Erie Buys & Pays

John Joseph Bernet, son of Swiss immigrant, is 61; has iron-grey hair, tousled; looks something like the hardheaded, two-fisted old-school railroader. As president of the Erie Railroad he last week ordered 20 engines from the Lima Locomotive works, 15 from Baldwin Locomotive works. This was remarkable, not because a railroad needs engines, but because nobody doubted that the Erie could afford them. Indeed, the Erie could afford to have them monogramed in gold. For, now at last, the Erie is making money and John Joseph Bernet has proved himself one of the greatest of railroad tycoons. Two months of 1929 show a surplus of $1,189,442 as compared with a corresponding 1928 deficit of $390,675.

The big change began when Cleveland's famed Brothers Van Sweringen got the road and put Mr. Bernet in charge. Mr. Bernet's genius began to show when, in 1916, the same Brothers Van Sweringen put Mr. Bernet on the Nickel Plate which was then described as "two streaks of rust and a pile of cinders." Mr. Bernet's beginning with the Erie was characterized by the scrapping of 400 locomotives and 8,000 box cars. The former he replaced by a new type of freight locomotive which he himself developed. He also startled steelmen by paying them cash for his new rails. And what with one thing and another he battered his operating ratio* down so that in 1927 it was less than 82, and in 1928 it was 76.49. Thus he seemed in fair way to have battered the truth out of that old Wall Street wheeze :

Young Son: Father, I know nothing about the stock market.

Rich Father: Son, all you need to know is that the Exchange opens at 10 a. m. and that Erie never pays a dividend.

Great though the Bernet achievement with Erie is, Mr. Bernet's sphere of influence is even greater for he sits in with the Brothers Van Sweringen in direction of all their 13,000 miles of rail, and might well be made President of the entire system should it be consolidated during his active life. Meanwhile, he lives in Shaker Heights, sensationally successful Van Sweringen real estate development adjoining Cleveland.

* Ratio between receipts and operating expenses.