Evening star., 1936-12-07
$274,6B2 BOUGHT
RAIL EMPIRE RULE
Ball Tells Senate Inquiry of
Purchase of Shares of
Van SWeringens.
BY the Associated Press.

BY the Associated Press.
George A. Ball, a grey-haired Mid
western manufacturer, told Senate in
vestigators today he had paid only
S274,682 for stock controlling So
1926, 900 railway and industrial
empire.
Testifying at the opening session
of the Senate's inquiry into railroad
financing, Ball said he bought the
stock at public auction in September,
1885.
1t carried control, he testified, of the
so-called 'Alleghany System"-part of
the vast holdings of the late Van
Sweringen brothers of Cleveland.
The system included about $4,000
miles of railroads, street car COM
panies, coal mines, bus lines, grain
elevators and even a peach orchard.
Chairman Wheeler of the Investigating
Committee asserted.
In addition to the Allegheny System,
Ball said, he bought other Van
Sweringen holdings, paying s3,12l 900
for the whole block of stock.
AiN StONhS WClC cOlo dG duCLlOll
New York City, he said, when the
late Van Sweringen brothers were
unable to repay a s39, 500 900 loan to
a j. P. Morgan banking syndicate.
The stocks were held by the syndicate
as collateral for the loan.
Mid-America Formed.
The securities he bought at auction
for s3,12l 900, Ball testified, were used
to form Mid-America Corp, the top
holding company in the Van Swerin-
gen system.
Through a chain of subsidiary hold
ing companies. Mid-America con-
trolled ,249 corporations. Ball said
Ball said he knew little about some
of the companies he controlled, and
that he could not tell what kind of
business they were engaged in.
AS he analyzed the far-f1ung Van
Sweringen enterprises, Ball testified
that Allegheny Corp, a subsidiary
holding company, owned 49 per cent
of the Nickel Plate Railroad stock.
rs there any doubt in your mind
that this 40 per cent gives Allegheny
working control of the Nickel Plate?"
asked Max Lowenthal, committee
counsel.
We'll, no. suppose not" Ball an
swered.
The 23,000-mile rail network also
includes the Chesapeake & Ohio. the
Missouri Pacific System, the Gulf
Coast Lines and "a very considerable
number" of other carriers, he con-
tinued.
Before calling Ball, Wheeler made
an opening statement promising to
conduct the hearings Collectively for
the welfare of the American trans
portation system"
The welfare of the country"
Wheeler said, demands that the rail-
roads be maintained as a solvent finan-
cial system. Otherwise the money nee
eSsary for refundings, or expansion,
will not be forthcoming and the holder
Of railroad securities, the shipper and
railroad labor will all be endangered.
I'VE wish to determine the extent to
which railroad financial difficulties re-
suit from avoidable capital losses and
excessive fixed charges rather than
simply from shrinkage in gross earn
ings"
Railroad holding companies, by
which the Van Sweringens wove to-
gether their rail empire, may be abol-
ished as a result of the hearings,
Wheeler predicted prior to the opening
of the hearings.
Two Financiers Called.
Both the financiers who "inherited'
control of the system when o. P. Van
Sweringen died last month were among
the first witnesses asked to testify.
They are George A. Tomlinson,
Cleveland shipowner, and Ball.
Wheeler said he also would question
Thomas H. Jones, Cleveland railway
attorney, and John P. Murphy, sec
retary of the Midamerica Corp.-the
capstone holding company in the Van
Sweringens' vast pyramid of corpora
tions.
They will be asked to trace the
climb of the two brothers from a mod