The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1908-09-04
STRIKES A SNAC.
State at Disadvantage in
Freight Hearing.
Evident That l.. T. e s. w. Is
Losing Proposition.
ON ITS OWN BOTTOM.
Showing Made That 1t Is an In
dependent Line.
Really Is Auxiliary to Z. p. and
Santa Fe.

That the state of Kansas is at a
great disadvantage in the first round
of the struggle for reduced freight
rates on Kansas railways has become
evident at the taking of testimony in
the Leavenworth & Topeka railway
case before Special Master T. T. Ha-
zen.
The Leavenworth & Topeka is oper-
ated as an independent railway, and
hence is able to prove, as almost any
small line could, that its own freight
business is improbable. But from a
legal standpoint, the L. & T. is not a
branch line. 1t stands on its own bot
tom.
AS matter of fact, however, the
Leavenworth & Topeka was bought at
a receivers sale by Z. Wilder, treasur-
er of the Santa Fe railway, for $780,
900. Its stock, except one share for
each director, is all owned by the Santa
Fe and Union Pacific railways. The
directors and officers of the L. & T.
are all officials of either the Santa Fe
or Union Pacific. Its officers probably
receive merely nominal salaries aside
from what is paid them by the Santa
Fe and Union Pacific. In short the
L. & T., as an independent" railway,
is a polite fiction of corporate law. 1t
is really a branch line of the Santa Fe
and Union Pacific, owned Jointly.
On it's independent" basis the L. &
T. has never paid operating expenses,
and year after year the Santa Fe and
Union Pacific have each purchased
enough bonds and notes from this
paper company to supply it with funds
to pay its deficits. Altogether the
Santa Fe and Union Pacific have paid
$175,000 into the treasury of the L. &
T. to make up deficits in operating ex-
penses.
1t will be very hard for the state to
prove that a railway which is losing
money every year, and which is $175,-
900 in debt should be compelled to re-
duce its freight rates, in accordance
with the new freight schedule by the
state board of railroad commissioners.
OF course if the state could find some
way of proving that the Leavenworth
& Topeka is really branch line of the
Santa Fe and Union Pacific, operated
as an Independent railway merely to
serve some obscure object of the own
ers it would put the line on an en-
tireIy different basis. 1t would then
go in simply as a part of the Santa
Fe and Union Pacific. its losses would
be absorbed" as are the losses of
many other branch lines, and it would
stand or fail in the freight rate ques-
tion with the whole railway system of
which it was a part.
1t was shown in the cross examina-
ton of ]. R. koontz, general freight
agent of the Santa Fe. that the
Leavenworth & Topeka is operated by
the Santa Fe and is treated in its
tariffs as part of the Santa Fe sys-
tenn and it is contended by the state
that it will be necessary to have an
examination of the entire business of
the Santa Fe company to determine
whether or not the rates proposed by
the commission are confiscatory and
that the state shall not be limited in
establishing reasonable rates for the
railroads of the state by the necessities
of a bankrupt road which is an in
cumbrance upon the Santa Fe. This
is the meat of the whole fight up to
the present time. The state wants to
show conclusively that the Leaven-
worth & Topeka is bankrupt and that
the reasonableness of the rates pro-
posed by the board should not be de-
termined with the conditions of this
road as a basis. What would be true
of the effect of the proposed rates on
this road would not be true of the big
roads of the state.
The principal witnesses examined
on behalf of the Leavenworth & To-
peka Yesterday were ]. R. Koontz and
E l.. Copeland Mr.. Koontz is gen.
eral freight agent of the Santa Fe-
also of the Leavenworth & Topeka
Mr. Copeland is treasurer of the Santa
Fe-also cf the Leavenworth & To-
peka. A. A. Hurd, who is appearing
for the Leavenworth & Topeka as at
torney is also special counsel for the
Santa Fe.
The taking of testimony was not
completed yesterday, and is still in
progress this afternoon. 1t may take
several days to complete the evidence
for the railway company.