BEFOEE THE
Interstate Commerce Commission.
IN" THE MATTER OF CONSOLIDATION
OF THE RAILWAY PROPERTIES OP I 12qfi4
THE UNITED STATES INTO A LLM- ^
ITED NUMBER OF SYSTEMS.
TESTIMONY GIVEN AT HEARINGS NOVEMBER 17
AND 18,1922, JANUARY 23, 1923, AND MARCH 1
AND 2,1923, AND SELECTED EXHIBITS
AND MAPS FILED BY
Hale Holden, President,
Chicago, Burlington S Quincy Bail-
road Compcmy,
Colorado and Southern Railway
Company,
Fort Worth and Denver City Rail-
way Company,
0. M. S'PENCEE,
Bruce Scott, . • , .
Counsel.
It
\A ^
eUNTHORP-WARREN PRINTINO COMPANY, CHICAQO.
BEFOEE THE
Interstate Commerce Commission.
IN THE MATTER OF CONSOLIDATION /
OF THE RAILWAY PROPERTIES OF [
No. 12964.
THE UNITED STATES INTO A LIM- /
ITED NUMBER OF SYSTEMS. V
STATEMENT BY HALE HOLDEN.
Heaehstg at Washingtoit, D. C., November 17, 1922.
The purpose of this statement will be—
(1) to deal with certain fundamental considerations relating to
paragraph (4) of section 5 of the Interstate Commerce Act, which is
the provision upon which this proceeding is based;
(2) analysis of the Burlington situation, primarily in relation to
its alliance with the Great Northern and Northern Pacific Companies,
which are the owners of approximately 98 per cent of the capital stock
of the Burlington; next, relation of the Burlington to its principal sub¬
sidiary, the Colorado and Southern lines and, finally, in relation to
the other important connections of the Burlington at the larger western
gateways where there is an established flow of important revenue inter¬
change tonnage;
(3) a statement of the present intercorporate and financial rela¬
tions between Burlington and Northern Pacific and Great Northern,
and of Burlington and Colorado and Southern lines; and
(4) comment upon the adverse effect upon Burlington of. the ten-
2
tative plan of the Commission as indicated in the report of August 3,
1921, in the designation of tentative systems 14 and 15 (and systems
16 and 17 in so far as disposition of the Colorado and Southern, Fort
Worth and Denver City and Trinity & Brazos Valley lines is con
cerned).
I.
GENERAIi CONSIDEBATIONS.
The primary features contained in paragraph (4) of section 5 of
the Interstate Commerce Act and which govern the Commission in the
preparation and adoption of a plan for the consolidation of the rail¬
way properties of the country '*into a limited number of systems"
are that—
(1) "competition shall be preserved as fully as possible" and
(2) "wherever practicable the existing routes and channels of
trade and commerce shall be maintained."
These are the essential requirements and it is subject to these re
quirements that "the several systems shall be so arranged that the cost
of transportation as between competitive systems and as related to
the values of the properties through which the service is rendered shall
be the same, so far as practicable, so that these systems can employ
uniform rates in the movement of competitive traffic and under effi-
. cient management earn substantially the same rate of return upon the
.value of their respective railway properties."
It is clear from this language that the competition which is to be
preserved as fully as possible is (1) competition in the larger and
broader aspect as distinguished from minor and purely local competi¬
tion, and (2) competition between the new systems thus worked out
under the plan to be adopted and not competition which before the
adoption of the plan may have existed between lines now separately
operated but which are designated to come under single ownershij)
and operation. In other words, the competition to be preserved and
the routes and channels of trade and commerce to be maintained are to
3
be safeguarded as between the new systems as adopted and when sys¬
tems are adopted which in every feature of importance maintain
existing routes and channels of trade and commerce and provide
practical competition, the requirements of the law in these important
preliminary features appear to be satisfied. It is probably agreed in
considering the remaining requirements of paragraph 4, that the sev¬
eral systems may vary in mileage or density of traffic within any
limits that may be practicable so long as the several systems proposed
may operate as far as practicable at the same cost and under the same
rates in the movement of competitive traffic and under efficient man¬
agement earn substantially the same rate of return upon the value of
their respective systems. In other words, similarity in mileage, cap¬
italization, valuation or density of tonnage and traffic are not required
in proposing systems which may operate at relatively similar cost and
under same rates and earn relatively a like return upon value.
In approaching this problem every reason seems to support the
view that existing system-s should not (if indeed they legally may) be
disrupted, and the phrase in the first sentence of paragraph (4) re¬
quiring the Commission to adopt a plan ''for the consolidation of the
railway properties of the continental United States'* bears out this
view. This phrase was inserted in the law in light of contemporary
conditions and has a well understood meaning. A railway property
is not a piece of line, nor a part of an existing system. The phrase
is more comprehensive in the common understanding and means the
properties owned or allied in corporate or system form as they pres¬
ently exist. Most of the railway properties of the country are the
results of years of careful development and ownership of these prop¬
erties is definitely fixed through existing corporate methods of stock
ownership, mortgage and bond liens, long term leases, etc., whereby
the railroad systems or railroad properties as they exist to-day are
separate units employed in the movement of the freight and passenger
traffic of the country. It -would appear inconceivable that Congress
contemplated the confusion and disorganization which would result
from any other construction of the phrase "railway properties" and
4
which would involve the undoing of years of careful planning, and
strenuous effort in bringing the larger railroad systems of the country
to their present state of efficiency and relative financial soundness.
This is a growing country, particularly in the west, and western rail¬
road systems have been growing with the western territory and will
he a part of the continuing growth of the west into the indefinite
future. As it happens, leaving out of consideration the short lines and
the relatively few number of so-called '*weak'* lines, the railroad
mileage of the west is largely now consolidated or associated into a
number, not large in amount, of large systems. These systems have
been constructed and developed and what is of more importance, are
still in process of development in varied form, ranging from direct
ownership of the physical property, stock ownership of allied and
subsidiary companies, interdependence of bond issues and long term
leases or trackage contracts; but whatever the corporate form of own¬
ership and control may be the system lines of these several railway
properties in western territory are well defined and are well started
along the path of their future development as in each case the condi¬
tions may permit and the controlling managements may judge from
time to time advantageous to the public and to their several classes
of security owners.
Q. (By Commissioner Hall.) Now, Mr. Holden, by the views
which you are expressing here, do you wish the Commission to un¬
derstand that the component parts of existing systems cannot join
with other component parts of that existing system in setting up a
new corporaion that will own and operate all the parts of that system?
A. Do you mean it cannot be done by voluntary action?
Q. By voluntary action.
A. That depends entirely, Mr. Commissioner, upon, first, the
willingness of the owners of the properties.
Q. I am assuming that.
A. And their ability to disentangle themselves or disassociate
themselves from their existing financial structure.
5
Q! I am assuming that too. I lam dealing with your contention
as to what the statute means. You say a railway property is not
a piece of line nor a part of an existing system. The statute con¬
templates the consolidation of the railway properties of the con¬
tinental United States. Now, I wanted to get clearly whether it is
your position a railway property that now forms a part of a system,
so held by stock ownership or held by lease, is not a railway property
within the contemplation of the statute, and cannot be consolidated
with the other members of that system to be held by an existing cor¬
poration or a new corporation, the consolidation company that would
own and operate what is now held in various forms of tenure or
operation.
A. I think, Mr. Commissioner, I deal with that a little bit later
in this chapter of my statement, and if you will allow me to, I would
prefer to cover it as I come to it.
Q. Certainly. I did not want to misunderstand what you were
intending here. I confess I myself had supposed that the proper¬
ties now held in various forms of tenure and following one of the
recognized systems, might, if they saw fit under the statute, with
the consent all around, become consolidated and held by a new corpo¬
ration that would own as well as operate all the components of the
system.
A. Answering that now, without doubt. But I think X will try to
point out it is quite a different matter for the respective owners of
the properties to realign and reassociate them under the law, and asr
we see it, for the Commission to develop a plan of this importance,
while voluntary as it is, nevertheless carrying with it certain obvi¬
ously grave consequences, and which plan lends the weight of the
judgment of this tribunal toward a segregation of existing corporate
and system relationships. There is my point of view, that it was not
contemplated nor intended by Congress to disrupt existing systems
as they have grown over this long period of years as a result of care¬
ful planning, and throw the systems thus marked for disruption into
confusion, and the security holders into alarm. I think I have de¬
veloped that idea as I proceed a little further.
6-
Systems of accounts covering all phases of railroad operation have
long since been in effect by Federal and State Governments, built up
around system managements; these accounts afford standard bases for
comparative analysis of traffic, operating and financial results and are
the basis upon which existing routes and channels of trade and com¬
merce are defined.
The tremendous fabric of financial securities which underlie the
railroad systems of the country is interwoven with the existing inter¬
corporate relations of the companies comprising the several systems
and millions of mortgage bonds held by investing institutions and the
public rest upon contract rights and obligations with which the existing
systems are bound together. The value of these securities has been
and always is appraised by close analysis and expert judgment of the
earning power, present and prospective, of the properties upon which
they rest, or to which they are related, and the present and future
traffic and earnings which may appear to be available to support them.
Every progressive railroad system is working along well defined
lines of progressive effidency according to standards and methods
deeply imbedded in the policies of management which control it; re¬
vision of line, enlargement of termiuals, and purchase of power and
equipment, all follow these lines of progress and development and
in no inconsiderable degree the permanency of employment by rail¬
road employees, schedules of wages and working conditions, location
of their homes and their social relations are seriously involved in the
maintenance of the existing systems and the continuity of existing
traffic movements, both freight and passenger, along the existing routes
and channels of trade and commerce.
These are some of the vital considerations which lead to the neces¬
sary conclusion that the plan "for the consolidation of the railway
properties" into a limited number of systems was not intended nor
contemplated by the framers of this law to be through the destructive
process of division or segregation, with all the confusion, financial dis¬
turbance and speculative results to follow, but rather by the welding
of existing systems together into a lesser number; in no other manner
7
can progress toward the aim sought to he accomplished and confusion
and alarm he avoided.
The plan adopted hy the Commission must be a practical plan and
one which can he worked out without serious and harmful consequences
to existing properties and Avithin a reasonable period of time, other¬
wise the effort on the part of the Commission will prove futile and
harmful. In support of this assertion, it will he sufficient at this time
to suggest that if in the development of this plan long-standing system
relationships are marked for disruption, these results will certainly
follow—
(1) Prospective plans for administration, improvement and en¬
largement of the several parts of the property affected will he embar¬
rassed by doubt and delay as to the future;
(2) The disorganizing effect upon the personnel of both officers
and employees becomes at once apparent; and
(3) Competitive relations between systems and parts thereof as
they exist to-day and the new systems which may be proposed under
plans involving segregation and disruption and which involve evident
changes in existing routes and channels of trade and commerce, be¬
come uncertain and speculative and disturbing to both shippers, rail¬
road officers and employees and security owners.
(4) Companies so involved would probably not agree with, any
such plans for segregation.
The point of these suggestions is that considering present intercor¬
porate relations, some years at the earliest will be required to bring
any such adopted plan into practical operation and during such de¬
layed period these confusing and harmful results would seem to. cer¬
tainly follow, and the owners of the properties involved Avould be
compelled to promptly announce their inability and unwilling-ness to
acquiesce in the plan. The delicacy of this situation and the serious
consequences froni any serious disturbance of existing systems were
evidently in the mind of the Commission when it stated in its an¬
nouncement of the tentative plans on August 3, 1921, that ''we have
sought to minimize dismemberment of existing lines or systems.'*
8
II.
THE BUKLINGTOH SITUATION TO-DAY AND AS AFFECTED BY THE TENTATIVE
PLAN OF THE COMMISSION.
The history of the development of the Burlington immediately
divides itself into the period prior and that subsequent to the year
1901, in which year approximately 98 per cent of the capital stock of
the Burlington was acquired in equal interests by the Northern Pacific
and Great Northern Companies.
The plans and aspirations of the former managements are of im¬
portance for several reasons. One of these is to bring to mind the
anxious care and hardheaded thought and work with which these
earlier men surrounded this property. The successful results prove
their ability, and I am not to be misunderstood when I say that care
is needed to see that their work is not imdone.
As the Burlington is the oldest and largest road of the three, I
will discuss it first. Mr. John M. Forbes of Boston and Mr. James
F. Joy of Detroit were able, vigorous and far-seeing men, and before
the Civil "War they were moving spirits in pushing the Michigan Cen¬
tral from Detroit to Chicago. After that they became interested in
the O. B. & Q. and in the development of the country and its neces¬
sary railroads west, northwest and southwest of Chicago. Mr.
Charles E. Perkins early became associated with them. These men
had the same pioneer spirit that in earlier days sent sailing vessels
from New England all over the world. This spirit was potential in
the creation of the C. B. & Q. and Santa Fe roads which were pushed
out by Boston capital largely into an undeveloped country.
The history of the C. B. & Q. dates back to February 12,1849. The
present company was formed by the consolidation of a number of
small companies June 24, 1864.
The road was built to various points as follows:
Burlington, Iowa, March 17, 1855.
Quincy, Illinois, January 1, 1856.
Ottumwa, Iowa, September 1, 1859.
East Plattsmouth (Western terminus B. & M. R. R. R.), January
1, 1870.
9
After the Civil War work was resumed at Ottumwa, Iowa, in 1866,
and the road was completed to the Missouri River January 1, 1870.
The Hannibal & St. Joe was built into Kansas City in 1867, and the
bridge over the Missouri River at that point, as well as the Mississippi
River bridges at Burlington and Quincy, were completed about the
same time, so that by 1870 the Burlington had become a real railroad
from Chicago to the Missouri River, with branch lines and feeders
in Illinois and Iowa and Missouri. Its prospects were so good that
in 1872 it consolidated with the B. & M. R. in Iowa, and in the next
few years its branch line policy was greatly developed.
Meantime, important events were happening west of the Missouri
River. The discovery of gold in California, and its wonderful soil
and climate, were destined to make the great state which it has since
become. The coast territory was very considerably occupied by peo¬
ple from the southern states, and there was much apprehension in
the north that California might set up a separate government, or
might even join the Southern Confederacy. This led, in 1862, to the
organization of the Union Pacific as a Union saver, and the granting
of lands and subsidies to induce eastern capital to build a road to
California. It was very important for this road to have eastern con¬
necting railroads at Council Bluffs. With that in mind, Congress in
1864 passed an act authorizing the Burlington & Missouri River, which
was then at Ottumwa, to extend its road into Nebraska and connect
up with the Union Pacific at Kearney, and offering it a valuable land
grant. That company could not raise the money, and the project had
to lie dormant for several years. Finally Mr. Forbes, Mr. Perkins,
and their Boston associates decided to undertake it, and in 1869, with
many misgivings, they organized the Burlington & Missouri River
Railroad in Nebraska, and Congress passed an Act authorizing the
Iowa company to transfer all of its Nebraska rights to this new com¬
pany. Then they secured the money and built the road through to
Kearney in 1872.
Then came on the disastrous panic of 1873. Many railroads in the
10
west "became bankrupt, but so strongly had the credit of the Burling¬
ton been preserved, that it was very little affected.
Alrnost nothing was done for several years in the way of railroad
extension, but by 1880 the situation had entirely changed. Specie
payments had been resumed in 1879, and the country was entering upon
an era of prosperity, and there followed, under the vigorous leader¬
ship of Perkins and Forbes and their associates, the most important
developments in the history of the C. B. & Q. They took over the
B. & M. B. in Nebraska in 1880, and extended it to Denver in 1882,
and built hundreds of miles of connecting lines all over southern
Nebraska, reaching out into Wyoming, South Dakota, and the Black
Hills, and into Montana to a connection with the Northern Pacific,
near Billings. At the same time they bought over a thousand miles
of important railroad in Missouri, the Burlington & Southwestern,
the St. Louis, Keokuk & Northwestern, the Hannibal & St. Joseph, and
Kansas City, St. Joseph & Council Bluffs, and built an independent
line into St. Louis costing over $7,000,000, thus connecting up their
Trans-Missouri system with St. Louis and Kansas City and the south,
and in 1883 promoted the Chicago, Burlington & Northern line to St.
Paul.
In pushing out into the western country the following dates show
the progress made;
Lincoln, Nebraska, July 26,1870.
Denver, Colorado, May 29, 1882.
•Alliance, Nebraska, February 3, 1888.
Huntley, Montana, where the connection was made with the North-
em Pacific, October 28, 1894.
From 1895 to 1898, inclusive, no construction was undertaken on
account of the financial conditions throughout the country. In 1899
construction agaih started and in 1900 the line was completed. Alliance,
Nebraska,' to Guernsey, Wyoming, and the large area^ in the North
Platte Valley was in shape for development. In 1901 the Tine was.
completed, from Toluca, Montana, to Cody, Wyoming, and the, develop¬
ment due to railroad construction was started in the Big Horn Basin,
Wyoming.
11
consideeatioit by the burlington of outtets to t:fl;e"west and
Northwest.
The policy of the Burlington management was to. develop and pro¬
tect the property, not only by branches feeding main lines and de¬
veloping new country, but also by having connections and outlets to
territory beyond via St. Louis, Kansas City, Omaha, Denver, St. Paul.
Minneapolis and Billings.
The road having been built into Denver in 1882, the Burlington
people began to consider outlets to Puget Sound, and to the country
west of Denver. They had pushed out a line from Lincoln to the
northwest with the idea of eventually getting through to the Pacific
Coast. This road reached Huntley on the Northern Pacific near
Billings on October 28, 1894.
This opening of the Billings gateway was an important event in
the upbuilding of the western country. It developed a through route
to the northwest and was one of the significant steps that resulted
finally in the purchase of the Burlington by the Northern Pacific and.
Great Northern in 1901.
Notwithstanding the possibilities of the Billings gateway, the Bur¬
lington people vigorously continued their investigations into the whole
situation west of the Missouri River. A great many surveys and
reconnaissances were made of which the more important may be noted:
1. Prom Billings to Great Falls, Montana, made in 1890.
2. Council Bluffs to Pierre on the Missouri River, 1888.
3. From a point on the proposed line to Great Falls, westwardly
into Helena, also over towards Butte and then across the mountains
to Ontario, Oregon, 1893. ' ^
4. From Sheridan, Wyoming, to Boise, Idaho, via Cody in 1891.
5. From Boise through Oregon and down the Deschute River to
the Columbia River at the Dalles, 1891. ' .
6. From Guernsey, Wyoming, to Ogden and Salt Lake, 1886, 1887
and i889. -
12
7. From Denver west to Provo between 1894 and 1898.
8. From Winnemncca, Nevada, northwesterly through Nevada
and Oregon to the Dalles on the Columbia Elver in 1891.
All of these surveys are shown by the records of the Company and
are referred to in connection with the historical aspect of our proposi¬
tion leading up to the fulfillment, as I expressed it a while ago, of the
hopes and aspirations of the managements of these three properties
in their solution of the problem before the purchase made in 1901.
This brief statement of some of the more important surveys towards
the west and northwest indicates hoAV actively the Burlington was at
work trying to connect up its great territory between Chicago, St.
Louis and Kansas City and Denver with the Pacific Coast not only
via Denver, but through the Columbia Valley and on to Puget Sound,
thus putting itself in a position of equality with Union Pacific and
Northern Pacific in serving what the Burlington people believed was
going to be a very valuable part of the United States; a section that,
in their judgment, needed to be connected up closely with the territory
served by the Burlington in the Mississippi and Missouri Valleys and
he states adjacent to the Great Lakes.
The St. Paul Gateway.
While there was much energy displayed by the Burlington in push¬
ing its lines to the country west of the Missouri Eiver, Messrs. Forbes
and Perkins always had their eyes on the upper Mississippi Valley
and the country beyond, and appreciated the importance of making
a connection at St. Paul and Minneapolis with the Northern Pacific
and Great-Northern. . As a result of investigations, the Burlington
people became convinced that there should be a line up the east bank
of the Mississippi Eiver to St. Paul.
A very careful report about the proposed line in July, 1885, said
among other things:
"It will be seen that the whole line is really a portion of a
great through route connecting the great Burlington system and
all its cities and towns and the vast southwestern regions to which
13
and through which the Burlington leads, with the great North¬
west and its chief trade centers, St. Paul and Minneapolis, with
their 200,000 people.'*
The construction of the road was pushed and completed to St. Paul
on AugTist 23, 1886, in the name of the Chicago, Burlington & North¬
ern. The Burlington Company subsequently acquired full ownership
of this line to St. Paul.
This connection with both the Northern Pacific and what is now the
Great Northern was very important to all three roads and to the de¬
velopment of the growing country west and north of St. Paul. The
relations established then have continued ever since, and were most
important factors in bringing about the purchase of the Burlington
in 1901.
Outlet Via Denver.
As shown by early surveys the possibility of going west from Den¬
ver was always in the minds of the Burlington people. One object
that the Burlington people had in going to Denver in 1882 was not
only to reach the metropolis of Colorado, but at the same time take
a step in the direction of getting a line through to the Pacific Coast,
and at one time some consideration was given to the purchase of the
Denver & Rio Grande.
r •
Southern Outlet.
The Burlington also always had in mind the desirability of having
a connection with the Gulf of Mexico, as that was the nearest point
where the ocean could be reached which would, in time, be important
to the agricultural states that might be seeking an export market for
their products. In February, 1893, a number of important stock¬
holders made a trip from Galveston through to Kansas City and over
the M. K. & T. route.
PUKOHASE OF THE C. B. & Q. BY THE NoBTHEBH EQADS.
The Burlington had been built up by the Forbes-Perkins manage¬
ment, so that it was one of the best, if not the best, railroad system
west of Chicago, and their plans for many years involved suitable
and permanent arrangements for exchange of business with the entire
northwest.
The Northern Pacific and Great Northern had been developed so
that in that great area between the Upper Mississippi Valley, Lake
Superior and Puget Sound and the Columbia River Basin they occu¬
pied country needing ample transportation to the east and southeast.
The Burlington having decided that it would not go on with exten¬
sions to the coast on its own behalf, was approached by different com¬
panies for an alliance. The Union Pacific realized its value as a gath¬
erer of westbound business and in serving a territory for eastbound
business, and in the early summer of 1899 suggested that the Union
Pacific and Burlington go together. Negotiations continued all
through 190O and into 1901.
Mr. James J. Hill and his friends, who had large investments in
Northern Pacific as well as in Great Northern, believed that the Bur¬
lington was the best connection for the two Northern roads and that
a combination of the three Avould help to develop the country and
provide in the long run the maximum of service at a minimum cost.
The final outcome of these overtures by Union Pacific, Northern
Pacific and Great Northern people that an alliance of some kind with
the Burlington be made resulted in the purchase by the Northern
Pacific and Great Northern together of about 98 per cent of Burling¬
ton stock. This trade was consummated in Boston on April 9,1901.
It seems to me it would be of interest to put into this record the
contemporary statements made at that time both by Mr. Perkins and
Mr. Hill. Mr. Perkins said:
''The C. B. & Q. Company will continue to do business pre¬
cisely as heretofore, with Mr. Harris as President and the or¬
ganization unchanged. But it will be assured of, what it does
15
,not now possess, a permanent connection by the shortest Ipe with
the Great Northwest, rich in minerals and lumber, with its mar¬
kets for agricnltnral and other products, jand with the. commerce
of the Pacific Ocean by way of Pnget Sound and the Columbia
River. On the other hand, the Northern roads will be assured
of a permanent connection by the shortest line'with the agricul¬
ture and manufactures of the Middle West, and the markets to
be found there for the products of the North and the .commerce
of the Pacific. No argument is necessary to show that this as¬
sured permanency is of the greatest importance to all of the in¬
terests concerned, the peonle as well as the railroads. ,* * *
*'The Avhole effect of the combination will be beneficial. Look
at a map and see how the lines of these corporations fit into and
supplement each other. And when doing so it will interest you to
trace, and compare with these railroads of to-day, the line of
march of Lewis and Clark, who took possession of the Louisiana
purchase for the Government of the United States a hundred
years ago."
Mr. James J. Hill said to his stockholders:
"Now the Burlington has food and fuel to a degree not pos¬
sessed by any other transportation system. Reaching from Chi¬
cago to Denver, and from the Twin Cities to St. Louis and Kansas
City, it covers the richest and most diversified zone in the world
in the production of grain, and provisions, and fuel. What do
these central prairies of Illinois, Iowa, Missouri and Nebraska
require in return? They need lumber. From where is the lum¬
ber to come? From Washington and British Columbia. This is
the only region with a heavy timber surplus. Look at the volume
of this traffic. The great central belt between the Alleghenies and
the Rockies consumes something like 10,000,000,000 feet of lum¬
ber annually, and produces perhaps half of that. Some of this
will come from the South, but the bulk from the Puget Sound
country.
"Thus, on the one hand, we have a vast surplus volume of
grain, provisions and fuel in the Mississippi and Missouri Valleys
seeking eastern and western outlets, and a similar large surplus
product of lumber in the Puget Sound country likewise pushing for
markets, and especially for the treeless prairies of the Mississippi
and Missouri. Grain, provisions, fuel and lumber constitute the
principal heavy staples which govern traffic and make traffic routes.
What, then, have we reached? We have a tremendous volume of
traffic across the Northwest between Puget Sound and the Mis¬
sissippi Valley. The Northern roads will carry westward the
16
meat, and corn, and coal, together with the raw cotton originating
withm Burlin^on territory at St. Lonis, and will place these
products on the Pacific docks for export to Asia, and for the re¬
turn trip the freight trains will bring back lumber for the Central
West and East. Nature and her products govern transportation
routes and traffic; we railway men can simply get in line or fall
by the way.**
By putting the three roads together in the manner proposed, each
one of them was at once put in a position to have a larger quantity of
the transportation needed by its patrons than it had before and this
without building additional railroads to the north Pacific Coast or to
the Missouri and Mississippi Valleys.
It was the belief of the directors of the Burlington, Northern Pa¬
cific and Great Northern at the time the purchase was being discussed,
and indeed was a controlling reason for their action, that the arrange¬
ment would result in a piece of transportation machinery which would
I
he more efficient and economical and therefore be able to give good
service at reasonable rates to the public, and which would have finan¬
cial resources that would permit additions to the property to meet
the demands of a rapidly growing country and promote the maximum
interchange of the products of the different States.
The results of the past twenty years show that these views were
correct.
Preliminary to my further testimony, it is appropriate to state that
in developing the reasons which seem to me to demand that the Bur¬
lington, Northern Pacific, Great Northern and Colorado and Southern
Lines should be placed by the Commission in the same group, I have
necessarily to deal with the tentative plan of the Commission which
proposes to segregate Burlington from Great Northern and deprive
Burlington of the great value of the interchange relations with the
Great Northern.
I shall in my further testimony deal, therefore, to some extent with
the relations between the Burlington and the Great Northern, but in
so doing the argument made will equally apply to the value to the
Burlington of the Northern Pacific and the dependence of the Burling-
17
ton upon its interchange relations with the Northern Pacific. In other
words, the evidence will show that the enormous expenditures which
have been made by the Burlington during the last twenty years have
been largely for the purpose of enabling it to equip itself to handle
in an efficient manner the volume of business moving between the
Burlington and the Northern Pacific and the Great Northern, and that
the loss to the Burlington of either of the Northern lines will not only
impair the support to those investments but seriously weaken the
Burlington strength and capacity to grow.
The expenditures which have been made on the Burlington have
been based upon carefully worked out plans to enable it to serve both
Northern lines as an integral part of each. Tonnage and revenue
figures in evidence will indicate that each has been and is relatively of
the same importance to the Burlington and that the preeminent posi¬
tion occupied by the Burlington as a strong and solvent railroad is in
large measure accounted for by the development of its system which
has been made in this joint interest.
With this preliminary statement I shall now proceed to discuss
the Burlington situation to-day and as affected by the tentative plan
of the Commission.
The Buelixgtok Lines.
I offer in evidence a map of the Burlington proper, showing in
black lines the track mileage operated as of June 30, 1901, and the
track mileage constructed since that date and operated as of Decem¬
ber 31, 1921, shown in broken lines. (Shown in red on original ex¬
hibit.) A portion of Colorado and Southern is also shown. This map
is marked Burlington Exhibit 16. (Commission's general Exhibit
170.)
I wish to draw attention to this map and show the significance of
the new construction indicated in broken lines in the development of
not only the intimate relations between the Burlington and the two
Northern lines but also in developing the routes of trade and com¬
merce since that alliance in 1901 was made.
18
In Illinois the dates when the several parts of the line from south¬
ern Illinois coal fields were constructed are shown on the map and the
second track is also indicated. And following these lines through up
to Galeshurg and then directly north, and other double tracked lines
beyond, I am indicating the low grade through freight route which is
ordinarily not apparent on a map to a casual observer. There is a
through route which later Avas carried on down to Paducah, Kentucky,
for an interchange with the Louisville & Nashville system, and the
map, therefore, indicates, as I say, with the double tracking on the
Mississippi River line which is now approaching completion, a through
north and south low grade route largely developed to handle southern
Illinois coal into the northwest, and also making a connection with
the southeast through Burlington to the Twin Cities, and the Northern
lines at that point.
Prom Kansas City the broken lines indicate double track construc¬
tion there to a point called Napier, where the line to Council Bluffs
and the lines west divide; and on through Table Rock and up to Lincoln
is a low grade freight line, connecting there vdth the lines there for
Denver and for the northwest. The double tracking built along the
Missouri River there has largely been brought about by the increasing
density of through traffic betAveen Burlington and its two northern
connections via the Billings gateAvay.
The Sioux City line referred to in the opening statement is shoAvn
from Ashland, a small point between Lincoln and Omaha, north to
Sioux City. The double tracking between Lincoln and Ashland is in- .
dicated, which was built to take care of the heavier a^-olume of business
which develops through serving not only the Sioux City line, but also
Omaha, and the through line which is the low grade freight line Ada
Plattsmouth, avoiding a higher grade line which routes through
Omaha.
The entire Big Horn Basin line shoAvn in broken lines Avas built to
develop a Ioav grade line from Billings to the Missouri River, and was
brought about because the increasing interchange and density of
traffic with the Northern lines did not enable efficient or economical
transportation to be performed on the higher grade line via Sheridan.
Burlington Exhibit 16
the
john crerar
19
I shall call attention later, and perhaps in some more detail, bnt in
explaining ihe map I draw attention to the fact that this exhibit in¬
dicating line construction has a direct relation to the developments
which have been going on in Burlington to pnt it in a position to
handle, the volume of interchange largely in its relations with both of
these northern lines.
I also offer in evidence Burlington ExTiihit 17, which is a statement
showing the mileage of all tracks owned and operated as of the same
relative dates, June 30, 1991, and December 31, 1921, subdivided be¬
tween main, second, third and fourth tracks and yard tracks and sid¬
ings. This exhibit shows that over the period of twenty and one-half
years since this alliance was accomplished, Burlington main track has
increased 15.0 per cent; second track 158.7 per cent; third track 89.6
per cent; yard tracks and sidings 87.4 per cent, or a total increase
of all tracks from 10,400.94 milCs operated to 13,881.02 miles, or an
increase of 33.5 per cent.' .-• v
A feature of significant importance in the development in strength
of the Burlington is that it early built or acquired main lines into all
the large middle western centers of population and railroad tonnage
interchange, such as Chicago, St. Paul, Minneapolis, St. Louis, Kansas
City, Peoria. Des Moines, St. Joseph, Omaha, Lincoln, Denver and
Billings, and numerous others of lesser size and importance. At each
of these centers it secured for itself ample terminals and these termi¬
nals, including many intermediate yards and interchange points, have
been continuously enlarged and expanded along with the increase in
second, third and fourth track mileage so as to enable the Company to
continue to handle the growing tonnage of this large western district.
■ I offer in evidence Bmlmgton Exhibit No. 18, which is a statement
of total carload tonnage and Burlington revenue thereon for the years
1917 to 1921, inclusive, and for the average of that five-year period,
subdivided between tonnage and revenue received from connecting
lines, tonnage and revenue delivered to connecting lines and tonnage
and revenue local as to origin and destination both on the Burlington
lines, with the percentage of each also sho^vn. This statement shows
20
that on the average during the five-year period, 47.5 per cent of the
total carload revenue tonnage handled was local to Burlington line,
and the remainder, or 52.5 per cent, either received from or delivered
to connections. It should he explained that there is some duplication
in both tonnage and revenue figures of connecting line business as
shown on this Exhibit, because overhead business is taken into account
at point of receipt as well as at point of delivery. In terms of freight
revenue on carload business, 45.1 per cent was earned on business local
to the line and 54.9 per cent on business interchanged with connec¬
tions. This statement does not include switch business and no separa¬
tion of L. C. L. tonnage is available. The statement indicates, how¬
ever, the great importance to Burlington of the interchange tonnage
and revenues.
Burlington Exhibit 20 is also offered in evidence, showing the yearly
average freight tonnage interchanged between foreign roads and Bur¬
lington at the important gateways reached by Burlington, for the
five-year period 1917 to 1921 inclusive.
I call attention to the large importance of the interchange to Bur¬
lington not only at Chicago, but at Kansas City, St. Paul, Billings,
Denver and St. Louis, as shown on the exhibit.
Colorado and Southern Purchase.
In 1908 the Burlington acquired a controlling interest through the
purchase of stock of the Colorado and Southern Eailway Company.
That company then owned and directly operated a line from Denver
north to Fort Collins, Colorado, operated from that point over the
Dnion Pacific to Cheyenne, Wyoming, and owned and operated its own
line from Cheyenne to Orin Junction, where at that time it connected
with a line of the Chicago & North Western Eailway Company. It
also owned and operated a line from Denver south through the large
and important southern Colorado mining district and on to the Texas-
New Mexico State line, where it connected with its principal sub¬
sidiary, the Fort Worth and Denver City Eailway Company, which
owns and operates from the state line referred to, to Fort Worth,
BURLINGTON EXHIBIT 17.
CHICAGO, BURLINGTON & QUINCY RAILROAD
MILEAGE OF ALL TRACKS OWNED AND OPERATED
June 30th, 1901
December 31st, 1921
Mileage
Owned*
Operated
Under
Trackage
Rights
Total
Mileage
Operated
Mileage
Owned
Operated
Under
Trackage
Rights
Total
Mileage
Operated
%
Increase
1st main track
2nd main track
3rd main track
7,982.59
425.58
23.55
188.78
8,171.37
425.58
23.55
9,040.50
984.44
44.65
5.41
3,319.83
353.19
116.42
9,393.69
1,100.86
44.65
5.41
3,336.41
15.0
158.7
89.6
4th main track
Yard tracks and sidings
1,780.44
1,780.44
16.58
87.4
Total, all tracks
10,212.16
188.78
10,400.94
13,394.83
486.19
13,881.02
33.5
*Note. Mileage for 1901 mcludes mileage owaed or controlled by the Burlington, some of which was then operated separately
but later merged with Burlington,
BURLINGTON EXHIBIT 18.
CHICAGO, BURLINGTON & QUINCY RAILROAD
SEPARATION OF TONNAGE AND C. B. & Q. REVENUE THEREON (CARLOAD TRAFFIC ONLY)
AS BETWEEN RECEIVED FROM AND DELIVERED TO CONNECTING LINES AND LOCAL TO C. B. & Q. R. R.
1917
1918
1919
1920
1921
5 Yr. Ave.
Total revenue tonnage handled
Local to C. B. & Q. R. R
Percent local traffic to total
Received from connecting lines destined System points.....
Received from connecting lines destined connecting line
points
42,797,507
44,392,491
37,810,319
44,761,326
34,098,081
40,771,944
20,432,287
47.7
8,898,417
4,146,188
13,044,605
30.5
9,320,615
4,146,188
13,466,803
31.5
21,314,516
48.0
8,811,896
5,041,927
13,853,823
31.2
9,224,152
5,041,927
14,266,079
32.1
16,956,282
44.8
8,263,979
4,594,460
12,858,439
34.0
7,995,598
4,594,460
12,590,058
33.3
20,758,714
46.4
9,704,982
4,368,351
14,073,333
31.4
9,929,279
4,368,351
14,297,630
31.9
17,256,753
50.6
6,707,790
2,447,141
9,154,931
26.8
7,686,397
2,447,141
10,133,538
29.7
19,343,710
47.5
8,477,413
4.119.613
12,597,026
30.9
8,831,208
4.119.614
12,950,822
31.8
Total received from connecting lines
Percent received from connecting lines to total
Delivered to connecting lines originating on System
Delivered to connecting lines originating on Foreign
Total delivered to connecting lines
Percent delivered to connecting lines to total
Gross Freight Revenue
On business local to C. B. & Q. R. R
Percent local traffic to total
Received from connecting lines destined System points.
Received from connecting lines destined connecting line
points
$76,676,134
$93,578,211
$95,907,708
$118,199,118
$109,485,502
$98,769,334
32,960,932
43.0
19,185,547
9,962,483
29,148,030
38.0
14,567,172
9,962,483
24,529,655
32.0
41,272,550
44.1
21,098,615
13,645,872
34,744,487
37.1
17,561,174
13,645,872
31,207,046
33.3
41,220,156
43.0
23,347,687
13,956,064
37,303,751
38.9
17,383,802
13,956,064
31,339,866
32.7
53,079,268
44.9
28,758,059
13,933,764
42,691,823
36.1
22,428,027
13,933,764
36,361,791
30.8
54,313,440
49.6
23,850,658
9,453,216
33,303,874
30.4
21,868,188
9,453,216
31,321,404
28.6
44,569,269
45.1
23,248,113
12,190,280
35,438,393
35.9
18,761,672
12,190,280
30,951,952
31.3
Total on business received from connecting lines
Percent received from connecting lines to total
Delivered to connecting lines originating on System
Delivered to connecting lines originating on Foreign
On business delivered to connecting lines
Percent delivered to connecting lines to total
N OTE.—Above figures do not include switch business and cover carload traffic only, as no separation of L. C. L. tonnage is
available.
BURLINGTON EXHIBIT 20.
FREJGHT TONNAGE INTERCHANGED
WITH ALL PRINCIPAL CONNECTING LINES
5 Year Averages (1917 to 1921, inclusive)
Junction
Received by
C. B. & Q.
(Tons)
Delivered by
C. B. & Q.
(Tons)
Total
(Tons)
1 Chicago
2 Kansas City
3 St. Paul
4 Billings
5 Denver
1,504,856
1,912,638
1,596,688
1,178,361
1,248,087
2,981,445
846,036
993,440
938,849
589,120
4,486,301
2,758,672
2,590,128
2,117,211
1,837,207
6 St. Louis
7 Omaha
8 Wendover
9 Peoria
10 Paducah
1,000,713
649.721
46i;896
369,580
231,957
679,279
577,764
548,342
497,256
373,110
1,679,992
1,227,485
1,010,238
866,835
605,067
11 Sioux City
12 Moline
13 Beardstown
14 Burlington
15 Savanna
206,924
70,382
304,035
179,896
37,023
364,781
493,999
177,184
213,803
345,627
571,705
564,381
481,219
393,699
382,650
16 Virden
17 St. Joseph
18 Sterling
19 Mendota
20 Des Moines
4,420
106,914
94,646
39,276
69,164
281,904
158,560
160,827
162,373
98,133
286.324
265;474
255,473
201,649
167,297
21 Hannibal
22 La Crosse
23 Lincoln
24 Cheyenne
25 Miscellaneous
88,625
18,761
24,805
41,212
366,590
53,227
31,361
25,046
7,467
353,370
141,852
50,123
49,851
48,679
719,960
Total
11,807,171
11,952,303
23,759,474
1 Includes Aurora, Congress Park, Eola, Zearing, Streator and West Chicago.
2 " Birmingham, Leavenworth, Lathrop, Beverly and Liberty, Mo.
3 " Minnesota Transfer, Minneapolis, So. St. Paul, Twin City Yards and Newport.
4 *' Laurel, Mossmain, Silesia, Fromberg and Huntley.
5 " Denver Yards, Utah Jet., Longmont, LaFayette, Bums Jet., Erie and Ft. Morgan.
6 " E. St. Louis, Shattuc, Brighton, E. Alton, Alton and Machens.
7 " So. Omaha, Council Bluffs, Carson, Plattsmouth and Louisville.
8 " Casper, Guernsey, Powder River, Orin Jet., Crawford and Northport.
9 " Streator and Zearing for L. E. & W.
10 " Metropolis W. Frankfort, Goreville, W. Vienna and Neilson.
11 " So. Sioux City, Dakota City, Jackson, Laurel, Lyons, Oakland and Randolph.
12 " Rock Island, Davenport and E. Moline.
13 " Jacksonville, Centralia, Chapin, Woodlawn, Christopher, Medora, Litchfield,
Waverly, Smithboro, Sorento, Girard, Virden, Whitehall and Greenfield.
14 « Monmouth.
15 " Dubuque, E. Dubuque, Galena, Galena Jet., Clinton and Fulton.
17 " Atchison, Armour and St. Joseph Yards.
18 " Amboy, Rockford, Davis Jet. and Forreston.
20 " Oskaloosa.
21 " Louisiana, Quincy, Hulls and Monroe.
?? 1 S* Trevino. Winona, Prairie du Chien, Grand Crossing and Onalaska.
23 David City, Seward, York and Crete.
25 " Interchange points not included above.
21
Texas. Certain branch lines in Texas operated separately and known
as Wichita Valley Lines, were owned and in process of construction by
the Colorado and Southern as feeders to the Fort Worth and Denver
City line. At the time of the Colorado and Southern purchase, that
company with other companies was engaged in the construction of the
Trinity & Brazos Valley line, which extended partly by certain track¬
age rights, but mainly on its own rails, from Fort Worth and Dallas,
Texas, to Houston and on to valuable terminal property on Galveston
Bay. At that time the Burlington was constructing its low grade line
south through the Big Horn Basin in Wyoming and soon connected
this line with the Colorado and Southern at Orin Junction and ar¬
ranged tor the completion of the gap between Fort Collins and Chey¬
enne, shortening the line and thereby making a through and continuous
north and south line from Billings, Montana, where connection is
made with the Northern Facihc and Great Northern Companies,
through Denver, hhrt Worth, Dallas, Texas, Houston and on to Gal¬
veston on the Gulf of Mexico. This through line is the shortest route
r
between the Gulf of Mexico and the important cities named in Texas
and Denver, and to practically all points in the northwest on the Bur¬
lington, Northern Pacific and Great Northern lines.
I offer in evidence Burlington Exhibit 21, showing the interchange
in carloads between Burlington and Colorado and Southern lines for
a period of nine months, January 1,1922, to September 30, 1922, inclu¬
sive, indicating also the carloads having origin on or destined Northern
Pacific and Great Northern lines. The aggregate carloads inter¬
changed during this nine months' period show a total of 31,670, indi¬
cating the substantial volume of tonnage moving along this north and
south route of trade and commerce.
burijngtoir Growth from 1901 to Present Date.
Following the purchase of Burlington by the Great Northern and
Northern Pacific Companies in 1901, a period of intensive develop¬
ment of Burlington began so as to equip it to efficiently handle the
growing interchange between the three companies. In like manner.
