Thursday, August 28, 2008

The Wenatchee Southern--The ICC Viewpoint--Part 5 Final



Submitted January 15, 1929. Decided February 5, 1929

Petition for further modification of certificate dated July 14, 1924, so as to extend the time within which construction thereby authorized is required to be completed, denied. Previous report, 90 1. C.C. 237.

A. N. Corbin for applicant.
Charles S. Albert for Great Northern Railway Company, protestant.
John O. Denney, James P. Neal, and O. R. Lonergan for Washington Department of' Public Works.


We issued in this proceeding on July 14, 1924, a certificate and order (1) authorizing the 'Wenatchee Southern Railway Company, hereinafter called the applicant, to construct a new line of railroad extending along the west shore of the Columbia River from Wenatchee to Beverly Junction, 53 miles, and from Hanford to a connection with the railroad of the Oregon-Washington Railroad & Navigation Company at a point about 5 miles west of Kennewick, 29 miles, all in Chelan, Kittitas, and Benton Counties, Wash., upon the express condition that construction of the line be begun on, or before January 1, 1925, and, be completed on or before December 31, 1926; and (2) granting permission to the applicant to retain for a period expiring not later than December 31, 1936, all its earnings derived from the proposed new construction, in excess of the amount provided in section 15a of the interstate commerce act, for such disposition as it might lawfully make of the same, also upon the express condition that construction of the line be completed on or before December 31, 1926. Facts of record upon which we found that construction of the line was required by public convenience and necessity are set forth in our previous report,' 90 I. C. C. 237.

Upon request of and for cause shown by the applicant, we subsequently modified the certificate of July 14, 1924, as follows: (a). By order dated December 2, 1924, extending the time for the beginning of construction from January 1, 1925, to July 1, 1925; (b) by, order dated July 1, 1925, further extending the time for beginning construction from July 1, 1925, to January 1, 1926; and (c) by supplemental order dated January 12, 1926, further extending the time for beginning construction from January 1, 1926, to July 1, 1926, and extending the time for completion of construction from December 31, 1926, to June 30, 1928., See 94 I. C. C. 673, 99 I. C. C. 349, and 105 I. C. C. 347.

On June 7_ 1926, a petition was filed in which the applicant prayed further extension of the time for beginning construction for a year and a half from July 1, 1926. The proceeding was reopened and assigned for further hearing at Wenatchee on July 28, 1926, but the order setting the hearing was vacated upon request of the applicant for leave to withdraw the petition and representations to the effect that the applicant had contracted for construction of the railroad and that construction work had been begun prior to July 1, 1926. Hence, there has been no alteration of our certificate as last modified to require completion of construction on or before June 30, 1928.

We are now called, upon to consider a petition filed on July 2, 1928, for further extension of the time for completion of the line for one year from July ,1, 1928. A, hearing was held at Seattle, Wash., on November 15, 1928. Counsel moved at the outset that an adjournment be taken for a period of six months in order to enable the applicant to submit a financial plan and to adduce such other evidence as it then might have. In support of the motion counsel testified that negotiations were pending with certain undisclosed parties for financial assistance, that these parties were engaged in investigating certain, unspecified phases of the matter, and that their decision to furnish or not furnish the necessary funds could be expected in a very short time-in later testimony fixed at not to exceed 60 days. A representative of the Washington Department of Public Works urged that the motion be granted on the ground that the proposed continuance would injure no one. A continuance was opposed by counsel for the Great Northern Railway Company, protestant herein. The motion was denied and the hearing proceeded to conclusion. The matter now stands submitted on

Under date of January 7, 1929, an officer and counsel joined in advice that the applicant had decided not to file a brief and suggested that if given until January 1, 1930, to obtain funds to complete the line, the applicant would be willing to have the certificate automatically canceled on the date mentioned if the applicant is unable to proceed at that time. In effect this suggestion proposes that the date for completion of the line be extended for some indefinite period from and beyond a date six months later than the time covered by the prayer of the pending petition. This suggestion can not be regarded as an amendment or the petition.

The protestant asks that the petition be denied and that the certificate originally issued be canceled and set aside.

The applicant's project includes about 81 miles of new line, estimated to cost approximately $3,600,000 without equipment, and 51 miles or trackage rights over two other railroads.

Work done in actual construction began on June 28, 1926, three days before the expiration of the time limit, and ceased at some date later in the same year. The work consisted of grading approximately 3,000 feet in the vicinity of Wenatchee and about' 6,000 feet at Beverly, and laying about 2,700 feet of track with light secondhand rails. The applicant secured rights of way covering about 58 per cent of the route proposed to be traversed and took options on about 25 per cent additional.
It was testified that the applicant has made expenditures and incurred obligations aggregating approximately $130,000, about half of which was for actual construction. The witness did not recall how the latter expenditures were divided, but in a letter dated September 12, 1928, the president of the' company advised us that the expenditures were as follows:

Engineering $28,550.71
Rights of way $19,151.40
Grading $15,464.96
Track $4,492.86

Total $67,659.99

The rails and ties have not been paid for. The remainder of the $130,000 was for organization and legal expenses, taxes, interest, etc. Expenditures since January 1, 1927, have amounted to approximately $1,500, all for office expense. One of the protestant's engineers estimated the cost of the work done at $16,250.

Based on the record made on prior hearings, we said in our original report, supra, page252:

“The applicant was incorporated with an authorized, capital stock of $50,000, all of which has been subscribed but not issued. Since the filing of the instant application the authorized capital stock ,has been, increased to $400,000.”

In the testimony now before, us it is stated that no steps have been taken to amend the applicant's charter so as to increase the amount of stock originally authorized.

The construction work was done under two successive contracts. The first was with the Railway Construction Company, which was, organized solely for the purposes of the contract. The contractor was required to furnish $10,000 to the applicant and arranged to have this sum advanced by a local bank on 90-day notes of the applicant. After advancing between $4,000 and $5,000, the bank declined to honor further checks drawn on the deposit because the applicant's assets were found to be poor. This contract was on a cost-plus basis.

Eventually the contract with the Railway Construction Company was canceled, and on December 3, 1926, a new contract to build the line was made with another company. This concern likewise was required to advance $10,000 for preliminary pay-roll construction costs on the applicant's promissory note for 90 days, with the privilege of extension for 180 days. The note, as extended, has matured and has not been paid. The contractor did not proceed with the work, but furnished experienced labor for employment under direction of the applicant's engineer. The second contract provided that the contractor should not be required to make any expenditures in excess of the funds available to the, applicant for repayment, of which fact the contractor was to be the sole judge.

The evidence shows that the applicant has never had any assurance of funds to build the line or any considerable part thereof, nor any contract with respect, to trackage rights over the line of railroad which would physically connect the two disjoined segments of line proposed to be constructed by the applicant. It is apparent that when the applicant began construction, three days before the expiration of the thrice-extended time limit, it had no funds to build the line nor any definite prospect of obtaining the necessary financial support. Until nearly two years after the work was begun, all the negotiations for financing the project, consuming several years, were conducted with one company. It is admitted that the project can not be financed locally.

Most of the right-of-way deeds have covenants for reversion of the land to the grantors at various times in case the line is not built, and apparently some of these limitations have already become effective. Application for rights of way across public lands was rejected on May 19, 1926, subject to the usual right of appeal. On August 4, 1926, the applicant was notified that since it had not availed itself of that right, the decision was final and the case closed. The applicant still has no map of definite location such as is required to obtain rights of way on Government lands.

The evidence shows that excepting the engineer the only person connected with the applicant having any experience in railway matters is the treasurer, who once held a clerical position with a railroad company.

It appears that the applicant did not learn definitely until about the end of May, 1928, that the concern with which it had been in negotiation for several years could not finance the project; that since that time effort has been exerted to interest other parties; and that between 30 and 45 days before the hearing an unnamed local resident claiming to represent Eastern financial interests, whose identity is not known to the applicant, made a proposal to have these interests undertake the financing. It is apprehended that the success of negotiations for financial assistance is prejudiced by doubt concerning retention of the certificate by the applicant.

The protestant contends that, in order to be able to make its plans, it should know where it stands and what traffic it must provide for, without the continuing threat of diversion of the traffic. It is further contended that the applicant, by failing to complete its line by July 1, 1928, has forfeited its certificate and is in the same position as if it had never had one; that the record shows laches and want of good faith in the applicant's conduct under the authority granted to it; and that since we decided the case in July, 1924, there have been important changes affecting the merits.

Thus, it was testified, the protestant, subsequent to the time mentioned, has made extensive improvements in its facilities, including, a new yard at Wenatchee; that the protestant has had no complaints as to its service at Wenatchee since 1923; and that in that year, the Western Fruit Express took over the protestant's refrigerator equipment, assumed the duty of supplying cars for the Wenatchee district, and has since fully satisfied all the traffic requirements of the Wenatchee Valley Traffic Association.

Shippers that produce or handle a large part of the outbound freight testified that since 1923 there has never been a shortage of cars and that the service performed by the protestant has been adequate and good. This testimony is not controverted. On behalf£ of the applicant it is conceded that the protestant is now serving the Wenatchee district as well as a railroad can.

