It is a matter of common knowledge that in a sense each railroad competes with every other railroad in the country. They differ only in degree. Actual paralleling or connection of tracks is not a necessary accompaniment of competition. Connections through boards of directors and traffic officials selected or influenced by them are much more important. With respect to consolidations the Delaware & Hudson has been left floating, and properly so, in our plan. Negotiations regarding consolidations have been proceeding without interruption and it is difficult to foresee just when the properties here concerned will again reach a critical stage in some consolidation plan. When that time comes it is important that a director shall not be asked or permitted to sit on both sides of the table. In fact, the preliminary negotiations leading up to the presentation of a "plan may be the most important. At such times the connection through persons will be decisive rather than the direct connection through steel rails. And these considerations should prevail, notwithstanding the high character of individual applicants. The principle is vital and departure from it will inevitably tend to concentrate control of all the railroads in the country, irrespective of the number of groups contained in any final plan which may ultimately prevail, in the hands of a very small group of men.

From this it does not necessarily follow that every existing board of directors, perhaps of long standing, which violates this principle must forthwith be brought into conformity with it. Corrections should be made as and when shown to be in the public interest. However, when new applications are presented conformity should be observed.

We are unable to find upon the showing before us that neither public nor private interests will be adversely affected by the applicant holding the position of director of The Delaware and Hudson Railroad Corporation while continuing to hold the positions of director of the Great Northern Railway Company and the Illinois Central Railroad Company. An order will be entered denying the appli

cation.

MAHAFFIE, Commissioner, dissenting:

The portion of section 20a (12) under which this application is before us reads:

After December 31, 1921, it shall be unlawful for any person to hold the position of officer or director of more than one carrier, unless such holding shall have been authorized by order of the Commission, upon due showing, in form and manner prescribed by the Commission, that neither public nor private interests will be adversely affected thereby.

The application was filed March 15, 1933. It complies with our requirements in all regards. We prescribed what must be shown.

Having met those requirements the applicant is entitled to have his showing considered by us. The majority report shows on its face that considerations other than those covered by our requirements are determinative of the action taken. No one representing any public or private interest claiming to be adversely affected has offered objection. The private interest which obviously is affected is the owner of the property. Its view is indicated by the fact that it has elected the applicant as one of the directors of its property. It is to be presumed that it thinks this advantageous to its interests. Among the speculations of the majority as to possible perils I find nothing suggesting any harm to any private interests.

The majority deny the application on the ground that it is not shown that public interests will not suffer. This denial appears to be based solely on the principle announced by the Commission in Consolidation of Railroads, supra, that in order for competition to be preserved as fully as possible the systems proposed by us, or any others that may be formed, should be independent of each other. The further discussion in the report obviously is an attempt to support that announcement, and to apply it to this situation. The fact that we made such an announcement as part of a plan of consolidation which has not been carried out, does not, for the present at least, make the statement a final and immutable standard of the public interest. If competitive systems such as we set up are in the future created, they should, of course, be independent. As that situation is in no way before us now, this application should be determined on its merits. The applicant is a director, with our approval, of the Great Northern and Illinois Central. He is a director of the Delaware & Hudson Company, which owns the entire capital stock of the Delaware & Hudson Railroad Corporation, which he now seeks our authority to serve. The preservation of competition being the object sought, the showing as to that seems to me important. The applicant's statement, under oath, is:

There is no relationship, operating, financial, competitive, or otherwise, between the said Great Northern Railway Company, Illinois Central Railroad Company and The Delaware and Hudson Railroad Corporation, or any two of them.

This is a part of the showing which we have prescribed in accordance with the act. As a tribunal possessing no authority to decide matters before us according to whim or caprice, we should accept that statement unless it is, in some way, contradicted. As discrediting it the majority rely on what is said to be common knowledge, "It is a matter of common knowledge that in a sense each railroad competes with every other railroad in the country." Perhaps a sufficient answer to this is, that if it be correct, Congress did a remarkably useless thing in giving us the power to permit one man

to serve more than one carrier, while, at the same time, attempting to preserve competition among carriers. A great many courts in passing on what constitutes competition between railroads have evidenced a singular lack of what the majority find to be common knowledge.