22
following the purchase by Burlington of controlling interest in the
Colorado and Southern in 1908, that property has been progressively
developed so as to enable it to handle its share of business inter¬
changed not only with Burlington, but through that line with Northern
Pacific and Great Northern Companies. These plans of development
have involved not only a large increase in line, but also much double
tracking, yard construction and enlargements and large purchases of
heavier power and equipment; in addition, many joint physical ar¬
rangements for common use of freight and passenger facilities have
been accomplished at interchange points. The important additions to
line and double track mileage are indicated on the map marked Bur¬
lington Exhibit 16. In order more efficiently to handle the growing
interchange through Minnesota Transfer, as well as the steadily in¬
creasing northbound movement of southern Illinois coal to St. Paul,
Minneapolis and points beyond in Minnesota, Burlington has revised
and double tracked a large part of the Mississippi Biver line from
Savanna to St. Paul, so that it now has practically a water level grade
and a standard 2° curvature, and with the continued growth in this
traffic this line revision and double track will be doubtless completed
during the next few years. The sum of $4,337,447 has been expended
on Capital Account in additions and betterments on this Mississippi
River line. A third track has been completed between Chicago and
Aurora, from which point the line to St. Paul diverges to Savanna.
In order to efficiently handle the growing volume of coal moving north¬
west from southern Illinois, Burlington has not only largely revised
the original line, but has added double track over substantially the
entire distance from Herrin to Galesburg, reducing grades for north¬
bound business over almost the entire distance to .3 maximum. It has
also secured under long term contract running rights over the Balti¬
more & Ohio from Shattuc to East St. Louis and added stretches of
double track on both sides of the Missouri River north of St. Louis to
properly care for the movement of coal and other business coming
from and destined to lines in Missouri and Iowa.
Burlington has extended its line south from Herrin, Illinois, to the
Ohio River and jointly with the Nashville, Chattanooga & St. Louis
BURLINGTON EXHIBIT 21.
COLORADO AND SOUTHERN LINES
INTERCHANGE WITH C. B. & Q. R. R. FOR PERIOD JANUARY 1st, 1922,
TO SEPTEMBER 30th, 1922
Number
Carloads
Received from C. B. & Q. (except originating on Northern Pacific and Great Northern) 11,822
Received from C. B. & Q. originating on Northern Pacific 2,428
Received from C. B. & Q. originating on Great Northern 2,037
Total Cars Received by C. & S. from C. B. & Q 16,287
Delivered to C. B. & Q. (except destined to Northern Pacific and Great Northern)... 14,656
Delivered to C. B. & Q. for destination on Northern Pacific 356
Delivered to C. B. & Q. for destination on Great Northern 371
Total Cars Delivered by C. & S. to C. B. & Q 15,383
GRAND TOTAL—Number Cars Interchanged between C. & S. and C.B.«fe Q. 31,670
23
Kailroad Company, controlled by the Louisville & Nashville System,
has built a large bridge across the Ohio Eiver with capacity in due
time for double track, and twelve miles of railroad on to Paducah,
Kentucky, for connection into the southeast, thereby establishing a
through north and south route between connections south of the Ohio
River and Chicago, and also with the Twin Cities and connects
there mth the Northern Pacific and Great Northern Companies. In
connection with this north and south route, Burlington in 1903 and
1904 completed a low grade cut-otf between Fenton and Thomson, as
indicated on the map, whereby southern Illinois coal on a continuous
low grade is moved through Galesburg, Barstow, Denrock and this
cut-off to Savanna for movement north through to the Twin Cities on
the Mississippi River line. In like manner this Fenton-Thomson cut¬
off provides a duplicate line between Savanna and Chicago and a lower
grade line for freight movement via Mendota and Aurora.
Since 1901 additional double tracking has been completed on the
main line in Iowa and on the main line north from Kansas City to
Napier, Missouri, where the southerly main line to Denver and to
Lincoln diverges from the river line to Council Bluffs and Omaha.
At Pacific Junction, Iowa, the line diverges and through freight
moves principally over the low grade line to Ashland for main line
points beyond. The purpose in construction of the Sioux City line
from Ashland northward is elsewhere referred to in this statement
and the importance of that line in the northbound movement of Kansas
and Nebraska grain to the Great Northern line has been emphasized
and indicated by the growing tonnage moving over that route. The
original Burlington main line from Alliance to Billings encountered
considerable high grade territory not subject to economical revision
and soon after 1901 the increasing volume of tonnage demonstrated
the need of an alternate line for cheaper cost of movement and larger
capacity. This situation brought about the development and con¬
struction of the Big Horn Basin line via Kirby, where important
coal deposits were opened, and Casper to a connection with the Colo¬
rado and Southern at Orin Junction and later at Wendover when the
24
Colorado and Southern line between Orin Junction and Wendover
was leased to the Burlington for operation. At Wendover the Big
Horn Basin line also connected with the important line from Guernsey
to Northport and provided an alternate route via Alliance to Lincoln
and points east.
Through the joint efforts of traffic and operating officers working
in close co-operation, channels of trade and commerce now long stand¬
ing and steadily increasing in volume, have been established and effi¬
cient and successful service to the public has been continuously given.
Each of the three railroads serves a great territory, having diversi¬
fied agricultural, mining and manufacturing interests for the full de¬
velopment of which first class transportation facilities affording, free
interchange of products, is absolutely necessary. Burlington lines
traverse the treeless States of Illinois, Iowa, Missouri, Nebraska, Wy¬
oming, Kansas and Colorado, which states afford the best market for
the forest products of Montana, Washington, and Idaho; they reach
Denver, Omaha, St. Joseph, Kansas City, St. Paul, Sioux City, St.
Louis and Chicago, where the great packing houses and markets for
cattle and sheep of the ranges of North Dakota, Montana, Wyoming,
Idaho, Oregon and Washington are located; they reach Kansas City,
Denver and St. Louis, connecting there with lines traversing the cot¬
ton states from which comes the cotton for shipment to the Orient;
and at Chicago, Peoria and St. Louis, they connect with all of the
eastern lines whence comes the supply of iron, steel, machinery and
other manufactured articles that find a market in the northwest and
the Orient. Burlington lines also serve the great com States of
Illinois, Iowa, Missouri and Nebraska and from the latter State in
particular there is a large movement of corn and its products to
northwest territory and to North Pacific terminals through the Bill¬
ings and Sioux City gateways; they also serve the large and increas¬
ing oil fields and refineries located in Wyoming, particularly at Cas¬
per and vicinity, from which there has grown a very large and impor¬
tant movement of refined oil and products to all of the territory served
not only by Great Northern and Northern Pacific, both via Billings
25"
gateway, but also throughoiit Btirlington and Coloradb and Soutb-
erii territory and their connections, etc. Burlington is one of the
largest handlers of coal from the various Illinois fields and particu¬
larly from the great coal deposits of southern Illinois which have
become' one of "the important sources of fuel supply for Minnesota,
Iowa and the Dakotas, as well as the State of Missouri and impor¬
tant points on the Missouri'Eiver. Burlington also Serves the-coal
deposits of northern Wyoming, particularly at Sheridan, Wyoming,
where vast deposits of an excellent quality of lignite coal lie and from
which Montana, northern Idaho and eastern Washington, as well as
territory east of Sheridan secure a large proportion of their require¬
ments. ' '
With the connection of the Big Horn Basin line of the Burlington
with the Colorado and Southern and the completion of that line via
its own rails to Denver, a large volume of Wyoming oil has moved
southbound over the Colorado and Southern to Denver and other
points in Colorado, as well as a steadily increasing volume of mis¬
cellaneous traffic moving north and southbound over this short line
route between the the northwest and the southwest.
Since the inception'of the present association of the. Burlington,
with "the Northern Pacific and Great Northern Companies, the terri¬
tory served by the three railroads has enjoyed a splendid growth
and abundant prosperity, and since the Colorado and Southern lines
have become a fourth partner in this joint enterprise, the territory
served by those lines has been equally progressive. The develop¬
ment of dry land farming in the west has practically all occurred
since 1901 and millions of acres that formerly were thought only
valuable for grazing are now under successful cultivation. To the ex¬
perimental work that was -necessary in the beginning and to demon¬
strate the practicability of this method "of farming, all four of these
companies have been liberal coutributors and each of them has main¬
tained an organization of agricultural experts to work in co-operation
with the United States Department of Agriculture and the State
Agricultural Colleges in promoting better farming methods. In the
" ~ 26 '
period, there has come the splendid work of the United States re¬
claiming the millions of acres of arid lands upon which irrigation is
feasible; many of the projects were in territory served by the lines
of these four railroads and the Reclamation Service received their
most hearty co-operation; new lines were built promptly to serve these
projects without which they could not have been a success. '
As with agriculture, so it has been with the lumber industry and
with mining and manufacturing; these companies have recognized
fully that their interests were hound up with the interests of the coun¬
try they serve; upon the success of one depended the success of
the other; and it has been their constant endeavor to promote de¬
velopment upon sound lines that meant permanent prosperity. Tho
measure of success in this great territory served by these four lines
to which their continued efforts have contributed in no small de¬
gree, is indicated by the increase in traffic, population, hank deposits
and clearing house exchange, grain production and forest products
shown in statements and exhibits introduced at this hearing, and the
tremendous development following the discovery and refining of oil
in the great fields of Wyoming. Figures showing the growth and de¬
velopment in other lines of human endeavor could be multiplied indef¬
initely, but it is deemed unnecessary to go beyond a few of the prin¬
cipal items.
Very naturally, routes and channels of trade and commerce havo
been established by reason of this traffic moving via these lines since
the Burlington was^ acquired in 1901. Owing to favorable rates and
traffic arrangements which this association of railroads was in a
position to offer, many industries were induced to locate along the
lines of the Northern Pacific and Great Northern where products
(particularly those of the forest) abounded^ for which there were and
are a natural necessity and demand in the territory served by Bur¬
lington and Colorado and Southern. The activities of these industries
would no doubt be curtailed should there be a disruption in the pres¬
ent association which has practically assured them a permanent mar-
ket in the territory served by Burlington and steadily increasing on
27
the Colorado and Southern lines, as well as satisfactory through
service.
«
Interchange and Joint Use of Facilities.
The aggregate interchange of the Burlington with the Great North¬
ern and with the Northern Pacific respectively, covering the period
from 1896 to 192i is shown hy Burlington Exhibit 22, which is now
offered in evidence.
For convenient reference in substantiation of the above statement,
the total tonnage interchange at all junctions between the two North¬
ern lines and the Burlington from 1908 (the year in which connection
at Billings, Montana, between the Great Northern and Burlington was
established) to 1921 inclusive, as shown on the exhibit, is given here¬
with t
Great Northern
Eeceived from Burlington 11,125,462
Delivered to Burlington 14,270,994 25,396,456
Northern Pacific
Received from Burlington 10,086,846
Delivered to Burlington 15,327,465 25,414,311
Total 50,810,767 Tons
As further indicative of the tremendous importance to Burlington
of the maintenance of the present association, Burlington Exhibit No.
23 has been prepared and is now offered in evidence. This exhibit
shows the average for the five years 1917 to 1921, inclusive, in terms
of freight revenue and revenue tons handled between Burlington and
Northern Pacific and Great Northern. The total average annual
freight revenue earned by Burlington and total average revenue tons
handled annually during this 5-year period are subdivided between
Burlington revenue and tonnage interchange with Great Northern,
and Burlington revenue and tonnage interchange with Northern Pa¬
cific and Burlington revenue and tonnage interchange with both those
companies. The percentages of each of these statements are also
28
shown and it is si^ificant to note that oii the average "during this S-y^ar
period Burlington interchanged 11.6 per cent of its total revenue tons
with Northern Pacific and Great Northern, but earned on the annual
average 15.8 per cent of its total freight revenue on this combined
average commercial freight tonnage interchange. The necessary con¬
clusion from this spread in percentage is the relatively higher revenue
through the longer haul on average revenue tons in the interchange
between Burlington and the Northern lines than on other Burlington
freight traffic.
It is clear, therefore, that the separation of Great Northern from
the present association by the inclusion of it in a.different system with
an - important competitor of Burlington would not only constitute a
discontinuance of existing routes and channels of trade and commerce
of the most serious character but would be a serious impairment to
Burlington present and future earning power and financial strength.
This disruption of existing routes and channels of trade and com¬
merce would be far more serious than is suggested by a mere state¬
ment of aggregate figures and in order to demonstrate the grave re¬
sults which would follow, a more detailed analysis of the close physi¬
cal relations long since established is advisable.
The Northern Pacific has two principal points of contact with Bur¬
lington, one at St. Paul and Minneapolis and the other at BiUings,
Montana. The Great Northern has three principal points of contact
with Burlington, one at the Twin Cities, one at Billings, Montana, and
one at Sioux City, Iowa. '
The St. Paul Coistneotiok.
At St. Paul and Minneapolis the Burlington has connection with
both the Great Northern and Northern Pacific. At both St. Paul and
Minneapolis Burlington uses jointly with the Great Northern the
freight facilities of the latter. In St. Paul the freight facilities in
question are practically new and were built by the Great Northern in
contemplation of their equal use by Burlington. Moreover, the Great
Northern acquired property for industrial sites adjacent to this new
BURLINGTON EXHIBIT 22.
TONNAGE INTERCHANGED WITH G. N. AND N. P. AT ALL JUNCTIONS.
Year
Received by C. B. & Q. R.R.
Delivered by C. B. & Q.R.R.
Total Interchange
G. N.
N. P.
Total
G. N.
N. P.
Total
G. N.
N. P.
Total
1896
1897
1898
1899
1900
95,880
100,871
91,497
80,093
101,201
146,827
192,648
182,001
213,760
252,655
242,707
293,519
273,498
293,853
353,856
30,822
33,469
28,240
32,549
38,519
39,797
59,894
86,115
98,087
106,987
70,619
93,363
114,355
130,636
145,506
126,702
134,340
119,737
112,642
139,720
186,624
252,542
268,116
311,847
359,642
313,326
386,882
387,853
424,489
499,362
1901
1902
1903
1904
1905
168,470
216,347
263,814
299,961
337,858
421.974
533,886
568,388
600,953
794.975
590,444
750,233
832,202
900,914
1,132,833
57,975
87,796
112,792
109,233
172,269
147,983
184,379
234,484
267,762
412,868
205,940
272,175
347,276
376,995
585,137
226,427
304,143
376,606
409,194
510,127
569,957
718,265
802,872
868,715
1,207,843
796,384
1,022,408
1,179,478
1,277,909
1,717,970
1906
1907
1908
1909
1910
358,908
441,337
413,745
599,994
698,707
869,379
804,291
704,456
726,773
791,069
1,228,287
1,245,628
1,118,201
1,326,767
1,489,776
292,031
459,769
559,029
407,231
576,700
532,009
745,369
456,718
537,640
611,047
824,040
1,205,138
1,015,747
944,871
1,187,747
650,939
901,106
972,774
1,007,225
1,275,407
1,401,388
1,549,660
1,161,174
1,264,413
1,402,116
2,052,327
2,450,766
2,133,948
2,271,638
2,677,523
1911
1912
1913
1914
1915
692,062
895,718
987,785
977,227
958,349
687,044
884,577
866,204
814,745
958,317
1,379,106
1,780,295
1,853,989
1,791,972
1,916,666
703,863
542,060
563,641
594,587
577,786
424,474
496,715
577,279
463,281
543,985
1,128,337
1,038,775
1,140,920
1,057,868
1,121,771
1,395,925
1,437,778
1,551,426
1,571,814
1,536,138
1,111,518
1,381,292
1,443,483
1,278,026
1,502,302
2,507,443
2,819,070
2,994,909
2,849,840
3,038,440
1916
1917
1918
1919
1920
1921
1,123,736
1,352,670
1,396,624
1,556,786
1,515,606
1,101,982
1,459,730
1,767,442
i;584,513
1,702,512
1,554,118
825,965
2,583,466
3,120,112
2,981,137
3,259,298
3,069,724
1,927,947
983,792
1,264,111
1,211,762
979,821
1,144,601
1,016,478
852,994
1,221,039
1,203,141
1,043,354
1,081,817
573,362
1,836,786
2,485,150
2,414,903
2,023,175
2,226,418
1,589,840
2,107,528
2,616,781
2,608,386
2,536,607
2,660,207
2,118,460
2,312,724
2,988,481
2,787,654
2,745,866
2,635,935
1,399,327
4,420,252
5,605,262
5,396,040
5,282,473
5,296,142
3,517,787
TOTAL TONNAGE INTERCHANGED 1908 TO 1921, INCLUSIVE. -
Great Northern:
Received from Burlington 11,125,462
Delivered to Burlington 14,270,994 25,396,456
Northern Pacific:
Received from Burlington 10,086,846
Delivered to Burlington 15,327,465 25,414,311
Total 50,810,767 Tons
BURLINGTON EXHIBIT 23.
CHICAGO, BURLINGTON & QUINCY RAILROAD,
Averages for 5 years (1917 to 1921, inclusive):
Total Freight Revenue, C. B. & Q. R. R $110,262,843
Burlington Revenue on Traffic Interchanged with N. P 8,969,790
% of Total Revenue 8.1
Burlington Revenue on Traffic Interchanged with G. N 8,470,932
% of Total Revenue. 7.7
Burlington Revenue on Traffic Interchanged with both N. P. and G. N 17,440,722
% of Total Revenue 15.8
Total Revenue Tons Handled 43,242,748
Revenue Tons Interchanged with N. P 2,511,454
% of Total Tons 5.8
Revenue Tons Interchanged with G. N 2,508,089
% of Total Tons 5.8
Revenue Tons Interchanged with both N. P. and G. N 5,019,543
% of Total Tons 11.6
29
freight terminal at a cost of approximately $1,800,000, upon an nnderr.
standing which was immediately carried into effect, that Burlington
should share by the OAvnership of an undivided one-half interest there¬
of, in the benefits to follow. This joint purchase of industrial prop¬
erty has already begun to develop important traffic producing indus¬
tries for both companies. All of these arrangements were made as
a result of the close association through equal one-half ownership be¬
tween Burlington and Great Northern.
At Minneapolis, the Great Northern performs the freight terminal
service for Burlington, making up its freight trains, switching to and
from industry and team tracks, receiving and forwarding in freight
warehouses, etc. The Great Northern Railway owns and operates a
4-track "Short Line" railroad between St. Paul and Minneapolis.
For freight movement between St. Paul and Minneapolis, Burling¬
ton uses the Northern Pacific line from Third Street in St. Paul to St.
Anthony Park, at which point tonnage is interchanged between North¬
ern Pacific and Burlington. Prom St. Anthony Park (Minnesota
Transfer) to Minneapolis, Burlington uses Great Northern freight
tracks. Burlington also uses the 3-track freight yard of the Great
Northern at Minnesota Transfer for the purpose of making its inter¬
change of business with lines other than Northern Pacific at that point.
For passenger traffic, Burlington uses the passenger tracks of the
Great Northern from its connection with the St. Paul Union Depot
Company at Third Street, St. Paul, through to Minneapolis via the
stone-arch viaduct into Minneapolis passenger station of the Great
Northern. Burlington coach yards in Minneapolis are located on
Great Northern property north of the passenger* station adjacent to
the Mississippi River. The total amount of Great Northern invest¬
ment used by the Burlington in the freight facilities at St. Paul and
tlie freight and passenger tracks between St. Paul and Minneapolis,
the yard at Minnesota Transfer and the freight facilities at Minneap¬
olis and the Great Northern passenger station at Minneaxwlis, to¬
gether with the miscellaneous property, like roundhouses, coach yards,
etc., furnished Burlington by the Great Northern would aggregate a
30
value of $15,000,000. The value of the Northern Pacific freight tracks
previously" referred to as used hy Burlington, is approximately
$1,650,000.
To recapitulate, Burlington freight business at St. Paul is handled
through the Great Northern freight station. Its freight interchange
at Minnesota Transfer is made through Great Northern yard at that
point. It uses Great Northern freight tracks from Minnesota Trans¬
fer to North Minneapolis, including the Great Northern yards, round¬
houses and other terminal facilities and Great Northern freight sta¬
tion at Minneapolis. Burlington passenger business is handled over
the Great Northern passenger tracks from St. Paul Union Depot to
Minneapolis passenger station of the Great Northern, which it uses at
that point and beyond that is the passenger yard of the Burlington
located upon Great Northern property. Burlington locomotives,
freight and passenger, are handled in Great Northern roundhouse and
make use of such other Great Northern terminal facilities as are neces¬
sary for their care. All these arrangements are based upon contracts
for extended periods of time and substantial portions of the invest¬
ments made necessary thereby were based upon the reliance of the
continued joint use of these facilities by the three companies, as indi¬
cated above.
In the Twin Cities the interchange between the various railway
lines generally is made through the medium of the Minnesota Transfer
Kailway located midway between St. Paul and Minneapolis. Based
upon reported tonnage to the Minnesota Transfer Company, a state¬
ment is now introduced as Burlington Exhibit 24 which shows tonnage
interchanged by these three lines as compared with the other users of
the Transfer during the years 1916 and 1917, this period being consid¬
ered more representative than subsequent years when Federal Control
during 1918 and 1919 and the fluctuations in business through de¬
pression and otherwise in 1920 and 1921, had a tendency to produce
abnormal results. The tonnage figures for 1916 and 1917 were taken
from the records of the Minnesota Transfer Railway Company and
the result supported by this data is very naturally considered as hav-
BURLINGTON EXHIBIT 24.
TONNAGE INTERCHANGED AT TWIN CITIES GATEWAY.
Calendar Years 1916 and 1917.
Great Northern to other lines:
1916 1,577,302
1917 1,884,512 3,461,814 Tons
Other lines to Great Northern:
1916 1,034,644
1917 1,396,511 2,431,155 Tons
Northern Pacific to other lines:
1916 2,678,047
1917 2,736,634 5,414,681 Tons
Other lines to Northern Pacific:
1916 1,166,700
1917 1,481,161 2,647,861 Tons
Burlington to other lines:
1916 798,207
1917 1,401,647 2,199,854 Tons
4 -
Other lines to Burlington:
1916 1,552,402
1917 1,839,005 3,391,407 Tons
Total for two years 19,546,772 Tons
Total Minnesota Transfer tonnage, 1916 16,851,464 Tons
Total Minnesota Transfer tonnage, 1917 15,776,363 Tons
Total 32,627,827 Tons
19,546,772 tons -5- 32,627,827 tons = 60%.
31
ing an important bearing on the matter of establishd trade routes and
channels which have been built up by the three lines under review. It
will be noted that the three lines for the period above stated handled
60 per cent of all the tonnage interchanged at the Transfer.
For the purpose of indicating the gradual growth, of interchange
at Minnesota Transfer between these three lines and which must also
be construed as having very largely influenced the establishment of
present existing routes and channels of trade, another Exhibit, No. 25,
is herewith offered, showing the tonnage interchanged, excluding com¬
pany material, for the years 1895 to 1921 inclusive, with a summary of
the result for the entire period at the foot of the exhibit. This e^ibit
shows the steady growth of this interchange and the very large pror
portions which it has attained in recent years.
The figures on this last Exhibit, No. 25, do not include coal used
by the Great Northern or the Northern Pacific in their locomotives
transported by the Burlington from Illinois fields. In 1920 the Great'
Northern locomotive fuel so handled by Burlington, amounted to 672,-
623 tons, and in 1921 to 659,435 tons. For the Northern Pacific the
%
locomotive fuel tonnage for these two years was as follows: 1920,
128,465 tons; 1921, 50,363 tons.
There is also a large volume of rah, tie plates, oil and supplies of
all kinds used in the operations of the Great Northern and Northern
Pacific, bought by them in eastern markets and routed to St. Paul,
Billings and Sioux City via the Burlington. The annual revenue to
the Burlington on this traffic is very considerable—on the coal alone
to the Great Northern in 1921 it was in excess of $2,500,000. If some
other^ine east of St. Paul is substituted for the Burlington, the Great
Northern will naturally place its coal orders at mines served by that
road and will also divert from the Burlington this large volume of
"Company freight."
32
The Sioux City Connectioit.
• At Sioux City the Burlington having no terminals of its own, has
continuously used those of the Great Northern since the Sioux City
line was built, in 1906. The Great Northern terminals were acquired
at a cost of $3,000,000 and provide the Northern companies as well as
Burlington, with a route between the west, south and southwest and
St. Paul, Duluth and north thereof, and is the route employed by the
Burlington on all such traffic. The circuitous route of the Burlington
via its own line from.Missouri River territory to St. Paul does not
permit using it on business, of this character. This connection with
the Northern lines via Sioux City is a most important route to the
Burlington and will become more so should the proposed Lakes to
Sea" movement be carried out while under present conditions it could
not be dispensed with nor the heavy tonnage moving via it be sacri¬
ficed or impaired without serious loss to Burlington. Shortly after
the acquisition of Burlington by the Northern companies, the necessity
for providing Burlington with an entrance into Sioux City became
increasingly apparent. Accordingly, the Great Northern built a con¬
nection from Dakota City, Nebraska, which is just across the Mis¬
souri River from Sioux City, to Ashland, Nebraska, a distance of 108
miles. This line was completed and opened for traffic in 1906 and was
operated by the Great Northern until November 1, 1907, when the
operations were taken over by the Burlington, the line having been
sold to Burlington for $3,200,000. The purpose of this connection
between Burlington and Great Northern at Sioux City was to enable
Great Northern and Burlington to engage in the Missouri Valley-
Minneapolis grain traffic, the idea being that by this connection cars
loaded with grain could be handled to Minneapolis and there unloaded
and then reloaded with flour from Minneapolis to Chicago and be¬
yond, thereby reducing the emptj^^ mileage on cars which otherwise
Burlington would largely have to move empty to Minneapolis for flour
tonnage, as well as permitting the joint property to secure its share
of northbound grain. In addition to grain tonnage there is also a con¬
siderable volume of oil and sugar tonnage delivered to the Great
BURLINGTON EXHIBIT 25.
TONNAGE INTERCHANGED AT MINNESOTA TRANSFER
(Inc. Mpls., St. Paul, So. St. Paul, T. C. Yards, etc.)
(Excludes Company Material)
Received by C.B.& Q.R.R.
Delivered by C.B.& Q.R.R.
Total
G. N.
N. P.
Total
G. N.
N. P.
Total
G. N.
N. P.
Total
1895
1896
1897
1898
1899
97,851
95,880
100,871
91,497
80,093
61,855
59,833
55,038
59,799
73,018
159,706
155,713
155,909
151,296
153,111
37,978
30,822
33,469
28,240
32,549
14,143
17,726
16,880
30,380
31,383
52,121
48,548
50,349
58,620
63,932
135,829
126,702
134,340
119,737
112,642
75,998
77,559
71,918
90,179
104,401
211,827
204,261
206,258
209,916
217,043
1900
1901
1902
1903
1904
1905
101,201
168,470
216,347
263,814
299,961
337,858
80,143
160,344
194,532
227,270
234,818
318,255
181,344
328,814
410,879
491,084
534,779
656,113
38,519
57,957
87,796
112,792
109,233
172,269
34,809
54,390
75,874
88,221
100,603
138,976
73,328
112,347
163,670
201,013
209,836
311,245
139,720
226,427
304,143
376,606
409,194
510,127
114,952
214,734
270,406
315,491
335,421
457,231
254,672
441,161
574,549
692,097
744,615
967,358
1906
1907
1908
1909
1910
337,139
341,146
298,090
339,074
357,201
341,345
290,391
241,364
244,300
309,103
678,484
631,537
539,454
583,374
666,304
215,691
215,983
158,927
176,568
210,869
162,022
146,096
111,620
148,079
171,610
377,713
362,079
270,547
324,647
382,479
552,830
557,129
457,017
515,642
568,070
503,367
436,487
352,984
392,379
480,713
1,056,197
993,616
810,001
908,021
1,048,783
1911
1912
1913
1914
1915
381,351
525,272
537,941
477,316
542,926
292,575
478,337
443,793
394,521
464,188
673,926
1,003,609
981,734
871,837
1,007,114
216,585
238,335
268,444
219,004
261,164
159,208
185,233
202,037
152,892
185,375
375,793
423,568
470,481
371,896
446,539
597,936
763,607
806,385
696,320
804,090
451,783
663,570
645,830
547,413
649,563
1,049,719
1,427,177
1,452,215
1,243,733
1,453,653
1916
1917
1918
1919
1920
1921
709,716
861,954
869,867
919,240
846,507
480,837
761,240
897,417
781,040
740,625
803,579
383,885
1,470,956
1,759,371
1,650,907
1,659,865
1,650,086
864,722
424,430
696,155
687,562
452,841
412,404
201,884
295,238
562,826
565,288
406,400
439,414
203,326
719,668
1,258,981
1,252,850
859,241
851,818
405,210
1,134,146
1,558,109
1,557,429
1,372,081
1,258,911
682,721
1,056,478
1,460,243
1,346,328
1,147,025
1,242,993
587,211
2,190,624
3,018,352
2,903,757
2,519,106
2,501,904
1,269,932
SUMMARY OF THE RESULT FOR THE ENTIRE PERIOD.
Great Northern:
Received from Burlington 5,798,470
Delivered to Burlington 10,679,420 16,477,890 Tons
Northern Pacific:
Received from Burlington 4,700,049
Delivered to Burlington 9,392,608 14,092,657 Tons
Total 30,570,547 Tons
33
Northern at Sionx City and southbonnd some of the principal com¬
modities delivered by the Great Northern'to Burlington are fruits and
vegetables, newsprint paper and forest products.
Burlington Exhibit 26 is now offered in evidence, showing the ton¬
nage interchanged between Great Northern and Burlington at Sioux
City and the revenue on same since that line was opened in 1907,.up
to and including 1921. This statement shows that the total ton¬
nage interchanged in 1921 amounted to 541,618 tons, on which Burling¬
ton revenue amounted to $2,107,559. The total tonnage received by
Burlington in 1921 amounted to 112,722 tons, which was an unfavorable
year for southbound movement because the exhibit shows that Bur¬
lington received in 1919 245,523 tons and in 1914 373,138 tons. The
total tonnage delivered by Burlington to Great Northern in 1921 was
428,896 tons, the largest delivered in any year since the route was
opened.
For the purpose of conveying an idea of the volume of Missouri
Valley-Minneapolis grain traffic passing through Sioux City via Bur¬
lington and Great Northern, Burlington Exhibit 27 has been prepared
and is now offered in evidence. This exhibit shows the total number
of bushels handled for each of the years 1909 to 1921 inclusive and the
yearly average.
The variation between the years in the movement of the north¬
bound grain via this route was largely due to crop and market con¬
ditions. An examination of the total will show the yearly average
brought down because of certain years of light crop movement does
not fairly indicate the volume in times when there is a fair move¬
ment, such as in 1920, when over 8,000,000 bushels were handled
through that gateway.
All the foregoing is intended to show that if Great Northern should
be eliminated from the present association the result would be not
only a complete disruption of a route and channel of trade and com¬
merce established at great cost bj'- the careful planning of fifteen
years ago, but also a serious loss of tonnage and revenue to Burling¬
ton if this north and southbound tonnage should be diverted to new
channels of competitive routing.
34
The Bilongs oohnecnon.
Greater in importance than the trade rente via Sionx City is the
Billings gateway where the two main lines of Burlington reach both
the Northern Pacific and Great Northern. The Northern Pacific line
was-opened and in operation when Burlington reached Billings line
prior, to 1901. It has already been shown that after reach¬
ing Billings, Burlington made surveys and had plans for. con¬
struction north to a. connection with the Great Northern at
Great Falls, but later consideration of these plans led properly
to the construction by the Great Northern of this connection, which
involved the building of. 194 miles from Armington, Montana, to
Mossmain, the junction adjacent to Billings and which was opened
for operation on November 1, 1908. The cost of this Great Northern
line to December 31,1921, was 112,300,000. This investment was made
because of the natural interest between Great Northern and Burling¬
ton in the Billings gateway and to permit both of those companies to
participate via that gateway in the growing interchange in traffic mov¬
ing through it. There is common use bv these three lines of terminal
facilities at Billings and Laurel, Montana^ "svith the exception that
the Great Northern uses the Burlington freight house at Billings. An
inconsiderable portion of the freight facilities at Billings are owned
by the Burlington, the remainder by the Northern Pacific. The ap¬
proximate value of the Northern Pacific facilities at Billings and
Laurel where the Northern Pacific has constructed and in operation
a large interchange yard with appropriate terminal facilities for the
use of all three companies, is $3,815,000 and of the Burlington facilities
at Billings $300,000.
Burlington uses by trackage contract the Northern Pacific line be¬
tween Huntley, Montana, and Billings, a distance of 13 miles; and also
from Billings to Fromberg, Montana, a distance of 37 miles. By these
two trackage arrangements Burlington avoided the necessity of con¬
structing its own line and is not only thereby enabled to make and
receive interchange between the Northern Pacific and Great Northern
but accomplishes a connection and circulation between its two main
BURLINGTON EXHIBIT 26.
STATEMENT OF TONNAGE INTERCHANGED WITH THE GREAT NORTHERN
AT SIOUX CITY, AND REVENUE ON SAME SINCE SIOUX CITY
LINE WAS OPENED
Years ended
June 30th
Business Received by
C. B. & Q.
Business Delivered by
C. B. & Q.
Total
Tons
Revenue
Tons
Revenue
Tons
Revenue
1907
1908
1909
1910
1911
66,956
93,104
92,537
116,843
88,162
$137,695
178,743
205,183
294,392
236,789
172,022
376,482
240,960
83,833
345,431
$ 599,788
1,370,634
778,596
244,197
1,019,848
238,978
469,586
333,497
200,676
433,593
$ 737,483
1,549,377
983,779
538,589
1,256,637
1912
1913
1914
1915
1916t
141,451
160,375
373,138
175,573
107,695
320,002
328,306
649,895
352,441
234,732
231,730
85,683
98,627
246,077
241,185
675,952
250,486
263,931
608,302
531,572
373,181
246,058
471,765
421,650
348,880
995,954
578,792
913,826
960,743 i
766,304
1917t
1918t
1919t
1920t
1921t
163,045
172,264
245,523
173,085
112,722
350,904
483,072
764,721
687,276
507,430
196,104
230,635
297,282
331,159
428,896
480,618
567,750
766,005
1,068,027
1,600,129
359,149
402,899
542,805
504,244
541,618
831,522
1,050,822
1,530,726
1,755,303
2,107,559
^Calendar years.
BURLINGTON EXHIBIT 27.
MISSOURI VALLEY-MINNEAPOLIS
GRAIN TRAFFIC PASSING THROUGH SIOUX CITY VIA BURLINGTON
AND GREAT NORTHERN RAILWAY
Year Bushels
1909 6,482,239
1910 1,459,195
1911 10,278,418
1912 5,707,786
1913 1,597,485
1914 1,833,335
1915 6,425,774
1916 2,368,937
1917 4,109,044
1918 1,756,806
1919 2,986,209
1920 8,068,820
1921 7,769,581
Total 60,843,629
Yearly average 4,680,279 bushels
35
lines terminating at Billings. Great Northern also has trackage rights
over the Northern Pacific, Lanrel to Billings, and the nse of the exten¬
sive Laurel terminals. - .
Burlington Exhibit 28 has been prepared and is now offered in evi¬
dence showing the interchange of tonnage annnally between the North-
em Pacific, Great Northern and Burlington Companies at Billings
gateway, beginning in 1896, shortly after the connection between
Northern Pacific and Burlington, and taking in the Great Northern
figures beginning in 1908 when the Great Northern line reached Bill¬
ings and established its through service via that gateway.
Tonnage received by Burlington from the Northern companies at
Billings consists principally of lumber, shingles, ores and smelter
products, crude oil, fruits and vegetables, canned s^mon, live stock,
condensed milk, newsprint paper, etc. The tonnage delivered to these
lines consists largely of coal and oil from the Wyoming district on the
Burlington, export cotton, grain and grain products, fruits and vege¬
tables, live stock, manufactured products and miscellaneous freight.
It is interesting to note a steadily increasing movement via this gate¬
way to the northwest in the banana traffic, which is very heavy in
season. Colorado and Southern is becoming a practical route for this
movement via the Denver gateway.
The Coloeado and Southern Lines.
The purchase of control of the Colorado and Southern by Burling¬
ton which included the important Fort Worth and Denver City Toady
has already been referred to. This occurred in 1908. By this means
the Burlington secured not only closer access to the important south¬
ern Colorado coal fields, but also a direct connection from the Big-
Horn Basin line and the developing oil fields at Casper, Wyoming, to
Denver and points south thereof. The Colorado and Southern owns
large and well located terminals in the City of Denver and the iin-
portance of it to Burlington was increased by this reason. Colorado
and Southern lines serve northern Colorado, producing increasing
quantities of grain, vegetable and fruit products which find markets
36
in all directions and in considerable growing volume eastward over
Burlington into consuming territory served by it. In addition to
these important features, a direct, short and efficient through route
was established not only between the Gulf of Mexico and Puget Sound,
but serving all the vast intermediate territory between those water
terminals. Exhibits in evidence show the general character of this
interchange and justify the certain prediction that as this vast west¬
ern territory increases in population through settlement and develop¬
ment and by the aid of the many Government projects for the
reclamation and irrigation of land, this north and south route will
continue to grow and establish itself as one of the important routes
and channels of trade and commerce. It is interesting to point out the
parallels of north and south routing of traffic as they have developed
through the increase in population in the country, and the acquisition
of Colorado and Southern in the interest of the other three lines com¬
prising this great system, was largely influenced by the conviction,
there being already a substantial north and southbound movement
of traffic over this line, that the volume would continue to grow
through the interchange of commodities of all kinds between the sec¬
tions of the country served by this line. As the population of the
country has grown, the great north and south gateways, like Potomac
Yard in eastern territory, Cincinnati, Memphis, St. Louis, Kansas
City and on the west coast, San Francisco with the Southern Pacific
lines serving the entire coast from one international boundary to the
other, have successively developed enormous interchange of tonnage
and the gateway of Denver promises equal development as the coun¬
try growls and population and traffic increase. The great lumber pro¬
ducing operations in the northwest are destined to ship forest products
in steadily growing volume to the treeless territory of Wyoming, Ne¬
braska, Kansas, Colorado and Texas as southern lumber approaches
exhaustion. Cotton from Texas and Louisiana has long moved in sub¬
stantial volume via this route and live stock, fruits and vegetables, as
the seasons change, move in both directions over it. As an illustra¬
tion of the character of this traffic, Burlington received from Great
Northern and Northern Pacific at Billings in 1920 for delivery to
BURLINGTON EXHIBIT 28.
TONNAGE INTERCHANGED AT BILLINGS
Year
Received by C. B. & Q.
Delivered by C. B. & Q.
Total Interchange
G. N.
N. P.
Total
G. N.
N. P.
Total
G. N.
N. P.
Total
1896
1897
1898
1899
1900
♦ 86,994
*137,610
*122,202
*140,742
♦172,512
♦ 86,994
*137,610
*122,202
*140,742
*172,512
22,071
43,014
55,735
66,704
72,178
22,071
43,014
55,735
66,704
72,178
109,065
180,624
177,937
207,446
244,690
109,065
180,624
177,937
207,446
244,690
1901
1902
1903
1904
1905
*261,630
♦339,354
341,118
366,135
476,720
*261,630
*339,354
341,118
366,135
476,720
93,593
108,505
146,263
167,159
273,892
93,593
108,505
146,263
167,159
273,892
355,223
447,859
487,381
533,294
750,612
355,223
447,859
487,381
533,294
750,612
1906
1907
1908
1909
1910
528,034
513 900
463,092
482,473
481,966
528,034
513,900
486,606
651,430
710,610
369 987
599,273
345,098
389,561
439,437
369,987
599,273
350,005
487,473
592,230
898,021
1,113,173
808,190
872,034
921,403
898,021
1,113,173
836,611
1,138,903
1,302,840
t 23,514
168,957
228,644
t 4,907
97,912
152,793
t 28,421
266,869
381,437
1911
1912
1913
1914
1915
202,516
213,290
197,178
205,672
277,036
394,469
406,240
422,411
420,224
494,129
596,985
619,530
619,589
625,896
771,165
180,891
170,472
206,308
155,331
185,104
265,266
311,482
375,242
310,389
358,610
446,157
481,954
581,550
465,720
543,714
383,407
383,762
403,486
361,003
462,140
659,735
717,722
797,653
730,613
852,739
1,043,142
1,101,484
1,201,139
1,091,616
1,314,879
1916
1917
1918
1919
1920
1921
306,925
310,651
354,493
392,023
496,014
508,423
698,490
871,941
803,473
961,887
750,539
442,080
1,005,415
1,182,592
1,157,966
1,353,910
1,246,553
950,503
318,177
424,638
293,565
229,698
399,038
385,698
557,756
674,366
637,853
636,954
642,403
370,036
1,875,933
1,099,004
931,418
866,652
1,041,441
755,734
625,102
735,289
648,058
621,721
895,052
894,121
1,256,246
1,546,307
1,441,326
1,598,841
1,392,942
812,116
1,881,348
2,281,596
2,089,384
2,220,562
2,287,994
1,706,237
♦Estimated 18 tons per car.
tTwo months.
37
Colorado and Southern destined to points in Texas, 454 carloads of
apples, 26 carloads of canned salmon, 1,446 carloads of shingles, 161
carloads of lumber, 52 carloads of paper, 44 carloads of condensed
milk and 18 carloads of potatoes. These were the principal commodir
ties originating in the far northwest and were delivered to Colorado
and Southern for Texas delivery; the entire movement is not included.
In order to show further the importance of Colorado and Southern
to this system, Burlington EaMbit 29 has been prepared and is now
offered in evidence, showing the tonnage and revenue on traffic inter¬
changed between Burlington and Colorado and Southern for the years
1905 to 1921 inclusive, averaged in 4-year periods during the earlier
portion of the time as indicated. 1921 was an abnormal year owing to
unfavorable conditions, 1920 being e-^dently more representative, and
Burlington revenue on tonnage received and delivered in that year
amounted to $3,766,652.
Southern Illinois Lines.'
At the time corporate relations were established between Bur¬
lington, Northern Pacific and Great Northern Companies, Burlington
while traversing eleven states, had meager and unimportant coal ton¬
nage originating on its line. No coal mines of commercial value were
known to exist in Minnesota or North Dakota—a vast territory de¬
manding large quantities of coal for industrial development and
domestic use. The principal available source of good coal for that
territory was from West Virginia, which at that time moved and still
moves via the Great Lakes to Duluth and other upper lake ports.
Due to the excellent quality of southern Illinois coal and in conse¬
quence of the close corporate relations then existing between these
three lines, the plan was adopted for Burlington to extend its Illinois
line into the southern Illinois coal field. This would permit the
movement of a supply of high grade coal by Burlington rails to. Min¬
nesota and Dakota territory served by the Great Northern and North¬
ern Pacific, thus giving Burlington and those roads an increased
tonnage and a more certain supply of locomotive fuel for all three
38
roads. The investment cost to the Burlington for the portion of the
line to southern Illinois was large. For acquisition and construction
of the new line between Concord and Metropolis on the Ohio River,
the amount expended exceeds $8,000,000, which amount includes the
cost of recent additions and betterments. Over 200 miles of double
track, and many miles of switch, side and passing tracks have been
built. This traffic required the strengthening of bridges and the build¬
ing of new yards at Galesburg, Bushnell, Beardstown, Centralia and
other less important assembly and terminal points. It also involved
the purchase of a large number of locomotives of Mikado and Santa Fe
type and thousands of new steel cars of 50-ton capacity. The imme¬
diate growth of this new coal tonnage also resulted in the construction
of the Fenton-Thomson cut-offi hereinbefore referred to, at a cost of
approximately $500,000 as a part of the development of the low grade
through line before described.
