The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1914-10-16
TELLS Of MONEY
ROCK ISLAND LOST
:ypert Testifies to False En-
tries, Huge Salaries, and
Stock Watering.

| took watered to five times its value.
II Of s4o.000.0oo to the Rock Island rail-
r 4 in the purchase of the Frisco and
n Alton roads. enormous salaries to
10 <als. and false entries on the books
It. boost market values OF stoCk-these
u re some of the things charged by F.
l. Sharood. expert accountant employed
| b. the Interstate Commerce Commits
81 n. who occupied the witness stand
/ Il rough the opening session of the COM
n ssions investigation of the Rock Is
ls nds affairs today.
Sharood testified how, Immediately
Ia rer the Moore syndicate "b-
Il ned control of the Rock Island in
Il , holding companies were organized
in Iowa and New Jersey. and $50, 0O0 600
s. ocks and bonds were issued dependent
tirely for earning power upon the
s 900, 900 capital stock of the Rock Is
l. nd.
He told how the financial wreck of
L Rock Island was FASTENED
rough the purchase of the Frisco,
trough J. P. Morgan & Co, with a
l'ss Of s35, 100000, and how the road
l'st s6,00O,000 more in the purchase
C the Chicago and Alton road from
the late +. H. Hartman, Jacob Schiff
ana James Stlllman
$4,000 Salary To Loree.
a contract between the Rock Island
and L. F. Loree, Of Baltimore. for
ner president of the Baltimore and
O-io railroad, under which Loree was
t. resign the Baltimore and Ohio
: esidency and become chairman Of
Rock Island executive board. at
al Of In HN-a
0ars, was produced.
Sharood charged the company made
- entries in its books to make a.
2 BETTER financial showing, and thus
ate a better market for its stock.
regularity of the entry of the $685.
q 100 loss in the Rock Island deal he
s. L. was that it appeared as an asset
II tead Of under profit and loss.
p. Morgan and Company received
l2a7. 600 shares Of New Jersey holding
cCmpany stock in return for their
s-arood testified. He also produced
records to show payment of 100000 to
! A. Jackson. vice president of the
Rex Island. in addition to his salary
C' $4,000 a year. There was no &C
G nting for this other than as legal
eN0enses,"
a great big woodpile without any
rrEger in it." was the way Robert Walk
counsel for the Rock Island. char
p-'erized the investigation before 1t
o1ered early today.
= c. Sharood. an accountant in the
employ of the commission, was the first
- mess TO take the stand. Commission
- Clements. who is presiding over the
Investigation. emphasized to Governor
Folk. chief counsel. the desirability of
eyncditing the hearing for the benefit
- Witnesses.
one Of the first disclosures brought
ont waF the disclosure of how the Rock
Island stock had been increased to five
tirnes its original capitalization, shortly
after the Reid-Moore syndicate obtain
ed control OF the road.
Employees Are Directors.
Shsrood told of the formation Of the
VA and New Jersey holding compan-
Ir=. the directors of which were en-
YES Of the Rock Island railroad. The
tai stocks and bonds issued by the
40 holding companies were 3350,000,-
60 These had no earning power of
cir own. examination disclosed, but
- ere dependent entirely for earnings
Q ION the dividends of S71.000,0o0 from
r~4 stock Of the Rock Island road.
Then the stock of the Rock Island
vas watered five times over" said Folk,
Yes. sir" replied Sharood.
Loss Charged As Asset.
re toIal loss IN ipS frisco NCftl' d.
ding 10 t. Rock Islands own BOOKS.
're witness said, was s25.0A0,oGG. 4 re
rlIsrity about the entry in the Rock
and books. Sharood testified was that
SO SIS 00l,oOJ loss WAS charged up as
- asset instead # appearing under
ont and loss
ne Rock Island lost $4,000 IN the
.rchase Of the Chicago and Alton rail-
I'd, Shar bod estimated The invest
mt Of tn Rock Island in Alton vas
pToNimatelT @05n,O00. The witness
ID the late +. II. Hartman, Jacob
hiT, and James Sti,lman sold the AL
F., n to the Rock Island.
Sharoo1 -es,ifed that misleading on
IS were made on The Rock Island
rOks. to create bette financial r.
~ Tor tn Dad and thus hencft the
0ck Island stock in the market.