Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1914-10-18
MILLIONS LOSS
TO ROCK ISLAND
Testimony at Hearing in Charges Of
Wreoking Road Proves Sen.
sational.
MANIPULATION IS ALLEGED
Foundation for Inquiry Laid by
Experts for Interstate Commerce,
who Had Gone over the
Rocks.

| losses indefinite In amount, but aggregat-
! ina many millions, in the acquisition Of
| the Frisco lines and the Chicago & Alton
railroad and a loss OF $4,000 on the stocks
4 and bonds Of the Deering Coal company
we're disclosed today at tho hearing OF
! the Interstate Commerce commission 8
/ investigation OF the financial operations
/ OF the Chicago. Rock Island 4 Pacific
! railway. Only two witnesses were ex-
amined
The hearing IL for the purpose OF in
| curing into charges, made on the floor
OF the senate, that through the manlpula-
| ton OF a small number Of financlers and
stockholders the Rock Island had suf-
/ fered enormous losses. As result OF
the charges the senate adopted a resolu-
ton directing that an investigation be
| made by the commission. The founda-
ton for the inquiry was laid by experts
Of the commission who had gone over
the books OF the Rock Island.
To he Resumed Later.
II was believed today that the hearing
would continue for only g day or 50 and
bo resumed later
Frederick c. sharood, an examiner Of
accounts for the commission. gave IL. de-
| ltu Llt IeHuliH Oh llh lnNebLlkhAAOh u
the books OF the system, consisting Of
the operating company and the two hold
Ing companies
Mr. sharood testified as to the salaries
received by various officers. As chair
man OF the board. r. r. Cable received
annually an amount varying from $4,000
\ to $4,000. w. u. Leeds as president also
1 received $4,000 for time and later 1000
year. n. L. winchell. as third vice
president. was paid $4,000 a year and as
president $4,000 y. +. Yoakum, as
chairman OF the board. was paid $4,000 a
year and Ia r. Loree received ss7.5OO
A voucher for $4,000, the proceeds of
which were paid to Robert Mather coun-
sci for the railway company, was offered
in evidence.
Fer Campaign Purposes
'"rhe index shows that the amount was
pad for campaign purposes" the witness
said. but was unable TO find the CORE
spondence file respecting the matter. The
file had disappeared"
Two other vouchers for $4,000 each also
were offered In evidence. No information
was obtainabe as TO the use TO which
that money had been put, ShHrood said
Describing the acquisition of the st.
Louis. Kansas City & Colorado road by
the Rock Island in 1909, Sharood said Da-
vid II. Francis and John sculiln Of st.
Louis received 100000 in Rock Island
stock for tS.0eO0OO in ST. Louis, Kansas
City 81 Colorado bonds and that the Rock
Island also assumed an indebtedness of
100000 from the absorbed road
Average Cest n nile.
"The average cost OF that line 10 the
Rock Island" he added, was s57,9ss a
mile"
THAT. Of course, includes st. Louis
terminal facilities and trackage facilities
over the Wabash" counsel for the Rock
Island suggested.
"of COURSE" sharood answered
Mr.. sharood declared tine loss TO the
Rock Island railroad was lust about
ss6, Os5,oo0 and that II was carried on the
company's books as an asset
In explaining the acquisition OF the
Chicago & Alton road by the Rock ISL
and railway company. he said;
MY estimate of the loss 20 the rail-
way company on the Chicago q Alton
traction Ia tS.790s4i, and that. too. on an
investment of only little over 5000 0O0"
The examiner said William T. Moore
was given a voucher of the Rock Island
railway company for about 5000 to re-
imburso him for losses sustained I'm sup
porting IN the market the bonds OF the
Rock Island railway company"
Submits Agreement.
Mr.. Bharood submitted an agreement
dated May 9. 1908. by which the Rock Is
A.. -
SIG, 500 900 TO be deposited with ]. =, Nor
gan & Co.. bankers of the Frisco trans
action.
The firms commission was said to have
amounted TO tl.ss7.e2S, The stock OF the
Frisco so acquired at sl2o a share. the
examiner said. subsequently was sold or
transferred to u. Il. yoakum and his as
soclates for $3.50 "a share. or Sl0S20oo
II became necessary for the Rock Island
railroad before Il could turn over to Mr.
Yoakum the Frisco stock 10 obtain $780,
900. That was borrowed. Sharood said
of the FIRST National bank of New York
Counsel Folk. for the commission.
brought out that the president OF the
bank was II. l.. Hine. who was a a..
rector OF the Rock Island railroad
How much did the Rock Island pay
the bank for that loan2' Mr. Folk asked.
THE books show SiS5.oOO."
Companies Represented.
Counsel represented the three companies
In the systematic Chicago. Rock Island
a Pacific Railroad Company OF Iowa
and the Rock Island Company OF New
Jersey. the two holding companies: and
the Chicago. Rock Island 4 Pacific Rail-
way company, the operating corpora
ton. sharoOd said all the directors OF
the Rock Island railway company were
employees OF the Rock Island railroad
company.
With one exception. he said, all a.
rectors OF the New Jersey company were
employees OF the Commercial Trust COM
pany II Jersey City.
Describing how the holding companies
had been organized. Sharood said stock
ana bonds In the companies. Rggregating
several hundred thousand dollars. were
given 20 several persons who were inter
ested in their formation.
II. L. Hine. president OF the First Ma
uonal bank Of New York. director IN
all three Rock Island companies. was the
only other witness. He said he became a
director OF the Rock Island railway in
is0. on invitation OF William II. Moore.
and admitted the stock which stood In
his name actually was the property OF
Mr. Moore