The movement of Illinois commercial coal from the southern Illi¬
nois coal field via the Burlington to the States of Minnesota and North
and South Dakota approximates 1,000,000 tons per annum. And the
total commercial coal tonnage loaded on the Beardstown Division in
southern Illinois on the Burlington reached 9,965,570 tons in the year
1918, which is the highest tonnage of any year since the movement
began. In 1920 the tonnage amounted to'8,827,616 tons and even in
the less favorable year of 1921 it aggregated 7,617,286 tons, or 73.4
per cent of the total commercial coal loaded on the Burlington system.
The steady growth and use of southern Illinois coal, aided by the
larger mining operations constantly developing in that field, promises a
continued and constant growth in this tonnage and a large increasing
share of it will steadily find its ultimate destination to points on the
Northern Pacific and Great Northern lines and in St. Paul and Minne¬
apolis and territory beyond in Minnesota and the Dakotas. The im¬
portance to Burlington, therefore, of retaining a market for coal pro¬
duced on its southern Illinois rails at points reached by the Great
Northern in northern territory referred to, as against the possible loss
and diversion of this tonnage by the segregation of the Great North¬
ern from this present alliance, needs no argument to support it.
BURLINGTON EXHIBIT 29.
TONNAGE AND REVENUE ON TRAFFIC INTERCHANGED WITH THE C. & S. RY.
YEARS ENDED JUNE 30TH AND AVERAGE FOR FOUR YEAR PERIOD.
Received by C. B. & Q.
Delivered by C. B. & Q.
Total
Tons
Revenue
Tons
Revenue
Tons
Revenue
1905
1906
1907
1908
Average
164,968
206,974
239,078
199,169
202,547
$ 507,666
589,325
657,424
604,932
589,837
97,228
116,674
121,923
114,318
112,536
$ 476,098
593,610
638,035
617,174
581,227
262,196
323,648
361,001
313,487
315,083
$ 983,764
1,182,935
1,295,459
1,222,106
1,171,064
1909
1910
1911
1912
Average
290,724
464,536
297,335
345,240
349,434
793,333
1,320,813
865,674
1,061,880
1,010,425
228,290
369,550
363,216
412,336
343,348
787,747
1,167,960
1,022,774
976,044
988,631
519,014
834,086
660,551
757,576
692,782
1,581,080
2,488,773
1,888,448
2,037,924
1,999,056
1913
1914
1915
1916
tl916
399,882
306,641
279,562
419,960
479,637
1,192,064
946,146
866,318
1,148,642
1,388,166
453,176
439,035
343,565
558,860
567,600
1,002,721
900,059
877,318
1,266,292
1,240,317
853,058
745,676
623,127
978,820
1,047,237
2,194,785
1,846,205
1,743,636
2,414,934
2,628,483
H917
1918
1919
1920
1921
583,234
780,166
477,922
648,210
387,531
' 1,654,864
2,337,165
1,638,340
1,941,895
1,422,325
'
687,000
511,407
627,845
649,508
476,412
1,558,590
1,293,231
1,611,915
1,824,757
1,496,486
1,270,234
1,291,573
1,105,767
1,297,718
863,943
3,213,454
3,630,396
3,250,255
3,766,652
2,918,811
tCalendar Years.
39
Big Horn Basin Line.
The constmctioii of the Big Horn Basin line southward from Bill¬
ings through Wyoming for a connection with the Guernsey Line of the
Burlington and Colorado and Southern, has already been referred to.
Starting from Billings, trackage was arranged by contract with the
Northern Pacific to Fromberg, Montana, a distance of 37 miles. From
Laurel to Fromberg, this is over a branch of the Northern Pacific, but
. due to the increased use of it for main line purposes by Burlington,
substantial sums have annually been expended by the Northern Pacific
since this contract was made to develop it to a higher standard for
Burlington use.' The line through from Fromberg to Guernsey which
adjoins Wendover a few miles-to the east, was completed and opened
for business in 1915, at an approximate cost of $17,242,000. This new
line was constructed because of the growth of tonnage interchange
through Billings and which could not all be moved nor efficiently
handled over the heavy grade on the main line via Alliance and Sheri¬
dan ; the building of the Big Horn Basin line resulted in a large sense
in a double track railroad for Burlington between Billings and Alli¬
ance, in addition to shortening the route to Denver via the Colorado
and Southern and territory beyond. The Big Horn Basin line with
unimportant exceptions is low grade and as it is gradually matured to
meet the increasing demands upon it, will complete the development of
a through low grade line between BUlings and the Missouri River. It
serves valuable coal fields in northern Wyoming, producirig consider¬
able coal of good quality, which is distributed to a large extent to the
territory served by the Northern Pacific and Great Northern. It also
serves the oil fields and refineries around Casper and Greybull, which
also furnish a large tonnage moving northwest through the BiUings
gateway.
40
Passeitger Seetice.
Following the association of these lines, through passenger train
routes via BurUngton and the Northern Pacific and Great Northern,
respectively, were established and have been maintained for many
years. Great Northern trains 1 and 2, known as the Oriental Limited,
are through trains between Chicago, Seattle and Tacoma, carrying
standard first-class equipment, including compartment-observation
cars in both directions; one sleeper runs between Chicago and Port¬
land via the S. P. & S. The Northern Pacific operates the North
Coast Limited, also a train of equal character and equipment between
Chicago, Seattle and Tacoma, with sleeper service from Spokane to
Portland via the S. P. & S. Each road- has additional service in con¬
nection with Burlington via the Twin Cities, with variable through car
arrangements as the season and demands of traffic from time to time
require. From Kansas City Burlington operates trains 41 and 42 via
Billings and to points beyond, including the Pacific Coast at Seattle,
Tacoma and Portland over the Northern Pacific, with service during
the summer season to Yellowstone Park. It also operates trains 43
and 44 from Kansas City via Billings and the Great Northern to North
Coast points and the intermediate territory, including service to
Glacier Park on the Great Northern during the summer season. These
Kansas City trains also carry standard high-class equipment, equal to
similar service on other standard lines in western territory. There
is no duplication of this service because the arrivals and departures
of these trains are spaced for different periods of the day and night,
and because both Northern Pacific and Great Northern serve a large
amount of intermediate territory not competitive nor adjacent to each
other. Not only on Burlington rails but on rails of the Northern
Pacific and Great Northern Companies these trains do a considerable
amount of local work, and this is particularly true over a substantial
part of the line of the Burlington between Lincoln, Nebraska, and
Billings, Montana, where these trains, 41 to 44 inclusive, furnish prac¬
tically the only needed passenger service for local territory.
It is therefore apparent that through this association there has
41
been established for many years existing and favorite routes for
through and local interchange passenger travel and for the handling
of express, mail and parcel post business on passenger trains, and that
a disruption of this system operation would necessarily mean a diver¬
sion and change in these passenger routes. Burlington through its
control of Colorado and Southern has established through sleeping
car and coach trains between Denver and "Wendover via Colorado
and Southern and Burlington, Wendover, via Casper to Billings, con¬
necting there with both Northern Pacific and Great Northern, includ¬
ing during the summer season service to the Cody entrance of Yellow¬
stone Park. These trains make close connections and operate in con¬
junction with a growing volume of summer tourist and regular all
the year round travel from southern Texas points tributary to the
Trinity & Brazos Valley and Port Worth and Denver City lines, arid
through sleepers operate between Denver, New Orleans and San An¬
tonio via Colorado and Southern lines throughout the year for both
north and southbound seasonal vacation and tourist traffic, as well as
regular all the year round movement. The segregation of Colorado
and Southern from Burlington would immediately involve serious dis¬
turbance in these well established routes of passenger travel by diver¬
sion to competing routes resulting from any such reassignment of
Colorado and Southern.
Gbneraij StmvEY.
From this general survey the conclusion is evident that routes
and channels of trade and commerce, both freight and passenger via
Burlington and Great Northern on the one hand and via Burlington
and Northern Pacific on the other, as well as by Burlington and
Colorado and Southern lines, have been established and maintained
in growing efficient operation for many years. The freight tonnage
interchange figures show the volume and growth of the business
moving in each direction over these routes.
This OA^^lership and association as between Burlington and North¬
ern Pacific and Great Northern has been and is to Burlington the
42
substantial equivalent of extension of its own lines throughout the
northwest via two essentially distinct routes, occupying in the main
distinct zones of territory and meeting only at important centers of
population or gateways of traffic.
Burlington might well have built each line in the courageous exten¬
sion of its own lines and in the logical development of its own system
with only minor changes and some saving of occasional duplication
of line and terminals. Burlington's own internal development has
produced a duplicate main line between Galesburg, Illinois, and Den¬
ver, Colorado, namely, the main line from Galesburg through lowa,
Omaha, and Lincoln to Oxford Junction in western Nebraska, and
the main line from Galesburg via Quincy, St. Joseph, Mo., and south¬
ern Nebraska to join the former line at Oxford Junction. It has also
developed and built the two lines through western Nebraska and
Wyoming to Billings, before referred to, and in like manner has de¬
veloped a duplicate line between Denver and Billings, one via its own
rails through Brush, Sterling and Alliance and the other via Colorado
and Southern through Wendover and the Big Horn Basin line.
As related to Burlington, an examination of the maps in evidence
indicates that it connects with both Great Northern and Northern
Pacific, but that it is in no sense a competing line with either. It con¬
nects with both roads at St. Paul and Minneapolis, and at Billings
and Laurel, Montana, and with the Great Northern at Sioux City,
Iowa. The Burlington on the one hand and the two Northern lines on
the other serve distinct portions of the country. There is of neces¬
sity a competitive zone wherever two roads connect, but in this case
the amount of competitive traffic in those zones is insignificant. This
lack of important competition is further emphasized by the fact that
while the three companies own lines in fifteen different states, in only
three of these states does Burlington operate, namely, Montana, Min¬
nesota and Wisconsin. The mileage of Burlington in Montana and
Minnesota is relatively small and so far as Wisconsin is concerned
the territory served by the Burlington is widely divergent and far to
the south of that served by the Northern Pacific and Great Northern.
43
While seemingly there is considerable competition between the
Great Northern and Northern Pacific, the principal competitive points
where heavy tonnage is involved are also reached by other carriers,
and those other carriers will continue as effective competitors at all
these principal common points. In other words, authority to consoli¬
date Burlington with Northern Pacific and Great Northern into one
system will in no substantial degree affect or diminish active and
effective competition throughout the territory occupied by those lines
respectively, because the same territory and practically all points
enjoying any substantial volume of tonnage or passenger traffic, are
and will continue to be equally served by important systems of existing
railroads now participating in the competitive business. This is par¬
ticularly true of all transcontinental business, including export and
import long haul business to and from common points in Montana and
business to and from the Head of the Lakes, including lake and rail
business such as coal, grain, flour mill products, iron and steel, mer¬
chandise, etc., as well as passenger travel.
Eegardless of the fact that a good many communities are served
by both the Great Northern and Northern Pacific, there is a compara¬
tively small population involved at the communities which are reached
exclusively by those companies, owing to the fact that the larger sta¬
tions are also served by other carriers. A table has been prepared,
which is offered in evidence as Burlington Exhibit 30, showing the
population of the competitive communities in question and indicating
in the first column, those communities which are not only reached by
Great Northern and Northern Pacific, but also by other lines and in
the second column those few and sparsely settled communities and
districts which are not served by any other lines than the Northern
Pacific and Great Northern. The table shows that there is a total
population of 1,750,406 people reached by Great Northern and North¬
ern Pacific and other lines of railroad and only a population of 92,553
served only by the Northern Pacific and Great Northern. It should
be added that the table shows that the 92,553 people are quite widely
Scattered. In other words, of the total population involved, 95.0 per
44
cent are served by other lines than those two and only 5.0 per cent
served hv these two alone..
The figures on this exhibit were secured from official sources wher¬
ever possible, based upon the fourteenth census reports issued by the
Census Bureau in Washington. In the absence of complete infonna-
tion from the Census Bureau, the records were obtained from station
agents for their respective communities and may he accepted as
reliable. • '
Even more conclusive than the population involved in the exclu¬
sive competitive communities listed, is the small amount of ton¬
nage in and out of stations where there is no competition between the
Great Northern and Northern Pacific and where there is no competi¬
tion with other lines as compared with the total amount of tonnage
handled hv those two lines. This is clearly indicated by Burlington
J^Thoh^f .91. now offered in evidence, which is a summarv of local and
competitive tonnage as compared to the total for each line for the five
years ended December 31, 1921. The exhibit shows that the local and
competitive tonnage from both lines together aggregated but 9.913.945
tons for the total period of five years as compared with 250,971,739
tons, or but 3.95 per cent. "
Approximately 50 per cent of the local and competitive tonnage
mav he considered as strictly competitive between the two lines, on
which basis the percentage to the total tonnage of both companies
would be less than 2 per" cent.
Thus practically all the competition will be preserved and in addi¬
tion, it can be stated, as an established condition, that in the. compara¬
tively few cases where minor elements of competition may be af¬
fected, those communities will necessarily have the benefit of the gen¬
eral standards of rates and service which w;ill prevail, upon the con¬
solidated system. Kates fixed and service established at competitive
points would largely if not completely control the rates and service
in intermediate territory in any.event, so that for all practical pur¬
poses shippers and passengers would have the benefit of competitive
conditions applying over the entire territory.
BURLINGTON EXHIBIT 30.
POPULATION OF COMPETITIVE COMMUNITIES REACHED BY
GREAT NORTHERN AND NORTHERN PACIFIC RAILWAYS.
Competitive Communities
Reached by
G. N., N. P.
and Other Lines
Not Reached by
Lines Other than
G. N. and N. P.
Duluth and Superior
Cloquet and Carlton
St. Paul and Minneapolis
Minneapolis to East St. Cloud...
Bemidji
Other Minnesota stations
Wahpeton and Fargo
Other stations in North Dakota.
Butte and Anaconda
Billings
Other stations in Montana
Sand Point
Spokane
Seattle
Tacoma
Monroe
Lowell
Snohomish
Everett
Bellingham
Sumas
Adrian & Sedro Woolley
Other stations m Washington on N. P. south of Seattle,
excluding Tacoma and Vancouver
Vancouver, Wash
Portland, Ore
Total.
138,541
6,827
615,177
4,287
7,086
25,030
53,279
15,100
2,876
104,437
315,652
96,965
58,726
854
35,664
12,637
258,268
1,750,406
95.0%
2,128
51,465
'21,498"
13,898
3,564
92,553
5.0%
BURLINGTON EXHIBIT 31.
LOCAL AND COMPETITIVE FREIGHT TONNAGE IN AND OUT OF STATIONS
WHERE THERE IS NOW COMPETITION BETWEEN THE GREAT NORTHERN
AND NORTHERN PACIFIC AND WHERE THERE IS NO COMPETITION WITH
OTHER LINES, AS COMPARED WITH THE TOTAL TONNAGE HANDLED BY
THE GREAT NORTHERN AND NORTHERN PACIFIC.
GREAT NORTHERN
NORTHERN PACIFIC
Local and
Local and
Competitive Total Tonnage
Competitive Total Tonnage
Tonnage
Tonnage
1917
1918
1919
1920
1921
993,384 30,650,814
834,799 30,948,659
1,010,730 27,390,432
1,049,623 32,948,292
816,201 19,533,134
1,142,901 22,842,151
1,078,684 24,150,782
963,241 21,389,131
1,180,401 23,448,182
843,981 17,670,162
Total
4,704,737 141,471,331
5,209,208 109,500,408
Total Great Northern
Total Great Northern and Northern Pacific 9,913,945 250,971,739
Percent to total 3.95%
45
The primary object being efficient service with lower cost to the
public and a reasonable return on the investment, it must be conceded
that any elimination of competition at unimportant points or through
unproductive territory, such as might be imagined in the event Bur¬
lington is permitted to consolidate with Northern Pacific and Great
Northern, must be held to be of minor importance and infinitesimal ef¬
fect, and without any substantial bearing upon the larger aspects of
the situation and the important final results to be accomplished. The
combination permits of the fullest competition at all the important
points served by either the Northern Pacific or Great Northern and
safeguards the future of Burlington in the important interchange
business now moving between it and these lines.
In so far as this primary requirement of paragraph (4) of section 5
of the law is concerned, which requires that'' competition shall be pre¬
served as fully as possible," the figures shown in these exhibits dem¬
onstrate that the practical intent of the Act in this particular is met*
A consolidation of Burlington with the Northern lines would undoubt¬
edly lead to further substantial benefits to the shipping and traveling
public and lower cost in transportation. The practical results of the
present alliance have been of signal success and advantage to the pub¬
lic and the carriers concerned; they have well served the territory
which they traverse and to deny permission for actual consolidation
under the terms of this Act because merely of the minute and insigni¬
ficant competitive features involved, cannot be justified in any fair
interpretation of this provision of the law.
Northern Pacific and Great Northern are largely complementary
to each other and in their relation to Burlington are particularly so.
The section of the greatest traffic development of the Northern Pacific
is west of the Missouri Kiver,.while that of the Great Northern is
east of it. This fact is emphasized by the following statement of
mileage on the east and Avest ends of each line, namely, dividing the
Great Northern at Williston, N. D., the Great Northern east end in
main and branch lines has 4,589 miles, whereas the Northern Pacific
divided east and west of Mandan, N. D., has 2,389 miles, or an excess
46
of Great Northern mileage east of this dividing line of 92 per cent,
or 2,200 miles. West of this line, Great Northern has in main
and branch lines, 3*,564 miles, as compared with Northern Pacific 4,400
miles, or Northern Pacific excess of 836 miles, or 23 per cent.
Viewing this situation from Burlington standpoint, this close asso¬
ciation of more than twenty years with these two Northern lines has
established the fact that wliile they are owners of the Burlington they
have become an integral part of the development and strength of the
Burlington; they are too important to it in revenue tonnage to permit
of segregation without seriously weakening Burlington and too impor¬
tant to the shipping and traveling public served jointly by all three
of these roads and the immense volume of trade and commerce pass¬
ing over their lines, to permit at this late date of competitive altera¬
tion of these channels. Three important illustrations will be sufficient
to indicate this conclusion: If the Great Northern should be required
to part with its interest in Burlington to a competitor of Burlington,
the loss of revenue on tonnage passing through the Twin Cities,
Sioux City and Billings gateways as shown elsewhere in this statement
and the impairment of the value of the large investments supporting
the movement through these gateways, become at once apparent. It
is manifest that the routes and channels of trade long since established
and currently passing through these gateways would be seriously in¬
terfered with and impaired; they would be curtailed by immediate
diversions to other new routes and gateways to follow the new com¬
petitive relation that might be established.
III.
CORPORATE AND FINANCIAL RELATIONS OF THE BURLINGTON, NORTHERN
PACIFIC AND GREAT NORTHERN, AND BURLINGTON AND COLORADO AND
SOUTHERN.
As already stated, the Northern lines acquired by purchase in
i901 approximately 98 per cent of the Burlington stock. This stock
was pledged under a Collateral Trast Indenture with a Trustee to se-
47
cure the payment of what became then known in the financial world
as the Collateral Joint 4 per cent bonds of the Great Northern and
Northern Pacific Companies. Those bonds matured in 1921 and were
paid by the refunding of the issue into Joint 6^ per cent bonds and
under a similar Collateral Trust Indenture secured by deposit of the
Burlington atock. Meanwhile under authority of this Commission,
Burlington had issued $60,000,000 of additional stock from surplus
accumulated during and prior to the 20-year period since the purchase,
the same proportion of Avhich was issued to the Northern Pacific and
Great Northern Companies and in like manner deposited under the
Collateral Trust Indenture. In accordance with provisions contained
in the documents underlying this transaction, holders of the Joint B-l*
per cent collateral bonds were permitted to exchange those bonds in
equal amounts into Great Northern 7 per cent mortgage bonds or
Northern Pacific 6 per cent mortgage bonds. In due time one-half of
the Burlington stock so pledged was exchanged for Great Northern 7
per cent mortgage bonds and later by the exercise of privilege to call
the remaining 6^ per cent collateral bonds at 1031, the Northern Pa¬
cific paid off approximately $9,000,000 of them; the remainder were ex¬
changed for Northern Pacific 6 per cent bonds, so that at the present
time practically all the 6^ per cent Joint bonds have been canceled and
the Burlington stock owned by these companies is pledged one-half
under Great Northern mortgage bonds and the other half imder
Northern Pacific mortgage bonds. In the case of the Great Northern,
the mortgage bonds secured by Burlington stock do not mature for fif¬
teen years; in the case of the Northern Pacific, the bonds do not ma¬
ture until 2047, but are subject to call on and after July 1, 1936, at a
premium of 10 per cent.
These facts are stated in order that the Commission may have be¬
fore it the close intercorporate relationship between these three com¬
panies so far as Burlington is concerned and the vital interest the
Northern companies have in the maintenance of the earnings power of
Burlington. Excepting for a few years after this purchase was made
in 1901, Burlington has been able to make dividend payments on its
48
capital stock to provide annual distribution sufficient to pay the in-:
terest upon the joint obligations issued by the Northern lines for the
purchase of the Burlington, and that policy is expected to continue be¬
cause Burlington under its present relations with the Northern lines
not only benefits greatly from this association but is in large meas¬
ure thereby enabled to pay this return. These facts are • stated. to
throw into sharp contrast the remarkable consequences which would
follow if the tentative plan of the Commission as outlined in proposed
systems 14 and 15 should be finally adopted, whereby Great Northern
would be separated from Burlington and associated with the Chicago,
Milwaukee & St. Paul Kailway Company, one of Burlington's prin¬
cipal competitors. If this plan should be adopted and, should be made
effective by the voluntary action of the various companies it would
indicate the approval of a situation in which the principal competitor
of the proposed combination of Burlington and Northern Pacific
would continue for many years to own substantially one-half of the
Burlington capital stock, while at the same time Burlington would be
deprived of a large volume of revenue through tonnage interchange
which it now enjoys with the Great Northern.
Burlington owns 1^0,876,200 of the preferred and common stock
of the Colorado and Southern Kailway Company, which is 64.3 per
cent of the total issues outstanding. This stock has been owned by
Burlington for many years, substantially all of which having been
acquired in 1908; it is pledged under the Burlington General Mortgage
and a further lien upon it is created by the Burlington First 'and
Refunding Mortgage. The interchange relations of the Colorado and
Southern and Burlington are of great importance to each and mutually
advantageous. Coal originating on Colorado and Southern southern
Colorado lines, as well as coal in northern Colorado, grain, fruits and
vegetables and the output of a number of large and important beet
sugar factories find their way eastward over Burlington and in north
and south direction, as already pointed out, there is a growing con¬
tinuous movement between Northern Pacific and Great Northern
through the Billings gateway and between Burlington lines north of
49
Denver via Colorado and Southern, points in northern Colorado and
points to the south. Under this close alliance of now nearly fifteen
years, the physical condition of the Colorado and Southern has been
distinctly improved and operating results continue to show favor¬
able gain. Burlington through its large stock interest has a natural
interest in the upbuilding of this property so as to not only increase
the interchange hut also to earn a return on the capital investment.
Burlington General Mortgage bonds were issued to reimburse the
treasury for the purchase of the Colorado and Southern stock.
The Santa Fe system is a competitor of Burlington between Colo¬
rado and the Missouri River and east thereof. Under the proposed
alignment of Colorado and Southern with Santa Fe the anomalous sit¬
uation would arise of Burlington *s stock interest continuing in the
Colorado and Southern and pledged under Burlington mortgages to
secure bonds issued to pay for it while losing a large proportion of
the competitive interchange traffic which would naturally he routed via
Santa Fe rails under the new association. The administration of
Burlington interest in Colorado and Southern would become a puzzle
in the effect upon the policies of management, in the continued devel¬
opment of the property and upon the personnel of the official staff,
which would be difficult and serious to deal with. In both of these
situations the mortgages referred to contain provisions under which
the stocks held by the corporate trustees may, under conditions satis¬
factory to the respective trustees and bondholders, perhaps be sold or
released by substitution of other securities of equal value; but even
though the raffroad companies through their wndely scattered, stock¬
holders should acquiesce in the plans proposed by the Commission,
the probability of trustees or bondholders accepting these speculative
exchanges seems certainly remote. A situation of this kind does not
square with the progressive intent evidenced by this law. and while
this law is on its face voluntary, the weight of findings of this charac¬
ter by this Commission will seriously embarrass and restrict ;the
future development of these properties. No such harmful nor destruc¬
tive disorganization could have been contemplated by the framers of
So
this law and full consideration of all the facts that are shown at this
hearing will not lead this Commission to mature its tentative sugges¬
tion into the final plan which the law requires it to adopt.
IV.
systems 14 and 15.
These proposed systems not only contemplate the segregation of
this great system hy assigning the Great Northern to the Chicago,
Milwaukee & St. Paul, but also the Colorado and Southern to the Santa
Fe. The Trinity & Brazos Valley which is the connection of the Colo¬
rado and Southern lines between north and south Texas and which
was built in the first instance by the Colorado and Southern for that
purpose, is assigned to systems 17 and 18, or apparently joint to the
"Southern Pacific-Rock Island" and "Frisco-Katy-Cotton Belt" sys¬
tems, as proposed.
The seriousness of these suggestions although resting only on
voluiitarj'' action so far a§ the law is now concerned, cannot be under¬
estimated j indeed, if matured into the final plan to be adopted under
paragraph (5) of section 5 of the lav^, they promise disorganization
and confusion because of the weight given to the final and mature con¬
clusions of this expert tribunal.
Heavy Loss op Bukdington Interchange.
The effect on Burlington of depriving it of the support of Great
Northern is not all. Burlington is seriously affected in addition by
the proposed merger of some of its more important connections into
systems competitive with it.
Burling-ton average annual interchange for the five years 1917 to
1921 inclusive with the St. Louis and San Francisco at Kansas City
and St. Louis amounted to 769,067 tons, upon which the average an¬
nual Burlington revenue amounted to $2,108,734.
Burlington average annual interchange Avith the Missouri, Kansas
51
& Texas for the period stated amounted to 528,468 tons, returning an
average annual Burlington revenue of |1,629,872.
Burlington annual average interchange with the Kansas City
Southern for the period named, aggregated 478,169 tons, with an aver¬
age annual revenue of $1,171,208.
On interchange with the Missouri Pacific, Burlington averaged an¬
nually 710,930 tons, with an average annual revenue of $1,915,595.
With Colorado and Southern the average annual interchange for
the period stated was 1,165,847 tons, with an average annual revenue
of $3,355,914.
These figures have been picked out from the records to show the
importance of these connections to Burlington revenue and princi¬
pally relate to Burlington's interchange with its important connec¬
tions at St. Louis, Kansas City and Denver.
During the same 5-year period the average tonnage interchange
between Burlington and Great Northern was 2,508,089 tons, returning
to Burlington an average annual revenue of $8,470,932.
During the same average period Burlington interchange revenue
on forwarded and received business at Chicago gateways amounted
to $14,134,569, at St. Louis gateways, $4,741,308, at Kansas City
gateways $7,973,210 and at Denver $6,746,739.
On Burlington Exhibit 18 it is shown that on the average during the
5-year period in question, Burlington interchange revenue tonnage
aggregated 52.5 per cent of the total and in terms of freight revenue,
Burlington earned 54.9 per cent of total freight receipts.
Without seeking to trace other probable ultimate consequences, the
figures at these large interchange points have been produced to show
the importance throughout to the Burlington system of maintaining
the strength of its interchange revenue and the evident consequences
which will result if by new alignment of connections into competitive
lines the volume of this interchange is seriously curtailed.
The St. Louis and San Francisco line, from these figures, is a very
important connection to Burlington at Kansas City and St. Louis.
52
The tentative plan of the Commission proposes to consolidate that line
and the St. Louis Southwestern, with which Burlington also inter¬
changes at St. Louis, with the Chicago & Alton.
The Missouri, Kansas & Texas is also an important connection of
Burlington at Kansas City, St. Louis and Hannibal, Missouri, and is
placed in the same system.
As a result these three southwestern connections and principally
the St. Louis and San Francisco and M. K. & T., will be extended
through by Chicago & Alton rails to Chicago, Peoria, Bloomington,
Springfield and other eastern line connections.
System No, 19 as proposed by the Commission contemplates the
consolidation of the Kansas City Southern, Missouri Pacific and other
southwestern lines of importance with the Chicago & Eastern Illinois,
thereby carrying these important southwestern lines through to Chi¬
cago, St. Louis and other eastern gateways.
System No. 16 proposes the consolidation of the Colorado and
Southern and Fort Worth and Denver City (now a part of the Colorado
and Southern) with the A. T. & S. F., also the D. & B. G. and the
Western Pacific.
The net result of these changes is to disrupt the long-standing rela¬
tions between Burlingdon as one of the lines reaching St. Louis, Kansas
City and Denver, and substantially all of its connections at those
large gateways; it brings those connections through by competing
lines with Burlington to its eastern termini, with the inevitable conse¬
quences that Burlinglon interchange tonnage at these junctions will
not increase but rapidly decrease. It is not claimed that all this ton¬
nage will be diverted, but following the established rule that the
originating line being in a position to transport freight through to
destination over its own rails and by a reasonable route, cannot be
denied the long haul if it so adjusts its tariffs to control it, the in¬
evitable tendency will be for these competitive systems thus extended
through these great western gateways to solicit and by car supply,
train service and otherwise seek to control the through movement and
ultimately as rapidly as their selfish interests permit so adjust their
53
tariffs as to confine tlirougli traflSc as largely as possible to their own
long hanl.
In the tentative plan proposed by Professor William Z. Ripley, at
the instance of the Commission, the importance of this sitnation was
recognized. On page 559 of his plan, he considered the consequences
of basing these transcontinental and Gnlf-Sonthwestem systems upon
Chicago, and said:
"The price paid is avowedly a heavy one; for the open market
for choice of routing at the Missouri River gateways and at the
Twin Cities is bound to .be restricted by the provisions of these
corporatively unified through routes. But the advantage on the
whole seems to compensate for the loss in flexibility which must
necessarily result. The fact that the Gulf-Southwestern lines have
also been projected into Chicago xmder this plan is also by no
means immaterial.*'
Again on page 598, in discussing the consequences of the violent
disruption of long established relationships and in speaking of the
stub end of the Chicago, Milwaukee & St. Paul to be left at the. Mis¬
souri River, Professor Ripley says:
"The stub end at the Missouri River, as it has already ap¬
peared, must look for its livelihood from western interchange
" with either the Union Pacific or the Burlington. As a preferred
connection with the latter and for many years as a close second
.to the North Western for interchange. with the former, this St.
Paul stub at Omaha would of necessity dry up were these traffic
interchanges to be diverted elsewhere. And the same thing is
true at the Twin Cities."
Again, in speakmg of the obvious consequences of breaking up the
present alliance of Burlington with Great Northern, Professor Ripley
says:
"Breaking up the existing Hill combination, and allying the
Burlington solely with the Northern Pacific, might well deprive
the Great Northern of so much business northbound from the
Burlin^on River line from Chicago as to jeopardize its welfare.
No division of traffic could hope to be constantly maintained for a
long term' of years; but during a transitional period, while the
various systems are getting upon their feet, some protection to
the Great Northem-St. Paul ought to be afforded by such a
contract."
54
If the loss of Burlington tonnage at the Twin Cities to Great
Northern might **jeopardize its welfare,*' it might properly he asked
whether the loss to Burlington of Great Northern interchange at the
Twin Cities, Sioux City and Billings, with the added loss to Burling¬
ton of interchange tonnage at St. Louis, Kansas City and Denver,
and all the other incidental and less apparent but harmful effects
which follow (such as the assignment of Wabash to Union Pacific
from Omaha to St. Louis), will not certainly jeopardize Burlington
welfare. ' 1 ' "
The conclusion to be drawn from this evident disruption of Bur¬
lington's valuable interchange is that the Commission in developing
the tentative plan for western territory has either gone too far or has
not gone far enough.
To illustrate: Although Santa Fe and Bock Island operate through
Kansas City gateway, Burlington connects there with St. Louis and
San Francisco, Missouri, Kansas & Texas, and Kansas City Southern^
and is able to compete for southwestern business through these valu¬
able connections. The existence of those connections forces Santa Fe
and Bock Island to keep this gateway open in order that they in turn
may interchange with those southwestern lines. While it is obvious
that through lines solicit and adjust train service to secure as much
of the through traffic to their ovm long haul as possible, their selfish
interest will not now permit the effective closing of the gateway. But
when these southwestern lines are projected through Kansas City by
efficient and practical lines of their ovm, such as the Chicago & Alton,
Missouri Pacific, and Chicago & Eastern Illinois, the gateway largely
disappears so far as through competitive traffic is concerned, and lines
like Burlington ending at Kansas City are left vdth unfriendly con¬
nections in all through and competitive business. To use the language
of Professor Bipley (page 598), this Burlington stub at Kansas City
would of necessity dry up were these traffic interchanges to be di¬
verted elsewhere.'' The influences surrounding a situation of this kind
are too well understood to require further explanation.
Similarly at Denver so long as Denver & Bio Grande with Western
55
Pacific and Santa Fe operate west from Denver, the Union Pacific is
compelled to leave Denver gateway open for competitive business that
D. & It. G. and Santa Fe can take from or deliver to Burlington there.
This has left this gateway open for all traffic originating east of Colo¬
rado junctions and destined California, and also for traffic originating
west of the Missouri River destined to points in Utah; as to this traffic,
having origin as stated, it may route Burlington via Denver and D. &
R. G. or Santa Fe or Union Pacific to California, or via D. & R. G. or
Union Pacific to Utah, On the other hand, Utah traffic originating on
or east of Missouri River, Sioux City to Kansas City, routes via Bur¬
lington and D. & R. G. to Utah, hut via Union Pacific only from Council
Bluffs. If D. & R. G. and Western Pacific are assigned
to Santa Fe as contemplated in plan No. 16 of the Cpmmission, the
effect on Burlington on both this California and Utah traffic becomes
immediately evident.
Using Professor Ripley's language again (page 559), "the open
market for choice of routing * * * is bound to be restricted by the
provision of these corporatively unified through routes."
The proposed combination of Great Northern and Chicago, Milwau¬
kee & St. Paul will in like manner influence as much tonnage from Bur¬
lington at the Billings, Sioux City and Twin City gateways as the
natural interests of that new and competitive combination may permit,
and serious loss to Burlington in revenue tonnage is inevitable.
The Commission has had occasion in numerous instances to con¬
sider the provision of section 15 of the Interstate Commerce Law re¬
lating to the power to establish through routes and joint rates, as well
as the limitation upon such power. Paragraph (4) of that section
provides in part—
"In establishing any such through route the Commission shall
not (except as provided in section 3, and except where one of the
carriers is a water line), require any carrier by railroad, with¬
out 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 pro¬
posed through route, unless such inclusion of lines would make
56
the througli route luireasonably long as compared with another
practicable through route which could otherwise he. established,"
etc.
- Under this provision of the la.w the Commission, has in several
cases permitted the cancellation of through joint rates which short-
hauled the line having through rails, one notable decision, being that
of the Ogden Gatewag Case, 35 I. C. C. 131, which permitted the Union
Pacific, to cancel routes and joint fares in connection with the D. &
B. G. at the .Ogden gateway, the finding being that Union Pacific had
the more direct route over its own line. The Commission in that case
permitted the cancellation to be made, holding that as it would not
have established such a through route in the first instance, it could not
require the maintenance of it against the situation of the carrier which
was short hauled. -
Under this situation, therefore, the general breaking down of gate¬
ways in western territory, all of which are now important interchange
points- for Burlington, leaves the proposed new through systems at
liberty to discontinue, such through routes and joint rates now in effect
on Burlington lines as from time to time their, individual and special
interests may permit and which, excepting where the proposed through
route is unreasonably long or emergency conditions exist, the Commis¬
sion is powerless to prevent.
It is for these reasons that the assertion has been made that the pro^
posed plans of the Commission either go too far or do not go far
enough. In proposing the segregation of Burlipgton. from one of its
two most important alliances and through connections, the Great North¬
ern, depriving it of Colorado, and Southern, and at the same time
seriously curtailing its important interchange at all other large west¬
ern gateways by incorporating its principal connections into through
systems and thereby into competitors of the Burlington, this plan
threatens isolation - of Burlington for which no similar parallel is
found in the whole plan. If it should be the conviction of the Com¬
mission that the long-standing conditions of interchange at these
great gateAvays should be disrupted and. through, competitive systems
57
created, basing snbstantially all upon Chicago and' St. Ijouis, then the
preservation of Burlington strength and opportunity to grow requires
that it have a fair share in the building of through systems via these
important gateways so that it may continue to enjoy its fair share
of the traffio moving through them.
It is a serious mistake to plan these great western systems so
largely in terms of east aiid west traffic, disregarding the enormous
growing importance of the north and south traffic. The Burlington
interchange figures for Kansas City and St. Louis before shown, are
an indication of the great volumes of traffic moving to and from the
southwest and the enormous groAvth of traffic via the Panama Canal
adds daily to the need of a line situated like Burlington to either have
its own rails to participate in that traffic or open connections for that
purpose. It is not necessary to point to the great moyement of traffic
through the Canal, nor predict the future influence of that new water
route. Regardless of the Canal, the growth in recent years of move¬
ment of central western grain for export via Gulf ports, as well as the
increasing movement of domestic commerce via those ports and eastern
territory, add additional strength to the demand that a road like Bur¬
lington cannot continue to prosper if it is denied free connections to
the Gulf or its own rails for that purpose. The same argument applies
to other roads that may be left in similar situation, particularly as
two of the great western systems proposed, namely, system'16, the
Santa Fe; and system 17, the Southern Pacific and Rock Island, will
enjoy, as the Santa Fe now does, access to both the Pacific Ocean and
the Gulf of Mexico.
Fair treatment of each western system demands similar oppor¬
tunity to share in these growing movements of traffic, otherwise the
drying up process of gateways now in active interchange operation
will follow. It is submitted, therefore,' that if these important gate¬
way interchanges are to be "dried up" a plan in western territory
must be adopted proposing larger systems and an outlet for each from
Chicago and St. Louis into the southwest and the Gulf, as well as to
transcontinental territory and ports on the Pacific Ocean.,
58
In conclusion, if one of the major purposes of this new law was to
propose the consolidation of so-called "weak" lines with those of
greater strength, the strength and ability to grow of the stronger lines
must he carefully safeguarded and assured. Tys cannot be done by
producing a situation which takes away or dries up important volumes
of traffic which underlie the vigor and strength of old and well estab¬
lished lines. It can only be accomplished by preserving that strength
unimpaired so as to enable lines of that type to consider in a spirit in
keeping with the progressive design of this law, reasonable plans in
connection with other like systems for the absorption and consolida¬
tion of other mileage less fortunately situated.
Laeger Groups for the Western Territort.
Q. (By Commissioner Hall.) Mr. Holden, I would like to ask you
to elaborate somewhat further the thought expressed near the end of
your statement with reference to the adoption in western territory
of larger systems having an outlet for each from Chicago and St.
Louis into the southwest and the Gulf, as well as to transcontinental
territory and ports on the Pacific Ocean!
' A, It seems to me, Mr. Commissioner, that I have already indi¬
cated the basis of that thought, and that, as a principle, this western
mileage ought to be—and I am satisfied that it ca^j. be—so associated
as to give equal competitive opportunity to each "system to the Gulf,
as well as to the Pacific Ocean. It is perfectly obvious that we are in
a situation of competitive movement of traffic, affected by the Panama
Canal and water transportation via Gulf ports, as well as transcon¬
tinental traffic, that calls for a road like the Burlington, serving a
great interior producing territory, and standing at the gateways of
aU of the lanes of traffic, not to be isolated by being assigned to a single
part of the territory, such as system 14 may call for, and then have
its gateway interchanges so curtaUed, as I have indicated, and thereby
largely be prevented from the opportunity of participating in the
59
movemeiit of traffic, whether it go Golf wise, or whether it go Pacific
Coastwise.
Secondly, with the steady and continued growth of all this inte'.-
mediate territory and the interchange of commodities, unless there
are to he open gateways, and a fair, even show for interchange—
speaking, largely, now, of the Southwest—^the Burlington cannot pros¬
per. It must have, in the absence of those even opportunities, which
are all it asks, its own rails into that territory. The State of Texas
is bigger than the whole of Germany, and, according to the last fig¬
ures, it has about 7 per cent of the population. These great railroad
systems are not built, and are not administered only for a year or
two, but over long periods, and it is an indication of what is in the
front and in the future in this great western territory.
Now, if it is fair basis that even, competitive opportunity ought to
be afforded, and if we start out with the proposition that the Santa
Fe is already both at the Gulf, and at the Pacific Ocean, and that the
Commission proposes the Southern Pacific-Bock Island combination,
having equal access to both of those destinations, it seems to me that
the rest of the important mileage in the west is entitled to equal con¬
sideration.
In order to test that out, we have had some figures prepared, and
have taken the total accumulated figures of revenue and traffic of all
the western railroads, and, as a fair measure, divided that total into
four, which indicates that possibly it might mean that the western
mileage could be associated or grouped into four western systems
on the basis that I have indicated. It has been suggested that it would
make systems too large, and too unwieldy.
In order to test that, we have compared the Western Group with
the New York Central System and the Pennsylvania System, both of
which the Conunission, in its tentative plans, has approved, and, sec¬
ondly, both of which have been operating for upwards of three-
quarters of a century, and both of which are very efficiently and well
operated railroads. The result is that, dividing the western territory
into four systems, there is still more managerial ability required in the
60
east, as tested "by any of the essentiMs, than any of snch. western
systems might call for.
I would like to read some figures into the record as illustrating this
point.
Taking one-fourth of all the western lines, the railway operating
revenue would he $412,000,000, compared with $472,000,000 on the New
York Central System and $458,000,000 on the Pennsylvania. With
regard to expenses, this theoretical one-fourth of Western mileage
expenses would he $274,000,000 compared with $341,000,000 on the
New York Central System, and $357,000,000 on the Pennsylvania Sys¬
tem; so there are less revenues and less expenses.
With regard to net, the net would be $137,000,000, compared to
$131,000,000 for the New York Central, and $100,000,000 for the Penn¬
sylvania. We would have a heavier burden of net in the West, but
that, perhaps, would not be difficult to deal with.
Testing that out on the basis of quantity of service, which is obvi¬
ously one of the important features to consider, in considering whether
systems such as I have indicated would be too large to be efficiently
handled, the freight train miles on this theoretical Western system,
including a proportion of mixed mileage, would be 69,000,000, as com¬
pared to 65,000,000 to-day on the New York Central, and 62,000,000 on
the Pennsylvania; For passenger train miles, including a portion of
mixed, on this Western system it would be 62,000,000 miles; New York
Central 71,000,000 miles; Pennsylvania, 64,QOO,000 miles. The total
train miles correspondingly break about even, 132,000,000 in the West,
136,000,000 on the New York Central, and 126,000,000 on the Pennsyl¬
vania.
In the matter of tons of revenue freight originating on line, in the
West that would be 115,000,000; on the New York Central, about
126,000,000, and 183,000,000 on the Pennsylvania. I should add that
these are figures for the year ended December 31, 1917.
The total ton miles of revenue and nonrevenue freight to be ad¬
ministered and handled: Western system, 40,000,000,000; New York
Central system, • 49,000,000,000; Pennsylvania system, 50,000,000,000.
61
Passengers carried, in the Western system, 70,000,000; New vYork
Central, 148,000,000; Pennsylvania, 198,000,000.
Passenger miles, in the West, 3,875,000,000; New York Central,
5,455,000,000; Pennsylvania, 5,176,000,000..
