REPORT:

FIRST HEARING

HOOSAC TUNNEL CONSOLIDATION,

BEFORE THE

COMMITTEE ON KAILWAYS.

January 29, 1873.

BOSTON WRIGHT & POTTER, STATE PRINTERS,

No. 19 Province Street.

1873. Commotujoealtt) of JttasBcu^nMts-

House of Representatives, January 30, 1873.

Ordered, That the report of each daily hearing before the Committee on Railways, upon matters relating to the consol- idation of railroad lines leading from Boston to the Hoosac Tunnel, be printed for the use of the legislature under the direction of said committee.

Sent up for concurrence.

Chas. H. Taylor, Clerk.

In Senate, Jan. 31, 1873.

Concurred. S. N. Gifford, Clerk. REPORT.

The hearing before the Railway Committee, in regard to the consolidation of the Hoosac Tunnel lines of railroads, was commenced on Wednesday morning, Jan. 29th, 1873, on the petition of the Vermont and Massachusetts Railroad Company for a bill to consolidate the Fitchburg, Vermont and Massa- chusetts, Troy and Greenfield and Troy and Boston Railroad Companies into one corporation to be called the Hoosac Tun- nel Railroad Company. George O. Shattuck, Esq., appeared for the Massachusetts Central Railroad, Hon. A. W. Rice for the Boston, Barre and Gardner, Mr. Mills for the Williamstown and Hancock Rail- road, John B. Goodrich for the Fitchburg Railroad, Samuel W. Bates, Esq., and Judge Thomas for the Vermont and Massachusetts road, and ex-Attorney-General Charles Allen for the Troy and Boston road. The hearing was held in the Green Room, and there were a large number of prominent railroad men present. In opening the case for the petitioners Judge Thomas said he represented what had been supposed to be from the begin- ning the established policy of the Commonwealth in the con- struction of the Tunnel road, and that was the opening of a new, distinct and independent railway to the West. The only new question which occurred to him was the consolidation of these roads, and this had perhaps been settled by the railroad experience of the last few years. There were two questions that came up in settling the matter ; first, whether, in view of the property which the Commonwealth has in the

Tunnel and in the roads connecting with it, this measure were a wise one, in view of a wise and prudential use of the prop-

erty ; and secondly, whether it is a wise use of the property with reference to the larger interests which the people of the 4-6-m Commonwealth have in this enterprise. He wished to suggest that this question be heard as one question, and if any one had an interest which was opposed to this movement that it should be heard now ; that all parties who are opposed to the general policy of the consolidation of this line should now be heard, whether it be the Boston and Lowell, the Fitchburg or the Commonwealth, that the petitioners may have an oppor- tunity to reply to all objections that may be made. The Chairman said the Committee had decided to give the usual hearing upon such matters, and of course in this case they would have the privilege of the closing argument. Mr. Bates said they did not propose to put in any witnesses unless they were needed, but would like to have the case left open that they might have an opportunity to put in rebuttal testimony if it were needed.

THE OPENING ARGUMENT.

Mr. Allen, counsel for the Troy and Boston road, said if it were agreeable he would make a little opening statement in support of the petition of the Vermont and Massachusetts Company, for the consolidation of the roads from Boston to Troy. Heretofore and for many years it had been the custom of those who had felt an interest in the establishment of a new through line to the West, to appear before the legislative committees of Massachusetts, for the purpose of persuading the legislature and the public that the Tunnel was worth

building ; and for that purpose, for year after year, with great variety of detail and with a persistency well known of all men

in Massachusetts, they had laid before the legislature and its committees, statistics going to show the advantages that would come from the establishment of this road, and showing the distance that would be saved between here and the West, and the differences in grade between this road and others running

from the West to the East. To-day that argument is settled.

