The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1914-07-09

WASHINGTON, July 9.-The Inter-
state Commerce Commission has be-
gun to turn its searchlight upon the
Rock Island and Pere Marquette rail
road systems, in which d. G. Reid is
interested.
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
Island, and information which from
time to time has come under the COM
mittee 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 estimated by
corps of experts Of the commission.
The investigation of the Rock Island
will be similar to that of the New Ha-
ven, which has just been completed.
he W Ill dSCel IUill Tic ldS 10
regarding the organization of the Chi
cago, Rock Island and Pacific Railroad
company and the Rock Island company
and the nature of their contract over
the Chicago, Rock Island and Pacific
Railroad company.
Reports Are Sensational.
If the reports which have reached
! the commission should be verified, that
body in it's official report will tell a
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. 1t was double-tracked for a
considerable distance beyond the Mis-
sisippi, possessed valuable terminal
| facilities, fine stations and equipment.
Stock Is Increased.
At the time it's stock outstanding
was only $60,O00,O00
In the year mentioned a syndicate
which had made large sums out of the
combination of tin mills into a trust
turned it's attention to the Rock
Island
| Two holding companies were form
ed, one, the Chicago, Rock Island and
Pacific Railroad company, the original
company, and the other, known as the
Rock Island company, to hold the
stock of the railroad company.
After obtaining control of the board
of directors of the original railway
company the promoters increased the
stock from $6O,00O,O0O to $75,OO0,0O0
and issued per cent bonds to the
amount of 100000 of the Chicago,
Rock Island and Pacific Railroad COM
pany and 81 100000 common stock
and $5O,000,000 of preferred stock of
the Rock Island company. In other
words. they issued against $71,000,O0O
of stock of the original company 1892
100000 of stock and bonds.
Seek Promoters Profits.
1t will be the duty of the commits.
sion during the investigation to devel
op how much profit was made by the
promoters out of this transaction and
what banking institutions participated
in the operation
The new management increased the
mileage operated during the first year
J.. about 5000 miles, but the extension
penetrated Sparsely populated dis
tricts. was cheaply constructed and
supplied with equipment of poor
: character.
Among the lines acquired were the
Choctaw, Oklahoma and Gulf and the
Arkansas and Louisiana and later the
Frisco lines. To buy the Frisco the
, Rock Island issued more than $4,000,
, 600 in per cent bonds Of the original
company and an equal amount of Rock
Island common stock. 1t is declared
} that the interest on the bonds up tC
February /, 1910, was lost when the
: sale was made, and the additional
amount Of bonds supplied to retire the
original $17,000,000, which was $6O45,
900
The original issue of SIT, 100000 was
paid off, but the new bonds, amount
ing to s7,500O0O and drawing 5 pei
cent interest, continue to be a claim
against the Rock Island railway. A