'Round the Circle in Policy

RAILROADS

'Round the Circle in Policy

Walker D. Hines, Director General of the Railroads during the last months of the period of Government operation, and now Eastern general counsel of the Great Northern, has joined Hale Holden, president of the C. B. & Q. in advocating railroad mergers as a cure for the railroad problem in the United States. Holden's plan, supported by Hines and other big railroad executives, contemplates a rail consolidation that would tie up every road west of the Mississippi Valley gateways into four great systems. As designated these would be the Burlington, Union Pacific, Santa Fe, and Southern Pacific systems, all reaching from the Great Lakes to the Gulf of Mexico to tap the Panama traffic and to the Pacific Coast to meet the Oriental trade. Net income and investment of each of these lines would be about the same.

This move for mergers and consolidation, if successful, will effect a complete revolution in our national railroad policy. Thirty years ago the country was alarmed at great railroad dictators like Harriman and Hill with their stock and promotion wizards such as Gates, Gould, and Reid. The public feared that they would become an industrial and financial oligarchy so powerful that the whole country would be at their mercy. So the Government broke their power, dissolved the great pools and combinations, hedged the railroad business about with a complex set of rules and regulations, and held the Sherman Act like a gun at their backs. The threat of autocracy vanished, but in its stead came a progressive loss of efficiency and a growing condition of inadequate transportation which reached a crisis during the war when the Government had to take over the roads to insure the movement of troops and supplies.

Now that the roads are back in private hands, the old malady has begun to develop again. The country is too big to support two hundred roads on a profit-making basis. Therefore, we have the cry for mergers. Let the strong roads absorb the weak; guard against the old game of stockjobbing, secret rebates, " milking" and " watering," but give the people the benefit of a trust without its monopoly privileges.

The powerful and profitable roads will doubtless oppose the merger idea, since they are strong enough to stand on their own feet. They don't want their profits diluted by having to nurse " sick " lines. But the logic of necessity seems to be driving them to acceptance. Either they must agree to pool their mileage, rolling stock, service, and managing brains, or succumb to Government Ownership and political operation.