Rebel Takes Gulf Coast

That two parallel lines can meet in the railroad business, if not in geometry, was all but proved last week. As the stalemate of U. S. railroads v. U. S. railroad labor over the proposed 15% wage cut* finally entered the mediation stage, Jesse Jones advanced another economy measure by announcing that RFC would be willing to lend $9,500,000 to enable Gulf, Mobile & Northern to buy Mobile & Ohio from Southern Railway. The Gulf and the Mobile & Ohio (which touches the Ohio River, but not Ohio) parallel each other for about 400 miles between western Tennessee and the Gulf of Mexico. G. M. & N.'s The Rebel, "the South's first streamlined, air-conditioned train," runs its 488 miles from New Orleans to Jackson, Tenn.; M. & O.'s crack Gulf Coast Special connects Mobile and St. Louis, 648 miles. Once consolidated, the two roads can use the best tracks for the main line, use the others for maintenance; Gulf can then send freight to East St. Louis, instead of paying Illinois Central for the use of tracks to Paducah, Ky. (last year's cost: about $150,000); and, not incidentally, its share of the $9,500,000 would help Southern meet its $7,295,000 Southern Railway M. & O. Collateral 4s maturing September 1.

RFC Chairman Jones indicated ICC would not oppose the merger. In that case, if affected security holders do not block the deal, harassed U. S. railroad management will have effected the first important railroad consolidation since 1929.

*Federal Judge Harland B. Howe last week told employes of the Rutland Railroad to take wage cuts of 10% to 30% or quit. Union leaders, who had previously refused a 15% cut (TIME, July 25), accepted the order under protest, after Judge Howe directed the road to consider the withheld wages as a debt to be paid if earnings warrant.

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