The Climax-Madisonian. (Richmond, Madison County, Ky.) 1914-1917, 1914-12-30
WEIRD FINANCIAL
DEALINGS SHOWN
Interstate Commerce Commits
sion Is Told of Juggling of
c., H. & D. Stock.
WITNESS WAS A DIRECTOR
Some Queer Operations In Connection
With the Reorganization of the
toere Marquette and Cincinnati,
Hamilton G Dayton Railroads.

Washington, Dec. 21.-Weird finan-
cial operations of the Pere Marquette
and Cincinnati, Hamilton & Dayton
railroads during the reorganization of
the roads in 1907 and 1909 were de-
scribed by Frederick w. Stevens of
New York at the reopening of the in
terstate commerce commissions in
vestigation into the financial. affairs
Of the carriers.
Stevens is a partner in the firm of
j. p. Morgan & Co., and has been
director in the Marquette road since
1907 and a director in the c., H. & D.
since 1909. He said he participated
personally in the reorganization of the
Marquette in 1907 and in the reorgani-
cation of the c., H. & D. in 1909.
Stevens testified that for many years
prior to July, 1904, the c., H. & D. was
under the control of M. D. Woodford
and Henry F. Shoemaker. and that
from it's organization in 1896 until 1904
the road paid regular dividends upon
its $S,000,00O of preferred stock. In
1903 it paid 2 per cent on its 100000
of common stock, he said.
Gains Control in 1904.
In 1904, Stevens said, syndicate
purchased sufficient stock from Shoe
maker and others to gain control of
the Cincinnati, Hamilton & Dayton.
Morgan & Co. had no part in this
transaction, said Stevens.
On July z, 1904, the syndicate took
charge of the property and elected
Eugene Zimmerman president. The
same day the purchase of 10000
shares of Pere Marquette stock at 1923
per share, a total of s13,750,000, was
authorized. This was paid with ST.
ESQ, 900 of c., H. & D. bonds and $5,-
100000 notes.
Stevens then told how the c., H. &
D. bought in all but $25O,00O of its
$8,000,000 preferred stock at about
$122 a share and retired it. The next
step was the lease by the c., H. G. D.
OF the Pere Marquette for 999 years.
Under the terms of the lease the c.,
H. & D. obligated itself to pay per |
cent dividends on the preferred stock |
of the Marquette and per cent on the |
common.
During the first year of thinner
mans administration, the c., H. & D. |
bonds. In 1905, said Stevens, the c., |
H. & D. purchased the Toledo Railway
and Terminal company. The indebted |
ness of the c., H. G D. now had piled
up to STATEHOOD. which was largely
due to the purchase of the Pere Mar
auette, the witness said.
In connection with the various new
issues of stock, stock purchases and
similar deals, the c., H. & D. paid to
F. H. Prince & Co. $4,000 in COM
missions and to H. B. Hollins & Co.
100000. The annual interest charge
on c., H. & D. obligations amounted
to $1,100,000, which doubled the in
terest charges of that road in the first
year of Zimmerman's administration.
At the end of this year the c., H. &
D. was in debt for more $4,000, 900,
with it's credit practically exhausted,
said Stevens. He added that ]. P.
Morgan & Co. had nothing to DO with
these transactions.
1t was in October, 1905, that ]. P.
Morgan purchased the c. H & d.
for the Erie railroad. said Stevens.
The reports of the company's career
during the year preceding that date
had not been published at that time,
he declared.
Morgan Takes a Hand.
President Underwood Of the Erie
wrote j. P. Morgan a long letter in
August of 1905, asking him to buy the
G., H. & D. for the Erie. Morgan
agreed and an arrangement was made
the purchase price was to be
paid by leng-term bonds of the Erie.
The purchase was concluded on Octo-
Der 20, 1905.
When the bad financial condition of
The purchased road was discovered,
Morgan offered to take it over, and
mis- offer was accepted with thanks by
he Erie board of directors, Stevens
asserted. In this way, the witness
added, Morgan saved the Erie from
heavy loss.
A reeeiyership of the c., H. & D.
was declared December 4, 1905 The
Pere Marquette lease was cancelled
and arrangements were made to re-
tund the obligations of the c., H. & D.