RATES UNCUT IN CONSOLIDATION OF RAILROADS

...Strange to say, this naive assumption has become prevalent and of almost universal acceptance by the public, but no railroad expert, banker or promoter or anyone familiar with the subject entertains any such fantastic notion, and none of them has been asked to calculate or speculate on what the savings would mean translated Into a reduction of rates...

...In order to bring their projects into conformity with the Transportation Act of 1920, which requires such unifications to be In the public interest, proof of some such benefit Is essentia...

...Public Not Effected After listening patiently for weeks and months to this formidable presentation, and the stacks of documents, statistical charts and tables becoming ever more ponderous until the case appeared to be proved beyond all cavil or reasonable doubt, the presiduig commissioner dryly turned to O. P. Van ' Sweringen, chief proponent, to inquire, if these savings would have any effect In reducing the rates to the public...

...It later developed in the course of the hearings, however, that the benefits to accrue to the Van Sweringen brothers themselves, for their management of this manipulation "in the public interest" would have been $80,000,000, but still later this turned out to be an under-es-timate...

...least in part by removing vast sums from the service of transportation to private speculative enterprises...

...it depended mainly on utilizing directly and Indirectly the funds of certain carriers to finance he acquisition of the particular securities to be favored by the unified control and at...

...Applying the same proportionate rat...

...LIKES THE PROGRESSIVE [Washington, D. C, Jan...

...When the Nlckle Plate merger case was being tried before the Interstate Commerce Commission, the principal claim of the Van Sweringen brothers for an approval of their proposed merger of the Chesapeake and Ohio, the Erie, the Nlckle Plate, the Pere Marquette and the Hocking Valley railroads into one unified system under the leadership of their Nickle Plate, was that the merger would be in the public interest...

...RATES UNCUT IN CONSOLIDATION OF RAILROADS Consolidation Would Be a Boon to Owners, No Saving to Road Patrons EDITOR'S NOTE: Hobart S. Bird, author of the article on railroad consolidation which appears below, is a New York attorney who has made a thorough study of the question discussed...

...In the Nlckle Plate case the six million dollars would equal 3.4 per cent on the common stock of the consolidated company...

...The pending bilk In congress do not provide for compulsory consolidation In accordance with the plan formulated by the Interstate Commerce Commission or in accordance with any other plan, based upon transportation considerations as distinguished from private financial considerations...

...And if for such defect proposals are rejected, no consolidations will be effected, for the spoils for the promoters Is the sine qua non of voluntary consolidations...

...Suffice it to say...

...That was all on that subject...

...Besides the legal staffs of the railroads involved, they had the aid of learned economists, college professors, railroad experts, engineers, accountants, manufacturers, business men, chambers of commerce and hundreds of others to marshal their facts and present to the commission in many huge volumes of testimony and exhibits, their reasons and explanations how this unified control would inure to the public benefit...

...For the proposed Nlckle Plate system alone six million dollars a year was forecast as a saving in operating costs to be realized by the unified control...

...So the figures are tabulated and they mount into millions of dollars of savings...

...By HOBART S. BIRD New York Lawyer The hankers and promoters who are engineering the proposed consolidations of our railroads into a limited number of strong competitive systems, paint a glowing picture of the marked reduction In the cost of transportation as the public benefit to follow in each case if their plans are adopted...

...The1 answer, a gem for brevity, was an unqualified and unamplied "NO...

...to win the approval of the Interstate Commerce Commission...

...It would appear that in some way consolidations must be made compulsory, according to a plan with the public interest as the central idea, or the private interests in our carriers eliminated...

...They were made possible by reason of the fact that the promoters and beneficiaries were so placed that they could and did control the merger policies of the railroads to be unified...

...Fooling the People To the uninitiated this would mean and such is the implication intended, that these savings would result in a veritable shower of benefits on the people of the United States in reduced rates to the public...

...15'—I Itke your Progressive paper very much.—E...

...An illustration will make the point clear...

...Most of these profits were realized even though the merger failed of approval...

...The process by which such vast sums were accumulated in the hands of private individuals is too involved and complex for exposition in the present article...

...Sole reliance Is placed upon making their consumption contingent upon approval by the commission so that a unification not in the public interest may be disapproved and thus inhibited .Experience however does not warrant the prediction that any-voluntary proposal will be made in whieh the genius of the proponents will be so assiduously applied to eliminating themselves and to showering benefits on the ratepayer and the public...

...He was the author of an article, "The Van Sweringens Turn Nlckle Plate Into Gold" which appeared in the March 17, 1928 Issue of the Nation...

...The amount of these "savings," if such they may be called by courtesy, was not determined by estimate or forecast, but by simple arithmetic starting with known premises and existing fact...

...to all the railroads, in the event of their grouping as proposed, we should really have a substantial saving In the cost of the] transportation service of the nation...