to day or week by week according to operating conditions on the road. If the weather becomes rough or a road has a high percentage of locomotives out of order due to shop troubles then these facts should have their full and due effect in dictating from day to day the embargo policy. Locomotive Repairs The record of the Boston & Albany in the matter of locomotive repairs seems to point to efficiency in locomotive shops and at roundhouses. The engines of the Boston & Albany averaged 36,240 pounds of tractive power in 1921, being substantially heavier than the engines of the Boston & Maine or New Haven or Maine Central, yet the average cost per locomotive mile although slightly higher than the Maine Central was much lower than either the Boston & Maine or New Haven. This result is due in part to the fact that the engines of the Boston & Albany are newer than those of the other two roads and the engine runs longer, making possible greater miles per locomotive, but our study indicates that the shop methods, the equipment of the roundhouses and the policy of making heavier repairs in the roundhouses than is done on the Boston & Maine or New Haven 105 have contributed to the low cost of repairs per loco¬ motive mile on the Boston & Albany. We give below the cost per locomotive mile, miles per locomotive, and the average tractive power per locomotive for the year ended December 31, 1921 : Cost per Tractive power locomotive Miles per per locomotive mile (cents) locomotive (Pounds) Boston & Albany ... . 23.52 28,369 36,240 Boston & Maine. . 30.67 20,535 27,715 New Haven (steam) . 35.03 18,124 31,097 M aine Central. 24,000 31,149 Bangor & Aroostook . . 24.23 19,599 25,674 Central Vermont .... 25,713 27,454 Rutland . 24,364 32,046 106 MAINE CENTRAL RAILROAD General Description The Maine Central system comprises 645 miles of line owned, 541 miles leased, and 15 miles operated under trackage rights (Map 10). It also operates two narrow gauge lines, totaling 125 miles. It owns and operates, for the joint benefit of itself and the Boston & Maine, the Portland Terminal Company. It has 230 locomotives; 7,489 freight cars; and 292 passenger cars, of which 37 are steel, 52 steel under¬ frame, and 203 wooden. The main line extends from Portland through Brunswick, Augusta, Waterville and Bangor to Vance- boro, 249 miles. The extreme eastern end of this line, from Mattawamkeag to Yanceboro, 56 miles, is also used by the Canadian Pacific as part of its main line from Montreal to St. John. Part of the main line traffic is carried on a line which extends from Port¬ land to Waterville by way of Auburn and Lewiston, forming in effect a second track between Portland and Waterville. The Maine Central has many branches. The long¬ est extends from Portland through the White Moun¬ tains to Lime Ridge, Quebec, 206 miles, with a branch of its own to St. Johnsbury, Vermont, 32 miles. At various points on these branches connection is made with the Boston & Maine, the Canadian Pacific, and the Grand Trunk. Another long branch is the Wash- 107 ington County, running from Washington Junction eastward to Calais, 102 miles. At Calais connection is made with a branch of the Canadian Pacific. There are various other branches — reaching Belfast, Mt. Desert Ferry, Dover-Foxcroft, Kineo, Rangeley, Ken- nebago. Of the total mileage operated more than 65 per cent is branch. Traffic, both freight and passen¬ ger, over most of these branches is light. In fact, a characteristic feature and great handicap of the Maine Central is its high percentage of unprofitable branch lines. Total revenue ton miles produced by the Maine Cen¬ tral in the year ending December 31,1922, amounted to 857,667,341, an increase over 1912 of 40.02 per cent. Passenger miles totaled 128,430,706, a decrease from 1912 of 20.4 per cent.* The chief points of freight interchange are at Port¬ land, with the Boston & Maine, and at Northern Maine Junction (Bangor) with the Bangor & Aroostook. At Portland the road received from the Boston & Maine in the year ending June 30, 1922, a daily average of 437 cars, and delivered 432. Loaded cars delivered largely exceeded those received owing to the bulky ton¬ nage furnished by the sawmills and pulpmills and by the Aroostook potato crop. During the calendar year 1922 the road hauled 42,005 cars of lumber, 40,287 cars of pulpwood, 25,923 cars of paper, and 34,302 cars of potatoes, comprising 45 per cent of the total tonnage carried that year. The interchange with the Bangor & * Appendix M. Revenue Ton Miles and Passenger Miles, Maine Cen¬ tral Railroad, 1903-1922 (Chart). 108 Aroostook at Northern Maine Junction amounted to a » daily average in the year ending June 30, 1922, of 154 cars received and 157 cars delivered. The Maine Central is the chief rail outlet to the market of lower New England for the extensive terri¬ tory in eastern and northern Maine, New Brunswick and the easterly portion of the Province of Quebec. Operation We find that the Maine Central is well operated. For the year ending June 30, 1922, it maintained a daily average movement per freight car day of 17.8 miles. It produced 264 net ton miles per car per day, standing fourth in the list of New England roads (year ending June 30,1922) : Boston & Albany Net Ton Miles per Freight Car Day 365 Atlantic & St. Lawrence 347 Central Vermont 268 Maine Central 264 Butland 247 Boston & Maine 246 New Haven 198 Bangor & Aroostook 186 This road measures up well also if we apply the test of comparing the average cars moved each day with the number of cars ready to be moved: 109 Boston & Albany Year Ending June 30,1922 80.3% 6 Mos. Ending Dec. 31,1922 77.2% Rutland 78.4 80.0 Maine Central 76.6 71.7 Central Vermont 76.1 69.9 Bangor & Aroostook 75.8 75.8 New Haven 69.2 58.7 Boston & Maine 61.5 56.2 Atlantic & St. Lawrence 58.3 63.1 The yard delays on the Maine Central are small. Portland shows the longest detention. For the year ending June 30, 1922, this was 11.6 hours. The av¬ erage delay for movement of cars through all the yards in the whole system, including Portland, for the year ending June 30, 1922, was 7.3 hours. The new classi¬ fication yard now under construction is expected to effect a material reduction in car delay at Portland. The number of bad order cars on this system is low, averaging during 1922 only 7.9 % of the total cars on the line, compared with an average for all the railroads of the country of 12.5%, and with the following for the New England roads (year ending Dec. 31,1922) : Railroad Freight Cars Per cent Unserviceable Boston & Albany 5.9 Atlantic & St. Lawrence 6.0 Maine Central 7.9 Boston & Maine 16.7 Rutland 21.2 New Haven 23.6 Bangor & Aroostook 24.2 Central Vermont 26.5 U. S. (excluding New England lines) 12.5 110 The average percentage of locomotives out of serv¬ ice awaiting repairs requiring more than 24 hours for the calendar year 1922 also makes a fair compari¬ son with the other New England roads: Per cent Unserviceable Locomotives Freight Passenger Central Vermont 20.6 21.6 Boston & Albany 20.7 19.8 Rutland 23.3 13.3 New Haven 24.2 28.3 Maine Central 24.6 20.8 Atlantic & St. Lawrence 24.8 15.5 Bangor & Aroostook 25.8 28.2 Boston & Maine 29.5 32.6 Locomotive Repairs We have already commented on the low cost of loco¬ motive repairs on the Maine Central in our discussion of the Boston & Maine. There seems to be a high degree of efficiency in this branch of the service. Financial The capitalization of this road in 1915 was: bonds $12,661,500, common stock $24,888,000. By December 31, 1922, the amount of bonds had been practically doubled — $24,212,600, and the common stock cut in halves —$12,006,000. $3,000,000 of 5% preferred stock was issued in 1916. Ill This large increase in bonds, the issue of the pre¬ ferred stock, and the reduction of the common stock are in large part explained by the purchase in 1916 of $15,960,000 common stock owned by the Boston & Maine, constituting a majority of the common stock. In carrying out this purchase of its common stock owned by the Boston & Maine, the Maine Cen¬ tral reduced its common stock from $25,000,000 to $15,000,000, and as it took into its treasury $2,881,500 in effect reduced its outstanding common stock in the hands of the public from the $24,888,000 as it stood in 1915 to $12,006,900 in 1916. At this figure the com¬ mon stock in the hands of the public still stands to¬ day. In order to assist in the purchase of this stock owned by the Boston & Maine, the Maine Central in 1916 issued $7,000,000 mortgage bonds, carrying in¬ terest at 4%%, and $3,000,000 of 5% preferred stock. During the adverse years of 1918-1919-1920 the road showed heavy deficits, but in 1922 the road showed fixed charges again earned. During the first two months of the current year the road was hard hit by the shop strike, unusual winter storms and by the embargoes declared by its southern connection, but April showed more than twice fixed charges earned, and we see no reason to believe this road is not going to show in the future substantial earn¬ ings above fixed charges. 112 We give below a summary of tbe road’s income ac¬ count, 1911-1922, and by months for 1923 to date: Year Gross Earnings Net Railway Operating Income Net income after fixed charges Dividends 1911 .... .$9,300,999 $2,031,963 $ 444,477 $ 398,152 1912 .... .11,114,615 2,303,934 540,371 441,860 1913 .... . 11,494,688 2,470,169 1,138,979 1,010,277 1914 .... .11,833,989 2,603,920 1,386,189 1,491,797 1915 .... .11,352,258 2,527,206 1,618,080 1,483,002 1916 .... .12,001,673 3,123,944 1,600,476 1,111,123 1917 .... .14,125,577 2,729,314 1,056,065 870,888 1918 .... . 16,415,178 595,895 (deficit) 972,193 870,888 1919 .... .17,525,178 1,231,427 (deficit) 1,085,971 870,888 1920 .... .21,357,508 2,647,174 (deficit) 304,433 653,166 1921 .... .20,590,064 *20,538 *1,677,862 (deficit) 1922 .... . 20,3S7,172 *2,355,143 *63,657 1923 January . . 1,516,549 184,190 (deficit) 338,474 (deficit) February . 1,406,849 233,838 (deficit) 390,282 (deficit) March .. . 1,819,443 59,700 96,778 (deficit) April ... . 1,986,982 438,432 277,087 * Net Income in 1922 was increased by a Credit to Operating Expenses of $487,500, on account of an adjustment applicable to 1921 expenses. We have therefore taken this credit out of 1922 expenses and applied it to 1921 expenses in order to make the results in the two years properly comparable. 113 BANGOR AND AROOSTOOK RAILROAD The Bangor & Aroostook Railroad comprises 616 miles of line located in Northern Maine,—main line 259 miles, branches 357. (Map 11.) It owns 95 loco¬ motives, 81 passenger cars, 4,224 freight cars. The main line extends from Searsport on Penobscot Bay to Van Buren on the St. John River. Its important branches are from Oldtown to Greenville on Moose- head Lake, and from Oakfield to St. Francis through Fort Kent. The Bangor & Aroostook controls the bridge across the St. John River and International Boundary to St. Leonard, New Brunswick, connecting with the Canadian Government Railway System and the Canadian Pacific Railway. The most important interchange is with the Maine Central Railroad at Northern Maine Junction (Bangor), where the aver¬ age daily interchange of cars during the year ending June 30, 1922, was 311. The railroad has tidewater terminals at Stockton Harbor and Searsport which are capable of handling a large volume of traffic, but are not actively used. The total traffic in 1922 was 267,482,345 freight ton miles, and 20,580,555 passenger miles.* The territory served is sparsely settled averaging 244 persons per mile of road, much the lowest in New Eng¬ land. Passenger earnings are light, comprising only 12 per cent of gross income. Northern Maine contains no consuming market of importance nor has it any industries to attract popula- * Appendix X. Revenue Ton Miles and Passenger Miles, Bangor & Aroos¬ took Railroad, 1903-1922 (chart). 114 tion other than those producing paper, lumber and forest products and potato starch. No mineral de¬ velopments exist. It burns mostly hard wood for fuel and raises much of its food. Inbound movements are principally confined to coal and fertilizers arriving by water, and food, mill supplies, etc., coming by rail. These do not bring in many of the cars needed for out¬ bound loading, hence a large number of empty cars are moved north. Potatoes, lumber, pulpwood, and newsprint paper constituted 62 per cent of the total freight carried in 1922. Potatoes w r ere 24.27 per cent of the total in 1922, when 24,630 cars were handled. This heavy movement originates on and north of the latitude of the City of Quebec and is moved between October and March during the season of lowest tem¬ perature. It moves in specially heated, lined cars and in pre-heated refrigerator cars which are returned empty. The variation of potato crops, both in quantity and in season produces either surplus or shortage of the special equipment required. Price fluctuations and other conditions incident to unorganized marketing produce underload and overload for the carrier and its connections. Congestion in lower New England fre¬ quently prevents either the forwarding of non-perish¬ able freight or the return of heater and lined cars. During the past winter the disabilities of some of the other New England railroads was costly to the North¬ ern Maine territory and as well to both the Bangor & Aroostook and the Maine Central. Shipments to New York and Boston by water from Portland were moved last winter without serious delay but in limited quantity. 115 In the opinion of the Committee this road is operated with marked efficiency. It has disabilities, as we have already noted, which present difficult operating prob¬ lems. The constant flow of empties northbound, and the assembling of refrigerator and heater cars to pro¬ tect uncertain potato shipments impair the net ton mileage factor greatly. Our investigation develops that cars once loaded leave the line very promptly, usually within twenty-four hours. They are not held to create a fixed train tonnage, but are moved in light trains from the assembling territory. These trains are increased at each braneh line junction until full ton¬ nage rating has been reached, after which the train moves to Northern Maine Junction without delay. The road has a surplus of locomotives and an adequate sup¬ ply of freight cars,— 6.86 per mile of road, and is a credit per diem road. Its income from rentals of loco¬ motives and cars to other roads is a substantial item of annual income. The percentage of cars moved each day of the total number of cars ready to be moved, for the year 1922, was 75.8 per cent, which was good practice, and is 1.8 per cent better than the average performance of 51 of the leading railroads of the United States for the same period. This road has paid dividends on its common stock for a number of years and has been physically well maintained. It is serving a territory still in the early stages of development and capable of producing more freight tonnage than at present. The thin population and the absence of large cities simplify operation of the railroad and relieve it from many of the burdens which inflate the cost of operation in lower New England. GRAND TRUNK RAILWAY The Grand Trunk Railway has two important arms reaching into New England, one the Atlantic & St. Lawrence, leased for 999 years to the Grand Trunk Railway, the other the Central Vermont, controlled by majority stock ownership — about seventy-five per cent. (Map 12.) Central Vermont Railway The Central Vermont Railway leaves the main line of the Grand Trunk at St. Johns, Canada. The Grand Trunk also connects by a line used practically wholly for freight at Alburg Junction, Vermont. The Central Vermont, however, extends 50 miles north of Swanton in the direction of Montreal to St. Johns, Quebec, where its passenger trains continue on another 27 miles over the Grand Trunk to Montreal. Returning to Alburg Junction, the Central Vermont runs in a generally southerly direction through Vermont, pass¬ ing St. Albans, Bellows Falls, and Brattleboro, crosses the Boston & Maine Fitchburg line at Millers Falls, the Boston & Albany at Palmer and finally reaches tidewater at New London, Connecticut. The Central Vermont by a branch reaches Burlington, Vermont, on Lake Champlain and Rouses Point, New York, also on Lake Champlain. The main north and south line is 344 miles in length, including some 49 miles of Bos¬ ton & Maine track and 14 miles of Central Vermont track, used by both systems under a joint trackage 117 agreement. The Central Vermont maintains a nightly boat service for freight between New York and New London and thus gathers at New York freight for movement north and west.* The Central Vermont offers shippers a differential rate to the west via the Grand Trunk. This differen¬ tial rate out of New England was first put into effect by Governor J. Gregory Smith of Vermont, then Pres¬ ident of the Central Vermont Railway more than forty years ago and before control was acquired by the Grand Trunk. Freight moving to the Central Vermont from Boston over the Boston & Maine system goes north through Lowell, Nashua, Manchester, Concord, and thence to White River Junction, Vermont, in the Con¬ necticut Valley. In the year ending June 30,1922, the Boston & Maine delivered to the Central Vermont a daily average of 36 loaded cars, and received a daily average of 91 loaded cars. The New Haven system also delivers a small amount of traffic to the Central Vermont at Willimantic and a few cars at New Lon¬ don. It does not seem necessary to discuss in detail the operation of the Central Vermont. The road has had the benefit during recent years of the expenditure of but a very limited amount of new capital. For the year ending June 30, 1922, it moved daily 76.1% of the business to be moved, and for the six months ending December 31, 1922, it moved daily 69.9%, which indicates good operation, being above the aver¬ age for the United States. It has been able since * Appendix O. Revenue Ton Miles and Passenger Miles, Central Vermont Railway, 1903-1922 (chart). 118 December 31, 1922, to reduce its bad order freight equipment to 5.9%. Grand Trunk Extension to Providence In 1912 the Grand Trunk Railway began to build a line from the Central Vermont at Palmer to Provi¬ dence, R. I. Work on this line was suspended within two years but not until the right of way both in Massa¬ chusetts and Rhode Island had been secured and the grading 75% completed. The opening of this line would be of real importance to New England and is especially vital to Providence and Rhode Island. Upon representation by the Grand Trunk officials that the road would be completed the legislature of Rhode Is¬ land has recently extended the Rhode Island charter and upon the same representation an extension has also been granted in Massachusetts. Importance of Canadian Routes In the tentative consolidation plan of the Interstate Commerce Commission it was not proposed that these New England lines controlled by the Grand Trunk should form a part of any consolidated American sys¬ tem, and in our judgment they should unquestionably remain in the control of the Grand Trunk Railway. They give New England another means of access to the West on a favorable basis of pates. To the average New Englander a shipment of freight from New Eng¬ land to Chicago by way of the Grand Trunk may seem roundabout but as a matter of fact this route is only 119 about a hundred miles longer than the shortest alterna¬ tive American route (New York Central) and it is shorter than several of the routes, as for example the Erie, Baltimore & Ohio, or the Pennsylvania, regularly used by New England shippers. Distances Boston to Chicago New York Central — Boston & Maine, Fitch¬ burg Division 1021 New York Central — Boston & Albany 1026 Grand Trunk — Boston & Maine 1129 Pennsylvania — New Haven 1137 Canadian Pacific — Boston & Maine 1189 Erie — New Haven 1226 Baltimore & Ohio — New Haven 1248 The American lines all pass through heavy traffic points which are apt to be congested and cause serious delay in times of active movement. These standard routes are also heavy coal carriers, especially during the winter months when weather conditions are un¬ favorable. The Grand Trunk route reaches Chicago with a straight line haul, passing through no congested points, and does not have a heavy coal traffic thrown upon it during the winter months. The daily manifest freight express carrying packing house products leaves Chicago every day for Boston, via Grand Trunk, Cen¬ tral Vermont, Boston & Maine, affording the same service as the corresponding fast provision train leaving Chicago daily for Boston by way of the New York Central svstem. «/ 120 Atlantic and St. Lawrence Railroad The Atlantic & St. Lawrence extends from the Cana¬ dian line at Norton Mills through Island Pond, Ver¬ mont, thence diagonally across New Hampshire just north of the White Mountains into Maine to tidewater at Portland. Over this line the Grand Trunk sends a large volume of grain during the five winter months when the port of Montreal is closed and the St. Law¬ rence unnavigable. During the last ten years grain shipments via the Grand Trunk over this line for trans¬ shipment to ocean steamers at Portland have been as follows: Grain Shipments from Portland Year Bushels 1913 12,635,868 1914 9,105,301 1915 15,772,374 1916 37,842,841 1917 12,171,779 1918 25,169,504 1919 29,527,000 1920 18,196,286 1921 18,290,116 1922 19,968,838 This is an important tonnage and it brings many steamers to Portland during five months of the year. Considerable other freight from Canada also moves over the Grand Trunk system to Portland for trans¬ shipment during the winter, and a good deal of import merchandise flows in the opposite direction. The At- 121 lantic & St. Lawrence produced 206,851,000 ton miles during the year ending December 31,1922.* It can be seen that this line is of great importance to the city of Portland and the State of Maine. It constitutes a shorter haul for the Grand Trunk than to any other available winter port. Portland by this route is 297 miles from Montreal. The Grand Trunk maintains a westbound differential rate from all points in Maine which is utilized by various industries and particularly by the large newsprint mills to reach such points as Detroit, Chicago, Mil¬ waukee, the Twin Cities and other western points where the Maine product comes into competition with newsprint mills located outside of New England. * Appendix P. Revenue Ton Miles and Passenger Miles, Atlantic & St. Lawrence Railroad, 1903-1922 (chart). 122 RUTLAND RAILROAD This road, 413 miles in length, extends from Ogdens- burg, N.Y., on the St. Lawrence River, through Rut¬ land, Vermont, to Chatham, N.Y., where it connects with the New York Central. Its passenger trains, how¬ ever, run to Troy, reaching the latter point by trackage rights over a portion of the Boston & Maine. From Rutland it has a branch to Bellows Falls, Vermont, where it connects with the Cheshire branch of the Bos¬ ton & Maine running to South Ashburnham, thence via the Fitchburg main line to Boston. (Map 13.) It has 87 locomotives, 115 passenger cars, 2,289 freight cars. It produced in the year ending December 31, 1922, 201,641,162 revenue ton miles and 43,572,947 passenger miles.* New York Central owns 25.4 per cent of the stock of the Rutland and the New Haven Railroad also owns 25.4 per cent, so that these roads jointly exercise con¬ trol. Formerly a line of freight boats, the Rutland Transit Company, owned by the railroad, connected its western terminal on the St. Lawrence River with Chicago. Some years ago the Interstate Commerce Commission under the terms of the Panama Canal Act refused per¬ mission for the road to own and operate these steamers and the boats were discontinued. Just recently a line of privately owned boats has been put on between Chi- * Appendix Q. Revenue Ton Miles and Passenger Miles, Rutland Railroad, 1903-1922 (chart). 123 cago and Ogdensburg in connection with the Rutland Railroad. This gives during the months of open lake navigation a differential rail and lake route out of New England. Freight moving from Boston via this route takes the Boston & Maine to South Ashburnham, thence over the Cheshire Line, a good single-track line but with heavy grades, to Bellows Falls where the connec¬ tion is made with the Rutland. This route has never carried a large volume of traffic. The Rutland operates also and all the year round all rail west bound differential route to the west from New England via either the Boston & Albany or the Boston & Maine in connection with the Rome, Water- town & Ogdensburg Division of the New York Central and the Michigan Central. The Rutland is a small road. It is in good physical condition and distinctly well operated. It is enough to say that for the year ending June 30, 1922, it moved daily 78.4 per cent of all the cars ready to be moved, and for the six months ending December 31, 1922, it moved 80.0 per cent. This route naturally attracts shippers because of the differential advantage and should be encouraged especially by the Boston & Maine system because the traffic leaves the main line of the old Fitchburg Railroad just beyond Fitchburg and does not pass through the Hoosac Tunnel or over the heavily loaded portion of the Fitchburg Railroad west of the Connecticut River. 124 CANADIAN PACIFIC RAILWAY The Canadian Pacific extends for a few miles into northern Vermont to Newport where it connects with the Boston & Maine system. Here the average number of loaded cars received daily from the Boston & Maine was 38 and the average number delivered 52. The Canadian Pacific also runs east and west across the central part of the State of Maine to St. John, N. B. It brings into Maine from the Province of New Bruns¬ wick and to a less extent from the Province of Quebec a considerable tonnage of rough and semi-finished for¬ est products which are converted in the Maine mills and reshipped to various points in and out of New England. This is an increasing traffic of considerable advantage to Maine industries and our New England railroads. This road picks up in Aroostook County eight or nine thousand carloads of potatoes. The Canadian Pacific moves these potatoes west via its direct line across the State of Maine, also in connection with the Maine Cen¬ tral and other New England lines into Canada and then completely around New England to a connection with the New York Central Adirondack Division, thence the New York Central carries them to New York City. 125 PASSENGER TRAFFIC OF NEW ENGLAND ROADS The substantially higher percentage of passenger train miles to total train miles in New England is one of the factors which adds to the complexity of railroad operations in this region, especially on the New Haven, Boston & Albany and Boston & Maine. In 1922, the total passenger train miles on New Eng¬ land railroads were 31,302,000 compared with 20,644,000 freight train miles, or 60 per cent of the total train miles. For the United States as a whole, the passenger train miles were 530,197,000 as compared with 554,780,000 freight train miles, or 49 per cent of the total. Revenues from passenger traffic on the railroads in New England constitute a much larger proportion of the total operating revenues than on the railroads of the United States as a whole. For the 12 months end¬ ing December 31, 1922, the total operating revenues of the railroads of the United States were $5,617,252,656, of which $1,076,043,334, or 19 per cent, were from pas¬ sengers. In New England out of total operating rev¬ enues of $288,961,226, $91,963,353, or 32 per cent, were from passengers. 126 The relation of the passenger revenues to total oper¬ ating revenues on the different New England railroads is shown in the following table (year ending December 31,1922) : Total Passenger Per Cent Passenger Revenue to Revenues Revenue total Revenues New Haven . . $130,037,392 $49,443,460 38.02 Boston & Maine. . 82,246,900 23,154,242 28.15 Boston & Albany . . 32,541,903 10,719,049 32.94 Maine Central . . 20,387,172 4,601,186 22.57 Rutland . . 5,803,15S 1,477,880 25.47 Central Vermont . * . 7,626,626 1,207,452 15.83 Bangor & Aroostook ... . 7,437,216 897,562 12.07 Atlantic & St. Lawrence s .... 2,880,859 462,522 16.06 Total New England roads $288,961,226 $91,963,353 31.83 Total United States .$5,617,252,656 $1,076,043,334 19.16 It will be noted that on the New Haven the revenue from passengers is the largest percentage of total rev¬ enues (38.02) of any of the New England railroads, Boston & Albany (32.94) and Boston & Maine (28.15) coming next. Growth of Passenger Traffic We give below a table showing the revenue passen¬ ger miles from 1903 to 1922 for the New York, New Haven & Hartford, Boston & Albany, Boston & Maine and Maine Central Railroads. 127 These four roads in 1922 produced 96 per cent of the passenger miles in New England: Boston Boston Maine Year New Haven & Maine & Albany Central 1903 . 1,123,327,000 683,038,000 252,055,000 111,961,000 1904 . 1,145,051,000 6S1,938,000 247,710,000 115,966,000 1905 . 1,184,346,000 702,490,000 254,879,000 120,7SS,000 1906 . 1,268,319,000 739,951,000 264,263,000 128,307,000 1907 . 1,383,997,000 762,518,000 281,541,000 132,969,000 190S . 1,413,626,000 790,SOS,000 262,798,000 138,432,000 1909 . 1,415,760,000 792,427,000 267,645,000 136,326,000 1910 . 1,521,466,000 864,871,000 300,826,000 142,224,000 1911 . 1,549,103,000 862,473,000 311,076,000 144,672,000 1912 . 1,573,146,000 880,742,000 327,704,000 161,342,000 1913 . 1,621,192,000 904,059,000 340,023,000 168,640,000 1914 . 1,620,005,000 896,081,000 353,710,000 161,051,000 1915 . 1,496,955,000 849,949,000 317,782,000 138,902,000 1916 . 1,589,142,000 798,695,000 328,112,000 144,416,000 1917 . 1,829,317,000 926,966,000 379,341,000 159,775,000 1918 . 1,843,634,000 882,382,000 375,242,000 153,393,000 1919 . 2,035,682,000 976,112,000 422,338,000 170,618,000 1920 . 2,165,185,000 1,041,735,000 455,469,000 168,146,000 1921 . 1,900,403,000 876,113,000 380,378,000 134,991,000 1922 . 1,857,933,000 847,361,000 376,178,000 128,431,000 Per cent increase 1912 over 1903 40.0 28.9 30.0 44.1 1922 over 1912 18.1 (dec.) 3.8 14.8 (dec.) 20.4 The increase in passenger miles on the New Haven during the period 1903-1922 has been steady and the percentage of increase in 1922 over 1912, was 18.1 per cent. On the Boston & Maine there was a decrease in 1922 as compared with 1912 of 3.8 per cent and a de¬ crease of 20.4 per cent on the Maine Central. The Boston & Albany showed an increase in 1922 of 14.8 per cent over 1912. The cause for the falling oft in the passenger busi¬ ness on the Boston & Maine and Maine Central is due in large measure to the increased use of the automobile not only by summer residents and tourists but also to a large extent in diminishing local traffic. 128 Commutation Passenger Traffic The New Haven, Boston & Maine, and Boston & Albany handle a very large commutation business. Por the year 1922 the division of passenger miles and passenger revenue between commutation and all other passengers is given in the following table: All Railroads of Passenger Miles United States New Haven B. & M. B. & A. Commutation .... $6,131,607,000 $756,860,000 $351,286,000 $123,303,000 Allother. 29,375,615,000 1,101,073,000 512,570,000 252,875,000 Total. $35,507,222,000 $1,857,933,000 $863,856,000 $376,178,000 Per cent commutation to total passenger miles. 17.27% Passenger Revenue Commutation .... $67,504,386 All other. 1,007,757,837 Total. Per cent commutation to total Passenger $1,075,262,223 Revenue. 6.28% Revenue per Passenger Mile Commutation .... $.01101 All other. Average all Passen- .03431 gers. .03028 40.7% 40.6% 32.8% $8,810,704 40,632,756 $4,343,402 18,466,169 $1,539,505 9,179,545 $49,443,460 $22,809,571 $10,719,050 17.8% 19.0% 14.4% $.01164 .03690 $.01236 .03603 $.01249 .03630 .02661 .02640 .02849 From this table it appears that commutation pas¬ senger traffic produces 40.7% of the total passenger miles on the New Haven and but 17.8% of the pas¬ senger revenue; on the Boston & Maine 40.6% of the total passenger miles are produced by commutation passengers and 19% of the passenger revenue. For the Boston & Albany the commutation business is some- 129 what less important, producing 32.8% of the total pas¬ senger miles and 14.4% of the passenger revenue. The revenue received by each of these roads per commuta¬ tion passenger mile in 1922 was: New Haven $.01164 Boston & Maine .01236 Boston & Albany .01249 Although the difference in average rate between the New Haven and Boston & Albany seems very minute, yet if the New Haven in 1922 had realized the average Boston & Albany rate it would have added $643,331 to its gross passenger income last year. We believe that it is a serious question whether the commutation traffic is today paying its fair share of the cost of the transportation service rendered by these three roads. Mail and Express In addition to revenue from passenger traffic, pas¬ senger trains on the New England railroads earn sub¬ stantial gross revenues by carrying mail and express. The following table shows the revenue from mail and express on the New England railroads for the cal¬ endar year 1922: New York, New Haven & Hartford Boston & Maine System . Boston & Albany. Maine Central . Rutland . Central Vermont . Bangor & Aroostook . Atlantic & St. Lawrence . Mail Express . .$1,523,311 $4,961,182 .. 1,049,737 3,049,491 .. 770,074 1,301,742 .. 357,045 672.545 .. 127,473 219,OSS .. 