CHAPTER IX

WHAT AN EXPERT CAN SAY


     I shall try to let my readers see how far so-called railroad experts can go in depreciating a property when they are ordered to do so by the Money Trust, who will, if the disobey, force them out of their positions. The hold of the Money Trust is especially strong because when one great interest discharges a man, none of the others would dare to take him up, so he must either do as requested or find some other occupation, or leave the United States.

     Now I will give you some extracts from H. van den Berg's report on the present Kansas City, Pittsburg & Gulf Railroad. When you think of the great success the Kansas City Southern road has been, and is today; when you think that is ranks with the great railroads of the land in earnings per mile; when you see the success Port Arthur has made, and when you read the extracts from the report, you will see to what depths these experts will go to serve their masters. And when you in the future may read reports on the possibilities of the Orient Railroad, then remember the misleading report of this man, who was Traffic Manager of the great Louisville & Nashville Railroad. You may be saved from being fooled, as some of my stockholders were by this report.

     But now as we see how false this man's report was, how he speaks of the road as a "swindle of gigantic proportions," think of me struggling to build this great road, to develop my beloved Kansas City, and finding this report in English, Dutch, and German wherever I went to sell our bonds and shares. Why, it halted our work six months, and yet it was only a pack of lies. But a pack of lies with a great name attached to it can do great harm. A lie can go a league while Truth is putting on its boots.

     To my friends who understand the success of the road and its territory, these extracts from van den Berg's report will prove of interest:

"I have completed my investigation, and I reiterate my previous statement viz., these enterprises are 'swindles of gigantic proportions.' Whether premeditated or unintentional, due to overconfidence honestly based on the part of the men fathering these schemes, is not material at this time." (Page 4 and 5.) 

     With this introduction, Mr. van den Berg goes on to discuss the various points:

"Outside of grain elevators, to which I refer later, the road does not reach packing houses, warehouses, or other industries of importance that are not reached by the railroads themselves, or by the Kansas City Belt Railway, except that it reaches exclusively the plant of the 'Indian Rice Milling Company,' which is bankrupt and not in operation. On the other hand, these various railroads and the Kansas City Belt Railway reach packing houses and many other industries that are not reached by this road. Stress is laid upon track connection with the packing of Fowler and Armour, but the tracks do not run up to the leading platforms, and the road does not handle the shipments of either. It also reaches the packing houses of Schwarzchild & Sulzberger and does handle their business at present at half the rate charged by the Kansas City Belt Railway, i. e., $1.00 per car; $2.00 per car is the customary charge." (Page 15 and 16.)

     With what wonderful detail Mr. Van den Berg goes into the great difficulty with which the road could extract one car of meat or packing house product from these packing houses. And then the ones we did reach were burned down, or we did not reach the proper platform. The truth is the first month we handled for Armour alone as much as one trainload of by-products for Amsterdam, and we had in each ship that sailed from Port Arthur at least a trainload of freight from some packing house.

"The K. C., P. & G. R. R. proper does not reach any important grain producing section, nor has it, to any material extent, and for practical purposes, access to the states of Kansas and Nebraska." (Page 31.)

     As I read this comment of Mr. van den Berg's, I think of the first months after the building of the road, when I was threatened day after day with law suits because I could not furnish cars. Within ninety days after the completion of the road, often five trainloads of grain would go south in one day. The seats on the Kansas City Stock Exchange went from fifty dollars to thirty-six hundred. Concerning Port Arthur he says:

     "I enclose a United States Government chat of the Coast of Texas from Sabine Pass westward, corrected up to October 14, 1896. Port Arthur is not located on the Gulf, but about twelve miles, by water, north of Sabine City, on the west shore of Sabine Lake. But for the bar (according to the chart, ten feet of water), Sabine Pass may properly be termed a deepwater harbor. The recent dredging of Sabine Pass, the dredge material being used in the construction of jetties, it is believed will not only keep the channel open, but materially increase the depth of water on the bar. This I think is true, but whether or not, from the northern end of the dredged channel of Sabine Pass, harbor the distance to Port Arthur is about seven miles. For this distance the depth of water varies from one to five feet, and this will not be increased by the channel that has been dredged in Sabine Pass harbor. To procure a depth of water at Port Arthur it will be necessary to dredge a channel from that point to the end of the Sabine Pass channel. A conservative estimate made by a competent engineer places the cost at not less than $1,400,000;and this engineer also expresses the opinion that the improvement ay not then be permanent; in other words that the channel may fill up, in which event frequent dredging would have to be done. The bottom of the Sabine Lake is a few feet of soft material on top, under which the substance is pipe clay." (Page 21.)

     "Regarding Port Arthur what an enormous success this harbor has been. Land-locked and storm-proof, when the great storm reached Galveston, the ships that could reach this canal rode in safety. The Government has been so impressed with the importance of this work that it has not only agreed to maintain it free ninety-years, but has extended it along the coast to connect with the Natchez River.

