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BEFORE THE
Interstate Commerce Commission
Docket No. 12964.
In the Matter of
CONSOLIDATION OF THE RAILWAY PROPERTIES
OF THE UNITED STATES INTO A LIMITED
NUMBER OF SYSTEMS
STATEMENT FOR THE NEW YORK, NEW HAVEN
AND HARTFORD RAILROAD SYSTEM
By
E. J. PEARSON, President
May 24th, 1923
\\A\-
The statements which will follow and the data which will be intro¬
duced, are in response to the order of the Commission of March 3rd,
1923, in its docket 12,964, and relates to the New York, New Haven
and Hartford Railroad System. Preparation has been aided greatly
by the thorough and constructive work of Professor Ripley, which
appears in the tentative plan of the Commission for the consolidation
of railway properties of the United States into a limited number of
systems.
The magnitude and the importance of this problem is recognized.
The study which has been given by those representing the New Haven
has been with a view of affording the utmost assistance that is pos¬
sible, in reaching a solution which will be in the best interest of the
public and of the owners of the property. Various features must be
considered; physical character and transportation capacity; effi¬
cient and economical operation; means of rehabilitating credit; and
relationship between New England and its railroads.
In pursuance of the general directions relating to the furnishing
of data, two schedules are submitted. The first (Exhibit A) a
series of statements of statistical data; the second (Exhibit B)
data which is displayed by a series of maps and charts.
Whfie the exhibits which have been introduced give full detail
with respect to the gradual building up of the New Haven System,
through consolidation, leasing, and acquiring of ownership of securities
in constituent lines, the general picture of these numerous and suc¬
cessive developments so far as the dates of origin of portions of the
physical property are concerned, is shown by a blueprint which is
submitted as Exhibit C. This print is dated February 16, 1920,
and by ten year periods, shows graphically the approximate dates
of opening of the various portions of the system.
That part of the System from Atlantic toward West Quincy was
opened in 1826; from Back Bay at Boston to East Providence, in
1834; from Mansfield to Taunton, in 1836; from South Providence
to the Port of Stonington which is under the shelter of Long Island,
in 1837; from Belle Dock, New Haven, to Hartford, and from West
Stockbridge to State Line, in 1839; from Norwich to Worcester and
from Bridgeport to Canaan, in 1840; from Read ville to Dedham,
and from Canaan to West Stockbridge, in 1842; from Norwich to
reach deeper water at Allyns Point, in 1843; from Hartford to Spring¬
field, in 1844; from Providence to Worcester, in 1847; from New
Haven to Plainville, in 1848; from New Haven to Woodlawn, and
Devon to Winsted, in 1849; and from Hartford to Willimantic, and
1
Dcdham to East Douglas, in 1849. The freight line to Harlem
River was opened in 1873. The Shore Line was not connected up
until the Thames River Bridge was opened in 1889, a transfer steamer,
however, had been operated theretofore. The South Station at
Boston was opened in 1898.
The exhibit shows the successive additions. But little main
track mileage has been added since the period 1880 to 1889. For
practicable purposes the completion of the present system as now
operated, was substantially effected under the administration of
President Clark which terminated in 1901.
The following tabulation illustrates for the twenty year period,
that while the miles of road remained substantially the same, that
population, traffic handled, and the provision of added tracks and
facilities, all increased largely.
Population of July, 1923—From estimate of Census Bureau
on April 11, 1923.
Population of July, 1903—(Approximated from Census of 1900
on same basis as Bureau estimate
for 1923.)
Control of Central New England by New York, New Haven
and Hartford dates from 1903.
July, 1903. July, 1923 P. C. Incr.
Population Conn., Mass., R.I.
(Approx.) 4,460,529 6,130,700 37
Miles of Road—^NH—CNE... 2,280 2,297 1
Miles of All Tracks—NH—
CNE 4,336 5,438 25
Population Per Mile of Road
Almost Exclusively Served
(Conn. R.I. and 1/3 of
Mass.) 1,077 1,500 39
Population of New England... 5,938,817 7,707,963 30
Population of United States... 81,762,521 110,663,502 35
1903 1922
Passengers One Mile—
NH.—CNE.. 1,123,326,576 1,857,933,433 65
Passengers One Mile Per
• Mile of Road 492,687 808,852 64
Rev. Ton Miles—NH.—
CNE 1,657,580,727 3,020,409,682 82
Rev. Ton Miles Per Mile
of Road 727,009 1,314,937 81
In many respects, so far as southern New England is concerned,
there has been brought about through the various processes of merger,
although in a lesser degree, a' consolidation of nearly all lines of
2
transportation within southern New England, much perhaps as is
contemplated in a larger measure, by the Transportation Act of
1920.
In the operation of the system, and this policy was established
under President Clark, it has been the endeavor not only to meet
the requirements of the territory served, but to afford its patrons
what might be designated as terminal service, that is, free and unre¬
stricted opportunity to utilize the transportation of the New Haven
System in connection with all other lines of connecting transporta¬
tion, rail or water; and similarly, to afford all connecting lines of
transportation what might be deemed terminal service for them,
for the purpose of reaching all points in the territory served by the
New Haven System.
