Evening star., 1940-12-16
Regulation Of Rail
Holding Companies
Urged by Report
Wheeler and Truman
Cite Operations Of
Van Swerineens
By the Associated Press.

| by tne AsSOCldLeu fTeSS.
A story of how $3.50 invested in
holding company brought control
"over 200 corporations owning So
100000, 900 of property" was given
the Senate today by Senators
Wheeler, Democrat, of Montana,
and Truman, Democrat, of Missouri
The report, dealing with financial
operations of the Midamerica Corp.
and the Ball-Van Sweringen inter-
ests from 1885 through 1887, was
offered as evidence Of the need for
subjecting railroad holding COM
panies to effective governmental
regulation, or for abolishing them
altogether"
The Senators said that "in inves-
tigating Midamerica" they found a
very small tail was wagging a very
big dog"
Sale Is Reviewed.
The report stated that the late O.
?. and M. J. Van Sweringen, brothers
who controlled vast railroad hold
ings, used holding companies "to re-
tain their grasp on corporate affairs
despite a forced sale of their hold
ings. Faced with disaster one mo-
ment. the Van Sweringens SO ar
ranged matters that in the next mo-
ment they were assured control of
their empire without any cost to
themselves, and were given the right
| to buy for $3.50 a majority of the
| voting stock of the new holding
company which took title to the en-
pire"
This new company, Midamerica
| Corp, formed in September, 1885,
was said to have acquired control
of corporations that operated thou
sands of miles of railroads. Far
flung enterprises which ranged from
peach orchards and grain elevators
to coal companies, real estate de-
velopments, Office buildings, street
railways, steamships, refrigerator
cars, and even a barge line. a de-
partment store, an export brokerage
business, a trucking line and radio
corporation"
The Senators said that the Van
| oWCI DOl lo"Co SIO,OOo,OOO
from a New York banking group
headed by j. P Morgan g. Co. in
1890 through two holding companies
and pledged stocks and bonds. in
Guiding those of the Allegheny Corp,
KEY holding company, through
which they had maintained control
of their empire
Acquired at Auction.
When the banks decided to collect
part of this loan by public auction
of collateral stocks in 1885, the
Senators said Midamerica Corp.
acquired control by purchase at this
auction. The report said Mid
america was formed two days before
the auction by George A. Ball,
wealthy Muncie, Ind, manufacturer,
and George A. Tomlinson, friend and
business associate of the Van
Sweringens.
The report said testimony indi-
Gated that $4,000 worth of common
stock controlled this new corporation
| and $3.50 of the stock was offered
to the Van Sweringens under 10
year option which gave them man
agement of the corporations. Both
brothers died in 1885 and the Senate
committee said control of Allie
ghany Corp. passed back to Mr.. Ball
and his holding company
The report, from the Senate Inter-
state Commerce Committee. resulted
from investigations and hearings by
a subcommittee into railroad finan-
cling. 1t informed the Senate that
Midamerica was an example OF
dangerous concentration of power
in the hands of individuals and the
temptation to misuse that power"