The daily telegram. [volume] (Clarksburg, W. Va.) 1901-1926, 1914-05-01
SOUTHERN PACIFIC
FILES IT'S ANSWER
In District Court 1.-The Govern.
nenfs Suit to Divorce II
from Central Pacific.
DENIES ALL ALLEGATIONS
And Points Out How Lines
Were Built and being OPP
Grated as One Road.

ALT LAKE cITY. utah. May

The. Southern Pacific Company
fled today in the United States dis
trict court its answer In the govern
ment suit 10 divorce the Central PA
cihc from the Southern Pacific. The
answer, after specifically denying an
allegations that the Sherman anti
trust law has been violated, points
out not only that the two lines were
originally built, operated and de-
yeloped as one road, but that, as far
back as 1898. the United States gov
eminent itself practically recognized
the combination as wholesome.
1t asserts that in the joint opera
ton Of these lines, through trains
have been run by the most direct OF
convenient route without reference
to their ownership. and that any sep.
aration of the Central Pacific lines
from those of the Southern Pacific
cannot now be had without detri-
ment to both properties, and without
impairing and Mountaineering the
public service and the communities
1 through which the lines pass.
Historical Resume.
In brief historical resume. the
answer declares:
First-That the lines OF the South.
ern Pacific Railroad Company were
built as extensions and connections OF
the lines of the Central Pacific Rail
road Company, and by the same
stockholders.
Second-That as the lines of the
Southern Pacific Railroad Company
were completed they were directly
leased to the Central Pacific to be
Operated within It's lines.
1 Third-That on April 1, 1886, the
Southern Pacific Railroad Company.
to simplify the organization, took
over, under lease for ninety-nine
years, all the lines of both Central
and Southern Pacific, and has since
managed and developed them as one
property, considering only efficiency
OF service to the public, without re-
gard to corporate properties, such as
terminals and branches.
Fourth That rel lying on the terms
/ under which the Central Faci hc'a
| debt to the government of ffty-eight
Emillion dollars was Eettled in 1898,
the Southern Pacific Company under
4 took heavy financial obligations, not
only guaran teeing payment Of this
debt, but also guaranteeing the one
hundred million dollars four per cent
mortgage bond issue OF the Central
Pacific. In this connection, Il is con-
tended that the government could
not consistently and with Justice
have accepted this settlement, OF
which 1t did have full knowledge as
party thereto, IL the arrangement Ia
volved relation between the roads
contrary to public policy.
Ftfth-That even as late as 1912,
In the recent so-called Hartman un-
merger suit, when the United States
Supreme Court ordered the dissolu-
ton Of the Union Pacific and the
Southern Pacific, the court, the high
est tribunal in the land, found no
reason to disturb the relations be-
tween the Central Pacific and the
Southern Pacific. The supreme court
ordered the dissolution OF Union Pa
citic from Southern Pacific, but as to
the Central-Southern Pacific rela-
tons said: I'VE find no reason to
disturb the action Of the court be-
low" The court below had declined
to disturb the Central-Southern Pa
ciftc relations, although the facts con-
corning 1t were at the time brought.
out.
One Ownership.
Commenting on the fact that the
lines were in one ownership and
management and developed as one
property, the early part Of the
answer points out that because of this
fact little heed was given as to which
corporation should hold the title to
terminal properties and branch lines.
Accordingly branch lines from points
on the Central Pacific were built and
owned by the Southern Pacific Rail
road Company, these branches hay
ing no connection wit hthe main line
of the Southern Pacific Railroad
Company except through Central Pa
ciic lines. At important points the
entire title to valuable. terminal prop
critics was taken and held In the
name of the Central Pacific Railroad
Company. At other points the titles
to terminal properties was held by
the Southern Pacific Railroad Conn
pany.
! Any separation of the Central Pa
cifc lines from the Southern Pacific
lines, 1t is asserted, cannot now be
had except with great detriment and
injury.
The answer further sets forth the
granting by the goyerhment,of sub
sidy, the secretaries Of the treasury
and the interior and the attorney
general to constitute a commission
with full power to settle this fndebt-
edness by agreement between them
and the railroads involved, and with
the written approval OF the president
of the United States. The answer al
leges:
ut was well understood by The.
Congress at the time of the passage
Of this law that the said indebteds
ness Of the Central Pacific Railroad
Company to the United States gov
eminent amounted TO at least nifty
leight million dollars, and. according,
therefore, to the terms Of said law,
the Central Pacific Railroad Company
was required to pay during each Of
the ten years allowed for the pay
lment Of said debt the sum Of I'VE
million. eight hundred thousand Per
annum.
This sum exceeded many times
over any possible net earnings Of the
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