The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-01-27

borrow funds from every available source
1t continued It's policy OF advancing money
TO companies In Texas.
Among these advances when II was In
such straitened circumstances were pay
ments to syndicate In which B. +.
Yoakum, chairman OF the Frisco's board
! Of directors, had been Interested. This
was what Is known as the Iberia Syndi-
cate.
THE Frisco" says the report. had ac-
quired in May. 1912. the syndicate interest
OF b. r. Yoakum In these properties by
purchasing his subscription to the syndi-
cate. plus Z per cent. interest thereon.
amounting TO $21269S. Mr.. Yoakum was
paid $I2,6es In cash and was given a
| note for 100000 dated May 6. 1912,
which was paid In cash November s,
1912"
To substantiate its statement that the
| Friscos difficulties were OF financial
and not of an operating character the
commission says that In spite of the In
| crease In net operating income from ST.
33e.15s for the year ended June 80, 1897.
to $11,677i37 for eleven months in the
| fiscal year 1918 the surplus OF income
| available for dividends in 1897 was only
| s33l.o65. while on May 81. 1918. there
was a deficit of s1,0eo,915.
Had 1; not been for book charges COW
ering the loss on the operation OF south
Texas lines for eleven months OF the fiscal
year 1918 amounting to sl.c1a.2s3. an
smortised discount OF s943.222. there
would says the commission. have been
a surplus Of sl,O92,5sa. or an Increase in
surplus for the 1913 period over the year
1897 OF s76i,534.
THE operating income for the eleven
months Of 1918 was S9.345.e7s greater
than that for the full year OF 1891
The absorption of the Increased net
operating income adds the commission.
as accounted for by charges OF s3.14o.61O
covering the cost OF the lease of the Kan
sas City. Fort Scot, and Memphis Rail
way, the Kansas City. Memphis and Bir-
mingham Railroad ard the Kansas City.
Memphis Railway and Bridge Company
and by the increase on funded debt from
S1.994.44s for the year ended June 80.
1897. 10 slo,6s4.7ss as of June 80. 1913.
an Increase Of ss.69o,Soo.
Mileage Earnings.
Tie gross earnings per mile O, road
operated increased from s5l57 FOR the
year ended June 80. 1897. TO $500 for
| the eleven months ended May 81. 1918,
and the net earnings per mile increased
during the same period from S2.i5s to
s2.733. an increase OF s574. while the
funded debt interest per operated mile
| increased from sl.7l6 for the year ended
June so. 1897. to s2,253 FOR the year ended
June 80. 1913, an increase Of s531.
THE ratio OF operating expenses to
gross revenues increased from $3.50 per
cent. for 1897 to s1.i7 per cent. for 1879,
which ratio for the last period does not
| indicate u relatively excessive cost Of OPP
Grafton.
Freight earnings per mile OF road in
creased s3.S5177 for the year ended June
80, 1897, to s5.i65.3l for the year ended
June 30. 1912. while during the same
period the revenue per ton mile decreased
from s0.0ll11 to s0.0099o.
An increase in traffic and operating
revenues had been secured. but the bene-
fits thereof had been absorbed by in
creased interest charges"
The commission in its report attributes
the Insolvency OF the Frisco chiefly TO the
following causes:
First, Disproportionate capitalization.
Second. the acquisition OF new lines.
Third, the financing by the Frisco of
the New Orleans, Texas asd Mexico Rail
road and other south Texas lines
Fourth, the desire for an entrance into
Chicago. resulting in the assumption OF
heavy fixed charges In the acquisition of
the stock of the Chicago and Eastern
Illinois Railroad.
Fifth the sale OF It's securities at prices
so low as to indicate "a deplorably weak
ened credit or an eXtravagant arrange
ment with bankers to whom large profits
accrued IN the purchase OF the bonds and
the subsequent sale of the sam. 10 the
public.
Sixth. miscellaneous causes among
which are the payment of dividends upon
Its preferred stock in spite Of its weak
ened credit and need of money, poor in
vestments and expensive rentals, among
which are the investment, in the New Or
leans Terminal Company. stock IN the
Kirby Lumber Company. and the rentals
paid the Crawford Mining Company"
Companion of Lila bilitics.
The report shows that the Friscos in
terest bearing liabilities exceed the stock
liability by 80 per cent. which is many
times greater than the ratio of other
roads west OF the Mississippi.
During the six years of Rock Island
control. the Frisco issued more than Sill
900. 900 IN short term notes all Of which
were liquidated within tho same period
except sl,s4l .0oo, During the same per-
| iod the net increase IN funded debt, in
GLIDING equipment trusts was SIS, O0O. 900.
The commission finds that in continuin,
/ to pay dividends of per cont on ts first
preferred stock the Frisco apparently at
tempted to maintain n prosperous appear
ance by disbursng dividends which were
, not in fact earned.
/ The report shows that tine Frisco's in
| vestment in the New Orleans Terminal
Company cost 1t IA net annual charge OF
| SlS0.00O. although IL did not Use such
! property and derives no apparent benefit
, from It.
| The commissions report contains a
! table showing that bankers handled the
I Frisco's securities at net cost to II of
| $40 500, 900 In discounts and commits
sions since the refundng operations in
| 1901.
or the commissions paid to bankers for
the handling OF the securities, Speyer &
| Co. got an aggregate of sl,sS1 900: Selig-
man e. Co., s4o6,0OO: Solomon & Co. and
Walker & Co, 100000: J. y, Morgan &
Co, S4.360. and the Trust Company OF
America, s2i5,000.