Journal of the House of Representatives of the Regular Session of the Thirty-Ninth Legislature of the State of Texas Page: 52
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road with, title to the rail by legislation, due observance should be given to the
Federal ruling on the question of the disposition of the road as a whole, should
this be at issue. We interpret this ruling to mean that the road funds of the
State of Texas, through its highway department, should receive the benefit of
the proceeds of the sale equal to the fair value of the rail as first laid. The
ruling draws attention to the provisions of the Kahn act, and fixes the value
of the rail at the time of transfer, at $35 per ton. It provides for payment
of 20 per cent of the estimated value of the property, from which may be de-
ducted the freight charges paid by the buyer as a set-off.
Whether title to the rail is in the highway department of the State of Texas,
or the Texas State Railroad is not consequential, for both departments in truth
are the State of Texas. But politicians have excited the public mind with the
question, and in the event of prospective sale of the road, such propaganda
might superinduce the same question in the minds of over-technical buyers.
Deeming it highly important that no opportunity be lost to sell the road when
a favorable price can be obtained, the board submits these suggestions and
recommends their execution.
It was only after six months' vigorous work on the State Railroad by the
Board of Managers, including the securing of the new rail and insuring its
installation, that the board succeeded in placing it in condition acceptable to
the Southern Pacific under lease. The operating lease was ratified by the
Legislature August 25, 1921, became effective November 5, 1921, and will expire
November 5, 1926.
On December 30, 1924, a complete inspection of the property was made by the
Board of Managers, composed of Lynch Davidson, chairman; J. A. Glen and
E. C. Durham, members, accompanied by L. H. Cecil, assistant vice president
and general manager of the Southern Pacific Lines; H. M. Lull, chief engineer
of the Southern Pacific Lines; H. J. Micksch, superintendent of the Beaumont
division of the Texas & New Orleans Railroad, and Thomas Scott, superintendent
of the Jacksonville division of the Texas & New Orleans Railroad. This inspec-
tion was for the purpose of ascertaining the condition of the property in order
that this report might be formulated and presented to the Governor and Legis--
lature in accordance with the act creating the Board of Managers.
The board is unanimous in its conclusion that the Southern Pacific Lines, in
the matter of the continued physical betterment of the property, the effort to
upbuild its traffic, and the custodianship of the property's general welfare under
the terms of the contract, have abundantly surpassed the board's expectations.
It is with gratification that the board unanimously agrees in the observation
in its report to Your Excellency and the Legislature of Texas, that Mr. W. R.
Scott, president of the Southern Pacific Lines; G. S. Waid, vice president and
general manager of the Southern Pacific Lines; C. K. Dunlap, general traffic
manager of the Southern Pacific Lines, and the other officials of the system
named above, have co-operated together both with reference to the upbuilding
of the physical condition of the property, the improvement of its traffic, and
its general welfare, in a highly commendable manner. The Board of Managers
hereby voice a vote of confidence in the operation and maintenance of the road
by the Southern Pacific under the terms of the contract.
With its 33 miles of track, the State Railroad forms such an infinitesimal
factor in the affairs of the enormously large Southern Pacific system, it was
gratifying to the board to find all of the officers of the Southern Pacific taking
a personal interest in the State Railroad, and familiar with its minutest details.
The trainmen operating over the road, and the station agents and employees
all seem to take a personal and patriotic interest in the success of the enterprise.
The interest in the Southern Pacific has been not only one of sentiment, but
likewise one of substance. As will be shown by the operating report of the
Southern Pacific reflecting its operations over the State Railroad from November
5, 1921, to and including November 30, 1924, attached hereto, marked Exhibit
"C," the Southern Pacific Lines have invested $204,332.89 more in the State
Railroad than they have taken out in revenue.
The State's operating contract with the Southern Pacific Lines provides that
it shall receive 50 per cent of all net earnings. It is to be seen from the oper-
ating report of the Southern Pacific, attached hereto, that the gross earnings of
the road have been invested, to a major extent, in the upbuilding of the road,
and the balance in its operating expenses.52
HOUSE JOURNAL.
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Texas. Legislature. House of Representatives. Journal of the House of Representatives of the Regular Session of the Thirty-Ninth Legislature of the State of Texas, legislative document, 1925; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth193834/m1/56/: accessed May 22, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.