Railroads: Toward the 21st Century Ltd.

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In his talks with Perlman, Saunders pursued a policy of not letting the opposition polarize. But keeping the opposition unpolarized was a herculean task; there was almost too much to keep track of. ICC examiners studying the Penn Central merger proposal, traveled to 18 cities, took 40,000 pages of conflicting testimony from 461 witnesses in 128 days. Nearly 350 lawyers have thus far been involved. Aside from legal tribulations (their case went to the

Supreme Court twice and lower courts five times) the prospective partners have had to overcome objections from both labor and Government.

First, as far as Saunders was concerned, came labor. At one point during the ICC hearings, a railroad spokesman had glowingly boasted that the merger would enable the lines to get rid of some 7,800 employees. Officials and members of the 24 railroad brother hoods reacted with understandable concern. In an industry where management and labor rarely meet except in the hostile atmosphere of the bargaining room, Saunders began seeking out union leaders for informal talks. "I knew I had to change labor's position," he says. "My argument with the leaders was: 'This is really in the interest of your people. Merger means better earnings, which mean better savings, more business and more jobs. I can only get these savings with your cooperation.' " As a more practical matter, Saunders also promised the unions that no one would be fired because of the merger; only as jobs become vacant because of retirement or death will the Penn Central cut down on employees.

Next came the Justice Department, which strongly opposed the merger on the ground that it would lessen competition among Eastern railroads. Saunders brought the Government lawyers over to his side by agreeing to absorb the bankrupt New Haven. Perlman and the Central had said that they would not take the New Haven under any circumstances. "But it was apparent," says Saunders, "that the New Haven provided the factor needed to get the merger through: an urgent public interest."

One of Saunders' main efforts was to cultivate Lyndon Johnson. A lifelong Democrat, the ambitious railroad man made himself available for public statements approving almost all Johnson Administration policies—from Viet Nam to tax increases. "I could not have gotten the merger through without help from members of the Administration," Saunders says frankly. Then, in a masterpiece of understatement, he adds: "They got the Justice Department to change its thinking." It was significant that Saunders, while celebrating his Supreme Court victory in a Washington dining room last week, received a congratulatory personal telephone call from the President.