The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1914-02-04
Financial Papers See q Big
Change in Control.
MAKE A real" ROAD AGAIN
System Will Emerge From
Holding Stock Tangle.
Other Items of Interest i'm the
Traffic World.

me iuedS OF tne eastern financial
puDlcat1Ons on the proposed reOrgan-
lzation of the Rock Island Lines is in
teresting to the people of the west who
contribute traffic and receive the OBJ
erative benefits of this big system of
5000 miles of rails. Below are quoted
comments from number of eastern
newspapers.
New York Tribune: On the stock
exchange traders did not know quite
how to take the story that the Rock
island was to do away with its ar
rangement of holding companies. Not
until after the close of thestrading ses-
sion was there any contradiction of the
positive report put out in the morning,
and SO, because there was a large ele-
ment of probability in it, it was taken
as true. Trying to make capital out of
it, traders found themselves confront
ed with a Chinese puzzle. There was
no obvious plan Of dissolution of the
intercOmpany arrangement and prob
abilities carried no confidence with
them. Deep down in the Rock Island,
it was recognized. there was valuable
equity, but nobody seemed to know
just how to be sure of getting at it. For
months it has been insisted, for in
stance, that the Chicago, Rock. Island
& Pacific railroad collateral trust As,
secured par for par by stock of the old
Chicago. Rock Island & Pacific rail-
way. were worth far more than their
market price. Yet the bonds. which
than 49A in the panic of 1907,
slumped from Sc Y in January, 1913,
to 48Z on December 13 of that year.
Since the first of January of this year
they have touched 47ss. AS for the
stocks, they are in a class by them
selves.
Change Coming.
1t is inevitable that there will be
some change in the financial structure
of the Rock Island organization, and
ohoI hot It'll
soon. Only few weeks ago one of
the influential directors described the
present system of holding companies
as awkward and cumbersome. He
said then, however, that it was prob
able that the board would wait until
it could be seen definitely whether the
administration demanded the dissolu-
ton of existing holding compa MES or
merely the prohibition of new ones be-
fore it decided upon any plan of ac-
ton. The Phelps-Dodge interests as
stunned the management of the Rock
Island a few months ago, not because
they had secured control, but because
the Moore-Reid party. who own over
$35, 100000 of the $54.000,000 prefer
red stock, invited them in to make
q real railway again of the Chicago,
Rock Island & Pacific. To succeed
in their endeavor they need consider
able amount of fresh capital. Even
the able work of Mr.. Schumacher, the
new noaO,
ing ratio to TO- cannot give the prop
erty as much money as 1t needs for
its reha Utilization. If the elaborate
structure of the holding companies
proves a handicap in raising new cap
ital. way will be found to do away
with it.
New York Mail: Drastic plans are
being considered to bring about read
tustment Of the affairs Of the Rock Is
land railroad.
sv-%e act
is due on the Rock Island company
4 per cent. collateral trust bonds. The
amount involved is $1.500.000. Seri-
Gus consideration is now being given
to default on these bonds.
So long as the Reid-Moore interests
held control of the Rock Island they
were unwilling to jeopardize their inter-
est in the road by permitting the col
lateral As to pass In defauIt. with the
change of management last year. when
the Phelps-Dodge people secured a ma
jority of the stock and put T. M. Schu-
macher at the head of the property,
consideration has been given to the
overthrow of the Rock Island company,
the holding concern, both in order to
re-establish the railroad on something
like its former credit basis and to meet
the present demands against holding
companies. per Sc.
Undoubtedly there would be much in
volved litigation should the collateral
As go to default, and it is much de-
bated question as to how holders of the
Rock Island company common and pre-
ferred shares would fare. 1t is not be-
lieved that their entire equity could be
wiped out. though obviously the value
of these stocks under the proposed ar
rangement is small.
New York Evening Post: This weeks
decline of over points in Rock Islands
4 per cent. collateral trust bonds and
preferred stock was generally attrib-
uted to uncertainty over the outcome
of the proposed holding company law.
In the message to congress delivered
January 20. dealing with the trusts,
President Wilson dismissed the ques-
ton of holding company. with the
brief statement. I'VE are agreed. take
it. that holding compa MES should be
prohibited" Rock Island as Wall
street knows, is one of the worst of the
holding company offenders.
In the railroad world there are many
TIT mn 1AY TAnEU