The Tunnel is now virtually an established fact ; unless every reasonable prediction fails, the early autumn will witness the complete penetration of the mountain, and next year will see the line between Boston and Troy in full operation. The question which arises now, to demand the attention of

Massachusetts, is what shall be done with the line which is so soon to be finished ? The present situation of affairs is that the line which is to be opened to Troy, within the next eighteen months, from Boston, is owned by four distinct com- Massachusetts, panies, viz. : the Fitchburg, Vermont and Troy and Greenfield, which embraces the Hoosac Tunnel and is the property of the Commonwealth, and the Troy and Bos- ton, running from the western line of the State to Troy, a distance of 35 miles. These four leading interests now con- trol the management of this great line of roads. What is to be done? It has always been the case, since the first idea was enter- tained of creating the Troy and Greenfield road, which includes the Hoosac Tunnel, that the line of road between Boston and Troy should ultimately be managed and operated as one line. He did not say that it was the original contemplation that they should be consolidated into one corporation, because perhaps the details of the methods on which a uniformity of action should be brought about had not been distinctly arrived

at. But it was from the outset, and has been until the pres- ent day, the general expectation that this line of railroad should be operated as one, and that there should be the benefit

of a harmonious management. This is shown by all the official and public action taken by the Commonwealth and by the roads composing the line. In the first place, the original charter of the Troy and Greenfield road, which was passed in 1848, chapter 307 in section 8, provides that the corpora- tion may contract with the owners of any contiguous roads, or make arrangements for the letting or hiring of any other con- tiguous roads which compose a part of the railroad line between the cities of Boston and Troy, of which they are a part. So that as early as the first grant of the charter there was an express recognition that it was chartered with a view that it should form a part of the continuous line of railroad between these points, which should be operated in harmonious action. Then, in the year 1856, the Troy and Boston road took a lease of the Southern Vermont Eailroad, which has been pub- lished among the documents of the State. That lease provides that the parties to the contract shall use their/ influence to bring about a proper and equitable consolidation of the Troy and Boston, Southern Vermont, Troy and Greenfield, Ver- mont and Massachusetts and Fitchburg roads. This was the

first formal pledge of these companies to labor distinctively for the object which is now presented to the people of Massa- chusetts for their consideration. In redemption of this pledge, the Troy and Boston Kailroad have always looked to that end,

and is here to-day to lend its influence and surrender its prop- erty in order that the road may become a part of such a con- solidated line. In the following year, 1857, there was an agreement made and entered into between these four roads, to seek to bring about the consolidation of their various inter-

ests. The agreement was dated July 1, and looked to the operation of all the roads as one line, so far as that there shall be a continuous line between Troy and Boston. It also pro- vides that when the said tunnel is done, and the Troy and Greenfield road is finished, connecting with the Vermont and Massachusetts, that they shall maintain permanent joint tariff on passengers and freights, at such fair rates as will best com- mand and control the business of the country which can be attracted. In 1863, after the report of the Brooks Commission, appointed by Gov. Andrew to look into the management of these roads, an agreement was made that in consideration of the expectation that the Commonwealth would go on and com- plete the tunnel, these several roads agreed to pay to the Commonwealth, after the time when the tunnel was completed, twenty per cent, of their gross receipts from passengers or freight coming over any part of the Troy and Greenfield road, until the receipts and revenues of the State from their road should amount to six per cent, upon a certain sum—the cost. Mr. Chisholm.—Was not that an inducement to the State to go on and build the road ?

it Mr. Allen. —Certainly was ; but Gov. Andrew congratu- lated the legislature that the committee was fortunate enough to secure it.

With regard to some matters a little more particular. . The Troy and Boston road was laid out and constructed with ref- erence to forming a portion of the through line, at no matter what the expense was to be. It is constructed with the fewest possible curves and at the least possible grade ; and in doing —

so, several important and flourishing villages have been avoided. Whenever the extension of the line is carried out to the West, there will be no changes necessary. There is also another fact connected with the financial management of this road. They have taken a perpetual lease of the Southern Vermont road, for which they pay $12,000 yearly, which comes to the Commonwealth, and has done so since 1862. Not only that, but at the time before the State undertook the construction of

this road, and when it was deemed desirable to obtain the subscription of towns in Western Massachusetts, through which the road would pass, the State authorized them to make subscriptions to the tunnel road and take such guarantees as might be obtained. The Troy and Boston, in no less than five instances, has guaranteed the payment of the interest on

their loans of these towns to the Troy and Greenfield. In all, they have become responsible for $280,000 in this plan, of

which $200,000 has come to the Commonwealth. This is the way in which all these parties stand committed to-day. But there may be another higher interest than that of these

several corporations, and that is the interest of the Common- wealth of Massachusetts as a Commonwealth, and the public or general interest of the people. The interest of the Com- monwealth must be looked after and protected. The money

it has paid for the Tunnel must be cared for, and that is a direct interest which should be made valuable to the Com- monwealth. The question should also be satisfied as to the wisest way to provide for the future development of the public interest. This road, and the Vermont and Massachusetts, adhere to the original idea that the most advantageous thing for the State is the consolidation of all the interests from Boston to Troy into one corporation, providing fairly for the interests of the State, and having the State become a member of the corporation on such terms as would be deemed advan- tageous and proper. Accordingly, a bill has been drawn, prepared by the Troy and Boston and Vermont and Massa- chusetts Companies, and accepted by both. The following is the bill : ;

