The Washington herald., 1910-07-28
RAILROAD VENTURE
CONES TO GRIEF
Continued from Page One.

c3ated in harmony with Judge Moore and /
Mr. Reid. the other dominant persons In
the Rock Island Company. These old
Rock Island men had long cast eyes at
Lehigh Valley, and presently directed DR.. |
Rearson's attention to that property.
Price Goes UD.
DR.. Pearson made an examination OF !
that property also and recommended it 10 |
his Canadian and British friends and got
their money into it as It was put into
Rock Island Eehigh Valley stock was
sold as low as g. In the early part Of last
year. and scared to 112 as result, in
part, to these purchases.
Here the paths Of the old and new Rock
Island men seem to have diverged. The
others were content with the expansion
they had alreaoy made; Dr. Pearson and
his associates went further UNTIL as It be-
came known to-day, they had bought into
companies with a stock capitalization OF
fully $4S5.OO00oO par value and controlling
1887 miles OF road. extending from the
Atlantic to the Pacific
These other operations were conducted
secretly. It was known and publicly
announced that the syndicate had ac-
quired heavy interests in Rock Island and
Lehigh Valley, but not until to-day did
It come out. DR.. Pearson and his friends
had gone further and made purchases OF
American railroad stocks on a scale IN
douhtedly never paraIleled by any one
group Of foreign capitalists at any one
time.
Lehigh Valley runs from New York to
Buffalo, and Rock Island from Chicago
west 10 Denver Here was a big gap
between Buffalo and Chicago. and the
syndicate bought into the Wabash. a road
loosely controlled by the Goulds, which
connects those two cities
Get Missouri Pacific.
From Denver 70 the Pacific Coast the
! best available route was by the Denver
and Rio Grande. which owns two-thfrds
Of the stock Of the recently completed
Western Pacific. But 40 per cent OF the
/ Denver and Rio Grande stock is owned
| by the Missouri Pacific. so that in order
60 acq1ire influence in Denver it was
| necessary also 20 acquire substantial I'm
! huence IN Missouri Pacific. From East
10 West the contemplated transcond-
I mental system was then conjured up, as
may be seen in the following table. CIV
/ ing the railroads, mileage, and capital
stock:
Lehih vaey-Nlnease 1Al; capital stock. So
Ooooo0
Wabash-Nllease. 2a4: capital stock. 2OMmO
| common and 100000 preferred.
4 Rock Idau6-MileaEe, Sis; capital stock. SO
| oooC0 common and $1,000 O0 preferred.
Missouri Pacfc-Mieage. S.77s; capital stock. sss-
W0ON
Denver and Rio Grande-snlease. 2ss; capital
/ stock. NS 20 600 cannon and so noon prc'erred-
Western Pacifc-Afilcagc 81; capital stock
! owned by Denver and Rio Grande.
Total mileage 1871; total capital stock, $751;
/ 10000.
story May Never Be known.
Just how well the syndicate got along
with It's purchases could not be learned
to-day. Now that the bulk Of its hold
/ ings have been transferred at private
sale. the extent Of the operations may
never be exactly or approximately
known. But It is known that II bought
| heavily into Wabash and heavily into
/ Denver before its operations ceased, per-
/ force, with the turn IN the market In the
/ early part OF the year and the conse-
/ quent steady increasing Discrimination Of
/ investors TO go heavily into railroad Sc
eurities until political and legal problems
were settled.
The Canadians and EQglishmen asso-
ciateG with Pearson in his enterprises
have not been made known, nor would
, the bankers who took over the syndi-
Gates or representatives Of Or. Pearson
disclose their names to-day. The doctor
! himself left his New York headquarters
at . Broad street for his summer home,
at Great harrington. Mass, as soon as
the arrangements with Kuhn. Loeb &
Co. were cCmoleted-
Prominent Men Interested.
In his Mexican and South American
ventures there have appeared as DR..
Pearson's associates such prominent men
as Sir William Van Horne. chairman OF
the board Of directors OF the Canadian
Pacific; William Mckenzie, one OF the
builders of the Canadian Northern and.
like Sir William Van Horne. one OF the
! greatest railroad constructors in Canada:
G. A Cox and Sir H. NJ Pellatt. Of To-
ronto: z. a. Lash, X. c., and many other
Canadians; John Gauval and Edward
/ Quellen, E. c., OF Paris; w. Verstraston.
Of Brussels; II. NJ Hubbard and r NJ.
I Horne-Payne. Of London and many other
Englishmen.
The holdings of the syndicate, though
probably representing an investment Of
at least $500O0.OOo were seemingly amply
protected In the early part Of the year.
1 Stocks and bonds owned by it were
pledged on loans made by bankers in
this city and London, but the margin on
these loans seemed 20 be sufficiently wide
70 provide for any but abnormal and ex-
/ traordinary fluctuations in the security
markets But when Rock Island COM
mon declined twenty-nine points and the
| preferred twenty-one points from the
prices early in the year there were losses
Of more than thirty points in Lehigh
Valley. Of twelve points in Wabash com
mon. and twenty-nine points in Wabash
preferred. and Of nineteen points in Mis-
souri, Pacific.
It seems 10 have been about that time
that the banks began looking for addi-
tionsI collateral and that the loans be-
came insecure. At any rate. the syndi-
cate began TO cut down its holdings The
market was a bad one on which to place
stocks like the Rock Island, Wabash, and
| Missouri Pacific issues. all Of them stocks
that pay no dividends. and money was
first raised by the sale Of big blocks OF
the Chicago. Rock Island and Pacific coll
lateral trust bonds.
Large Sale OF Bonds.
In the course Of the liquidation of these.
which ended about two weeks ago. and
which then further unsettled the security
markets the bonds declined about fifteen
points. which is an extraordinary loss Cor