S.P.DISRUPT1QN WOULD SET UP ' BAD PRECEDENT Attorneys for Railroad Cor poration Make Answer to Government's Contention " for Dissolution ST LOUIS Doc to the arpuroents of the go em ent n the suit to sei rate the Central Udc fro the bo then) Pacific ra Iwav as ade n th f c leral court lie e th s afternoon bv P ter i Duune of "an Iran isco o n I or the Southern Fac fio Mr D nue d d not o Uete h s ar Sin ei t today anl he will resun e be fore the three circuit ludges who are hei vnjr the case tonorrov n om ng , Vhei he finishes Edwarl F McClen nen of boston ill n ake the f rial argu nent for th governn ent Mr Dunne's argiment was based largel ou the propos tion tl at the gov ern nent havin" secured the d ssolut on of the Onion Pacific n erger on one content ou coald not come nto court now and on a contrary content on seek the d ssol tlon of the bouthern Pacif c Mr D nne &a I I the Union Pac f c case we argued and as we tho ght logi callv that tl e ownership of the Southern Pacif e w th the Central Pacif c by the tin on Pac f c couli not be a combination in restraint of trade because there never could hae been compet tion between the Southern Pac(f a Sunset ro te and the Lmcm Pacific Central Pacif o route b$ 4jr of Ogden Isot Analagous Wo baseds our argument in the , Union Pacifae ease, on the fact that the UmonPaelfie was dependent on the handling'' of transcontinental traffic to 'Ca&fornia on its connec t on at Oglen with the Central Pa c fic wfyuih, the Southern Pacif e ouM nAtuse to its o n d sadvan tape jgjt The gorerjiment argued and the supreme eourtr held that as a mat ter of praojtlfal railroad ng there had been before1 Hhe Un on la cific n erger, actual con petition between the Central Pacif le-Umon Pacific route and, .the Sunset route both beeause the, eastern connec, ttons of the "Union Pacific were competing with, the Southern Pa cific water Sunset route for Atlan be seaboard bus ness to California and because the Atch son Topeka & banta Pe was compet ng for the central West bus ness On th s contention the govern nient ivop. on the as umpt on that by the- dissolution of the Union Pa cific merger compet t on between the Ogden route and the Sunset route would be restored. The goy errimenfe can not now come in and ask a severence of the Central Pa " elfic aril the Southern Pacific 6n the groifnd that compet tion cannot exsf betiveen the Ogden and the El Pasa routes so long as the Southern Pajfie controls the Cen tral 1 acific Gav ernmnt Is Late If the government wanted ads solut on of the Central Pacif c bouthern Pacific it should have sought it when the Un on Pacific b t was filed It cannot take up th s matter p ecemeaL Mr Dunne analyzed traff c cond t ons and sa 1 that the Central Pac f e was Dot a natural compet tor for the busi ness of southern California and that the Sunset 1 ne was not a compet tor for the business of northern Cal forn a The natural gateway for trail e between the eastern and central states and northern Calif orn a he sa d was by the Ogden route Emphasis is placed by the govern ment, he sa d on the po nt that the Pac f c ra lroad laws under which the Central and Union Pacif c 3 nes were built prohib t one of those 1 nes from d scr m nat n against the other and from th s is drawn the conclus on that the Central Pac f c cannot ii n the same ontrol as the bunset 1 De lest t work to the d sadvanlage of the Un on Pacific Mountains a Barrier What did the Un on Pac f c th nk of that reason ng when it b It the Ore gon Short L ne and thereby competed w th the Central Pacific for .northern Califom a b s nessf What d d the Un ion Pac fie think of that' reason n v hen it aequi ed the San Pedro Los ngeles i. Salt Lake 1 ne and thereby be ame a compet tor of the ( entral Pa f c for the southern Californ a bus ess? f t Mr Dunne, sa d that the Cent al Pa cif c even under Southern Pac t c own ersn p woull rema n a compet t ve fac tor in traDscont cental traffic because of, the connect on of the Ch cago Bock Island &, Pac f c w th the bouthern Pa c f e at El Paso The through traffic ea n ngs of the ( ent al Pacif c he sa 1 vere equal to 9 J er cent of the through traff c earn ns of the bouthern Pacific Sunset ro te A new factor n con pet t on he 0 ti ucd ' is tl e Panama cmal Tor y s x si ps a e engage 1 a the canal t affu. from coast to coast w th a ca a t of a mill o i tons a year The attorneys for the Southern Pa f c placed ,i the courtroom today a opograihicaj nap of Cal for a anl Ne a la aado tl s map tl ey ete re I to 11 strate thei content on that the Tehaelup l oilnta us we e a natu al bar r er separat ng northern and southern Cal forn a