Business & Finance: Empire’s Heirs

Filed in Cleveland’s probate court last week was an estimate of the estate of Oris Paxton Van Sweringen, elder of the legendary bachelor brothers whose joint holdings in real estate and 23,000 miles of railroads before Depression were worth $100,000,000. The value of the estate was placed at some $700,000, most of it in life insurance.

Brother Mantis James Van Sweringen, who died last year, left only $3,067.85.

In fortune if not in fame the Van Sweringens at the time of their deaths were just about where they started 20 years ago when they stepped from real estate into railroading.

Surviving “O. P.” and “M. J.” Van Sweringen is another Van Sweringen who is known in Cleveland as the “forgotten brother”—Herbert C. Van Sweringen.

Now 68, he was never associated with his younger brothers except in their early real-estate days. The only member of a family of five children who ever married, he continued in real estate until 1925, when he retired. The two spinster Van Sweringen sisters, who live together in the house their brothers originally built in their swank Shaker Heights development, were taken care of in “O. P.’s” will.

The real heirs of the Van Sweringen empire were the two septuagenarian Midwest industrialists who backed the brothers last year when they bought back control of their vast rail and real-estate properties at public auction in Manhattan (TIME, Oct. 7, 1935). These backers were George Alexander Ball, 74, Muncie (Ind.) fruit-jar tycoon and George Ashley Tomlinson, 70, Great Lakes ship operator. The two George A.’s together put up $3,121,000 to buy the key collateral pledged by the Van Sweringens for defaulted loans from a J. P. Morgan & Co. banking group, setting up a concern called Midamerica Corp. as a new super-holding company for the Van Sweringens. What the Brothers Van Sweringen got was a 10-year option on a controlling block of Midamerica common stock, together with the right to vote it in the meantime.

With no other investment except their native resourcefulness, the railroading brothers were in a position to stage what might have been the most spectacular comeback of their generation. Under the arrangement with their backers, however, they could not bequeath this potentiality in their last will & testament. Control of Midamerica reverted to Messrs. Ball & Tomlinson—principally Mr. Ball. Since neither of these gentlemen cared to cope with the discouragingly complex Van Sweringen corporate setup, they had to find a successor to Brother Oris Paxton.

Last week they found him in the person of Herbert Fitzpatrick, vice-president & general counsel of Chesapeake & Ohio Ry.

and the most trusted Van Sweringen advisor. Indeed, for the past five years Lawyer Fitzpatrick has lived most of the time at the Van Sweringen estate, Daisy Hill Farm. Said Messrs. Ball & Tomlinson in announcing their choice for the Mid-america presidency and the vacant Van Sweringen directorships: “It is our intention to conserve these properties and to carry forward the conservative and constructive policies which, under the guidance of O. P. and M. J. Van Sweringen, established them at a mark of efficient public service well-recognized in the railway and financial world. We feel that the record of accomplishment . . . will best be carried forward and onward under the direction of one so closely associated with the founders of the organization.”

Now 64, tall, silver-thatched Lawyer Fitzpatrick is a bachelor like his late employers. He got his start in Huntington. W. Va., where he built up a large law practice and got into politics, serving as a Democratic National Committeeman for eight years. Democrats John W. Davis and Newton D. Baker are good Fitzpatrick friends and also fellow trustees of Washington & Lee. Today Mr. Fitzpatrick spends most of his time in Cleveland, though he still maintains a Huntington residence in the Guyandot Club, where he likes to weekend. A collector of Turkish rugs, a fancier of blue-ribbon Irish terriers, he has a wide reputation for poker-faced humor.

No sinecure is the job Mr. Fitzpatrick will take over. The Van Sweringen railroad properties, led by the rich Chesapeake & Ohio, are coming back fast, net earnings as a whole for 1936 being estimated at about $40,000,000 as against $12,000,000 two years ago. But big, rusty Missouri Pacific is still to be reorganized, and the Cleveland real-estate holdings, worth some $150,000,000, are in a mess.

It was not Mr. Fitzpatrick but Mr. Ball who provided the first headlines in the examination of the Van Sweringen Empire with which Senator Burton K. Wheeler’s investigation of railroad finance opened this week. Admitting that he had acquired control of the Van Sweringen railroad holdings for precisely $274,682, or what the Senator called “about the price of two first class locomotives,” Oldster Ball was asked if he had not “thought it strange” that the Morgan banking group was willing to sell for $3,121,000 stock which then had a market value of $5,745,219.

Said Bachelor Ball: “Yes, I wondered, but didn’t try to find out why.”