As the situation exists today, the New Haven System comprises:
The New York, New Haven and Hartford Railroad and leased
lines:
The Central New England Railway and leased line:
The New York Coimecting Railroad—jointly owned with the
Pennsylvania Railroad:
The New England Steamship Company which now includes the
New Bedford, Martha's Vineyard and Nantucket Steamboat
Company; and.
The Hartford and New York Transportation Company.
The Central New England is operated as an integral part of the
System. The New York Connecting is operated by the New Haven,
for the joint account of the New Haven and Pennsylvania. The
New England Steamship Lines are operated jointly with the New
Haven for rail and water traffic, and supplementally, as is also the
Hartford and New York Transportation Company, for port to port
traffic. All of these lines are essential to a co-operative system of
transportation, to the end that the New Haven System may meet
the needs of the public which it serves.
The System now serves, almost exclusively, the states of Connecti¬
cut; Rhode Island; the southerly portion of Massachusetts approxi¬
mately a third of the state; and the southeasterly corner of New
York. This territory is densely settled, prosperous commercially,
important, and highly developed industrially. It has a population
of about million; approximately 3.2% of the United States.
The value of all property in this territory (from the tax returns of
1920), is approximately 6 billion dollars. The annual production of
agriculture, commerce and industry (from the United States Census
of 1919), is approximately 3J^ billion dollars; roughly 5% of the
3
United States. The revenues of the System amount to about 2.5%
of the revenues of the railways of the United States.
As has been shown by exhibit C just referred to, the original
transportation lines of New England comprised railways which were
mostly located along portions of the seaboard and through the
valleys between the tidewater ports and the centers of industry
and traffic in the interior; these were operated in connection with
steamers to and from New York.
As the independent and disconnected railways and steamer lines
were merged, and as capacity of western gateways was expanded,
traffic tended to favor the all-rail movement. This has generally
kept the all-rail route with its gradually increasing capacity, pretty
well filled, and has at times caused congestion.
In view of the impressions that appear to prevail from time to
time, which improperly reflect the situation and conditions of the
New Haven, and particularly because of remarks that have been
made earlier during this hearing to the effect that the New Haven
must be short of both facilities and equipment because of its weak
financial condition, it is desirable to outline some of the matters
relating to the New Haven in this regard, which on the contrary
are favorable. This data is pertinent, in order that in considering
consolidation plans, there may be a comprehensive understanding
of what the New Haven System is in reality today.
Beginning with the European War, freight traffic grew so that
during 1915-10 the capacity of the road was severely taxed to care
for the load that was imposed and congestion resulted. This was due
very largely to unusually heavy buying and shipping, in part to
anticipation of rapidly rising costs, and was at a rate not only more
rapid than the railroads could handle with satisfaction, but also
more rapid than consignees could receive. It has been frequently
asserted that in this period the New Haven "broke down". The
fact is, that while the New Haven suffered both as to capacity and
operating costs, nevertheless, as a whole it furnished transportation
enabling industry to grow and prosper as it never had done before in
a similar period. The majority of its freight houses were filled with
inbound freight much of the time, because of delayed removal on
the part of consignees. For long periods of time its delivery tracks
were filled to high records of cars in place for consignees, while at
the same time the rate of unloading was no more than normally
rapid. During this period the hiring away of its employees by private
industries at the high rates justified by prospering commercial condi¬
tions, further crippled the railroad. It was a record period of diffi-
4
culty for both the milroad and the ehippera, but it ims also a record
of a general fulfillment of transportation requirements, and not a
record of railway breakdown.
Realizing the situation so quickly imposed upon the road, and with
a "dew to the future, the Directors took ñnmedkte steps to cause to
be made a study of the requirements and the development of a program
for miki^ing capacity, hnprodng serdce, remodelling operation,
expediting the movement of cars, and reducing costs. This was
with the dew of overcranii^ operating limitations due to various
causes, including the inadequate terminals of the numerous small
constituent railway whose facilitieB may have bmi adequate for
their own former independent operation with a smaller voltune of
traffioï and of prodding fadUtíes for system operation, which would
at the same time remove overload and congestion at such terminals
as Bridgeport, Waterbmy, Hartford, New Haven, Proddence,
relieve the conditions at the New York gatesrays as well, and would
be in accord with any furthra- development m the movement of the
trafiSc of New En^and as a whole.
This program was promptly and enej^etioally progr^sed. It
was carefully conâdered by the Board of Directors, and then ap¬
proved as to portions from time to time, for procedure on the basis
of the combination of, (a) funds that could be pro-ddol and, (b) first
and preference attention to the itöns of greater necesâty and of
immedmte benefit from the stondpránt of operation. Eadi improve¬
ment, títierefore, was carefully designed and provided to meet an
opm'ating requirement.
With the ¿lortage of fimds at all times, even during Federal con¬
trol; with the high costs of labor and material; and with imeertainty
of the commercial and traffic future after the war; it is obvious that
the proper course, whidi was followed, "was that of carefid attention
at all times to the providing of only those items which were of greater
and immediate operating necesrity and of maximum benefit. It was
realized further that the improvements, even in the case of reduced
traffic later, must then be found to be justified becaure of continued
decreased costs for operation'—^in which there was marked success.
