Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-07-14

should be confined to the furnishing Of
transportation Railroads should not be
permitted to invest generally in the stocks,
bonds and securities of other railway and
of steamship companies, except connecting
lines, for the purpose of forming through
routes of transportation. including branches
and feeders. 1t is in the interest of the
public to facilitate the consolidation Of
connecting lines.
THE credit Of a railway company is
founded upon the resources and prosperity
of the country through which 1t runs. Its
surplus funds and credit should be used
for the betterment of its lines and in eX-
tensions and branches to develop the coun-
try contiguous to it. -..-
The testimony taken upon this hearing
shows that about 10000 square miles Of
territory in the state of Oregon, surrounded
by the lines of the Oregon Short Line Rail-
road Company, the Oregon Railroad and
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 invested
in stocks like the New York Central and
other lines having only a remote relation
to the territory in which the Union Pacific
system is located.
Railroad Securities.
RAILROAD securities should be safe and
conservative investments for the people.
To this end the risks of the railroad should
be reduced to a minimum. Every one
knows that railway securities fuctuate
more or less, according to the pros
perty of the times. and also by reason
of the wide speculation in suchc securities
1t therefore adds an clement of hazard to
a railroads capital and credit to have it's
funds invested in the stocks of other COM
panes. thereby endangering it's solvency
and its ability to pay reasonable dividends
upon its own capital stock. 1t is a serious
menace to the financial condition of the
country to have large railway system fail
to meet their obligations or go into the
hands of receivers, and the object of legis-
lation and administration should be to les
sen the risks of railway Investments.
1T Is contrary to public policy, as we'll
as unlawful for railways to acquire con-
troll of parallel and competing lines. This
policy is expressed in the federal laws and
in the constitutions and laws of nearly
every state in the Union. We have exam
ined the constitutions and laws of all the
states, and find in about forty of them pro-
hibitions against consolidation of capital
stock or franchises of competing railways
or the purchase and acquisition by rail
way of competing lines.
Competition between railways as well as
between other industries is the established
policy of the nation. And while the ac-
QUESTION of a small minority of the stock
of competing line might not decrease the
competition. yet the acquisition of any con-
siderable amount of stock with represen-
tation the board of directors of such
railway, uEquestionably has the effect OF
diminishing competition and lessening to
that extent its effectiveness. So long as 1t is
the policy of the general government and
of the states to maintain competition be-
tween naturally competing lines, the own
ership of any stock by one railway in
competing railway should not be permitted
and such lines of railway should be pro-
hibited from having any common directors
or officers. o.
Reasonable Regulations.
THE time has come when some reason
able regulation should be imposed upon
the issuance of securities by railways en-
gagged in interstate commerce. We are
aware that in the construction OF new lines
OF railway, developing new territory, it
has been necessary in many instances to
sell railway securities at large discount and
to sell bonds with stock bonuses, and even
in such cases it has many times been diff
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
established 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 de-
velop the country. 1t is of the utmost i'm
portance. also, that railway securities
should be safe and conservative investments
Tor the public. and should yield good and
ample return for the money invested Rea-
sonable regulation will tend TO male to-,
safer and more secure Investments nnd
thereby benefit not only the raiiwav' oo "nu
panies, but the public" ~''''
Commissions Conclusions.
After comprehensive review of the evil
dence taken in the case the commission
states its conclusions as follows:
The effect of the control of the South
ern Pacific by the Union Pacific has been
to unity and amalgamata the management
of these two railway companies and their
steamship lines, and to eliminate competi-
ton between them in transcontinentaI bust
ports.
The Union Pacific. as has been shown.
| controls the San Pedro, Los Angeles and
Salt Lake railroad. the stock Of which is
deposited in the hands of trustee This
line was originally intended as an indie
pendent road. extending from Salt Lake,
where IT connects with the Union Pacific
and with the Denver and Rio Grande. to
Los Angeles and San Pedro, Cal. Theirs
u.s. therefore. no competition between this