115,541 189,805 87,479 109,166 37,449 43,436 .. $4,068,109 $10,546,455 Total 130 MOTOR TRUCK TRANSPORTATION Since the war especially the motor truck has be¬ come of great importance in New England transporta¬ tion. The Committee secured the services of Austin B. Fletcher, formerly Chief Engineer of the Massa¬ chusetts State Highway Commission, and until re¬ cently chief engineer of the Highway Commission of the State of California, to investigate the problems relating to truck transportation. Mr. Fletcher’s re¬ port shows that there is as yet a dearth of reliable statistics, either as to tonnage carried by trucks or as to the cost of operating trucks. In 1922 there were 660,845 automobiles and 128,272 trucks registered in the New England states. Of the trucks, 95,433 were of one ton or less capacity, and 11,615 were of three tons and over. In New England there are 87,000 miles of highway outside the city limits, of which 10,160 miles are now administered by the state highway departments of the various New England states. Only 1,487 miles of these state highways have been improved with Class A sur¬ faces (concrete or bituminous macadam), 1,242 miles have been improved with Class B surfaces (water bound macadam), 6,169 miles are rated as Class C roads, being surfaced with gravel or sand, or clay, or merely graded, but with drainage installed. This statement shows that the New England states have much ahead of them in building permanent highways to take care of the automobile traffic and more espe- 131 cially of the heavy trucks. Since the inauguration of state highway control in the New England states in 1893 the total expenditure for construction, and for maintenance and reconstruction of state highways has been $157,000,000, of which $8,655,975 represents the amount received as Federal aid,* under the terms of the Federal Road Act. The expenditures of the New England states for state highways have shown a large increase during the last few years. Average, 1915-1919 $9,152,988 Expended, 1922 23,885,192 This total of $23,885,192 is far from representing New England’s whole highway bill. In Massachusetts alone it is estimated that the expenditure of the cities and towns upon their highways is in excess of $25,000,000 annually; so that if the cities and towns of the other five states all put together spend half as much as Massachusetts our total annual New England highway bill is running at $60,000,000 per annum. The annual fees for the heavier trucks in Maine, Vermont, Massachusetts and Connecticut are as fol- lows: Maine f Vermont Massachusetts Connecticut Capacity 3 ton . ,.. $73.33 $75.00 $30.00 $70.00 4 ton . .. 106.67 100.00 40.00 137.50 5 ton . . . 146.66 125.00 50.00 187.50 * This Federal aid of $8,655,975 represents but a small part of the money taken throu gh Federal taxes from New England for Federal road grants. -J- in Maine trucks on pneumatic tires pay 25% less but there are probably few heavy trucks with inflated tires. 132 Rhode Island and New Hampshire are not included above as fees are based on gross weight instead of capacity, but in these two states the average fees re¬ ceived for trucks of three tons or more in 1922 were: Rhode Island .$50.00 New Hampshire .121.41 It seems quite clear that in Massachusetts, at least where fees for trucks of 3, 4, and 5-ton capacity are only $30-$40-$50, respectively, the railroads are sub¬ ject to what amounts to state subsidized truck com¬ petition. If a five-ton truck is permitted to roam over Class A, B, and C state highways for a week, it seems quite clear that it will inflict an amount of wear, tear and damage for which the $1 it pays into the state treasury is no compensatory return. In one week in the spring when the frost is working out of the road foundation much more damage is often undoubtedly done than the whole year’s fee of $50.00 can repair. If to prevent this road destruction by the big trucks the Class A road with concrete top and heavy supporting foundation is built, a type of road not needed for passenger vehicles and light trucks, then the state is furnishing the truck, for an almost nom¬ inal consideration, a right of way well up to the av¬ erage expense of building a large part of the railroad mileage of this country. If a gasoline tax of 2 cents a gallon be added to the $50.00 yearly fee it still means undoubtedly a considerable state subsidy for the truck. A heavily loaded five-ton truck going twenty-six miles over a state highway from Lowell to Boston would use, 133 ■we suppose, five or six gallons of gasoline, which would give the state the rather nominal sum of ten or twelve cents. We are not arguing either for or against the present state highway policy in regard to trucks but merely pointing out that for the movement of merchandise the railroads are of vastly greater importance to our industrial welfare than trucks, and yet we are play¬ ing favorites. We are speaking harshly to our oldest born, on whom we are really dependent, and at the same time lavishing caresses on our youngest born, whose push can hardly take the family carriage out of the door yard. 134 NEW ENGLAND PORT DEVELOPMENT Development of Water Transportation Fundamental We Lave already pointed out the enormous advan¬ tage to New England of her coast line and the excel¬ lent harbors, large and small, dotted along the coast, affording good protection and easy access to the sea, and we have called attention to the fact that a large part of our population live immediately adjacent to the sea and that more than seventy per cent of our people and probably a larger proportion of our indus¬ tries are within fifty miles of the seaboard. We have also pointed out that the movement through our water gateways (26,158,573 tons for the calendar year 1921) comes within sight of balancing the all¬ rail movement through our rail gateways, which for the year ending June 30,1922, was 31,500,000 tons, and that the doubling of the cost of rail transportation within recent years has greatly increased the relative importance to New England of her location by the sea. We have also shown that the opening of the Panama Canal has brought New England nearer to the great and flourishing population of the Pacific Coast than any of the manufacturing centers in the Mississippi or Ohio valleys or on the Great Lakes, or western New York or western Pennsylvania. 135 New England Railroads Need More Export Freight If any of our New England ports like Portland, Boston, Providence or New London can offer increas¬ ing advantages which will attract the outgoing grain, provisions, or other commodities of the states be¬ yond the Hudson and incoming merchandise from overseas, it will be not only a local benefit but also a help in sustaining our New England railroads. “ Be¬ yond to beyond ” business is badly needed. Take away from any of the other ports on the Atlantic or Gulf coasts the export of grain, whether New York, Phila¬ delphia, Baltimore, Norfolk, New Orleans or Galves¬ ton, and not only will the ports be badly hurt but the railroads back of them will see their revenues mate- rialty decreased. Bulk cargo for outgoing transatlantic steamers is today critically needed to sustain the port of Boston. One of the large transatlantic lines tells us that they expect shortly to make Boston merely a port of call for their incoming steamers en route to New York or Baltimore, and another long established transatlantic line tells us they are having the utmost difficulty in maintaining their line to Boston owing to the impossi¬ bility of securing return cargoes; Undoubtedly the disabilities of some of our railroads have been an obstacle. If these can be removed, as we have no doubt they can if New England decides to face the problem, there still remains the obstacle pre¬ sented by the lower rates for export grain in favor of Baltimore and Philadelphia. 136 This last obstacle may be removed by a decision of the Interstate Commerce Commission in the pending port differential case permitting our New England railroads to get a supporting share of this traffic. Enlargement of Welland Canal We are advised that within four years the enlarge¬ ment of the Welland Canal, connecting Lake Erie with Lake Ontario, will be completed so as to permit the standard grain carrying boats to reach Oswego on Lake Ontario, and somewhat smaller vessels to reach Ogdens- burg on the St. Lawrence Liver, a short distance below the foot of Lake Ontario. This will transfer the foot of the Great Lakes from Buffalo to Oswego. It will bring much traffic to Os¬ wego which will be 121 miles nearer the port of New York than Buffalo. It will also bring the big lake carriers at Oswego some thirty miles nearer to Boston than to Baltimore. Oswego is a good winter port and the grain which remains in these lake carriers at the end of their last loaded trip to Oswego will continue to furnish traffic through the winter months just as is now the case with Buffalo. Four years from now export grain can move 54 miles from this new foot of the lake port, Oswego, by the New York, Ontario & Western to its junction with the West Shore or New York Central main tracks in the Mohawk valley, then 122 miles to a connection with the Boston & Albany, or 97 miles to a connection with the Boston & Maine at Rotterdam Junction, or the grain can move all the way to Rotterdam Junction or 137 Albany by New York Central tracks which reach Os¬ wego. When the enlargement of the Welland Canal has been completed grain can move by water also to Og- densburg and thence over the Rutland railroad to Bel¬ lows Falls and so by the Cheshire and Fitchburg Divi¬ sion of the Boston & Maine to the Boston elevators. This Rutland route has been in operation for many years as a lake and rail route for general merchandise moving to or from New England. The Rutland rail¬ road used to be more active in carrying traffic back and forth between New England and the West when it owned and operated its own lake steamers but after the passage of the Panama Canal Act the Rutland was obliged to sell its steamers. A separately owned line of steamers has been put on within a few weeks but it is hoped this old New England lake route may again be restored to full vigor by permitting the Rutland to operate as the water extension of its line its own dependable and closely coordinated steamers. Expe¬ rience seems to have demonstrated that cutting oft the Rutland steamers benefited no one except possibly the New York Central and that to an entirely negligible, extent. The Rutland railroad is in good condition and when the Welland Canal has been enlarged it is hoped this Lake-Rutland-Boston & Maine route can be utilized to feed the port of Boston a limited perhaps, but at any rate, a dependable flow of grain. 138 Advice of Expert ox Port Development This Committee has not felt it could undertake a detailed study of the New England ports, but owing to the interlocking of our ports and railways it sought the advice of Mr. Frederick W. Cowie of Montreal. Mr. Cowie is an engineer who for many years has de¬ voted himself to the study of port development. He is familiar by study on the ground with the principal ports of Europe and this country. He has been fre¬ quently called in as a consulting engineer and port expert in. regard to various ports in this country. He was already quite familiar with the port of Boston. The development of the present great port of Mont¬ real from a port of limited facilities and unimportant traffic sixteen years ago to a port of first-class modern facilities which last year exported 153 million bushels of grain, has been under his immediate direction. Moreover, until his resignation a short time ago, he has been in active operating charge of these facilities at Montreal. They have been constructed with the aid of public credit, but they have at all times proved profitable and borne all expense of operation, upkeep, interest upon borrowed money, and sinking funds for the retirement of the debt. Mr. Cowie visited Portland, Boston, Providence and New London. Portland He reported the large volume of grain brought to Portland by the Grand Trunk during the winter 139 months, furnishing the bulk of Portland’s across-sea traffic, as flowing smoothly and economically. The two Grand Trunk elevators at Portland have a holding- capacity of more than two million bushels and can unload promptly two hundred cars in a day. The new state pier just completed, constructed at a cost to the state of approximately $2,000,000, constitutes a notable addition to Portland’s port facilities and seems to pro¬ vide adequately for all traffic now in sight. Portland has as deep a harbor (35 ft.) as any port on the Atlantic Seaboard with but one exception; the entrance to the harbor is along a well defined channel running in a nearly straight line, making it easily accessible and nearer Europe than any other Atlantic port. Providence Providence harbor is 27 miles from the open sea with a channel 600 feet wide and 30 feet of water at low tide. It reaches the heart of Rhode Island’s manu¬ facturing area. The State of Rhode Island has built a modern well-equipped pier and the city of Provi¬ dence has also constructed a pier and has under way further port developments. The State of Rhode Island has spent $667,604 on the development of the port and the City of Providence $867,747 and the Federal Government $3,266,393. In gross tonnage, foreign and coastwise, the port of Providence ranks second to Boston in New Eng¬ land. Unlike Portland or Boston, its foreign com¬ merce is not large except for a large tonnage of fuel oil from Mexico. 140 Providence is served by the Fabre Line with direct sailings to Marseilles, Genoa, Naples and other Med¬ iterranean ports. The coastwise movement of coal is heavy and there are numerous coastwise lines serving the great indus¬ trial district of which Providence is the center. There are three lines between Providence and New York and the Merchants and Miners Transportation Company gives service to Philadelphia, Norfolk and Baltimore. The port of Providence is well equipped, having a large number of private piers in addition to the state pier and the municipal pier, and the city has recently appropriated $500,000 for further improvements. New London New London has an excellent natural harbor and the State of Connecticut has built a modern pier which is already self-supporting. Further development, in¬ cluding a grain elevator and additional piers, are being projected. New London has three lines to New York, —one maintained by the New England Steamship Company (a subsidiary of the New Haven railroad), the Thames River Line, and the Central Vermont Steamship Company, a part of the Grand Trunk rail¬ road’s transcontinental service, giving that system its access to New York City. Modern Port Development A modern port should be developed and organized along the line of any modern industrial machine. In a manufacturing plant putting things on the floor to 141 pick them up again gets you nowhere and is a sign of senescence in the management. If the man operating the tool has to stoop to the floor or in fact “reach” in any direction for the next piece it may easily increase the cost of the operation ten or twenty or thirty per cent and destroy all chance of profit. Just so with the industrial machinery of a port. The port facilities should permit a car of incoming grain, no matter by what railway it arrives, to reach any grain elevator serving the port by the simplest possible switching movement in hardly more than minutes of time rather than hours or the days sometimes now re¬ quired. With a modern grain elevator a car can be un¬ loaded in ten minutes and a train in a few hours and then the empty cars started back for the next load. With merchandise the same principles apply except that the cars of merchandise arriving at the different rail heads are not destined for one or two points on the water front but in the ideal port should be able to move promptly and easily along the whole water front to the receiving shed directly opposite the desired steamer. This is the whole story of the ideal port. In New York an immense amount of lightering is performed and considerable trucking to connect the rail heads with the individual steamers. This does not represent an ideal arrangement at all but only an enormous bill for connecting the rail heads with the ship side, levied upon the tonnage passing through the port of New York. The enormous amount of trucking in New York to take local merchandise to the steamer side and the long lines of trucks waiting at the ferries for passage 142 to Brooklyn, Jersey City or Hoboken also present a striking picture of port facilities not to be classed perhaps as bad, but ten thousand miles short of the ideal. Boston Since 1859 the Commonwealth of Massachusetts has expended in the development of the port of Boston $20,164,125.* During the war the government built the Army Base at South Boston at a cost of approxi¬ mately $26,000,000. The Commonwealth also has built within recent years the Commonwealth Pier. Both of these great piers constitute sound and useful additions to the port facilities of Boston. The Commonwealth Pier has been utilized to its capacity during the last year and also the large portion of the Army Base Pier not reserved by the government for its own use. It has been stated by many who have studied the development of the port of Boston that there should be a connecting railroad built outside of the city limits. The Cowie Plan Now turning to the plan, presented to us by Mr. Cowie which it is proper to say he describes as the result of a reconnaissance, as he was able only to de- i vote a little over two weeks to his study, it will be found that it is so simple that the map makes it easily understood. (Map 16.) The center of Boston’s present port activities Mr. Cowie has pointed out is where the Charles and Mystic * Appendix R. Expenditures of Commonwealth of Massachusetts on Port of Boston 1859-1922. 143 Rivers coming together make the inner harbor. The old-fashioned wharves along the front of the city proper, which are too short for large steamers, he proposes to fill in to a line drawn along the outer edge of the piers, bulkheading this line so that steamers will come alongside and not enter a slip. Then starting from the big terminals in South Bos¬ ton, constituting the rail heads of the New Haven Railroad and the Boston & Albany, he proceeds with a double track railroad crossing Fort Point channel and thence along the new land created by the filling in of the old wharves, then crossing the Charles to a point where connection is established with the rail heads of the Boston & Maine system, including the old Fitch¬ burg, Boston & Maine, Boston & Lowell and Eastern Divisions, then back of the Navy Yard upon a raised structure to the big Mystic Wharf terminal of the Boston & Maine system where rail connection is again established; thence across the Mystic River through a corner of Chelsea, and so along the water front of East Boston where there is ample opportunity for as many large piers as the port may require for many years. Then along the base of the present East Boston piers of the Albany Railroad to a connection with the Grand Junction Railway and picking up any traffic which may come by the Eastern Division of the Boston & Maine directly to East Boston, and establishing con¬ nection with the present East Boston freight yard of the Boston & Albany and the East Boston freight yard of the Boston & Maine system on the eastern side of East Boston. Mr. Cowie has pointed out also that by means 144 of an elevated structure a wide new motor roadway circling the port of Boston can well be constructed over this new belt line. Besides the two main tracks it will be advisable to construct four tracks over portions of this route. This development is further illustrated by a cross section of the city proper water front. (Map 17.) This shows a steamer in position alongside the bulk¬ head, then the receiving and collecting warehouse which should he established always for the temporary storage of cargo arriving and the collection of cargo for a ship due. Then comes the railway with switch tracks leading directly into the receiving and collect¬ ing warehouse, and overhead is the truck roadway feed¬ ing into the second story of the receiving and collecting warehouse. Next will come such permanent ware¬ houses as the port may need and it shall seem desirable to construct either with private capital or probably better built by port trustees and leased. Next comes Atlantic Avenue. It will he seen that Mr. Cowie’s plan does away en¬ tirely with any necessity for the enormously expensive, both to build and to operate, proposed new belt rail¬ way outside of Boston. Mr. Cowie’s plan joins all the existing rail heads of our railroads serving Boston; it permits a car to be shifted almost in a few minutes from any rail head to the existing grain elevators, or, if containing merchan¬ dise, into the receiving warehouse directly opposite the desired steamer. It also permits merchandise handled by truck to run up one of the inclines or ramps of the overhead roadway and deliver its merchandise directly 145 into the receiving warehouse right opposite the desired steamer. It brings the business of the port close to the city, the custom house, and the business of the city with which it necessarily has many relations. The elevated roadway can be built wide enough to furnish Boston with a new circular motorway, and the advantages of this are so obvious that they do not need explanation. Necessity for Coordination of Boston Terminals Our advices are that at present there is a lack of cooperation in the service of the port or perhaps it is fairer to call it coordination between our different rail¬ roads. A steamer expecting cargo by different rail¬ roads today is seriously delayed and embarrassed by this lack of coordination. If the people of Massachusetts prefer a meat diet to gruel, and intend to take hold of their chief port in a vigorous, constructive manner, we suggest they should go further than the above plan. All port ex¬ perience here and the world over indicates that for the proper development of a modern port there should be one general unified terminal control. It follows from this that all the railroad property within a certain radius from the center of the city, as illustrated by map 16, should be taken over by terminal trustees backed by state credit. These trustees would necessarily attack the problem presented by the four separate antiquated freight yards of the Boston & Maine Bailroad and from time to time upon a conservative program carry out other 146 plans for the improvement of the Boston terminals. This unified terminal plan would also have the advan¬ tage resulting from the purchase of these terminal prop¬ erties of providing a substantial fund for each of our existing railroads to be expended under some form of public control, referred to later, for the purchase of locomotives or for other capital needs of public concern. 147 TENTATIVE CONSOLIDATION PLAN OF THE INTERSTATE COMMERCE COMMISSION The consolidation section of the Transportation Act of 1920 requires the Interstate Commerce Commission to set up a tentative plan for the consolidation of the railroads of this country into “ a limited number of systems.” In accordance with this mandate the Com¬ mission in August, 1921, issued a tentative plan for consolidating the railroads into nineteen systems (No. 12964; 63 I.C.C. 455). As an appendix to the tentative plan the Commission published the report of Professor William Z. Ripley, of Harvard University, who had been engaged to make a study of possible consolida¬ tions. Following the publication of its tentative plan, the Commission in accordance with the provisions of the statute has held numerous hearings in Washington and elsewhere, at which the carriers and others inter¬ ested have appeared. Further hearings, including probably one or more in New England, are to be held in different parts of the country. At the conclusion of the hearings the statute lays upon the Commission the duty to suggest a plan for consolidation of the rail¬ way properties of the country. Alternative New t England Plans In its tentative plan the Commission assigns the Bos¬ ton & Maine, Maine Central, Bangor & Aroostook, as well as the Rutland, to the New York Central, System 148 No. 1, and the New Haven, including the Central New England, to the Baltimore & Ohio, System No. 3. In making these suggestions the Commission says, “ Pro¬ fessor Ripley rejects the trunk line treatment of the New England roads, but we present this alternative with a view to developing the situation upon hearing. ’ ’ The arrangement suggested by the Commission in place of the trunk line alternative, is a consolidation of the New England roads named above (except the Rutland) together with the New York, Ontario & West¬ ern, and two small 1 ‘ bridge lines, ’ ’ the Lehigh & Hud¬ son River and the Lehigh & New England, the entire group being designated as “System No. 7 — New England.” Besides the suggested trunk line alternative, the Commission submits a further alternative to “ System No. 7 — New England ” by adding to the group of roads named in that system the Delaware & Hudson, the Ul¬ ster & Delaware, the Delaware, Lackawanna & West¬ ern, the Buffalo, Rochester & Pittsburgh, the Pitts¬ burgh & Shawmut, and the Pittsburgh, Shawmut & Northern, this alternative and enlarged group being called “System No. 7 A—New England-Great Lakes.” To the peculiar conditions and problems of the New England situation, Professor Ripley devotes his entire Chapter II (63 I.C.C., 509) of his report to the Com¬ mission. He first takes up for consideration a trunk line consolidation for the New England railroads, and proposes that the Boston & Albany shall remain as part of the New York Central system. He then considers various suggestions for turning over the New Haven system, south of the Boston & 149 Albany, to some trunk line, and then similar sugges¬ tions for turning over the Boston & Maine and other New England roads, north of the Boston & Albany, to some other trunk line. Treatment of the New Haven under Trunk Line Plan Of the three plans considered by him for consolidat¬ ing the New Haven railroad with either the Pennsyl¬ vania, the Baltimore & Ohio (map 18), or a new trunk line system to be created by joining the Lackawanna & Nickel Plate, Professor Ripley seems to prefer, if there is to be a consolidation of the New England railroads with the trunk lines, joining the New Haven to the Baltimore & Ohio. We can hardly agree with this. This consolidation is also the Commission’s trunk line alternative “System No. 3 — Baltimore & Ohio.” Comparison between Allocating the New Haven to (1) the Baltimore & Ohio or (2) the Pennsylvania The greatly predominant interchange of traffic be¬ tween the New Haven and the trunk line systems is with the Pennsylvania. This is not simply a railroad matter; it means that the New England people and the people served by the Pennsylvania system have found that under economic conditions and the inherent es¬ sence of things as they actually exist, they have business interests in common. No arbitrary consoli¬ dation between the New Haven and the Baltimore & Ohio system will change this state of affairs. The traffic interchange between the people reached by 150 the New Haven system and the people served by the Baltimore & Ohio is relatively small. If there is to be a trunk line consolidation with the New Haven system, the existing current and movement of merchandise point inevitably to the Pennsylvania sys¬ tem. To consolidate the New Haven with the Balti¬ more & Ohio would seem to fail to carry out a declared intention of the Transportation Act which provides that “Wherever practicable the existing routes and channels of trade and commerce shall be maintained.” These words not only express a clear direction inserted in the Act but they express a sound principle to be observed in regard to consolidation of different rail¬ roads. Coal Movement Professor Ripley speaks of the rich coal fields tribu¬ tary to the Balthnore & Ohio system. The Balti¬ more & Ohio railroad does not serve the hard coal fields of Eastern Pennsylvania. It touches the Somer¬ set County and Connellsville bituminous coal district of Western Pennsylvania, but no hard coal and compara¬ tively little soft coal reaches New England all rail by way of the Baltimore & Ohio from these Pennsylvania fields. New England does take a large tonnage of bituminous coal from Pennsylvania, but the coal mainly moves to New England over the Pennsylvania and New York Central railroads. The Baltimore & Ohio, therefore, plays but a minor and unimportant part in the movement of all rail coal to New Eng¬ land. Taking up now the rich fields of West Virginia 151 where the Pocahontas, New River, Fairmont, Ka¬ nawha, and other justly celebrated steam coals are to be found, these fields ship a very heavy tonnage of coal to New England for our railroads, public utilities, manufacturers and other consumers of steam coal. They are an important and steadily growing source of supply; but the coal moves and should continue to move practically wholly by the tidewater routes, first by rail down to the seaboard at Hampton Roads or from the Fairmont field to Baltimore, Philadelphia or New York where the coal is dumped into vessels and is transported to New England. The Baltimore & Ohio takes part in this tidewater movement by bringing to ship side at Baltimore a large amount of coal destined for New England. The Baltimore & Ohio all rail route to New England from the West Virginia field is via the Shippenburg gateway, then to Harrisburg, then east to Easton, Pennsylvania, then over the Lehigh & Hudson River railroad to the New Haven gateway at Maybrook. This is a long, circuitous, expensive rail route. A car loaded in the West Virginia field of the Balti¬ more & Ohio for a New England destination prob¬ ably requires on the average a month to make the round trip and in winter usually considerably longer. By this route the average coal car would probably make less than three round trips during the four months of winter. Pennsylvania and the adjoining states of New Jersey and New York are states of immense industrial activ¬ ity and are inevitably going to need a constantly rising percentage of the near-by Pennsylvania coal. New 152 England must look more and more to the West Vir¬ ginia water-borne coal. A car loaded with, coal on the Virginian railway, Chesapeake & Ohio or the Norfolk & Western, which all directly tap these Southern West Virginia fields, reaches one of the Hampton Roads ports probably on the average in three days. At the steamer pier the car is turned upside down and the coal dumped into the hold of a New England vessel and the car returns im¬ mediately to the mines. This is a shuttle movement on these railroads especially designed, equipped and operated to facilitate the tidewater coal movement and unencumbered with any large volume of general mer¬ chandise. It takes a collier but a few hours to load and only a limited number of days or rather hours to reach its New England destination, whether it be Provi¬ dence, Fall River, New Bedford, Boston, Beverly, Portsmouth, Portland, or Searsport. As the major portion of the coal consumption in New England is on the sea front or close by, the time consumed at the New England end for rail transportation is either nothing or represents a minimum haul. It is of significance that three new public utility power plants of large capacity are now in process of erection on tidewater, — the Connecticut Light and Power Company at Devon, the Hartford Electric Light Company at Hart¬ ford, and the great new power plant of the Boston Edison Company at Weymouth. These plants all expect to use West Virginia water-borne coal and will transmit their power derived from this coal farther and farther back from the shore line. This development is of great economic importance. It 153 will probably lead to a material reduction in the size of New England’s coal bill. New England (map 19) was constantly advised dur¬ ing the war, when economy in the use of cars and trans¬ portation was of national moment, that it was almost a crime to try to get coal from the West Virginia fields to New England by the all-rail route. It may not ap¬ proach a crime today but it remains a slow, wasteful method of transporting coal to New England. Comparative New Haven Interchange with Pennsylvania and Baltimore & Ohio The daily interchange of cars between the New Haven railroad and the Pennsylvania system via the Hell Grate bridge route, jointly owned by the Pennsyl¬ vania and New Haven, amounted to an average of 589 loaded cars a day during 1922—by far its largest inter¬ change with any connecting road. Besides this the New Haven receives at Maybrook a limited tonnage originating on the Pennsylvania railroad. The number of cars interchanged between the New Haven and the Baltimore & Ohio system is difficult to obtain because the New Haven has no physical con¬ nection with the Baltimore & Ohio system. However, the President of the New Haven submitted a statement of a Typical Day’s Interchange in detail which showed that on Oct. 18, 1922 (the day selected as typical), the New Haven received forty-six loaded cars originating on the Baltimore & Ohio and delivered forty-seven for destinations on the Baltimore & Ohio. The interchange of the New Haven, therefore, with the Pennsylvania, 154 is clearly many times the interchange between the Baltimore and Ohio and the New Haven. The main interchanges of the New Haven with lines west of the Hudson River for the year ending June 30, 1922, counting movement both ways, were (in car¬ loads and empties): Loaded Total Cars Cars Pennsylvania . 214,942 336,271 Lehigh & Hudson River . 101,110 155,832 Lehigh Valley . 63,107 104,327 Erie . 60,067 105,072 Central Railroad of New Jersey . 55,078 82,673 Lehigh & New England. 29,587 60,272 New York Central . 13,822 37,042 New York, Ontario & Western . 15,053 26,563 Long Island . 