Evening star., 1938-05-03
ERIE PLAYS PART
IN {. & D. FIGHT
Young Declares Bradley,
Murphy to Blame for
Bad Situation.
BY the Associated Press.

NEW YORK, May 3.-Hostility aris-
ing from the refusal of the Chesa-
peake & Ohio Railroad to guarantee
loans to prevent the Erie Railroads
recent financial crisis played large
part In starting the current feud be-
tween Wall Street banking interests
and Robert r. Young, the latter
charged today.
Young, in the midst Of an interview
hgh-lighting the inside story Of the
Erie's difficulties, said he recommends
the election of Harris Creech, presi-
dent Of the Cleveland Trust Co., as a
director Of c. e. o. to fill the existing
vacancy on the board caused by the
death Of the late Frank H. CHM.
Creech, he said, had been invited
some time ago to take the post, but
declined.
The Management Proxy Commit
tee on one side and three Would-be
directors headed by Earle Bailie. part
ner in J. g. W. Sengman e. Co., bank
ers. on the other, are engaged in
u q " proxy ConteSt.
Backed by Guaranty.
Bailie and his associates, John L.
Dickinson, Charleston. W. Va, banker.
and John B. Hollster, Cincinnati
lawyer, are Endorsed by Guaranty
Trust Co.. third largest bank in the
United States. which. as trustee, con-
trolls "a per cent block of c. & o.
stock owned by Chesapeake Corp.
Young is asking in United States Cir
cult Court Of Appeals an injunction
restraining Guaranty from voting
stock in Chesapeake Corp, held by
the bank and owned by Allegheny
Corp, of which Young is chairman
Argument in the action was postponed
yesterday until Thursday.
Young. discussing the Erie. said he
had caused Charles L. Bradley and
John P. Murphy to be ousted from
the board of Allegheny Corp, because
Bradley had failed to notify Young
OF the seriousness Of Erie's situation
last fall. The Erie was in trouble. he
said, as early as last July, but, Young
said. repeating what he had said in
afidavits in Federal court, Bradley
was spending much of his time, al
though president of Alleghaney. in
operating the Higbee Department
Store in Cleveland. Young himself,
he said, was i'll at the time. He said:
Bankers Had Stake.
Morgan sold s50000,000 Of Erie
bonds in 1927 and s5o,0ooooO more
in 1880 I suspect that some of the
banking elements in New York would
have liked to see the Erie saved"
However, he said, the bankers did
not increase their s2,5oo,oo0 loans to
Erie.
Young's first knowledge Of Erie's
situation, he said, came when Bradley
at a meeting Of c. g. O. directors
early this year urged the c. g. o. to
consent to guarantee a s6,000,000 r..
F. c. loan to save Erie and protect G.
& Os S45,O0oo00 investment in Erie
common stock.
While the matter was being dis
cussed," he said, I'VE had news that
the New York Stock Exchange had
suspended trading in Erie bonds be-
cause Of a default. Making such a
loan or 10 times that amount would
not have saved Erie.
If the c. e. o. had guaranteed
that loan, it would not have ended
there. The c. & o. would have been
asked to guarantee Sl6,O0O,0oO al
ready loaned and the bankers loans
of S2,500000. It would have been
$50 100000 or $60,00o,o00 instead Of
$6,0O0,000 before We got through"
Young said that before the news
of the suspension came through. he
himself had proposed that c. & O..
pledge its Erie stock, for an r. F. c.
loan
When the time comes, and Erie is
properly reorganized the c. g. o. will
be ready to put cash on the line" he
said,