In the period from 1914 to 1923, inclusive, the volume of apple shipments from the Wenatchee district almost tripled. The tonnage moving in 1923 has not been equaled in the four succeeding years. For the three years 1925, 1926, and 1927, the shipments averaged 16,480 cars per annum. Total claims paid on carload shipments of apples declined from $622,135.10 in 1920 and $408,557.71 in 1924 to $130,266.57 in 1927. In the 3-year period 1925-1927, claims paid for freezing or heater failures averaged approximately $61,000 per year.

The volume of fruit traffic alone originating in the territory expected to be served by the applicant warrants the assumption that the territory is not lacking in prosperity. Both from the standpoint of original financing and the standpoint of adequate earnings during the early period of operation, the hope of the applicant's project has been largely the support of the people and shippers of the territory represented to be in need of an additional railroad. Yet, after the expiration of more than eight years from the incorporation of the applicant in September, 1920, for the purpose of constructing and operating the railroad, efforts to attract the necessary initial capital have been ineffective. In view of all the circumstances, we can not escape the conclusion that there is little likelihood of a higher degree of success in enlisting the aid of investors whose chief concern in the project would be security of their funds and at least reasonably certain assurance of a satisfactory return thereon.

Whether or not detriment might result to any party from the grant of the extension prayed for, we are persuaded that little advantage would be gained by protracting this proceeding. We are unable to find that good cause has been shown for the extension of time sought by the applicant. It follows that the petition must be denied. Since it has already expired by limitation, it is unnecessary, if not improper for other reasons, that the certificate be canceled and set aside.

An appropriate order will be entered.



Entered February 5, 1929

A hearing and investigation of the matters and, things involved in the petition filed herein July2, 1928, having been had, and the commission having, on the date hereof, made and filed a supplemental report containing its findings of fact and conclusions thereon, which report is hereby referred to and made a part hereof:

It is ordered, That the petition filed in this proceeding on July 2, 1928, by the Wenatchee Southeri1 Railway Company, for further modification of the certificate and order issued herein on July 14,
1924, by extension of the time required for completion of construction of a proposed line of railroad in Chelan, Kittitas, and Benton Counties, Wash., be, and it is hereby, denied.

Wednesday, August 27, 2008

The Wenatchee Southern--The ICC Viewpoint--Part 4



Approved January 12, 1926


It appearing, That on July 14,1924, the commission issued its report, certificate, and order in the, above entitled proceeding, in which certificate and order it was provided that construction of the line of railroad therein authorized should be commenced on or before January 1, 1925;
It further appearing, That by orders entered December 2, 1924, and July 1, 1925, the time for commencing construction was extended to January 1, 1926;

It further appearing, That, for good cause shown, the Wenatchee Southern Railway Company will be unable to commence the construction of said line of railroad within the period prescribed in said certificate and order, as extended, and has filed its petition praying that the time limit for the commencement of such construction be further extended for a period of one year:

It is ordered, That the time prescribed in said certificate and order, as extended, within which the Wenatchee Southern Railway Company may commence the construction of the line of railroad therein authorized, be, and it is hereby, further extended to July 1, 1926, and that the time fixed in said certificate and order for the completion of construction be, and it is hereby, extended to June 30, 1928.

It is further ordered, That the second ordering paragraph in the certificate and order issued in this proceeding on July 14, 1924, be, and it is hereby, amended to read as follows:

It is further ordered, That the Wenatchee Southern Railway Company be, and it is hereby permitted to retain for a period expiring not later than 10 years from the date said line is completed and placed in operation, but not later than June 30, 1938, all of its earnings derived from the proposed new construction in excess of the amount provided in section 15a of the interstate commerce act for such disposition as it may lawfully make: Provided, however, that this permission is granted upon the express condition, that the construction of said line of railroad shall be completed on or before
June 30, 1928.

And it is further ordered, That, except as herein modified, the certificate and order issued in this proceeding on July 14, 1924, shall remain in full force and effect.

Tuesday, August 26, 2008

The Wenatchee Southern--The ICC Viewpoint--Part 3



Approved July 1, 1925


It appearing, That on July 14, 1924, the commission issued its report, certificate, and order in the above-entitled proceeding, in which certificate and order it was provided that construction of the line of railroad therein authorized should be commenced on or before January 1, 1925.

It further appearing, That by order entered December 2, 1924, the time for commencing construction of said line of railroad was extended to July 1, 1925.

It further appearing, That, for good cause shown, the Wenatchee Southern Railway Company will be unable to commence the construction of said line of railroad within the period prescribed in said certificate and order, as extended, and has requested that the time limit for the commencement of such construction be further extended to January 1, 1926:

It is ordered, That the time prescribed in said certificate and order within which the Wenatchee Southern Railway Company may commence the construction of said line of railroad be, and it is hereby, further extended to January 1, 1926.

Monday, August 25, 2008

The Wenatchee Southern--The ICC Viewpoint-Part 2



Approved December 2, 1924


It appearing, That on July 14, 1924, the commission issued its report, and certificate and order, in the above-entitled proceeding, in which certificate and order it was provided that construction of the line of railroad therein authorized should be commenced on or before January 1, 1925;

It further appearing, That, for good cause shown, the Wenatchee Southern Railway Company will be unable to commence the construction of said line of railroad within the period prescribed in said certificate and order, and has requested that the time limit therein fixed for commencement of such construction be extended to July 1, 1925:

It is ordered, That the time prescribed in said certificate and order within which the Wenatchee Southern Railway Company may commence the construction of said line of railroad be, and it is hereby, extended to July 1, 1925.

Sunday, August 24, 2008

The Wenatchee Southern--The ICC Viewpoint-Part 1


Submitted May 2. 1924. Decided July 14. 1924

Certificate issued authorizing the Wenatchee Southern Railway Company to construct a new line of railroad in Chelan, Kittitas, and Benton Counties, Wash. Permission to retain excess earnings granted.

A. N. Corbin, Fayette B. Dow, and Corbin &: Easton for applicant.
Fayette B. Dow for Yakima Valley Transportation Association, intervener.
L. L. Thompson, attorney general, and Raymond W. Clifford for State of Washington, and Frank R. Spinning for Washington Department of Public Works.
S. J. Wettrick for Seattle Chamber of Commerce.
Col. R. E. Longan for United States War Department, transportation branch.
F. G. Dorety, M. L. Countryman, and Thomas Balmer for Great Northern Railway Company, protestant.


This application was originally heard for us by the Washington Department of Public Works. The applicant, Wenatchee Southern Railway Company, excepted to the report proposed by our examiner and the case was orally argued. Thereafter the proceeding was reopened, a further hearing has been had, and the matter stands submitted upon briefs, without further oral argument. Except as otherwise indicated, places named in this report are situated in the State of Washington.

The applicant is a corporation of the State of Washington, organized September 15, 1920, to engage in interstate commerce by the ownership and operation of a common-carrier railroad. In its application, filed January 11, 1922, it asks for the issuance of a certificate of public convenience and necessity, pursuant to paragraph (18) of section 1 of the interstate commerce act, authorizing it to construct a standard-gauge steam railroad as follows: (a) From Wenatchee, Chelan County, southerly along the west side of the Columbia River to Beverly Junction, Kittitas County, 53 miles; (b) from Hanford, Benton County, southerly along the west side of the Columbia River to a connection with the railroad of the Oregon-Washington Railroad &. Navigation Company, hereinafter called the Oregon-Washington, about 5 miles west of Kennewick, Benton County, a distance of 29 miles; (c) from a point about 13 miles south of Wenatchee northerly to Orondo, Douglas County, about 30 miles. The latter request has been withdrawn. The applicant proposes to operate trains under trackage rights over the Hanford branch of the Chicago, Milwaukee &. St. Paul Railway, hereinafter called the Milwaukee, between Beverly Junction and Hanford, approximately 46 miles, and over the tracks of the Oregon-Washington between Kennewick and the proposed junction 5 miles west thereof. This would afford it a continuous line along the west bank of the Columbia River from Wenatchee to Kennewick, about 132 miles. Applicant also requests permission under paragraph (18) of section 15a of the act to retain the excess earnings from the new construction.

The Great Northern Railway Company, herein called protestant or Great Northern, opposes the application. At the further hearing the Washington Department of Public Works appeared in support of the application.

The bases for the application are that the Wenatchee district, now served only by the Great Northern, needs a direct and open connection with other transcontinental lines, and additional routes to and from Pacific coast points; that the territory between Wenatchee and Kennewick is in need of transportation facilities; and that the northern and southern portions of central Washington need more adequate railroad connection. In opposition, protestant urges that its facilities are, and in the future will be adequate to the needs of the Wenatchee district; that the proposed connection with other transcontinental lines would not improve transportation facilities in the Wenatchee district; that no appreciable development would result from the construction; that the prospective traffic does not warrant the expenditure necessary, and would not support the road after construction; and that the proposed line would unnecessarily deprive protestant of traffic for which it has made adequate provision.

