• • • •
Before the
Interstate Commerce Commission
In the Matter of the Consolidation
of the Railway Properties of the
United States Into a Limited
Number of Systems.
Docket
No. 12964
THE NEW YORK CENTRAL LINES
Statement of Alfred H. Smith, President,
New York Central Lines, at the hearing
in Washington, D. C., May 16,1923.
W •
BEFOEE THE
Interstate Commerce Commission
In the Matter
of the
Docket
Consolidation of the Kaihvay Prop-i 12964.
erties of the United States into a\
Limited Number of Systems.
STATEMENT OF ALFRED H. SMITH,
PRESIDENT OF THE NEW YORK
CENTRAL LINES
At the beginning of my testimony I desire to present
to the Commission three exhibits. The first of these is
a descriptive and historical statement of the New
York Central Lines as they now exist, together
wdth some of the important facts relating to the
history of their physical construction, corporate
history and the history of the growth and exten¬
sion of their existing control. This statement has been
carefully prepared under my direction by members of
the executive staff and has been reviewed by me. It is
correct to the best of my knowledge and belief and I
therefore offer it asking that it be given the appropriate
Commission number and also be designated as New York
Central Lines Descriptive and Historical Statement.
2
The second exhibit is a series of 27 maps, as follows :
Map 1. The present New York Central Lines.
Map 2. Profiles of the New York Central Lines.
Maps 3 to 9 inclusive. Construction of Lines by
Decades.
Maps 10 to 18 inclusive. Growth of Common.
Control or Management.
Map 19. Trackage Eights and Part Ownership.
Map 20. Density of Passenger Traffic.
Map 21. Interchange.
Map 22. Density of Freight Traffic.
Map 23. Fuel Coal Supply.
Map 24. Prof. Kipley's Plan for New York Cen¬
tral System.
Map 25. I. C. C. Tentative Plan, System No. 1,
New York Central.
Map 26. New York Central Lines Plan, New
York Central System.
Map 27. New York Central Lines Plan, New
. . . York Central System, adding the Kutland
Eailroad and the Western Maryland Eailway,
assigned by the Commission.
■ . Some of these maps are referred to in the descriptive
and ; historicál statement and others will be re¬
ferred to in my testimony. These maps have
been carefully prepared by members of the executive
slaiï and have beén examined by me from time to
time. They are correct to the best of my information
and belief arid I therefore offer them in evidence
ánd ask that this exhibit be ' given ' the appropriate
Commission number and also be designated as New York
Central Lines Maps Nos. 1 to 27, inclusive.
3
The third exhibit is a series of statements followed
by traffic diagrams and a map as follows:
1. Statement Keferring to and Explaining Maps.
Pages 1 and 2. Growth of Common Control
and Management.
Page 3. Joint and Minor Interests in Other
Koads.
Page 4. Principal Trackage Eights.
Pages 5 to 7. Daily Passenger, Train Car
Movements.
Pages 8 to 31. Interchange.
Pages 32 to 38. Daily Freight Traffic.
2. Tables of Tracks Operated by New York Central
Lines, December 31, 1921.
3. New York Central Lines Equipment Owned, Held
in Trust or Held in Other Forms of Title as
of December 31, 1922.
4. Corporate History of the New York Central Lines,
December 31, 1921.
5. New York Central Lines Classes of Commodities
Handled during 1922.
6. New York Central Lines Stock and Other Capital
Obligations as of December 31,1922. .
' 7. New York Central Lines Statement of Income Ac¬
counts for 1915, 1916, 1917, 1921 and 1922.
8. Statement of Income Accounts for 1915,1916,1917,
1921 and 1922—-New York Central Lines Plan,
New York Central System.
9. Statement of Income Accounts for 1915,1916,1917,
1921 and 1922—^New York Central Lines Plan,
New York Central System, adding the West¬
ern Maryland Bailway.
4
10. Statement of Income Accounts for 1915,1916,1917,
1921 and 1922—New York Central Lines Plan,
New York Central System, adding the Kutland
Railroad.
11. Statement of Income Accounts for 1915,1916,1917,
1921 and 1922—New York Central Lines Plan,
NeAV York Centra! System, adding the Rutland
Railroad and the Western Maryland Railway.
12. Statement of Income Accounts for 1915,1916,1917,
1921 and 1922—1. C. C. Tentative Plan, System
No. 1, New York Central. • '
13. Statement of Income Accounts for 1915,1916,1917,
1921 and 1922—Prof. Ripley's Plan, New York
Central System.
14. Traffic Diagrams—Two for the Central-Railroad
of New Jersey and Philadelphia and Reading
Railway; two for the Ohio Central Lines.
15. Map of Toledo showing New York Central Lines—
Ohio Central Lines property and facilities
jointly used.
These statements have likewise been carefully pre¬
pared by members of the executive staff. The traffic
diagrams contained in statement Number 14 of the ex¬
hibit are for reasons which I shall state later to some
extent based on general information as detailed statis¬
tics were not available. Subject to this qualification as
to that portion of the exhibit it is correct to the best of
my information and belief and is offered in evidence
with the request that it be given the appropriate Com¬
mission number , and also that it be designated as New
York Central Lines Statements, Traffic Diagrams, and
Map.
5
I desire to call the attention of the Commission to
some of the principal features -which are developed in
the descriptive and historical statement and in the maps
and exhibits. The present stem of the New York Central
Lines, extending from Boston and New York, to Chicago
was physically constructed, excepting for the bridge
across the Hudson, at Albany, as far back as 1853. This
construction followed the great historic water^vay which
was so potent a factor in the early growth of the terri¬
tory now served by the New York Central Lines. From
1858 until the present the development of the system has
been a logical one, extensions connecting with this main
line being built for the purpose of developing the tribu¬
tary territory.
The extension of control by common stockholders
began as far back as 1867 and the growth and extension
of the system since that time has practically been under
continuity of management and policy to which may be
attributed the logical development of the system.
The system as it now exists serves such important
points as New York, Boston, Springfield, Albany, Mont¬
real, Syracuse, Utica, Kochester, Buffalo, Ashtabula,
Youngstown, Cleveland, Pittsburgh, Detroit, Toledo,
Columbus, Cincinnati, Indianapolis, St. Louis, and Chi¬
cago. Between New York and Buffalo the back bone of
the system consists of the New York Central main line
and the West Shore Railroad, which have been consoli¬
dated for unified operation, traffic being crossed from
one line to the other to avoid grades and points of con¬
gestion, and to reach the Manhattan terminals and the
Weehawken terminals as required. Between Buffalo and
6
Chicago the back bone of the system consists of the old
Lake Shore line and the Michigan Central, both being
indispensable to complement the great through route
east of Buffalo. The system handles approximately
one-fourth of the 43 per cent of foreign commerce of the
United States passing through the Port of New York.
The New York Central Lines own 4,984 road freight and
switching locomotives, and 263,384 freight train cars,
and during the year 1922 the system transported 200,-
671,000 tons of freight. The system has approximately
f) per cent of the country's mileage and carries more
than 10 per cent of its freight traffic.
The territory in which the New York Central Lines
are located has nearly one-half of the population of
the United States largely served by these lines. The
NeAV York Central Lines pass through 174 cities having
populations over 10,000. In Canada the New York Cen¬
tral Lines have access to the two richest provinces of the
Dominion, Ontario and Quebec, which contain about 60
per cent of the total population of Canada.
The NeAv York Central Lines own 1,334 passenger
locomotives and 4,821 cars for passenger and allied serv¬
ice. The Lines carried in 1920 a total of 103,009,924
revenue passengers and in 1922 a total of 85,934,814 Avith
total passenger miles in 1920 of 5,184,455,000 and in
1922 of 4,515,624,000.
