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entral PaGifiG Southern
And Its Relation to Oregon Transportation and Development
Following Are the Questions and
Answers. The Decision Will
Mean Much to Oregon. Aire
the
By
ARTHUR C. SPENCER,
General Attorney, Union Pacific
SyBteni.
Portland, Oregon.
lnbi Pacific-Central Pacific Con
structed With (iovcnimoiit Aid
As ONE HOAI) for "Military,
1'oHtiil and Other Purposes."
1. Q. How was the construe.
lion of the Union Pacific and the
Central Pacirlc brought about?
A. By the aid or tho United
States Government,
2. Q. What action was taken by
the government? . j
" A. Preslodnt Lincoln advocated
the construction and Congress paus
ed the Pacific Railway Act in 1MI2,
amending and r.upplemcntln;; It in
18B4.-
' a.' . Q. What Interest did the Gov
ernment have In tho construction of
these railroads?
A. ' The tltlo of tho Act Btatos tho
purpose to be "to secure to llio Gov
ernment tho use of tho same fur
Postal, military and other purposes."
' 'i. Q. What aid did the Govern
ment extend to these two roads
A; Jt advanced them large
amounts in Government bonds and
made large granta of land to them.
C. Q. Between what points were
these lines built and when?
A. Tho Union ' Pacific was built
westerly from Omaha and Kansas
City and tho. Central Pacific easterly
from San Francisco and Sacramen
to, the two linos meeting near Og
den, Utah, lit 181)9. Together 1 hoy
formod the first transcontinental
railroad.
In Financing Them, Congress Im
posed tho Condition That They
Should Work Together and
' Not Discriminate Against
' Hitch Other.
0. Q. Why should those two lined
bo required to work together, and
in the Interest of each other.
j jggSS5 Jointly used and operaied Railroads
J m ..'.t;3J3&&&, (SS Washington have resulted in
People
Ready
to Decide
A. First: Tho Pacific Railroad
Acts require them to operate "as
one connected, continuous line,' 'and
in such operation "to afford and se
cure to each equal advantages and
facilities as to rates, time and
transportation, without any discrim
ination of any kind In favor of
or adverse to the road or
business of any1 or either of the
others;" and
Second: Neither tho Government
nor the people can have "one con
nected mid com Inuoiis lines" In op
eration if they refuse to work to
gether and divert traffic from each
other.
7. Q. Is It not true, as contend
ed by tho Southern Pacific, that the
obligation to the Government is met
if they "he operated as a physically
connected lino not in tho sense of
ownership, but as a matter not break
ing the line by putting obstacles In
tho wuy which would prevent unob
structed movement?"
A. Tho Supremo Court says: "We
do not think tho ai ts il'aciflc Hull
road Acts) stop with that require
ment" (physical continuity)
"and tho purpose of Congress to so
curo a continuous lino of road, op
erating from tho Missouri River to
tho Pacific Coast as one road, Is fur
ther emphasized in tho Act of Con
gress of June 30th, 1X7 1, making It
an offense for any officer or agent
of tho companies to refuso
to operato and use the samo
as one continuous line, and
to afford to each equal
advantages and facilities without
any discrimination In favor of
or advorso to either of snid
companies." Furthermore no greater
obstacle to the successful operation
of a railroad could be conceived of
than it divert Its traffic away from II.
Southern Pacific Acquired Central
Pacific Stock Subject to This
Obligation hut (lax Flagrantly
- Discriminated Against I'nlon
Pacific in Operation
of Central.
' 8. Q. What is tho Southern' Pa
cific Company?
A. It Is n holding company of
the Stato of Kentucky, controlling
and operating a number of rullrouds
and a steamship line, collectively
known as tho Soifthern Pacific Sys
tem. This system extends from San
Francisco Bay by way of Los Angeles
and 101 Paso to Galveston, Texas, and
to New Orleans, where It connects
with Its steamer lines to New York
City. At El l'aso It connocts with the
Rock Island which runs to Omaha
and Chicago. It also has a line from
Pan Francisco to Portland and branch
lines in Western Oregon.
