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Friedman points out that the 1940 Omnibus Transportation

Act repealed the requirement of the land grant railroads to grant
rate reductions for the movement of mail and federal government
property. In 1946, the land grant preferences for movement of
government military property terminated by act of Congress. The
Friedman study says:

One of the most important aspects of the controversy
over repeal of the land-grant rates on government
traffic was the contractual origin of the obligation
which had been assumed by the railroads at the time
they petitioned for, and received, vast areas of the
public domain. There was no time limit placed on the
duration of the rate concessions that grant-aided
railroads agreed to provide. In essence, the government
and the railroads made a bargain under which the
government granted the lands and the railroads agreed
to live up to the terms of the grants, one of which was
to carry government traffic free or at reduced rates
over the railroad lines built with the aid of the grants--
as well as with financial and other aids--and to do so
in perpetuity.

P. 49.

In 1942, Congress considered a bill to reconvey to the government the land grants if the railroads abrogated the contracts. Congressman Everett Dirksen opposed it unless there was an equitable procedure for the conveyance of the land to the federal government. Congressman Leavy of Washington pointed out that the NP at that time owned

5.6 million acres of land grant land and had disposed of millions of acres.

He said "to relieve the railroad company of this responsibility to haul government freight and passengers and yet permit them to keep the consideration is indefensible". Friedman Study, p. Congress, however, did not attach any conditions regarding the return of unsold lands when it finally repealed the land grant concessions in 1945. I know of no legislation that has terminated the obligation of the railroads to keep their assets obtained

52.

by land grants for the development of the railroads in the movement of passengers and freight.

Perhaps it is my Irish background, but I find that the Burlington Northern is a dear and old friend. I worked for the Great Northern as a section hand many years ago, and I have been in relatively constant litigation with the Burlington Northern since its merger on March 3, 1970. Perhaps it is the Irish spirit that "tis better to be quarrelsome than lonesome".

THE INTERSTATE COMMERCE ACT AND MERGERS

The Hill Reference Library in St. Paul, Minnesota, produces

an emormous amount of information about the history of the railroads, the history of the Interstate Commerce Act, and the history of mergers and development of holding companies.

Railroads existed for some 57 years, at least, in the United States before any federal statute was designed and enacted to impose any type of control. There is, of course, no precise date for development of a substantial amount of interstate railroading. The railroads started developing at least by 1830 and involved many state statutes enacted before actual receipt of corporations capable of constructing the lines.

The first general period would be before 1887, the year when the Interstate Commerce Act was enacted. By 1850, for lack of any effective competition, the success of railroad transportation "seemed assured." (Caudill, p. 13). Perhaps the first merger occurred in 1853 when ten carriers formed the single railroad between Albany and Buffalo and named the new company the New York Central. (RLEA, p. 8) Minnesota enacted a statute in 1856 to incorporate the Minneapolis and St. Cloud Railroad Company, which was thereby empowered to acquire property and to connect with any railroad. That corporation later on invoked that statute,

unsuccessfully.

(1896).

Pearsall v. Great Northern Ry. Co., 16 S.Ct. 705

The Civil War certainly expanded the potential by manifesting the need for the railroad system. The federal government became active in the promotion of the national transportation system. While hardly the first statute, Congress on July 12, 1862 authorized

Minnesota to aid in the construction of a railroad

from Stillwater, through St. Paul, to St. Anthony, then to Big Stone Lake. On July 2, 1864, Congress chartered the Northern Pacific Railroad Company, named persons erected thereby into a body corporate, and made specific authorizations which have been referred to elsewhere in this testimony. On March 3, 1865, they increased the 1857 allotment of lands to ten sections per mile for each of the railroads involved. Chapter 105, 38th Congress, 1865. The Green Bay and Lake Pepin Railway Company was authorized to build across the Oneida Reservation in Wisconsin, and on the same day, March 3, 1871, the St. Paul and Pacific Railroad Company was allowed to order its branch lines to enable it to intersect with the Northern Pacific, dependent however upon approval by the Minnesota Legislature and a release of all land along the abandoned lines involved in the transfer. Chapters 100 and 42, 144, 41st

Congress, 1871.

The early consolidations were of the end to end type, rather than those reducing competition along parallel lines. (Jacobson, p. 30. The major incident producing a great system of combinations and construction was the depression period of 1873-1893. (Caudill, p. 14). The first transconctinental railroad, the Union Pacific, had already connected with the Central Pacific by that time, that is May, 1869.

From the 23 miles of railroad in 1830, the industry expanded to 30,626 miles in 1860. (FRA, p. 53). There were approximately 100,000 miles by 1880. The continuing expansion of the railroad, with the recurring mergers and the potential for rebates and exploiting charges, the 1870's saw the promotion of the Granger Laws in the various states in the Midwest for the

purpose of setting maximum rates on railroad service and railroad owned elevators and warehouses. (FRA, p. 56).

Congress finally considered the railroad industry from the standpoint of controls, primarily because of the evils of the rate (Daniels, p. 52). The bill was introduced by

discrimination.

Senator Cullom in 1886, and Congress enacted the Interstate Commerce Act and established the Interstate Commerce Commission on February 4, 1887. 54 Stat. 379, Chapter 104. This act did not empower the

(Caudill, p. 14) It

new ICC to deal at all with consolidations. dealt primarily with proscription as rebates, Section 2, unreasonable preferences or advantages, Section 3, the extension of equal facilities, Section 3, and the pooling of freight of different and competing railroads or the division the aggregate or net proceeds of the earnings of the railroads. Section 5. It was, obviously,

a response to the Granger movement and an attempt to set up the ICC as a regulator of claims between the shippers and the carriers. An amendment on March 2, 1889 required that the carriers print and keep schedules and impose criminal sanctions for willful violations. The federal government first indicated an interest in the competitive aspects of this railroad system by the Sherman Antitrust Act of 1890. 26 Stat. 209, Chapter 647. That Act declared illegal every combination in restraint of trade or commerce among the several states or with foreign nations. The first case before the Supreme Court resulted in a dismissal of the Complaint because the defendant's sugar refining was restricted to the Philadelphia area and bore no relationship to commerce between the states or foreign United States v. E. C. Knight Co., 15 S.Ct. 249 (1895). The next case resulted in a finding for the defendant on the grounds that the cattle dealers organization there was open to whoever desired

nations.

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