Reading page 10 of the August 1964 issue of Trains magazine is an article stating that the Dept of Justice had filed a brief against merger of said lines, stating it "would combine two railroads into one, much too big railroad"
The railroads contested that the accusation was untrue because the combined earnings of the two was still less than that of Chessie, alone. (not hard to see how they marched blindly into failure, given their preoccupation with anticipated revenue, instead of operating cost, is it?)
In context with the brief, the ICC exerted it's independence, and pointed out that it was not bound to the justice dept, as it had proved in going ahead with the ACL + SCL merger, in spite of Justice dept reservations.
I admit that hindsight is too easy. Yet still, it's interesting to see that some parties were thinking the proper thoughts and suggesting restraint even before the mistake was made.
"Much too big" in what way that would affect the Justice Department? I can agree that more in depth study, and less raw optimism may have gone a long way, what reason would the DoJ have had for suggesting restraint?
Thanks to Chris / CopCarSS for my avatar.
I wish the article had gone more indepth, but (I) was forced to settle for what was there
Convicted,
The Justice Department opposed virtually every merger. They were not prescient about PC. Even a broken clock is right twice a day.
Mac
I would imagine that "antitrust" entered into the thought process for many mergers - seems like it was a "cause du jour" at the time.
The folks who opposed such minor (in today's terms) mergers are probably rolling over in their graves.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
The DOJ was stuck on ANTITRUST even though the national transportation picture had changed dramatically. In their thinking (or lack thereof) railroads had to compete with each other, even while airlines and private cars devoured their passengers and rubber-wheeled transport ate their high-profit freight. We had people in Washington who thought that nothing had changed since 1900 - and don't bother them with any contrary facts.
Of course the entire Federal Government suffers from the same problem - being years or even decades behind the power curve. One example was the report that declared Orlando, FL, a depressed area in need of assistance - 20 years after Disney World opened. (The Orlando TV station panned their horizon and counted 50 construction cranes the day the report came out.) Another was a young lady who told me, in 1983, that she planned to train as a card-punch operator on the strength of a US Labor Department forecast predicting a high and rising demand. The local business college had just dumped the course, since punched card users had shifted to optical character readers.
As for the present situation, I'll bite my tongue and sit on my fingers...
Chuck
I don't know guys, some of you appear to be painting with an extremely broad brush.
Broad brush? I doubt that I would seem any less informed, if I was using an airless sprayer. Why do you suppose the Justice Department had reservations about the ACL+SCL merger? Did any of the reservations about either merger later prove to be justified, from the point of view of the Justice Department?
Murphy Siding Broad brush? Why do you suppose the Justice Department had reservations about the ACL+SCL merger? Did any of the reservations about either merger later prove to be justified, from the point of view of the Justice Department?
Broad brush? Why do you suppose the Justice Department had reservations about the ACL+SCL merger? Did any of the reservations about either merger later prove to be justified, from the point of view of the Justice Department?
"Broad brush" because Some are promoting Anti Trust leanings as a "one stop" explanation, and while I don't doubt that A/T plays a role, as far as the DOJ is involved, I don't think it fits the facts as a singular solution to the question.It would help if such claims were backed up with accountable sources, but we're left with opinion only.
One poster here claimed that A/T was ALWAYS an issue, yet the article I read mentioned only that the DOJ had opposed SCL-ACL and NYC-PRR.
So, what of the other mergers of the period? Was the DOJ asleep at the switch for N&W-NKP-WAB? N&W-VGN? C&O-B&O? and forgot to tender their defacto anti-trust protest? Or might there be other criteria involved?
Anti Trust grounds might actually be a good answer, particularly in context of these two eastern giants. Even still, when people start talking in absolutes, I am forced to be skeptical.
My first thought when reading the article, was that there possibly was some "cooperation" between unscrupulous DOJ members and their cronys at other railroads trying to upset NYC-PRR's applecart.
Not trying to swerve political here, but where the DOJ is truly asleep is the merger of banks. Those are making railroad mergers look like small potatoes.
Norm
Correct me if I'm wrong but didn't antitrust concerns kill the earlier C&O-NYC and PRR-N&W-Wabash merger proposals? I believe the opposition may have been more on the ICC side?
The case has been made that the earlier proposals were more "end-to-end" in nature and could have been better for the RR industry as a whole in the east...
