The Birmingham age-herald., 1914-01-27
The Requirement of Lines
Through Syndicates Which
Pr0fited to Extent of
Over $S,OOO,OOO Cited
CLAIM SOME OF
PROFITS POCKETED
BY ROAD OFFICIALS
Report Shows Funded Debt of Road
When Receivership Was Ordered
Amounted to S2.63 Per Cent
Of the Total Capt.
tai Liability


Washington, January 26.-Financial
operations which included the acquire
ment of lines through syndicates which
prcfited to the extent of more than
sted by the roads own officers. are
cited as among the underlying causes
for the insolvency of the St Louis and
San Francisco Railroad company, in a
report to the Senate today by the in
terstate commerce commission on the
Frisco line receivership. No recon-
mendations are made by the commits
sion, e. e. Clark, the chairman, stat
ing In letter of transmittal addressed
to the President, that they were not
called for in the resolution adopted by
the Senate last summer directing the
investigation.
The report shows that the funded
debt of the railroad May 2S, 1918, when
the receivership was ordered amount
ed to 1888 per cent of the total cap
ital liability. the total capital at that
time amounting to 1926, sSS.9sS.72 of
which only s51.364.1o0 was capital
stock and s244,2ss.S3S.72 was funded
debt including equipment trust notes
That the interest bearing liabilities
Of the Frisco system exceeded the stock
liability by 375 per cent and were
wholly disproportionate when COM
pared with the capitalization of other
carriers, including those in the terri
tory west of the Mississippi river" is
asserted by the committee, which sub
mits figures for eight selected rail-
roads showing the average ratio of
funded debt to capital liability to be
1886 per cent.
Apparent for Sometime
The report further declares that the
inability of the Frisco to meet its op-
legations seemed to have been appar-
ent for some time prior to the applica-
tion for a receivership. that strenuous
efforts were made by its officers to
tide over financial difficulties from
day TO day; that money was borrowed
from all available sources until every
avenue of assistance was exhausted.
marketable securities being either sold
or pledged as collateral under the num-
erous loans, and that Notwithstanding
this exhausted financial condition the
Frisco sold to Speyer & Co. of New
York $3.000,000 of Its general lien s
per cent bonds. a transaction was the
| demnation.
Summarized the commissions report
attributes the insolvency of the Frisco
to the following causes:
"Disproportionate capitalization.
'The acquisition of new lines.
The financing by the Frisco of the
New Orleans. Texas and Mexico rail-
road and other south Texas lines.
The desire for an entrance into
chicago, ILL.,, resulting In the assump-
tion of heavy fixed charges in the ac-
Aquisition of the stock of the Chica go
ana Eastern Illinois railroad.
The sale of its securities at prices
90 low as TO indicate a deplorably
Weakened credit or an extravagant
arrangement with bankers to whom
large profits accrued in the purchase
of the bonds and the subsequent sale
of same to the public
miscellaneous causes among which
are the payment of dividends upon its
preferred stock in spite of it's weakened
credit and need of money.
Poor investments and expensive
rentals among which are the invest
ment in the New Orleans Terminal COM
pany, stock in the Kirby Lumber com
pany and rentals paid the Crawford
mining company"
Operations Described
Detailed description is given of the op-
u - SiotiOho VI synulcdteS IoTfneu 10 Hnance
the construction of a number of lines,
II and the sale of such properties to the
|, Frisco, and summary of these opera
7 tions, in which B. f. YoalSum and other
II officers OF the Frisco participated, is given
II as follows:
II Oklahoma City and Western. amount
| paid in, s2,0a7 043.95, profit $36s, ,272. %: St
L Louis, San Francisco and New Orleans
amount paid in. $5.30O000. profit sS37, 400: St
+ Louis and Gulf. amount paid in. 50, 700, 600
II profit $l3S5. .69652; st. Louis and Oklahoma
L City. amount paid in. N,000,000, profit $685.
II 80; st. Louis, Oklahoma and Southern.
II 90, 42s. 1872 10. profit $71s,5749O: Adkins Val
|. ley and Western, $3046.635, profit S529.-
n 767.32: New Iberia and Northern, amount
d paid in, 100000. profit 100000; ST. Louis
n Brownsville and Mexico, $3.9S1 .OOv, profit
y $4011, ,922.o6; Colorado Southern. New Or
\ leans and Pacific. amount paid IN, $3, ,00O,- :
(Continued o. PAGE Ninel