Potter Plan

Among the many schemes to rehabilitate the St. Paul Railroad, not the least ingenious is that worked out by the receivers, Mark W. Potter and Edward J. Brundage, and known as the "Potter plan." This is almost literally a scheme for robbing Peter to pay Paul--the Peter in this case being other Western lines more prosperous than the St. Paul. The receivers argue that any increase in rates in the Western carriers should be pooled among them in such a way as to give the neediest roads the largest share of the increase. If, for example, the Great Northern should realize a tidy profit by increased rates, much of this profit would be taken from it and turned over to the St. Paul. In this plan, Mr. Potter claims that it is undoubtedly legal under the Transportation Act, that prospects for voluntary agreement by the carriers concerned are good, that it would be more satisfactory to shippers generally, that it would make management more efficient, that it would not cause complications with the "recapture" clause, and that its dependence upon both values is no drawback. On all these grounds the "Potter plan" has been assailed by rival Northwest carriers.

The gist of the situation is that if the Northwestern roads were given high enough rates to enable the St. Paul to live, its rival roads would prosper too much to suit local shippers, Washington politicians and others. The "Potter plan" solution is to give a moderate rate increase only, and turn over to St. Paul most of the profits coming thereby to its rival roads. The St. Paul wants a rate increase on any terms that promise its own solvency. Shippers growl at much higher rates. These interests are well cared for by the plan. But the rival roads do not enjoy being forced to share their profits with the less fortunate St. Paul.