Statement on Railroad Consolidation.

THE PRESIDENT said:

"As a result of meetings of General [William W.] Atterbury, Mr. [Patrick E.] Crowley, Mr. [Daniel] Willard, Messrs. [Mantis J. and Oris P.] Van Sweringen and other representatives of the Pennsylvania, New York Central, Nickel Plate, and Baltimore and Ohio Railroads, a plan for consolidation of the different railways in official classification territory (except New England) into four independent systems was agreed upon for presentation to the Interstate Commerce Commission.

"The four new systems embrace the territory east of the Mississippi River, including the Virginian Railway on the south, the New York Central on the north.

"These negotiations 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 their weaker roads.

"The Transportation Act [41 Stat. 456] passed by Congress in 1920 provides for a consolidation of railways into a limited number of strong systems in order to maintain broader competition, more adequate service, simplification of rate structure, lower operating costs, and, in the long run, lower rates to the public.

"During the past 10 years a possible grouping of the roads so as to carry out the law has been under constant discussion. The Interstate Commerce Commission has no power to compel such consolidations. They can only be effected upon initiation of the carriers. During this period a number of negotiations have been undertaken in respect to these railways, with view to carrying out the wishes of Congress, but they have proved abortive. A year ago the Interstate Commerce Commission issued a suggested plan for consolidating these roads into five systems. This plan, like others, has met with objections which apparently made it an unsolvable basis.

"These uncertainties and delays over nearly 10 years have seriously retarded development of the railways and have prevented a desirable growth in many directions, and have diminished their ability to compete with other forms of transportation. Such questions as electrification, linking up of different railroads, development of terminals and many other major improvements have been retarded because of uncertainty with respect to the position which particular roads are to occupy in the permanent grouping.

"It is my understanding that the plan provides for the protection of the interests of the employees and full consideration of the interest of the various communities and carries out the requirements of the law in protection of public interest generally. The presidents of the major systems have agreed upon the many details of the plan with the exception of a minor point, which is left to arbitration.

"The plan, of course, must be submitted to the Interstate Commerce Commission, who have the independent duty to determine if it meets with every requirement of public interest."