Evening star., 1933-06-08

Erie common at si2 200, 900. for total
paid to vaness by the Allegheny OF
| S22, 2,413,952.
was that paid directly?"
MY record shows 1t direct"
On the same day, Van Sweringen also
said. the Allegheny paid to o. P. and
M. J. Van Sweringen ss. 800 900 for 90. 900
shares of Buffalo, Rochester e. Pitts
burgh common and $4, 800 900 for $4,000
shares Buffalo, Rochester g. Pittsburgh
preferred, or a total of $4,000, 900.
Was that payment direct?"
YES"
Van Sweringen testified that the value
of the securities the Allegheny Corpo-
ration issued coincident with its forma-
ton was s82, $50 900.
Roughly, he said, this came through
the sale Of s32.575 900 in bonds: $25.-
600 900 in 5l2 per cent preferred stock
S375 900 in non detachable warrants
and s25.000.000 from l,250.000 shares
of common.
Gets New Morgan Loan.
Pecora wanted to know what profit
the Vaness Co. made from the sale of
securities amounting to $22,413,000.
Van Sweringen, after whispered
conference with associates, said he
would have to furnish htat later.
Pecora commented that records
showed that at the time of the series
of transactions, the Vaness Co. got over
s36 900 900 in cash in addition to Sc
curities.
Some indebtedness of the Van Swerin-
gems was satisfied out of this, Van
SWeringen said
He could not give the total amount
owing, but said on February Is, 1929,
the Vaness Co. paid Morgan g. Co
$2& 10000 on $27 800, 900 loan made
in 1927. .-
A new loan of slo,ls4.277 was OBJ
tanned from Morgan on the same day.
Pecora placed the total investment
on the Allegheny up to March 81. 1929,
at $139 ,004, 900, asking, Was it bought
in the open rlarket?"
Van Sweringen said most Of 1t was.
The operator, who became a director
of Missouri Pacific in May 1880, was
asked If between the end of March, 1929,
and May, 1890 the Allegheny Corpora
ticn had acquired more Missouri Pacific
stock
we did," he said. adding that when
he became q director a ma jority of the
outstanding stock and about one half
the debenture notes, valued at about
sac, 900 plus, had been obtained.
Denies Consolidation"
At times Morgan became more inter-
ested and leaned forward to hear.
Most of the time, however, he sat
back smoking.
Pecora asked why, the Allegheny Cor
poration bought Missouri Pacific stock
Van Sweringen repeated it was be-
cause of belief in the development Of
the Southwest and to have diversity.
For instance" he said, THE Mis-
souri-Pacific carries a lot of oil and
Chesapeake 81 Ohio COAL"
Pecora reminded him he had said
there was no thought of consolidating
the Missouri-Pacif1c and the Chesa-
peake & Ohio or of a transcontinental
railroad system by acquiring the Mis-
souri-Paciflc, and the witness assented.
But in effect the acquisition of the
Missouri Pacific consolidated its system
and your Eastern group, didn't it," the
counsel put in.
NO" was Van Sweringen's return,
adding that he had resigned from
Eastern railroad directorships when he
became chairman of the Missouri
Pacific.
They argued back and forth. but Van
Sweringen insisted that the two groups
werc operated separately.
But your associates remained as di-
rectors and officials of the Eastern
roads?" Peroca said and Van Sweringen
agreed.
You don't deny the Allegheny has
management control Of the Eastern
group through stock ownership" Pc
cora asked.
1T has the right to elect directors
from its stock holdings as provided in
corporate charters" Van Sweringen re-
piled. Management control comes
from the directors"
Missouri-Pacific Control.
"You don't deny you control the
Missouri Pacific through your chair
manship?"
THAT might be so''
And you are president Of the Allie
ghahy?"
Yes"
Then you are established in the
position Of controlling policies or OF
having q strong influence on roads not
also In the East?"
II can agree partly to that. At least
hope it's So"
Though it was bought in at 1929
prices, the operator said he doubted
I'VE paid more for the Missouri-Pacif1c
than it is worth; we were not blind
to the fact that the Missouri-Paciflc
had a top-heavy financial structure.
I'VE intended to cure that. We in
tended to transfer more dollars to the
stock side and reduce the dollar on the
debt side"
Chairman Fletcher, who came in
during the discussion, referred to the
more than s45,O00, 100000 drop in
value of securities" during the de-
preston.
Yes, Van Sweringen said, I'VE had
to sell some things we did not want
to sell"