Vilas County news. [volume] (Eagle River, Vilas County, Wis.) 1896-1927, 1906-11-26
GOVERNOR ORDERS
AN INVESTIGATION
Wants to Know About North
Westerns Recent Big
Stock Issue.
WRITES THE COMMISSION
Calls Upon Railroad Experts to
Ascertain if State Law
Is Violated.
WRITES THE COMMISSION
Madison, Nov. 81.


Governor Davidson proposes to as
certain whether or not the Chicago &
Northwestern Railroad company is I'M
duly watering it's stock or enriching
it's present stockholders by issuing
$100, O0O,0 of additional common
stock, and has formally called upon
the state railroad commission to make
an investigation of the matter and re-
port to him.
Yesterday he addressed a letter to
John Barnes, chairman of the com
mission, setting the facts before the
commission so far as at present known
to the governor, and calling for full
ascertainmest of the facts by the
commission, moving within the au-
thority conferred upon it by law. The
letter is as follows:
"Gentlemen:- Overcapitalization of
railway corporations is recognized as
the source of many of the evils con-
nected with railway management.
Stocks and bonds are issued and sold
upon the market to innocent purchas-
ers and charges are fixed with view
of providing earnings to pay dividends
and interest. My attention has been
called to the fact that on October 26,
1906, an amendment to the articles of
association of the Chicago & North
western Railway company was filed
in the Office of the secretary of state
authorizing an increased issue of the
&I.aA To
100000, 900. For what particular
purpose this issue was authorized or
at what price the stock is to be sold
does not appear.
''On May g. 1903, an amendment OF
the articles of association of the Chi
cago & Northwestern Railway conf
pany was filed in the office of the sec
rotary Of state increasing the COM
mon stock to $10O000,000 par value
On May 25, 1908, the company filed a
report with the secretary Of state
showing that of the increased capital
$9,226,110 had been issued and had
been or wouIu be devoted to the pur-
poses of the road. September IT,
1905, further report was filed by the
same company with the secretary of
state stating that of the increased
capial so authorized $1O,6O9,230 had
been issued in addition to the amount
of $9,226,1 Heretofore issued as ap-
peared by the previous report.
cat what rate this stock was issued
does not appear from the report of the
company to the secretary of state. III
the report of the railroad commission
er for 1904, on page SO, there is
statement from the Chicago & North
western Railway company giving the
amount of common stock issued for
cash 92,261 shares, total cash realized,
$9,241,4 4213. From this it would ap-
pear that the stock had been issued
at par with possibly accrued dividends
and not at the market price which
must at that time have been more
than $3.50 instead of the par value of
800.
THE inference is that the company
permits existing stockholders to ex-
ercise a preferential right to SUD-
scribe for the new stock at par though
it is worth a much larger sum in the
market The law of the state clear
ly contemplates that all stock should
be issued for legitimate purposes and
not to enrich existing stockholders.
Under the railroad commission law
you are authorized to inquire into the
management of the business of all
railroads and to ascertain the amount
of outstanding bonds, debentures and
Indebtedness, when issued and to
whom and at what price; also to in
quire into any neglect or violation OF
the laws OF the state by any railroad
corporation doing business therein
and to report all violations thereof 20
the attorney general. the authority
conferred upon the commission by the
law seems adequate to justify an in
vestigation as to the increased issue
of stock by the amendment of October
&c, 1906, the purpose to which it is tC
be applied and the rate at which it is
to be sold. / therefore request that
you make such investigation at you
earliest convenience and to advise me
OF the result