New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1914-10-17
Begins InquiryInto Roads
transactions, Ordered
by Senate.
EXAMINER REPORTS
LOSSES IN DEALS
hectares Large Sums Wasted in
Acouirement of Frisco and
Other Lines.

isss OF s. ,5UVVVV IN orc o"nu trahSaC-
40. losses. indefinite in amount but
..creeating many millions, in the &C
--,.ition Of the Frisco lines and the
c.;.sgo & Alton road. and loss Of
s-ssNOO on the stock and bonds Of the
nssrinc Coal Company were disclosed
.,Ssv Al the hearing OF the Interstate
r,,meree Commission investigation
- .be financial operations of the Chi
-, Rock Island & Pacific Railway.
NV two witnesses were examined.
Frederick C. Sharood, an examiner
= accounts for the commission, gave
!, 5etai the results Of his inveStiga-
,,- al The books Of the operating COM
,s,, and the two holding companies.
NJ Sharood testified that as chair
-sn Of the board K. K. Cable received
.-ruauy from $4,000 10 $4,000: W.
2 leeds. as president, received $4,000
"a. a time and later $4,000 a year.
al. Winchell. as third vice president.
vos paid $4,000 a year and as preSi-
Ssat $4,000. b. F. Noakum. as chair
rsn Of the board. was paid $4,000 a
,ssr. and l. F. Loree received SS7 500.
voucher for S25. 600. the proceeds
n which were paid TO Robert Mather,
counsel for the railway company, was
,rsred in evidence
The index shows that the amount
AS paid for campaign purposes" said
,le witness. "hut I was unable 10 find
he correspondence file respecting the
natter. The file had disappeared"
Mystery in Vouchers.
Two other vouchers for $4,000 each
$50 were offered IN evidence. No in
formation was obtainable as to the
$50 70 which the money had been pat,
NJ. Sharood said.
Describing the acquisition Of the st.
Louis. Kansas City & Colorado road by
40 Rock Island. IN 1902. Mr. Sharood
aid that David X. Fran,iS and John
S,ullir. OF S. Louis. received $4,000 900
IN Rock Island stock for S3.03O,00 in ST.
louis. Kansas City & Colorado bonds.
md the RocS Island also assumed an
Indebtedness O. S4.50O,OOO from the alb
scrbed road
The average cost OF that lime TO
he Rock Island ne added. was $751;
t%a mile That, Of course. irrludes
S. Louis terminal facilities and ;track-
lgs facilities over the Wabash"
VI Sharood. describing transactions
b which tire Rock Island acquired the
FRISCO lines. declared the loss 10 the
Iotk Island was Gust about SIS, 0S5.-
fV and that t was carried on the
N-pany's books as an asset.
The exam 'ler submitted an agree
rent, dated May 6, 1908. by which the
ko;s Island company executed bonds of
gs500O00, % be- deposited with J. T.
G. =
ia,sseton. The firms commission was
al 70 have amounted TO $l,S97 ,625.
Sold Below Cost.
II stock of the Frisco so acquired
ri2O a share. the witness said. sub
serenity was sold or transferred TO
B T. Yoakum and his associates for
SIS a share. or S10.S52, 900
i became necessary for the Rock
STAND Railroad. before IL could turn
Wsr 70 Mr.. Ioakum the Frisco stock,
% obtain $7.500,00O. That was Dor
nyei, Mr. Sharood said, Of the First
MiOnal Bank Of New YORK.
How much did the RocksIsland pay
be bank for that loan ~ asked Mr..
FOX.
The books snow Sl95,O0O," was the
i1sWer
?. l. Hine, PR sident Of the First Ma
tonal Bank Of New York, a director in
O.. three Rock Island companies, said
q became a director OF the. Rock Island
. 1902 on invitation Of William II.
toore. He admitted that the stock
theh stood IN his name actually was
ne property OF Judge Moore.
Ar hne said he heartily approved
q ne sale otrhe Frisco stock TO B. +
'oasum and his associates. although
ne Transaction entailec considerable
0u
Ar HlIe explained me transaction
b which a loan ~ $7.50G00O was OBJ
a'ned by the Rock Island Of New Jer-
i'y through the First National Bank OF
ss" York, the bank participating to
hs extent o. S1.250,OO0
We received" said the witness. "our
20 rata share OF the $4,000 paid for
ne loan. Our bank could not legally
tsys made the entire loan of $780,
ne only source or income Of the two
l lodng CON panies was the Rock Island
A VpeTa-ing Company. the witness said
sneh had exchanged through its
Nockholders about S7I.000000 Of stock
2" nearly FIVE times that amount IN
sselrtes OF the holding companies
socknolders owning about S4,000,0OC
aasS Island operating stock refused to
G,hsnge.
Ignored the Minority.
What consideration. as a director
1 you give those minority stockhold-
" inquired Commissioner Clements.
never looked p. the matter from
4 viewpoint o. the minority stock
gaeT, replied Mr. Hine 81 regard
" from the .tandpoint OF 96 per
"ni Of the stock"
VAS the transaction detrimental TO
4 Pfomot.ve off, the interests OF the
4 "a stockholders asked the Com
Nssioner.
prefer not TO answer that ques-
responded Mr. Hine.
WIN the examination OF witnesses
morrow, including r. NJ Schumach-
george +. Boggs, George G. Nc
ny. ID. g. Reid, J. \. Wallace and
= ioakum. OF New York, the hear
/ Probably will be adjourned for ten
4 ne nearing begun to-day is to in
80 INTO charges made in the Senate
81 through the manipulations of a
~ number Of fnanciers the stock
.tts Of the Rock Island had suffered
'n9uS losses The Senate adopted
,oi9uon directing that an investi-
~~'R De made by the commission.
FEDERAL RESERVE