The primary purpose of the project is to provide additional facilities to move apples from the Wenatchee district. In the Wenatchee Valley, and along the Columbia from the mouth of the Okanogan River to a point a few miles below Wenatchee, including also some areas on the Okanogan River, there are about 28,000 acres of irrigated lands, of which approximately 16,000 acres lie within 20 miles of Wenatchee. This area we may call the Wenatchee district. Shipments of fruits and vegetables therefrom have shown a remarkable increase, from 1,302 carloads in 1907 to 16,986 carloads in 1921. The bulk of this great increase is of apple shipments, which from 616 carloads in 1907 grew to 15,915 carloads in 1921. At the hearing estimates of the 1923 shipments of apples and of all fruits were placed at 16,600 and 17,800 carloads, respectively. Apples now constitute over 90 per cent of the production of the Wenatchee Valley. The community is virtually dependent upon the one product. The Great Northern's plans anticipate that the annual production of the district will be 20,000 to 25,000 carloads within the next few years. Most of the apple crop moves to destinations east of the Mississippi River. A small but increasing portion is shipped to Puget Sound ports, or Portland, Oreg., for export or coastwise ocean movement. The movement is highly seasonal. A large part of the production consists of the Jonathan and Delicious varieties, which mature early, and which the growers claim are therefore not adapted to storage and late consumption.

The shipping season begins about September 1. In the early part of the season shipments are refrigerated. After this there is a short period in which the temperature is controlled by ventilation. Beginning about October 15, heating of cars becomes necessary. It is difficult to avoid injury to the fruit when the outside temperature is much below zero for several consecutive days. During the carheating season the shipper has the option of securing carrier's protective service, under which the carriers assume the liability for losses from freezing, at a cost of 9 cents per 100 pounds to Chicago. The greater part of the fruit crop is moved during the period of refrigeration and ventilation. Growers and dealers claim with great earnestness that, for business reasons and to conserve the crop, at least two-thirds of the apples from this district should go into consumption during the months of October, November, and December, and that the greater part would not keep longer in storage.

The Great Northern serves the district by its main east-and-west line through the Wenatchee Valley; the Oroville branch, extending north along the Columbia and Okanogan Rivers to the Canadian boundary; and by the Mansfield branch, which extends northeasterly 60 miles from the main line a few miles south of Wenatchee. It has extensive terminal facilities at Wenatchee to assemble and handle traffic originating in the district, and reaches and serves all industries at Wenatchee.

Applicant's proposal apparently originated in the dissatisfaction of apple growers and dealers of the Wenatchee district with the service rendered by protestant. These growers and dealers testify that during almost every peak season protestant does not furnish sufficient cars, and frequently delays the movement of the crop to market beyond the period of refrigeration and ventilation. As a result, it is said, great direct damage often ensues from deterioration, freezing, or overheating, and also large consequential damages from depressed market prices, caused by the offering of fruit, the quality of which has become so impaired, or due to the offering of early varieties which have passed their prime at a time when later varieties should be consumed.

During the crop years 1912 to 1921, inclusive, the Great Northern increased its ownership of refrigerator cars from 1,052 to 5,136 cars, and the Wenatchee apple shipments increased from 4,273 to 15,613 carloads. For 1922, on the basis of the number of carloads of fresh fruits and vegetables, including potatoes, originated per refrigerator car owned, the Great Northern's ownership compares favorably with that of each of the other three principal carriers serving the Pacific Northwest. The Milwaukee has little such traffic. Its equipment situation will be stated later herein. The Pacific Fruit Express is the private-car line which operates over the Union Pacific and various other systems. It obtains a more efficient use of its equipment than is possible under operation by a single railroad company. Protestant's scheduled service from Wenatchee to eastern termini is comparable with similar service of other carriers. Thus, the schedule time of fruit trains over the Union Pacific from Yakima to Council Bluffs, Iowa, is 137 hours. From Wenatchee to Minnesota Transfer, Minn., protestant's schedule for fruit trains is 146 hours, but in actual running time it has approximated the Union Pacific schedule time. Minnesota Transfer is 48 miles nearer to Chicago than is Council Bluffs. The Milwaukee does not operate regular fruit trains to the east. Its regular time freight schedule is about 147 hours from Beverly to Minnesota Transfer, which does not include stops for icing perishable freight.

Winter temperatures on protestant's line are generally somewhat lower than on the Union Pacific, and the latter crosses the Rockies some 2,600 feet higher than does the Great Northern. Probably there would be some advantage as to temperature in shipping apples over the Union Pacific during the winter, but the evidence is not conclusive. Citrus fruits from California during midwinter are largely routed over the southern lines in preference to the Union Pacific. Damage claims arising from all causes paid on apples shipped over protestant's line for the years shown, were as follows: Crop of 1919, $941,000; crop of 1920, $207,000; crop of 1921, estimated at $225,000. These payments cover the damages on all lines to destination, and protestant's proportion thereof amounted to about 60 per cent.

Protestant contends that the embarrassment suffered by Wenatchee apple shippers in times of fluctuation of car supply is due not to inadequate transportation service, but largely to insufficient storage. With an estimated production of 16,600 carloads of apples in 1923, the Wenatchee district had cold-storage space for but 633 carloads, with additional space for 164 carloads under construction. Common or air-cooled track storage amounted to 5,748 carloads, and ranch storage to about 1,510 carloads. Including track-side common storage under construction at the time of the hearing, the total storage available for the 1923 crop was 8,359 carloads.

The Yakima Valley, a large apple-producing section, has a larger amount of cold-storage space than Wenatchee. This is partly due to a larger production of soft fruits, which require precooling before shipment, and also because the bulk of the apples are of intermediate or later varieties, which do not have to be marketed as soon as the earlier varieties raised so extensively in the Wenatchee district. Because of the large proportion of early varieties and the practical necessity of shipping over the northernmost transcontinental route in the United States, the Wenatchee growers deem it impracticable to store apples to an extent proportionately as great as in other sections.

Clearly the Wenatchee district has from time to time suffered considerable damage from delay in getting its apples to market. In this it has not been alone, although the degree of its damage at times may have been greater than in other sections. Often, although possibly not always, shortage conditions at Wenatchee have reflected a general situation which has affected other Northwest producing sections. The severe car shortage of 1922 and its effects upon the entire Pacific Northwest have been described in Transportation Facilities in Northwest Pacific States, 87 I. C. C. 472. In that case the record contained evidence on these subjects similar to that before us in this proceeding. In fact, much of the record in the case cited and this proceeding is common to both.

At the further hearing herein protestant announced important rearrangements in its refrigerator service, acquisitions of equipment, and betterments of facilities. On page 501 of the report in the case cited we referred to these improvements as follows:

“Prior to 1923 the Great Northern operated its refrigerators under a pooling arrangement with other lines whose peak requirements were the same as its own. In that year it completed an arrangement whereby it leased its equipment to the Western Fruit Express, the stock of which company it owns, and whereunder such company affiliated with the Fruit Growers Express. The latter serves several eastern and southern roads. The principal traffic of the Fruit Growers Express is southeastern fruit, mainly from Florida, for which the heavy demand comes in the late winter and spring months. The two companies have a total ownership of 21.000 refrigerator cars. Under the arrangement each during the period of its peak movement is entitled to preferential use of the cars of the other. The operation of the Western Fruit Express is under the same management as the Fruit Growers Express. Better service and condition of equipment and more prompt return of cars are possible under private-the management than under the previous arrangement.

“In addition to the matter of cars the Great Northern has made and is making extensive improvements in its motive power, tracks, bridges, and yards With a view to enlarging the traffic capacity and speeding up its movement. These improvements include heavier rail, more double track, automatic signals, a new engine terminal at Appleyard near Wenatchee, improved icing facilities at Appleyard and Hillyard, Wash., and the use of crude oil for engines west of Cut Bank, Mont., except between Whitefish and Troy, Mont. The use of oil as a fuel is to increase the tonnage capacity on grades and to decrease engine failures.”

Growers and dealers in the Wenatchee district are chiefly interested in the matter of improved car supply. Applicant does not intend to provide itself with refrigerator cars, but expects to obtain such equipment from the Milwaukee, the Northern Pacific, and the Oregon-Washington. A representative of the Milwaukee testified that this carrier would treat applicant as a local industry on its line in the distribution of available equipment. In 1923 the Milwaukee owned or leased about 2,000 refrigerator cars suitable for fruit loading. In Transportation Facilities in Northwest Pacific States, supra, the Milwaukee stated its ownership of refrigerator cars of all kinds to be about 3,000 cars. An arrangement with the Union Refrigerator Transit Company, a private-car line, enables the Milwaukee to obtain additional refrigerator equipment. The Milwaukee originates only about 700 cars of fresh fruit yearly in the State of Washington. During the period December 15, 1922, to the end of January, 1923, the Milwaukee furnished 451 refrigerator cars to the Great Northern at Spokane for loading at Wenatchee and for redelivery to it at that junction, 75 of which were so delivered during December. Earlier in the season the Milwaukee was too short of refrigerator cars to supply any appreciable number to its short-line connection, the Spokane & Eastern.

