The daily morning journal and courier., 1907-07-15

Pacific and the construction of the San Pedro road this line has ben denied equal facilities in the receipt and trans portation of freight over the Central l Pacific and the San Pedro lines Its business, thereore, has decreased, and its ability to compete with the Union Pacific and Southern Pacific impaired. ! On this account the Gould lines are aiding the construction of another line from Ogden to San Francisco.
 The joint control of the Alton Rail- way by the Union Pacific and the Chi cago, Rock Island and Pacific Railway Company has undoubtedly eliminated 1 competition between the Alton and the Rock Island between Chicago, St. Louis and Kansas City.
 l These are conspicuous illustrations of { the development of the theory of ',com- munity of interest" and ''flarmony of management" which Mir. Hartman suggested when he demanded repre- sentation upon the Santa Fe board. Recommendations,
 l RSSOAllhe4udtlols UT SeHclal pollCy aro stated as follows:
 CD The function of a railroad corpor- ation should be confined to the furnish ing of transportation. Railroads should not be permitted to invest generally ] in the stocks, bonds and securities of other railway and of steamship com | panies except connecting lines, for the purpose of forming through routes of transportation, including branches and feeders It is in the interest of the public to facilitate the consolidation of connecting lines The credit of a rail- way company is founded upon the re- sources and prosperity of the country through which 1t runs. It's surplus funds and credit should be used for the betterment of its lines and in extensions and branches to develop the country contiguous to 1t. The testimony taken upon this hearing shows that about 30, O00 square miles of territory in the State of Oregon, surrounded by the
 lines of the Oregon Short Line Rail- road Company, the Oregon Railroad and Navigation Company and the
 Southern Pacific Company, is not devel- oped while the funds of those com
 panies which could be used for that
 purpose are being invested in stocks
 like the New York Central and other lines having a remote relation to the
 territory in which the Union Pacific sys tenn is located
 Railroad securities sholud be safe and conservative investments for the peo-
 pe To this end the risks of the rail-
 road should be reduced to minimum
 Everyone knows that railway securi-
 ties fluctuate more or less according to the prosperity of the times and also
 by reason of the wide speculation 1T
 such securities. It therefore adds al element of hazard to railroads cap
 ital and credit to have it's funds in
 vested in the stocks of other com
 panies, thereby endangcring it's solven'
 cy and lis ability to pay reasonable
 dividends upon it's own capital stock. Il
 is serious menace to the tinancia
 condition of the country to have large
 railway systems fail to meet their ob
 legations or go Into the hands of re.
 ceivers, and the object of Legislation
 and administration should be to lesser
 the risks of railway investments.
 @ It Is contrary to public policy as
 well as unlawful for railways to ac.
 quire control of parallel and compet
 ing lines This policy is expressed 1T
 the federal laws and in the eonsti
 tutions and laws of nearly every State in the Union We have examined the Constitutions and laws of all the
 States and find in about forty of then prohibitions against consolidation of
 capital stock or franchises of compet-
 ing railways or the purchase and ac- qiusition by railway of competing
 lines Competitor between railways as
 we'll as between other industries is the
 establisher policy of the nation. AnC
 while the acquisition of a small min ority of the stock of a competing line
 might not decrease the competition
 yet the acquisition of any considerable
 amount of stock with representation on the board of directors of such rail. way unquestionably has the effect oi ]; diminishing competition and lessenine to that extent It's effectiveness. Sc long as it is the policy of the genera
 government and of the States to main.
 tain competition between naturally
 competing lines the ownership of any
 stock by one railway in a competing l railway should not be permitted, ant
 such lines of railway should be pro.
 hlbited from having any common di-
 rectors or officers.
 (S). The time has come when some reasonable regulation should be i'm. posed upon the issuance of securities by railways engaged in intersatet com. merCe. We are awrt athat in the con. struction of new lines of railway, de. veloping new territory, it has been ne. cessary in many instances to sell rail. way securities at lagre discount ant to sell bonds with stock bonuses, ant } even in such cases 1t has many times . ben defficu1t to raise the necessary capital. Men will not invest theil ' money and take the risk for smaI rates of interest.
 But this principle does not apply tt : old established railway systems hay. . ing good credit. Such r ailway' should be prevented from initiating
 their securities for merely speculative purposes. Railroads should be en couraged to extend their systems ant develop the country. It is of the ut : most importance also that railway se curities should be safe and conserv' ative investments foi the public ant ; should yield good and ample return fol the money invested. Reasonable regu