New-York tribune., 1907-07-14

tensions and branches 10 develop the country
contiguous 10 it, The testimony taken upon this
hearing shows that about 10000 square miles OF
territo-s in the State of Oregon, surrounded by
the lines of the Oregon Short Line Railroad
Company the Oregon Railroad & Navigation
Company and the Southern Pacific Company, is
nut developed. while the funds of those COM
panes which could be used for that purpose are
being invested in stocks like the New York Cen
tral and other lines having only remote rela-
tion TO the territory in which the Union Pacific
system is located.
Railroad securities should be safe and con-
servative investments for The people. To this
end the risks of the railroad should be reduced
10 minimum. Every one knows that railway
securities f1uctuate less, according to the
prosperity of the times and also by reason Of the
wide speculation in such securities 1t there
fore adds an element Of hazard to a railroads
capital and credit to have its funds invested in
the stocks of other companies, thereby endan-
gering its solvenCy and its ability to pay rea-
sonable dividends upon its own capital stock
1t is a serious menace to the financial condition
OF the country to have large railway systems
fail TO meet their obligations go into the hands
of receivers. and the object of legislation and
administration should be to lessen the risks of
railway investments.
C2) 1t is contrary to public policy, as we'll
unlawful. for railways to acquire control of
parallel and competing lines. This policy is
pressed in the federal laws and in the constitu-
tions 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 them prohibitions against consolidation of
capital stock franchises OF competing rail
ways, or the purchase and acquisition by a rail-
way of competing lines. Competition between
railways rs we'll as between other industries is
the established policy Of the nation. And while
the acquisition Of small minority of the stock
of a competing line might not decrease the COM
petition yet the acquisition of any considerable
of stock, with representation the
board Of directors Of such railway. unquestlon-
ably has the effect of diminishing competition
and lessening that extent its effectiveness So
long as it is the policy Of the general govern
ment and the states 70 maintain competition
between naturally competing lines. the owner
ship Of any stock by railway in competing
railway should not he permitted. and such lines
of railway should be prohibited from having
any common directors or officers.
90 The time has come when some reasonable
regulation should he imposed upon the issuance
Of securities by railways engaged in interstate
commerce. We are aware that in the COnstruc
ton Of lines of railway, developing new
territory, Il has been necessary In many in
stances to sell railway securities at large dis
count and To- sell bonds with stock bonuses. and
even iE such cases il has many times been diffi-
cult to raise the necessary capital Men will
not invest their money and take the risk for
small rates Of interest.
But this principle does not apply to old estab
Iisked railway systems having good credit. Such
railways should be prevented from initiating
their securities for merely speculative purposes.
Railroads should be encouraged to extend their
systems and develop the country 1t Is Of the
utmost importance also, that railway securi-
ties should be safe and conservative invest
rnents for the public and should yield good and
ample return for the money invested. Reason
able regulation will tend TO make them safer
and more secure investments, and thereby ben
eft not only the railway companies but the
pIIblic