The Northern Pacific has practically the same situation at Yakima that the Great Northern has at Wenatchee. The peak loading comes about the same period, and apples from both districts move to the same eastern destination territory. The Northern Pacific owns slightly less refrigerator cars than the Great Northern, 4,957 as compared with 5,529 at the close of 1922. This ownership is not always sufficient to take care of its Yakima business; assistance from the car pool is necessary in times of heavy loading. Applicant expects no refrigerator equipment from the Northern Pacific other than cars to be returned under load destined to Northern Pacific points.

The Pacific Fruit Express had 29,750 refrigerator cars in 1923. It supplies the Southern Pacific lines and Western Pacific Railroad besides the Union Pacific system. During the period when the Wenatchee apple crop moves to market or should so move, the Pacific Fruit Express has a heavy burden in the transportation of fruit crops from these western lines. It serves the Yakima, Hood River, Oreg., and southern Idaho fruit districts, and moves the heavy California wine-grape crop to market. In 1921 the latter crop amounted to 31,000 carloads, and at the time of the hearing the 1923 crop was estimated at 60,000 carloads. The grapes move mainly in September and October, and to some extent in November. Applicant has had no negotiations with the Oregon-Washington for a car supply, and has no assurances that it would furnish refrigerator cars to applicant. During the period from November 29, 1922, to February 5, 1923, the Oregon-Washington furnished the Great Northern at Spokane about 2,000 Pacific Fruit Express refrigerators for loading at Wenatchee and redelivery to it at Spokane. As detailed in Transportation Facilities in Northwest Pacific States, supra, transportation conditions were then abnormal. Ordinarily the peak demand for cars on the Great Northern would be passed by December 1, and the protestant could supply current requirements thereafter.

Protestant claim that its line and facilities are ordinarily adequate to care for the Wenatchee traffic. It holds out that in event of a shortage of cars it will accept all cars tendered to it at Spokane by other lines for loading and redelivery at that point. It also states that in such a case it would publish temporary joint rates with the Northern Pacific and Milwaukee via Spokane, and would eliminate the restriction on storage in transit which at present effectually restricts the use of the joint rates with the Oregon- Washington applicable through that junction. It will not agree to keep the Spokane gateway open at all times, as that would give other lines opportunity to obtain Wenatchee traffic when cars are plentiful and leave the burden to protestant in times of shortage. This does not satisfy Wenatchee shippers, who desire access to other roads at all times.

On apple traffic from the applicant destined to eastern points the connecting carrier would receive less earnings than on similar traffic originating on its own line. The tendency would be for such carriers in times of car shortage first to meet their own needs and afterward to furnish any available cars to the Wenatchee Southern.

Another claim stressed by applicant is that as the proposed line would permit free access to the more southerly line of the Union Pacific they would have a shorter route to the Southwest. Apple shipments from Wenatchee to the Southwest are routed through Billings, Mont., In connection with the Chicago, Burlington & Quincy. The routes over the proposed line and the lines of its connections are no shorter to Kansas City, Mo., than is the Great Northern- Burlington route. Because of the necessity of allowing time for interchange, the time schedule of the applicant and Union Pacific to eastern destinations probably would not quite equal the schedules of protestant.

Applicant claims that the proposed line would open to Wenatchee shippers additional markets local to the lines of connecting carriers. It does not appear that such markets are of great importance. Wenatchee can now reach almost all markets of any consequence on fair terms as compared with other producing sections in the Northwest.

In addition to creating new routes to eastern apple markets, applicant considers that the proposed line will be of important value in providing an alternative route on traffic for Wenatchee from the east and south, and on traffic between Wenatchee and the Pacific coast. A considerable tonnage of inbound supplies moves to Wenatchee from the east and south. We have already referred to the movement of apples through Puget Sound cities and Portland for export or coastwise transportation. Supplies move inbound to Wenatchee from these coast points. The Portland cattle market is the most important of those on the north coast. Applicant states that the proposed line would furnish a route thereto preferable to the Great Northern route through Seattle. The distance to Portland through Seattle is 11 miles less than over the proposed line. As between Wenatchee and the Puget Sound cities only, the Milwaukee would form a practicable route in connection with the applicant. The distance from Wenatchee to Seattle over the Great Northern, and over the applicant and Milwaukee would be 165 and 204 miles, respectively, and the two-line haul in the latter case would necessitate some loss of time in interchange.

The territory between Wenatchee and Kennewick adjacent to the proposed railroad is arid, and adjacent to the river is rough except for areas of comparatively level flats and benches. The productivity of these areas is entirely dependent upon irrigation. In some cases their elevation and soil characteristics make irrigation under present conditions expensive or impracticable. South along the river from Malaga, 5 miles south of Wenatchee on the Great Northern and the southerly limit of the Wenatchee district, there are approximately 2,000 acres of bench lands in the vicinity of Valhalla, the first station on the proposed line south of Malaga. These lands were once under irrigation, but due to the cost of pumping, the development was unsuccessful, and about two-thirds of that acreage has been abandoned. About 2 miles south of Malaga the Great Northern crosses to the east bank of the river. Except for some small irrigated areas opposite the Great Northern station of the Columbia River, the next tillable land south of Valhalla is the so-called Horn ranch. At this place there are some 500 acres of arable land, of which about 100 acres are cultivated. Four miles farther south lies the West Bar, a bench of 2,000 acres opposite the Great Northern station of Trinidad, to which it has access by ferry and 3 miles of wagon road. Most of the land on the bar is more than 175 feet above the river, and only about 100 acres is under cultivation. Except for two small bars, having a total area of about 500 acres, of which only about 160 acres are irrigated, there is little arable land close to the river in the 20-mile section south of West Bar to Vantage. Applicant estimates that back from the river along the creeks that flow through the two small bars there are about 3,000 acres of good land, but from the contour maps this appears excessive.

Vantage Flat lies between Vantage and Cohasset, a station on the main line of the Milwaukee, a short distance from Beverly. Its north end is distant about 7 miles, and its southerly end about 1 mile from the line of the Milwaukee, and it lies about 200 feet below the railroad. It contains some 3,500 acres, of which at least half would be tillable by a pumping lift of approximately 75 to 125 feet. This is one of the best tracts which the applicant's line would serve. It is accessible to the Milwaukee by a wagon road which could be improved to permit the use of trucks. Just after the Milwaukee was built the land at the northern end of the flat was sold to an irrigation company, which, after unsuccessful attempts at irrigation, allowed the land to go back to a. raw state. The land is now used only as a pasture for sheep. Apparently its development has not been retarded so much by lack of transportation as by the cost of pumping water.

South of Beverly, on the west side of the Columbia, is a strip of land containing 2,000 to 2,500 acres, served by the Hanford branch of the Milwaukee. About 600 acres of exceptionally good land on this tract has been under intensive cultivation, but is now uncared for, because of the expense of pumping water to it. South of this section there is little irrigable land, until the valley broadens out about 5 miles below Priest Rapids into the Hanford-White Bluffs district. The original project in this district included 23,000 acres of land, which is now within a haul of 5 to 8 miles of the Hanford, branch of the Milwaukee. In the 13-year period prior to 1922, but 5,000 acres were settled. An additional 2,000 acres, including a soldier settlement, was developed in the interim between the first and second hearings. The land is fertile when reclaimed, but requires considerable leveling and a relatively high duty of miter. The bulk of the lands in this district are within a reasonable pumping distance of wells or the river. The soldier settlement consists of 58 units of 20 acres each, of which 41 had been taken at the time of the last hearing, each unit with a house, barn, chicken house, and wells dug for irrigation. In 1922 the entire Hanford branch produced but 700 carloads of inbound and outbound tonnage. What rights applicant would have as to traffic originating on or destined to points on the. Hanford branch has not been developed. Most of the benefits which the Hanford district would derive from the construction of the proposed line would flow from a railway connection with the trunk lines to the south.
For 12 miles south of Hanford to the Richland section, the country is rough and sandy, and difficult of reclamation. The reclaimed section includes about 21,000 acres with water rights, of which 15,900 acres are within a municipal irrigation district, and 8,000 acres are occupied. These are the only lands along the proposed route that are or can be irrigated by gravity from the Columbia River. The soil requires considerable water, particularly in the northern part where the land is rough and sandy. Products shipped from the Richland district are hauled to Kennewick by truck, about 10 miles. Kennewick, with a population of 1,684, is located at the junction of the main lines of the Northern Pacific and Oregon-Washington. The straight-line distance between the center of the Richland irrigation district and the line of the Oregon-Washington is about 5 miles. Leslie station on the Oregon-Washington is about 3 miles from Richland, but at a considerably greater elevation. Apparently fruit is trucked to Kennewick to gain advantages to be had at that point not obtainable at the way station at Leslie. The building of a 9-mile spur to connect this section with the Oregon-Washington would supply practically all the transportation benefits the Richland district would secure from applicant's proposed line.

