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Wikipedia:WikiProject Trains/ICC valuations/Elgin, Joliet and Eastern Railway

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Interstate Commerce Commission, Valuation Reports, Volume 84

Elgin, Joliet and Eastern Railway

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Location and General Description of Carrier

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The Elgin operates all the properties that are the subject of this proceeding. The system forms a belt line around the city of Chicago, known as the outer belt, at a radius of approximately 30 miles from the center of the city. The northern terminus of the Elgin is at Waukegan, Ill., from which point its line extends southwest and south through the city of Joliet, Ill., and from that point east through Chicago Heights, Ill., to the Indiana State line at Dyer, Ind., and thence northeast to its terminus at Porter, Ind. One of its lines extends from Griffith, Ind., to Cavanaugh, Ind., at which point it connects with the Eastern. The line of the latter extends from Cavanaugh, Ind., to Gary, Ind.; and thence northwest along the shore of Lake Michigan through Indiana Harbor, Ind., and Whiting, Ind., to South Chicago, Ill., where it terminates in the plant of the Illinois Steel Company. A branch of the Elgin extends from Cavanaugh, Ind., to Shearson, Ind., at which point the line divides, one branch extending to Whiting, Ind., and the other to Hammond, Ind. The Elgin has trackage rights over the line of the Chicago & Western Indiana Railway from Hammond, Ind., to One Hundred and Twelfth Street, Chicago, and from that point over the Belt Railway of Chicago to Ninety-eighth Street, South Chicago. Other branches of the Elgin extend from Walker, Ill., to South Wilmington, Ill., and from Normantown, Ill., to Aurora, Ill., and from Rockdale Junction, Ill., to Rockdale, Ill. This line connects with the Joliet in the city of Joliet. The Joliet is located within, and in the immediate vicinity of, the plant of the Illinois Steel Company at Joliet. It owns no main-line tracks but owns 42.69 miles of industrial and yard tracks. It does not own any land. With the exception of three parcels of land used under contract with other railroads and several parcels which it uses under ordinances of the city of Joliet, all the land occupied by the tracks of the Joliet is owned by the Illinois Steel Company.

Trackage rights of the Elgin cover 236.52 miles of line in the territory in which it operates. The tracks of the system cross lines of all carriers entering the city of Chicago and connect with a great many of them.

The Elgin, operating the properties of the three carriers, conducts but little passenger business. The greater part of its revenues is derived from the transportation of freight. The principal revenues of the Elgin are obtained from the interchange of traffic between trunk lines entering and leaving Chicago and from the movement of traffic originating on and destined to industries on its line, including plants and subsidiaries of the United States Steel Corporation in Chicago, South Chicago, Joliet, and Waukegan, Ill., and Gary, Ind., and also from interplant switching. The greater part of the traffic of the Eastern is freight shipped from and to the plant of the Illinois Steel Company at South Chicago and the Indiana Steel Company at Gary. Practically the entire traffic of the Joliet consists of shipments to and from the plant of the Illinois Steel Company at Joliet. The three carriers are controlled either directly or indirectly by the United States Steel Corporation, the Elgin through ownership of its capital stock by that corporation and the Eastern and Joliet through the ownership of their capital stock by the Illinois Steel Company, a subsidiary of the United States Steel Corporation. Further details regarding the location and description of the properties and the nature and character of the traffic and operations will appear in the order we shall enter, and need not be stated here.

Location and General Description of Property

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The lines of railway operated by the Elgin, Joliet & Eastern Railway Company, hereinafter called the Elgin, are located partly in the State of Illinois and partly in the State of Indiana. Its main line forms a belt around the City of Chicago, extending from Waukegan, Ill., on the north, through Normantown, Ill., and East Joliet, Ill., to Porter, Ind., on the east. It has one branch line running from Normantown to Aurora, Ill., and another extending from Walker, Ill., to South Wilmington, Ill. It also operates several other branch lines and many industrial tracks by means of which its main line is connected with a large number of manufacturing plants, including plants of subsidiaries of the United States Steel Corporation, in Chicago, South Chicago, Joliet, and Waukegan, Ill., and Gary, Ind. Its lines of railway connect with thirty-four (34) steam railroads and four (4) electric railways, and it has extensive trackage rights over lines of railway operated by other carriers, which it uses to reach points off its own line, including coal mines and limestone quarries owned by subsidiaries of the United States Steel Corporation.

