The $2 Fee That Sunk a Warehouse: Railroads Tighten Grip on Seattle's Waterfront

The proposition of a syndicate of local business men, headed by C. G. Austin and G. P. Zimmerman, to organize the Seattle Warehouse and Shipping Company, for the purpose of conducting a general grain and warehouse business in a building to be constructed at the foot of Battery street, has fallen through, owing, it is claimed, to the inability of the company to make a satisfactory arrangement as to switching fees with the Northern Pacific railroad.

The building was to have been erected by Senator Squire, and the company was to take out a five years' lease. The Seattle, Lake Shore & Eastern railroad was to build a side track to the warehouse, and everything seemed to be arranged smoothly and the company expected to be in a position to commence business within thirty days. In fixing up the final details, however, a dispute arose as to switching fees, the Seattle, Lake Shore & Eastern deciding to charge the Northern Pacific and Great Northern $2 per car for all cars handled. The Northern Pacific company was not as prompt in settling the matter as the projectors desired, and the project is now off altogether.

Mr. Austin was sanguine of the success of the enterprise until a week ago, and, of course, he is now very much disgusted with the turn affairs have taken. Explaining his company's position yesterday, he said:

"We were fully organized two weeks ago Monday with a paid-up capital of $10,000 and it was our intention to do a general grain and warehouse business. The incorporators were myself, G. P. Zimmerman and W. S. Hahn, but the stockholders were representative business men, bankers and financiers of this city, all of whom were anxious to see the deal go through. A week ago Monday night a meeting was held in our office in which arrangements were perfected with Senator W. C. Squire's representative, Mr. Hogan, for the construction of a warehouse two stories high, 110x210 feet, at the foot of Battery street with a pier running out to deep water. The papers were drawn up, lease for five years signed and building was to commence immediately. The following day, hardly anticipating any trouble but desiring not to overlook any of the minor details, we went to the railroad company to see about their handling of cars.

"We had made arrangements with the Seattle, Lake Shore & Eastern people by which they agreed to build a side track to the warehouse site, which would cost in the neighborhood of $1,800, and for so doing they would charge the Northern Pacific and the Great Northern roads $2 per car switching fee. The Great Northern people assured us they would not stand in our way and would absorb the fee, but the Northern Pacific would give us no satisfaction, Mr. Nadeau not thinking that his road should absorb the fee. Thus matters dragged along until Receiver Oakes and General Manager Kendrick arrived here Monday and some of our stockholders waited on them and had a talk with them. Mr. Kendrick gave us a good deal of encouragement and assured us he would communicate by wire with Mr. Hannaford, the traffic manager, saying that such matters would come under that gentleman's jurisdiction, and assured us that we would receive a reply by Tuesday at the latest. They left Monday night for Portland and we haven't heard from Hannaford or anything concerning the matter since. Time has dragged along until it is too late to build and some of our stockholders have notified us that they won't put in any money.

"We explained to the Northern Pacific people that it was necessary that we secure arrangements with them in order that we could show our backers that they were not putting their money into any wildcat scheme; that nothing stood in the way of the proposition being a paying one. We could not afford to stand the $2 switching fee, that's certain. In the course of a year we would probably use 6,000 Northern Pacific cars, and if we were to put up $2 a car that would be $10,000 thrown away. No concern in existence could stand such an exorbitant drain. The railroads here own the whole waterfront, and if a man desires to start an enterprise on one railroad the others stand in the way and the enterprise is suppressed. The only way that Seattle can expect to compete with the other towns in shipping is to establish a terminal company, and until this is done we might as well give up trying to do anything."

Mr. Nadeau, when seen last evening, said that, while he did not care to be interviewed on the subject, he wanted to say that Mr. Hannaford, the traffic manager, had been notified by wire of the circumstances of the case. Mr. Hannaford is now in Helena on his way West, and will arrive at this city in two or three days, when it is his intention to look into the matter. Mr. Nadeau said that it was an important matter and involved the question whether or not the railroad company or the warehouse company should be at a loss, just as Mr. Austin says, of $10,000 or some such sum per annum. Mr. Hannaford is attending to just such important matters all along the line, and when Seattle was reached he would dispose of the proposition here. Mr. Nadeau was very sorry that the company had gone up, but says that he can't understand why it should go to pieces suddenly within thirty-six hours.

"Mr. Kendrick talked with Mr. Austin and others Monday afternoon," said he, "and here on Wednesday the deal is declared off."

Regarding the terminal company Mr. Nadeau says he is heartily in favor of such an enterprise, and always has been; that the city needs such a company, and no time should be lost in organizing one.