Applicant submits estimates as to a large acreage of good land tributary to the proposed line in the country west of the river toward the mountains. Because of its arid nature, its high elevation above the river, the difficulty of reclaiming it, and of reaching the proposed line, it appears unlikely that such land would produce much traffic for applicant for many years.

The claim is advanced that it is possible that lumber mills will be located in the timber west of applicant's line in southeastern Chelan and northeastern Kittitas Counties, and that the products will be brought to it for shipment. The timber is of a very light stand, and lies from 4 to 7 miles west of applicant's proposed line. The distance from the timber to Wenatchee is but little greater, and there is no assurance that the products would be brought to the proposed line. Apparently applicant does not give much weight thereto in the estimates of its traffic which it has submitted to us. No mining tonnage is anticipated, or any considerable tonnage of manufactures, except such as would naturally follow general development if certain projects which are hereinafter mentioned are completed.

The applicant submits an estimate that the population of the territory to be served is 20,650. From the census of 1920, this appears high. The most important of the stations to be served by the proposed line are the termini, Wenatchee and Kennewick, with 6,324 and 1,684 inhabitants, respectively. Existing lines directly serve five of the remaining stations, and two more have access to rail transportation by ferry. Of the points without rail service, Richland has a population of 279, and the estimated population of each of the others is 25.

Applicant refers to three contemplated large developments which would be served in part by the proposed line, the Greater Wenatchee, theColumbia River Basin, and the Priest Rapids projects. The Greater Wenatchee irrigation project embrace’s 42,800 acres, which it is proposed to irrigate at a cost of $172.66 an acre. Much of the land lies east of the Columbia River, and none is distant more than 10 miles from direct service on the line of the Great Northern. Applicant's line would serve a small portion of this district, but would reach no part not served by the Great Northern. This enterprise has not been financed, and the district has not been organized. After construction has commenced, two years will be necessary to complete the irrigation works. A number of years must elapse before the added territory can be settled; and after settlement, assuming the additional area is devoted to orchards, there must ensue six years to develop any material production and 12 years for anything like quantity production. Nothing before us indicates that this project is further advanced than at the time of the last hearing.

.The most ambitious of these irrigation works is the Columbia River Basin project, which contemplates the irrigation of 1,753,000 acres lying between the Columbia and Snake Rivers in the State of Washington at an estimated cost of $254,170,000. The time needed for completion is at least six years. The irrigation of this section was under discussion as early as 1903. The development is of such magnitude it could be carried out only by the United States Government. We may notice judicially that expenditures of approximately $350,000 have been made by authority of Congress and the legislature of the State of Washington for investigation as to the practicability and extent of the reclamation possible under this project, and that further investigations are provided for by appropriations now available. The area included is a high table-land. It is traversed north and south by the Northern Pacific and east and west by the Milwaukee, each of which divides it into nearly equal parts. The Great Northern's line is along the northern border. If this project should become a reality, it seems reasonable to assume that the greater part of its products would move to the existing railroads rather than down the cliffs of the Columbia to be ferried across the river to the proposed line. The undertaking and completion of the Columbia, Basin irrigation project will not in any way be contingent on the construction of the applicant's proposed line.

The third project is the proposed hydroelectric plant at Priest Rapids on the Columbia River. The plans call for a 90-foot dam and an initial installation of 300,000 horsepower. The power plant is expected to develop 400,000 all-the-year-round horsepower, and, in addition, 300,000 secondary horsepower from April 1 to September 1, which would be used to pump water for some 250,000 acres. The estimated cost of this project is $40,000,000, and that of the industrial plants to be located at Priest Rapids to use the power is a similar amount. The promoters have been interested in this project for 11 years. Active construction work apparently awaits the grant of a Federal license and the making of contracts for the sale of sufficient power to justify the proposed development. It is a seriously considered project of enormous possibilities if successfully carried out. This section is now served by the Milwaukee, but the protestant states that, if the proposed development ever takes place, two or three railroads will be needed, and that it will then build a line to serve the district. If this project were in fact under way, a certificate such as here sought would be clearly in order for some rail carrier. The prospect for the construction of this development furnishes some warrant for the conclusion that future convenience and necessity, which we are required to consider, will be served by the construction of the line which the applicant proposes.

Applicant offered testimony as to the need of the new line to facilitate communication and interchange of products between the northern and southern portions of central Washington. The products of these sections are similar in the main to those of the Wenatchee district, but the crops of the Yakima and Kittitas Valleys are more diversified. The evidence does not establish that there would be a large interchange of products between the agricultural areas that would be connected. The proposed line would shorten the distance, and probably facilitate the short seasonal movement of sheep and cattle to and from the Okanogan region.

The proposed line would afford a connecting link between the several east-and-west trunk-line carriers, but applicant does not expect much traffic from this source. All the trunk lines connect both in eastern and western Washington, and it does not appear that they would exchange much traffic by means of a cross line in the middle of the State. There are emergencies when such a connection would be of benefit, and possibly interchange of traffic might be increased, but this would necessitate somewhat of a revisal of the policy of the existing principal carriers as to the interchange wherever rails intersect. Passengers now traveling by railroad between the northern and southern portions of central Washington are inconvenienced by the necessity of going through either Seattle or Spokane, so that passenger travel between these sections is now almost wholly by automobile. Between Wenatchee and Ellensburg it is necessary to traverse a mountain road over Blewett Pass, open only nine months in the year. The State is now building a good road over the pass. At present communication during the other three months is by way of Quincy and Vantage Ferry. In 1922 the stage line handled 769 passengers between Ellensburg and Wenatchee at a fare of $8. There is also some travel between Wenatchee and other southern points, such as Kennewick and Hanford, by motor stage.

The assistant chief of staff for war plans, operations, and training of the ninth army corps area, United States Army, appeared as a witness by direction of the War Department, to present the views of the department as to necessity for the construction of the proposed line of railway. He stated that there are three main strategic areas on the Pacific coast, of which one is the Puget Sound-Columbia River area that embraces the coast from Canada to south of Tillamook Bay, Oreg. In this area, besides Puget Sound, are embraced Gray's Harbor, Willapa Bay, and the mouth of the Columbia River. It was the opinion of the witness that the construction of the proposed line, east of the Cascades, would be of material military value under most circumstances of war on the Pacific coast, by affording a lateral sheltered line of north-and-south military communication otherwise lacking. The testimony of the witness disregarded features as to economies of operation. Of course, no funds are available in the War Department to cover any deficit that might arise in the operation of the railway or to aid in its construction.

The survey of the proposed line parallels the Columbia River throughout, slightly above high water. For 9 miles south of Wenatchee alternative routes are under consideration, both practically adjacent to the Great Northern's main line. The first is located from 100 to 900 feet west of that line, and the other parallel to, and 15 feet between centers from, the tracks of the Great Northern for 6.6 miles, commencing at a point 2.4 miles south of Wenatchee. The last-described route would necessitate condemnation of a portion of the Great Northern right of way unless that carrier voluntarily permits its use. Neither plan would interfere with the future double tracking of the Great Northern line. The heaviest adverse grade running south on the new line would be 1.5 per cent, and 1.7 per cent on the existing Hanford branch of the Milwaukee. Apparently, the most difficult climb would be the 2,000 feet of 1 per cent grade between the Yakima River and the Oregon-Washington connection north of Kennewick, with a curvature of 2°. The cliffs adjoining the Columbia River between Wenatchee and Beverly are columnar basalt, hard and unstable. About 10 miles of the track would be along almost perpendicular cliffs, and the rocky terrain would require heavy construction.

The plans of the applicant call for a yard of five tracks at Wenatchee, including team, storage, and switch tracks, each slightly more than 2,000 feet long. This would provide a maximum workable track capacity of about 250 cars. No storage tracks are planned other than at Wenatchee. The plan also includes a single interchange track 1,500 feet in length at Beverly Junction, a similar track at the connection with the Oregon-Washington, and 11 passing tracks, three of 2,000-foot length and eight of 1,000-foot length, at various points along the line.

Applicant's plans provide for a $40,000 depot at Wenatchee, containing a room for less-than-carload freight but none for carload freight; and four portable depots, 12 by 40 feet in size, estimated to cost $1,500 each, for erection at West Bar, Beverly Junction, Richland, and at the junction with the Oregon-Washington. Each of the four depots will have a waiting room, a small baggage room, and an office. At other points on its line 10 cinder platforms to cost about $100 each are in contemplation. There is adequate modern public storage along the proposed line in Wenatchee to handle any carload freight that might have to be stored.

The plans of the applicant have been stated in some detail. They are generally to be described as constituting about the minimum of plant and equipment to be expected for a railroad of this length.
Witnesses for the applicant testified as to tentative arrangements with officials of the Milwaukee and the Oregon-Washington looking toward the joint use of the Hanford branch of the former between Beverly and Hanford and of a 5-mile section of the latter into Kennewick. Apparently such use can be arranged, the applicant to bear one-half of a fair interest charge on the value of the tracks used and a proportion of the cost of operation and maintenance on a wheelage basis. The record does not disclose the cost or values of either of the proposed joint facilities. The cost of such use would be a charge upon applicant's revenues, which would have to be met at all hazards, as otherwise the line would be severed and without one indispensable terminal. Pending a conclusion as to the use of such portions of lines of the Milwaukee and Oregon- Washington, the success of the applicant's venture is, of course, conjectural. The Hanford branch of the Milwaukee will need considerable maintenance work in the next few years, and certain improvements will be necessary if the line is to handle any substantial amount of additional traffic, and this will reflect itself in the cost which would have to be met by applicant.

