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The Central's urge to merge with the Pennsy was renewed by two events: 1) the Pennsylvania seemed to be considering joining up with the projected merger of the Norfolk & Western (of which it owns 32.7%) and the Nickel Plate; 2) after a titanic proxy fight, control of Alleghany Corp.—the holding company that controls the Central—passed from Robert Young's associate, Financier Allan P. Kirby to the Texas brothers, Clint and John Murchison, and Perlman found himself working for new bosses who insisted that the solution to the problems of the Eastern railroads lay in merger. Reopening negotiations, the two lines called in a trio of prestigious investment banking houses—Morgan, Stanley & Co., the First Boston Corp. and Glore, Forgan & Co.—which spent two months digging into the intricate finances of both lines before approving as equitable the stock exchange ratios agreed upon last week.
Off-Track Trouble. With the bankers' encouragement, stockholders of the two roads are expected to approve the merger at the annual meetings in May. Approval from the sympathetic Interstate Commerce Commission will come—if ever—only after tedious deliberations in which town after town will object to losing tax revenues from consolidation of Pennsy and Central terminals. Still another hur dle lies in the attitude of Justice Department trustbusters, who have taken no position so far but who might argue that the sheer bigness of the merged railroad would outweigh the fierce competition it would face from trucks, airlines and cars. Even if everyone else approves, the roads will certainly face trouble with the railroad brotherhoods, which last week extravagantly denounced the merger agreement as "the most catastrophic proposal . . . ever placed before the public" and asked up to three years' pay for anyone laid off. In the end, the fact that it is the only visible alternative to steadily deteriorating railroad service in the eastern half of the U.S. seems the best guarantee for the birth of the Pennsylvania New York Central Transportation Co.