An Act to provide for the consolidation of the Fitchburg, Vermont and Massachusetts, and Troy and Boston Railroads.

Be it enacted, §c, as follows :

Sect. 1. The Fitchburg Railroad Company, the Vermont and Massachusetts Railroad Company, the Commonwealth of Massachu- setts by virtue of its interest in the Troy and Greenfield Railroad and Hoosac Tunnel and Southern Vermont Railroad, and the Troy and Boston Railroad Company, or so many of the said railroads as may vote to do so, in connection with the Commonwealth, are hereby authorized to consolidate their several railroad interests and to form

one railroad corporation in the manner following : The said railroad companies, or any two of them, at meetings duly called to consider the question of consolidation, ma}', by vote of a majority in interest of the stockholders present and voting at such meetings, at any time within four months from the passage of this act, agree to consolidate and unite the said companies with each other and with the Commonwealth, subject to the provisions of this act, in the manner and upon terms to be fixed by three commission- ers to be appointed by the supreme judicial court, unless such man- ner and terms shall be mutually agreed upon by the said companies and by the governor and council as hereinafter provided ; and the governor and council at any time within five months from the pas- sage of this act may agree to consolidate and unite the said railroad interests of the Commonwealth with the said companies, or with any two of them that may have voted for such consolidation and union,

upon the same terms ; and such votes so passed by the governor and council and by said railroad companies, or an}^ two of said railroad companies, shall be effectual to consolidate and unite into one cor- poration all of the said interests in respect to which such votes shall have been passed, subject however to the provisions of this act. If within three months from the passing of such vote by the gov- ernor and council, the terms of such consolidation shall not have been mutually agreed upon by the companies voting for such con- solidation and by the governor and council, then either of said com- panies or the governor and council may petition the supreme judicial court for the appointment of three commissioners, to fix the terms of such consolidation, subject however to the provisions of this act and upon such application and due notice, the court shall appoint such commissioners, the award of whom or a majority of whom,

' being made to and confirmed by said court, shall be final ; and the court shall enter such orders or decrees as may be found needful to carry such award into effect.

Said consolidated corporation shall have all the powers and privi- ;

9 leges, and be subject to all the duties and liabilities set forth in chapter sixty-three of the General Statutes, and in all general laws that now are or may hereafter be in force relating to railroad corpo- rations. Sect. 2. If the Fitchburg Railroad Company neglects or refuses to pass said vote to unite and consolidate the said companies with each other and with the Commonwealth, as aforesaid, and a consoli- dated corporation shall be formed by the other companies above named and the Commonwealth, such consolidated corporation is hereb}7 authorized and required to establish, on or near tide-water in or near the city of Boston, before the first day of May, in the year of our Lord eighteen hundred and seventy-seven, a terminal depot for the accommodation of its merchandise and other traffic, with

power to take the land necessary therefor ; and it is further author- ized to extend its railroad from a convenient point at or near the present terminus of the line of the Vermont and Massachusetts Rail- road in Fitchburg, by some direct and feasible route, to said termi- nal depot ; and for these purposes shall have all the powers and privileges, and be subject to all the duties, restrictions and liabili- ties set forth in the sixty-third chapter of the General Statutes, and in all general laws that now are or hereafter may be in force relating to railroad corporations : provided, however, that said extension road shall be located within two years from the date of consolidation, and constructed within four years after date of consolidation. Sect. 3. In place of locating and constructing a new line of rail- road from Fitchburg to Boston, as provided in the preceding section, said corporation may within two years purchase the road, property and franchise, or so much of the roadfand franchise of any railroad company as may be necessary and convenient to form with its own road a first-class continuous line of railroad from Troj^-to Boston or said corporation may unite and consolidate its stock with the stock of such company ; and any such companj^ may within two years sell a portion of its road and franchise, or the whole of its road, property and franchise to, or unite and consolidate its stock with the stock of said consolidated corporation, upon such terms and conditions as may be agreed upon by a majority in interest of the stockholders of such company present and voting at a meeting duly called for that purpose, and by the directors of said consolidated corporation appointed as hereinafter provided, and approved by the governor and council.

