Evening star., 1934-03-06
RAILS 4EM|LL|0N
DEFAULT SHOWN
Banks Make No Move to
Take Over Van SWerin.
gen Lines.
BY the Associated Press.

oy INC hsooeidtcu Aesn'
A report filed with the Federal
Trace Commission shows that two
large companies in the Van Swer!n-
gen railroad group have defaulted on
loans by j. P. Morgan g. Co. and
group of New York bankers.
There was no indication. however.
that Morgan & Co. or any of its asso-
ciates had ever called for payment
of the loans or taken any steps to
foreclose on them.
The loans. totaling 40.1l9,932,
were made to the Cleveland Termi-
mails Building Co.. which constructed
grest union station at Cleveland.
and the Vaness Co.. a Van Sweringen
holding corporation. Most of the
security for both loans was stock in
the Allegheny Corporation, principal
Van Sweringen holding company.
Certificates Asked.
In accordance with the Federal Sc
curities act, the Bankers Trust Co.
filed an application with the commits
sion for permission to issue certif-
Gates of deposit to holders of st.
Louis. Iron Mountain & Southern
Railroad Co. River and Gulf Division
per cent bonds which were de-
faulted on May /. 1888, throwing the
entire Missouri Pacific system into
trusteeship for reorganization. The
bank is acting as depository for the
Bondholders' Protective Committee.
The commission requires in each
instance that issues of certificates
must disclose all of the holdings of
members of the Protective Committee
This committee consists of r. G. Page
of the Bankers Trust Co.. Malcolm
P. Aldrich of the Commonwealth
fund, New York; Harlan H. Newell
of the Society for Savings in the
city of Cleveland. Ohio: A. w. Rob-
ertson of the Westinghouse Electric
ard Manufacturing Co., New York;
Lee p Stack of the John Hancock
Mutual Life Insurance Co.. Boston.
and Gerald M. Swanstrom of the
Northwestern Life Insurance Co.,
Milwaukee.
Status Explained.
Regarding the status of the loans,
the statement said:
Bankers Trust Co. holds in its
individual capacity a participation Of
81 .672 399.78. or 7.5949 per cent. in a
loan of s22.019. 1921 10. now in default.
made by j. P. Morgan & Co., and
others to Cleveland Terminals Build
ing Co., guaranteed by the Van ESs
Co., o. P. Van Sweringen and M. j.
Van Cweringen, secured by the pledge
of various securities
After listing the securities pledged
against this loan, including 1.482,91O
shares Of Allegheny Corporation COM
mon stock, the statement continued
that the Bankers Trust Co. also holds
"a participation of $l,226, ,58241, or
57767 per cent, in loan. now in de-
fault, of $18,1OO.OOo made by j. p.
Morgan & Co. and others to the Van
Ess Co., guaranteed by o. P. Van
Sweringen and M. j. Van Sweringen,
secured by pledge Of various secur-
tiles" Among the collateral for this
second loan are 649,982 shares of
Allegheny Corporation common stock.
Wall Street Topic.
While formal comment regarding
these loans has heretofore been lack
ing, the strategic position of the bank
ing group in the Van Sweringen situa-
ton, should they desire to exercise
control, has been a subject Of con-
siderable discussion in Wall Street
for some time.
It has been widely assumed in the
financial district that the marked i'm
provement in railroad revenues in
1888 encouraged the banks to 60 along
with the Cleveland brothers, rather
than acting to take title to the col
lateral.
The backbone of the Van Sweringen
group of railroads is the Chesapeake
& Ohio. Other roads in the group
include the Erie, the Nickel Plate. the
Pere Marquette and the Chicago &
Eastern Illinois.