Old Story

On Election Day-minus-76, the Justice Department leapt at the throats of 47 Western railroads, their officials, the Western Association of Railway Executives,

The Association of American Railroads, and Wall Street railroad-bankers J. P. Morgan & Co. and Kuhn, Loeb & Co. Bantamweight Attorney General Francis Biddle filed an antitrust suit in Lincoln, Neb. charging the railroads, et aL, with:

P:Conspiracy to snuff out competitive rate reductions and improvements in service.

P:Discrimination against Western agriculture and industry by charging higher freight rates than Eastern railroads. CJ Collusive effort to strangle the development of pipelines, highways, waterways and air lines.

Government by Confusion. Biddle, and his Assistant Attorney General, stocky Wendell Berge (rhymes with serge) had long been planning an attack on the railroads. Over a year ago they swarmed into action when a Justice Department investigator quite casually discovered the trail of a "Western Agreement" among the railroads. The Western Agreement was news to the Justice Department; it sounded mysterious and sinister. Actually it had been in the newspapers off-&-on for twelve years.

The Western Agreement was created and widely publicized by the Western railroads in 1932. Then the ICC sharply criticized the railroads for too much competitive rate-cutting and for giving special services to various groups of shippers. Bluntly the ICC had ordered the railroads to "cooperate more efficiently with each other." The Reconstruction Finance Corp., busy pouring out loans to keep the railroads alive, had nodded approval. Under the Western Agreement the railroads did what the ICC advised--they policed themselves. And since 1932 ICC has approved rate cuts that have brought the average freight tariffs in the Western territory down 17%, passenger fares 22%.

Too Busy to Argue. Western railroad operators were fighting mad at Biddle and Berge last week, but they had little time for a quarrel. Their lines were jammed with a record freight and passenger traffic. Union Pacific's president, big Bill Jeffers, took time out to roar that Berge was suffering from "Potomac fever." Joseph Hays, counsel for the W.A.R.E., said: "Mr. Biddle knows that if his charges were anything more than sheer demagoguery he could take the complaint to the ICC for speedy redress." Hays argued that Attorney General Biddle should have included ICC among the culprits, since all freight rates must be cleared through ICC. Others felt that the U.S. Ambassador to Russia, W. Averell Harriman, should have been among those sued. Harriman was Chairman of the Board of Union Pacific in 1932, helped draft the Western Agreements. In a typical answer to a typical specific charge (that the Western railroads were slow in air-conditioning their cars), Santa Fe's new president, Fred Gurley (TIME, Aug. 7), retorted that Santa Fe began experimenting with air-washing and cooling systems on eight dining cars in 1911, had installed the equipment in 25 additional cars by 1914, by 1944 operated 596 air-conditioned cars.

Said the New York Times: "The antitrust suit . . . has all the earmarks of a political move in the Democratic election campaign.

"The suit sounds like a revival of all the favorite political targets of approximately 1912. It would not have been the perfect specimen it is of that period if it had not dragged in the names of J. P.

Morgan & Co. and Kuhn Loeb & Co. As neither bankers nor railroads can make a move today without the approval of either the ICC or the SEC, the Department of Justice must once more be attacking the competence of another Governmental agency.

". . . Under any circumstances six to twelve months will intervene before the hearings begin in court. The railroads, in other words, will have no legal opportunity to answer the charges until after the election has passed."

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