Savannah morning news. [volume] (Savannah) 1868-1887, 1884-08-29

Inc Kate ~ ar RuCSAAOhs
our esteemed contemporary, the At
lanta Constitution. in discussing the an
nouucement Of the withdrawal OF the
Hast Tennessee, Virginia and Georgia
Road from the Southern pool. and the pro-
liability Of a rate war, reaches the con-
clusion that the POOL is foolish make
shift, and advises the roads interested in
it to abolish it. We have no fault
to ind with this conclusion, or
advice, provided it can be shown that
some other arrangement can be made by
which the interests of those who have
business with the roads and Of share
holders will be better served. The pool
has not benefited Savannah 1t has been
inimicaI, rather, to Savannah's interests.
But we do not wholly agree with the
views expressed in the following extract
from the CONSTITUTIONS article:
The Savannah NEWS has printed an
opinion 10 the effect that in the event oil
a rate war. the Central Road can more
than hold its own. From a superficial
point Of view that is undoubtedly true;
but there are other things TO be taken into
consideration besides equipment and con-
uectiOus. The Central Road is as well
eguipDed and as wisely managed as ans
corporation in the South. and yet it IS
not IN a condition to cripple itself
by entering upon a rate war. 1t
cannot afford it. The stock Of the East
Tennessee is mainly held in blocks
by capitalists, and they can easily afford
to pocket whatever losses may accrue
from the furry in rates. The stOckhold-
ers Of the Central Road, on the other
| hand. represent another class altogether.
| The majority Of the stockholders are men
and women who have been investors IN
/ the road for years. Some OF them have
| inherited their investments; some hold
| the stock as trustees for estates and for
| widows and orphan children. Those who
manage the property of such people can
not afford to waste it in rate war from
which nothing is to be gained but actual
| lOss-if we may be pardoned the bull.
The three points we take exception to
in the above are, first, that the Central is
prepared only from a superficial point OF
view to hold its own in the event Of rate
| war; second, that the Central cannot af
ford to engage in rate war; and, third
that the Central can gain nothing from g
rate war.
| What is there beneath the surface that
impairs the ability of the Central to re-
tain what belongs to it in a contest with
the East Tennessee, Virginia and GeOr
| gia! The contest will be for the business
of certain territory, and the road that car
hold out the longest will win. The
| MORNING NEWS has expressed the
opinion that the Central will VIII
in. the event Of a contest for the follow
ing reasons: 1t is in a far better finan
eial condition than its rival; it is better
equipped; it has more and better connec
tiOns: it has much shorter haul to reacl
the seaboard, and, therefore, can get {
relatively higher rate for carrying freigh
to the seabOard; being a home institution
it will be favored to a certain extent, ant
it can be run cheaper.
With respect to the second point: VIII!
cannot the Central afford to engage in ;
rate war? The Constitution says becaus
those who hold the stock cannot afford 4
have their dividends cut of or the pric,
of the stock to 90 down. But will a refu
sal to engage in a war Of rates save tn,
dividends and stock? If the Contra
maintains its rates and the East Tennes
see, Virginia and Georgia carries on
what is supposed to be its programme
what will be the RESULT VIII not thu
Central lose a very large portion of it
business? In that case the shareholder
will not only lose their dividends, bu
their stock will not be worth very much
and the loss would be permanent. Arat'
war means a temporary loss of dividend:
and a shrinkage in the value Of the stock
Would it not be better to suffer tempo
rary loss than a permanent loss? Tht
! question is not whether the Central car
afford to engage in a rate war, bu
whether it can afford not to engage in it
A rate war can be avoided, perhaps, b!
making concession to the East Tennes
see, Virginia and Georgia, but these con
cessiOns mean the loss of an immense
amount of business which legitimately
belongs to the Central. They mean more
than that. They mean the gradual ruin
of the Central Railroad system. If re
ports are correct the East Tennessee
Virginia and Georgia is not only hostile
but is aggressively so. The probability
therefore, of making an agreement fair Il
both sides is very remote.
| With respect to the third point: TIT
Central has everything to gain by engag
ing in a rate war, provided the East Ten
nessee, Virginia and Georgia encrOache'
upon its territory and seeks to get cOntrO
of its business by lowering rates. To re
main inactive would be a slow death; t.
fight and win, and it would win, would b.
to secure a firmer foundation for future
prosperity.