Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-12-06
HOLDING COMPANY
STATUS IS SOUGHT
|. C. C. Faces Problem in
Determining Course in
Rail Mergers.
BY CHARLES r. sPEARE.

Special Dispatch to The star.
NEW YORK, December 6.-That the
Interstate Commerce Commission is
faced with a new problem in connec-
ton with railroad consultations, and
one in which 1t frankly does not see
its way, is indicated in it's annual re-
port, where It reviews at length the sit
uation regarding holding companies that
have been created within the past year.
The commission deals specifically with
competitive complications that have
arisen from the incorporation last jan
uary Of the Allegheny Corporation by
the Van Sweringen interests and in
April of the Pennroad Corporation,
which is subsidiary Of the Pennsyl-
vania Railroad.
Activities Of Companies.
The Importance Of both companies to
their sponsors has been rapidly increaS-
ing in recent months, especially that of
the Pennroad Co., which, as late as
Tuesday of this week, was said to have
bought a substantial block Of stock Of
the New York, New Haven & Hartford
and the Boston & Maine, thereby ex-
vania Railroad in New England, where
1t had previously been only nominal
The Interstate Commerce Commission
discussed the holding company aspect
from the standpoint Of thOGlayton anti
trust act. This act says" mo corpora
ton shall acquire, directly or indirectly,
the whole or any part of the stock or
other share capital of two or more cor
porations engaged in commerce where
the effect Of such acquisition, or the use
OF such stock by voting or granting of
proxies or otherwise, may be to sub
stantially lessen competition between
such corporations, or any of them,
whose stock or other share capital is so
acquired, or to restrain such commerce
in any section or community, or tend
to create a monopoly in any line of
| commerce"
The Interpretation placed on this Sec
ton Of the act by the commission is
| that the law was framed to prevent cor
porations of holding company char
acter from acquiring stock in other cor
porations, including railroads, where the
purchase would have the effect of SUBJ
stantially reducing the competition be-
| tween them. It has been felt for some
time that inasmuch as the commission
had power to institute legal proceedings
under the Clayton act that it has been
astonishingly slow in taking official cog
nizance Of what has been going on re-
Gently In the railroad world, and par
ticularly in the trunk line territory.
Jurisdiction.
! The commission states plainly that it
has no direct Jurisdiction over either the
Allegheny Corporation or the Pennroad
| Co. 1t looks on the situation which
they have created in the railroad world
as one that may be inimlcal to the pro-
poSal for consolidation. The report says,
THE subsection of the unification of
carriers to the orderly processes of a
carefully planned scheme of public regu-
lations, which section 5 was designed
to accomplish is very likely to be par
tally or even wholly defeated, subject
to the possibility that the Clayton anti
trust act may in some measure, after
protracted litigation, enable control
over the situation to be maintained"
What the remedy is the commission
does not know. 1t calls the matter Of
the holding companies to the attention
of Congress because it believes "it de-
serves thorough investigation and seri-
Gus consideration" and because 1t con-
tains evident dangers"
The Allegheny Corporation holds the
stocks of the Chesapeake Corporation,
the Chesapeake g. Ohio Railway, New
York, Chicago & st. Louis, Erie g. Buff
falo and Rochester & Pittsburgh Rail-
ways. The Pennroad Corporation is
| commonly supposed to own the stock Of
| the Detroit, Toledo g. Ironton Railroad
| and of the Canton Co. and an interest
In the Raritan River Railroad. The
Pennsylvania Co. holds the shares of the
Lehigh Valley and the Wabash roads,
which were bought from L. F. Loree a
year and a half ago. and it has been
stated unofncially that Pennsylvania
Railroad interests would oppose any or
der requiring them to give up these
stocks, even If they have to carry the
issue to the United States Supreme
Court.