The property investment of the Noav York Central
Lines at the end of 1922 was $1,717,000,000, and the rate
of return 5.60.
7
The system is not the result of haphazard growth hut
has been thoughtfully and carefuUy buüt up so that each
member of it performs a definite function and we believe
the best interests of the communities served demand that
no detachments be made from this great transportation
machine. There is no suggestion on the part of either
the Commission or Professor Eipley that any detach¬
ment, except the Ohio Central Lines, be made. On the
other hand the Commission's tentative plan makes as¬
signments, some definite and some tentative, of additional
lines. ~
I therefore come to a statement of the views of the
management of the New York Central Lines with respect
to these matters.
THE NEW YORK CENTRAL SYSTEM AS PROPOSED
BY THE NEW YORK CENTRAL LINES
The consolidation which we believe would be most
adequate to meet the requirements of the Transporta¬
tion Act and the transportation demands of the territory
is shown on Map 26 and would comprise under the name
of the New York Central System the following New York
Central Lines ;
The New York Central Eailroad;
The Toledo & Ohio Central Eailway;
The Kanawha & Michigan Eailway.
The Kanawha & West Virginia Eailroad;
The Zanesville & Western Eailway;
The Boston & Albany Eailroad;
. The Pittsburgh & Lake Erie Eailroad;
The Lake Erie & Eastern Eailroad ;
8 .
■ The Michigan Central Eailroad;
The Chicago, Kalamazoo & Saginaw Eaihvay;
The Cleveland, Cincinnati, Chicago & St. Louis
Eailway [Big Four] ;
The Cincinnati Northern Eailroad ;
The Evansvillc, Indianapolis & Terre Haute
Eaihvay ;
The Indiana Harbor Belt Eailroad;
The Chicago Eiver & Indiana Eailroad, and
The Chicago Junction Eaihvay,
to Avhich should be added:
The Central Eailroad of New Jersey with its leased
and controlled lines, subject to trackage rights
in favor of the Baltimore & Ohio for overhead
or through business between Bound Brook and
Jersey City and possibly a similar trackage
right between Allentown and Easton, providing
the Lehigh & New England Eailroad, Lehigh
& Hudson Eiver Eailroad and the New York,
New Haven & Hartford Eailroad are grouped
with the Baltimore & Ohio Eailroad together
with suitable participation by the Baltimore &
Ohio in the Jersey City terminal facilities.
The leased lines of the Philadelphia & Beading Eail¬
road in Pennsylvania as follows :
The Catawissa Eailroad (Newberry Junction to
Tamanend (Haucks), 95.6 miles with about 8
miles of branches) ;
The Shamokin, Sunbury & Le^visburgh Eailroad
(West Milton through Sunbury to Shamokin, '
32.11 miles) ;
9
The Little Schuylkill Navigation Eailroad (Tam-
anend to Port Clinton, about 32 miles) sub¬
ject to trackage rights in favor of the Balti¬
more & Ohio Eailroad for the handling of all
traffic except local traffic originating and ter¬
minating on this line ;
The East Mahanoy Eailroad (Mahanoy City to
East Mahanoy Junction with branch to
Tamanend, 11.35 miles) subject to trackage
rights in favor of the Baltimore & Ohio for the
handling of all traffic except local traffic orig¬
inating and terminating on this line;
together with trackage rights on the following portions
of the Philadelphia and Eeading for the handling of all
traffic except local traffic originating and terminating on
the line of the Philadelphia and Eeading:
Shamokin to Mahanoy City, including all mine
branches and tracks within the anthracite
fields ;
Port Clinton through Eeading to Philadelphia and
Port Eichmond, including an adequate use of
all such portions of the Philadelphia termi¬
nals as may be necessary for handling the
system business;
together with the following railroads in which the New
York Central Lines have a joint ownership, continued
in that relation :
The Cherry Tree & Dixonville Eailroad;
The Monongahela Eailway;
The Pittsburgh, Chartiers & Youghiogheny EaU-
way;
10
The Chartiers Southern Railway;
The Lake Erie & Pittsburgh Railway and
The Kankakee & Seneca Railroad.
Both the Commission and Professor Ripley agree
that System No. 1 should include all the Ne^v York Cen¬
tral Lines, with the exception of the Lake Erie & West¬
ern, now separated from the system, the Indiana Harbor
Belt, reserved by the Commission in connection with ter¬
minal problems, the Chicago River & Indiana and Chi¬
cago Junction, acquired since the publication of the tenta¬
tive report, and the Ohio Central Lines. The retention
of the Ohio Central Lines in the proposed system %vill
be discussed fully in this statement and the inclusion of
the Central Railroad of New Jersey and of portions of
the Philadelphia & Reading will also be dealt with later.
With respect to the Indiana Harbor Belt, Chicago
River & Indiana, and Chicago Junction, it appears to be
necessary only to say that the relations of these lines to
the New York Central Lines are fuUy set forth in the
Descriptive and Historical Statement and it does not
seem necessary to add anything at this time in justifica¬
tion of the continued inclusion of these properties in
the System.
The Commission assigns the Lake Erie & Pittsburgh,
the Pittsburgh, Chartiers & Youghiogheny, the Monon-
gahela and the Central Indiana alternatively, to be in¬
corporated in either System No. 1-New York Central, or
System No. 2-Pennsylvania. ^The joint ownership rela¬
tions in the Llonongahela Railway and the Pittsburgh,
Chartiers & Youghiogheny mentioned above, as well as
11
in the Chartiers Southern and the Cherry Tree & Dixon-
ville Eailroad have resulted from efforts to economize
in capital expenditure necessary to serve the coal fields
which the owning companies earlier undertook each to
develop independently. Duplication of capital expendi¬
ture will be avoided by a continuance of the joint owner¬
ship. The interest of the New York Central Lines in
these properties because of the fuel requirements of the
markets of its territory is stated in the Descriptive and
Historical Statement. The Lake Erie & Pittsburgh, as
shown in the same statement, is important as a con¬
nection between the territory of the Pittsburgh & Lake
Erie and the main line of the system at Cleveland.
The Kankakee & Seneca forms a connection for inter¬
change between the Big Four and the carriers reaching
the "West and Northwest. The Central Indiana is in
the hands of a Keceiver and proceedings are under way
for its dissolution and the abandonment of portions of its
railroad, which will probably eliminate it from further
consideration.
Before proceeding with a discussion of the Ohio Cen¬
tral Lines and the Central Eailroad of New Jersey and
the Philadelphia & Eeading, it seems desirable to refer
to some other matters in connection with the Commis¬
sion's tentative plan.
Map No. 27 shows the proposed New York Central
System as above described together with the "Western
Maryland Eailroad and the Eutland, inasmuch as the
Commission assigns them to its proposed System No. 1-
New York Central. Prof. Eipley agrees with the Com¬
mission as to the assignment of the Eutland but includes
12
the Western Maryland in his proposed Lackawanna-
Niekel Plate System to serve as an eastern outlet for
that system from Lake Erie via Pittsburgh to the sea¬
board at Baltimore.
We are willing to accept the Eutland, although we
have not shoAvn it on the map of our proposed plan. We
do not advocate the indusiqn of the Western Maryland
in our System, hut are willing to co-operate in its acqui¬
sition upon reasonable terms if the Commission should
he of the opinion that the suceesa of its consolidation
plans requires such grouping. Since the Commission has
included both them in the New York Central System, the
effect of their inclusion is exhibited on a map and shown
in the statements submitted.
