Proceedings and Acts of the General Assembly, 1867


OFFICE OF THE CUMBERLAND & PENNSYLVANIA R. R. Co., New York, February 12, 1867.

To the Honorable the House of Delegates of Maryland:

The Cumberland and Pennsylvania Railroad Company, beg leave to respond to the order of your Honorable body, passed on the 2nd day of February.

In regard to the inquiry as to "what charter the line of railroad running from Cumberland via Mount Savage, Frostburg and Lonaconing to Piedmont, is worked under." They answer and say the line of railroad named, is worked under the charter of the Cumberland and Pennsylvania Railroad Company, a corporation of the State of Maryland, a copy of
which, with the several amendments thereto is herewith submitted. The organization, business and accounts of the said railroad company, have no direct connection with any other body corporate of the State.

To the further inquiry as to "whether the said railroad is worked in accordance with its charter," the answer is made that the company is not aware of any instance in which the
authority of its charter has been exceeded, nor its provisions in any respect visited. The company was only chartered, its stock subscribed and paid for; its organization perfected, and it entered upon the prosecution of its business of transportation precisely alike, and in no respect different from any other railroad company of Maryland.

Its power to charge the maximum rate of six per cent per ton per mile have never been used, except upon the very short hauls near Piedmont of 1 1/2 to 5 miles, whilst in all cases of 15 miles and upward the rates of charge are confined to about two-thirds of the amount authorized by the State. These are the existing rates: Up to the fourth year of the war, viz : July 1st, 1864, when the cost of every element of operating had advanced so enormously that the income of the road at the previous rates was exceeded by the expenses, the rates of charge were about two and one-half cents per ton per mile, and at no previous period did they exceed three cents per ton per mile. The advance to present rates, was rendered necessary to keep up the condition of the road and equipment, which had greatly depreciated in value during the preceeding three years when the trade upon it was light.

In order that your Honorable body may clearly understand the result of the working of the road during the past three years, the following statement of receipts and outlays, is

In 1864, the gross revenue was $139,981.56
In 1865, the gross revenue was 344,699.42
In 1866, the gross revenue was 431,437.08 Total $916,181.06
The payments during the same period was:
For ordinary operating expenses $848,806.61
For equipment and improvem't 578,266.01 Total $1,427,072.62

Showing an excess of expenditure over income $510,954.56

Under such a statement of facts, compiled from official records, it will surely not be alleged that the Cumberland and Pennsylvania Railroad Company have sought to impose
an onerous tariff of rates for transportation upon its customers.

In this connection it may be stated that the heavy annual outlays of the company to develope the Cumberland coal trade have thus far been attended wish no remuneration to
themselves, nor in the whole thirteen years of the company's operation, have the stockholders received the smallest dividend from their investment in the property.

The very highest rates ever imposed upon hauls of 15 miles and over, eastwardly, was during the month of April and May, 1865, when the charge was 4 1/2cents per ton per
mile. The half-cent was drooped on 1st of June, of that year, leaving the rates as they now stand at four cents per ton per mile eastwardly, and six cents per ton per mile westwardly. The reason for making the distinction in the rates, is found in the fact that while the westward delivery involves the maximum haul of 8 1/2 miles only, the range of the east-
ward delivery is between 15 miles minimum and 29 miles maximum.

These rates were therefore established by the company upon the theory that the operating expenses of a railway increase in due proportion as the length of the haul is diminished. The company cites this fact in support of the propriety of the distinction made in their tariff of rates without the fear of successful refutation. The Baltimore and Ohio Rail Road Company, which carried some seventy per cent, of the whole coal trade of the past year, graduate their toll sheet in the same manner, with the difference only their local rates, on hauls of fifty miles and under, are from thirty to sixty-six per cent, higher than those of the Cumberland and Pennsylvania Rail Road Company. If it be complained that the latter company charge the full rate of six cents per ton per mile allowed by its charter, then it may be stated that the former do the same, and more, with no apparent discontent on the part of its customers. As an example, take the village of Barton; the coal companies there shipped the large quantity of 176,463 tons over the Cumberland and Pennsylvania Rail Road in 1866, to Piedmont, five mile, at the gross cost per ton of thirty cents. The same operation conducted on the Baltimore and Ohio Rail Road for the same distance, would have cost the owners or shippers fifty cents per ton according to their present rates of charge, or sixty-six and two-third per cent, higher than the heaviest rate of charge ever imposed by the Cumberland and Pennsylvania Rail Road Company.

The Baltimore and Ohio Rail Road Company is here cited in comparison, for the only reason that that great corporation was the pioneer of its kind in Maryland, and its powers
made the model of all subsequent railway charters of the State.

Its great length, comparatively level engineering features and discretion to impose remunerative rates upon short distances, have made it profitable to its shareholders, whilst the short line, very high grades, involving great expense in operating, and a strict adherence to the letter of its corporate powers, have been attended with the very reverse results on the part of this railroad company.

