Evening star. [volume] (Washington, D.C.) 1854-1972, 1906-12-31
QUESTION OF COMPETITION
To Determine Whether q. P. and S. P.
Lines Are Parallel.
EXTENT OF THE INQUIRY
Understood That Specific Charges of
Mismanagement in Financing
Will Not Be Considered.

NEW YORK, December 31.-With perhaps
a keener interest than has been shown in
any like event since the investigation into
life insurance companies by the Armstrong
committee, the financial world awaits the
opening Of the inquiry which the interstate
commerce commission will begin this week
into the financial structure and operation of
what is popularity termed the Hartman
system OF railroads The hearings are to
open in this city next Friday, and it is
probable that E. H. Hartman himself,
obviously the star witness, will be among
the first to be put on the stand.
For months past all sorts of rumors have
been drifting into Wall street as to the pos
stbilities. OF probabilities. of this investiga-
ton. Various recent events, such as the de-
posing of Stuyvesant Fish from the Illinois
Central presidency, or, little further back
the declaration of 10 per cent dividend on
Union Pacific under circumstances that at
tracted widespread comment, have given
currency to huge variety of suggestions
as to the channels into which the Interstate
commerce commissions probe might lead.
But within the last few days authoritative
information has been received by important
banking interests that indicates pretty
closely the line of inquiry that will be fol-
lowed.
Whether They Are Parallel.
AS stated by man who had it from
first-hand sources. the proposition of the
interstate commerce commission will be to
find out first whether the Union Pacific and
Southern Pacific systems may be considered
as parallel or competing lines or as consti-
tuting a combination in restraint of trade
within the meaning of the Sherman anti
trust law, invoked in the Northern Securi-
ties prosecution. Secondarily, and as dis
tinct matter from the major inquiry, the
commission Will seek to discover whether
the Oregon Short Line, Central Pacific and
San Pedro, Los Angeles and Salt Lake, the
latter road which Senator Clark started
to build in which the Oregon Short Line has
a half interest make up similar category.
1t is understood that the commission will
take the position that specific charges of
mismanagement in the financing opera
ton of any Of the Hartman roads will not
come within the scope of it's inquiry, ex-
cept as they may affect questions of dis
sonabeness of rates. The reason for this
stand appears to be that questions of mis-
management. except as specified, are not
grievances Of the United States govern
ment In its function of regulating COM
merce. but are grievances of the stock
holders or bondholders of the road, as the
case may be.
Will Shut Off Charges.
This decision, If adhered to. will shut off
a good many lines of inquiry that Wall
street has been anticipating with some
eagerness. Charges growing out of the
management of the Kansas Clty Southern
under the late voting trust and more recent
talk concerning the doings of the Hartman
road. as well as the recent Illinois Central
incident and the Union Pacific dividend cpl
Sode, are all topics that have been Sug-
geSted every time the commissions inquiry
has been preached. But the indications
are, as stated, that such matters will figure
only indirectly as they may in isolated
cases have a bearing upon the questions
upon which the commission takes jurisdic-
ton.
Vast Systems Are Joined.
In view of this a pretty accurate idea Of
the problem to which the commission will
have to address itself may be gained by
looking at the relations which the various
Hartman and semi Hartman roads bear
to each other through stock ownership
keeping in mind at the same time the prin-
cipal points which their tracks connect
The Union Pacific is, of course, the parent
of the system, with it's lines proper ex-
tending from Omaha and Kansas City to
Ogden. Utah.
Considering, for the purposes of the dis
man control, one has for the eastern focal
points either Chicago or Omaha on the
north and New Orleans on the south.
The western points, north and south, are
obviously Portland, Ore, and Los Angeles.
by the Southern Pacific and its
roads, with San Francisco as a
center. 1t is a tremendous range of coun-
try that Is inclosed within these bounda-
ries, with the Atchison. Topeka and Santa
Fe road, in which Union Pacific interests
have all
through it, south from Chicago into Mexico
and thence westward into Los Angeles and
lp into San Francisco. And the Union Pa
cific's side of the case is at first sight
by this very element of dis
ance.
Not Competitive, the Defense Made.
1t is contended that the north and south
terminals of the system at each end are
SO far apart and serve so widely different
commercial interests in the matter of ship
ping that the elements of restraint do not
Exist nor can the roads themselves be con-
,idered parallel and competing The other
view of the matter has been that traffic
from San Francisco or Los Angeles may
AXE either the southern or northern route
% the Mississippi. there to find the con-
meeting link in the Illinois Central railroad
hat furnishes the elements of competition
and therefore. of restraint.
This, of course, is where the Central Pa
,ific enters into the case, for where it is
necessary for freight from San Francisco
% seek Ogden. Utah. around by way of
Portland, and the Oregon Short Line. no
me would seriously contend that competi-
ion existed with the Southern Pacific's
quite via Los Angeles. But the Central
Pacific. running almost directly across the
Nevada deserts to Ogden, puts the matter
n very different light, and an additional
element of complication arises when one
considers the San Pedro, Los Angeles and
Salt Lake operating in the interest Of the
Union Pacific from Los Angeles I'D to
Utah.
So one is brought to the second line of
inquiry, affecting the Oregon Short Line
he Central Pacific and the San Pedro
from Ogden the three roads spread out like
he ribs OF a fan to Portland on the north.
o San Francisco on the middle coast and
o Los Angeles on the south. Connected by
he Southern Pacitic's north and south
ines, the basis for a contention that they
nay compete is not difficult to see And
t may be recalled in this connection that
he language of the statute is parallel or
oil hot tIa