The existing channel of commerce between the Pitts¬
burgh & Lake Erie and the Western Maryland at
Connellsville may be observed on Map 21—Inter-
diange, and Map 22—^Density of Freight Traffic. In
1910 the Western Maryland and the Pittsburgh & Lake
Erie entered into a traffic agreement for 99 years de¬
signed to encourage the flow of traffic from one to Üie
other. Under that agreement the Western Maryland
extended its line from a point near Cumberland, Mary¬
land, to Connellsville and provided additional terminal
facilities at Baltimore. The tonnage from the Pitts¬
burgh & Lake Erie through Connellsville eastbound, con¬
sists prindpally of coal, grain, and iron and sted prod¬
ucts with some general merchandise, and the westbound
movement from the Western Maryland consists prind¬
pally of furnace limestone and merchandise. This traffic
IS
movement has increased from 86,585 cars interchanged
in 1914 to 150,401 cars in 1921.
The Commission tentatively ass%ns to the New York
Central Systetn the Boston & Maine, the Maine Central,
and the Bangor & Aroostook Bailroads. This assign¬
ment appears to. he in fact triply tentative for the rea¬
son ttat these same lines are assigned to System No. 7,
the New England System, and also System No. 7-A, the
NeAV England-Great Lakes System. We assume that
these various altemati'^e assignments indicate to some
extent the difficulties with which the Commission is con¬
fronted in making a satisfactory disposition of the New
England lines. This is, of course, a matter in wMch the
New England public is very deeply interested and it is
our understanding that careful studies are being made
of this subject by a committee appointed by the New
England Governors and also by other trade bodies and
commercial associations. Under these circumstances we
have not thought it incumbent upon us to do anything
more than to present statistics showing the property in¬
vestment, net railway operating income, rate of return
and otlier data of System No. 1 as tentatively found by
the Commission, which statistics necessarily include the
three New England lines above mentioned. The views of
the New York Central Lines with respect to the possible
acquisition of these roads will no doubt be influenced by
the expression of New England public opinion on this
subject and for that reason we have deferred reaching
any conclusion with respect to this feature of the Com¬
mission's plan until the New England public has been
heard.
14
In regard to the Short Lines, Prof. Eipley says: "No
attempt has been made to trace the natural relationships
of these minor properties and probably it is not neces¬
sary at this time data concerning them is not at present
available and no attempt is made to assign them in this
tentative plan which confines itself solely to the larger
steam roads." The Commission assigns the Fonda,
Johnstown & Gloversville to the New York Central Sys¬
tem. That road is a short line largely an electric rail¬
way and partly electric light and power property and it
does not seem appropriate to undertake to deal with it
in the discussion of consolidation at this time.
The Commission suggests the inclusion of the Buf¬
falo, Eochester & Pittsburgh vith the New England-
Great Lakes System, or as an alternative with the Nickel
Plate-Lehigh Valley, and Prof. Eipley adds it to his
Nickel Plate-Lackawanna System. In disposing of the
Buffalo, Eochester & Pittsburgh it may be appropriate
to observe that the principal markets for its coal traffic
are on the New York Central lines; that its inter¬
change with the New York Central is more than twice
that of the next largest interchange Avith any carrier;
and that trackage arrangements exist betAveen it and the
NeAv York Central at several points in the bituminous
coal producing fields of Pennsylvania.
The NeAV York, Ontario & Western is grouped by
Prof. Eipley Avith the Erie-DelaAvare & Hudson Sys¬
tem. In his remarks he refers to a present or pro¬
spective interest of the NeAV York Central in the NeAV
15
York, Ontario & Western. The most important relation
between the two companies is that arising ont of the
agreement for the nse by the latter of the West
Shore's Weehawken terminals and approaches there¬
to, which is pointed to as a reason for adding it
to the Brie System because "such merger would consid¬
erably amplify the Erie terminals at New York under
this contract above mentioned for the use of the West
Shore yards at Weehawken." It is not clear how any
practical advantage would result to the Erie Kailroad
from the acquisition of a contract for the use of a ter¬
minal which is already fully occupied in the interest of
the public.
REASONS FOR RETAINING THE OHIO CENTRAL LINES
IN THE NEW YORK CENTRAL SYSTEM
The Interstate Commerce Commission proposes to
separate from the New York Central System the Ohio
Central Lines, consisting of the Toledo & Ohio Central
Eailway, the Kanawha & Michigan Kailway, the Kanawha
& West Virginia Eailroad and the Zanesville & Western
Eailway, and proposes to assign them to System No. 9—
The Norfolk & Western.
Prof. Eipley, on page 500 of his report assigns to his
proposed Lackawanna—Nickel Plate System, trackage
over that part of the Toledo & Ohio Central from St.
Marys through Columbus to Thurston and that part of
the Zanesville & Western from Thurston to Zanesville,
in order, as he describes it, to connect that system with
the Wheeling & Lake Erie and Pittsburgh & West Vir¬
ginia via thé Lake Erie & Western.
16
As to the: remainder of these roads, Prof. Kipley in
forming his proposed Lake to Atlantic seaboard coal
roads, offers three possibilities: first, the making of a
separate system composed of the Norfolk & Western and
the Pennsylvania Railroad present line to Sandusky;
second, combining the Western Division of the Toledo &
Ohio Central with the Norfolk & Western as an inde¬
pendent line and combining the Eastern Division of the
Toledo & Ohio Central system Avith the Virginian Rail¬
way, and third, the combination of the Virginian and
Norfolk & Western with the Toledo & Ohio Central and
the KanaAvha & Michigan. Of these three possibilities
he recommends the third—the consolidation of the Vir¬
ginian and the Norfolk & Western mth the Toledo &
Ohio Central and the Kanawha & Michigan.
The New York Central Lines proposal is that,the
Ohio Central Lines should be retained in the New York
Central System. This is advocated because it is believed
that such disposition is in conformity with the principles
of consolidation as prescribed by the Transportation Act,
namely, preservation of existing routes and channels of
trade and commerce ; providing adequate transportation
service for the public and earning by the various com¬
petitive systems of substantially the same rate of return
upon the value of the respective railway properties. In
addition, there is inter-dependence between these lines
and the New York Central Lines in the use of each other's
facilities.
Since March, 1910, the New York Central Lines have
controlled the Toledo & Ohio Central and the Zanes-
ville & Western and since 1914, the Kanawha & Michigan.
17
Through a lease dated January. 1, 1922, the New York
Central Railroad Company assumed the entire operation
and financial obligations of the Ohio Central lines, thus
establishing closer relations between the railroads, with
a view of furnishing improved transportation service and
to make possible economies in equipment supply, account¬
ing and operation. The Interstate Commerce Commis¬
sion found, in its decision of July 21, 1922, that the op¬
eration of these lines under lease to the New York Cen¬
tral Railroad, would be in the public interest.
. The acquisition by the New York Central of all the
capital stock of the Toledo & Ohio Central, the acquisition
by the Toledo & Ohio Central of 99.4% of the capital
stock of the Kanawha & Michigan and all of the capital
stock of the Zanesville & "Western and the acquisition by
the Kanawha & Michigan of all'of the capital stock of the
Kanawha & West Virginia arose out of the need of the
Lake Shore & Michigan Southern (predecessor of the
New York Central Railroad Company) to obtain a fuel
supply for its territory and itself in the fields of South¬
ern Ohio and West Virginia and also out of court deci¬
sions by the Ohio courts in 1909 and 1910, and a decree
by the Federal court in 1914, which found,that the partici-.
pation by the Hocking Valley and the Chesapeake and
Ohio in the ownership and control of these properties was
in restraint of trade and therefore illegal.
