No green light flared from a
track-side tower; no warning whistle echoed down the line. But no
trainman missed the signal. When the Supreme Court gave its approval
last week to the merger of the Pennsylvania and New York Central
railroads, it was clearing the track for the nation's entire rail
system. It was giving railroad management permission to highball into
the future. As Justice Abe Fortas read the 37-page opinion that put an end to ten
years of frustrating negotiation and deliberation, the smile on the
face of a chunky, balding spectator seemed to light up the marbled
chamber. For Stuart Thomas Saunders, 58, the man who has already been
picked to head the Pennsylvania New York Central Transportation Co.,
the court's 8-0* vote was a singular personal triumph. It was Saunders, as chairman and chief executive officer of the
Pennsylvania, who planned the tactics and organized the arguments that
led to one of the largest mergers in corporate history. It was Saunders
who held the pieces together during the frequent assaults from
competitors concerned about the Penn Central's potential power; it was
Saunders who won over dubious labor leaders, worried lest future
economies lead to fewer jobs. Above all, it was Saunders, the
lawyer-turned-railroader, who convinced the Interstate Commerce Commission and the Justice Department that both public interest and
private good would be helped if two troubled rivals were allowed to
operate as a unit, instead of continuing costly and wasteful
competition. His victory was a victory for railroads across the
country. For the court gave its approval to his philosophy that
railroads must combine, that they must grow in size and decline in
number if they are to serve their customers and survive. Envious Hill or Harrimcm. Saunders will be working in tandem with the
Central's President Alfred E. Perlman, 65, one of the best operating
men in the business; and the two men will be managing a railroad empire
to excite the envy of a Hill or a Harriman. The Penn Central will
operate on 40,000 miles of track in 14 states and two Ca nadian
provinces. It will run 4,200 locomotives, 195,000 freight cars, and
4,937 passenger cars. It will also be the nation's largest private
landlord, with real estate holdings that include Park Avenue hotels and
a Pittsburgh office building-apartment complex, a 25% share in the new
Madison Square Garden, erected over the rebuilt Pennsylvania Station in
New York City, resorts in Florida, parks in Texas and housing
developments in California. The diversified corporation will have total
assets of $6.3 billion, annual revenues of almost $2 billion, and tidy
tax-loss credits from dismal years in the past that will help to
improve net income for years to come. Most of all, in its plans and in
its performance, Penn Central will be a prototype of the U.S. railroad
of the future.
