The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1907-04-06
Interstate Commerce Com
mission Concludes Inquiry.
MAY PROSECUTE RAILROADS
I've Points 10 BE Considered In
Bringing Action In Courts-CounSeI
"Fafr PIay7-YanderbiIt and Other
Systems should Not lie Excepted.

I system was concluded before the inter-
state Commerce Commission.
The commission will now take the case
under consideration with a view 10 action.
The Hartman railroads may be prose-
cuted for violations of the act 10 regulate
/ commerce. as well as on "a charge that
/ they are operating in restraint of trade.
| over the first point mentioned the com
mission has jurisdiction. The second must
/ be decided by the Attorney General.
| The management OF the Union Pacific
and the Southern Pacific and Hartman
"syndicating' o. The Chicago and Alton,
were argued at length yesterday. Frank
b. Kellogg and c. A. Severance, counsel for
/ the commission, cOntended that the Har-
riman lines, as at present conducted. con-
stituted a combination in restraint OF
trade. and they vigorously condemned the
questionable financiering that character
| lied Harriman's handling Of the Alton
property. John O. Milburn and X. $.
| Lovett combated the proposition of
Atessrs. kellogg and Severance as to the
Hartman lines as a whole. and defended
/ Mr.. Harriman's course in manipulating
the Alton for the benefit of himself, Gould,
Schff, and Stillman.
Pleads for Fair Play.
| Mr. Milbum made plea for fair
lplay." as he put it. He begged that before
faction was taken as regards the Hartman
roads the commission should inquire into
/ the operations Of the Pennsylvania and
+ the Vanderbilt systems. the Northern Pa
cihc, and the Rock Island. He declared
that railroad management was alike on
/ all roads. and that ii one was operating
outside the pale of the law all roads were
equally guilty.
IF the politicians would only let this
/ body alone. let it consider these great
problems which are coming before it-Of
more Importance than lawsuits in the
/ courts-it would be a great deal better all
around" he said Let the people come
/ here and YOU decide their cases in calm
/ ness. Again ] appeal for fair play Don't
pick as out; treat an alike
Mr.. Milbum laid down several funda-
mental propositions in support OF the
contention that there was no violation Of
/ the Sherman antitrust law in the puT-
chase of the Southern Pacifc by the
Union Pacific or ia the conduct of the
two roads. These propositions Will form
/ the basis Of the defense If the case
against Hartman is taken into the courts.
Propositions Outlined.
! They were outlined as follows:
/ J. A restraint of trade to be within the
antitrust act must be a direct immediate.
ana necessary effect Of the transaction.
and not merely an indirect or incidental
result.
/ . A restraint Of trade consequent upon
a purchase of property. in any Of its
+ various forms, is incidental merely. and
therefore not within the act.
/ 3. The purchase must, OF course, be
real; IL a mere device for the suppression
/ OF competition, as it was held To be IN the
/ Northern Securities case, while it may be
effective 10 operate upon the legal title as
/ between the parties, it is, In fact, unsub-
stantial ana may be disregarded.
/ T. Provided the purchase be real and
substantial. the motive which induces IL
cannot affect the result; for any resultant
restraint OF trade is still only coasequen-
/ tial and incidental 10 the exercise of an
absolute and undouhted right; that is, the
right to acquire property.
] 8. Therefore, the purchase by "A railroad
company, within it's corporate powers. of
an interest in another line of railway, is
not within the act because the restraint
upon trade. if any, is not direct, but
merely incidental 10 the purchase.
/ G. If, however. the purchase by a rail-
road company, within its corporate pow
Elss Nl "a llllt AA runway AflcaAF ~ suppress
competition. be obnoxious TO the act. that
result does not follow if the purchase be
made for a legitimate and proper purpose
of the purchasing company.
/ z. In any event. a purchase by railroad
company of an interest in a line OF rail-
way which is not parallel and competing,
( is not within the act
8 The purchase by the Union Pacific
I of its interest in the Southern Pacific was
not made to suppress competition. but to
protect its property by an extension Of its
line in that way 10 the Pacific Coast
! g. The Union Pacific and Southern Pa
ciic are not parallel or competing lines
or systems.
Refers to Illinois Central.
Mr.. Severance followed Mr.. Milburn
He took the position that the Union Pa
cidc and the Southern Pacific were I'M
doubtedly operating in restraint Of trade,
and that this was true, whether or not
the two roads We're operated and con-
/ trolled by a common ownership. He re-
feTred 10 the Union Pacincs ownership
| of the Illinois Central Judge LOyett, OF
/ counsel for Hartman, objected to the
/ statement that the Union Pacific con-
| trolled the Illinois Central Mr. Sever
/ ance replied that Mr. Kohn had testified
al New York that 29iz per cent of the
/ Illinois Central stock owned by the Union
Pacific was sufficient to control under
/ ordinary conditions. This control. Judge
/ Ilovett interrupted, was merely a legal
conclusion.
Nj Severance declared that a hard and
fast agreement had been made between
the Oregon Short Line. a Hartman road,
and the San Pedro road, covering rates
as we'll as business, and containing fea-
lures that were of unusual interest, The
agreement wac to cover a period of nine
ty-nine years During that time neither
road was to build IN the territory of the
other The agreement was so strong that
neither party to il could even advise a
third party to build in the territory OF
extend lines into the territories of the
lnegotiators. This tended to show. he
maintained. that a combination existed
that restrained trade within the meaning
of the Sherman antitrust act.
should BE Punished.
I At the outset of his argument Mr.. Kel-
Iogg addressed himself to the plea Of Mr.
Il AIilburn that the Hartman lines should
not he singled out for investigation and
possible prosecution while the practices
Of other roads We're overlooked. If the
/ Hartman lines were guilty of wrongdo-
ing. said Mr.. Kellogg, they should be pun
/ ished and the fact that other roads were
likewise guilty was no excuse why the
government should pause In the pending
case.
when the Northwestern merger was
dissolved said Mr.. Kellogg. 1T was pre-
dicted that dire results would follow
1T did not change the practices of the
Great Northern and the Northern Pacific
/ Al "a 81 81 Nh
III the government had not stepped in
and prevented that control at its inceD-