Victory for the C. & O.

After a bitter six-month struggle for control of the Baltimore & Ohio Railroad, the Chesapeake & Ohio last week won out over the New York Central. The C. & O. obtained tenders from B. & O. stockholders for 55% of the road's stock, enough to ensure control. The victory was a personal triumph for the C. & O.'s fast-moving President Walter J. Tuohy, who personally canvassed hundreds of B. & O. stockholders for support, twice flew to Switzerland to argue his case with Swiss bankers whose depositors held 20% of B. & O. stock (they backed him). The Central, which was also soliciting tenders of B. & O. stock, refused to say how many it had received. But the figure was estimated as low as only 7%.

Next step for the C. & O. will be to ask the Interstate Commerce Commission to permit the exchange of stock to give C. & O. control of the B. & O. Tuohy insists on control as a first step toward merger, since he wants to make some changes in the financial structure of the debt-ridden B. & O., notably alter a clause requiring that a $23 million bond issue be paid up if the B. & O. merges. After that, he intends to push for complete merger of the C. & O. and B. & O., which would create a vast railroad net rivaled only by the Pennsylvania in assets ($2.3 billion) and surpassed only by the Santa Fe in track mileage (11,000). Eventually, Tuohy sees a huge, unified rail system in the East. Says he: "This opens the sluice gates. Wait till we get this merger squared away. I have other ideas already."

The prosperous C. & O., which earned $37,994,000 in the first eleven months of 1960 and has paid a dividend for all years except two since 1899, intends to pump money into the B. & O. system for a badly needed modernization program, will repair or replace the B. & O.'s worn freight cars. All told, Tuohy expects the merger ultimately to save the two lines $46 million a year.

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