Invisible Giants: The Empires of Cleveland's Van Sweringen Brothers

8. To the South, East, and North

To the South, East, and North • 85 Eight To the South, East, and North Back in late 1920, when Professor Ripley began his intimidating consolidation-planning job, his first logical (and diplomatic ) move was to canvass various railroad executives for their ideas. O. P. was on his list, and Ripley wrote him on November 10th suggesting a conference as soon as possible. Significantly, O. P.’s first reaction was to pass the letter on to A. H. Smith and ask him for a suggested answer. Smith responded the same day but was careful to couch his advice in generalities. “You might merely say to him,” Smith suggested, that “you have opinions [about] reaching into the coal districts . . . and that you also believe there are other possibilities for the Nickel Plate extending into Michigan.”1 Smith purposely gave broad outlines without being specific , but in this case the specifics could be easily deduced. The most promising coal districts were in the so-called Pocahontas region of West Virginia, where there were two major carriers —the Norfolk & Western and the Chesapeake & Ohio (C&O). The Norfolk & Western was already under the Pennsylvania Railroad’s large wing, so that left the C&O. Like- 86 • Invisible Giants wise, in Michigan, only three railroads comprehensively covered the state’s major population centers and industrial areas. One was the New York Central’s Michigan Central subsidiary , and Smith had no desire to give that up; the second was an extension of Canada’s Grand Trunk Railway, which was off limits for several reasons. The third was a regional company called the Pere Marquette.2 By early 1921, the Van Sweringens were actively exploring both the C&O and the Pere Marquette. In March, O. P. met with Frederick H. Prince, a Boston capitalist who, with some friends, had a large block of Pere Marquette stock. Prince was a friend of Smith’s and three months earlier had helped O. P. launch his Clover Leaf conquest by investigating the railroad ’s ownership situation. Although powerful and mostly respected , Prince was a pariah to the Interstate Commerce Commission , which condemned his blatant plundering of the Pere Marquette seventeen years earlier. Negotiations between Smith and O. P. soon hit a dead end, however, in part because O. P. insisted on a complex variation of his holding company method which would give him maximum control for a minimum investment. That and some other control proposals went nowhere , and the Vans gave up on the Pere Marquette for the time being.3 To the South, East, and North • 87 But they kept moving on the Chesapeake & Ohio. In May, they hired two agents to investigate how to get control of the company’s stock and handle the negotiations—Judge David W. Fairleigh and Matthew L. Akers. Both were from Louisville , Kentucky; Fairleigh was a lawyer and Akers had close business contacts with the C&O’s operating management. Aside from travel expenses, Akers and his partner were to work on a commission tied to the price they negotiated. C&O stock had a $100 par value; if they could get it at $70, they would get 1.5 percent of the sale price. Their commission percentage was scaled down as the negotiated price rose; at $100 they would get nothing.4 To those in a certain social stratum, the C&O was known mostly as the way for the First Families of Virginia and affluent easterners to reach the resorts at White Sulphur Springs, West Virginia; Virginia Hot Springs, Virginia; and the host of lesser springs tucked away in the Alleghenies near the Virginia– West Virginia border—or to deposit them on the beaches and steamboat piers at Old Point Comfort at Hampton Roads. To most others, the railroad was an off-the-beaten-path nonentity running west from Newport News, Richmond, and Washington to Cincinnati and Chicago, with a branch to Louisville, Kentucky; together with its Hocking Valley Railway subsidiary , it also reached coal-shipping docks on Lake Erie at Toledo. En route it wound through the West Virginia mountains, a region legendary for its isolation and clannishness. While the springs in this territory may have given the C&O some social cachet, the railroad’s roots were a thick collection of tendrils reaching deep in the West Virginia and eastern Kentucky hollows, touching spots with names like Marrowbone, Slab Fork, Peach Creek, Glen Jean, and Elkhorn City. This was rich bituminous coal country, and it was C&O’s life; by 1923, 79 percent of the railroad’s...