A Victory for the C. & O.

The biggest single block of stock (an estimated 25%) in the Baltimore & Ohio Railroad is held in Swiss bank accounts. In the fight between the New York Central and the Chesapeake & Ohio railroads to gain control of the B. & O. (TIME, July11), the Swiss-held shares may prove to be the decisive block. Last week the three big Swiss banks that hold the stock advised the owners, in a confidential memo, to accept the merger offer of the C. & O. Merger of the C. & O. and the B. & O., said the memo, would "present many real advantages." The banks pointed to the C. & O.'s strong earnings and high common stock dividends ($4 a year since 1957), noted that the Central's "earnings have fluctuated widely" and "the stock must be considered as speculative."

The recommendation was a major victory for the C. & 0. President Walter Touhy, who last month flew to Switzerland, spent nine days pleading his case. Central President Alfred E. Perlman, apparently more confident of victory, made a tactical error: he merely sent his financial vice president, Walter Grant, who spent four days talking to the bankers.

When word of the banks' memo reached Perlman, he hurriedly called a press conference in the Central's stodgy board room. He announced that he would fly to Switzerland to "correct certain errors" in the banks' thinking. Perlman, who has been a few steps behind fast-moving Walter Touhy since the merger talks started, may not be able to make up the lost ground. The C. & O. already has an estimated 10% of the B. & O.'s stock pledged to it, is reported to have the promise of another 20% from B. & O. investors in the U.S. If the Swiss go along, the C. & 0. will have more than the 51% it needs to control the B. & O., though it needs 80% for a tax-free stock trade.

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