14,715 23,821 New York Terminal Companies . 16,437 19,154 Total 583,918 951,027 Consolidation with Baltimore & Ohio neither Logical nor Natural As a through connection for the New Haven system to Chicago the Baltimore & Ohio route would be 105 miles longer than the Pennsylvania route. The historical and natural port constituting now and always the focus of the Baltimore & Ohio’s deep water activity is Baltimore. As compared with Baltimore its relation to the port of New York has always been in¬ cidental and unimportant, and to try and force the in¬ terests and activity of the Baltimore & Ohio manage¬ ment still further east beyond the port of New York into New England seems to us unlikely to be a virile success. 155 It is true that the tentative plan of the Commission suggests that the proposed Baltimore & Ohio system shall be augmented by the addition of the Philadelphia & Reading and Central Railroad of New Jersey. Both of these roads interchange with the New Haven, although in the case of the Philadelphia & Reading there is no direct connection, the freight moving via the Central Railroad of New Jersey, thence via the Lehigh and Hudson River or the Lehigh and New England to the New Haven at May brook. The Central of New Jersey moves freight from the territory west of Easton via the Lehigh and Hudson to Maybrook, and freight from the territory east of Easton is interchanged by float in New York harbor to the New Haven at Harlem River. The tonnage received from these roads is mainly anthracite coal. (Map 20.) Their inclusion with the Baltimore & Ohio does not change the situa¬ tion, for the interchange of the New Haven with the Pennsylvania is much greater than the combined inter¬ change with the Baltimore & Ohio, Reading, and Cen¬ tral Railroad of New Jersey. It also seems to us unquestionably true that the Bal¬ timore & Ohio system is not in a position (whether combined with the Reading or not) to carry the finan¬ cial load involved in the acquisition of the New Haven. Position of Baltimore & Ohio as to Consolidation with New Haven The position of the Baltimore & Ohio railroad in re¬ gard to the suggestion to include the New Haven rail¬ road in the proposed Baltimore & Ohio system, as ex¬ pressed before the Interstate Commerce Commission 156 at its hearing in Washington on May 17, was as follows (Official Statement of Daniel Willard, President Balti¬ more & Ohio railroad, page 16) : “We are of the opinion that the New York, New Haven and Hartford railroad should not he included in the Baltimore and Ohio-Reacling system, but that the properties of that company in conjunction with all other New England railroad properties East of the Hudson River should be consolidated into what might he termed a New England Regional Group to be held and operated as a distinct unit interchanging traffic freely and without prejudice with the several Trunk Line systems and with the Canadian railroads. “A statement is attached, marked Exhibit 20, show¬ ing the approximate tonnage interchanged between the several New England Lines and their various connec¬ tions to the North and East, and particular attention is called to the fact that each of the several Trunk Lines has an extensive interchange. While the Balti¬ more and Ohio does not have a direct interchange, it participates substantially in the traffic through indirect connections notably via the Central Railroad, Reading, etc.” Consolidation with Pennsylvania Natural and Logical A consolidation of the New Haven with the Pennsyl¬ vania seems to us the natural and logical trunk line consolidation for the New Haven railroad if there is to he a trunk line consolidation. We do not under¬ stand that the Pennsylvania railroad is anxious for 157 this consolidation, certainly not under present con¬ ditions, as it is not eager to assume the heavy financial burden of the New Haven. The President of the Pennsylvania railroad in his formal printed statement presented before Commissioner Hall at the Washing¬ ton hearing May 16, speaking of the New Haven rail¬ road, said (pp. 19-21) : “Our long established mutual relations have built up a large exchange traffic, and as a consequence well es¬ tablished commercial relations on a large scale have resulted between both territories, so that any propo¬ sition to assign the New Haven and its traffic to any other System would be a public calamity, as well' as hurtful to the Pennsylvania System. It is true, as Prof. Ripley points out, that the New Haven’s finan¬ cial condition is not strong, and under existing limited net earnings the Pennsylvania could not carry its own burdens and financially carry the New Haven as well. However, under the proposed Consolidation Plan, which requires valuation and assumably re-capitaliza¬ tion of the Consolidated Systems, the financial ques¬ tions must be faced, and if adjusted in other cases, similar action will be taken for New Haven, and in that event I am sure it will be found that all relationships, public and corporate, will unite the New Haven with the Pennsylvania System as the best method of giving the broadest transportation service. Even if that re¬ sult should be brought about, the requirements of the territory demand a separate operating organization dealing with New England problems right at home. Further, I cannot see how the New Haven could be assigned to another system without assigning with it 158 the guaranties, traffic relations and the important fa¬ cilities which the Pennsylvania provides. ”... “We realize that the officers of the New Haven Sys¬ tem have been making a brave struggle to meet con¬ ditions in their territory, notwithstanding they must be short of both facilities and equipment, because of their weak financial condition; and are, no doubt, hurt by the improved highways and the use of motor trucks, which must result in making many of the branch lines unprofitable. To the extent of our resources we have always made the New Haven very favorable allow¬ ances out of the through rates, and we assist in sup¬ porting the New York Connecting Railroad which is used chiefly for traffic to and from the New Haven Railroad. Until the financial difficulties of this situ¬ ation are cleared up, and without any knowledge of what the New Haven officers may recommend to the Commission, I feel that the New Haven Road should remain separate under an independent management, exchanging traffic freely with the various connecting trunk lines.” Consolidation with the Pennsylvania railroad does not seem, therefore, to offer an immediate harbor of refuge for the savings banks and insurance companies and small investors of New England who are such large holders of the New Haven bonds, nor for the dis¬ tressed stockholders. Under the terms of the Trans¬ portation Act of 1920, no consolidation can be made compulsory. The Pennsylvania railroad must first be persuaded to desire to assume the heavy financial bur¬ dens involved in the acquirement of the New Haven railroad, and this seems a long way off. (Map 21.) 159 The Proposal to Ailocate the New Haven to a Possible Delaware,, Lackawanna & Western — Nickel Plate Consolidation Since the suggestion in Professor Ripley’s report that the Nickel Plate, the Delaware, Lackawanna & Western, and the New Haven might be consolidated, the controlling interests of the Nickel Plate railroad have made application to the Interstate Commerce Commission to consolidate with the Lake Erie & West¬ ern and the Toledo, St. Louis & Western (The Clover Leaf) and the same interests have also recently pur¬ chased control of the Chesapeake & Ohio which has a first class deep-water harbor at Hampton Roads. As the suggestion of combining the New Haven with the Nickel Plate system seems to have received no sup¬ port from any quarter, it is perhaps not necessary for us to discuss it further. Trunk Line Consolidations for Northern New England Turning now to the consolidations proposed for the northern New England lines and taking up first Pro¬ fessor Ripley’s faintly suggested consolidation of the Boston & Maine railroad with the Erie, which appar¬ ently he discusses merely to show that it has not been overlooked, it seems almost enough to say that the fi¬ nancial situation of each of these roads is such that to¬ gether they will constitute but a tottering system which probably would soon fall because of financial weakness. The pith and marrow of the Transportation Act of 160 1920 is to set up a limited number of systems combin¬ ing financially weak roads with financially strong roads so that when the consolidations have been accomplished we shall have systems which can bear with substantial equality the enforcement of the “ uniform rates ” con¬ templated by the Transportation Act without wrecking a large part of our railroad mileage and perhaps at the same time unduly enriching, or at least unneces¬ sarily enhancing the cost of transportation on, the rich and strong roads. It is intimated in Professor Ripley’s report that perhaps the Delaware & Hudson might be combined with the Boston & Maine and the Erie Railroad; but the Delaware & Hudson is a small system, and while with the assistance of its controlled coal mines it is reasonably profitable, if it tried to uphold financially these two other systems it would be a case of an ele¬ phant sitting on a pancake. The President of the Delaware & Hudson made this perfectly clear in his statement before Commissioner Hall. There is no gainsaying it. The Proposal to Allocate Northern New England Railroads to the New York Central Undoubtedly the only trunk line consolidation worthy of serious consideration in the case of the Northern New England lines is the consolidation pro¬ posed with the New York Central system. This is the Interstate Commerce Commission’s suggested tentative alternative, in its 11 System No. 1 — New York Cen¬ tral ” for a New England system, and presented to de- 161 velop “ the situation upon hearing.” If the New York Central chooses to support the financial load involved, there seems to be no reason to doubt its ability. If the New York Central is to consolidate with the Boston & Maine, and if the purpose of Congress is to be car¬ ried out in its declared desire for consolidation of the railroads of the United States into a “ limited ” num¬ ber of great systems, there exists no reason to exclude the Maine Central and the Bangor & Aroostook in this consolidation. The Commission, indeed, includes them in its tentative System No. 1 just mentioned above. These two roads if left outside the pale, whether judged by mileage or gross receipts, would constitute hardly more than toy railroads compared with the great sys¬ tems contemplated by the Transportation Act. Under the conditions as they exist today the New York Central by means of its lease of the Boston & Albany Railroad reaches directly across New England from east to west. (Map 22.) We can all remember that some years ago when the then directing officers of the New York Central system failed to exhibit the signal ability of the officers of today, the service rend¬ ered by the Boston & Albany Railroad was lamentable and generally considered the worst in New England. Today the operation of the Boston & Albany is entitled to the highest praise. Human affairs are mutable and New England may well pause before it favors placing all this additional New England mileage in a single control and that, too, outside of New England. New England should not shirk its responsibility for the present lamentable condition of the New Haven Rail¬ road, but the general feeling and understanding in New 162 England, that while the series of unfortunate chapters in this road’s history were being written, the actual though not technical control of this road lay outside New England, has a foundation in fact and should not be too soon forgotten. Views of Trunk Line Presidents on Disposition of Northern New England Roads The natural wish of the Commission fully to develop the situation affecting New England transportation, which it had in view in tentatively including the Bos¬ ton & Maine, the Maine Central, and the Bangor & Aroostook in the New York Central, was realized at the hearings in Washington in May. Representatives of the Baltimore & Ohio, the Pennsylvania, the Dela¬ ware & Hudson, and the New York Central itself all discussed it. None favored it, although President Smith of the New York Central withheld final judg¬ ment pending the report of this Committee. L. E. Loree, President of the Delaware & Hudson Company, in his statement before the Interstate Com¬ merce Commission, at the hearing on May 19th, said (pp. 13-15 his printed statement) : ‘ ‘ Boston & Maine Railroad. The plan would seem to have the effect of greatly augmenting the power of the New York Central. This is shown by the allo¬ cation of the Boston & Maine Railroad to the New York Central, accompanied by a provision for the perpetu¬ ation of its control of x the Boston & Albany; the omission of any consideration of the West Shore sepa¬ rate from that system; the refusal to include the Michi- 163 gan Central in the proposed Pere Marquette system, although Professor Ripley considered that ‘ the desir¬ ability of withdrawing it from the New York Central ... is self-evident, ’ and the weakening of its greatest rival by making the Norfolk and Western Railway the center of an independent system. ’ ’ “ The Delaware & Hudson would be particularly and most unfavorably affected by the proposed transfor¬ mation of the Boston & Maine from an independent operating concern to an integral portion of a system which would be capable of diverting to its own rails a great deal of the traffic which now passes from and into New England through the Mechanicville gateway.” “ The railroad of the Delaware & Hudson Company had its origin in the necessity to provide facilities for the distribution of the product of anthracite lands in Pennsylvania. The original project was that of the owners of these lands and very many years ago their interest and the interest of many New England com¬ munities united in establishing New England as their principal market. To that end, the railway route to Mechanicville was created and it is very largely for the purpose of transporting the anthracite products of the same and adjacent lands that it still exists. Its con¬ nection at Mechanicville is with the Boston & Maine and it is understood that, over a period of years, about sixty per cent of the traffic interchanged with the West by that railroad has been by way of the Delaware & Hudson. Moreover, the Delaware & Hudson is a ‘ bridge ’ carrier, forming, by means of connections, through Binghampton, with the Erie, Delaware, Lack¬ awanna and Western, and Lehigh Valley, part of three 164 trunk line routes and, in addition to coal, it is able to deliver to the Boston & Maine important general mer¬ chandise traffic. It is, also, an intermediate carrier of traffic interchanged with New England and passing to or from the lines of the Pennsylvania; New York, Ontario and Western; Central Railroad of New Jer¬ sey; Philadelphia & Reading, and Baltimore and Ohio railroads. A very large amount of bituminous coal moves over its rails for the use of the manufacturers and railroads of northern New England. It receives from the Boston and Maine westbound traffic for transportation over the same routes. While the allo¬ cation of the Boston & Maine to a competitive system might not prevent its acceptance of anthracite passing over the Delaware & Hudson rails, it would probably re¬ sult in its delivering to the New York Central all west¬ bound traffic which it could control and closing its rails to much eastbound traffic not originating on, but which otherwise would pass over, the Delaware and Hudson. The latter has never been able to negotiate joint rates for bituminous coal for delivery via the Boston and Albany and the Interstate Commerce Act requires no railway system to open its route for joint services un¬ less it receives a haul equal to substantially its entire length.’ ’ “ Professor Ripley recommended the union of the essential portion of the Boston & Maine with the Dela¬ ware and Hudson, unless a separate New England system would be established. He characterized the suggestion that the Boston & Maine should be united with the New York Central as 1 the baldest proposal’ and said that it would cut down 1 competition at most of 165 the important New England centers.’ . . . No conceiv¬ able adjustment which could be made would make up to the property which I represent the loss which it would sustain in the exclusion from and diversion of impor¬ tant traffic which it now enjoys, should this portion of the tentative plan be consummated.” Remarks of Mr. Rea, President of the Pennsylvania Railroad in regard to relationship of the Pennsylvania to the Boston & Maine should be noted. (Mr. Rea’s printed statement, page 18) : “ It is surprising to note the volume flowing to and from the Boston & Maine Railroad, which is the primary System for Central and Northern New Eng¬ land, and aside from its interchange with the New York Central, it handled practically all the freight between that section and points west of the Hudson, via the Delaware & Hudson, the Erie, the Lehigh Valley and the Lackawanna Systems, and through these roads traffic from the Pennsylvania. The Pennsylvania is deeply interested in keeping the Boston and Maine as a gateway and open traffic exchange, notably through the Delaware & Hudson System and the joint Wilkes- Barre Gateway in Pennsylvania.” On the Boston & Maine system the largest inter¬ change business today is not with the New York Cen¬ tral system but with the Delaware & Hudson. 166 The average daily interchange of cars moving both east and west between the Boston & Maine Railroad and its connections (year ending June 30, 1922) was: Loaded Cars Total Cars Delaware & Hudson. 326,193 New York Central. Grand Trunk, direct . . 11,242 ... 126,107 21,464 191,497 Grand Trunk, via Central Vermont 28,472 39,714 40,290 61,754 Canadian Pacific, direct . . 39,121 58,973 Canadian Pacific, via Quebec Central 3,409 6,270 42,530 65,243 Total . 418,836 644,687 Mr. Loree, however, submitted to the Interstate Commerce Commission a financial exhibit entitled “ Delaware & Hudson and New England District, Con¬ densed Statistical Study of Various Lines, Year 1921.” which showed that in that year the consolidation of the Northern New England roads with the Delaware & Hudson would have shown a deficit after fixed charges of $5,190,996, and if the Delaware & Hudson’s income from coal operations was excluded a deficit of $7,707,170. It is true that this statement included the Central Ver¬ mont as well as the Boston & Maine, Maine Central and Bangor & Aroostook. If the Central Vermont be omitted the deficit would remain substantially $3,583,139 with the income from coal properties, and the deficit would have been $6,099,313 if the income from the coal properties be excluded. One thing to bear in mind in studying traffic con¬ ditions with reference to New England’s future wel¬ fare is the provision of the Interstate Commerce Act that no railroad is obliged to “short-haul” itself. This means that if a shipper gives freight to the Bos¬ ton & Albany that railroad has the right, and in prac- 167 tice exercises the right, to haul the freight all the way to the desired destination, if its system, which in the case of this road includes all the lines of the New York Central, reaches that destination, and if the system does not reach the destination then so far as it can be hauled in that direction on the New York Central. One bear¬ ing of this is, that a shipper delivering freight for the West to the Boston & Maine, for example, has today a great choice of routes west of the Hudson River over which he can send his merchandise, owing to the numer¬ ous and competitive trunk line connections available through Mechanicville gateway or he can ship via the northern gateways, White River Junction and New¬ port, Vt., over the Canadian lines. This is not only a good thing for the individual shipper in affording him a choice of routing which it is often in his interest to exercise, because of varying traffic conditions, or be¬ cause of convenience of access to the car on the part of his customer at the other end, or because of any one of a number of other reasons, but it operates also to the advantage of New England as a whole. It has been largely because our shippers have been able to ship, by what route they chose, a large part of the traffic origi¬ nating in New England, that New England has ob¬ tained many advantages which have helped to build up our industries. If the Boston & Maine became a part of the New York Central system this freedom to use competitive routes would be denied New England shippers in all cases where direct routing over the New York Central is possible. It is a bit enlightening on this point to quote from 1 168 the statement of some of the trunk line presidents made at the Washington hearing of May 16. Views of President Rea and President Willard on Importance of Maintaining Free Routing in New England. Mr. Rea, President of the Pennsylvania Railroad, in his testimony before the Interstate Commerce Commis¬ sion in reference to the subject of maintaining free routing for all of the Trunk Lines in New England, said: (Record, pp. 7318-7319) “ Q. With reference to New England, I take it that it is your view that it is very essential to that district that a free and open routing by all of the trunk lines be preserved ? ’ ’ “ A. Yes, sir; and by all gateways.” “ Q. Do you think that would be as likely to be preserved if there were a partition of the New Eng¬ land lines among the trunk lines, if that general plan were followed of partitioning the whole territory? ” “A. That is, partitioning the New England lines among three or four trunk lines? ” “ Q. Yes; partitioning the New England lines among three or four trunk lines.” “ A. Well, it would have to be among them all, and you would have to have a neutral management, but I don’t know then that it would be satisfactory. It is a very difficult proposition, I am bound to say. Of course, if the railroads of New England were affluent they could do a great many more things than they have been able to do. Perhaps the traffic conditions would not have gotten quite so bad as they do when congestion occurs. 169 Mr. Daniel Willard, President of tlie Baltimore & Ohio Railroad, expressed his views on the trunk line treatment of the New England carriers before the In¬ terstate Commerce Commission, May 17th, in part as follows: (Record, pp. 7367-7370) u Now, from the service standpoint I think there is this thing to be considered. It is proposed in the tenta¬ tive plan that the New Haven road should be given to the Baltimore & Ohio group. Mr. Rea has protested, very properly, against that, because of the disturbance which it would make in long-existing conditions.” “ The plan also proposes to give the Boston & Maine to the New York Central; and they would have the Boston & Albany and the Boston & Maine. If the Commission should yield to the arguments of Mr. Rea and leave the New Haven road connected with the Pennsylvania, then I wonder what there would be left in New England to interest the Baltimore & Ohio. We maintain commercial agents in Boston today and in other New England points in an effort to get as much business as may be influenced to go over our line. If those lines were all tied up to trunk lines west of the Hudson River, it seems to me we would not be justified under such conditions in leaving representatives in New England at all. What could we get for it? ” “ I am told that the New England people have felt that they would be better served with trunk lines going in and coupling up with the New England roads. I think that is a fallacy. A man does not run after a street car after he catches it; and when you have tied the roads together you have definitely determined how much of that business is going to move, and you have taken it out of the field of competition.” 170 “ It seems to me if all tlie New England roads were in a group, if rate divisions were made at the Hudson River or Canadian boundary, and if all roads were in a position to interchange business on even terms, if all roads outside could interchange on a parity with all roads in New England, then I am sure that under such conditions we would want representatives in New Eng¬ land. We would solicit their business, and by the kind of service which we would give them, we would hope to increase our business in that section. It seems to me that situation would do more to improve the service into and out of New England than any possible com¬ bination of existing railroads. And it is because of all those things, Mr. Chairman, it seems to me that it would be better to deal with New England as a group rather than as a part of the Baltimore & Ohio or any other road.” u Q. (By Prof. Ripley) Do you think, Mr. Wil¬ lard, that that would somewhat automatically take care of the question of division of through rates to New England points? ” “ A. Well, I suppose what you have in mind is this, that the different roads might bid against each other. There would always be that opportunity, of course, be¬ tween the Canadian and the American roads, because the Canadian roads would not be under the jurisdic¬ tion. And New England would still have as much advantage from that avenue as she has today. But as to whether the roads west of the Hudson would be likely to reduce rates as against each other, they would be just as likely to do it then as they are now; and even now I think we have reached the basis where those 171 things are likely not to happen so much as in the past. The present arrangements make more for stability. ” “ Q. Would you have the competition between the Canadian and American roads ? ’ ’ “ A. That you would have, and just as much as you have now between the American.” ‘ ‘ Q. Do you regard the preservation of those Cana¬ dian routes as of real significance to New England? ” “ A. I think New England probably regards them as such, and they would not be interfered with at all by this. Nothing in the plan I have suggested, from my point of view, would weaken the position of New England to demand good service and get good rates. On the contrary, I think their ability to route their bus¬ iness to this, that or the other road would put every road on notice, and everybody would be running after the street-car.” (Record, pp. 7373-7375.) “ Q. (By Mr. Shriver) Before you leave that, Mr. Willard, you referred to the particular interest the Pennsylvania had in the New England interchange? ” “ A. Yes, sir.” “ Q. The statement you have filed showing the dis¬ tribution of New England traffic for a constructive year showed the Pennsylvania interchanges 18.54 per cent. That statement also shows the interchange with the Central Railroad of New Jersey as 15.41 per cent of the tonnage. ’ ’ “ A. Yes.” “ Q. That is also a large interest.” “ A, I am glad you reminded me of that because I shall now want to say this, that if the Commission 172 should decide not to make New England a separate group as I have suggested, then in that event I should think you would leave the New Haven road as a part of the Baltimore & Ohio and Reading group, because if that is the way it is going to be settled, then I should hope the Baltimore & Ohio group might have some con¬ nection in New England. ” u Q. (By Prof. Ripley) In other words, Mr. Wil¬ lard, isn’t it an almost inevitable result of affiliation of part of New England with any trunk line that that trunk line would enjoy a predominant share of the business so far as it could?” “A. So far as it could, undoubtedly.” ‘ 1 Q. And that would interfere with the freedom of routing-” “A. So it seems to me.” “ Q. With all the trunk lines that they now enjoy ? ” “A. It is for that reason, as I say, we would he quite satisfied, entirely satisfied, and would prefer to stay at the west bank of the Hudson River. But still if one road goes over, we will want to go over with the rest, and I should want the New Haven left with the Baltimore & Ohio under this proposition.” “ Q. In other words, any grouping of New England should he at least in such form that each of the trunk lines will get a part? ” “A. Yes, sir.” “Q. As long as none of them have anything, you have no desire to go in ? ” “ A. I have no desire to go in at all if none of the rest go in, but if even one goes in, I want to go in also.” “ Q. (By Mr. Brown) Go in or stay? ” 173 “A. Or come out.” “ Q. (By Commissioner Hall) Some are in al¬ ready. ’ ’ u A. I think that is not an insurmountable situation to deal with.” (Record, pp. 7420-7421.) “ Q. Coming to New England for a moment, do you feel that it should be part of the sound national policy to develop Up-River contacts for New England, rather than to throw the traffic more and more through the Port of New York ? ” “A. No, I think New England — it seems to me that they ought to make the fullest use possible of their water transportation facilities, which they always have used. They have been built up on that basis, bring¬ ing their coal and lumber and stuff along the coast and then carrying it inland either by water or by rail. It seems to me that is an economically sound arrangement and ought to be continued.” “ Q. I was thinking rather of that interior coal line that is developed on your property. The contact of that line with New England is in part by way of the Poughkeepsie route, isn’t it? ” “A. Yes, sir.” “ Q. The question is this: Isn’t the development of traffic moved by such an up-river route, instead of going directly through New York, on the whole desir¬ able as a part of the policy looking to the future? ” “A. Well, that would not go through New York, would it? Coal going to New England via Pough¬ keepsie ? ’ ’ “Q. No. It avoids New York. That is just the point.” 174 The Fear that a New England Group would have TOO GREAT POWER IN DEALING WITH TRUNK LlNES The comment of W. H. Williams, Vice President of the Delaware & Hudson Railroad and Chairman of tlie Board of the Wabash, upon the strength of the group¬ ing of New England lines in its relations with the Trunk Lines should perhaps be referred to. He said before the Interstate Commerce Commission May 18, (record page 7767) : — “ In the event of the consummation of the proposed grouping of the New England lines, think of the power that would be given them on such questions as divisions, service, per diem and the furnishing of cars. They could take all of their traffic and turn it over to one system west of the Hudson until they forced another line to give them something to which they might not be equitably entitled. For example, they could turn over all of their traffic to the Pennsylvania and keep it there until the New York Central should outbid its competitor. In dealing with this situation it is sig¬ nificant that the New York Central has been granted an important advantage over competing properties through the allocation to it of the Boston & Albany lines, permitting exclusion of competitive traffic over those lines. This preferential position has been fur¬ ther strengthened through the tentative assignment to the New York Central of the additional lines of the Boston & Maine, Maine Central and Bangor & Aroos¬ took. This arrangement tends to enlarge and support a system, declared to be already of sufficient magnitude 175 and strength, at the expense of less powerful and more natural connections.” and (record on page 7776) : — “I think there is another thing that would be of con¬ siderable interest to develop. In the New England Divisions Case there was an analysis made of the traffic interchanged between the New England lines and the other territories, and this analysis (Brigham Exhibit No. 14) showed: Interchange with Trunk Line Territory 61.0% Interchange with Central Freight Association Territory 27.0 Interchange with Territory west of the Mississippi Biver 3.7 Interchange with Canadian roads 3.0 Interchange with Southern roads 2.8 Interchange with Transcontinental traffic (moving on transcontinental rates) 2.5 This would emphasize, in a way, that if all the New England lines were placed in one group and this traffic diverted to one of the trunk lines, it would have a ter¬ rific effect. It would not make much difference to the transcontinental lines but would in the intermediate territory. ’ ’ If, because of a New England consolidation, we should acquire the power feared by Mr. Williams, we should try to use it humbly and under the direction of the Interstate Commerce Commission and so as to earn the good will of our neighbors. It would not, we sup¬ pose, be reasonable to expect some of these trunk line presidents to consider in their consolidation plans what might be for the interest of these seven and a half mil- 176 lion people living in New England, but their views do seem to take on a bit the color of Joseph’s brothers casting lots for his clothes. Mr. L. P. Loree, President of the Delaware & Hud¬ son Company, said in the same connection (printed statement, page 18) : “New England. Contrary to a general public im¬ pression, there is no proposal, in the 1 tentative plan ’ or by Professor Ripley, to create a single system em¬ bracing all New England lines. Perpetuation of the control of the New York Central over the Boston and Albany, and that of the Grand Trunk (of Canada) over the Central Vermont, as well as the continued owner¬ ship by the Grand Trunk and Canadian Pacific of their railway properties in northeastern New Eng¬ land, seems to have been accepted without question. The consolidation, into a single system, of the remain¬ ing New England railways is, however, one of the proposals and, as to this, it is necessary to observe that the power of such a combination to divert an im¬ portant volume of traffic, at its pleasure, from one connection to another, would confer an opportunity to extort unfair and excessive divisions which would certainly be utilized and which ought not to be per¬ mitted. The control of traffic originating on one such railroad has, in the past, been utilized to produce pre¬ cisely that result, that company receiving as much as one-fourth of the total earnings for a haul of 150 miles out of a 1,000-mile haul, or twenty-five per cent of the compensation for fifteen per cent of the service. Sixty-one per cent of the traffic of New England rail- 177 ways is interchange traffic, to or from Trunk Line con¬ nections. “I have, therefore, two suggestions to make as to New England, as follows: — “ 1- That New England railways located north of the Boston & Albany (the Boston & Maine, Maine Cen¬ tral, Bangor & Aroostook and Central Vermont) be united with those of The Delaware & Hudson Company, or, “ 2. That the New England railways located north of the Boston & Albany be united with those of the Boston & Albany and that the Delaware and Hudson and the New York Central Bailroad Company become owners of equal interests in the consolidated property.” Mr. William S. Jenney, Counsel for the Delaware, Lackawanna & Western Railroad expressed himself in Washington as not agreeing with the position taken by Mr. Williams and Mr. Loree. We quote from his testimony. (Record page 7871.) “ Q. In that connection I would like to read a para¬ graph from Mr. Williams ’ statement yesterday on be¬ half of the Wabash, and ask you if in your judgment it represents the situation.” ‘ ‘ In the event of the consummation of the proposed grouping of the New England lines, think of the power that would be given them on such questions as divisions, service, per diem, and the furnishing of cars. They could take all of their traffic and turn it over to one system west of the Hudson until they forced another line to give them something to which they might not be equitably entitled. For example, they could turn over all of their traffic to the Pennsylvania and keep it 178 there until the New York Central should outbid its competitors. ” “ And in another place:” ‘ The figures of interchange would emphasize, in a way, that if all the New England lines were placed in one group and this traffic diverted to one of the trunk lines, it would have a terrific effect.’ “A. I do not agree with him at all. I don’t think there is any thing to that at all.” “ Q. Do you think that power might be utilized to secure a fairer division of the through joint rates?” “ I will not use the word 1 fairer’, but to bring about an equitable adjustment in the division of the through rates. ’ ’ “A. I doubt if they could exert enough power even for that. What I mean to say is that I think they would have to go to the Commission if they were to get any larger division of rates than now. I don’t think they would be able to force that tonnage over one line. It has to go over its natural routes. The Pennsylvania have to take it and the New York Central have to take it, and what is left will go to the other lines. The New England lines, even if operating as one property, could not force the routing of traffic in any one direction so as to get any undue advantage or anything of that sort, in my judgment.” “ Q. But the advantage of that consolidated group would be to perpetuate opportunity as among all the trunk lines, whether they were of equal size and strength or not?” “A. I think it would be very helpful from a trunk line standpoint. In other words, I think that the trunk 179 line that gives the best service, etc. would increase its New England business.” “ Q- You are not assuming, are you, that competing strength of the big as against the lesser companies is a matter of size?” “ A. Oh, no. I don’t think it is a matter of size. In other words, the small company that had a profitable business to a very much lesser extent than a large com¬ pany, who had a very much smaller interest charge, might be able to do as well upon its small business as the big company upon its bigger business. I do not think it is necessary to have the companies of the same size, but you have to create, it seems to me, if we are going to have two small trunk lines in competition with three big lines, a condition where you have the small lines in a position where they can get business from all the different parts of the country. You cannot practi¬ cally shut them off from Pittsburgh and Chicago and shut them off from New England and Philadelphia and expect them to do business.” Importance of Canadian Gateways In considering this consolidation of the Boston & Maine with the New York Central, we must not over¬ look New England’s two important northern gateways, one via the Central Vermont-Grand Trunk route and the other via the Canadian Pacific. The former bisects New England from the Canadian-Vermont line to tide¬ water at New London, cutting all our east and west lines. The Canadian Pacific is reached by the Boston & Maine at Newport, Vermont, and freight from eastern and northern New England moves to Newport 180 chiefly by the Boston & Maine line which leaving Boston passes through Lowell, Nashua, Manchester and Concord to a connection with the Central Vermont at White Biver Junction in the Connecticut Valley or further north to the Newport connection with the Canadian Pacific. We shall refer again to the differ¬ ential routes through these two northern gateways. Suffice it to say now that the interchange of New England’s industries through these two northern gate¬ ways for the year ending June 30, 1922, amounted to 61,754 loaded cars via the Central Vermont and Grand Trunk and 58,973 loaded cars via the Canadian Pacific. Many people, even New Englanders, if they are not regular shippers, impressed by the fact that these lines run through New England almost due north, think of •them as roundabout routes to Chicago and the West, only suitable for relatively unimportant and low-grade merchandise, hut, as a matter of fact, the distance from Boston to Chicago by the Grand Trunk route is 1129 miles, and the New York Central route is only 108 miles shorter. 181 We give the distance from Boston to Chicago by half a dozen of the established routes, having joint tariffs regularly used by New England shippers: Boston to Chicago — Comparative Distances Miles Boston & Maine, New York Central—Wabash 989 Boston & Maine, New York Central — Nickel Plate 1004 Boston & Maine, New York Central (West Shore) 1021 Boston & Albany, New York Central 1026 Boston & Maine, Delaware & Hudson—Delaware, Lackawanna & Western — Nickel Plate 1061 Boston & Maine, Central Vermont—Grand Trunk Bailway (via Swanton & Coteau Junction) 1129 New Haven — Pennsylvania Railroad 1137 Boston to Chicago via Boston & Maine, Canadian Pa¬ cific Railroad & Michigan Central 1189 New Haven (via Devon & Maybrook) —Erie 1226 New Haven — Baltimore & Ohio (freight line) 1248 The Grand Trunk route turns westerly about 3 miles north of St. Albans, Vermont, and does not go through Montreal or through any big terminals or congested points anywhere between the Vermont line and Chicago. This is a great operating advantage compared with traffic over the New York Central which moves through Albany, Buffalo, Cleveland, and various other terminals where traffic is heavy and con¬ gestion frequent. Moreover, the Canadian routes do not become loaded with coal during the winter months when the going is hard and the drawbar pull of the locomotive at the minimum owing to cold. / 182 Trunk Line Control would endanger Canadian Gateways With the New York Central in control of the Boston & Maine, Maine Central, and Bangor & Aroostook, the situation would be exactly that contemplated by the Amendment of June 10, 1910 (36 St. 552) to the Inter¬ state Commerce Act as amended February 28, 1920 (41 St. 485), which provides that the Commission shall not in establishing a through route “ require any carrier by railroad, without its consent, to embrace in such route substantially less than the entire length of its railroad and of any intermediate railroad operated in conjunction and under a common management or control therewith, which lies between the termini of such proposed through route, unless such inclusion of such lines would make the through route unreasonably long as compared with another practic¬ able through route which could otherwise be estab¬ lished. ’ * It has been suggested that in the event of a consoli¬ dation of the Boston & Maine with the New York Central these northern routes could be protected by an order of the Interstate Commerce Commission or by some collateral agreement, but to us this is not at all reassuring. It is by no means certain that the Com¬ mission would feel warranted under such an order, in disregarding the provisions just quoted from the statute, nor is it yet clear that as a matter of law it legally could do so. In order that these northern routes may be successful they need more than an order or a formal agreement to be enforced by appeal to the Interstate Commerce Commission; they must have sympathetic, smooth, prompt and regular service. 183 Sympathetic, responsive and effective cooperation between two men as partners cannot often be secured by a written agreement, if tbeir self-interests and in¬ clinations pull in opposite directions. It has been pointed out that such an order was entered by the Interstate Commerce Commission to protect other railroads in the case of the Chicago Junc¬ tion Railway in connection with its acquisition by the New York Central system. But we note that, besides a clearly expressed belief on the part of the other rail¬ roads that this stipulation or agreement will not suffi¬ ciently protect them, the Pennsylvania Company, the Baltimore and Ohio, the Erie and four other com¬ panies have brought suit in the United States Circuit Court in an endeavor to stop this consolidation. This litigation is burdensome and expensive, but neverthe¬ less has been begun due to the apprehension, based on the plaintiff companies’ experience of many years in practical railroading, that somehow or other the re¬ lations between the Chicago Junction Railway and the New York Central system are going to slide along in an easy groove, while the other roads are going to be at a practical disadvantage. President Hustis Emphasizes importance of Canadian Gateways The importance of the Canadian gateways was pointed out and emphasized by Mr. J. H. Hustis, Pres¬ ident of the Boston & Maine, in his testimony before the Interstate Commerce Commission on May 24th (Record, pp. 8030-1) : “ The Boston & Maine lias a substantial interchange 184 with the Canadian Pacific direct and with the Grand Trunk (now the Canadian National Railways) through the Central Vermont. New England traffic is regarded as attractive by both of these lines, and a high quality of service is maintained through these northern gate¬ ways, which has probably been quite as effective in maintaining the popularity of these routes as have the westbound differential rates.” “ In any event, and in any plan which may be adopted, the importance of these routes not only to New England but to the Boston & Maine will, of course, be recognized.” President Pearson on Effect of Trunk Line Control upon Free Routing of New England Traffic That these Canadian connections as well as the present equality of treatment for all trunk lines at the various gateways would be jeopardized by a trunk line consolidation is clearly the opinion of President Pear¬ son of the New Haven, who testified before the Com¬ mission in Washington (Record, p. 8141) : “ Assuming consolidation between the New Haven and a trunk line, this would inevitably result in an attempt to control the movement of traffic and restrict it as against other gateways and other routes.” “ Privileges of shippers, heretofore enjoyed freely, would become restricted in part by the provisions of the Interstate Commerce Act, permitting a system to refuse to short haul itself, and in addition, shippers would gradually find themselves under new influences. The tendencies could not be other than restrictive, in 185 the desire to secure all of the traffic possible for the consolidated system.” (Record, p. 8143.) “ Inflexibility would gradually come about in respect to rates divisions, etc., other than those confined to the consolidated system. The use by Hew England of any and all routes, water as well as rail, would almost surely suffer restriction in¬ stead of encouragement as now.” (Record, pp. 8144-8145.) “ It has been assumed that with respect to the New England section of a consoli¬ dated system, it could be placed under the requirement to continue to serve the public in all matters as hereto¬ fore.” 1 ‘ If this is the case, it is apparently the thought that the trunk lines which consolidated with the New England system would forego certain advantages and rights but would assume the financial obligation. Is this reasonable? Should a trunk line, for example, merge the New Haven, is it conceivable that terminal service for the other trunk lines would thereafter re¬ ceive the same treatment as now? Does the history of railroads bear evidence of such instances of altruism? Is this contemplated by the Transportation Act? ” “ Can it be conceived that other connecting carriers would anticipate such a situation with equanimity? Would they not, and in all fairness to their point of view should they not, as in the recent case of the Belt Line in Chicago, take into the courts those questions relating to the probable restriction of their free open opportunity to receive hereafter that charactei of ter- minal service in New England that they have enjoyed heretofore?” 186 View of President Todd President Percy R. Todd, of the Bangor & Aroos¬ took, who was formerly General Traffic Manager of the West Shore Railroad and later Vice-President of the New Haven, and in a varied railroad career has an unusual knowledge based upon practical experience with New England transportation conditions, gave some valuable testimony before the Interstate Com¬ merce Commission in Washington on May 25th. Speaking primarily from the standpoint of his own company, not so much on the basis of the interest of its security holders as upon that of the public served by it, he said (Record, p. 8227) : “ System No. 1.—At the present time shippers on the line of the Bangor & Aroostook Railroad forward a great deal of freight to Central Freight Association territory, and have open to them through our connec¬ tion with the Canadian Pacific at Brownville Junction, excellent service, and sometimes slightly lower rates than by other routes, and if they do ship via the Maine Central Railroad through our connection at Northern Maine Junction, have the choice of many different routes to the west ”— (of which he enumerated and described ten) “.whereas it is natural to assume that if consolidation was made under System No. 1 idtimately the traffic would have to be confined to the New York Central System, for the reason that there can be no possible object in the New York Cen¬ tral or any other trunk line acquiring ownership through consolidation with any of the present inde- 187 pendent New England railroads, none of which ex¬ cept the Bangor & Aroostook are financially strong, and which acquisition would undoubtedly involve the trunk lines in assuming financial liabilities on behalf of the New England Railroads acquired, unless they hope to offset these financial obligations by monopoliz¬ ing the traffic to and from New England, and thereby make up in revenue more than sufficient to offset these deficits which certainly would not be to the interest of the New England public.” Then extending his comments as to the effect of trunk line consolidation (as embodied in the Commis¬ sion’s alternative tentative plans—“ System No. 1 — New York Central,” giving the Boston & Maine to the New York Central, “System No. 3 — Baltimore & Ohio,” allocating the New Haven Railroad to the Bal¬ timore & Ohio, and “ System No. 7A—New England- Great Lakes,” setting up a new trunk line system he observed (Record, p. 8229) : “ The above statements ” (those just quoted) “ refer to the interests only of the public served by the Bangor & Aroostook Railroad, but it is our feeling that the same is true, possibly to even a greater degree, of the New England public generally in that portion of Maine not served by the Bangor & Aroostook, and in the other New England States, as no other object than that of monopolizing the traffic can be conceived for any trunk line being willing to invest large sums of money in acquiring one or more of the New England railroads, and becoming financially respon¬ sible for their obligations; the interest on the money invested on such acquisition, and the money required 188 for meeting obligations of tbe New England roads, with which consolidation is effected, must come from some source, and what possible way is there of realiz¬ ing that money by the trunk lines except by securing a greater share of traffic to and from New England than such trunk lines have heretofore enjoyed.” “ While the question of freight rates is always a vital one, it is well known that in recent years the pub¬ lic has placed good service ahead of low rates, and with the general New England public having at the present time at least ten outlets to and from the west, it is a natural assumption that with the number of outlets decreased, and to some extent a monopoly substituted, the service will not be as good as it is under the present conditions.” Differential Routes to West and South would BE ENDANGERED BY TRUNK LlNE CONSOLIDATION It is also true that New England, as we have previ¬ ously explained, has various vital differential routes by water and rail to the west and southwest, particu¬ larly through Baltimore and Savannah, which may find their usefulness and ability to obtain cargoes di¬ minished, because the New York Central management in the long run would find its interests more directly concerned in moving merchandise destined for any point south or west out of the central or northern half of New England, by its own standard full-price, all¬ rail route. 189 Boston & Maine should not be dismembered In his discussion of the northern New England sit¬ uation, Professor Ripley intimated, as an incidental feature of a Boston & Maine consolidation with the Erie, a possibility of first cutting out from the heart of the Boston & Maine its line from Worcester, through New Hampshire to Portland — originally the Worces¬ ter, Nashua & Rochester — and assigning that line, to¬ gether with the Maine Central and the Bangor & Aroos¬ took, to the New York Central. No such suggestion should for a moment be entertained. It would fatally weaken the Boston & Maine and precipitate immedi¬ ately the financial debacle likely in any event to follow the consolidation of the weak Erie with the already sufficiently weak Boston & Maine even without having subjected the latter to this proposed major excision of one of its vital parts. Far better would it be to turn all these northern roads, including the Boston & Maine, over, once for all, to the New York Central. Tentative Alternative—“System 7A—New England-Great Lakes ” In regard to the other alternative consolidation pro¬ posed by the Interstate Commerce Commission in its tentative plan, designated as “System 7a — New England-Great Lakes,” providing for the consolida¬ tion of the New England lines with the Delaware & Hudson, the Delaware, Lackawanna & Western, Buf¬ falo, Rochester & Pittsburgh and certain smaller roads, no one has seriously urged it. Its weaknesses were 190 pointed out in the statement of William S. Jenney, Counsel for the Delaware, Lackawanna & Western Railway Company, before the Interstate Commerce Commission in Washington at the hearing on May 17, and we agree with his conclusion that the objections to it are insuperable. We give in Appendix Q a portion of Mr. Jenney’s statement. Disposition of Rutland Railroad With regard to the disposition of the Rutland Rail¬ road it should be noted that Professor Ripley has sug¬ gested that it be consolidated with the New York Cen¬ tral system, as does the Commission also, affirmatively in its “ System No. 1 — New York Central,” and neg¬ atively in its “ System No. 7 — New England ” and “System No. 7a — New England-Great Lakes,” by including it in neither of those tentative systems. In the proceeedings before the Interstate Commerce Com¬ mission at Washington, Mr. A. H. Smith, President of the New York Central, said (printed statement, p. 12). “ we are willing to accept the Rutland although we have not shown it on the map of our proposed plan. ’ ’ At present the control of the Rutland is owned jointly by the New York Central and the New Haven railroads, these two roads having an equal interest in 51 per cent of its capital stock, and we think it vital that this joint interest should remain or at least that New England should remain as a partner in this road. In the opinion of the committee, consolidation of the Rutland with the New York Central at the present time would be unfortunate, for, in the event that it 191 proves possible to reconstruct the New England rail¬ roads so that a New England consolidation may be ultimately effected, a part ownership in the Rutland Railroad would, in the opinion of the Committee, be of importance in this New England system. It provides a differential route to the West via the Lakes from New England. The route is via the old Cheshire Rail¬ road from Fitchburg to Bellows Falls, which is in excel¬ lent condition, and from Bellows Falls, via the Rutland, to Ogdensburg. With the enlargement of the Welland Canal, the Rutland would also have new possibilities for export grain movement from Ogdensburg, via the Boston & Maine at Bellows Falls, which, in the hands of an aggressive New England railroad management, should be able to add materially to the export grain traffic through the port of Boston. Argument for Trunk Line Consolidation The fact is that so far at least as the welfare of New England is concerned, the only argument that has been put forth with any emphasis in favor of trunk line consolidation has been the financial argument. This has been set forth ably by Mr. John E. Oldham, who has performed a public service in studying and elabo¬ rating this side of the question. Mr. Oldham appeared before this Committee and gave us the benefit of his thorough study of this question, and Mr. Charles A. An¬ drews, his associate, also presented an able argument on the financial side of the question. Mr. Oldham dealt with the Committee with straightforward frankness, and stated that his conclusion had not taken into ac- 192 count the operating policies or the present manage¬ ment of either the New Haven or the Boston & Maine railroads. He pointed out certain general operating disadvantages, chiefly the relatively high cost of fuel in New England, and the relatively short haul, and the large terminal expenses, which he felt were materially unfavorable factors. Certainly the New England handicap in regard to these factors cannot be gainsaid. A New England System Preferred This Committee has reached the conclusion that if financial considerations permit, the welfare of New England can be better served by a consolidation of the New England systems, leaving out the Boston & Al¬ bany, Central Vermont, and the Grand Trunk Line to Portland, and the small Canadian Pacific mileage in Maine and Northern Vermont. This system is outlined in the Interstate Commerce Commission’s “ Plan No. 7 — New England,” but should, as we have already indicated, include joint ownership with the New York Central in the Rutland Railroad. In this Committee’s opinion to retain in this “ System 7 — New England ” the two small so- called Bridge Lines — the Lehigh & New England and the Lehigh & Hudson River — is not so vital. Not only do we think such a New England Consolidation in the interest of New England shippers but we think it is equally in the interest of the consignees at the other end who are receiving merchandise originating in New England, and also of the shippers outside of New Eng- 193 land wlio wish to send the product of their farms, mines or factories into New England. New England would like to wear its own breeches. We submit that it should be allowed to do so unless a clear case can be made out why one leg should be handed over to the Pennsylvania Railroad, or the Bal¬ timore and Ohio, and the other to the New York Central. Railroad Management in New England Must be Sympathetic to Development of New England Seaports The indented shore line of New England, and its many harbors, with population and industries gathered directly on or within a few miles of the shore, give New England a special interest and compel a special policy, if New England is to continue to flourish. A New England system offers in many respects the best hope for these seven and a half million people. We must have and must properly maintain our rail¬ roads, but up here in the corner the greatly enhanced cost of rail transportation is going to “ get ” us unless we can operate our railroads so as to take day by day the utmost advantage of our sea possibilities. Is it practical, is it safe, to expect a New York Cen¬ tral or a Pennsylvania management to lay this to heart and keep it there day by day? We must, without the slightest tinge of criticism, deal with the ordinary springs of human action. Might not the directors of these two roads looking out of the windows of their meeting rooms understand better, and be more dis- 194 posed sympathetically to cooperate with, the needs of the port of New York and the port of Philadelphia than of Portland or Boston or Providence or New London ? So far as the Pennsylvania Railroad is con¬ cerned in port development, Philadelphia and New York must inevitably be the magnets to attract their thought and their capital, and the port of New York cannot help in the long run being a greater object of solicitude to the New York Central officials than the port of Boston. These New England seaports are to us not part of a surplus stock in trade — they are our chief stock in trade, and essential to our livelihood. The development to the utmost of this single eco¬ nomic advantage possessed by the people living in New England is not in any way prejudicial to the welfare and interests of this country as a whole. Neither does the national welfare nor a national rail¬ road policy require the uprooting of the interests of any large body of citizens anywhere in this country; the problem rather is how to make the railroads con¬ tribute the utmost good to each large group of Amer¬ ican citizens whether on the Atlantic seacoast, or the Pacific seacoast, the Great Lakes or elsewhere in the country. We think it is clear that unless there is a compelling financial reason there is no advantage either to New England or any other part of the country in consolidat¬ ing the New England railroads with the trunk lines. Do the shorter haul, the enhanced cost of fuel, and the other operating disadvantages of the New England rail carriers, constitute a compelling reason ? 195 New England's Adverse Per Diems The change from a mileage to a per diem basis for the use of freight cars, and the gradual rise in the rate until it reached a dollar, created one of the most seri¬ ous adverse factors in the New England railroad situ¬ ation. Its effects have been profound. The change was in the interests of general economy and efficiency, and therefore sound for the country as a whole, but it introduced an entirely new situation in New Eng¬ land. The short haul, the multiplicity of branches, junction points and terminals, which have caused New England to be described as having rather the character of a great terminal, produce necessarily a slowing of car movement in New England and impose therefore a heavy adverse per diem burden. The line-haul is the really profitable part of railway operation. There is no question but that the introduction of the per diem and the rise in the rate until it reached the present level of a dollar a day put New England at a serious disadvantage. The adverse per diem balances of cer¬ tain of the New England roads during the year 1922 amounted to $8,833,185, and the credit balances of the three creditor roads amounted only to $422,266. Rate Divisions, Based on New England's Operating Disabilities, Work toward same Benefits as Would Consolidation with Strong Roads The purpose of the Transportation Act can only be accomplished in many and we suppose in most parts of the country by consolidations such as are discussed 196 in the Ripley report. If the financially weaker lines must be maintained for the benefit of the people who depend upon them, and if the policy of the government is to maintain equal rates for equal service without permitting some roads to operate at too great profit and others at insufficient profit, the object sought can be gained only in most sections of the country by a consolidation of the weaker roads with the stronger. In the case of the New England railroads their geographical location, set off as they are in the north¬ east corner of the country, with none of them reaching substantially west of the Hudson River, there remains another method of maintaining the national policy of equal rates, without permitting these roads if they are consolidated into a New England system to earn either too much or too little. The way has been found; moreover it has been put into effect already by the Interstate Commerce Commission. It has been de¬ clared also by the Supreme Court to be legal and with¬ in the existing powers of the Interstate Commerce Commission. This recent decision of the Interstate Commerce Commission, sustained by the Court, or¬ dered a new division of rates between the New Eng¬ land railroads and the trunk lines. It is true that this action established a diversion of income from the trunk lines to the New England lines, but so will the consolidation feature of the Transportation Act if that feature of the Act is ever made mandatory. We see no difference in result. This plan is now in effect so far as the New England roads are concerned, and we see no necessity and no reason based on public wel¬ fare for destroying it and starting another policy. 197 We do not say this because we happen to live in New England but because these New England roads are tucked away beyond the Hudson River in one homo¬ geneous corner of the country. Trunk: Line Consolidation a Last Resort The great majority of the inhabitants of New Eng¬ land do not want trunk line consolidation; they do not believe that national interests require it, and they do not believe it is best for the development of this portion of the country. We think New England has too long a record and has shown too many times, whether in war or peace, its desire to contribute to the national welfare, whether it happened to be to the immediate interest of New England or not, to permit the charge to be successfully made that in this matter it is seeking to obtain for itself a benefit which in any respect is hostile to the interest of the country as a whole. On the contrary, the development of each and every group of states in this country to the utmost possibility is in the interest of all the states, and this doctrine applies to the question before us. The Question of Competition The importance of competition has been recognized by Congress, which directed in the Transportation Act of 1920, that in setting up proposed consolidations 11 competition shall be preserved as fully as possible.” 