1
UNION PACIFIC
CHIEF PROTFSTS
Does Not Favor Grouping of
Western Railroads Pro
posed By Hale Holden.
JUDGE LOVETT'S STATEMENT
Declares a Re-Merger of Harriman
System to Be the Only Fair Basis
of Competition With
Northern Lines
San Francisco, April 2, 1923
"Consolidating all railways west of
Chicago and the Mississippi River into
four systems as proposed recently to
the Interstate Commerce Commission
by Hale Holden, president of the Chi
cago, Burlington & Quincy Railroad,
would create many unnatural alliances
and would greatly strengthen the so
called Hill group of raliroads and
greatly weaken the so-called Harriman
group," said Judge Robert S. Lovett,
chairman nf the Union Pactf'e i -stem,
at today' lit ug bofo: - ;,tate
Commerce Commissioner Hjnry C.
Hall.
The commission's tentative plan com
prising seven Instead of four systems
was characterized as affording the
basis and ground work which should
be departed from only with great cau
tion. The Holden plan grouping the
Union Pacific with the Chicago, Mil
waukee & St. Paul was strongly con
demned, the witness explaining that
the commission's plan of placing the
Chicago & Northwestern with the Un
ion Pacific was the only logical group
ing, the Chicago, Milwaukee & St. Paul
being a competitor and the Chicago &
Northwestern a connection and natural
ally.
"Should the Hill lines merger be ap
proved," Judge Lovett said, "a re-merger
of the Harriman lines, Union Pa
cific and Southern Pacific, should be
authorized to meet the strong combin
ation which would be effected by the
Great Northern, Northern Pacific and
Burlington. The retention of the Cen
tral Pacific by the Southern Pacific
with the same conditions imposed by
the commission in the recent hearing,
is satisfactory to the Union Pacific, as
they protect with reasonable adequacy
the rights of the Union Pacific," he
Bald. Continuing he added: "Another
striking effect of the way the Holden
plan treats the old Harriman system
appears when after assigning to the
Southern Pacific the Rock Island, it
also puts with the Southern Pacific the
Misgouri Pacific and the Missouri,
Kansas & Texas systems, wilh which
Jthe Southern Pacific does but little
business, and with which it would have
occasion to do even less after acquiring
the Rock Island and also the Kansas
City, Mexico & Orient which the press
dispatches report is about to be aban
doned the Missouri, Oklahoma &
Gulf and a half interest in the Denver
& Rio Grande Western and the Denver
and Salt Lake. The latter feature is es
pecially significant because it would
indeed effectually 'bottle up' or as Pro
fessor Ripley expressed it, 'short cir
cuit' the Union Pacific, since it would
give the Southern Pacific a line of its
own through from San Francisco to
Chicago by way of Ogden and Denver
paralleling the Union Pacificrom Og
den both to Omaha and Kansas City
and paralleling also the lines allocated
to the Union Pacific from Omaha to
Chicago and elsewhere east of the Mis
souri river.
"The plan Is more kind to the Santa
Fe system, for it takes away from
the Union Pacific group, where the
commission's tentative plans places it.
the Chicago & Northwestern, which in
.connection with the Union Pacific is
the door and gateway for most of the
competition out of Chicago with the
Santa Fe for Pacific coast traffic, and
turns it over to the Santa Fe to
gether with the Chicago, St. Paul, Min
neapolis & Omaha, which is the prin
cipal connection and almost the sole
reliance of the Union Pacific for traf
fic coming to its line at Omaha from
St. Paul, Minneapolis and that terri
tory. It gives to the Santa Fe the
Canadian Pacific controlled lines, the
Minneapolis, St. Paul & Sault Saint
Marie and the Spokane International,
thereby taking away another valuable
connection of the Union Pacific at
Spokane.
"Thus the plan sends the Santa Fe
as far into the northwest as Spokane,
Washington. By going through Can
ada and stopping short of Puget S mnd,
however, its capacity for harm to the
business of other lines of the northwest
would not be great, for while almost
in sight of the promised land Seattle,
Tacoma, Olympia, Portland, it is given
no entrance therein, but is held safe
ly on the east side of the Cascade
mountains at Spokane. The Santa Ft
is also given the St. Louis Southwest
ern, the Chicago A Eastern Illinois
the New Orleans, Texas ft Mexico, th
Western Pacific and a half Interest
la the Denver & Rio Grande Western
and the Denver and Salt Lake. It
takes away from the Santa Fe, how
ever, the Colorado and Southern and
the Ft. Worth and Denver City, which
the tentative plan of the commission
put with the Santa Fe consolidation,
and transfers them to the group em
bracing the Burlington and other
strong Hill lines."
