Red Light in Washington

Of the 23 U.S. railroads with merger applications before the Interstate Commerce Commission, none are more eager to unite than the Pennsylvania Railroad and the New York Central. The Central lost $4.4 million and the Pennsy $1.1 million during 1963's first half. Both badly need to strengthen their competitive positions, particularly since the rich Chesapeake & Ohio has already gained ICC approval to control the Baltimore & Ohio, and the well-run Norfolk & Western appears certain to win an O.K. to merge with the Wabash and Nickel Plate.

Last week the Kennedy Administration flashed a red signal on the Pennsy-Central plan--while giving its backing to both the C. & O. and N. & W. moves.

Appearing before the ICC, Assistant Attorney General William H. Orrick Jr. surprised his listeners by attacking the Pennsy-Central proposal as a blow against "beneficial rail competition." Basing its stand on a report of a presidential advisory group on mergers, the Administration argued that the two lines should remain separate so that each may serve as a framework for future consolidations with smaller carriers. The smaller carriers would probably include the New Haven and the Boston & Maine, which are both in such a sorry state that no one wants to merge with them.

Deeply disappointed, the Pennsy's new chairman, Stuart Saunders, 54, who had taken over the line on the very day of Orrick's pronouncement, and the Central's President Alfred Perlman denounced the Administration's stand as "impractical and unrealistic." The final decision about the merger is still up to the independent ICC, but the Administration will probably be able to make its stand stick. Before year's end President Kennedy will appoint two new ICC members, thus gaining a majority of supporters on the eleven-man commission before the Pennsy-Central proposal is put to a vote.

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