The Ohio state courts found that the Toledo & Ohio
Central, Kanawha & Michigan and the Zanesville & West¬
ern Railway companies were "largely engaged in the
transportation of bituminous coal from the Ohio and
West Virginia coal fields to the states of Michigan and
18
Ohio and to the Great Lakes"; that the "Toledo & Ohio
Central was a natural connection to the Lake Shore and
Michigan Southern"; that the "Kanawha & Michigan
is a coal carrying road extending from the Hocking Val¬
ley District to the Kanawha District of West Virginia
and reaching the markets through its connections,
largely the Toledo and Ohio Central. The Kanawha &
Michigan Kailway was naturally adopted by the Toledo
& Ohio Central Eailway Company as a connecting branch,
and the adoption made more permanent by the Toledo &
Ohio Central Company acquiring and owning a majority
of its capital stock"; and that "the Chesapeake & Ohio
and the Hocking Valley on the one hand and the Toledo
& Ohio Central and the Kanawha & l\Iichigan on the other
should be completely divorced."
That was the finding of the court.
The decree of the United States Circuit Court of
March 14, 1914, among other things provided that
either the stock of the Kanawha & Michigan held by the
Chesapeake & Ohio should be transferred to the Lake
Shore & Michigan Southern or the holdings of both in
the KanaAvha & Michigan should be disposed of.
In the segregation of the properties which took place
in 1910, following the state court proceedings and prior
to the Federal decree the Chesapeake and Ohio insisted
on sharing with the Lake Shore & Michigan Southern in
the ownership of the Kanawha & Michigan for the pur¬
pose of retaining a connection between its line and the
Hocking Valley and also that it might continue to share
in the traffic from the Kanawha & Michigan. The Lake
Shore & Michigan Southern had not interposed any ob¬
jection to the participation of the Chesapeake & Ohio
19
in the Kanawha & Michigan but upon the decree of the
Federal Court, purchased its holdings in the KanaAvha &
Michigan. There is nothing in our records to indicate
that there Avas ever any desire on the part of the Lake
Shore to sell the IvanaAvha & Michigan to the Chesa¬
peake & Ohio or that a definite price for a lease to any
other line Avas fixed, as suggested in the Eipley report.
Coal constitutes about 80% of the tonnage handled
by the Ohio Central Lines. The fields tributary to the
Ohio Central Lines supply coal for territory served
by the New York Central Lines principally in the states
of Michigan and Ohio. The delivery of coal to the NeAV
York Central Lines is mostly made through Toledo at
Avhich point the Toledo & Ohio Central interchange AAÛth
the NeAV York Central Lines averages almost 65% of its
total. In addition to coal, the NeAV York Central Lines
handle the preponderance of interchange of other freight
AA'ith the Toledo & Ohio Central, most of AA'hich is done at
Toledo Avhere, during the past 12 years, the latter's de¬
liveries to the NeAV York Central Lines have averaged
more than four times as much as Avas delivered to the
three foreign roads at this point. In the same period
the NeAV York Central Lines delivered to the Toledo &
Ohio Central nearly tAvo and one-half times as many cars
of other freight as Avere turned over to it» by foreign
lines.
The coal movement is illustrated on tAvo traffic dia¬
grams Avhich are included in the third exhibit.
Diagram No. 1 shows the volume of movement on dif¬
ferent sections of the lines, together with the quantity
leaving the principal points of interchange, all of Avhich is
produced by mines of these roads.
20
The direction of the lines radiating from the
points of departure on the diagram has no reference
to the direction in ^vhich the coal is distributed.
The quantities appearing on the diagram are the average
for the years 1920 and 1921, and shoAv a total coal ton¬
nage originated of 7,266,990 tons. Of this amount only
34% -was turned over to 15 foreign roads for distribu¬
tion. The remaining quantity of 4,824,760 tons, which
includes the Lake coal, was handled by the four New
York Central Lines entering Toledo. The four New
York Central Lines took 706,980 tons, or 9.8% for fuel
purposes, while the 15 foreign roads took 594,900 tons,
or about 8.2% for the same purpose.
Diagram No. 2 shows the quantities of commercial
coal, exclusive of Lake coal, distributed to the principal
points of destination and for which definite figures could
be obtained, the total amounting to approximately 43% of
all of the commercial coal. Of this 43% a little more than
one-half is distributed via the New York Central Lines.
The specific allocation of the remaining commercial coal
can only be obtained accurately by the great labor of
examining the way bills and settlement sheets at the va¬
rious junctions. The information of the traffic represent¬
atives, gained through years of experience, is that the re¬
maining 57 % of commercial coal moves to miscellaneous
minor points in the territories indicated by the principal
points and the quantities so moving is distributed very
nearly in the same proportion as the quantities shoAvn for
the principal points.
The division of total commercial coal betAveen New
York Central Lines and foreign lines as shoAvn on Dia-
21
gram No. 1 differs a little from the above conclusion but
is near enough to indicate that the New York Central
Lines probably handle about one-half of the commercial
business, exclusive of Lake coal.
The present interest of the Norfolk & Western and
the Virginian in the Ohio Central Lines is indicated by
the car interchange figures for a representative week in
March, 1922. These figures show that the Ohio Central
Lines and the Norfolk & Western interchange is only
about 5.5% of the Ohio Central total. The Virginian
has no direct connection with the Ohio Central Lines but
a small amount of business moves to it via Charleston
through the Chesapeake & Ohio. The entire interchange
between the Chesapeake & Ohio and the Ohio Central
Lines is only about 5.5% of the Ohio Central total.
The omission of the Ohio Central Lines from the
New York Central System would create a gap, reducing
that breadth which, as Prof. Eipley states, is essential
for furnishing adequate transportation service by a
trunk line system. This would be particularly felt be¬
cause of the introduction of a break in the transportation
system, now continuous, between the coal producing
areas of the Ohio Central Lines and the consuming areas
of Ohio and Michigan to which a considerable part of
its product now goes. Deprived of the Ohio Central
Lines the New York Central Lines would either have to
pay the commercial rate to a foreign line on a large
quantity of fuel delivered to them at various junc¬
tions in Ohio or to transport their coal as company
material from the Pittsburgh and southern Indiana and
. Illinois territories. In either event the cost of operation
of the New York Central Lines would be increased.
22
It is stated in Prof Kipley's report and the plan of
the Commission indicates, that the proposed treatment
of the Ohio Central Lines is designed to create for the
so-called Chesapeake soft coal roads independent lake-
to-tide coal lines. Prof. Kipley's opinion is that such
systems would have the advantage of being able to ren¬
der additional service at times when there may be
a slack coal movement to the seaboard, by turning the
production of their entire territory to the westbound
movement and vice versa. This argument seems to de¬
pend upon the assumption that periods of diminished
demand at the seaboard would coincide with periods
of increased demand at the lakes and vice versa.
Quoting from one of the reports on coal and coke by
the Department of the Interior (Prices of Coal and
Coke 1913-1918—By C. E. Lesher. Prepared in co-opera¬
tion with the United States Fuel Administration and the
War Industries Board.) :
"In round numbers 80% of the bituminous
coal produced goes to the railroads, public utilities
and manufacturing industries, which taken to¬
gether represents a market very little subject to
seasonal change but subject to all the vicissitudes
of business conditions—prosperous and dull times
—that mark the ebb and flow of our industrial
life."
Of the remaining bituminous coal produced, about
4% is exported and 16% is taken by domestic consumers,
whose use of coal is, of course, seasonal. In normal
times when the European countries are producing sub¬
stantially all of the coal which they use, the movement
through Hampton Eoads is largely destined to New Eng-
23
land. It seems reasonable to expect, therefore, that dur¬
ing prosperous times the annual movement from the
coal fields to the Seaboard and the movement
to the Lakes and the North and Northwest, tvill both be
large and conversely during lean years the movement in
both directions will suffer together because of the influ¬
ence.of the large amount of coal consumption subject to
the "vicissitudes of business conditions". Even for the
relatively small quantity of coal subject to seasonal varia¬
tion it seems doubtful if any advantage to the public
would result from turning the production of one field
into the consuming territory of the other because of the
added distance which the car supply must travel. Car
supply, which is so often a limiting feature in coal pro¬
duction, eifects the greatest output when its travel time
is reduced to a minimum.
