This paper examines accounting records and federal legislative archives encompassing the operations of the New York, Chicago & St Louis Railroad Company (Nickel Plate Road – NKP) from 1929 to 1936. This study researches the strategic management practices, financing methods, capital structure and impact this company had on regulation. The Van Sweringen Brothers, Oris Paxton (O.P.), Mantis James (M.J.) and their President Jon Bernet built an empire worth over US$3 billion (US$45 billion today). They did it all by using little money of their own. The Van Sweringens fully advanced concepts such as leveraging, buying on margin and the utilisation of non-voting preferred stock. In the market turmoil following the Crash of 1929, these methods drew the attention of federal policymakers who initiated investigations that led to capital market regulation. The untimely death of the three leaders, a large amount of debt and the Great Depression resulted in the demise of their empire.
AcikgozBMirantiPPalmonD (2022) Accounting as a social practice: US railroad regulation, value of service accounting, and regional economic development. Accounting History27(1): 125–146.
2.
AdamsCJ (1869) Railroad inflation. The North American Review108(222): 130–164.
3.
AdamsCJAdamsH (1871) Chapters of Erie. Illinois: Waveland Press.
BannerP (1971) Regulation of the transportation industry. Business Economics6(1): 64–67.
6.
BoockholdtJT (1978) Influence of nineteenth and early twentieth century railroad accounting on the development of modern accounting theory. Accounting Historians Journal5(1): 9–28.
7.
BorgattaEBalesRCouchA (1954) Some findings relevant to the Great Man Theory of Leadership. American Sociological Review19(6): 755–759.
8.
Buffalo Times (1935) Bernet Railroader, 10 July.
9.
BullI (1989) Financial performance of leveraged buyouts: An empirical analysis. Journal of Business Venturing4(4): 263–279.
10.
CawthonD (1996) Leadership: The great man theory revisited. Business Horizons39(3): 1–5.
11.
ChandlerAD (1977) The Visible Hand: The Managerial Revolution in American Business. Massachusetts: Harvard University Press.
12.
ChernowR (2010) The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance. New York: Grove Atlantic Publishers.
13.
CoreyH (1937) Mr. Ball's Ambition. Nation's Business. June.
14.
CullenE (1926) American Railway Accounting: A Bibliography. Washington D.C.: Railway Accounting Officers Association.
15.
FinkA (1880) Testimony before the Committee on Commerce of the U.S. House of Representatives. The Railroad Problem and its Solution: 14–16. January.
16.
FlesherDPrevitsG (2008) Railroad accounting, book chapter 18. In: EdwardsJRWalkerSP (eds) The Routledge Companion to Accounting History. London, New York: Routledge, pp. 443–465.
17.
FlesherDPrevitsGSamsonW (2003) Accounting, economic development and financial reporting: The case of three pre-Civil War U.S. Railroads. Accounting History8(2): 61–77.
18.
FoltinCFlesherDPrevitsG (2022) Lessons learned from the Nickel Plate Road, 1881–1916, a company built to be sold. Accounting History27(3): 425–444.
19.
Galambos LPrattJ (1988) The Rise of the Commonwealth. New York: Basic Books Inc.
20.
GilchristDT (1960) Albert Fink and the pooling system. The Business History Review34(1): 24–49.
21.
GordonJ (1990) The Great Game: The Emergence of Wall Street as a World Power: 1653–2000. New York: Scribner Publishers.
22.
GrahamJLearyMRobertsM (2015) A century of capital structure: The leveraging of corporate America. Journal of Financial Economics118(3): 658–683.
23.
HabermanI (1945) The Van Sweringens of Cleveland. Publication No. 148 of the Western Reserve Historical Society.
24.
HarwoodH (2003) Invisible Giants: The Empires of Cleveland's Van Sweringen Brothers. Bloomington, Indiana: Indiana University Press.
25.
HeierJ (2009) Building the Union Pacific Railroad: A study of mid-nineteenth-century railroad construction accounting and reporting practices. Accounting, Business & Financial History19(3): 327–351.
26.