Number of locomotives: This theoretical Western system would
have 5,995 locomotives, whereas the New York Central has 7,267, and
the Pennsylvania 7,172.
Tractive capacity in pounds, in the West, 194,000,000; New York
Central 246,000,000; Pennsylvania, 270,000,000: *
^ Number of freight cars, an important feature: In the West, this
system would have 206,000 freight cars, whereas the New York Cen¬
tral has 291,000, and the Pennsylvania 270,000, and so the figures run.
I would like to file this sheet. •
But, coming down, now, to the average number of employees, an¬
other important measure, this Western system would employ 169,755
men, whereas the Now York Central had this year 196.047; the Penn¬
sylvania 221,074.
Finally, with regard to the wages paid, the Western system would
represent, at that time, $167,000,000; New York Central. $206,000,000;
Pennsylvania, $237,000,000.
62
(The statement referred to is as follows):
COMPAEATIVB STATISTICS.
December 31, 1917.
One-f our th all New Y ork
"Western Lines Central System
Total miles—all tracks. 46,805 34,216
Railway Operating
Revenues $412,166,277 $472,751,660
Railway Operating Ex¬
penses 274,572,735 341,731,011
Net Revenue from Rail¬
way Operation 137,593,542 131,020,649
Freight Train Miles
(inc. Prop, mixed). 69,394,068 64,963,214
Passenger Train Miles
(inc. prop, mixed). 62,733,447 71,264,621
Total Train Miles .... 132,127,515 136,227,835
Tons Revenue Freight
Originating on Line 115,293,122 126,189,207
Total Ton Miles (Rev.
and Nonrevenue)... 40,016,221,176 48,806,143,170
Passengers carried.... 70,758,067 148,709,375
Passenger Miles 3,875,008,385 5,455,939,104
Number Locomotives.. 5,995 7,267
Total Tractive Capacity
(pounds) 194,293,747 246,984,878
Number Freight Train
Cars 206,007 291,638
Aggregate Capacity
Freight Cars (tons) 7,997,057 11,995,149
Passenger Train Cars. 4,805 7,272
Locomotive Fuel Tons. 14,678,669 15,988,772
Average Number Em¬
ployees 169,755 196,047
Wages $167,212,930 $206,083,186
Pennsylvania
System
25,774
$458,276,335
357,446,455
100,829,880
62,104,285
64,688,475
126,792,760
183,179,154
50,004,945,694
198,086,035
5,176,182,538
7,172
270,441,840
270,035
13,647,632
7,290
16,919,147
221,074
$237,182,001
In other words, it seems to me that the test of systems that may be
competently handled is not in the extent of geography, but, much
more important, in the density of tonnage, density of passenger travel,
number of employees, and features of that kind, quantity of train
63
miles, etc. Therefore, the conclosion seems to me to be clear that
there is no objection whatever growing out of possible unwieldy size
in constructing western systems, which would have the outlets that I
speak of in western territory.
It seems to me the so-called Harriman System, prior to the deci¬
sion of the Supreme Court, vras as excellent an illustration as can be
found of eflScient and admirable management of a very large mileage,
extending over a very wide extent of territory, and it became a ques¬
tion of proper administration in working out the system of operation,
the structure of the staff; and I think there are some Santa Fe people
here who will agree with me, that the Santa Fe to-day is about as ex¬
tensive in geography as any western systems that I have suggested,
and that the Santa Fe management is entirely adequate and admirable
for the handling of this widely distributed mileage. The Southern
Pacifio-Rock Island combination proposed by the Commission involves
a spread of territory from Chicago to New Orleans and San Fran¬
cisco, and the north coast, and so, by precedent and example, as well
as by the figures, I have shown that the railroad management to-day
has already disposed of that question.
Gross-Examination,
Q. (By Professor Ripley.) Mr. Holden, your argument, in the
main, as I understand it, proceeds upon the assumption that if you
establish a necessary relationship between A and B, and O and B, that
would produce a necessary relationship between A and C. In other
words, to put it in another shape, if a certain party is eligible for
marriage to a certain man, and another certain party is eligible, that,
in itself, is an argument for the marriage of the man to both?
A. No; I would say that where A, B, and C are all married, that
they ought not to be divorced. (Laughter.)
Q. That was the admission which I hoped to bring out. Is that
not, in effect, the basis of your argument? If you establish—and
please understand me correctly, I say this not necessarily to over-
•64
thrOT^ yotir argument,-but to briug out its^ •meaning—^Have you nut
placed the major relianbe for your argument iipon that logid .
A. Yes, sir, Professor Ripleyj if you will let me just state it this
way. What we want to do here is to accomplish something. We have
a" practical'situation: We have a system here that has been sigrially
successful, and, as I have had very little to do in making that success,
I have no hesitation in boasting of it. It is the result of the efforts of
some of the great minds and names in the railroad world. When I
examined and'oonsidered, and studied, with the help that was given
me, the consequences of these suggestions, it seemed to me that we
were threatening to disrupt and destroy the results of 75 years of
great, hard, int^ligent work. ,;■ >
Now then, that is the basis of my argument in the main. We have
r ' - } "
something that is too valuable, in this railroad situation, to destroy
or to impair, and if the major purpose of this law is to find a way to
absorb the weak lines, as we have always understood it to be, we are
willing to take our share, but we must not have the bloOd run out of
US'from all our pores first, because \ve will not be strong enough to
do so in that event; so it is an argument from convenience and from
protection, largely. We want to try to participate in a practical dem¬
onstration of the wisdom of this law, but we must build from what we
have, instead of retrograding and starting all over again; of, if I may
do so without offense, tn use your own thought, in one of your para¬
graphs, we ought not to go back and wait for a period while the "new
systems are getting on their feet. ' Perhaps they will, not survive, but
those that are strong to-day ought to be utilized and built on, as they
are. .
Q. Would it be your contention that the prohibition of the North-
em Securities [decision Was intended to be considered here f "
A. I would not say not to be considered, Professor Bipley, but in
the first place, this law throws'a new and a broader aspect on .'the
whole, situation, and secondly, a very significant change has'occurred.
The Chicago^ Milwaukee St. Paul has built throughout almost that.
^65
whole territory, and introduced a neAv factor,, which alters the previ¬
ous situation. - -
Q. Why did the St. Paul build throu^ch. to the Pacific-Coast?
A. I tliink you would have to ask them.
Q. Would you venture an opinion on that?
A. I Avould not undertake to say. I suppose they thought it was
an excellent thing to do, and they Avanted to share in the traffic, ^ind to
join in upbuilding the country.' ' , .; , . /
Q. Was there brought to your attention al all,—or perhaps this
was prior to your connection" Avith the Burlington" in that AVay—^was it
brought to your attention, or do you know of its- having been brought
to the attention of the Burlington, that the first offer for a connection
for these tAvo Northern roads to-Chicago was the purchase of the St.
Paul? . - , - :
A. I have understood that in substance, yes.'
Q. That Avas a first choice ? . , !
A. What I would have to say about that would be hearsay. Mr.
Elliott, I think will be on the AAutness stand. It is. a question of who
was making the choice. I belieA'^e there was one important gentleman
. * ' I
who thought St. Paul, and another thought Burlington, and if we finally
were chosen, we were not dissatisfied.
Q. But that would appear to indicate that at that time the St.
Paul would have been a feasible connection for, at least, one of these
roads, Avould it not? ... . ,
} ' * 4
A. I think so. ■ . .
Q. Another basis of your ar^ment—and I say this again,-.let me
repeat, not to overstate it, but merely "to bring " out" its implica¬
tions—is that certain established relationships which have groAvn up
since 1901 are the defense for the existing conditions. Does not the
question necessarily arise Avhether the creation of those new conditions
was in effect in compliance ^Auth the prohibition of the Supreme Court
in the Northern-Securities case, or otherwise? What was the decision
66
in that case! Was it not that the two Northern lines ought to con¬
tinue actively to compete with one another!
A. I should say broadly that was the result of the decision. I have
not read it recently.
Q. Does this growth of interrelationship between the two lines,
which has been set forth here, indicate that that purpose has been
fulfilled during the last 15,16 or 17 years !
A. Without question, in my humble opinion, because following
that decision the Northern lines assiduously obeyed it. The Burling¬
ton's status was not involved in the decision, and ever since the situ¬
ation has existed and continued, it creates, in my lay mind, the belief
that we have the right to say that it is now the status of an approved
relationship, if it ever was in doubt, but I assert that it never was in
doubt. It was not dealt with or exploded in the Northern Securities
case. The opportunity was there for the Supreme Court, however, to
have commented upon it if they felt the law was in any way being
violated.
Q. Might not the question arise, however, in deliberation whether
there was an essential difference between combining two roads through
their common ownership from above or combining those same two
roads through their common ownership of a road, so to speak, below!
A. It might be discussed. But it certainly would seem to me that,
if tliere was ground for the thought that this arrangement was in
violation of the Sherman Act, it not only would have been developed
then, but it ought to have been developed before, and now, after all
these years of acquiescence and the building up of these three roads
in this manner, it seems to me with the broad latitude which this
Transportation Act now gives the Interstate Commerce Commission,
and the evident change in the policy of the law that consolidations are
now to be promoted, that the Sherman Act situation, so far as these
properties are concerned, is obsolete.
Q. One further point, and I shall be through. I understand you
and I are in substantial agreement that an effect of this consolidation
67
is likely to be a limitation of free interchange at the different gate¬
ways 1
A. Yes, sir.
Q. And you instanced the possible drying up of stubs at vari¬
ous places—Sioux City, Billings, Kansas City, etc. Does not the
record show, appearing right here in your tables of interchange, that
such a drying up of interchange at stub ends has in effect occurred at
St. Paul, for instance, with the other lines? I may misread those
tables, but a superficial examination seems to indicate that while inter¬
change has rapidly increased between the Burlington and the two
Northern lines that interchange between those two Northern lines and
others between Chicago and St. Paul which formerly enjoyed a sub¬
stantial part of that traffic, has substantially dwindled. Now, those
stub ends are drying up. Isn't it, in other words, a next effect of any
consolidation? Then, haven't we just got to weigh the advantages
here and there?
A. I would not concede the first part of your statement without
an analysis, and, of course, 40 per cent is not an inconsiderable part
of a hundred, and the three roads that are in question here are par¬
ticularly the two Northern lines occupying so much of the northwestern
territory. The St. Paul gateway is wide open. It is not closed, and
for the same reasons I explained at Kansas City, because there are
other railroads coming to St. Paul, and the interests of the Northern
Pacific and the Great Northern require them to keep their interchange
up with roads like the Chicago & Northwestern and the Chicago Great
Western, the drying up process does not exist and has not existed,
and it would not exist at Kansas City except as you carry through
all the connections on their own rails. The St. Paul gateway is not
dried up. The Northern Pacific as well as the Great Northern inter¬
change is very large.
Q. Unless your figures are wrong, I think by your figures at St.
Paul that the drying up process is in evidence.
A. Of course, the Burlington, the Northern Pacific and the Great
Northern work preferentially together, but a further examination of
68
the figures will show, as I have said, that it has not excluded any of tho
other lines, and the gateway is open, because joint through rates
apply via other lines to Chicago as well as via the Burlington, and
there is a very large interchange between the Northern lines and other
St. Paul-Chicago lines.
Q. That necessarily leads to another question. You have spoken
of the requirement in the statute that established routes and channels
of trade and commerce be maintained. Now at a number of places in
your brief you indicate that a ditferent alignment between these prop¬
erties would very greatly disturb that existing relationship so far as
it consists of tonnage interchanged. Does not that show that there is
a very large element of agreement and understanding in all this inter¬
change; in other' words, that we are dealing here not wholly with a
natural situation, the natural flow of traffic, but that flow of traffic is
to a very considerable degree artificial as determined by an alignment
between these companies ?
A. No; I would not agree Avith that. I don't know quite what you
mean by ''artificial." Traffic flows as it is directed. It is solicited
under the natural spur of incentive by each railroad and under the
demands that there be competition. The shippers route their traffic
very largely as they desire or as they are solicited to, and it has never
occurred to me except in minor instances that we may hear of it,
that there is any artificial flow of tonnage.
Q. This is what I mean. On page 23 of your brief you say: "If
some other line east of St. Paul is substituted for the Burlington, the
Great Northern will naturally place its coal orders at mines served
by that road and will also divert from the Burlington this large vol¬
ume of "company freight." That admits the power of a road,—and
I am not speaking alone of the Burlington here but of a general condi¬
tion—to create an artificial channel.
A. No,. Let me answer that, please. The Chicago, Milwaukee &
St. Paul owns the Chicago, Terre Haute & Southeastern Eailroad
Avhich serves very important and excellent coal mines; and what I
meant to convey there in that statement was that if the St. Paul-Great
69
Northern combination would be made, I would assume at once that
the volume of coal required for use on the Great Northern line would
leave the southern Illinois lines of the Burlington and go to the Chi¬
cago, Terre Haute & Southeastern, as it properly should if they were
joined together as one railroad under one management. That is not
artificial. It is **at just what grocery store will a man trade?"
Q. Now so far as company freight is concerned, suppose we turn
to page 37 of your brief: "If the Great Northern should be required
to part with its interest in Burlington to a competitor of Burlington,
the loss of revenue on tonnage passing through the Twin Cities, Sioux
City and Billings gateways as shown elsewhere in this statement, and
the impairment of the value of the large investments supporting the
movement through these gateways, become at once apparent," etc.
The reason there apparently is—and the same thing crops out again
on pages 42 and 43, and I quote the words on page 43: "and the evi¬
dent consequences which will result if, by new alignment of connec¬
tions into competitive lines, the volume of this interchange is seriously
curtailed.''
And on page 42: " The effect on Burlington of depriving it of the
support of Great Northern is not all."
That implies the fact, which is well known, is it not, in the railroad
business, that the ability to route the traffic at connecting points is, to
a considerable degree, a matter of arrangement between them?
A. It is a matter of transaction of business between business in ¬
stitutions.
Q. And in respect of traffic?
A. In respect of traffic—there is nothing artificial about it under
the policy as shown in Section 15 of the law, unless it involves unduly
long lines.
Q. Then, why should you fear that a segregation of the Great
Northern at any junction, the segregation of one road from another,
would so seriously affect its revenue? The mere fact it is withdrawn
from the system then means it will then more freely choose its routing?
70'
• A. Np., If you turu a connection into a competitor, you start a
new line of causes and events that is as obvious and old as the condi¬
tions of trade in the world. Now, the Great Northern is a connection
of the Burlington at St. Paul, Sioux City and BiUings. It is not a
competitor, hut if the Great Northern becomes amalgamated with, the
Chicago, Milwaukee & St. Paul, which is a Burlington competitor, it
then becomes a competitor of the Burlington, and the situation is com¬
pletely changed. Therefore, it would be obvious that the new consoli¬
dated company would seek to retain, and lawfully with the right to
retain, on its own through rails as much of the competitive traffic as
it could get hold of, and it certainly would take as much away from
the Burlington as it was able to.
Q. If that be the case, may it not be that you are quoting an inter¬
change of traffic here as an argument for support of the continued
relationship, when, as a matter of fact, it is the present relationship
which to some considerable degree determines the volume of that in¬
terchange. As cause and effect are interrelated, haven't you possibly
turned them tail end to?
A. I do not think so, I think the present relationship has a great
deal to do with the growth of tonnage as shown in these exhibits.
Q. (By Examiner Healy,) How much of the traffic interchanged
at Billings could be handled by the Great Northern and .Northern
Pacific at Minnesota Transfer?
A. As against Avhat? As: against the Burlington?
Q. Given to the Burlington. How much could they handle them¬
selves aU the way of that sort of traffic?
A. I can answer that best in this way: Before there was any cor¬
porate or financial relations between Burlington and Northern Pacific,
there were connections there, and they had a system of through rates
applying via Billings to territory beyond, as well as applying via the
Twin Cities to territory beyond, which was worked out by the traffic
officials of the two companies. Later, when the Great Northern reached
Billings, the same basis was agreed on by that company, and it was
71
what might he called a normal basis as such things are understood
between connections in railroad parlance. That basis has never been
changed, and the traffic flows through Billings gateway according to
that basis, or it flows through the Twin Cities gateway as the destina¬
tion indicates the better, more efficient and shorter route. And, as I
say, it was made at a time when the Northern Pacific and Burlington
were merely connections. The Great Northern later got to Billings
and joined in it, and the same basis continues to-day.
# # # #, • •
Mr. Donnelly: This whole argumentj as I understand you, has
been presented on the assumption that the Northern Pacific and the
Burlington are tentatively combined by the Commission's suggested
order, and that it is necessary simply to show the reasons for the addi¬
tion of the Great Northern to that combination.. Is that correct?
Mr. Holden: It was for the purpose of showing from Burlington's
standpoint the vital necessity of retaining the Great Northern in the
present association.
Q. (By Mr. Donnelly.) And why was no stress placed upon the
necessity of retaining the Northern Pacific for the Burlington?
A. I testified that my testimony in all of such features would be
understood as being to the effect that I believe, and the Burlington
believes, that each of the Northern lines is equally vital to its con¬
tinued welfare, and the reason there may appear to be more refer¬
ence to the Great Northern than to the Northern Pacific is that there
is no contemplation of depriving the Burlington of the support of the
Northern Pacific, but it is in contemplation that it be deprived of the
support of the Great Northern, and the tonnage figures and revenue
figures show that they are almost equally productive of tonnage and
revenue in interchange with the Burlington. •
*«#»•#
Q. (By Commissioner Hall.) Now, Mr. Holden, I just want to
ask you one or two things. You referred to the existing combination
as being the logical—I am not using the right word, perhaps—^but the
outcome of 75 years of sustained effort in the development of this sys¬
tem. Isn't it true that in its present form it is the outcome of 21 years?
72
A. No, sir. I mean more broadly than that, Mr. Commissioner.
As I stated, Burlington began in 1849. The Northern lines had their
early origin long before this combination was made 21 years ago. And
what I mean to say is that each in its own way and over its long
growth, by the careful direction of its several managements, contrib¬
uted in 1901 the accumulated energy in the joint alliance that was then
made. So broadly speaking, the story of the three parts of this line
runs back 75 years.
Q. That may be true, but as a trinity they date back about 21
years, and up to that time is it not true, as appears from your testi¬
mony this morning or this afternoon, that there was a weighing and
balancing of the advantages of this combination as against other com¬
binations?
A. That is quite right.
Q. And perhaps it indicates that on the whole the judgment
reached after many years of probing and balancing and testing was
that this was the best available combination; but if the cat had jumped
a little differently twenty odd years ago, this combination might not
have been in existence. So it is no doubt true the sign of life or health
on the part of these various components, that they were pushing out
for more business and more development, yet it gives it a little wrong
slant, does it not, to say that all that growth and effort was in the
direction of the present combination? This combination is the out¬
come after weighing many other possibilities, and it is an outcome
which has existed for some twenty-one years. Can you say very much
more for it than that, except that it has proven satisfactory to those
who participated in it?
A. Well, as you have given it, it is correct. The combination has
only been in existence since 1901. What I intended to say is that the
three systems then got together in the manner in which they did, with
a much longer accumulated development. Now then, going back in
the manner they did in 1901, twenty years is a long time, and a great
deal of right, it seems to me, has developed over that period, which
"we think should be protected. And during that time, as intimated by
73
Mr. Hines, $900,000,000 has been put into the development of these
joint properties. And 20 years in one way is not long, hut 20 years of
studious effort to make this combination what it is, is a long time when
it has cost a lot of money, and we are very anxious to safeguard it.
Q. You are speaking for the Burlington. Now, can it he said the
Burlington has had any independent thought or plan as distinct from
the thought and plan of its owners during the last odd twenty-one
years ?
A. I think we have lived in harmony and peace, and we have all
thought along the same lines except when we were locally competing
up there in the northwest, and that is so far away I never heard of the
row from Chicago. But seriously, the plans have been made and the
development has gone on by mutual, joint effort.
Q. Isn't it straining the term *'mutual" a little bit when 98 per
cent of the stock of one road has been acquired by two others, to leave
that first road in the position of a road having a choice?
A. Well, Mr. Perkins started it and Mr. Hill made good with it,
and the Burlington independence and management has never been in¬
terfered with, and we have gone on in our own way as an equal partner
in a very large and fine sense.
Q. That has been what might be called personal relations between
the officials of one carrier and the officials of two other carriers. But
in the essence of things, the owners of that road, of the Burlington,
were in a position to control its policy at any time?
A. Exactly.
Q. And that was necessarily so?
A. Yes, sir.
Q. Now, you have suggested the possibility of four systems taking
care of the west. Have you formulated in your own mind those sys¬
tems at all?
A. No, Mr. Commissioner, we have not. We have advanced the
idea and given enough study to the matter without undertaking to sug¬
gest the destiny of other properties, but we have come to believe from
.74
» ' J
such studies as -we have made that it can practically he done without
doing violence to our association, and it seems to me giving all rea¬
sonable protection to the other properties in the west.
'Now, we are prepared to join, at such time as might he desired, the
. joint investigation or a study, or to testify further on the subject, hut
; it seems to us that having laid our situation before the Commission
and having stated, as I have, that it is a practical disposition of the
western mileage, perhaps it would come better after the other western
lines have expressed their views and their record has been made
here.
Q. If you have faith in this idea, it will have to come before us
into this record in some concrete form at some time.
A. Yes, sir.
Q. Because we will have to end by defining systems, and if there
are better systems than those indicated here, those who so believe
ought to be able to show them to us.
A. I assume before this record is closed that that subject ought
to be and doubtless will be further pursued.
Q. Then, you will have that in mind yourself with a view of con¬
tributing what you can?
A. Yes, sir.
Q. Do you look for further railroad construction in this country
■ during the next 25 years ?
A. I do not anticipate that there will ever be another transconti¬
nental railroad built, because there does not seem to be a call for it.
I do look, or at least I hope, for a great deal of intensive- internal im¬
provement and development, and there is obviously some • additional
mileage needed.
Q. Where will it be? "
A. Well, I could not undertake to speak.
Q. Will it be west or east? -
A. I am speaking entirely of the western countrv here, I do not
know anything about the east.
:T5
Q. I was asking the question about this country. The railroad de¬
velopment, so far as one can see it, is more likely to come in the west
than in the east, is it not?
A. It seems to me so. . -
Q. That would he adding to your number of miles that you would
have in your four systems?
A. Yes.
Q. We are making a plan here which it is to he hoped will prove
good for a considerable len^h of time, and not merely for the time
being. • ■ ! ' ■ i i'
A. It does not seem to me that an increase, or any possible in¬
creases in a good many years, would in any substantial degree change
the conclusions I intimated some time ago.
Q. About four systems for the west?
A. Yes; as compared with what already exists in the east, and
which has already had the suggested approval of the Commission
in the tentative plan. Or to state it in perfect frankness, it is a ques¬
tion of ingenuity of management and skill, and possibly to administer
as successfully as the New York Central or Pennsylvania do their
traffic. It seems to me that a similar mileage, or a considerably larger
mileage in a western system running over sparsely settled territory,
and light train service would not present nearly so much of a task as
some of these gentlemen in the eastern country are already disposing
of in an excellent way.
Q. We have thought it would require four or five systems to take
care of Official Territory alone. When you reach the western territory
you have a vast expanse, and it seems as though the increase in popu¬
lation and development in manufacturing, etc., might be looked-for
there, and I thought the real development is quite as likely to come
there as anywhere, and in fact more likely to come there.
A. It will come very slowly though, Mr. Commissioner. ."
Commissioner Hall: It has been coming slowly of late at all events.
76
Q. (By Mr. Eipley.) You have implied that this four system plan
in the west would carry the northern lines to the Gulf. Isn't such a
plan also to carry the southern lines to Seattle and Spokane?
A. Well, one of them is already there, the Southern Pacific. The
Santa Fe is halfway there, on the ocean side of the Cascade Moun¬
tains.
Q. You would favor having the Santa Fe coming up to the north¬
ern boundary in pursuance of a well balanced plan which would admit
the northern lines to the Gulf and the Gulf lines to the north?
A. I do not say the GuLt lines to the north. I said to the
Pacific Ocean.
Q. You want to go to Seattle?
A. To the Gulf as weU as the Pacific Ocean. It is not whether to
the South Pacific or North Pacific. Everybody can't be in every ter¬
minal, of course.
But the significance, as it seems to me, of our situation as thus far
outlined in the tentative plan is a complete denial of access south and
the closing up of our gateways to get there. So, in studying that situ¬
ation I got to the point that it seems to me you could not do even-
handed justice to these great investments unless they have the outlets
I speak of.
Q. Does not the plan proposed by the Commission admit you to
San Francisco?
A. No, sir. Your plan did.
Q. I beg your pardon. The tentative plan does not; mine did. I
will withdraw that question.
Q. (By Mr. Childe.) I wanted to ask, Mr. Holden, what your
opinion is with reference to the proposed consolidation of the Chicago
Great Western into the Burlington system?
A. I haven't any, because we have been more concerned about our
own situation for the moment. But as intimated in my testimony, if
the Burlington situation is not seriously interfered with, it is prepared
77
to take its share in consideration of the proper disposition of so-called
weak lines. Now, I do not mean to indicate hy that that the Chicago
Great Western is. But it is proposed as a line that goes with the Bur¬
lington, and when we come to the stage in the hearings when we can
give that consideration, we expect to and are willing to give it careful
thought. Where we will come out, I don't know.
Q. What I wanted to get on this point was: Would it, in your
opinion, benefit the Burlington-Northern Pacific consolidation in any
broad way to add the Chicago Great Western Eailroad to it, or would
such a consolidation be more for or altogether for the benefit of the
Chicago Great Western?
A. Well, we have not been trying to buy it.
Q. And it is, so far as it has; any influence at all, a competitor
rather than complementary to the Burlington system, is it not?
A. It is a competitor, yes. And it would be difficult for it to be
moulded into the Burlington system.
Q. You would not wish to suggest to the Commission that such a
consolidation would in any way be in compliance with the provisions of
the law that competition should be preserved rather than stifled?
A. I don't know what I would say to that. I probably would not
want to suggest that to the Commission one way or the other.
Q. Now, would your position be the same as to the Minneapolis &
St. Louis? Have you given that any study, Mr. Holden?
A. Some; yes.
Q. Would you favor or oppose the addition of the Minneapolis &
St. Louis Eailroad to the Burlington system?
A. Well, we have a very excellent line from Peoria to St. Paul
now, and on its merits I don't know what use the Burlington could
make of the Minneapolis & St. Louis. It is an excellent connection of
ours for traffic in some directions. But again, that subject has not
gotten to a point where we have been able to give it any practical
thought.
78
Testimony of Mr. Holdbn on Cross-Examination November 18, 1922.
Mr. Hoeden was recalled as a witness for and in behalf of the Bur¬
lington, and testified as follows:
Q. (By Mr. Eipley.) Your proposal, Mr. Holden, for a general
consolidation of all the roads west of the Mississippi in four large sys¬
tems is so persuasive that I want to think it over pretty carefully, and
one or two general considerations that occurred to me. This all re¬
sults in a balancing of advantages and disadvantages. In your brief,
on page 47, you say:
"The general breaking down of gateways in western territory, all
of which are now important interchange points for Burlington, leaves
the proposed new through systems at liberty to discontinue such
through routes and joint rates now in effect on Burlington lines as
from time to time their individual and special interests may permit"—
And again, on page 46, you quote apparently with approval, my
expression of approval that the "open market for choice of routing is
bound to be restricted by the provision of these corporatively unified
through routes."
A. I quote that with anxiety and not approval.
Q. I take it you agreed somewhat with it. At any rate, you see
the point?
A. I do. It is a very important point.
Q. I wanted to ask you then this question: If attempting to
plan through east and west systems interferes so seriously with these
junction points, with what you might call the articulation of our pres¬
ent railroad system, isn't there some danger if you do that in north
and south as well as east and west, that you will wipe out all of the
articulation points ? That is to say, the junction of the Burlington and
the two Northern lines has almost inevitably, for a great deal of traffic,
• closed St. Paul as an open trading point. Much traffic goes through
in a rut naturally. You complain that the plan proposed by the Com¬
mission tends to close you out at Sioux City or Kansas City. Now, if
79
the Commission would have plamied a system for the west which not
only went clear through east and west hut clear through north and
south, wouldn't that put an end to any articulation, of any of these
junctions where routing may be varied, at important places like Kan¬
sas City and St. Louis? Do I make my point clear?
A. Perfectly. And that is precisely the reason for my expression
that the Commission has either gone too far or has not gone far
enough.
Now, the situation as it is to-day is the outgrowth of natural con¬
ditions, and Burlington situation is adjusted to it—speaking now only
of Burlington—^but when the Commission proposes to bring all these
southwestern lines through, my point is I want a place in the sun, and
then I will take my chances, but I do not want, as Mr. Hines has ex¬
pressed it, to have my strong connections of the. southwest come
through as competitors and leave me without any inlet into their ter¬
ritory. But if you combine all of the mileage, as I suggest, into a few
large systems, each one having a line through into the southwest
access to the Grulf, and opportunity as time goes on to increase their
mileage as they may determine, by building here or there, why then of
course, you have got a situation where each line will look out for its own
long haul and will not expect much contribution of interchange tonnage
midway on a through line from a road that was formerly a connection
but now has its own through rails. So, I say if you are going to break
down the idea that roads like Burlington—and there are several others
of equal importance—that are no longer to meet strong connections at
these big gateways, then yoii have to go the next step, in my humble
opinion, and we have to go along with the consequences; aiid I sa}^ that
if you give me a responsible connection, one of these responsible con¬
nections, so far as I am concerned, I am willing to take my. chances.
But I must have a line through or else I must have an open gatewav.
Q. We may all agree then that a consolidation program ca:med
through broadly is going to wipe out a good deal of this free inter¬
change at what you might call the secondary gateways,—^not Chicago
and St. Louis, perhaps, but points like—7-I hesitate to say it—Kansas
80
City, Denver, St. Paul, Council Bluffs, and Buffalo in the east. Isn't
it almost inevitable that we have to face that as a consequence?
A. It indicates. Professor Eipley, the very great care that is
needed not to lose a great deal of ground that we have gained, and
obviously it is a delicate situation.
Q. I am seriously impressed with the gravity of the situation that
way, and that is why I am asking you these questions.
Q. (By Examiner Healy.) You might put it concretely, Mr.
Holden, that if the southwestern lines, such as the Frisco and the Mis¬
souri, Kansas & Texas, and the Missouri Pacific, were projected into
Chicago, do you consider the Fort Worth and Denver City and Colorado
and Southern, and probably the Trinity & Brazos Valley a sufficient
outlet for your lines?
A, Absolutely not, and because as I described yesterday, those
lines were acquired from a different point of view. It has been care¬
lessly said at times that the Colorado and Southern lines do not seem
to have any relation to the Burlington, but it is because they do not
understand what we had in mind. It was not any idea of routing
traffic from the east through Denver and then to Texas, but it was, as
I described it yesterday, that we are interested in the idea and the
great growing line of north and south traffic between Texas and Okla¬
homa, which is where every acre almost is potential in the production
of tonnage to the northwest, where almost the same conditions exist.
So that route has not got any relation to the route through St. Louis
and Kansas City except in a remote way.
Q. (By Mr. Eipley.) What are we going to do then? There is
only one Colorado and Southern route from Denver down.
A. No.
Q. Or one quite as straight as that.
A. That is the one reason we are a little cautious about letting go
of that. The Santa Fe has a route through Newton, and the Eock
Island through Harrington.
Q. Not over its own rails?
81
A. It is an active competitor of ours. And watching the map, I
see the Santa Fe is developing a route to the south of us, it is perfectly
ohvious.
Q. Then, your thought about the western situation is that if you
are allowed to continue the Colorado and Southern we ought to con¬
tinue our plan further and he sure that the other northern systems
like the St. Paul, wherever it is placed, have a similar access to the
Gulf?
A. Certainly. And I think it is quite possible.
Q. Unless we do that, a system like the Burlington taking its place
in the sun is a little hit apt to leave somebody else in the shade?
A. I don't want to leave that idea. I want every man to have an
even break, and I think it is quite possible to take the western map
and figure that out.
Q. Now, why shouldn't the western lines get together and try to
help the Commission to do just that?
A. We are quite prepared to do that; and eighteen months ago
I endeavored to make a beginning along that line. I think it is the
sensible and wise course.
Q. We are breaking our hearts in the Commission in working
this out so that it will result in the least inconvenience and loss and
disruption of existing arrangements, but nobody has got that fund
of information that you people have got yourselves, and if you with
your knowledge of the situation could compose your differences and
come to us with such a plan, it would fit into this voluntary scheme
of consolidation, and perhaps something that might conceivably come
about rather than leaving us to prepare an academic plan on paper.
A. I thought. Professor Ripley, as I indicated yesterday, that I
have gone about as far as I ought to in developing that idea. I think
the Commission ought to hear the views of other railroad executives.
They may not find them as amiable as I am, and I am not sure we can
agree, but it seems to me in that big, broad sense, the other western
railroads ought to be able to sit around the table and aid the Commis-
82
sion, at least, in the study of the western territory; and we are pre¬
pared to do it.
Q. (By Examiner Healy.) That is something to come later.
A. Yes; after the facts are in. And I do not want to get ahead of
the views of the other western railroads, because they may radically
differ with my views. So, what 1 have said is simply stating it from
the Burhngton-Colorado Southern standpoint, and it is not intended
to embarrass or reflect the opinions of anybody else out in that terri¬
tory.
Q. (By Mr. Ripley.) Just one word and then I am done. Would
that thought of yours imply that the southern lines ought to be pro¬
duced up to Seattle. If the northern lines are to go to the Gulf, the
Gulf lines ought to go to the north, oughtn't they?
Examiner Healy: I think you answered that yesterday by saying
they should go to the Pacific Ocean, not necessarily to go to the North
Pacific or South Pacific.
Mr. Holden: Yes; I did. It is not possible to give everybody the
same location in the same harbor, speaking in terms of water termi¬
nals, or the same part of the west and south, but to do the best you
can. If each system has a reasonable outlet into each of these two
grand divisions of the west, why then you have done all you probably
could do; but I think you must do that much.
Q. (By Mr. Ripley.) You have expressed some concern with the
Commission's tentative plan cutting you off from various opportuni¬
ties. Are you familiar roughly with the differences between the plan
which I proposed and the tentative plan of the Commission? The
main difference was that I proposed that you have a line to the Golden
Gate, whereas the Commission took the. Western Pacific—am I right?
—and put it on the Santa Fe?
A. They took the whole works.
Q. It did not give you an independent line, at all events, to San
Francisco ?
83'
A. No. The Commissioii left the Burlington, Northern Pacific,
Chicago Great Western, and Minneapolis & St. Louis.
Q. Do you wish to express any opinion at all upon those two dif¬
ferent plans?
A. I would prefer not to at this stage of the hearings, Professor,
although I do not want to appear reluctant to discuss the matter.
Q. Perhaps later on?
A. Yes. And we anticipate that we ought to he prepared to ex¬
press our views as to those features of the situation, hut it seems to
me perhaps it would come in better at a later stage.
Mr. Ripley: That is all, Mr. Examiner.
Q. (By Mr. Hines.) Mr. Holden, let me ask you one question.
I would like to have your view as to whether this is or is not a con¬
sideration worthy of serious study in connection with the possibility
of four large systems in the west. As I understand it, a very desir¬
able thing which the statute seems to accomplish is to get large systems
which will be reasonably balanced. I believe in your statement you
referred to a tendency to east and west systems rather than north
and south. From the standpoint of a reasonably balanced traffic year
by year as business and crop conditions vary, it has occurred to me
that systems which reached Chicago and St. Louis on the east, the
Pacific Ocean on the west, the Gulf on the south, and all of which,
touched the great central crop producing territory, would be likely to
be better balanced than systems which are in only a part of that
territory, for the reason that a system only in a part of that territory
would be dependent unduly upon the crop conditions in that particular
part, and also upon market conditions which influence the movement
of traffic, such as, for example, that in certain years there appears to
be a combination of crop and market conditions which leads to a much
greater eastern movement of grain, and in other years there appears
to be a combination of crop and market conditions which leads to a
greater movement of grain to the Gulf, and the thought that I wanted
to get an expression of your opinion upon, as an aid to further con-
84
sideration of this matter, was whether this four system plan where
each system would reach all these territories and would participate ip
the movement of traffic whichever way it moved, would not lead to a
better balancing of systems year by year with the varying crop and
business conditions?
A. I think without doubt, Mr. Hines, you have stated it exactly.
I think the idea of segregating a system like the Burlington exclu¬
sively into the northwest is an isolation. Now, it is a fine situation
when the trend of business is strong through that territory and the
crops are good and there is a heavy demand for lumber, but there do
come off seasons, as were indicated even yesterday in some of the
traffic figures. And one important feature of the situation is the bet¬
ter control of car supply. There has been a strong movement of grain
for export through the Gulf ports for some years now, and the system
balanced as you have outlined it and having an outlet to the Gulf,
would have a better control and better movement of its cars, and they
would have more expedition. Every time you put a loaded car through
a heavy terminal there is a loss of time and considerable amount of
expense. But that is the value of the through haul, that it avoids the
delays of intermediate junctions quite largely, and it enables you to
keep a better handling and better control of your equipment.
Q. (By Mr. Bipley.) But Mr. Holden, you would recognize that
if you were constructing four systems, they have got to have fair
equality of opportunity of gathering lines as well as through lines?
A. Quite so; and that is shown, I think, in a study of the map, that
both of those fair opportunities can be provided.
Q. I would like to be present at a session when you get four sys¬
tems with equal gathering lines north and south and in California.
A. That is one of the details. Professor Ripley, of course. And
you can't get in any possible way precision. But the suggestions have
so favored the Burlington in the ways I have indicated, that we think
there must be something different done.
85
Testimony op Mb. Holden, Januaby 23, 1923, in Connection with
Hearing Regarding System 16—Santa Fe Group.
TTat.tc Holden, heretofore called as a witness, was recalled and testified
further as follows:
Direct Examination {Continued).
Mr. Holden: I merely want to call attention at this place in the
record to my former testimony given at the previous hearing, on the
relation and bearing of the Colorado and Southern lines to the Burling¬
ton, Northern Pacific, and Great Northern properties, so that that
testimony will be taken in connection vdth System 16 as well as in
connection with System 14, in which it is introduced; also the exhibits
offered in evidence at that time showing details of Colorado and
Southern interchange traffic.
In addition, in this particular tentative Group 16,1 thinlc it proper
to point out, as between Colorado and Texas, as well as points beyond
in each direction, the Colorado and Southern and Santa Fe are in
actual, practical competition, and so far as I know, no other lines are
in a practical sense competitive between the territories named. This is
true as to both freight and passenger traffic. The Santa Fe offers a
sleeping car service between Texas and Denver via Newton, and
handles freight, as shown yesterday, in competition with the Colorado
and Southern via that route.
So that it would seem to me that placing the two lines in one group,
or ultimately in one system, would eliminate all practical competition
between Colorado and Texas, and have a bearing, for instance, on
Utah business of the same nature.
As between Colorado and New Mexico, including El Paso and
freight moving to and from Mexico, of which in times past, before
the revolutionary conditions in Mexico, there was a steady movement,
again the Santa Fe and Colorado and Southern, in conjunction with the
Rock Island, via Dalhart, are the only two lines. It would seem to me,
86
therefore, that putting the Colorado and Southern with the Santa Fe
would eliminate competition in that territory, and so, speak¬
ing in terms of triangles, as suggested yesterday, there would
be a triangle beginning with Denver as the apex, and reaching
out certainly to Aubuquerque, El Paso, and over to Newton and Fort
Worth, in which, excepting for the Kock Island Lines moving in the
other direction, the Santa Fe would be the only mileage. That is
rather a vast territory to be without competition. Our view is that the
Colorado and Southern is a proper part, as originally designed when
the purchase was made, of the north and south route which the Bur¬
lington has constructed, and which we desire to maintain.
Q. (By Commissioner Hall.) You think that elimination of com¬
petition would be against the public interest as well as contrary to the
statute?
A. It seems to me it is not in keeping with the purpose of the
statute, because the moment the Santa Fe has the Fort AYorth and
Denver and Colorado and Southern line, I know of no other competi¬
tion between the points I have named.
Speaking about the D. & E. G., of course, as Mr. Storey said, the
Burlington and Santa Fe in many respects are active competitors. The
Santa Fe proposes to reach St. Louis some day, and we hope to intro¬
duce her into that society. As he outlined, a plan is on foot for that
purpose, but we will be in St. Louis as active competitors as we are in
Chicago. It would seem to me that combining the D. & R. G. and
Western Pacific with the Santa Fe would leave the Burlington Line
in Colorado, at Denver, without access to the territory beyond for
competitive business.
At least, while as stated yesterday, doubtless joint through rates
would continue in effect, that is perhaps the lesser of the practical
matters. The road having the through rails from the eastern gate¬
ways to Utah and points beyond, including Pacific territory, would
undoubtedly so adjust its train service, car supply, and all its solicita¬
tion so that the lines not having the through rails would unquestion¬
ably suffer largely in their opportunity for competitive interchange.
87
The Santa Fe, connecting with the D. & B. G., of course, would make
the route through Pueblo, which is one hundred and some miles south
of Denver. It would seem that that sort of an arrangement would
indicate no motive whatever for dealing with the so-called Moffat Eoad,
because the business would not move around through Denver and over
that suggested route.
I am merely pointing out these features because we wanted to have
it felt that while this burglary was going on the family was awake, at
least, and aware of the situation, and we will probably have more to
say on the subject later, in the argument, or at the western hearings.
Q. (By Commissioner Hall.) Your lines come into Denver, and
if that tunnel is completed within a reasonable time, and the Dotsero
cut-off, that 40-mile cut-off, is completed, that would he the short line
to the west, would it not?
A. That is my understanding; when that mileage is calculated, it
mil be. Whether it will he actually shorter than the Union Pacific or
not, it will be approximately the same.
Q. I did not mean that, but I mean as compared with the Santa Fe
going to Pueblo and then following up the Rockies on the west side, as
it does?
A. It will be so from Omaha and Chicago. I have not calculated
it lately from Kansas City.
Q. (By Mr. Bledsoe.) The difference would he about 75 miles,
would it not, Mr. Holden, from Omaha and Denver via Dotsero?
A. In favor of the Dotsero route; something of that sort, as I
recall it.
Mr. Bledsoe: Something less than 100 miles.
Q. (By Commissioner Hall.) That is, assuming that the Moffat
Road is never carried farther west than it is now, at Craig, I think?
A. Craig, yes.
Q. I think that is the terminus. They have their route surveyed
through to Salt Lake City, if I remember rightly.
88
A. . That is indicated; I understand it is a fact. So, that line may
he completed in that manner, or by the Dotsero cut-olf, either one,
Q. Of course, if the Dotsero cut-off is used, there is quite a stretch
running out to Craig that would form no part of that. It would be a
side line, or a feeder for that cattle and coal country?
A. That is the part of the line that serves the coal deposits.
Q. There are cattle up there too?
A, Yes, quite a bit.
That is all I have to suggest now.
Oross-Examination {Continued).
Q. (By Professor Eipley.) Is it your opinion that the inclusion of
the Denver & Eio Grande and the Western Pacific in the Santa Pe
System would create within one system two competing routes to the
Pacific Coast?
A. It is not an opinion; it is the fact, Mr. Eipley.
Q. That would be a situation, then, analogous to the one which has
been in the courts so long with respect to the Southern Pacific and
Central, would it not?