One of the influences limiting the capacity for the
transportation of bituminous coal and affecting its cost,
is illustrated by the following figures quoted from the
1922 Annual Bulletin of the American Eailway Associa¬
tion, Car Service Division. In the decade 1910 to 1920
there was an increase in the^ number of bituminous coal
mines in the country of 154% but the increase in produc¬
tion in the same period was only 37%. The average pro¬
duction per mine in 1910 was 71,550 tons while the pro¬
duction per mine in 1920 was only 38,512 tons. Had the
1910 mine production rate been maintained in 1920 the
tonnage of that year would have been produced by 7,950
mines instead of 14,766 mines. The effect of spreading
the production over a larger number of mines was to re¬
quire thé railroads to divide the available ear supply
24
among nearly 7,000 additional mines, with the consequent
requirement for more motive power, man power and
trackage for excess transportation service.
■ '"5
One of the economic problems related to the coal in¬
dustry is to keep the number of operations required for
a given consuming area more nearly confined to the num¬
ber and location which will require the least transporta¬
tion rather than to spread out and diversify the sources
of supply. The latter would seem to be the premise on
which a part of the theory rests for the consolidation of
the Ohio Central Lines Avith other coal roads betAveen the
Lake and Seaboard.
It is believed that the territory traversed by the Ohio
Central Lines can be given better transportation service
if these lines are part of the NeAV York Central System
than Avould result from combining them Avith the Norfolk
& Western or Virginian, because of the smaller fluctua¬
tions in operating results of a property which has a
diversified traflic, than is the case mth a property which
depends for its traffic almost entirely on one commodity
Avith little to balance its loaded movement Consider¬
able expenditures will be necessary on the Ohio Central
Lines in the near future for the reAÛsion and extension
of the Toledo & Ohio Central yards and engine terminals
and the Maumee Biver dock facilities at Toledo. More¬
over, in order to provide service for the timber lands and
the smokeless coal areas of the Few Biver fields in West
Virginia, tributary to the Kanawha and West Virginia,
extensions must be made along the Oauley and Meadow
Bivers. Petition for permission to build such extensions
has been filed Avith the Commission. The ability to pro-
Adde facilities for increasing capacity or for decreasing
25
the cost of transportation is directly dependent upon the'
company's credit, which in turn is a function of a fair
return, uniformly maintained.
These extensions in the Gauley fields go into low
volatile coal, where there is an increasing demand for
domestic uses, that is not affected or not related to the
business vicissitudes that I refer to above.
Professor Eipley's figures show for the combined
system composed of the Ohio Central Lines, the Nor¬
folk & Western and the Virginian a rate of return of
6.18%, representing the ratio of the "Standard Ee-
tum" to the investment in 1917. The following shows
the rate of return for these lines in some of the more
recent years, from which it appears that combined re¬
sults might be less favorable.
Percentage of Net Railway Operating Income to
Investment
Ohio Central
Norfolk A
lÀnes
Western
Virginian
1916
5.60
9.30
. 4.27
1917
5.56
7.94
4.54
1918
4.01
5.72
1.56
1919
• — .54
2.84
2.57
1920
2.39
1.19
4.51
1921
3.61
4.56 •
. 4.30
It also appears that the earnings of the three prop¬
erties fluctuate more or less uniformly, emphasizing the
opinion that the consolidation of one-Kanmodity rail¬
roads will not accomplish the purposes sought as well
as the consolidation of properties which will produce a
greater diversity of combined traffic.
2G
Further, it seems to us that the creation of such sys¬
tems would produce some obstacles in the way of proper
rate regulation. It would evidently be to the interest of
such systems to maintain high rates on coal traffic and
to prefer that rate increases, when made, be made on
coal traffic and that rate reductions, when made, should
be made on merchandise traffic rather than on coal traffic.
Through the Ohio Central Lines the New York Cen¬
tral System would be in a better position to contribute
towards the development of competition with the other
systems serving the important smokeless coal areas of
West Virginia so as to supplj' this by-product coal to the
steel and iron industries of its territory. The total yearly
bituminous coal tonnage of the New York Central Sys¬
tem, including the Ohio Central Lines, is less than the
Pennsylvania's soft coal tonnage and the separation of
the Ohio Central Lines would still further increase the
difference between the two systems in this respect.
In 1922 when the earnings of the Ohio Central Lines
Avere reduced because the moA'ement of the principal com¬
modity Avas seriously interrupted by the coal strike, their
ratio of net railAA^ay operating income to investment Avas
a minus amount of 1.77%. When added to the net rail-
Avay operating income of the other NeAv York Central
Lines, there Avas produced a combined ratio to investment
of 5.6%. In the year 1921, aa'ith reduced business activ¬
ity, the Ohio Central Lines ratio aa'as 3.61%, but the
combined ratio Avith the other Ncav York Central Lines
Avas 5.38%. The continuance of the Ohio Central Lines
in the NeAV York Central System aaûII, therefore, tend to
accomplish the purpose of stabilizing the rate of return.
27
\
The map of Toledo and vicinity contained in the third
exhibit shows the inter-dependence of the Ohio Central
Lines and the other New York Central Lines in the joint
use of property and facilities.
The inset on the map shows the route that the To¬
ledo & Ohio Central affords the Big Four for its traffic
from Kentucky and the Southwest through Cincinnati
and from Southern and Western Ohio to Toledo, form¬
ing an important connection for the Big Four to inter¬
change with the other New York Central Lines at the
Toledo gateway particularly for Detroit and the eastern
part of the Michigan peninsula.
The Big Four route is over the Eastern Division of
the Toledo & Ohio Central from the junction of the roads
at Berwick, Ohio, a distance of 42.3 miles, to Stanley,
located on the outsldrts of Toledo. It will also be seen
on the map that there is another route over the Western
Division of the Toledo & Ohio Central from the junction
of the roads at Kenton, Ohio, 68 miles from Stanley, to
which consideration is being given for use during periods
of heavy traffic on the single track divisions of the To¬
ledo & Ohio Central. The freight, traffic of the Big Four
between Berwick and Stanley is about equal to that of
the Toledo & Ohio Central.
Stanley and Hickox (located at the ends of the two
divisions of the Toledo & Ohio Central and about 2,000
feet apart) are on the Toledo Terminal Bailroad and
mark the entrance to the receiving and departure yards
of the Toledo & Ohio Central, also used as the yards
of the Big Four. They extend northerly towards the
Maumee Eiver for about 1% miles to Whitmore where
28
/
engine terminals, coal and water stations and other fa¬
cilities aré provided both for the Toledo and Ohio Cen¬
tral and Big Four. The Big Four's use of the Toledo
and Ohio Central's tracks extends beyond the yards
through South Toledo to the Maumee Kiver dock prop-
1 I., . . Î i - ; ■ . ■, * ■ • ■ .
erty where, the ,coal car dumper, and its supporting yards
are located. The Big Four freight traffic in both direc¬
tions is classified at the yards by the Toledo & Ohio
Central and either moved to connections by that company
: I . ; '. . . i i' i. i
via the Toledo Terminal Eailroad or , to the terminal on
the Mauriíeé-Biver. ' ' ' , ' ' . - '
From Stanley all passenger traffic of the Big Four
and the Toledo & Ohio Central (that of the Big.Four be¬
ing about tivice that of the Toledo &'Ohib Central) moves
about three mües over.the Toledo Terminal and Hocking
Valley Eailwáys to a junction Avith the New York Centrà]|
hear EbckweU Junction, and thence over the New York
Central.for the remaining 2.56.miles to the Toledo Union
staiibn. The New York Central Eailroad owns thé Union
Passenger , Station and" thé' passenger engine ténninal
both of which are used by the other Nbav York Central
Lines ■ entering Toledo, including the Toledo and .Ohio,
Central. ' ' ' !
