Moffat tunnel eoconomics

Trains Magazine General Discussion
21

In response to Railway Man and Murphy Siding, I’m generally familiar with the financial arrangements covering the original construction of Moffat Tunnel and with the resulting litigation between DSL and the Moffat Tunnel Commission. Railway Man is correct - the tolls did not cover the costs of the railway tunnel. The reason they didn’t is interesting. The original intention was that the railroad would be charged rental that was high enough to repay the construction cost over a period of years (I think it was 50). Trouble was, the Moffat Tunnel Commission, for some reason that is lost to history, made its lease agreement with DSL - including the rental schedule - before the tunnel was completed and its full costs were known. Needless to say, the final costs proved to be much higher than the Commission had anticipated. That’s what led to the litigation. The courts ultimately decided that the Commission was stuck with the agreement they had made with the railroad. And that’s why the taxpayers in the Moffat Tunnel District had to make up the difference. Of course, as RWM points out, there were lots of collateral benefits but, from the standpoint of the owner itself (the District), it was a loser.

By the way, a few years back, the Tunnel District attempted to sell both the water and rail tunnels (the water tunnel was sold to the Denver Water Commission - the rail tunnel was not sold). At the time, a reporter asked one of the tunnel commissioners why they were selling the tunnels. His answer was something to the effect that they wanted give an opportunity to those who missed out on the Brooklyn Bridge.

22

Well, yeah. I’m sure that if the toll contract was wanted by the Commission before the Tunnel was completed - or even started, then the railroad was sharp enough to want a known, fixed price that it could commit to and rely on to plan its own finances and valuations (and likewise for the Commission). Otherwise, the Commission would have been holding essentially a blank check drawn on the account of the Denver & Salt Lake RR. Even though the railroad would be the only user, to be exposed that way - with no control over the construction and its costs - is foolish if it can be avoided, and evidently the railroad still had enough bargaining power to accomplish that. I noted above that the Tunnel as built was radically different from what the railroad had originally contemplated - some 1,000 ft. lower and hence over twice as long. What other changes might the Commission have implemented without the railroad’s consent ? To be fair to the Commission, Boner wrote that the tunneling was much more difficult than anticipated - instead of solid grani

23

I think the most direct answer to the original question is that the Moffat route is still in use while the Royal Gorge/Tennessee Pass route isn’t!

24

Paul North’s note makes sense as a possible explanation of why the Moffat Tunnel Commission and the railroad agreed on the rental schedule before the full costs of the tunnel were known. But no one really knows for sure. In response to the design differences between the railroad designed tunnel and the tunnel that was actually built, by the time the rental agreement was signed, the tunnel design had been finalized and the tunnel was under construction. Both parties knew what the finished tunnel would be. But the Commission people underestimated the cost. There’s probably also an element of the railroad people being just a little sharper than the Commission people, and getting an agreement earlier in the process than otherwise would have happened.

There were lots of bad jokes going around Colorado when the Commission tried to sell the two tunnels (the water tunnel and the RR tunnel), although the Brooklyn Bridge comment was one of the best I saw. As i mentioned in my prior note, the water tunnel was sold to the Denver Water Commission. But Commission never got an acceptable bid on the RR tunnel, so it wasn’t sold. I believe the District still exists and remains the owner of the tunnel. The Commission itself was sunsetted and its functions transferred to another agency (offhand, I don’t recall its name). As an interesting postscript, one of the earliest offices held by John Hickenlooper, former mayor of Denver and the new U.S’ Senator from Colorado, was as a commissioner on the Moffat Tunnel Commission. I guess you can say he managed to pull himself up from a hole in the ground,

25

Not only of value to owners of the D&SL and then the D&RGW but also to the CB&Q and the WP. I doubt that the WP would have survived the Depression if it had not been for the added freight traffic the Moffat brought them. The CB&Q’s increase in traffic converted their secondary main connecting to some narrow gauge feeders (Denver and South Park) and a long way to Texas into a major transcontinental line. The Denver Zephyr was their prime train, instead of the Twin Zephyrs. The coordination between the three partners for frieght traffic was excellent and probably better than that between the UP and the SP and between the UP and the connecting railroads at Omaha - Council Bluffs. I don’t think you would have even asked the question if you had railfanned the line in the 1970’s, before the Anchutz purchase and the merger with the SP. Riders of the CZ and then the RGZ passed at least four or five freights going the other way, just between Grand Junction and St. L City. The route did compete with the UP and had the traffic to prove it. And wihtout the Moffat, the CB&Q’s line west of Omaha would have ended up like the Rock’s.