"I Often Dream of Trains"-From the Album of the Same Name by Robyn Hitchcock
carnej1 Correct me if I'm wrong but didn't antitrust concerns kill the earlier C&O-NYC and PRR-N&W-Wabash merger proposals? I believe the opposition may have been more on the ICC side? The case has been made that the earlier proposals were more "end-to-end" in nature and could have been better for the RR industry as a whole in the east...
I'm going out on a limb with faulty memory here but I seem to recall a column (Phillips? Frailey?) that said what scuttled the C&O-NYC merger was the C&O's impending merger with the B&O. Apparently Chessie expected having to make considerable capital investments in the B&O and didn't feel up to adding NYC's needs to it's burden. They were willing to accept the NYC a few years down the road, then both roads financial pictures were expected to stabilize. NYC didn't feel safe waiting, though.
Since the PRR already had interests in both the N&W and the Wabash, I wonder if there were qualms at the DoJ about combining them into a larger railroad that would not be sufficiently independent?
Kevin C. SmithI'm going out on a limb with faulty memory here but I seem to recall a column (Phillips? Frailey?) that said what scuttled the C&O-NYC merger was the C&O's impending merger with the B&O. Apparently Chessie expected having to make considerable capital investments in the B&O and didn't feel up to adding NYC's needs to it's burden. They were willing to accept the NYC a few years down the road, then both roads financial pictures were expected to stabilize.
Exactly correct. Page 48....Oct 1992 issue of Trains magazine. According to that article, C&O and B&O were talking merger, and Al Perlman was trying to strong arm his way into the union.
C&O was receptive to an eventual inclusion of NYC, but not until after B&O had been stabilized
Murphy SidingDid any of the reservations about either merger later prove to be justified, from the point of view of the Justice Department?
Does anyone have the ability or the authority to decide what POV is appropriate for the DOJ to have, and what POV they are to be prohibited?
Interestingly enough, widely lauded and beloved industry organ David P Morgan airs similar sentiment in consideration of any PRR-NYC merger, in the January 1958 edition of Trains magazine. (pages 24 & 25) where he opines "...because nobody had figured that the troubles of bigness could be cured by biggerness..."
In that same article he touches on criteria that I have always felt were pertinent to the eventual failure, "Summed up, both Central and Pennsey possess huge plants which loom large in their capitalization, but which either do not work at capacity, or work overtime losing money"
I always felt that far too great a share of their capitalization was surplussed through redundancy, for a combination to make sense. If each railroad is paying off construction bonds for 60 bridges between Indianapolis and St Louis, the fact that half of them can be abandoned after merger is of marginal benefit
Perhaps the DOJ had similar thoughts in it's "one much too large" conclusion?
The DOJ looked at overall business practices and not transportation policies and needs. So they were not looking at the same things as the ICC. The Security and Exchange people also had to look mergers over. But when it came to the final say of railroads, the ICC held more weight.
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Having read a great deal more about this subject in the past couple days than I ever had before (much of it written before the actual union), I am forced to ask myself why Perlman, Simes, et al COULD NOT see what was evidently abundantly clear to Walter Tuohy, David P. Morgan, and (evidently) the D.O.J.?
Probably a twist on the old objectivity/subjectivity dilemma. Looking at their stated positions at the time, it appears that NYC was too ambitious for what PRR had, and PRR too ambitious for what NYC had, and both too jealous of what other combining railroads had, to see the mine field wrapped around the lollipops that they were so wanting of. I say this based, in part, upon NYC/PRR's somewhat dubious response that their combined entity('s revenue) would NOT be larger than that of the Chessie system('s revenue).
While the rest of America could probably care less at the time, enough knowledgeable people clearly did see the true nature of the beast before the fact, to warrant the DOJ's apprehension.
DOJ's spere of influence would have been those things having to do with legal matters of the merger, not financial ones. A lot of people at the time thought that merging two railroads that were facing financial woes into one huge railroad with financial woes was not a winning game plan. As long as the merger met the legal requirements, DOJ shouldn't have been concerned about the rest.
Murphy SidingDOJ shouldn't have been concerned about the rest.
Granted, there is a lot of common ground I could find with the notion "The government should just stay out of private affairs"...but you and I both know the reality, that the government loves cramming it's nose into everything.
Law often gets involved in matters concerning transfer of real estate....so I think the DOJ may have had a legitimate interest given the size and nature of the (proposed) transaction. Lets also not forget the strategic importance that railroads play ....so couldn't a failure of such magnitude conceivably threaten the republic?
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