Arizona republican., 1922-03-14
The S. PC. p. Mercer

The case Of the government against the Southern
Pacific to break its hold upon the Central Pacific
which an Associated Press dispatch announced would
be heard in the United States supreme court this
week. argued year ago and ever since then
decision had been expected until an announcement
Of re-argument made
The issue Of this was a doubtful one from
the beginning. The suit was instituted by tie gov
ernment after had succeeded in destroying the
Southern Pacifc-Union Pacific merger Of 1901 That
merger had been allowed to exist ten years before
1t determinedly attacked.
1t shown that there had been sharp competi-
tion between the two lines previous to the merger
and that it had ceased with the merger. AS result
Of the suit. reorganization place and the Union
Pacific disposed its Southern Pacific stock de
yering large part Of the Pennsylvania in ex-
change for stock Of the Baltimore & Ohio Ogden and
New Orleans became the eastern ternaini Of the
Southern Pacific.
The against the alleged Southern Pacific
Central Pacific merger somewhat different
There was difference though so far as concerned
competition II the Union Pacific had competed with
the Southern Pacific in freight Omaha to Ogden
the Central Pacific was in competition in freight
ogden to Sacramento.
But in two important points the relations between
the Southern Pacific and the Central Pacific differed
from those between the Southern Pacific and the
Union Pacific Unlike the Union Pacific, the South
ern Pacific had obtained control OF the Central
Pacific at time when the federal government
interested party. In the reorganization of the
Central Pacific In 1898 the accepted
in satisfaction Of its claims against the Central
Pacific. These notes were secured by mortgage bonds
which guaranteed by the Southern Pacific. That
guaranty was one of series Of transactions which
fha of Tacif fir hv
the Southern Pacific in exchange certificates Of
the latter
These transactions in their relation to the Sher-
man law were described at the time. Though they
were not understood to constitute assent by the
government to violation Of the Sherman law
consideration the payment by the Southern Pacif
c of the Central Pacfcs debt, it plain that the
government had profted from relation thus brought
about between the two companies and these
panes might well complain Of the governments at
tempt to disturb that relation
Another thing though, upon which the defendant
in the second merger laid the greater stress
that the combination between the Southern Pacific
and the Central Pacific really began with the
izaton of the former company, whereas the merger
which had just been dissolved comparatively
matter The situation, the defense contended
was much the same as if the Southern Pacific had
been expressly take the Central Pacific
and had Later built other lines which would naturally
have been in competition with a line situated the
Central Pacific was il the latter should be in
independent ownership. But it contended that
both roads constituted one property.
The case was argued in st. Louis in 1915 and
two years later majority of the circuit court Of the
Eighth district rendered decision against the gov
Two of the judges held that there had
been a natural and existing competition But the
greater part OF opinion consisted of detailed his
tory OF the financial transaction in which congress
had appeared to approve the control Of the Central
Pacific by the Southern Pacific.