The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1904-10-26
RAILROAD NEWS.
Rock Island Bookkeeping as
Shown by the Annual Report.
Study of the Yagaries of Com
pIicated Balance Sheet.
NHATIT DOES NOT SHOW
Comparisons Made With Report
One Year Prior.
SOSsip and Matters OF Interest in
Railroad Circles.
WHATIT DOES NOT SHOW

When the first annual report of the
Rock Island company was published a
year ago, it was received with mingled
perplexity and amazement. The read
er was first confronted, on the balance
sheet. by the item of $34,911, 900 lad
vances for construction and improve
ment." What did this extraordinary
entry mean? Not a word was said.
Next came $32, $4,000, scheduled I'M
der assets as stocks and bonds of con-
stituent companies What were these
stocks ana bonds, and how were they
valued on the books? No Information
was VouchSafed. So through series
of entries, many of which md very
few parallels in railway accounts
Seven pages of the report were oeVoteu
to other matter than lists OF oHcerS or
tables of statistics, and of those seven,
six were devoted to the republication
of the company's charter. Not a Woro
appeared by way of explanation OF
these mysterious entries on the books
Vagaries of a Balance Sheet.
The company's second annual re-
port has for this reason been awaited
with natural curiosity. 1t Is at mana
this week. and the investor or account
ant who undertakes to get from it the
much needed light on the company
complicated finances, Will nave MS IA
Dor for his pains. The first impress
sion derived by the reader is, that
studied effort has been made to con-
ceal essential facts This impression
presently gives way to the conV1ctlon
that the compilers of this years ROCK
Island annual report were unable to
grapple with their situation. Certainly
nothing more blind and bewildering
than this company's balance sheet
could be offered to the inquiring inVes-
tor. The report does, indeed, include
a general explanation of what was
meant by last years mysterious S61,-
100000 debts to advances for con-
struction" and stocks and bonds or
constituent companies" This eXplana-
ton though it comes twelve months
after the proper time. and gives no
proper classification, should be duly
recognized; but it does not cast great
light on present or future.
Let US take, for instance, what is
called in the report the general bal |
ance sheet of the Rock Island system.
Last year, the item capital stock was
set down at $90,796,345; this year, the I
same item figures out $75,O0O,OOO.
Nothing is said. IN the text of the re-
port, to explain this rather unusual
showing; the reader is driven to fur |
Their scrutiny of the balance sheet. ThiS
examination first unearths the fact
that valuation of property and fran
chises has been marked up from
$15O,962,9SS to no less a sum than
S216, 321.269 Next, he finds that an
item of S32, 322,269. on last years as
set column, scheduled as stocks and
bonds of constituent companies" is /
this year marked off entirely, and that i
another 1903 asset of $34,911,053, en-
tered as advances of construction and
equipment" is reduced to $17,142,2S4-
on the side of liabilities, against the |
$15,796,345 decrease in capital stock,
outstanding funded debt increases
S19,745,0OO, while a new item appears
of $12.500,000 in temporary loans. A
little calculation will show that these
other changes offset the increase in
property and franchises" the ad-
vances made and securities held hav-
ing been covered into that item, while |
increase in interest bearing debt ac-
counts for the rest of the increase in
property account.
Story of the Debt.
Thus assets and liabilities have been
made o balance; but let the investi
gator next inquire what actual trans
actions stand behind these entries. 1t /
is clear at least, on the face of things,
some $33. 1000 further. For what,
then, was this fresh debt contracted? |
The list of the years additions to fund
ed debt accounts for something like |
$50. 000. 900, of which $15.000,0 900 was APP
piled to reimbursing the treasury for
expenditures made for construction
and acquisition of new lines" AS to /
what use was made of the So, 500 coo |
raised through temporary loans due
April 1, 1905, and July 1, 1907, the report
gives no information wha tsoever. One
gets from these unavoidable confessions
however, useful glimpse of the finance |
which sent the company, first into |
panic market with the cool request for
a $3.50, O00. 900 loan. and then to the
bankers for one and three year Dor