The New York herald., 1922-10-18
SOUTHERN PACIFICIN
APLEA FOR CENTRAL
Asks Commerce Commission to
Permit Acquisition of the
Latter Line.
CONTROL Is THE ISSUE
Affirmation of Control Is Now
Sought Pending Decision
Oh Grouping.

WASHINGTON. Oct. 1.-THE Southern
Pacific Company filed to-day with che
Interstate Commerce Commission pc
tition which if granted. ii was said viii
prevent the separation from its system
of the lines of the Central Pacific, al
though this separation was ordered by
the Supreme Court in decision several
months ago and a rehearng of the case
subsequently was denied by the court.
According to the railroads petition
the Interstate Commerce Commission
has power under the transportation act
of 1920 to allow the operation of the
combined railroad system as one insti-
tuition even though the Supreme Court
declared the situation TO be an example
Of the merger of parallel and competing
lines which is forbidden by the Sher-
man antitrust law.
The primary purpose of the applca-
ton is to enable the Southern Pacific
to control the Central Pacific, pending
the determination by the commission f
Its plans for consolidating the railroads
into about eighteen or twenty systems.
While the two railroad systems are now
grouped, the grouping is tentative. 1t
is not known how long the tentative
plan will exist, or whether il will be
continued permanently or be changed.
The Southern Pacific desires to be re-
leved of the embarrassments of uncer-
tainty.
This consolidation was authorized by
the Transportation act. In its applica-
ton the Southern Pacific proposes that
the control shall be terminated by the
commission if it is found to be inconsis-
tent with the consolidation plan. One
provision of the Transportation act au-
thorizes the commission to confer con-
troll by one carrier over another through
lease or stock ownership whenever il
finds such control to be in the public
interest. To permit the commission to
exercise this authority it was necessary
for the Transportation act to modify
the Sherman Antitrust law. which for
bids combinations Of that character.
The case filed to-day had its begin
nings in proceedings instituted by the
Wilson Administration in 1914 to dis
solve the merger of the Southern Pa
cific and the Centra. Pacific. The Su-
preme Court ordered the merger dis
solved. and recently finally disposed of
the matter by refusing rehearing.
That there is nothing inconsistent with
the Supreme Courts decision in the ap-
plication made to-day is contended by
the Southern Pacific. which points out,
among other things, that the acquisition
competing railroad is permissible under
the transportation act, and that the
commission has recognized this in sew
eral instances.
The application calls attention to the
recent decision of the Supreme Court i'm
the Southern Central Pacific case, point
ing cut that the suit under the Sherman
law was begun, tried and the record
closed before the passage of the trans
portation act and that the later law was
not mentioned in the decision.
In setting forth reasons why ii is in
the public interest that the acquisition
of the control should be authorized and
the consequences of an attempt to tear
apart the interdependent properties
avoided. pending the determination of
the commissions plan for consolidation
the history of the Southern Pacific sys-
tenn with the Central Pacific always a
part of it is given from its beginning in
1870. 1t is stated that in this fifty years
of system development railroads have
been constructed. terminal facilities To-
Gated and provided. equipment for the
whole supplied, operating divisions and
methods established routes and chan
nels OF traffic created all for single
united railway system. without regard
10 corporate ownership Of the different
parts
The financial interrelations are no
less extensive and involved than their
physical interrelations, according to the
application. Financial complications at
tcndant upon the separation are gwen
as additional reasons why It is in the
public interest that the separation
should be postponed until IL Is deter
mined whether the Central Pacific is
10 be grouped with the Southern Pa
c.fic or with some other system
When the Interstate Commerce Com
mission sought to work out plan to
consolidate the railways into about
eighteen or twenty groups Prof Ripley
of Harvard was intrusted with the duty
Of drafting a scheme. His plan called
for the grouping of the Central Pacific
With the Union Pacific. This did not
satisfy the commission which sent Com
missioner Hall to the West to make a
personal examination. As a result of
his recommendations the commission
rodihed the Ripley plan so as to group
the Central Pacific with the Southern
Iaci6l.