The Sentinel=record., 1914-10-17
ROCK ISLANDS
HEAVY LOSSES
SEVEN AND A HALF MILLION
LOST IN BOND TRANSACTIONS
BY THAT ROAD.
Acquisition of the Frisco and CHICAGO
and Alton Resulted in Heavy Finan-
cial Losses.

""9IlH5loH, Ocl. it,-An apparent
loss of $75OO,OOO in one bond transac
tion, losses indefinite in amount but
aggresating many millions in the ae
QUESTION OF the Frisco lines and the
Chicago and Alton road. and loss of
Sf56,Oo0 on the stock and bonds of the
). Deering Coal Company were dis
closed today at the hearing of the In
lerstate Commerce Commission's in
yestigation OF the financial operations
OF the Chicago Rock Island and Pa
2iiic railway. Only two witnesses
were examined.
Frederick G. Sharood. an examine,
Of accounts for the commission. gave
detail the results of his investiga
ion of the books of the system, con
sisting of the operating company ana
The two holding companies.
Mr.. Sharood testified as to the sal
aries received by the various officers.
AS chairman of the board, r. r. Gable
received annually varying from $24,
100 to $4,000; w. N. Leeds, as presi.
dent, received also $4,000 for time
md later 1872 GOO year b. L. Win
chell, as third vice president, was
Daid $4,000 year and as presiden
100000. B. F. Yoakum, as chairman
Of the board, was paid $4,000 a
year, and l.. f. Loree received $37500
voucher for $4,000, the proceeds
Of which were paid to Robert Mather
ounsel for the railway company, was
offered in evidence
THE index shows that the amount
was paid for campaign purposes said
The witness, but | was unable to find
he correspondence files prospecting
the matter The file had disappeared. 7"
Two other vouchers for $4,000 each
also were offered in evidence. No in.
formation was obtainable as to the
use to which that money had been
put, Sharood said
Describing the acquisition of the
St Louis, Kansas City and Colorado
road by the Rock Island in 1902 Sha-
rood said David r. Francis and John
Schulln of st. Louis received $2.00G,-
200 in Rock Island stock for $3,030,00G
N St Louis and Kansas City bonds
and that the Rock Island also as
sumed the Indebtedness of 81 100000
from the absorbed road,
THE average cost of that line to
the Rock Island" ne added, was
$50 ,9SS a mile"
That, of course, included st. Louis
terminal facilities and trackage ia
ciiities over the Wabash?" suggested
counsel for the Rock Island "Of
course, said Sharood.
f. L. Hine, president of the Firs,
National bank of New York, a director
in all three Rock Island companies
was the only other witness. He said
he became a director of the Rock Is
land railway in 1902 on invitation of
William II, Moore and admitted that
the vote that stood in his name &C
tually was the property of Judg
Moore
MI. Hine said he heartily approved
of the sale of the Frisco stock to b.
+. Yoalmm and his associates thougI1
the transaction entailed consider
able loss. He explained the transac
ton by which a loan of 81, 800 GOO was
obtained by the Rock Island of New
Jersey through the First National
bank of New York, the bank partici
pating to the extent of $1,2500O0
I'VE received" said the witness
cur pro rata share of the $4,000
paid for the loan Our bank could not
legally have made the entire loan OF
ST. 100000"
The only source of income of the
two holding companies was the Rock
Island Operating Company, the wit
ness said, which had exchanged
through its stockholders about ST.
100000 of stock for nearly five times
ing companies. Stockholders owning
about $f000,00O of Rock Island op-
Grating stock refused to exchange.
What consideration as a director
did you give those minority stock
holders?' inquired Commissioner
Clements.
81 never looked at the matter from
the viewpoint of the minority stock
holders, replied Mr. Hine, 81 re-
garded it from the standpoint of SO
per cent of the stock
Was the transaction detrimental to
or promotive OF the interests of the
small stockholders" asked the COM
missioner,
Il prefer not to answer that ques-
ton" responded Mr., fIir
After the examination of witnesses
tomorrow, including T. NJ. Schu
macher, George f. Boggs, George G.
McMutry, d. G. Reid, ]. N Wallace
ard B. f. Yoakum of New York, the
hearing probably will be adjourned
for ten days.