The Birmingham age-herald., 1914-01-27
UNDERLYING CAUSES
FOR INSOLVENCY OF
FRISCO COMPANY is
REPORTED TO SENATE
tContinued From Page one3


0t0, profit s375,000 Total amount paid IN,
s26.54s, ,111s5, profit $s44f,i9s.M.
The requirement through a syndicate
operation of the st. Louis, Brownsville
and Mexico Railway company, the report
says. represented a profit of 7jGo per cent
oii the subscription Of each syndicate
member The syndicate was composed
OF - members, who contributed $3.50. 90 %
toward the construction oi tie riitrond
and the report adds:
THE effect of the entire transaction
was that The syndicate secured "a pratt
of sS,011,9 1929. 70, which included the profits
on land. the cash donations, and syndi-
cate operations
The original BrownsvllA line, 141 miles
in length. was turned over for operation
July 4, 1904 and extended to Slnton, Tex
in April, 1905. In 1903, tho report says. II
committee of five was organized com
posed of b. f. Ioakum. Samuel w. For
dyce. Thomas II. West, Robert IA.
Brookins and Edward Whitaker fer the
purpose of constructing the road from
Pobstown, Tex, to Brownsville. This
committee received about $1,000 acres of
land and large sums of money donated
for the purpose of aiding in construction
of the road and development of the
land. The land deals, the cash bonuses
and the syndicated explorations resulted
in a profit to the syndicate of 1892, 1921.
Securities Authorized
After the Brownsville issues its securi-
ties amounting to s10756,000. as author
lied by the Texas railroad commission. "
the report continues, IAN agreement was
executed between the St. Louis Union
Trust company as syndicate manager
and the Frisco, dated December j. 1909
under which the Frisco was to purchase
these, and additional securities having
par value of $455,450 for the sum of
S11 ,S27 200. with interest from December
1, 1909 Payment was made by the Frisco
on May 20, 1910, in the sum of S12, 1922
Sg7.7 r."
The principal difficulty with the
Brownsville company has been inability
to meet the interest on bonds. Its total
capitalization is s12.670, ,105.9s; its capital
stock only 100000. and its interest bear
ing debt, S12,179, 1888, all of which, ex-
cepting $32, ,000 bears interest at Q per
cent.
"rhe ratio of Understanding securi-
ties" the report says. TO the total of
securities outstanding is 1906 per cent, an
excessive ratio even when compared with
the Frisco. which has ratio of s263 per
cent
Desire of the Frisco for an entrance into
Chicago resulted in purchase of the Chi
cago and Eastern Illinois railroad in 1902
by the issuance of Frisco stock trust cer-
t1flcateS upon the OASIS OF siO IOr tne pre-
ferred and $3.50 for the common stock.
I'm order to meet the fixed charges
upon its stock trust certificates" the re-
port asserts, at was essential that the
Frisco should receive in dividends from
the Chicago and Eastern Illinois per
cent upon the preferred stock and 10 per
cent on the common stock each year. On
the preferred stock 6 per cent was paid
each year. The dividend on the common
stock has been sufficient to meet the in
terest requirement on the stock trust GER
tiicates in but three years. The resultant
net loss on the common stoc kamounted
as Of May 27. 1918, to N,11O.3SS, which
amount the Frisco. paid In interest upon
its common stock trust certificates, held
by the public in excess of the dividends
received upon the Chicago and Eastern
Illinois common stock
THE discount on bonds and notes other
than short term notes issued by the
Frisco and lines which it controls aggre-
gated $3.,152. .902.07.
e. RocL Island CoufrOI