National Railroad Consolidation and the Van Sweringen Merger

Report Outline
National Railroad Consolidation and the Van Sweringen Merger
Railroad Consolidation in the Past
Advantages of Railroad Consolidation
Compulsory Consolidation
Appendix

National Railroad Consolidation and the Van Sweringen Merger

A distinct impetus has been given to the movement for general railroad consolidation, as contemplated in the Transportation Act of 1920 by the proposed Van Sweringen merger of the New York, Chicago & St. Louis, the Chesapeake & Ohie, the Hocking Valley, the Erie and the pere Marquette for unified operation. An actual corporate consolidation of these properties into one system cannot be undertaken until the Interstats Commerce Commission has promulgated its final consolidation plan for the grouping of all roads, but the Van Sweringen plan Will effect what amounts to a consolidation for all practical purposes, in advance of the Commission's final announcement.

The Van Sweringen merger is the first independent attempt at grouping railroads, hitherto unaffiliated, into a new system combining strong and weak lines to produce a structure of uniform strength, it is being undertaken under that section of the Transportation Act which authorizes the railroads, with the approval of the Interstate Commerce Commission, to acquire other carriers by lease, stock purchase or otherwise., but prohibits the consolidation for the time being of roads so acquired into a single system for ownership and operation, This partial relaxation of anti-monopoly Prohibitions was intended to bridge the gap between the passage of the Transportation Act and the publication of the Interstate Commerce Commission's final consolidation plan, by allowing hitherto affiliated railroads to come into closer relations, thus gaining some of the benefits of consolidation and making actual consolidation a less complex process when the time for it arrives.

Under this section various railroad companies have made application to acquire other compares with which they have establish-I relations, some of which have been approved by the Commission. How-ever, an application of the Boston and Hainebo acquire four small New England railroads, in which the word “consolidation” was used, was denied by the Commission.