Lion of Nassau Street

In a cupid-encrusted office at No. 32 Nassau St., Manhattan, where Jay Gould used to play financial chess with railroads for queens, hulking old Leonor Fresnel Loree has sat growling into his beard for seven years, trying to thwart a checkmate. Occasionally he would stride over to a railroad map of the U. S. on which a great Loree System was only a dotted line, and stand there cursing softly. Or he would sit slumped behind his desk banging a stack of five-dollar gold pieces from one hand into the other and express himself bitterly to curious interviewers: "Hell, I don't see how those fellows have the face to talk the way they do. But you can say anything if you keep a straight face."

"Those fellows" were the Interstate Commerce Commission and the "Big Four" railway systems--New York Central, Baltimore & Ohio, Chesapeake & Ohio, Pennsylvania. They had balked his every effort to form another great Eastern system which would be L. F. Loree's monument. As a railroad man in the gaudy tradition of Vanderbilt, Harriman and Hill, Leonor Loree was known & feared, but Vanderbilt, Harriman and Hill had their big systems and bearded old Mr. Loree had only the smallish Delaware & Hudson and Kansas City Southern. Between them was a great gap. But L. F. Loree was tenacious.

Last week railroad men opened their eyes wide at the announcement that Loree's D. & H. had bought 500,000 shares of New York Central--the full 10% of shares outstanding which it could buy without permission from the New York Public Service Commission--and at the report that L. F. Loree's friends had acquired another 500,000 shares. With a 20% command, the 74-year-old fighter was in a fair way to dominate one of the biggest rail systems in the land.

During the seven years in which he schemed for prestige L. F. Loree may sometimes have reflected cynically that if he had not been such a good executive he might have become a greater power. By nature, training and beard he belongs in the tradition of the earlier rail tycoons. From Rutgers, at 19, he went into railway engineering on Western roads, quit to carry a tripod with the Army Engineer Corps, quit that to survey a right of way for the Mexican National Railway. In 1883 he went to the Pennsylvania and began to make himself known. He could speedily dig out traffic stalled in snowdrifts; he reconstructed in short order a section of the main line washed out by the Johnstown flood. At 38 he was jumped over a dozen heads to the job of General Manager West of Pittsburgh. When the Pennsylvania bought the dilapidated Baltimore & Ohio, Leonor Loree was sent in as president.

He put the B. & O. on its feet in three years and immediately was offered $75,000 a year to be president of the Rock Island. As president of the B. & O. he was getting $25,000. Hardheaded, he wanted the money. Personally ambitious and aggressive, he wanted to do things by himself.

He took the Rock Island job and thereby probably kept himself from becoming head of a great system long before this. Within nine months he had split with Rock Island's backers, but under his five-year contract he continued to draw his $75,000, largest in the U. S. He went to the Kansas City Southern, described at the time as "a right of way and two streaks of rust," and promptly put that firmly on its feet.

After the panic of 1907 the late great Edward Henry Harriman picked L. F. Loree for president of another tottering road, the Delaware & Hudson. It was an 870-mi. line running from "nowhere [WilkesBarre] to nowhere [Montreal]." President Loree saw that its only paying function would be carrying hard coal. He segregated its coal properties, then its coal-carrying railroad, so that today D. & H. is a holding company. It was the coal properties that eventually enabled L. F. Loree to enter railroading's major league as a real power.

Meanwhile he was stuck with two disconnected roads out of the main line of railroad development. The "Big Four" systems grew up and dominated Eastern transportation. The Loree roads, though profitable, were little heard of, though Mr. Loree was heard of: People said he knew more about railroading than any man in the U. S.; his Railroad Freight Transportation is the Blackstone of the subject.

In 1925 he began to fight. He was 67, but with no idea of retiring. Backed by Kuhn, Loeb & Co. and the second generation of Harrimans, he began planning a big system in the Southwest, another system to connect his Kansas City Southern and D. & H. In 1927 the Interstate Commerce Commission turned thumbs down on his Southwestern plan, holding that K. C. S. was too small a base for a financial pyramid.

He dropped his Southwestern plan and concentrated on the East. In 1927 he mortgaged D. & H. coal properties for $35,000,000 and began to buy into small Eastern key roads, planning to build and piece together a new trunkline to the Midwest. This plan the I. C. C. blocked with its first consolidation plan, parceling out the East among the "Big Four," taking no account of Mr. Loree.

He next thrust himself into the picture with a plan for a semicircular belt system connecting New England and Baltimore, to distribute Midwestern products to seaboard. This again stepped on too many toes. He was ordered to sell his interest in the Wabash (now in receivership) and Lehigh Valley, which he did, to the Pennsylvania, at $23,000,000 clear profit.

The second I. C. C. consolidation plan (TIME, Aug. 1) as usual left D. & H. in a bad spot, its disposition undetermined. Mr. Loree, with masses of cash on hand, bided his time to begin a frontal attack for his place in the sun. At the 1929 high, 500,000 New York Central shares would have cost D. & H. $125,000,000. At Depression figures Mr. Loree picked them up through J. P. Morgan & Co. for $10.000,000. With the leverage that a 20% interest gives him, he would not have to wait long to fit little D. & H. into New York Central's big system, if that is his intention. The fact that Central owes some $80,000,000 to banks and the R. F. C. did not seem to bother him at all last week.

What place he will seek for himself had railroad men guessing. Central's board chairmanship has been vacant since Chauncey Depew died (1928). That he would seek the presidency he promptly denied, saying:

"I have the greatest confidence in the present management of Central. During the War I was put in charge of railroad operations in the Eastern region and H. H. Smith, then president of Central, let me have [present President Frederick Ely] Williamson to help me out. We transported 3,500,000 troops in our territory, and it really was Mr. Williamson who did the work. . . . I have the greatest confidence in him."

That Leonor Loree had not carried his big maneuvers to their final stage was suggested by one more event of last week: David M. Collins, Mr. Loree's son-in-law, that day retired from his Stock Exchange firm to act as his father-in-law's personal broker in future. Although D. & H. last week passed its dividend for the first time in 53 years, it still has perhaps $25,000,0001n its war chest.

Other rail news last week:

P: After 63 years of operation South Manchester R. R., shortest passenger line in the U. S. (1.94 mi.), ceased service. Owned by Connecticut's Cheney Bros., it ran between Manchester and their silk mills at South Manchester. Its one train with one engine, one car was called "Cheney's Goat."

P: By declaring a 50-c- dividend, directors of Pennsylvania R. R. maintained the record of having made a payment on the stock in every year since 1847.

P: A reorganization plan was adopted for Pittsburgh, Shawmut & Northern R. R. (198 mi.) after 27 long years in receivership.

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