198 Whatever competition of a substantial sort now exists in New England railroading is between one or another of the strictly New England roads and the New York Central (Boston & Albany), the Grand Trunk (Central Vermont) or the Canadian Pacific. All this would he preserved under the proposed New England consolidation. As among those roads which have been designated to form a possible New England system, competition does not now exist in any substan¬ tial amount. Each road serves a territory into which none of the other New England roads penetrate to an appreciable extent—with the single exception that there is a fringe of towns and cities along the southern border of the Boston & Maine and the northern border of the New Haven which are served by both. This fringe is for the most part, and under a New England consolidation would continue to he, served by the strong and efficient New York Central system (Boston & Al¬ bany). The real railroad competition of value to New Eng¬ land, and which it is important to preserve, is in the transportation facilities furnished from the western and northern New England boundaries to other por¬ tions of the United States and to Canada. With the assurance of a reasonable public control, in the interest of the maintenance and development of New England industrial activities, competition within New England is distinctly secondary in importance to the New Eng¬ lander provided he has the choice (which with the uni¬ fied New England system he would have) among the various New England gateways and the routes avail¬ able through them. 199 Transportation Act Does Not Make Consolidation Compulsory The Committee, of course, recognizes that the adop¬ tion of any consolidation plan by the Interstate Com¬ merce Co mmi ssion under the provisions, relative to consolidation, contained in the Transportation Act of 1920, does not necessarily result either in an immediate or even ultimate consolidation in accordance with the plan adopted. Except, however, as that plan may, upon application, be subsequently modified by the Commis¬ sion, no consolidation can be effected which does not conform to it. Furthermore, the statute is mandatory upon the Commission to adopt a plan and this it must do with reasonable diligence. It is this situation which creates, in the opinion of the Committee, the necessity of the consideration given in this report to various possible consolidations and the necessity of the adop¬ tion for the New England States, and the New Eng¬ land public, of that form of consolidation which seems to them best adapted to their continued prosperity and development and consequently the best for all other sections of the country with whose prosperity and de¬ velopment ours in New England is so closely hound up. Interstate Commerce Commission’s ‘ ‘ System No. 7—• New England ” Best for New England The Committee does not recommend at the present time any further consolidation either of the New Eng¬ land railroads among themselves or between any of them and any of the trunk lines or other railroad sys¬ tems. It seems sufficient now to indicate merely what 200 kind of consolidation is best so that if at any time in the future further consolidations are desired, they may be along lines in harmony with the expressed prefer¬ ence of New England. As already indicated, the Committee believes that the Interstate Commerce Commission’s System No. 7, with minor modifications, is the best for New England. This system would consist of the Bangor & Aroostook, the Maine Central, the Boston & Maine, and the New York, New Haven & Hartford railroads, and their controlled fines, including the New York, Ontario & Western and the Central New England, and at least an equal interest with the New York Central in the Rutland Railroad. While the Commission included the two so-called bridge fines, the Lehigh & Hudson River and the Le¬ high & New England, the Committee is of the opinion that neither of these fines is essential provided their present relation to New England fines is not substan¬ tially changed. If a New England system should eventually be es¬ tablished, leaving out the Boston & Albany and the Central Vermont, it is clear that the inclusion of the Bangor & Aroostook, the Maine Central, the Rutland, and the New York, Ontario & Western would present no financial problems of consequence in addition to the problems involved in the rehabilitation of the New Haven and the Boston & Maine. These four roads will all at least care for their fixed charges. The Bangor & Aroostook is paying dividends on both its common and preferred stock, and the Maine Central though getting a bad start in January and February is a sound, well managed property. 201 The Proposed New England System Compared with Other Railroad Systems Such a New England System, if and when put to¬ gether, would constitute a compact railroad, comparing favorably in mileage, revenues, volume of traffic, both passenger and freight, with the existing railroads of the country as well as with several of the proposed consolidated systems under the Interstate Commerce Commission’s tentative plan. It would have 7,612 miles of line, the aggregate earnings of which in the year 1922 were $258,253,750. 202 The following table gives, for purposes of comparison, 1922 gross revenues of the present larger railroads of the United States, including their principal subsidia¬ ries : Gross Revenues Pennsylvania . $699,489,929 New York Central . 574,590,294 Southern Pacific. 260,979,957 New England System (N.H., B. & M., Me. C., Atchison, Topeka & Santa Fe. 225,124,544 Baltimore & Ohio. 203,959,372 Illinois Central . 198,028,369 Union Pacific . 196,048,716 Chicago, Burlington & Quincy . 189,072,034 Southern . 183,162,171 Chicago & Northwestern . 173,901,444 Chicago, Milwaukee & St. Paul. 156,950,628 Louisville & Nashville . 146,768,778 Chicago, Rock Island & Pacific. 125,086,233 Erie . 112,565,748 Great Northern . 103,452,937 Missouri Pacific . 99,921,331 Northern Pacific. 96,076,067 Norfolk & Western . 90,314,743 Chesapeake & Ohio . 83,511,561 St. Louis — San Francisco. 83,008,023 Delaware, Lackawanna & Western . 74,873,605 Atlantic Coast Line . 74,044,589 It will be seen that of these 23 systems the New Eng¬ land roads, if taken together and reckoned as one sys¬ tem with revenues combined, would be fourth in re¬ spect to revenue. 203 The following table gives a similar comparison be¬ tween the proposed New England System, as suggested by the Committee, with each of the other systems de¬ scribed in the Commission’s tentative plan, omitting, however, from “ System No. 1—New York Central,” the Boston & Maine, the Maine Central, the Bangor & Aroostook and the Rutland, and from “ System No. 3 — Baltimore & Ohio,” the New York, New Haven & Hartford and Central New England: Gross Revenues System 2 Pennsylvania .$696,983,478 1 New York Central (Excluding New Eng¬ land Lines) . 578,381,963 17 Southern Pacific — Rock Island. 416,490,758 13 Union Pacific — Northwestern . 371,023,658 3 Baltimore & Ohio (Excluding New Haven) 362,443,933 14 Burlington — Northern Pacific. 309,400,750 16 Santa Fe. 304,236,707 4 Erie . 303,027,136 15 Milwaukee — Great Northern. 284,804,897 11 Atlantic Coast Line — Louisville & Nash¬ ville . 278,944,431 7 New England (Committee’s recommenda¬ tion) . 12 Illinois Central—Seaboard. 19 Chicago — Missouri Pacific . 18 Frisco — Katy Cotton Belt . 10 Southern . 5 Nickel Plate — Lehigh Valley. 8 Chesapeake & Ohio . 9 Norfolk & Western . 6 Pere Marquette. 258,253,750 249,173,976 212,071,998 192,731,019 190,355,309 149,699,199 116,376,470 106,970,629 54,807,948 204 New England would be submerged in Enlarged Pennsylvania and New York Central Systems It will be seen from this comparison that the New England group would rank eleventh in gross revenue among the 19 consolidated systems proposed in the ten¬ tative plan of the Interstate Commerce Commission. It would be almost as large as systems 6, 8, and 9 combined. Should, however, the alternative suggestion of trunk line consolidation be adopted and the four northern New England roads be included in System No. 1,'New York Central, that system would become unduly, if not menacingly, large. It would then have 17,239 miles of railroad and $694,256,409 of revenue, exceeding in each respect any of the other proposed consolidated systems, except that of the Pennsylvania. While the Commis¬ sion has suggested as an alternative to a New England System the inclusion of the New York, New Haven & Hartford in “ System No. 3 — Baltimore & Ohio,” the Committee feels that this would be an unnatural and un¬ fortunate combination. The objections to it have al¬ ready been discussed earlier in this report. Assuming the Committee’s conclusions in this respect to be well taken and assuming further that the plan of a New England System is to be rejected, the Committee thinks that the only reasonable trunk line consoli¬ dation for the New Haven system is with the Penn¬ sylvania. Here again, however, there would result, as in the case of adding the Boston & Maine 205 to the New York Central, an over-extended super system, exceeding in size the New York Central with the addition of the Northern New England roads. Such a swollen Pennsylvania System would embrace 14,239 miles of railroad and would have had in 1922 a revenue of $827,020,870. The railroads suggested for a New England consoli¬ dation represent 5 per cent of the total gross railroad revenue of the country. If turned over in part to such an enlarged New York Central and in part to an enlarged Pennsylvania, the two resulting consolida¬ tions, although constituting only 2 out of 19 proposed systems, would together constitute 27 per cent of the railroad gross revenues of the entire country. In the opinion of this Committee this situation would he un¬ fortunate for the country as a whole and disastrous for New England. Such a Pennsylvania System would have lines of railway and exercise important control over transportation in fourteen states, viz., Massachu¬ setts, Rhode Island, Connecticut, New York, New Jer¬ sey, Delaware, Maryland, District of Columbia, Penn¬ sylvania, Ohio, Indiana, Michigan, Illinois and Mis¬ souri; the New York Central similarly in thirteen states, viz., Maine, New Hampshire, Vermont, Massa¬ chusetts, New York, Pennsylvania, New Jersey, Prov¬ ince of Ontario, Michigan, Ohio, Indiana, Illinois, and Missouri. Not many students, either of business or government administration, would expect as satisfactory results for the public from the centralized management in Phila¬ delphia of a railroad extending from Boston to Wash¬ ington in the South, St. Louis and Chicago in the West, 206 and Mackinaw City, Michigan, in the North, or from the management in New York of a railroad extending from Yanceboro, Maine, to Pittsburgh, Southern West Virginia and to Cairo, Illinois, at the South, St. Louis and Chicago at the West, to the tip of the Michigan pen¬ insula at Mackinaw City, and Canada and the St. Law¬ rence Liver at the North, as from the management of a consolidated New England System, with practically its entire mileage within New England, and with its policy shaped by New England men. Our railroads and the interests of the local population at present served by them would be hopelessly lost in such over-extended and unwieldy transportation agen¬ cies. In transportation as in government it is always possible, and there is always danger, that a centralized authority will be developed attempting to exercise its jurisdiction over so vast an area, and upon such a numerous population as inevitably to lead to ignorance of and disregard for the wishes, welfare and interests of individuals. It is important to avoid this wrong tendency for, after all, the prosperity, happiness and contentment of any people is only the aggregate pros¬ perity, happiness and contentment of its individual members. 207 Conclusion of Committee as to Consolidation The Committee is satisfied that such a compact rail¬ road system as that represented in the proposed New England consolidation would involve a minimum of the evils and, with conditions as they are in New England, would produce a maximum of the benefits possible to result from consolidation under the provisions of the Transportation Act of 1920. But the Committee believes that such consolidation is neither advisable nor equitably possible until each of the two major New England systems shall first have been rehabilitated and shall have shown the financial and operating results it is capable of producing under normal conditions and with restored credit. 208 REHABILITATION BY COOPERATION New Haven Rehabilitation The immediate problem under our nose in New Eng¬ land is not consolidation. It is the rehabilitation of our two major systems so that they can be lifted out of their present acute difficulties and give to New England industry and to the New England public the grade of transportation service that is vital if New England is to hold its place against the keen competition of other districts. Consolidation is not the immediate medicine needed by New England. Rehabilitation comes first. Turning first to the New Haven, we briefly review the financial conditions of the road as it has already been described in this report. Since 1915 it has sustained and written off losses of $40,546,840 on its outside in¬ vestments. It is carrying on its books at cost price many outside investments which are of little value. The shrinkage is very large, including, as it does, such items as New York, Westchester & Boston, which brings in no income and costs the New Haven $864,000 a year in interest on the guaranteed bonds, also the trolley investments some of which have but a nominal value. During the past three years the Income Accounts have shown large deficits as follows: Deficits after Interest Charges 1920 . $4,276,726 1921 . 13,603,654 1922 . 5,309,759 Total 3 years $23,190,139 209 The result of the losses in outside investments and deficits from operation is reflected in a large balance sheet deficit as of December 31, 1922. In 1921 the company wrote up its property investment account $25,685,000 (net), to capitalize improvements made be¬ tween 1880 and 1915 previously charged to Income, Profit and Loss and Operating Expenses, but after allowing for the effect of this write-up the Net Corpor¬ ate Deficit including the $2,581,667 Corporate Surplus of the Central New England Railway is $22,750,010. We have discussed the results of operation of the first four months of the present year, which show a deficit of $4,999,483 after fixed charges. The road will be fortunate if it does not in the year 1923 have as large a deficit from operations as in 1922. It is unnecessary to dwell upon the bearing of these facts upon the road’s credit. The question of credit is vital. During the next twelve years the road has maturing indebtedness of $127,824,201 (to the Federal Government $88,546,500, bonds in hands of public $39,277,701) with $12,819,505 additional for leased lines. These maturities begin with $5,587,348 * in 1924 followed by $24,431,251 of the European loan of 1907 due April, 1925, less than two years away, which has already been once extended at the rate of 7%. In addition $11,762,607 * of other indebtedness comes due during 1925. * Includes obligations of leased lines and subsidiary trolley properties. 210 In our judgment only two alternatives present them¬ selves as methods of procedure in rehabilitating the New Haven. One is rehabilitation through receiver¬ ship. This method would be accompanied not only by the heavy expenses involved in receivership proceed¬ ings, but by a depressing effect upon all business activ¬ ity in New England. The other alternative is rehabilitation by coopera¬ tion, a voluntary reorganization of the company in which all New England will give its help, the public through the state governments, the stockholders, the bondholders, and the shippers served by the road—and we believe the Federal Government. The advantages of the method of rehabilitation through cooperation speak for themselves. We be¬ lieve the prompt and successful achievement of such a venture would give New England a new impetus. New England has shown courage and resourceful¬ ness in the past. We believe New England is ready to do so again. The Committee has worked out a constructive plan for rehabilitation which it presents in detail. This plan it should be understood is offered as a tentative suggestion, but it is the result of careful study and represents an effort to put into actual workable form what would otherwise be a mere statement of generali¬ ties. As a first step in building our plan of rehabilitation by cooperation we have endeavored to arrive at an estimate of what the earnings of the New Haven should be in 1925 based upon the conditions and assumptions . we shall set forth. 211 Estimate oe Earnings in 1925 Under Normal Conditions In our opinion the New Haven Railroad, if its opera¬ tions can be conducted with a reasonable and attainable degree of efficiency to be arrived at in 1925, should earn in that year, if average business conditions and the present general average of rates prevail, a gross rev¬ enue from railway operations of about $143,232,000 and a net revenue, before fixed charges, of about $29,155,000. This net revenue after deducting $21,- 640,000 Tor fixed charges would leave a surplus of in¬ come over all expenses and charges of about $7,515,000. We have considered this estimate with great care and we believe it is based upon a sound analysis of all material factors, and is thoroughly conservative. We cannot compare to much advantage this estimate with a recent year because 1922 was the year of the strike in the textile industry and the coal strike which affected coal traffic and distorted the cost of locomotive fuel and also the year of the shop strike. 1921 was a year of acute business depression. The several years before 1921 were affected by war conditions and fed¬ eral control. We give, however, in the following state¬ ment our estimate in comparison with the calendar year 1922 and in comparison with the overlapping year July 1, 1921, to June 30, 1922, which does not include the shop strike period: 212 NEW YORK, NEW HAVEN & HARTFORD R. R. CO. (INCLUDING CENTRAL NEW ENGLAND) Comparison of Earnings for Years Ending June 30 , 1922 , and December 31 , 1922 , with Estimate of Earnings in 1925 under Normal Conditions Year Ending June 30, 1922 Per Cent Expenses to Revenues Year Ending Dec. 31, 1922 Per Cent Expenses to Revenues Estimate op Earnings in 1925 Per Cent Expenses to Revenues REVENUE Freight. $64,227,084 $66,157,967 $73,814,000 Passenger. 49,595,777 49,443,460 53,889,000 Mail .“. 1,542,451 1,523,311 1,660,000 Express. 4,029,777 4,961,182 5,408,000 Other Passenger Transportation. 1,546,872 1,612,707 1,758,000 Other Freight Transportation. 772,550 832,650 933,000 Total Transportation Revenue. $121,714,511 $124,531,277 $137,462,000 Dining Buffet and Other Incidental Passenger Revenue . 1,904,966 1,985,289 2,164,000 Demurrage and Other Incidental Freight Revenue . 713,362 709,044 794,000 Other Incidental Revenues. 1,617,507 1,793,746 1,794,000 Joint Facility Revenues. 1,031,987 1,018,036 1,018,000 • Total Railway Operating Revenue .... $126,982,333 $130,037,392 $143,232,000 EXPENSES Maintenance of Way and Structures .... $18,558,127 14.61 $17,893,602 13.76 $18,500,000 12.92 Maintenance of Equipment. 25,854,031 20.36 27,495,877 21.14 26,096,000 18.22 Transportation. 51,785,614 40.78 53,618,342 41.24 56,177,000 39.22 Other Expenses. 6,406,980 5.05 6,198,271 4.77 6,399,000 4.46 Total Railway Operating Expenses . . . $102,604,752 80.80 $105,206,092 80.91 $107,172,000 74.82 Net Revenue from Railway Operation . . 24,377,581 24,831,300 36,060,000 TAXES AND RENTS Taxes. $4,678,809 $4,874,486 $5,000,000 Hire of Freight Cars (Net). 1,812,618 2,880,235 1,550,000 Other Equipment Rents (Net). Cr .-178,824- 108,588 125,000 Joint Facility Rent (Net). 4,274,008 4,111,110 4,200,000 Uncollectible Railway Revenues. 39,792 30,841 30,000 Total Taxes and Rents. $10,626,903 $12,005,260 $10,905,000 Net Railway Operating Income. 13,750,678 12,826,040 25,155,000 Non-Operating Income (Net). 3,196,275 A 2,650,122 A 4,000,000 Total Net Inc. Available for Fixed Charges $16,946,953 $15,476,162 $29,155,000 FIXED CHARGES Rent for Leased Roads (Net). $2,843,561 A $2,843,621 A $2,844,000 Interest. 15,982,022 16,408,228 17,128,000 Other Deductions. 1,556,834 1,667,882 1,668,000 Total Fixed Charges. $20,382,417 $20,919,731 $21,640,000 Per Cent Net Income to Fixed Charges . . 83.14 73.98 134.73 Adjustments for Period of Federal Control . Ct.-993,570 Dr. 26,008 Net Income. Det.-2,W,894 Def .-5,469,577 7,515,000 Note A — This is a Net Item and excludes certain inter-company and leased line accounts. The exclusion of these items from both “Non-Operating Income” and “Rents for Leased Roads” makes a clearer and more logical statement in the opinio 0 of the Committee. This accounts for the difference between these items for the year ending December 31, 1922, on thu statement and on the Condensed Income Account, 1908 to 1922 (Exhibit A, opposite page 65). 213 Basis of Estimate The figures supporting this estimated surplus of $7,515,000 after fixed charges are based upon: An estimated increase in freight traffic over 1922 at the rate of 4% a year. This means a ton-mile movement of about 3,383,000,- 000 compared with 3,020,000,000 ton miles in 1922, when the volume of freight handled by the New Haven reached about the lowest point during the last six years. The actual volume of freight traffic in the four months ending April 30,1923, increased 8% over the same four months of 1922, despite the embargoes of 1923. We believe also that there will be a gain in passenger traffic which we have estimated at 3% a year, and we have estimated that mail, express and other railway operating revenues will increase in similar propor¬ tions. The volume of passenger traffic in the first four months of 1923 has already shown a considerable in¬ crease (about 5%) over the same period of 1922. We are assuming in our estimate of gross revenue that the average rates for freight, passenger, mail and express will remain at about the present level. We are also assuming that the embargo policy which during 1922 seriously depleted the net earnings will be revised and put on a different basis; also that the nimble freight car will predominate on the New Haven system and bring the average freight car miles up to seventeen miles per day. The president of the road has advised this committee that it can be brought to nine¬ teen miles per day. 214 We quote from his testimony: “ But if we assume the approximation of nineteen miles which you could reach, although I am sure it is going to go above twenty when we get normal, in comparison with the average in prior years of fifteen, it means that heavy traffic will do the business of the New Haven road with something like 6,000 to 8,000 less cars, because of more rapid movement than would have been possible on the basis of selecting the lower number of miles per day. ’ 9 ( Committee’s Record p. 2571.) In our estimate of “ normal 99 operating expenses we have assumed there will be no important changes in the present scale of wages. Expenses for Maintenance of Way & Structures we estimate at $18,500,000, which is $606,000 greater than in the year ending December 31,1922, and substantially the same as for the year ending June 30, 1922, when these expenses appear to have been about normal. It must be borne in mind that repairs of road and struc¬ tures need not necessarily increase materially on ac¬ count of a moderate increase in train movement. In our estimate of expenses for Maintenance of Equipment we are assuming that the cost of locomotive repairs can be brought down well below the average for 1922, when it was thrown quite out of line by the shop strike, and that the condition of equipment and the number of “ bad order 99 freight cars will have been brought by 1925 to normal, so that 7,951 bad order cars will be restored to service and earning money. Our estimate of Transportation Expenses assumes 215 that the cost of coal will be substantially the same as for the year ending June 30, 1922; that winter conditions will be normal, and that the traffic will be handled with reasonable, attainable efficiency. We have estimated that the Transportation Expenses incident to the move¬ ment of freight traffic will be increased over those of the year ending June 30,1922, in direct proportions to our estimated increases in traffic, and that other Transpor¬ tation Expenses will increase over 1922 to the extent of 75 per cent of our estimated increases in traffic. We have reduced certain items of cost, but only where they were clearly abnormally large in 1922. Our estimate of net cost for rentals of freight cars has been based upon careful study, due allowance hav¬ ing been made for the additional “ foreign ” cars re¬ quired for the additional traffic. We have estimated that fixed charges will increase about $720,000 over 1922, representing interest on an estimated annual expenditure of $4,000,000 for addi¬ tions and improvements to the property and equip¬ ment during 3 years. We have estimated that the net “ Non-operating In¬ come ” would increase from $2,650,000 in 1922 to about $4,000,000 in 1925. This estimate is based upon the fact that no dividends were paid in 1922 upon the capital stock of the New England Steamship Co. (which owns and operates the Fall Kiver line and other Long Island Sound steamboat lines) or on the capital stock of the New York, Ontario & Western. The entire capital stock of the New England Steamship Co. and a majority of the stock of the New York, Ontario & Western are owned by the New Haven. The New 216 England Steamship Co., in the 12 months ending April 30, 1922, earned about $850,000 over its fixed charges. The New York, Ontario & Western, during years when coal traffic was normal, has been able to pay 2 per cent dividends bringing in about $583,000 annually to the New Haven. In our estimate of $4,000,000 we have taken into account probable dividends from the above two sources, hut have estimated that no revenue will be received by 1925 from stocks of the Boston & Maine or Rutland railroads, the investment in New York, Westchester & Boston, or from stocks of the various street railway properties. The Connecticut Company is showing a substantial surplus over its fixed charges, but its surplus income for several years to come will probably be needed to take care of its own capital requirements for additions and improvements and to pay oft its floating debt. Improved Operation Will Build up Traffic A good, sound, thrifty management whether in rail¬ roading or manufacturing generally secures not a small part of its net results from the many little leaks stopped and the many little increases in efficiency gained. We have taken this into consideration but to a very minor extent in our calculations. Our estimate of increase in freight traffic seems con¬ servative partly because the New Haven has not been able to build up its freight business, during recent months at least, to • what might have been possible, owing to the poor condition of its motive power and other operating conditions. The traffic department 217 which is the selling department has had little to sell in the way of surplus transportation and frequently nothing to sell because the operating department has been unable to take on additional business, or indeed to care for all the business pressed on the road by ship¬ pers. On a strong road the operating department, ex¬ cept rarely at a peak when all roads are overloaded, spends no time limiting traffic. On the contrary the traffic department is out soliciting additional business as hard as it can go and when successful the operating department cares for it and undertakes to give service satisfactory to the new shippers as a matter of course. The shippers of a great deal of valuable trainload traffic originating in Northern New England, although the New Haven has the level route and the shortest by a hundred miles, are routing their cars over the Berk¬ shire Hills and then down the Hudson River to New York and beyond, because they find that this circuitous up and down hill route gives the better service. If operating conditions on the New Haven improve, the traffic department cannot be expected to go out and bring this business back in a month or two, but continued good service and ability to handle it ought gradually to bring back at least a large part of it to the natural route possessed by the New Haven. Cooperation of Employees The employees of this road are New England men. We fir ml y believe that under the right circumstances they will gladly lend a hand to make this railroad one of the best conducted roads in the country. It is but 218 a small percentage of men wlio are solely interested in getting. Most of us want to give as well as get, if our relations are on a friendly and sympathetic basis. We feel sure that the New Haven Railroad can at¬ tain a standard of which we shall all be proud. It’s a better game—more interesting. Let us all make up our minds to help, — shippers, travelers, officers, employees, public authorities, everybody. Putting in a stream of alibis why we are not what we want to be here in New England is dull stuff. It isn’t half as interesting as getting all together as our fathers did at the opening of the railroad era and being what we would like to be. Credit It may be said if on a conservative estimate we figure a surplus of $7,515,000, that will keep us out of the sheriff’s hands, and is it not enough % It is not enough. In the first place this thirty-five per cent margin above fixed charges is an average figure. We are bound to have normal years, extra good years and extra bad years. Every time we have an extra bad year the road might not earn its fixed charges. If every few years a year came along when the road did not earn its fixed charges the road would have only a third- or fourth- class credit. If we want to make the New Haven a first- class road we must have a first-class credit and get it now. It is a tool we need to work with. If at times the road cannot sell its securities at all and the rest of the time additional capital can be at¬ tracted only at excessive rates we can never get our feet on dry land. 219 To get first-class credit we must not only earn our fixed charges every year, but we must earn them by a good margin. When people find it interesting to dis¬ cuss whether a railroad is going to earn its fixed charges, you may be sure the road’s credit is already damaged. Good credit involves keeping so far away from the region of doubt that no one cares to hold a conversation on the subject. Where is this line? By common consent and based upon many years’ experience the rule for first-class railroad credit is that net earnings must average close to twice the fixed charges. The promise to pay of such a road will always be considered prime and will bring a high price. Come down to one and a half or one and a third and you have “ boarding house ” butter, come down to one and a quarter or one and a fifth and you have “ worked over ” butter. It is perhaps true that a road which has shown over a long period of years ability to earn once and a half times its fixed charges will gradually acquire confidence and a good credit, but certainly a road that is trying to rebuild its credit within a reasonable period of time must show a bigger margin than once and a half. How are we going to establish a better relation be¬ tween fixed charges and net earnings? It is no fault of the bondholders that the road has lost a lot of its capital, and the savings banks are the largest bond¬ holders. It is clear, however, we must ask the bond¬ holders, savings banks and all, to waive some of their claims. It may be asked why does this Committee concern it¬ self with the fixed charges of the New Haven or with 220 what should be done in regard to them. It is because to take no cognizance of the fixed charges of the New Haven and to present no plan for dealing with them would leave the conclusions of the Committee dangling in the air with no solution of our problem. Readjustment of New Haven Capitalization We have reached the conclusion that it is fair and necessary under all the circumstances to ask the bond¬ holders to cut down their bonds $76,000,000. All the bondholders cannot be treated alike as some of them hold bonds which are far from the firing line even under present circumstances—bonds, for ex¬ ample, like the Harlem River & Port Chester 4s of 1954. So it is not proposed to disturb bonds of this character. But about $133,000,000 of bonds not so well secured we suggest should be cut forty per cent. About $25,000,000 bonds which are still less well secured we suggest should be cut fifty per cent, and about $17,000,000 other debenture bonds should be cut about sixty per cent. We suggest that the holders of the bonds that are cut should be asked to take a new 5 per cent first preferred stock cumulative from January 1, 1927. This stock would be issued against 3y 2 per cent, 4 per cent and 5 per cent bonds to an amount equal to the amount that the bonds are scaled down. Against 6 per cent and 7 per cent bonds it would be issued to an amount equal to 120 per cent of the amount that the bonds are cut down. This as set forth in detail in Appendix T would cut the indebtedness of the New Haven Railroad 221 t. by $76,006,640 and reduce the annual fixed charges by $3,641,498. This would reduce fixed charges of the road from $21,640,000 to $18,000,000 as compared with estimated earnings of $29,155,000, a ratio between interest charges and average net earnings of one and six tenths, but this as we have pointed out does not go far enough to estab¬ lish a first-class credit. Next, therefore, we suggest that the present stock¬ holders should be asked to come forward and undertake to raise $15,000,000 of cash by buying or arranging for the purchase by others from the company of enough common stock at or about market prices to bring in the $15,000,000. Under our state laws today this stock cannot be sold by the company at less than $100 per share. It is true when this stock was originally sold the purchasers paid at least $100 per share for it and a great many paid much more. But to imagine this new stock can now be sold for $100 per share would be like expecting a canvas- back duck to step out of a hen’s egg. We recommend, therefore, that the legislatures of Connecticut, Rhode Island, and Massachusetts recognize today’s reality by removing the old par value for the New Haven stock and permitting it to be sold for its market value. It maybe asked why not stick to the par value stamped on the common stock certificate and sell a preferred. If the preferred is put on equal footing with the preferred stock given the bondholders, it is diluting for the benefit of the common stockholders a stock created to compen¬ sate for the waiver of the superior right of the bond¬ holders and does not seem fair. If it is made a second 222 preferred stock it seems to us it would be very difficult to sell. But if the road is to be rehabilitated, to be set up in solid financial condition and given a new orienta¬ tion, it is believed the common stock would appeal to a large reservoir of capital which would be glad to come forward to subscribe for it. The sale of this new stock is especially fair because if a stockholder wants to preserve his same proportion, he can take his share of the new stock, but if he is un¬ able to do this he has still by assenting to the plan made an indirect contribution and yet retains a stock interest which under a receivership and an assessment he would lose altogether if he did not pay his assessment. Atchison Reorganization of 1893 The rehabilitation of the Atchison Railroad Company in 1893 proved to be one of the soundest and most suc¬ cessful reorganizations ever undertaken in this country. In that case the common stockholders came forward and did their part by contributing ten dollars cash per share. It is to be noted that the Atchison common stock sold at a good deal lower price than has been recorded for the common stock of either the Boston & Maine or the New Haven. As the Atchison was in the hands of a receiver it was possible to wipe out any common stock refusing to con¬ tribute and so unanimous consent to the contribution was obtained. This cannot be done here. Even after the reorganization and the paying in of the additional ten dollars per share the common stock 223 of the Atchison still sold for a time at less than today’s prices of the common stock of either of our two rail¬ roads, and for less than five dollars above the new ten dollars paid in. But the reorganization was sound, first-class management was given the property, and today its credit stands as high as that of any railroad in the country. We recommend that savings banks and other institu¬ tions and fiduciaries be given any necessary power to participate in the rehabilitation of the New Haven under the plan suggested by the Committee, and to hold for five years after the period of control by the trustees their present securities and any new securities they acquire by participating. This $15,000,000 to be secured by the sale of common stock could be used to buy in outstanding bonds and so further reduce capital or it more probably should be held in hand for future capital needs. In either case it will reduce charges or give the road some more cars or locomotives or other property to help earn the fixed charges. For the purpose of our calculation, we will consider it is applied to the reduction of charges by the purchase and cancellation of bonds. It would, we think, buy in at least enough outstanding bonds to reduce fixed charges seven hundred and fifty thousand dollars so we will deduct this sum from our last figure for fixed charges — $18,000,000 — and this brings us to fixed charges of $17,250,000 compared with net earn¬ ings of $29,155,000. 