The Salt Lake herald-Republican. [volume] (Salt Lake City, Utah) 1909-1918, 1910-09-20
MANIPULATION Of
STOCK SUSPECTED
Interstate Commerce Commits
sion Strikes New Trail at
the Rate Inquiry.
MANY MILLIONS INVOLVED
Comptroller Of the Illinois Central on
the Grill and Required to
Explain.

Explain.
Chicago. Sept. 19.-AiIeeed stock in
tlation and manipulation. designed to
turn over 20 the stockholders large
SUITS of money without putting In the
companys record any evidence Of more
nan passing fair dividends. was the
subject into which the interstate COM
mcrcc commission delved today at the
continuation Of the hearing following
I the suspension OF the general advance
OF freight rates Of western lines SEIZED
I uled 10 take effect September I.
The stock manipulation feature Of
the inquiry was suggested BY Commits
sioner Clements and was Immediately
taken up by the commissions attorney.
frank Lyon. and Attorney Atwood OF
kansas City. who appeared FOR the gen
eral shippers committee which Is fight
I ing the increase. Comptroller Blauvclt
or the Illinois Central railroad was the
witness from whom the. disclosures
which followed were obtained.
Opened Up ny Clements.
Commissioner Clements called the
| witness attention to figures he had
furnished on direct examination by the
railroads counsel The commissioner
said:
You say. Mr.. Blauvelt. that in 1891
your capital stock was $40 600 900 on
ISIS miles Of road. and 1910, on only
about 100 miles more, ~ was S109. 000.
I goo. Also that in 1891. the bonded in
dchtednces was only $4,000. 0G0 while
IN 1910 T. had reached si7s.oo0.ooo. Why
Well was the answer. what would
appear 90 be the excess went to i'm
prove She roadway and for equipment
and purchase OF other roads"
And how was the stock raised for
I these purchases soldTr continued the
conmissioner Was IL on the open
/ market -
| was sold 20 the stockholders at par
80, Wgs there ever declared stock .di-
con, 7 am sure there was not That
would amount 70 the same as any other
dividend, you see. The Illinois Central
stock sales represented real values. you
must see In dollars and cents"
An Alleged Difference.
I Here Attorney Lyon sought TO have
the witness differentiate between Civ
I ing stockholders a stock dividend or
/ giving them stock worth more than par
az parity The comptroller insisted
the result were the same in cash TO
I the stakeholder. which he admitted.
This part Of the testimony opened a
new disposition Of corporation's
stock. and Commissioner Lane. after
asking N % was TO make the stock
value approach the cash value and be-
inC informed Do was not. allowed the at
torney TO deive into the par stock deals.
II your stock sold at $50 in open
market asked the attorney. and you
gave 81 TO your stockholders at 100.
what became Of the extra so per cent
I Of its value
WHY. g. went TO the stakeholder"
Then the upshot Of g was your cap
I ttal added to its capital stock by letting
/ stock go to par. when 60 needed money.
when 10 could have sold less stock on
I the open market. satisfied its needs.
and Kept the capital stock down. giving
less capital 90 figure dividends upon:
I isn't that so7"
Comptroller RIauveIt was unwilling
such an impression should prevail. he
said. and he explained by saying:
/ SupposinE we dumped $4,000. 900 in
/ stock on the market az once. &c would
send rs value way below par. 7 con-
! slider 10 "a good business policy TO sell
| where we were sure &C. would bring par
IND keep control Of the road where 10
Attorney Atwood asked how much Of
! the company's S2S5.000 900 in stocks and
I bonds had thus been sold al par since
The reply caused other attorneys for
] the shippers 20 examine the records
I that had been submitted by the com
Z pany. Mr. Elauvelt answered.
I value
"That. sold I'm small dabs on tho mar
I ket. or m a. an could have been sold
l at market prices. would have amount
I % 90 about a third or a half more than
l half or more IN addition Go that figure.
] would it not7"
/ 81 do not know" replied the witness.
] II think 7 can help you" answered
I the attorney. He read from n stock
and bond company pamphlet which
I quoted the high and low market prices
/ in The period covered as between 100
I and ia with an average Of about $50.
New Line Of Inquiry.
Dir. Clements interposed an inquiry
I that directed the questioning along a
] new line. that Of the uses to which
/ stock sale money was put. and the pos
sihiHty of actual gains ~ the company
being hidden I'm its owning stocks and
] bonds In subsidiary companies
/ The comptroller answered this 0ue~-
I ton by insisting that when the parent
company paid out maintenance costs for
/ iaries paid back dividends. those re-
! turns were not properly sources Of in-
come 20 be considered in computing
/ dividends.
The commissioner asked.
some or this additional property
/ which your company acquired was pur-
chased by earnings. wasn't it2'
| III was was the reply
! Then interrupted Attorney Lyon
/ does the income include returns from
these outside companiesT~
40; certainly not. replied Comptrol-
ler Blauvelt Few Of them pay ans
dividends and return revenue Isl con.
| stunned Ia payment OF expenses on thici
separate lines and does not furnish The
parent company with any excess for in
Attorney clifford Thorn. Of a farm
ers COOPERATIVE association. ther
!, present years high cost Of mainteu
auce was abnormal and would not b,
expected next year. hence Increase OF
rates on that account was not nccce
sary. The comptroller did not have
the specific Information he sought.
AMERICA m COMES DOWN.
Warrcnton. Va. sept. 1q.-The bal
loon America TT. with Allen T.. Hawley
as pilot and August Post as aide. land
ed today AZ 2.20 o'clock. three mile.
southwest n this place.
Mr.. Hawlcy reports that tho big bal
met with little rain and practically NJ
storms. maintaining an altitude Of be-
tween 5000 and 10000 feet in its trfr
across Ohio and West virginia into
I this state. The balloon was in the air
| 1928 hours and the two aviators were
I practically exhausted. They left to-
/ night for New York.
The America IT was the winner OF
last years International contest at
Zurich.
II THREE OF a PARTY or