Applications approved. PURCHASE OF STOCK 65 I. C. C. 124, August 23, 1920: The Pittsburgh & West Virginia Railway Co. was authorized to acquire control of the West Side Belt Railroad Co. by purchase of its capital stock. The applicant controls the Pittsburgh Terminal Railroad & Coal Co., through ownership of its entire outstanding capital stock, and this company owns 21,300 shares of the total outstanding capital stock of 21,600 shares of the West Side Co., the remaining 300 shares of which are owned by the applicant. 67 I. C. C. 513, April 29, 1921: The Cleveland, Cincinnati, Chicago & St. Louis Railway Co. was authorized to acquire control of the Evansville, Indianapolis & Terre Haute Railway Co. by purchase of its entire capital stock. 67 I. C. C. 752, June 14, 1921: The Pennsylvania Railroad Co. was authorized to acquire control of the Pittsburgh, Fort Wayne & Chicago Railway Co. by the purchase of its special guaranteed stock. All this stock is owned by the Pennsylvania Co., and all the stock of the Pennsylvania Co. is owned by the Pennsylvania Railroad Co.. 70 I. C. C. 413, August 30, 1921: The Pere Marquette Railway Co. was authorized to acquire control of the Flint Belt Railroad Co. by the purchase of not more than 10,000 shares of its capital stock. The incorporators of the Flint were the officials and employees of the Marquette, and it was stated that the Marquette was the only available purchaser, and that the Flint's railroad could not be built unless the Marquette is permitted to acquire this stock. The Marquette proposes to buy substantially all the stock proposed to be issued by the Flint. 71 I. C. C. 124, February 11, 1922: The Chicago, Milwaukee & St. Paul Railway Co. was authorized to acquire control of the Chicago, Milwaukee & Gary Railway Co. by the purchase of its entire outstanding stock. 72 I. C. C. 96, June 27, 1922: The New York Central Railroad Co. was authorized to acquire further control of the Cleveland, Cincinnati, Chicago & St. Louis Railway Co. (the Big Four) by the purchase of additional preferred and common stock. The New York Central owned at that time 52.97 per cent of the total Big Four stock outstanding, but this did not constitute complete control, since the consent of the majority of the preferred stock owners was required before the issuance of any evidence of funded debt or the making of any lease of railway property. The acquisition was to be made by an exchange of securities. The decision was by the entire commission, Commissioner Potter concurring and Commissioner Eastman dissenting. 82 I. C. C. 745, December 12, 1923: The Denver & Rio Grande Western Railroad Co. was authorized to acquire certain stock of the Rio Grande Junction Railway Co. and of the Rio Grande & Southwestern Railroad Co. 86 I. C. C. 631, April 2, 1924: The Kansas City, Kaw Valley & Western Railway Co., and the Kansas City Southern Railway Co. were each authorized to acquire by purchase one-half of the capital stock of the Kansas & Missouri Railway & Terminal Co. Authority was also sought to acquire the bonds of the Terminal Co., but was denied upon the ground that the acquisition of the bonds did not give other or further control than was to be procured through the acquisition of the stock. 86 I. C. C. 808, April 25, 1924: The Missouri Pacific Railroad Co. was authorized to acquire an amount of the noncumulative preferred stock to be issued by the Texas & Pacific Railway Co. sufficient to permit it to exchange certain bonds held by it for the stock. 90 I. C. C. 161, June 9, 1924: The Missouri Pacific Railroad Co. was authorized to acquire one-half of the common stock of the Denver & Rio Grande Western Railroad Co. from the Western Pacific Railroad Corporation, which then held the entire outstanding shares of such stock. The decision was by the entire commission, Commissioners Eastman, Aitchison, Cox, and McManamy dissenting. 90 I. C. C. 262, June 12, 1924: The New Orleans, Texas & Mexico Railway Co. was authorized to acquire control of the International-Great Northern Railroad Co. by the purchase of its capital stock, upon the condition that if the commission, in a proceeding upon an application filed by the Missouri Pacific Railroad Co. for authority to acquire control by purchase of the capital stock of the applicant, should find that it was not in the public interest for the applicant to hold the stock of the International-Great North ern, that the applicant should, within 90 days thereafter sell and dispose of the stock. (For the supplemental order authorizing the unconditional acquisition, see 94 I. C. C. 191, 205.) The State of Texas had protested against the acquisition, upon the ground that it was prohibited by the laws of Texas. The decision was by the entire commission, Commissioners Eastman and Campbell dissenting. 