Mr Dunn& was p eceded 1 Garrett Vv AIcEnerncv of San fran sco, who ade the rnnc pal argument for the de tense The Central Pac f c 1 ne to Oglen a I was opeoed n 18M and n s tie only transco t nental nc nt 1 t e Sou hern Pac f c Sunset 1 ne was opened n 1883 Thei construct on of the Sun set 1 ne beganin 18 4.s tast as the se t ods of the Southe n 1 ac f c 1 ne e e bu It thejCent al Pac f operated n through to ew Orleans and on t n cl to 0 eratc then n co ne ton w h ts 0 vn 1 itcs unt 1 188 vhen the f So thern Pa tie ompanv he Ken v orporat on was fo m I the anagers of the C ntral n So the n 1 ac f o npan efc an too o c the e on dr tl ese 1 ne E Operated Under I ease To a o i g ate e , t g a jpne a e a lease exe ted t e jca a bef o e the Sherman anti trust law was passed It would seem that f tho govern ment w ns n th s case it w 11 e6tabl sh a precedent which w U just fy the break ing up of all the ra lroad systems of the country that hae been built up by the acquisit on of 1 nes often compet ng and by leases ownersh p of stock etc pr or to the passage of the Sherman law Counsel for the ra lroads rely upon the contention that the lease of the Central Pacif c to the Southern Pacific and the ownersh p of the stock of the Central Pac fic by the Southern Pa cific were expre sly conf rmed by con gress n the proceedings by vh ch the indebtedness of the Central Pac f c to the United States government was set tied n 1899 At that t me the Central Pac f c was indebted to the Un ted States go eminent n the sum of $08 000 000 The Central Pae f e was practically bankrupt and as the government re quired the payment of th s ent re in debtedness w Uiin ten ears t was ob vions that the Central Pac f c rely ng upon ts own resources would have fa led to n eet these payn ents Leases Recognized Therefore the Southern Pa t company which bad the ninet n ne year lease of the Central Pac f c 1 nes also a like lease of the Southern Pa cif c 1 nes and was the owner of the cap ital stock of the Southern Pac f c lines and was n pro perous f nan al condi t on jo ned n the plan of adjustment of the indebtedness of the Central Pa cif c by subordinat ng ts leabe of the Central Pac f c to the f rst 1 en bonds to be g ven to the Un ted States as col lateralsecunty The government after rece v ng ts $o8 000 000 in full by th s plan s estopped from tjuest on lig the al d ty of the lease recogn zed n that settle ment and also the ownersh p of the Cen tral Pacif c stock by the bouthern Pa c f c which was expressly author zed by the settlement The go ernn ent also s estopped by the f nal dec ee n the tin on lac f c merger case In other worls the government cannot br ng ts 1 t gat on by p ecemeal but was bound to present its whole case n thd Un on Pac f e su t wh ch t un doubtedly could have done The government took a pos t on n the Un on Pa f c cas"e entirely incon s stent w th the pos t on now taken by t n the present ease n that n the Un on Pac f c case t conten led that notw thstand ng the ownersh p of the Central by the Southern there was vig orous and act ve compet t on between the Ogden and the El Paso transcont nental routes vb ch compet t on had been suppressed by the ownersh p ot So thern Pacif c stock by the Un on Pae f c Real Competition U on t s content on having ob ta ned a decree n ts favo the gove n ment ca not now turn a oun 1 and con tend that the ownersh p of th Central by the Southern Pac t prevents any con pet t on between the Ogden and El Paso routes Tl e traff c cond t ons now ex st ng lo not mal e any case of olation oi the She n an law b nee the Un on Pa c f c s t vas b ougl t two new trans ont nenta 1 nes have ente ed Cal for n a the Western Pac I c and the Sa Ped o T os ngeles 4- Salt Lake Be s des the Panama canal nas been opened and the test n on of all the w tnesses agrees that these ne v com pet ng routes n al e t t erly n poss ble for the Southern Pac f c to onopo 1 ze or to control the compet to wh ch s now enfo eel b these n lependent roads as between the Ogden and L Paso routes the Un on Pac 1 ase s er were alel as v tnosses who protested st o g aga nst control ot tl So hern Pacif c by the Un on Pa f c u tie resent ase not a s ngle si ppcr was calll as a vituess by the go r n c t As far is the raer ant I te Jits ha e exp e s 1 an op n on t s i ver e to tne se).a at on of t pntr Pic t c t o n the o thern Pa f o tl e groun 1 tl at the separat o of t nes wo Id se ous y u ure the n Ca to n a and tend to e a cs w e eas o c at o of these d oc stp s t e nte est ot h o le to be sr el Al M ne ne sa tl t wh the o I a a te f on he S Ta the a I a go o 1 o T f o e a P n uy o able 1