Sect. 4. It shall be the duty of the Commonwealth, at its own expense, to complete the Hoosac Tunnel, and lay a track through the same ready for use, substantially as provided in the contract now existing between the Commonwealth and the Messrs. Shanly ; 10

and also to lay and finish the Troy and Greenfield Railroad west of the Hoosac Tunnel, so that the same shall be fitted for the passage of through trains. Sect. 5. The amount of the capital stock of the corporation

herelyy authorized, msij be fixed b}^ the companies voting for such consolidation, and by the governor and council, not, however, ex-

T ceeding twent} -five millions of dollars ; and such portion thereof as majr be agreed upon may be set apart for the benefit of such consoli- dated corporation, and sold at auction as now provided by law, in

case of an increase of the capital stock of railroad corporations ; or bonds to such amount as may be agreed upon b}T said companies and by the governor and council, may be issued by such consoli- dated corporation, and convertible into stock of said consolidated

T corporation, at an} time within ten years ; and in case of the issue of bonds, the whole amount of capital stock and bonds shall not exceed twenty-five millions of dollars.

Sect. 6. There shall be a board of directors of the said consolidated corporation, who, until after the completion of the Hoosac Tunnel, and the election of directors thereafter, as provided for in section nine, shall be appointed as follows : The governor and council shall appoint four, one of whom shall hold office for one }^ear, one for two T for three years, for } ears, one and one four years ; and the times when said terms expire shall be in the month of January ; and as often as a vacancj^ shall occur from expiration of a term of office, or other cause, the same may be filled by the general court. And the directors of each of the railroad companies which shall have voted for consolidation, shall annually appoint three members of their respective boards of directors to act as directors ^of the con- solidated corporation, during the term for which the}r have been chosen by said companies, and until their successors are chosen.

Sect. 7. After the appointment of a board of directors of said consolidated corporation, as provided in the preceding section, all alterations in the line of the railroad, and all permanent improve- ments or additions, except ordinary or necessary repairs or additions, shall be made with the consent and under the direction of said board ; and all such alterations, improvements and additions so made shall be deemed to be for the benefit and at the expense of said consolidated corporation ; and the cost thereof, with interest, if paid in the first instance by either of said corporations now ex- isting, or by the Commonwealth, shall be chargeable to and assumed by said consolidated corporation, after its full and final organiza- tion, as herein provided. And the determination of said board as to the alterations, im- provements and additions which shall be deemed to be for the ben- 11

efil and at the expense of said consolidated corporation, and as to the cost thereof which shall be chargeable to and assumed by the same, shall be final. Sect. 8. The consolidation herein provided for shall not affect the running of trains, or the conducting of the business of said several railroad companies until after the completion of the Hoosac Tunnel and track through the same, and of the railroad west of the tunnel, as provided in section four, and until the holding of the first meeting of said consolidated corporation after such completion, and

the election of directors as provided in section nine ; but until then each of the said several railroad companies shall manage and con- duct its own business as at present, keeping up its road and equip- ment however to such a standard as shall be specified by the terms of consolidation agreed upon, or by the award of the commissioners. Sect. 9. After the completion of the Hoosac Tunnel and track through the same, and of the railroad from the west end of the tun- nel to North Adams, as provided in section four, the board of direc- tors of said consolidated corporation shall call a meeting of said corporation, to be held in the city of Boston, and shall give ten days' notice of the time and place of such meeting hj publication in two newspapers in the city of Boston, one in each of the towns of Fitchburg, Greenfield and Adams, and two in the city of Troy, in the state of New York ; and at said meeting persons holding stock in either of said railroad companies now existing, which shall have voted for such consolidation, shall be entitled to vote in like manner as they would have been had these railroad companies been separately convened, and shall jointly choose the same number of directors allowed for all of said railroad companies in section six. Sect. 10. Upon the election of directors as provided in the pre- ceding section, the consolidated corporation shall have, hold and possess, and enjoy all the estate and interest of the Commonwealth in the Troy and Greenfield Railroad and Hoosac Tunnel and South- ern Vermont Railroad, and all the property, real or personal, of the