To the further question of your Honorable Body, as to the rates of wharfage charged upon the coal at Cumberland, this company respond that the matter referred to is under the control of the " Potomac Wharf Association," a distinct corporation of the State, which fixes the charge per ton from time to time, at its discretion.

The feature of the order of your Honorable Body, as to "whether any special agreement have been made with the American Coal Company, the George's Creek Coal and Iron
Company, the Central Coal Mining and Manufacturing Company, or the Borden Mining Company, by which they or either of them transport coal on said road at less freight than
any other coal company on the line of said railroad," is answered in the affirmative, and the following statement in explanation respectfully submitted:

First. The Cumberland and Pennsylvania Rail Road Company have an agreement with the American Coal Company, now within ten months of expiration, by which, and in consideration of, the advance to it of a large sum of money, (to be refunded in the accruing freights of subsequent years,) amounting to nearly one-half the whole cost, to aid the extension of its road from the head of Jennings' Run to Lonaconing, ten and a half miles, the small concession of less than one-third of one cent per ton per mile in transportation, below the rates charged to all other parties at the period of making the agreement, was made; and then only upon the guaranteed daily quantity of six hundred tons. This agreement was made in 1856, and the money supplied during the following year, which was one of great severity in the money market, and but for such aid, promptly rendered, the extension of the road would not have been consummated. This extension of ten and a half miles, so made, enabled some seven other coal companies to develope their property, which they did with comparatively slight cost. The rates named in this contract were at the period undoubtedly remunerative, and it was within the ability of any other proprietor of coal lands at that period to have had similar concessions in freight, if any equal, or definite daily quantity, similarly guaranteed, had been offered, but it was not asked for.

Second. In Oct. 1863, finding constant difficulties thrown in the way of its business in fulfilling the American contract in good faith, (for their mines were located 1 1/3 miles below Lonaconing, upon the line of railroad belonging to the George's Creek Coal and Iron Company,) and believing an identity of ownership of the two roads, would advance the general interest, this company opened negotiations with the said George's Creek Coal and Iron Company for the purchase of its 9 miles of railroad, extending from Piedmont to Lonaconing, and finally consummated the purchase upon the best attainable terms. Coupled with the sale the George's Creek Coal and Iron Company exacted the sole condition, of having the products of its mines transported over the 9 miles, to Piedmont,
at the (lien prevailing rates of two and a half cents per ton per mile, common alike to the 9 miles of railroad so sold, and to that of the Cumberland and Pennsylvania Railroad Company's line at the period of purchase. The effect to avoid this condition, which had no practical bearing at the time, was made without results and believing that rate remunerative, it was finally conceded in view of what were deemed the more advantageous features of the purchase.

The extraordinary advance in the cost of operating, which followed the fourth year of war, obliged this company to increase its rates at all points where it was practicable to do so, and hence the higher rates of charge imposed upon the coal companies who had not aided the company in any manner, and rendered absolutely necessary to keep up its way and machinery.

Third. For and in consideration of heavy advances of money, (to be refunded in the accruing freights of subsequent years,) by the Central Opal Mining and Manufacturing Company, and the Borden Mining Company to stock the road with adequate machinery, and upon a guaranteed daily transportation of a large quantity of coal, agreements were made with each in 1864, and subsequently, at the then prevailing and regular rates, for a specified period of time. Both these special agreements have two years or less to run, and when they expire, it is not likely the Cumberland and Pennsylvania Railroad Company will open the door to the complaint of its customers, by the renewal of any such engagements. The origin of any and all possible complaint or discontent with the charges imposed by this company, lie solely in the unfortunate fact that the railroad company could not look into the future, and see the cost of labor and materials of all kinds double up in value as they did after these several engagements were entered into.

The Cumberland and Pennsylvania Railroad Company does not believe it would comport with the State, which conferred its charter, nor its own sense of fair dealing and honor to
make any attempt to evade the exact performance of its part of these several compacts.

It has been previously stated that its outlay, in money, to maintain and equip the road in a manner to promptly meet all possible demands for transportation, during the past three years, has exceeded its income by more than half a million of dollars, and this too upon a line of only 33 miles in extent.

Whatever may be the result in the end, the agreements named must on their part be executed in good faith; but at their expiration, now near at hand, your Honorable Body
may rely upon the fact that this company can have no motive to discriminate for or against any of the many interests which use its road, and that ultimately all such shall occupy a common basis so far as the action and policy of this corporation
may effect it.

This communication, or answer to the order of your Honorable Body is entrusted to the personal care of its Superintendent for delivery, with instructions to appear before the Committee on Corporations, if necessary or required, and to answer such questions as may be propounded to him.

In attestation of the foregoing, the Secretary has been directed to sign this communication and to attach the corporate seal of the company.

[SEAL.] . H. C. HICKS, Secretary.

Maryland State Archives Volume 133, Page 3967