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HE Terminal Railroad Association of St. Louis, Mo., jointly owned by 14 trunk line railroads, today comprises the largest and most complete system of unified terminals in the world. Its resources, facilities and activities serve the people of the St. Louis district through the annual handling of more than 4,500,000 freight cars and 650,000 passenger cars.

The physical properties owned and operated by the Terminal Association include two bridges across the Mississippi river, the Eads and the Merchants; the Union station, with its 32 parallel tracks; used by all railroads entering St. Louis; a station at the foot of the Eads bridge for the accommodation of travelers desiring to leave the city from down town; six belt lines circling and extending throughout the industrial districts of St. Louis and East St. Louis and connecting with 28 railroads. In all the Association has more than 400 miles of track.

Five yards are maintained for the storage and care of passenger train equipment, accommodating last year 50,854 incoming passenger trains and 40,461 outgoing passenger trains. In interchange the Association handles annually more than 2,500,000 loaded freight cars and more than 2,000,000 empty freight cars. From its own tracks it directly serves about 1,400 industries and industries not located on its tracks are served by 30 public team tracks located in widely separated localities of the manufacturing district. In 1927 the Association. loaded and unloaded more than 250,000 cars for 50 of the largest industries of St. Louis and the Cupples station, a part of its facilities, provides over 2,000,000 sq. ft of warehouse space for housing wholesale, jobbing and manufacturing business Classification yards are located at 10 different points, with a capacity of 20,000 cars. It serves the less than carload freight stations of 12 trunk line carriers. The magnitude of its investment is more strikingly indicated when it is shown that the Association is the largest local tax payer and pays annual taxes in excess of 1,500,000.

No Congestion at St. Louis

Through the medium of this Association passengers and freight are handled with remarkable precision and dispatch. No other large city in the United States can equal this record. When other places are congested with freight cars, St. Louis keeps its local and through traffic moving. The Terminal Railroad Association is accountable for this satisfactory condition. The Interstate Commerce Commission has spoken approvingly

of this situation in these words:

"Switching charges in St. Louis are the lowest in the United States. Switching on all classes of business is absorbed by the carrying line, except on the limited traffic with near-by towns where the through rates do

not afford sufficient revenue to enable the carriers to take up these charges. More than 80 per cent of the switching charges on St. Louis traffic are paid by the railroads out of the through rates."

The railroads that jointly own the stock of the Association are sponsors and guarantors of its bonds and other obligations. Any other common carrier may have the immediate and full use of all the service, switching facilities, team tracks and other accommodations upon exactly the same terms and conditions as any one of the proprietary lines. With such an open door policy in force the business men of St Louis have been permitted immediately to reach any new territory that may be opened up by new lines without the delay incident to the development of terminals

The Municipal Bridge Project

The City of St Louis has spent over $6,500,000 in the construction of the Municipal bridge, a combined highway and railway structure, and is proposing to spend $1,500,000 more for another approach, in order, as it is claimed, to foster and promote terminal competition. so that two small switching companies, one in Illinois and the other in Missouri, may use this bridge in transMississippi service and compete with the Terminal Railroad Association for freight and passenger business. To attain any degree of efficiency these small switching companies must purchase more locomotives, acquire additional classification yards, freight stations, and storage and unloading yards entailing the expenditure of many millions of dollars. A reasonable return on this investment must be paid by the public which means higher terminal charges resulting from duplication in the cost of terminal facilities, as well as duplication of engine movements, labor and the keeping of records.

At this time the Terminal Railroad Association has enough locomotives to handle existing and prospective traffic adequately for many years. Each of its specially built engines can transport and handle over 125 cars. If these cars were split up into several trains handled by competitive companies the cost would obviously be increased, and it has been the announced purpose of the Interstate Commerce Commission to require that terminal services be performed as expeditiously and as cheaply as possible. The Commission has repeatedly advocated the St. Louis plan of having one agency perform all terminal services for all the trunk line carriers.

Every student of this subject is in agreement, and all could not be wrong.

The profit in railroads should be made out of the trunk line haul, while the switching, hauling, assembling and delivering of passenger and freight traffic should be performed at cost by a terminal company. To this end the Association has created and it has, since 1889, adequately and efficiently served all the trunk line carriers. at cost and without discrimination. It has never paid,

Abstract of an address presented before the St. Louis Railway Club on February 10.

and never will pay, a dividend, and under the structure of its formation can only earn sufficient to meet operating expenses and to make requisite improvements and extensions commensurate with the commercial and industrial growth and development of the community it

serves.

