Age of Innocence

Observed in proper legal form in Baltimore last week were stockholders' meetings in two spinal column holding companies of the erstwhile $3,000,000,000 Van Sweringen rail and real-estate empire, Alleghany Corp. and Chesapeake Corp. Proxies prosaically were cast to elect as directors the new controlling interests in Alleghany Corp. At the same time in Manhattan, Stockbrokers Robert Ralph Young and Frank Frederick Kolbe were sitting down with George A. Ball to complete the transaction by which the 74-year-old Muncie, Ind. fruit-jar manufacturer stepped down as the dominant figure in the Van Sweringen picture (TIME, May 3).

Place of the Manhattan meeting was the Manufacturers Trust Co. offices at Broad & Beaver Streets where old Mr. Ball made his headquarters in September 1935 when he bought into Alleghany Corp. at Wall Street's most spectacular auction. Passed to Mr. Ball last week was a check for $3,000,000 made out to the philanthropic George & Frances Ball Foundation and signed by Allan Price Kirby, son of one of the founders of F. W. Woolworth Co. and the third partner in the deal. Another $1,000,000 came from Messrs. Young & Kolbe. Rest of the sale price for control of Alleghany Corp. ($6,375,000) was made up by a promissory note for $2,375,000, payable in two years and secured by 1,200,000 shares of Alleghany common, last week selling on the New York Stock Exchange at $4 per share.

In Stockbroker Young's swank Park Avenue apartment that evening, Manhattan financial writers got a further taste of how the self-styled "babes" in the Van Sweringen corporate woods do business. After munching sandwiches and drinking coffee in Mr. Young's tapestried dining room, newshawks met short, grey Frank B. Bernard of Muncie's Merchants National Bank, who will represent the Ball Foundation on Alleghany Corp.'s board. Next to be introduced was ruddy-faced, bald-pated Charles Leininger Bradley, chairman of the Erie R. R. and one of the late Oris Paxton Van Sweringen's closest associates. He will be Alleghany's president, Stockbroker Young its chairman.

With his brother Alva, owner of the Cleveland Indians baseball club, Charles Bradley was heir to a vast real-estate and Great Lakes shipping fortune. As a banker he early became associated with the Van Sweringens in real-estate, later in rail roads. When the Vans started building Cleveland's Terminals Building in 1927, blunt, outspoken Mr. Bradley was asked to supervise activities. He moved his office from the Union Trust Co. to the site of the excavation. Asked by newshawks what his plans were, Charles Bradley replied: "First thing we'll do is raise hell." The building was completed in record time. Last week at Mr. Young's apartment, Mr. Bradley avowed that he would rather talk about golf than raising hell.

The surprise guest at the party was one of the Interstate Commerce Commission's investigators, H. G. Cunningham, currently helping Montana's Senator Burton Kendall Wheeler in collecting pages for the annals of Van Sweringen railroad financing. Like the newshawks, Mr. Cunningham was free to see what was going on in Alleghany Corp. The next day Messrs. Young, Kolbe & Kirby were due in Washington for a session with Senator Wheeler's investigating committee. Said Mr. Young at his party: "We have nothing to hide."

With that prefacing motto, the three "babes in the woods" went to Washington, answered without hesitation the sheaf of questions which Montana's Wheeler has popularized in the long-drawn-out Van Sweringen hearings. Such an air of knowing innocence impressed Mr. Wheeler. He liked it. When the Senator asked Mr. Young if widows, orphans and other investors "don't get gypped by these big holding companies," the Manhattan broker replied: "That's right."

Senator Wheeler: This sort of thing [tossing around control of vast railroad properties] is evil and it should not be tolerated, and I hope the people who are now in control will act to correct, as far as they can, these evils.

Broker Young: We hope to beat Congress to it.

What the new rulers of Alleghany Corp. are going to do, said Mr. Young, is to eliminate three-fourths of more than 200 separate corporations which make up the corporate crazy quilt. First announcement of action was the formation of a committee comprised of Messrs, Young, Kolbe & Bradley to plan the elimination of Chesapeake Corp. by merger or consolidation with Alleghany Corp.

To Senator Wheeler's remarks about the $79,000,000 debt of Alleghany Corp. and its dividend arrearage. Broker Young replied :

"It's a very bad thing for anybody to be out on a limb so far as debt is concerned. We are going to work like hell to get off the limb before the next depression."

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