Ashland, Wisconsin, August 9, 1886
Wm. B. Strong, Esq.,
Pres. A T & S F Ry.,
95 Milk St., Boston, Mass.
Dear Sir:
The question of connecting the Atchison System of Railroads with Chicago, the metropolis of the West, is increasing in interest to the Atchison Company and involving as it will the expenditure of many millions the problem should receive the closest scrutiny.
The question is one affecting present investment in Railroad property between Kansas City and Chicago and involves large commercial results outside of the future; such a step would entail upon the Atchison's interests.
The problem is so vast in its consequences that I can expect to speak of only a few of the points involved, the most important of which to the Atchison Company at this time being "will it pay?"
Bearing upon this main question, and upon others incidentally, I desire to call your attention to the report of Mr. Norris L. Gage attached (See appendix "A") in which I fully concur. It is not necessary for me to mention Mr. Gage's qualifications to deal with such a subject in order that his report may be appreciated.
I also wish to call your attention to my report on this subject to you under date of November 11, 1884 (See Appendix "B") to which is attached a statement by Mr. Goddard as to probable earnings, based on his large experience in such matters, after full consideration, aided by careful reports prepared by the Auditor.
These figures presented, you will observe, do not cover local business or through business now buying tickets at Kansas City and of which we have no coupon record.
In addition to the above it may be interesting to know that this line under examination between Kansas City and Chicago covers a fine section of Country for local business. In Missouri the line goes through a section of country which will give us a good local business, both to Kansas City and Chicago and especially in the northeastern part of Missouri; the line will traverse for 100 miles, a territory having no direct connection with either city and a country now accommodated by local roads and rates which should make it profitable to the contemplated line.
In Illinois we also have a good local territory tributary. In my judgment, the whole route will be able in a short time to control at least three-fourths of its full allotment of local business; of course the large towns upon the old lines will have their influence in controlling local interests that we cannot expect to touch except by slow methods and constant work.
We know that the present lines between Kansas City and Chicago are profitable. These are four in number and the Atchison would make five. Considering with this the advantage the Atchison would have over the other lines by reason of its being able to route a considerable portion of its own business East and west of Kansas City, the only conclusion that can be deducted is that the investment must be profitable.
The Chicago and Alton, perhaps, presents a fair illustration of what another Kansas City and Chicago line would be without any control of traffic through Kansas City. Its indebtedness, bonds and stock, amounts to about $46,000 per mile, including all mileage. Its earnings per mile for 1884 and part of 1885, as reported by Illinois Commissioners, amount to upwards of $9,900 per mile, for all main line and branches, in which is included 62 miles of double track. It is fair to presume that the earnings for main line would be greater than the average given. If each of the Kansas City and Chicago lines make the same earnings, the same earnings for the five lines would be about $7,900 per mile each.
In this connection it may not be amiss to call your attention to the fact that the KC, T&W, between Kansas City and Topeka earns about $20,000 per mile, and that Operating Expenses amount to about 35%. While we could hardly expect such earnings for the line Kansas City to Chicago, I think it is fair to presume that with the extra strength it would have from the Atchison backing it would safely earn from $9,000 to $10,000 per mile per annum, on the basis of 55% Operating Expenses.
But outside of the question as to whether this investment could be made directly profitable, there are other considerations involving the welfare and success of the Atchison System, which, in my judgment, are of much greater weight than the question just discussed.
Until recently the Atchison has operated in a territory of its own, and has been content with, and has fought for the Missouri line as the dividing line in commercial affairs between the East and the West. It must continue to maintain this line to protect its local revenue. Its territory is now invaded by the Missouri Pacific system, and the Rock Island is now building into the State and the St. Louis & San Francisco is also encroaching upon its most valuable agricultural lands.
To protect our local rates we must have a line to Chicago if not to St. Louis as well. Perhaps an alliance, if possible, with the St. Louis & San Francisco would protect us from the St. Louis direction for the present, but there are too many interests toward Chicago to be met in this way as is amply illustrated by the crippled condition of the Union Pacific at this time, and by its futile efforts to ward off its fate by the famous Tripartite Agreement, from which one of the contracting parties had to withdraw very soon after the contract was sealed for thirty years. I refer to the withdrawal of the Chicago and Northwestern by reason of its purchase of the Chicago, St. Paul Minneapolis & Omaha Railway.
We cannot protect our local territory by paying the two local rates to reach market.
With the C R I & P in our territory we must succumb; under such conditions we must finally see our own local business and rates on all short hauls gradually grow less, and at the same time be forced to take through business at points further west, thus making the present profitable end of the Atchison less and less so.
With a line to Chicago, however, especially the best to be had, we can control the situation in local rates and insist upon the Missouri River as the dividing line for through business. Especially will this be true if the Chicago line is shorter and with better grades than upon any other line, as is contemplated.
With the best line, and a volume of business, such that the Operating Expenses are very large in comparison to fixed charges, taxes and interest, our position for war or peace would be the strongest possible.
In considering this subject it will be urged, perhaps, that we should need outlets east from Atchison, St. Joseph and Leavenworth, but I doubt if this will so appear, especially if Kansas City maintains her supremacy and growth, which seems to me must result from the Gulf, Colorado & Santa Fe purchase, and from the proposed Chicago extension, if made. The building up of Kansas City and concentration at that point I consider very important, especially if the Chicago extension is made. We could reach Leavenworth via Holliday by a branch 30 miles long, but Atchison and St. Joseph we could not control via Topeka.
In transcontinental affairs this line would be of value if not profitable, but it would be of still greater value if the Atchison should finally succeed in securing a connection from Galveston in a Northwesterly direction through Texas so as to connect with the extension now being made in the Atchison interest into the Pan Handle of Texas. This completed to a connection with the main line in New Mexico would enable successful competition with the Southern Pacific for transcontinental business (which is now doubtful) and would make the Chicago line profitable in some lines of this traffic which it could thus protect.
In conclusion I desire to say that from every standpoint the more this subject is investigated the more it becomes evident that this line will pay, and what I consider more important, it becomes more and more conclusive that the Atchison must make this move to maintain a progressive aggression and successful position among the great Railroad Corporations.
I believe the time has come for action, and delays from this time are dangerous. There is no other way to maintain Atchison supremacy.
Yours truly
(signed) A. A. Robinson
2nd V.P. & Chief Engr.
Volume 12 Splinters transcribed in altered form for the web by Matt Lee.
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