Arizona republican., 1922-05-30
s. SUPREME
RULES
RAIL COMBINE
IS UNLAWFUL
Dissolution OF Southern Pa
cific Control Of Central
Pacific Railway Ordered
By The Supreme Court
[RepubIican A. p. leased WIre1


WASHINGTON, May 29.-Dissolu-
ton of ownership and control of the
Central Pacific railway by the South-
ern Pacific company was ordered to-
day by the supreme court in an opin-
ion delivered by Justice Day. The
decision in the case, which was the
last of the railroad merger suits to
come before the court, held that the
TWO lines were competitive. Justice
McReynolds and Brandeis, because
OF their official connections prior to
going upon the bench. did not parti-
cipate- Justice McKenna delivered
a short dissent.
The court directed that a 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 mortgage
lien of the Union Trust company OF
New York should be protected.
The several terminal lines and cut
offs leading to San Francisco bay
which have been constructed or ac-
quired during the unified control of
the two systems for convenient ac-
cess to the bay. and TO the principal
terminal facilities about the bay,
should be dealt with, the court de-
clared, either by way of appor-
tionment or by provisions for Joint
or common use, in such manner 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 legis-
lation under which it was con-
structed."
A like course should be pursued.
Justice Day added, 'in dealing with
the lines extending from San Fran
cisco bay to Sacramento, and to
Portland. Ore"
The case had been pending in the
courts since Feb. 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 anti trust
and the Pacific railway act. The
United States asserted that the lines
of the two railroads constituted COM
petitive systems and added that the
ownership acquired by the Southern
L
the Central Pacific be declared un-
lawful.
Review Of Case
A minute review of the history OF
the two roads was given by Justice
Day leading up to what he termed
THE outstanding facts" of the phys
ical operation of the two railroads.
"The Central Pacific, with its east
ern connection at Ogden. forms one
great system of transportation be-
tween. the East and the West the
opinion stated. "and the Southern
Pacific with its roads and connec-
tions and steamboat lines forms an
other great transcontinental system
for transportation from coast to
coast. The Central Pacific consti-
tutes some 500 miles of transconti-
mental line of which it IS part. The
Southern Pacific system has prac-
tically its own line of railroads and
steamboat connections to New York
via Galveston and New Orleans"
The acquisition of the Central Pa
cific stock by the Southern Pacific
was held to be unlawful under the
opinion of the court in the Union Pa
cific case, unless justified by the
special circumstances relied upon for
that purpose, but the court, after
analyzing the special circumstances,
discarded them as not justifying the
control. The present case did not
differ from the Union Pacific case
at all in principle Justice Day assert
ed, the only difference being that In
the Central Pacific the Southern Pa
cific acquired a competitive system
of 500 miles in length, whereas in
the Union Pacific the competitive
system absorbed was 1000 miles in
length.
These two great systems are nor
mally competitive for the carrying
trade in some parts from the East
and Middle West to the coast" jus
tice Day said, "and in greater vol-
ume for the traffic moving to and
from central and northern California.
including a great volume of ocean
going traffic which lands on the
coast, destined across the continent
to the Atlantic seaboard. and inter
mediate western and eastern points
or is destined from the latter point
to foreign ports via San Francisco or Z
other Pacific coast points,
Cannot Throttle Trade
Reviewing previous railroad merger
decisions, Justice Day asserted the
court had collectively established
i'm these that one system of railroad
transportation cannot acquire an
other nor substantial and vital part
thereof, when the effect of such ac-
QUESTION is to interrupt or materially
reduce the free and normal flow OF
competition in the channels of inter-
state trade
Ample proof had been furnished.
he added, to show that it had been
the policy of the Southern Pacific to
favor transportation on its line by
securing for itself, whenever prac-
ticable, the carriage of freight which
would normally move eastward or
westward over the shorter line of
the Central Pacific and its connec-
tions, for it's own much longer ana
wholly owned Southern route"
The court refused to accept the
theory of prior practical consolida-
ton as a justification for a violation
of the sherman act. The bearing of
the 99-year lease of the Central Pa
acific made in 1885 was reviewed, the
court reaching the conclusion that 1t
could not have been legally made
without authorization by federal leg
islation which was never given.
Congress has the authority to reg
ulate interstate commerce. Justice
Day said, and under its legislation
conduct becomes illegal which was
the effect of contracts, conspiracies