The equipment plans of the applicant call for the purchase of five engines, three coaches, four flat cars, four box cars, two gondolas, and three cabooses. Since the further hearing applicant has notified us that it concluded to substitute two gasoline-motor cars for one of the locomotives in order to handle passenger traffic to better advantage. For other equipment, including refrigerator cars, it will be dependent upon its connections, as has already been discussed.

Applicant expects to operate one mixed train a day each way, with extra trains during the apple-shipping season. Protestant asserts that the proposed line could not with the equipment planned handle more than a fraction of the volume of traffic applicant estimates will be offered, and that based on an equal division of the Wenatchee station apple traffic during peak movement in October of each year, applicant would have to handle five trains per day each way. But the protestant concedes that the applicant would not obtain so large a portion of the Wenatchee traffic.

At the original hearing applicant estimated the total cost of construction at $3,270,944.65, or an average cost per mile of $40,036.05. Over the alternative route requiring the use of part of the right of way or the Great Northern, the total cost was figured at $3,243,702.48, or $39,702.60 per mile. One of the Great Northern's engineers estimated the cost of construction at $4,087,831. At the further hearing applicant increased its estimate to $3,581,743.97, not including equipment, which would entail a further capital charge of $183,400. The Great Northern's engineer testified that this cost was too low, because of advances in the price of labor and materials over the basic figures used and because of the omission of certain other elements of cost, which would bring the total figure to $4,324 475. For example, applicant estimated $73,499 for bridges, trestles, and culverts between Wenatchee and Beverly, based upon a price of $24 per thousand feet for the timber. At the time of the further hearing the price of timber was $26 per thousand on Puget Sound and freight to the Wenatchee district was about $6 per thousand. Similarly, the cost of rails at Seattle, shown in applicant's estimates was below the prices of rail at either Pittsburgh or Chicago at the time of the further hearing. When the estimates were prepared applicant intended to use foreign rails, but at the time of the second hearing such were not available. If new rails had been purchased then, the excess cost would have been $50,000. Applicant relies on obtaining secondhand or foreign rail to come within its estimate.

The applicant was incorporated with an authorized capital stock of $50,000, all of which has been subscribed but not issued. Since the filing of the instant application the authorized capital stock has been increased to $400,000. While no definite financial plan has been adopted, the tentative plan contemplates financing the construction cost by an issue of bonds in the principal amount of $3,500,000, bearing 5 per cent interest, and by the sale of the capital stock. The proposed bond issue is but slightly less than the applicant's estimated cost of construction. Steps have also been taken to obtain guaranties from the growers of fruit in the Wenatchee district to meet any deficit in operation and interest on the investment for a period of three years. The plan, largely voluntary on the part of the growers, is for the guarantors to pay 3 cents per box on the marketable apples produced, in addition to the freight rate, the amount to be deducted by the selling agents and held as a fund for the purpose stated. Up to October guaranties had been signed to the amount of 1,253,950 boxes, annually. Protestant denies the validity of such a guaranty, and claims that, practically, it is unenforceable. No evidence was submitted as to the solvency of the signers or of the probability of their production of the quantity of apples estimated in the agreements. Assuming, however, that the guaranties are valid and that the number of boxes of apples signed up would be actually shipped annually, it would secure applicant approximately $37,600 a year.

At the original hearing applicant estimated that it would have a gross revenue of $655,778.70 for the first year, with a progressive increase to $1,571,096.58 for the tenth year. At the further hearing the estimate for the first year was raised to $707.305.20. This figure includes no revenue from less-than-carload freight at stations other than Wenatchee, nor does it take into account any traffic handled as an intermediate line. The original estimate assumed that in the first year of operation the Wenatchee Southern would obtain at Wenatchee freight equivalent to 50 per cent of the 1920 business at that
station. The second estimate proceeds upon the assumption that during 1926, the first year of expected operation, applicant would divide with the Great Northern the entire Wenatchee business, computed at 7,627 carloads, and in addition would handle 2,591 carloads of traffic to and from other stations on its line. Traffic other than fruit which applicant would expect to secure includes such commodities as orchard supplies, box shooks, lumber, wood, coal, wool, flour, and feed, and in addition a considerable seasonal movement of sheep to and from the northern ranges, and a movement of cattle to the Portland market.

The Great Northern criticizes the estimates referred to as too optimistic. It states that applicant in arriving at the revenue to be obtained from Wenatchee traffic has made unwarranted assumptions. The estimate mentioned of 7,627 carloads of traffic in 1926, yielding a total revenue of over $5,000,000, is based upon the 1920 figures plus progressive annual increases of 6.5 per cent. Applicant counts on a 20 per cent division of the rates on half that traffic, amounting to $518,847.05 in revenue from the Wenatchee station alone. This represents about 79 per cent of applicant's total estimated revenue for the first year. Protestant insists that, considering the comparative service and facilities that would be offered by it and the applicant at Wenatchee, there is serious doubt whether the new line would get more than a fraction of the expected traffic.

At the present time the Great Northern directly serves all Wenatchee industries. By spurs from its track down the center of Columbia Street the proposed line would be able to reach the loading platforms of 17 fruit warehouses, containing over two-thirds of the total storage capacity of the 20 warehouses in Wenatchee. To what extent the applicant's operations on Columbia Street would interfere with the delivery of fruit at the warehouses and necessitate night loading is not clear. Applicant's line would serve two mercantile establishments not now reached by the Great Northern. Considerations of car supply and comparative schedule time to the east over the Great Northern and in connection with the applicant have been treated elsewhere in this report. The record does not warrant the assumption that the new line could obtain half of the Wenatchee traffic within the near future.

Protestant further claims that traffic which applicant expects to develop at other points on the new line will not materialize. For example, applicant's revenue figures contain an estimated volume of traffic to or from West Bar amounting to 385 carloads. According to the only witness cultivating land on this bar, the total area under irrigation consists of 100 acres in apples and 5 or 10 acres in alfalfa and vegetables. The shipments from this bar, which are made from Trinidad across the river, amounted to 25 carloads in 1922. Protestant stated that the 1923 shipments from West Bar would amount to 50 carloads, all apples, and the inbound traffic to 15 carloads. Even considering that applicant's estimate is for a period three years later, during which time production might rapidly increase it appears questionable whether the West Bar traffic would measure up to applicant's expectations.

On the assumption that applicant would obtain the traffic it anticipates, the Great Northern has computed applicant's operating expenses at $754,378.56. It has reached this figure by increasing applicant's operating expense figures as follows: Depreciation of equipment at 2 per cent, $5,200; additional general expense, mainly salaries, $20,580; maintenance of the Hanford branch of the Milwaukee on a 75 per cent instead of 50 per cent basis, $15,466.80; and additional transportation and maintenance-of-equipment expense, $200,000. The latter figure is based upon the train-mile transportation expense on the Okanogan branch of the Great Northern in 1921 applied to the probable train-miles on the applicant if the volume of traffic expected by applicant should move. Apparently this amount includes the cost of fuel, which applicant has estimated separately at $185,911.88.

Without going into more detail concerning expenses, from the record it seems probable that the proposed line would not, at least in the first few years of its operation, be able to meet its operating expenses and capital charges.

The record indicates that practically 80 per cent of the business of the proposed line would be Wenatchee station traffic, and that of the balance all but a small percentage would come from communities now served directly or indirectly by railroad. It further appears that the development of the territory along the Columbia River which the applicant would serve is dependent far more upon cheap water than upon additional rail transportation. The communities south of Wenatchee that would derive the most benefit from the proposed line could apparently be almost equally well served by the construction of less extensive facilities. The Priest Rapids project seems to promise much traffic and development, but the record contains no indication that steps will be taken in the near future looking toward its consummation. It therefore appears appropriate that determination of the question as now presented should be largely influenced by the situation at Wenatchee.

As the prosperity of the Wenatchee district is almost wholly dependant upon the successful marketing of its apple crop, the disrict requires to an unusual degree transportation facilities and
service of a very high order. For whatever reasons, it is clear that the facilities and service have not in the past years measured up to that standard with any marked degree of consistency, at times to the great embarrassment of the industry. This is not to say that the Great Northern has not, in general, done as well as other northwestern carriers. The service rendered the Wenatchee district in 1923 as disclosed by our records represents, on the whole, transportation as adequate as the shippers could reasonably ask. The outlook for the 1924 crop movement is also good. The arrangements made in 1923 by the Great Northern for a better refrigerator-car supply have been detailed above. The proposed line of railroad, though dependent for refrigerator equipment upon its connections, would bring to Wenatchee station and Malaga an additional service, and to the extent that it lightened the Great Northern traffic at those points would correspondingly benefit stations north and west of Wenatchee served only by the Great Northern.

