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The Grand Slam. With Loewenstein, Emanuel planned a grandiose scheme to take over just about all the utilities in the U.S. Before the plan went into effect, Loewenstein mysteriously jumped or fell from a plane over the English Channel (V.E. is sure he fell). But Emanuel, backed by the Schroders, who had been Loewenstein's bankers, and A. C. Allyn, among others, went ahead anyway. They fixed their sights on the multi-millioned Standard Gas & Electric System. Altogether, they ante'd up about $60,000,000 and formed the U.S. Electric Power Corp., a holding company with Emanuel as president to take over Standard Gas. But Emanuel & friends couldn't get control because H. M. Byllesby & Co. controlled the voting stock. Emanuel et al. ruthlessly forced Byllesby to capitulate by filing a list of charges of misappropriation of funds, mismanagement, etc.
By this coup, Emanuel & friends got control of a utility empire stretching over 20 states and worth $1,119,000,000. There was only one big thing wrong: the depression had come—and with it the paper empire of USEPCO collapsed. With it Emanuel lost most of his personal fortune. The holding-company act, which was passed to put a stop to just such brobdignagian jiggery-pokery as USEPCO, put the headstone on V.E.'s empire. But Emanuel & friends salvaged something good from the wreck. They kept control of Standard Gas and its underwriting, profited on the issues until SEC stopped the practice.
Soon after, ailing Standard Gas went into reorganization, and V.E., who had been chairman of the board, stepped out in favor of Leo Crowley. The great days of financial legerdemain, when a man could run a few electric light bulbs into a utility empire, were gone for good. V.E. looked around for fresh territory. In the sprawling Cord Corp., which then included AVCO as a subsidiary, he found it.
The New Hand. After years of mismanagement, AVCO was so close to death it was hardly breathing. Nevertheless, there were plenty who wanted a chance at the carcass. Errett Lobban Cord, a brass young auto salesman who had skyrocketed up in the golden '20s,—and put out a slinky car bearing his name—controlled AVCO. But to a cunning infighter like V.E., with the well-heeled Schroders again in his corner, it was the work of only a few months to knock out Cord* and take over the company in August 1937.
With the Cord Corp. in hand, V.E. changed his tactics. The crash of one empire had taught him a lesson. Instead of mushrooming all over, he tried to make some sense out of the rickety maze of companies (45) he had. He wanted to turn Cord, the bad holding company, into a good operating company. One of his first moves was to drop the Cord name, substitute Aviation and Transportation Corp. for the top holding company. Then, like a horse trader, he sold, bartered and junked the money-losing companies in ATCO and AVCO and a holding company of lower degree, Aviation Manufacturing Corp. (AMCO).
But it was touch & go to keep ATCO breathing. One example: AMCO ran short of cash to keep its subsidiaries operating, so it borrowed $1,400,000 from AVCO. AVCO, in turn, ran short, so it borrowed $500,000 from ATCO. ATCO then sold its interest in Checker Cab Manufacturing Corp., and later some new stock and was then able to help out AVCO, which was then better able to help AMCO.