!. Q. What Is tho nature of the
control by the Southern Puclfic of
the Central i'aclfic?
Sow
uc
Central
Iflc.
10. Q. Is it true that the South
ern Pacific, in its operation of the
Central Pacific, has committed the
discrimination prohibited by the Acts
of Congress?
A. Yes. The Supremo Court finds:
"Tho proof is ninplo that, the iMilicy
of th(" Southern Pacific System has
Ix-cn to favor transportation on its
lino by securing for Itself, whenever
pi'iicticnhle. tho rnivliigc of freight
which would normally move cust
uiml or westward over the shorter
line of the Central Pacific Railroad
and its connections, for its own much
lonirer and wholly owned southern
roiue."
11. Q. Under tho law, doc3 not
the shipper have tho right to route
his shipment?
A. Yes. This provision was In
corporated Into the Commerce Act In
1010, some four years before tho
Government brought this suit. But
tho Traffic Solicitor of tho, railroad
can generally obtain the routing. As
stated by tho Supreme Court: "there
aro elements of competition In the
grunting; of special facilities, the
Vuompt carrying and delivery of
freight, the i-onily and agreeable ad
justment and settlement, of claims,
and other clement which thai legis
lation docs not control."
12. Q. Is it fair to require the
Southern Pacific to observe these
Acts of Congress?:
A. Certainly. It bought the Cen
tral Pacific stock with full knowl
edge of these obligations and should
llvo up to thorn. The Supreme Court
snvs: "tho obligation to keep faith
with the Government continued,
notwithstanding changed
foi ins of ownership mid olganlji-
WHAT DOES THIS MEM TO YOU AS A CITIZEN OF OREGON?
lion," and by the 1912 decision in
the aso of United States; vs. Union
Pacific and Southern Pacific, the
roads were warned that such dis
crimination might posibly result in
forfeiture of all rights under the Acta
of Congress. -
I lilted States Supreme Court Finds
-Such Combination "A; .Menace
. and Itetdrnint UMH1' 'Free
dom of .Commerce."
13. Q. Is It true, as asserted by
the Southern Pacific people, that the
Central Pacific and Southern Pa
cific "have grown and developed like
a healthy tree, from a common root
into a single unit?"
A. No. Tho Southern Pacific
Company (the Kentucky holding
company) was not organized until
1X84, fifteen years after the Central
Pacific was built. The Southern Pa
cific Railroad Company was incorpor
ated in 1863 to build tho railroad
from San Francisco south and east to
tho easterly boundary of California.
Tho Supreme Court considered this
contention, and ound '-that these
roads wore always distinct corpora
tions and for years had.' Boards of
Directors not consisting or the same
persons. It is true that latterly the
Central Pacific, for years the parent
and dominant company, has become
submerged by the Southern's stock
ownership and control, and referring
to this the Supreme Court says:
"Such combinations, not the result of
normal and natural growth and de
velopment, but siirluging from the
formation of holding romniinics. or
stock purchases, resulting in the uni
fied control of different rouils or sys
tems, naturally competitive, consti
tute n menace and a restraint UMin
thnt freedom of commerce, which
Congress Intended to rero!rnix and
protect, and which the public Is en
titled to have protected."
14. O. Tho Southern Pnclfle rnn-
resents that enforcement of the Su-'
nrcme Court's decision will operate'
to tear its system into "confused!
remnants" of railroad., neither of j
which can function nf Itself Wlmt
!Is tho fact? .