94 I. C. C. 191, December 8, 1924: The Missouri Pacific Railroad Co. was authorized to acquire control of the New Orleans, Texas & Mexico Railway Co. by purchase of capital stock. The applicant at the time had an option for the purchase of 37,500 shares, and this application was for authority to acquire control through the purchase of additional shares. The decision was by the entire commission, Commissioners Eastman, McManamy, and Campbell dissenting. 94 I. C. C. 224, December 8, 1924: The Baltimore, Chesapeake & Atlantic Railway Co. was authorized to acquire control of the Baltimore & Eastern Railroad Co. by purchase of capital stock. 94 I. C. C. 279, December 20, 1924: The Monongahela Connecting Railroad Co. was authorized to acquire control of the Eastern Railroad Co. by purchase of its capital stock. The stock of both companies was held by one corporation, and it was proposed ultimately to consolidate or merge the property of the two companies. 99 I. C. C. 169, June 1, 1925: The Illinois Central Railroad Co. was authorized to acquire control of the Gulf & Ship Island Railroad Co. by the purchase, through the Mississippi Valley Co. (its subsidiary), of the entire outstanding capital stock. 99 I. C. C. 382, July 8, 1925: The Western Pacific Railroad Co. was authorized to acquire control of the lines and other property of the Sacramento Northern Railroad upon transfer thereof to the Sacramento Northern Railway, through the purchase of the railway's capital stock, and by the purchase of all of the bonds of the railroad company. 105 I. C. C. 35, November 2, 1925: The New Orleans, Texas & Mexico Railway Co. was authorized to acquire control of the San Antonio, Uvalde & Gulf Railway Co. by purchase of all the outstanding capital stock and bonds of that company. The application also sought authority for the purchase of the physical properties of a pipe-line company and also of a railroad engaged purely in intrastate transportation and not authorized to engage in interstate commerce, but this was denied on the ground that the commission was without jurisdiction. 105 I. C. C. 43, November 2, 1925: The Wabash Railway Co. was authorized to acquire control of the Ann Arbor Railroad Co. by purchase of capital stock. 105 I. C. C. 99, November 14, 1925: The St. Louis-San Francisco Railway Co. was authorized to acquire control of the Muscle Shoals, Birmingham & Pensacola Railroad Co. by the purchase of all the capital stock authorized to be issued in the same proceeding. 105 I. C. C. 131, November 14, 1925: The Kansas City Southern Railway Co. was authorized to acquire control of the Kansas City & Grandview Railway Co. by purchase of its capital stock. 105 I. C. C. 282, January 2, 1926: The Southern Pacific Co. was authorized to acquire control of the Holton Inter-Urban Railway Co. by the purchase of capital stock. 105 I. C. C. 349, January 16, 1926: The Atchison, Topeka & Santa Fe Railway Co. and the Western Pacific Railroad Co. were each authorized to purchase onehalf of the capital stock of the Alameda Belt Line. 105 I. C. C. 383, January 25, 1926: The Seaboard Air Line Railway Co. was authorized to acquire control of the Tavares & Gulf Railroad Co. by purchase of capital stock. The decision was by the entire commission, Chairman Eastman dissenting. 105 I. C. C. 499, February 12, 1926: The Pennsylvania Railroad Co. was authorized to acquire control of the West Allegheny Railroad Co. by purchase of capital stock. 105 I. C. C. 543, February 23, 1926: The Chicago & North Western Railway Co. was authorized to acquire further control of the Chicago, St. Paul, Minneapolis & Omaha Railway Co. by purchase of stock. The North Western then owned about 50.04 per cent of the outstanding stock. The acquisition was proposed as a step toward complete unification of operations through a lease or some form of consolidation or merger when permitted by law. 105 I. C. C. 804, April 6, 1926: The Chesapeake & Ohio Railway Co. was authorized to acquire control of the Island Creek Railroad Co. by purchase of all the capital stock. The applicant operates the Island Creek line under a 20-year lease dated April 5, 1912. Applications denied. 71 I. C. C. 747, May 27, 1922: The Cleveland, Cincinnati, Chicago & St. Louis Railway Co. filed its application for authority to purchase all the outstanding capital stock of the Peoria & Eastern Railway Co. and all its outstanding bonds. The applicant then owned $5,000,100 par value of its capital stock, of which there was outstanding $9,994,200 out of a total authorized capital of $10,000,000. The application was denied on the ground that the acquisition did not give the applicant any other or further control than that which it had. 72 I. C. C. 273, July 21, 1922: The Chicago, Rock Island & Pacific Railway filed an application for authority to acquire 25.8 per cent of the total outstanding capital stock of the Chicago & Alton Railroad Co. The acquisition was to be made in pursuance of a compromise after several years' litigation. The application was dismissed on the ground that it did not involve the acquisition of control. 