In progressing this program, the Fedm'al Government assisted largely
in the furnishing of funds. The Director General, made a personal
inspection while the hea-vier work was under way, and affonied
valued assistance.
The result has been that in no instances have unnecessary expendi¬
tures been made for remote or doubtful requirements. They have
been spread throughout the System; they involve nearly every dass
5
of work; they include signals and circuits for communication; re¬
moval of points of restricted clearances and bridges of inadequate
strength; some freight stations and bulk yards; passing tracks and
various freight terminals; water supply, fuel stations, coal storage
yards, turntables, engine houses, shops, shop tools, and power plants;
locomotives, cars, etc.
The following is a Summary of Expendidtures for the Major Items,
for the Years 1917-1922, inch
Equipment $12,539,159.
120 Steam locomotives, 5 electrics,
13G Passenger cars, 22 multiple units
1500 coal cars.
Yard and Freight Terminals 14,973,279.
Boston, Providence, Auburn, Worcester,
Midway, Cedar Hill, Pawtucket, Springfield,
Waterbury.
Additional Tracks and Sidings 7,523,258.
Running Tracks, Groton to Midway, Kingston
to Slocums, New Haven,Pawtucket, AVestbrook
to Saybrook, Spring field. Passing Tracks, new
or lengthened: New Haven to Boston (24),
Devon to Maybrook (18), Hawleyville to
Hartford (5), Hartford to Boston (15), New
Haven to Springfield (10).
Engine Terminals and Shop Facilities 3,570,547.
Boston, Bridgeport, Cedar Hill, Danbur>', East
Hartford, Harlem River, Maybrook, Midway,
Providence, South AVorcester, Springfield,
AVaterbury, New Haven, Read\'ille.
Bridges 5,175,519.
Thames River, Poughkeepsie, Mystic, Connecti-
dut River at East Hartford. MUford to Boston.
Hartford to Boston New Haven to Willimantic.
Derby to AVaterbury. Litchfield Branch.
Coal Handling Facilities 468,613.
Miscellaneous Items 738,997.
Signalling at various points 1,699,063.
Telephone Lines, etc 1,737,201.
Total $48,425,637.
These expenditures were carefully made to promote good and
economical operation, with the very definite view of removing each
point of restriction or of incapacity, and of producing an adequate
6
system, well balanced as to capacity, service and economy. It was
clearly realized that in removing the points of restriction, capacity
as a whole ^nmld be increased over that of former maximum demands
or those then definitely in sight, but obviously that there would be
limitations in the future as traffic continued to grow. Hence the
plan followed in ^ch instance, was so deigned and deväoped that
without incurring unnecessary expense at the time, proviaon would
be made for such logical and econ(^cal expanáon as futura inamees
of traffic mi^t dranand.
The pro^am for enlarging capacity, spread over the entire System,
was BubstanÄUy rannpleted with the putting into servi«^ of the last
portion of the Cedar HiU Yard late in 1919.
It has bœn the purpose of the foregoing to show how during the
past few yeara the New Haven System has been developed into one
of large and substantial transportation capacity.
The results from the substantial completion of the program,
together with the work of the Operating Department, are diown:
By the fact that the capacity of the railroad has been such that
there have beœ no general emtexgo restrictions since Jxme, 1918
mtcept for causes beyond the control of the management;
By the handling in 1919 of the largest volume of gross ton miles
of freight traffic dming any ymr;
By the handling of the largest pmk during the month of October
of that year; and,
By the handling of. the three record pmhn of freight, occuring
dming the months of July, 1918, October, 1919, and October,
1920, without embargoes.
In consideration of the operating accomplMunents, conclurions
from the statistics must not be clouded, because the conditions
have never been normal in all respects for maximum efficiency. The
broad operating accompUriunents are self-Bpeaking. The detailed
statistics are of value, only when considered in connection with
undra'lying conditiom the storm and outkw strike rituations of 1920;
depreraed traffic, surplus cars standing imused on home rails; deferred
maintenance in freight cars and power, because of the heavily running
deficits; the strike of the shopmen; and tibe abnormal winter condi¬
tions just passed.
The facta are that during 1916-19 the physical property has been
rehabilitated as to transportation tapacity, which has nmde posrible
more efficient and economical operation, as shown by the handling
of traffic witii a large decrmse relativriy, in employee hours and train
and switching miles. These accomplishments are entitled to con¬
sideration, m connection with the problem of rehabilitation of credit.
7
The future prospects of capacity, service, and income, constitute the
real problems of today.
There are two phases of the transportation problem of southern
New England. The first is that of restoring the credit of the New
Haven System, so that regardless of whatever consolidation may be
adopted or plans developed, adequate transportation may be furnished
promptly and at all times, and so that the true value of the property
of the New Haven may be ascertained and fixed for use in considering
any form of consolidation. It is essential that in the consideration
of consolidations, the complete picture of the New Haven System be
drawn. The second, is the determination in the interests of the New
England public and of the stockholders of what will be the most
beneficial disposition and future use of the New Haven System.