Remember, the SP handed its eastbound freight traffic to the UP at Ogden under durress. Whenever they could they would route Bay Area traffic to the east via the RI at Tucamcari or via the Cotten Belt. They lived up to their agreement but went no further than that.

26

That the SP had a problem with the UP is a new thought to me. It’s a little off topic, but could you please elaborate on the nature or cause of the SP’s unhappiness?

27

The problems began following the death of EHH, the real one, Edward H. Harriman, and the rise of Populism, in the form of Teddy Roosevelt and then Howard Taft. The Supreme Court ruled in 1912 that the common control of both Southern Pacific and Union Pacific violated the Sherman Antitrust Act. The big shocker in the ruling was the implication that control of the Central Pacific should pass to the Union Pacific, though they did not specifically order that. They sent the matter back to the Appeals court to consider control of the Central Pacific.

The SP was required to preferentially solicit all freight traffic originating on their lines in Northern California and Oregon to the UP at Ogden, and there were joint rates for this movement. If a shipper wanted the freight to move otherwise, say to the Rio Grande, then local rates were quoted to Ogden, and from Ogden east. These would have been higher rates. Eventually the Rio Grande got a partial revocation, but only on a limited number of commodities, and only after many years in court. From the Espee’s perspective, they stopped actively soliciting traffic in those two areas, and let the Cotton Belt do the soliciting as they were not subject to the Ogden Gateway ruling. So what you had was Cotton Belt (SSW) soliciting against the UP for customers in Northern California and Oregon.

28

As part of the consolidation, where the SP took over the CP, the SP had to agree to continue interchanging a certain amount of Bay Area freight with the UP at Ogden, because the ICC or whatever preceded it, responded to the UP complaint that the SP would want to route traffic via the Sunset and its connections to get a much bigger share of the revenue. During WWII (and WWI under gov. control) this was not a problem, because all railroads worked together very cooperatively to move the traffic as efficiently as possible, with fare divisions being very secondary (including the UP handing the D&RGW a lot of eastbound traffic at Salt Lake City that originated in the LA area). The SP lived up to this agreement, but still managed to route some traffic via the Sunset, the Rock, and the Cotton Belt. (Not much if any via the TP-MP). On the other hand, the WP, DRG&W, and CB&Q were solidly together in promoting their combined route.

29

In response to Dave Klepper, I don’t think the requirement for SP to interchange with UP survived the SP-DRGW merger, and possibly went away earlier than that (it could have been the UP-MP-WP merger). I know there’s an ICC decision and possibly a court decision that discuss the issue. I’m off to gorge myself on turkey in a few minutes but, if I remember (problematical with my advancing years), I’ll do some research over the weekend and make another posting.

I’m not sure that it’s accurate to say that SP was historically an unwilling interchange partner with UP on the overland routing. Certainly, the cooperation on passenger services between the two roads (which went far beyond anything a legal requirement to interchange traffic would have required) suggests that the two roads were willng partners. And, for Chicago gateway traffic, routing Bay Area traffic via the Sunset and RI was circuitous, and wouldn’t have been very competitive with other routings. You could see that in the stategy the combined SP-DRGW pursued after they got together. Rather than sending all of the Bay Area transcontental traffic via the southern route, SP-DRGW cobbled together a central corridor route to the Chicago Gateway comprised ot SP-Ogden- DRGW to Pueblo via Tennessee Pass, trackage rights over MP (UP) to Kansas City, and trackage rights over BN to Chicago. They wouldn’t gone to all the trouble to do this if the southern route would have sufficed.

I do know that SP wasn’t a very friendly connection with UP after UP acquired WP and SP and DRGW tied the knot…

30

I was only discussing the situation up to the Anschutz purchase of the D&RGW, somewhat before the mreger ot that railroad with the SP. And after the merger, the cobbled-together route did not handle as much traffic as still went through the Moffat, then mostly to the CB&Q, but some via trackage rights on the UP to Limon, via the RI. As far as SP-UP cooperaton, yes they did cooperate passenger-wise and also on fruit traffic and much other high-rated traffic, but low value traffic did take the circuitous route because the SP got a far higher share of the revenue. I wished to simply point out that the Moffat was of great benefit to the CB&Q and the WP, not just the D&RGW.

