Forest City press. (Forest City, Potter County, D.T. [S.D.]) 1883-19??, 1911-06-01
Floyd w. Mundy in Golfers.

Floyd w. Mundy In Corners.
Smal groups Of capitalists arc frequent
y found to control. through a relatively
hsnalt investment of capital, large systems
"a railroads where scores of millions of
0Dliurs of bonds OF such railroads are
placed In the hands OF bonafide investors
VINO have no protection against reckless
hnaucing or imprudent management on
ths part of the small group in control.
4sthouyh such may result in the IMPAIR
xDcrit Of the safety of their Investments.
The amounts actually invested In u rail-
road might be 800. 100000 represented in Sc
ctiratieg by $40, OOJ.9O0 of stock and SlGO, 0O0,CG
~ bonds and other fixed interest but non
voting xecurities, and not only the market
taluc hut also the intrinsic value of the
tioO.OOO.GW of n%on-voting securities might be
placed In Jeopardy by the imprudent imam
Gal operations Of a few who own control
OF The $iO. OF capital stock.
10 Illustrate the dangers besetting in
xeStors from financial pyramiding, even RS
tils applies to investors Of underlying
hon0s. 1 may properly refer to the Rock
Island company. In 1902 the mileage of
tho Chicago. Rock Island and Pacific rail-
road system Appropriated $500 miles of
ROAD. The net capital stock outstanding
against this mileage was about $75, 900. O0
hieh-priced. nigl grade stock. having a
market value of approximately. 500, 600. OGO.
To become captains of the railroad indus
ssy q became necessary In the case Of this
company for the would-be captains to In
vNet mot less than. say $50.I00, eco to con-
tf0t $50 miles OF road. Tho control of this
mileage was, in fact, acquired and sub
ecQoonty retained by means OF a hnancia
Adjustment whereby about $500, 900, 900 of
0ew securities were issued In exchange
Tor tho old capital stock. A newly formed
railroad company purchased the entire
cOnsraon stock C$29. 600. 00O of the st. Louis
= Han Francisco Railroad company, issu-
1g bonds and stock to make this pur-
chase The Frisco purchased practically
an thu stock of the Chicago & Eastern
ultnofD ratlrOad: the Chicago & Eastern
Illinois railroad purchased the majority o,
ebe voting stock OF the Evansville & Terre
Haute railroad: interest n other com
bAnles was acquired and the pyramid was
setipSste. lin December, 1909. the st. Louis
and Bar Francisco lines were divorced
troaa the Rock Island lines, so the controI
no longer rests with the Rock Island com
tany)
WHEN the Rock Island was in.
e~pfporated It was provided that the hold
ofs ct . majority interest In the preferred
Aesck (abOut $50. 0OO.0 Gao par value) Of this
company were entitled to elect the ma
tos3ty Of the board of directors; thu the
ownership OF the majority of the preferred
Lex OF the ROCK Island company carried
WITH Il the absolute control OF the com
panles above mentioned. On June 30. 1909,
~ aggreEate mileage controlled directly
~ the owners of the majority Of the Rock
1alasnd company's preferred stock amount
~ approximately. to 5000 miles Nhe mile
q OF the system was $500 miles in 1902
u courae. the Increase in mileage was ac-
eoplplished by issuing bonds, guaranteed
certificates. etc.
= be granted hat the value of a bono
g Q company. even though 1t be ade-