The Central Says No

One of the mysteries surrounding the fight for the New York Central Railroad is: Who owns the 800,000 shares of Central stock supposedly sold by the Chesapeake & Ohio railroad to Robert R. Young's Texas friends, Clint Murchison and Sid Richardson? The Texans say that they bought the stock for $20 million, but New York Central President William White charges that they are not the real owners, says they put up no money of their own. As a result, the Central this week refused to transfer the stock until it got the "proper papers."

Under the terms of the agreement by which the stock was taken out of trusteeship in the Chase National Bank, the shares had to be sold to buyers with no direct or indirect affiliation with Alleghany Corp. And the Central suspected that Murchison and Richardson had been able to buy the stock only with Alleghany's help.

High Finance. This week Young and his two friends cleared up the mystery of the purchase. It turned out that 1) the Texans had spent none of their own money to get the stock, and 2) Bob Young's Alleghany Corp. had clearly put up a large chunk of the money to finance the stock purchase. But no one agreed on exactly how the deal had been arranged.

Murchison said that he and Richardson had borrowed a total of $10 million from Alleghany with the option of paying off the loan with 400,000 of their 800,000 shares valued at $25 a share, the loan to be "secured by our own general credit." The rest of the $20 million, said Murchison, came from a $2,500,000 personal loan and a $7,500,000 loan, secured by the 800,000 shares, from an Ohio bank.

In Manhattan, a lawyer for Murchison corrected this story in a few details. He said that $7,500,000 came from a group of Ohio banks, headed by the Central National of Cleveland, $7,500,000 from the Alleghany Corp. and $5,000,000 as a personal loan to Sid Richardson from Young's good friend and business associate, Allan Kirby. Bob Young agreed with most of these details and added that Alleghany's loans to Murchison and Richardson were secured only by the oilmen's signatures. Said he: "Our relations with Mr. Murchison have existed for years, and we are glad to bring Mr. Richardson into the family." And. he added, he has been advised by four sets of attorneys that Alleghany's dealings with the Texans should not bar them from voting the stock.

High Profits? Why hadn't Young simply bought the Central stock himself instead of just putting up most of the money for it? His explanation was that the ICC has not officially recognized that Alleghany has divorced itself from the C. & O. But the net result of the deal was that Millionaires Murchison and Richardson are now in a position to make millions without taking a penny out of their own pockets. With the option of selling back the stock in six months at $25 a share (the price they paid for it), they cannot lose if it goes down, will get the profits if it goes up. Thus, Alleghany takes all the risk and none of the profits, unless the two shrewd Texans voluntarily cut in the company. Said Murchison: "If the stock is selling at 30 or 35, we will hold on to it."

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