The problems in convenience and necessity cases have been intensified by uncertainty as to how the law should be interpreted. Apparently the earnings in prospect for the applicant will be insufficient for some time to sustain the project as an independent enterprise. Ability to earn is not the sole test of public convenience and necessity, although always a factor to be given consideration. When such ability is shown to exist a strong presumption may arise that public need for the new facility exists. When not shown to exist it may frequently be concluded that such need is too slight to warrant the expenditure necessary for the proposed construction. When it is established, however, that a project will render important public service, and its sponsors are willing to assume the risk of loss in the expectation of ultimate gain either directly through the property or indirectly through benefits to themselves and to the shipping community, the requirements as to the public interest may be fully satisfied, although losses to investors seem more probable than gains. We are to consider what is best in order to foster, build, and make efficient transportation facilities as a whole in the interest of the greatest number. Where only the private aspect is involved, individuals are at liberty to take risks. So far as the public is concerned, the advantages of new or better service may be so great as to justify increasing the burden upon shippers generally by the amount necessary to sustain the facility. If it should prove later, however, that the line, because of competitive conditions, lack of business, or other circumstances, can not be operated profitably under fair divisions and fair rates, the burden of the loss would properly fall upon the investors and not upon the shipping public. Our approval of a new enterprise neither constitutes nor requires a finding that such enterprise will prove successful. Our responsibility is to determine the public interest involved in the construction of the line. The history of railway construction illustrates that prospective tonnage depending for its development upon transportation facilities, rather than tonnage immediately in view, has been the main justification for railway construction. Progress has involved risks. It is not to be presumed that the Congress contemplated discarding, as insufficient, conditions which in the past have furnished the warrant for a constructive policy in the upbuilding of the system of transportation. It is rather to be presumed that the Congress did not contemplate an interpretation of its enactment which, applied as a policy in the past, would have prevented the construction of many railway properties now serving the public interest in an important way. Prospective earnings or losses may properly be considered as one of the factors evidencing the public interest, but, taken alone, do not determine whether a particular enterprise is or is not required by public convenience and necessity.

The significance of the financial aspect may vary in different cases. Certainty of failure to earn may have effect different from uncertainty of earnings or as to the time when they are to be realized. A prospect for earnings not free from uncertainty may justify the granting of a certificate permitting the construction of a line, the subsequent abandonment of which may be authorized on demonstration of futility of the prospect. Cases must be determined by the particular facts presented regarding them, and it is not possible to state a rule applicable alike to all. Circumstances may warrant the drawing of final conclusions regarding the financial aspect before the issuance of a certificate authorizing construction, or, conversely, may justify deferring such consideration.

Important and growing industries on the line proposed are shown to require efficient transportation. Notwithstanding all that may be said favorable to the Great Northern and its present service, it has failed at times to meet demands made upon it. Advantages to shippers of an additional outlet for their product is apparent. The perishable nature of the apple crop and the conditions under which it is marketed render it desirable that transportation facilities of the highest order be available to shippers at Wenatchee and vicinity. The assurance of access to lines other than the Great Northern at the critical periods in the crop movement is a factor of prime importance to such shippers and clearly is in the public interest. It is probable that the competition afforded would stimulate the Great Northern to further improve its service. Competition, within reason, rather than monopoly, is in the public interest. It would seem that a more pronounced policy of cooperation and coordination upon the part of connecting carriers, designed to make their transportation facilities available to the greatest possible number of shippers, would prompt the construction and operation of the project by such carriers as a joint facility. Whether or not such carriers will benefit sufficiently by the construction of the line to be willing to take part in its construction or to assist those who now propose to build it, we conclude that public convenience and necessity require its construction.

Questions as to financing the proposed construction and the character of securities to be issued are not now before us. They will be considered when appropriate application is made under section 20a of the act.
Upon the facts presented we find that the present and future public convenience and necessity require the construction and operation by the applicant of the line of railroad in Chelan, Kittitas, and Benton Counties, Wash., described in the application.

We further find that the matters of record justify the granting of permission to retain excess earnings.

An appropriate certificate and order will be entered.

EASTMAN, Commissioner, concurring:

I agree that we should grant a certificate of public convenience and necessity to the applicant in this proceeding. Sooner or later a railroad will be constructed along the route proposed. It is a natural route for a north-and-south railroad, following, as it does, the course of the Columbia River and connecting the four great east-and-west railroads, namely, the Great Northern, the Milwaukee, the Northern Pacific, and the Union Pacific. The eventual construction of a hydroelectric plant at Priest Rapids is inevitable, and it is conceded by all that when such a plant is built the proposed line of railroad or one like it will be necessary. The question is whether public convenience and necessity require such a line of railroad at the present time.

I think it altogether unlikely that, if constructed, it will be able to earn interest on the investment for some considerable period of time. It may not even be able to earn operating expenses. At the same time I do not believe that the line, if built, will ever be abandoned. It might become insolvent and it might be sold to pay its debts, but I doubt that all of the connecting trunk lines would permit its operation to be discontinued. If, then, there are those in the Wenatchee district who are willing to face the certain risk of present construction because of indirect advantages which they might gain and if they are willing, as it is claimed that they are, to submit to such limitations as we may see fit to impose with respect to the character of the securities used in financing the venture, I see no reason why we should not grant the certificate. Without prejudice to any further evidence that may be presented if and when authority is sought to issue securities under section 20a of the act, I am of the opinion, upon the present record, that we ought to require the original construction of the line to be financed by the sale of stock. By such a requirement investment will as a practical matter be confined to those who appreciate the risk and are willing to face it. Furthermore, this railroad, if constructed, will need ample borrowing capacity in order to carryon through the development period.

In reaching the above conclusion I have been influenced somewhat by the fact that the Great Northern is unwilling to keep the Spokane gateway open at all times, and insists upon the right of exclusive service of the Wenatchee district, except in the event of shortage of cars. So much uncertainty attaches to the promise to open the gateway upon such a contingency that it would be of little value to the district or to the other lines.

AITCHISON, Commissioner, dissenting:

The majority opinion fairly and amply states the facts of record, but, in my view, draws therefrom a conclusion they do not warrant. I have little doubt that eventually, with the further development of the territory outlined in the majority report, and because of the needs of national defense, which, however, we have no direct means of meeting under the interstate commerce act, a railroad should be and will be constructed along the Columbia River substantially as located by the projectors of this line. But we are not considering that general question now; the immediate question is whether the application to construct a particular railroad, which has been described in much detail in the record, is or will be required by the public convenience and necessity. It is practically certain that the line as proposed could not for a considerable number of years meet its operating expenses and capital charges. In addition, the plan for financing construction is indefinite and of questionable soundness. For the evident purpose of keeping the construction and operation expense to a minimum, the plans submitted have been cut so that the plant and operating arrangements projected do not seem ample to carry the traffic, and particularly the peak traffic, which admittedly is the principal reason for the new railroad.

Though a demonstration that success would attend a projected railroad enterprise is not indispensable to the grant of a certificate authorizing construction, the prospective earnings are a consideration of weight in determining the relative public convenience and necessity involved. The likelihood of continued loss is cogent evidence that the public interest does not require the proposed facilities. A long-continued inability to meet expenses and fixed charges might well lead to impairment of service or complete failure to meet the requirements of the public through bankruptcy, and receivership or through actual abandonment of the line, with attendant losses to investors who might have placed some reliance upon our certificate. The greatest burden, in the event of failure, generally falls upon those who invest in homes, business enterprises, schools, and churches along the projected line. These people are likely to lose everything, while investors in an abandoned railroad lose only their investment in an enterprise which they knew to be speculative. But during the life-or-death struggle the expense of operation, including maintenance, must be met by somebody. If not met by the shippers over the projected line, it will fall, directly or indirectly, upon shippers over connecting lines, or else impair to that extent the ability of those connecting lines to serve their patrons. This burden should not be laid upon the public unless there is reasonable assurance that the public benefit to result from construction and operation of the projected line will at least offset the public burden. Such assurance is not given upon this record, nor is it to be found in exposition of general views, not shared by all of us, as to what matters may be considered seriously upon applications for certificates.

The majority opinion proceeds upon the theory that in the instant proceeding we need decide only the issue of public convenience and necessity, and may appropriately defer consideration of the financial plan until application is made to issue securities. Though such a course may be proper in some cases, in many others the financial plan is of primary importance in determining whether a certificate should be granted. Especially is this the case under conditions such as are here presented. The probability of the construction work being properly and successfully done depends upon the financial ability of the applicant. We have no means of assuring the execution of the project according to the plans submitted, and the fact of public convenience and necessity may rest upon the physical fitness of the proposed line for the purposes it is intended to serve. In my judgment the applicants have underestimated the cost of their project, and have overestimated its physical capacity to carry the great volume of traffic they count upon receiving, and which they regard as necessary to pay for their low estimate of operating costs. Further the financial plan furnishes a key to the motives for the application and a test of the faith of the promoters in the earning power of the line. Moreover, an outstanding certificate in the hands of persons unable to properly to carry out the project might while in force obstruct the public interest by preventing the issuance of a certificate covering practically the same route to others financially able to construct a more suitable and adequate railroad.

