Merger Profits

When O. P. Van Sweringen took the stand last week in the Nickel Plate case before the Interstate Commerce Commission, some interesting facts concerning the past history of that merger came out. Much attention was paid to his assertions relating to his and his brother's profits, which have amounted to $16,812,809 so far.

The Van Sweringen brothers entered the steam railroad business in 1916 by purchasing the old "Nickel Plate" (New York, Chicago & St. Louis R. R.) from the New York Central for $2,000,000 cash and $6,500,000 credit. Despite old Nickel Plate's official title, it possessed no real terminal facilities at New York, Chicago or St. Louis. To make something of the line, it consequently became necessary to expand it. First they went after and acquired (for $750,000 cash and $2,250,000 credit) the "Clover Leaf" (Toledo, St. Louis & Western), then in a receivership. Next, the brothers acquired from the New York Central the Lake Erie & Western ($500,000 cash and $2,500,000 credit). In 1923, the Interstate Commerce Commission approved these minor consolidations, from which the present Nickel Plate system has resulted, with the Van Sweringens still firmly in control. By selling new Nickel Plate stock, they were able to pay off the heavy debt of about $21,000,000 they had contracted in buying the three original roads.

Their further steps to acquire the Erie, Chesapeake & Ohio and Pere Marquette is recent history (TiME, Aug. 18, Apr. 6, 27). If the I. C. C. approves, a railroad system whose market value is approximately $1,000,000,000 will have been acquired by two men with an initial cash outlay of only $2,000,000. The appreciation in the Van Sweringen stocks has not only done the rest, but also paid them $16,812,809 profit for their pains.