Merging at Milk-Train Speed

Moving with the velocity of a milk train, the proposed merger of the Pennsylvania Railroad and the New York Central into a single 20,000-mile system to be known as the Penn Central rickety-racked past another way station last week. Led by the Erie-Lackawanna, eight smaller Eastern railroads* had requested a three-judge federal court in New York to delay the merger's effective date. The court, by a 2-1 vote, sided with the Penn Central.

The merger, originally approved last April by the Interstate Commerce Commission, has since been put off four times while the ICC and the Eastern railroads tried to work out conditions that would be equitable for all. One problem has been the debt-ridden New Haven railroad. Under the terms of the merger, it will eventually become a part of the Penn Central; until it does. New York, Connecticut, Rhode Island and

Massachusetts have agreed to pay subsidies to protect their commuters. One reason the court refused to stay the merger was that a postponement would jeopardize the subsidy at a time when the New Haven needs it most.

The central point of the court hearing, however, was what is to become of the Erie-Lackawanna, the Boston & Maine and the Delaware & Hudson. All of the Eastern railroads are more interested in maintaining freight revenues than in picking up passengers; the ICC, in approving the Pennsylvania and Central's request to merge, has ordered that the bigger line continue current freight interchanges with the smaller railroads in order to guarantee their revenues. The three small roads are destined to eventually end up in a second merger that will link them with the Norfolk & Western and C. & O.-B. & O. in a system as big as the Penn Central. The suspicion is that the smaller railroads, which do not oppose the Penn Central merger, are actually maneuvering to get better terms in the merger of the remaining lines. So thought the court's majority last week. "Despite all the words," it said, "this is what we suspect these actions to be mostly about."

Even with a highball from the appeals court, the Penn Central will have to maintain its milk-train speed for a while. The protesting railroads announced that they were taking the case to the Supreme Court; they petitioned Justice John Harlan, who as judicial overseer of the U.S. Second Circuit handles such appeals from New York, to grant a stay so that the full court can hear their arguments.

*The others: Boston & Maine, Delaware & Hudson, Reading, Central of New Jersey, Western Maryland, Chesapeake & Ohio-Baltimore & Ohio, and Norfolk & Western.

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