Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-02-12
MEN AND MONEY
By NJ. S. Rukeyser.
Copyright. 1927

In the formation of the newly an
nounced railroad merger plan, Orris
p. Van Sweringen, the artist. yielded
TO the practical side of his nature.
The first Nickel Plate unification
plan. which he and his younger broth
err. Mantis j., and formulated and con-
sidered their masterpiece, was rejected
by the Interstate Commerce Commits
sion, II months ago--on financial, not
transportation. grounds. The new
grouping around Chesapeake and Ohio
temporarily leaves out the Nickel
Plate, the first road to come under
Van Sweringen control, but takes in
the Hooking Valley, the present c. &
Q. subsidiary, the Pere Marquette, and
the Erie. The Chesapeake and Ohio. in
stead of the Nickel Plate, becomes
the parent road. If the Interstate
Commerce Commission approves the
new set.up, the next step will be to
join the Nickel Plate to the Chesa
peake and it's subsidiaries. Perhaps
other roads will be added later.
The Van Sweringens - bachelor
brothers of Cleveland-are silent men,
but they plainly foreshadowed this
new leadership of the Chesapeake
many months ago, when 0. P. Van
Sweringen. desiring to discontinue the
appearance of interlocking directors,
resigned from the Nickel Plate board
and remained as chairman of the
Chesapeake board. More recently the
job of building new 63-mile stretch
of railroad. which under the original
plan was assigned to the proposed new
Nickel Plate Co., was undertaken by
newly formed subsidiary of the
Chesapeake and Ohio-the Chesa-
peake and Hooking Construction
Co., which already has 40 steam SHOW.
els at work to build line from Val
ley Crossing to Gregg. Ohio, physi-
cally joining the Chesapeake with the
Hooking Valley, obviating the con-
tinued use Of the Independent Norfolk
and Western for this purpose.
Nickel Plate Plan Dead.
The Nickel Plate unification plan is
dead. The Chesapeake and Ohio merger
program has been born.
The new plan, unlike the original
program, obviates the need of leasing
the component roads to the parent
road. The new plan does not provide
for physical merger at present, but
for control through stock ownership.
The proposed greater Chesapeake
will be modelled after the New York
Central system, which has been made
up on controlled separate corporations.
such as the Big Four and the Michigan
Central.
Unlike the original plan, the new
plan makes no provision for assuring
the various classes of Erie stockhold.
ers dividends as soon as the pro.
gram has been approved and put
into effect. BY the new formula, the
larger system gets control of Erie
without assuming the burden of pay
ing dividends to Erie shareholders
whose fate in this regard will be de-
termined by Erie directors on the
basis of Erie earnings. OF course,
under this plan, the largest single
holder of Erie common will be the
Chesapeake and Ohio Railroad.
The Van Sweringens are in control
of all five roads, and the new shut
f1e, its proponents believe, will tend
TO approach in result those of the
original plan. The lamented Nickel
Plate merger plan, however. was the
Van Sweringen creation, which, they
believed, met the situation better
than any other, and was more orig.
1nal in conception than the present
plan. The current plan is an at
tempt to meet the practical consid
erations involved-especially the i'm
plication by the Interstate Commerce
Commission that the earlier plan
though satisfactory from trans
the Nickel Plate against the Chesa
peake and Ohio.
Grouping i'm Public Interest.
That this thought was dominant ir
the minds of the projectors of the
new system was indicated in the an
nouncement by w. j. Harahan, pres
ident of the Chesapeake and Ohio
who said:
1.-THE Interstate Commerce Commits
sion nearly year ago held that q
proposed grouping of railroads, in
Guiding Erie, Pere Marquette ant
Chesapeake and Ohio was, from {
transportation standpoint, in the pub
lie interest, and the logic of the de
cision was to the effect that tn,
Chesapeake and Ohio should be thu
backbone"
Mr.. Harahan further declared tina
the new program will lead to tn
creation OF great transportation
system able to efficiently compet
with the New York Central, Bait
more and Ohio and Pennsylvania sys
TENS"
To finance stock purchases Of sui
kidiaries and to get a revolving fun
for develOpmental purposes Is tn
object of the authorization of ne,
C.. & o. stock, to which shareholder
may subscribe at par on the basi
of one-haH share of new stock 70
each one share Of old held. TIL
nav issue viii give o. n Or g bette