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

18. Taking Stock: 1930

Taking Stock: 1930 • 217 Eighteen Taking Stock: 1930 The “irregular and conflicting movements of business” during the first half of 1930 were beginning to cause some concern in the new Terminal Tower offices. Perversely, however, it was the year in which the Van Sweringens could take the most pride in the physical state of their several empires, if not their immediate financial prospects. Almost everything which had been underway for the past several years was finally complete, or nearly so. So, like 1924, the midyear of 1930 is an appropriate spot to halt the narrative and look at what had been created so far. By the most common calculation, the Van Sweringens now controlled 29,431 miles of rail line—11 percent of the total U.S. mileage. In the six years since 1924, they had almost tripled the size of their system. (The total mileage figure varied according to one’s definition of “control” and could include or exclude such partly owned but not fully controlled lines as the Denver & Rio Grande Western and the Kansas City Southern . But it was no less than 23,000 miles.) However measured, 218 • Invisible Giants it was by far the largest group of railroads in the country under a single control. There were now seven major railroad companies in the fold: the Chesapeake & Ohio, Nickel Plate, Erie, Pere Marquette, Wheeling & Lake Erie, Missouri Pacific (which included the Texas & Pacific and several others), and Chicago & Eastern Illinois. In a more indistinct category were the Kansas City Southern (in which the Vans had a one-fifth interest and effective control) and the Denver & Rio Grande Western, of which the Missouri Pacific owned half.1 Sadly, however, none of the various Van Sweringen railroads were much closer to consolidation than they were in 1924. The only significant step forward was the shared top management of the C&O and the Pere Marquette, and that was only a year old. The ICC’s “final” consolidation plan gave some hope for more positive moves soon, but there were still many kinks to work out. One was the Wheeling & Lake Erie, their chronic legal problem child, which was in the awkward position of being theirs but not theirs. The ICC had allowed them to keep ownership of the controlling stock, but that stock had to be voted by independent trustees; there were also no Van Sweringen representatives on the railroad’s board. Furthermore, Frank Taplin’s Pittsburgh & West Virginia still held on to its minority interest, and, with Pennroad’s tacit support, Taplin continued to give the brothers grief wherever he could. As of 1930, the “fifth system” was a live issue that was sanctioned by the ICC, and the Wheeling was an essential part of it. Merger problems aside, the newly expanded Van Sweringen system made much theoretical sense as a unified network . As with the original eastern system, traffic flows could feed one another well and there was a healthy diversity of commodities and industries. The weaknesses were mostly financial—especially the Missouri Pacific’s heavy debt, the Erie’s almost equally burdensome financial structure, and the Chicago &Eastern Illinois’ underperformance. So far, national prosperity had papered over those problems, but at some point they needed to be addressed. As of mid-1930, however, the major challenge for the Van Sweringens was simply to digest the mass of disparate companies and make them a more coherent whole. The ICC’s final consolidation had given the Vans their original four railroads—the C&O, Nickel Plate, Erie, and Pere Marquette. Assuming that the tortured planning process would end soon, this implied that the Commission would bless a merger or some form of operation as a single unit. In the western territory, the Commission had specified an ex- Taking Stock: 1930 • 219 panded Missouri Pacific which included the Rio Grande and the Western Pacific, creating a St. Louis-to-San Francisco line, among other things. That too was encouraging for the Vans, since their MoPac was to be preserved as its own system. At this date, however, the ICC had voiced no opinions about their control, so the green light was a dim one. The odd railroads out were the Wheeling (which was to go to the Wabashdominated fifth system), the Chicago & Eastern Illinois (which had unaccountably been made part of the Chicago & North Western), and the Kansas City Southern, which was allocated to the Union Pacific. As yet, though, nothing was really final, and the Vans were...