Evening star., 1923-02-18
RAILROAD MERGER
HEARINGS NEAR
!. C. C. Consolidation In
quiries May Be Beneficial to
Rail investment Situation.
MONEY RATES ARE FIRMER
Secretary Mellon Expects Well
Stabilized Market-New Is.
sues Well Absorbed.
Money RATES ARE FIRMER
BY BYRON SELLER.

Special Dispat tch to The Star.
NEW YORK, February 17.-One OF
the early constructive phases of the
investment situation. the movement
toward railroad consolidation, has al
ready begun today. This movement
will be stimulated by the hearings in
Washington toward the end of the
month covering the proposed COM
binations of various transportation
groups in the northwest. southwest.
central west and of the transconti-
mental lines.
There are certain well-def1ned
groupings which would be to the
advantage of the public and which
should lead TO economies benefiting
the holder Of railway securities.
These are suggested in either the Rip
ley plan or in that of the Interstate
Commerce Commission, and, with
notifications, ought to be practicable
and workable.
Impetus Given Plan.
A great impetus has been given to
railroad consultations by the order
of the Interstate Commerce Commis-
sion defining the relations of the
Southern Pacific and Union Paclnc 70
the Central Pacific. now owned by the
first-named road, but to be given over
for use in part to the Union racine.
This adjustment was one OF the most
difficult with which the commits ssioH
will have to deal. If 1t has been able
to settle satisfactorily what threat
ened to be a most disastrous break
between the two Pacific roads. almost
any other situation can be dealt with
practically and to general satisfac-
ton.
The public has the right to be
given a test OF consultations as pro-
posed under the transportation act
such consultations may not accom-
plish in economies and in service
what is predicted for them. but. at
least, they will relieve the carriers
of responsibilities that are connected
with duplicate service and waste
full competition.
Mergers Prove Helpful.
1t has been found among Industries
that combinations erect great
changes inebalance sheets. Witness
the recent mergers of good sized iron
and steel companies with the Bethle-
hem Steel Company. An equlya!ent
to this would be the consolidation or
the Chicago, Rock Island and Pacinc
with the Southern Pacific. one OF the
suggested mergers. by the way. and
one that had quite a little to do III
developing Union Pacific's desire for
Central Pacific. However, there have
been almost no railroad consultations
The purchase by the ST. Louis and
San Francisco of the international
Great Northern and by the Nickle
Plate of a control Of the Chesa peake
and Ohio represent investments, but
not that kind of merger that Is in
timated in the transportation act.
Methods Used Abroad
Evidence has been given in both the
French railway system OF division or
territory into group OF six lines
covering all of France and in Great
Britain in the reduction OF railroad
units to half dozen. serving all of
England, that profits are multiplied
as the duplication of effort is reduced.
We may expect to see speculation in
railroad stocks based on the posi-
bilities of purchase by one line or
another line, and an Improvement in
Junior grades Of bonds as the pro-
tectorate of a strong line over a weak
one is established.
The other side Of the picture will
he the objection by holders OF securt-
ties of strong line to taking over
the stocks or bonds OF an inferior
road with little ability over an aver
age of years in earning its fixed
charges.
Money Rates Firmer.
Money rates this week have been
firmer, with as high q figure as per
cent quoted for call loans. Rates for
commercial paper were also steady,
and in all there was evidence that
the commercial demands were in
creasing. Quite a difference of opin-
ion exists as to the future of loaning
rates. Secretary Mellon Is quoted as
believing in q we'll stabilized COM
modify and money market. Wall
street banks which lend to a large
extent on collaterals' take the same
position.
The important commercial banks Of
the east, on the other hand, have the
feeling that rates will be firm
throughout the spring and that the
era Of easy money. about which so
much was written last year. may be
considerably delayed SO far this has
not injured the position of fixed in
terest- bearing securities. They have
advanced during the week in line
with stocks, though the emphasis has
been rather on those OF the convert
fble type than those of the purely
mortgage character.
Situation ConfusinE.
New issues have been taken on a
more liberal scale and quite we'll
placed. There is a growing DISPOSE
tion to finance with issues of no par
value stock. Several promising offer
ings of this sort have been made late
ly and others are. to follow. While
there have been refundings of high
coupon bands by bonds Of moderate
rate, there have also been plenty Of
high grade investments to return bet
ter than per cent. The situation is
full of contradiction and is a long
way from being at equilibrium.
'(Copyright, 1921
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