The Washington herald., 1907-06-07
FRIDAY. JUNE =. 1907
A Notable Railway Merger

An interesting study in the control Of
interstate railroad corporations OF lack
Of il. through State governments. is af-
forded by the merger Of the New Haven
and Hartford and Boston and Maine sys-
tens. which brings under unified man
agement the most important tTaHsporta-
ton interests Of New England In order
20 effect the merger, the New Haven road
obtained from the Connecticut legislature
an amendment 10 its charter giving it
power "to merge, consolidate, and make
common stock with any or all corpora
tons engaged in transportation" As the
Boston and Maine is a Massachusetts
corporation. this action Of the Connect
cut legislature gave the New Haven road
authority 90 absorb corporation char
tered by neighbOring Commonwealth
and having lines reaching out into sew
eral other States The proposed merger
naturally attracted the attention Of Gov.
Guild. Of Massachusetts. who wrote Pres
ident Mellen. of the New Haven road, for
information respecting it, This he
promptly received. together with a de
fense of the merger as tending 90 the
betterment Of railway facilities through
out New England. to the development Of
an increased revenue for the roads con-
Cernad, and possibly 20 a reduction of
rates Mr. Mellen declared that no stock
watering was contemplated, and pooh
poohed the idea that misuse of power
would follow the combination.
Gov. Guild appears not to have been
wholly reassured by President Mellen's
communication, for in message TO the
legislature transmitting his correspond
ence with the railroad president, he urged
further legislation safeguarding the pub
lie interest, especially with reference 10
the possibility that at some future time
the increased profits due to the merger
might be made the basis of a stock in
fation. He asked that the public be pro
tected from any stock-watering device or
extra distribution Of dividends. 20 he
taken ultimately from shippers and pas
sengers in the shape of excessive
charges"
II is conceivable. Of course. that the
Nfellen combination may operate to the
advantage Of the public as well as that
of the investors, but the means by which
Il has been brought about show that no
public body was consulted except the
legislature OF Connecticut, which State
made a grant Of extraordinary powers
affecting the welfare Of the people OF
several States. without any correlative
power 10 safeguard any interests outside
It's own boundaries. In effect. Connecticut
bestowed upon one Of its own corpora
tons the right TO go into another State
and seize upon the vitals of a corpora
ton chartered by that State and subject
70 its regulation. The Boston and
Maine, except in name. virtually disap.
pears as a Massachusetts corporation
becoming subject TO the manipulation OF
the directors Of a foreign corporation. II
is doubtless this feature Of the merger
that eKcites the apprehension Of Gov
Guild. and well X may. for a single Com.
monwealth, sovereign though # may be
within its own territory, cannot follow
with regulative statutes the ramifica-
tons Of a mighty railway system extend
ing over half a dozen Commonwealths
though it may become a victim of the
pretudicial action Of a neighboring State
harboring an offending corporation.