No reason, aside from the application of the principle as to independence, above referred to, is assigned for the denial. That application, since there is no competition to be preserved, I believe to be a mistaken one. If it be sound, I see no escape from the conclusion that this applicant should be required to discontinue his service with one of the two roads he now serves. If there is competition between the Delaware & Hudson and either the Illinois Central or Great Northern, there must at least equally be competition between the two last named. Our orders run "until the further order of the Commission." If membership of this applicant on the board of the Delaware & Hudson Railroad Corporation necessarily would affect adversely the public interest, it is difficult to see the justification for continuing in effect our orders permitting other directors of the corporation to serve on the boards of directors of such carriers as the Illinois Central, Southern Pacific, Union Pacific, and Kansas City Southern, all of which are assigned to separate systems. The dangers the majority envision are at least as serious from interlocking that now exists as from that proposed. If, as is said, "the principle is vital", our orders permitting this dangerous practice should not be allowed to stand.

Consolidations can only be effected in accordance with our plan as it now exists, or as we may modify it. The Delaware & Hudson is a complete and independent system as the plan now stands. It cannot be consolidated with the Great Northern or the Illinois Central unless and until we change our plan to permit that to be done. The danger, therefore, that this applicant may be "asked or permitted to sit on both sides of the table" seems sufficiently remote. The reasoning in this regard may have relevancy as to individual carriers which are parts of a single system under the plan. It is totally irrelevant so far as this application is concerned.

I submit that no applicant under this provision of the law can make such proof as will pass the majority test if it be actually applied in other cases. Congress might, if it saw fit, forbid any person to serve more than a single carrier. For us to do so, or to lay down standards that necessarily have that effect, is, as I see it, the assumption of power we do not possess.

In my judgment, the denial of this application is unwarranted. I am authorized to state that COMMISSIONERS AITCHISON, BRAINERD, and TATE concur in this expression.

FINANCE DOCKET No. 10023

OKOLONA, HOUSTON & CALHOUN CITY RAILWAY COMPANY STOCK

Submitted September 21, 1933. Decided October 6, 1933

Authority granted to issue $5,000 of common stock, consisting of 50 shares of the par value of $100 each, to be distributed at par to the incorporators of the applicant in repayment of advances and in payment for services rendered.

Eugene B. Ethridge for applicant.

REPORT OF THE COMMISSION

DIVISION 4, COMMISSIONERS MEYER, BRAINERD, AND MAHAFFIE BY DIVISION 4:

The Okolona, Houston and Calhoun City Railway Company on June 3, 1933, applied for authority to issue $5,000 of common stock, consisting of 50 shares of the par value of $100 each. No objection to the application has been offered.

The applicant was incorporated under the laws of Mississippi in April 1933, with an authorized capital stock of $5,000. By our certificate and order of May 13, 1933, in Okolona, H. & C. C. Ry. Co. Operation, 193 I.C.C. 89, it was authorized to operate a line of railroad extending from Okolona to Calhoun City, 37.34 miles, in Chickasaw and Calhoun Counties, Miss., the property of the Southern Railway Company, formerly operated by the Mobile & Ohio Railroad Company or its receiver. The terms and conditions upon which the applicant is to acquire the railroad property and certain equipment, estimated to have a total value of $78,150, are set forth in detail in our report in Okolona, H. & C. C. Ry. Co. Operation, supra. The applicant shows that the incorporators have expended $880.09 in connection with its organization, the acquisition of the property, securing the certificate of convenience and necessity, and other expenses incident thereto, and that they have rendered services in connection with the organization of the corporation of the agreed value shown hereby, as follows: Eugene B. Ethridge $1,000, T. A. Rhodes $500, and W. N. Ethridge $2,619.91, total $5,000. The proposed shares are to be issued at par and distributed to the three organizers in repayment of advances made for expenses and in payment for services rendered.

It appears that 12 shares of stock, of a total par value of $1,200, have already been issued by the applicant without our authorization therefor first having been had. These shares are void, and the authority to be granted herein will require the surrender and cancelation of the void shares.

We find that the issue by the Okolona, Houston, and Calhoun City Railway Company of $5,000 of common stock, as aforesaid, (a) is for a lawful object within its corporate purposes, and compatible with the public interest, which is necessary and appropriate for and consistent with the proper performance by it of service to the public as a common carrier, and which will not impair its ability to perform that service, and (b) is reasonably necessary and appropriate for such purpose.

An appropriate order will be entered.

193 I.C.C.