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412 piers having special facilities and are usually, or should be, kept out of the congested industrial section of the har- bor. An analysis of the business handled and its relation to industries adjacent, and the economic requirements of both water and rail interests, would indicate that the logical preferences of locations of piers should be as fol- lows: 1. Passenger business, such as fer- _ry, excursion, short haul coastwise. 2. Piers for either railroad floating equipment or coastwise business of which 100 per cent of the freight pass- ing through the pier is for distribu- tion within a tracking zone to inter- ests which have been built up on the Dasis- Of stich a: facility. ". Shipping interests, the larger part of whose business is for local trackage distribution. 4. Ocean liners carrying passenger traffic and general cargo. 5. Ocean freighters carrying large proportion of general cargo. 6. Package freight for trans-ship- Mieit ees '7. Bulk freight' for trans-shipment. For the first two classes rail con- 'nection with pier is not necessary and often, from the congestion caused at such points, not even desirable; for the 'third' and fourth, rail connections with piers is desirable, but not abso- lutely: necessary; for the fifth, sixth and seventh, rail connections with piers a necessity. ~There:iis a great difference in the financial and physical requirements of the interests for handling the various classes of business enumerated. ~ From: the growth of the industries of our' country the largest proportion > of water freight is collected by the _railroads and brought to the ports. Coastwise Shipping Business Sevehty-five per cent of the busi- ness of coastwise shipping companies of the ports of the United States is for trans-shipment from a port to an- other port for distribution by rail to interior' points, .or received by rail at a port for transportation to an- other port for distribution. Ocean- going business is very similar to coast- wise trade, and the largest proportion of ocean-going freight is collected at a port by railroad routes for trans- portation to another port for further distribution by rail. For the shipping interests, the right of way is free and their capital ac- count is practically the cost of the carrying units (the ship),--and their operating account, the running ex- penses and dockage facilities at their port terminals--ande in their opera- THE MARINE REVIEW tion and methods of business they have a great flexibility, and are in the enviable position of being able to withdraw their carrying units from a pier, or unprofitable locations, or a port, or even a country, as the busi- ness demands. Their rates are made by competitive business conditions and not by political commissions, except in so far as they are affected by wise or unwise maritime laws of the na- tions under which they sail. The railroads, which are the largest co-partners or agents for the collec- tion and distribution of freight for the water interests, are as pre-eminently a part of the port as the shipping and should also be considered as one of the primary parts of a port. The conditions under which their part in the port development is car- ried on should be borne in mind. Un- der a federal valuation act the Inter- state Commerce Commission has un- Seventy-five per cent of the busi- ness of coastwmise shipping com- panies of the ports of the Umted _ States is for trans-shipment from a port to another port for distribu- tion by rail to interior points, or received by rail at a port for trans- portation to another port for dis- tribution. Ocean-going business is very similar to coastwise trade, and the largest proportion of ocean- going freight is collected at a port by railroad routes for transporta- tion to another port for further distribution by rail. dertaken the valuation of all the rail- roads of the United' States, and re- gardless of the purposes which were in the minds of the instigators of such a valuation, in my opinion it will re- sult in a benefit to the railroads and, through them, even to the water in- terests. Among the results which will be accepted as facts, it will surprise me if dt is*not found that at feast 30 per cent of the capital of the trunk lines is invested in terminals in cities having water transportation, and pos- sibly 50 per cent or more of their capital in what may properly be termed terminals of all kinds in all cities. This sub-division of the cap- italization of the railroads alone will give you an idea of the problems which confront the railroads, and also, the port authorities, for part of their problems are your problems. The railroad system may be likened unto a tree, with rootlets and leaves and branchlets being the necessary terminals for collection and distribu- tion of the elements which pass up and down the trunk and_ larger branches of the tree, the branchlets November, 1914 and rootlets costing 50 per cent of the entire capitalization, and the branch- lets and rootlets, when once built, are fixtures, immovable and without flexi- bility. It is for this reason, among others, that I am unable to satisfy my mind that there is any outstanding rational method so far advanced for 'basing rate regulation on the cost of haul of any one commodity between any particular localities on a large sys- tem. Rate Based on Haul The rate is based on the haul, on the portion of the length of the trunk and main branches used, the entire length of which represents 50 per cent of the capital cost of the investment, and is subject to control of political commissions, whose rulings are sub- ject only to the application of a court test of confiscation of its individual tilings aud, so fal, mo court. test: or its collective rulings which, after all, should be the final test, and the re- sults of which are burdening and from the facts submitted, in my opinion, unnecessarily retarding the growth of this great transportation agency and the country. Referring particularly to the rail- road Situation .at a large' seaport: Such a city usually has four distinct districts of utility; first, the water- front; second, the industrial district; third the 'business district, and fourth, the residential district, through all of which zones the railroads have to buy a right of way to even reach the wa- terfront and, having reached it, in ad- dition to lighterage and floating equip- ment, piers have to be constructed at their own expense which are suitable to the particular kind of business. which they carry on, with special load- ing and unloading facilities, and which become obsolete as soon as the char- acter of the business changes. Owing to its obligations to the industrial interests which have located along its. lines through the city it is practically impossible to abandon such a line, or a portion of it, even if the growth of the city and the municipal demands for grade crossing elimination or other city improvements, which such a line is universally subject to, makes the investment so great that the business. is unprofitable and a burden to the railroad. As to a railroad company building along a waterfront, even where needed and the financial re- turns on present cost make it possi- ble, it has been made so difficult by the municipal authorities, and _ has: such possibilities of unlimited bur- dens being placed on the investment,