Definite Traffic Zones for Rate Making While St. Louis and East St. Louis comprise a single industrial district, and, except on traffic originating nearby, principally coal, enjoy the same passenger and freight rates from all outside points, this industrial district has been divided into different traffic zones for rate making. It would, of course, be desirable to the users of coal in St. Louis if coal could be delivered at the same price as in East St. Louis, but this can never be because of certain insurmountable obstacles and geographical reasons.

The commission has pointed out that "the service rendered by the transportation agencies in the through routes from the mines to final points of delivery is greater, both from the standpoint of mileage and of expense per mile, on the St. Louis coal than on the East St. Louis coal. The service beyond East St. Louis on the St. Louis coal is over expensive bridges and through a congested metropolitan district, where the cost of terminal acquisition and upkeep is very great."

The East St. Louis-St. Louis district is territorially so large that coal mined only eight miles from East St. Louis in Illinois cannot be delivered at the same rate to all parts of this district, even though St. Louis and East St. Louis were not separated by the Mississippi river. The East St Louis district is an area of 30 square miles, while the St Louis district is an area of 75 square miles. The average delivery haul in East St. Louis is 3.5 miles and in St. Louis 8.5 miles, while there is an additional river haul of 2 miles. The bridges to be crossed cost millions of dollars, sufficient to build several hundred miles or railroad tracks, so that for rate making purposes East St. Louis and St. Louis are hundreds of miles apart. Some people thought that when the city built the Municipal bridge its existence would affect the rate situation but the Commission has contended that the bridge has little effect upon the rates. This Association and the railroads have been criticized for imposing an "arbitrary" charge for hauling coal across the river. The word "arbitrary" is unfortunately used because to practically everyone it means. something done, not based on actual facts, nor justified. by reason. When the ferry companies, prior to 1874, charged 60 cents per ton for merely hauling coal across the river, there was no complaint, and everyone seemed satisfied. The Eads bridge was placed in operation in 1874 to lower those charges from 60 cents to 30 cents per ton. This reduction was indeed arbitrary, because it was based on no facts or figures, nor justified by experience, but it was wholly in the interest of the public. After the creation of the Interstate Commerce Commission in 1887 the charge on coal was investigated from time to time and that rate has represented for a number of years the result of a study predicated upon the cost of service, the value of the facilities and comparisons with other river crossings. Today this charge is in no sense arbitrary, but it is the matured judgment of the Commission, which is now again reviewing the mat

ter.

Others have criticized the Association as a monopoly. Since all the rates of the terminal are fixed by the Commission and not by the Association, manifestly it is not a monopoly and cannot under the law become a monopoly.

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Freight Car Loading

WASHINGTON, D. C.

EVENUE freight car loading during the week ended February 11 amounted to 906,009 cars, a - decrease of 56,593 cars from the corresponding week of 1927 and of 11,616 cars from 1926. Loadings of grain and grain products and livestock were larger than a year ago. than a year ago. Coal led a decline in other commodity totals. Coal loading amounted to 170,307 cars, as compared with 212,486 in the corresponding week of last year. Loadings of districts were smaller, with one exception, than last year. There was a small increase in the Northwestern district. The summary, as compiled by the Car Service Division of the American Railway Association, follows:

ports filed by 34 roads in 1926, 147 reports from 29 roads in 1925, 166 reports from 35 roads in 1924, 214 reports from 27 roads in 1923, 181 reports from 27 roads, in 1922, and 262 reports from 22 roads in 1921, or a total of 1,450 reports since the law became effective seven years ago. The largest number of reports coming from any road in 1927 was 124 filed by the Pennsylvania.

The Norfolk & Western was the second with 47 reports, while the New York Central Lines filed 37

I. C. C. Rate

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WASHINGTON, D. C.

