Pillaging Electric Railways in Illinois & Wisconsin

Henry Bruner Enters the Picture

 

Besides Traer and his NCL gang, somebody else was picking the bones of electric railways clean: utility executive turned transit “consultant” and all-round wheeler-dealer Henry Bruner. (Bruner had also, no surprise, been pals with Fitzgerald and Traer since before 1939.) Bruner was a Harvard business school graduate who knew a lucrative racket when he saw it; he was ace at leveraging something from nothing. The Swanson v Traer trial record gives a slew of fascinating detail about the plunder of both the NSL and Milwaukee Transport Company:

 

In seven years, starting at the age of 39 with personal assets of only $16,000 ($307,000 in 2021 dollars). Bruner bought “distressed” interurban lines from the Transport Company of Milwaukee, which provided local transit surface as well. Like Fitzgerald and Traer, Bruner picked up these rail lines for a small fraction of their original values. The Transport Company benefited from tax savings for writing off the assets,.

 

A great way for Bruner to get rich in a hurry was to pay himself a bunch of different salaries, including $25,000 ($38o,000 in 2021 dollars) for running Shore Line Transit, $15,000 ($231,000) for managing Racine Motor Coach Lines (plus another six hundred bucks ($9,200) for his wife), $7,500 ($136,000)  for the Appleton and Intercity Bus Lines and $10,000 ($154,000) for being boss of Kenosha Motor Coach Lines. Grand total: ($910,200). Ka-ching. 

 

EM Goodman, a Milwaukee lawyer, filed another suit than Swanson v Traer against Bruner for much the same reasons as in  the bigger case. Goodman called Bruner a stooge and said the bus company sales were fraudulent, but the judge disagreed.

 

Like many interurbans (and indeed like many companies and tens of millions of people), the North Shore fell on hard times in the Depression. Fitzgerald and his pals said their goal buying NSL shares was to put the company on a sound financial basis and “physically rehabilitate and modernize” the service. Judging by how NCL usually operated, this translated into ripping out rails, selling off assets and buying General Motors buses. In 1947, naturally, NSL got rid of local streetcars in Waukegan and North Chicago, bought twenty buses, and jacked fares up from seven to ten cents. In 1948, NSL scrapped the original rail line that ran right along Lake Michigan, and converted it to buses as well (the inland Skokie Valley rail line was retained.)

 

It’s not clear whether it was Bruner or Traer and Fitzgerald who created Shore Line Transit, in May of 1945. What is clear is that, after putting up only $60,000, Bruner sold his bus companies to Shore Line for $595,000. Then Shore Line sold the same companies back to to NSL for $1,682, 835.67. A sweet deal indeed for Bruner! (it also cleaned out about half of the railroad’s cash reserves.) In 1948, Shore Line Transit, whose main purpose seems to have been fattening the bank accounts of Bruner, Traer and Fitzgerald, was dissolved. It had served its purpose admirably.

 

Roy Crummer wasn’t consulted about any of these dealings, even though he owned a big chunk of NSL stock. Nor were many of the company directors. In fact, Crummer thought the whole idea of the train company going into the bus business was “completely unsound.”

 

The final Illinois Appeals Court appeal of the North Shore legal action was decided in February of 1956, after more than five-and-a-half years of litigation. The judge ruled that the railroad had not fallen into “antagonistic hands”, as the prosecution argued.

 

The case was then appealed to the US Supreme Court. The judges in Washington DC in a 5-4 decision, overturned the Appeals Court decision, and said that Traer and others had indeed acted in a way that was antagonistic  for shareholders. The verdict was given by Justice William O Douglas in June of 1957.