New-York tribune., 1922-05-30
Court Divorces
Central Pacific
From Southern
Two Roads Are Competitive,
u. S. Supreme Bench De-
.cides in Ending Control
Through Stock or Lease
Last of Merger Actions
Federal Suit Filed in 1914
to Compel Severance by
Invoking Antitrust Act

WASHINGTON, May 28.--Dissolution
OF ownership and control Of the7Central
Pacific Railway by the Southern Pacific
Company was ordered to-day by the
Supreme Court in an opinion delivered
by Justice Day. The decision, which
was the last in railroad merger suits,
held that the two lines we're competi-
tive. Justices McReynolds and Bran
deis, because of their official connec
tions prior to going upon the bench, did
not participate. Justice McKenna de-
livered short dissent.
The court directed that decree be
entered severing the control by the
Southern Pacific Of the Central Pacific
by stock ownership or by lease. But
in accomplishing that end so far as
compatible, the court said, the mort
gage lien of the Union Trust Company
of New York should be protected.
Terminal Rights Safeguarded
The several terminal lines and cut
offs leading to San Francisco Bay,
which have been constructed or &C
quired during the unified control Of
the two systems for convenient access
10 the bay and to the principal terminal
facilities about the bay, should be dealt
with. the court declared, "either by
way of apportionment or by provisions
for joint or common use, in such man
ner as will secure to both companies
such full. convenient and ready access
to the bay and to terminal facilities
thereon that each company will be
able freely to compete with the other,
TO serve the public efficiently and to
accomplish the purpose Of the legisa
tion under which it was constructed"
A like course should be pursued
Justice Day added. ain dealing with
the lines extending from San Francisco
Bay to Sacramento and to Portland,
Ore"
The case had been pending in the
courts since February II, 1914, when
the United States asked the United
States District Court Of Utah to re-
strain the two railroads, the Union
Trust Company of New York and the
directors and officials of the Southern
Pacific under the Sherman antitrust
and the Pacific railroad acts. The
United States asserted that the lines
Of the two railroads constituted com
petitive systems and added that the
ownership acquired by the Southern
Pacific of controlling interest in the
Central Pacific was unlawful.
Court Reviews History
minute review of the history of
the two railroads was given by Justice
Day leading up to what he termed
'the outstanding facts" of the physical
operation of the two railroads.
"The Central Pacific, with its east
ern connection at Ogden. forms one
great system Of transportation between
the East and the West" the opinion
stated, "and the Southern Pacific with
its roads and connections and steam
boat lines forms another great trans
continental system for transportation
from coast to coast. The Central
Pacific constitutes some SEQ miles of
transcontinental line, of which it is Il
part. The Southern Pacific system has
practically it's own line of railroads
and steamboat connections to New
York, via Galveston and New Orleans"
The acquisition OF the Central
Pacific stock by the Southern Pacific
was held to be unlawful under the
opinion Of the court in the Union
Pacific case, "unless justified by the
special circumstances relied upon for
analyzing the special circumstances
discarded them as not justifyng the
control. The present case did not diff
Ter from the Union Pacific case at all
IN principle, Justice Day asserted, the
only difference being that in the Cen
trail Pacific the Southern Pacific &C
quired competitive system of 500
miles in length, whereas, in the Union
Pacific case the competing system
absorbed was $1,000 miles in length.
! Lines Normally Competitive
"These two great systems are nor
mally competitive for the carrying
trade in some parts from the East and
Middle West to the Coast" Justice Day