Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-04-13
OF DECISION
There is Still Potency in
Merger Company.
MAY TRANSFER STOCK
VIEWS OF RAILROAD OFFICIAL
ON FUTURE COMBINATIONS.
Says That the Principle Cannot Be
Touched by Law-Present Litigation
Only Serving to Establish It.

How the recent decision in the Northern
securities Company case is viewed from
the standpoint of practical railroad men
Is one of the interesting phases of the pres
ent situation so far as it affects future
combinations. An interview with promi-
nent railroad official this point was OBJ
tained by The Star today. For obvious
reasons the official preferred not to have
ms Identity revealed in the discussion. The
views presented, however. may be taken
as the railroad idea on the subject
I'm the first place. remarked the official.
"the recent decision does not settle the
present case. 1t will go to the Supreme
Court of the United States. The important
feature which the decision presents how
ever. is that if the court of last resort
takes the same view that the circuit court
of appeals has taken there will still
be something of potency left I'm the North
ern Securities Company. BY the decision
of the court authority is given the COM
pany to transfer its stock. This clearly is
ground for the assumption that the holding
company cannot be wholly without potency
1T may be readily seen that if this COM
pany has power to transfer its stock If
mas power also to do other things In other
words. the decision has not entirely wiped
the company from existence even If 1t
should be sustained in the Supreme Court
The Principle Not Stake.
'"The present against the securities
company is not regarded by railroad men
as being the crucial test, If such a test
were possible, of the principle OF combining
two or more roads.
This principle is the legitimate outgrowth
of the development of the country and it
can no more be eliminated from the prac-
teal operation of the carrying system of
the country than that Development
You may pass all the laws you please and
render all the decisions you please and
you still can not touch the idea. the vital
principle that combination and concentra-
ton of management can be accomplished
There Is general popular idea that to
eliminate such combination is to better the
general welfare. This idea is based on ex-
perience with railroad companies under the
managements prevailing prior to ten years
ago, when the quick dollar was the prin-
c1ple of management and when the devel-
opment Of the country was not the thing
sought by railways The possibilities of
railroads for good were not taken into ac-
count simply their possibilities for money!
making, either through security manipula-
ton or through rate manipulation
New Use for Railroads.
This condition has been entirely out
grown. 1t may be truly said that the great
interests of this country, the tremendous
traffic and the immense volume of business
cannot now be handled with the system
that prevailed then. The proper concep-
tion of this condition, too, by the master
minds in the railroad field. has resulted in
the formation of the combination This
development is not only truly beneficial to
the country. but is the logical procedure
of the railroad development.
There may be objections to doing away
with independent operating mana gements
OF paraneling lines of roads, but there is
benefit in a generally similar policy be-
tween two such roads. You cannot legis-
late away the right of one man to dictate
this general single policy, and that is ex-
actly the idea which has developed and
which was sought to be accomplished by
the Northern Securities Company. This
company was never recognized the per-
feet form of combination. 1t was only one
step in the general direction.
There will still be enough of the idea
left after the courts have finished trim
ming off the rough corners with which to
put the plan into operation. In fact I
think it would be safe 70 assume that the
half dozen great lawyers interested in the
defense of this and in the formation
of the company have even now formed
concrete ideas of what may be done to-
ward new form of combination, built on
what is left of this one.
What Combination Has Done.
"One of the best illustrations of the ad-
vantages of combination in what is gener-
ally termed the industrial world" is the
United States Steel Company By reason
OF this combination it is generally stated
that the cost of marketing the product Of
the plants forming 1T has been reduced
from 10 per cent to small fraction of
per cent.
I'm this day of immense volume of busi-
ness where the net profit depends on a
very small margin, this saving in itself
is more than enough to justify the COM
bination and to lead sound men of business
to see its advantages and profit thereby.
There are other attractions besides this in
the combination, and there are advantages
from a practical railroad standpoint which
equal this illustration.
1.-THE day has passed in this country for
wildcat schemes to succeed. The country
is a substantial business basis. The
question now uppermost is how to conduct
business in the most economical and advan-
tageous manner. and the combination has
resulted. and has proved beneficial. 1t can
not be abandoned on any good ground. 1t
is substantial business principle and no
matter what the courts may decide, they
are only helping to develop this principle
and get 1t down to a solid legal foundation
where, when it has been placed, it will be-
come of the cardinal principles of our
industrial world"
When asked If there We're not many more
mergers planned. pending the result of the
proceedings against the Northern Securi-
ties Company, the official said that this was
undoubtedly the case. He predicted that
these mergers would be made eventually
that many amalgamations of railroad in
tereSts had been successfully ACCOMPLISHED
'The development Of the south within the
last ten years" he said may be taken as
a direct result of the amalgamation of the
numberless little railroad systems into sew
eral larger ones, with the result that in
stead of working at cross purposes, the
roads have turned their attention to de-
yelopment of their territory with telling eff
feet"
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