Cleveland Coronation

Crowned last week was the cleverest, scrappiest U.S. railroad king of the New Deal era. The new king was ruddy-faced, grey-haired, Chesapeake & Ohio Railway Chairman Robert Ralph Young, 45, who has direct or indirect control of 23,000 miles of track rambling through 21 States.

The coronation was held in a Cleveland board room where Financier Young got three of his friends elected to important railroad jobs: lawyer-trained Carl Elbridge Newton, 44, as president of powerful and profitable C. & 0.; up-from-the-yards John W. Davin, 50, as president of C. & 0. subsidiary New York, Chicago & St. Louis (the "Nickel Plate"), which owns a whopping interest in Wheeling & Lake Erie; and ex-Freight Clerk Robert Jay Bowman, 51, as president of C. & O. subsidiary Pere Marquette.

Already controlling the biggest stock interest in vast, complex railroad holding company Alleghany Corp. (main asset: C. & O. stock), last week's elections also gave Bob Young undisputed control over four top-notch railroads.* The four this year will gross about $335,000,000, will clear net profits of almost $50,000,000.

The Grade. To win this control cost Bob Young five years of uphill fighting, most of the grey hairs now on his head. It all started in April 1937, when Bob Young and two tyro financiers bought control of Alleghany Corp. for $4,000,000 cash and $2,375,000 notes. Within a few months the 1937 stockmarket break had forced out one of the trio, the second had taken a back seat. Bob was soon in a head-to-head fight with underwriters Morgan Stanley & Co. (over competitive bidding on C. & O. and other bond issues) and a court skirmish with Manhattan's Guaranty Trust Co (over control of C. & O. voting rights). He finally won both scraps after he had spent months weeding out the opposition, forcing changes in directors, improving railroad finances. By last week, when his three pals were elected presidents of his roads, he really had a clear track.

The Future. As boss of the C. & O.-Nickel Plate-Pere Marquette-Wheeling combination, Bob Young has plenty of plans for the future. First on the list is his No. 1 belief: drastic debt reduction as the best way to keep a railroad on the tracks during the next depression. A man who practices what he preaches, Bob Young has slashed Nickel Plate's debt $25,200,000 in the past two years, hopes to cut it another $10,000,000 next year. Meanwhile he has put most of C. & O.'s debt on a sinking-fund basis, hiked Pere Marquette's working capital from 1937's $170,000 to nearly $8,000,000 in September.

After debts are scaled down still further Young wants to push consolidation, figures his four roads "go together naturally." But before any consolidation can be made, at least two big problems must be solved: 1) how to wipe out $25,000,000 back dividends on Nickel Plate preferred; 2) what to do with $70,000,000 Alleghany Corp. funded debt.

This week newly crowned Bob Young was feeling too chipper to fret over problems. In light blue silk lounging pajamas, he was relaxing in his Waldorf Towers apartment. Said he of his three new railroad presidents: "They have my wholehearted endorsement." Said he of himself: "I guess I'm sitting on top!"

* Alleghany Corp. also has a huge interest in Missouri Pacific, now under court control and facing reorganization.

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