Judge Lovett made it plain that he
had no objection to the commission's
authorizing a consolidation of the Hill
lines, but that if that were done the
commission should also authorize the
reconstitution of the Harriman group,
the Union and Southern Pacific, to
meet the strong combination that
would be effected by the consolidation
of the Hill lines.
The Holden plan, however, does not
contemplate a consolidation of the
Union and Southern Pacific, but in
stead weakens both by loading them
down wiih lines with which they have
no natural affiliations and makes them
competitive with their natural allies,
notable in the case of the Union Pa
cific by placing the Chicago & North
western in a rival group. The Holden
plan also would run counter to the
legislation under which the Union Pa
cific and Central Pacific were con
structed as one continuous line by as
signing to the Southern Pacific a half
interest in the Denvor & Rio Grande
Western and Denver and Salt Lake,
which with the lines of the Rock Is
land from Colorado Springs and Den
ver to the Missouri river and Chicago
would make it to the interest of the
proposed Southern Pacific group to
tear down instead of build up the
Ogden route of the Union and Central
Pacific.
"In addition" he said, "both the
Union Pacific and Southern Pacific
are sent far afield into tsrritories
where they have never been, where
they have no business or connections
and where apparently there is no
shadow of reas.in for them to go. The
Union Pacific is sent down into Ten
nessee, Alabama, Louisana, Tex is,
Arkansas and Oklahoma with lines
to New Orleans, Laredo on the Mex
ioan border and to El Paso, and again
into northern Michigan. The Hill lines,
however, are treated very conserva
tively in this respect and the only new
territory in which they venture is from
Fort Worth to Houston, Texas, an 1
over the Kansas City Southern and an
other short line to New Orleans."
With reference to Mr. Holden's sub
stitution of the Chicago, Milwaukee &
St. Paul for the Chicago & Nonhwest
ern for consolidation with the Union
Pacific, Judge Lovett pointed out tha'
the former is a competitor of the Un
Ion Pacific for traffic to and from the
Puget Sound country, while the Chica
go & Northwestern is a connection. Thf
substitution would not only disrup'
exis nJ routes and channels of trad'
but would run counter to another re
quirement of the law that compcttt jn
be preserved as fully as possible.
Again, the consolidation of the Union
Pacific and Chicago, Milwaukee & St
Paul would be a linking of the two
Weakest Puset Soutd lines, while the
Northern Pacific and Great Northern,
which are the oldest and strongest
lines In that territory, wculd be con
splidatod under the Holdi n plan. Such
an alignment would certainly not be
In the interest of giving the Puget
Sound country the best competitive
service.
Concluding this portion of his test!
mony Judge Lovett said, "The consoli
dation of the Hill lines with their sub
sidiaries into a single system would so
far overshadow Its competitors and
any other railroad system proposed in
the United States in size and financial
strength and possibilities that one
might infer that a desire to meet this
objection had something to do with the
jumbling of the International-Great
Northern, Texas and Pacific and Si
Louis-Francisco systems with th
Union Pacific, and of the Missouri Pa
cific, Toledo, Peoria & Western and
the Missouri Kansas & Texas, and var
ious other lines with the' Southern Pa
cific, In order that there should be
other systems equal in mileage and
investment to the Hill combination.
however unequal in solidarity, finan
cial strength and prospects and In
traffic and operating relationships."
Judge Lovett complimented highly
It! manner In which Professor Ripley
and the commission had worked out
for the direction of congress a plan
for the consolidation of the railway
properties of the United States. He
said that while there were defects and
mistakes here and there, which must
be corrected If great Injury to public
as well as private Interests Is to be
avoldsd, that yet the tentative plan of
the commission affords the basis and
ground work which should be followed
and from which departures should be
made only with great caution. He said
he doubted whether railroad men
themselves could have formulated a
plan so fair and workable, because
they could not have divested them
selves of tttelr environment and their
affection for lints with which they
had spent many years.
Judge Lovett opposed the suggestion
that all line In western territory
should be consolidated into four sys
terns, saying. "Four systems, compris
ing from th.rty thousand to upward ol
thirty-five thousand miles each and
each extending from Puget Sound or
the Pacific ocean to the Great lakes,
to the mouth of the Mississippi river
and the Gulf of Mexico, and traversing
most of the intermediate states, make
the combinations entirely too large
for efficient management and service
for the welfare of the corporations
themselves, their creditors and stock
holders and for the public good, and
present a situation which probably
would be a source of much undesirable
friction and in many ways a constant
menace, especially in case of failure."
