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Does Not Favor Grouping of
Western Railroads Pro
posed By Hale Holden.
IUDGE LOVETT’S STATEMENT
M oh I h at All Hours,
Declares a Re-Merger of Harriman
System to Be the Only Fair Basis
of Competition With
Northern Lines
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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 railroads and
greatly weaken the so-called Harriman
group,” said Judge Robert S. Lovett,
chairman of tbe Union Pacific System,
st today's hearing before Interstate
Commerce Commissioner Henry C.
Hall.
The commission's tentative plan com
prising seven instead of four systems
was characterized as affording tbe
basis and ground work which should
be departed from only with great cau
tion. Tbe Holden plan grouping the
Union Pacific with the Chicago, Mil
waukee A St. Paul was strongly con
demned, tbe witness explaining that
the commission’s plan of placing the
Chicago A Northwestern with the Un
ion Pacific was the onky logical group
ing, the Chicago, Milwaukee A St. Paul
being a competitor and1 the Chicago A
Northwestern a connection and natural
ally.
"Should the Hill lines) merger be ap
proved," Judge Lovett said, "a re-mer
ger of the Harriman Hues, 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. Therretentlon of the Cen
tral Pacific by/the Southern Pacific
with the sanie^condltlous -imposed by
the commission\ln the recent hearing,
Is satisfactory toithe Union'Pacific, as
they protect with treasonable« adequacy
the rights of thel Union Pacific,” he
laid. Continuing The added: "'Another
striking effect of the way the^ Holden
plan treats the/ofc t Harrimanlsyetem
appears when -after'assigning Ho the
Southern Pacific tbe Rock Island, it
also puta.wttb th lefSouthern Pacific the
the Missouri,
Missouri Pacific :]and
¡and tho
Kansas A Texas systems. with twhlch
the Southern Paet fie does but \ little
business, and with which it wouldihave
occasiou to do evon less after acquiring
the Rook Island and', also ths Kansas
?ity, Mexico A Orient—which the press
lispatches report is about to be aban-
loned—the Missouri, Oklahoma A
Gulf and a laalf interestiln the Denver
A Rio Orande Western and the Denver
ind Salt Latae. The latter feature is es
pecially significant because it would
Indeed effectually ‘bottlojup’ or as Pro-
'ossor Ripley expressed (it, 'short cir
cuit’ the Uaion 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 Pacific from Og
den both to Omaha, and Kansas City
ind 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>kindtto the Santa
Fe system, for it takes away from
the Union Pacific (group, where the
commission’s tentative plans places it.
tho Chicago A Northwestern, which in
connection with tholUnlon Pacific is
the door and gateway for most of the
competition out of ClMcago with the
3anta Fe for Pacific coast traffic, and
turns it over to the Santa Fe to
gether with the Chicago, St. Paul. Min
neapolis A Omaha, which is the prin
cipal connection and almost the sile
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 oontrolled lines, the
Minneapolis, St. Paul A 8ault 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 Sound,
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 lend Seattle,
Tacoma, Olympia, Portland, It is given
no entrance therein, but is hold safe
ly on the east side of tho Cascade
mountains at Spokane. The Santa Fe
is also given the St. Louis Southwest
ern, the Chicago A Eastern Illinois,
the Now Orleans, Texas A Mexico, tho
Western Pacific and a half Interest
1« tbe Denver A Rio Grande West
had ths Denver and Salt Lake.
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^
authorising a consolidation of the Hill,
lines, but that if that were done the
commission should also authorize the
reconstitution of ths 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 with lines with which they have
no natural affiliations and makes them
competitive with their natural allies,
notable in the case of ths Union Pa
cific by placing the Chicago A 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 Denver & Rio Grande
Western and Denver and Sajt 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 territories
where they have never been, where
they have no business or connections
and where apparently there is no
shadow of reason for them to go. The
Union Pacific is sent down into Ten
nessee, Alabama, Louisans, Texas,
Arkansas and Oklahoma with lines
to New Orleans. Laredo on the Mex
ican border and to El Paso, and again
into northern Michigan. Tbe Hill linea,
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, and
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 A
St. Paul for the Chicago A Northwest-
ern for consolidation with the Union
Pacific, Judge Lovett pointed out that
the former is a competitor'll the Un
ion Pacific for traffic to and from the
Puget Sound country, while the Chica
go A Northwestern is a connection. The
substitution would not only disrupt
existing routes and channels of trade
but would run counter to another re
quirement of the law that competition
be preserved as fully as possible.