Commonwealth held, used or enjoyed in connection therewith ; and all the powers, privileges, rights, franchises, propertj^, claims, de- mands and estates which at the time of such union may be held and enjoyed by either of the said existing railroad companies, which shall have voted for consolidation, and be subject to all the duties, restrictions, obligations, debts and liabilities to which, at the time

of the union, either is subject in severalty ; and all suits at law or in equit}^, and all proceedings before any tribunal which may be pending, to which either of said railroad companies shall be a party, may be prosecuted and defended by the corporation hereby author- ized in the same name, in like manner and with the same effect as 12

might have been done had such union not been formed. All claims, contracts, rights and causes of action, of or against either of said railroad companies at law or in equity, may be enforced by suit or action, to be commenced or prosecuted by or against the corporation formed as aforesaid. And the said existing railroad companies shall continue corpora- tions for the purpose of prosecuting or defending any suit or pro- ceeding at law or in equity, or otherwise, now pending, or which may hereafter be brought by or against either of them out of this Commonwealth. Sect. 11. Each of the said existing railroad companies which shall have voted for consolidation shall also continue a separate cor- poration for the purpose of perfecting such union, and of doing all such acts and things as are herein provided for or contemplated to

be done by them separately ; and after the election of directors, as

provided in section nine, shall execute all such transfers, assign- ments and conveyances as said consolidated corporation may deem necessary or expedient to vest in itself any property, estates, con- tracts, rights or claims, if any there be, which do not vest in it by virtue or authorit}' of this act. Sect. 12. In fixing the terms of the consolidation and union authorized by this act, whether the same is done by agreement or by a board of commissioners, the value of the several interests consoli- dated, and the amount of capital stock which shall be apportioned to represent each of said interests, shall be fixed with reference to the time when the election of directors, as provided for in section nine, can first be had ; and if such apportionment of stock cannot otherwise be conveniently and justly made, then a sum in money may be agreed upon or awarded to be paid out of the funds of said consolidated corporation to either of the original parties composing the same (and in such case the same may be distributed among the stockholders of the railroad company or companies receiving the same), or by either of said original parties to said consolidated cor- poration. Sect. 13. The corporation formed as aforesaid shall be called the Hoosac Tunnel Railroad Company, and shall have power to take and hold additional lands, necessary for the enlargement of its depot accommodations, or for straightening its line, compensation therefor to be determined by law. Sect. 14. The time and place of the annual meeting of the con- solidated corporation authorized by this act shall be fixed by the by- laws. The number of directors shall not exceed thirteen, of whom four shall be appointed in behalf of the state in the manner provided in section six. 13

Sect. 15. The said consolidated corporation is also authorized to purchase the railroad property and franchise of the Cheshire Rail- road, at any time within two years from the passage of this act, upon terms to be agreed upon by a vote of a majority in interest of the stockholders of said Cheshire Railroad present and voting at a meeting duly called for that purpose, and by the directors of said consolidated corporation, and approved by the governor and coun- purchase, to issue stock or bonds in cil ; and, in case of such pay- ment therefor, and to increase the capital stock to the amount of such purchase : provided, however, that the consent of the legislature of New Hampshire is first obtained to such purchase. Sect. 16. The Vermont and Massachusetts Railroad Company is authorized to sell and convey that portion of its franchise and rail- road from Miller's Falls to Brattleboro', upon terms to be agreed upon by a vote of a majority in interest of the stockholders of said company, present and voting at a meeting duly called for that pur- pose. And any corporation established under the laws of this Com- monwealth is authorized to purchase the same, upon terms to be agreed upon by a similar vote. Sect. 17. The said consolidated corporation shall not receive from passengers or freight, to and from other connecting railroads, greater rates for passing through the tunnel than in proportion to the extra costs of the tunnel over and above ordinary railroad con- struction, and in case of any disagreement about such rates, the governor and council shall from time to rime fix and revise the same. Sect. 18. This act shall take effect upon its passage.

A Few Questions. Mr. Codman. —Do you mean that there must be a con- solidation.

