Midwest Midas

Henry Crown is a fast-moving, fast-thinking Chicagoan who has made $50 million in the last 30 years and has thereby become something of a legendary figure in finance. He is chairman of the Empire State Building Corp., is the No. 2 power in the Hilton hotel chain, and controls the Chicago, Rock Island & Pacific Railroad (with two associates). With Hotelman Conrad Hilton, he bought Chicago's Palmer House and with Hilton and some associates, the Waldorf-Astoria Hotel. On top of all this, Crown built his Materials Service Corp. of Chicago into the biggest supplier of construction materials in the U.S. Crown has achieved much of his success by a simple method: he has boldly staked his money on enterprises that would grey the hair of many a Wall Street speculator.

Last week, confident as ever, Henry Crown embarked on a new venture; as the coal strike ended (see NATIONAL AFFAIRS), he was ready to put into full production one of the most thoroughly mechanized coal mines in the U.S. At a time when soaring costs and shrinking coal markets are closing many mines (TIME, Sept. 15),

Crown had poured $10 million into his mine at Farmersville, Ill., one of the biggest (annual capacity: 2,500,000 tons) in the state. By using machines to cut the coal, load and carry it out of the mine to be cleaned, sorted and conveyed to hoppers for shipping, he thinks he can cut his production costs well below those of most other mines. He plans to cut transportation costs by shipping in barges. He already has a big market; fast-expanding Commonwealth Edison Co. in Chicago will take half his output. For Crown, the whole enterprise was no more chancy than many of the other shrewdly calculated risks he has taken.

The Sandman. The son of an immigrant suspenders maker in Chicago, Crown quit school at 14 to take a job at $4 a week as shipping clerk for a building materials company. He was fired when he mixed up orders, not knowing that it takes both sand and gravel to make concrete. At 23, after several other jobs, he and two brothers started a materials supply company of their own with a borrowed $10,000.

Young Henry, who soon became president of the company, lined up good sources of raw materials and cheap water transport to haul them. By cutting costs (and prices) below competitors, and often supplying his big customers with financial aid, Crown became top dog in Chicago's material supply business. Today his Materials Service Corp. is still the keystone of his empire, with a 1951 gross of $45 million.

Payoffs. After a World War II stint as a colonel in charge of buying $1 billion worth of Army supplies, Crown started spreading into other fields. He put close to $4,000,000 in cash and notes into Chicago's Palmer House and $250,000 into the Waldorf; with Realtor William Zeckendorf he bought a big tract of land on Manhattan's East Side, with the idea of putting up a big housing development. The deals paid off: the Waldorf, once deep in the red, is now well in the black; the Manhattan land, soon sold to the Rockefellers for United Nations headquarters, made Crown a $600,000 profit on his $2,000,000 investment.

In 1946, while in bed recovering from a broken leg suffered in a fall from a horse, Crown studied the balance sheet of the bankrupt Rock Island railroad. Against the advice of the road's own lawyer, he bought $4,000,000 worth of defaulted bonds, exchanged them for 100,000 shares of common and preferred stock when the Rock Island was reorganized. Railroad Juggler Robert R. Young had exactly the same idea; he had picked up 250,000 shares, and wanted the Rock Island as a link in his projected transcontinental rail system.

But Crown and two other big stockholders refused to sell, so Young offered to sell his holdings. But if Crown & Co. wanted the profitable Rock Island, they would also have to take Young's holdings in the Seaboard Air Line Railroad which was not doing too well. To save the deal, Crown took the Seaboard stock himself. Again he cashed in. Seaboard stock began to soar, and Crown more than doubled the $600,000 he paid for it. In addition, the $4,000,000 he put into Rock Island bonds has nearly tripled.

All Crown's interests--plus the job of looking for new ones--keep him busy, but because of a heart ailment many years ago, he usually gets to bed by 10. To keep in trim, he swims twice a day in the basement pool in his is-room house in Evanston. The Crown mind, however, is always racing with plans for future deals or improvements on past ones. Recently on a visit to the Empire State Building, Crown was amazed to hear that in the previous month the building had taken in $180,000 from sightseers who paid $1.20 a head to go to the top. Since Crown has no intention of letting such traffic go to waste, his next role may be about as far from coal mining as he can get--running a big bar and restaurant 1,070 feet above the sidewalks of New York.

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