Plain Dealer article published on June 2, 1996
DEPRESSION DERAILED VAN SWERINGEN EXPRESS
Those two masters of the game of real estate, the Van Sweringen brothers of Cleveland, had just made their greatest coup, winning a referendum in 1919 that gave them development rights for their Union Terminal complex on the southwest corner of Public Square.
Against all odds and seeming common sense, they had first overpaid for the old Shaker North Union Colony acreage; then, in order to make the area accessible to future home buyers, acquired the Nickle Plate Railroad, 539 miles long, to get a vital two miles for their own transit line over its right-of-way from their Shaker Village development to downtown Cleveland. Now, the final piece in the jigsaw puzzle was in place, and the work started, work that would take 11 years and $200 million.
By 1920, 35 acres of historic old Cleveland were being cleared west from Public Square down the hill to the river. Something was gained and something was lost. Squalid, disease-ridden hovels fell to the wrecker’s ball; so did some landmark old inns and restaurants. Fifteen thousand people were displaced from their homes – as rundown and riddled with crime as the area was, it was home to them.
The crowning jewel of the complex was the 52-story Terminal Tower; next to it was Higbee’s Department Store; behind it was a brand-new street with two more high-rise office buildings. But underneath the tower was what it was all about, because here all the major railroads, except the Pennsylvania converged. This was a time when railroads seemed all-powerful, the industry that legendary robber barons like Jay Gould, Commodore Vanderbilt, and Leland Stanford had made part of the American industrial fabric. Nobody could have foreseen the end of their dominance of passenger travel within a relatively few years.
As for Shaker Village, that exclusive community had succeeded beyond even the Van Sweringen brothers’ wildest dreams! They had added an average of 300 new, expensive homes each year from 1919 to 1929, and the population had gone from 1,700 to 15,500 in the same time. In 1931, it became a city and changed its name to Shaker Heights.
And those 1,366 acres of Shaker land that the Van Sweringens had bought from a Buffalo syndicate for $1 million was now valued at $80 million.
Shaker Village seems to have been among the first planned suburban communities in the country. And its very restrictions were what made it so attractive to so many affluent buyers. In the ’20s and ’30s, you weren’t permitted to buy or resell a house until you got permission from all the neighbors, plus that of the Van Sweringen Co. The latter had to approve the architect, the paint colors, even the realtors!
There were 99-year deed restrictions that effectively kept out Jews, Catholics and blacks until after World War II. The Van Sweringens persuaded Cleveland’s University School to relocate in Shaker, and they were soon followed by Hathaway Brown and Laurel School. It was typical of Oris O. and Mantis J. Van Sweringen that after acquiring the whole Nickle Plate Railroad, almost as an afterthought, they set about buying 24 more railroads to the tune of 27,000 miles of trackage, and that led to being involved with more than 200 other companies including real estate, traction and coal interests that may have had some $4 billion dollars of assets, according to historian George Condon .
Had success gone to the heads of the two shy, reclusive bachelors?
Hardly! On June 28, 1930, Terminal Tower and the Union Terminal were to be dedicated with an immense party of prominent Clevelanders and guests from all over the country. After all, it was the greatest city center complex that had ever been built up to that point. (Rockefeller Center was several years away.) But O.P. and M.J. Van Sweringen weren’t there – they stayed home and listened to the celebration on the radio.
But not even the Van Sweringens could have foreseen the disaster that the Great Depression would create. Railroad revenues plunged, Shaker real estate was going for a song – if it went at all. And the Van Sweringens were into two local banks for a lot of loans, loans that were called and the collateral lost. Even a huge loan from the J.P. Morgan bank wasn’t enough to bail them out, and at the end of September 1935, at an auction of their assets, several entrepreneurs picked up some $3 billion of assets for a little over $3 million.
The two local banks who had loaned the Van Sweringens all that money never re-opened their doors, and there are Clevelanders to this day who feel that their collapse, caused by the Van Sweringens’ defaulted loans, was such a devastating financial and psychological blow to this area that only now it has really begun to recover.
From the Roaring ’20s to the Great Depression, the Van Sweringens led the rise and fall of a great city.