A. It looks very much that way to me. Without commenting upon
the wisdom or the iniquity of it, the facts seem to indicate that the
situations are very much alike.
Q. That would seem to you to be a very serious objection to this
arrangement from the point of view of the law?
A. Speaking now only in terms of the Burlington, it seems to me it
is rather serious. You see, we have been so exceptionally favored by
having all of our assets distributed and all of our gateways closed.
In Denver this is the illustration here. We do business with the D. &
E. G. It is proposed to turn it oyer to one of our most active, wealthy,
and handsome competitors, and so I think I have made my point, as
I did in my last testimony, that that is exceedingly inimical to the
"growth of the Burlington and its business through that gateway, and
89
therefore I cannot help hut point out that fact. Whether, in the larger
aspects it is ohjectionahle under the decision of the Supreme Court in
the Central Pacific case, I would not undertake to say. I have not
studied it from that point of view.
Q. Do you think a well balanced and consistent national plan for
the west ought to give a Pacific outlet to the Burlington System
through the Ogden gateway?
A. Either that or a connection. I am satisfied with the connection.
Q. It ought to insure neutral connections, in fact, in that event,
to all lines which come into Denver from the Easf?
A. It seems to me so. That is the way it has been all these years.
Business has grown, and the railroads have developed on that basis,
and I think it ought to continue.
Q. There would seem to he, then, those two possibilities: one to
give a line like the Burlington, which comes into Denver, an independ¬
ent outlet to the coast; the other, to insure a neutral opportunity for
interchange and through carriage over the lines of other connections?
A. It seems to me the latter, as you will analyze it, is the necessary
one of the two, because if you give the Burlington the outlet, you are
doing an injustice to the Missouri Pacific and the Eock Island. They
cannot all have it.
Q. Have you anything to offer, then, constructively in the way of
a suggestion? The Denver & Eio Grande and the Western Pacific are
there, and they have got to he incorporated somewhere in a national
plan. You hold they should not go into the Santa Fe: You say that
there is no special desire to take them into the Burlington. Where
shall they he placed?
A. I think that is a matter for further study. Professor Ripley.
I have not reached a conclusion. It seems to me the status of the Cen¬
tral Pacific was largely involved in that, and that has just been dis¬
posed of, apparently,, although the Commission has not announced
itself. But at the present time I have not a definite expression of opin¬
ion to give you. The Missouri Pacific, I observe in the newspapers, is
90
acquiring it, anO with an open gateway through Denver, that owner¬
ship may be the logical way to leave it.
Q. Were it to be a part of the Missouri Pacific, the logical mode
of treatment of that whole western situation, then would be to treat
all of the mileage west of the Mississippi indistinguishably, would it
not, and not to attempt to set off a southwestern group of Gulf lines
distinct from the transcontinental lines?
A. That has been the conclusion that I have been forced to. Pro¬
fessor Ripley, by the bringing of the southwestern lines into Chicago
as the plan contemplates. Do not misunderstand me. I have not pro¬
posed that. I do not favor that as a choice, but when you bring the
southwestern lines into Chicago, then I do not see that you can avoid
carrying lines like the Burlington into the southwest, and therefore
you must select one of the two.
Q. If, then, the southwestern lines were to be considered merely
as provincial or local systems, it is your thought that they ought to
stop at St. Louis, and merely be confined to the territory between St.
Louis and the Gulf?
A. They ought to stop as they are to-day, at St. Louis and Kansas
City, leaving those gateways open so that lines that are dependent
upon that interchange may continue to enjoy it.
Q. But if they are to be produced to the Pacific Coast, then ought
they not to go into Chicago, so that they should be treated as Chicago-
Pacific Coast systems, with all the other transcontinental systems?
A. You mean if the southwestern lines were to be taken to the
Pacific Coast?
Q. Yes; we must recommend one way or the other. If you are
going to segregate them and hold them below the Kansas City-St. Louis
gateway, I understand your thought is that they might be treated as
mere Gulf lines, distinct from the transcontinental lines. Is that so?
A. No, sir; I was not speaking of it in terms of transcontinental
lines. I was speaking of it in connection with the plan which both
yourself and the Commission have adopted, of basing all the western
91
mileage on Chicago and St. Louis. The point I make is that if that is
the promise, bringing the southwestern lines into Chicago and the
Great Lakes, and St. Louis, then I think you are forced to allow lines
that stop at Chicago and St. Louis, to have mileage into the southwest,
because they will have no connections. Does that answer your ques¬
tion?
Q. I think so, yes. May I ask another question? You have indi¬
cated that the inclusion of the Colorado and Southern System in the
Santa Fe would eliminate competition between Colorado and the Gulf.
Would not its inclusion in the Rock Island-Southern Pacific System
do the same thing?
A. The inclusion of the Colorado and Southern in the Rock Island
System?
Q. In the Rock Island-Southern Pacific group. That has been
suggested as a possibility.
A. I had not thought about that, and I perhaps ought to do so be¬
fore I ventured an opinion. The Rock Island has mileage between
Colorado and Texas, but quite round-about.
Q. The suggestion has been made, and somewhat pressed upon
our attention, that the inclusion of the Colorado & Southern in that
group would round out the Rock Island-Southern Pacific combination
by giving them a line from Colorado to Texas points,
A. I should want to look at the map and study that. I had not
heard that suggestion. I had hoped that the suggestion might be that
the Colorado and Southern would stay where it is, but no one seems
to have made that one yet, except myself.
Q. (By Mr. Bledsoe.) Mr. Holden, is there any open route of
traffic from Denver west to the Pacific Coast, other than up by the
Union Pacific, and down by the Denver & Rio Grande?
A. Not to-day, that I know of.
Q. The suggestion you have in mind would be, perhaps, in con¬
nection with the proposed tunnel that is under consideration from
Denver westward?
92
A. Only partly so, Mr. Bledsoe. It was based primarily on the
facts as they are to-day, that the Burlington interchanges with the
D. & K. Gi. at Denver, which hauls the business via Pueblo, as the rails
run now, and my statement was made on the present-day condition.
Of course, when that tunnel is completed, if it is, that will better the
situation in the matter of mileage and the handling of business with
the combined lines.
Q. At least for those lines coming into Denver?
A. Yes.
Q. Mr. Holden, I gather that your thought—perhaps not definitely
expressed—^is that the better method of handling the Denver & Rio
Grande and "Western Pacific situation is to make of those two lines a
bridge route available for all of the lines that have not Pacific Coast
connections?
A. I think that is a situation that ought to be studied from that
angle. It might also include the mileage beyond, as a part of the study.
Q. What mileage beyond do you have in mind?
A. The Western Pacific.
Q. I intended to say Denver & Rio Grande and Western Pacific.
If I did not, I intended to include the two as constituting rather a
bridge line for those companies that have not a southern Pacific Coast
connection.
A. Without expressing any opinion on the subject, because I have
not studied it yet, for the reason I indicated, it seems to me that is a
suggestion that is entitled to careful study.
Q. Whatever you said in objection to the grouping of the Denver
& Rio Grande and Western Pacific with the Atchison would apply, per¬
haps, with equal force to the Missouri Pacific or any other line which
would constitute a through transcontinental line in connection with
the Denver & Rio Grande and the Western Pacific?
A. In a way, yes, although the Missouri Pacific is not a Chicago
line, as the Santa Fe is. It is a St. Louis line.
93
Q. (By Professor Ripley.) Mr. Holden, if you consider the pos¬
sibility of making the D. & R. G.-Western Pacific a bridge line for
the service of all connections from the east, do you not logically pro¬
ceed from that point to the proposition that the Central Pacific and
the D. & R. G.-Western Pacific might be used, as they were during the
war, as a double track bridge line for the service of everybody east
and west ? That has been pressed upon the Commission.
A, Yes; I never personally thought that double track experiment
was successful. The mileage is too far apart in many places, and we
had to run too many stages to get passengers over seven and eight-
mile gaps, and acrobatic stunts of that kind, and it did not seem to me
to indicate that the experiment was a success, although it looks so on
the map. But, as was pointed out here the other day in somewhat
similar cases, things on maps are not always as they are on the ground.
Where the mileage is separated by considerable distances and com¬
munities established, it is not so easy to run double track operation.
Q. May we not hope that perhaps at a later stage in this pro¬
ceeding you will give further thought to this treatment of the D. & R.
G. and Western Pacific, constructively, that is, a placing of them
somewhere, and let us have the benefit of your views?
A. I will be very glad to. Professor Ripley.
Q. (By Commissioner Hall.) Mr. Holden, is the Colorado and
Southern line to Leadville still operated?
A. Yes.
Q. How long is that? What is the distance?
A. It takes all day to get there. I don't remember the mileage.
Q. Do you remember the mileage as compared with going down by
the D. & R. G., or by the Colorado and Southern line to Pueblo, and
then up through the Royal Gorge?
A. I think it is considerably shorter by the Colorado and South¬
ern.
Q. Do you remember anything about the grades and curvatures?
94
A. I do not think there is much choice.
Q. If there is not much choice, and this is considerably shorter,
why isn't it, in answer to Mr. Bledsoe's question, another route to the
west, as far as it goes?
A. As far as it goes; hut it is narrow gauge, it is mostly on
end, and there is no business that moves that way. The grades are too
steep and the curvature would not justify broad-gauging. It is ut¬
terly out of the question, Mr. Commissioner. Snow troubles are too
severe in the winter, etc.
Q. I know they have been very severe in the past, but are the
physical difficulties there encountered any greater than those en¬
countered by the Moffat Line I
A. I would have to say not so great, because I think the Moffat
Line has the place at the head on that trouble, as they are above the
timber line.
Q. Even if they got their tunnel through under James Peak, or
somebody's tunnel through under James Peak, the operating diffi¬
culties in getting up to James Peak would still be as great as those on
the Colorado and Southern?
A. I understand not. I think, to get to the mouth of the proposed
tunnel, the weather troubles will not be comparable with those that
are found up in the altitudes as high as the Colorado and Southern
reaches in getting to Leadville.
Q. In brief, you do not regard your narrow gauge line up to Lead¬
ville, with proper modification and improvement, as a possible link in
traffic to the west?
A. It would have to be very much modified, and unquestionably, to
secure practical grades for a through line to handle tonnage, there
would have to be heavy tunnel construction, and it has never been
considered feasible in that territory.
Q. Do you operate it through the winter now?
A. Yes, sir, when the weather does not close it down, as it does
occasionally.
95
Testimony of Me. Holden at Heaeing on Maech 1, 1923.
fuethee statement of tentative geotjps foe westeen raileoads.
Direct Examination.
Delations Between Burlington, Great Northern, Northern Pacific and
Colorado and Southern.
Before proceeding further with testimony in support of the pro¬
posal that Burlington, Northern Pacific, Great Northern and Colorado
and Southern lines he grouped together in this proceeding, it seems
proper to briefly review the evidence already introduced for that
purpose.
It has been shown that the Great Northern and Northern Padfio
Companies in 1901 purchased approximately 98 per cent of the capital
stock of the Burlington Company. This stock was then pledged to
secure the payment of approximately $210,000,000 of the collateral
joint 4 per cent bonds of those companies, which bonds matured on
July 1, 1921. At maturity these bonds were refunded by a new issue
of joint 6^ per cent bonds of the same companies with certain call and
exchange privileges, whereby through the exercise of these privileges
and by proceedings before this Commission, one-half of this Burling¬
ton stock (with proper proportion of new stock lately issued) has now
come to be pledged under Great Northern mortgage bonds; the re¬
maining one-half (vdth like proportion of new stock) has also been
pledged under Northern Pacific mortgage bonds, in each instance
those bonds having maturity many years hence.
Burlington owns $30,876,200 of the preferred and common stock
of Colorado and Southern Railway Company, which is 64.3 per cent
of the total issues outstanding. This stock was practically all pur¬
chased in 1908 and has been pledged for many years under the General
Mortgage of the Burlington and is now also under the lien of the Bur¬
lington First and Refunding Mortgage.
These facts show the large and intimate financial relations between
these four system lines and indicate the large amount of outstanding
96
mortgage bonds in the hands of the public which rests upon the owner¬
ship of capital stock referred to, and which bears, more importantly,
upon the continued earning power of all of the companies named.
These facts further indicate the inevitable reluctance, which would
quite certainly mean the unwillingness on the part of mortgage trus¬
tees and bondholders, as well as stockholders, to consent to any plans
which would indicate doubt about the continued earning power of the
properties; they indicate that ordinary business prudence and sagacity
would not encourage the belief that the owners of, these securities
and those responsible as trustees for them and for the properties
which underlie them, could find any motive or justification and indeed
ought not to be placed in a position of pressure to yield to the uncer¬
tain and speculative prospects which radical disruption of these re¬
lations would necessarily involve, particularly in view of the con¬
tinued economic uncertainties now confronting the stability of rail¬
road investments and business in general.
Evidence already introduced has shown in considerable detail the
gradual growth and painstaking care that has been exerted in the de¬
velopment of these systems and the close relations which they bear to
each other.
Burlington has been under a steady progTess of growth since 1849;
Northern Pacific and Great Northern have had a similar history cov¬
ering not quite so many years, but almost the span of the average life.
The first physical connection between these properties was established
in 1886 when the Chicago, Burlington and Northern, now for many
years past a part of the Burlington system, was completed into St.
Paul and Minneapolis, in pursuance of a definite program and purpose
of effecting connection between the Northern lines and the great Mis¬
sissippi Valley, Chicago and lines reaching eastern territory. In 1894
the Burlington pushed its lines, through to a connection with the
Northern Pacific at Huntley, Montana, thus establishing a second con¬
nection into the northwest with the Northern Pacific. Burlington was
meanwhile actively pursuing investigations by surveys and reoon-
noissances in various directions for further mileage into northwestern
97
territory and to California and the record shows the process whereby
those in control of the Northern lines and those directing the policies
of the Burlington finally met and found a solution of their mutual
plans by the purchase of approximately 98 per cent of the, stock of the
Burlington in 1901 by Northern Pacific and Great Northern. This pur¬
chase accomplished the extension of the two Northern lines into the
middle west and a direct connection with all of the large centers of
traffic in the Mississippi Valley with lines leading to the east and
southeast. At the same time it solved the problem of the Burlington
for the necessary development of an outlet for it into the far west,
and the results of this transaction, over the past 21 years, have dem¬
onstrated the wisdom and foresight Avith which it was accomplished.
Following this purchase a process of further physical development
to bring these three systems into closer, more efficient contact began,
resulting in 1908 in the extension of the Great Northern line from
Great Falls, Montana, to Billings and the connection of the Burlington
with the Great Northern at Sioux City by what is known as the Sioux
City line. In the meantime Burlington was developing its low grade
line into the Southern Illinois coal fields, adding stretches .of double
track on its Mississippi Eiver line, coming to a third track develop¬
ment between Chicago and Aurora, Illinois,, and completing double
track from Aurora practically through to the Missouri Eiver. The
increased A^'olume of traffic through the Billings and Sioux City .gate¬
ways called for continued expenditures for double track along the Mis¬
souri Eiver from Kansas City north, and at various other points in
the low grade route that was developed between the Missouri Eiver
and Lincoln, Nebraska. In addition the Big Horn Basin line was
constructed to afford a low grade and alternate route between Billings
and common points in Nebraska, as well as with the connection with
Colorado and Southern, a more direct route to Denver and points
beyond. During this period enormous sums have been spent in ter¬
minal improvements and enlargements all over the system, extensions
of side and passing tracks, automatic signals and other needed facili¬
ties, as well as the purchase of large amounts of heavier power and
98
freight and passenger equipment. From the map, Burlington Exhibit
16, these developments in double track and new lines are seen,
showing as already testified to, that these enlargements have been
made along definite routes and channels of trade, moving between
Burlington, Northern Pacific, Great Northern and Colorado and South¬
ern lines, so that adequate facilities representing the large invest¬
ments shown in the testimony have now been fully provided and have
long< since been in practical use for the efficient and economic handling
of the heavy interchange of business between these properties.
Burlington investment in Colorado and Southern occurred in 1908,
made as a part of the plan of the development of the Big Horn Basin
line and a better route to Denver and points beyond, and is a part
of the larger plan for the development of a practical and short line,
north and south route, betw^een territory served by Northern Pacific
and Great Northern beyond Billings and points in Wyoming, Colorado,
New Mexico and Texas, includinar access to the Gulf of Mexico. By
this purchase an efficient route has been established, not only for the
movement of lumber and other products from the northwest, but also
for the large tonnage of oil from Wyoming moving north through
Billings, as well as east and south over the Burlington and Colorado and
Southern lines, and including the products of Wyoming and northern
Colorado including coal, sugar and a variety of agricultural products.
Southern Colorado coal moves both north and south via Colorado
and Southern and into Burlinsion territory east of Denver, as well as
into Texas territory on the Fort Worth and Denver City, and the
evidence shows an established and growing movement of through traffic
of varied character, as well as a heavy passenger movement over this
north and south route.
As a result of these long standing intimate relations and close
working arrangements, Burlington Exhibit 22 shows a total of
50,810,767 tons of freight interchanged between Burlington, Northern
Pacific and Great Northern between years 1908 and 1921, both inclu¬
sive. In the year 1920, which represents more fairly than 1921 a nor¬
mal volume of business, the total interchange between Burlington
99
and the two Northern lines at all junctions amounted to 5,296,142 tons,
although in 1917 it aggregated 5,605,262 tons. Burlingdon Exhibit
23, based upon averages for five years, 1917 to 1921, inclusive, showed
that the Burlington revenue on traffic interchanged with both Northern
Pacific and Great Northern amounted to $17,440,722, or 15.8 per cent
of the total Burlington freight revenue. In the year 1920 the total
tonnage interchanged with both Northern lines at Minnesota Transfer
aggregated 2,501,904 tons, and the Exhibit shows that for the entire
period from 1895 to 1921, both inclusive, 30,570,547 tons of freight
were interchanged between the three companies at Minnesota Trans¬
fer. At Sioux City in 1921 Burlington and Great Northern inter¬
changed 541,618 tons, involving revenue of $2,107,559. This is shown
on Burlington Exhibit 26. Burlington Exhibit 28, using again
the year 1920, the total tonnage interchanged at Billings amounted to
2,287,994 tons. Burlington Exhibit 29, showing the tonnage and
revenue on traffic interchanged by Burlington and Colorado and
Southern, indicates that in 1920 1,297,718 tons were handled, involving
a total revenue of $3,766,652.
These exhibits are recalled to mind to show the importance of
the existing relations between these roads and the large volume of
revenue which underlies these heavy movements of traffic over the
routes that have been mutually developed between them. Aside from
the large number of relatively minor and less significant expenditures
for internal improvements needed to sustain this growing volume of
interchange, the record shows significant individual items that have
been spent to establish and develop these main line routes for inter¬
change movement. The Burlington has spent over $17,000,000 upon
its Big Horn Basin line; the Great Northern $12,300,000 in building
dovm to a connection with Burlington at Billings; and the Northern
Pacific $3,815,000 for the Laurel Yard at Billings for the accommoda¬
tion of all three companies. The Ashland-Sioux City line cost the
Burlington $3,200,000 in 1908, and the Great Northern has an invest¬
ment in Sioux City Terminals of over $3,000,000; these investments
for the purpose of establishing the important Sioux City route. In
m
Minneapolis the Great Northern has an investment of over $15,000,000
for itself and its tenants, of which the Burlington is perhaps the prin¬
cipal tenant. The' new Great Northern freight terminal at St. Paul
was built to accommodate Burlington, a& well as Great Northern, at a
cost of $2,150,000 and in addition Great Northern and Burlington own
$1,800,000 of adjacent industrial property. Burlington uses Northern
Pacific freight tracks between St. Paul and Minneapolis, having a
value of $1,650,000. Burlington has spent for betterments in the way
of double tracking and automatic signals, etc., on its Mississippi Val¬
ley line $4,337,000, and over $8,000,000 in the improvement and de¬
velopment of its southern Illinois coal line. These are only the signifi¬
cant items expended in developing the^ close physical and traffic rela¬
tions between these three great properties and indicate the large in¬
vestments which require the preservation of the earnings from the
present volume of interchange business.
It has also been shovui that Burlington has a large interchange at
St. Louis, Kansas City and Denver, with important lines reaching
those gateways. The details of these interchange relations are sum¬
marized by important gateways on Burlington Exhibit 20. Ex¬
hibit 18 shows that on the average during five years between and
including 1917 and 1921, Burlington interchange revenue tonnage ag¬
gregated 52.5 per cent of the total, and in terms of freight revenue,
interchange revenue tonnage produced 54.9 per cent of its total freight
earnings. These heavy interchange figures show the long standing
and established routes and channels of trade and commerce through
these gateways and the importance to the continued stability of Bur¬
lington that these relations be not disturbed, and in summarizing the
effect of the tentative plan of the Commission I think we have shown
genuine grounds for anxiety over the result if that plan be carried
out. If the Great Northern or Northern Pacific be disassociated from
Burlington and grouped with Chicago, Milwaukee and St. Paul, either
thereby becomes a competitor instead of a friendly connection and it
is immediately evident that a large part of the competitive inter¬
change which Burlington has enjoyed will be handled over St. Paul
101
rails and Burlin^on intercliange at Twin Cities, Sioux City and
Billings wiU be heavily reduced. If the present independent lines in
the southwest leading to St. Louis, Kansas City and Omaha are car¬
ried through to rest their base upon St. Louis and Chicago and other
intermediate eastern gateways, leaving Burlington lines at St. Louis
and Kansas City without friendly connections, Burlington interchange
revenue at those great gateways vdll in a like manner be heavily
reduced. The plan to incorporate Denver and Bio Grande and West-
em Pacific with Atchison, Topeka and Santa Fe will largely reduce
Burlington interchange at Denver by depriving it of its only friendly
connection at that point. If Colorado and Southern be also grouped
with Santa Fe, the present north and south route above referred to
between BiUings and the Northern lines and Colorado and the south-
west will be seriously impaired and on east and west business between
Burlington and Colorado and Southern there will also he a substan¬
tial loss.
Burlington earnings, in a practical sense, underlie the great bond
obligations which Northern Pacific and Great Northern have incurred
in the purchase and ownership of Burlington. Viewing the destmctive
effect upon Burlington of this plan and the serious dismption of es¬
tablished routes and channels of trade and commerce which affect the
public interest, we have felt it necessary to point out that Burlington
seems to have been singled out in the tentative plan relating to west¬
ern territory, for treatment which will impair its stability and oppor¬
tunity to grow and that through the weakening of Burlington the
Northern lines will be confronted with a financial problem of more
serious consequences than they can undertake to face, and that these
evident results offer no possible encouragement for voluntary action.
The Burlington, Northern Pacific, Great Northern and Colorado
and Southern lines have expressed their desire, and propose, if au¬
thority can be secured, to actually consolidate, and are here asldng
that they be grouped together as a preliminary step to that action.
We have shown that important routes, channels of trade and commerce
have long since been established over these lines and claim the right.
102
under the statute, to have these continued. We have shown that the
construction of the Chicago, Milwaukee and St. Paul line throughout
the territory occupied by the Northern lines, taken with other existing
important through lines, such as Chicago aud Northwestern, Soo Line,
Union Pacific and Southern Pacific, provide active competition for all
but approximately 2 per cent of the total tonnage handled by the North¬
ern Pacific and Great Northern together, so that the grouping of these
lines for purposes of consolidation wiU in no way transgress the com¬
mand of the statute that competition shall be preserved as fully as
possible.
These primary requirements of the statute being thus provided for,
we may say that certainly a prima facie case is made out, requiring
urgent and controlling reasons to justify the disruption of present as¬
sociations and of the financial structure of these Companies and the
loss of interchange revenues that would follow the reduction in the
substantial volume of freight and passenger movement between them;
finally urgent and controlling reasons must exist to disturb the routes
and channels of trade and commerce which the statute requires to bo
maintained "wherever practicable."
The reason which seems to have controlled the Commission in the
development of the tentative plan appears to be a problem of finding a
suitable grouping for the Chicago, Milwaukee and St. Paul line and to
accomplish this that line has been grouped with the Great Northern.
A study of the western railroad map has convinced me that there are
several rational alternate suggestions which would indicate that the
extreme measure of divorcing Great Northern from Burlington is not
necessary.
General Considerations as to Groupings Proposed.
Before developing these suggestions, however, it may be of
help to discuss some of the general features which underlie the pol¬
icy of the Transportation Act as to the method of making rates and
working out railroad groups, under the directions contained in Section
103
15-a. It has come to be understood that the policy of this new legisla¬
tion in this, as in several other particulars, is based upon a survey of
average conditions. Recognizing that this policy will, of course, pro¬
duce individual conditions both below and above an average, other
features of the law, such as the Recapture clause, provide a method of
handling surplus earnings beyond the maximum permitted, as well as
for aid and assistance to individual lines unable to earn the stated
group return. The consolidation provisions of the Act require that
railway properties of the continental United States shall be grouped
for purposes of consolidation "into a limited number of Systems.'' It
would seem that these two provisions in the Act must be considered to¬
gether because when the consolidations are completed it would seem to
follow that each consolidated property should be calculated and ex¬
pected to present average conditions as nearly as may be, so as to earn
the designated rate of return for the group as a whole. If this be not
true, then the fixing of a rate structure for the Western group involves
the application of it to railroad systems widely divergent in type, char¬
acter and location, and it becomes impossible, as I believe, for the rate
regulating body to forecast with any degree of precision the probable
results of the rate structure which it is required to establish and from
time to time, as fundamental changes in the rate structure are called
for, like uncertainty in the result presents itself. On the other hand,
with consolidated systems having reasonably like conditions each to
the other, a distinct element of accuracy in survey and calculation of
results is afforded; and the establishment of rates calculated to earn
the required rate of return is relieved of uncertainty and becomes the
exercise of intelligent action. These views are well illustrated by the
widely divergent results of the increase in rates authorized by the
Commission in Ex Parte 74. While because of other conditions, the
western group failed by a considerable margin to earn the specified
return, individual roads within the group have shown mdely differ¬
ent individual returns. The reason in this particular seems to be be^
cause some of the larger western systems present fairly average con¬
ditions while many others do not have that broad advantage.
104
Each western group should therefore present, as nearly as pos¬
sible, average conditions. This may mean that each should have
broadly the same diversity of traf&c, well balanced by territorial dis¬
tribution, climatic and crop conditions and comparable routes and
channels of trade and commerce, also routes between large cities and
producing and consuming centers of substantial equality that can fur¬
nish adequate competitive service to the public. Stated differently, if
certain groups occupy only one part of the western territory, remem¬
bering the wide diversity in fundamental conditions throughout that
territory and are dependent upon one set only of crop and climatic
conditions and the limitations in volume and types of traffic which those
limited conditions present, those groups unless by accident cannot pre¬
sent average conditions of revenue and expense to the whole rate group.
There would appear under such circumstances to be no rational assur¬
ance that earnings would approximate the average return designed by
the statute.
It may be assumed that these provisions of the law were enacted in
the light of existing practical conditions. In western territory there
were at the time the law was under discussion and are to-day, several
railroad systems presenting reasonably average conditions, but for the
very reason that the law was enacted, an improvement in these condi¬
tions in various respects was deemed essential.
The Atchison, Topeka and Santa Fe Failway System extends from
Chicago throughout the southwest to the Gulf of Mexico, and through¬
out the further southwest to the Pacific Coast, with terminus at San
Francisco, and an interest in a line extending perhaps halfway to the
City of Portland. Probably the great strength of the Santa Fe sys¬
tem is to be partly accounted for by the wise location presenting aver¬
age conditions over its extended territory. The Union Pacific system,
based upon the Missouri Eiver, extends throughout the entire far west
and mth close connections to the east and south has established a
practical system relationship productive again of average conditions
and therefore of sustained earning power. The Southern Pacific system
extending from New Orleans throughout the southwest and on to the
105
north coast with the Central Pacific line to Ogden, presents a similar
situation. The Burlington, Northern Pacific, Great Northern and
Colorado and Sonthem lines extending from Chicago throughout the
northwest, with a line to Denver and strong connections at Kansas City
and St. Louis and with the north and south route developed through
the purchase of the Colorado and Southern, presents a diversified sys¬
tem of traffic local to its own rails, and through interchange with estab¬
lished connection of similar character.
Treatment or the Chicago, Milwaukee and St. Paul.
The Chicago, Milwaukee and St. Paul line was constructed through
to the north coast for the purpose of competing with other strong sys¬
tems already occupying that territory, anticipating it may he assumed
that the continued growth of traffic would provide sufficient revenue
for all lines in that territory. If the volume of traffic has been disap¬
pointing, the result illustrates the necessity for a wider distribution of
supporting territory and a better average of conditions, such as is
found in the case of the other systems referred to.
At the hearing held on November 18, 1922 (Rec., 1475) the sug¬
gestion was developed of combining the Chicago, Milwaukee and St.
Paul with the Soo line and its connection, the Duluth, South Shore
and Atlantic, together with Duluth, Missabe and Northern and Duluth
and Iron Range. I offer in evidence a map showing this combination,
marked Exhibit 251, together with a table of statistics showing rate
of return based upon the standard return of 4.96 per cent. In addi¬
tion to the roads specified, this group should doubtless also include the
Mineral Range, Duluth, Winnipeg and Pacific, Lake Superior and
Ishpeming and Copper Range roads, together with the Spokane and
International. Mr. Geo. R. Martin testified in reference to this sug¬
gestion, comparing this rate of return with returns of several of the
systems suggested in the tentative plan and this map and table of
figures is offered now in connection with the testimony then given.
If average conditions underlie the policy of this law, both in the
fixing of rates for group purposes and in the grouping of railroads so
106
as to enable them to earn as nearly as may be, the specified return,
the grouping of the Chicago, Milwaukee and St. Paul with the Great
Northern or Northern Pacific fails to meet the situation because that
grouping confines those lines to a specified portion of western terri¬
tory and to similar conditions, economic, climatic and physical, and
as compared with other existing systems and tentative groups, leaves
doubt in my mind of the ability of that limited group to measure up to
the average standard of earning power which the law contemplates.
The solution would seem therefore to be to find other grouping for the
St. Paul which will give broader support, wider distribution of mileage
and greater opportunity for the average conditions presented by west¬
ern territory as a whole.
The President of the St. Paul line testified (Bee., 1697) that the
property has not been yielding results, in terms of return upon value,
fairly on the same terms as other roads; a large part of the reason
for this result has been because of lack of volume of business; that
such a large proportion of the St. Paul mileage is west of the Mis¬
souri Eiver where the density of traffic is scant. The principal reason
for lack of results is the lack of tonnage. Asked if the placing of the
St. Paul and the Great Northern together would put the combined sys¬
tem in possession of a larger volume of tonnage that would help to
meet the situation, the "witness answered that in his judgment it would
help a little but not very much. The lines are so far separated that
there would not be any way of diverting any large amount of traffic
over the electrified lines from the Great Northern, to have any great
influence on it.
Mr. Byram was further asked (Bee., 1702):
**Are you at this present time prepared to give us some alternative
suggestion or modification, or lay before us some other statement of
the elements of the problem?
*'A. Yes, I am. I think there is another arrangement for consoli¬
dation of the St. Paul that would do away with practically all of these
difficulties that have heen recited here in the last two or three days,
and perhaps some of the other difficulties, and that would be an alliance
of the St. Paul with the Union Pacific. It seems to me that such an
STATISTICS—EXHIBIT 251.
CHICAGO, MILWAUKEE & ST. PAUL —MINNEAPOLIS, ST. PAUL & SAULT STE. MARIE
DULUTH, MISSABE & NORTHERN, AND DULUTH & IRON RANGE GROUP.
MILES OWNED AND OPERATED, INVESTMENT COSTS, STANDARD RETURN, CAPITAL STOCK,
FUNDED DEBT WITH INTEREST THEREON AND REVENUE TON MILES.
Miles
Operated
Miles
Owned
Investment in
Road and
Equipment
Dec. 31, 1917
Standard
Return
%
Capital Stock
December
Funded Debt
31, 1921
Interest on
Funded
Debt
Revenue Ton
Miles
Dec. 31,1917
Chicago, Milwaukee & St. Paul
Chicago, Terre Haute & Southeastern
Chicago, Milwaukee & Gary
Minneapolis, St. Paul & Sault Ste. Marie
DulutK South Shore & Atlantic
Duluth, Mjssabe & Northern
Duluth & Iron Range
10,625
374
142
4,228
601
411
285
10,262
361
108
4,178
597
403
284
$618,560,579
24,767,369
11,270,535
185,550,746
48,479,725
43,953,260
29,170,380
$27,946,771
922,785
228,777
10,547,429
562,348
5,122,051
2,355,242
4.52
3.72
2.02
5.68
1.16
11.65
8.07
$233,251,800
4,300,000
1,000,000
37,810,200
22,000,000
4,112,500
6,500,000
$410,877,348
19,246,600
5,798,000
102,502,400
20,243,000
9,784,000
8,151,000
$18,767,681
529,978
289,900
4,557,026
873,755
508,583
407,550
10,593,315,618
573,874,163
96,810,822
3,611,368,749
343,513,247
1,905,305,100
896,257,252
Total
16,666
16,193
$961,752,594
$47,685,403
4.96
$308,974,500
$576,602,348
$25,934,473
18,020,444,951
INVESTMENT IN ROAD AND EQUIPMENT DECEMBER 31, 1921.
NET RAILWAY OPERATING INCOME YEAR ENDED DECEMBER 31, 1922,
AND PER CENT EARNED.
Miles
Operated
Investment in
Road and
Equipment
Dec. 31, 1921
Net Railway
Operating
Income
1922
%
Chicago, Milwaukee & St. Paul (incl. C.T.H.&S.E.).
Minneapolis, St. Paul & Sault Ste. Marie
Duluth, South Shore & Atlantic
Duluth, Missabe & Northern
Duluth & Iron Range
11,029
4,383
591
306
280
$686,907,839
199,231,121
48,487,109
46,434,679
30,435,408
$13,284,245
7,178,971
86,962
6,579,607
1,686,323
1.93
3.60
.18
14.17
5.54
Total
16,589
$1,011,496,156
$28,816,108
2.85
NOTE.—^Investment in Road and Equipment excludes Materials and Supplies, Working Cash and
Investments in Property not operated by the Railroad.
Exhibit 251
1
2QW CRERAa
LIBRABX
107
alliance would be much more comprehensive, and do away with these
difSlculties, and altogether clarify the situation.'*
He further testified (Eec., 1703):
'*In the first place the Union Pacific has no lines east of the Mis¬
souri Elver at all. We have none west, except our northern line. I
mean in Nebraska. The only places where we really compete are at
Seattle, and Tacoma. We joiu each other at Spokane, and at Butte, but
the lines of both companies entering there are such that there is no
particular through trafiSc involved. We also join at Kansas City, and
we have for many years had a preferred connection with the Union
Pacific for our westbound business, the business at Council Bluffs and
Omaha, and our main line through Omaha was double tracked for the
express purpose of handling that traffic, so that to allow the traffic to
continue to flow in that channel would not change the situation at aU."
I have abstracted from some recent exhibits that have been offered,
the figures of the interchange between the Chicago & Northwestern,
which includes the C. St. P. M. 0., for the year 1921 with the Union
Pacific, and the C. M. & St. P. The only figures I had for that were
eight months of 1922, but I have estimated the year on the basis of
those figures, so that while these figures are not absolutely accurate,
they give a relationship.
The Northwestern, including the Omaha line, or the C. St. P.
M. & 0., delivered to the Union Pacific at all junctions 43,079 line-
haul loaded cars, and received from the Union Pacific 51,145, or a
total interchange of 94,224 cars.
The St. Paul delivered to the Union Pacific on the estimate I have
referred to, 22,680 cars, and received 32,655 cars, or a total of 55,335
line-haul loaded cars, indicating an approximate relationship in the
interchange between the Northwestern and the Union Pacific, and the
St. Paul and the Union Pacific of 9 to 5.
Continuing Mr. Byram's testimony, he said:
"In the north, it would do away with the problem of what to do with
a third transcontinental line. Assuming that the Commission decided
to finally separate these two northern properties, the Union Pacific
and St. Paul combination would still leave a third line in that north-
em territory, which would be eliminated or reduced to two, under the
plan that is proposed. It would leave no dead ends of important lines
108
to be dried up, as has been feared here, because the Union Pacific's
line joining us at Kansas City would protect our line to Kansas City,
and at Omaha our line would continue to be as it is now, a channel for
through traffic. There would be no competitive problems at all, but
all of the advantages of an eastern connection, if there are any. I
think our Union Pacific friends do not think there would be any, but,
assuming that the Commission took a different view of it, if there are
any advantages in having an eastern connection, our line supplies
them to the Union Pacific very well. All of the advantages of increased
territory and the route for handling traffic to and around Chicago,
are present. A combination of the Union Pacific and the St. Paul
would not make any excessive mileage. I think it is somewhere around
20,000 miles. It is singular how uniform the groupings of these lines
together run. They run uniformly to about 20,000 miles each; so, there
would not be any excessive mileage in that respect, and there would be
a great many advantages to our line, including the one of entrance to
Portland, and that territory, which we are unable to get now through
rates. We are not allowed to take our traffic over our own line for
Portland, from a large part of our territory, because there are no
through rates and our neighbors won't make any, that is, those that
have access to Portland, so we are shut out of the Portland business,
except to take it to Omaha and send it around the short route. Al¬
though originated on our railroad, we are unable to take it on the long
line, so that it seems to me it would be a very consistent arrangement
to group the Union Pacific with the St. Paul."
I offer in evidence a map showing the Union Pacific System and the
Chicago, Milwaukee and St. Paul system grouped together, to be
marked Exhibit 252. Examination of this map shows the advantages
testified to by Mr. Byram. The St. Paul is a double-track railroad be¬
tween Omaha and Chicago and one of the strong connections of the
Union Pacific. It has ample terminals in Chicago and a development
throughout the states of Iowa, Wisconsin and Minnesota quite the
equivalent of any other system in those states. It operates under con¬
tract over the Northern Pacific to Duluth and touches Green Bay and
Escanaba, Wisconsin, with trans-lake ferry service available; in fact
the St. Paul road covers the entire western lake shore, so that lake
terminals and connections by car ferry are as available as exist with
any other system. The Kansas City line of the St. Paul furnishes ad¬
ditional and apparently valuable and desirable connection with Union
Pacific line reaching Kansas City. The St. Paul connects with the
STATISTICS—EXHIBIT 252.
CHICAGO, MILWAUKEE & ST. PAUL —UNION PACIFIC SYSTEM —
WABASH (WEST OF MISSISSIPPI RIVER) GROUP
MILES OWNED AND OPERATED, INVESTMENT COSTS, STANDARD RETURN, CAPITAL STOCK,
FUNDED DEBT WITH INTEREST THEREON AND REVENUE TON MILES.
Miles
Operated
Miles
Owned
Investment in
Road and
Equipment
Dec. 31, 1917
Standard
Return
%
Capital Stock
Decembe
Funded Debt
r 31, 1921
Interest on
Funded
Debt
Revenue Ton
Miles
Dec. 31, 1917
Chicago, Milwaukee & St. Paul
Chicago, Terre Haute & Southeastern
Chicago, Milwaukee & Gary
Union Pacific System
Los Angeles & Salt Lake
St. Joseph & Grand Island
Wabash (West of Mississippi River)
10,625
374
142
8,003
1,164
259
881
10,262
361
108
7,889
1,034
258
881
$618,560,579
24,767,369
11,270,535
596,399,825
82,600,440
19,473,064
72,514,842
$27,946,771
922,745
228,777
38,552,929
3,414,751
373,811
2,039,383
4.52
3.72
2.02
6.46
4.13
1.91
2.81
$233,251,800
4,300,000
1,000,000
321,836,600
25,000,000
13,599,400
52,627,164
$410,877,348
19,246,600
5,798,000
379,665,530
59,022,000
4,000,000
28,301,180
$18,767,681
529,978
289,900
15,914,445
2,360,880
160,000
1,384,770
10,593,315,681
573,874,163
96,810,822
11,040,260,259
722,502,533
192,758,662
1,674,881,178
Total
21,448
20,793
$1,425,586,654
$73,479,167
5.15
$651,614,964
$906,910,658
$39,407,654
24,894,403,298
INVESTMENT IN ROAD & EQUIPMENT, DECEMBER 31, 1921.
NET RAILWAY OPERATING INCOME YEAR ENDED DECEMBER 31, 1922,
AND PERCENT EARNED.
Miles
Operated
Investment
in Road and
Equipment
Dec. 31, 1921
Net Railway
Operating
Income
1922
%
Chicago, Milwaukee & St. Paul (Incl. C. T. H. & S. E.)
Union Pacific System
Los Angeles & Salt Lake
St. Joseph & Grand Island
Wabash (West of Mississippi River)
11,029
8,285
1,139
258
865
$ 686,907,839
647,743,173
87,301,334
19,158,747
77,970,300
$ 13,284,245
32,070,928
1,425,390
70,029
1,437,265
1.93
4.95
1.63
.37
1.84
Total
21,576
$1,519,081,393
$ 48,287,857
3.18
NOTE.—Investment in Road and Equipment excludes Materials and Supplies, Working Cash and Investments
in Property not operated by the Railroad.
•owfon
'^3feiio
SioujK Ci*-
Omaha
Grand Islan
Hannibo\
Lo& Angeles
San Pedro
Exhibit 252
C. M. & St. p. - Union Pacific
W^abash (West of Miss. River)
Chicago, IWitwauKee Ot St. Paul
Chicago, Terre Haute & Southeastern
Chicago, Milwaukee & Gary
Union Pacific System
Los Angeles & Salt Lake
St, Joseph & Grand Island
Wabash {West of Mississippi River)
THS
^ "HN CRBRAR
.IBRARX
109
#
Union Pacific at Butte, Montana, and Spokane, Seattle and Tacoma as
well as some intermediate junctions. A combination of these systems
would provide the line into Portland referred to by Mr. Byram. For
business moving between Chicago and Spokane and Seattle, the dis¬
tance via Chicago, Milwaukee and St. Paul is substantially shorter
than via the present Union Pacific lines via Omaha, and it would seem
that a combination of these lines would give improved service, par¬
ticularly a better car supply at the far west end, and offer for north¬
west coast business two excellent available routes which should post¬
pone the need for further double tracking on present Union Pacific
lines in that territory and provide additional density on the electrified
divisions of the St. Paul, which is said to be needed to secure thei de¬
sired economies from that type of operation.
The distance from Chicago to Butte, Montana, via the St. Paul line
is 1,523 miles, as compared with 1,813 miles via the Northwestern
and the Union Pacific. To Spokane via the St. Paul it is 1,881 miles
as compared with 2,302 miles via the Northwestern and the Union
Pacific. To Seattle, via the St. Paul, it is 2,190 miles as compared with
2,449 miles via the Northwestern and the Union Pacific. To Tacoma
"\da the St. Paul it is 2,209 miles as compared with 2,411 miles via the
Northwestern and Union Pacific.
A comparison of the lines of the Chicago and Northwestern and
Chicago, Milwaukee and St. Paul, would seem to indicate little ground
for difference as between them east of the Missouri Biver, with the
added advantage in the case of the St. Paul of the Kansas City con¬
nection vuth the Union Pacific at that point. The addition of the
Wabash line between Omaha and Kansas City and St. Louis would give
this combination access to St. Louis and points beyond, basing it upon
St. Louis as well as Chicago. I offer this map as evidence of a logical
and legitimate suggestion for a combination having excellent reasons
to justify it and one which may be approved without necessity of radi¬
cal disturbance in the present status of the Great Northern which tho
tentative plan of the Commission involves.
