Balance of Powers

Into the eastern railroad situation of the U. S. were injected two large new merger plans last week, carrying promise of consolidation and settlement, carrying also prospect of confusion and conflict.

The Baltimore & Ohio R. R. suggested a merger that would more than double its mileage and valuation. The Chesapeake & Ohio R. R. offered a plan that would link the somewhat scattered Van Sweringen holdings into a unified and expanded trunk system.

The New York Central R. R. was rumored to have a merger in process of preparation; the Pennsylvania R. R. offered no plan but glowered at the other three. Details of the suggested mergers presented the reader with a somewhat forbidding assembly of names connected with "&'s," and listed such roads as the 45-mile Montour and the 13-mile Pittsburgh, Chartiers & Youghiogheny. The multiplicity of the branches obscured a clear view of their trunks.

Four Powers. Perhaps the general outline of the eastern railroad situation is most clearly seen through an analogy between the pre-war Balance of Power in Europe and the present Balance of Power between the rail systems east of the Mississippi.

Comparable to pre-War England, France, Russia and Germany are the Pennsylvania, the New York Central, the Baltimore & Ohio and the Chesapeake & Ohio. Like spheres of influence of the Great Powers are the territories of the Great Railroads. As the Great Powers had their colonies, so the Great Railroads have their controlled lines. Like Morocco to France, for instance, is the Cleveland, Cincinnati, Chicago & St. Louis R. R. (Big Four) to the New York Central. And as the Great Powers suspiciously eyed each other's excursions in remote Asia and Africa, so each Great Railroad arches its back when a rival seeks to acquire some little road which to the outsider might appear to carry merchandise of driblet volume between terminals of meagre importance.

B. & O. Empire. Oldest railroad Empire (founded in 1827) is the Baltimore & Ohio, with Daniel Willard its Emperor and Baltimore its capital. The B. & O. runs west from Baltimore to Cumberland, then stretches a long northern arm off to Chicago and a long southern arm off to St. Louis. It has also short but vital trackage between Washington, Baltimore and Philadelphia. Through West Virginia, southwestern Pennsylvania and Ohio, the B. & O. map shows many little criss-cross branches. West of Cincinnati and Toledo, however, its main lines stretch out in lonely isolation and in the critical region between Philadelphia and New York it has no trackage; it must operate over the lines of the Reading and the Jersey Central roads.

How could this weak-at-the-ends situation be remedied? Very easily, said the B. & O. last week. First, let us take over the Wabash. Running west from Buffalo and Toledo, the Wabash goes through Indiana and Illinois, gives us an additional line into St. Louis and an entirely new line into Kansas City, Des Moines and Omaha. Then if we could also have the Chicago, Indianapolis & Louisville, and the Detroit, Toledo & Ironton, and build a new line south from Toledo through Ohio, we would have our northern arm (Toledo to Chicago) and our southern arm (to St. Louis) nicely connected with three splendid north-and-south railroads. In the East, we should have the Reading and the Jersey Central (25% of whose stock we control anyhow) and the Western Maryland (which we also already control but on account of which some persons are bringing anti-trust proceedings against us). We certainly have to have that Reading to give us secure access to New York. Remember that the New York Central and the Pennsylvania are twice as long as we are and make more money per mile of track. Just give us these roads we have mentioned, and a few others, and we will be better able to compete with our big rivals and all the cities we reach will get better service. Thus spoke the Baltimore & Ohio, seeking to consolidate lines that would increase its trackage from 5,200 to 14,141 miles, its investment from slightly under one billion to slightly more than two billion dollars, its net income from about $46,000,000 to about $98,000,000.

Opposition. How do the rival Empires regard this proposed enlargement of the B. & O.? It is quite acceptable to the Chesapeake & Ohio, which has apparently concluded an alliance with the B. & O. and is even willing to concede the B. & O. one of the railroads (Buffalo, Rochester & Pittsburgh) which the Van Sweringens own. The position of the New York Central is doubtful, since the New York Central also has a 25% interest in the Reading and may not be willing to turn over its holdings.

Surely hostile will be the Pennsylvania, which only last year bought control of the Wabash and might well object to relinquishing this major line (2,400 miles). The Pennsylvania is also understood to be sympathetic with the ambitions of Charles Farrand Taplin, who is trying to put together a fast coal route from Toledo to the Atlantic and all of whose prospective roads (particularly the Western Maryland) are included in the B. & O. plan. The Pennsylvania, affluent, central, well satisfied with existing conditions, has no more reason to applaud new consolidations than Great Britain had reason to applaud Napoleon's armies or the Kaiser's navy.

C. & O. Empire. Newest of the railroad Empires is the Chesapeake & Ohio, controlled by Cleveland's Van Sweringen brothers, Oris Paxton and Mantis James. In addition to the Chesapeake & Ohio, which runs from Norfolk to Chicago, it includes the New York, Chicago & St. Louis (better known as the Nickel Plate) which runs from Buffalo and Toledo to Chicago, Peoria and St. Louis, and the Pere Marquette in the Great Lakes district. The vital unit in the enlarged system would be the Erie road (New York City, Buffalo, Cleveland, Cincinnati, Chicago), stock of which the Van Sweringens already control. Last year the Interstate Commerce Commission held up a merger of the Nickel Plate and the Erie. The undiscouraged Van Sweringens are now trying to sell the same idea except that it has a Chesapeake & Ohio instead of a Nickel Plate label.

A considerable portion of the C. & O. merger would be accomplished if the Van Sweringens were given permission to operate as a unit, lines which they already control separately. Their plan is well oriented with that of the B. & O. and probably contains little that could not be amicably adjusted with the New York Central. But the C. & O. scheme is probably just as displeasing to the Pennsylvania as the B. & O. scheme, though the Pennsylvania has thus far made no public statement.

Should the Van Sweringen consolidation be approved, the Brother Emperors would reign over some 13,000 miles of track with a valuation of about $2,500,000,000.

I. C. C. Preparation of separate plans by the B. & O. and C. & O. marks the end of fours years of conferences in which the rival eastern railroads have unsuccessfully tried to set up a four-system layout satisfactory to all. The Railroad Powers have to arbitrate their differences before a Railroad World Court--the Interstate Commerce Commission--and before this notoriously deliberate government body the eastern rail problem now lies afresh. Both B. & O. and C. & O. have promised to take over whatever short lines the Commission may recommend and have also asked the Commission for whatever constructive criticism it may feel like giving. But whatever the Commission may do will be done only after prolonged discussion, including public hearings at which the New York Central and Pennsylvania will doubtless be heard. Far-reaching are the B. & O. and C. & O. proposals, but they can be considered only as first steps in long and delicate negotiations.