Introduction

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The Elgin is controlled through ownership of capital stock by the United States Steel Corporation, and, although it receives a few dollars annually from passenger business, its revenues are derived mainly from the transportation of freight traffic. The lines of railway operated by it are located partly in the State of Illinois and partly in the State of Indiana. Its main line forms a belt around the city of Chicago, extending from Waukegan, Ill., on the north, through Normantown, Ill., and East Joliet, Ill., to Porter, Ind., on the east. It has one branch line running from Normantown to Aurora, Ill., and another extending from Walker, Ill., to South Wilmington, Ill. It also operates several other branch lines and many industrial tracks by means of which its main line is connected with a large number of manufacturing plants, including plants of subsidiaries of the United States Steel Corporation in Chicago, South Chicago, Joliet, and Waukegan, Ill., and Gary, Ind. Its lines of railway connect with thirty-four (34) steam railroads and four (4) electric railways, and it has extensive trackage rights over lines of railway operated by other carriers, which it uses to reach points off its own line, including coal mines and limestone quarries owned by subsidiaries of the United States Steel Corporation.

Corporate History and Development of Fixed Physical Property

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The lines owned by the Elgin comprise lines and extensions thereof constructed by and for it in Illinois and Indiana, and lines formerly owned by the following corporations: The Elgin, Joliet & Eastern Railway Company, of Indiana; the Joliet, Aurora & Northern Railway Company, of Illinois; the Gardner, Coal City & Northern Railway Company, of Illinois; the Waukegan & Southwestern Railway Company, of Illinois; the Chicago Heights & Northern Railway Company, of Illinois (including property formerly owned by the Western Indiana Railway Company), and the Rockdale, Joliet & Lockport Terminal Railway Company, of Illinois.

The Elgin operates under lease the line of the Chicago, Lake Shore & Eastern Railway Company, called herein the Eastern, which extends from South Chicago, Ill., to Gary and Cavanaugh, Ind., and the property of the Joliet & Blue Island Railway Company, herein called the Joliet, whose tracks are all located in and in the immediate vicinity of the plant of the Illinois Steel Company at Joliet.

In addition to the above the Elgin uses to a comparatively small extent facilities owned by other carriers.

The lease under which the Elgin operates the property of the Joliet was originally executed by the latter to the Eastern.

[Well, that's not too useful. Here's a list of when each company existed:

Elgin, Joliet and Eastern Railway December 11, 1888 in Illinois and Indiana

Chicago, Lake Shore and Eastern Railway February 17, 1897 in Illinois and Indiana

What about the Griffith and Northern Railway, lessor?]

Leased Railway Property

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The Elgin operates the aforesaid properties of the Eastern and the Joliet under leases dated June 1, 1909, which are to remain in force until June 1, 1969.

The lease pertaining to the property of the Joliet required the Elgin to pay for the use of the property an annual rental of $15,000. The lease of June 1, 1909, pertaining to the property of the Eastern, as modified by an agreement between the parties executed at a later date, requires the Elgin to make payments for the use of the property as described in a communication dated June 27, 1914, and addressed by the chairman of the United States Steel Corporation to the presidents, respectively, of the Elgin and the Illinois Steel Company. The pertinent portion of the communication is as follows:

“I herewith confirm the conclusion reached at our conference on the 24th instant as to a modification of the lease of the C. L. S. & E. Ry. Co. to the E. J. & E. Ry. Co. to wit:

“The existing lease is to be modified so that the rental payments by the E. J. & E. will be on the following basis and plan:

“First. An amount equal to the interest on C. L. S. & E. Ry. Co. bonds outstanding.

“Second. An amount equal to 5 per cent interest rate on additions and betterments to the property of the C. L. S. & E.

“Third. After deducting from the net or surplus earnings the rental items as above and (a) the interest on E. J. & E. bonds outstanding and (b) dividend of 4 per cent annually on E. J. & E. stock outstanding (the same to be cumulative if not earned annually), additional rental shall be paid from the net earnings, if any, as follows:

“(a) An amount equal to 7 per cent on the C. L. S. & E. stock outstanding. This payment to be cumulative if each year's earnings are not sufficient to meet it.

“(b) An amount of $250,000 per annum, non-cumulative.

“Fourth. And if there remains net or surplus earnings, in each year after making the rental payments and deductions as above provided, then out of such net an additional rental amount to be paid determined by same method as prescribed in paragraph 3, section 6 of present lease. This is it of remaining surplus.

“The modification of lease as above to be made effective as of December 1, 1913. The E. J. & E. to promptly settle with C. L. S. & E., for any rentals accrued prior to December 1, 1913, and not yet accounted for. Rental accounts accrued since December 1, 1913, to be adjusted in accordance with terms of modified lease.

“It was also understood each company will for itself assume and pay all Federal income taxes against it; such taxes will not be included in the joint account for determination of rentals due.

“It was also understood the E. J. & E. was to retain possession of cash funds representing proper depreciation allowances account C. L. S. & E. property, which the former may include in the operating expenses charged to the joint account for the purpose of determining rentals due; and any interest income received by it on such cash funds are to be retained by the E. J. & E. for itself and not to be included in such joint account.”

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