Evening star. [volume] (Washington, D.C.) 1854-1972, 1962-12-29
Mergers for Strength

There is something about the word
merger" In business circles that rings
an alarm bell Federal agencies, for ex-
ample, are alerted Immediately to a
threat OF real or fancied-monopol
through "bigneSs." Competitors protest
loudly against the danger of suffocation
at the hands of giant rivals, in effect
also equating bignesS with unfair adj
vantage. Labor unions worry about pos
Sible loss Of jobs through elimination Of
duplicating operations, even though the
jobs may be baSically uneconomic. There
are other voices always ready to echo
these warnings, and to charge merger
proponents with designs against the pub
lie interest
This ION guard" reaction is particu-
larry noticeable in the transport indus
try, which not only is subject to the stiff
fest Of Government control and regula-
ton, but coincidentally Is suffering some
of the worst Of economic troubles. Pend
ing in both the airline and railroad seq
ments Of this industry are major merger
propoSals-including American and
Eastern in the air, and the Pennsylvania
and New York Central on the rails. In
each case, arrangements have made their
cases convincingly before proper Gov
eminent agencies-on grounds Of eff
cheney, economy and service to the pub
lie.
In the American-Eastern case, an
examiner for the Civil AeronauticS Board
now has recommended against the mer-
ger, largely because it would upset the
balanced competition" in an industry
which many, including other CAB Off
Gals, now believe is suffering from too
much, not too little, competition. There
are similar ironies in the railroad case,
including expressed fears of poorer serv-
ice while the head Of the Pennsylvania
points out that the East'S forty railroads
"are starving to death in one another's
front yards fighting desperately and un-
profitably for business that a merged
industry could handle efficiently and
profitably"
In recent days another major air.
line merger has been proposed, Pan
American and Trans World, with a diff
ferent element of competition promi-
nently in the picture. This is, in short,
the deep penetration into the rich trans
Atlantic market by Is foreign flag lines
for the most part government-owned
and government-Subsi able to dis
regard capital losses while they white
down the share of traffic travelling in
American carriers. Between 1851 and
1861, the share of trans-ocean traffic
carried by American-flag planes dropped
from 70.8 per cent to 49.6 per cent, and on
the North Atlantic run 1t was down to
"a per cent in the later year.
Among other ways, the foreign lines
are finding operating economies and
possibly better service in the very way
proposed by Pan Am and TWA-namely
through consolidation of facilities and
equipment A British Commonwealth
combine, for example, pools the oper-
atoms of government-owned airlines Of
Great Britain, India and Australia, and
the Common Market bloc of Western
Europe is organizing an Air Union for
the same reasons.
All of this does not imply, of course,
that any merger proposal per Sc is a
good thing. All such projects should be
studied with care, but not with the cards
stacked against them because of out
dated fears Of monopoly in an industry
where monopoly is hardly attainable in
today's world. The national interest,
both at home and across the seas, calls
for a strong transport system, not one
kept weak by augmentation. 1t will,
after all, remain under Government reg
ulation as the instrument Of maintaining
standards Of service.