The Washington herald., 1914-10-18
YOAKUM, GRILLED,
RARE'S FINANCING
Railroad Magnate Discloses
How Rock Island Stock
Was Juggied.
sGoNG AT FAST GAIT"
&c. C. Witness Advocates cO-partner-
ship Between Government and
Private Interests.

B. F. Yoakum. who with Daniel G.
Reid, Judge Moore, and W. B. Leeds.
was an active figure in the organization
and financing of the Rock Island COM
panies, was a witness yesterday In the
Interstate Commerces Commissions in
quiry into the management Of this sys-
tenn.
Counsel Folk, Of the commission led
Mr.. Yoakum through the maze OF Rock
Islands fnances, showing how capitals
zation Of $3.50. 100 had been pyramided
through holding companies on an original
capital OF 81. 900. 900 in the operating rail-
road and he drew from the witness the
explanation that these things had hap
pened ten years ago when conditions
governing the railroad business were diff
ferent than they are now. He expressed
faith in the Rock Island system, but left
unanswered a statement by counsel for
the commission that IL was S2ooi0oo0oe Of
watered stock that broke the Rock Is
lands back.
Paid S:B,OOO n Year.
Mr.. Yoakum disclosed that L. F. Lowe,
former president of the Baltimore and
Ohio, had been engaged by the Reid
Moore management to run the Rock Is
land at a salary OF $4,000 a year and
u IOulE VI eoVosvey a. NhC NAa VI hNo
years. He lasted only ten. months be-
cause his way Of doing things did not
SUIT the men in control, but he received
at the end of this brief period $4,000 in
bonds.
Mr.. Yoakum advocated co-partnership
between the government and private in
terests in the running Of railroads, in
cluding a profit sharing between the two.
N. N. Wallace, president OF the Gen.
trail Trust Company and head Of the
Rock Island bondholders committee,
that has begun foreclosure proceedings
to compel the sale OF the S7l.OooOoO Of
Rock Island stock held as trustee by
the trust company, also appeared as
witness yesterday.
Questions asked by Counsel Folk indi-
Gated a suspicion that some Of the old
Rock Island crowd Is behind the present
foreclosure proceedings, but this was de-
MED emphatically by Mr.. Wallace, who
asserted that the forced sale of the $71,-
feet Of wipIng out the S550.OOo.Ooo Of Sc
curities Of the holding companies.
Sale of FrIsco.
Mr.. Yoakum described in detail his sale
Of the Frisco to the Rock Island in 1903
at 12O a share and his re-purchase of the
same stock in 1909 at 81 1-2 a share.
A paper deal' was the way he char
acterfzed It. The Rock Island. he said,
paid S516O each a share and paid the rest
in ten-year collateral notes Of the New
Jersey holding company. In other words,
Yoakum said Rock island, paid him
81, 500, 900 cash for the Frisco and sold II
back to him for So.oooooo cash six years
later.
How Yoakum put one over on the
late E. H. Hartman in the purchase Of
a. - than ROrfrnIiad
by Hartman, was developed on question
ing by Folk. The Rock Island wanted
the Alton, but waited until Hartman
went to Europe.
I'VE considered it a more propitious
time then" said Yoakum. with q chuckle.
When it was suggested by Folk that
fear Of criminal proceedings against the
Rock Island directors by the Department
of Justice had hastened the sale OF the
Alton by the Rock Island, Yoakum in
sisted this was untrue.
Going at Fast. Gait.
Things were going at a pretty fast
gait among the railroads ten or twelve
years ago." he said. Those were the
days of consolidation. Lots Of projects
were started which didn't pan out. Take
the. Western Pacific. 1t has spent 49,
600, 600 trying to put the Rio Grande on
the coast and it is losing 100000 to
s. OOO, 900 in doing II"
Yoakum surprised the inquiry by advo-
eating closer Federal control Of the rail-
roads. He went even further, favoring,
he said, copartnership between the
large carriers and the government, In
which the government should participate
in the carriers earnings and have the
fullest power to regulate.
This would be a good trade both for
the railroads and the public" he said.
Yoakum expressed his faith in the
Frisco and declared the Rock Island to
be one Of the best railroads in the coun-
try Its physical condition is as good as
any other railroad Of Its section, he de-
clared.
Commissioner Clements announced that
the inquiry would be resumed at date
hereafter to be fixed. 1t is probable that