HE Interstate Commerce Commission has been under a barrage of criticism on the part of a number of senators during the past week, both in Senate debate and at hearings before the committee on interstate commerce where Commissioner Esch has been questioned by senators from the southern coal states who are opposing confirmation of his reappointment to the commission because of his vote in the lake cargo coal rate case. The southern coal senators have gained some reinforcements by enlisting the services of others not particularly interested in that case by treating it as a manifestation of a general policy of the commission to use its rate regulation policy to "equalize prosperity" between sections. The controversy has been given some of the aspects of a partisan issue by charges that the commission's latest decision, in 1927, was influenced by political pressure exerted by the "old guard" of Pennsylvania, including Secretary Mellon, and that Commissioner Esch had changed his vote in order to keep from being dropped from the commission by the President, at the expiration of his term, as Commissioner Cox was not reappointed after he had voted against what the Pennsylvania interests wanted.

On February 18 and again on February 20 Commishad passed a resolution proposed by Senator Robinson, of Arkansas, Democratic leader of the Senate, calling on the commission to report to Congress its authority for claiming the power to equalize prosperity between competing sections, Senator Reed, of Missouri, a candidate for the Democratic nomination for President, aligned himself with the critics of the commission's decision by reading in the Senate a carefully prepared speech reviewing the case from the viewpoint of the losers. The speech showed so much greater familiarity with the case, and particularly the partisan side of it, than Senator Reed usually displays in discussing freight rate questions, as to lead to some comment that he had "adopted" it. Referring to the order in which the commission suspended a reduction proposed by the southern roads to meet the cut it had ordered from the northern fields, pending an investigation which has just been concluded, Senator Reed said the result "is to place an artificial burden upon the people of a vast portion of the United States" and that its effect "is to produce the same result which might be brought about by an unlawful conspiracy between the railroads." He took the position that by ordering the railroads not to reduce rates which he said they had contended were "fully compensatory," the commission had ordered the carriers "to

do the very thing which the law was intended to prevent."

On February 17, also, Senator Sackett, of Kentucky, introduced in the Senate a resolution providing for an investigation of the commission's decisions in coal rate cases and of its alleged policies.

Commissioner Esch "On Trial"

On February 18 and again of February 20 Commissioner Esch was before the committee, for interrogation as to his reasons for his vote in the case, with persistent emphasis on the question whether the commission had not deliberately reduced the rates from Pennsylvania and Ohio to the lake ports, while expressing the opinion that a similar reduction should not be made in the southern rates, for the specific purpose of destroying the southern competition with the northern fields.

Mr. Esch insisted that the commission was merely trying to comply with its duty under the law to prescribe just and reasonable rates and that any advantage that accrued to any district was an incidental consequence of its conclusion as to the proper adjustment of rates for the distance involved and inevitably inherent in any exercise of its power. He said that the commission also had considered evidence showing that the the lake cargo coal business from 40 to 82 per cent southern coal fields had increased their percentage of while the proportion handled by the northern mines had been reduced, but he pointed out that the Hoch-Smith resolution had directed the commission to consider the conditions prevailing at a given time in any industry and Ohio was reasonably prosperous at the time of the hearsaid that while the coal industry of Pennsylvania and ings which preceded the 1925 decision it was in a depressed condition at the time of the hearings which led

to the reversal in 1927. He also insisted that the record of the second case contained a large amount of additional evidence bearing on the reasonableness of the northern lake cargo rates, including a showing that the rates from the northern district on lake coal had increased 112 to 117 per cent since 1912, whereas class rates in Central Freight Association territory had increased only 90 per cent, rates on 54 commodities in the same territory had increased only 80 per cent and lake coal rates from the southern districts had increased only 83 to 96 per cent.

Political Influence Denied

"It has been intimated," Mr. Esch said, "that I chang. ed my decision because of political influence. I want to

say as emphatically as I can that I do not know of any political influence that affected my vote or that of any member of the commission." When Senator Neely asked if he believed he would have had "a single chance" of being reappointed if he had not changed his decision, Mr. Esch replied that he did not believe it would have affected his situation in the slightest; that neither the President nor any representative of the President had ever talked with him about it and that he had never been an applicant for the position.

When Mr. Esch referred to the Hoch-Smith resolution and the new evidence in the second case as having affected the commission's decision several senators asked if the commission took that seriously or as having the force of a statute. Senator Neely asked if it was not intended to apply specifically to agriculture and others took the position that it was a mere expression by Congress and did not have the binding effect of a statute. Mr. Esch observed that it declares the "true policy of rate-making", that it had been signed by the President, and that it directed the commission to take into consideration conditions it had not before.

