Railway empires of the ‘robber barons’ merging

Press, 13 June 1984, Page 19

Railway empires of the ‘robber barons’ merging

From

JOHN HUTCHISON

in San Francisco

Modern corporate planning is accomplishing what rascally old Collis P. Huntington was never able to achieve. The Southern Pacific Railroad and the Atchison, Topeka and Santa Fe are about to become one railway system. It will have combined trackage enough to put a steel belt around the earth, with enough left over to tie a knot.

The two companies which own the railways have already merged most of their holdings, but the merger of the railways themselves awaits the approval of the Interstate Commerce Commission. When that expected section is given, the Southern Pacific and Santa Fe Railway Company will have 40,000 km of tracks.

The combined goods waggons will total 126,000, with more than 4600 locomotives to pull them across the 18-state system. It reaches from Chicago and Indianapolis to the Mexican border and the West Coast of the United States.

The merger joins two big corporations famous in American history for the romance surrounding their push into the vast and almost empty American West. They were also infamous in those days, for their greed, exploitation of public lands, and monumental corruption. Huntington, a hardware merchant before he was seized with the fever to build a railroad eastward from California, made himself the prototypical robber baron of the American nineteenth century. Shrewd, scheming, and ruthless, he lobbied Congress for millions of dollars and financed, with others'

money, the construction of the Central Pacific.

Driven through the towering granite of the Sierra Nevada range, it joined in Utah a road built from the east to give the United States transcontinental unity in 1869. His partners also became legends in California — Charles Crocker, Leland Stanford, and Mark Hopkins have their names preserved today in one of the nation’s largest banks, a prestigious university, and a famed hotel.

The Central Pacific became the Southern Pacific. It achieved such hold on California that it was called the Steel Octopus. It was not until 1910, a decade after Huntington’s death, that a reform governor, Hiram Johnson, shook the government loose from the railroad’s domination and pushed the “S.P.” into the modern world of relatively more responsible corporate ethics.

Huntington and his associates had bought and sold legislators, destroyed rivals, and stifled competition with unregulated excess. It was not until 1888 that the Santa Fe muscled its way into California in a no-holds-barred fight that for a time forced down the fare for a passenger from Kansas City to Los Angeles to one dollar. Huntington’s ghost must be astonished that the two companies have amicably negotiated the merger. It follows a pattern of railway consolidation in the United States

regarded by many economists as an essential rationalisation of an historically fragmented industry. Others warn of the monopolistic implications of the process which is rapidly telescoping the hundreds of privately owned railroads of the nation into super railways which also own and operate great complexes of other enterprises.

The Southern Pacific and Santa Fe Railway represents only about a third of the interests of the new Santa Fe and Southern Pacific Corporation. There was even larger revenue last year from real estate; the firms develop, market, and manage huge properties, ranging from almost 67,000 hectares of farm land to large urban housing, industrial, and commercial developments. The companies have road hauling services in 48 states. They operate oil, coal slurry, liquid fertiliser, and natural gas pipelines with combined total length of more than 10,000 km — almost enough to reach from Auckland to Los Angeles. They explore for petroleum and hard minerals, lease 3.8 million hectares of coal lands, and own 500,000 hectares of forest. All told, these resources nowbeing assembled under one company total more than SUSII billion. Total revenues for the new company for the first quarter of 1984 were SUSI. 6 billion, up from SUSI. 4 billion for the same period last year. Collis Huntington probably would be pleased.