He answered Mr. Holden's argument,
based on the fact that the traffic
handled by the New York Central and
Pennsylvania respectively is substan
tially as great as that which would be
handled by any of the four systems,
by pointing out that the problems of
management in a territory extending
only from New York to Chicago and
St. Louis are very different from the
problems of management in new and
rapidly developing territory, extending
all the way from the Canadian border,
Puget Sound and the Pacific ocean to
the Great lakes, the mouth of the Mis
sissippi river, the gulf and the Mex
ican border.
Judge Lovett also disagreed with Mr.
Holden's view that each of the Pacific
coast lines should have a line ex
tending to the gulf, stating that the
east and west traffic was the im
portant and controlling traffic with
the transcontinental lines. After point
ing out various reasons for this he
said:
"But more important still and almost
startling is the inevitable tendency
and effect of the Holden plan to
divert grain from the trunk lines and
Atlantic seaboard to the gulf. Hither
to the Great Northern, the Northern
Pacific, the Burlington, the Chicago.
Milwaukee & St Paul, the Chicago &
Northwestern, the Union Pacific and
the Chicago Great Western have been
impartial as between Atlantic and gulf
ports, as their carriage did not extend
beyond Chicago, Kansas City or St.
Louis, and they interchanged without
preference with the trunk lines and
the gulf lines alike at the usual gate
ways. But the Holden plan ties each
one of the great 'Granger' roads up
with a gulf line of its own, but with
out any line east of Chicago or St.
Louis, thus forcing all of them in their
own interest thereafter, through con
trol of car supply and otherwise, to
exert their influence in favor of move
ment of all export grain over their
own rails to the gulf instead of being
impartial as heretofore. If such con
solidations are accomplished where
will the trunk lines and Atlantic ports
get their grain for export? I am not
their advocate, but only wish to point
out this as another revolutionary and
disastrous effect to some interests of
the action the commission is asked to
take."
Even If the four-system plan wen
adopted, it is Judge Lovett's view thu
the systems should be constituted In a
much different way than proposed I:
the Holden plan. He said that if th
Hill lines were to be consolidated, lli
Union Pacific and Southern Pacific
should also be consolidated, as their
combined strength would be needed to
place them on a fair, competitive basir
with the northern lines. Again he sail!
that under a four-system plan the Chi
cago, Milwaukee & Si. Paul Instead oi
the Chicago & Northwestern should be
combined with the Santa Fe. Such a
consolidation would put the Santa Pi
system into the North Pacific coas!
territory in competition with the Hill
lines and the Union Pacific-Southern
Pacific group Instead of stopping the
Santa Fe group cast of the Cascade
mountains as proposed by Mr. Holden
He also stated that the Chicago, Mil
waukee & St. Paul and Santa Fe con
nect at both Chicago and Kansas City,
while the Chicago & Northwestern ha:
no Una to the latter point.
Judge Lovett dealt at some lengtl.
with the history of the Centrai Pacifie
and lis relationship to the- Union Pa
clfic and the tttutUft) dependence ol
these lines on each other. He referred
to the decision of the supreme court
ordering the dissolution of the contro
of the Central by the Southern Paclfi
because violative of the Sherman ae
and to the recent hearing before th
commission of the application of tie
Southern Pacific for authority to ae
quire control, and the decision of tb
conditions imposed ny the commissi'!
to the granting of the Southern Pacifi'
application, protected with reasonable
adequacy the rights of the Union Pa
clfic, and that with these conditioni
imposed the Union Pacific would n 1
object to a permanent consolidation ol
the Southern Pacific-Central Pacific.
He said that the Holden plan prove!
ing for a half interest by the Southern
Pacific in the Denver & Rio Grae !
Western and the Denver and Salt Lai ,
lines would be inconsistent with these
conditions and would be highly pr
judicial to the Union Pacific. He also
referred to the testimony already of
fered In behalf of the Union ant!
Southern Pacific askinz that the Col
orado lines of the Rock Island be elirn
inated from the proposed Southern Pa
clfic group, as th ownership of the i
lines would be likewise Iriconalsten'
with the conditions imposed by 0
commission In granting the Southern
Pacifie s application to control the
Central Pacific.
"Finally, to guard against possible
misunderstanding of my views in stat
ing our purpose to carry out as far
as we can the tentative plan of the
commission with the modifications
above suggested, I should like to add
that I believe entirely too much is
expected by some of our statesmen,
and in some quarters of public opinion,
from this commission's work and the
effect of the transportation act of 1920
with respect to these consolidations
Good undoubtedly will come from con
solidation and legal solidification into
one company of lmo.s naturally allied
and grown together as one system, but
legally held by numerous different
corporations loosely combined in com
mon control through stock ownership.
