The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1907-07-14

States soliciting traffic over their respec-
tive lines. they now have common agents
and solicitors who represent the unified
Union Pacific and Southern Pacific sys-
TEN.
1T is claimed by the Union Pacific,
continues the report, that the principal
reason for acquiring the Southern Pacific
was 10 obtain the Central Pacific connec-
ton from Ogden to San Francisco. It is
undoubtedly true that this is a desirable
connection for that company; but.
whether purchased or not, the Central
Pacific is required TO form a through line
OF transportation with the Union Pacific,
and not to discriminate against II in the
receipt and transportation of freight and
through traffic.
The report declares that there Is a con-
sideration of national policy arising out
OF the history of the Union Pacific, the
Central Pacific, and the Southern Pacific
roads which distinguishes a combination
OF such roads.
Backed ny the Nation.
The Union Pacific and the Central Pa
oifc.' it says. were born out of ma
tionaI sentiment and need. The nation
felt the necessity for rail- connection to
its isolated Pacific Coast territory. and
for this purpose, and 10 an unprecedented
degree. pledged its own credit and do
mated It's own lands 10 create national
highway between the Missouri River and
the Bay of San Francisco. In every
statute passed by Congress affecting these
two roads there is TO be found proof of
the existence of such a policy They
were to be built toward each other-one
from the East and one from the West
and were to form one continuous line.
which was TO remain for all time availa-
bic TO the business and governmental
necessities Of our people
There is then quoted in the report the
act of June 20. 1874. which provides that
any officer or agent Of the companies"
Central Pacific. Western Pacific, Union
Pacific. Kansas City and Denver Pacific
authorized TO construct the aforesaid
roads, or any company engaged in Oper-
ating said roads. who shall refuse TO
operate and use the road or telegraph
under his control" or shall refuse in
such operation and use to afford and
secure to each Of said roads equal ad
vantages and facilities as to rates, time,
transportation. &c. is deemed guilty Of
a misdemeanor and punishable by fine
not exceeding $1,000 and by Imprisonment
of not less than six months.
Under Public Obligation.
The fact that the Union Pacific and
Central Pacific companies were thereafter
separately recognized under the laws OF
Utah and acquired these lines do not
rolgo,.o tho,,, Froy, .bo -.,,hlf, .Ltt~-. 49,
imposed By the acts of Congress-" con
tinues the report. 1.-THE Union Pacific
was. therefore. forever guaranteed. with
out purchase. connection with the Cen.
trail upon terms as favorable as might be
given 20 any other connection" The
commission. in framing its report. paused
for while to praise Hartman, as fol-
lows:
1t has been, however, no part OF the
Hartman policy TO permit the properties
which were brought under the Union Pa
ciflc control to degenerate ard decline; as
railroads they are better properties to-day
than they were when they came under
that control Large sums have been gen
erously expended in the carrying on of
engineering works and betterments which
make for the Improvement of the service
and the permanent value of the property
The commission tells how the San
Pedro, the road built by former Senator
William A Clark. of Montana, came I'M
der the control of Hartman. This trans
action has been outlined heretofore The
San Pedro and the Union Pacific entered
into an agreement whereby the two roads
maintained the same rates, charges. and
classifcations on competing business.
Agreement Now Abrognted.
The roads contended that the agree
ment covered only business within the
State of California. The agreement was
abrogated in April on the ground that
the legislature Of California at its last
session enacted a statute prohibiting con-
tracts in restraint of competition.
The commission squints at another pos
sible violation of laws in the control of
the Union Pacific and the Rock Island
over the Chicago and Alton.
Harriman's dealings with the Alton is
treated at great length. No new light Is
thrown on this particular transaction
The report refers 70 the Alton deal as "iI,-
defensible financing"
by way of justification or excuse" the
report says, however, I'VE are told tina
the methods of the financing of RAILROADS
which prevailed IN the year 1900 are now
obsolete, owing TO higher degree Of con-
scientiousness among financiers. and,
moreover. that the Chicago and Alton
should not be regarded as an isolated in
stance inasmuch as il was dealt with
much as many ether roads were at that
period. The first OF these statements IS,
we trust, true; the latter statement is not
calculated TO uphold the value Of Ameri-
can railroad securities"
1T is true, however, as contended, that
a close examination of the method Of
capitalization adopted in the case of the
Chicago and Alton shows that while the
total of bonds and stocks was doubled.
there was no such proportionate increase
in the fixed charges of the railroad.
Fixed Charges Not So Great.
Under the Blackstone managemant.
when s per cent was paid on the stock
and but a small bonded debt rested on
the property, the yearly charges for divi-
dends and interested amounted TO g, 49,
9S6. whereas with the greatly increased
present capitalization the yearly fixed
charges amount 10 but S3,47I.59O This. Of
course, takes no account of che present
common stock. upon which no divIdendsY
are paid. The plan adopted WIS to sub
stitute long-term bonds and guaranteed
stock bearing an exceptionally low rate
Of interest forscommon stock which paid