In Advance of Ulcers

In Boston last week, silver-haired, short-tempered Patrick Benedict McGinnis, 58, bowed out as head of a Class I U.S. railroad for the fourth time in ten years. But in surrendering his job as chief executive of the 127-year-old Boston & Maine, the hotspur of U.S. railroading at least set a refreshing precedent. On previous occasions--aboard the Norfolk Southern, the Central of Georgia and the New Haven--McGinnis was tossed out by angry stockholders. At the B. & M. he decided to move up to chairman on his own hook.

Ostensibly for health reasons, McGinnis is turning the B. & M. presidency over to Vice President Daniel A. Benson, 47, a tough, savvy operating railroader who began as a New Haven yard clerk. "I don't have any heart trouble. I don't have any ulcers," says McGinnis. "But I've been working twelve-hour days. I'm slowing down before something happens.'' Of considerably more concern, however, is the state of the B. & M.'s health. By McGinnis' standards the road's financial picture has been improving: "In railroads, we measure the best by who's doing the least bad. We had less deficit last year [$3.279.716] than the seven other East Coast railroads.'' But under a 1960 refinancing arrangement, the B. & M. also has $47,014,700 in first-mortgage bonds coming due between now and the end of 1965. Unless funds are found to retire them--or the due date is postponed--the end of the line is in sight.

The only solution McGinnis sees to the B. & M.'s troubles is a merger, and he is moving over to chairman--at a $44,000 salary cut--to put all his time, and his experience as a longtime Wall Street expert on bankrupt railroads, into finding one. McGinnis would first like to merge the B. & M. with the Delaware & Hudson, with which it connects, and then with the booming Norfolk & Western. This arrangement would eliminate much of the $7,000,000 a year that the B. & M.. as a terminal line, pays other railroads in freight car charges.

McGinnis concedes, however, that his merger proposals are still "at a very informal stage," and on Wall Street last week some of his old colleagues did not seem to share his confidence in the Boston & Maine's future. "I think a swift breeze could take them right off the diving board," said one metaphor mixer. "McGinnis is probably abandoning a sinking ship."

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