This may be by consolidation with a Trunk Line or lines; consohda-
tion with other roads within New England—which should include
the Boston and Albany, Rutland and Central Vermont, and to these,
the New York, Ontario and Western Railroad should be added; or
by consideration of a northern New England group of roads and,
separately, the component parts of the New Haven as a southern
New England system. Under no circumstances should there be
consideration of a northern New England—Trunk Line grouping,
unless there is a similar plan made effective for southern New England.
The following relates to the first and immediate problein; the
restoration of credit and the performance at all times, of adequate
and satisfactory transportation.
IVhat has the management of the New Haven System accom¬
plished? With the confidence and support of representatives of the
Federal Government, it has raised the funds and enlarged its physical
property, to adequately meet present and prospective requirements.
It has taken this course courageously, recognizing the needs of its
patrons for transportation in order that their business may grow and
prosper, confident of resulting recognition and co-operation which
would so spread as to produce for the railroad, similar prosperity
and a restoration of its credit; a hope which it still carries.
It has developed an operating machine which has not only carried
the necessary requirements of its patrons, but has provided trans¬
portation that has enabled the territory served to prosper during
past years to an unusual degree.
Its rate policy has been on the basis only, of the cost of service, of
an income, if possible, that would afford a reasonable return on the
valuation of the property used for transportation (not on outside
investments), and of a relationship with rates in other and competing
8
territories which will not beár restrictively on New England industry
and commerce as compared to adjoining eastern and œmpetitÏTe
territory.
It has imrticipated in the work of Federal valuation, with the
result for the property used for transportation purposes only, of an
apparent equity per share to the stockholders that stands muÄ above
par. The importance of this valuation, is apparent in connection
with the means by which a more rmsonable rate of return tlmn has
heretofore been enjoyed may be brought about on the value of the
property used for transportation.
During the Trat Period, the New Havai earned a surplus of about
$4,000,000 per annum. If the conditions of that period as to the
relative baas of costs and revenues could Imve been retained, tire
addition of the economies resulting from the improvements to the
property and in operation, would have restored dividends at a hi^
rate. The magnitude of this accomplishment must not be over-
lookrà. It wdl justifies every asástance toward the rehabilitation
of credit. The economies, large and important as they are, have
been submerged, however, because of the tremendous hunease in tte
rate of unit costs, as compared to the rate of increase in the units of
revenue. The défiât approaching $15,000,000 in 1821, has bran re
duced to less than $5,000,00 in 1922.
If a reasonable and adequate return can be secured, there is eaaly
the posâbOity of a reasonable dividend rate, after the costs of carry¬
ing unprofitable outride investments have been taken from the sur¬
plus available for dividends. In this coimection, it must also not
be overlooked that any unfortunate outride investments have never
burdened the public which uses the road for transportation} that
this entire burden has fallen on the stockholders.
What are the factors necesraiy for this purpose? They are; first,
a continuation of the present general spread between the base levds
of revenues and of expenses; second, time necesrary for working
out from imder the abnormal losses of approxinaately $4,500,000
during 1922 because of the coal strike and Ihe shop strike, and for
an amount approximately similar in 1923 because of the continuation
of the shop strike effects together with the several conditions of ad-
verrity which combined during the recent winter, and induding also
the heavier expenditures for recovering from equipment maintenance
that was in arrears prior to the shop strike; third, time to bring about
further reduction in operating costs which may aggregate upward
toward $4,000,(WO per annum and involve largely, reductions in per
diem; and fourth, added revenues aggregating $9,000,000 that may
9
accrue from the various items that are under consideration which we
believe are justified on their merits, and none of which would impose
any undue burden upon New England industry. These items may
reach a total around S17,000,000 per annum. Each appears to us to
be possible or justified. But cooperation from every direction is
essential to their realization. The effect in rehabilitating credit, if
these results can be accomplished, is readily apparent.
The fairness of increased revenues, on the basis of what the traffic
will bear and not on the basis of what the traffic will not bear, must
be neither overlooked nor minimized. Compared with the Trunk
Lines, the New England roads as to income, are on thin ice. The
New England public demands a competitive rate basis that is non¬
discriminatory. The New England roads are in accord with this
principle. In continuing on that platform, however, the New Eng¬
land roads must have public support to the extent necessary to main¬
tain proper credit, in adjusting all other rates to the full extent they
are reasonable and justified.
Industry and commerce cannot prosper without adequate trans¬
portation. Secretary Hoover has approximated annual losses
throughout the United States, because of partial transportation
inadequacy at §1,000,000,000. per year. Adequate railroad credit
would enable the further development of transportation capacity
that is desirable. With adequate credit, the railroad managements
can be depended upon to increase their plant. The pressure of com¬
petition compels this course. The railroad managers take pride in
the performance of service that is satisfactory. The influence of
the Interstate Commerce Commission will constantly be in behalf
of such a course. Moreover, there can be no question but that under
the general provisions of the Transportation Act, the railroad with
adequate capacity can be more efficiently and economically operated,
and therefore, in the end will be the more profitable.
Roughly, one-third of the billion dollars—estimated as an economic
loss,—either through an increase in rates or through a lessening of
decreases which may follow in time, would solve the transportation
problem and in the end would enable the users of transportation to
save the other two-thirds of the billion, or in other words, secure an
annual benefit running at the rate of 200%.
