Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1902-08-07
CUMMINS AFTER
THE ROCK ISLAND
HAWkEYE GOVERNOR WILL MAKE
INVESTIGATION.
SEES ILLEGAL INITIATION
Thinks Laws of Iowa VIII Not Permit
Recently Announced Plan of Reor-
ganization-Credit to Stockholders
Must Equal Increase of Capitalize
ton.

Des Moines, Aug. Ex-Governor Cum
Minis announced yesterday that he is
investigating the recent reorganization
OF the Chicago, Rock Island & Pacific
Railway company with view of ascer-
tanning whether the organization is il
all respects in harmony with the laws
OF the state Of Iowa. He has not vet
conferred with The attorney genera,
but will do so as soon as the attorney
general returns to the city.
The governor stated yesterday that
the first question he is inQuiring into is
as to whether the imitation of the cap
ltal stock which is contemplated by The
reorganization is consistent with Iowa
law. In the second place he desires
to know just how far it is lawful for
New Jersey corporation to own and
control the property of a railway oper-
ated in Iowa. He has not reached a
conclusion on either of these questions,
but declares he means to give them
thorough investigation before he de-
cldes what his duty toward the new
company may be under the premises.
1T may be-" he stated, that Iowa
laws contemplate as much latitude as
this company has used, but l doubt it
very much. 1t is my opinion that the
reorganization is out of harmony with
Iowa laws. l may be mistaken, but if
have read the press dispatches Alright
there has been such an imitation OF
capital stock here as is not contemplate
ed by the laws of this state. 1t is true
there is no limlt upon the Indebtedness
of such corporations, but there must
be something shown to the credit of
the stockholders of such a company
which will represent the difference in
the increased capitalization.
ct is my understanding that under
the Rock Island plans of readjustment,
each holder Of 100 shares of common
stock is to receive a $4,000 bond, Sc
cured by a collateral trust mortgage
upon the present Rock Island stock.
In addition to this, they receive in the
Rock Island company of New jersey,
20 in preferred stock and 100 shares of
common stock, preferred stock being
preferred to the extent of per cent
from the earnings of each year for a
period of seven years, when it becomes
preferred for per cent. for an adm
tional period of seven years, after
which it is preferred, l believe, to the
extent of 6 per cent. per annum This
is as I read the plans in the newspa-
pers.
Now, the capitalization OF the old
Rock Island was but $75,00O,OOG, while
the new company located in Iowa de-
clares capital of $125,OOO,OOO There
must be something, to my mind, to
show more than is indicated in tn
above plan, that the increased capital
1zation is not an excessive imitation, Q:
that the stock which has been issued
is not watered. Under the Hubbard
bill, which l vetoed last winter, It
would have been possible for this new
company to organize without any diff
Guilty as all limitations to the indebted.
ness of such corporations were practi-
cally removed by that act in it's origi- |
nal form. Under the present law there
are limitations in this regard.
Il am not prepared to state that the +,
Iowa law has any penalties which |!
could be inflicted for the violation OF |
such statutes, but l am not willing to |
sit by and allow a proposition of such ;
enormous size to amalgamate withou.
lnquiring into the methods which it
employs and their conformity to the
state laws. l am convinced such cen
tralization of capital and power is IAN
gerous, to say the least, and cannot be
encouraged without threatening bus
mess interests. Such Capitalization Oh
capital means there may follow an ex-
plosion which when it comes, is likely
not only to effect one, but many inter
ests. There is reason therefore, why
have felt it my duty to inquire into
tnls present case in Iowa.