Evening star. [volume] (Washington, D.C.) 1854-1972, 1928-01-15
RAIL CONSULTATIONS
REMAIN FAR DISTANT
Capitalization Must Not Exceed Physical
Assets in Mergers So Much
Desired.

which Mr. Willard has receded from
his previous stand. that additional
railroad consolidation ia no. nsces-
sarr. TO the point where he now be-
lievcs legislation IL necessary and will
20 along with the other rail exscu
tives in an effort 10 bring IL about.
The need for modification Of the
law has been recognized" Mr.. Hall
said. lin the Presidents message
for several years a we'll as by intro
duction Of several bills.
Better Service Possible.
Uniacation Of carriers into larger
sys.cmsI Mr. Hall said should pro-
mote more adequate service. create
systems more readily subject 10 re-
valuation, increase carrier efficiency
and tend TO decrease the cost 10 the
public.
Discussing the obstacles 20 urnfca-
ton which now interpOse themselves.
Mr. Hall said that any progress rauAr
be arrested until the commission has
promulgated a complete plan ennbrac-
ing all the railway properties OF the
United States. and also because Of
the requirement in the law that the
commission determine the values q
the properties proposed 10 be included
y
| proposed capitalization.
The valuation statute a : thus sal
! construed" he said provides for thf
! ascertainn1ent Of A value fo- yate
| making purposes. which might -
/ very different thing from A Valuation
/ for other purposes. such a. 20 TX tn
amount Of allowable capitalization.
None o. us knows certainly whz. tn
valuation act requires. II is still Be
/ fore the courts and in Two Or three
I instances we have cot no light from
/ the courts because the Supreme Courf
/ found that valuations have not get
/ reached a stage where they aR JUST
/ ciabie The provision o. the present
I law would require Us 20 arrive al
present value and would require Us
20 bring the work down 10 date. and
many railroads have property which
is not included in a valuation Of the
( carrier property. but which must be
taken into consideration for consoli-
dation purposes. That question has
/ been ore such 8 70 arrest progress
! toward consolidation for several years.
State Laws Interfere.
/ We found il inipracticabie 20 pre-
( pare a complete plan using only the
/ form OF unification under which one
1
/ crate. and il would have ceen a futile
I thing Il We had done 50. Also there is
j lack OF provision FOR Federal ma
| ch:nery in the corporate operation Of
carriers 20 bring about the further uni
. fication which y was Plainly the pur-
pose OF the law TO bring about /.
! seemed desirable 10 the carriers tina.
there should be some mailing act 20
/ enable carrier 20 carry oue the inrsnr
( OF Congress in spite OF State constitu-
t!orai or statutory prohibitions. Many
Western States and some others have
prohibitions against any form Of con-
solldation or parallel and competing
lines"
Mr. Hall also declared tina, he did
not think the law should make the
Interstate Commerce Commission a
medium for adjusting private ccrtro-
versies between security holders IN
connection with 2 uniGcarion plan
which might serve 20 dsrracs from the
main purpose. He said that I'M
portaut questions affecting the rights
~ one class ~ security holders an
against another would 20 10 the rrer-
its o. Plan itself bur that In dealing
with ,hs fairness % a plan The com
mission Sl.ouli TO. have 20 settle all
questions relating 20 questions Of
uinorities.
Two Plans Before Body.
Two great consolidation schemes
have come before the commission
within the last TWO years. The frSs
and biggest involved the proposed
merger OF The Nickel Plate. owned BY
the Van Sverirssn brothers. with q
number OF olhsr and smaller roads
This vas diSapproveG by the commits
sion because % certain financial in
sQuah,:es~ The latest defeat the
merger forces have met came Only a
few days aso when L. 2 LcFss's At
tempt 20 acquire control 81 the
Buffalo Rochester 4 Pittsburgh ny
his Delaware 4 Hudson Was turned
down by the commission. This uasrxer
would have created trunk lire
across the state % Psnnsylvansa IN q
rortAsa S,srly direction and would
have opened W 4 new line 90 railroad
into the territory in New York State
west and north az New York City.
The commission found the acquisition
NJ control ~ the Buffalo. Rochester &
Pittsburgh nv the Delaware & ku3.
son not III the pueiic interest, a def
Unite Indication Q. the temper o. the
rail- regulatory body toward ccns,s,Sa>
'.a0s which 10 nct ~ N with :hs car-
s!sl picture now before :. for creation
~ I'VE great trunk hires in the East.
As the situation stands today. Cc-~
S-SSS. the Interstate Cc-insercs Com
mission and the rSl,gVNs6s are rsatrly
disposed 10 remove che seSSe barriers
. Ec SPEEDY consolidation rrS~sSSss IN
der some as We. u1srscl@s1 general
r.Aa, Euc there Ss.,, lccES< The Phys
heal rrsee2sra .: bringing Valuations ~
~ date - thar ;cr~ssSNN eapssalsa-
tion MIL nee evs~eVaaNcs tes physical
assets ~ the rfsrSeS roads,