The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-09-13
Genius!
Down but Not Out, Swear
Van SWeringenS, Try
ing for Comeback.
BY NED BROOKS
Times Special Writer

financial horizon again today as
the inseparable brothers sought
to save the remnants of their
crumbling empire of rails and 10
comotiveS.
Business circles which have
learned to expect featS of financial
magic from Oris Paxton and
Mantis James Van Sweringen are
wondering whether the brothers
can perform the seemingly i'm
possible-the rescue of their great
network of railroads from the
auction block on which it has been
placed by J. P. Morgan & Co.
AS when they entered the rail-
road business in 1916 by purchas-
ing the Nickel Plate Railroad for
S8,5OO0OO when they had only
a half million in their jeans, the
Vans" are mysterious and I'M
orthodox figures in the world Of
finance today.
They have announced they will
bid on their own properties when
control of the $4,000, 100000 en-
pire goes under the auctioneer 5
hammer. What resources they
have for such a come-bac none
can accurately guess.
TINE Vans are still young as
i financial leaders 600. P.
is Sc, M. j. "a Their 20year rise
is a classic story of ingenuity in
the use of other peoples money,
of piling holding company upon
holding company, of gaining con-
troll of railroads by borrowing
from one source to pay another,
of turning big deals with a mini
mum of their own cash.
In business transactions the
Vans are regarded as one man.
O. P. usually does the talking.
He projects the schemes which
his brother develops. If they ever
disagree, they do it in the privacy
of their Offices atop Cleveland's
Terminal Tower. The door be-
tween these Offices is never closed.
Both bachelors, they are rarely
seen in public, they live quietly,
but extensively, they sleep in twin
beds in the same room. M. j..
rises at daybreak, arrives at his
office promptly at 9; o. P. is an
hour later Neither has ever
been abroad; even when they con-
trolled $4,000 miles of railroad
they seldom left Cleveland.
The financial structure of the
Vans enterprises had experts of
the Senate stock market inveSti-
eating committee dizzy, yet in
general it followed the pathway
of their acquisition of the old
Nickel Plate, which railroad men
called a streak of rust" but
which the canny Vans recon-
Structed into a dividend-paying
property.
THEY started out in Cleveland
l. as real estate promoters.
Pyramiding loans on options, sales
and more loans, they developed by
1916 the fashionable Shaker
Heights section.
A rapid transit system from the
business district to their subdivi-
sion was needed, an enterprise
which included acquisition of two
miles of the Nickel Plate right-of-
way. The Vans were offered the
whole road from Buffalo to Chi
cago at $8,500O00.
With their half million. they
bought the road, agreeing to pay
100000 in cash and giving 10
notes for the balance, the first
payable in five years. They bor-
rowed $2,100,000 from the Guar
dian Savings & Trust Co. of
Cleveland on real estate collateral,
put up the Nickel Plate stock as
collateral on the notes, with the
Guarantee Trust Co. of New York
as trustee, and then organized a
holding company to sell nOn-vot-
ing preferred stock to pay off the
original loan.
An issue of $12,500,OOO in vot-
ing common stock, control of
which was retained by the broth
ers, completed the transaction.
Succeeding deals bore the same
Van SWeringen label for ingenuity.
They envisioned a fourth great
Eastern rail system. Control of
the Chesapeake & Ohio they
bought for $7,300,000, The Erie
cost them 100000. The Pere
Marquette $14,000000
= =
A T the height of their activities
1 n they built the S88,000,0 900
Cleveland terminal, erected a TOO
foot SI8,000,0O0 tower above the
railroad station and then found
that three big roads couldn't al
ford tor WOuldn't-uSel 1t.
An 100000 hotel and an
$9,0OOOOOO department store, both
connecting with the terminal. re-
made Cleveland's previously shod-
dy public square.
Depression days found the Vans
struggling to retain their empire.
In three years the gross revenue of
their railroads fell $4,000 900.
Two large Cleveland banks, hold
ing $14000,O0O of their notes, COL
lapsed.
They went further in the hole
by borrowing $14O0OOOO from the
RFC. When it was all over, their
dynasty was in hook TO Morgan
and other Neu Work bankers