The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1933-06-05
CON TIN l.! II, U E y
How CleVelanders
Built Rail Empire
Told to Committee

The witness conferred so frequent.
ly with associates that Pecora finally
directed him to tell us when 1t Is
necessary to confer with those about
you, so that the record will show 1t. y
In a deliberate voice, o. p. Swerin-
gen read steadily from a prepared
statement before questioning began
Bought Block of Stock
Morgan and company aided the
Van Sweringens In the financing OF
the railroad holding company and
bought large quantity Of Allegheny
company stock. A part Of this was
sold to favored customers, many
prominent men among them, at cost
Shortly thereafter, the stock was
selling at prices which permitted
millions in paper profit to those who
bought from Morgan.
The story the railroad man told be-
gan with the Van Sweringens' &C.
quisition Of the Nickel Plate because
"in connection with an undertaking to
provide rapid transit to some portions
of Cleveland, we wanted to use part
of the Nickel Plate
The move for rail consolidation was
under way by 1920. The Van Swer-
ingens in 1922 purchased stock con-
troll of the Toledo, st. Louis e. West
ern and the Lake Erie &, Western
consolidating them with Nickel Plate
Along came the chance to acquire a
major interest in the Chesapeake &
Ohio. The Morgans felt 1t wasn't
the time for us to make the expendi-
lures. We were going to have to
have some money. We took their ad-
wee
But "a year or so' later the Var
Sweringens were back at % Wall
Street:
"Ths time the Morgan firm agreed
with us and we closed the deal, the
Nickel Plate buying 10000 of the
Huntington shares, the total Of which
was 10000"
Cast Eyes At Erie
He went on to tell how they then
eyed the Erie railroad and won the
cooperation of the late George F.
Baker, so that together they wound
up with half the common and much
of the Fries preferred. They needed
new outlets for coal, so bought into
the Pere Marquette. It was 1925. and
the brothers went to the I. G. G. with
their first plan for the Nickel Plate
unification.
The plan was rejected, but since
the I. c. c. regarded the G. & o. as
logical backbone Of their system, they
built link through Ohio to give 1t q
continuous line from Newport News
Va, to Toledo.
Here appeared the first Of the hold
ing companies. G. & o. was to be now
the nucleus of the consolidation and
Nickel Plate was big stock owner In
its prospective parent. To change
this and still keep the Nickel Plates
G. & o. shares in the group, Chesa-
peake corporation was created and
it's shares exchanged for the G. & O.'s
Nickel Plate. The Van Sweringens
own G. & o. holdings went into the
pot upon the same basis"
This took money.
Got Help From Morgan
chesapeake corporation went to j
P. Morgan and Company for this fl
nancial aid, and realized it by the sale
to them in the spring Of 1927 Of $48,'
600, 900 Of 20-year per cent bonds"
The G. & o. asked then for I. G. G
permission to acquire control Of thu
Erie and Pere Marquette: was grant
ed the latter, but not the Erie. Thu
Van Sweringens, faced then with
need for some manner of holding In
unified fashion all the interests they
had acquired for formation of TIT
fourth system Of the rail consolida-
ton plan, IN 1929 brought into be!ni
Allegheny corporation, the ir.medt