Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1914-01-27
Interstate Commerce Commis-
sion Makes Detailed Re-
port of Investigation Of In
solvent Railroad,
LARGE PROFITS TO
INSIDE SYNDICATES
Reckless Borrowing at Extor-
tionate Rates and PurchaS-
es Of Branch Lines Cause
Wreck of Property,

s-~--a
tut soRWRo JOURNAL SPECIAL tessso Wlatl
Washington. Jan 26 Financial
I operations which included the acquls-
ition of lines through yndlcatcs
which profited 10 the extent of moro
/ than S6.O00,0oO. some OF which was
I pocketed by the roads own officers.
are cited as among the underlying
causes for the insolvency Of the 81
( Louis & San Francisco railroad com
I panN in a report to the senate today
I by The Interstate Commerce commits
sion on the Frisco lines rcceivershln.
SO recommendation are made by
the commission. t. T.. Clark. chair
man. stating IN a letter 10 the presl-
dent that they we're not called for IN
the resolution adopted by the senate
last summer, directing the investiga-
/ lions
The report shows that the funded
+ debt Of the railroad, May %. 1913,
( when the receivershlp was ordered.
amounted 10 SEGA per cent of the
total capital liability. the total capital
/ at that time amounting to Sga5.G3s,-
a53.ie 90 which only s6l.3G4.le0 was
capital stock mud 4l26g,S33,5g was
funded debit including equipment
trust notes.
THAT the inlerest-bearlng Liabilities
Of the Frisco system exceeded tho
stock liability by 375 per cept, and
were wholly disprdportlonte when
compared with the capitalization of
ethor carriers. including those in ths
territory west 0f the Mississippi river.
Is asserted by The committee. which
submits figures for eight selected
railroads showing The average ratio
nf funded debt 90 capital liability to ha
5SG5 per cent
The report declares that the in-
ability Of the Frisco 20 meet It's OBJ
legations seemed 10 have been ap-
parent for some time prior TO the ap-
plioation for a rceeWershlp. that
strenuous efforts were made by ITS
officers to tide over financial diff
cuties from day to day. that money
was borrowed from All available
sources until every avouue OF assist.
ance was exhausted. marketable se-
curltles being either sold or pledged
as collateral under numerous loans.
and that Notwithstanding this eN.
hausted financial condition. the Frisco
sold TO speycr a Co., of New York.
&3.o0eoo0 on its general lien per
cent bonds. 20 transaction which the
commission declares warranted con-
domination
summarized tho commissions re-
port attributed The insolvency Of the
Frisco 10 the following causes
Detailed description Is given Of tie
operations of syndicates formed to H.
nance the construction of a number
OF lines. ana the sale Of many proper
ties 90 the Frisco, and a summary Of
these operations In which o. T. Yoa-
KUN and other officers OF the Frisco
participated. ~ given as follows.
'ulspropartionatc capitalization.
The acquisition of now lines.
"The financing by the Frisco OF tho
Ncw orleans, Texas a. Mexico rail-
rnad and other south Texas lines
THE desirc for an entrance into
Chicago, resulting IN the assumption
of heavy fixed charges In the acquisi-
ton of the Chicago q Eastern Illinois
"The sale OF it's securities AT prices
sa low us 60 indicate deplorably
weakened credit or an extrayagant
with bankers to whom
large profits accrued In the purchase
of the bonds aud the subsequent sale
b the same 60 the public
Miscellaneous causes. among
which are tho payment OF dividends
1n its preferred stock In spite OF It's
Weakened credit and need of money.
Poor investments and expensive
rentals among which are the invest
nent In the New Orleans Terminal
'ompany stock In The Kirby Lumber
company and rentals paid the Craw-
ord Mining company
The requirement through syndi-
ate operation OF the ST. Louis.
~ Mexico Railway Co,
he report says. represented profit
If 1866 per cent ON the subscription
# each syndicate member The synd-
ate was composed of ninety-nine
members who contributed $3.9S0,-
8g.20 toward the construction Of the
ailroad and the report addsi "The
fleet of the entire transaction was
hat the syndicate secured profit Of
which included the
'ronts on land the cash donations
nd syndicate operations"
The original Brownsvlle line, 1lt
niles In length. was turned over for
pomtion July { 1901, aud extended
o sintnn Tex, in April, 1905. In 1908.
he report SAYS. a committee OF five
vas organized. composed OF =. f.
nnkum. samuel w Fordyce, Thomas
West Robert ~ Breekinga and
.dw,fd Whitaker for the purpose Of
the railroad from Rohs-
own, Tex, TO Brownsville. This COM