And I don’t need any proof to know absolutely that the Moffat saved at least one USA serviceman’s life, and for that reason alone it was of great value --me, anyway.

It is not a matter of gridlock or not grid lock. All the western transcons operated just about at capacity, and the Moffat increased that capacity.

31

About 25 years ago some young railfan living in Steamboat Springs, Colo. was trying to drum up interest in having either Amtrak or The D.& R.G.W. restore passenger train service between Denver and the Yampa River valley. He thought he had a legal argument to compel the service based on a provision in the original Moffat Tunnel charter that required the railroad that used the tunnel to provide passenger train service to all of the counties that guaranteed the Tunnel’s construction bonds. Routt County (county seat - Steamboat Springs) was one of those counties.

Other than a few public rallies in Steamboat Springs to drum up support for his dream, nothing ever came of that effort. Perhaps there was something in the Amtrak enabling legislation that overrode the kid’s legal argument.

32

As a further note to one of Falcon48’s posts on either page 1 or 2, undoubtedly one reason the Moffat Tunnel cost way more than expected is that it 2 years longer to build than planned - likely due to the unexpectedly difficult geology that was encountered.

I went back and re-read portions of The Giant’s Ladder, and find the correlation of dates for the Tunnel nad the Dotsero* Cutoff highly significant in evaluating what the purpose Moffat Tunnel really was, at least in the minds of its backers. To summarize: 1922 - Tunnel construction starts; 1927 - ‘holed through’ and Feb. 1928 - placed into service; 1924 - agreement between D&RGW and D&SL to build Dotsero Cutoff; 1931 - D&RGW obtains ICC approval to build Cutoff, instead of the D&SL; 1932 - Cutoff construction starts; June 15, 1934 - placed into service.

[*The name “Dotsero” is commonly thought to be a corruption of “Dot Zero” for the beginning MilePost of the Cutoff, and/ or the MP on the D&RGW’s line as having been “XXX.0”. The former isn’t supported by the historical record, since the place had that name long before the Cutoff was surveyed. The latter is more likely - but I also found one source that says it was named after a Ute Indian tribe leader - see: http://www.trainorders.com/discussion/read.php?1,1242696 , post by “WW” on 09/18/06 about 2/3 of the way down that webpage. But I have no further knowledge or insight on this. - PDN.]

Note that the Cutoff and the resulting ‘through’ route to Salt Lake City and the West Coast apparently was not an integral part of the Tunnel’s approval and financing - otherwise, why else would the Tunnel’s proponents and backers have left th

33

You might wish to check my WWII memories. As I remember, the D&RGW ran three through Denver St. Lake City passenger trains. One was the through Exposition Flyer, which sometimes had space for Denver - StLC passengers, but was often sold out with through passsengers off the WP for CB&Q points . The basically overnight Prospector was the next choice, but often sold out at capacity and was all-reserved, including coaches, as I remember. The only choice for sure if you did not have reservation was the train via Pueblo, the George, and Tennesse Pass, which did carry some non-reserved coaches, and took about half a day longer. All these trains were heavyweights at the time. The combining of the latter two at Grand Junction was, if my memory is correct, a post-WWII change. Going via the UP up to Cheyenne and then the Los Angeles Limited was another option for those lacking a reservation, but did involve a chage of trains in Cheyenne. (There was, if I remember correctly, a through UP sleeper Denver- Oakland, but not Denver - LA. But I may be mistaken. But no through NON-RESERVED coaches.)

34

As promised (or threatened) in an earlier note, here’s my thumbnail history of the SP-UP preferential routing requirements. I will try to be relatively brief although, in my case, “relatively” is a relative term.

(1) The preferential routing requirement was originally created by the ICC, based in large part on its reading of the policy behind the 1862 Pacific Railroad Act. The ICC imposed it as a condition to the 1923 ICC decision approving the CP (Cental Pacific) -SP merger, 76 ICC 508. “Condition (e)” read, in relevant part, as follows (I’ve abbreviated the RR names):

“That the [SP] shall cooperate with the [UP] to secure by active solicitation the routing of the maximum of freight traffic via the lines of the [UP] and the [CP] through the Missouri River and Ogden, Utah, as parts of one connected continuous line, between all points in California and Oregon north of and including Caliente and Santa Margarita, Calif., and south of and including the Klamath Falls branch and Kirk, Ore., on the one hand, and points north and west of a line along the northern boundaries of Oklahoma and Arkansas, to the Mississippi River, thence along the Mississippi and Ohio Rivers (but not including intermediate cites on the Ohio River) to Wheeling, W. Va., and thence on a line drawn just east of Pittsburgh, Pa., and Buffalo, N.Y., to Niagra Falls, N.Y.”

