Evening star., 1954-05-09

ket value of $33,714,310, plus Gov
ernment, municipal and corporate
bonds worth slightly over So million.
One significant change in Ale
ghany's portfolio was the sale last
January Of 104.854 shares Of Ches-
apeake & Ohio common. This was
the tip-on that Mr.. Young's fight
for control Of Central was about to
start.
In 1947, Mr.. Young had asked
Central to place him and an aSso-
ciate on the board of directors by
virtue of his Chesapeake & Ohio
Railroads ownership Of 100000
shares. Central, probably with
tongue in cheek, invited Mr.. Young
onto the board (subject to approval
by the Interstate Commerce Com
mission). ICC found in 1948 that
81 o. and Central were competitors.
The commission not only turned
thumbs down, it directed that vot-
ing power OF the 100000 shares be
turned over to an independent vot-
ing trustee. Chase National Bank OF
New York was selected. It's president,
Percy j. Ebbott, now is Central
director mainly on the strength OF
that trusteeship, which ended last
February.
Having failed to subjugate Cen
trails board in flanking move IN
1918, Mr.. Young prepared Tor the
frontal assault now under way.
Careful Stroteey
Mr.. Young laid his strategy care
fully. First, in January tas men
toned earlier), Allegheny sold us
C. %. stock to Cyrus Eaton. who
succeeded Mr.. Young as c. & O.'s
board chairman. This severed his
connection completely with any Cen
tral competitor, Mr.. Young an
nounced.
Then he bought 100000 shares OF
Central in his own name to go with
200 shares he already owned. Now
Mr.. Young was ready.
Proclaiming himself the Largest
single shareholders claim Mr..
White denied-Mr. Young demanded
that he be made chairman OF the
board with authority over the presl-
dent. Only for one brief period
since the death Of Chauncey M.
Depew in 1928 has Central had a
chairman, and traditionally the
chairman's Job has been to handle
the gavel at board meetings.
On February 10 last. Central an
nounced: "The board unanimously
decided that it would be 1nim1cal 10
the best interests Of the company TO
grant Mr.. Young's request"
That salvo momentarily halted Mr.
Young's attack, but did not drive
the invader off the beachhead. The
publicity caissons that had rolled SO
noisily in the '40s got in motion
again, while legal and financial guns
were unlimbered for q full-scale
fight.
Ownership Management
Blasting the Central directors as
a bankers clique whose primary
aims were contrary to Centraps we'll
being, Mr.. Young launched cam
paign for Ownership management.
Some critics observed wryly that
this was a new pitch for Bob Young,
who had taken over the Van SWer-
ingen properties and later the &. q
O. on the smallest Of shoestrings.
Meanwhile, some fiscal maneuver-
ing was going on in respect OF
C.&O.s 100000 trusteed shares. MI.
Young knew that Chase Bank would
certainly vote them against him.
So he arranged with Cyrus Eaton OF
C.&O. to sell the shares to two Texas
friends, Clint Murchison and Sid
Richardson. The sale was consum-
mated for $40 million, at rate OF
$25 q share.
1t surprised no one that these two
Texas "big rich" should take $40
million flier into Central stock. In
the context of Texas money. this
was equivalent to 81 show ticket
on Native Dancer. What was sur
prising was that Allegheny ad-
yanced SIS million to the two
fabulous Texans to help them make
the purchase. The necessity for Sucn
loan was difficult for some OBJ
servers to discern.
It turned out, moreover, that the
loan was written so as to make 1t
unlikely that the Texans could lose.
even if the stock fell below $25-as
it did soon after their plunge.
Mr.. White, on learning OF the
Murchison- Richardson deal. imme-
diately charged an effort to cir
cumvent the Chase Bank trust
agreement in order to get control
of approximately 125 per cent Of
CentrarS voting stock.
New York Central acts as its own
transfer agent. When the transac-
ton came to the railroads Office
for recording. transfer was denied
on grounds that the transfer GER
tif1cates were not in order.
Three Lawsuits
Meanwhile, the April 19 stock
transfer deadline was drawing near.
On April Is the first of three legal
actions resulting from the Murchi-
Richardson sale" was entered.
These suits. all presently pending.
were:
. BY Messrs. Murchison and Rich