The site of the Toledo and Ohio Central Maumee
Eiver docks for the handling of coal, ore and grain, was
originally the passenger terminal of,the old Lake Shore
and Michigan Southern ánd the trácks leading to thé
property, as well as the larger portion of the land, is
still owned by the New York Central Eailroad but leased
to thé Toledo and Ohio . Central so that it is dependent
upon the New York Central'for an important part of its
terminal facilities!" ' ' " ^ ' '
29
- 5 The Toledo Terminal, Kailroad is a 32 mile belt, line
com^etely'enêîrcling the outlying distnet of Toledo hav¬
ing connections with all nailroads and is the medium over
which the heavy interchange between roads is carried on
and furnishes to its various proprietors access to a
large part of the industrial section of Toledo. Three of
the railroads owning this belt line are New York Cen¬
tral Lines, namely, : the New York Central Eailroad,
Meidgan Central and Toledo & Ohio . Central. Thé
Toledo and.Ohio Central looks to the New York Central
for the handling of itS: interchange business moving to
and from the west over the Toledo Terminal Eailroad
ií'«..-'-» i."J*. • •' ■■
between Staidéy and Nasby. ¡ ■
' ; Mn:brief .'the 'Big Foiir"> depends on the Toledo. &
Ohio-Centrairfof áccéssdolTolédo as well as for freight
yard and engine terminal facilities and service and. both
of these çompames are dependent.on the New; York-Cen¬
tral.for a portion of their freight .terminals and entirely
dependent opbhe.New York Central for passenger ter¬
minal facilities. Improvements are contemplated looking
to a. re-arrang^ent and expansion of both freight and
passenger fadlities,.including a new coal car.dumper
with supporting yards at the Maumee Eiver docks to
providé for the increasing tonnage of the Big Four and
the'Toledo"■& Ohio' Central. It is important that all of
thè facilities shall be so co-ordinated as to permit the
rapid, and economical handling of Big Four, Toledo &
Ohio Central, Miehigán Central and New York Central
business. This result can be'satisfactorily attained only
by the continuance of the Ohio Central Lines in the New
York-Central ■System, ■■ • S v ^ •
30
REASONS WHY THE CENTRAL RAILROAD OF
NEW JERSEY AND CERTAIN PORTIONS OF THE
PHILADELPHIA & READING WITH TRACKAGES
SHOULD BE ASSIGNED TO THE NEW YORK CEN^
TRAL SYSTEM.
The survey of the existing traffic relations, opera¬
tions and facilities of the New York Central Lines con¬
tained in the Descriptive and Historical Statement
shows that the most important problems connected with
the future development of the system are involved in
what is known as Trunk Line territory, or the territory
east and southeast of Lake Erie. From Buffalo east
the stream of traffic density, as shown by Maps 20 and
22, widens greatly and there is a very heavy volume of
traffic through the State of New York where the line
traverses a densely populated and highly developed ter¬
ritory.
The territory between Buffalo and Albany is
practically a continuous line of towns and cities where
business is rapidly increasing, Avhere land values are ris¬
ing and important street interferences and other ob¬
stacles to expansion of railway facilities exist which
materially limit possible future railway devfilopment.
An immense volume of traffic originating in the great
and productive Middle West, West and Southwest con¬
verges at Buffalo. This'is indicated by the progressive
increase of traffic density of eastbound traffic as it passes
over the successive sections of the New York Central
Railroad. In 1921, a year of moderate traffic, 215,526
loaded cars moved east between Chicago and South Bend ;
218,471 loaded cars moved between South Bend and
Toledo ; 348,332 loaded cars moved between Toledo and
31
Cleveland; 489,657 loaded cars reached BnfEalo via the
Kne from Cleveland. la addition there was the large
volume of txaffe delivered at the Hiagara Frontier by
the Michigan Central and foreign connecting lines. East
of Bnffalo there was added also the traffic originating at.
the Niagara Frontier and the large volume of traffic
originating in the central portions of the great Empire
State. It must be anticipated that this through traffic
from the Middle West, the West and the Southwest wiU
continue to grow in volume as well as the traffic originat¬
ing in the State of New York east of the Buffalo gateway.
The management of the New York Central Lines has
realized for some years that, with the progressive in¬
crease in traffic and with ihe great difficulties, financial
and physical, of expanding its main line east of Buffalo,
to meet this progressive increase it would become neces¬
sary to secure an additional avenue for through traffic
in order to balance the capacity of the eastern end of its
system with that^of the western end and provide ade¬
quate transportation for the territory as a whole.
The Lake Shore & Michigan Southern owned a line
known as the Jamestown, Franklin & Clearfield, ex¬
tending southeasterly into Pennsylvania. It was de¬
luded to extend this line with a view to developing a
route in connection with the New York Central Eail-
road lines in Pennsylvania, the Philadelphia & Beading,
and the Central Eailröad of New Jersey. The line was
extended by construction to Kose, Pa. From that point
temporary trackage rights were obtained from the Penn¬
sylvania Kailroad and the Buffalo, Kochester & Pitts¬
burgh, by which the route was extended to Clearfield.
From that point it continued over to Newberry Junction,
32
a point of connection with the Philadelphia & Beading.
From that point the ronte followed the Philadelphia &
Reading to Hauchs (Tamanend) where it connected with
the Central Railroad of New Jersey, thereby extending
the route to Jersey City. This route is usually referred
to as the Clearfield route. Because of the fact that the
main lines of the New York Central east of Buffalo have
not yet attained their full capacity; because of the neces¬
sary limitations over the tradiage divisions of the Clear¬
field route, and because the New York Central ownership
did not extend over a large part of the route, the through
route has not been as yet greatly developed. However,
it is our view that the development of the Clearfield route
is essential to the balancing of the system and to the
provision of adequate transportation for the territory
which it serves.
The capital expenditures which must be .made
to develop satisfactorily this alternate route, would
include, among other things, the construction of new lines
of railroad, for which surveys have been made, to take
the place of the temporary trackage rights referred to,
and would include of course such additions and better¬
ments as double tracking where necessary, reduction of
grades and curves and provision of yard and engine
teminal facüities.
That is about 50 miles of traclcage that I refer to,
and of course, as we develop the line and its growth con¬
tinues, then wn have in mind to build our own line, be¬
cause of the limitations of the trackage with other lines.
It is obvious that expenditures of this character can¬
not be made advantageously and with due regard for eon-
33
sistent development unless the entire line is under a
single ownership and that the NeAv York Central would
not he justified in making material improvements in its
existing facilities west of Newberry Junction if it were
to be dependent upon traffic arrangements or even track¬
age rights with respect to that portion of the route east
of Newberry Junction.
In other words, the best transportation comes from
a continuous flow and control of the flow between reason¬
ably given points.
The suggestion is therefore made that the New York
Central be permitted to acquire the leased lines of the
Philadelphia & Beading Avhich have been described and
which apparently can be detached from that system with¬
out serious interference with its corporate structure and
that New York Central should also be permitted to ac¬
quire the Central Eailroad of New Jersey, subject to
certain equities which the Baltimore & Ohio has in con¬
nection with parts of that property and which the New
York Central Lines have no disposition to ignore or
minimize.
