Babes in the Woods (Cont'd)

Frequently absent these days from the Senate committee hearings on railroad finance is their prime mover and inquisitor, Senator Burton Kendall Wheeler. Contrary to report, however, the Senator is not losing interest, nor is the investigation likely to peter out. With plenty of money left out of a $150,000 appropriation last March, the committee this week will turn to the affairs of either Pennroad or Chicago, Milwaukee, St. Paul & Pacific, next on its list after the old Van Sweringen network.

During Chairman Wheeler's absence his place has usually been taken by Senator Harry S. Truman of Missouri, whose practice has been to sit ruminating while the committee's lawyers ran the Van Sweringen show. But a time has come in almost each day's testimony when Senator Truman has felt impelled to bring his palms down whack on the green covered committee table and speak his mind--in virtually identical terms: "These hearings have very plainly brought out that holding companies and New York bankers are not the proper people to run the railroads. ..." Last week he added: "Holding companies are as great an evil in the railroad field as they are in the field of public utilities and eventually Congress will have to get rid of them." With this refrain well-understood by all, last week the following choice testimony went into the Van Sweringen record:

P: For the five years 1926 through 1930 Chesapeake & Ohio Railway owned through its subsidiary, Virginia Transportation Corp., about 1,000,000 shares of stock worth $50,000,000, carrying, together with stock of affiliates, working control of the Erie and Nickel Plate railroads. These holdings were not reported to the Interstate Commerce Commission. C. & O.'s Comptroller E. M. Thomas declared that this was "solely through a clerical error." When Senator Truman marveled at this explanation, Comptroller Thomas continued hotly: "

There was no attempt to deceive anybody. I'm telling you under oath that it was a plain error and nothing else--made by the clerks in my office. . . ."

P: Shrewd, grey-haired Robert Ralph Young, who called himself and partners "babes in the woods" when they bought control of Alleghany Corp. from George A. Ball (TIME, May 3), insisted again that he could simplify the Van Sweringen pyramid more painlessly than could Congress. First step, said he, would be elimination of Alleghany Corp., not Chesapeake Corp. as he had announced fortnight before. But Babe Young appeared for the first time genuinely starry-eyed when he confessed that he had never heard of the classic 1,800-page report on railroad holding companies made in 1931 by ICCommissioner Walter Marshall William Splawn, nor of its highly reputed author. An expert on utility holding companies, deliberate, bespectacled Commissioner Splawn also did the spadework that resulted in the Federal Communications Commission investigation of American Telephone & Telegraph (TIME, April 16, 1934). On Mr. Young's admission of ignorance and on the news that Alleghany was marked for dissolution, Alleghany stock nose-dived from $3.75 to $2.37.

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