Bisbee daily review., 1914-03-01

practically a duplicate of the capital stock Of the Railway company and likewise the stock Of the Railroad company is a duplicate for the stock of the Rock Island company
 But to give value and position to these various securities the operating, or railway company, must earn stuff cient to. first, take care of it's own | fixed charges, second. enough surplus s75,000,000 stock. third, these div. idends must be Iafge enough to more than pay the fixed charges of the rail road company, fourth. the balance re- maining after payment of said charges must be more than sufficient to pay the SC dividends due on the Rock Islnd preferred
 Rock Island company preferred is entitled 10 5fo dlyidends up to 1916, 6P, therafter. So long as charges are all paid. Rock Island preferred. holds control of the system, since it has the right. to the exclusion of the Holders of the common, to choose the directors of the first class. and 1t takes a twothird vote to increase the preferred issue.
 However. should the interest on the collateral As of 20O2 be defaulted the Folders Of these bends would imme- diately be placed in a position to con trol the situation by taking over the Railway company stock which serves as collateral behind the issue.
 This bond issue must hold the key to the situation in any readjustment for another reason. It is provided in the lndenture that the capital stock of the Chicago, Rock Island X Pacific Railway company shDll not be in. creased in excess of its present au. uhorized amount (S75,00O, ,00O) until all the bonds of this issue shall have been paid.
 Only through the consent of the holders cf these bonds, therefore, will it be possible to provide, for the hold. CTS of the common and preferred stock of the Rock Island company, the top holding concern, a security in ex- change for their own. The logical thing to do of course would be to issue additional stock of the Railway company and exchange it for the stock of the Rock Island company. If this were done an assessment would probably be levied on the Holding company stock Either this, or the re. adjustment doing away with this hold. ing company must wipe out its SC. curities altogether.
 In fact it is not too much to say that if the holding companies were wiped out, control of the system could not be maintained without first buy. ing up 59e of the widely scattered railroad collateral trust As.
 These 4s in spite of all the entan. elements involved in tn earchitec- ture of the system, and in their own indenture, represent the old Rock Isl. and Railway stock. which in 1913 earned 5,42fo in 1912 5.27Gs and in 1911 7.41&.
 The following table compares the income account of 1913 with that of 1907:
 Gross . s 71,364.935 s 60,2ss, ,42O Expenses %. 52.504 ,l02 40S12,S22 Tot. net .. l6,944,190 1S,263, ,422 Charges ... 12.Ss5.S35 9,512,9O5 Bal. for div. 4,05S,35y S,75O.57l Tot. Capitali-
 zation 4T3, ,65l ,252 4O1AS1,792 fo Or. to Cap. 15.07 15.00 70 net to Cap 3.5S 4.55 e earn. on stk 5.42 11.66
 It will be perfectly plain from the above figures why some sort of a re. organization which will lift portion of the burden of capitalization from the operating company is necessary at the present time.
 The operating company's expenses , have risen in the past six years in undue proportion to gross. In 1907 on | 0aA Ao