Newark evening star and Newark advertiser. [volume] (Newark, N.J.) 1909-1916, 1913-08-02
Washington
' ' LETTER
BY II. D WALKER
star sta1 ro--..no.a.-.
SWAPPING RAILROADS SILLY

the guise of regulating railroads and
enforcing competition is the trans
action now in process, with the ap-
prevail of the department of Justice
of converting two railroad monop-
olies into two competing systems.
Through stock ownership the
Pennsylvania railroad controls the
Baltimore and Ohio railroad, which
are parallel lines. The Southern
Pacific controls the Union Pacific,
which are parallel lines. OF course.
that makes two railroad monopolies.
| The Pennsylvania is not going to
cut rates to get business away from
the Baltimore and Ohio, which it
controls. nor is the Southern Pacific
going to permit rate-cutting on
either of it's lines.
To get rid of this situation. which
the courts and the department of
| justice declare to be contrary to the
| Sherman act, it is now proposed that
there be a trade of ownership The
Pennsylvania is to swap its control
of the Baltimore and Ohio for one of
| the Pacific roads, and the Pacific
road is to swap control of its parallel
line for control of the Baltimore
and Ohio. so there will be- with their
controlled connections, two trans
continental systems, under different
ownership and control.
scheme Is Impractical.
Theoretically and legally, this is to
destroy the railroad monopoly and
establish competition. The arrange
ment is approved by the attorney
general as meeting the requirements
of the Sherman act, and regulation
has accomplished another great vic
tory in destroying another wicked
monopoly.
So far as practical results are con-
cerned, the whole thing is as silly as
possible. It's economics are about as
sensible as the physics taught In
Alice in Wonderland.
There was a tremendous howl
| few years ago when Theodore Roose-
welt seriously proposed that railroads
! be allowed to pool their earnings.
/ Such a thing, of course, would nave
meant abandoning the pretense OF
railroad competition. Actually, there
| has been no such thing as railroad
competition for years, and there never
will be, or can be, such thing again.
petition is absurd.
The sole idea of competition, in any
thing, is that to get the business, one
concern will offer lower prices or
| better service than it's competitor.
Nobody suspects seriously for mo-
ment, though, that merely because
there is a transfer of stocks and
| bonds. a rate cutting fight between
the Pennsylvania and B, and o will
fOIlnW Nor &c fI,ara cItcrininn fhof
piecing together two competitive"
Unconstitutional railroad systems Is
going to result in any reduction what
ever of passenger or freight rates
from one side of the continent to the
other side.
Railroad rates are made on the
basis of all the traffic will bear.
Rates and classifications are fixed,
not by each road separately, SO far
as points on competing lines are con-
cerned, but by associations in which
all the railroads in the same territory
are represented.
All Out for the Money.
The Pennsylvania wants to make
all the money and pas as big divi-
dends as possible. So does the B. and
0. management. To do so, they've got
to get the highest rates possible for
hauling people and freight. There is
so much business to be carried If
one road started in cutting rates to
get more of the business, it might
succeed for a time, but in the long
run the effect would be that both
roads would be doing business at
lower rates. and making less money,
instead of more. So there is no pos
| sibi1ity. ever, of railroad rate cutting.
| The effort of all railroad manage
ments, everywhere, is to increase
rates and earnings. The mere ques-
ton of ownership of stocks or bonds
In competing lines has no more effect
| upon rates than has the question of
which way the wind blows.
| And the rates will be fixed, always.
not by the railroad best equipped
and able to give'the best service. but
| by the road poorest equipped and
which gives the poorest service
| Take for instance the Lackawanna
and Erie Railroads, between New
| York and Buffalo. The Erie, for long
years bankrupt and without equip
ment, its stock watered to the point
of saturation by Wall Street gamb-
| lers, was a wreck. In order to pay
dividends on it's capitalization. il
must earn profits much higher than
needed by the Lackawanna, whose
stock represented a fairer approx
/ mate of actual investment
! Between these two roads, the Lack
awanna could earn a profit and nav
| dividends by making rates on which
| the Erie would starve to death. So
what happens? The rates between
! New York and Buffalo, on all the
competing" railroads, are made the
same for similar service, so that the
Erie may have a chance to live and
! earn dividends on it's millions OF
| watered stock. All the other roads
regardless of their needs and profits
charge the same rates as the Erie
| They've got to do so. The DAYS OF
railroad wrecking and rate cutting
are over. No matter what silly hocus-
pocus may be extensively agreed
upon by the courts and Congress
and the lawyers for keeping alive
railroad competition, there is no such
thing as railroad competition. There
can be no such thing.
The Price of Our statesmanship.
The railroad monopoly is com.
plete. Railroads in their very ma.
ture should be a monopoly, and tn,
| natural law of economies has mad,
joke of the silly efforts to force
a natural monopoly to be broken int,
competitive units.
Sane and sober legislation on tn,
subject will sooner or later recognize
that the country can be better an,
more cheaply served by a railroad
monopoly owned by the people thai
by private monopoly which onl,
near sighted and stupid politicians o
old-fashioned ideas refuse to recog
nize as such.
The billion dollar year profits pal,
to the railroad monopoly out of tn
pockets of the wage-w workers an,
consumers of the country, in the form
of high rates. is the price paid 70
the brand of craftsmanship which il
concerned with technicalities of tn
antitrust law, rather than with tn