Just 29 months later, PC was the nation's biggest bankruptcy.

Clearly, Saunders believed that the total financial savings realized through the Penn Central merger would more than balance the trade-offs he made to secure approval. Unfortunately for the future of the company, his calculations proved to be very wrong. In defense of Saunders, it should be pointed out that many experts in the 1960s agreed with his assessment. They, too, assumed that the enormous size of the Penn Central would result in greater efficiency and shelter it from cyclical downturns.

Time magazine, for example, hailed the 1968 merger for ending "costly and wasteful competition" between Northeastern railroads, and placed Saunders on its cover as a business visionary carrying the industry forward on the "21st Century Limited." Wrote Time: "It was Saunders, as chairman and chief executive officer of the Pennsylvania, who planned the tactics and organized the arguments that led to one of the largest mergers in corporate history … So auspicious is the outlook for the Penn Central merger that Stuart Saunders last week relaxed his customary aggressiveness. ‘I have heard it said that a long courtship makes for a happy marriage,’ said Saunders."

Also in his defense, Saunders faced a corrosive regulatory climate in which his critics were repeatedly able to redefine the "public interest" in terms of local issues rather than interstate commerce. The merger proceedings thus became fragmented into hundreds of micro political and economic battles, with county, city, and state officials often taking leading roles. To compound the problem, the ever-cautious and bureaucratic ICC gathered monstrous amounts of data. There were public hearings in 17 cities in which the agency heard 336 attorneys who represented 276 parties, called 456 witnesses, offered 328 exhibits, submitted 35,000 pages of evidence, and created 18,000 pages of testimony. The record eventually stretched to 40,000 pages contained in 40 volumes that formed a stack 13 feet high.

This information overload led to intensive debates over minor matters at the expense of focusing on the merger’s overall goals and of the increasingly desperate plight of Northeastern railroads. It should be emphasized that the interest groups that exacted so many concessions from Saunders and his team did not have a vendetta against the railroad industry. Nor did they set out to destroy Penn Central. Rather it was their ability to substitute their agenda for the railroad’s agenda that weakened the merged company …