Kingsbury County independent. (DeSmet, Kingsbury County, S.D.) 1894-1929, 1905-09-22

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Burlington stock that is sold un,
der pa three years before as cola,
teral at tie rate of 5000 a share.
The so-called bonds were promptly
listed on the stock exchange and a
market made far them. The three
big life.insurance companies now
hold S20,000000 of them, and prac
tically all have been distributed to
the public in one way or another
By this device it will be observed,
Messrs. Hill and Morgan secured
absolute control of the Burlington
road, through Gre { Northern and
Northern Pacific, without having
any of their own money tied up in
it, If they had cared to begin buy
ing Burlington stock at the opening
of the year when it sold at about
Sl45 share and somebody, as we
have seen, did begin buying it, for
over million shares changed hands
in January and February around
that price-later converting this
stock into bonds at $500 a share, and
selling the bonds to the public, they
could have made a very handsome
cash profit in addition to getting
control of the road for nothing.
In 1898 the Chicago and Alton
was choice railroad property. 1t
had maintained dividends during
the hard times when many other
lines made reductions and still! others
went through bankruptcy. But it
was old fashioned, unprogressive,
and it needed extensive improve
ments to bring road and equipment
up to modern standards. It's presi-
dent and largest stockholder, I. B.
Blackstone, was cid and in poor
health. So syndicate got together
and offered to buy Alton stock at
5000 share for the preferred and
Sl75 share for the common. Mr..
Blackstone protested at first, then
withdrew his opposition, and the
syndicate got nearly all the $4,000,
600 capital stock of the road. they
then organized the Chicago aud AL
ton Railway Company, which leased
the Chicago and Alton Railroad
Company, and issued S22,000,000
worth of three and half per cent.
bonds secured by the deposited
stock of the railroad company (the
old company Also, the new com
pany issued S20,000,000 four per
cent preferred and S20,000,0O0 in
common stock of its own. Then the
old or Railroad company issued $40,
100000 three per cent. bonds which
were sold to the syndicate at $3.50
for each $1,000 bond, the proceeds be-
ing used to pay off Sl2,000,000 of
old bonds aud to make the needed
Improvements.
When the deal was completed the
syndicate distributed to its members
for each 81 900 paid in, 1876 in Rail.
road three per cent bonds, $500 in
Railway three and half per cent.
bonds, S400 in the new preferred
stock and $3.50 in the new common
stock. And Chicago and Alton had
stocks and bonds outstanding to the
amount of Sl02,OOO,OO0 in place of
S35, 100000 outstanding in 1898.
about $l4,0OO,0O0 cash having been
paid into its treasury mean
while for improvements aud fifty
eight miles of additional road hav-
been acquired,
Thus we see that, while the Bur
lington in 1896 had 1900 miles of
railroad and Slll,O00,000 capital
stock, after Hill and Morgan per-
fected their scheme the road belong
ed to their syndicate and had cost
them absolutely nothing. The Great
Northern and Northern Pacific had
been bonded for the full amount of
the purchase. Also, the Alton road
changed hands and, instead Of the