Principles of Railroad Consolidation

Report Outline
Forms of Railroad Consolidation
Economies of Railroad Consolidation
Consolidation Amd the Weak and Short Lines
Motives of Railroad Executives in Consolidations

In the seven years that have elapsed since the passage of the Transportation Act and the return of the railroads to private control, March 1, 1920, only one important change has been made in the provisions of the act. This change was made by the last Congress when it adopted the new Railway Labor Disputes Act, first advanced by the railroad brotherhoods in 1923 and later supported by the railroad managers, as a substitute for the labor provisions of the Transportation Act. In all other important respects the act stands as it was written in 1920, although many of its provisions have failed to give full satisfaction.

Repeal or amendment of the rate-making section of the act has been repeatedly sought by agricultural interests since 1920, and revision of its consolidation sections has been urged by President Coolidge in each of his annual messages. In his first message to Congress in 1923 the President recommended legislation which would aid and stimulate “voluntary consolidations” and in his second annual message he recommended that a definite period for voluntary consolidation should be fixed by law and that means be provided for the application of “government pressure to secure action after the expiration of such a period.”

“Such consolidation,” he said, “will assure not only a greater element of competition as to service, but it will afford economy in operation, greater stability in railway earnings, and more economical financing. It opens large possibilities of better equalization of rates between different classes of traffic so as to relieve undue burdens upon agricultural products and raw materials generally, which are now not possible without ruin to small units owing to the lack of diversity of traffic, It would also tend to equalize earnings in such fashion as to reduce the importance of section 15A, at which criticism, often misapplied, has been directed.”