The Chicago, Milwaukee and St. Paul lines and those of the Ulinoia
110
Central system offer an interesting study for purposes of being
grouped together. They present a group having complementary mile¬
age throughout the Mississippi Valley and with access to the Gulf and
to the Pacific Coast. The heavy production of southern Illinois coal
on the Illinois Central finds a considerable market in Wisconsin, north¬
ern Iowa and southern Minnesota. The southbound movement of grain
over the Illinois Central for export would be increased by the addi¬
tional grain producing territory served by the eastern lines of the St.
Paul, and southern lumber as well as western lumber moving into the
Mississippi Valley would seem to be productive of tonnage for delivery
on this combined system. I offer in evidence a map to be marked as
Exhibit 253, showing these two systems in combination. If additional
mileage connecting Omaha, Kansas City and St. Louis and giving a
wider distribution of territory and a nearer approach to an average
condition should be desirable, the addition of the Missouri Pacific lines
would seem to strengthen the combination, and I offer in evidence a
map showing the combined lines of the Illinois Central, Chicago, Mil¬
waukee and St. Paul, and Missouri Pacific systems, to be marked Ex¬
hibit 254. By the addition of the Missouri Pacific an efficient connec¬
tion is provided between Omaha and Kansas City. The southern mile¬
age of the Missouri Pacific moves a heavy volume of tonnage to and
from Kansas City, which would lend support to the line of the Chicago,
Milwaukee and St. Paul terminating at that gateway. The same is
true at St. Louis, and the Missouri Pacific affords an efficient line be¬
tween Kansas City and St. Louis and an alternate route from the south¬
east via Kansas City and Omaha to St. Paul territory in the north and
west.
While it is true that these alternative suggestions must be taken
and studied in connection with the groups of other western systems,
it is evident from the accompanying table of statistics that the earning
power of each of these combinations is substantial and reasonably bal¬
anced, as compared with those for other systems in western territory
as will be indicated by later exhibits. These maps and tables are of¬
fered as additional legitimate and tentative suggestions, logical in
STATISTICS—EXHIBIT 253.
ILLINOIS CENTRAL—CHICAGO, MILWAUKEE & ST. PAUL GROUP.
MILES OWNED AND OPERATED, INVESTMENT COSTS, STANDARD RETURN, CAPITAL STOCK,'
FUNDED DEBT WITH INTEREST THEREON AND REVENUE TON MILES.
Miles
Operated
Miles
Owned
Investment
in Road and
Equipment
Dec. 31, 1917
Standard
Return
%
Capital
Stock
Decembe
Funded
Debt
r 31, 1921
Interest
on Funded
Debt
Revenue
Ton Miles
December 31,
1917
Chicago, Milwaukee & St. Paul
Chicago, Terre Haute & Southeastern
Chicago, Milwaukee & Gary
Illinois Central
Yazoo & Mississippi Valley
Central of Georgia
10,625
374
142
4,818
1,382
2,022
10,262
361
108
4,477
1,280
2,067
$ 618,560,579
24,767,369
11,270,535
318,361,948
63,799,814
73,655,532
$27,946,771
922,785
228,777
16,466,251
3,862,318
3,402,065
4.52
3.72
2.02
5.17
6.05
4.62
$233,251,800
4,300,000
1,000,000
109,295,867
21,553,300
20,000,000
$410,877,3^8
19,246,600
5,798,000
264,962,885
31,833,000
45,400,030
$18,767,681
529,978
289,900
10,928,659
1,423,330
2,329,290
10,593,315,681
573,874,163
96,810,822
11,234,067,259
1,966,960,536
1,052,560,223
Total
19,363
18,555
$1,110,415,777
.$52,828,967
4.76
$389,400,967
$778,117,863
$34,268,838
25,517,588,684
INVESTMENT IN ROAD AND EQUIPMENT DECEMBER 31st, 1921.
NET RAILWAY OPERATING INCOME YEAR ENDED DECEMBER 31st, 1922
AND PERCENT EARNED.
Miles
Operated
Investment
in Road and
Equipment
Dec. 31, 1921
Net Railway
Operating
Income
1922
%
Illinois Central
Yazoo & Mississippi Valley
Central of Georgia
Chicago, Milwaukee & St. Paul (Inch C.T.H.& S.E.)
4,784
1,381
1,919
11,029
$ 394,505,808
68,582,580
75,003,370
686,907,839
$25,121,128
1,631,609
4,375,578
13,284,245
6.37
2.38
5.83
1.93
Total
19,113
$1,224,999,597
$44,412,560
3.63
NOTE.—Investment in Road and Equipment excludes Materials and Supplies, Working Cash and Invest¬
ments in Property not operated by the Railroad.
Exhitk 253
the
john crurab
STATISTICS—EXHIBIT 254.
ILLINOIS CENTRAL—CHICAGO, MILWAUKEE & ST. PAUL-MISSOURI PACIFIC GROUP
MILES OWNED AND OPERATED, INVESTMENT COSTS, STANDARD RETURN, CAPITAL STOCK,
FUNDED DEBT WITH INTEREST THEREON, AND REVENUE TON MILES.
Miles
Operated
Miles
Owned
Investment
in Road and
Equipment
Dec. 31, 1917
Standard
Return
%
Capital
Stock
Decembei
Funded
Debt
r 31, 1921
Interest
on Funded
Debt
Revenue
Ton Miles
December
31, 1917
Chicago, Milwaukee & St. Paul
Chicago, Terre Haute & Southeastern
Chicago, Milwaukee & Gary
Illinois Central
Yazoo & Mississippi Valley
Central of Georgia
Missouri Pacific
10,625
374
142
4,818
1,382
2,022
7,348
10,262
361
108
4,477
1,280
2,067
6,842
$ 618,560,579
24,767,369
11,270,535
318,361,948
63,799,814
73,655,532
350,659,717
$27,946,771
922,785
228,777
16,466,251
3,862,318
3,402,065
14,312,344
4.52
3.72
2.02
5.17
6.05
4.62
4.08
$233,251,800
4,300,000
1,000,000
109,295,867
21,553,300
20,000,000
154,639,600
$410,877,438
19,246,600
5,798,000
264,962,885
31,833,000
45,400,030
243,447,980
$18,767,681
529,978
289,900
10,928,659
1,423,330
2,329,290
11,152,933
10,593,315,681
573,874,163
96,810,822
11,234,067,259
1,966,960,536
1,052,560,223
7,784,444,725
Total
26,711
25,397
$1,461,075,494
$67,141,311
4.60
$544,040,567
$1,021,565,843
$45,421,771
33,302,033,409
INVESTMENT IN ROAD AND EQUIPMENT DECEMBER 31st, 1921.
NET RAILWAY OPERATING INCOME YEAR ENDED DECEMBER 31st, 1922, AND PERCENT
EARNED.
1 .. 5 ,
Miles
Operated
P
Investment
in Road and
Equipment
Dec. 31, 1921
Net Railway
Operating
Income
1922
%
Chicago, Milwaukee & St. Paul (Inch C.T.H.& S.E.).
Illinois Central
Yazoo & Mississippi Valley
Central of Georgia
Missouri Pacific
ll,b29
4,784
1,381
1,919
7,261
$ 686,907,839
394,505,808
68,582,580
75,003,370
382,277,854
$ 13,284,245
25,121,128
1,631,609
4,375,578
8,247,035
1.93
6.37
2.38
5.83
2.16
Total
26,374
$1,607,277,451
$52,659,595
3.28
NOTE.—Investment in Road and Equipment excludes Materials and Supplies, Working Cash and Invest¬
ments Jn Property not operated by the Railroad.
Exhibit 254
^pid Cffy
Indianajwhs
GhoUonooqo
Tfcxorkona
ivannah
New Orleans
Illinois Central - C. M. & St. P.
Mo. Pac. Group
Illinois Central
Yazoo & Mississippi Valley
Central of Georgia
Chicago, Miiwaukee & St. Paul
Chicago, Terre Haute & Southeastern
Chicago, Milwaukee & Gary
Missouri Pacific
HHOC
IHI
Ill
cliaracter and I believe worthy of further study. Again they indicate
not only a better and stronger combination for St. Paul than that pro¬
posed in the tentative plan, more nearly approaching average condi¬
tions and contributing greater strength, but also prove that a disrux)-
tion of the present long standing close relations between Burlington,
Northern Pacific and Great Northern is not necessary in order to deal
fairly "with the Chicago, Milwaukee and St. Paul.
Treatment op Chicago ahd Northwestern paiiiwat.
Pursuing the inquiry further, if St. Paul be grouped Avith Union
Pacific, the question of the Chicago and Northwestern presents itself
and I venture to add one or two tentative suggestions for further study
as to that important system.
I hope I may escape the charge that I am undertaking to make a
map of western territory or even to argue the future of other western
systems Avith which I obviously have no concern and for Avhich I carry
- * t.
no responsibility. I hope, hoAvever, to be helpful in the making of these
tentative suggestions and acknowledge that the reason they are made
is because I am persuaded that it is unAvise, impossible and unneces¬
sary to break up the long standing and, as I believe, efficient close rela¬
tionship between Burlington, Great Northern and Northern Pacific.
Those lines desire not only to maintain their relationship because they
believe it is in the public interest and necessary for the financial struc¬
ture which surrounds them; they are willing and prepared to proceed
to actual consolidation if authority is given for that purpose and hav¬
ing before us the problem Avhich the tentative plan has unfortunately
presented, we are compelled to go further and make the effort to indi¬
cate certain lines of thought and study a\ffiich may be of help in the solu¬
tion of this problem and in the preservation of the earning power of
the properties owned by those companies.
112
As to the Chicago and Northwestern, in that spirit it may be
grouped with the Illinois Central and I offer in evidence a map and
tables of statistics *showdng that combination which may be marked
Exhibit 255. The rate of return indicated on this group is 5.48 per
cent based on the standard return and examination of the map shows
that this combination would present a system having strong features.
That system may likewise be grouped with Illinois Central and Mis¬
souri Pacific, and I offer in evidence map which may be marked Ex¬
hibit 256, showing the lines of those three systems grouped together.
I have said that it seemed to me that each western system ought to
have, an outlet to the Pacific Coast and a later suggestion as to the
Chicago and Northwestern mil carry out that idea, but it would seem
legitimate to consider Chicago and Northwestern, Illinois Central and
Missouri Pacific aside from that general principle and as a strong
Mississippi Valley combination. A close similarity between the Chi¬
cago, Milwaukee and St. Paul eastern lines and the Northwestern
make the same observations as to complementary nature appropriate.
This "map shows how well these three systems would seem to fit to¬
gether in the interchange of the important items of traffic which they
each carry. By this combination they mil occupy substantially all
of the great western centers of traffic and be in a position to inter¬
change with connections, both east and west. The calculation of the
apparent results of operation of this combination shows comparative
strength and earning power and the attention of the Commission is
invited to this suggestion.
Another interesting arrangement for the Chicago and Northwest¬
ern would be to combine it mth the Illinois Central and Soo Line,
and I offer in evidence map to be marked Exhibit 257, mth tables of
figures showing the apparent results of that combination. I shall a
little later have another suggestion to make with reference to the Chi¬
cago and Northwestern.
STATISTICS—EXHIBIT 255.
ILLINOIS CENTRAL-CHICAGO & NORTHWESTERN GROUP.
MILES OWNED AND OPERATED, INVESTMENT COSTS, STANDARD RETURN, CAPITAL STOCK,
FUNDED DEBT WITH INTEREST THEREON AND REVENUE TON MILES.
Miles
Operated
Miles
Owned
Investment
in Road and
Equipment
Dec. 31, 1917
Standard
Return
%
Capital Stock
Decembei
Funded Debt
' 31, 1921
Interest on
Funded
Debt
Revenue
Ton Miles
December 31,
1917
Illinois Central
Yazoo & Mississippi Valley
Central of Georgia
Chicago & Northwestern
Chicago, St. Paul, Minneapolis & Omaha
4,818
1,382
2,022
8,410
1,749
4,477
1,280
2,067
8,388
1,677
$318,361,948
63,799,814
73,655,532
414,412,131
79,656,153
$16,466,251
3,862,318
3,402,065
23,364,029
4,934,790
5.17
6.05
4.62
5.64
6.20
$109,295,867
21,553,300
20,000,000
167,577,024
29,818,946
$264,962,885
31,833,000
45,400,030
238,450,600
45,001,200
$10,928,659
1,423,330
2,329,990
11,218,008
2,478,531
11,234,067,259
1,966,960,536
1,052,560,223
9,270,928,675
1,678,230,772
Total
18,381
17,889
$949,885,578
$52,029,453
5.48
$348,245,137
$625,647,715
$28,378,518
25,202,747,465
INVESTMENT IN ROAD AND EQUIPMENT, DECEMBER 31, 1921.
NET RAILWAY OPERATING INCOME YEAR ENDED DECEMBER 31, 1922,
AND PERCENT EARNED.
Miles
Operated
Investment
in Road and
Equipment
Dec. 31, 1921
Net Railway
Operating
Income
1922
%
Illinois Central
Yazoo & Mississippi Valley
Central of Georgia
Chicago & Northwestern
Chicago, St. Paul, Minneapolis & Omaha
4,784
1,381
1,919
8,403
1,749
$ 394,505,808
68,582,580
75,003,370
453,946,192
86,370,096
$ 25,121,128
1,631,609
4,375,578
17,036,305
3,812,671
6.37
2.38
5.83
3.75
4.41
Total
18,236
$1,078,408,046
$ 51,977,291
4.82
NOTE.—Investment in Road and Equipment excludes Materials and Supplies, Working Cash and Investments
in Property not operated by the Railroad.
St.Louis
LOUIS'
Chattanooqa
Savannah
,omfr
Exhibit '255
lliinois Central
Yazoo & Mississippi Valley
Central of Georgia
Ctiicago & Northwestern
Chicago, St. Paul, Minneapolis & Omaha
Illinois Central
C. & N. W. Group
STATISTICS—EXHIBIT 256.
ILLINOIS CENTRAL-CHICAGO & NORTHWESTERN-MISSOURI PACIFIC GROUP.
MILES OWNED AND OPERATED, INVESTMENT COSTS, STANDARD RETURN, CAPITAL STOCK,
FUNDED DEBT WITH INTEREST THEREON AND REVENUE TON MILES.
Miles
Operated
Miles
Owned
Investment
in Road and
Equipment
Dec. 31, 1917
Standard
Return
%
Capital Stock
Decembei
Funded Debt
r 31, 1921
Interest on
Funded
Debt
Revenue
Ton Miles
December 31,
1917
Illinois Central
Yazoo & Mississippi Valley
Chicago & Northwestern
Hs Chicago, St. Paul, Minneapolis & Omaha
Missouri Pacific
Central of Georgia
4,818
1,382
8,410
1,749
7,348
2,022
4,477
1,280
8,388
1,677
6,842
2,067
$ 318,361,948
63,799,814
414,412,131
79,656,153
350,659,717
73,655,532
$16,466,251
3,862,318
23,364,029
4,934,790
14,312,344
3,402,065
5.17
6.05
5.64
6.20
4.08
4.62
$109,295,867
21,553,300
167,577,024
29,818,946
154,639,600
20,000,000
$264,962,885
31,833,000
238,450,600
45,001,200
243,447,980
45,400,030
$10,928,659
1,423,330
11,218,008
2,478,531
11,152,933
2,329,290
11,234,067,259
1,966,960,536
9,270,928,675
1,678,230,772
7,784,444,725
1,052,560,223
Total
25,729
24,731
$1,300,545,295
$66,341,797
5.10
$502,884,737
$869,095,695
$39,530,751
32,987,192,190
INVESTMENT IN ROAD AND EQUIPMENT, DECEMBER 31, 1921.
NET RAILWAY OPERATING INCOME YEAR ENDED DECEMBER 31, 1922,
AND PERCENT EARNED.
Miles
Operated,
Investment
in Road and
Equipment
Dec. 31, 1921
Net Railway
Operating
Income
1922
%
Illinois Central
Yazoo & Mississippi Valley
Central of Georgia
Chicago & Northwestern
Chicago, St. Paul, Minneapolis & Omaha
Missouri Pacific
4,784 '
1,381
1,919
8,403
1,749
7,261
$ 394,505,808
68,582,580
75,003,370
453,946,192
86,370,096
382,277,854
$ 25,121,128
1,631,609
4,375,578
17,036,305
3,812,671
8,247,035
6.37
2.38
5.83
3.75
4.41
2.16
Total
25,497
$1,460,685,900
$ 60,224,326
4.12
NOTE.—Investme nt in Road and Equipment excludes Materials and Supplies, Working Cash and Investments
in Property not operated by the Railroad.
Illinois Central - Chicago &
Northwestern - Mo. Pacific
Group
Illinois Central
Yazoo & Mississippi Valley
Chicago & Northwestern
Chicago, St. Paul, Minneapolis & Omaha
Missouri Pacific
Central of Georgia
Duluth
Oakes'
SI. Paul
linsieapoiis/
Des Moines
Omaha
.Sl.Joseph Spn<K]field
Kans^City \
Stock-ton
LOuisviile
Wichiti
Ft. Smith
Chattanooyo
lirminqhai
Texarkann^-
Jackson
Lake Charles
New Orleans
Exliibit 256
THE •
JOHN CREm ,'\c
STATISTICS—EXHIBIT 257
ILLINOIS CENTRAL—MINNEAPOLIS, ST. PAUL & SAULT STE. MARIE—CHICAGO & NORTHWESTERN GROUP
MILES OWNED AND OPERATED, INVESTMENT COSTS, STANDARD RETURN, CAPITAL STOCK, FUNDED DEBT WITH INTEREST THEREON
AND REVENUE TON MILES.
Miles
Operated
Miles
Owned
Investment
in Road and
Equipment
Dec. 31, 1917
Standard
Return
%
Capital Stock
Decembei
Funded Debt
" 31, 1921
Interest
on Funded
Debt
Revenue
Ton Miles
December 31,
1917
Illinois Central
Yazoo & Mississippi Valley
Central of Georgia
Minneapolis, St. Paul & Sault Ste. Marie
Duluth, South Shore & Atlantic
Chicago & Northwestern
Chicago, St. Paul, Minneapolis Omaha....
4,818
1,382
2,022
4,228
601
8,410
1,749
4,477
1,280
2,067
4,178
697
8,388
1,677
$ 318,361,948
63,799,814
73,655,532
185,550,746
48,479,725
414,412,131
79,656,153
$16,466,251
3,862,318
3,402,065
10,547,429
562,348
23,364,029
4,934,790
6.17
6.05
4.62
5.68
1.16
5.64
6.20
$109,295,867
21,553,300
20,000,000
37,810,200
22,000,000
167,577,024
29,818,946
$264,962,885
31,833,000
45,400,000
102,502,400
20,243,000
238,450,000
45,001,200
$10,928,659
1,423,330
2,329,290
4,557,026
873,755
11,218,008
2,478,531
11,234,067,259
1,966,960,536
1,052,660,223
3,611,368,749
343,513,247
9,270,928,675
1,678,230,772
Total
23,210
22,664
$1,183,916,049
$63,139,230
5.33
$408,055,337
$748,392,485
$33,808,599
29,157,629,461
INVESTMENT IN ROAD AND EQUIPMENT DECEMBER 31, 1921.
NET RAILWAY OPERATING INCOME YEAR ENDED DECEMBER 31, 1922, AND PERCENT
EARNED.
¥
Miles
Operated
Investment
in Road and
Equipment
Dec. 31, 1921
Net Railway
Operating
Income
1922
%
Illinois Central
Yazoo & Mississippi Valley
Central of Georgia
Minneapolis, St. Paul & Sault Ste. Marie
Duluth, South Shore & Atlantic
Chicago & Northwestern
Chicago, St. Paul, Minneapolis & Omaha
4,784
1,381
1,919
4,383
591
8,403
1,749
$ 394,505,808
68,582,580
75,003,370
199,231,121
48,487,109
453,946,192
86,370,096
$ 25,121,128
1,631,609
4,375,578
7,178,971
86,962
17,036,305
3,812,671
6.37
2.38
5.83
3.60
.18
3.75
4.41
Total
23,210
$1,326,126,276
$59,243,224
4.47
NOTE.—Investment in Road and Equipment excludes Materials and Supplies, Working Cash and Invest
ments in property not operated by the Railroad.
i
Exhibit257
Illinois Central - See Line
C. & N. W. Group
Illinois Central
Yazoo & Mississippi Valley
Central of Georgia
Minneapolis, St. Paul & Sault St. Marie
Duiuth, South Shore & Atlantic
Chicago & Northwestern
Chicago, St. Paul, Minneapolis & Omaha
Emersori
Calumet
Sault Ste. Marie
Escanaba
Minneapolis
-1^
Albert Lea
iMadison
Omaha
Peoria
Superior
Louisville
St. Louis
J80k5or^
Chattanoog_a
Memphis.
Atlanta
Savanna
Montqom^;;^
Jackson
Natche^
THE
T .BHi'^
113
Four-Group Plan for Western Territory.
Kesponding to the inquiry of Mr. Commissioner Hall at the hearing
on November 17th (Rec., 1397), that if I have faith in the suggestion
that the western mileage may be effectively grouped into four prin¬
cipal systems I should contribute a concrete suggestion for that pur¬
pose, I now offer in evidence a set of maps to be marked Exhibit 258,
with accompanying statistical references showing mileage, investment
in' road and equipment, percentage of return and other essential fea¬
tures, all of these being summarized in a recapitulation at the begin¬
ning of the exhibit.
Before discussing these maps in details, I wish to recall the basis
which has led me to express this view. In the first place the western
mileage is already, as I have before stated, in a general sense largely
grouped in a few large systems, loosely welded together but definitely
related in physical, traffic and financial relations. There are, however,
several important independent and smaller lines, aside from a larger
number of so-called Shoi't Lines and lesser properties with which I am
liot now undertaking to deal. ■ The statute requires that' the railroads
be grouped for" purposes of consolidation into a limited number of
systems, and it appears to have been the view of the Commission in
developing the tentative plan, that further progress toward a lesser
number of systems and a greater degree of association is expected in
western territory. This is probably in keeping with the intent of
the law." It is further in keeping with the underlying policy of the
rate making provisions as \vell, because as before pointed out the con¬
solidation provision and the rate making provisions seem" to be com¬
plementary to each other and bear one Upon "the other. I have adopted
the view of the Commission that in carrying out these requirements
western Systems should be based upon points like Chicago and St.
Louis where immediate connection is made with eastern and south¬
eastern railroads and the whole basis of the suggestion which I shall
make rests upon the assumption that this course is logical and neces¬
sary.
114
Present day conditions are the result of gradual growth and the
sensitive balance of interchange relations between connecting carriers
in western territory cannot be disturbed without serious results, un¬
less in the changes that are made a similar balance is restored. I
mean by this that to-day we have certain through lines like Santa Fe,
now based on Chicago and with connecting lines on St. Louis, and ex¬
tending through Western gateways like Kansas City to the south¬
west and far west. The close association of Southern Pacific and
Pock Island presents a like situation, Rock Island having its own
rails from Chicago and St. Louis through to connections with South-
em Pacific at Texas points, including El Paso gateway. Other lines
not having such extensive mileage of their own have long standing
traffic interchange relations, such as Burlington at Kansas City with
lines like St. Louis-San Francisco, Missouri, Kansas and Texas, Kan¬
sas City Southern and others. As a result of these varied conditions,
through routes and channels of trade and commerce have long been
in effect, competitive in character and as before fully explained, the
maintenance of these heavy lines of supporting revenue tonnage move¬
ment by the maintenance of these great gateways of interchange traffic
is absolutely vital and essential to the continued strength and growth
of every line where such relations exist. The tentative plan of the
Commission proposes to bring the southwestern lines through, by
consolidation, to Chicago and St. Louis, leaving lines like Burlington
obviously deprived of a large amount of competitive interchange at
Kansas City and St. Louis. The same conditions have been pointed
out at other gateways, such as Denver and Omaha. As a further
illustration .not before specifically mentioned, the Commission pro¬
poses in tentative system 19 to group Missouri Pacific, Kansas City
Southern and other southwestern lines with Chicago and Eastern Illi¬
nois. Burlington interchanges a large volume of competitive traffic
at Kansas City with, Kansas City Southern for points north of Kansas
City such as Omaha, intermediate territory, and points beyond. Mis¬
souri Pacific operates an efficient line between Kansas City and
Omaha, and if grouped with Kansas City Southern will have through
rails from Kansas City Southern territory to points north of Kansas
115
City, thereby threatening Burlington interchange at that point. These
examples can he multiplied, hut sufficient has been said to indicate
the justice of the statement that the plan of the Commission either
goes too far, or does not go far enough. In carrying southwestern
lines through the great gateways of Kansas City and St. Louis, no
adequate provision is left for the stub lines of Burlington and other
carriers resting on those gateways, and for this reason it is evident
that the plan will be harmful in these important features because it
offers these stub lines no adequate protection in the southwest in ex¬
change for the loss of their interchange.
Assuming therefore that the plan to base all western groups on
Chicago and St. Louis is fundamental, it becomes necessary to point
out at least a legitimate and logical way in which the Commission's
plan may go further so that these serious consequences may be es¬
caped and corrected. Without including some of the smaller mileage
which obviously in great systems would be only of a branch line char¬
acter, western operated mileage may be stated as approximately 135,-
000 miles, and divided into four parts roughly would indicate systems
of somewhat over 30,000 miles each. I offered in evidence at the hear-
• ing on November 17th a table of figures copied on page 1362^| of the
Eecord, comparing one-fourth of western mileage and other financial,
operating and traffic statistics vdth similar figures on the existing
New York Central and Pennsylvania systems, to which I wish now to
again make reference. In that table one-fourth of the total miles of
all tracks of western lines is shovui aggregating 46,805 miles, but
these include all trackage and short lines, etc., whereas the figures
should be limited in my opinion to miles of line. As before indicated,
however, geographical extent and line, or track mileage does not seem
to me to be the important test. There are to-day systems like the
Santa Fe extending from Chicago to Galveston, San Diego and San
Francisco with mileage approximately half way beyond towards Port¬
land. Southern Pacific owns and operates mileage from Seattle to New
Orleans and to' Ogden. Union Pacific operates from Omaha to Seattle,
San Francisco and Los Angeles. Burlington, Northern Pacific, Great
Northern and Colorado and Southern with subsidiary companies
116
have been associated for many years in the operation of approxi¬
mately 28,000 miles of line.
The Commission in its plan" proposes to group for purposes of
consolidation the Union Pacihc and Chicago and Northwestern, indi¬
cating a consolidated system from Duluth and Chicago to Los Angeles,
San Francisco and Seattle. It would seem therefore to follow that
in geographical extent alone, western groups covering generally the
entire western territory offer no objection.
The more essential features in my judgment, however, are the vol¬
ume of business, the quantity of equipment, the number of employees
and like features indicating the quantity of management required for
effective administration and operation. Comparing one-fourth of
western statistics in these particulars with existing conditions on New
York Central and Pennsylvania systems, the exhibit before referred
to shows that in substantially all features the problems of manage¬
ment are to-day greater in volume and extent in those two eastern
systems than upon a tentative western system covering one-fourth of
western railroad operation, and I direct attention to those figures in
support of the view that the problem of management for four western
groups does not present objection to the plan. ♦
Using the figures for the year ended December 31, 1917, the rail¬
way operating revenues for this tentative one-fourth of the western
mileage, in round figures, would be $412,000,000 as compared with
New York Central actual of $472,000,000 and Pennsylvania actual of
$458,000,000.
The expenses of this western system would be $274,000,000, as com¬
pared with New York Central expenses of $341,000,000 and Pennsyl¬
vania expenses of $357,000,000.
The freight train miles, one-fourth of the western lines would in¬
dicate 69,000,000 in round numbers as compared wuth 65,000,000 of the
New York Central, and 62,000j000 of the Pennsylvania.
Passenger train miles, 62,000,000 of the western system as against
71,000,000 of the New York Central and 64,000,000 of the Pennsylvania.
117
Now, the total tons of revenue freight originating on line for this
one-fonrth western system is 115,000,000 tons as compared with 126,-
000,000 on the New York Central and 183,000,000 on the Pennsylvania.
The total ton miles of revenne and nonrevenne freight on the west¬
ern system wonld be 40 billion, as compared with 49 billion on the New
York Central and 50 billion on the Pennsylvania.
The passengers carried wonld obviously be much less, being only
70,000,000 on the western system, as compared with 149,000,000 on the
New York Central and 198,000,000 on the Pennsylvania.
Correspondingly, the passenger miles on the western system would
be 3,875,000,000, as compared vuth 5,455,000,000 on the New York
Central and 5,176,000,000 on the Pennsylvania.
This western s^^^stem would have 5,995 locomotives, whereas the
NeAV York Central has 7,267 locomotives and the Pennsylvania 7,172
locomotives.
In total tractive capacity in pounds the relationship would be as
between 194,000,000 in the western system and 247,000,000 on the New
York Central and 270,000,000 on the Pennsylvania.
The number of freight train cars on this Western system would
amount to 206,000, whereas the New York Central had in that year
291,000 and the Pennsylvania 270,000.
Finally, passing over some of the other statistics showing like re¬
sults, the average number of employees on this western system would
be 169,755, as compared with 196,047 on the New York Central and
221,074 on the Pennsylvania.
It would seem that successful operation would only require a skill¬
ful scheme of organization, with proper subdivisions directed by effi¬
cient and comprehensive local authority and there is ample precedent
in existing organizations for the moderate extension of that idea in
the event these somewhat larger groups should be approved.
118
With these preliminaries and assuming as before stated that the
laAv contemplates average conditions throughout the western rate
group so that there may be intelligent rate administration of the ter¬
ritory and fairly equal competitive opportunity, each system with the
other, it seems necessarily to follow that these western systems based
on Chicago and St. Louis, should each have an outlet throughout the
southwest, and to the Gulf of Mexico, including access to Mexico and
access throughout western territory to the Pacific Ocean. It is obvi¬
ous that exact equality cannot be secured upon any possible plan, but
that a reasonable approximation of like conditions is all that is avail¬
able and all that the statute requires.
With these views in mind therefore, I have undertaken by these
maps to tentatively suggest for consideration, the following four main
groups:
Group 1.
Miles Percent of Return Based
Operated On Standard Return
Chicago, Burlington & Quincy
(Inc. QO&KC)
Great Northern
Northern Pacific
Spokane, Portland & Seattle,
Colorado and Southern
Fort Worth and Denver City
Wichita Valley
Trinity & Brazos Valley
Colorado and Wyoming
Green Bay and Western
Kansas City Southern
Louisiana Railway & Navigation Co.
Chicago Great Western 30,945 5.64
119
Geoup 2.
Miles Percent of Return Based
Operated On Btamdard Return
Atchison, Topeka & Santa Fe System
Chicago & Northwestern
Chicago, St. Paul, Minneapolis & Omaha
Northwestern Pacific
Midland Valley
Missouri & North Arkansas
Louisiana & Arkansas
Fort Smith & Western
Mineral Range
Duluth, Missabe & Northern
Duluth & Iron Range
Spokane International
Duluth, Winnipeg & Pacific
Copper Range
Lake Superior & Ishpeming
Minneapolis, St. Paul & Sault St. Marie
Duluth, South Shore & Atlantic
St. Louis & Southwestern
Chicago & Eastern Illinois
New Orleans, Texas & Mexico
(Gulf Coast Lines)
Western Pacific
Denver & Rio Grande Western (i)
Denver & Salt Lake (i) 35,976 5.17
120
GrEOUP 3.
Miles Percent of Returth Based
Operated On StoAidard Return
Southern Pacific
Central Pacific
Chicago, Kock Island & Pacific System
El Paso & Southwestern
Kansas City, Mexico & Orient
Vickshurg, Shreveport & Pacific
San Antonio & Aransas Pass
Missouri Pacific
Toledo, Peoria & Western
Chicago, Peoria & St. Louis
Missouri, Kansas & Texas System
Missouri Oklahoma & Gulf
Denver & Rio Grande Western (^)
Denver & Salt Lake (^) 35,627 4.76
Group 4.
Miles Percent of Return Rased
Operated On Stcmdaird Return
Union Pacific System
Los Angeles & Salt Lake
St. Joseph & Grand Island
Chicago, Milwaukee & St. Paul
Chicago, Terre Haute & Southeastern
Chicago & Alton
St. Louis-San Francisco System
Minneapolis & St. Louis
Wabash (West of Mississippi River)
Texas & Pacific
International & Great Northern
Chicago, Milwaukee & Gary 32,419 4.69
STATISTICS—EXHIBIT 258.
RECAPITULATION.
MILES OWNED AND OPERATED, INVESTMENT COSTS, STANDARD RETURN, CAPITAL STOCK, FUNDED DEBT
WITH INTEREST THEREON AND REVENUE TON MILES.
Miles
Operated
Miles
Owned
Investment
Cost per
Mile of
Road
Owned
Investment in
Road and
Equipment
Dec. 31, 1917
Standard
Return
Per Cent
Capital Stock
December
Funded Debt
31, 1921
Interest on
Funded
Debt
Per Cent of
Interest to
Funded
Debt
Revenue Ton
Miles
Dec. 31, 1917
Standard
Return per
Revenue
Ton Mile
in Cents
Group No. 1
Group No. 2
Group No. 3
Group No. 4
30,945
36,976
35,627
32,419
30,077
34,889
33,925
31,372
$62,736
59,550
63,563
66,955
$1,886,908,895
2,077,651,984
2,156,401,367
2,100,523,231
$106,444,950
107,470,088
102,750,326
98,591,390
5.64
5.17
4.76
4.69
$ 917,712,065
892,067,218
1,1.55,719,902
818,971,500
$1,036,198,975
1,002,499,340
1,340,781,794
1,411,468,064
$ 47,930,436
45,629,826
55,913,210
60,276,950
4.6
4.6
4.2
4.3
35,572,679,300
38,627,992,557
34,600,982,863
34,605,723,368
.2992
.2782
.2970
.2849
Total
134,967
130,263
$63,115
$8,221,485,477
$415,256,754
5.05
$3,784,470,685
$4,790,948,173
$209,750,422
4.4
143,407,378,088
.2896
NOTE.—Figures for 1917 taken from the Interstate Commerce Commission's 31st Annual Report of the Statistics of Railways.
Figures for 1921 taken from Poor's Manual of Railroads.
Standard Return, except where otherwise noted, taken from latest published returns of the Federal Railroad Administration.
INVESTMENT IN ROAD AND EQUIPMENT DECEMBER 31, 1921.
NET RAILWAY OPERATING INCOME YEAR ENDED DECEMBER 31, 1922,
AND PERCENT EARNED.
Miles
Operated
Investment in
Road and Equipment
Dec. 31, 1921
Net Railway
Operating Income
1922
Per Cent
Group 1
Group 2
Group 3
Group 4
30,219
35,483
35,349
32,515
$1,996,358,033
2,253,997,382
2,342,101,999
2,282,001,214
$70,915,235
95,092,589
84,528,974
70,900,232
3.55
4.22
3.61
3.11
Total
133,566
$8,874,458,628
$321,439,030
3.62
NOTE.—The lower statement excludes following roads for which did not have 1922 earnings and 1921
investment records:
Operating
Mileage
Group 1. Colorado & Wyoming Ry
Farmers Grain & Shipping Co..
Watertown & Sioux Falls Ry. Co
Big Fork & International Falls.
Minnesota & International Ry..
Billings & Central Montana Ry.
Oregon Trunk Ry
Ahnapee & Western Ry
Kewaunee, Green Bay & Western
R. R
Waupaca-Green Bay Ry
43
67
106
35
195
14
157
34
39
10
Total 700
Operating
Mileage
Group 2. Grand Canyon Ry 64
Rio Grande, El Paso & Santa Fe
Ry 20
Mineral Range 101
Copper Range 165
Eastern Texas R. R 30
Pine Bluff Arkansas River Ry 33
New Iberia & Northern R. R.... 114
Orange & Northwestern R. R 62
Total.
589
Group 3.
Group 4.
Arkansas Central 46
Chicago, Milwaukee & Gary 142
NOTE.—Investment in Road and Equipment excludes Materials and Supplies, Working Cash and Invest¬
ments in Property not Operated by the Railroad.
STATISTICS—GROUP 1—EXHIBIT 258.
GROUP 1.
MILES OWNED AND OPERATED, INVESTMENT COSTS, STANDARD RETURN, CAPITAL STOCK, FUNDED DEBT WITH INTEREST THEREON
AND REVENUE TON MILES.
Miles
Operated
Miles
Owned
Investment
in Road and
Equipment
Dec. 31, 1917
Standard
Return
%
Capital Stock
Decembei
Funded Debt
r 31, 1921
Interest
on Funded
Debt
Revenue
Ton Miles
December
31, 1917
Chicag(^ Burlington «& Quincy (Inc. Q.0.& K.C.)
Great Northern
Northern Pacific
Spokane, Portland & Seattle
Colorado & Southern
Fort Worth & Denver City
9,628
8,427
6,863
712
1,103
454
9,277
7,999
7,012
653
1,132
454
$ 479,780,862
458,159,295
495,932,439
76,402,110
81,992,282
24,971,490
$33,390,080
28,771,361
30,130,069
1,871,083
2,481,212
1,891,386
6.96
6.28
6.08
2.45
3.03
7.57
$170,839,100
249,477,150
248,000,000
40,000,000
48,000,000
9,243,800
$173,619,300
(1)292,583,415
©314,922,000
74,530,400
49,358,900
9,042,600
$ 6,805,637
16,421,189
14,653,872
2,997,624
2,139,026
536,141
13,200,166,346
8,408,514,794
8,826,481,478
479,546,225
839,144,150
439,516,494
Wichita Valley
Trinity & Brazos Valley
Colorado & Wyoming
Green Bay & Western
Kansas City Southern
Louisiana Ry. & Nav. Co
Chicago Great Western
257
369
43
336
901
356
1,496
257
303
51
311
884
334
1,410
5,444,469
11,412,217
4,774,226
12,559,843
84,126,502
21,121,682
130,231,478
352,367
46,154
333,053
331,955
3,535,427
357,353
2,953,450
6.47
.40
6.98
2.64
4.20
1.69
2.27
1,020,000
304,000
100,000
2,500,000
50,959,900
8,131,000
89,137,115
769,000
8,760,000
4,500,000
7,600,000
49,312,887
10,493,500
40,706,973
38,450
525,600
180,000
65,000
1,878,795
474,195
1,214,907
24,050,223
67,392,172
15,205,763
48,978,520
1,434,180,174
149,828,357
1,636,674,604
Total
30,945
30,077
$1,886,908,895
$106,444,950
5.64
$917,712,065
$1,036,198,975
$47,930,436
35,572,679,300
Qlncludes new financing to July 31, 1922.
INVESTMENT IN ROAD AND EQUIPMENT DECEMBER 31, 1921.
NET RAILWAY OPERATING INCOME YEAR ENDED DECEMBER 31, 1922, AND PERCENT
EARNED
Miles
Operated
Investment
in Road and
Equipment
Dec. 31, 1921
Net Railway
Operating
Income
1922
%
Chicago, Bmlington & Quincy (Inch Q.0.& K.C.)....
Great Northern
Northern Pacific
^okane, Portland & Seattle
Colorado & Southern
Ft. Worth & Denver City
9,645
8,260
6,640
551
1,099
456
$ 523,664,831
485,428,900
526,670,604
62,655,294
83,878,240
28,526,338
$24,983,855
17,276,598
19,450,513
1,652,267
1,061,877
2,360,249
4.77
3.56
3.69
2.64
1.27
8.27
Wichita Valley
Trinity & Brazos Valley
256
368
257
848
343
1,496
5,520,550
11,535,160
10,455,464
102,369,548
21,982,211
133,670,893
231,652
• 13,858
159,402
3,398,855
88,642
265,183
4.20
Green Bay & Western
Kansas City Southern
Louisiana Railway & Navigation Company
Chicago Great Western
1.52
3.32
.40
.20
Total
30,219
$1,996,358,033
$70,915,235
3.55
*Deficit.
NOTE.—Certain Class 2 and 3 lines are not included in the lower statement. Investment in Road and Equip¬
ment excludes Materials and Supplies, Working Cash and Investments in Property not operated by the Railroad.
Exhibit 258
STATISTICS—GROUP 2—EXHIBIT 258.
GROUP 2.
I^IILES OWNED AND OPERATED, INVESTMENT COSTS, STANDARD RETURN, CAPITAL STOCK,
FUNDED DEBT WITH INTEREST THEREON AND REVENUE TON MILES.
Miles
Operated
Miles
Owned
Investment
in Road and
Equipment
Dec. 31, 1917
Standard
Return
%
Capital Stock
Decembei
Funded Debt
r 31, 1921
Interest on
Funded
Debt
Revenue
Ton Miles
December 31,
1917
Atchison, Topeka & Santa Fe System
Chicago & Northwestern
Chicago, St. Paul, Minneapolis & Omaha
Northwestern Pacific
Midland Valley
11,291
8,410
1,749
525
386
11,070
8,388
1,677
525
361
$ 708,848,075
414,412,131
79,656,153
66,504,272
16,722,095
$ 42,885,311
23,364,029
4,934,790
1,338,000
444,346
6.05
5.64
6.20
2.01
2.66
t 349,571,200
167,577,024
29,818,946
35,000,000
8,005,750
$ 289,888,269
238,450,600
45,001,200
29,277,400
10,754,900
$11,953,002
11,218,008
2,478,531
1,334,621
538,104
12,905,999,445
9,270,928,675
1,678,230,772
104,175,548
199,111,967
Missouri & North Arkansas
Louisiana & Arkansas
Fort Smith & Western
Mineral Range
Duluth, Missabe & Northern
365
302
254
101
411
337
273
201
98
403
18,074,717
12,163,303
11,955,278
3,614,661
43,953,260
175,000
359,362
82,194
144,006
5,122,051
.97
2.95
.69
3.98
11.65
@ 3,000,000
5,000,000
5,000,000
1,500,000
4,112,500
® 3,500,000
, 3,773,000
6,415,234
1,918,000
9,784,000
210,000
196,445
259,112
83,443
508,583
69,268,561
97,100,472
51,346,318
83,803,771
1,905,305,100
Duluth & Iron Range
Spokane International
Duluth, Winnipeg & Pacific
Copper Range
Lake Superior & Ishpeming
285
165
179
165
33
284
141
171
123
34
29,170,380
5,035,165
16,798,563
7,278,924
3,843,019
2,355,242
190,909
357,136
222,781
150,880
8.07
3.79
2.13
3.06
3.93
6,500,000
4,200,000
6,000,000
4,244,300
1,000,000
8,151,000
4,200,000
7,011,324
2,280,000
366,000
407,550
210,000
280,453
114,000
21,960
896,257,252
64,685,869
221,443,571
45,900,051
44,986,776
Minneapolis, St. Paul & Sault Ste. Marie
Duluth, South Shore & Atlantic
St. Louis & Southwestern
Chicago & Eastern Illinois
4,228
601
1,817
1,269
4,178
597
1,574
1,143
185,550,746
48,479,725
96,336,649
86,574,356
10,547,429
562,348
3,910,914
2,946,001
5.68
1.16
4.06
3.40
37,810,200
22,000,000
36,249,750
® 46,186,200
102,502,400
20,243,000
58,078,910
® 44,250,800
4,557,026
873,755
2,473,697
2,295,047
3,611,368,749
343,513,247
1,270,829,273
3,062,989,103
New Orleans, Texas & Mexico (Gulf Coast Line).
