by Robert Morss Lovett
(published in The New Republic, June 27, 1923)
The city of Cleveland, like Chicago, is a transportation city. As a meeting point for coal and iron, and a junction for lake and railroad traffic, it has a strategic position which has drawn to it manufacturing enterprises by the score and increased its population from 400,000 to 800,000 in the last twenty years. The city lies on a plateau, sixty to a hundred feet above Lake Erie. A strip of beach along the lake shore affords the best approach east and west, and this is controlled by the New York Central, which with the Pennsylvania and Big Four railroads occupies a passenger station built in 1865. The plateau is intersected by several valleys which have been utilized by railroads from the south, the Wheeling and Lake Erie, the Erie, the Baltimore and Ohio, etc. Clearly the unification of transportation systems should be one of the first objects of city planning. It was so regarded by Mayor Tom L. Johnson when he developed his scheme of public buildings in 1902. The effort to carry out this plan has written one more chapter in that section of United States history, which might be called the railroads against the people, one not less dramatic than Charles Francis Adams's Chapters of Erie.
Mayor Johnson's plan, which was drawn up by such architects as D. H. Burnham, Arnold Brunner and John M. Carrere, called for a group of public buildings on an oblong tract known as the mall near the edge of the plateau-a post office, courthouse, city hall, library, public hall, and at the head of the formation a union passenger station. The plan was accepted and nearly all the buildings except the last were erected. A contract between the city and the railroads was approved by popular vote in 1915. It was estimated that the station would cost $35,000,000. The city and federal governments had spent approximately that sum in carrying out their part of the enterprise.
About the time that Mayor Johnson was assembling his architects and developing his comprehensive plan in the public interest, an almost equally ambitious project was undertaken in the private interest of Messrs. O. P. and M. J. Van Sweringen. This was the development of a residential suburb to the southwest of the city. That was before the days of the universal automobile, and the need for transportation if the lots were to be sold, obliged the entrepreneurs to seek a charter for an electric railroad. This line, known as the Cleveland and Youngstown, was duly built and is now in operation in correspondence with the city street railways. As a feature of the plan a terminal station altogether more ambitious than is usual for interurban traffic was projected in the Public Square of Cleveland, and the Cleveland Union Terminals Company was organized with the modest capital of $10,000. This feature extended the operations of the Van Sweringens from suburban to city real estate, and opened a vista of development in Cleveland similar to that which has taken place about the Grand Central in New York. The Van Sweringens became local wizards. They charmed banks and private fortunes into their circle until the success of their enterprise became of intense moment to the whole financial world of Cleveland.
Alfred H. Smith's Proposal
But things moved slowly and real estate about the Public Square remained, to quote the Interstate Commerce Commission, "stagnant." About 1912 the Citizens' Savings and Trust Company was understood to have taken direction of the Van Sweringens' enterprises; but whether the latter were in the hands of the banks or the banks in the hands of the Van Sweringens makes little difference. Clearly the real estate near the Public Square needed more power to move it than could be furnished by an interurban terminal station. At the critical time a new ally was secured in the person of Alfred H. Smith, President of the New York Central, who in 1918 appeared with a proposal to abandon the site of the union station on the Mall in favor of a location in the Public Square.
This proposal took the form of an initiated ordinance, and though disapproved by the City Council it was submitted to the electors at a special election, January 6, 1919. Behind it were ranged the big interests of Cleveland, the banks and the newspapers. Citizen's organizations were squarely against it except the Chamber of Commerce, which divided. The most persuasive argument in favor of the change seems to have been that work on the Public Square station would be begun at once, giving employment to returning soldiers. The ordinance was carried by approximately 30,000 to 20,000.
Up to this time the only road in favor of the change of site was the New York Central with its subsidiaries, the Big Four and the Nickel Plate. A year was allowed to secure the adhesion of the other roads, but the most important of them, the Pennsylvania, flatly refused. It became necessary, therefore, to pass an ordinance in the City Council permitting the Central to go it alone. This as an emergency measure required a three-fourths vote in its favor. It failed. It was reintroduced December 29, 1919 and after a statement by the mayor in which he promised that at least six railroads would unite on the Public Square site, the necessary majority was secured.
The scene now shifts to Washington, and the Interstate Commerce Commission becomes a leading actor. In April 1921, the New York Central and its subsidiaries made application to the Commission for certificates of public convenience and necessity granting authority to acquire the stock of the Cleveland Union Terminals Company and to guarantee its bonds for the construction of the station in the Public Square. This application was heard by W. S. Colston, Director of Finance for the I. C. C. Mr. Colston had been a brigadier-general during the war. He doubtless remembered his former chief, Newton D. Baker, who until a month before had been Secretary of War. Mr. Baker as a lieutenant of Tom Johnson had been originally one of the advocates of the Mall site, and when he appeared as a witness in favor of the Public Square site his testimony certainly had weight with Mr. Colston, who approved the application and recommended it to the Commission. At a private hearing before the finance committee of the I. C. C. in July, Mr. Baker again appeared, this time as full-fledged attorney for the Van Sweringen interests represented by the Cleveland Terminals Company; and the committee, following Mr. Colston, approved. The application was then heard on August 12th before the full Commission and was rejected.
The report of the Commission, adverse to the application of the New York Central and the Van Sweringens, deserves attention by students of railway history in the United States. It gives a full account of the terminal question at Cleveland and the merits of the two sites, with a drastic analysis of the plan submitted by the New York Central for the benefit of the Van Sweringens and their clients. It finds that although the railroads were to acquire all the stock of the Terminals Company, they proposed to give proxies to O. P. Van Sweringen, insuring to him complete control of this company during the construction period. It finds that part of the station to be built by the railroads with their own credit was to be leased to the Cleveland Terminal Traction Company, organized to furnish terminal facilities to a group of electric lines which were to handle suburban traffic, and controlled by the Van Sweringens. This Traction Company was to dispose of a large "concession area" in the station available for stores, restaurants, etc., the income from which was to pay the initial rent of $850,000 charged to the company.