There will also be consolidations of
some lines not at this time under
common control or otherwise related
where the stockholders are able to
agree upon relative values. Yet, the
Consolidation of independent systems
will not be as rapid or as numerous,
I fear, as are anticipated by many,
at least without further legislation by
congress solving many of the problems
that will present themselves even
where the terms of consolidation have
been agreed upon; and there will be
great difficulty in the stockholders
agreeing upon relative value even not
counting those individuals who are in
the habit of acquiring a small amount
of stock and posing as an oppressed
minority.
"A great difficulty in this connection
is that there are many unsuccessful
ailroads in the United State! Which
.night to he liquidated. Doubtless ther
ire owners of these who are lookin
to this consolidation law as an op
p (rtunity for them to escape from theii
Investment! by unloading on tin
strong roads. Their properties are un
profitable and failures financially foi
one reason or another, and sooner or
later must be dealt with according t
their actual value based upon thoi
earning capacity, present or prospec
tive, regardless of the capitalization
I apprehend that financially stroll!
roads asked by the commission, by th
adoption of its plan of consolidation
to absorb these roads, will be willing
to take them, if at all, only at their
actual value, and that if there are any
losses to be liquidated they must bt
borne by those who have sustained
them rather than be shifted onto tht
stoc kholders of the successful roads.
"But if the object of the statute I:
accomplished and a plan for the con
solidation of the railroad properties
of the continental United States Int
a limited number of systems is adopt
ed by the commission and carried OUi L
in full, It will not in my opinion ai
very much in solving the railroad prob
ttm. It will not reduce the cost ot
transportation, whic h is the great prob
lem, or increase the traffic. Of cours'
It will not affect wages or the price
of rails or rolling stock or coal oi
other materials and supplies, or re
duce the taxes, and It will not hell
the credit of the railroads as a whole,
and we shall still have 'strong' and
'weak' railroads.
"Evenr if all the systems to be creat
ed by the commission plan were givei.
an even start (which is Impossible
they will not remain even, for sone
will succeed while others fail, and
there Is the very great danger ol
permanently welding together Incom
patible and inherently different p-op
erties, and isolating trade centers and
traffic routes and relationships which
with the greatest care cannot all now
he foreseen In a situation so vast and
complicated. Hut it is the policy of
the government, as declared by con
gress which the commission is carry
ing out, and it Is our purpose to co
operate to the greatest po:-s hie ex
tent we can consistently with what
we regard as our duty to our stock
holders and employee! and the com
munities ami traffic we serve."
S. E. NOTSON
ATTORNEY-Al-I AW
Office
IIKPIWKK
in Court
House
OKKUON
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NOTICE FOR II'HUCATION
Department of the Interior, United
States Land Office at The Dalles,
Ore., March 15, 1923.
Notice is hereby given that Claude
White, of Boardman, Ore., who, on
Aug J, 1917, made Homestead Entry
No. 019112, for K USW NE . E'4
NWMSHVi, being Unit "C". Umatil
la Project, Section 24. Township 4
North, Range 24 East. Willamette
Meridian, has filed notice of inten
tion In make three year Proof, to
establish claim to the land above
described, before c. G. Blayden
United States Commissioner. a'
Boardman Ore., on the 25th day o
April. 1923.
Claimant names as witnesses:
Homer J. Cason, Eugene Cumins,
S. H. Boardman, Chas. Nizor, all of
Boardman, Ore.
J. M. DONNELLY,
7-11 Register
Dr. J. L. Graves
DENTIST
Fraternal Building
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G. L. McLELLAN, M. D.
Physician and Surgeon
Fraternal lluilcllig
Rtanfield, Oregon
NOTICE FOR Pl'HI.UWTION
U. S. Land Office at The Dalles,
Ore., Fab. 23, 1923.
Notice is hereby given that Ilonja
min F Attoberry of Boardinan, Ore.,
ho, on Jan. 14, 191S, made Homo
'tead Entry No. 019688, for NWW
N'WV,, being Unit "II", Section 20.
"ownship 4 North, .Rang 25 East
Vlllatuetto Meridian, lias fil d noMc
I intent ion to matte three year proof,
o establish claim to the land above
escribed, before C. O. Blayden
tilted State's Commissioner, a'
'oardman. Oregon, on the 11th day
f April. 1923.
Claimant names as witnesses:
C. H. Atteberry, S. Atte'erry,
'rank Otto, W. A. Price, all of
loardutan, Ore.
J. W. DONNELLY,
1-9 Register
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55 VIOLATE LIQUOR LAW
Mayor of Gary and Other Officials
Convicted Under Volstead Act.
Indianapolis. One of the most sen
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1 the Volstead act became effec tive was
brought to a close In United Statei
district court with the conviction of
55 persons on a charge of conspiracy
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The defendants are all residents of
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were among those found guilty.
Fight on Japanese Orchard Help Win-
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take effect April 1, the lease has been
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