The evening world. [volume] (New York, N.Y.) 1887-1931, 1914-03-03

anu nSrness 10 MAKE spawned na =
Aauhl ia u trsttrf
a little more than ton sears ago
In 1902 TO he exact there existed the
good. old chicago. Rock Island 4
Patiiic Railway Company. Takc par.
ticuiar notice that n was Titled ",nii-
way company" because In the iuygie
that ensued a neat palning ac. ~
substituting railroad company" for
railway company" was worked and
made vast corporate difference.
This original railway company had
S'o.1o".0o0 of outstanding stock on
which II was paying good divide nds.
such rs fve and six per cent. It also
hsd. and stIii has. a lot Of bonds
perfectly good first mortgage sccuri-
ties on which IL paid the interes.
regularly and will continue TO do ~.
These underlying bonds do not figure
In the present hubble bursting and
will continue sound and good. but 4.
In necessary to noe another fine dis.
tinction between. mortgage bonds''
and collateral trust bonds"
Herein lies juggie OF words similar
to the play between railway" and
railroad" companies This manipu-
lators devised the idea Of issuing -
curitics called collateral trust bonds.
but that IL mere fiction OF Chronology
because bonds mean the mortgage Of
en- DlNtA
called collateral trust bonds" mort.
cages no property and represent nc
real aiae save prospective profits
They were called bonds because that
sounds better and also To avoid con-
fusion between tho many kinds .,
stock.
Flushed with profits In tin plate
and steel trust and match combines
four Chicago muiti.miIlionaires inaus
urated the Rock Island bubble In 1909
These men were Daniel q. Reid and
his now deceased partner In tin plate
william n. Leeds. ex-Judge william
II. Moore and his brother James II
Moore. They put up a large sum Oi
real money. Just how much has moi
been disclosed. whcrcwith to buy n
controlling block Of the &75.0000O0 Of
original Rock Island Railway stock.
HOW THE INTERFERING GAME
WAS WORKED.
Having secured this. they proceeded
10 create tho amasing structure o
now companies and new securities
that has now Collapsed with sucl
enormous losses to thousands Of PEG
pie who paid good money ior tn
watered securities. This was the wa!
the game was worked:
First step-Purchase Of \ larg'
block OF the SIS. OO0,000 stock OF tn
Chicago. Rock Island and Pacin
Railway Compsny.
Second Experimentation Of tn
Chicago, Rock Island and Pacih
Railroad Company Of Iowa Note tn
only difference In name u to inoor
railroad for railway. The only func
ton Of this railroad company was 4
Issue e7b. 000.0 600 Of collateral trust
Dor cent. bonds. which were not bond
At al, but were to be exchanged ant
substituted for the original railwa,
compauy's stock.
Third LIBERALIZATION Of tn
Rock Island Company OF New Jorso
a. the holding company. OF baSma
ct the head Of the whole structure.
| This Jersey corporation issue
| e1b0. 900. 90 Of preferred and commo
stock, which was pure water becaus
Il did not represent the ownership Q
operation Of . mile. of railway.
Its value lay In two rights. votin
power for the entire Rock Island bub
BILE was lodged In it, nifty millions q
preferred stock. % that control Z
Us .o0o. 900 Of that kind Of securit
dominated the enormous system
railway transportation with hundred
mate stocks and bonds outstandin!
There also. was lodged in this Jerss
holding company wonderful possibil
ties of stock market speculation. IN
for ten years this function Mas exc
cissd to the limit.
When this corporation jusGiir
scheme was completed tho origin
17b. 100000 Of Rock Island Railws
stock had been expanded into o7S ,00(
900 Of collateral trust bonds and $50
900 Of stock. which made an Inn,
ton Of three to one. It resulted In
stock jobbing solution composed
three parts water to one part solid.
TEMPTING oFFgRS MADE Z
THE BUBBLE DloWERe.
I The bubble blowers sought to r
inaburpe themselves with enormo
profits for the good money they h,
put up to buy control Of the oria
nal stock. and also to bait we'll q
other old stockholders TO join In Il
trading scheme. 30 with the new
organised Iowa and Jersey comp
MES completely In hand and es3s ,00'
900 Of freshly printed certificates il
on tbs press. they turned the trt
| With n tam ptinR offer