"We have been wrestling with these rates since 1912," Mr. Esch said, referring to the lake cargo rates, "and even supermen could not harmonize these rate adjustments and satisfy all interests. A difficult economic situation is involved, due to the over development of the coal industry. We try to determine what are just and reasonable rates and their proper relations. If that results in advantage or disadvantage to any section it is inevitably involved in the power and duty of the commission to determine just and reasonable rates."

Most of the questions were asked by Senator Neely, of West Virginia, Senator Barkley, of Kentucky, and Senator Glass of Virginia, who are not members of the committee. A few members of the committee, particularly Senator Sackett, participated, and Senators Wheeler, of Montana, and Gooding, of Idaho, took advantage of the opportunity to engage in a debate on the application of the long-and-short haul clause to the transcontinental rates. Senator Fess, of Ohio, came to the aid of the commissioners on several occasions.

The southern senators during the debate and in their questions appeared to base their arguments on the theory that rates ought to be related to the cost of transportation but that distance is not the proper measure of cost in the lake cargo case because the southern coalcarrying roads can carry coal for less per mile than those serving the northern fields, and they appear especially bitter because the commission suspended the reduction proposed by the southern roads, which is now under consideration by the commission, treating it as if the commission had decided the case without a hearing. There were also interjected into the discussion several cases in which the commission has exercised its power to prescribe minimum rates to prevent a reduction offered by some railroad.

The Function of the I. C. C.

When Senator Neely asked if the commission considers it its function to build up business or stimulate prosperity in one section at the expense of another he replied that the commission has not sought to exercise that power; that it considers the reasonableness of rates, into which many factors enter, those most generally considered being distance and comparison with other rates, but that it is also directed by law to prevent undue discrimination or preference or prejudice as between shippers or communities. He said the commission has repeatedly stated that it has no authority to

equalize opportunities or fortunes or the cost of production, and he expressed the opinion that it ought not to be an "umpire between sections," but said the commission could not fix any rate without affecting someone advantageously or adversely.

Senator Sackett asked if the commission is not giving preference to one section by refusing to allow the southern carriers to reduce the rates and thus allowing them to earn more than a fair return. "My position is,' he said, "that when you go beyond determining what is a reasonable rate you are exercising a dangerous power." On several occasions Mr. Esch declined to answer questions which he said were involved in the case now pending.

Mr. Esch pointed out that whereas the earlier lake cargo cases were based on the question of differentials, in the second case more emphasis was placed on the alleged unreasonableness of the northern rates. He was asked over and over again if it was not the purpose of the commission to try to help the northern fields to regain some of the tonnage they had lost to their competitors in the southern fields. He said it had merely tried to determine just and reasonable rates for the distance involved and that the result would probably be to the advantage of the northern mines but that experience would be required to demonstrate the effect and he said there was a question of fact as to the extent to which the southern mines would lose business because so many of the consumers demand the quality of coal they produce.

Senator Neely asked if the commissioner's statement that the shift in tonnage of the lake coal from one district to the other had been considered was not an admission that the commission was trying to equalize conditions. He also asked why the commission had inserted its expression of opinion that the southern roads should not meet the reduction. Mr. Esch said that if they should reduce their rates the old relation would be restored and that the commission was trying to establish a proper relation. While the cost studies before it in that case related mainly to the northern roads, the commission had before it the ton-mile earnings of the southern roads and extensive cost studies of the latter are before it in the pending case.

When the senator brought out that prior to 1912 the southern fields paid only 9 cents a ton more than the rate from the northern fields, and that the differential has been gradually increased to 45 cents, which he referred to as an increase of 400 per cent, "or 25 per cent a year for 16 years," Mr. Esch said there should also be considered the fact that the differential represents an additional haul from the southern fields ranging from 190 to nearly 300 miles. "Should we ignore the cost of haulage over that distance and just look at the percentage of increase in the differential?" he asked. He pointed out that the southern roads had originally established low rates on lake cargo coal as "missionary rates, without much consideration for distance or cost of transportation."

Senator Neely also brought up the recent decision in the Illinois-Indiana coal rate case, in which the commission increased the differential against Kentucky coal to 35 cents a ton. Commissioner Esch said that the complainants had asked for a differential of 50 cents but that the commission had decided that 35 cents was fair for a difference in distance of 88 miles. In reply to some questions by Senator Barkley he said the decision was not "based on" commercial conditions, and when the senator read some statements from the decision regarding the depressed condition in the Illinois.