     "I shall now proceed to discuss the points made by Mr. Stilwell in his pamphlet, and for convenience I have numbered the pages of this pamphlet.
"(1) It is claimed 'The Kansas City, Pittsburg & Gulf Road is the shortest line to deep water, hence has every advantage of being the shortest line to all the deep water ports, viz., New Orleans, Sabine Pass, and Galveston. The Kansas City, Pittsburg & Gulf, besides being the shortest line to the ports mentioned, reaches two more ports than any road in the West by means of its connections at Shreveport and Beaumont.'

"The statements are untrue; and even if they were true, the reasoning in arriving at the advantages claimed for the Kansas City, Pittsburg & Gulf Road is faulty. In dealing with the feature, Mr. Stillwell can have in view no traffic other than export, for deep water is not essential to control traffic in and from the ports proper.

"The advertised distance of the Kansas City, Pittsburg & Gulf R. R. from Kansas City to Port Arthur, its advertised terminal, is 760 miles. To Sabine Pass the distance would be about twelve or fifteen miles greater; but as I have already indicated, neither Port Arthur nor Sabine Pass is at present a deep water port. Assuming Sabine Pass with be a deep water port and the K. C., P. & G. R. R. will make that point, instead of Port Arthur, its terminus, success in its attempts to handle export traffic through that port is far remote. The water frontage at Sabine Pass is owned by bankers in this country, naturally with the intent to, if possible, realize an income. To accomplish this, wharfage and other charges must be assessed, and this of itself is an embargo, whether it is assessed against ships or cargoes or absorbed by the rail line to the port. In the latter case, owing to competitive rates in effect, competitive not only because of competition as between two or more lines to the same port, but also competitive because of competition between all lines leading to all the ports on the American continent, except ports on the Pacific coast, the traffic would be wholly unremunerative to the inland carrier. It may be suggested that the K. C., P. & G. R. R. may relieve itself of this embargo by acquiring Sabine Pass water frontage by purchase. As will appear later, the investment of this additional capital would be throwing good money in an attempt to secure deep water at Port Arthur. It being impracticable to export through Port Arthur or Sabine Pass. . . . " (Pages 21, 22, and 23.)

From what Mr. van den Berg says, no road on earth would be justified in having a deep water outlet, since some one must be paid for the property.

"(2) It is claimed 'The road reaches more natural freight-producing regions than any other road of equal length in the West, including coal, hardwood, long and short leaf pine, lead and zinc.'
"There is nothing to warrant the assertion, and it is misleading. If it were true, it is of no moment unless all of the products can be marketed. The Kansas City, Pittsburg & Gulf reaches a few of the less important markets reached by lines traversing corresponding territory, viz., the Missouri, Kansas & Texas R. R., the Missouri Pacific R. R., the Atchison, the Kansas City, Fort Scott & Memphis, etc., on which roads the commodities (coal and lumber) named by Mr. Stilwell are produced, and I do know they have not been successful in finding a market for all that is produced on their lines, notwithstanding their local territory (and to which the K . C., P. & G. is not likely to be given access), is much greater than that of the K. C., P. & G. R. R." (Page 26.)

"The K. C., P. & G. R. R. has no local consuming points of importance--about the most important is Siloam Springs, Ark., 2,198 inhabitants. As to the number of inhabitants at the various points mentioned, the figures were taken from the United States Tenth Census Report, the latest published." (Page 28.)

It is rather unjust that Mr. can den Berg should give the census report of Siloam Springs, one of the smallest cities on the road, and not mention Pittsburg, Kansas; Joplin, Missouri; Fort Smith, Arkansas; Texarkana, Texas, and Shreveport, Louisiana, all of them from five to ten times larger than Siloam Springs.

"Long Leaf Pine. The K. C., P. & G. road will reach a large and valuable long leaf pine territory. The difficulty is to find a market. Their market will be almost wholly confined to points on their own lines, as all of their own rails, either yellow pine or white pine territories, and naturally will do everything they legally can to protect the mills on their own lines and shut out lumber from foreign lines. If at all possible, the K. C., P. & G. will necessarily encounter great difficulty in marketing their own lumber beyond their own lines." (Page 30.)

How amusing and misleading this statement is regarding the long leaf pine business, and Mr. van den Berg mist have known it was so when he made it. The product of the forests on the Kansas City Southern is about fifty per cent of its business, and the business of the long leaf pine belt is daily supplied by numerous mills, and the output of these mills is shipped as far as Portland, Maine, and also exported to all over Europe. This is what I claimed would be done, and this is what happened.

"The character of the territory reached and markets served by the Iron Mountain, Chicago & Alton and Illinois Central is so well known that a comparison with that of the K. C., P. & G. is obviously absurd, and any comments from me are unnecessary." (Page32.)

What I said--that the Kansas Cut Southern would some day earn as much as the Missouri Pacific, Chicago & Alton and the Illinois Central--has always been borne out by facts, except that the Kansas City Southern earns about five thousand dollars more a mile per year than the Missouri Pacific, and its earnings are up in the Illinois and Alton class per mile. And any one who knows the great success if this territory and then reads Mr. van den Berg's statement here will wonder how any man who regarded hus name could sink to such depths. 

 

Arthur Edward Stilwell, Visionary

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