We should take no such narrow view of the statute as unduly to restrict private initiative or prevent development which the future public convenience will reasonably require. But when an applicant invokes our jurisdiction, and does not justify its project sufficient for the purposes, or as potentially sound, as far as the record indicates we have no alternative, and should dismiss the application. Such action, I may point out, in no wise precludes our subsequent consideration of the same general question and the grant of a certificate of convenience and necessity when it can be made to appear that those obstacles can be overcome.

CHAIRMAN HALL and COMMISSIONERS MEYER, ESCH, and LEWIS concur in these expressions of dissent.


Entered July 14, 1924
A hearing and investigation of the matters and things involved in this proceeding having been had, and the commission having, on the date hereof, made and filed a report containing its findings of fact and conclusions thereon, which said report is hereby referred to and made a part hereof:

It is hereby certified, That the present and future public convenience and necessity require the construction and operation by the Wenatchee Southern Railway Company of the line of railroad in Chelan, Kittitas, and Benton Counties, Wash., described in the application and report aforesaid: Provided, however, and this certificate is issued upon the express condition, that the construction of said line shall be commenced on or before January 1, 1925, and completed on or before December 31, 1926.

It is ordered, That the Wenatchee Southern Railway Company shall report to the commission in writing the commencement and the completion of such construction, within 15 days after such commencement or completion, respectively.

It is further ordered, That the Wenatchee Southern Railway Company be, and it is hereby, permitted to retain for a period expiring not later than 10 years from the date said line is completed and placed in operation not later than December 31, 1936, all of its earnings derived from the proposed new construction, in excess of the amount provided in section 15a of the interstate commerce act, for such disposition as it may lawfully make: Provided, however, and this permission is granted upon the express condition, that the construction of said line shall be completed on or before December 31, 1926.

It is further ordered, That the Wenatchee Southern Railway Company. when filing, schedules establishing rates and fares to and from points on said line, shall in such schedules refer to this certificate by title, date, and docket number.

And it is further ordered, That this certificate€ and order shall take effect and be in force from and after 30 days from the date hereof.

Saturday, August 23, 2008

The Wenatchee Southern

From “History of Wenatchee”

by John A Gellatly, 1958

During the years 1920 and 1921 the Wenatchee area was producing large crops of apples and the Great Northern Railway Company was having trouble in being able to supply sufficient refrigerator cars to promptly move the fruit to market. At that time, there were not enough cold storage plants available to house the fruit at this end of the line, making for a situation where it had to be shipped immediately to eastern points where storage was obtainable.

Conditions at certain times aroused grave concern for fear that heavy losses might result if more cars could not be had. This condition reached a point where a number of growers felt that if a connection could be made with the Milwaukee Railway at Beverly, some fifty miles below Wenatchee, that the competition which would result would insure or make certain our getting refrigerator cars as needed.

Sentiment for the new railway connecting reached a point where a company was incorporated and the active sale of stock followed. I never knew how much money was subscribed, but the new company did purchase considerable right of way for the proposed railway. This being quite a large undertaking for community of this size, progress towards an accomplishment naturally did not move very fast. The committee in charge headed by H.A. Saunders, a large fruit grower, got a little ahead of proper procedure, as a the newly organized company started spending money for right of way before permit had been issued by the ICC, a most important requirement. When an application was filed for a permit, a public hearing was arranged for by the officers of the ICC to be held in Tacoma, where the pros and cons could be heard. while the major portion of the people to be effected were enthusiastic, there were others who felt that instead of another railroad to be maintained, all we actually needed was more refrigerator cars, as the roadbed and the rails on the Great Northern could handle an unlimited number of cars if they had them. The Great Northern Company officials were able to convince the government officials that their company would use every human effort possible to get the necessary cars and that the whole situation would be resolved just as soon as this was done. In the end the permit was denied and the plans to build the new line had to be abandoned, resulting in considerable financial loss to the promoters and, of course, a great disappointment as well. Be it said to the credit of the Great Northern, however, there has never been since that time, much difficulty in getting all the cars necessary to move the crop as fast as it was ready for shipment. Additional cold storage warehouses at this end has materially helped out.


It is generally know that this section of the state has never had any railway service other that the Great Northern system. As the fruit production of the area reached large proportions, that company in certain seasons had difficulty in supplying the necessary cold storage fruit cars and, as this district did not have sufficient cold storage warehouses to properly care for this fruit, many growers became quite concerned about the matter. Several growers and businessmen under the belief that another rail outlet would assist in curing the situation with the result that on March 20, 1920, a new corporation named the Wenatchee Southern Railway Company was formed, the idea being to construct a railway line down along the Columbia River from Wenatchee to as far as Pasco. Such a line would make available the facilities of the Milwaukee, the Northern Pacific, and the Union Pacific Systems. It was understood, however, that the first big effort would be to build as far as the Milwaukee. The corporate papers included the names of Ed S. Russell, H.A. Saunders, Harry I. Shotwell, R.T. Burkey, L.D. Merritt, H.G. Bohlke, W.S. Gehr, L.L. Matthews, A.L. Morris, W.S. Batterman, A.N. Corbin, H.N. May, N.I. Neubauer, A.Z. Wells, W.T. Powell, T.L. Ross, T.H. Atkinson, Guy C. Browne, C.E. Chase, Conrad Rose and Wm. H. Little.

Officers for the new company were immediately elected and instructed to proceed as rapidly as possible in seeding finances with which to buy right-of-way and to do all other necessary operations to get the ball rolling for a new railroad into Wenatchee. Some funds were made available immediately and considerable right-of-way just south of Wenatchee was purchased.

These men were very conscientious in their belief that another railroad built into our valley would materially benefit the entire North Central Washington district. Before a new line could be built, it developed that the Interstate Commerce Commission would have to give its sanction. In an effort to obtain this approval, a hearing was held in Tacoma where witnesses in favor of the new line could present their reasons and where any other with contrary views could also be heard.

The ICC after hearing all the evidence presented from both sides decided that the new line was not really needed, provided the Great Northern Company would furnish more freezer cars, as the railroad tracks that company maintained were capable of hauling ten times the tonnage that could be produced in this area. This decision by the ICC obviously put an end to this well intended enterprise, and those who had invested money in it took a considerable loss as there were not enough assets to pay out the costs when the project was abandoned.

Goodbye To Some Old Friends

The “Grant County Journal,” Ephrata, WA

May 6, 1971

Some of the grand old names in Ephrata railroading bid goodbye here last Friday and rolled out of town, east and west, into oblivion. Ephrata said farewell to the Empire Builder and the Western Star as they joined the legions of lost trains.

The trains were replaced on Saturday by “Amtrak” trains, the federal governments attempt to rescue the railroad passenger business that was floundering in financial troubles. Part of the Amtrak plans were to eliminate huge areas of the United States from passenger service by railroads at all, and the route from Spokane via Ephrata to Seattle was one of the routes that heard the death knell.

Some leading political figures are already calling Amtrak by a new name—Half Track—and this feeling was echoed in many parts of the nation as attempts were made to sidetrack the Amtrak schedule last weekend and to maintain the regular passenger service for at least another six months. More efforts are expected to try to improve service to areas left stranded.

For Ephrata, loss of railroad passenger service came nearly 100 years after train service came through here, and nearly 80 years after the first passenger service came to the community.

Pioneers in this area have recalled as best they could from memory tat the first train service here was in 1876, followed by passenger service to Ephrata from the east in about 1892 or 1893, and passenger service on farther west to Everett in 1896.

Under the new Amtrak schedule, there will be only one passenger train east and one west each day, and the route selected was fro Spokane down through the Tri-Cities area, Yakima and on to the Coast.

The Empire Builder, the most popular of the “name” trains that have disappeared began service in 1947 but it was really a new name for the old Oriental Limited of the Great Northern that had been a famous east-west train since 1929. Much of the rolling stock the Burlington Northern will operate for Amtrak will be the former Empire Builder cars.

But for Ephrata and the surrounding area…Amtrak will never hold the adventure and excitement for the youngsters, and it will never replace the memory for the oldsters, that was offered by the Western Star and the Empire Builder!

Gus McTigue, the number one engineer for the old Great Northern, was at the throttle of #9854 Western Star on its last trip going west.

Ted Brown, who has a mail service contract for many years at the Ephrata depot, handles one of his last loads of mail at the depot.

Going west Friday, passengers load on the final Western Star Heading out of Ephrata for Seattle.

A final farewell was sounded by the whistle of the Empire Builder engine #9855 on its last trip to Ephrata Friday night before departing east.

A young passenger, one of the last to get off the Empire Builder, steps down at the Ephrata depot on Friday night.

This is progress? An empty Ephrata depot stands mute witness to the blow dealt this area by the termination of passenger train service.