Show SHERMAN HERMAN LAW LAVi NOT VIOLATED S. S P. P PROTESTS S Government G Charges Re ReI Restraint Re- Re of C Competition I Asks Separation I ST ST. LOUIS LOuIS Dec 2 Garret Garret w W. W McEnerney counsel for the Southern Pacific railway today Argued b before fore foe three three circuit I judg judges s' s sitting sitti as as' the United States district court for Utah against the separation of the Central Pacific railway from th the Southern Pacific The j Judges who heard the arguments arguments arg ments v vere r ere Walter II H. Sanborn of StPaul StPaul St St. Paul William C C. JI JIp k of f Leavenworth Leavenworth Leavenworth Leaven- Leaven I worth Kan and Elmer B. B B A Adams lams of ot St St. Louis The case against the Southern Pacific Pacific Pa Pa- ra- ra was was filed In February 1914 and the railway c filed its answer In May of th that t year Since then testimony tes tes- es- es has b been en taken by an examiner examiner examiner exam exam- exam exam- iner in all p parts of the United States The Central Pacific line lino to Ogden Ogden Og- Og den McEnerney said was vas opened It in 1869 and was was the only transcontinental transcontinental transcontinental line until the Southern Pacific Pa Pa- cHic Sunset Sl line was opened in 1883 The construction of the Sunset line began in 1872 As fast as s the sections sections sec see of the Southern Pacific line were built bunt the Central Pacific operated operated operated oper oper- them theft through to New NeV Orleans and continued to operate them in I connection with its own lines until 1885 when the Southern Pacific com coin company company comI I pany the Kentucky corporation was II formed form d by the managers of ot the Central Central Cen Cen- teal and So Southern t lern Pacific companies and took over the possession of ot these lines S Owed U U. U S. S There was no change change whatever Inthe in inthe inthe the operating management manag ment and the lines have been operated under ninetynine ninetynine ninetynine nine nine- ty-nine ty year ear leases executed five years before belore the Sherman antitrust law was p passed It It would seem that if ir the government government government govern govern- ment wins In this case it will establish establish lish Ush a a. precedent which will Justify the breaking up of all the railroad systems of the country that have hav been built up by the acquisition of lines often competing and by leases ownership of ot stock etc prior to the passage o 0 the Sherman law Counsel for the railroads rely upon the contention that the lease of the Central Pacific to the Southern Pacific and the ownership of the stock of the Central Pacific by the South Southern Pacific were were expressly confirmed confirmed confirmed con con- firmed bv by congress in the proceedings by which the indebtedness of the Central Pacific to the United States government was settled in 1899 1809 At that time the Central Pacific was indebted to the United States government in Iq the sum of Central Pacific Bankrupt The Central Pacific was practically practical practical- ly bankrupt and as the tle government e pay payment ent of this en entire lre Indebtedness within ten years it was obvious that the Central Pacific relying relyIng relying rely rely- ing upon Its own resources would have failed to meet these payments Therefore the the Southern Pacific company compan which had the ninety nine year lease of ot the Central Pacific lines also a like lease of the Southern Pacific Pacific Pa Pa- chic lines and was the owner of the capital stock of the Southern Pacific lines and wa was in prosperous financial condition Joined in the plan of adjustment adjustment ad ad- of the indebtedness of the Central Pacific by subordinating its lease of ot the Central Pacific to the first lien Hen bonds to be given to the Uie United States as collateral security The government after receiving its in full by this plan is I estopped from questioning the tho validIty validity validity valid valid- ity of the lease recognized in that settlement settlement set set- and also the ownership of the Central Pacific stock by the Southern P Pacific which expressly au- au authorized authorized au au- by the settlement The government also is ia estopped by the final decree in the Union Pacific Pacific Pa Pa- merger case Active Competition S In other words the government can not bring its litigation by piecemeal piecemeal piece piece- meal but was bound to present its whole case In the Union Pacific suit which it undoubtedly could have done The government took a position In inI di the he U Union lon Pacific a case cas entirelY entirely i incon c I ow li ow li with the position now taken en enby by by it in the present case in that of the Union Pacific case it contended that notwithstanding the ownership of the Central by the Southern there was vigorous and active competition between the Ogden and the El EI Paso transcontinental routes which competition competition com corn petition had been suppressed by the ownership of Southern Pacific stock stockby stockby stockby by the Union Pacific Upon this cor contention having ob obtained oh- oh S tamed a decree in its favor the government goVernment government gov goV- can not now turn around and contend thc that the ownership of ot the Central by the Southern Pacific prevents prevents prevents pre pre- vents any competition between between the Ogden and El HI Paso routes The traffic conditions now existing existing exist exist- ing do not make any case of violation of ot the Sherman law Since the Union Pacific suit was brought two new transcontinental lines have entered California the California the Western Vestern Pacific and the San Pedro Los Angeles Salt Lake Besides the Panama canal has b been en opened and the testimony of all the tle witnesses agrees that these new c competing routes make It utterly Impossible im impossible Im- Im possible for the Southern Pacific to monopolize or to control the competition competition compe compe- which is now enforced by these independent roads as between the Ogden Ogden Ogden Og Og- Og- Og den and El EI Paso routes While in the Union Pacific case shippers were called as witnesses who protested strongly strong against control of the Southern Pacific by the Union Pacific protested in the present case not a A. sin sin- gle shipper was called as a. a witness by b the government government As far as the mercantile interests have expressed any opinion it Is ia adverse to the separation separation separation sepa sepa- ration of ot the Central Pacific from the Southern Pacific on the ground the sep separation of these lines would seriously seriously seriously seri seri- Injure the service in California and tend to increase rates whereas ration op of ot these roads as one system aye sy-s- tern tem is in the interest of ot the people to tobe tobe tobe be served Mr McClennen closed the argument for the government in an address of ofa ofa ofa a little more than an hour He laid down the principles under the Serman Ser Ser- man law under which the government is proceeding The Sherman antitrust act act he said is is not limited in its prohibition of monopolies it is not necessary to show annihilation of ot competition If It there is a direct substantial restraint of competition that is sufficient for a decision under this law |