Note that there was no specific volume level in this condition beyond which SP could route traffic as it pleased. There was, however, a 1924 agreement between UP and SP to implement the ICC condition, which I don’t have, but could possibly have had a specific volume guarantee (although, given the language of the ICC condition, it’s difficult to see why UP would have agreed to anything like that).

(2) In 1966, the ICC revised the condition by eliminating the requirement that SP prefer UP for Ogden interchange traffic, and opened the gateway to DRGW. In other words, under the revise

35

Thank you very much, Falcon48, for that intelligently-worded, thoughtful, and concise summary of the history of that situation, and especially for the citations. It’s not a subject that I’ve had much interest in so far, but now I know where to go for a better understanding if I should want it - the above post, and those references. Thank you also for a good example of how to do that kind of thing.

  • Paul North.
36

This is a good summary of the Ogden conditions. It is one reason the Cotton Belt was not merged into the Espee until after the UP+MP+WP merger. While a SP salesmen in California was required to ask for traffic via Ogden his Cotton Belt counter part was free to sell via SP-Corsincana-SSW-ESTL-Connections. If you look at an Official Guide from the 60s or 70s you will see many Cotton Belt sales offices in Oregon and California.

Also, the SP nor any other railroad routed traffic. The right to route was absolute with whoever paid the freight. It was often true in say the first 2/3 of the last century that a shipper would delegate the matter to the origin railroad by only noting the destination carrier and instructions to protect the lowest rate on the Bill of Lading.

37

You’re, of course, correct that shippers generally had the right to route their traffic, if they chose to exercise it. That’s why ICC imposed preferential routing conditions in rail mergers were usually expressed as solicitation conditions. You’re also correct that many shippers let the origin carrier route the traffic subject to the “protect the lowest rate” caveat.

There were, however, some limitations on the shipper’s right ot route, none of which are relevant to the SP-Ogden conditions. One limitation was that the routing had to be over established interchanges. A shipper couldn’t direct a railroad to interchange traffic with another road at a point the two railroads didn’t hold out as an interchange for the traffic in question. This wasn’t a big issue in pre-Staggers days because railroads tended to establish interchanges almost anywhere that two roads connected. However, after Staggers, the large railroads restructured their interline routings to concentrate traffic over fewer routes and interchanges. This resulted in elimination of many interchange options that p

38

Consider the following, as I did during the tedium of some fall yard work last night:

From the “What-Dog-Didn’t-Bark”, “Railroad Geopolitics in the Middle Ages of the 1920’s”, and “Machiavelli-Lived-in-Colorado-Too” Depts.:

In the 1921 - 1922 time frame, why didn’t the D&RGW successfully block the Moffat Tunnel legislation ? D&RGW had an important hub - and presumably some political influence to match - in Pueblo. And yet it allowed Pueblo to “make a deal with the devil” in the form of a tunnel which would benefit only Denver in the immediate future, and had long-term threat implications for D&RGW’s Tennessee Pass line !

But maybe D&RGW correctly assessed and evaluated the potential threat, and was content to be merely a ‘stalking horse’, as follows:

  • The Moffat Tunnel would directly and immediately serve only a branch-line territory that D&RGW didn’t and really couldn’t serve itself, so it would suffer no big loss in traffic or revenues there (except maybe to the extent that Craig Branch traffic might have otherwise moved on another D&RGW line, but it wasn’t much volume anyway).

  • Longer-term, the Denver & Salt Lake had known aspirations to reach the latter city - but it had to cross several hundred miles of tough terrain with little tra

39

I wonder how much of the D&RGW’s caution was due to its experience with financial embarrassment from helping to finance the WP’s construction?

40

You are correct about needing a interchange and internal routing. I think after Staggers I shipper would be crazy note route in detail showing exact interchanges. It started to make a big difference if you routed SP-SHRPT-SSW-ESTL-SLM-CR or SP-SHRPT-SSW-ESTL-ESTL-CR on the transit time and price.

I am the Bob Wilcox you are thinking of. I am one of those veterans who know the answer to, “did you buy enough?”