Red Board on a Merger

In the gloom of the '57-'58 recession, many a U.S. railroad sought merger partners to strengthen its condition. For 14 months the Pennsylvania and the New York Central, the nation's No. 1 and No. 2 roads, talked, thought and studied. Last week the Central flashed the red board. It announced that it was suspending the Pennsy merger talks until "three or four systems of nearly balanced economic strength in the East" could be studied. Conferences among smaller roads in Portland (Me.) and Cleveland (TIME, Dec. 1), said the Central's directors, indicate "a new climate among Eastern railroads in regard to merger." While studies of the Pennsy merger indicated that "savings are possible from both coordination of facilities and corporate merger," what the Central would like to do for the time being is combine some facilities with the Pennsy.

The Pennsy sounded like a bride left at the church. Said President James M. Symes: "I am disappointed." U.S. railmen have known for some time that the Pennsy is more anxious to merge than the Central, which has had its doubts about managing the $5.6 billion behemoth that would be formed by a merger. Meanwhile the seven smaller roads--Erie, Baltimore & Ohio, Chesapeake & Ohio, Reading, Delaware & Hudson, New York, Chicago & St. Louis, Delaware, Lackawanna & Western--that had huddled in October to discuss what to do in the face of a Central-Pennsy merger also dropped their own merger talks.

One reason the merger ardor may be cooling slightly is simply that business is getting better. Late in December rail car-loadings hit 431,938 cars, topped the year-ago level for the first time in 16 months, although the corresponding week a year ago was particularly depressed by bad weather. Fortnight ago, loadings climbed to 467,699 cars, lagged only 1% below the same week in 1958. Railmen think the year-to-year gap has now been closed, expect carloadings to keep climbing above those of 1958 as the tempo of U.S. business picks up.

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