Omaha daily bee., 1903-04-16
RICH ON MERGER DECISION
Says it VIII Not Apply to Union Pacific
and Southern Pacific.
BELIEVES IN CONSOLIDATION OF ROADS
Argues that Lower Rates Will Result
from GENERALIZATION of
ment and Consequent Reduc-
tion of Expenses.

1.-The decision in the case Of the Northern
Securities company will, in my Judgment,
have no effect upon the relations existing
between the Union and Southern Pacific"
said Edison Rich, associate counsel for the
Union Pacific. Mr.. Rich does not believe
in the apprehension fcsteTed by certain
magnates interested in the Northern Sc
%curities company that this decision will
have the far-reaching effect of dlssolving
or disturbing every concern doing an inter-
state business.
''Only where there is an actual consolida-
ton or merger can this decision be APP
Piled" continued Mr.. Rich. Between the
Union Pacific and Southern Pacific there
is no constellation; there is no positive
community Of interest In the sense in
which that phrase has come to be generally
used in the railroad world. Some stock
holders OF the Union Pacific are stockhold-
ers of the Southern Pacific, but the man
agements are separate and distinct, as are
the corporations, and neither is the holding
company of the other. l see, therefore, no
chance for this decision to apply to these
companies, or for that matter, to other
companies similarly related.
object of the Suit.
9TH primary object of the suit out of
which this decision has grown was to
prevent the consolidation Of the Northern
Pacific, Great Northern and Burlington
and stop Hill and his associates from TAX
ing over the stock Of the Burlington all
under one management and corporation,
and the Immediate effect will be to shut
off the acquisition by the Northern securi-
ties company OF the Burlington. AS for the
Northern Pacific and Great Northern they
were practically consolidated before this
concern was organized. The Northern
Securities company, therefore, was simply
organized az a holding company. Yet / see
no reason for not allowing Hill to take
over the Burlington since the latter is not
a direct competitor or a parallel with
either of his northern roads. The general
purpose Of this kind of law is to prevent
the consolidation Of two or more parallel
and competing lines, since it is generally
recognized of course that the original pur-
pose of consolidation is to shut off COM
petition. But there certainly could be no
objection to all three of these companies
being owned by the same individuals so
long as they were operated under separate
arrangements, as is the case largely with
the Southern and Union Pacific.
May Retard Consolidation.
This decision would seem to contradict
the theory that all conditions point to an
carly COuSOlludtlOu VI the great IdllTOduS VI
the country under one or two arrangements.
II the decision stands it certainly will have
the effect of retarding such a condition of
affairs. For my part l cannot see anything
wrong in the pooling of railroad manage
ments under one or two general heads. AS
a nation We are proceeding toward an era
OF GENERALIZATION. This is inevitable; 1t is
logical. l believe the time will come, and
that within a comparatively short period,
when the railroads of this country will be
operated under centralized arrangements,
and l can't see how it is going to be a bad
thing for the people either. In the railroad
business, as in every other kind of bust
ness. Capitalization simply means retrench-
ment. The more compact the organization
the less expensive the operation of the en-
terprise. That is a patent fact which stands
to reason. Now the logical sequence of this
will be. or ought TO be, a reduction instead
of an increase in freight and passenger rates.
The courts have the power to enforce laws
with regard to railroads as we'll as any
other class of enterprises, and they can
compel roads 70 cheaper rates in the same
ratio as they will have cheapened their OPP
Grating expenses"
As to darlington Affairs.
Asked II he thought the alleged con-
templated union of all the Burlington
headquarters would be deferred by this
recent merger decision, Mr.. Rich replied
in the negative.
"Tf Mr.. Hill can make one man do what
three are now doing, have one headquarters
say in Chicago or st. Paul, whereas he now
has several, l don't see why he would not
do 1t. That is the general tendency said
Mr.. Rich, "of the railroad business. Take
the case of Erastus Young, general auditor
OF the Union Pacific, Southern Pacific, Pa
cihc Mail, Oregon Short line, Oregon Rail.
way & Navigation company-hve companies
He takes the place OF about three high.
priced men and is holding the greatest
auditors position in the United States
railroad world. Now it is just such move;
as this that l say can be made dement's
of strength in railroad managements ant
OF benefit to the patrons in the matter o.
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