Arizona republican., 1910-09-20
DIVIDENDS IF STOCKS Subject of Inquiry by Inter-
 state Commission IN WESTERN RATE CASF.
IN WESTERN RATE CASE.
An Inquiry Into the Plan of Distributing Stock to Stockholders at Par When It Is Worth More
 in Open Market.

Chicago, III, Sept. 19.-Alleged stock
 imitation and manipulation. designed
 sums of money without putting in the companies records any reference of
 more than passing fair dividends, was
 the subject into which the inter state
 commerce commission delved today at l the continuation of the hearing, pend ing the suspension of freight rates of western lines scheduled to take effect September l.
 The stock manipulation feature vas
 suggested by Commissioner Cleic, hts,
 and was imm ediatriy taken ID by the
 commissioner a.torney Frank NJ
 Lyon, and Attorney Atwood of han- sas City. who aDpe1rrd for t':e general shippers complittee. which IS lighting the increases.
 Controller BlaI ycit of tho I'Hncis Central was a w'tn.:ss frDu whom the disclosures which f)ll lowed w"re ob- tained Clements called the witness attention ,u figur,s he had furnished on direct examination by tine Iail- roads counsel.
 The commissioner said: "You say that in 1891 your capital stock was $40,000.000 on 2.S75 miles If road: in 1910 on about 1,700 miles more, slO9,- 0a0.On0 also in 1891 tue bonded in dcOte,iaess was Ss2,06G000 while lnt 1910 it had reached $176, 1000, 900. Why is this?"
 We'll" was the answer, what would appear to be an excess wont to improve the roadway, fp- equipment, and the purchase of ether roads
 How was stock raised fir these purposes sold?" continued lbe com missioner. Was it on the open mar ket?"
 Part of it was, but IlOst Cf it was sold to stockholders at per"
 Was there ever decldce.l a stock dividend?"
 "I am sure thern was moi. That would amount to the s1me as any other dividendd, you see. That all the Illinois Central stock sales re- present real values you will sec in l dollars and cents"
 Here Attorney Lyon sought t. have the witness differentiate between gN II ing the stockholders a stock dividend | or giving tneoI stock, wo h moro | than par at parity. The controller in sisted that there was a difference even if the results were the same in | cash to the stockholders. which he admitted.
 This part of the testimony opened a | new question as to the disposition of | the corporations stock and Commis- | sioner Lyon, after asking if it was | to make the stock value approach the | cash value, and being informed that it | was not, he allowed the attorney tot delve into par stock deals.
 eff your stock sold at 150 in the | open market" asked the attorney. and you gave it to your stockholders 1t 100, what became of the extra 30 per cent of it's value?'
 "Why, it went to tho stockholders" was the answer.
 Then the uBshot of it was that your company added to it's capital stock by letting the stock go at par, when it needed money. when it could nave sold less stock on the open mar 1et. satisfied it's needs and kept the capital stock down, giving less capi- al to figure dividends upon; isn't hat so?'
 Controller Blauvelt, unwilling that mch an impression should prevail, ex- ,iained. saving: "Supposing we Jumped $15.000,000 of stock on the market at once, it would send its Talue way below par. l consider it a yood business policy to sell where we were sure it would bring par and keep he control of the road where it was"
 Atwood asked how much of the ompany's $2S5, 5,000,000 in stocks and 'onds had thus been sold at par ince 1900
 The reply caused the other attorneys or the shippers to examine the re- ords submitted by the company. Slauvelt answered.: Tfind the sum of , 49,00O.O00. par value.'
 That was sold in small dabs on he market or if all could have been old at the market prices it would , ave amounted to about a third or a alf more.
 Half or more in addition to that igure, wouldn't it?" asked the astor- , ey.
 q don't know" replied the witness
 q think I can help you," answered he attorney.
 He read from a stock bond com any's pamphlet which quoted high q nd low market prices in the period . overed, as between 122 and 174. with [ n average of about 150. Commissioner Clements interposed [ n inquiry that directed the question