AAA Spark Meeting of Regions

Innovation, Stock Manipulation, and Wealth Building—The Van Sweringens’ Nickel Plate Railroad and its Impact on Accounting and Business

• In Event: Banking, Credits, and Wealth Building

Abstract

This paper examines the strategic management practices that grew the New York, Chicago & St. Louis Railroad Company (Nickel Plate Railroad – NKP) from 1916 until 1935 into one of the largest businesses in the world. The Van Sweringen Brothers, Oris Paxton (OP), and Mantis James (MJ), brought massive expansion, revolutionary advancement, modernization, innovation, and growth in control of a railroad empire worth over $3 Billion (over $45 billion in today’s dollars). They did it all by using virtually no money of their own. They fully embraced and advanced the concept of leveraging, buying on margin, and the utilization of non-voting preferred stock. Their methodology caught the attention of policymakers in Washington and provided supporting evidence of the need for regulation. Their methods eventually resulted in the demise of their empire and the NKP falling into the hands of a non-railroading glassmaking giant from Indiana, George Ball.

Authors

• L. Craig Foltin, Cleveland State University

• Dale L Flesher, The University of Mississippi

• Gary John Previts, Case Western Reserve University