LOUISIANA & PINE BLUFF RAILWAY. The Louisiana & Pine Bluff Railway Company is owned by the Union Sawmill Company, which itself is subsidiary to and owned by the Frost-Johnson Lumber Company. The three companies are one line interest. The facts are somewhat involved, but it will be well to state in some detail the history of the whole investment.
The Union Sawmill Company was incorporated in December, 1902, and acquired a large body of timber lying in southern Arkansas and across the line in Louisiana. It opened a sawmill at Huttig, Ark., and as a facility for the lumbering operations the Little Rock & Monroe Railway Company was incorporated, and 44 miles of track were constructed, extending from a connection with the El Dorado & Bastrop division of the Iron Mountain at Felsenthal to Monroe, passing through Huttig.
Immediately after the completion of this line, in the spring of 1905, it was sold to the Iron Mountain for about $580,000 in cash, the right being reserved to the sawmill company, in a contract with the Iron Mountain, to operate its logging trains over the Little Rock & Monroe, the El Dorado & Bastrop, and Farmerville & Southern, being subsidiary lines of the Iron Mountain system, at a trackage charge of 35 cents per train-mile. At about this time, and apparently pursuant to a suggestion by the Iron Mountain officials, the sawmill company acquired extensive additional holdings of timber land valued at more than $1,000,000. The contract heretofore referred to required the sawmill company and C.. D. Johnson individually to organize a railroad corporation for the construction of a new line northerly from Huttig, to reach the timber in that direction and make it available for manufacture at the mill at Huttig. The pro-vision in the contract was that the proposed railroad should be constructed and incorporated in such manner as to justify the publication of joint rates and the payment to it of allowances. In accordance with this agreement the Louisiana & Pine Bluff Railway Company was incorporated in March, 1905, with a capital stock of $300,000, which was issued to practically the same persons that owned the Union Sawmill Company. The so-called terminals in the vicinity of the mill at Huttig, as well as the locomotives, cars, and other equipment that had been used on the Little Rock & Monroe previous to its sale to the Iron Mountain, were turned over to the tap line by the sawmill company in exchange for stock, which stock is still held by the sawmill company. This, in brief, is the story of the investment.
The Louisiana & Pine Bluff, as described on the record, has a main track 3 miles in length connecting with the Farmerville & Southern and Little Rock & Monroe divisions of the Iron Mountain at Huttig, and extending to Dollar Junction, where it meets the El Dorado & Bastrop division of the same system. There is also about 5 miles of track beyond Dollar Junction which was not yet completed for operation at the date of the hearing. From Huttig a track nearly 22 miles in length extends westward in a general way parallel to the Iron Mountain. This track was not included as part of the incorporated road until shortly prior to the hearing, as we shall hereinafter state. We shall also refer again to the logging tracks, aggregating 75 miles in length, some of which are included as part of the incorporated line, while others are not. A track or branch about 3 miles in length, extending from Felsenthal to the river, was reserved when the Little Rock & Monroe was sold to the Iron Mountain, and was afterwards conveyed by the lumber company to the Louisiana & Pine Bluff. It was used for hauling logs from the river, and when the lumber company ceased getting logs from that source the track was abandoned and taken up. The equipment of the tap line consists of 12 locomotives, 1 combination passenger car, 1 caboose, 31 box cars, 36 flat cars, 22 coal and other cars, and 152 logging cars.
The track 22 miles in length from Huttig to El Dorado & Bastrop Junction, which has been referred to above, was constructed by the tap line, but until a year and a half before the hearing it was operated by the Huttig Logging Company, owned by the Frost-Johnson interests. The annual report for 1911 does not include this track as part of the tap line, but it is distinctly so included on the record. Nothing was paid by the logging company or the Union Sawmill Company to the tap line for the use of the tracks. Connecting with the tap line at various points are logging branches, one of which is 7 miles in length and another 21 miles long. These are referred to on -the record as main logging stems; and connecting with them are logging spurs which are built by the logging company, the necessary steel being loaned by the tap line without charge. These spurs are operated by the logging company, which uses locomotives and cars belonging to the tap line, no rental being paid, although the locomotives are kept in repair by the tap line at its own cost.
