"Tap Line Case" Summary of Red River & Gulf Railroad  
  Abstracted from "Tap Line Case", published in Decisions of the Interstate Commerce Commission, 23 I.C.C. 277, 23 I.C.C. 549, and in Decisions of the United States Supreme Court, 234 U.S. 1.  

RED RIVER & GULF RAILROAD. The Red River & Gulf Railroad Company was incorporated in April, 1905, and its capital stock, amounting to $101,000, was delivered to the Crowell & Spencer Lumber Company and distributed by the latter as a dividend to its stockholders. The lumber company constructed the track and deeded the property to the railroad corporation. The two companies are, and have been from their inception, identical in interest, and they have the same officers.

The tap line connects with the Iron Mountain at Long Leaf, La., and with the Rock Island, Texas & Pacific and Southern Pacific at LeCompte, the track between those points being about 13 miles in length. The timber has all been cut away along the main line; but the lumber company has an unincorporated track about 4 miles in length, connecting with the tap line and running into the standing timber. The equipment of the tap line consists of 1 locomotive, a combination passenger and freight car, and 3 flat cars. The lumber company itself owns and operates 3 locomotives and about 50 logging cars.

The mill of the lumber company is at Long Leaf, within a quarter of a mile of the tracks of the Iron Mountain. The lumber company loads the logs on its cars in the woods, and with its engines- hauls them over the unincorporated tracks and thence over the incorporated tap line to the mill under a trackage privilege, for which it pays the tap line 25 cents per 1,000 feet, log scale. In other words, the logs are moved to the mill precisely in the manner that they were before the incorporation of the tap line, with the exception that the lumber company goes through the form of paying a trackage charge. Before the incorporation practically all the lumber moved over the Iron Mountain and no divisions were paid. But at the time of the hearing the bulk of the lumber moved over the tap line to the Rock Island, a distance of over 12 miles, the divisions paid by that company ranging from 2-1/2 cents to 4-1/2 cents per 100 pounds. The allowance of the Iron Mountain is uniformly 3 cents, while the Southern Pacific pays 3 and 4 cents per 100 pounds. The Texas & Pacific grants no divisions.

There is an independent mill on the tap line about 5 miles from LeCompte, with a capacity of about 40,000 feet per day. It hauls its logs to the mill by wagon. The lumber traffic of the tap line for the year 1910 amounted to 37,820 tons, with 1,363 tons of other freight. The revenue from the freight was $29,576.56, in addition to which the lumber company paid $5,191.36 for trackage rights for its log trains, and the Rock Island paid $6,666.75 for the privilege of running trains loaded with gravel over a portion of the tap line. The Red River & Gulf runs one train daily in each direction, on which passengers are carried; and its revenues from passengers amounted to $1,213.40 for the year 1910. These figures are taken from the annual reports to the Commission, which show an accumulated surplus on June 30, 1910, of $6,865.74, after the payment of a 40 per cent dividend during that year, amounting to $40,400. In the year 1907 it paid a 15 per cent dividend, with 40 per cent in 1908, and 20 per cent in 1909, making a total of $116,150 distributed in four years to its stockholders, on a capitalization of $101,000.

The allowances paid here are clearly excessive and amount to a re-bate to the lumber company. The allowance by the Iron Mountain to the tap line for switching the product of the mill to its rails may not lawfully exceed $2 a car; and we fix the division out of the rates that may lawfully be made by the Rock Island and other trunk lines on the products- of the mill of the controlling company at Long Leaf at 2 cents per 100 pounds as a maximum.

Text and images were digitized and proofread from the original source documents by Murry Hammond. Contact Murry for all corrections, additions, and contributions of new material.