RAILROADS: End of the Line

Robert Ralph Young was a bantamweight scrapper (135 Ibs.) with heavyweight ideas, who came out of obscurity as a Wall Street speculator to become the most powerful and most debated railroad tycoon of his day. As board chairman of the New York Central, the nation’s second biggest railroad, and an important voice in several other roads, Bob Young had collected all the prizes of a champion battler: wealth, power, glittering friends (the Duke and Duchess of Windsor et al.), palatial homes in Palm Beach and Newport.

One morning last week, in his 25-room Palm Beach mansion, where he spent three months each year, Bob Young started his day in routine fashion. He finished breakfast, casually went upstairs to the third-floor billiard room, where he usually played each day after breakfast. But instead of playing billiards, Bob Young took a double-barreled 20-gauge shotgun and sat in a chair. Carefully he set the gun between his knees, placed the barrels against his head, and pulled both triggers. He left no note, and shocked friends could only ask in amazement: “Why?” But close associates could readily see that in Bob Young’s fabulous rise there lay also a reason for his suicide at 60.

More Than Money. The son of a Texas banker. Young married at 18,* went to New York four years later (1920) with $15,000 inherited from his maternal grandfather—and promptly lost it all playing the market. He went to work for General Motors, rose to be assistant treasurer at a salary of $35.000 a year before going to Du Pont as financial adviser to the late John J. Raskob. Du Font’s top financial man. Young made his first million by selling short just before the 1929 crash, set up a brokerage firm with an old friend. By picking up securities that looked worthless to most people, then stepping in to run the properties involved, he added another $5,000,000 to his bank roll by 1937. But Young was not merely after money. “Anyone who has an active mind must keep it engaged,” he said, “and I want mine engaged in important instead of minor things.”

Bob Young was after power as well as money. While building his personal fortune, he began a battle to win control of Alleghany Corp., the rundown holding company of railroads and real estate put together by Cleveland’s famed Van Sweringen brothers. After bitter battles with Wall Street bankers, the Interstate Commerce Commission and some of Alleghany’s chief stockholders (Young became known as “the most litigious man in Wall Street”). Young bought heavily into Alleghany in 1937 with $1,000,000 of his own money and $3,000,000 put up by an associate, Allan Kirby. the 5-&-100 store heir. It took five more years of court fights before he was solidly in control. For his trouble, Bob Young got control of $2 billion worth of assets, including the Chesapeake & Ohio Railway, the Nickel Plate, Pere Marquette and Missouri Pacific. But in the intense strain of the battle, he also suffered a nervous breakdown. His sandy hair had turned white, and at 45 he looked 15 years older.

High on the Hog. Taking over as chairman of the C. & O., he cashed in on the war-brought prosperity of the railroads. Flush with millions, he began the bitter attacks on the railroad industry that marked his stormy career from then on, launched a publicity campaign whose high point was the famous newspaper ad that said: “A hog can cross the country without changing trains—but you can’t.” He lashed out fiercely at “goddam bankers” (his favorite phrase) for their control of the railroads, set himself up as the champion of the people in a crusade to revitalize U.S. railroads. And all the while, he strengthened and expanded Allegheny’s holdings, started his biggest battle of all: an attempt to win control of the mighty New York Central.

Bob Young was a man of grandiose ideas and supreme self-confidence who felt it his destiny to create a great transcontinental railroad system that would put to shame the 19th century railroad empires of Harriman, Vanderbilt and Gould. The keystone would be the Central. But it was not until 1954 that he was ready to move in for the kill. Quietly he had bought up stock, then loudly bombarded the Central with newspaper ads attacking its operating policies. Gradually, he softened confidence in the Central’s management until he finally captured the road with the help of a dazzling financial trick. Using friends for financial help, as he often did, Young got Texas Oilmen Clint Murchison and Sid Richardson to buy 800,000 shares of Central stock owned by the C. & 0. (which had been prevented by the Interstate Commerce Commission from voting its shares) so they could vote the stock for Young. Not only had the stock been bought completely on borrowed cash, but Young actually got Central’s stockholders to vote him the $1.300.000 cost of the proxy fight.

Young made a clean sweep of Central’s board (including such “goddam bankers” as two descendants of Commodore Cornelius Vanderbilt and the head of J. P. Morgan & Co.), brought in Alfred E. Perlman from the Denver & Rio Grande to run the road. The Central was one of the most heavily mortgaged U.S. roads and in terms of its heavy and unprofitable passenger traffic one of the least desirable. But Young talked as if his mere presence would banish trouble and nurture prosperity. For a while, it seemed as if Young would repeat the success he had with the coal-hauling C. & 0. The Central went on a $2 annual dividend basis; costs were cut and income boosted. Central’s stock shot up from 23 to 49½; Young confidently predicted that it would go to 100, and urged his friends to get in while the getting was good.

Down the Road. Bob Young’s golden moment soon passed. Like every other U.S. road, the Central was caught in the nationwide rail slump. Fortnight ago the Central’s directors voted not to pay the quarterly dividend. The railroad’s earnings had plummeted along with the stock, which reached a low of 13¼ last week. Bob Young, who had borrowed heavilyto buy the 100,000 shares of Central stock he owned, was forced by lenders to sell as the price skidded lower. By year’s end he had unloaded all but a few thousand of his remaining shares “to take tax losses.” Friends insisted Young’s own personal finances were in good shape, but it was a bitter blow for him to lose so much money on his own road.

Equally bitter to Young was the knowledge that others who had counted on him to make good were also losing money. The Central’s directors, all brought in by Young, lost hundreds of thousands of dollars as the road’s stock fell. His Alleghany Corp. had paper losses of more than $16 million on stock it had bought in the New York Central. To make matters worse, Bob Young was being challenged in the courts by a former associate named Randolph Phillips, who blocked some of Young’s pet plans for Alleghany Corp. (TIME, May 6). So insistent and shrewd was Phillips’ opposition that Young ranted and raved about him in private, hardly dared come to New York publicly for fear of being served with another Phillips summons.

Bob Young, hard hit in his pride and pocket, brooded over his troubles. At a directors’ meeting last week in Palm Beach, he was so quiet that one director later phoned him to ask what was the matter. Young brushed him off. To Young none of his troubles were the kind that he could solve, as before, with a single brilliant financial coup or a rough-and-tumble court fight. His goal of empire was moving away from him.

Twenty years ago, after a temporary defeat, Bob Young wrote a verse that now seemed more apt:

Until today it seemed my path led upward,

But now I find myself upon a constant downward slope

Which gains in pitch until I see

Dim, distantly, a void,

From which departed friends have vainly turned tired faces,

And love has lost its zest,

The quest of fortune ended . . .

* Young married Anita Ten Eyck O’Keeffe. sister of Painter Georgia O’Keeffe; their only daughter, Eleanor, was killed in a private airplane crash in 1941 at 23.