The fines of the New Haven system are logically and well located.
Viewed from the standpoint of public necessity, there are but few
short stretches that can be considered for abandonment and they are
immaterial considering the property as a whole. WhUe the New
Haven does not carry a heavy overhead of through traffic, neverthe-
10
less it serves the high average of 1,490 in population per mile of its
road, in comparison with an average of 409 of population per mile, of
all roads in the United States.
The following relates to the second problem; the determination
in the interest of the New England public and the stocldiolders, of
what will be the most benefidal use of the New Haven ^stem in
connection with the project for consîlidations.
Unfortumtely, when Professor Ripl^ was prejmring his report
(I.C.C. 12964, August 3rd, 1921, Rige 309) complete data were
lacking as to New England traffic interchange. In fact there was
none except as to interchange with roads outside New England.
There was a notable and regrettable lack of information as to inter¬
change between New En^and railroads and as to traffic originating
and terminatiag on each railroad. Appar^tly the importance of
sudi information and of haráig it fuxniáied Profesor Bipley was not
then realized. The study of Prof®œr Ripley's report has empha-
Hzed the importance of intra-New En^nd interchange in the solu¬
tion of the New England railroad problem.
The statistics of interchange with reads outside New England
during 1919 as shown on Chart 1 and 2 facing page 510 of Professor
Ripley's report, apparently developed for the New England District
as a whole under Federal oantrol, do not subdivide intorchange be¬
tween New England itmds.
Further analysis indicates that about 35% of the œistbound treffic
of the Boston and Albany is delivered to the New Hawn for local
deliveiy on New Havai rails; and similarly, a large excess of the
traffic from the Boston and hfeine, is for local New Haven delivery.
From one of the statements in Exhibit A, entitled "Statistics show¬
ing trend or direction of carloads indicating existing routes and
channels," which shows this data in more detail, the largely prevail¬
ing excœs of loads delivered and the wûie divergenœ as between
the various eoimeetions, is brought out the following recapitula¬
tion;
CentialNewJers^ (Parlvia Harlem Riv^) 29,186 17,829
192Î
Received Delmred
Boston and Albany.
Boston arrd Maine.
Peimsylvania
91,989 40,039
128,349 90,050
146,515 57,401
10,374 3,875
New York Central
Lehigjh Valley.
Long Island..
50,022 9,307
4,284 8,156
11
ISËl
Central Vermont
7,829
8,156
Erie n r r , - n n
47,929
10,383
Lehigh & Hudson (Includes B.&0., P.&E.,
D,L.&W. and part C.N.J.,)
86,135
20,933
Lehigh and New England
27,009
303
N. Y. 0. & W.
13,617
2,120
Miscellaneous
11,632
17,887
Total.
654,870
286,439
From these figures it appearsj first, that the intra New England
interchange is heavy and important; second, that total of the East
and West interchange preponderates largely; third, that the East
and West interchange which includes the New York Central via
the Boston and Albany, is spread throx;^ numocous gatermys;
fourth, that materially enlarged concentration to and from any one
trunk line would be impracticable; fifth, that no connection affords
traffic in such great volume as to {mint to the desimbility of con¬
solidation on that account; and sixth, that it is to the interest of the
New England public and the New Haven road to continue the best
of cordial relations with each connecting road.
For further illustration of the terminal fffiaracteiistícs, studies
have been made and summaries derived for the New Haven—ONE.
copies of which follow. (Freight received from and delivered to the
New England Btmmship Company considered as local ficeight.)
Summary op Seven Day Period of Interchange Carloads,
October 16 to 22,1921,
WITH ALL CONNECTIONS
Date
Reedjáa
Local Overhead
For deliv- For delivery
ery on to another
N. H. Baaread
Deliveries
Grig, on
N. H.
Percent.
OS Over-
hmd
Traffù!
October 16th
1804
131
466
5
October 17th
2031
176
580
6
October 18th
2048
234
700
8
October 19th
1860
153
767
6 -
October 20th
2054
207
841
7
October 21st
2142
162
843
5
October 22d
2102
142
1013
4
Total
14041
1205
6210
6
12
Per mit. of Overhead (1205); to total of loads mîeived from con¬
nections for delivery on New Haven rails (14041), plus loads origina¬
ting on New Ifoven raife for delivery to connections (6210) ; i per cent.
Summary of Seven Day Period of Interchange Carloads,
October 14 to 20, 1922.
WITH ALL CONNECTIONS
Date
Receipts
Oserhead
Far Miv- Fm- ddimp
ery on to another
N. H. Railroad
Delimies
Orig.m
N. H.
Percent.
(^Over¬
head
Traffic
October 14th
2158
158
622
5
October 15th
2216
150
863
5
October 16th
2268
183
697
6
Oetobar 17th
2075
163 ,
842
5
October 18th
2085
149
791
5
October 19th
2006
156
SOI
5
October 20th
2252
162
735
6
Total
16060
1119
6451
5
Percent, of Overhead (1119); to total of loads received from con¬
nections for delimy on New EÎaven rails (16060), plus loads origina-
ing on New Haven Rails for delivery to connections (5451), 5 per¬
cent.
