The ALLEGHANY CORP., an investment holding company chartered in 1929 and headquartered in Cleveland, was originally financed through its holding of the Van Sweringen brothers' stock in 5 eastern railroads. The brothers' railroad empire began in 1916 when they purchased the Nickel Plate railroad (see NICKEL PLATE ROAD), a subsidiary of the New York Central, for $8.5 million. The Nickel Plate operated most of the right-of-way through Cleveland that the brothers needed to establish public rail transportation between Cleveland and their suburban SHAKER HTS. development (see VAN SWERINGEN, M. J. and O. P.). During the following years, the Van Sweringens expanded their railroad empire which, at its height, was valued at $3 billion.
The Alleghany Corp., which controlled the brothers' rail stock, was created in an attempt to secure ICC approval for a new railroad trunk line. The holding company, however, was hit hard by the Depression and when several Van Sweringen railroads went bankrupt, Alleghany stock plummeted to a few dollars a share. Through loans from the Reconstruction Finance Corp. and other banks, Alleghany remained solvent until 1935, when its creditors foreclosed. The holding company's collapse resulted in congressional hearings that became the focal point of national railroad policy. The Alleghany Corp. was sold to Midamerica, a holding company organized to salvage the Van Sweringens' interests, and resold in 1937 to a group headed by Robt. Young, who moved its operations to New York City.