The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1906-02-02
PROBE OF PENNSY
NOT UNEXPECTED
Many Have Looked for 1t Ever
Since Decision in North
ern Securities Case.
HOW HOLDING IDEA STARTED
Scheme Originated Under the
Hat Worn BY James J. Hill,
OF Railway Fame.

(F'rom Our Regular Correspondent) Il
WASHINGTON, d. c., February 1.-The
friends of the Pennsylvania Railroad are
more stirred than they will admit by the
resolution which passed the Houes. call
ing on the President for information con-
corning the alleged control OF the Chesa-
peake and Ohio the Norfolk and Western,
the Baltimore and Ohio, and other roads.
by the nrst-named company. 1t may be
stated with absolute positiveness that the
friends OF the Pennsylvania fear that
the investigation of the control of these
three roads by the Pennsylvania will
reveal a condition OF affairs similar to
that which the Supreme Court OF the
United States found to exist In the now,
celebrated Northern Securities case. and
that the result will be n prosecution in
stitutcd by the Department of Justice to
compel the relinquishment of the control;
by the larger road.
The community of interest plan, such
as that which the Pennsylvania adopted
in order to get control of these three
coal carrying roads of the South. orign-
ated with a great corporation lawyer in
New York several years ago. This lawyer
suggested. III an entirely tentative way.
that the directors of the big road could
be represented on the boards of smaller
roads in such a way as to practically
give to the larger road the control of the
smaller. OF course. this representation
was to be secured only through the pur-
chase of stock by individuals who were
already stockholders of the road which
desired to gain control of other property
of like character. The plan was sug-
gester on the afternoon of the day that
the courts gave decision in the Trans Mis-
souri, Traffic Association case. Things
IN p1 FL, no nj ba ,t.y
roads, and it seemed as If steps would
have to be taken to undo all the work
which had been done towards unlfy!ng
the great systems of the country.
Accomplished the End.
The community-o f-interest suggestion
was we'll received 1t was adopted by
President Cassatt, of the Pennsylvania,
and by Mr.. Vanderbilt. Soon afterwards
1t was announced that the Pennsylvania
had secured large blocks of the stock OF
the Virginia roads. and would be repre-
scented on the boards of the three roads
The Pennsylvania has never admitted Of
ficially that II had secured the control
of the Chesapeake and Ohio or OF the
Norfolk and Western or of the Baltimore
and Ohio. 1t has not done SO in the
strictly legal sense, but the community
of-interest plan was intended to accom-
Representative Gillespie, author OF the
resolution for an investigation. that the
Pennsylvania actually got control OF the
roads, though it did not own majority
of the stock of any one of them.
There have been often heard chorge5
that the community-of-intarcst plan Is
only subterfuge, similar 10 The s"iin,ia
embodied i'll the organization of the North
ern Securities Company. This company
was formed for the purpose of holding
the stock of two great railway lines.
competing lines-the Northern Pacific and
the Union Pacific. The scheme originated
in the great brain of James j. HILL As
the head of the great Northern Pacific
Company. he wanted to get control or
the Union Pacific, but he could not do so.
save through the adoption of the COM
munity- of-interest plan. He did not like
tins, so he adopted the idea Of holding
company, composed of the stockholders
chiefly of the Northern Pacific. There
was public cutlery at once against this
evasion of the law against the throttline
OF railway competition, and finally the
case got into the courts, with the govern
ment as the prosecutor. The Supreme
Court decided that the securities company
was an unlawful corporations: it was COM
PEELED to disband, and the Union Pacific
is now said to be independent OF the
Northern Pacific
Morgan Opposed Plan.
}. Plerpont Morgan, 1t is said. never
approved OF the scheme for the organiza-
ton OF a holding company. which should
own the stock of two railroads which the
law would not allow to merge His opin-
ion of the community-of- interest method
is not known.
the courts have never in any way pass
ed on the community of interest method.
The public knows that 1t is only in
reality, corporations acting in partner
ship to secure the control of other prop
erty. The Richmond, Frederlcksburg
and Potomac, otherwise known as the
Washington Southern, is controlled by
several roads, exemplifying the commu-
nifty of Interest idea in a sort of inverse
way
The charge that the investigation is
the result of the Pennsylvania in re-
lusing to issue passes to members OF
Congress. is hardly true. There have been
mutterings for several years which in
dicated the approach of the storm. and
the anti-pass order has been in operation
ONLY since the first of the year. The
author of the resolution, Texan, does
not ride on the Pennsylvania once
year There is a story back of the res
oluton which may be made public some
day, hut all the fact preceding Its in
PRODUCTION cannot be printed now.
Representative Gaines. of the Third
West Virginia District, introduced n
resolution two years ago to have Invcsti-
gated the manner in which the Pennsyl-l
vanilla controlled the three smaller roads.
but he did not claim it was privileged,
as Mr. Gillespie did for he did not di-s
rect 1t to the President of the United
States. The result was that the Gaines
resolution went to the Rules Commit
tee. and there is sleeping. BY max
$1fsK MEkEaAgABsls