ExMMt D, wHdi is suhmitted, shows the detaila of the two state¬
ments preceding. Exhibit E is a diagram illustrating carload inter¬
change for 1921 through all gateways.
Without commenting on the ^eet of simflar statistics when applied
to other New Bagland railroads, it is apparent that the New Haven
is not only a terminal in a large degree for the Trunk Lines, but for
other Imœ within New. England. This is obvious, when it is con¬
sidered that southern New England is a kr^ comumer of foodstuffs,
feed, fuel, raw materials, rough stock, and materials for construc¬
tion; whereas the outbound shipments represent more largdy manu¬
factured goods.
Because shippera in New Haven territory are so largely dependent
upon Ihe New Haven for transportation, the polii^ has been devel¬
oped to pmmit tl^n to route traffic in both directions free from New
Haven control or solicitation offering a fair field and no favor for
tinffic agents of connecting lines, while the New Haven aims to
provitk for patrons and Gonnœtûms a high chanmter of tm-minal
service. This situation has been recognized in its policy with respect
13
to divisions, with a view to their adjustment on a basis not only
otherwise equitable, but such that equality of service can te given
without occasion for interfering with the desir© of shippms, or of
representative of connecting railroads, to handle all of the traffic in
accordance with their wishes. It is obvious that no other course
would either satisfy or afford, both shippers and connecting lines of
transportation, freedom of opportunity for shippers to select, or
representative of coimecting roads to solicit fm, participating rout®;
this is eœentially in their inti3®t, where such a large, important and
populous tatritory is exclusively served to such a large degree,
as is southern New England by the New Haven System. Only
through a continuation of this policy, can the patrons of the New
England roads be guaranteed a continuation of that essential stated
by the Transportation Act as a condition precedent,—that in con¬
solidations, "competition shaU be presen^d as fully as possible and
wherever pactitfflible the existing routes and dbannels of trade and
commerce, shall be maintained."
"Whatever in a selfish sense might be to the mutual interest of
the New Haven and some of the systems with which it connects—
and this also applies to the B®ton and Maine—^the obligation of the
New Hhven to its patrons and to its many connection is far greater,
to maintain open terminal service for all.
Assuming consolidation between the New Haven and a Trunk
Line, this would inevitably result in an attempt to control the move¬
ment of traffic and restrict it as against other gateways and other
routes. Privileges of shippers, heretofore enjoyed freely, would be¬
come restricted in part by the provisions of the Interstate Com¬
merce Act, permitting a systmn to refuse to ôiort haul itself, and in
addition, shipperB would gradually find thmnsdves under new influ¬
ences. The tendencies could not be other than restrictive, in the
desire to secure all of the traffic possible for the consolidated sys¬
tem. Consolidation, however, would neither enlarge the gateways
nor materially-increase transportation capacity.
The movement of traffic and development of the system of rail¬
ways in New England, has been in connection with the nmnerous
gateways. The capacity of these gateways and of the connecting
fines, and the volmne of traffic they have handled, have both grown
commensurately with traffic conditions and dmnands. It must not
be overlooked that a large volmne of New Eogjand traffic is to and
from pointe upon only one of its connectiorm—^not points that are
common with other roads. A continuation of this traffic and operat¬
ing policy is e®ential, in order that every avenue of transportation
14
may be used to its best advantage, and there may be opportunity
for each shipment to follow the route of least resistance and maxi-
mmn advantage. Because of these situations, East and West con¬
solidations might very probably tend to the gradual growth of bar¬
riers against what is now the normal and advantageous interchange
and flow of traflac within New England, and consequently influ¬
ences, perhaps disadvantageous, might tend to the realignment of
market conditions and trade within New England.
No Trunk Line has indicated a desire to consider absorption of
New England roads on a basis with encouragement to the holders of
their stock. The Interstate Commerce Commission's tentative
valuation indicates a minimum value of the New England roads.
Means have been suggested which will again bring about the real¬
ization of those values and a fair return upon them. The many
holders of railroad securities in New England should be safeguarded,
particularly in view of the possibility that through the support and
cooperation of every interest, market value can be again restored to a
proper level.
The competitive incentive heretofore displayed on the part of
the Trimk Lines, to participate in New England traffic, would dis¬
appear if one of the Trunk Lines should control in New England.
Also it is highly probable that after acquiring control such Trunk
Line might so act as to bring about a relocation of industry outside
of New England where the net resulting from the handling of the
traffic might be a httle more attractive. It has been assumed that
Trunk Line consolidation would produce the "pocket book" needed
by the New England roads, but where is the assurance? Would not
their greater interest be found in the industrial development out¬
side of New England, with consequently greater advantages to their
traffic elsewhere?
Inflexibility would gradually come about in respect to rates,
divisions, etc., other than those confined to the consolidated systems.
The use by New England of any and all routes, water as well as rail,
would almost surely suffer restriction instead of encouragement as
now.
The value arising from consolidation, for the creation of an ex¬
clusive route for the movement of fuel into New England, is debatable.
