Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1914-07-02
ROCK ISLAND TO
Be INVESTIGATED
Commerce Commission Turns
Searchlight on Financ-
ing of Railroad.
PROBE OVER STOCK ISSUE
Profits of Promoters During Reorean-
izstion to Be Subject of
Rigid Inquiry.

John Callan O'Laughlin, Washing
ton correspondent of the Chicago Her
aid. has the following story in today's
issue of his paper:
Washington. D. c.. July 2.-The in
terstate commerce commission has be-
gun to turn its searchlight upon the
Rock Island and Pere Marquette rail-
road systems.
In accordance with the direction of
congress that body has sent investiga-
tors to delve into the history and
books of the corporations named.
If past investigations, which Incl
dentally have brought in the Rock Is
land. and information which from time
to time has come under the commit
tees are TO be relied upon there will
be a condition of affairs developed
fully as scandalous. at least so far as,
the past Is concerned. as that in con-
nection with other railroads which
have been examined.
Experts to Fix Value.
While the investigation is in pro
gress under the direction of Commits
sioner McChord. the value of the prop
critics of both the Rock Island and
Marquette will be timated by a
corps of experts of the commission.
This valuation will be made in the
fall and the results probably will be
available for interpretations in the re-
port on the two lines which will be
submitted to congress.
The investigation of the Rock Island
will be similar to that of the New
Haven which has just been completed.
The committee will ascertain the facts
regarding the organization of the Chi
cago. Rock Island & Pacific Railroad
ompany and the Rock Island company
and the nature of their control over
the Chicago, Rock Island & Pacific
Railroad company.
Reports Are Sensational.
If the reports which have reached
the commission should be verified. that
story of high finance fully as sensa-
tional as anything which has come to
light.
The Rock Island in 1902 connected
Chicago and Denver, with branches
terminating at st. Paul, Minneapolis
and Kansas City. 1t penetrated rich
districts of Illinois. Iowa, Nebraska,
Kansas and other middle western
states. It was double-tracked for a
considerable distance beyond the Mis-
sissippi. possessed valuable terminal
facilities, fine stations and equipment.
Stock is Increased.
At the time its stock outstanding
was only 100000, 10000.
In the year mentioned a syndicate
which had made large sums out of the
combination of tin mills into trust
turned its attention to the Rock Is
land.
Two holding companies were form
ed one, the Chicago, Rock Island &
Pacific railroad company, to hold. the
stock of the Chicago, Rock Island &
Pacific Railway company, the original
company, and the other. known as the
Rock Island company, to hold tho
stock of the railroad company.
After obtaining control of the board
OF directors of the original railway
company the promoters increased the
stock from s6O.OOO.O0O to s75,OOO,O0O
amount of ST. zoo, 900 of the Chicago.
Rock Island & Pacific Railroad coz
pany and s71.OOo.OOO common stock !
and $4,000. 600 of preferred stock OF
the Rock Island company. In other |
words. they issued against s71.00O,OOO
of stock of the original company 1892 |
900, 900 of stock and bonds.
Seek Promoters Profits.
It will be the duty of the commission |
during the investigation 10 develop how !
much profit was made by the promot |
ers out of this transaction and what |
institutions participated in the /
operation.
The new management increased the
mileage operated during the first year
about 5000 miles. but the extension
penetrated sparsely populated districts.