Pittsburgh to Deep Water

From one rich U. S. family to another last week passed working control of the Virginian Railway, the 600-mi. model coal road built by the late Standard Oilman Henry Huttleston Rogers in the days of Roosevelt I (TIME, Dec. 16, 1935). In Manhattan, Adrian Hoffman Larkin, Virginian Board Chairman and trustee of the Rogers estate, laconically announced that 75% of the Virginian's common stock had been sold to interests identified with Andrew William Mellon. The consideration, said Mr. Larkin, was in excess of $31,000,000. Actual purchaser was a group headed by Koppers Co., Eastern Gas & Fuel Associates and First Boston Corp. The presence of First Boston (see p. 52) irr what was otherwise a pure Mellon deal could be explained by the fact that that big underwriting concern plays banker to Eastern Gas & Fuel. Though the Mellons bought 236,000 of Virginian's 312,700 shares of common, they did not acquire a voting majority, the road's preferred stock (279,550 shares) also having voting rights. In point of voice in the carrier's affairs the Mellons got about 40%, which is enough to dominate almost any railroad's council. Among the fantastic motives ascribed to the Mellons in their purchase last week was the wish to even a mythical grudge against Pennsylvania R. R.--by diverting traffic. Aside from the fact that the Mellons are big Pennsy stockholders (young Richard Mellon is a Pennsy director), the Mellons have another good reason to keep on the best terms with as many railroads as possible: they are heavily interested in National Lumber & Creosoting Co., which treats railroad ties and telegraph poles. For a strategic reason for the deal, it was necessary only to look at the Virginian's traffic, which is 90% bituminous coal. Its coal route over the Alleghenies from West Deepwater, W. Va. to deeper water at Hampton Roads, Va. is the shortest, easiest. And one of its best customers is the Koppers group of coke, gas and by-products companies, for all of which coal is the basic raw material. The Mellons, unlike some of their contemporaries, do not play the great game of railroad strategy for the sheer thrill of it. The Virginian is a choice investment. It stayed in the black throughout Depression, earned $11.44 for each share of its common stock in the first ten months of last year.

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