The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1907-07-14

steamship lines and to eliminate compe-
| tttion between them in trdns-cOntinental
business and in business to and from ori-
entail ports,
The Union Pacific controls the San
Pedro, Los Angeles & Salt Lake railroad.
| the stock of which is deposited in the
| hands of trustee. This line was orig
inally intended as an Independent road.
| extending from Salt Lake, where it con-
meets with the Union Pacific and with
the Denver & Rio Grande to Los Angeles
and San Pedro, Cal There is. therefore.
no competition between this line and the
| Union Pacific and Southern Pacific.
Interest in Santa Fe.
1T appears that the Union Pacific also
| owns S10.OOo,O90 par value of the stock OF
the AtchisOn, Topeka q Santa Fe Rail-
way company, and about $S0,000,00O more
! is owned by individuals connected with
| the Union Pacific, making 100000. or
| substantially II per cent OF the entire
capital stock of the Santa Fe system.
Who owns this stock outside of the $10.-
100000 Mr. Hartman declined to state
! Two directors of the Union Pacific are
also directors of the Santa Fe company:
ana there is now q division of the orr
ental traffic by the Pacific Mail Steam
snip company between the Union Pacific
and the Santa Fe systems. 1t appears
mat there also has been a division of the
! fruit traffic between certain California
territory and the east, each taking GER
tain percentage; and that north of San
[ FRANCISCO the Union Pacific and the
Santa Fe have Joined and amalgamated
| thelr interests in the Northwestern Pa
elfic railroad, and that Joint control
has been inaugurated similar to that of
the Alton. -
Prior to the acquisition of the South
gTh racine by the Union Pacific, the
Denver & Rio Grande system. EXTENDING
from Denver, where it connects with va
r1ous lines to the east to Salt Lake and
ogden, was given equal facilities over
the Central Pacific, and thereby prac-
ticaliy formed another transcontinentaI
line Since the amalgamation of the
Union Pacific and Southern Pacific COM
Panies and the construction of the San
Pedro road, this line has been denied
equal facilities in the receipt and trans
portatlon Of business over the Central
Pacific and the San Pedro lines. Its bus
mess, therefore, has decreased and IT'S
ability to compete with the Union Pa
cific and Southern Pacific Railway com
panieS. has undoubtedly eliminated COM
petition between the Alton and the Rock
Island between Chicago, St. Louis and
Kansas CITY.
These are conspicuous Illustrations of
the development Of the theory of com
munity of inter est and harmony of man
agement,' which Mr. Hartman suggested
when he demanded representation upon
the Santa Fe board.
If the policy of the purchasing and
controlling. stocks in competing lines IS
permitted to continue, it must mean sup
preston of competition.
Recommendations.
''First-The function of A railroad cor-
poratlon should be confined to the fur
nishing of transportation. Railroads
should not be permitted to invest gener-
ally 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. 1t is in the interest of the pub
lie to facilitate the consolidation of con-
Meeting lines. The credit Of a railway
company is founded upon the resources
and prosperity of the country through
which it runs. Its surplus funds and
credit should b. used for the betterment
OF Its lines and in extensions and
branches to develop the country contigu-
Gus to it. The testimony taken shows
that about 10000 square miles of terri
tory in the state of Oregon, surrounded
by the lines of the Oregon Short Line
Railroad company, the Oregon Railroad K
Navigation company and the Southern
Pacific company, is not developed; while
the funds of those companies which could
be used for that purpose are being in
vested in stocks like the New York Cen
trail and other lines having only a remote
relation to the territory in which the
Union Pacific system is located
Railroad securities should be safe and
conservative investments for the people |
To this end, the risks of the railroad
should be reduced TO q minimum Every
one knows that railroad securities fIuc-
tuate more or less according to the pros
perity of the times, and also by reason
Of the wide speculation in those securi- |
ties 1t, therefore, adds an element of |
hazard to a railroads capital and credit |
to have its funds invested in the stocks |
of other companies, thereby endangering |
its solvency and its ability to pay regular |
dividends on its own capital stock. 1t is |
a serious menace to the financial condi- |
ton of the country to have large rail- |
way systems fail to meet their obliga- |
tionss or go into the hands of receivers, |
and the object of legislation and admin |
istratiOn should be to lessen the risks |
of railway investments.
Unlawful Investments.
'Second-It is contrary to public policy. |
as well as unlawful for railways to ac-
quire control of parallel and competing |
lines. This policy is expressed in the |
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 con- |
soidation of capital stock or franchises |
of competing railways. or the purchase /
and acquisition by a railway of Compel |
ing lines. Competition between railways |
as well as between other industries is /
the established policy of the nation. And /
while the acquisition of a small minority /
of the stock of competing line might /
not decrease the competition. yet the ac- /
QUESTION of any considerable amount of /
stock with representation on the board 1
of directors of such railway, unquestiOns /
ably has the effect of diminishing COM /
effectiveness. So long as it is the policy
of the general government and of the |
states to maintain competition between |
competitive lines the ownership |
of any stock by one railway in a COM |
peting railway should not be permitted
and such lines of railay should be pro-
hibited from having any common direc-
tors or officers.
Time for Regulation.
"Third.-The time has come when some
reasonable regulation should be imposed
upon the issuance of securities by rail-
ways engaged in interstate commerce
We are aware that in the construction of
new lines of railway developing new ter
ritoTy, it has been necessary in many in
stances to sell railway securities at large
and to sell bonds with stock
bonuses. and even in such cases it has
many times been difficult 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 established railway systems having
good credit. Such railways should be
prevented from initiating their securities
for merely speculative purposes. Rail-
roads should be encouraged to extend |
their systems and develop the country.
1t is of the utmost importance also, that |
railway securities should be safe and
investments for the public |
q nd should Weld nd 1