The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1910-09-20
Commerce Commission Probing
into the Roads Management.
John III. Atwood Directs Atten-
tion to Stock Manipulation.
GRAFT is HINTED AT.
Vice President of Road Called to
the Stand.
Tells of the Growth of Both
Traffic and Expenses.

Chicago, Sept. 20.-Controller M. P
Blauvelt of the Illinois Central railroad
again was the target of the questions
relating to the alleged manipulation of
stocks and bonds of his company when
the interstate commerce commission
resumed the rate hearing today.
The attack of the shippers was
made on the company's statement of
capitalization, dividends and bond in
terest- Attorney H. C. Lust, represent
ing the Illinois Manufacturing associa-
ton, sought to show discrepancy be-
tween the roads reports to the inter-
state commission and those to the Illi-
nois grain and warehouse commission.
Attorney Frank Lyon of the interstate
commerce commission questioned the
correctness of several items given by
Mr.. Blauvelt of cash expenditures by
the Illinois Central, by which he will
in part seek to show a diSproportion-
ate drain on revenues and the justice
of the proposed advance in freight
rates.
Lyons interrogations brought out
mention of the car repair graft" for
which three former officials of the
road are now on trial in the municipal
court. The lawyer referred to state
mept that during the fiscal year 1910
$4,000 cars of a total of $4,000 were
repaired and that the discovery of
the alleged swindle would probably
take care of the normal increase in
wages during the present fiscal year.
"Do you expect the cost of car repairs
to be less this year?" inquired Mr..
I'VE certainly do by about $1,000
900 or $1,6O0,O00," replied the wit
ness.
''That was about the excess we paid
last year by reason of deferred main
fQnannn reasons.
he added, alluding to the alleged
graft" and smiling grimly.
The commissioner next directed Mr..
Blauvelt's testimony back to the mat
ter of disposal of stock of the road to
stockholders at par instead of the
open market where the price average
considerable above parity. Attorney
Horton of the railroad sought testi-
mony to justify this method of dispos-
ing of stock.
DO you consider it was better bust
ness to dispose of the stock at par to
stockholders because open sale would
depress values?" he asked.
'I certainly do responded the
controller.
Here Attorney Jno. Atwood of Kan
sas City representing the general ship
pers committee interrupted with some
heat:
Now, let me say just what we mean
here he exclaimed.
I'VE maintain that when the Illinois
Central sees fit to sell stock at 81,
which could have been sold at $3.50,
and gives the difference to it's stock
holders and when $49, 1000 900 par value
of this is sold in ten years, the com
pany choosing to sell stock when 1t
was not necessary the company has no
right to come in here and ask for a
raise in rates.
This line was dropped for the time
being. at least.
IF the Dubuque & Sioux City road
although a subsidiary line of yours,
should have a rate controversy" Com
Clements asked, "it would
claim the right to earn per cent divi
dends, wouldn't it?'
Yes admitted Mr.. Blauvelt.
And you say the Illinois Central
owns about $11, 500 900 of the $4,000. 900
stock of the Dubuque & Sioux City.
having paid, We'll say, about $8,000,000
of its own stock for it?''
"Yes."
"Then, do you maintain that the IL
linois Central should earn Z per cent
on the $4,000, 900 of it's stock, and also
Z per cent on it's Dubuque and Sioux
City stock?"
mot at all; there should be no dupli-
replied the witness.
William L. Park, vice president and
general manager of the Illinois Cen
tral, was the next witness He testi )