72 I. C. C. 377, August 2, 1922: The New Orleans, Texas & Mexico Railway Co. filed an application for authority to acquire control of the Dayton-Goose Creek Railway Co. by purchase of its capital stock. The proposed purchase price was far in excess of the investment in road and equipment, less depreciation. The controlling reason for the proposed acquisition was to secure traffic from a competitor. The application was denied upon the ground that the record did not justify a conclusion by the commission that the price to be paid was a reasonable one. Upon a further consideration by the entire com. mission, the order was approved and the application denied. (82 I. C. C. 27 (July 16, 1923).) Applications approved. OPERATING AGREEMENTS 70 I. C. C. 470, September 21, 1921: A contract made by the Boston & Albany Railroad Co. with the Providence, Webster & Springfield Railroad Co., providing that the Boston shall perform all transportation upon and over the railroad of the Providence (through the New York Central Railroad Co., the lessee of the Boston) was approved and authorized. 71 I. C. C. 68, January 16, 1922: A contract made by the Pittsburgh & West Virginia Railway Co. with the West Side Belt Railroad Co., providing that the railroad properties of the two companies shall be operated by the Pittsburgh Co., was approved and authorized. The entire capital stock of the Belt Co. is owned by the Pittsburgh Co. 71 I. C. C. 190, March 4, 1922: The Union Pacific Railroad Co. was authorized to acquire control of the Saratoga & Encampment Railroad under a contract providing for its operation of the property for a period of three years, with an option to purchase at the end of such period. The Encampment had filed an application for the abandonment of its line, and the proposed acquisition was suggested as an experiment in an effort to avoid abandonment. 72 I. C. C. 459, August 12, 1922: The New York, Chicago & St. Louis Railroad Co. was authorized to acquire control of the property of the Lake Erie & Western Railroad Co. by a contract providing for operation, management, and control by the Nickel Plate of the railroads and properties of both companies. 79 I. C. C. 312, May 9, 1923: The Gulf, Mobile & Northern Railroad Co. was authorized to acquire control of the Meridian & Memphis Railway Co. by means of a proposed operating contract, under which the railroads and properties of the two companies are to be operated, managed, and controlled by the Gulf Co. 105 I. C. C. 369, January 12, 1926: The operating contract between the Pittsburgh & West Virginia Railway Co. and the West Side Belt Railroad Co., approved in 71 I. C. C. 68 (above), was continued for a period of 10 years. Application denied. 72 I. C. C. 151, July 6, 1922: The New York, Chicago & St. Louis Railroad Co. and the Lake Erie & Western Railroad Co. filed a joint application for the approval of a proposed contract for the joint purchase, exchange, and use of materials and supplies. The application was denied upon the ground that the control," under paragraph (2) of section 5, did not include merely control by one carrier in the purchase of materials and supplies for another carrier and that paragraph (2) had no application. Respectfully submitted. 66 ELLSWORTH C. ALVORD, Assistant Counsel, Office of the Legislative Counsel, (Whereupon, at 12 o'clock noon, the committee adjourned.) Hon. JAMES S. PARKER, INTERSTATE COMMERCE COMMISSION, Chairman Committee on Interstaie and Foreign Commerce, House of Representaiives, Washington, D. C. MY DEAR CHAIRMAN: Since forwarding to you our report on H. R. 11212, under date of May 11, relating to the consolidation of railroads, I received the attached memorandum from Commissioner Taylor with the request that it be brought to your attention. Respectfully submitted. [H. R. 11212] JOHN J. ESCH, Commissioner. MAY 13, 1926. Memorandum to Commissioner Esch: While the letter to the Hon. James S. Parker, chairman of the House Committee on Interstate and Foreign Commerce, was under consideration by the commission on last Monday, I overlooked making the following suggestion: Without objection from the commission, under date of February 8, I addressed a letter to Senator Underwood, of which I attach a copy. In that letter I asked Senator Underwood to use his good offices in having included in the proposed amendment to the transportation act, then before the Senate committee, this clause: "No consolidation to be approved which is found by the Interstate Commerce Commission to create a preference between the ports of one State over the ports of another." This was an individual act and not that of the commission, but as it was only an