The New England market must be supplied from various fields. This
is necessary in order that the market may be wide open and the
best results be secured as to quality, price, and delivery. This is
desirable for protection, in case of interferences in any mining field
or of transportation difficulties on any railroad or through any partie¬
ls
ular section. Eastern New England normally receives its fuel from
the southern fields by water; northwestern New England, all-rail
from the northern coal fields; and similarly, southwestern New
England, all-rail from the coal areas located more southerly.
It has been assumed that with respect to the New England section
of a consolidated system, it could be placed under the requirement to
continue to serve the public in all matters as heretofore. If this is
the case, it is apparently the thought that the Trunk Line which
consolidated with the New England system would forego certain
advantages and rights but would assume the financial obligation.
Is this reasonable? Should a trunk line, for example, merge the
New Haven, is it conceivable that terminal service for the other
trunk lines would thereafter receive the same treatment as now?
Does the history of railroads bear evidence of such instances of al¬
truism? Is this contemplated by the Transportation Act?
Can it be conceived that other connecting carriers would antici¬
pate such a situation with equanimity? Would they not, and in all
fairness to their point of view should they not, as in the recent case
of the Belt Line in Chicago, take into the courts those questions
relating to the probable restriction of their free open opportunity to
receive hereafter that character of terminal service in New England
that they have enjoyed heretofore?
The operation by the New York Central of the Boston and Albany,
has been cited as an instance, but in respect to the Boston and Albany,
what has happened? The New York Central was obliged to finance
large improvements. It was to their advantage to do so, because the
Boston and Albany is a main stem of heavy traffic, serving not only
populous centers en route, but bringing the New York Central into
Boston, and consequently offered many advantages. The Boston
and Albany is not loaded with the large proportion of light traffic
lines, such as the Boston and Maine and the New Haven; lines which
are largely non-productive in net, but which must be continued and
operated in the pubhc interest.
The principal traffic centers on the Boston and Albany are also
served by the Boston and Maine and the New Haven. It was
apparent that under such conditions, the Boston and Albany could be
made profitable to the New York Central so far as its individual opera¬
tion is concerned, as an extension of the New York Central rails to
Pittsfield, Westfield, Springfield, Worcester, Framingham and
Boston. Enjoying a large degree of prosperity, because of concen¬
tration in a heavy traffic main fine, the New York Central was able
to establish what is substantially an independent management,
16
located in New England and co-operating directly with the people of
New England in all matters of joint interest.
Should the Pennsylvania take the New Haven, or the New York
Central take the Boston and Maine, it is inconceivable that public
opinion in New England would countenance any other less favorable
arrangement than an independence of management, with which the
people of New England could directly handle their own affairs, and
a continuation of the direct relations in this regard heretofore and
now existing.
Financial, physical and operating conditions of the Boston and
Maine and the New Haven are so entirely different from those of the
Boston and Albany, they are not an incentive to a Trunk Line which
might effect a consolidation, to take a similar and popular course of
estabUshing detached and independent managements; but would
the New England public accept any other or less satisfactory course?
The Boston Tea Party stands forth prominently in New England
history.
One of the important underlying motives in the program for the
consolidation of railroads is that of diminishing gateways, unifying
terminals, decreasing parallel or duplicating service, and consequently
the bringing about of reduction in the costs of operation but without
disadvantage to the pubhc. Consideration of each of New England's
gateways and of the operation of the carriers both East and West of
the same shows very clearly, that there are no beneficial prospects of
this character with respect to New England; moreover, if a national
system of railways should be brought about, it looks to us that the
situation in regard to these matters, would be no different after than
before.
Concerning a remark that has been made at times, that New
England.may be provincial; consideration must be given to the pos¬
sible effect that would follow a consolidation of part, or all, of the New
England railroads on the East and West basis. Would not this
create, for a portion, or all, of New England, a tendency toward
provincialism, regionalism, or localism, as compared to the present
status or that following a continued control by New England of its
railroads? New England control enables the use of the fines of trans¬
portation in the best interests of New England; for connected use
with each and every Trunk Line and the Canadian fines; and with
the water routes; coastwise, via the Panama Canal, and trans-ocean.
These opportunities to New England are a heritage, which undoubted¬
ly it will not willingly surrender. Instead of a tendency toward
provincialism, home control is a large and valuable asset; of advan¬
tage not only nationally, but world wide.
17
In no other locality in the United States is there such an important
concentration of population and industry. The transactions be¬
tween the public and the railroads are largely detail and much in
excess of those of any other territory. They are essentially of a
character requiring local control and home management.
In no other section of the United States is there a locality such
as New England within which the property and the operation of the
serving carriers, is both located and owned within the same geo¬
graphical boundary; in which the character of transportation is of
greater importance; and in which so many of the financial institu¬
tions, local to the territory, are so directly and so largely interested.
From no viewpoint does it appear that practicable advantages can
be brought about through East and West consolidations; from every
angle, however, advantages appear from a continuation of home
control and the promotion of home support.
With the foregoing facts in mind, what plan has the New Haven
with respect to the consolidation of New England railroads? Natural¬
ly the New Haven System, which should include the New York,
Ontario and AVestern Railroad, prefers to continue to work with and
to help and be helped by the public whom it serves, and their repre¬
sentatives.
