New-York tribune., 1921-12-04
Mistake to Let |. c. c. Merger Plan
Undo Hills Life Work, Says Critic

needs of territory. A railroad might
have present value" Of 100000 900
on the basis Of original cost, present
reproduction cost less depreciation, and
yet the territory served by it might not
be able to produce business enough to
return fair yield on that If merged
with strong" road on valuation"
basis the other territory served by the
system would have to carry it, at least
in part. The fact is that t'valuation'
will squeeze out only "watered capital
spent tor property not needed. A great
deal will depend upon the basis of
mergers when the time comes
Case Of ssHill System
Now. in the light of these three
clauses of the act which deal with con-
soiidations and mergers, let us con-
slider the case of the "Hill system"
consisting of the three great railroads
the Great Northern, the Northern
Pacific and the Chicago, Burlington &
Quincy-together with the Colorado &
SouthernSan certain lines built Joint
ly in the. Columbia River Valley and
elsewhere.
The Interstate Commerce Com
missions tentative scheme for ''con-
soildations' (based on Professor
w. u. Riplcy's plan) provides for
dismemberment of this system by
divorce of the Northern Pacific from
the Great Northern, and by combining
the former of these systems with the
burlington and the latter with the
Chicago, Milwaukee & ST. Paul in order
to make two northwestern transcon-
tinental lines out of the present "Hill
system. The main reasons governing
thus proposal are, first, to insure Com
petition" and, second, to 'find a home"
for the st. Paul, which is now weak"
and an orphan. In other words. clauses
one and three apply, and chiefly clause
one.
What was the genesis of the Hill
system? It's origin goes back to the
second reorga nization of the Northern
Pacific, in 1893 '96 following complete
bankruptcy. Mr.. Hills aid was sought
by the Deutsche Bank and other large
financial interests in Northern Pacific,
with the result that he and his associ-
ates became large owners in Northern
Pacific and his policies were adopted
in management largely under his own
supervision. Prosperity followed and
Northern Pacific operating statistics
began to take on Great Northern
character.
BY 1900 both roads were being oper-
ated with economy and efficiency, and,
| therefore, with financial success. The
Burlington purchase in MAY, 1901, for
the joint account of both railroads, was
made for reasons growing out of traffic
considerations into which ! need not
enter further than to say that the three
railroads complemented each other in
very thorough manner, because they
corresponded to important "channels
of trade"
Aid to Burlington
In the twenty years which have
elapsed since the acquisition of the
Burlington the system has been filled
out at many places, added to in several
important places. notably in the case
of the Columbia River Valley construc-
ton, thoroughly welded together in
operation and the channels of trade
that it serves have been deepened and
widencd, so that they carry an enor-
mously increas Used volume of commerce.
Mr.. Ford, of the Interstate Commerce
Commission, in rendering a decision on
the application OF the Burlington to
issue stock and bonds February 2s,
1920, said of the system:
"The evidence presented to us has
been such as to convince me that the
practical results of the relationship
between the Great Northern Pacific and
Great Northern and the Burlington
have been signally to the advantage of
all these carriers and particularly to
that of the Burlington, and that it is to
the public interest that this relation
ship shall be allowed to continue"
Mr.. Ford rightly pointed to the
prosperity of the carriers as the true
measure of the prosperity of their
patrons and the true criterion of the
public interest" | have not at my
4hand ali the data necessary to prove
my contention, but my strong impress
sion is that this group of railroads can
show relatively larger growth OF
business handled since 1901 than can
any other group of railroads, either
Eastern or Western, in the United
States And be it remembered that
volume of railroad business is the
best single index to the prosperity
of the country served by a railroad.
1t is precisely the result aimed at by
the requirements of "con.petition." 1t
was the kind of "exploitation" at
which Mr.. Hill always aimed and at
which he especially aimed in building
the three-road" system. My conten-
tion is that this is exactly the kind