Evening star., 1926-03-03
Rail Merger Disapproved.


Dsapproval by the Interstate Com
nerce Commission of the application
of the Van SWeringen brothers for the
combination of the Nickel Plate, Erie,
Chesapeake and Ohio, Hooking Valley
and Pere Marquette Railroads does not
necc ssarily end the effort to unite
these lines III & SINGLE trarzp zp0rtation
system. The commission ruled that
the financial structure proposed for
the merger IS unsound, and therefore
rejected the application, without, how
ever, disappearing the general trans
portation plan proposed. The pro-
ponents of the consolidation are now
free to renew their petition after such
revision as they may consider suffi-
cient to meet the objections on which
the denial is based.
The proposed merger would have
embraced more than 5000 miles of
* Ines, which the commission esti-
mates to be worth more than $1,250,-
100000 1t would have covered an area
ranging from New York to st. Louis
and from Norfolk to Chicago, travers-
ing or touching ten States. It would
make the strongest railway system
in the country, perhaps the strongest
In the world With an unsound finan-
cial structure such a system would be,
however, essentially weak. The COM
mission holds that minority interests
are not accorded equitable recogni-
ton. 1t holds further that the plan
was arranged with the intention of
keeping control in the hands of its pro-
ponents, even though their interest is
a minority one in fact. Such an ar
rangement, it declares, is not in ac-
cord with sound railroad practice. 1t
asserts it to be self-evident that the
public interest requires that the entire
body of stockholders Of the railroad,
which is bonded in excess of one-half
of its investment, and not a powerful
few, shall be responsible for it's man
agement. This can be done only by
giving them the power to control the
management. While the lethargy of
ordinary stockholders in exercising
their power in large corporations has
been often criticized that power
should nevertheless be in their hands
to use as they see fit.
1t is unquestionably desirable that
certain railway lines in this country
should be united under single owner
ship and management, to lessen over
head expense of operation, to permit
more efficient administration and to
yield a greater service to the public.
It is also desirable that there should
be competition between systems. No
single area or section of the country
should be given over to monopolistic
railway systems. Fortunately the In
terstate Commerce Commission, repre-
senting the public interest. is en-
powered to check combinations that
are either monOpolistic or unwise. In
this case, the question of monopoly
does not enter. The proposed Van
Sweringen merger does not unite di-
rectly competing lines or systems.
1t does not follow from the decision
of the Interstate Commerce Commits
sion that rail consultations will be
definitely checked. The Van Swer-
ingens may not undertake to revise
their proposed reorganization plan.
This particular combination may be
dropped But eventually other unions
will he proposed and in the light of
the commissions ruling on this one
doubtless there will be in future
propositions avoidance of the financial
faults which are now declared to be
intnical both to ownership interests
and TO the public welfare.