Western Pacific
Denver & Rio Grande Western (if)
Denver & Salt Lake (^f)
1,033
974
1,305
128
926
974
1,285
126
35,171,020
86,985,845
89,249,230
11,274,417
1,140,676
1,900,350
4,159,688
176,645
3.24
2.18
4.66
1.57
15,005,300
75,000,000
28,994,291
291,757
23,465,995
26,703,500
60,113,000
6,370,808
1,293,481
1,225,860
2,774,265
322,883
375,451,172
1,186,336,845
1,041,265,781
97,694,239
Total
35,976
34,889
$2,077,651,984
$ 107,470,088
5.17
$ 892,067,218
$1,002,499,340
$45,629,826
38,627,992,557
0Obligations of new company organized in April, 1922. ©Obligations of new company as of June 30, 1922. with Southern Pacific Group (3) one-half each.
INVESTMENT IN ROAD AND EQUIPMENT. DECEMBER 31, 1921, NET RAILWAY OPERATING
INCOME YEAR ENDED DECEMBER 31, 1922, AND PERCENT EARNED.
Miles
Operated
Investment
in Road and
Equipment
Dec. 31, 1921
Net Railway
Operating
Income
1922
%
Atchison, Topeka & Santa Fe (Incl. A. T. & S. F.,
G. C. & S. F. and P. H. & S. F.)
Chicago & Northwestern
Chicago, St. Paul, Minneapolis & Omaha
Northwestern Pacific
Midland Valley
Missouri & North Arkansas
Louisiana & Arkansas
11,621
8,403
1,749
500
365
317
302
$ 805,219,603
453,946,192
86,370,096
67,434,604
19,235,043
18,160,187
12,542,195
$ 39,938,083
17,036,305
3,812,671
1,563,167
1,100,049
80,818
695,547
4.96
3.75
4.41
2.32
5.72
.45
5.55
Fort Smith & Western
Duluth, Missabe & N orthern
Duluth & Iron Range
Spokane International
Duluth, Winnipeg & Pacific (11 months)
249
306
280
165
178
33
4,383
12,446,854
46,434,679
30,435,408
5,272,246
14,708,195
4,447,323
199,231,121
169,531
6,579,607
1,686,323
254,453
* 36,359
417,173
7,178,971
1.36
14.17
5.54
4.83
Lake Superior & Ishpeming
Minneapolis, St. Paul & Sault Ste. Marie
9.38
3.60
Duluth, South Shore & Atlantic
St. Louis & Southwestern
Chicago & Eastern Illinois
New Orleans^ Texas & Mexicof
Western Pacific
Denver & Rio Grande Western (^)
Denver Salt Lake (|)
591
1,775
945
859
1,042
1,297
123
48,487,109
110,435,133
83,559,525
37,521,358
98,006,100
93,606,707
6,497,704
86,962
4,386,825
2,721,469
2,751,057
1,966,442
2,779,226
*75,731
.18
3.97
3.26
7.33
2.01
2.97
Total
35,483
$2,253,997,382
$ 95,092,589
4.22
JIncludes N. O. T. & M., St. L. B. & M. and B. S. L. & W. Rys. ^Deficit.
NOTE.—Certain Class 2 and 3 lines are not included in the lower statement. Investment in Road and
Eauinment excludes Materials and Supplies, Working Cash and Investments in Property not operated by the Railroad.
GROUP 2
Atchison, Top«ka & Santa Fe System
Chicago & Northwestern
Chicago, St. Faut. Minneapolis
& Omaha
Northwestern Pacific
Midland Valley
Missouri & North Arkansas
Louisiana & Arkansas
Fort Smith & Western
Mineral Range
Ouluth, Missabe & Northern
Duluth & Iron Range
Spokane International
Ouluth, Winnipeg & Pacific
Copper Range
Lake Superior & Ishpeming
Mpls. St. Paul & Saiiit Ste. Marie
Duluth. South Shore & Atlantic
St. Louis & Southwestern
Chicago & Eastern Illinois
New Orleans, Teias & Mexico
(Gulf Coast Lines)
Western Pacific
Denver & Rio Grande Western | ooi
Denver & Salt Lake i
International Fal
Minneapolis
Omaha
Denver
St Joseph
Kansas
Fresno
j£urango/
Barstow
Tulsa
^Husikoqee
Smith
Little Rock
Oklahoma Ctij
Ft. lAtorth
New Orleans
Qalveston
rownville
the
JOHH CHEHAR
STATISTICS—GROUP 3—EXHIBIT 258.
GROUP 3.
MILES OWNED AND OPERATED, INVESTMENT COSTS, STANDARD RETURN, CAPITAL STOCK,
FUNDED DEBT WITH INTEREST THEREON AND REVENUE TON MILES.
Miles
Operated
Miles
Owned
Investment
in Road and
Equipment
Dec. 31, 1917
Standard
Return
%
Capital Stock
Decembei
Funded Debt
r 31, 1921
Interest on
Funded
Debt
Revenue
Ton Miles
December 31,
1917
Southern Pacific
Central Pacific
Chicago, Rock Island & Pacific System
El Paso & Southwestern
9,378
1,786
8,297
1,028
737
183
733
9,218
1,786
7,682
935
725
200
724
$ 823,317,759
160,164,516
342,323,794
54,163,663
28,804,866
9,220,044
24,310,391
$ 47,959,898
7,704,113
15,880,681
4,145,102
150,000
337,948
456,684
5.83*
4.81
4.64
7.65
.52
3.66
1.88
$ 612,842,246
84,675,500
129,040,511
25,000,000
20,000,000
4,999,300
1,000,000
$ 392,144,626
183,340,842
232,969,415
$12,721,131
7,683,793
10,876,198
11,245,198,584
2,173,892,804
7,076,007,235
1,144,535,531
217,996,804
108,526,995
174,209,631
Kansas City, Mexico & Orient
Vicksburg, Shreveport & Pacific
San Antonio & Aransas Pass
33,500,000
3,245,000
28,336,912
1,700,000
172,044
1,133,476
Missouri Pacific
Toledo, Peoria & Western
Chicago, Peoria & St. Louis
Missouri, Kansas & Texas System
Missouri, Oklahoma & Gulf
Denver & Rio Grande Western (If)
Denver & Salt Lake Gt)
7,348
248
255
3,869
332
1,305
128
6,842
230
235
3,611
326
1,285
126
350,659,717
9,993,319
8,295,289
236,429,336
8,195,026
89,249,230
11,274,417
14,312,344
159,740
127,540
7,263,546
Def. 83,603
4,159,688
176,645
4.08
1.60
1.54
3.07
'4!66
1.57
154,639,600
4,076,900
4,000,000
76,309,657
9,850,140
28,994,291
291,757
243,447,980
4,933,509
4,181,000
143,322,900
4,875,802
6P, 113,000
6,370,808
11,152,933
198,025
183,087
6,702,827
292,548
2,774,265
322,883
7,784,444,725
62,455,552
292,424,050
2,986,315,848
196,015,084
1,041,265,781
97,694,239
Total
35,627
33,925
$2,156,401,367
$ 102,750,326
4.76
$1,155,719,902
$1,340,781,794
$55,913,210
34,600,982,863
NOTE.—The San Diego & Arizona Ry. is also included in Group 3-A, as shown on accompanying map of 3-A.
tJoint with Santa Fe Group (2)—one-half each.
INVESTMENT IN ROAD AND EQUIPMENT, DECEMBER 31, 1921, NET RAILWAY OPERATING
INCOME YEAR ENDED DECEMBER. 31, 1922, AND PERCENT EARNED.
Miles
Operated
Investment
in Road and
Equipment
Dec. 31, 1921
Net Railway
Operating
Income
1922
%
Southern Pacific (Incl. C. P.)
Chicago, Rock Island & Pacific System
El Paso & Southwestern
Kansas Cit^ Mexico & Orient
11,223
8,116
1,139
737
171
739
$1,040,866,722
391,496,696
61,920,565
29,127,443
9,753,262
24,584,032
$ 46,222,846
14,656,572
2,260,162
•" 474,895
368,823
253,430
4.44
3.74
3.65
Vicksburg, Shreveport & Pacific
San Antonio & Aransas Pass
3.78
1.03
Missouri Pacific
Toledo, Peoria & Western
7,261
247
246
3,736
314
1,297
123
382,277,854
9,918,849
8,250,109
270,170,323
13,631,733
93,606,707
6,497,704
8,247,035
■» 212,424
■" 447,083
10,395,020
555,993
2,779,226
* 75,731
2.16
Chicago^ Peoria & St. Louis
Missouri, Kansas & Texas System
Missouri. Oklahoma & Gulf (K. 0. & G.)
Denver <s: Rio Grande Western.(i)
Denver & Salt Lake (|)
3.85
4.08
2.97
Total
35,349
$2,342,101,999
$ 84,528,974
3.61
■"Deficit.
NOTE.—Investment in Road and Equipment excludes Materials and Supplies, Working Cash and Investments
in Property not operated by the Railroad.
Exhibit 258
r«y5eaHle,
Minneapolis
Wa+ertown
T^Peona
Sprinqfi&W
bscramenfs!.
•enver
^Colorado Springs
'k Trinidad
-Dawson
Toxarkan;
lewOrleans
GROUP 3
Southern Pacific (Incf. Central Pacific)
Chicago, Rock Island & pacific System
El Paso & Southwestern
Kansas City, Mexico & Orient
Vicksburg, Shreveport & Pacific
San Antonio & Aransas Pass
Missouri Pacific
Toledo, Peoria & Western
Chicago, Peoria & St. Louis
Missouri, Kansas & Texas System
Missouri, Oklahoma & Gulf
Denver & Rio Grande Western ' ^ ,
Denver & Salt Lake ( D®"®"
THE
crerar
library
STATISTICS—GROUP 4—EXHIBIT 258.
GROUP 4.
MILES OWNED AND OPERATED, INVESTMENT COSTS, STANDARD RETURN, CAPITAL STOCK, FUNDED DEBT, WITH INTEREST THEREON
AND REVENUE TON MILES.
Miles
Operated
Miles
Owned
Investment
in Road and
Equipment
Dec. 31, 1917
Standard
Return
%
Capital Stock
Decembei
Funded Debt
31, 1921
Interest
on Funded
Debt
Revenue
Ton Miles
December
31, 1917
Union Pacific System
Los Angeles & Salt Lake
St. Joseph & Grand Island
Chicago, Milwaukee & St. Paul
Chicago, Terre Haute & Southeastern
Chicago & Alton
8,003
1,164
259
10,625
374
1,053
7,889
1,034
258
10,262
361
1,010
$ 596,399,825
82,600,440
19,473,064
618,560,579
24,767,369
122,046,407
$38,552,929
3,414,751
373,811
27,946,771
922,785
3,178,315
6.46
4.13
1.91
4.52
3.72
2.60
$321,836,600
25,000,000
13,599,400
233,251,800
4,300,000 .
39,955,500
$ 379,665,530
59,022,000
4,000,000
410,877,348
19,246,600
88,003,878
$15,914,445
2,360,880
160,000
18,767,681
529,978
3,333,256
11,040,260,259
722,502,533
192,758,662
10,593,315,681
573,874,163
2,396,078,107
St. Louis-San Francisco System
Minneapolis & St. Louis
Wabash (West of Mississippi River)
Texas & Pacific
International & Great Northern
Chicago, Milwaukee & Gary
5,165
1,647
881
1,947
1,160
142
5,064
1,538
881
1,861
1,106
108
335,965,549
62,950,218
72,514,842
112,882,521
41,091,882
11,270,535
13,417,482
2,812,008
2,039,383
4,107,432
1,596,946
228,777
3.99
4.47
2.81
3.64
3.89
2.02
58,031,326
25,792,600
52,627,164
38,755,110
4,822,000
1,000,000
280,671,877
47,400,231
28,301,180
59,829,820
28,651,600
5,798,000
12,057,629
2,116,069
1,384,770
1,792,166
1,570,176
289,900
3,963,259,492
1,119,920,904
1,674,881,178
1,480,535,434
751,526,133
96,810,822
Total
32,419
31,372
$2,100,523,231
$98,591,390
4.69
$818,971,500
$1,411,468,064
$60,276,950
34,605,723,368
INVESTMENT IN ROAD AND EQUIPMENT DECEMBER 31, 1921.
NET RAILWAY OPERATING INCOME YEAR ENDED DECEMBER 31, 1922, AND PERCENT
EARNED.
Miles
Operated
Investment
in Road and
Equipment
Dec. 31, 1921
Net Railway
Operating
Income
1922
%
Union Pacific System
Los Angeles & Salt Lake
St. Joseph & Grand Island
Chicago, Milwaukee & St. Paul (Inch C.T.H.& S.E.)
Chicago & Alton
8,285
1,139
258
11,029
1,050
$ 647,743,173
87,301,334
19,158,747
686,907,839
143,880,763
$ 32,070,928
1,425,390
70,029
13,284,245
1,532,189
4.95
1.63
.37
1.93
1.06
St. Louis-San Francisco System
Minneapolis & St. Louis
Wabash (West of Mississippi River)
Texas & Pacific
International & Great Northern
5,129
1,649
865
1,952
1,159
385,053,618
65,297,069
77,970,300
125,607,102
43,081,269
15,248,527
883,800
1,437,265
3,629,472
1,318,387
3.96
1.35
1.84
2.89
3.06
Total
32,515
$2,282,001,214
$70,900,232
3.11
NOTE.—Investment in Road and Equipment excludes Material and Supplies, Working Cash and Invest¬
ments in Property not operated by the Railroad.
Exhibit 258
GROUP 4
Union Pacific System
Los Angeles & Salt Lake
St. Joseph & Grand Island
Chicago. Milwaukee & St. Paul
Chicago, Terre Haute & Southeastern
Chicago & Alton
St. Louis-San Francisco System
Minneapolis & St. Louis
Wabash (West of Mississippi River)
Texas & Pacific
)
International & Great Northern
i
Chicago, Milwaukee & Gary
thu
jqhll creraf
library
121
Testimony Resumed on Maech 2, as Follows:
Before dealing with these groups separately, it will appear that
each western group is provided with two through lines to the Pacific
Coast. The recent decision of the Commission in Finance Docket
2613, Control of Central Pacific hy Southern Pacific, has approved for
the present the acquisition by the Southern Pacific Company of con¬
trol of the Central Pacific Railway by ownership of the capital stock,
in accordance with terms of a proposed lease, upon the specified terms
and conditions contained in the order. This conclusion was reached
under the provisions of Section 5 of the Interstate Commerce Act, as
amended, and the conclusion appears to be that the public interest,
under terms and conditions recited in the order, will be advanced by
continuing the Central Pacific under the control of the Southern Pa¬
cific. This decision is expressly subject to the further action of the
Commission in connection with the consolidation inquiry now before
it, but for the present it may be assumed that the order was made
with the fact in mind that the Rock Island has been grouped in the
tentative plan with the Southern Pacific. This fact lends accent to
the conditions presented in the case decided by the Supreme Court
relating to the competition between Ogden and El Paso gateways, be¬
cause the tentative plan provides the proposed Southern Pacific-Rock
Island system with mileage not only between San Francisco and Ogden,
but also with mileage between Chicago and Denver, leaving only the
gap between Denver and Ogden beyond direct control. In other words,
unless the decision in ihe Central Pacific Control case be changed,
the combined Southern Pacific-Rock Island group is practically af¬
forded two through routes for transcontinental business.
In suggesting the combination of the Union Pacific and the Chi¬
cago, Milwaukee and St. Paul, these conditions were also in mind and
the value to a group so constructed has already been pointed out
through the shortening of distance between Chicago and many impor¬
tant points in the far northwest, and the relief that will be afforded to
the present main line of the Union Pacific between Omaha and Port-
122"
land by the other available route furnished by the Chicago, Milwaukee
and St. Paiil rails.
In the tentative plan it is proposed to allocate Denver and Rio
Grande and Western Pacific to Atchison, Topeka & Santa Fe, afford¬
ing that system two separate and distinct routes between the middle
west and the Pacific Coast.
With this survey, however, the objection heretofore urged in the
Courts grounded on the Sherman Act, not only to the Union Pacific
Southern Pacific.combination, but also to the Southern Pacific-Central
Pacific combination, seems to have become capable of correction under
the provisions of the Transportation Act and the authority of this
Commission to specify the conditions necessary to protect the public
interest. This was done in the recent decision of the Central Pacific
case, and the grouping of Denver and Rio Grande and Western Pacific
"with Santa Fe, presenting as it appears to do, quite similar conditions,
may be accepted as having been proposed as in keeping with public
interest as well, and indeed under the jurisdiction of the Commission
under the present law and the modified policy which that law indicates,
relating to competition, no reason appears against the conclusions
which have been indicated as to these two proposed groups.
In the case of the Northern Pacific and Great Northern we have
already shown that but 2 per cent of the total competitive tonnage han¬
dled by them both "will not, if they are allowed to consolidate, be open
to.actual and effective competition by other lines. For this reason as
well as in accordance with policy indicated as to Central Pacific and
Santa Fe lines, no public interest will be adversely affected if the
Northern Pacific and Great Northern are allowed to consolidate with
the Burlington, nor can there be objection from the standpoint of pub¬
lic interest, for the reason stated, to the consolidation of the Union
Pacific and Chicago, Milwaukee and St. Paul. The provision for each
of these four western groups of alternate through routes connecting in
the west, "will plainly be in the interest of better and more efficient
handling of cars, shorter routing by the direct line and the Avider dis¬
tribution of traflic over the lines' of each system.
123
A study into tlie details of this particular feature of the plan will
convince that this conclusion is correct and important.
Group 1.
Group 1 is composed of Burlington, Great Northern, Northern Pa¬
cific, Spokane, Portland & Seattle, Colorado and Southern, Fort Worth
and Denver City, Wichita Valley and Trinity & Brazos Valley, all at
present associated lines through financial relations and long standing
close traffic interchange relations. These lines aggregate 27,813 miles
of operated mileage and 27,087 miles of owned mileage. To these have
heen added the Chicago Great Westeni, Green Bay & Western, Kansas
City Southern, Louisiana Eailway & Navigation Company and also the
Colorado & Wyoming, a small separately owned property in the State
of Colorado. By these additions the operated mileage has been in¬
creased 3,132 miles and the owned mileage 2,990 miles, a moderate
addition only to the present system mileage, which has been long as¬
sociated under the circumstances before recited.
By the inclusion of Chicago Great Western one of the smaller inde¬
pendent properties may become a part of considerable value to this
system by affording alternate routes between Chicago and the Twdn
Cities and between Omaha, Kansas City and the Twin Cities, and
through the addition of the Green Bay & Western a through route for
the movement of grain and other products which may move by th(!
Lakes or trans-lake ferry to and from eastern lines. This combined
system would have access to the Great Lakes-St. Lawrence Waterway
when developed, at Chicago, upper Lake Michigan points and at Du-
luth and Superior. It will have contact with the Canadian lines at
various points for international business and adequate access to the
Pacific Ocean throughout the Northwest. By extending the system to
the Gulf of Mexico through the Kansas City Southern and Louisiana
Railway & Navigation Company, one of the present day routes and
channels of trade and commerce is preserved and the system, in lieu
of interchange at Kansas City, is provided with its own rails to Gulf
ports. The retention of the Colorado and Southern lines in this group
124
preserves not only tlie ownership, but also the north and south route
which has been developed between Colorado and Southern, Burlington,
Northern Pacific and Great Northern, or in other words, between the
northwest, throughout the Eocky Mountain territory and the south¬
west. Without doubt, as a part of future development these two south¬
ern portions of the system would be brought together by additional
mileage so as to give direct access between Kansas City and points in
Oklahoma and Texas, as well as between points in Louisiana and
Texas.
I would like to offer in evidence as an exhibit a tabulation showing
the cities of 25,000 or more population reached by these western raib
road systems as proposed, subdivided between cities of 25,000 to 50,000
and cities of 50,000 or more.
r ,
Examiner Healy: That will be received as Exhibit 259.
• Mr. Holden:. The purpose of this exhibit is to show the actual
competition, with a four-system plan somewhat as 1 have suggested,
as between all the larger points throughout the west. As, for instance,
in the table relating to cities of 50,000 population or more, Chicago, as
is well known, will have all of the four groups there. And so through¬
out that table the figures indicate the groups as I have numbered them
here, that are present in each one of the cities specified.
The same is true as to the second table of cities between 25,000 and
50,000.
The notes at the bottom refer to a few points to be served by only
one of the western groups, as, for instance, note 1 refers to Sheboy¬
gan, which now has only the Chicago & Northwestern. '
Note 2 relates to Danville, 111., w^hich the exhibit shows will also be
served by the Big Four, New Yerk Central and Wabash east of the
Mississippi Eiver, and so as to the other three or four specified points,
leaving, I think, the statement a fair one that these four groups will
preserve in a practical and substantial way actual, effective competi¬
tion for all of the main lines and routes of traffic in the west. -
(By Prof. Ripley.) On that particular point, Mr. Holden, don't
EXHIBIT 259.
CITIES OF 25,000 OR MORE POPULATION REACHED BY WESTERN RAILROAD
SYSTEMS AS PROPOSED.
CITIES OF 60,000 OR MORE.
Chicago
St. Louis
Los Angeles
San Francisco
Milwaukee
New Orleans
Minneapolis
Kansas City
Seattle
Portland
Denver
St. Paul
Oakland, Calif
Omaha
Memphis
San Antonio
Dallas
Houston
Des Moines
Salt Lake City...
Fort Worth
Spokane
Kansas City, Kas
Groups
Serving
1-2-3-4
1-2-3-4
2-3-4
2-3
2-A
1-2-3-4
1-2-3-4
1-2-3-4
1-4
1-3-4
1-2-3-4
1-2-3-4
2-3
1-2-3-4
2-a-4
a-4
2-3-4
1-2-3-4
1-2-3-4
2-3-4
1-2-3-4
1-2-4
1-2-3-4
Little Rock, Ark.
Berkeley, Calif...
Long Beach
Sacramento
San Diego
East St. Louis, 111
Peoria
Rockford
Springfield
Terre Haute, Ind.
Davenport, Iowa.,
Sioux City
Topeka, Kas
Wichita
Duluth, Minn
St. Joseph, Mo
Lincoln, Neb
Oklahoma City...
Tulsa
El Paso, Texas
Tacoma, Wash....
Racine, Wis
Groups
Serving
2-3
2-3
2-3-4
2-3
2-3
1-2-3-4
1-2-3-4
1-2^
2-3-4
2-4
1-3-4
1-2-4
2-3-4
2-3-4
1-2-4
1-2-3-4
1-2-3-4
2-3-4
2-3-4
2-3-4
1-4
2-4
Phoenix, Ariz
Ft. Smith, Ark
Alameda, Calif
Fresno
Pasadena
San Jose
Stockton
Colorado Springs, Colo
Pueblo
Aurora, 111
Bloomington
Danville
Elgin
Evanston
Joliet
Moline
Quincy
Rock Island
Evansville, Ind
Cedar Rapids, Iowa
Council Bluffs
Dubuque
CITIES OF 25,000 TO 50,000
Groups
Serving
2-3
2-3-4
3 Note 5
2-3
2-3-4
2-3
2-3
1-2-3
1-2-3
1-24
4 Note 3
2 Note 2
2-4
2-4
2-3-4
1-3-4
1-4
1-3-4
2 Note 4
2-3-4
1-2-3-4
1-4
Waterloo
Shreveport, La
Joplin, Mo
Springfield, Mo...
Butte, Mont
Muskogee, Okla...
Sioux I^alls, S. D..
Austin, Tex
Beaumont
Galveston
WoPA
Wichita Falls!!!!!
Ogden, Utah
Bellingham, Wash
Everett
Green Bay, Wis...
Kenosha
La Crosse
Madison
Oshkosh
Sheboygan
Superior
Groups
Serving
1-3
1-2-3-4
1-2-3^
3-4
1-4
2-3^
1-2-3-4
3-4
1-2-3
2-3-4
2-3-4
1-3 ^
2-3-4
1-4
1-4
1-2-4
2-4
1-2-4
2-4
2-4
2 Note 1
1-2-4
Note 1.—C. & N. W. only railroad now there.
Note 2.—Also Big Four, N. Y. C. and Wabash.
Note 3.—Also Big Four, 111. Cent, and L. E. & W.
Note 4.—Also Big Four, 111. Cent., L. & N., L. H. & St. L., Southern Ry. and E. I. & T. H.
Note 5.—Southern Pacific only railroad now there.
125
you think to make that showing conclusive you ought to indicate
whether these systems at each one of these points afford the short
line or merely reach the place? It makes a great difference to a sys¬
tem as to its ability to share in the traffic at any center as to whether
it gets there under favorable conditions or whether it comes in by the
back door.
A'. That ought to be done as a part of a more intensive study of
the plan, and we will be glad to do it.
Of course, in that respect. Prof. Ripley, the condition you indicate
is in effect to-day. Every present day road or system has an advan¬
tage by short line mileage at one point and has to give way in that ad¬
vantage to another system at another point.
My belief is that such a study of this exhibit as you suggest would
probably reproduce in general terms the situation of to-day. Only if
it should improve those conditions, the study would have to be made
to determine whether it would or not, but, for instance, as I have indi¬
cated, we think to a very important degree that alliance of the Chicago,
Milwaukee & St. Paul with the ITnion Pacific would give opportunity
for shorter and more direct routing east, Chicago and all eastern points
to points like Spokane and the far northwest. The saving in mile¬
age previously referred to is 300 or more miles to several of the
specified points.
Q. My suggestion was merely intended to make this really con¬
vincing, and also to prove suggestive for modifications here and there
as the plan might call for it with that additional information.
A. I will go further, and would be glad to have the opportunity;
by that, I mean as to specified points. But take the' suggestion of put¬
ting the Santa Fe through Colorado on a transcontinental line. I think
obviously that Avould shorten the mileage between Chicago and upper
Missouri River points to the far middle west rather than the mileage
in the present day Santa Fe movement. Now, these maps will show,
when you come to examine them, and I hope I can keep your interest
long enough so that you will, that into the southwest the Santa Fe dis¬
tance will be distinctly shortened by the addition of mileage which w^e
:i26
suggest for it south of St. Louis, rather than hauling their freight
clear around through Newton, Kansas; and passenger movement direct
to Texas points will he shortened. The same is true in several other
particulars.
Broadly speaking, I am confident that you will find it is true that in
the great lanes of traffic, these maps will show that the short line mile¬
age has been distinctly developed. Take the Rock Island again. Their
mileage from the Missouri River to Texas goes out quite a ways into
the west before it turns south; and the suggestion we have made of
Missouri Pacific mileage for that group distinctly shortens their route
between the Mississippi River and Missouri River points" to Texas,
both through St. Louis and through Kansas City.
I would like also at this point to introduce an exhibit which I be¬
lieve will be marked Exhibit 260, which shows a comparison of
group 1, as I have proposed it, and which I will call Burlington system,
with the Interstate Commerce Commission's tentative system No. 1.3
which is Union Pacific-Chicago & Northwestern system; and system
No. 1 in the Interstate Commerce Commission's tentative plan. New
York Central system, and system No. 2, the Pennsylvania system.
Examiner Healy: It will be received as exhibit 260.
Mr. Holden: The purpose of that exhibit is somewhat similar to
the one I referred to yesterday, comparing one-fourth of the western
traffic to operating statistics of the New York Central and Pennsyl¬
vania.
This exhibit takes the actual figures of my group No. 1 and the
Union Pacific-Northwestern tentative system No. 13, and while in the
main group No. 1 is somewhat larger in its traffic and operating fea¬
tures than system No. 13, my assertion is that the difference is not of
importance, and particularly in comparison with the figures on the New
York Central plan, which the Commission itself is now proposing in
this tentative plan, and the same as to the Pennsylvania system which
the Commission is proposing.
In other words, as I have said in my statement, I have outlined and
EXHIBIT 260.
COMPARISON OF GROUP 1 (FOUR SYSTEM PLAN) WITH INTERSTATE COMMERCE COMMISSION'S SYSTEMS
13, 1 AND 2.
Year Ended December 31, 1920.
Total miles of road operated
Total miles of all tracks operated...
Railway operating revenues
Railway operating e^enses
Net revenue from railway operation.
Freight train miles
Passenger train miles
Total revenue train miles
Tons revenue freight originating on line.
Ton miles—revenue
Ton miles—company
Ton miles—total
Passengers carried.
Passenger miles
Density—revenue ton miles per mile operated..,
Density—passengers one mile per mile operated.
Number locomotives
Tractive capacity (lbs.)
Number freight cars
Aggregate capacity freight cars (tons).
Passenger train cars
Locomotive fuel (tons)
Average number employes.
Wages
Group 1
Four System
Plan
(C. B. & Q.,
N. P., G. N.,
etc.)
System 13
I. C. C.
Plan
(U. P.,
C.*&iN. W.,
etc.t)
System 1
I. C. C.
Plan
(New York
Central,
etc.)
System 2
I. C. C.
Plan
(Peimsylvania,
etc.)
30,902
43,593
20,499
31,685
16,330
34,494
11,689
27,302
$520,301,352
470,561,220
49,740,132
$452,553,759
385,676,586
66,877,173
$734,599,495
698,189,366
36,410,129
$747,774,285
785,932,958
38,158,673t
54,272,198
47,779,051
104,702,417
49,581,020
45,268,664
99,372,905
59,297,403
68,048,061
128,778,892
52,851,491
67,569,624
120,852,114
94,446,678
71,466,154
113,632,577
173,914,132
36,378,987,383
5,070,421,110
41,449,408,493
27,313,794,407
4,620,726,441
31,934,520,848
46,409,865,290
3,255,726,494
49,665,591,784
44,944,328,311
3,842,054,753
48,786,383,064
51,555,693
3,393,827,733
59,664,275
3,372,859,230
163,548,708
6,445,427,028
273,448,351
7,337,726,518
1,177,237
109,826
1,332,445
164,538
2,842,000
394,699
3,845,011
627,746
5,747
209,684,549
4,586
153,620,836
7,741
277,338,330
311,628,'900
198,932
7,858,994
139,962
5,944,400
293,909
12,132,250
272,496
14,189,689
4,221
3,767
7,092
8,175
13,440,008
12,121,579
16,205,014
17,174,660
164,007
$295,402,077
134,053
$251,720,956
218,586
$424,233,703
268,710
$509,904,864
tWabash Lines West of Mississippi River estimated at one-third of Wabash System operations.
J Deficit.
127
developed this thouglit based upon certain actual features. One branch
is the actual facts on the New York Central and Pennsylvania to-day
and as they have been for a considerable period of time.
Secondly, on what I find—and I think I might fairly say—is the in¬
fluence of the Commission's o^vn conviction in its tentative plan that
New York Central system enlarged as system No. 1, and Pennsylva¬
nia system enlarged as system No. 2, are put forward as rational
groups for this consolidation program.
I take it that that offers at least a fair basis for discussion. If the
Commission's tentative plan proposes systems of the size of system
No. 1 and system No. 2, we may fairly feel on safe ground in suggest¬
ing systems of greater size in western territory. If we are on unsafe
ground, then I will have to make the suggestion that possibly the Com¬
mission is on unsafe ground in proposing system No. 1 and No. 2. I
do not think we are. I think we must accept the fact that New York
Central and Pennsylvania systems are effective, successful operating
properties, with no apparent thought in mind of dividing them or
segregating them, and if over the course of years that have passed in!
the development of those systems and the care they have given to the
territory and the traffic they serve, they are to be accepted as practical
and efficient and to be continued, I think we have a safe and correct
basis for saying that we have a right in reason to propose that western
systems having substantially less tax on management are fair and
proper for consideration.
Now, on this exhibit the railway operating revenues of group 1 are
$520,000,000 as compared with Union Pacific-Northwestern operating
revenues of $452,000,000. These figures are less than either of the
eastern systems. The same is true as to expenses. But as to net reve¬
nue, group No. 1 is $49,000,000 as compared with $66,000,000 in Com¬
mission's plan No. 13, and both are larger than the net in the east.
Now, freight train miles, which is one of the important factors on
group No. 1, of 54,000,000 as compared with 49,500,000 on system No.
13, I insist that that difference is' not of sufficient importance to indi ¬
cate any undue size in group No. 1, particularly as again it is dis-
128
tinctly less than New York Central and slightly above the Pennsyl¬
vania.
Passenger train miles are 47,750,000 on group No. 1, 45,250,000 on
system No. 13, but in the two eastern systems much above either of
those figures. Again, in that particular, group No. 1 compares very
favorably with system No. 13 proposed.
And the total revenue train miles are not materially dift'erent be¬
tween system No. 13 and No. 1, and both much less than the two east¬
ern roads.
Q. (By Commissioner Esch.) The greatest disparity seems to be
in the passengers carried and the passenger miles.
A. Passengers carried on group No. 1 are much less than those
on Union Pacific-Northwestern. Of course, it should be said there that
probably the large suburban traf&c of the Northwestern is in those
figures, but Burlington has a very large suburban business in Chicago
also; but what the eastern systems are doing in passengers carried
and in passenger miles is shown in the figures, and obviously, so far aa
features of the passenger traffic are concerned, there is no rational ob¬
jection to the western systems that I am proposing.
Now, the density of revenue ton miles per mile operated on group
No. 1 as I propose is less than on the Commission's system No. 13, the
difference being, in my case 1,177,000, and in system No. 13, 1,332,000,
and on the two eastern systems more than tmce as much.
The same is true of passengers one mile per mUe operated. Group
No. 1 in my plan is much less than system No. 13, and very much less
than both of these two eastern systems.
My point is that the difference between group 1 that I suggest, and
system No. 13, is not of sufficient extent to offer a substantial objec¬
tion. And again, the comparison with the eastern systems indicates
that groups of the size I am proposing in the west are not in any way
beyond the capacity of rational management.
Q. (By Commissioner Esch.) I notice in net revenue from rail¬
way operations, there is a deficit of over $38,000,000 in system No. 2 for
the year ending December 31,. 1920. I suppose a better showing could
be made as of December 31, 19221 ' ■
A. Undoubtedly. Of course, 1920 was the year involved in the
guaranty period and the heavy readjustments in that year, but they
were the latest figures we had available; and undoubtedly as to all four
of the systems a later set of figures would develop it. But I have in
my maps to which I will refer later—not this type of comparison,
but we have made use of the figures for 1922 in making some of our
comparisons Avith the western groups, based upon the property invest¬
ment of 1921, which was as late as we could get, the point being this,
Mr. Commissioner, that in Professor Eipley's tabulations and in our
own in the earlier hearings, we have been using standard Tetum and
the property investment as of December 31, 1917. We have later
figures now, and we think it gives a better view to take those. But.it is
perfectly obvious, as was suggested a day or two ago in the hearings
here, that calculations of traffic to be handled and earnings to be made
of new groups of railroads are more or less speculative in results, be¬
cause it involves the changes in the. routes of traffic which will ob¬
viously follow by realignments. We have pointed that out in our own
case as the basis for our keen anxiety about the Commissioii's plan as
to Burlington, and any calculations as to what the Burlington's earn¬
ings would be if the tentative plan of the Commission should be adopted
and put into practical operation could not be made now, but we are
quite certain that any of the present day ghomngs would be very much
reduced. If you cut the Great Northern interchange oft from Burling¬
ton and cut us off at Kansas City and St. Louis and at Omaha and at
Denver, and generally speaking surround iis by the stone wall which
the plan seems to suggest, it would be pure speculation to figure out a
rate of return on the property value of the system which the tentative
plan suggests. But that is all we have. And in making these calcula¬
tions we have simply assumed a basis which is obviously more or less
speculative.'
I want to add just this to that, however, that in working out these
four plans based upon Avhat I have tried to suggest is an average of
130
conditions and what I think the law contemplates, I believe these calcu¬
lations indicate as closely as any that can be made the probable re¬
sults. Otherwise, the average does not exist. But if it does exist, from
the type of systems which we have constructed, you may fairly assume
that something approaching average results in the way of traffic and
earnings will develop. In other words, if each of the systems has an
equal competitive opportunity along broad lines in the, traffic into the
west and for connection to the east, then it is a fair assumption that
each, of the systems will earn, broadly speaking, something approach¬
ing the average of all, or somewhat approaching each other. But be¬
yond that type of calculation there are no figures I know of that can
be made as to the result of operations of complete new grouping such
as have been suggested.
Q. (By Prof. Eipley.) This would probably be true, wouldn't it,
that your calculations would be on firm and safe ground for all those
systems which are not disturbed in their customary relationships?
A. Exactly.
Q. It is only for those which are shifted in those relationships in
which you pass from safe ground to most unsafe ground? You would
concede that, wouldn't you?
A. If you let me express,it this way: Take the Sante Fe. None
of the plans apparently propose any particular disturbance of the
Santa Fe. On the contrary, the addition of Colorado and Southern and
Denver & Kio Grande and Western Pacific, knowing the Santa Fe as
I have and their methods for a period, there might be what you might
call a load on the Santa Fe for a while, but after that period I would
expect to see Santa Fe continue, if not increase, its scale of earnings.
Now, the Southern Pacific-Eock Island tentative plan does not dis¬
tinctly change the present day conditions. As I have tried cautiously
to suggest several times, Burlington seems to have been singled out for
a speculative venture in the future. The Union Pacific-Northwestern
system does not seem to suggest serious change, and it may account
for some of the serenity of my associates as to this program, in that
they do not see much to be alarmed about. It is all in line of their
131
natural .deyelopnent. W.e seem to be the particular group in line of
new ventures, .of which we are somewhat afraid.
• In my four group plan'I have not seriously disrupted any existing
routes and channels of trade. I think the plan will show that prac¬
tically no so-called "stub-ends** are left. There is circulation pro¬
vided. And so, I get back to my belief that those four system plans
do not indicate any very violent changes in earning power.
(By Prof. Ripley.) ' Mr. Holden, don't you think that the earning
power of the Central Pacific' might be pretty substantially modified if
it had to look for its sole eastern connection to the Rio Grande?
A. It does not. ...
• J ' .
Q. In Group 3?
A. If that were true; yes. But the contract between the Southern
Pacific and the Union Pacific as to the Central Pacific seems to take
care adequately , of the Centra;l Pacific.
Q. Well, then, in that event you would expect that the corporate
relationships that would be entered into in setting up group 3 would
not be supported by a future close relationship in the interchange of
traffic? In other words, you would expect the Rock Island-Southern
Pacific-Central Pacific to assume the obligation of carrying the Denver
& Rio Grande -without expecting that they would thereupon divert a
large measure of their traffic over that line in order to make the in¬
vestment an earning one?
A. Well, Mr. Ripley, that is a puz^ile. I think that is a matter that
will have to have further study.
Q. My point, Mr. Holden, was at this time not to criticize that par¬
ticular arrangement, but to ask yoU' whether any calculation based
upon the earning power of the Central Pacific, we will say, with such
a shift in its relationships, would not become what we might call almost
fantastical. -
A. 1 do hot Want to leave this uncertain on the record. If you
have in mind that this plan would involve a diversion of Central Pacific
tonnage to th^ Denver & Rio Grande, hf course you are right. But I
132
do noise'understand it. Back of that I am dealing with'the Commis¬
sion's plan, and as I said in my statement, I assunie the Central Pacific
decision was rendered in the light of the understanding you are pro¬
posing, to put Southern Pacific and Eock Island together. And that
means Southern Pacific rails as far east as Ogden, and Southern Pa¬
cific rails as far west as Denver from Chicago. It seems to me, that
is a situation that is susceptible of proper treatment without impairing
the interests of either. I would like to relegate that to a good many
other of the so-called details in my suggestion, because I have indi-
pated, and it is so obvious, that there are so many details that would
require further consideration. I am naturally undertaking to develop
a question of the public interest being promoted and public service
being promoted by dividing the western mileage into four main
groups. - . -
Now, taking the southwest as an illustration, there are many alter¬
nate suggestions that I myself would want to further consider. But
that does not have much to do now with the general basis of my
thought, that is, whether four main groups are desirable. And going
back again to this matter you speak about, it was suggested by the
Union Pacific, and Southern Pacific themselves that the Eock Island
line from Omaha to Denver be associated elsewhere. That is a legiti¬
mate suggestion, and I can add to it here that that would probably be
a legitimate, suggestion for group No. 2 that I suggest—Santa Fe-
Northwestern. But again, that is a detail which can be developed and
disposed of if this idea is worthy of further study.
Gtroup 2.
• '
Group 2 proposes the association of Santa Fe, Chicago & North¬
western" system lines, the Iron Eange roads, the Soo.Line, the Chicago
& Eastern Illinois, St. Louis-Southwestern, certain other smaller prop¬
erties and one-half interest in the Denver and Eio Grande, Denver &
Salt Lakej anjd also includes Western Pacific. Without pausing at this
time to discuss less important details, the association of Santa Fe with
Chicago &, Northwestern and Chicago & Eastern Illinois seems to rep-
133
resent a rational instance of what may logically and properly be done,
particularly where effort, as indicated in the language of the Com¬
mission's report of August 3, 1921, is made to minimize dismember¬
ment of existing lines or systems." By Chicago & Eastern Illinois,
southern Illinois coal may move over one line haul to the market ter¬
ritory afforded by Chicago & Northwestern, and Chicago & North¬
western secures not only a line into St. Louis, but also an' outlet at
the Ohio River into the southeast.
Santa Fe connects with Chicago & Northwestern near Peoria and
at Chicago; it also connects at Superior, Nebraska, thus offering a
route Avhich is to-day to some extent in use, for movement of Kansas
grain to Omaha and the Twin Cities, as well as interchange of traffic
between the territory served now by the two systems, not unlike the
present Sioux City line owned by the Burlington aind the Great North¬
ern. In the event of further study of these plans some variation in
detail may he suggested. For instance, the line of the Chicago Great
Western between Kansas City and Des Moines might well be included
in this group, thereby giving direct connection hetAveen the Missouri
River at Kansas City and St. Joseph and territory of the Chicago &
Northwestern, Des Moines and north, and if connection were consid¬
ered necessary between Omaha and Kansas City, doubtless arrange¬
ments accomplishing that could be made. The plan of the Santa Fe,
as testified to before the Commission by its President, to secure au¬
thority to extend its line to St. Louis immediately suggests the value
of the connection there with the Chicago & Eastern Illinois, as Avell
as the St. Louis & Southwestern, and the St. Louis & Southwestern
leading from St. Louis into the southwest would appear to be a logical
addition to the present extensive Santa Fe mileage in that territory
and to provide a shorter distance for the movement of traffic destined
to St. Louis and eastern connections and an alternate route for busi¬
ness to Chicago and beyond, which would without doubt relieve pres¬
sure at times. of heavy business upon other lines of the proposed
group. Santa Fe rails to-day reach Pueblo and Denver, there being
now double track operation with Denver & Rio Grande and Colorado
134
and Southern between Denver and Pueblo. In order to provide. Santa
Fe with an alternate route tbrougbbut the central west , to, San Fran¬
cisco, it is proposed as a fair.matter for consideration and in order
to give strength to Denver & Eio Grande and "Western Pacific; that it
have ownership of the Western Pacific and an equal one-half ownerr
ship in the Denver & Rio Grande and also in the Denver' & Salt Lake.