224 Cooperation of the States This, however, still does not go far enough. It may be asked why if this does not go far enough should we not “ hit ” the bondholders and stockholders harder for as much more as we need. The answer is that neither we nor anybody else, not even the states, have the power to “hit” either the bondholders or the stockholders. We are asking for the voluntary cooperation of the bondholders and stockholders in rehabilitating for the public good this property and setting it on its feet. What, therefore, can we propose in order to get the New Haven to the point where it can be set up with the first-class credit that seems essential and what is to be the incentive to these bondholders and these stock¬ holders to play their part ? Here we think the states can well cooperate. We will say first that if any state help is to be given we recommend that the control and management of the Company be vested in trustees to be appointed to serve ten years by the several states, two by Connecti¬ cut, one by Rhode Island and two by Massachusetts. We do this chiefly because if the states are to lend their credit then we think they should take control. We do not believe in a divided responsibility, part state trustees and part representatives of the stockholders. If this were done the responsibility would be neither here nor there. This board would be comprised of human men who could hardly be blamed for saying, and honestly believing, too, that if each side during a series of years had voted differently on a series of questions something different would have taken place 225 from what actually happened. We believe that the best policy will be all state trustees sitting in the limelight and one hundred per cent responsible to the states and to the public for their acts and the results. The trus¬ tees should be paid reasonable compensation; none of them should be executive officers but they should be responsible for the selection of the executive officers and their continuance in office and therefore at all times for the quality of the management and the policies of the company. In our opinion state aid should be extended by each of the three states of Connecticut, Rhode Island, and Massachusetts undertaking to return to the road such portion of the taxes paid by the New Haven in any given year for state and local taxes within the state as may be required to meet any failure of net earnings to cover fixed charges for that year. We do not mean that the sums paid in local taxes should be returned to the railroad by the cities and towns but that the states should undertake the return of the tax money or such portion thereof as may be needed to restore a deficit in fixed charges. The sum paid by the New Haven in taxes in these three states totalled for 1922 —$3,569,934 divided as follows: Connecticut $1,890,239, Rhode Island $558,134, Massachusetts $1,121,561. This would make the total liability of Connecticut under such a guaranty applied to the year 1924, $1,890,239, plus any increase in state or local Connecti¬ cut taxes levied during 1924 above the $1,890,239 col¬ lected for the year 1922. In like manner and to the extent of the sums respectively levied in Rhode Island 226 and Massachusetts would the guaranty of these two states apply. It seems to us this is a fair and sound method of distributing the burden between these three states. If the taxes are relatively too high in one of these states it will pay relatively perhaps more, but why should it not if it is undertaking to collect a higher tax rate from the railroad in the majority of years when the guaranty, in our judgment, will cost nothing. This guaranty should last as long as the control through these trustees continues. We will now suppose a year so bad that the full guaranty of the states of $3,569,934 is called for. In order to reach the point where the states could be called upon at all, the net earnings of the road would have to drop, after the bondholders and stockholders had done their parts as above outlined, from our estimate of $29,155,000 down to $17,250,000. We think there is little likelihood of the earnings dropping to this figure of $17,250,000 unless in some quite abnormal year, and still less down to the lower figure of $13,680,000 which must be the case before the states could be called upon for their full guaranty. Indeed, if this road has $75,000,000 of its bonds cancelled and $15,000,000 fresh cash put in and operations are brought by the state trustees up to the operating results which we believe are attainable within a few years, then thereafter at least it is improbable that the states will be called on for any help under their guaranty. It is clear that for a period while the road is being re-established, we suggest three years, no common dividends should be declared and thereafter during the last seven years of control by the trustees not 227 in excess of half the earnings of such years ordinarily applicable to dividends on the common stock. The preferred stock which represents the surrender of bonds should be subject to no restrictions on the decla ration of its stipulated 5 per cent dividends if earned. We also suggest that shippers should be asked to help for a time by reducing the present two days of free time for loading or unloading to one day — the second day to have a moderate demurrage charge of say two dollars. The question whether bonds issued by the state trustees during their control should receive a state guaranty of principal and interest is a closer question but we are of opinion that if the state trustees decide to issue bonds they should carry a state guaranty as to principal and interest. All the people of these states are vitally interested in making this property serve them effectively at the least possible cost, and for the states to stand behind the road to the extent of the guaranty we have proposed and not to assist in enabling the company to raise at the lowest possible cost the new capital needed to perform the service which the people of these states require seems faint-hearted and on the whole an undesirable stopping point. The liability of the states on this guaranty would be pro-rated among them on the basis of the taxes paid by the road in the several states during the year preceding the issue of the bonds. If this is done it may be found a better method for the states to issue their own bonds and with the proceeds buy a like amount of bonds of the company of the same maturity and interest rate. In this way the money will be obtained at a less rate of interest and the liability of the states be correspondingly smaller. The amount to 228 be financed in this way on state credit could if desired be limited to the amount of bonds now outstanding which, after the readjustment we propose, will mature during the period of control by the trustees, plus, say, $4,000,000 a year for additions and improvements. Cooperation" of Federal Government If the states are thus to cooperate in setting this road on its feet to enable it to function properly it seems clear that it is fair to ask the Federal Govern¬ ment to reduce its present rate of 6 per cent on the government war loan. This 6 per cent under the new setup with the much improved credit becomes too high. We think that a reduction from the present 6 per cent to 4 per cent would be reasonable and fair. This would still leave the government rate of interest on a basis comparable to that recently fixed by our Federal Gov¬ ernment for our British war loan. We suggest that the states of Connecticut, Rhode Island, and Massa¬ chusetts proceed through their representatives to put forward this request for the cooperation of the Fed¬ eral Govermnent, and also request the government to fund its maturities into a long time loan. This cooperation if secured on the part of the Fed¬ eral Government would reduce the company’s annual interest charges by a sum equal to 2 per cent on $88,500,000, viz. $1,770,000. Early maturities of New Haven debt We give now the indebtedness maturing from 1924 to 1935, including the obligations of leased and con¬ trolled lines: 229 Year Due U. S. Government Due Others Total 1924 . . . $100,000 $5,487,348 $5,587,348 1925 . . . 4,390,000 31,803,858 36,193,858 1926 . . . 100,000 1,190,370 1,290,370 1927 . . . 100,000 2,840,370 2,940,370 1928 . . . 100,000 1,239,370 1,339,370 1929 . . . 100,000 893,370 993,370 1930 . . . 60,126,500 4,296,020 64,422,520 1931. . . 8,160,000 1,172,900 9,332,900 1932 . . . 2,560,000 1,426,900 3,986,900 1933 . . . 4,360,000 709,900 5,069,900 1934 . . . 160,000 609,900 769,900 1935 . . . 8,290,000 426,900 8,716,900 Total . . . $88,546,500 $52,097,206* $140,643,706 * Includes $1,186,800 Equipment Trust obligations now held by Director General of Railroads which are subject to resale. If the maturities to the Federal Government are ex¬ tended as we propose, we are left to deal with $52,000,000 of other maturities of which more than half mature in 1925, consisting principally of the $24,431,251 de¬ bentures of the so-called European Loan. The re¬ mainder of the maturities for the entire twelve-year period includes several million dollars of street railway bonds assumed by the New Haven in connection with the acquisition of street railway properties which in our opinion should be refunded or paid off by the street railway properties, a smaller amount of trolley bonds upon which the New Haven itself is not liable, and almost the entire balance consists of underlying bonds, equipment trust obligations, and bonds of leased lines, all of which the integrity of the system requires be paid. The holders of the European Loan, however, we think should receive 30 per cent in cash and should extend 30 per cent of their principal by taking in payment therefor new 6 per cent First and Refunding Mort¬ gage bonds maturing in November, 1937. For the ✓ 230 remaining 40 per cent they will, under the committee’s plan, receive preferred stock. Other Suggestions The New Haven Company has guaranteed dividends of $4 a share a year on a total of $6,300,000 (63,000 shares) of preferred stock divided as follows: Boston Railroad Holding Co. $2,800,000 New England Investment & Security Co. 112,100 Springfield Railway Companies . 3,387,900 Total . $6,300,000 An effort should be made so to deal with each of these issues as entirely to eliminate the guaranties by the New Haven Company. The New Haven Company is in effect the guarantor of the rental ($1,400,000 a year) under the lease from the Connecticut Railway & Lighting Company of its trolley and gas and electric properties. While $350,000 of this is protected apparently fully by the rental on the sublease of the gas and electric properties, a balance of $1,050,000 remains as *a direct charge against the trolleys operated by the New Haven’s subsidiary, the Connecticut Company. The Connecticut Company is now earning well in excess of its charges. But not¬ withstanding these facts, we think an effort should be made to find a basis on which the entire guaranty of the New Haven Company can be eliminated. In fact all the trolley investments of the New Haven should be disposed of as soon as their fair value can be realized. The capital invested in them will thus become 231 available for the uses of the New Haven Railroad. In an^ such sale a special effort should be made to have the trolley properties provide for the payment in full of all mortgage bonds secured upon them. Such a sale, too, ought to afford an opportunity to procure a release of the New Haven from its guaranty of the Connecti¬ cut Railway & Lighting rental. The New Haven and the Pennsylvania Railroad are joint guarantors of $24,000,000 of 4% per cent bonds of New York Connecting Railroad Company. The Connecting Company is unable to meet its interest without receiving abnormal allowances from the New Haven and the Pennsylvania, so that in fact the New Haven is being called upon under this guaranty. As the New Haven’s liability here is unsecured, and so is of a lower grade than most of the bonds and de¬ bentures which under the plan are to be converted in part into preferred stock, an adjustment with the Pennsylvania should be sought under which the New Haven’s responsibility for those bonds would take on, in part at least, the character of a contingent charge, ranking with the New Haven’s preferred stock, rather than of a fixed charge. State Cooperation not new in New England Railroad History It may be urged that it is a bold step to utilize state credit to help in the restoration of this railroad to a condition which will enable it to perform the service the public needs so badly. Perhaps it is. But the present situation is a menace to the welfare of the people of 232 these three states. The amount of the assistance pro¬ posed, if it should be all required, is not sufficient to cause any strain on the credit of these states and in our judgment is an essential part of the plan needed to provide these people and their industries with the serv¬ ice which it is in the public interest they should receive with the least possible delay. In Massachusetts the State, believing that the welfare of its people demanded the construction of the more difficult and expensive lines west across the state, ad¬ vanced more than three and one half million dollars to the predecessor of the New York & New England Rail¬ way to help it to reach the Hudson River. In 1836 the State of Massachusetts to aid the Western Railroad (later the western half of the Boston & Al¬ bany) subscribed for one million dollars of its capital stock and subsequently loaned the road $2,800,000 as further assistance. In the case of the western predecessor of the Eitch- burg Railroad (the Troy & Greenfield Railroad) the state advanced a total of $29,257,913, principal and interest, mainly for the construction of the Hoosac Tunnel. These grants of state and local aid were bold meas¬ ures carried forward by enterprising men at a time when the resources of the state were almost insig¬ nificant compared with our resources of today. They were bold but they were wise. They gave New Eng¬ land an immediate and tremendous impetus which in¬ sured the successful growth of our industries, our population, and our well being for many decades. Be¬ fore the coming of the railroads the town of Petersham 233 in Worcester County is said to have been bigger than Worcester. But Petersham, still untouched by a rail¬ road, has been a charming hut dwindling village now for nearly a hundred years, while the village of Worcester has grown to he a busy, prosperous city of 180,000 people. On both the Western Railroad and its successor, the Boston & Albany, and also on the Troy & Greenfield Road and its successor, the Fitchburg Railroad, the state was represented by state directors for many years. Compared with the boldness of our predecessors in utilizing the credit of their states and also the credit of many of the local communities for connecting links, to prevent New England from being left behind in the new era of railroad building, our present proposal in relation to our resources of today seems hardly to take courage enough to fill a thimble. We have not had opportunity to develop the railroad history of our other New England states but we could undoubtedly find many instances where local credit, if not state, was pooled to construct needed lines or links in our New England railway systems. Large public expenditures for highways Quite a good many public highways and bridges in the early days were built with private capital in return for the grant of tolls and if the states and communities had not taken over the building of roads we would have had more and more of our roads and bridges built with private capital. But first the local communities and within recent years the states also have supplied the 234 capital needed to construct the highways and have pro¬ vided the great sums needed annually for maintenance. Only to speak of recent years, since 1895, the six New England state governments have expended for the con¬ struction, reconstruction and maintenance of highways $148,000,000. At the present time they are spending annually at the rate of $23,000,000 a year, less than half of which is being returned in the form of motor vehicle fees. We have not obtained the local figures from all the New England states but the towns and cities in Massachusetts are spending additionally on the roads at least twenty-five million dollars a year. Our roads are necessary, yes, but not a whit more than our rail¬ roads. Extensive use of public credit for municipal IMPROVEMENTS The use of public credit in the Metropolitan district of Boston alone since 1895 for water, sewers, and parks has amounted to eighty-two million dollars one hun¬ dred per cent essential, without dispute, so far at least as water and sewers are concerned, but besides running water our people if their welfare is to be conserved must be served by efficient modern rail transportation facilities. Since 1894 the city of Boston has pledged its credit for approximately thirty-seven million dollars for sub¬ ways and to improve rapid transit facilities. In like manner other communities have not hesitated to solve the problems of their growing needs by the utilization of their public credit. 235 REHABILITATION OF BOSTON & MAINE Our review of the financial condition of the Boston & Maine has shown that it is in weak condition and that there is immediate necessity for rehabilitation of its credit. In 1921 its deficit after interest charges was $6,612,422. Although 1922 showed fixed charges earned (by the narrow margin of $27,992) it has a deficit after fixed charges for the first four months of 1923 of $4,632,471; and a substantial deficit for the current year seems inevitable. The road was reorganized in 1919 and the fixed charges reduced $2,725,862 chiefly by the holders of leased line stocks taking various classes of first preferred stocks. The first preferred stocks have paid no dividends since July 1920 and the accumulated dividends on January 1, 1924 will be $7,125,230. On that date the rate of dividend on all classes of first pre¬ ferred stocks steps up twenty-five per cent in accord¬ ance with the terms of the reorganization agreement. The Boston & Maine has heavy maturities in the next twelve years, a total of $93,145,679 beginning with $1,505,200 in 1924, $5,194,200 in 1925, and $10,720,200 in 1926. We suggest a plan for rehabilitation by cooperation similar in its general outline to the rehabilitation plan for the New Haven already described. As in the case of the New Haven, this plan is of¬ fered as a tentative suggestion in order to give a pic¬ ture as to the way in which such a plan might be ac¬ tually worked out. 236 As a starting point for the formulation of such a plan we begin with an estimate, based upon the condi¬ tions we shall set forth, for the year 1925. Estimate of earnings in 1925 under normal CONDITIONS We have analyzed with care the earning possibili¬ ties of the Boston & Maine Railroad and reached the conclusion that in 1925, assuming that its operations are conducted efficiently, the gross revenue from rail¬ way operations should be about $86,180,000 under average business conditions, and that the net revenue before fixed charges should be about $10,667,000. After deducting estimated fixed charges of $7,414,000 there should remain, in our judgment, a surplus over all expenses and charges of $3,253,000. We believe this estimate is sound and not over sanguine. As in the case of the New Haven, we cannot compare to much advantage these estimates with a recent normal year because 1922 w T as the year of the strikes in the textile industry and the coal strike which both affected coal traffic and distorted the cost of locomotive fuel, and also was the year of the shop strike, while 1921 was a period of acute business depression. The several years before 1921 were affected by war conditions and Federal control. We give, however, our estimate in comparison with the calendar year 1922 and in compari¬ son with the twelve months from July 1,1921, to July 1, 1922, which does not include the shop strike period. 237 BOSTON & MAINE RAILROAD Comparison of Earnings for Years Ending June 30 , 1922 , and December 31 , 1922 , with Estimate of Earnings in 1925 under Normal Conditions REVENUES F ight Revenue. P i.senger Revenue. Ml. Epress. Gier Passenger Transportation Cher Freight Transportation . V .terline Transportation . . . i’otal Transportation. . . . I:udental Revenue Passenger . I :idental Revenue Freight . . C ler Incidental Revenues . . J nt Facility Revenues. . . . Total Railway Operating Revenues . . . EXPENSES Mintenance of Way and Structures .... IN lintenance of Equipment. fansportation. C her Expenses. Total Railway Operating Expenses . . . Net Revenue from Railway Operation . . TAXES AND RENTS Txes .. Ire of Freight Cars (Net). (her Equipment Rents (Net). J nt Facility Rent. I icollectible Railway Revenues. Total Taxes and Rents. 'Net Railway Operating Income. 1 >n-Operating Income. Total Net Inc. Available for Fixed Charges FIXED CHARGES 1 :nt for Leased Roads. 1terest. (her Deductions. Total Fixed Charges. 1 r Cent Total Net Income to Fixed Charges .djustment for Period of Federal Control AjNet Income. Year Ending June 30, 1922 Per cent Expenses to Revenues Year Ending Dec. 31, 1922 Per cent Expenses to Revenues Estimate of Earnings in 1925 Per cent Expenses to Revenues $48,164,234 $48,316,267 $53,084,000 22,916,914 22,556,855 23,578,000 914,466 995,185 1,055,000 2,253,871 2,919,859 3,155,000 2,168,291 2,266,538 2,403,000 735,789 751,106 826,000 18,741 $77,172,306 $77,805,810 $84,101,000 463,833 461,238 489,000 583,506 572,405 629,000 766,685 957,762 958,000 2,374 2,908 3,000 $78,988,704 $79,800,123 $86,180,000 $12,038,245 15.24 $11,076,742 13.88 $12,000,000 13.92 15^012,657 19.01 16,112,965 20.19 15,563,000 18.06 36,834,916 46.63 36,445,903 45.67 38,793,000 45.01 3,633,995 4.60 3,418,787 4.29 3,419,000 3.97 $67,519,813 85.48 $67,054,397 84.03 $69,775,000 80.96 11,468,891 12,745,726 * 16,405,000 $2,298,676 $2,580,677 $2,850,000 3,297,606 3,740,974 3,736,000 Cr .-49,873 Ct.-18,850 Ct.-18,000 62,855 Ct.-38,409 Cr.-38,000 8,420 5,094 5,000 $5,618,184 $6,269,986 $6,535,000 5,850,707 6,475,740 9,S70,000 625,741 797,209 797,000 $6,476,448 $7,272,949 $10,667,000 $920,376 $920,376 $920,000 5,937,532 6,004,691 6,455,000 ' 6L595 39,428 39,000 $6,919,503 $6,964,495 $7,414,000 93.60 104.43 143.88 Cr - 470,595 280,462 27,540 27,992 3,253,000 238 Basis of Estimate The figures supporting this estimated surplus of $3,253,000 are based upon an estimated increase in freight traffic of three and one-third per cent a year, or a ton mile movement of 2,959,000,000 as compared with 2,690,000,000 ton miles in 1922 when, largely due to operating difficulties, the volume of freight handled by the Boston & Maine reached about the lowest point during the last seven years. The road actually pro¬ duced 3,705,000,000 ton miles in 1920. This, it is true, was a period of very active business, but our estimate is for 1925, five years later, and is based upon 2,959,000,000 ton miles, or actually 746,000,000 less than 1920. We believe that there is likely to be some recovery in pas¬ senger business from the low level of 1922, and have estimated this at two per cent a year. We have also estimated that mail, express, and other railway operat¬ ing revenues will increase in similar proportions. The actual passenger revenue in the 4 months ending April 30, 1923, increased eight per cent over the same four months of 1922. While this was doubtless due, in part, to the severe winter and the consequent reduction in motor car competition, we think these last 4 months’ operations reflect a general improvement in business in Boston & Maine territory and that a moderate improve¬ ment in passenger traffic on the Boston & Maine is prob¬ able during the next 3 years. We are also assuming in our estimate of gross rev- 239 enue that the average rates for freight, passenger, mail, and express will remain at about the present level. “ Normal ” expenses for Maintenance of Way and Structures we estimate at $12,000,000. This is $923,000 greater than for the year ending Dec. 31, 1922, sub¬ stantially the same as for the year ending June 30, 1922, and somewhat greater than the average for the last five years, 1918 to 1922 inclusive, when the volume of traffic averaged considerably more than in the Committee’s estimated “normal year” (1925). In our estimate of expenses for Maintenance of Equipment we are assuming that the cost of locomotive repairs can be brought down somewhat below the aver¬ age for 1922 which was adversely affected by the shop strike and that the condition of the equipment and the number of “ bad order ” freight cars will by that time be brought into satisfactory shape. It is probable that the Boston & Maine should pur¬ chase several thousand additional freight cars, but this estimate does not take into account the possible effect of the ownership of additional cars. Our estimate of Transportation Expenses assumes that the ten additional heavy locomotives already ordered will be in service; that there will be no im¬ portant change in the present scale of wages; that the cost of coal will be about the same as in the year end¬ ing June 30,1922; that winter conditions will be normal and that the traffic will be handled with efficiency. We have also assumed that the Transportation Expenses incident to the movement of freight traffic will be in¬ creased over those of the year ending June 30, 1922, in direct proportion to our estimated increase in traffic 240 and that other Transportation Expenses will increase over 1922 to the extent of seventy-five per cent of our estimated increases in traffic. We have reduced cer¬ tain other minor items of cost, but only where they were clearly abnormally large in 1922. Our estimate of net cost for Rentals of Freight Cars has been based upon careful study, due allowance hav¬ ing been made for the additional ‘ ‘ foreign * ’ cars re¬ quired to carry the estimated additional traffic, and for a reasonably efficient car movement. We have estimated that fixed charges will increase by about $450,000 over 1922 representing interest on an estimated annual expenditure of $2,500,000 for addi¬ tions and improvements to the property and equip¬ ment during three years. Our estimate of $3,253,000 net income would give a margin in an average year of about 44 per cent over fixed charges. This margin, however, is too close to establish a stout credit for the road. In order to build a thoroughly sound credit, the road should be able to earn in an average year approximately twice its fixed charges of $7,414,000. 241 Early Maturities of Boston and Maine debt The necessity for the prompt re-establishment of first-class credit for the Boston & Maine is emphasized by its capital requirements for refunding its present indebtedness during the next 12 years: Due U. S. Due Total Year Government Others Due 1924 . $1,505,200 $1,505,200 1925 . 5,194,200 5,194,200 1926 . 10,720,200 10,720,200 1927 . 5,637,200 5,637,200 1928 . 4,425,200 4,425,200 1929 . $28,303,500 11,984,200 40,287,700 1930 . 5,443,979 4,951,700 10,395,679 1931 . 3,049,000 1,117,200 4,166,200 1932 . 2,775,200 2,775,200 1933 . 5,975,200 1,975,200 1934 . 2,826,200 2,S26,200 1935 . 5,000,000 725,200 5,725,200 Total .... $41,796,479 $57,836,900* $99,633,379 * Includes $1,826,400 Equipment Trust obligations now held by the Director General of Railroads which are subject to resale. It will be noted that the requirements for refund¬ ing during the next three years are approximately $17,400,000 and that in the year 1929 the maturities due the public are $11,984,200 besides the maturity of $28,303,500 due the government. Suggested Plan for Extension of Debt The holders of $46,000,000 of these maturing bonds should cooperate with the rehabilitation plan by as¬ senting to an extension for twelve years at the present rate of interest except that for the period of the ex¬ tension bonds now receiving a coupon rate of less than five per cent shall be brought up to that level, and bonds now receiving a coupon rate of more than six 242 per cent shall be brought down to six per cent for the period of the extension. We exclude from this extension the equipment trust obligations and ap¬ proximately $1,838,000 of underlying first mortgage bonds. A detailed list of the bonds to he extended ap¬ pears in Appendix U. The extension of these bonds will cost the road some $300,000 increase over its present fixed charges but will save the banking expense for refunding and will assist the road to its feet. The bondholders during the recent receivership contributed nothing, and as their principal is to be made secure and the market value of their bonds enhanced it seems fair they should cooperate to this extent. We recommend that savings banks and other insti¬ tutions and fiduciaries be given any necessary powers to make this extension and to hold the extended bonds to maturity. Cooperation of the State Turning now back to our estimated surplus of $3,253,000, or 44 per cent above fixed charges, it is clear that while this average would enable the road to earn its fixed charges in an average year yet it is not margin enough for an abnormally bad year or to bufid a first-class credit. Accordingly we suggest that the states served by the Boston & Maine, viz., Maine, New Hampshire, Ver¬ mont, and Massachusetts should undertake to return to the Boston & Maine such portion of the taxes paid to or within these several states as may be needed to enable the road to meet any failure of net earnings to cover fixed charges for that year. 243 Tlie taxes paid by the Boston & Maine during 1922 to the New England states and the cities and towns wdthin the respective states were — Maine $311,522, New Hampshire $846,421, Vermont $84,432, Massa¬ chusetts $1,245,673, total $2,488,049. It is not proposed that the cities and towns should be called upon to return the taxes paid, but that each state should undertake to return pro rata its share of the tax money paid to the state or the cities and towns within the state or as much of its share as may be needed to cover any deficit in fixed charges. If state cooperation is to be thus given we believe that the control and management of the company should be vested in state trustees to be appointed for ten years, by the several states, one by the State of Maine, two by the State of New Hampshire, one by the State of Vermont and three by the State of Massachusetts. We do not believe in divided responsibility and therefore do not suggest that some of the trustees should be selected by the directors or stockholders of the Boston & Maine. We believe it will be best to have all trustees appointed by the states and unreservedly responsible to the states and to the public for what they may do or leave undone. No READJUSTMENT IN CAPITALIZATION REQUIRED It may be asked why we do not suggest cutting down the bonded indebtedness and substituting preferred stock, as in the case of the New Haven. The question is perhaps open to argument but our estimated ratio of net earnings to fixed charges on the Boston & Maine is somewhat better —1.44 as compared with 1.35 for the New Haven. There has also been an actual destruc¬ tion or permanent loss of a large amount of capital on the New Haven which seems to make fair a concession on the part of the New Haven bondholders before the states step in to help. The “first preferred ” stockholders of the Boston & Maine who hold the $38,817,900 par value of “ first preferred ” stock formerly held leased line stocks, the dividends on wdiich were guaranteed by the Boston & Maine and constituted a fixed obligation of the company. As the result of the receivership inau¬ gurated in August, 1916, these holders of leased line stocks waived their rights and took first preferred stock upon wdiicli they are receiving no dividends and have received no dividends since 1920. • The present so-called 11 preferred ’ * shareholders of the Boston & Maine hold $3,149,800 par value of an inferior class of preferred stock because at the time of the receivership they subordinated their right to dividends to the 11 first preferred ’ ’ stock so as to as¬ sist in the cutting down of the fixed obligations of the company and also consented to a reduction of their dividend rate from 6 per cent to 4 per cent for five years. They are at present receiving no dividends and have received none since 1913, except that dividends aggregating 6.67 per cent were paid on this stock in 1920. Under the circumstances we are not inclined to ask either the first or second class of pref erred stockholders to make a further sacrifice at the present time. Neither the first preferred stock nor the second class of preferred stock involve a fixed charge on the Bos- 245 ton & Maine and so do not constitute a factor adverse to its financial stability. At the time of the receivership the connnon stock¬ holders contributed nothing and made no sacrifice; in fact their position was improved by the concession of the holders of the leased line stocks. It would be fair, therefore, to ask the common stockholders to buy new common stock just as we are asking the New Haven stockholders to buy new connnon stock, and we have considered quite seriously doing so, but we have come to the conclusion that in this case results com¬ mensurate with the effort cannot be obtained. After counting out the New Haven’s holdings of Boston & Maine stock, we should get from the remaining Boston & Maine stockholders less than $2,000,000, if they contributed on the same basis that gives us $15,000,000 in the case of the New Haven. We think, however, that it should be provided, as a means of further strengthening the company, that for the first three years of control by the trustees no common stock divi¬ dends be paid, and that during the last seven years not more than half the amount applicable to dividends on the common stock be actually declared and paid * thereon. We have given much thought to the question whether bonds issued by the state trustees should carry the guaranty of the states for principal and interest, and have come to the conclusion that it is in the best in¬ terests of the public that this be done. If the states are to cooperate in financing and to appoint trustees, they will want to insure the success of the plan. The amount of bonds so to be guaranteed could if desired ( 246 be limited to say $2,500,000 a year for additions and improvements, plus whatever relatively small amount will be required for the refunding of those bonds now outstanding which after the proposed plan has been put into effect will mature within the period of con¬ trol. The liability of the states would be pro-rated among them on the basis of the taxes for the year preceding the issue. It might be preferable for the states to issue their own bonds and with the proceeds to buy bonds of the road of like interest rate and maturity. This is not essential, but it would save the road interest and would mean a lesser liability for the state, since the state bonds would bring a higher price. Cooperation of Federal Government We further suggest that the Federal Government be requested to aid in strengthening the credit of the Boston & Maine by taking bonds of longer maturity, bearing 4 per cent interest, in place of those it now holds. Cooperation of Shippers We think that shippers probably should be asked to lend their aid by reducing the present two days of free time for loading or unloading to one day, the second day to have a moderate demurrage charge of two dollars. This will quicken car movement and help to offset the road’s per diem debit balance. 