Bob Young Tries Again

Railroader Robert R. Young is a patient man. For years, from the driver's seat of his medium-sized (4,301 miles of track) Chesapeake & Ohio Railway, he has tried to get control of the big (10,714 miles) New York Central. Young started to move in on the Central when his C. & O. bought 400,000 shares of Central stock in 1947, thus becoming its biggest stockholder. But the Interstate Commerce Commission stopped him, when it refused to allow a C. & O. voice on the board of the competing railroad.

Last week Young tried a new maneuver: he announced that he had sold all the C. & O. stock held by his Alleghany Corp. to Old Friend Cyrus S. Eaton, Cleveland industrialist and a longtime fellow castigator of New York banking interests. Young also sold his own C. & O. holdings, as did a small group of men around Young, including wealthy. Dime Store Heir Allan P. Kirby. Young also turned over his job as chairman of the C. & O. board to Eaton whose C. & O. holdings, with the 104,854 shares bought from Alleghany, swelled to 205,854 shares. Young, Kirby and four other C. & O. directors resigned from the board. This left Young and Kirby "free to acquire control of another carrier."

Plans for the Central. There was no question about which other carrier they had their hearts set on. In a concentrated buying spree, Young, Kirby and Alleghany Corp. have bought upwards of 300,000 shares of the Central on the open market at a cost of about $6.000,000, are still buying more. Next to the C. & O., which bought another 400,000 shares of the Central last year (and now owns 800,000. more than 12% of the 6,447,410 outstanding), this made the Young group the largest stockholding interest.*

Recently, Young informed the ICC of his intentions towards the Central. Then he told Director Harold Vanderbilt, his Palm Beach neighbor, that he wanted to be named chairman of the board at next month's meeting of the Central directors. He also asked for a place on the 15-man board for Kirby. If he and Young get on the board, Young plans to get a majority by gradually replacing present directors with his own men. After that, he will try to turn into reality his own grandiose schemes for American railroading: a flashy advertising and promotion campaign to boost railroad travel; large-scale financing to buy new equipment (including as much as $250 million to be sunk into his low-slung "Train X"); reducing debt by having the railroad buy up its own bonds, and pressuring the ICC to raise freight rates. Eventually, too, another old dream would fit into the master plan: merging the Central and C. & O. into the biggest railroad system in the U.S. If ICC opposition to this plan can be overcome, the rest would be easy, since Young and Eaton usually work together like fingers on a hand. Young is also carrying on his fight for control of the Missouri Pacific, now under reorganization in the federal courts.

Ready for a Fight. Young's Central buying had helped make it 1953's most active issue on the New York Stock Exchange, with 4,084,900 shares changing hands. Last week, with the Young syndicate still buying, trading in the stock averaged better than 25,000 shares a day, and the price shot up 2-c- points to 21-c-.

Speculators and investors who were going along for the ride on Bob Young's train had no guarantee it would not be derailed. There was no assurance that the C. & O.'s 800,000 shares would be voted on the side of Young, since the ICC has turned them over to Manhattan's Chase National Bank as impartial voting trustee. However, the Central's management, often needled by Young in the past, might not agree quietly while he moves in and takes over.

If Young meets resistance, he will launch a proxy fight for the votes of Central's 44,461 shareholders. Said one of his associates last week: "Sure, Bob has a small circle of tough enemies, but he also has a very large circle of friends--the public."

* Next largest: 160,000 shares owned by the Union Pacific Railroad, once headed by Averell Harriman. Harold S. Vanderbilt, great-grandson of empire-building Commodore Vanderbilt, who made the Central great, owns only 10,000.

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