Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1908-04-07
Small Number of Rail Mag
mates Control Lines OF the
Country
COMMERCE COMMISSION REPORT
Results of Investigations of Relations
Between Companies Owners of
Small Portion of Stock Control Rock
Island System - Sensational His
tory Revealed.

Washington. April i-Therc has
just been completed by the interstate
commerce commission an extraordin-
AIRY report which has been compiled as
| the FIRST response to that section OF
| the Hepburn law which directed the
commission to investigate the relation
| ships between the railroad companies
| The result has been the throwing OF
an extraordinary light upon the man
ncr in which railroad corporations
once Independent have been welded
into highly centralized systems.
These systems themselves have be-
come interested in each other BY
means of minority holdings of stock
among different railroad corporations
there has been produced network OF
ownership which is extremely intricate
to an outsider, but which this invests
cation by the interstate commerce
commission will, for the first time,
clearly reveal to the general public.
1t will show that while the people at
large consider themselves to be the
owners OF the railroads. these wheels
within wheels have been created by the
railroad managers, SO that a small
minority interest in almost every case
runs the railroad, while the public, as
usual. pays the freight.
The tables prepared for this report
are now in the hands of the printer,
but in the meantime there is obtains
able the sensational history of the
way in which competition has been de-
stroyed and one system of railroads
built into another SO that almost the
whole continent is in the hands Of u
few men.
When the tables finally are pub
lished they will show that the holding
company, which is a corporation exist
ing merely for the purpose OF holding
and dealing In the securities OF other
companies, plays an extremely proml- :
nent part in the building up of this
extraordinary centralized American
railroad system, which has not only
destroyed competition. but also has to
a certain extent destroyed the owner
ship as we'll.
The investigation, prosecuted by the
interstate commerce commission ex-
perts, w. j. Meyers, now in charge OF
the statistical division of the New York
public service commission, and Frank
H. Dixon. still in charge OF the IN
yestigation section of the interstate
commerce commission. has particular
bearing upon the peculiar operations
of the Rock Island railroad system.
which has been studied as a model
of q holding company and its opera
tions.
1t may surprise some people to learn,
as the commission has learned, that
a majority of the preferred stock of the
Rock Island company, or only $250oo,-
OO0 dominates the situation and con-
trolls solely and Jointly, thru the enor-
nous issue of s370.000.000 of the hold
ing companys securities. the vast net
work OF railroad lines comprised in
the Rock Island system, amounting to
a total of more than $1,000 miles, with
combined capitalization, stock, and
funded debt of $500. 100000.
This extraordinary statement is en-
tirely borne out by the facts. 1t means,
if it means anything at all, that the
clever railroad manipulators by secur-
ing control of S25 100000 worth of CEN
tralized stock, absolutely dominate ST.
500, 900. 900 of securities held by the
general public or by subsidiary rail-
roads.
1t is by means of such holding COM
panies as these that Hartman and 9TH
er railroad kings have secured such
complete control of the transportation
lines of the country, their power to
issue stock being limited only by the
Willingness of the general public to
pay for lit.
As direct instance of the way in
which stock issues are manipulated so
as to throw the control into the hands
of Il few persons. the commission cites
the fact that holders of the preferred
stock of the Rock Island company have
the right. to the exclusion of the voters
of common stock. to choose majority
OF the board of directors.
That right can be surrendered only
with the consent of two thirds Of the
preferred stockholders themselves.
Then it appears that the amount of
creased. except upon the affirmative
vote of two-thirds Of both the pre-
ferred and common stock.
This Rock Island company, ii should
be explained, is a holding company
pure and simple, and ii was organized
for the express purpose of concen-
trating the control of the railroad pro-
perties in few hands.
1t apparently has no interest in any
corporation except those gen
orally regarded as part of the Rock
Island Frisco system.
It was chartered in New Jersey In
1902 as a holding company and on
June 30. 1906, outside of its treasury
holdings. its preferred stock was $4S,-
956SS0. and common $13s, $50. The
had no debt.
The preferred stock, as I have just
explained carried With it the right to
control the majority of the director
ate. and. of course to control the COM
panv.
Then there is the Chicago Rock Is
land and Pacific railroad company,
which was chartered in Iowa in the
same wear as an operating company.
altho ii is as a matter of fact. a hold
ing company.
It's entire outstanding stock. amount
ing to sl45.000 900 is owned by the
Rock Island company, which secured 1t
in exchange for its own stock.