The logging company loads the cars in the timber and moves them, with the engines borrowed from the tap line, to the main track. The cars are taken the rest of the way to the hill by the tap line, no charge being made against the lumber company or the logging company for the movement, although the trainmen employed by the tap line do the unloading.
The mill of the lumber company, as heretofore stated, is at Huttig and is directly accessible to the Iron Mountain. The plant covers about 160 acres. The lumber could be taken by the Iron Mountain directly from the mill; but as a matter of fact it is moved by the tap line for a distance of 3 miles to Dollar Junction, and there delivered to the Iron Mountain, which allows 5 cents per 100 pounds out of its rates on yellow-pine lumber to all destinations. The rates on hard-wood lumber are about 2 cents lower than the rates on yellow pine, and on such traffic the Iron Mountain allows 3 cents per 100 pounds. On all lumber the rate of the Iron Mountain from the junction point is published as a joint rate from points on the tap line.
The Wisconsin Lumber Company, which is affiliated with the International Harvester Company, has a large hardwood sawmill on the tracks of the tap line at Huttig. It obtains a portion of its hardwood logs from the Union Sawmill Company, at a price including their delivery at the mill. Such logs are hauled to the mill in the same manner as the yellow-pine logs moving to the Union sawmill. The hardwood logs which the Wisconsin Lumber Company obtains from the lands owned by others are also brought to the mill without charge, the service being performed by the logging company and the tap line in the manner already described. The manufactured lumber is moved from the Wisconsin Lumber Company's mill to Dollar Junction by the tap line, which receives the divisions heretofore stated. The annual report to the Commission for the fiscal year ending June 30, 1910, shows no tonnage other than forest products moving out-bound and coal coming inbound. The coal was consumed entirely by the sawmill company, the logging company, and the tap line itself, and aggregated 3,835 tons. Out of the total of 317,473 tons of logs and lumber handled during the same year, about 7,900 tons was manufactured by others than the sawmill company from logs cut on the lands of that company. The tap line has joint rates with the Iron Mountain on coal as well as lumber, but not on merchandise or class traffic. The record indicates that no charge is made for hauling logs that are cut by farmers or others and manufactured at the mills on the tap line. Although the tap line claims to run " two passenger trains daily " between Dollar Junction and Huttig, it has but one combination coach, and its receipts from passengers for the year 1910 amounted to only $587.24. Its mail revenue amounted to $101.31. Its operating revenues for that year aggregated $78,714.93, and this amount was substantially less than its operating expenses. On June 30, 1910, it had an accumulated deficit of more than $85,000, which we assume has been taken care of in some way by the lumber company or its owners.
This is a typical instance of a mere manipulation of its facilities in such a way as to give the tap line the appearance of performing a service as a basis for an allowance out of the rate. Indeed, it was agreed, as heretofore stated, that the tap line should be constructed in such a manner as to justify allowances. A glance at the map will show how this was done. The Iron Mountain reaches the mill with its own rails, and is, therefore, in a position to serve the mill directly without making a concession to the lumber company out of the rate. The lumber company, however, has constructed a track of its own 3 miles in length to the Iron Mountain rails, and in compensation for its service in switching its lumber over that track it receives allowances of 5 cents a hundred pounds, or from $20 to $30 a car. We have already said that the extension of the trunk-line lumber rate through the mill point to the tree stump on a tap line is discriminatory unless the same rate adjustment is in effect on the trunk line's own rails. The only service of transportation, there-fore, that this tap line can be said to perform for the lumber company that owns it is the switching of the product of its mill to the trunk line, and this the latter is equipped to do upon its own rails. Under these circumstances we regard the arrangement as a mere device for the payment of allowances, which we hold to be unlawful.
We have already pointed out that a tap line claiming to be a common carrier can not render service for others without charge. It follows, if that is its status, that its practice of hauling hardwood logs without charge to the mill of the Wisconsin Lumber Company is unlawful. The divisions received by it for switching products of the Wisconsin Lumber Company's mill to the Iron Mountain are also unlawful.