Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1902-09-18
Governor Cummlins Makes Pub
lie the Opinion Of Attorney
General Mullen
IOWA STATUTE NOT VIOLATED
Nothing Found in the Rock island Re-
organization That Violates the State
Law, But the Whole Transaction
Looks Shady -. cummins Suggests
Legislation on the Subject.
Special to Times-,Republican.

| Special to Times Republican
Des Moines, Sept.1S.-Governor Cum
Minis last night made public the opin
ion of Attorney General Mullan on tn
legality Of the Rock Island re-organiza
ton scheme. Governor Cummfns ais
issued q short statement III which h
|acquiesces in Mulian's views.
The acts of the new Iowa corpora
Hon, the Chicago, Rock Island s. Pa
cific Railroad Company. recently form
ed in this state with a capital of $125,
900, 900, he holds are not outside of tn
powers conferred by statute. Nor ar
they opposed, he declares. to the publ
policy OF the state in a sense that will
enable the state b prevent the transac
ton or maintain ian action Of quo war
ranto for the dissolution Of the corpo
rate franchise.
The effect OF the opinion will be ar
end Of any further investigation Of The
Rock Islands pl:lns and their relation
to the Iowa statutes. Governor Cum.
Minis in statement said:
81 have carefully examined the opin-
ion Of the attorney general and / con-
cur with him in the conclusion that un-
Ger the law as 1t now is, the state OF
Iowa can not prevent the consumma-
ton Of the plan described in my letter
to the attorney general and in the
opinion he has filed with me.
The thing done is neither merger
nor consolidation. Not mile Of track
nor q dollar in value Is added to the
Rock Island property. It Is simply a
new device for watering securities.
Tt is for the next general assembly
to say whether 1t is wise to permit our
possible
Governor Cummins also makes pub
lie his letter 70 Attorney General Null
Ian in which he rccites the plans of
the Rock Island company In detail and
gives the history Of the re-organiza-
ton in which he asserts his belief that
a few men whose relations were SO
close that they acted in concert to ac-
complish a common purpose. The stock
Of the Rock Island was quoted on the
New York exchange at about 200 per
cent and the total capital represented
was about $75,O0O,000. The Governors
letter then says:
''Sixth-1n the stead Of seventy-hve
holding majority Of the seventy-five
Millions Of the stock of the old Chicago
Rock Island & Pacific Railway Compa-
1y, came to the conclusion that IL
would at least be advantageous to them
1rst to increase, the stock and secure
les of the property without contrib
lting anything for such increase. Sec
md, to so arrange the plan of increase
hat the control of the system could be
'etained with greatly reduced invest
nent. While 1T is only an inference. I
I'm clearly of the opinion that every
'6mplish the two objects above stated.
md beg that your reply hereto will
10 assume"
The governor then reviews the meth
Ids employed to carry out the above
,lans and sums up the situation as
olIows:
"a brief review Of the facts as have
iven them will show that when this
,lan is carried out and until the above
ransfer be made, the situation may be
hus stated:
''F'irst-The Chicago, Rock Island &
Pacific Railway Company (the old
ystem Of railway lines
"Second-Tfe Chicago, Rock Island
! Pacific Railroad Company (the new
ompany) will own the seventy-five
Millions Of stock Of the old company,
'ut it will be pledged to secure an
quail amount of bonds which it pro-
oses to issue. It Will practically
peaking, have no further function to
erform, unless it becomes the owner
r lessee of the property.
"Third-The Rock Island company
the New Jersey company will own
nd hold the entire capital stock of the
This being the situation. these men
millions of dollars.
"Fourth-A majority of the preferred
took of the New Jersey company will
lect majority of the board of direc-
ors and thus control it. This same
lajority will elect the directors Of the
ew Iowa company and thus contlpl 1t,
nd the last named company will elect
ne directors Of the old Rock Island
which operates the property.
he chain is complete.
"Fifth-As conditions were before the
Ian was undertaken, with the stock of |
he old Rock Island company at two
rNH rsa1 +
lore than seventy-five millions to
ontrol the property. Now with the
stock Of the New Jersey COM
any at parTit requires an investment
only twenty-six millions, two hun
red and fifty-one Thousand to control
"Sixth-In tn setead of seventy-f1ve
illions of stock which formerly rep
scented the entire interest in the
ock Island system, exclusive of in
ebtedness, there are now four hundred
I'd two millions, five hundred thous-
i'd dollars of stock and bonds, and
lis without the payment of a dollar,
,s-e ch m m tmm
I've the fees for organizing these COM
lnies. The whole amount of the stock
not available for trading purposes,
1t it exists.
Upon this; statement will you kind
take the matter up from legal
andpoint and advise me whether the
wv Rock Island company of Iowa is a
wfully organized corporation, and
neither the transaction I have de-
ribed can be arrested at the instance
the state; or, stating the inquiry in
, broadcast terms, Is there any remedy
ller our laws for 40 grave an nffenaa