Again, the consolidation of the Union
Pacific and Chicago, Milwaukee A St.
Paul would be a linking of the two
weakeat Puget Sound lines, while the
Northern Pacific and Great Northern,
which are the oldeat and strongest
lines In that territory, would be con
solidated under the Holden plan. Such
aa alignment would certainly not be
In the interest of giving the Puget
Sound country the best competitive
service.
Concluding this portion of his testi
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 else 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 8t.
Louie-Francisco systems with the
Union Paoiflc, and of the Missouri Pa
cific, Toledo, Peoria A Western and
the Missouri Kansas A 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
the manner in which Professor Ripley
and tho commission had worked out
for the direction of congress a plan
far tho 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 it great injury to public
as well as private interests is to be
avoided, 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 grent caution. Ha said
he doubted whether railroad men
themselves could have formulated a
plan so fair and workable, because
they could not have divealed them
selves of their environment and their
affection for lines with which they
had spent many years.
Judge Lovett opposed the suggestion
that ail lines In western territory
should be consolidated into four sys
tems. saylnr, "Four systems, compris
ing from thirty thousand to upw
thirty-five thousand mil
each extending from Puget* Sound or
the Pacific ocean to the 'Ghent lakes,
to the mouth of tbe MlasriaHlpiif river
and tho 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
rapiQly developing territory, extending
al! 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 tbe 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 tho gulf. Hither
to the Great Northern, the Northern
Pacific, the Burlington, the Chicago,
Milwaukee A 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 u*-ual 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 tbe gulf instead of being
impartial as heretofore. If such con
solidate ns are accomplished where
will the trunk lines and Atlantic ports
get t i -lr grain for export? I am not
their advocate, but only wish to point
out this as another revolutionary and
disaitrous effect to some Interests of
the t c tion the commission is asked to
take."
Ei 'n if the four-system plan were
adopii d, It is Judge Lovett's view- that
the systems should be constituted in a
much different way than proposed In
the Holden plan. He said that if the
Hill lines were to be consolidated, the
Union Pacific and Southern Pacific
shnu'd also be consolidated, as their
coml i:ied strength would be needed to
plae them on a fair, competitive basis
with the northern lines. Again he said
thot under a four-system plan the Chi
cago Milwaukee A St. Paul instead of
the Chicago A Northwestern should be
coml i ted with the Santa Fe. Such a
con»' iidation would put the Santa Fe
system Into the North Pacific coast
terri cry In competition with the Hill
liner and the Union Pacific-Southern
Pact.Jo group Instead of stopping the
Santa Fe group east of the Cascade
mountains as proposed by Mr. Holden.
He abo stated that the Chicago, Mil
waukee A St. Paul and Santa Fe con
nect at both Chicago and Kansas City,
while the Chicago A Northwestern has
to line to the latter point.
Judie Lovett dealt at some length
with the history of the Central Pacific
and Its relationship to the Union Pa
cific and the mutual dependence of
these lines on each other. He referred
to the decision of the supreme court,
ordering the dissolution of the control
of the Central by the Southern Pacific
beer use violative of the Sherman act,
and to the recent hearing before the
comm lesion of the application of the
Southern Pacific tor authority to ac-
quire control, and the decision of the
conditions Imposed by the commission
to the granting of the Southern Pacific
application, protected with reasonable
adequacy the rights of the Union Pa-
ciflc. and that with these conditions
Imposed the Union Pacific would not
object to a permanent consolidation or
the Southern Pacific-Central Pacific.
He said that the Holden plan provid
ing for a half interest by the Southern
Pacific In the Denver & Rio Grande
Wer tern and the Denver and Salt Lake
lines would be Inconsistent with these
conditions and would be highly pre
judicial to the Union Pacific. He also
referred to the testimony already of
fered in behalf of the Union and
Southern Pacific asking that the Col
orado linea of tho Rock Island be elim
inated from the proposed Southern Pa
cific group, aa the ownership of these
lines would be likewise inconsistent
with the conditions Imposed by the
(Continued on Page 4.)
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