The New Haven System is the creation of economic and social
forces operating through the last 85 or 90 years. Its growth has
been logical. Its service is shaped and operated to the necessities
of its patrons. It is home owned. Any consolidation is bound to
produce alterations, adjustments and possibly some friction which
will disturb and temporarily arrest or divert, the development of
the transportation facilities. Moreover, the present management
has a justifiable pride, in proving that its policy of intensive cultiva¬
tion will bear fruit. To bring back the New Haven System to its
former high estate, is an ambition worthy of every effort and would
entitle all who participate, to the highest encomiums of a grateful
body of security owners and a well served pubhc.
So far, from the record before the Commission, no other system
seems anxious to have the New Haven until it has become prosperous,
and its management, confident of the future, may be pardoned for
not wishing to force an unwilling partnership. In point of mileage,
if the routes of the steamship lines be included (and they really are
additional tracks of the New Haven System between New York and
their respective New England ports), the New Haven System is
substantially as large as Professor Ripley's proposed Chesapeake and
Ohio System and much larger than his Florida East Coast System.
18
Its operating revenues last year exceeded the operating revenues of
ten of the twenty-one systems proposed by Professor Eipley, as shown
on the basis of 1917, on Page 655, I.C.C. 12964. Its population per
mile of line is more than three times that of the average in the United
States. All in aU, it is a system by itself which its management has
confidence, may be made to earn a fair return upon the value of its
property devoted to the service of transportation, and with rates to
promote the industries which it serves with the result of a mutual
prosperity of the public and the carrier.
And yet this hearing is to consider the consoUdation of railway
properties of the United States into a limited number of systems.
The facts evolved from the experience of Federal administration and
war conditions, have bred in the public mind an opinion in favor of
consolidations.
The Congressional hearing which led to the passage of the Trans¬
portation Act, emphasized this fact. One of the strongest reasons
for abandoning the provisions of compulsory consolidation, was the
hope and expectation that the carriers would voluntarily do what
Congress did not then force them to do.
If this public opinion is to prevail, the New Haven then, in all the
circumstances, concludes that a complete consoUdation of all of the
New England railroads, except the two northern Canadian lines
traversing Maine, is one which should if possible be brought about.
This New England system should include the following:
Bangor and Aroostook
Maine Central
Boston and Maine
Boston and Albany
Central Vermont
Rutland
New Haven
Central New England
New York, Ontario and Western
And their respective leased, operated or controlled rail and
water lines.
These lines together, form a group performing a distinctive terri¬
torial service. They are not substantially competitive with each
other. There is but little competition within New England. Such
competition as there is between New England lines is substantially
between New England points and points outside of New England,
and this competition should and can be best promoted and continued,
19
through a consolidated New England system. Such a consolidation
will insure to a degree not even now attained, the freedom of routing
to all points beyond New England. In connection with the Ontario
and the Rutland, it will afford New England the advantage of pos¬
sible rail and lake service to Chicago, Duluth and intermediate lake
ports. In connection with the Central Vermont, Boston and Maine,
and the Rutland, it will preserve Canadian connections. It will
keep New England's face to the sea and enable her industries to eon-
tinue to enjoy the advantage of water transportation to Atlantic and
Pacific ports, and to exercise their choice of trading with all the world
by sea as well as by land.
There is value enough in the New England lines as the tentative
findings of the Commission have already proved, to entitle them to
a return which will be appealing to any of their investors. There is
business enough in New England to bring that return There is
money enough in New England to finance them. There are brains
enough in New England to run its transportation systems and direct
their policies.
It is recognized that the lines to be included within a New England
regional consolidation as proposed, are somewhat different from
those proposed in system No. 7—New England, in that it includes
the Boston and Albany, the Central Vermont and the Rutland, and
excludes the Lehigh and Hudson River and the Lehigh and New
England. The Central Vermont and Rutland are essential to the
enjojunent of Canadian connections and one of them aids in the
development of lake and rail operation. The two latter are only
bridge roads which may well be continued under their present man¬
agement to perform their present functions. They form no part of
a New England terminal system. They add nothing of substantial
advantage to the New England group, so long as they continue to be
operated as at present. Under New England grouping. New Eng¬
land will continue to be supplied through its present gateways and
ports, with anthracite and bituminous coal from the many fields
competing for its business.
There is therefore no advantage, either traffic, operating, or other¬
wise, to add to the New England systems the roads in System No. 7A
—Great Lakes. Those additional roads will bring to New England
nothing, that is not already brought or can be brought by the other
lines in the proposed grouping.
System No. 3 does not commend itself to the New Haven. To
restrict New Haven territory largely to the routes afforded by the
Baltimore and Ohio, however eflnciently such a system may be man-
20
a^, would to a mistake, and the New En^nd public would not
view with favor any policy which would restrict its complete freedom
of routing, by any line b^nd the Hudson Biver.
Our condxision, therefore, if ccmsohdations must be broi^ht
about, is similar in most respects to that reached by Professor Ripley,
excepting that it includes some New En^tand roato which he has not
included, and excludes two of the lines west of the Hudson which
he has included. The reaaons which he u^es in his able advocacy of
a New England consolidation, seem to apply with even greater force
to the grouping herein recommended.
21