The Northern Combine

When the U.S. Supreme Court approved consolidation of the Pennsylvania and New York Central Railroads last January, it opened a new right of way for railroad mergers on a grand scale. National policy, the court noted, requires that railroads be allowed to unite into a "limited number of systems." In accord with the Supreme Court's doctrine, a special three-judge Federal District Court in Washington last week flashed a long-awaited green light for a merger that would create the nation's longest railroad.

Delays Endured. The merger would combine the 8,282-mile Great Northern Railway, the 6,747-mile Northern Pacific, the 8,538-mile Chicago, Burlington & Quincy and the 922-mile Spokane, Portland & Seattle. The resulting 26,509-mile system, including a few subsidiaries, would serve 17 states and two Canadian provinces, from Chicago to Vancouver, from Galveston to Winnipeg. The merged northern lines, to be known as the Burlington Northern Inc., would rank third among U.S. railroads (after the Penn Central and the Southern Pacific), with 1967 revenues of $875 million.

Last week's decision crowns 13 years of frustrating delays since the merger plan was born in 1955. The roads sought the sanction of the Interstate Commerce Commission to unite in 1961. Five years later, the commission rejected their petition on the ground that the northern combine, involving some of the profit-starved railroad industry's most prosperous carriers, would hurt competition. In particular, the commission expressed the fear that the merged companies would draw traffic away from the Chicago & North Western and the Milwaukee Road. Late last year, the commission reversed itself after the northern lines promised to give valuable track rights to the Milwaukee and mollified labor by agreeing to eliminate 4,511 excess employees by attrition over several years rather than dismissal. The chief executives of the carriers gathered in Manhattan to sign the consolidation papers last May. But only hours before they were to complete the formalities that would have created the Burlington Northern, Chief Justice Earl Warren abruptly halted the merger at the Justice Department's request.

Romance Lost. The department raised six major objections to the merger, most notably that the. ICC had not fully considered the anti-competitive aspects of the consolidation. Last week's unanimous court decision rejected all those objections. In a somewhat lyrical burst of prose, Federal Appeals Judge Charles Fahy took the occasion to lament: "The romance of railroad building is all but lost in the welter of data before us. The merger will bring about changes in vast enterprises that took over from the pony express, the stagecoach and the covered wagon."

If it chooses to be stubborn, the Justice Department can still carry the case to the Supreme Court, provided it files an appeal by next week. Still pending before the ICC are eleven other consolidation proposals. They date all the way back to 1963.

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