OCR Text |
Show ECONOMIC ANALYSIS AND COMMENT Rail Merger to Benefit Public That "mighty good road," the Chicago, Rock Island and Pacific, Pa-cific, has fallen victim to the ailments besetting too many other railroads in the U.S. Caught in a vice by rising costs and increasing increas-ing competition, it finds itself in need of money for such additional equipment as diesels, freight cars, commuter equipment, roadbed improvements and other facilities. It needs may well be beyond its reach. Based on studies made in 19G4, Union Pacific estimates this need to be at least $200 million. The Rock Island's competitors, trucks, barge lines, and airlines, air-lines, get government subsidies. The Rock Island gets no such help. Meanwhile, its neighbor to the west, the Union Pacific, finds its has a problem of its own. The UP, serving west coast points, stops short at the Missouri River and must route traffic over other lines to reach major eastern railroads. Three of its rail competitors have exclusive single-line routes connecting west coast points directly di-rectly with the eastern roads the Santa Fe and Southern Pacific Cotton Belt routes in the south and the Milwaukee in the north. The proposed Great Northern-Northern Pacific-Burlington merger, linking the Pacific northwest with the major eastern gateways, would create two more strong single-line transcontinental transconti-nental routes, one through the northern tier of states and the other through the central US. Furthermore, the proposed North Western-Milwaukee-Great Western merger would give that consolidated company control of three of the seven lines between Chicago and Omaha. A wedding between the UP and the Rock Island roads looks like a good match, and both roads have taken their case for merger to the Interstate Commerce Commission. In the UP, the Rock Island would gain the support of a financially strong partner while the Union Pacific would gain the access to the east that it needs to keep competition healthy on the western rail scene. Rail competition would be further strengthened if a second proposal, also before the ICC, is approved. If it gets a go-ahead on merger, the UP proposes to sell the southern portion of the Rock Island to the Southern Pacific, bringing the resources of one of the country's major railroads into action to revitalize and improve rail service in the southern midwest. Joining SP's lines to those of the Rock Island will create a new single-carrier route between Los Angeles and Kansas City, with connections available at Kansas City with several important carriers serving Chicago, St. Louis and the entire eastern United States. Both the merger and the sale can bring greatly improved service, a badly needed transfusion of capital to the Rock Island, and the healthy force of greater rail competition to the nation. Wholly apart from the needs of the railroads, everyone who lives, works or does business in the areas served by the SP, UP, and Rock Island stands to benefit from ICC approval. |