A. No tracks will bo torn up, nor
will abandonment of their operation
bo permitted, under the Transporta
tion Act. The two comnanles will, I
where necessary nnerato them jointly '
and in competition, instead of the
one company controlling 'in nil operat-j
trul will he freed from Southern con
trol. In disposing of thts foature of
the case, tho decision provides that
tho several terminal lines and cut
offs lead'ng to San Francisco Bay
shoqld he dealt with, "either by way
of apportionment or by provisions for
joint or common use. in such manner
as will secure to both romnaiilcs suclf
full, convenient and ready access to
the Bay and to terminal facilities
thereon that, eiich(lcomiany will lie
utile freely to compete with the other
to serve the nublic efficientlv, and to
accomplish the purpose of tho legls-!
latlim under which It was con-1
1
structed. ,. And a like course,, should
be pursued in (billing with the linen
extending from- San' Francisco Bay
to SaerauicuUj pud to Portland, Oregon;"
The Givatcst Agency in the Success
of Washington's ' Transportation
Systems Has Been Joint. Rail
road Operation,..' Samel Re- ,
duces. Overhead , and
Works to Advnntago
of Territory Served
and Railroads '
Involved.
15. Q. Is such Joint use practic
able and common in raUroad opera
tion?
A. It certainly is witness some
seven Joint operations of this kind
by railroads in Washington, where
in one Instanco three railroadB Joined
in double tracking and operating be
tween Vancouver and Tacoma. Maps
attached illustrates Washington sit
uation and possibilities in Oregon.,
President Sproulo .Testified Under
Outh That Sale of Central Pa. .
cific to Union I'aclfic 'Would
Benefit the Iublic and tho
Southern Pacific Itself.
16. 0. If the Southern Pacific is
compelled to sell the Central Pacific,
will not be left In a crippled con
dition, unable to compete in an effi
cient way for traffic? .
A. No. The Southern Pacific, will
'he paid for the property sold and will
Fecure rental for any of its property
v.sed by the Central under the joint
arrangement. Indeed, In 1913. the
Southern and the'Unlon agreed upon
terms of sale of the Central by the
former to the latter, but under tho
agreement then made the Union was
kept out of Western Oregon. Upon
that occasion lh-esident Sproulo of
the Southern testified liefore the
Railroad Commission of California in
an effort to accomplish tho sale, and,
said in substance that: The sale
would bring tho roads into coniiie
titlon Willi each othe:-; tho greater
tho number of roads, the less like
lihood (hero is of maintaining rates
at their present parity: the gmitor
tho number of railroads contending
for any pleco of traffic, trio greater
the tendency to reduce rates; couiie
tition always (nipiwes service and
the competition will bo chiefly in the
service; Ihi effect as to' local points
not romnetitivo would probably lie
unnoticed, depending, liowever, on
the policy of the new owners. The
effect from competitive points, Fresno
for e.vaii'le, would be to give Fmtio
three railroads where it now has only
two. at, Tehama to give it two rail
roads wlier it now has only one. at;
points on tlie joint line between Sac
ramento and Oakland, by way of
Henlcia. two ronds where they now
have on": under this change, pui-su-ant.
to this agreement,. It is the Cen
tral Pacific that is likely to lose the
business and tho Southern Pacific,
that is likely to get business; we arc
not by any means in tiio lion's maw
o( tho Union Pacific; wo will luive
tho Western I'aclfic and Santa Ke
soliciting us for this business, too; I
will bet on tlie I'nion Pacific not get
ting the lion's share of it; the change
of ownership of tho Central Pacific
will' not affect tho jinssengcr.
(See Transcript m Application
Southern Pacific et.nl to Railroad
Commission of California, .Filed Feb
ruary 17th, 1013, Xumber-409.)
Union Pacific Seeks to Insure Per,
' foiiiuinco I.V Central of Obliga
tion by Central and Union to
Government That Theso Roads
' Work in the Interest of F.ach
Other. The Southern Bought
Uie Central With This
Obligation Attached to
' tho Property.
; 17. Q. The : Southern Pacific
claims that the Union Pacific is seek
ing to control the lines of the South
orn. Pactfio and to tear down tho
property of the Southern Pacific.
What justification is there ror the
Union- Pacific to Interest itself in
the matter, and to contend for the
enforcement of the decision of the
Supreme Court of the United States?