This subject will be again referred to later, in connection with another
group.
Now, on that map as it appears, there is. an obvious gap between
Kansas City, Omaha, and Des Moines, just as there is between. Kansas
City and St. Louis. And the suggestions that I have made might well
have been carried into the suggestion oh the map.. But the point I
make is that the Chicago Great Western line from Kansas City and
St. Joseph to Des Moines would he a logical arrangement—if not per¬
haps the entire Chicago Great Western system. That, would give
direct connection between the two systems, and I. am quite certain it
would afford a very important route for the movement of business.
The same is true, as I have stated, between Kansas City and St.
Joseph. I have no doubt that arrangements could be made for con¬
nection there. Now, when the' Santa Fe line, as Mr. Storey proposed,
reaches St. Louis, which undoubtedly it should, the relationship seems
to me to be a valuable one with a liiie like the Chicago & Eastern Illi¬
nois, because then it provides a system which neither the Northwestern
nor the Santa Fe to-day have—^mileage between St. Louis and Chicago.
And with the St. Louis Southwestern, it seems obvious that a new
and shorter route to Texas points, particularly to east Texas points, is
developed as against the present rather long route of the Santa Fe.
And it has been pretty well known, and it was evident in Federal con¬
trol times, that in times of heavy movement of grain south to the Gulf
and heavy oil movement from Oklahoma points, that one of the diffi¬
cult operations of the Santa Fe system was in their north and south
line from Texas and Oklahoma to Newton, Kansas, and double track¬
ing expenditures have been going on there" for some "time to enlarge
the capacity. . . . > , i
Now, in a scheme of this kind involving consolidation ideas, it
135
would seem to me that here is an illustration of the value of shorten¬
ing distance and providing an alternate route, and postponing capital
expenditures for a considerable period of time.
Q. (By Mr. Scott.) These references which you made to the
map are references to the map of your proposed group No. 2, Ex¬
hibit 258. ' ■
A. Yes, sir.
While on that, I want to say a little more about the Denver & Rio
Grrande. ,
Of all the transcontinental lines, the Denver & Rio. Grande has had
perhaps less development and less physical improvement than any of
the others. In the north, all of the lines are in a comparatively high
state of development and susceptible of efficient and economical use.
The same is true, of course, of the Union Pacific route. And the same
is likewise true of the lines through the southwest, like the Santa Fe
and the Southern Pacific. But the one portion of transcontinental
mileage which seems to me to need further support in the way of de¬
velopment of traffic, which means earnings, to justify the expenditures
needed, and needs.further expenditures for shortening the distance
and further physical improvements, happens to be the Denver & Rio
Grande, and as connected Avith it, the Denver & Salt Lake.
Noav. knoAving as we all do the general traffic situation relating to
transcontinental business as affected by the Panama Canal, and other
questions Avhich I need not go into,-it is going to. take some financial
strength and some courage to take hold of a property like the Denver
&} Rio Grande and the Denver & Salt Lake and bring them to an equiva¬
lent -with the other transcontinental systems; but it ought to be done.
Q., (By Commissioner Hall.) You are looking at it primarily as
a part of a transcontinental route ?
A. That is one. I.Avas ahout to say in addition that there is a vast
amount of local territory adjacent to and d.ependent upon the Denver
& Rio Grande, and the Denver & Salt Lake that "will be benefited by
having better service. The Denver & Rio Grande territory is steadily
I
136
growing'. It is producing large and increasing volumes of perishables.
I think last year the figures will show there were 22,000 carloads of
perishable traffic that originated on the Denver & Rio Grande. I have
looked at the solution of that situation in the effort to try to find a
volume of traffic and financial strength that would enable the further
development of the Denver & Rio Grande to be made, both for the local
business as well as—not only Utah business but transcontinental busi¬
ness. And it seems to me that as the Santa Fe is reputed to have been
interested in securing an interest in the Denver & Rio Grande, and
that the Commission's plan proposes to allocate the Denver &
Rio Grande to the Santa Fe, that it would be just as well to encourage
that idea and, therefore, my plan suggests that the Santa Fe have a
half interest in this property. - The Santa Fe reaches the Denver &
Rio Grande at Pueblo and parallels- it up to Denver, but its main
route for through business would be through the Pueblo gateAVay.
That situation would not seem to lend support to the development
of the Moffat line, Avhich comes from the nortliAvestern part of Colo¬
rado to Denver^ and it is likely, I suppose, that if the Moffat line is
developed into a connection at Dotsero Avith the Denver & Rio Grande,
that the traffic moAung over the Denver & Rio Grande Avould probably
divide at Dotsero, and that which should logically route Denver and
east Avould go that way, and the remainder, Avhich would logically go
through "the Pueblo gateAvay, would go over the existing Denver &
Rio Grande line. ■ -
Q. That is the eastbound traffic. Noav, how about the Avestbound
traffic, Mr. Hoiden?
A. Westbound also. Such traffic as Burlington. Avould bring to
Denver routed beyond would hardly go south to Pueblo and around
that long loop, Avhich has been one of the disabilities of the Denver &
Rio Grande, if the Moffat line tunnel improvement is made and the
Dotsero' connection is developed.
Q. Prior to 1901 the Burlington AA'as a favorite connection of the
Denver & Rio Grande, wasn't it^
A. And since, I think.
137
Q. Wasn't there a little change about the time the Gould interests
came into the Denver & Bio Grande, and the Missouri Pacific became
a preferred connection in several senses'? While the Burlington con¬
tinued to exchange traffic, of course, yet wasn't the Burlington some¬
what affected by that shift in control?
A. I think that is true, Mr. Commissioner. And the figures which
Mr. Bush offered here the other day show that the Missouri Pacific-
Denver & Bio Grande interchange is, as I recall it broadly, probably
as much as all of the other roads together. I think Burlington is the
next. Undoubtedly when the Missouri Pacific connection was made
and the financial relations between that road and the Denver & Bio
Grande were arranged, the tendency was to favor the Missouri Pacific-
Denver & Bio Grande route in competitive business, but Burlington
was always in a position to deliver a considerable volume of west-
hound business and enjoyed reasonable interchange in return. •
Q. The Burlington has always been in very close touch with the
Denver & Bio Grande. Mr. Perkins and General Palmer were intimate
friends, and they worked together more or less. Perhaps you recall,
Mr. Holden, that since 1901 or thereabouts there have been practically
no extensions of Denver & Bio Grande lines.
A. I think that is true.
Q. And that at that time and since, it has been originating about
80 per cent of its own traffic, which shov/s the wisdom .with which Gen¬
eral Palmer had planned and laid out that system for development.
A. That is quite true. And it also indicates, as. I think, the rea¬
son why it has not enjoyed a larger volume of through business, which
is very important to it, and it has not been in position to effectively
handle it, and it has affected its connections because the service has
not been comparable with that which the Union Pacific to the north
and the Santa Fe to the south have offered.
Q. Now, "will you develop a little fiirther, if you have not already
done so, this idea that the Santa Fe should have a half interest in¬
stead of the Denver & Bio Grande being a component part of the sys¬
tem which the Santa Fe was, for convenience, named for?
138
A. The reason for that, in addition to securing for the Denver &
E-io Grande route further strength and traffic, was because I find that
the Commission has proposed to put the Rock Island and Southern
Pacific together; and then, in the recent Central Pacific decision re¬
turning the relation of Central Pacific as a part of the Southern Pa¬
cific, it seemed to have the situation that the Southern Pacific rails
come east to Ogden and come west from Chicago to Denver and there
is a gap in there between Colorado and Utah on the new Southern
Pacific system as the Commission proposes it, wffiich would seem to
make it logical to bridge that gap by giving that system a half interest
in the Denver & Rio Grande.
Q. (By Prof. Ripley.) Right there on that point, Mr. Holden,
you are aware that the Union Pacific interests have already expressed
apprehension lest the continuation of the Rock Island line to Denver
should leave them caught between the two arms of that system, one
reaching in from the west and the other reading in fron^Jhe east?
Now, you have continued still further that TO^ffoaohmcnt by adding
the intervening link. Isn't there danger there of short circuiting the
Union Pacific just as they apprehended the danger of such short cir¬
cuit by the present arrangement?
A. That is possible. I would think that would be a matter for the
Union Pacific to discuss. I am dealing with the plan as I find it. I
had supposed that was in everybody's mind when they were dealing
with the situation and the other aspects of it, but if it is desirable to
avoid the short circuit and concentrate all of the business possible on
the Union Pacific line, another arrangement can be made by the Denver
& Rio Grande.
But here is the situation, Mr. Ripley, and I have looked at it
from that angle. For years Burlington and Rock Island and Missouri
Pacific have come out from the east and they have been up against
the wall of the Rocky Mountains. The only outlet they have had was
over the Denver & Rio Grande, and it has not been one comparable
with the through routes to the north and the south. Again, as I said
before, it seems to me to be a problem there both for the local interests
139
of Colorado and Utali as well as for the maturing of this railroad as a
transcontinental line in competition mth the others that traffic and
strength he found to do that, and if the suggestion that I have made
seems embarrassing to the route further north, I have no doubt that
further consideration of the matter might find some other way to
go along with the Denver & Rio Grande enterprise.
Q. (By Commissioner Hall.) How does the idea of undivided
half interest fit in with the consolidation plan or the consolidation
statute, as you understand it? MHiere do you find room in that stat¬
ute for the undivided half interest? That provides for the establish¬
ment of systems. Now, what would this system be?
A. Mr. Commissioner, it seems to me that law was passed in the
light of existing conditions and existing practices, and many cases
of joint ovuiership and joint use in one way or another, and I had
not thought, and was not inclined to take the view, that the language
of this statute would be restricted to complete ownership or complete
individual use of any particular mileage. It would involve a great
many present day disruptions. Take the Richmond, Fredericksburg
& Potomac as a nearby illustration. There are six large systems which
developed that bridge line, and I supposed it was an admirable ar¬
rangement. Now, I would not imagine Congress, in passing this law,
contemplated that arrangements of that type distinctly in public in¬
terest and in the interest of economy, should be disrupted. When it
says *'limited number of systems," I think it can be properly said
that joint ownership, trackage rights, and joint operations of that kind
would be continued and are permissible.
Q. I am not challenging the value of your suggestion, but I am
inviting your attention to the wording of the statute, because that is
the basis upon which we are all acting.
Paragraph 6, for example, of Section 5 says:
"It shall be lawful for two or more carriers by railroad, subject
to this Act, to consolidate their properties or any part thereof, into
one corporation for the ownership, management, and operation of the
properties theretofore in separate ownership, management and opera¬
tion, under the following conditions.
140
The proposed consolidation must be in harmony with and in fur¬
therance of the complete plan of consolidation.'*
Then, there are other provisions.
Does that, to your mind, leave it open for a corporation Avhich we
may look forward to as the development of this plan, operating as a
system, to share with some other corporation in the ownership of the
system?
A. I do not see any legal objection to it. It seems to me that the
Avord "property" does not necessarily mean an entire OAvnership. A
railroad company may have a property in a half interest. It seems
to me we ought to lean to that construction, and if it is not admissible,
the law necessarily will have to be amended because it would be a
great step backward to find that Ave would have to have entire oAvner-
ship of existing rails for operation. There are too many practical
and valuable illustrations all over the country of joint use, and the
trend is in the direction of bridge lines and joint use of appropriate
pieces of trackage, etc. So that has been my point of view. And I
do not believe Congress expected to have the law interpreted in such
way as would destroy or discourage the joint use of mileage where it
Avould be desirable.
Q. I was not speaking of joint use. I was speaking of joint OAvner-
ship. Noav, for example, you have in your oAvn case joint OAvnership
by the Great Northern and Northern Pacific of the Burlington. If
this plan were given etfect, as you would like to see it given effect, I
suppose those three corporations would become one, wouldn't they?
A. Doubtless they would in time.
Q. And that corporation would be the owner of the properties com¬
prising that system as well as the operator of those properties, and
that feature of joint oAvnership of stock, etc., would have gone out
of it. But should we look forward to a different working out of the
consolidation plan when Ave reach the middle gateways of the west,
and there say where there is now undivided ownership there shall bo
diAuded oAvnership? I AVant .to get at the virtue of your idea that the
Santa Fe system instead of having, as has been discussed, the entire
U1
ownership—or taking Mr. Bushes idea, the Missouri Pacific system
liaving the entire ownership, that instead of that the Santa Fe shall
have half, and someone else shall have half, and that we shall look
npon that as part of the complete plan for future systems, if the trans¬
portation plan of this country is to take on an element of permanency?
A. It seems to me that each case ought to be considered with its
own facts in mind. Now, in this instance it seems to me that the Bio
Grande in one broad sense is a bridge, and may well be utilized by
more than one system for that purpose. In the next place, as I have
indicated, it has a large and important local territory and as to which
probably the service needs improvement. There is a great deal of
narrow gauge mileage which probably ought to be broad-gauged, and
grades be corrected, etc. I have looked at that as permissible, and
desirable to encourage such strength in the way of financial resources
as can be found to accomplish that object as to this specific case. I
believe the Colorado situation and the Utah situation as affected by
the Bio Grande and Moffat line will find a quicker and more generous
solution if you can invite not only the Santa Pe but another strong
partner to take hold of that situation and bring it up to the standard
of all the other middle western railroads. It is the only striking in¬
stance of that kind.
Q. Who is your other strong partner?
A. Well, I have suggested the Southern Pacific System because I
find certain obvious facts which I have indicated, its mileage coming
to Colorado from both sides really, coming to Ogden from the west,
and out from Chicago to Denver from the east. Now, if that situa¬
tion presents an embarrassment with relation to other matters, then
it needs further consideration, and it becomes, perhaps, a larger de¬
tail, but really a detail in the general consideration of this four group
suggestion. Burlingion is still in Colorado and might be considered
in connection with that subject. Perhaps I have hot reached the point,
Mr. Commissioner, that I might "suggest the Missouri Pacific be also
a part of the Southern Pacific system. By that plan I have tried to
take care of these three western so-called stub lines that have come to
142
the Kocky Mountains there and have heen awaiting development be¬
yond, on account of the Denver & Rio Grande situation. The Missouri
Pacific being a part of the new Southern Pacific, that takes care of
the Rock Island and Missouri Pacific lines coming out from the east.
Group 3.
Group 3. As before indicated, the proposed Southern Pacific-Rock
Island group as planned by the Commission contemplates not only
transcontinental mileage as to-day in effect via El Paso gateway, but
indicates mileage to Denver and Colorado from the east and via Cen¬
tral Pacific from San Francisco to Ogden and Salt Lake City. The
addition of the Missouri Pacific and Missouri, Kansas & Texas sys¬
tems to this group is suggested, together with certain other lines,
including the El Paso & Southwestern. By connection south from
St. Louis a shorter and more direct route into the southwest, at least
an alternate route of an efficient character, is developed. The same
is true of the more direct mileage south from Kansas City occupying
a different belt of territory than that now served by the Rock Island
lines leading southwesterly from Kansas City. The two lines from
Missouri River to Colorado points occupy distinct portions of Kansas
and Colorado, but both ending at Colorado need consideration for
business beyond. To bridge the gap between Colorado and Utah and
again to contribute strength to the Denver & Rio Grande for its future
development and improvement and including the Denver & Salt
Lake, one-half ownership of the Denver & Rio Grande and Denver &
Salt Lake is suggested for this Southern Pacific-Rock Island group.
By this suggestion of joint ownership of the Denver & Rio Grande
and Denver & Salt Lake between the Santa Fe-Northwestern group
and the Southern Pacific-Rock Island group, the one remaining trans¬
continental route which apparently requires improvement and develop¬
ment and particularly shortening, would seem to be provided with the
means for that purpose and the traffic needed to support it. It is in¬
teresting to note that throughout the northwest all" of the routes now
in operation are reasonably matured and in effective and economical
143
operation. The same is true of the Union Pacific-Central Pacific
route and equally true of the Santa Fe and Southern Pacific routes
throughout the southwest. Many perplexing problems would be
solved by providing for the Denver & Pio Grande and Moffat line in
the manner stated not only the additional traffic but also the financial
strength needed to accomplish the improvements necessary.
Group 4.
Group 4. The grouping of the Union Pacific and Chicago, Mil¬
waukee & St. Paul has already been suggested and it is evident that
whether the present suggestions for four groups are entertained or
not, that suggestion has merit and is entitled to consideration. Broad¬
ening the proposal, however, to include a discussion of the four group
plan it is proposed that Union Pacific system lines and Chicago, Mil¬
waukee & St. Paul system lines be grouped with Chicago & Alton,
Minneapolis & St. Louis, St. Louis-San Francisco, Wabash lines west
of Mississippi River, Texas & Pacific and International & Great North¬
ern. The decision of the Commission in the Central Pacific case above
referred to assures the Union Pacific of a continued close traffic rela¬
tionship with that line and thereby the continuance of its present ef¬
fective through route between the Missouri River and San Fran¬
cisco. I have already indicated the merit, as I see it, of the association
of Union Pacific vuth Chicago, Milwaukee & St. Paul, providing agmn
an alternate through route between the middle west and the northwest
with the resulting advantages which have been indicated. By the addi¬
tion of the Chicago & Alton and the Wabash lines west of the Missis¬
sippi River, direct connection between Kansas City and St. Louis and
between Omaha and St. Louis, and between Kansas City, St. Louis and
Des Moines and territory beyond, is secured. In addition the im¬
portant Chicago & Alton line between Chicago and St. Louis is added.
With the St. Louis-San Francisco, one of the stronger southwestern
systems provides mileage from St. Louis and Kansas City into the
southwest, and the addition of the Texas & Pacific provides access to
New Orleans, and the International & Great Northern to Houston and
144
Galveston. The Texas and Pacific includes the present line to El
Paso "with access to Mexico as the traffic with that country may in the
future develop.
I have proposed these tentative "western groups "with hesitation
and only as an indication that I believe that the tentative plan of the
Commisson goes either too far, or does not go far enough. I believe
that the intent of the statute taken in connection mth the present ex¬
tensive systems now in the west justifies, if it does not require, that
the western groups shall be based on Chicago and St. Louis. If this
be true, I have been forced to the conclusion that there is no logical
nor fair way to group the western mileage short of groups somewhat
as I have indicated.
The influence of the Panama Canal is to-day the most outstanding
and significant influence on western traffic. Enough has developed to
indicate the continued influence of that new route and no one will to¬
day undertake to predict as this western country grows, the ultimate
influence of low water rates between Atlantic, Gulf and Pacific ports.
There are to-day systems in the west having their own rails from
connections with eastern lines to the Gulf and to the Pacific Coast and
intermediate territory. It is not proposed to disturb or disrupt those
systems. It must follow then as a matter of common justice that other
groups must have reasonably equal opportunity to compete and to
grow, and therefore unless the plan to base western groups on Chi¬
cago and St. Louis be abandoned, equal competitive opportunity de¬
mands that each group have through rails into the west and south¬
west.
It is ob"sdous that groups of the character suggested will neces¬
sarily involve considerable study as to the many details which are
presented, but which I have not in this general survey undertaken
to deal with. It would seem necessary, before considering details of
lesser importance, to consider the general plan in its broader aspectsj
leaving the. working out of details, readjustments and modifications, to
follow the approval of a general basis.
145
I think I have shown that groups of the size suggested are not
substantially larger in geographical extent nor in volume of business
nor other features" taxing management than features of the tentative
plan and precedents in present day operation justify. It appears to
be the presumption of the law that the consolidation of railroads into
a limited number of systems is in the public interest and by this is
meant that larger systems will be productive of better and more effi¬
cient transportation and greater economy in operation. The history
of American railroads has been one of steady development into larger
operations and larger systems, although for a time delayed and im¬
peded by the policy of the Sherman Act, which now is in a measure
behind us under the policy announced in the Transportation Act, and
as recently interpreted in the Central Pacific decision. I do not be¬
lieve that the full benefits which the public expects to secure through
these consolidation provisions will arrive unless a courageous and
comprehensive view is adopted.
Finally, I predict that the courage and ability of American railroad
management, if permitted to do so, will demonstrate the value of great
western systems similar in type to those I have suggested and I offer
these suggestions in the belief that they are sound in principle and
with the hope that they may be of assistance to the Commission in the
solution of the difficult problem that confronts it.
I just want to add a word, Mr. Chairman, broadly, about these four
systems as indicated by these four maps.
As I have said, each system is provided with two routes into the
west, alternate routes, and if you like, but both coming at the western
end and productive, as I believe, of opportunity for routing via the
shorter mileage and better circulation of car supply and the more effi¬
cient use of existing equipment.
Each system has an alternate route with the same advantages into
the southwest. I think you will find from an examination of them
that there are practically no so-called ''stub ends" left, although there
146
are two or three, and I know of no escape from a situation of that kind,
and none has been found in any of the plans that have been thus far
presented. But I think you will find in these plans less objection on
that score than thus far has been developed.
Now to reiterate once more, it may strike, and doubtless will strike,
some as beyond the scope of effective management to deal with mile¬
age of this kind, and I have tried to show by actual precedents and by
what appears to be in the Commission's mind, that' that objection is
not sound.
Now, this western territory is, in a broad sense, a harmonious terri¬
tory. It is, broadly speaking, covered by a rate structure which is
harmonious throughout, although, of course, with variations, but the
country has found itself by development into three grand subdivisions,
the east, southeast, and the west. In the west we have two or three
practical systems already in effective operation reaching from the
Great Lakes to the Gulf and to the Pacific Ocean. So, we start off with
a precedent that encourages us to believe that those systems were not
accidentally developed but that they were developed according, to a
wise design. They are in successful operation, they are rendering effi¬
cient transportation, and in developing the thoughts that I have given
you, I base my conclusions largely upon what I find to be in actual
existence. - .
Taking our own group, if you like, as I have shown you, under our
present system of inter-related managements, the Burlington, Northern
Pacific and Great Northern, and Colorado and Southern, we are oper¬
ating 28,000 miles of railroad, and I may be bold enough to say, with
reasonable public satisfaction. I do not think we need to shy away
from the idea that by a redistribution of authority and mileage, under
the point of view that one' corporation owns the 28,000 miles instead
of a dozen, that any substantial difference in the problem of manage¬
ment would present itself. Take the Union Pacific System, the South¬
ern Pacific, and the Santa Fe. Those are ..the other three grand stems
around which I have grouped the ideas that I have worked out. The
addition of mileage which has been suggested is only the addition of a
147
certain amount of through routes, and the aggregation around the
main routes of a considerable mileage which is really branch line
mileage, and presents relatively simple problems for operation.
Take the Santa Fe, for instance. It operates from Chicago to the
Pacific Coast, and into the south, which is a very comprehensive sys¬
tem in either of those grand districts. To encourage another system
to duplicate in the southwest what the Santa Fe has does not seem
to present to my mind any more difficult problems than the Santa Fe
itself is handling with success. To invite the extension of the Santa
Fe into Chicago & Northwestern territory does not present to my
mind objections beyond the capacity of adequate management, because
the Northwestern is being adequately managed to-day, and it again be¬
comes merely a question of redistribution of authority of existing
officers.
Q. (By Commissioner Esch.) The Canadian Pacific has about
what, 13,000 miles ?
A. I was coming to that as an illustration, Mr. Esch. I think it
is substantially that. There we have an illustration of a very success¬
ful operation, a transcontinental railroad in truth. It has Pacific and
Atlantic Coast steamship service. It is all under one general direction
and operation. So far as geographical extent is concerned, I think we
need not hesitate about that, in these days of telephones and tele¬
graphs, and it finally becomes a question of a sensible scheme of the
distribution of authority and an .adequate and ample amount of local
authority for the prompt and correct decision of local questions.
I do not mean to encourage the idea that a general manager to-day
having authority over 4,000 miles of territory is expected to take on
8,000 miles of territory, or a division superintendent who to-day super¬
vises 400 miles of line is expected to take on 1,200 miles of line; noth¬
ing of that kind. There is a limit to the capacity of the individual man,
of course, but if there is any precedent in the growth of these Western
systems, going back to the days when a railroad in New England was
60 miles, or 150 miles, remembering what in this generation we know
about the growth of mileage by additions and extensions and consoli-
148
dations from systems of a thousand or 1,500 miles to present day sys¬
tems of 8,000 or 12,000 miles, I see no problem, beyond the exercise of
good common sense, in developing management adequate to take care
of systems such as I have proposed..
I bebeve that if we are going to do anything with this consolidation
question, if it is based upon a public opinion, which the legislation in¬
dicates, my conviction is that the way to go at it is to recognize that
this western territory is a unit, in a broad sense; that we have existing
systems here that are in effective operation, which practically cover,
on the principles I have stated, the western territory; and what we
should do is to take a courageous view and develop this system along
the lines that the actual situations indicate, and that is to give each
system equal competitive opportunity mth the other, so that there will
be a wide and a broad base under each system, in climatic and crop
conditions, and in the general economical conditions of the West, and
not limit any system to a limited part of the western territory.
Now then, if the law is based upon average conditions for rate-
making purposes, I think you have to find systems that present aver¬
age conditions for operating, traffic, and earning conditions, and I be¬
lieve that a study of this western territory indicates that you cannot
have an equally competitive opportunity, and you cannot have average
conditions without giving each system an outlet into the far west and
an outlet to the southwest.
Q. (By Commissioner Hall.) By the southwest, do you mean the
Gulf?
A. I mean the Gulf ultimately, but in speaking of it, I mean into
the southwest, and resting on the Gulf for access to water borne traffic,
and the same is true of the far west. I mean not only the Pacific
Coast ports, but also reasonable mileage through the far west, so
that for long haul transcontinental traffic each system may enjoy it,
and also may have its share in the development of the territory
throughout the west adjacent to its mileage.
149
Gross-Examination.
Q. (By Commissioner Esch.) Mr. Holden yesterday you sug¬
gested an alternative treatment of the Milwaukee hy possible consoli¬
dation with the Illinois Central?
A. Yes, sir.
Q. That raises in my mind the practicability of combining an east
and west transcontinental line with a north and south transcontinental
line, from the Lakes to the Gulf, arising out of the fact that the Illinois
Central is a road without grades. The Milwaukee, of course, has to
cross the mountain ranges. There is a difference of products along the
lines, and a difference of traffic conditions. Would it be possible for
us, in such a consolidation plan as you suggested, to comply with the
requirements of the consolidation statute, as, for instance, to uniform¬
ity in the rate structure producing, on the average, the same return?
A. The Illinois Central is like the Wabash in one sense. It is on
the dividing line; whether it is a southern or southeastern road, or
whether it is a western road, is hard to say. It is both. It has a line
to Omaha. It has mileage into Iowa.
Q. It reaches Sioux Falls, South Dakota?
A. Sioux Falls, South Dakota. It is a heavy grain carrier to the
Gulf. In that way it presents quite comparable characteristics in rates
and other features mth the roads leading to the Gulf on the west side
of the Mississippi Eiver. It is a heavy coal carrier from Dlinois and
Kentucl^y, particularly Dlinois, into the north, and is like the Burling
ton in that respect. I see no substantial difference, unless you have in
mind the Central of Georgia, which is a distinctively southeastern svs-
tem, associated with the Illinois Central.
I see no substantial difference between the Dlinois Central and the
Burlington or any of these so-called western lines. It has lumber
traffic, for instance. It hauls large quantities of lumber north from
Mississippi and Louisiana. So do the roads on the west side of the
river. Their rate structure is alike, and must be. That is obvious. I
think, if the Dlinois Central had not had the western mileage, we
150
might have always considered it as a sontheastern railroad, but it has
western mileage. It is a western railroad. It has its base on Chicago,
competing with western railroads in large quantities and items of its
traffic. I made the suggestion of associating it with the Chicago, Mil¬
waukee & St. Paul, because it seems to present an admirable! instance
of the principle that I have rather based my thoughts on, that access
to the Gulf and access to the Pacific Coast territory were essential,
and I believe the Illinois Central can very properly be considered in
that connection.
The only fact is, as you point out, that it happens to be on the east
side of the Mississippi River, but the Mississippi Valley is very much
alike on both sides of the river, for a reasonable extent of territory
and in products produced.
Q. (By Commissioner Esch.) We have always recognized the
right of the roads west of the river to a higher rate than the roads
east.
A. But they cannot charge any higher rate for competitive traffic
than a road like the Illinois Central, which is in competition with them.
Take the southbound movement of grain, and the northbound move¬
ment of lumber, and the handling of cotton. There seems to be a rela¬
tionship of the rates there that produces a substantial parity. I think
what you say is true as to so-called southeastern territory, but as I
say, the Illinois Central is rather on the line, and I think we can claim
it as a western road just as well, and better, I believe, than it can be
claimed as a southeastern road.
Q. (By Prof. Ripley.) Mr. Holden, is there not an administrative
consideration there of some importance, inasmuch as under the law
the Commission has elected to fix rates by groups territorially?
Wouldn't it be somewhat of a source of embarrassment if the Illinois
Central were to be associated with a road lying in the northwest, when
it came to the determination of these rate questions; rate increases and
rate decreases, for example?
A. I do not think so, Mr Ripley, because, as I say, the Illinois
Central is'here, and it is astride of the line. If it is an embarrassment.
151
it has been so, and it will continue to be so. You cannot get it out of
Iowa, unless you split it up, so I do not view that as a difficulty, because
we cannot get away from it if it is.
Q. But should not a wise plan comprehensively attempt, so far as
possible, to keep the systems Avithin the rate grouping territory?
A'. Broadly speaking, yes, but I am very much opposed to the idea
of splitting up any systems. I do not think that this plan will move
at all if that be done, and therefore I must say that I do not believe it
would be Avise to split up the Illinois Central system merely on the
point that you have in mind.
Examiner Healy: Have you anything further of Mr. .Holden?
Prof.- Eipley: I do not knoAV Avhether it would be best to pursue
the inquiry now somewhat further in this way, or to wait for a future
time.
Examiner Healy: It probably should be the subject of further
study.
Prof. Eipley: I am quite content to leave Mr. Holden to the
friendly attentions of his neighbor, as far as criticism goes. There
are possibly one or tAvo very general considerations which it might
be worth while to bring out, merely to show what appeared to be gov¬
erning in the preparation of the Commission's plan.
Q. (By Prof. Eipley.) The statute calls for the preservation of
the existing current of trade and commerce, does it not?
A. Wherever practicable.
Q. As far as practicable. Now the current of trade and commerce
from the beginning has flowed from the Urn'on Pacific into the Central
Pacific and vice versa, at Ogden, has it not?
A. Yes.
Q. Isn't it a pretty rude disturbance of that relationship to as¬
sume that a large part of that traffic is going to move east of Ogden
by the Eio Grande, rather than by the Union Pacific?
A. I should thinlc that AAmuld be a matter which the parties inter¬
ested would have to work out by a proper distribution of it.
152
Q. As a practical railroad man, would it be possible to move the
tonnage of the Central Pacific Line over the Rio Grande route, with
its grades and curvatures, etc. ?
A. Not now,
Q. It is your expectation then, of course, that a large amount of
money would have to be spent to bring it up to a proper standard!
A. Yes, sir.
Q. The problem for the West really reduces itself, in its broadest
aspects, to taking care of the St. Paul and the Rio Grande, does it not!
A. I think fairly so, yes.
Q. Are there any other dispositions that occur to you for the Rio
Grande, except to put it, as in the Commission's tentative plan, with
the Santa Fe, or to put it with the Burlington as I put it, or to adopt
some alternative, like the one you have adopted in your plan!
A. I think that is about all that seems to be available, unless you
go the farther step, which at one time was under some thought, of hav¬
ing a fifth group made up of the mileage between Colorado and Cali¬
fornia and the middle route; but I do not advocate that.
Q. Now, as to the St. Paul—
Commissioner Hall (interposing): In your query. Prof. Ripley, do
you leave out Mr. Bush's suggestion!
Prof. Ripley: It occurred to me afterwards, that I should have
added that. There are four possibilities, then. With the Santa Fe, as
in the Commission's tentative plan; the Burlington, as in the plan
which I suggested; this arrangement with the Southern Pacific and
the Bock Island, which you suggest; and the continuance of the old
historical relationship, as set forth by Mr. Bush.
Mr. Holden: I should have included the Missouri Pacific also, but
I want to add right there the thought, Mr. Ripley, that I do not see
the opportunity for the development of the D. & R. G., unless it has the
advantage of the tonnage which is now already, you might say, under
control of the existing lines in California. It was testified here the
153
other day, and I thiTiV the figures show the volume of business is heav¬
ily easthound. How long it will continue that way, I do not know, hut
so much is going west through the Canal that perhaps any change in
that regard is not in sight at an early date. The easthound business
out of California is already now effectively handled hy the Southern
Pacific, and Santa Fe and the Union Pacific, as it reaches Los Angeles,
and I douht whether it is in the policy of the present law to encourage
a large amount of additional railroad construction in California, and
I douht whether anyone would emhark upon it. So that is the traffic
that has got to he found availahle for movement in whole or in part
over the D. & R. G. easthound, and that was a large part of my thought
of suggesting that the Santa Fe originating a large amount of it, and
the Southern Pacific originating a large amount of it, ought to he in¬
terested in the D. & R. G.
Q. (By Prof. Ripley.) In any event, the problem of carrying the
D. & R. G. calls for roads of considerable strength financially, does it
not?
A. It seems to me so, because these eastern roads like the Burling¬
ton—^^ve have no large amount of traffic that we can deliver to it, and
we have no traffic to originate in the west end.
Q. Do you regard the Panama Canal as likely to grow in its seri¬
ousness of competition with the transcontinental lines?
A. It seems to me that is the present-day indication, yes.
Q. Its attack is primarily directed against the southern transcon¬
tinental lines, is it not?
A. There was a steamer unloading shingles from the State of
Washington in Houston the other day, and I think the effect—^I mean to
speak of it seriously—^I think the effect of it is in one sense largely
against the Southwestern lines, hut the traffic is being taken from all
the Pacific Coast ports, and is being taken to all the Pacific ports.
Q. But it does most directly menace the southern lines, does it
not? That is, it is most clearly in direct parallel with them. It prob¬
ably could take from them a larger volume of tonnage than it could
154
take from the northern transcontinental lines, could it not, as a matter
of fact?
A. I don't believe that is very material. I am not enough of a
transcontinental traffic man to he able to answer that intelligently, hut
I doubt whether that is of as much importance as your question indi¬
cates. /
Q. If it were so; that is to say, if the Canal competition is likely to
cut into the earnings and financial stability of these southern lines,
that would induce one to look for financial support able to carry the
Eio Grande, rather to the northern lines than these southern lines,
would it not, if that were true? You have not admitted that it is. but
if it were, wouldn't that be the case?
A. I would have to think about that, but I can say this. I do not
know where the financial streng-th in the north is to be given to the
D. & E. G., if this tentative plan is carried out.
Q. Just a word, now, about the St. Paul, and I will be through.
The statute calls for the preservation of competition so far as may be,
does it not?
A. Yes, sir.
Q. Let us take the case of the Union Pacific. If the plan contem¬
plates carrying it into Chicago, its choice is reduced to a limited num¬
ber of connections, is it not ?
A. (Interposing.) For through competitive business, yes.
Q. For through competitive business.
A. Just a moment. That is in its own hands, but I assume you
mean that it will develop the through haul for its own rails.
Q. Yes. What I mean is, if it is to be produced into Chicago, there
are only a certain number of lines available, namely, the Chicago &
Northwestern, the St. Paul, the Illinois Central, and the Burlington.
Would it not seem logical that the connection which was chosen there
for consolidation would be one which is not a competitor to the Pacific
Coast with the Union Pacific, pursuing the terms of the statute?
155
A. In that aspect, yes; but that is only one of the several aspects,
because the main feature is to preserve existing competition. Putting
it with the St. Paul as I have suggested, where other etfective systems
are in actual competition, it is in my opinion preserving existing com¬
petition, so far as the public is concerned. I do not take it that this
law was based solely on the idea of preserving competition between
railroads. They were looking at the public interest. Because the St.
Paul nowadays competes with the Union Pacific, we will say, from
Spokane eastbound, I do not understand this law meant that we must
not interfere with that railroad competition, but what it meant was
that Spokane should have the benefit of practical continued competi¬
tion in service, and if there are greater advantages in putting the St.
Paul and the Union Pacific together than the apparent loss through
leaving them as competitors for Spokane business, then I would take the
greater of the two; and I believe there are such. One of the greater
advantages, as I have pointed out, I think, outside of shortening
the distance up to that territory, is that the St. Paul furnishes con¬
nection with the Union Pacific at Kansas City, which the Northwestern
will not.
Q. I will ask you just one further question. There are three gate¬
ways through the Pocky Mountains at the north, to the Coast, are there
not, held by the three lines of the St. Paul, Northern Pacific, and the
Great Northern?
A. Yes.
Q. Those three lines are not of equal strength, according to gen¬
eral report, are they?
A. According to general report, I believe that is true.
Q. The Northern Pacific and the Great Northern are reputed to be
financially stronger than the St. Paul?
A. I believe so.
Q. The statute calls, so far as may be, for a balancing of financial
strength, does it not, of earning power?
A. The latter rather than the former. It says, so that the sys-
156'
tems may earn approximately like returns on tlie same rate stmcture,
or something of that sort.
Q. Would it not, in pursuance, then, of the apparent intent of the
statute, seem more logical that instead of putting the two strong lines
together against one weaker line in a consolidation, that some other
arrangement should he effected?
A. If you left it precisely that way, I might have to agree with
you, although I do not go quite as far as you do in understanding the
law relating to financial strength hut, as I have tried to point out. Prof.
Eipley, I do not think you are doing justice to the St. Paul hy leaving
it alone with the Great Northern. I do not think you have found the
solution. If you are looking for additional traffic and earning power
for the St. Paul, I think it needs a broader base, and I do not believe
you can find it by associating it with a parallel line in that limited part
of the whole western territory, because, as Mr. Byram said, putting
it with the Great Northern, it does not seem to him, will produce any
more traffic for either, and I do not believe it will. What the St. Paul
may need—^I hesitate to talk about my neighbor, but based upon what
its President himself said here, what the St. Paul needs is not to be
associated with its competitor out in that territory, with no opportunity
for either to get more traffic, but merely to redistribute what they
now themselves have. You could do something, as I have suggested,
like putting the St. Paul with the Union Pacific; or, if the Union Pacific-
Northwestern marriage is so final that it should never be disturbed, put
the St. Paul with the Illinois Central, or some of the other suggestions
I have made. I leave it finally with you. The St. Paul situation is
not such as will be bettered, nor is it necessary to divorce the Great
Northern from the Burlington to find a proper solution for the St.
Paul.
Prof. Eipley: That is all.
Examiner Healy: Are there any further questions of Mr. Holden?
Q. (By Mr. Scandrett.) I would like to ask one or two questions.
Mr. Holden, do I correctly understand your testimony, that the pri-
157
mary purpose of your suggestion as to joint ownersMp of the Denver
& Bio Grande is in order to provide additional tonnage for that line?
A. Not the primary purpose, hut it is an important part of the
idea, yes.
Q. That tonnage would he tonnage that is all moving via the Cen¬
tral Pacific and the Union Pacific, would it not?
A. Not necessarily. The Santa Fe tonnage might provide it.
Q. That would he accomplished hy having the Santa Fe the sole
owner of the Denver & Bio Grande?
A. That might, yes.
Q. If this additional tonnage is not the purpose, will you state
again what is the purpose of the divided ownership of the Denver &
Bio Grande?
A. To provide the financial strength and resources to develop it
into a practical competition with the Union Pacific, and, as an incident
to that, to provide it with adequate tonnage so as to justify the in¬
vestment.
Q. Why is the Southern Pacific selected as the aid of the Santa Fe
in that enterprise, rather than the Burlington?
A. The study that has been given to the subject hy the Commis¬
sion, and by those that have testified and made their suggestions here,
seemed to indicate that the Southern Pacific had a gap between Ogden
and Denver which ought to he bridged. Whether you bridge it by
ownership or otherwise, I suppose it was meant that that was to be
an effective route.
Q. Then, that is the reason for the selection of the Southern Pacific
to go along with the Santa Fe in this Denver & Bio Grande enter¬
prise? I
A. It seems to suggest itself as one reason. You had the Southern
Pacific on two sides of that territory, and it might logically complete
the gap.
Q. Would that, in your judgment, tend to build up or tend to pull
158
down the interchange at Ogden bet^veen the Union and the Central
Pacific?
A. That would depend a good deal on how it is handled. I could
not undertake to say. It would depend a good deal on how the traffic
might be routed.'
Q. The thought back of the suggestion is to make it in the interest
of the Southern Pacific to work business through the Colorado gate¬
ways, via the Denver & Eio Grande, is it not?
A. The thought seems so, from the facts as they are presented
and if you want me to go further, it might be proper, after the D. &
E. G. has been matured, to suggest that some of the traffic be better
routed over that line through Pueblo into territory where that is
the short route, than via other routes. I do not know. I am not enough
of a traffic man to tell just how the Union Pacific would handle the mat¬
ter in a case of that kind.
Q. Does this joint ownership of the Denver & Eio Grande by the
Southern Pacific and the Santa Fe eliminate what you characterize as
stub-ends at Colorado?
A. It seems to me it does, excepting one.
Q. In part by reason of the fact that you propose the incorporation
of the Missouri Pacific in that same system?
A. Yes, sir.
Q. I Avant to ask you one or two questions about the Illinois Cen¬
tral. As I understand your testimony, you think that consolidation of
the Illinois Central and Milwaukee might be a feasible project?
A. Yes.
Q. I think I am correct in understanding you as taking the posi¬
tion that the Milwaukee and the Union Pacific would also be a feasible
consolidation?
A. Yes.
Q. Had it occurred to you to consolidate the three, the Milwaul^ee,
the Illinois Central and the Union Pacific?
A. No.
159
Q. That would provide the Milwaukee-Union Pacific with a much
better route to the Gulf than you have provided in your allocation for
Group 4, would it not?
A. I do not know whether it would be better or not. Do you mean
in physical condition, or in shorter mileage, or what? .
Q. Both.
A. I should think, for grain originating in Kansas, for instance,
on the Union Pacific lines, it would be a long way around to take it over
to the Illinois Central and down to the Gulf that way. The St. Louis-
San Francisco, is an efficient southwestern railroad.
Q. You spoke of that working out, that it would work out de¬
sirably in connection wdth the Milwaukee and the Illinois Central.
Wouldn't it work out just as acceptably if the Union Pacific were in¬
cluded in the same group?
A. For the reasons I have just stated. The Union Pacific is down
in Kansas, and it is a Kansas City line. The St. Paul is farther north.
It is not west of the Missouri Eiver. It seems to me it is more logical
to consider the St. Paul and the Illinois Central as properly associ¬
ated, than to consider the Union Pacific and the Illinois Central, al¬
though historically I have no doubt that those two lines have had a
close association, because they have been more or less second cousins,
I believe. But if you think that would be a good arrangement, I would
be glad to consider it. But perhaps you will make the suggestion in
connection with some other western groupings.
Q. All I can do is to suggest questions. I am not in a position to
suggest consolidations.
A. I think that is a very interesting suggestion.
Q. You did not provide for the Illinois Central in your four west-
em systems?
A. No, not the four western systems.
Q. Had it occurred to you at all, Mr. Holden—^you spoke of the
Denver & Rio Grande being a bridge—that the Colorado and Southern
and the Fort Worth and Denver City might be used as a bridge for
these large systems, all of which would connect with it in Texas?
A. That is a possibility, yes. We might be prepared to consider
that, at a price.