It is recognized that this proposal runs counter to
the tentative plan of the Commission which assigns the
Philadelphia & Beading and Central Bailroad of New
Jersey to the Baltimore & Ohio. The proposal does not,
however, run counter to the same extent to that of Pro¬
fessor Bipley, who recognizes the important interest
which the New York Central has both in the Phila¬
delphia & Beading and the Central Bailroad of New
Jersey and proposes to satisfy this interest by the grant¬
ing of certain trackage rights.
34
Professor Kipley's conclusion appears to be based
entirely upon the existing traffic relationship which the
New York Central has with the Philadelphia & Eeading
and Central Railroad of New Jersey via the Newberry
Junction gateway. This relationship, important as it
is and we are inclined to think that Professor Eipley
rather under estimated it than over estimated it, is not
so important in our opinion as is the necessity of secur¬
ing an essential through route from New York to the
West.
However, we think it important to pursue the analy¬
sis along the lines made by Professor Eipley for the
purpose of showing the large importance of the present
established route of trade and commerce between the
New York Central and the Central Eailroad of New
Jersey and the northern lines of the Philadelphia &
Eeading. We think that this analysis will emphasize
the importance of the existing relationship and will also
show that the interests of the New York Central Lines
and the Baltimore & Ohio in portions of these properties
which compose present established routes are not in
substantial opposition to each other and are in fact to
a large extent complementary^
We have prepared two traffic diagrams contained in
the third exhibit, one for coal and another for merchan¬
dise showing the tonnages to and from the New York
Central handled over the Eeading System as compared
with the traffic to and from the Baltimore & Ohio. The
year used is 1921.
The diagrams are not submitted as being absolutely
accurate as they could only be made so by a laborious
35
analysis of all innction settlements and way bills. The
flgnres are the result of compilations of data furnished
by the Philadelphia & Beading and the Central Eailroad
of New Jersey, supplemented by discussion with officers
of these companies as well as with officers of our own
company familiar with the movements and it is believed
that they closely approximate the facts as to the princi¬
pal movements of the business passing between the com¬
panies.
These diagrams show the larger interest ■ of the
New York Central Lines in thát part of the Philadel¬
phia & Beading from Newberry Junction to'its con¬
nection with the Central Bailroad of New Jersey and in
the Central Eailroad of New Jersey to the port of New
York. The diagrams also show the New York Central's
large and important interest in that part of the Phila¬
delphia à Beading in the anthracite mining districts
between Tamaqua and West Milton and in the line from
Haucks (TaAanend Junction) through Tamaqua, to
Phüaddphia and Port Bichtnond.
The coal diagram shows that a large tonnage of soft
coal eastbound and hard coal westbound, to and from the
New York Centra^ passes over the Philadelphia & Bead¬
ing between Haucks and Newberry Junction. Adding the
merchandise traffic, there was interchanged with the New
York Central over that portion of the PhiladelpMa &
Beading a total tonnage of 6,783,000 tons in 1921. The
Baltimore & Ohio has practically no traffic over this sec¬
tion of the Philadelphia & Beading. The diagram also
shows a large Ne:w York Central tonnage passing over
the Central Bailroad of New Jersey from Haucks to
3G
Allentown over -which there is no Baltimore & Ohio
traffic. From Allentown easterly to the Lehigh & New
England connection, at Bethlehem, a distance of 5 miles,
and from Allentown to Easton, the point of connection
with the Lehigh & Hudson Eiver, a distance of 16
miles, the Baltimore & Ohio traffic is somewhat greater
than that of the New York Central for the reason that
the coal from the Baltimore & Ohio to New Eng¬
land passes over this short section of the Central Eail-
road of New Jersey. Obviously, this interest of the
Baltimore' & Ohio could he satisfied by a trackage right
in the event that these, lines and the New York, New
Haven & Hartford connecting therewith are assigned to
the Baltimore & Ohio.
For the 43 miles from Easton to Bound Brook, the
New York Central's proportion of traffic is about 32%
greater than that of the Baltimore & Ohio.
At Bound Brook the Baltimore & Ohio tonnage de¬
livered to the Heading at Park Junction and Philadelphia
reaches the Central Eailroad of Noav Jersey. This
is mostly overhead traffic for delivery at Cranford Junc¬
tion to the Staten Island Eapid Transit Eailway, a ter¬
minal subsidiary of the Baltimore & Ohio.
Considering the section from Cranford Junction east¬
erly, the 1921 bituininous coal tonnage for local points
and Jersey City piers -was, from the New York Central
1,465,500; from the Baltimore & Ohio 1,737,800. Over
this short section of the Central Eailroad of New Jersey
the Baltimore & Ohio through traffic is slightly larger
than that of the New York Central.
37
If the respective use by the two systems be stated
from the standpoint of the mileage, utilized, the New
York Central has a larger interest in a total of 88
miles of the Central Eailroad of New Jersey out of
134 miles, or. 66% of the line.
However, a statement from the standpoint of mileage
utilized does not indicate the real relative use. This is
best indicated by ton-mile statistics. In 1921 the New
York Central traffic handled over the Central Eailroad of
New Jersey amounted to 304,653,220 ton-miles, while the
Baltimore & Ohio's traffic was 221,747,725 ton-miles.
Of these ton-miles of the Baltimore & Ohio 89,767,983
ton-miles represented the overhead traffic received by the
Central Eailroad of New Jersey at Bound Brook and
redelivered by it to the Baltimore & Ohio at Cranford
Junction. The circumstance that so large a part of the
Baltimore & Ohio traffic passes over the Central Eailroad
of New Jersey for only the relatively short distance of
14 miles between Bound Brook and Cranford Junction
and does not utilize the Jersey City terminals of the
Central Eailroad of New Jersey, is an important fact
to be considered in estimating the relative interests of
the Baltimore & Ohio and the New York Central in the
Central Eailroad of New Jersey.
Turning now to the relative interests of the two sys¬
tems in the Philadelphia & Eeading, it appears that from
Tamanend, through Port Clinton and Eeading, there is
about 2,800,000 tons of New York Central business, con¬
sisting of merchandise and soft coal and about 800,000
tons of hard coal moving to the Baltimore & Ohio. It
thus appears that the New York Central traffic over that
38
portion of the Eeading is about 250% greater than that
of the Baltimore & Ohio.
On that part of the Philadelphia & Eeading between
Eeading and Philadelphia, the Baltimore & Ohio traffic,
as it moves under present arrangements, is about 52%
greater than the Noav York Central traffic. There is,
however, a circumstance connected with this Balti¬
more & Ohio traffic, to which attention is directed. A
total of 2,289,000 tons moved from the Baltimore & Ohio
to the Pennsylvania's Cumberland Valley line or the
Western Maryland and thus to the Eeading at Shippens-
burg. 812,500 tons of this are destined to Port Eich-
mond and 1,477,300 tons are destined to Port Eeading.
This traffic, since it originates on the. Baltimore & Ohio,
apparently might otherwise move entirely over the Bal¬
timore & Ohio to Park Junction. It may be that the Eead¬
ing in accordance with the usual custom demands the
longest practicable haul on this traffic in order to compen¬
sate it for the use of its terminal facilities. Under a
consolidation of the southern lines of the Eeading with
the Baltimore & Ohio, the movement of this traffic in
the present manner might be materially affected. If so,
the interest of the Baltimore & Ohio in that portion
of the Eeading which lies between Eeading and Phila¬
delphia may be so reduced as to be substantially less
than the interest of the New York Central.
