The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1902-08-02
GOVERNOR OF IOWA INVESTI-
eating THE ROCK ISLAND
REORGANIZATION
THINKS 1T MAY BE IN
CONFLICT WITH STATE LAW
Doesn't Like the Enormous Increase of
Capital, and Is Not Sure That 1t
Does Not Represent Lots of Water
Such Capitalization of Capital and
Power Dangerous.

DIES MONIES, Iowa, Aug. Gov.
Cummins announced today that he is
investigating the recent reorganization
of the Chicago, Rock Island & Pacific
Railway company with view of as
certaining whether the organization
is in all respects in harmony with the
laws of Iowa. The governor stated to-
day that the first question he issinquir-
ing into is as to whether the imitation
of capital stock which contemplated by
the reorganization is consistent with
the Iowa law. In the second place, he
desires to know just how far it is law
full for a New Jersey corporation to
own and control the property of a
railway owned and operated in Iowa.
He has not reached a conclusion on
either of these question, and declares
that he means to give them a thorough
investigation before he decides what
his duty towards the new company
may be under the premises.
Too Much Latitude, Perhaps.
at may be-" he stated, that the
Iowa laws contemplate as much lati-
rude as the company has used, but
doubt it very much. 1t is my opinion
that the reorganization is out of har-
lIlOnS Will the iowa laws. Inlay D6
mistaken, but if have read the press
dispatches right, there has been such
an imitation of the capital stock here as
is not contemplated by the laws of this
state. 1t is true that there is no limit
placed on the capitalization of such a
company, but there is a limit upon the
Indebtedness of such corporations
and there must be sometl-ngA shown to
h. ~, Ia
company that will represent the differ
ence in increased capitalization.
1T is my understanding that under
the Rock Island plans of REIMBURSEMENT
each holder of 100 shares of common
stock is to receive a $4,000 bonds Sc
cured by a collateral trust mortgage
upon the present Rock Island stock
In addition to this, he receives in the
Rock Island company, of New Jersey,
70 shares in preferred stock and 100
shares in common stock, the preferred
stock being preferred to the extent of
4 per cent from the earnings of each
year for a period of seven years, when
it becomes preferred for per cent
for an additional period of seven years,
after which it is preferred, believe to
the extent of per cent per annum.
L
papers.
Watered?
Now, the capitalization of the old
Rock Island company was but $75, 000,-
600, awhile the new company, located
in Iowa, declares a capital of $685.
100000. There must be something, to
my mind, to show more than is indi-
Gated in the above plan, that the in
creased capitalization is not excessive
imitation or that the stock which has
been issued is not Watered. Under the
Hubbard bill, which 1 vetoed last Win
ter, it would have been possible for
this new company to organize without
any difficulty, as all limitations to the
Indebtedness of such corporations were
practically removed by that act in it's
original form. Under the present law
there are limitations in this regard
L am not prepared to state that the
Iowa law has any penalties which could
be inflicted for violation of such stat
utes, but am not willing to sit by and
allow a proposition of such enormous
size to amalgamate without inquiring
into the method which it employs and
their conformity to the state laws I
am convinced that such a centraliza-
ton of capital and power is dangerous,
to say the least, and cannot be encour-
aged without threatening business in
tereStS. Such Capitalization of CAPT.
tai means that there may follow an ex-
ploslon, which, when it comes, is likely
not only to affect one, but many>inter-
ests. There is reason, therefore, why
l have felt 1t my duty to inquire into
this present case in Iowa."
Says All Is Legal.
NEW YORK, Aug. 1.-Regarding
the dispatch from Des Moines that
GOV. Cummins may take action against
the Rock Island company, an official
of that road said today:
don't believe that there is any
point at which our Incorporation in the
state OF Iowa can be attacked. The
Incorporation papers were drawn IN
with due regard for the laws of that
state, and we believe that they will
hold in law"