Railroads: The Penn Central: Sidetracked Again

“The public,” insists Interstate Commerce Commission Chairman William H. Tucker, “should not have to wait half a generation for a railroad merger to be decided.” In the case of the biggest railroad merger ever conceived—the union of the Pennsylvania and the New York Central into a gigantic 20,000-mile-long Penn Central—the public seems destined to wait at least that long.

The merger was first proposed in 1957, formally agreed on last year after extensive ICC hearings. It seemed so imminent that Pennsy and Central executives began working out the details of what jobs to start phasing out. Workers were even photographed symbolically shaking hands. Since then, the deal has been sidetracked by complaints, confusion and court suits at increasingly higher levels. Last week another delay was ordered at the highest level of all. The Supreme Court, acting on a plea for protection by three smaller railroads—the Erie-Lackawanna, Delaware & Hudson, and Boston & Maine—agreed with the complainants and put off the merger once more.

Thin as a Ticket. The margin of the decision was about as thin as a rail road ticket: the vote to delay the merger until the ICC devises proper protections for the little railroads was 5-4.

Ironically, Justice Tom Clark wrote the majority opinion. And Clark, since his son Ramsey was appointed Acting Attorney General and later Attorney General, has abstained from cases in which the Justice Department takes a part. This time, even though Justice was deeply involved, Clark sat in on the arguments and tipped the decision against the Penn Central. Without Clark’s vote, the outcome would have been a 4-4 tie, in which case the merger would have been flagged through.

Most of the justices found no fault with the merger itself—although William Douglas did worry that the court might be “the final instrument for foisting this new cartel on the country.” The big question was what would happen to the small complainants in the face of strengthened competition. Most railroad men assume that all three will eventually be included in another merger under consideration, that of the Norfolk & Western and the C. & O.-B. & O. But the ICC, maintained Clark, “erred in approving the immediate consummation of the [Penn Central] merger without determining the ultimate fate” of the smaller roads.

Unique & Flexible. The opinion was glumly received. Justice Abe Fortas, in an unusually strong dissent, praised the merger as “unique,” applauded the ICC for “flexibility” in its approach to Eastern railroad problems, and criticized his colleagues for “a reversion to the days of judicial negation of governmental action in the economic sphere.”

For its part, the ICC was plainly worried. The commission has been trying to handle rail mergers one by one for the sake of speed and economy and Justice William Brennan, siding with the majority, wrote a strong opinion stating that it ought to go back to the old, laborious system of considering all regional mergers together. As for the railroads involved, they were, in the words of Pennsy Chairman Stuart Saunders, “disappointed but not disheartened.” Though the Supreme Court spoke of a “very short delay,” the complications it unraveled last week may well keep the merger hanging for two or three years more. Which would make it just about half a generation since the plan was first proposed.