Great Shoes Shuffled

When the late Edward Henry Harriman died, burned out by work, he left the great problem of how to manage his Union Pacific and its big subsidiary, the Southern Pacific. He was succeeded as chairman of Union Pacific's executive committee by his attorney, the late Judge Robert Scott Lovett, who soon devised a plan of regional management for sprawling Southern Pacific. In 1913 Union Pacific was forced to sell its stock control in Southern Pacific, but S. P. maintained the regional plan. Last week these two great shoes of the late great Harriman were shuffled. Southern Pacific, the left shoe, was returned from regional management to one-man control under tall, taciturn Hale Holden. Union Pacific, the right shoe, was given over to the late great Harriman's son, William Averell Harri man, now 40 and ready to undertake his greatest heritage.

By Southern Pacific's old plan (which will continue until Aug. 1). the road had two divisions separated at El Paso. The western lines were run by Paul Shoup, president of the company since Jan. 1, 1929 when he succeeded William Sproule. The eastern rail and steamship lines were managed by Angus Daniel McDonald, vice chairman of the executive committee which in turn was headed by Hale Hol den. oldtime chief of the Burlington, whose son is Pullman Inc.'s eastern vice president. By last week's changes Mr. McDonald becomes president of the company, making him operating chief of all its transportation routes. He will be responsible to Hale Holden, for whom is created the new position of company chairman. President Shoup is shifted to vice chairman, likewise under Chairman Holden. In railroad circles this shift was not regarded as a complete sidetracking of slim, grizzled Paul Shoup, 58. He will move from San Francisco to Manhattan, devote his time to traffic, in which he is rated an expert. In late years Southern Pacific has lost much of its east & west traffic to Missouri Pacific where the lines compete, notably from El Paso to New Orleans. S. P. now controls St. Louis Southwestern ("The Cotton Belt") and can compete with the Van Sweringens' MOP directly into St. Louis. It will be Vice Chairman Shoup's job to follow the course of S. P.'s eastbound shipments. trying to persuade shippers against diverting them to competing lines, and to originate business in the East. He formerly received $90,000 a year. His new salary was not revealed. Hale Holden, whose $150,000 salary was recently cut 10%, will receive another 10% cut to gether with all other S. P. men getting $10,000 or more. Completely shelved by the changes wall be Henry Wheeler De Forest, board chairman. His position will be abolished although he remains a director and on the executive committee. Net result of the changes, putting Hale Holden in supreme command, follows the trend of all roads toward simplification of control.

The election of William Averell Harri man to chairmanship of the system his father built was foreshadowed a year ago when he became chairman of the executive committee of Illinois Central (25% U. P. controlled), marking his first major entrance into railroads. Son Harriman. who was 1 8 when his father died in 1909, has exhibited diligence and ambition as a businessman but has yet made no great name for himself. His financial backing has come largely from his mother. Mrs. Mary W. Harriman, who describes herself in Who's Who as "sole heir upon death of husband to estate appraised at about $100,000,000." In 1916 he resigned a Union Pacific vice-presidency to enter the shipbuilding field. Later he formed American Ship & Commerce Corp., an ambitious scheme for international trade. In 1926 the company sold most of its vessels to Hamburg-American and is still liquidating its shipbuilding and heavy machinery business. Mr. Harriman is a director also of American Hawaiian Steamship Co.

Failing to make his name great upon the sea, in 1929 Son Harriman turned to the air with the formation of Aviation Corp., which has yet to show earning power. He took his money abroad, put it into zinc mines in Poland, a manganese concession in Russia. In 1919, six years out of Yale, Son Harriman formed W. A. Harriman & Co. which conducted a large-scale investment banking business. Hard-working young Mr. Harriman, attractive and sociable (two years ago he married Marie Norton Whitney, art-wise first wife of his turf friend Cornelius Vanderbilt ["Sonny"] Whitney), did not make a raging success of the firm. Its financial bulwarking made it an appropriate party last year to a merger with Brown Bros. & Co., forming Brown Bros. Harriman & Co. Another Harriman venture is Harriman & Co., a small firm doing a lucrative business in commercial paper. Virile Son Harriman enjoys sport as well as work, is an expert polo player with a 4-goal handicap. In business his luck has been to tackle situations at bad moments. He has always had a sentimental attachment for Union Pacific, from which by hard work, spectacular plunging and foresight his father hammered fame & fortune. He was a U. P. director while at Yale, sometimes appearing at meetings with a classbook under his arm. He spent vacations working on the road. His family's direct U. P. holdings are estimated at only 1.63% of the common stock but the Board sought him as chairman for several reasons. The position does not demand a professional railroadman. The chairman is often chosen for his financial and personal prestige. Son Harriman has both in abundance. His duties will not be so arduous that he will have to relinquish any of his other interests although friends last week reflected grimly that, having found the going hard at sea and in the air, he now beholds railroading on one of the steepest gradients in its history.

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