attempt to have incorporated into the transportation act what is, in effect, a quotation from the Constitution, I can think of no reasonable objection that anyone could have to its being done. It is true that such a suggestion might be considered idle supererogation, as Congress can neither add to, nor take from, a limitation placed upon its power by the Constitution, except for the reason that if this clause is in the transportation act, it would only be necessary to prove that any consolidation contrary thereto did not comply with the act, whereas if this clause is not included, and such a consolidation was attempted, it would be necessary to prove the unconstitutionality of the consolidation. Can you properly add this suggestion to your letter to Chairman Parker? Or if there is objection to your doing this, can you send him a copy of this communication and my letter to Senator Underwood for such merit as the suggestion may have, as an individual contribution to the subject under consideration? Hon. O. W. UNDERWOOD, TAYLOR. FEBRUARY 8, 1926. United States Senate, Washington, D. C. MY DEAR SENATOR: At a meeting in conference of the Interstate Commerce Commissioners this morning the subject of a recent communication addressed by the chairman of the commission to the chairman of the Senate Committee on Interstate Commerce was under consideration. My attention had been called to the fact that the chairman of the commission had mentioned in this communication that I was not present when it was being formulated, and I asked permission of the commission, upon my own initiative, to suggest to the Committee on Interstate Commerce, through you, the desirability of including a clause in the amended transportation act reading as follows: "No consolidation to be approved which is found by the Interstate Commerce Commission to create a preference between the ports of one State over the ports of another." For your convenience I am sending copy of the pending bill with this clause inserted. There was no objection on the part of any member of the Interstate Commerce Commission to my doing this. Sincerely yours, Hon. JAMES S. PARKER, R. V. TAYLOR, Commissioner. MERRILL, OLDHAM & Co. (INC.), 35 Congress Street, Boston, June 11, 1926. Chairman Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D. C. DEAR MR. PARKER: In accordance with your suggestion at the hearing in Washington the other day, I am forwarding to you copy of a pamphlet dealing with the grouping of the railroads of the country, which I prepared and which was published by the Investment Bankers' Association in November, 1921. I am also forwarding statements, bound together, of my testimony before the Interstate Commerce Commission in regard to consolidations under dates of November 23, 1923, and January 12, 1924, and statement before the Senate Committee on Interstate and Foreign Commerce under date of May 21, 1924. I have taken the liberty of sending a duplicate of this matter to Mr. Hoch, as this material is forwarded to you for use by the committee as the result of questions which were asked by him. Trusting that your bill will be favorably reported, I remain, Very truly yours, JOHN E. OLDHAM. MAY 21, 1924. To the Committee on Intersicie and Foreign Commerce of the United States Senate. Senator Cummins has asked me to appear before this committee to-day to present the results of my studies relating to the subject of railroad consolidations, and to say what I will concerning Senate bill 2224 which he had introduced. To comply with his invitation I have prepared a memorandum which I desire to read to the committee. In this memorandum I have undertaken to set forth in broad outline, rather than in detail, my understanding of the results which a general consolidation procedure will accomplish, to show why these results are essential to the success of any system of public regulation of the railroads, and to indicate the principles which should be followed in grouping the railroads of the country into a few well-organized systems. I point out certain respects in which it seems to me the consolidation provisions of the transportation act should be amended, and in this connection I refer briefly to Senator Cummins's bill. Respectfully, JOHN E. OLDHAM. TESTIMONY OF JOHN E. OLDHAM BEFORE THE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE OF THE UNITED STATES SENATE MAY 21, 1924 Anyone who acquaints himself with the evidence of the numerous witnesses who have appeared before the various committees of Congress during the last 8 or 10 years in relation to the railroad problem will find little or no indication of any substantial opinion that public regulation of the railroads is unnecessary or undesirable. In fact he will find abundant evidence of an almost unanimous opinion that under a policy of private ownership and operation public regulation |