The Waterbury Democrat., 1931-05-07

60sc0u, May J.-(UP)-COnsOltd tion of the Boston & Maine and New York. New Haven & Hartford rail- roads, provided present excess ownership of the Pennsylvania rail- road and Pennr0ad Corporation" in rierB is substantially reduced was recommended by the New England governors railroad committee to- day.
 The committee suggested that the governors request the arrangements of the Pennsylvania, Boston & Maine and New Haven roads Ito cooperate in working out an arrangement which will remedy the present sit- uation" and make 1t possible for the two local systems to formulate a plan for consolidation. This would be submitted to the interstate com merce commission while the so- called four-party plan is before it for approval.
 The four-party plan, sponsored by President Hoover. would allocate principal carriers in the eastern cepti0n of those in New England to four systems, the Pennsylvania, Baltimore & Ohio, Chesapeake & Ohio-Nickel Plate. and New York Central.
 Enlarging upon. it's insistence that the Pennsylvania and Pennroad Cor poration substantially reduce their holdings of Boston & Maine and New Haven stock prior to the proposed consolidation, the committee speci- fled that the outside interests "should not retain a combined ownership in excess of 10 per cent of the total voting stock" in either of the New England carriers.
 With former Governor Roland H. Spaulding of New Hampshire as chairman, the railroad committee composed of five gubernatorial ap- pointees from each of the six states had labored 16 months and held eight public hearings to gather the data upon which to-day's S5,O00- word report and recommendations were based.
 The recommendations were not ap- proved unanimously. In a dissent ing report, the entire Rhode Island membership, under George l.. Crooker. urged adoption of plan featuring amalgamation of the Bos- ton 6 Maine with the Chesapeake & Ohio-Nickel Plate System, and of the New Haven with the Pennsyl- vania.
 Chairman James l.. Richards and Charles H. Jones of the Massachu- setts group signed the majority re- port, as whole, but affixed a reser- vatton dissenting from characterize tion of present ownership of the Fonnsylvanfa railroad in securities or the New Haven and Boston & Main aS excessive"
 "rha 0vvnerahin h., fba Na,, rYo ven of substantial stock interest in the Boston 6 Maine has long fur nished . link between them," the majority said in favoringe consolida- tion of the two roads. And apart from this." they continued. "their common interest in the prosperity of New England has created relations between these two roads which are already harmonious. The results in recent years have generally been ad- mitted to have been beneficial to both roads and to the pdblic."
 "From all these points of view the committee said in concluding this line of argument. Tit can be said that unification of these two roads is natural one, serving rather to confirm and more fully obtain the benefit of an already existing affilia-
 
 transportation situation"
 Affirming that "the institution of legal proceedings against the Penn sylvania should be avoided if possi- ble," the majority report suggests that excess stock holdings of that road and the Pennroad Corporation be placed in the hands of trustees to be lfquidated. Terms of the sale would have to be approved by the Pennsylvania interests and the inter- state commerce commission. Pending the sale. voting power. of the stock would be placed in trust to be voted by the trustees.
 Legal proceedings. based perhaps on allegations of violations of the Clayton antitrust act, would be re- stored to should the Pennsylvania interests refuse to cooperate in this program. The committee also sug- gested that in such an event the gov- ernors request the interstate com- merce commission. should the four party plan be approved, to stipulate as condition of its approval that the Pennsylvania divest itself of it's excess ownership in the Boston & Maine and New Haven.
 The basis for such a stipulation, the committee said, would be that otherwise the Pennsylvania, "already the largest and most powerful trunk line, would be much further en- hanced in size and strength by it's virtual control of the two largest railroads in New England" This" 1t contended, would throw serious ly out of balance the parity of com petitive opportunity contemplated by the four-party plan.'
 fa 10 hla that fha ,.aa< y,. dation to consolidate the New Ha- ven and Boston & Maine cannot be consumnnated either in fact or un- der the law, the Rhode Island mem- bers of the committee declared.
 ''The proposal of the majority" they said, ,''is to take from under the New Haven one of the main foundations of its exsiting strength. namely the support of the powerful progressive Pennsylvania system and to place on the shoulders of the New Haven the heavy burden of com paratively weak road. the Boston & Maine, a road whose gross revenues have shown a continual decline from 1921 to 1880, road which 1t is con- ceded faces serious financial prob lems in the immediat efuture."
 The New York Central would be left undisturbed in its control of the Boston & Albany under the Rhode Island plan. On the other hand, the majority report recommended that at some future time the New York Central, as we'll as the Pennsylvania, be restricted to an ihterchange with New England roads at the Hudson river.
 Among important benefits' which 1t claimed the consolidation would bring to New England, the majority report listed the following:
 1-The effecting of important eco- monies. which. "by increasing the earning power of the New Haven ans E0afon A Maine roa ds wauld