THE Transportation Act of 1920 provided for two forms of voluntary railroad grouping: unification and consolidation. By unification one company secures control of another through stock ownership or lease, without change in corporate identity. By consolidation one company absorbs the other, which loses its corporate identity.
The act directed the Interstate Commerce Commission to formulate a general plan for consolidations and laid down certain guiding principles. Both unification and consolidation should preserve competition and promote the public interest.
In 1921 the commission published a tentative plan of consolidation and held hearings upon it. Eventually the commission deeming it impracticable to work out a satisfactory plan asked Congress to amend the law. Congress took no action. Finally on December 9, 1929, the commission promulgated its consolidation plan of twenty-one railway systems. In the meantime 55,000 miles of railroad had been absorbed through unification plans, with the approval of the commission.
The message of President Hoover to Congress at its opening in December, 1930, emphasized the necessity of further legislation to facilitate consolida-