Battle for the Long Island

When the Pennsylvania Railroad threw its sickly stepchild, the Long Island, into bankruptcy two years ago, it expected the reorganization to run a normal course. That meant that the Long Island's $78.6 million debt would be scaled down its fares raised, and the Pennsy would step back into control. But nothing normal ever^happens on the Long Island.

"First Consideration." After the rickety railroad killed 110 passengers and injured about 450 in two big crashes last year, New_York's Governor Thomas E. Dewey appointed a three-man investigating commission.* Six weeks ago, the commission reported that "the first consideration ... is the complete and permanent separation of the Long Island from control of the Pennsylvania." Doubting that any private company could make a go of the Long Island the investigators urged that the road be taken over by a nonprofit state authority, relieved of its real-estate taxes and empowered to set its own fares. Although the commission set the Long Island's debt to the Pennsy at $50 million, it urged a ceiling of $100 million on bonds to be issued by the authority and proposed that $67.5 million be set aside for new equipment. That would leave only $32.5 million for all creditors. It would leave nothing at all for the Long Island's single stockholder, i.e., the Pennsy.

Last week, Pennsy President Walter S. Franklin let out an anguished blast at the commission's plan as "the essence of state socialism at its worst." He termed it "expropriation" of the Long Island at depressed values caused by years of "oppressive regulation and taxation."

"ReasonableCompensation." Franklin argued that the Long Island had been denied fare boosts until too late (1948) to save the road, that it had suffered big increases in real-estate taxes (almost tripled since 1922), and that it had to put $32 million into such projects as grade crossings, from which it got no revenue benefits. Franklin insisted that the Pennsy would fight to keep the Long Island under private ownership and for "fair and reasonable compensation" for the $100 million that he claimed the Pennsy had sunk in the Long Island.

But Franklin would have a hard time getting any backing from the Long Island's angry and politically potent riders. They wanted changes made, and they had already gotten some. Manhattan Investment Banker William H. Draper court-appointed boss of the bankrupt road, had raised $6,000,000 in loans from Manhattan banks to buy new equipment and safety devices which the Pennsy had not installed.

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In New Jersey, too, the Pennsy had a fight on its hands. A New Jersey grand jury last week charged that the Pennsylvania Railroad "did feloniously kill and slay 84 people in its commuter wreck at woodbridge, N.J. (TIME, Feb. 19) and turned 84 separate manslaughter indictments against the railroad. Conviction would bring a maximum fine of $84,000. Said Prosecutor Alex Beber: "The fine is not important. The important thing is to fix responsibility."

* Ex-Secretary of War Robert P. Patterson, New York City Parks Commissioner Robert M. Moses, ex-New York Supreme Court Justice Charles C. Lockwood

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