Not only this, but another company organized and controlled by the Van Sweringens and known as the Cleveland Terminals Building Company was to have the right to build a large office building occupying the space of six acres above the railroad terminal, which was to be entirely underground. In return for these "air rights" the railroads were to receive a perpetual easement covering the underground approach from the east. The report estimates that the total cost of the Public Square station on the 1920 building basis would be $72,000,000, leaving untouched some of the serious handicaps to which traffic is now subjected, while the station on the Mall with the rectification of these features would cost less than $35,000,000. The report becomes mildly ironical at the expense of President Smith's pretension that he was acting in the interest of his railroad and its stockholders in relinquishing control of construction, "air rights" and concession areas to the Van Sweringens, while taking the land which the latter had acquired near the Public Square off their hands on the cost plus system popular during the war. Altogether in language of extreme urbanity it reveals the complacency of the railroads to private interests, a procedure, which it declares mildly to be "not compatible with sound railroad finance and economy."
Why did the Commission reverse itself? Perhaps the visit which President Smith of the New York Central hurriedly made to the White House immediately on the handing down of the first decision had something to do with its action. Perhaps the argument of Newton D. Baker had decisive weight, that we owe victory in the war not to Pershing and his valiant boys but to those modest patriots, the New York Central and Pennsylvania Railroads, in consequence of their energy in passing freight through the necks of the traffic bottles at Cleveland and Pittsburgh, and that we shall lose the next war if they fail. There are echoes of this bunk in the report of Commissioner Campbell, to whom the case was submitted for rehearing in November 1921. His report is the greatest possible contrast with the earlier one. It is a feeble and disingenuous statement which ignores the fundamental points at issue in the respective merits of the two sites, withdraws the specific criticisms made in the preceding report, and concerns itself entirely with the bad traffic situation at Cleveland, which no one disputes. Nevertheless the commission accepted it, Mr. Eastman alone dissenting in a trenchant restatement of the original position of the Commission.
Larding the Van Sweringens' Prospects
Although the Commission had decided to permit the location of the station in the Public Square-a decision which gave great comfort to the real estate syndicate which had been operating in that district-it held out on the financial arrangements. Accordingly, the New York Central applied for permission to guarantee bonds to the amount of $12,000,000 for the Cleveland Terminals Company and in May 1922 Commissioners Meyer and Potter acted on the case. It is interesting to note that, at the hearing in Cleveland before Examiner Agnew, appeared the same Colston who had first approved of the Public Square site, no longer an officer of the I. C. C., but as General Counsel and Vice President of the Nickel Plate railroad. Although a motion to reopen the entire case was pending, and the date June 27th had been set for its hearing, on June 15th the committee on Finance of the I. C. C. granted permission to issue the $12,000,000 bonds, the first actual railroad money vouchsafed to lard the lean earth of the Van Sweringen's prospects. It would be interesting to know how much of this money went to the patient b banks which had carried the Van Sweringens so long, whether one dollar of it went to the purchase of land which the railroads will use for railroad purposes.
For the plan at present stands thus: The old right of way of the New York Central along the lake front is to be used for freight. Passenger traffic from the west will be conducted to the heart of the city by means of a bridge or viaduct, more than a mile in length, and a tunnel. Tracks will enter an underground terminal station at a sharp curve, and depart for the east likewise by tunnel. The chances of frequent delays by accident on the curving tracks seem excellent. But it is to be emphasized that the projected railroad tracks do not run over or under the land concerned in the present activities of the Cleveland Terminals Company with its $12,000,000 or railroad money. Not at all. This land is appropriated to the office building above that part of the terminal to be used by the interurban electric roads, at present for the most part nonexistent. Whether in view of the state of interurban transportation business these roads and their terminal will not remain in the realm of mythology is a question raised by the I. C. C. in its first decision. Meanwhile the passenger traffic of the New York Central continues to follow the lake shore to its station built in 1865; on the bluff just above the tracks the site of Tom Johnson's station (itself only a few hundred yards distant from the Public Square) remains unoccupied, a great gap in the imposing alignment of public buildings, and the terminals of the other railroads remain scattered about the city and suburbs, squalid little monuments to American planlessness.
An application of the Cleveland Terminals Company for a second issue of $12,000,000 is now pending before the Interstate Commerce Commission. It should be resisted by the organization recently formed at the Chicago conference on railway valuation; and the whole situation should be a subject of investigation b y the congressional committees on railroads. By the Esch-Cummins Act the I. C. C. is given the right to fix rates of transportation such as to insure to capital invested in railroads a fair return. By virtue of this law the Commission is appointed a guardian of this capital interest, with special power to prevent the railroads from pledging their credit, squandering their resources, and increasing their obligations in such a way as to jeopardize it. By the same law it is guardian of the public, which must bear the burden of increased railroad charges on the form of increased rates. Has the I. C. C. fulfilled its trust toward the shareholders of the New York Central or toward the public in the matter of the Cleveland terminal, or has it proved a tool in the hands of men enjoying a position of special privilege at the expense of legitimate interests and the public good? It may be hoped further that such an investigation will expose three matters of highest importance to citizens of this country: first, the political influence to which the I. C. C. was subjected to reverse its original decision; second, the nature of the relations between the New York Central (or its directors, or President Smith) and the Van Sweringens; third, the circumstances under which men like Baker and Colston can apply the prestige and knowledge which they gain in public service to the profit of private interests which menace public welfare.