Mr. Allen.—No, sir ; it is assumed that at least two of the roads will agree, and if they do agree they are subject to the decision of the governor and council. Mr. Fairbanks. —If the Vermont and Massachusetts were to refuse, might not the Troy and Boston and the Fitchburg unite under this bill, and still not be contiguous roads ? Mr. Allen. —That would probably be taken care of by the governor and council. If there is any objection to that point, there is no objection to a change. Mr. Barker. —In the 5th section there is a provision that $5,000,000 of the capital stock shall be set aside for the benefit of the new corporation. 14

Mr. Allen. —It means that we shall probably need it for additional equipment and other necessary expenses that will attend the operation of a through line. With regard to this proposition of directors, it is not to be taken as a show of the relative value, of the State's property in this contract, but simply to give the fact that we want to treat the State liberally

Mr. Barker.—Is it intended to give the sinking fund of the

State to that company ? Mr. Allen.—No sir. I should not think the section would carry the sinking fund. Mr. Fairbanks.—How are the rates of fare to be regulated over this line. It will cost over a million a mile? Mr. Allen. —I suppose that will be allowed for in the regu- lar tariff or fixed by the Commonwealth. Mr. Chisholm. —What is the necessity of this section about the Cheshire?

Mr. Allen. —I don't know that it is necessary. It is a matter connected with the Vermont and Massachusetts, and I will leave it for them to explain.

Remarks of Mr. Bates.

Mr. Bates, the associate counsel for the Vermont and

Massachusetts Railroad, said : Before railroads were known as the best means of transportation of passengers and freight the importance of connecting Hudson River with the Atlantic Ocean was recognized, and there were surveys made for a caual which should meet this need. Three routes, and only three, were found that were considered practical, and there have never been but these three found practical for railroads.

One of these is substantially occupied by the Boston, Hart- ford and Erie by way of Hartford and Fishkill, N. Y. ; the second is occupied by the Boston and Albany, running through Massachusetts to Albany, N. Y. ; and the third is the one which is represented in this bill, going through Hoosac Mountain and connecting at Troy. Before anything definite was done, Stevenson's locomotive proved successful beyond the expectations of every one but himself, and railroads were made to take the place of water transportation. 15

But these routes had been surveyed, and the question came up as to which of these routes should be used. It was thought that the one that went through Connecticut would benefit Connecticut more than it would Massachusetts, and it would take too long to tunnel the mountain. It resulted in the building of the Boston and Albany road, and it was built almost entirely by the State. For though it turns out that the State is not as large a stockholder as other parties, still it will be found that not a shovel went into the ground until the state aid was first secured ; and the State was really the party that built the road. But after that was started the other routes were not given up and a start was made towards Hartford and Fishkill. In the same manner the Fitchburg started the other way towards Hoosac Tunnel, and these roads have from time to time been carried along with the idea of carrying out the original plan of a through road to the West. Since then, through the energy and enterprise and money almost entirely of Boston men, another road has been established, little of it in Massachusetts, and that is the road that goes to Ogdensburg. Now the Tunnel is nearly com- pleted and the State has substantially aided all these three enterprises—the Tunnel road to the amount of about $12,- 000,000—and it has all been done with the idea of a through line to the West for the benefit of the State of Massachusetts and to make the State hold its own in comparison with the other States in the Union. Now, it has always been the idea that these four roads should always be kept separate, and no idea was ever brought out to do anything differently till within a year. We want them to be competing roads, for if they were put under one management where would be the advantage of competition? Nothing could be done cheaper than before. We ask, therefore, that this be made an inde- pendent through line. A map was then produced showing the position of the road, and the possible relation of the Cheshire to the Vermont and Massachusetts. The simplifications which were to be made at several places were pointed out, and the distances given. By this road, the distance from Boston to Troy will be 190 miles ; but as the line will be changed somewhat, to extend to Saratoga and Oswego, to Johnsonville, which is compara- .

16 tively on a line with Troy, the distance will be 174 miles.

The distance from Boston to Albany is 201 miles. Mr. Bates said he did not suppose it would be necessary to make any argument in favor of consolidation. The consolidation of the Boston and Albany had been of such benefit he thought it would warrant another experiment. The consolidation of two competing roads was of course out of the question.

The hearing was then adjourned till Thursday morning at half-past ten, when Mr. Bates would be ready to introduce evidence