HoskinsKMacveR (1988) The genesis of accountability: The West Point connections. Accounting, Organizations and Society13(1): 37–73.
27.
JenksL (1944) Railroads as an economic force in American development. The Journal of Economic History4(1): 1–20.
28.
KaplanSStrombergP (2009) Leveraged buyouts and private equity. Journal of Economic Perspectives23(1): 121–146.
MaeseneireWBrinkhuisS (2012) What drives leverage in leveraged buyouts? An analysis of European leveraged buyouts' capital structure. Accounting and Finance52(Supplement): 155–182.
31.
McCrawT (1984) Prophets of Regulation. Massachusetts: Harvard University Press.
32.
MichieR (2006) The Global Securities Market. Oxford: Oxford University Press.
33.
MirantiP (1989) The mind’s eye of reform: The ICC’s Bureau of Statistics and Accounts and a vision of regulation 1887–1940. The Business History Review63(3): 469–509.
34.
MirantiP (1990) Measurement and organizational effectiveness: The ICC and accounting-based regulation, 1887-1940. Business and Economic History19: 183–192.
35.
New York Times (1934) O.P. Van Sweringen Indicted in Fraud; Named with J.R. Nutt and W.M. Baldwin of Defunct Cleveland Bank. 14 April.
36.
New York Times (1935) ICC Begins Inquiry on Van Sweringens, 26 December.
37.
New York Times (1937a) I.C.C. Control Asked for Rail ‘Empires’; Wheeler Committee for Federal Policing of Activities of Holding Companies, 16 March 1937.
38.
New York Times (1937b) Drastic Railroad Bill Will Hit Holding Units; Wheeler Committee Proposes to Bring Them Under Control of the I.C.C or to Prohibit Them Altogether,’ 29 August 1937.
39.
New York Times (1955) George Ball Dies. p. 14, Industrialist92, 23 October.
40.
Nickel Plate Railroad, New York, Chicago and St. Louis Railroad Annual Reports (1929–1938).
PerinoM (2010) The Hellhound of Wall Street. New York: Penguin Press.
43.
Railway Age (1936) Obituary of Oris P. Van Sweringen. Vol. 93, Nov. 28th.
44.
RamirezC (1995) Did J.P. Morgan’s men add liquidity? Corporate investment, cash flow, and financial structure at the turn of the twentieth century. The Journal of Finance50(2): 661–678.
SamsonWFlesherDPrevitsG (2003) Quality of earnings: The case of the Mobile and Ohio Railroad in the 19th century. Issues in Accounting Education18(4): 335–357.
47.
Stevenson-ClarkePBowdenB (2018) Difference of purpose: The usage of railway accounts in Victoria and Queensland (1880-1900), a comparative study. Accounting History23(1–2): 231–251.
48.
ThompsonJ (2013) Railroad investing and the importance of financial accounting information in 1880’s America. Accounting Historians Journal40(2): 55–89.
49.
United States of America (1933) Report on hearings to investigate practices of stock exchanges with respect to the buying and selling and the borrowing and lending of listed securities. Committee on Banking and Currency, United States Senate, Resolution No. 84, The Pecora Committee.
50.
United States of America (1937) Investigation of Railroad Holding Companies and Affiliated Companies. Senate Committee on Interstate Commerce, 75th Congress, Resolution 71.
51.
United States of America (1941) In re the Van Sweringen Company. Circuit Court of Appeals, Sixth Circuit, Nos 8846, 8654, 8655, April 16th.
52.
Vangermeersch R (1979) Comments on accounting disclosures in the Baltimore and Ohio annual reports from 1828 through 1850. The Academy of Accounting Historians Working Paper Series2: 38.
53.
VeenendaalAJ (1992) Other people's money: Dutch capital in American railroads. Business and Economic History21: 147–158. WP.
54.
WalshR (2001) An historical framework for the federal taxation of dividend and interest payments in the U.S.Accounting History6(1): 61–74.
55.
WrenDBedeianA (1972) The Evolution of Management Thought. New Jersey, USA: John Wiley and Sons.
