Evening star. [volume] (Washington, D.C.) 1854-1972, 1914-10-17
LOSS OF MILLIONS
! |NDEAL, IS ALLEGED
Further Developments in Fl
nanciaI Operations of C., R. |.
and Pacific Railway.
| HEARING Is CONTINUED
BEFORE |. C. COMMISSION
Testimony Given by George G. Nc
Murtry and George T. Boggs, Of
fcials of the Company.

Some details concerning the acquisi-
ton and subsequent sale at loss of
millions of the Frisco lines were de-
veloped today, when the investigation
into the financial operations of the
Chicago, Rock Island and Pacific rail-
way was resumed before the interstate
commerce commission.
George @. McMurtry of New York, a
director of the Rock Island operating
company and of the New Jersey hold
ing company of the Rock Island, gave
testimony tending to show that the
board of directors practically was
dominated by Daniel G. Reid.
The witness said he knew personally
very little concerning the financial
operations of the several companies.
Asked about specific transactions-in-
GLIDING the Frisco deal and the pay
ments of money to Directors Jackson
and Cable, for which no explanation
had been given-the witness said he
could remember nothing about those
matters.
Relies Upon Reports.
try said that, as usual in such COM
pany operations. he relied upon the re-
ports of the executive committee, which
had direct charge of them.
George T. Boggs Of New York, di-
rector Of the Rock Island Operating
Company and an official in various ca
pacities of that company for many
years. giving his version of the pur-
chase and subsequent sale by the Rock
Island of the Frisco lines, said he be-
lieved it to be for the best interest OF
the Rock Island to dispose of the Frisco
stock to B. F. Yoakum and his associ-
ates. even at the loss which the Rock
Island was obliged to take in thai
transaction.
1.-The time and condition had chang
ed" said the witness, "and it was nee
essary for US to do the best we could
in the circumstances"
you believe, them" suggested So
licitor Folk, that the board of direc-
tors of a railroad has h right to do
what it pleases with the company S
money. without respect to the general
public?"
Does What It Deems Proper.
II do not quite understand the ques-
tion," said Mr.. Boggs. 1.-The board of
directors of this property, for instance,
does what it deems to be proper in any
circumstances"
"As to the bond transaction of ST.
100000, at the time the Frisco stock
was sold to Mr.. Yoakum, it was nee
essary that those bonds should be re-
deemed before the stock could be pass
ed to the new ownership
Mr.. Boggs said as director he ap-
proved of that transaction, and OF the
loan of $7,500,000 made through the
First National Bank of New York. be-
q hat gould off,
saving to the Rock Island railway
The loss to the Rock Island railway
through its purchase and subsequent
sale of the stock of the Frisco lines
was the difference between $3.50 and
$3.50 share. according to B. F.
Yoakum of New York. who conducted
the negotiations for the Frisco stock
holders. The total amount of actual
loss. Mr.. Yoakum thought, was about
81 100000
Mr.. Yoakum. always actively con-
nected with the Frisco lines. became a
member of the various Rock Island
boards of directors when the Frisco
stock was acquired by the Rock Island
Frisco was in the Rock Island competi
ton between the two lines did not
cease.
Losses Aggregate Millions.
Losses indefinite in amount, but ag-
gregating many millions. sustained by
the Chicago. Rock Island and Pacific
railway in the acquisition of the Frisco
lines and the Chicago and Alton road:
an apparent loss of $7.5O0,000 in one
bond transaction, and loss of $685.
600 on the stock and bonds of the Deer
ing Coal Company. were disclosed at
yesterdays hearing. Only two wit
nesses were examined.
Frederick c. Sharood, an examiner OF
accounts for the commission, gave in
detail the results of his investigation
of the books of the system. consisting
of the operating company and the two
holding companies.
Testifies Regarding Salaries.
Mr.. Sharood testified as to the salaries
received by various officers. As chair
man of the board, R. r. Cable received
annually salary varying from $4,000
to $4,000; w. B. Lieds. as president re-
ceived also $4,000 for time and later
$4,000 a year. B. L. Winchell, as third
vice president. was paid $4,000 a year
and as president $4,000; B; F. Yoakum.
a chairman of the board, was paid
$4,000 year, and L. F. Loree received
$4,000.
Describing the acquisition of the st.
Louis. Kansas City and Colorado road
by the Rock Island in 1902. Sharood
said David r. Francis and John Soul
lin of st. Louis received 100000 in
Rock Island stock for s3.03O,00O in st.
Louis. Kansas City bonds. and that the
Rock Island also assumed an indebt-
edness of $4,500,000 from the absorbed
road.
F. L. Hine, president of the First Ma
tional Bank of New York, director in
all three Rock Island companies, was
the only other witness. He said he be-
came director Of the Rock Island rail-
way in 1902 on invitation of William H.
N ana ADMITTED the stock which
property Of Judge Moore.