A. The Union Pacific Is not seek
ing to control' the Southern, cannot
legally do so, nor has it attempted
nor does It desire to weaken or tear
down the Southern Pacific. It is en
deavoring to make secure the per
formance by the Central Pacific of its
part of rtie mutual obligation im-
posed by Congress upon that road .
and -the Union Pacific found in the!
Pacific Railroad Acts that created
them and reaffirmed by the Supreme j
Court of the United States as attach-1
Ing to the properties irrespective of j
change of ownership. The Supreme
Court has found that this obligation
has -been violated 'by, the Southern
Pacific. The Southern Pacific pro
noses in effect that it be relieved
I from . the obligation. Were this to
I happon the Southern could take tho
business of : theiUnion. at Ogden and
the empty cars delivered to it at that
junction, and after loading them with
Central Pacific freight, route thein
over its own lino to the middle west
through El Paso and to the East
at the Gulf, leaving the Union Pa
cific in a pocket at Ogdcu.
If the Southern "Pacific -lias, as
found by the Supremo Court, so di
verted this business In tho past in
disregard of its-obligations to the
Government and to the Union Pa
cific, it is a moral certainty that it
would starve the line- from San
Francisco to Ogden if the obligation
were removed. Not only does the
past conduct of the Southern war
rant this apprehension, but the con
solidation plan of the Interstate
Conimerce Commission providing for
tho merging of tho Rock Island with
the Southern whereby it would have
Jointly used and operated Railroads
in Washington have resulted in
improved service and development
a 100 per cent, haul over its own
line by way of El Paso to Chicago
and other noints In the middle west,
emphasizes the duty of the Union.
Pacific to oppose the continued con
trol by the Southern Pacific of tho
Central Pacific. The Union Pacific
has too long refrained from taking
part in this litigation, with the re
sult that the Southern Pacific is
now boldlv claiming that the Cen
tral Pacific has become a part of.
the Southern Pacific unit, whereas
the Supreme Court has held that
the Union Pacific and Central Pa
cific are to operate from the Mis
souri River to . the Poctflc Coast
"us ono road."
t
18. Q. In view of the owner
ship by the Union Pacific of a line
from Salt Lake to Los Angeles, is
it eligible to acquire the Central?
A. Yes. Tho Acts or Congress
under which they were built con
templated that the Union and Cen
tral should be one road and author
ized their consolidation. Further
more, the Central Pacific does not
reach Los Angoles, and the Supremo
Court In the caso of the United
States against the Union and tho
Southern approved the proposal or
(he Government that the Union ac
quire the Central.
19. Q. Is it true that the de
cision of the Supreme Court ex
onerates the Southern and the Cen
tral from alleged violation of... the
Pacific Railroad Acts and limits the
offense to a violation of the Sher
man Act? .
A. No. ' The decision affirmatively
finds the Southern guilty of discrim
ination upon ample proof, and the
Southern, in the brief of its Counsel
in me supreme uouri, m suusiance
admitted the charge. True, the Court
says It finds it unnecessary to pass
on me Vjovernineni s .coiuenuon inai
the leases to the Southern and the
acquisition 'by it of the Central Pa
cific stock were in and of themselves
violative of the Pacific Railroad Acts,
but this observation is made after It
had stated its findings of guilt;'
against the offending defendants,
which ruquiieu ruveiaui UL LUW uo-
creo of the lower court. Further
more, the Court's opinion shows a'
desire not to visit a forfeiture penalty
upon the defendants aari orders that
in severing the control liy the South
ern of the Central Pacific by stock
ownership or lease, tho mortgage lien
securing the oustanding. bonds shall
be protected.
Upon Joint Operation of Main Lino
. Shippers on Southern I'aclfic
Branches Can Secure Com
petition by Forcing
Joint Rates.
.20. Q. , If the Central and the
Southern should, pursuant to the de.
cision of the Supreme Court, acquire
(Continued on page five)