The traffic relationships between the New York Cen¬
tral, Philadelphia & Eeading and Central Eailroad of
New Jersey through Newberry Junction are of long and
gradual growth. As far back as 1882 traffic agreements
existed for the handling of this business which went so
39
far as to provide for the mutual granting of trackage
rights in ease either company failed to move the ship¬
ments as required. These agreements, as renewed and
adapted to the present conditions, and the traffic devel¬
oped under them, support the following conclusions :
(1) The line of the New York Central extendiug
southerly from Lyons, N. Y., a point on the main line,
to Newberry Junction, provides an important existing
route for anthracite coal from the Beading fields to New
York Central points easterly and westerly. At Buffalo
joint New York Central and Philadelphia & Beading
facilities are provided for the handling of this traffic
moving via lake to western destinations.
It also provides ^ an important route for the mer¬
chandise traffic, both inbound and outbound, between the
industrial territory of the Philadelphia & Beading and
Central Bailroad of New Jersey and New York Central
points in New York State and West including the move¬
ment of all rail and ex-lake grain through Buffalo, for
the handling of which the New York Central has very
extensive facilities.
(2) The line of the New York Central extending
easterly from Clearfield, Pa., to Newberry Junction
provides an important route for bituminous coal to in¬
dustrial sections and ports served by the Philadelphia
& Beading and Central Bailroad of New Jersey and
■forms part of a through route for merchandise traffic
between territories of those lines and New York Central
territory, both north and west.
The volume of business handled through the New-
40
berry Junction gateway is well illustrated by Maps 21-
and 22, which show respectively the interchange of
freight cars and the density of freight traffic. This inter¬
change is a continuous growth. In the 7 year period
before the war, there was an increase in this traffic from
about 2,200,000 tons, received by the New York Central
from the Philadelphia & Eeading in 1911 to about 3,000,-
000 tons received in 1917 and from 5,900,000 tons deliv¬
ered by the New York Central to the Philadelphia &
Reading in 1911 to over 8,000,000 tons delivered in 1917.
We have been unable to secure the interchange fig¬
ures for the. years 1918, 1919 and 1920, but it is well
known that during the period of Federal control this
route was more extensively used than at any previous
time. The tonnage received by the New York Central
in 1921 was approximately 2,600,000 and in 1922,
2,100,000, while the tonnage delivered by it was approxi¬
mately 4,200,000 in 1921, and 4,900,000 in 1922. 1921
was a year of low business activity and 1922 was a year
of abnormally low interchange because of the coal strike.
The available quantity of bituminous coal in the
fields reached by the New York Central in Pennsyl¬
vania is very large, the output in 1920 carried by the
New York Central from Pennsylvania being 10,819,466
tons. The New York Central Pennsylvania fields enjoy
a substantial advantage in distance over competing fields
with respect to the large consuming district of New York.
The route from the New York Central coal fields in Penn¬
sylvania through the Newberry Junction gateway to.New
York is considerably more direct and shorter than the
route from the Maryland and West Virginia coal fields of
41
the Baltimore & Ohio. It would appear to be in the pub¬
lic interest not only to preserve hut to promote for New
York this through route from the nearest source of bitu¬
minous coal supply.
It is, of course, necessary to consider the earning
power of the Central Eailroad of New Jersey by itself
and as combined with the NeAV York Central Lines. The
property investment of the Central Eailroad of New
Jersey in 1917 Avas $110,523,417. In 1922 it Avas $140,-
942,633. Its percentage of net raihvay operating in¬
come to property investment from 1917 to 1922, inclu¬
sive,. Avas as folloAvs: .
1917 - • 1918 1919 :: .1920 1921 1922'
7.49 5.22 .0.77 6.65* 3.73 2.40
• * Deficit.
The net ton miles per car day in 1921 were 221, as
compared with 379 on the NeAV York Central Lines,
while in 1922 they Avere 191 as compared Avith 367 on
the NeAV York Central Lines. The Central Eailroad
of NeAV Jersey in 1921 consumed 185 pounds of coal
per 1,000 gross ton miles as compared with 132 for
the NeAV York Central Lines, and in 1922 the Central
Eailroad of -NeAV Jersey consumed 199 pounds as com¬
pared Avith 130 for the New York Central Lines.
These statistics may indicate exceptional difficulties in
those years, but they may also and probábly do indicate
heavier grades, shorter hauls and the proportionately
greater influence of terminal delays.
The Central Eailroad of Ncav Jersey has relatively
less diversified traffic. Its ratio of coal to all other com-
42
modities was 56.5% for the year 1921 as compared with
the New York Central Lines of 44.8%. It woidd obvi¬
ously benefit the Central Eailroad of New Jersey to be
included in a system of more diversified traffic.
The following statistics for the year 1922 show the
situation as to the earning power of the Nbav York Cen¬
tral Lines and in combination with the Central Kailroad
of New Jersey. It is of course recognized that this was
a year of exceptional disturbance of traffic and operating
conditions but it is given as the latest period available.
Property Investment—Total $1,717,231,773 $1,858,174,406
R'y Operating Revenue 583,459,583 632,948,054
Per Cent of Operating Revenue
_ ♦ The above figures do not include the small portions of the
Philadelphia & Reading which are proposed to be included in the
New York Central System as they have been operated as part of
the Philadelphia & Reading and separate figures are not available.
It appears that except for the year 1917 the inclusion
of the Central Eailroad of New Jersey would operate to
reduce the percentage of net railway operating income
of the System unless consolidated operation "with the
New York Central Lines should produce a greater return
for the system than would be earned by the present New
York Central Lines.
Investment and net railway operating income of the
Central Eailroad of New Jersey bear such a small rela¬
tion to that of the New York Central Lines as a whole
that it is hardly to be expected that probable beneficial
Existing N.Y.C. System in*
New Y Ork Cen- Combination with
tral Lines. C.R.R. of N.J.
to Investment
Net Railway Operating Income...
Per Cent Net Railway Operating
Income to Investment
34.0%
96,101,391
5.60%
34.1%
99,476,545
5.35%
43
effects from consolidated operation would be sufficient to
materially affect the rate of return of the' entire system.
Somie of the disadvantages of the Commission's Sys¬
tem No. 1—the New York Central System, as compared
with System No. 8—Baltimore & Ohio System may be
pointed out as follows :
(1) The New York Central System would have no
access to the anthracite fields while the Baltimore & Ohio
System would become the largest factor in that traffic,
according to your plan.
. (2) The Baltimore & Ohio System would have access
to the ports of Boston, New York, Philadelphia and Bal¬
timore, while the New York Central System would have
access only to the ports of Boston, New York and Balti¬
more, provided the New York Central adds the Western
Maryland.
(3) As a result of the consolidation, Philadelphia
might be deprived to a large extent of the advantages of
its Newberry Junction route to and from the West.
(4) The New York Central would be deprived of its
existing important traffic relation "with the Philadel¬
phia & Beading and the Central Eailroad of New Jersey
and be debarred from the opportunity of establish¬
ing an alternative route to the west since no new line
can be constructed from Jersey City to Newberry Junc¬
tion, except at prohibitive cost.
In conclusion the New York Central Lines ask the
Commission to retain the existing system, and to add the
Central Eailroad of New Jersey, subject to the limita¬
tions heretofore stated, and those portions of the Phila-
44
delphia & Eeading above enumerated, subject to the
rights and limitations heretofore stated.
The proposals with respect to the Philadelphia &
Keading are, in considerable part, based upon the tenta¬
tive proposal of the Commission, that the Philadelphia
& Reading is to be assigned to System No. 3—The Balti¬
more & Ohio. In that event, it would be necessary to
protect territory served by the New York Central Lines
through the Newberry Junction Gateway as against the
restriction of this route by a competing line. If the
Philadelphia & Reading remains independent, the needs
of the New York Central Lines so far as the Reading is
concerned would be satisfied by the acquisition of the
Catawissa Branch of the Reading, with terminal and
interchange facilities at Tamanend.