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Trains Magazine 1961 June Look at Central Gp Ride Behind steam
Trains Magazine 1961
June 1961 Volume 21 Number 8
NEWS -
NEWS PHOTOS8
STEAM NEWS PHOTOS10
WHERE TO RIDE BEHIND STEAM! 15
LOOK AT CENTRAL GO!20
MOTIVE POWER SURVEY34
IMAGE OVERHAUL -38
TAKE ANOTHER LOOK42
ROUND THE WORLD - 544
ART SALON--49
Railway post office 58Of books & trains 59
Second section60Running extra62
Interchange 66
NYC-C&O-B&O . . . SIMULTANEOUSLY
I.WE assume it must be obvious to all concerned that the Eastern railroads are bound for a two-system merger - and why. New York Central and Pennsylvania are the physical and economic giants of the East, hence each must serve as the nucleus of one of these super systems. This is a comparatively straightforward objective for the Pennsy to implement since it owns a substantial 33.7 per cent interest in Norfolk & Western which, recently merged with Virginian, now aims at adding Nickel Plate and Wabash to its map. Throw in an Erie-Lackawanna here and a Lehigh Valley there, and you have a 1.6-billion-dollar-a - year, 21,700-mile railroad-which solves exactly one-half the problem.
The other logical system would of course be Central, plus Chesapeake & Ohio and Baltimore & Ohio, plus everybody else (Jersey Central, Reading, Western Maryland, et al.), but logic is compromised by the fact that Central is financially weak, Chessie is strong, and there are two ownership ties that unite the two.
No calculating machine is required to analyze and appreciate Chessie's position. Year after year the coal hauler issues $4 dividends on less than half the gross revenues of Central (which barely managed a 50-cent dividend last year). Such financial health has won for Chessie almost 70 per cent of B&O stockholder approval on a stock-exchange offer leading toward - with I.C.C. approval - control, then merger. Such affiliation would bond two roads which have in common much coal and few passengers; put Chessie's renowned credit to work resolving B&O top-heavy debt and starting a capital improvements program; and restore C&O to an equal footing with its ambitious rival, N&W. Unto itself, then, C&O +B&O would appear to make dollars-and-cents sense.
Its fatal flaw lies in its pointed exclusion of New York Central.
Central argues that C&O + B&O is essentially an end-to-end proposition, not an affiliation of two parallel lines which could effect genuine merger savings by elimination of duplicate facilities. NYC, for example, has 61 connections and 98 common points with B&O vs. totals of 17 and 23, respectively, for C&O and B&O. Central's contention is that C&O + B&O "savings" would actually be in the form of traffic raids upon neighboring roads -notably NYC itself - and that Central can ill afford to lose any of the tonnage that makes up for the losses it sustains east of Buffalo on New York harbor services and passenger traffic, particularly commuters. Finally, any combine that excludes Central is not an adequate answer
to the impending Pennsylvania alliance.
Inasmuch as Central cannot afford financially to block a two-way C&O +B&O hookup and since Chessie has made it clear that Central is not invited to the party, anyone who backs Central at this stage of the game risks being accused of supporting compulsory consolidation. C&O Vice-President Owen Clarke says, "Compulsory consolidation, in my opinion, is only one step removed from nationalization." N&W President Stuart Saunders declares that "attempts to bring about mergers by compulsion are doomed to failure." We agree. Yet we can conceive of no more direct road to compulsory consolidation than to ask the Interstate Commerce Commission to approve those voluntary mergers which ignore over-all industry welfare. To quote Saunders again: "The decisive test must be the public interest." It is not in the public interest to pretend that the nasecond largest railroad (as well as one of the most economic in terms of location and profiles) does not exist. No amount of tub thumping for voluntary mergers can excuse an affiliation whose effect might threaten the solvency of such a carrier. Assuming that Pennsy aims to consolidate its gains into one super system (and the road now openly hints at such a goal), then Central, Chessie, and B&O must integrate simultaneously. Chesapeake & Ohio will not long preserve its $4 dividend record nor will nationalization be averted if Central goes down the drain.
The Commission will be well advised to reserve its stamp of approval for a three-way NYC-C&O-B&O merger symathetic to the realities of Eastern railroading in our time.
Passenger points
Passenger trains are odd creatures -seven times safer than commercial airliners, yet dangerous enough to push New Haven to the brink of bankruptcy. They also made this news recently:
The high occupancy rate established by the four Slumbercoaches it leased from the Budd Company in late 1959 has persuaded New York Central to add to the fleet. Budd will rebuild 10 stainless-steel 22-roomette Central sleepers into 36-pasSlumbercoaches (10 double and 16 single rooms per car) at its Red Lion Plant near Philadelphia. Work will take nine months, cost 1 million dollars; cars will be assigned to New York-Chicago trains running via both Cleveland and Detroit.
Experimentally, Jersey Central has extended seven-day-a-week Budd RDC service out of Jersey City westward to
IN YOUR NAME
A SPOKESMAN for the Association of American Railroads dropped in the other morning to ask about you. Specifically, do fans care enough about the industry in 1961 to support its recently announced Magna Carta program (which calls for freedom from unfair regulation, taxation, and competition; freedom to diversify into nonrail transport)? There are enthusiasts, of course, who delight in the railroad scene in the past tense and who feel no compulsion to argue the roads' political case today (any more than steamboat fans need to press for inland waterway improvements). No law obligates them to, and we, for one, attach no stigma to their position. But, we said, most fans do care and always have. Did we tell the truth?
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