MALVERN & FREEO VALLEY RAILWAY. The entire capital stock is owned by the stockholders of the Wisconsin & Arkansas Lumber Company "a community of interests; they are both held by the same stockholders." This statement was made by the president of the tap line, who is also president of the lumber company; he admitted that both properties constitute practically one investment, and this is also admitted on the brief. In its report for 1910 it appears that all the stock of the tap line is now held by the president of the lumber company as trustee for its stockholders. None of the officials of the tap line receive any salary from it, but all are under salary by the lumber company.
The tap line extends from a point near the mill to a logging camp in the forest called Landers, a distance of about 9 miles. The legal title to this track is in the tap line. The track leading through the mill yards to the junction with the Rock Island and Iron Mountain, a point called Walco, is owned by the lumber company, but is leased to the tap line. There is no industry at Walco other than the mill nor any at Landers. The lumber company has a commissary store at the mill and another in the woods. There is a rough, temporary board shed at Walco, but no station or agent at Landers.
The mill and the road were constructed at the same time and together went into operation during the spring of 1902. At this time the tap line was owned directly by the lumber company. The mill was built on the Iron Mountain tracks; at that time the Rock Island terminus was at Malvern, a mile and a half away. While this condition existed the Iron Mountain had the bulk of the traffic and paid an allowance for it, although an occasional carload reached the Rock Island at Malvern, being switched there by the Iron Mountain.
In 1905 the Rock Island built to a point within a half mile of the mill. Its approach was accompanied by an understanding, after-wards reduced to contract, by which the Rock Island agreed to make an allowance of 3 cents per 100 pounds and the lumber company agreed to give the Rock Island the bulk of their tonnage. We shall not stop to go into the details of the, contracts between them. Under their terms the Rock Island now gets 661 per cent of the out-bound shipments of the lumber company; and it reserved the right to fix rates inbound and outbound both on lumber and other traffic, whether handled by the tap line for the lumber company or for the public. Another feature of the agreement is the provision that in case the allowance is declared illegal by this or any other commission or by any court it shall no longer be payable or shall be modified as the circumstances may require, and that in such case no claim or demand will accrue against the Rock Island. The lumber company is a party to these contracts.
The proximity of the Rock Island and its offer of such a traffic arrangement was followed by the incorporation of the tap line, which thereupon acquired the equipment of the lumber company and the right of way from the mill to Landers. This was accomplished by an exchange of its capital stock. No money passed and no further stock has been issued since the transaction was completed. When asked why the tap line had been incorporated, its president replied that it was done for the express purpose of legalizing the allowance. The tap line has no passenger, mail, or express business. Out of revenues of $41,131.40 for the year 1910 its outside traffic is stated at $2,058.17. In 1909 its outside traffic aggregated $241.67, and for 1908 it amounted to $90.47. An examination develops the fact that of the outside traffic claimed for 1910 $1,985.61 was for oak staves and stave bolts, all of which doubtless came from its own forests. The other traffic claimed for outsiders during that year consisted of four carloads of fertilizer and one carload of brick, on which was collected the local state rate. If it had any such traffic in 1910 or 1911, it was so inconsiderable that it was not thought worth while to show it on the annual reports to the Commission for those years.
The line ends, as heretofore stated, at Landers. From that point the lumber company owns 17 miles of logging road radiating into its forests. Most of the rail in the logging road was supplied by the Rock Island under lease at a rental of 6 per cent on a valuation of $28 per ton. It is interesting to note that, while the tap line acquired the locomotives of the lumber company as heretofore explained, all but one of them are used by the lumber company on its logging roads. The tap line has no equipment suitable for general traffic, all its cars being logging cars specially adapted for hauling logs.
Throughout the investigation it appeared that the lumber companies are careful to draw a sharp line between the " tap line " and the " logging road," and there is much significance in this practice. As heretofore stated, while Mr. Foster, president of this tap line and also president of the lumber company by which it is owned, was testifying it appeared that it was the desire to legalize the allowance that led to the incorporation of his tap line to Landers and the desire to monopolize the forests and thus control the timber that led the lumber company to' retain the ownership of the logging road beyond Landers. The Wisconsin & Arkansas Lumber Company has added 35,000 acres to its original holding of 75,000 acres of timber lands. Of this total holding about 65,000 acres are still uncut and will yield 500,000,000 feet of lumber and keep the mill and its tap line in operation for 12 or 14 years. At the expiration of that period Mr. Foster did not know whether the tap line would be taken up, as has happened in a number of cases, or whether it would continue in operation.
As hereinafter appears, the logs are hauled by the tap lines or logging roads of lumber companies under a variety of conditions. In this case it appears that after the logs have been loaded by the lumber company on the cars the locomotive of the incorporated tap line runs up into the woods over the unincorporated logging line and hauls them to the point called Landers; from that point it hauls the cars over the tap-line tracks to the mill, where the logs are unloaded into the mill pond by employees of the lumber company. The tap line makes a formal charge against the lumber company of 80 cents per thousand feet, log scale, for hauling the logs over the unincorporated logging tracks to Landers. It makes no charge against the lumber company for hauling the logs from Landers over the incorporated line to the mill.
There are no bills of lading, waybills, or other shipping papers covering the movement from the forest to Landers; nor is there any billing covering the movements of the logs from Landers to the mill at Walco. When the manufactured lumber is ready for shipment it is loaded by the employees of the mill on cars furnished by the Rock Island or Iron Mountain, which are switched from the mill to these lines by the tap line, a distance of a few. hundred feet in the case of the Iron Mountain and half a mile in the case of the Rock Island. A bill of lading is then issued by the agent at Walco, who is a joint employee of the Iron Mountain and of the Rock Island; it is dated on the day the lumber is tendered for transportation and shows Landers as the point of origin and not Walco. The tap line receives out of the rate 3 cents per 100 pounds, which is equivalent to from $12 to $18 for carloads of 40,000 to 60,000 pounds. Its president says that the carriers " should pay if they want the tonnage."