247 DEVOTION AND COURAGE OF EXECUTIVES OF NEW ENGLAND ROADS This Committee wishes to record that as the result of nearly a year’s contact it has learned to appreciate the tremendous burden carried now for so long by the chief executives of our New England railroads and more especially the presidents of our two largest sys¬ tems. Taking charge of their respective properties at a time when many adverse factors and especially financial difficulties had already developed, they have carried their burdens through the war and through the much more difficult circumstances which have de¬ veloped since the war with unsparing devotion and great courage. The fight to a large extent has been a lonely struggle against heavy odds, but the cause in the main has been the cause of New England. It is time the people of New England appeared on the scene to lend their aid. 248 CONCLUSIONS Based upon its ten months’ study of the New Eng¬ land transportation problem this Committee has reached the following conclusions: General Findings (1) That rail transportation, besides its essential passenger side, constitutes a plant facility absolutely necessary to the maintenance and development of our industries. The locomotive and track are just as necessary to our factories, with possibly a few ex¬ ceptions, as the main engine which drives the factory machinery. Efficient and economical management of our rail systems is quite as important to us as efficient and economical management of our factories. That the locomotive has been under different ownership and that it has been somebody else’s job to run it may have tended to obscure but not to change this fact. (2) That due to New England’s situation in the nor theast corner of the country and the consequent long in-and-out rail haul and because seventy-five per cent of our industrial enterprises are either at or close to the coast line with its many large and small harbors, it is vital to New England’s future welfare that a close, friendly, and harmonious cooperation should prevail at all times between our rail and water transportation. (3) That the continuance of the steel-railed high¬ ways of New England in condition to render good serv- 249 \ ice to its people is just as important as the maintenance and improvement of tlie “ ways ” more connnonly de¬ scribed as highways. (4) That this coordinating of our rail and water transportation in New England is not merely for the purpose of facilitating exports and imports as is largely the case with the territory back of the other ports of the country, but is vital as a means of securing our supplies from other sections of this country and send¬ ing back the products of our factories in exchange. (5) That we produce no coal or grain or iron or wool or cotton or other basic raw materials which the rest of the world must have, so that to get them it will pay at least any reasonable cost of transportation. (6) That transportation costs to us constitute a weighted factor in our welfare to which our indus¬ tries are extremely sensitive. The manufacture of locomotives, well begun in New England, left us many years ago because of the transportation cost of the raw materials. The coal and iron mines of Pennsyl¬ vania are still there and likewise for all time the cotton fields of the South and the wonderful corn and wheat producing farms of the great Mississippi valley. If New England’s industries are ever forced into a position where they chiefly depend on standard trunk line rates, they are bound to suffer, but if New Eng¬ land can hold its own knife and fork and feed it¬ self to a balanced ration of standard rates, differential rates and water rates, we see no reason why we should not maintain full bodily vigor and continue to meet changing conditions by new adjustments of our in¬ dustries and enterprises. 250 Specific Findings (7) That the Bangor & Aroostook Railroad is in good operating and financial condition and serving its territory adequately and well. (8) That the Maine Central Railroad is performing excellent service and is not confronted with any finan¬ cial problem threatening its usefulness. (9) That the Rutland Railroad is a well operated property and, though not paying dividends, is being well maintained and gradually improved from year to year by the application of surplus earnings. (10) That the Boston & Albany Railroad is giving the industries tributary to it a high grade of service. (11) That the Central Vermont is performing good service and that its stock control by the Grand Trunk and the operating relations of the two systems place upon the Grand Trunk management the first duty to offer the Central Vermont financial assistance if needed. The same is true of the Atlantic & St. Lawrence — the Grand Trunk subsidiary extending to Portland. (12) That the Boston & Maine is inadequately serv¬ ing its territory and is in such financial condition that it must receive aid before it can be expected to properly care for the people and industries depending upon it. (13) That the New Haven Railroad is affording in¬ adequate service to the people and the industries lo¬ cated on the system and that its financial condition is unsatisfactory and must be set in order and its credit re-established before it can be expected to properly care for the people and industries depending upon it. 251 Consolidation (14) That if trunk line consolidation should be made compulsory, the Boston & Maine, and as an essential consequence the Maine Central and the Bangor & Aroos¬ took, should he consolidated with the New York Cen¬ tral and the New Haven with the Pennsylvania. (15) That in the opinion of this Committee, however, New England should be allowed to run its own railroads, and should not turn one over to the Pennsylvania with its management centered in Philadelphia, nor the others to the New York Central with its management centered in New York City. Trunk line ownership would substantially eliminate competition among the trunk lines for New England’s westbound business, and with it one of the greatest incentives to good serv¬ ice. The lower rates through the northern gateways would be imperilled. Cooperation with water trans¬ portation to the Pacific Coast via the Panama Canal, and to midwestern points via Savannah and other southern ports, might be adversely affected by the de¬ sire of the trunk lines to get the long haul which the all-rail route would give them. New England should oppose the taking over of any of its existing lines by the trunk lines. The Boston & Albany should remain, however, as a part of the New York Central system and the Central Vermont and the Atlantic & St. Lawrence as parts of the Grand Trunk system. (16) That if there is to be a New England system the Rutland Railroad should be part of the New Eng¬ land system or at least the ownership of it be divided equally between the New York Central system and 252 tlie New England system; the New York, Ontario & Western Railroad should remain in the New Eng¬ land system. These two roads give New England a window on the Great Lakes. Rehabilitation by Cooperation (17) That the terms of the Transportation Act do not make compulsory any plan that finally may be promulgated by the Interstate Commerce Commission. That accordingly a consolidation may not come about next year or the year following or for five years, or indeed ever. (18) That New England from any point of view, whether in favor of a New England consolidation or even a trunk line consolidation or of no consolidation at all, should not sit on the doorstep waiting to be taken in or waiting for conditions to improve. It is in the interest of everyone in New England, whether a shipper, a traveler or a security holder in one of these roads, that we should get together and set our two major systems in order at once. (19) That our New England savings banks, which are particularly the subject of solicitude on the part of our states, hold a hundred million of the securities of these two roads, and that this fact alone seems to justify the cooperation of our states in a plan for putting these two transportation companies on a sound basis. (20) That the restoration of the New Haven and Boston & Maine properties to sound health cannot be accomplished without fully restoring their credit. No half-way measures should be taken. 253 Rehabilitation of the New Haven (21) That the existing common stockholders of the New Haven should subscribe or undertake to have sub¬ scribed at or about market value an additional amount of common stock sufficient to bring into the road’s treasury $15,000,000, which should be applied in part at least to the reduction of the road’s indebtedness by payment of outstanding bonds or their purchase at the lowest price at which they are obtainable. That in order to enable this to be done, appropriate legislation should be enacted to place the common stock on a non-par basis in order to permit the issue and sale of additional common stock at less than the pres¬ ent par. (22) That the bondholders of the New Haven Com¬ pany are not in comfortable position today and should be willing to cooperate with the states to put the New Haven on a stable basis and as their contribution to such a plan, should be willing to exchange $75,000,000 par value of their securities for a first preferred stock which shall have its rights to dividends and principal placed ahead of the rights of the common stockholders, as more particularly set forth in Appendix T. The bondholders should also, as set forth in that appendix, extend $7,329,000 par value of their holdings to Novem¬ ber, 1937, at six per cent. (23) That the Federal Government be requested to fund the New Haven Company’s indebtedness to it for a reasonable period at four per cent interest. (24) That the power to control the New Haven Company and its operations and finances be vested 254 in a board of five trustees appointed for ten years by the several states, two by the State of Connecticut, one by the State of Rhode Island and two by the State of Massachusetts. (25) That if the New Haven is fully to rehabilitate its credit so that it can promptly and efficiently serve the communities dependent on it still more must be done; that it is not enough to make its ability to meet its fixed charges a probability—it should be made a practical certainty. Under the circumstances this cannot be satisfactorily accomplished without the co¬ operation of the states. (26) That the states of Connecticut, Rhode Island, and Massachusetts shall undertake that in any year in which the earnings of the New Haven do not equal its fixed charges, each will refund such portion of the total taxes levied by it and locally within its limits during that year in which the deficit occurs as may be necessary to meet the deficit, but there shall not thus be refunded by any state more than the amount of such taxes. We do not mean that the cities and towns shall be called upon to repay taxes levied by them, but merely that the total of taxes levied within the state shall be the measure of the contribution of the state. (27) That the states of Connecticut, Rhode Island, and Massachusetts, in order further to ensure the sta¬ bility and credit of the New Haven Company, under¬ take to guarantee principal and interest of a specified amount of bonds to be issued by the state trustees dur¬ ing the period of control, this amount to be calculated to cover the amount of the bonds now outstanding which after the readjustment we propose will mature 255 during tlie period of control by tlie trustees plus, say $4,000,000 a year for additions and improvements, the liability of the states to be several, and to be appor¬ tioned among them in the ratios of the taxes levied on the New Haven by them and locally within their limits during the year preceding the issue of the bonds. Rehabilitation of the Boston & Maine (28) That the bondholders of the Boston & Maine should be glad to assist in its rehabilitation, and should be asked for this purpose to extend for twelve years some $46,000,000 of bonds maturing prior to Decem¬ ber 31,1935, as set forth in more detail in Appendix TJ. (29) That the Federal Government be requested to exchange the bonds of the Boston & Maine that it holds for other bonds bearing a lower rate of interest and of a longer maturity. (30) That the entire power to control the Boston & Maine and its operations and finances be vested in a board of seven trustees, appointed for ten years by the several states, two by the State of New Hampshire, one by the State of Maine, one by the State of Vermont, and three by the State of Massachusetts. (31) That the states of Massachusetts, New Hamp¬ shire, Maine, and Vermont shall undertake that in any year in which the earnings of the Boston & Maine do not equal its fixed charges each will refund such por¬ tion of the total taxes levied by it and locally within its limits during such year as may be necessary to meet the deficit, but not more than the total amount of such taxes. We do not mean that the cities and towns shall be called upon to repay taxes levied by them, but 256 merely that the total of taxes levied within the state shall be the measure of the contribution of the state. (32) That the states of Massachusetts, New Hamp¬ shire, Maine, and Vermont, in order further to en¬ sure the stability and credit of the Boston & Maine, shall undertake to guarantee principal and interest of a specified amount of bonds to be issued by the state trustees during the period of control, this amount to be calculated to cover the bonds now outstanding which after the plan we propose has been put into effect will mature during the period of control by the trustees, plus, say $2,500,000 a year for additions and improve¬ ments, the liabilitv of the states to be several and to be apportioned among them in the ratios of the taxes levied on the Boston & Maine by them and locally within their limits during the year preceding the issue of the bonds. Final (33) We suggest that committees be appointed by the several states to act jointly in formulating a detailed program for the rehabilitation of the New Haven and Boston & Maine systems, and if such joint Committee receives from the stockholders and bond¬ holders reasonable assurance of cooperation a special session of the legislature of each of the six New Eng¬ land states should be called to meet in October for the purpose of dealing with the rehabilitation of these two railroad svstems. 257 Vermont James F. Dewey, Chairman Walton F. Andrews Ralph M. Buck N. Nelson Jackson Hugh J. M. Jones New Hampshire Lester F. Thurber, Chairman Clarence E. Carr Benjamin W. Couch Arthur H. Hale James P. Richardson Massachusetts James J. Storrow, Chairman Carl Dreyfus Adolph W. Gilbert Frank H. Willard Rhode Island George L. Crooker, Chairman Howard W. Fitz Wesley F. Morse Everett E. Salisbury William Trafton Connecticut E. Kent Hubbard, Chairman Stanley H. Bullard Frederick L. Ford Edward 0 . Goss George S. Stevenson Howard. G. Kelley, Technical Adviser 258 Reservation of New Hampshire Committee We the undersigned members of the Committee sign the report with the reservation that we dissent from the con¬ clusions reached by the Committee to the effect that sub¬ sequent to the success of the plan for rehabilitation of the New Haven and the Boston & Maine Railroads there should be a consolidation of the New England railroads into a regional group as set forth in the report. We do not believe that there should be any consolidation of New England railroads at the present time. We believe that the two major New England railroads can obtain substantial rehabilitation by the plan described in the report, but we believe that if consolidations must then follow, they should be with the trunk lines. The government offers assistance to financially weak railroads of the country by annexation to the financially strong trunk lines. We believe that the two major New England railroads are the fairest of examples of financially weak railroads in need of the financial strength of the trunk lines. By reason of additional operating costs inherent in New England, the New England railroads will always have to carry an excess load. If the government is willing to distribute through financially strong trunk lines our excess burdens of motor truck competition in congested territory, our burden of terminal costs, switching charges, fuel costs and the short hauls, we cannot in the long run afford to decline the offer in justice to New England industry. The example of the efficiency of service of the Boston & Albany Railroad as shown in detail in the report leads us to abandon all fear of outside control. We think that efficient and prompt service with adequate facilities throughout New England will automatically take care of the Canadian Gateway problem, that the port developments should be made by the states, or by the states and the steam¬ ship lines together, and not by the railroads, and that the 259 coastwise shipping should be independent and competitive for the good of New England industry. We do not believe that the New England transportation properties should be put on the trunk line bargain counter, nor do we think that the government would, or could if it would, force trunk line consolidations upon any terms which would constitute confiscation of property, the value of which has already been tentatively determined by gov¬ ernment agency. Lester F. Thtjrber, Chairman Clarence E. Carr Benjamin W. Couch Arthur H. Hale James P. Richardson Statement of Maine Committee We concur in the findings and conclusions of the report in respect of the choice between proposed plans of railroad consolidation, if some form of consolidation be required. We feel bound to state, however, that in our judgment the interests of Maine would be adversely affected by the adoption of any form of consolidation considered by the Committee. Carl E. Milliken, Chairman Charles E. Gurney Edward W. Wheeler L. E. McIntire Edwin M. Hamlin 260 Statement of Philip Dexter Biarritz, June 30, 1923. Governor Cox, State House, Boston, Mass. A copy of the report of the Committee appointed to con¬ sider the railroads has been forwarded to me. While I agree with much of it there are portions from which I dis¬ sent as follows: Our principal railroads are unable to earn enough to maintain their credit because present wages and car hire leave insufficient net earnings but discussion of delay in car movement is futile. Whenever a car is received there is im¬ mediately a question whether to make up a train or wait for more cars and pay rentals. The operating officers are quite aware of this and in my opinion have shown good judgment in handling cars. It is unfair to measure operating effi¬ ciency by car delays without regard to the conditions under which business must be done and idle to calculate earnings upon an improvement in car movement which would cost far more than it would save. The nature of the railroad business in New England will always make it impossible to attain the rapidity of movement which other railroads can secure. With respect to the New Haven it is unfair to lay stress upon the losses of capital which have occurred. The value of the property which remains and which is devoted solely to railroad purposes, is sufficient to maintain high credit if it were possible to earn five per cent on that value. It is a question of earnings not of capital and the New Haven is unable to get the earnings because of the high cost above mentioned. The road is as efficiently operated as circum¬ stances permit and its failure to secure sufficient earnings is due to causes beyond the control of its officers. It is in my judgment a mistake for the committee to rec¬ ommend any plan of financial reorganization such as is out- 261 lined in the report. I think the plans are inadequate and the committee insufficiently informed on this subject to en¬ able it to formulate a plan without further study. It is not properly within our province and we have not given it sufficient attention. With respect to consolidation I agree that if the matter can be adjourned for a time we shall be likely to reach a wiser conclusion but if that is impossible it seems to me clear that the interests of Massachusetts and of New England will be injured by a consolidation of our railroads into one system. The danger of such a step is alarming. It would in my opinion result in increased rates which would hurt our industries. The evidence taken by the committee estab¬ lishes to my mind that a New England railroad will be even more unable to give good service than our present roads and will be from the beginning on the verge of financial collapse. A consolidation of our roads with trunk lines on the other hand is promising. There are undoubtedly objec¬ tions to either course but it is clear from the evidence that the interests of everybody concerned which means the whole population of New England will be far better served by a consolidation with the trunk lines. The New York Central has found it profitable to give good service to the industries on the line of the Boston & Albany. It will be equally ad¬ vantageous to trunk lines to build up industry along our other road then the eventual profit will go to them. I am satisfied that the danger of trunk line control has been much exaggerated and can easily be overcome while the more serious danger inherent in a New England consolidation has not received enough attention. There can be no doubt that the port of Boston and the co¬ ordination of the railroads and their terminals should be taken in hand at once and I am in accord with that part of the report though the subject would seem to require further study. There are other matters of minor consequence with which I will not trouble you now. Philip Dextee. . 263 APPENDIX A NET CAPITAL EXPENDITURES FOR ROAD AND EQUIPMENT — ALL NEW ENGLAND RAILROADS JULY 1, 1914, to DECEMBER 31, 1922 (Including Improvements on Leased Railway Property) Account New York, New Haven & Hartford Central New Eng. Total New Haven C. N. E. Boston & Maine Boston & Albany Maine Central Bangor & Aroostook C. Vermont (excluding Canadian Lines) Rutland Atlantic & St. Lawrence Total Road Engineering. Grading. Bridges, Trestles and Culverts. Track Materials and Labor, Track Laying and Surfacing. Station and Office Buildings. Shops and Engine Houses. Crossings and Signs. Telegraph and Telephone Lines. Signals and Interlockers. Power Plants and Transmission Lines.... Shop Machinery. All Other. 81,074,060 6,600,436 4,214,473 6,935,910 3,725,126 2,367,053 2,093,009 1,261,017 1,917,810 1,829,956 1,001,964 2,014,752 $31,223 229,817 127,088 298,312 194,491 304,808 131,993 24,774 16,310 26,272 65,790 - 47,934 $1,105,283 6,830,253 4,341,561 7,234,222 3,919,617 2,671,861 2,225,002 1,285,791 1,934,120 1,856,228 1,067,754 1,966,818 $561,127 2,002,063 3,461,741 2,739,116 1,070,743 2,678,498 1,241,832 32,564 688,085 556,886 273,911 620,685 $162,070 435,738 603,354 1,464,722 345,867 136,862 393,958 111,833 158,007 79,195 90,809 632,296 $37,191 431,357 1,039,182 746,212 297,563 262,956 128,094 3,966 73,911 23,506 135,952 209,508 $6,565 238,804 38,078 456,512 94,546 154,426 20,165 307 19,891 - 3,444 80,699 276,250 $4,133 19,885 102,553 253,715 300,786 73,550 56,157 5,062 5,548 133,414 82,325 $670 92,945 147,036 568,490 160,716 512,576 74,855 255 1,218 4,683 73,436 48,801 $373 19,249 49,074 711,091 167,684 93,651 18,695 8,263 151,958 384 37,538 25,656 $1,877,412 10,070,294 9,782,579 14,174,080 6,357,522 6,584,380 4,158,758 1,448,041 3,032,738 2,518,438 1,893,513 3,862,339 Total Road. $35,035,566 $1,402,944 $36,438,510 $15,927,251 $4,614,711 $3,389,398 $1,383,799 $1,037,128 $1,685,681 $1,283,616 $65,760,094 Equipment Steam and Other Locomotives. Freight Train Cars. Passenger Train Cars. Other Equipment Expenditures. $8,239,825 3,818,665 8,323,154 1,411,284 $724,671 - 63,869 14,431 9,721 $8,964,496 3,754,796 8,337,585 1,421,005 $3,106,485 5,665,745 1,358,908 199,296 $1,725,776 675,984 1,455,257 155,286 $1,681,057 1,931,400 302,246 - 189,332 $544,396 622,235 27,830 120,003 $250,313 116,100 16,464 79,225 $271,113 - 31,434 114,254 21,400 $5,372 95,945 $16,549,008 12,744,826 11,612,544 1,902,828 Total Equipment. General Expenditures. $21,792,928 1,475,337 $684,954 19,724 $22,477,882 1,495,061 $10,330,434 156,468 $4,012,303 10,845 $3,725,371 17,958 $1,314,464 19,073 $462,102 1,740 $385,333 8,222 $101,317 3,400 $42,809,206 1,712,767 Grand Total. $58,303,831 $2,107,622 $60,411,453 $26,414,153 $8,637,859 $7,132,727 $2,717,336 $1,500,970 $2,079,236 $1,388,333 $110,282,067 - Italics indicate Credits ' 265 APPENDIX B 1 INTERCHANGE OF NEW ENGLAND RAILROADS WITH CONNECTIONS CLASSIFIED BY NEW ENGLAND RAILROADS (Year Ending June 30, 1922) Railroad Cars Received Cars Delivered Cars Received and Delivered — Grand Total Loaded Empty Total Loaded Empty Total Loaded Percent of Total Loaded Empty Grand Total New Haven .... Boston & Maine. Boston & Albany. Maine Central . . Bangor & Aroostook . . . Central Vermont . Rutland. Total. 422,838 284,745 268,460 36,539 4,698 39,320 40,791 1,097,391 47,764 20,948 21,492 5,611 1,574 4,952 9,273 111,614 470,602 305,693 289,952 42,150 6,272 44,272 50,064 1,209,005 161,080 105,619 102,998 15,650 2,455 26,987 28,558 319,345 193,085 175,793 29,535 3,222 20,324 24,593 480,425 298,704 278,791 45,185 5,677 47,311 53,151 583,918 390,364 371,458 52,189 7,153 66,307 69,349 37.9 25.3 24.1 3.4 0.5 4.3 4.5 100.0 367,109 214,033 197,285 35,146 4,796 25,276 33,866 877,511 951,027 604,397 568,743 87,335 11,949 91,583 103,215 2,418,249 443,347 765,897 1,209,244 1,540,738 267 APPENDIX B2 INTERCHANGE OF NEW ENGLAND RAILROADS WITH CONNECTIONS CLASSIFIED BY GATEWAYS (Year Ending June 30, 1922) Gateway Cars Received Cars Delivered Cars Received and Delivered — Grand total Loaded Empty Total Loaded Empty Total Loaded Percent of Total Loaded Empty Total Western Gateways (Trunk Line Connections) Harlem River. 246,611 35,536 282,147 120,381 179,679 300,060 366,992 23.8 215,215 582,207 Maybrook. 176,227 12,228 188,455 40,699 139,666 180,365 216,926 14.1 151,894 368,820 Albany. Mechanicville 268,460 21,492 289,952 102,998 175,793 278,791 371,458 24.1 197,285 568,743 (and Rotterdam Jet.) . . . 247,425 16,826 264,251 89,167 164,272 253,439 336,592 21.8 181,098 517,690 Rutland. 7,738 2,417 10,155 5,494 5,731 11,225 13,232 0.9 8,148 21,380 Total Western Gateways . . 946,461 88,499 1,034,960 358,739 665,141 1,023,880 1,305,200 84.7 753,640 2,058,840 Northern Gateways (Canadian Connections) Norwood. 23,290 5,878 29,168 21,670 13,620 35,290 44,960 2.9 19,498 64,458 Swanton . 49,611 6,035 55,646 28,560 26,187 54,747 78,171 5.1 32,222 110,393 Newport . 36,792 4,017 40,809 16,273 28,192 44,465 53,065 3.5 32,209 85,274 Maine Central. 12,889 4,631 17,520 11,567 12,003 23,570 24,456 1.6 16,634 41,090 Bangor & Aroostook .... 1,055 1,562 2,617 2,439 324 2,763 3,494 0.2 1,886 5,380 Total Northern Gateways . . 123,637 22,123 145,760 80,509 80,326 160,835 204,146 13.3 102,449 306,595 Eastern Gateways (Canadian Connections to Maritime Provinces) Bangor & Aroostook (Van Buren & Other Points Maine Central 3,643 12 3,655 16 2,898 2,914 3,659 0.2 2,910 6,569 (Vanceboro & Other Points) 23,650 980 24,630 4,083 17,532 21,615 27,733 1.8 18,512 46,245 Total Eastern Gateways . . . 27,293 992 28,285 4,099 20,430 24,529 31,392 2.0 21,422 52,814 Grand Total. 1,097,391 111,614 1,209,005 443,347 765,897 1,209,244 1,540,738 100.0 877,511 2,418,249 r • . 269 APPENDIX B 3 APPENDIX B 3 INTERCHANGE OF NEW ENGLAND RAILROADS WITH CONNECTIONS CLASSIFIED BY CONNECTING LINES (Yeab Ending June 30, 1922) Connecting Lines New York Central. Delaware & Hudson . . . ’ Pennsylvania. Lehigh & Hudson River . . Grand Trunk. Canadian Pacific . . Erie. Lehigh Valley. ’ Central R.R. of New Jersey Lehigh & New England Long Island . New York, Ontario and Western Quebec Central. New York Terminal Companies Quebec, Montreal & Southern . Canadian National . Albany Southern (Electric) ) Norwood & St. Lawrence . . Total. Percent of Grand Total.... Cars Received from Connecting Lines Loaded 375,470 188,232 149,977 77,108 57,120 51,662 48,422 50,516 33,390 29,277 4,165 12,708 3,447 6,986 4,060 3,817 746 288 1,097,391 Empty 33,228 14,578 13,830 3,684 9,520 6,367 5,610 3,448 6,790 499 7,771 1,089 176 2,299 187 34 1,242 1,262 111,614 Total 408,698 202,810 163,807 80,792 66,640 58,029 54,032 53,964 40,180 29,776 11,936 13,797 3,623 9,285 4,247 3,851 1,988 1,550 1,209,005 Cars Delivered to Connecting Lines Loaded 155,113 65,502 64,965 24,002 36,551 23,430 11,645 12,591 21,688 310 10,550 2,345 605 9,451 479 105 1,907 2,108 443,347 Empty 254,495 129,149 107,499 51,038 37,691 36,946 39,395 37,772 20,805 30,186 1,335 10,421 2,973 418 2,420 3,206 102 46 765,897 Total 409,608 194,651 172,464 75,040 74,242 60,376 51,040 50,363 42,493 30,496 11,885 12,766 3,578 9,869 2,899 3,311 2,009 2,154 1,209,244 Cars Received and Delivered — Grand Total Loaded Percent of Total Loaded Empty 530,583 34.4 287,723 253,734 16.5 143,727 214,942 13.9 121,329 101,110 6.5 54,722 93,671 6.1 47,211 75,092 4.9 43)313 60,067 3.9 45,005 63,107 4.1 41,220 55,078 3.6 27,595 29,587 1.9 30,685 14,715 1.0 9,106 15,053 1.0 11,510 4,052 0.2 3,149 16,437 1.1 2,717 4,539 0.3 2)607 3,922 0.2 3,240 2,653 0.2 1,344 2,396 0.2 1,308 1,540,738 100.0 877,511 63.7% 36.3% Total 818,306 397,461 336,271 155,832 140,882 118,405 105,072 104,327 82,673 60,272 23,821 26,563 7,201 19,154 7,146 7,162 3,997 3,704 2,418,249 100 . 0 % 271 APPENDIX C Description of Freight Traffic of New England Railroads The principal commodities handled by the New England roads are shown in the following statement: (Year ending December 31, 1922) Tons Per cent Commodity Handled of Total Anthracite and Bituminous Coal. 18,078,372 22.93 Miscellaneous Manufactures. 