Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1902-08-02
.CUMM|NS To INQUIRE
loWa's Executive Wants to Know
Something More of Rock
Island Reorganization.
BIG INITIATION OF CAPITAL STOCK
One Thing That Seems Indicated
Has Some Suspicious of
Watery DiIution.

Des Noines, Ia, Aug. 2.-Governor
Cummins announced yesterday that he
is investigating the recent reorganiza
tion of the Chicago, Rock Island and
Pacific Railway company with a>view
OF ascertaining whether the organiZa
ton is in all respects in harmony with
the laws of the state of Iowa. He has
not conferred with the attorney gen.
eral, but will do so as soon as the at
torney general returns to the city. Gov
ernOr Cummins stated that the first
question he is inquiring into is as to
whether the imitation of capital stock
which is contemplated by the reOrgani-
zation is consistent with the Iowa law.
Second Thing HO Wants to Know.
In the second place he desires to
know just how far ii is lawful for
New Jersey corporation TO own and
contrOlthe property of a railway owned
and operated in Iowa. He has not
reached a conclusion on either of these
questions, and declares that he means
to give them thorough investigation
before he decides what his duty to-
ward the new company may be under
the premises. 1T may be-" he stated,
that the Iowa laws contemplate as
much latitude as this company has
used. but 1 doubt it very much
Too Much Imitation of Stock.
IF l have read the press dispatches
Alright there has been such an imitation
of capital stock, here as is not con-
templated by the laws of this state.
1t is true that there is no limit placed
upon the capitalization of such COM
pany, but there is a limit upon the
Indebtedness of such corporations, and
there must be something shown to the
.Nf -fa -I,<NIsl .Nf
company which will represent the diff
ference in increased capitalization. 1t
is my understanding that under the
Rock Island plan of readjustment each
holder of 100 shares of common stock
is to receive $4,000 bond secured
by Il collateral trust mortgage upon
the present Rock Island stock.
The Way He Reads the News.
''In addition to this they receive in
the Rock Island company, of New .Jer-
sey. seventy shares in Il preferred
stock and 100 shares in COM
mon stock the preferred stock being
preferred to the extent of 4 per cent.
from the earnings of each year for
period of seven years. when it be-
comes preferred for > per cent. for an
additional period of seven years, after
which it is preferred-I believe-to the
extent of q per cent per annum. This
is as / have read the plans in the
newspapers.
Governor Suspects Watered Stock.
''NOw the capitalization of the old
Rock Island company was but ST3,
100000. while the new company. To-
Gated in Iowa, declares a capital OF
$125. 100000. There must be something,
to my mind, to show more than is in
dicated in the above plan that the in
creased capitalization is not an eX
cesSive imitation. or that the stock
which has been issued is not watered.
Under the Hubbard bill. which i We
tOed last winter. it would have been
possible for this new company to or
ganiZe without any difficulty. as all
limitations to the Indebtedness of such
corporations were practically removed
by that act in its original form. I'm
der the present law there are limita-
tions in this regard.
such CentrRlizations Are Dangerous.
Il am not prepared to state that the
Iowa law has any penalties which
could be inflicted for violation of such
statutes, but / am not willing to sit
by and allow n proposition of such
enormous size to amalgamate without
inquiring into the method which it
employs and its conformity TO the
state laws. 1 am convinced that such
Il Capitalization of capital and power
is dangerous, to say the least, and
cannot be encouraged without threat
ening business interests. Such CEN
traliZation of capital means that there
may follow an explosion. which when.
it comes is likely not only to affect
one but many interests. There is rea-
son. therefore. why l have felt it my
duty to inquire into this present case
in Iowa."