Help! Help!

In the fight for control of the New York Central, both sides went looking for outside help. To the Interstate Commerce Commission, the Central's management last week sent a 17-page petition asking the Commission to check up on all of Robert R. Young's maneuvers since the fight began, charging that they violated ICC regulations.

Specifically, the Central charged that the sale by Young's Alleghany Corp. of its Chesapeake & Ohio stock holdings to Cleveland Financier Cyrus Eaton was just a trick to skirt the ICC rules, that Young and Alleghany still control the line. C. & 0. Board Chairman Eaton, said the Central, had obligingly sold the C. & O.'s 800,000 shares of Central stock, which had been held by a trustee, to Young's millionaire friends Sid Richardson and

Clint Murchison so they could vote it. "Eaton," said the Central darkly, "does Young's bidding."

"Substantial Benefits." Bob Young swung back with a sweeping blow against the Central and 15 of its directors. He filed suit charging that the directors misused Central funds by hiring a publicity firm (Manhattan's Robinson-Hannagan Associates) to help fight him and by spending company money to solicit proxies for the Central meeting, May 26. Young also charged that four big banks (J. P. Morgan, the Mellon National Bank, First National of New York City and Chase National) were deriving "substantial benefits" from the fact that their heads are Central board members. The railroad itself, Young noted, operated at a $2,762,696 deficit last month. What galled Young even more was the contract given to the Central's President William White, which stipulates $120,000 a year until he retires at 65, $70,000 for five more years, and $40,000 a year from then on until he dies. Young charged that the contract was never approved by the Central's stockholders.

White answered Young by pointing out that the Central's biggest bank deposits are with the Irving Trust Co., which is not represented on the Central board. As to the terms of his contract, said White, they were in a proxy statement sent to all stockholders after he was hired in 1952.

The Central got a chance to jab again when Young nominated seven men who, he said, would be on the board if he captures control. He airily added that he wanted a Vanderbilt on the board because "I can't imagine a New York Central board without at least one Vanderbilt ... to flavor it." William H. Vanderbilt and his cousin, Harold S. Vanderbilt, both members of the Central board, turned Young down cold. Alfred Vanderbilt, William's half brother, followed suit. Added Harold: "I have no doubts about Mr. Young's ability as a stock manipulator, but running a railroad is quite another thing."

For the Record. How well had Young run his railroads? When Young took over Alleghany Corp. in 1937 he got control of five railroads--the C. & O., the Pere Marquette, the Nickel Plate, the Wheeling & Lake Erie, and the Erie. The shaky Erie went into bankruptcy in 1938. As for the others, which have a total 6,485 miles of track compared to the Central's 10,714 miles, even Young's bitterest enemies admit that he has done a fine job on finances, though opinions differ on Young's ability as a practical operating railroader.

Critics complain that he has spent too much money ($195 million since 1937) on road improvement on his C. & O. for too small a return. Furthermore, the Central's White charges that other highly publicized Young improvements, such as a prohibition against tipping, a centralized ticket-reservation bureau for the whole line, and ultramodern freight cars, have not materialized.

This week Bob Young laid down his list of accomplishments in the annual report of his Alleghany Corp. "C. & O. locomotives, which in 1938 averaged 20.1 years of age," said Young, "now average only 9.1 years; regular service passenger cars, which averaged 17 years of age in 1938, now average about six ... No other railroad has so completely modernized its passenger equipment." The C. & O.'s passenger service losses, said Young, have been cut from $21 million in 1947 to $14 million in 1952 by eliminating unprofitable runs. Young added that "in the same period, the Central's passenger losses rose from $30 million to $50 million."

Earnings-wise, the C. & O. is not exceptional among U.S. railroads. But Young pointed out that "earnings went from $4.43 a common share in' 1937 to $6.04 last year, [while] C. & O.'s chief competitor, the Norfolk & Western, earned $5.53 . . . in 1937 and only $4.75 a share last year" (adjusted for a stock split). The Pere Marquette, which was near bankruptcy in 1937, said Bob Young, had reduced its fixed-interest debt 24% and the carrying charges 44% by 1947, the year it was absorbed into the C. & O. "A property which might easily have been lost through bankruptcy, in 1953 contributed over $7,000,000 to C. & O.'s total in net income."

As for the Nickel Plate, said Young, it failed to earn its fixed charges in 1938. But by 1946 the road was "rehabilitated." In 1947,, when Young started his Central fight, he had to get rid of his Nickel Plate stock, under ICC regulations, because it competes with the Central. He chose to give it to C. & O.'s shareholders, and the stock has proved a bonanza. Nickel Plate shares, said Young, which sold "as low as 7" in 1938, had climbed as high as 50 in the year the melon was cut. Since then, the stock has been split 5 for one and still sells for 35, the equivalent of 175 a share of the old stock.

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