10,954,564 13.89 Less than Carload Freight. 6,617,047 8.39 Grain, Flour and other Mill Products, Hay, Straw and Alfalfa. 6,574,616 8.34 Lumber and other Products of Forests. 6,453,743 8.18 Cement, Brick, Lime and Plaster. 3,868,165 4.91 Refined Petroleum and its Products. 3,273,742 4.15 Clay, Gravel, Sand, Stone and other Products of Mines, except Coal and Coke. 3,268,365 4.15 Potatoes. 2,596,603 3.29 Paper, Printed Matter and Books. 2,491,740 3.16 Pulp Wood. 1,885,642 2.39 Bar and Sheet iron, Structural Iron, Iron Pipe, other Metals, Pig, Bar and Sheet. 1,751,374 2.22 Fruit ana Vegetables and other Products of Agriculture 1,387,058 1.76 Fresh Meats, other Packing House Products, Canned Goods. 1,277,543 1.62 Ice. 1,241,770 1.58 Iron, Pig and Bloom, Castings, Machinery and Boilers 1,168,434 1.49 Chemicals and Explosives. 830,205 1.05 Unclassified Tonnage. 825,507 1.05 Cotton. 669,995 .85 Other Products of Animals. 524,304 .66 Sugar, Syrup, Glucose and Molasses. 514,896 .65 Coke. 500,927 .64 Textiles. 465,300 .59 Hides and Leather. 416,113 .53 Automobiles and Auto Trucks. 394,748 .50 Live Stock. 389,842 .50 Wool. 302,935 .38 Rails and Fastenings. 122,080 .15 Total. 78,845,630 100.00 Coal Traffic Coal is the largest single item of traffic on the New Eng¬ land roads. In 1922 the movement of anthracite coal was below normal because of the coal strike which lasted from April 1st to September 15th. The tonnage of anthracite and bituminous coal and the percentage of each to total traffic last year as compared with 1921 on the three prin¬ cipal roads were as follows: Anthracite New Haven . . . Boston & Maine . Boston & Albany . Bituminous New Haven . . . Boston & Maine . Boston & Albany . Tons of Coal Handled 1921 Per cent of 1922 Per cent of Total Traffic Total Traffic . . 3,433,352 15.6 2,026,780 8.4 . . 2,791,699 13.9 1,728,913 8.1 . . 1,492,975 17.1 749,700 8.0 . . 3,375,663 15.3 3,926,888 16.2 . . 2,432,132 12.1 2,449,931 11.5 . . 1,772,804 20.3 1,788,110 19.0 It will be noted that while there was a large decrease in the movement of anthracite coal, there was an increase in the movement of bituminous coal. This was due chiefly to the fact that while the strike in the anthracite coal regions was complete, and during the period of the strike little anthracite coal moved into New England, in the case of the bituminous coal there was not only a large movement of coal into New England from non-union mines but also a large quantity of foreign coal was received at the New England ports, and the movement of this coal from tide¬ water to interior points offset to a certain extent the loss of the all-rail movement from the union fields. Petroleum and Its Products During recent years the tonnage of petroleum and its products has become important because of the substitution on a large scale by New England industries of fuel oil for coal. The growth of this traffic since 1912 on the New Haven, Boston & Maine, Boston & Albany and Maine Cen¬ tral which carry most of it, is as follows: Petroleum and Its Products—Tons Handled in 1912 and 1922 1912 Per cent 1922 Per cent of Total of Total Traffic Traffic New Haven*. 397,069 1.61 1,631,115 6.73 Boston & Maine. 230,755 .97 870,352 4.09 Boston & Albany . 138,465 1.59 326,800 3.47 Maine Central. 40,267 .59 9-38.748 3.25 •Does not include Central New England. 273 A large tonnage of lumber and other forest products, pulpwood, paper and potatoes is originated on the Ban¬ gor & Aroostook and Maine Central, but as the traffic carried by each road will be given later in some detail we will not attempt to describe the general characteristics of New England freight traffic further than to comment on its high percentage of less than carload traffic. Less Than Carload Traffic A distinguishing feature of freight traffic on the New England lines is the large percentage of less than carload freight to total. In 1922 a total of 23,935,273 tons of freight originated on the New England railroads of which 3,731,012 tons, or 15.59 per cent was less than carload traffic. During the same period the total tonnage originating on all the rail¬ roads of the United States was 1,023,165,630 tons, of which 43,168,067 tons, or only 4.22 per cent was less than carload freight. While the New England railroads originated only 2.34 per cent of the total tonnage of the United States they originated 8.64 per cent of the less than carload tonnage. The following table shows the relation between less than carload traffic and total traffic originated on the different New England railroads (year ending December 31, 1922): Tons Originated Per cent less than carload Less than Carload Total to total orig- Road inated New Haven. . . . 1,641,514 8,267,432 19.85 Boston & Maine. . . . 1,201,161 6,620,179 18.14 Boston & Albany. . . . 375,631 2,372,980 15.83 Maine Central. . . . 313,472 3,506,807 8.94 Central Vermont. . . . 79,411 715,292 11.10 Rutland. . . . 66,863 422,064 15.84 Bangor & Aroostook . . . . . . . 19,466 1,580,720 1.23 Atlantic & St. Lawrence . . . . . 33,494 449,799 7.45 Total New England . . . . . . . 3,731,012 23,935,273 15.59 Total United States . . . . . . . 43,168,067 1,023,165,630 4.22 These statistics refer only to tonnage originated, not total tonnage carried. We give in the following table the tonnage of less than carload freight carried and the percentage of this traffic to total tonnage carried in 1922, as compared with 1912, for the New Haven and Boston & Maine, the only two roads for which the comparison is available. The figures for the New 274 Haven exclude the Central New England to avoid duplica¬ tion of tonnage interchanged between these roads. Total Less Than Carload Freight Carried 1912 Per cent 1922 Per cent Tonnage of Total Tonnage of Total New Haven*. 3,934,985 15.95 2,409,673 9.95 Boston & Maine. 1,781,547 7.51 1,950,547 9.16 * Does not include Central New England. This statement shows an increase of 169,000 tons on the Boston & Maine, and a loss of 1,525,312 tons on the New Haven. This falling off on the New Haven undoubtedly reflects the increase in motor truck transportation which has been very large since 1917, especially in Southern New England. Tonnage carried by principal commodities in 1912 and 1922 for the individual New England roads is given in the following tables. The classification of commodities under which the tonnage was reported in 1922 has been condensed to correspond as closely as possible with the classification used in 1912. PAGE New Haven.275 Boston & Maine.276 Boston & Albany.277 Maine Central.278 Central Vermont.279 Bangor & Aroostook.280 Rutland. .... 281 275 "NEW HAVEN RAILROAD* Tons of Revenue Freight Carried by Commodities 1912 and 1922 Products of Agriculture 1. Grain. 2. Flour. 3. Other Mill Products .... 4. Hay. . 5. Tobacco. 6. Cotton. 7. Fruit and Vegetables .... 8. Other Products of Agriculture Products of Animals 9. Live Stock . 10. Dressed Meats. 11. Other Packing House Products 12. Poultry, Game and Fish . . . 13. Wool. 14. Hides and Leather. 15. Other Products of Animals Products of Mines 16. Anthracite Coal. 17. Bituminous Coal. 18. Coke. 19. Ores. 20. Stone,Sand, and other like article 21. Other Products of Mines . . Products of Forests 22. Lumber. 23. Other Products of Forests . . Manufactures 24. Petroleum and Other Oils . . 25. Sugar. 26. Naval Stores. 27. Iron, Pig and Bloom .... 28. Iron and Steel Rails .... 29. Other Castings and Machinery 30. Bar and Sheet Metal .... 31. Cement, Brick and Lime . . 32. Agricultural Implements . . 33. Wagons, Carriages, etc. . . . 34. Wines, Liquors and Beers . . 35. Household Goods and Furniture 36. Other Manufactures .... 37. Other Carload Commodities . 38. Less than Carload Freight Total Tons Carried .24,675,469 Revenue Ton Miles. 2,343,040,000 Average Haul — Miles. 94.95 1912 Per cent 1922 Per cent Tons op Total Tons op Total 691,288 2.80 370,992 1.53 256,477 1.04 327,675 1.35 236,297 .96 581,149 2.40 277,325 1.12 209,545 .87 16,324 .06 22,152 .09 223,867 .91 275,068 1.14 352,321 1.43 819,516 3.38 42,136 .17 149,829 .62 46,210 .19 45,232 .19 148,100 .60 166,387 .69 18,810 .08 18,523 .08 40,957 .17 10,719 .04 124,082 .50 112,495 .47 123,983 .50 127,008 .53 203,234 .82 191,994 .79 !,366,613 9.59 2,026,780 8.37 : ,133,374 16.75 3,926,888 16.22 125,234 .51 210,337 .87 68,984 .28 9,279 .04 .,053,607 4.27 782,780 3.23 73,838 .30 212,354 .88 ,043,825 4.23 1,303,786 5.38 118,738 .48 164,459 .68 397,069 1.61 1,631,115 6.73 48,153 .19 153,865 .63 460 .00 976 A 273,183 1.11 330,647 1.36 125,495 .51 34,222 .14 246,619 1.00 245,935 1.02 533,340 2.16 931,259 3.84 985,180 3.99 1,356,757 5.60 1,660 .01 21,163 .08 15,572 .06 86,602 .35 154,368 .63 42,838 .18 31,986 .13 26,077 .11 .,935,306 7.84 1,582,085 6.53 ,206,469 17.05 3,305,375 13.64 ,934,985 15.95 2,409,673 9.95 t ,675,469 100.00 24,223,536 100.00 2,552,128,000 107.68 •Does not include Central New England. A. Less than .005 per cent of total. 276 BOSTON & MAINE RAILROAD Tons of Revenue Freight Carried by Commodities 1912 AND 1922 Products of Agriculture. Tons 1. Grain. 1,178,677 2. Flour. 437,302 3. Other Mill Products. 368,617 4. Hay. 544,497 5. Tobacco. 30,088 6. Cotton and Products. 231,798 7. Vegetables and Fruit. 831,195 8. Other Products of Agriculture . 97,293 Products of Animals 9. Live Stock . 134,759 10. Dressed Meats. 257,918 11. Other Packing House Products . 173,656 12. Poultry, Game and Fish .... 81,468 13. Wool. 123,829 14. Hides and Leather. 207,469 15. Other Products of Animals . . 25,828 Products of Mines 16. Anthracite Coal. 1,736,404 17. Bituminous Coal. 2,885,636 18. Coke. 195,492 19. Ores. 88,849 20. Stone, Sand and Other Like Articles. 1,310,761 21. Other Products of Mines . . . 41,374 Products of Forests 22. Lumber. 2,296,813 23. Other Products of Forests . . . 698,403 Manufactures 24. Petroleum and Other Oils . . . 230,755 25. Sugar . 203,607 26. Naval Stores. 47,539 27. Iron, Pig and Bloom. 156,166 28. Iron and Steel Rails. 96,519 29. Other Castings and Machinery . 400,092 30. Bar and Sheet Metal. 94,593 31. Cement. 177,093 32. Brick. 362,435 33. Lime. 136,479 34. Agricultural Implements . . . 49,803 35. Autos, Trucks, Wagons, Car¬ riages, Tools, etc. 41,615 36. Wines, Liquors and Beers . . . 219,075 37. Household Goods and Furniture 132,588 38. Other Carload Commodities . . 5,586,955 39. Less than Carload Freight . . 1,781,547 Total Tons Carried. 23,694,987 Revenue Ton Miles. 2,460,991,000 Average Haul — Miles. 103.86 A. Less than .005 per cent of total. Per cent 1922 Per cent of Total Tons of Total 4.97 724,873 3.40 1.85 320,320 1.50 1.56 481,117 2.26 2.30 163,162 .77 .13 7,565 .04 .98 225,393 1.06 3.51 1,062,342 4.96 .41 48,895 .23 .57 73,695 .35 1.09 105,293 .49 .73 90,992 .43 .34 10,517 .05 .52 84,979 .40 .88 157,427 .74 .11 121,177 .57 7.33 1,728,913 8.12 12.18 2,449,931 11.50 .83 123,437 .58 .37 8,051 .04 5.53 787,407 3.70 .17 208,529 .98 9.69 2,068,140 9.71 2.95 612,235 2.87 .97 870,352 4.09 .86 112,247 .53 .20 888 A .66 82,152 .38 .41 38,844 .18 1.69 173,158 .81 .40 318,714 1.50 .75 390,925 1.84 1.53 292,373 1.37 .58 153,545 .72 .21 48,640 .23 .17 93,796 .44 .92 16,017 .07 .56 37,213 .17 23.58 5,051,915 23.73 7.51 1,950,547 9.16 100.00 21,295,716 100.00 .. 2,689,915,000 126.31 277 BOSTON & ALBANY RAILROAD Tons of Revenue Freight Carried by Commodities 1912 and 1922 Products of Agriculture 1. Grain. 2. Flour. 3. Other Mill Products. 4. Hay. 5. Tobacco. 6. Cotton. 7. Fruit and Vegetables. 8. Other Agricultural Products . . Products of Animals 9. Live Stock . 10. Dressed Meats. 11. Other Packing House Products . 12. Poultry, Game and Fish .... 13. Wool. 14. Hides and Leather. 15. Other Products of Animals . . Products of Mines 16. Anthracite Coal. 17. Bituminous Coal.. 18. Coke.. 19. Ores. 20. Stone, Sand and Other Like Articles. 21. Other Products of Mines. . . . Products of Forests 22. Lumber. 23. Other Products of Forests . . . Manufactures 24. Petroleum and Other Oils . . 25. Sugar. 26. Naval Stores. 27. Iron, Pig and Bloom .... 28. Iron and Steel Rails .... 29. Other Castings and Machinery 30. Bar and Sheet Metal .... 31. Cement, Brick and Lime . . 32. Agricultural Implements . . 33. Wines, Liquors and Beers . . 34. Household Goods and Furniture 35. Other Manufactures .... 36. All Other Commodities . . . Total Tons Carried. Revenue Ton Miles. Average Haul — Miles. A. Less than .005 per cent of total. 1912 Per cent 1922 Per cent Tons op Total Tons op Total 478,327 5.51 310,963 3.31 168,503 1.94 191,690 2.04 152,955 1.76 232,874 2.48 146,830 1.69 119,650 1.27 4,053 .05 691 .01 88,564 1.02 53,051 .56 150,023 1.73 193,142 2.05 73,724 .85 65,902 .70 280,123 3.22 219,325 2.33 59,376 .68 169,143 1.80 99,919 1.15 58,717 .62 17,795 .20 16,931 .18 74,326 .85 62,869 .67 102,632 1.18 59,456 .63 90,923 1.05 84,041 .89 797,716 9.18 749,700 7.97 1,332,595 15.34 1,788,110 19.01 81,461 .94 132,689 1.41 21,553 .25 4,628 .05 510,647 5.88 273,443 2.91 52,030 .60 71,872 .76 263,236 3.03 241,312 2.57 128,194 1.4S 47,085 .50 138,465 1.59 326,800 3.47 42,779 .49 55,834 .59 29,796 .34 136 A 142,447 1.64 57,242 .61 7,304 .OS 16,636 .18 185,180 2.13 115,808 1.23 254,609 2.93 287,744 3.06 583^543 6.72 727,321 7.73 2,303 .03 4,459 .05 52,622 .60 6,274 .07 26,616 .31 12,248 .13 1,658,134 19.08 1,767,464 18.79 '389,273 4.48 881,150 9.37 8,688,576 100.00 9,406,380 100.00 972,359,000 .. 1,089,660,000 111.91 .. 115.84 278 MAINE CENTRAL RAILROAD Tons of Revenue Freight Carried by Commodities 1912 and 1922 Products of Agriculture 1912 Tons Per cent or Total 1922 Tons i Per cent of Total 1. Grain. 288,091 4.24 228,721 3.11 2. Flour . 75,008 1.11 65,116 .88 3. Other Mill Products. 88,182 1.30 178,388 2.43 4. Hay. 171,213 2.52 31,510 .43 5. Cotton. 22,112 .33 32,023 .44 6. Potatoes. 565,156 8.33 787,283 10.71 7. Fruit and Vegetables. 89,706 1.32 27,791 .38 8. Other Products of Agriculture . 22,424 .33 6,046 .08 Products of Animals 9. Live Stock . 20,625 .31 15,764 .21 10. Dressed Meats. 11,993 .18 12,684 .17 11. Other Packing House Products . 19,968 .29 4,753 .06 12. Poultry, Game and Fish .... 13,630 .20 309 A 13. Wool. 5,496 .08 4,921 .07 14. Hides and Leather. 20,992 30,172 .31 9,824 .13 15. Other Products of Animals . . .44 9,952 .14 Products of Mines 16. Anthracite Coal. 124,510 1.83 137,920 1.87 17. Bituminous Coal. 612,596 9.02 711,656 9.68 18. Coke. 6,998 1,435 .10 10,116 .14 19. Ores. .01 416 .01 20. Stone, Sand and Other Like Articles. 138,857 2.04 135,530 1.84 21. Other Products of Mines . . . 78,615 1.16 93,649 1.27 Products of Forests 22. Lumber. 1,041,609 15.33 934,446 12.71 23. Railroad Ties. 62,945 737,503 .93 10,254 .14 24. Pulp Wood. 10.86 906,214 12.32 25. Other Products of Forests . . . 392,322 5.77 128,425 1.75 Manufactures 26. Petroleum and other Oils . . . 40,267 .59 238,748 3.25 27. Sugar . 15,499 .23 16,356 .22 28. Naval Stores. 1,526 .02 440 .01 29. Iron, Pig and Bloom. 13,625 .20 3,386 .05 30. Rails, Iron and Steel. 28,160 .41 11,905 .16 31. Other Castings and Machinery . 28,899 .42 20,699 .28 32. Metal, Bar and Sheet. 5,120 .08 13,749 .19 33. Cement. 26,074 .38 58.342 .79 34. Agricultural Implements . . . 3,359 .05 4,820 .07 35. Autos, Wagons, Carriages and other Vehicles. 3,435 .05 13,281 .18 36. Household Goods and Furniture 10,799 .16 2,938 .04 37. Brick. 25,147 .37 22,448 133,110 .31 38. Lime. 107,863 1.59 1.81 39. Paper. 477,447 7.03 654,596 8.90 40. Acids. 7,346 .11 58,582 .80 41. Ice . 31,281 .46 35,980 .49 42. All Other Commodities .... 1,325,514 19.51 1,579,607 21.48 Total Tons Carried. 6,793,519 100.00 7,352,698 100.00 612,514,000 ... 857,667,000 90.16 ... 116.65 Revenue Ton Miles. Average Haul — Miles . . . . A. Less than .005 per cent of total. 279 CENTRAL VERMONT RAILWAY Tons of Revenue Freight Carried by Commodities 1912 and 1922 Products of Agriculture 1. Grain. 2. Flour. 3. Other Mill Products. 4. Hay. 5. Other Products of Agriculture . Products of Animals 6. Live Stock . 7. Packing House Products . . . 8. Hides and Leather. 9. Other Products of Animals . . Products of Mines 10. Anthracite Coal. 11. Bituminous Coal. 12. Granite, Clay, Gravel and Sand 13. Other Products of Mines . . . Products of Forests 14. Lumber. 15. Pulp Wood. 16. Other Products of Forests . . . Manufactures 17. Petroleum and Oils. 18. Brick, Cement and Lime . . . 19. All Other Commodities .... Total Tons Carried. 1912 Per cent 1922 Per cent Tons of Total Tons of Total 355,662 8.82 348,900 9.03 84,546 2.10 98,403 2.55 139,835 3.47 199,519 5.16 253,528 6.28 37,833 .98 85,265 2.11 160,850 4.16 28,543 .71 17,702 .46 45,251 1.12 128,659 3.33 18,245 .45 27,968 .72 53,364 1.32 54,500 1.41 305,237 7.57 196,201 5.08 553,020 13.71 312,276 8.08 120,313 2.98 205,809 5.32 162,557 4.03 31,388 .81 350,418 8.69 405,382 10.49 26,723 .66 67,455 1.74 115,599 2.87 77,409 2.00 24,500 .61 113,583 2.94 91,174 2.26 91,030 2.35 ,219,859 30.24 1,290,822 33.39 ,033,639 100.00 3,865,689 100.00 ',505,000 .. 369,128,000 76.73 .. 95.49 Revenue Ton Miles Average Haul — Miles 280 BANGOR & AROOSTOOK RAILROAD Tons of Revenue Freight Careied by Commodities 1912 and 1922 Products of Agriculture 1. Grain. 2. Flour. 3. Other Mill Products. 4. Hay. 5. Fruits and Vegetables. 6. Potatoes. 7. Other Products of Agriculture . Products of Animals 8. Live Stock . 9. Dressed Meats. 10. Other Packing House Products . 11. Wool. 12. Hides and Leather. 13. Other Products of Animals . . Products of Mines 14. Anthracite Coal. 15. Bituminous Coal. 16. Coke. 17. Stone, Sand and Other Like Articles. 18. Other Products of Mines . . . Products of Forests 19. Lumber. 20. Other Products of Forests . . . Manufactures 21. Fertilizer. 22. Starch. 23. Petroleum and Other Oils . . . 24. Sugar. 25. Naval Stores. 26. Iron and Steel Rails. 27. Other Castings and Machinery . 28. Cement, Brick and Lime . . . 29. Agricultural Implements . . . 30. Wagons, Carriages, Tools, etc. . 31. Wines, Liquors and Beers . . . 32. Household Goods and Furniture. 33. Paper. 34. All Other Commodities .... 1912 Per cent 1922 Per cent Tons op Total Tons of Total 14,612 .81 19,952 .92 6,625 .37 6,418 .30 11,528 .64 10,697 .50 42,436 2.36 12,574 .58 3,500 .20 1,878 .09 388,323 21.64 532,896 24.70 560 .03 448 .02 1,963 .11 1,722 .08 121 .01 273 .01 2,187 .12 1,220 .06 22 474 .02 6,116 .34 1,182 .05 1,287 .07 64 A 34,662 1.93 4,771 .22 137,072 7.64 267,897 12.42 234 .01 193 .01 16,466 .92 19,352 .90 33,810 1.89 2,587 .12 359,058 20.01 262,697 12.18 362,141 20.18 396,280 18.37 79,707 4.44 105,196 4.88 2,232 .12 4,681 .22 3,400 .19 19,485 .90 2,101 .12 2,592 .12 281 .02 58 A 10 332 .02 10,314 .57 5,539 .26 18,577 1.04 26,075 1.21 1,426 .08 1,037 .05 828 .05 880 .04 105 .01 89 A 384 .02 229 .01 151,659 8.45 248,142 11.50 100,666 5.61 119,109 9.24 Total Tons Carried. 1,794,413 100.00 2,157,019 100.00 Revenue Ton Miles. 225,214,000 .. 267,482,000 .. Average Haul — Miles. 125.51 .. 124.01 A. Less than .005 per cent of total. 281 RUTLAND RAILROAD Tons of Revenue Freight Carried by Commodities 1912 and 1922 Products of Agriculture 1. Grain. 2. Flour and Meal. 3. Other Mill Products. 4. Hay, Straw and Alfalfa .... 5. Tobacco. 6. Cotton, Cotton Seed & Products except Oil. 7. Fruit and Vegetables _. 8. Other Products of Agriculture . Products of Animals 9. Live Stock . 10. Dressed Meats. 11. Other Packing House Products . 12. Poultry, Game and Fish .... 13. Wool. 14. Hides and Leather. 15. Other Products of Animals . . Products of Mines 16. Anthracite Coal. 17. Bituminous Coal .. 18. Coke. 19. Ores. 20. Stone, Sand and Other Like Articles. 21. Other Products of Mines . . . Products of Forests 22. Lumber. 23. Other Products of Forests . . Manufactures 24. Petroleum and Other Oils . . . 25. Sugar, Syrup, Glucose and Molasses. 26. Naval Stores. 27. Iron, Pig and Bloom. 28. Iron and Steel Rails. 29. Other Castings and Machinery . 30. Bar and Sheet Metal. 31. Cement, Brick and Lime . . . 32. Agricultural Implements . . . 33. Automobiles, Trucks, Wagons, Carriages, Tools, etc. 34. Wines, Liquors and Beers . . . 35. Household Goods and Furniture. 36. All Other Commodities .... Total Tons Carried. Revenue Ton Miles. Average Haul—Miles. * Year ending Dec. 31, 1912. A. Less than .005 per cent of total. 1912* Per cent 1922 Percent Tons of Total Tons of Total 99,012 4.15 80,238 4.39 40,538 1.70 24,344 1.33 83,534 3.50 74,709 4.09 83,074 3.49 11,939 .65 591 .02 80 A 3,735 .16 3,883 .21 29,133 1.22 22,371 1.22 6,655 .28 4,502 .25 13,913 .58 9,956 .55 2,705 .11 1,175 .06 1,488 .06 1,931 .11 820 .04 11 A 2,050 .09 2,964 .16 3,777 .16 4,348 .24 21,983 .92 4,528 .25 243,085 10.20 230,352 12.60 374,773 15.72 296,063 16.19 8,773 .37 6,132 .34 2,628 .11 271 .01 178,876 7.50 184,331 10.08 18,704 .78 11,919 .65 123,670 5.19 93,795 5.13 439,286 18.43 108,235 5.92 10,815 .45 34,548 1.89 5,796 .24 19,577 1.07 243 .01 5 A 6,891 .29 3,191 .17 10,778 .45 6,734 .37 16,655 .70 10,706 .59 6,423 .27 9,927 .54 48,442 2.03 48,207 2.64 6,416 .27 5,057 .28 2,803 .12 20,939 1.15 3,872 .16 562 .03 6,545 .28 4,354 .24 475,482 19.95 486,335 26.60 2,383,964 100.00 1,828,219 100.00 261,143,000 .. 201,641,000 . , 109.54 # # 110.29 • . 282 APPENDIX D Comparative Rates to Pacific Coast (San Francisco) (Rate per Hundred Pounds) Commodity By Water from Boston By Bail From Boston Pittsburgh Detroit Chicago Cotton Piece Goods .... _ n r CL $1.87*6 $1.73 $1.65 $1.58 '•• m60 { LCL 3 . 40*6 3.18 3.18 2.95*6 f CL 1.87*6 1.73 1.65 1.58 Dry Goods. " 175 { LCL 3.40*6 3.18 3.18 2.95*6 f CL 2.40 2.25 2.18 2.10 Carpets and Rugs. - - 75 i LCL 3.75 3.45 3.45 3.21 Paper. .. .50 CL 1.65 1.40 1.33 1.25 Hardware and Tools.... ... .70 LCL 3.40*6 3.18 3.18 2.95*6 , CL 3.53 2.75 2.63 2.50 Pianos. • • ,75 1 LCL 5.55 5.40 5.25 5.10 ( CL .. 1.50 | LCL 4.80 4.65 3.76 3.69 Boots and Shoes. 5.16 4.74 4.74 4.41 ( CL 3.44*6 2.75* 2.63 2.50 Automobile Tires. • • - 80 ) LCL 5.55 5.18 5.18 4.82 CL Carload shipments. LCL Less than carload shipments. * Pittsburgh rate group includes Akron, Ohio. 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 3 3 3 3 3 3 3 283 Coastwise tt tt a a Foreign if a Coastwise It it li it tt u tt tt a a it a a a tt tt a a a a a a a a a a it a a tt tt u a it Foreign if it it tt tt Coastwise APPENDIX E Arrivals of Foreign and Domestic Vessels at Poet of Boston April 1 - 15,1923 Class Name Nationality From Nature of Cargo Steamer Glen White .... American Norfolk. Coal a Lake Strymon. . . tt Jacksonville. General a Wilton. it New York. General tt Lewis K. Thurlow . tt Baltimore. Coal a City of Gloucester . tt Gloucester. General San Benito .... British Port Limon. Fruit & General Prince George . . tt Yarmouth, N. S. General Thode Fagerlund . Norwegian Buenos Aires. Wool & General tt Seaconnet .... American Norfolk. Coal a Quincy. tt tt Coal tt Gov. Dingley . . . it Portland, Me. General Tug Norfolk. it Norfolk (towing) .... Barge Northern No. 31 . it Norfolk . Coal Tug D. F. McAllister . it Elizabethport, N. J. . . . Barge Easton. a tt tt Coal it Coaldale ..... tt li tt Coal it Summit Hill . . . n it tt Coal Tug Tamaqua .... a Philadelphia. Coal Barge Cocalico. tt tt it Ontelaunce .... n it Coal (for Gloucester) it Cohansey .... a it Coal ( “ “ ) Steamer Yorba Linda . . . a San Pedro, Calif. Oil it Cretan. tt Philadelphia. General it Nevisian. British “ (in transit to Liverpool). Coal it Penobscot .... American Norfolk . Tug Nottingham . . . tt Jersey City. Coal Barge L & W No. 6 . . . it tt it L & W No. 4 . . . tt it it Coal (for Gloucester) tt Wilkesbarre . . . it tt il Coal Steamer Norfolk. tt Norfolk . Coal Tug Paoli. tt Vineyard Haven. Coal Barge Canisteo. it New York. it Haverford .... a tt it Coal tt Strafford. tt it it Coal (for Lynn) Steamer Grecian. tt Baltimore. General tt City of Columbus . a Savannah . General Tug Resolute. n Norfolk (towing) Coal Barge Potomac. tt it il Nanticoke .... tt it Coal Tug Chas. P. Greenough tt “ (towing) Coal (for Beverly) Barge Hattie. tt tt tt Rockland .... tt Philadelphia. Coal it Northern No. 11 . a it Coal Edge Hill .... American Rotterdam. General Connehatta . . . il Manchester. General Hortensius .... British Buenos Aires. Wool & General Helesius. li tt it General (hides & skins' Naneric. it Calcutta. General Mayari. it Banes, Cuba. Sugar Steamer City of Gloucester . American Gloucester. General 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 5 5 5 5 5 5 5 5 5 5 6 6 6 6 6 284 Arrivals of Foreign and Domestic Vessels (Continued) Class Name Nationality From Nature of Cargo Coastwise Steamer Everett. American Norfolk . Coal il a Freeman. ii a Coal a a Artigas. ti Pacific Ports. General a Tug Loraine D. a Burlington, N. J. (towing). ii Barge Northern No. 2 . . a a n Sand it Tug Mars. a Philadelphia (towing) it Barge West Moreland . . a ti Coal il Tug Perth Amboy . . . a Perth Amboy (towing) ii Barge 702 . a il il Coal a a 706 . a a a Coal ti a 767 . ti a a Coal (for Rockland, Me.) ti Tug Puamico. a New York (towing) a Barge Sagamore .... ti Edgewater, N. J. Coal a ii Esther Hughes . . a Port Reading, N. J. . . . Coal a Schooner Grand Turk . . . it Jacksonville. Lumber il it Mabel A. Frye . . a ii Lumber it Steamer Newton. a Norfolk . Coal a ii Delaware .... a New York. General a il Deepwater .... a Norfolk . Coal Foreign City of Dunkirk British Shanghai, etc. General & Rubber il West Cohas . . . American Liverpool . General il Deuel. ii Hamburg. General it Agwimars . . . il Port Lobos. Oil it West Helix .... ii Rotterdam. General it Boswell. British Santa Fe. Wool & Hides Coastwise il City of Gloucester . American Gloucester. General It il Calvin Austin . . a New York. General il il Evelyn . a Porto Rico. Sugar it ti Gov. Dingley . . . a Portland. General il Tug Savage . a Philadelphia (towing) it Barge No. 19. a a Coal it ii No. 20. a ii Coal it ii No. 25. a a Coal it Steamer Cornish. a New York. General ii ii Quantico. a Philadelphia. General a Tug Col. J. F. Gaynor . it New York (towing) a Barge Tamaqua .... ti il ii Coal a a Rahn. a il ii Coal a a Nesquehoning . . it il it Coal Foreign Prince George . . British Yarmouth. General ti Elisha Walker . . American Tampico. Oil a Commodore Rollins Norwegian Santa Marta. Bananas a Gardenia. British Port Talbot. Coal Coastwise Steamer City of Gloucester. American Gloucester. General ii a Belfast. ii New York. General ii a Lewis Luckenbach il Pacific Ports. General it a Merrimack .... a Norfolk . General il Tug J uno. a Sandwich (towing) fl Barge Hughes Brothers . a Guttenberg, N. J. Coal Foreign Canadian Challenger British Australian Ports, via New York. Wool & Hides it W. L. Steed. . . . American Tampico. Oil il Winifredian . . . British Liverpool. General il Montana. American Vancouver, B. C. Lumber ii City of Cambridge British Calcutta. General 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 7 8 8 8 8 8 8 8 8 8 9 9 9 9 9 285 Arrivals of Foreign and Domestic Vessels (Continued) Class Name Nationality From Nature of Cargo Coastwise Steamer City of Gloucester . American Gloucester. General tt ft M unmotor . . . . a Norfolk . Coal tt tt Indian. a it General tt tt Gov. Dingley . . . tt Portland. General tt Tug Carlisle. tt Philadelphia (towing) if Barge Salem. tt tt Coal tt tt Ephrata. tt tt Coal (for Portland) tt tt Neshaminy .... tt tt Coal “ tt Steamer Dorchester .... tt ft General it tt City of Rome . . . tt Savannah . General tt tt Hampden. tt Norfolk . Coal tt a Calvin Austin . . it New York. General a it Wilton. tt tt tt General tt it Walter D. Noyes . tt Norfolk . Coal tt Tug Mercury. tt Vineyard Haven (towing) tt Barge Brooklyn. tt New York. Coal Foreign Port Said, Maru . Japanese Italian Ports, via New York. Olive Oil, Hides, etc. (C Herbert G. Wylie . American Tampico. Oil it Wascana. Norwegian Louisburg, C. B. Coal tt Thistlemore . . . British Liverpool . General it Levisa. American Preston, Cuba. Sugar Coastwise Steamer City of Gloucester . tt Gloucester. General tt tt Bristol. tt Norfolk . Coal tt tt Belfast. tt New York. General tt tt Ontario. tt Baltimore. General tt tt Massasoit .... tt Jonesport, etc. General tt Tug Col. J. F. Gaynor . tt Sandwich (towing) tt Barge No. 5. tt Philadelphia. Coal tt Tug Triton. tt New York (towing) it Barge Cohocton .... tt tt tt Coal (for Clark Island) tt tt Shickskinny. . . . tt tt it Coal tt Tug Harold . tt “ “ (towing) ft Barge Iron Queen .... tt tt tt Coal Tar tt Steamer Carisco. tt Port Ivory, S. I. Soap Stock tt Tug International . . . tt Philadelphia (towing) it Barge Langhorne .... It tt Coal tt tt Silver Brook . . . tt tt Coal (for Plymouth) it it Oak Hill. it It Coal tt Steamer Lake Fannin . . . tt Jacksonville. General tt Schooner Henrietta Simmons tt Nantucket. Junk tt Steamer Delaware .... it New York. General tt tt Glen White . . . tt Norfolk . Coal ft it Cornish. tt New York. General tt tt Gov. Dingley . . . tt Portland. General tt tt Calvin Austin . . tt New York. General tt it Steel Seafarer . . . tt Pacific Ports . General tt Schooner Spindrift. tt Georgetown, S. C. Lumber it Tug Battleboro . . . tt Norfolk (towing) tt Barge Bango. tt It Coal it tt Cohasset. tt Coal Foreign Columbia .... British Glasgow, Scot. General for New York tt Ningchow .... tt Shanghai, etc. General it Verentia. tt London . General tt Vincenzo Florio . . Italian Leghorn . General tt Stanmore . . . . British Glasgow, Scot. General 286 Arrivals of Foreign and Domestic Vessels (Continued) Date Class Name Nationality From Nature of Cargo April 9 Foreign San Bruno .... British Port Limon.Bananas & Coffee 9 “ Prince George . . “ Yarmouth, N. S.General 9 “ Geo. G. Henry . . American Tampico.Oil 9 “ Australind .... British Australia.Wool & Casein 9 “ Scythian. “ London.General 9 Coastwise Steamer City of Gloucester. American Gloucester.General 9 “ “ Arlington .... “ Norfolk .Coal 9 “ “ Belfast . “ New York.General 9 “ “ Cretan. “ Philadelphia.General 9 “ “ J. H. Devereaux . “ “ .Coal 9 “ “ Middlesex .... “ Norfolk .Coal 9 “ “ Nacoochee .... “ Savannah.General 9 “ “ Seaconnet .... “ Norfolk.Coal 9 “ Tug Gettysburg .... “ Philadelphia (towing) 9 “ Barge Yardley. “ “ .Coal (for Lynn) 9 “ Tug Fame ....... “ Norfolk (towing) 9 “ Barge Beattie. “ “ .Coal 9 " “ Irene. “ “ .Coal (for Lynn) 9 “ “ Biwabik. “ “ .Coal (for Beverly) 9 “ Tug Murrell. “ “ (towing) 9 •' Barge Flora. “ “ .Coal 9 “ “ Edith. “ “ .Coal 9 “ “ Annie. “ “ .Coal (for Beverly) 9 “ Tug Lehigh. “ Perth Amboy (towing) 9 “ Barge No. 781 .... . “ “ “ .Coal 9 “ Schooner W. H. Harriman . “ St. Andrews Bay .... Railroad Ties 9 “ Barge No. 784 . “ Perth Amboy.Coal 9 " “ No. 785 . “ “ “ .Coal 9 “ Steamer Grecian. “ Baltimore & Norfolk . . . General 9 “ “ Swiftsure .... “ Curacao via F. It.Oil 10 Foreign Laertes.Dutch Padang.General 10 Coastwise Steamer Calvin Austin . . American New York.General 10 “ “ City of Gloucester . “ Gloucester.General 10 “ “ Lake Gilboa ... “ Jacksonville & Charleston . General 10 “ “ Long Beach ... “ Norfolk.Coal 10 “ " Suffolk. “ “ .Coal 10 “ Barge Socony No. G2 . . “ New York.Oil 10 “ Tug Roger Williams . . “ “ “ (towing) 10 “ Barge Marion. “ “ “ .Coal 10 “ “ Edgewater .... “ “ “ .Coal 10 “ Schooner James C. Hamlen . “ Port St. Joe.Lumber 10 “ Tug Boston. “ Norfolk (towing) 10 “ Barge Northern No. 14 . “ “ .Coal 10 “ “ Northern No. 4 . . “ “ .Coal (for Portland) 10 “ Tug T. J. Hooper ... “ “ (towing) 10 “ Barge Eastern. “ “ .Coal 10 “ “ Seth Linthicum . . “ “ .Coal (for Lynn) 10 “ “ J. J. Hock .... “ « .Coal “ 10 “ Steamer Lake Elsmere ... “ Jacksonville.General 10 Foreign Azov.British St. John, N. B.None 11 Foreign Steel Seafarer . . American .Lumber & Hides 11 “ Eudunda.British Melbourne.Wool & Skins 11 “ Dania.Danish Copenhagen*..General 11 Coastwise “ City of Gloucester. American Gloucester.General 11 “ “ Anahuac. “ Fall River.Oil 11 “ “ Belfast. “ New York.General 11 “ “ Corsica. “ Norfolk.Coal 287 Arrivals of Foreign and Domestic Vessels (Continued) Date Class Name Nationality From Nature of Cargo April 11 Coastwise Steamer Everett. American Norfolk. Coal 11 il il Peter H. Crowell . U it . Coal 11 it ti Wilton. (( New York. . General 11 a it Gov. Dingley . . . it Portland. . General 11 a il Merrimack .... ii Philadelphia. General 11 it Quantico. u Norfolk. . General 11 a Tug Cheektowago . . . it Perth Amboy (towing) 11 Barge No. 701. il a u Coal 11 it a No. 786 . a a a . Coal 11 a a No. 783 . a a a . Coal (for Lynn) 11 il Tug Dunmore .... a Norfolk (towing) 11 a Barge Garrett. a il . Coal 11 il Tug Honey Brook . . . a New York (towing) 11 il Barge I & W B C C No. 8 a it u . Coal (for Salem) 11 a U I & W B C C No. 9 n a a . Coal (for Lynn) 11 a il I & W B C C No. 11 a a it . Coal 11 a Tug Pallas. 1C Sandwich (towing) 11 a Barge Geo. J. Hughes . . u New York. . Coal 11 a Steamer Coastwise .... 4 Jan. 1, 1933 400,000 . 5 Jan. 1, 1934 1,872,000 44 Boston & Lowell R.R. . . . zyz Sept. 1, 1925 500,000 44 <4 4 4 44 4 Nov. 1, 1926 500,000 44 44 44 44 . 4 July 1, 1927 325,000 44 41 44 44 . 4 April 1, 1929 350,000 . 4 April 1, 1932 1,000,000 44 44 . 4^ Feb. 1, 1933 1,000,000 Total $46,059,000 The above constitute all the Boston & Maine bonds ma¬ turing prior to December 31, 1935, with the exception of equipment trust obligations, of bonds held by the Federal Government, of bonds secured by underlying mortgages, and of the bonds next mentioned. The $4,000,000 of 6% General Mortgage Series M Bonds, dated January 1, 1923, due January 1, 1933, to be similarly extended for twelve years. These bonds are not listed in the above statement for the reason that the statement is made up as of December 31, 1922, and the bonds are dated January 1, 1923. BOSTON COLLEGE 3 9031 1037398 3 BOSTON COLLEGE LIBRARY UNIVERSITY HEIGHTS CHESTNUT HILL, MASS. Books may be kept for two weeks and may be tenewed for the same period, unless reserved. Two cents a day is charged for each book kept overtime. If you cannot find what you want, ask the Librarian who will be glad to help you. The borrower is responsible for books drawn on his card and for all fines accruing on the same.