The Railroad Consolidation Controversy

Report Outline
Proposed Consolidation of Eastern Railroads
Consolidation Legislation in Congress
Background of Railroad Merger Legislation
Controversy Over Benefits of Consolidation

Proposed Consolidation of Eastern Railroads

Current controversy over the plan for consolidation of the eastern railroads and over pending legislation to impose new restrictions upon railroad mergers is expected to continue into the life of the next Congress and to play an important part in an impending revision of the Transportation Act of 1920. No action on railroad problems is now expected before the present Congress comes to a close on March 4, 1931. The Seventy-second Congress is expected, however, to undertake the most important revision of existing railroad legislation since the roads were returned to private management on March 1, 1920.

The demand for new legislation to govern railroad mergers has been brought to a head by the negotiation of an agreement between the Pennsylvania, New York Central, Nickel Plate, and Baltimore & Ohio railroads to consolidate the carriers of the eastern territory (excluding New England) into four systems. Announcement that a tentative agreement to this end had been reached by executives of the four railroad companies, meeting at New York, was made by President Hoover at the White House on December 30, 1930.

These negotiations [the President said] have been in progress for some weeks and were undertaken at my suggestion in the hope of effecting the consolidation policies declared by Congress in 1920 and especially at this time as a contribution to the recovery of business by enlarging opportunity for employment and by increasing the financial stability of all the railways and particularly some of the weaker roads.