Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-07
RAIL MERGER PLAN
| MEETS OPPOSITION
Counsel for Interstate Com
merCe Committee of Senate
Oppose Terms.
BY CHARLES F. SPEARE.

Special Dispatch to The Star.
NEW YORK. February 1.-THE first
definite and detailed opposition to the
proposed Eastern railroad consolidation
under a four-SyStem plan comes in q
report from the counsel to the Inter-
state Commerce Committee of the
United States Senate, which finds little
virtue in the merger and disapproves
of it at many points.
In contrast is the statement of Pres
ident Atterbury of the Pennsylvania
Railroad, who significantly character
ICES the consolidation effort as the first
step in the direction of real, construc-
tive industrial craftsmanship"
Probability of Objections.
None of the railroad executives who
have had a part in the Eastern merger
have overlooked the probability of OBJ
iections to the plan announced by Pres
ident Hoover last December They have
all realized that they faced months of
trial at the hands of congressional COM
mittees, State public service commits
sionS, representatives of shippers, Of
labor, of minority stockholders, and that
various interests in the So-called short
lines" would undoubtedly ask for an
opportunity to be heard. Taking into
account all of these forms of objections
JAidI AluoJ DC lA1C LII
terstate Commerce Commission passes
Judgment on the plan, it is estimated
that a decision from the final arbiter
N this matter cannot be made at the
earliest before the Summer of 1882.
The main arguments of the counsel
for the Senate Interstate Commerce
Committee against the proposed East
ern consolidation are that it will not
benefit the shipper in a reduction in
rot hat xx-iII aOf he
sition of the weak lines, that it does not
produce the necessary balance required
to create the same rate of return on
property investment for each of the sys-
TENS identified with the merger and
that it will bring suffering to the army
of railroad workers, inaSmuch as the
chief economies to be effected by the
merger are these from cutting down
Of the payroll.
Defense of Weak Roads.
The report to the Interstate Com
merce Committee is to a considerable
extent defense of the weak roads. It
not only takes into account their status
in the Eastern territory. but in other
parts of the United States. They have
always been one of the difficulties In
putting into effect consolidation through
legislation. The strong roads have not
been willing to assume the burden of
roads in their territory that were not
able to cover their fixed charges by
much Of margin and could not con-
tribute income in the way of dividends
on stocks.
AS a matter of fact, however, pro-
vision is made in the Eastern railroad
merger for many So-called weak lines.
It has been realized that the weak road
is frequently the one that is RESPONSE
BILE for rate disturbances and that, in
order to correct the situation, these
small roads must be included in the
larger and stronger families of trans
portation systems. Had the Great
Northern-Northern Pacific consolidation
gone into effect it would have elimi-
mated several of these situations which
have been unfavorable to the general
railroad position in the Northwest.
Intent Of Act.
The report discusses the original in
tentioAs of the transportation act,
under which the Interstate Commerce
Commission should prepare a plan by
which all the carriers of the country
were to be grouped in a limited num-
Der of systems. The answer to this is
that the Interstate. Commerce Commits
sion did make tentative recommend
alton 10 years ago and a second one in
1929. No attention was paid to either.
The only real progress that has been
made in railroad consolidation is that
that has been initiated by the carriers
themselves, which often has been dis
tinct in its set-up from that previously
proposed by the commission.
& Copyright. 1917