0.00006% Isn't Enough

Rail Juggler Robert R. Young, whose fond, bright dream was to control the New York Central, got a rude awakening last week. In a ruling as abrupt as the jangling of a fire bell, the Interstate Commerce Commission flatly refused to let Young and Chesapeake & Ohio President Robert J. Bowman 1) sit on Central's board, or 2) vote C. & O.'s 400,000 shares in Central which would give Young working control.

In reviewing the reams of testimony on Young's year-old plea, ICC found all sorts of reasons for saying no. For one thing, any closer alliance between the C. & O. and Central would lessen the "extensive competition" between them, would thus violate the antitrust and interstate commerce laws. For another, "the applicants have not shown that either public or private interests will not be adversely affected." ICC reckoned that half a dozen other railroads--and therefore the public --would have been harmed. Example: Frank D. Beale, president of the Virginian Railway Co., wailed that a C. & O.-Central link would just about choke off his road.

Was the Central, as Young charged, banker-controlled? ICC cited the findings of its examiner (TIME, Dec. 22) that C. & O. had more bankers among its directors (8 out of 15) than Central (6 out of 15).

Would Young be able to "revolutionize" travel on the Central and "put it back on its feet" as he promised? ICC thought that whatever improvements he made in Central would not make up for the harm to other roads. Furthermore, Young's stock holdings were too small to guarantee that he could make the improvements he promised. Said ICC: C. & O. is controlled by Alleghany Corp. through an interest of only 3.34%, and Alleghany is controlled by Young through an interest of less than 1%. Young's interest in Central, "when traced down through Alleghany and the C. & O. amounts to 0.00006% ... so small as to give no positive assurance of the benefits said to follow from such ownership representation."

If Young's own stock holdings were counted in, Alleghany's control of Central would be a "concentration of 11to 570,000 [dollars] as against a concentration of 1 to 50" which ICC had turned down in a case involving consolidation of southwestern roads.

For once, Bob Young had nothing to say. (He had already said that he would appeal to court and to Congress if ICC turned him down.) But no one thought that Bantam Bob, who crows louder than any other bird in the railroad yard, was going to give up his fight.

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