New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1914-03-02
Position of tho Rock Island.

securities.
Position of tho Rock Island.
The announcement Of the decision 10
reorganige the Rock Island system had
little effect upon the market. the stocks
Of the holding company indeed advenc-
ing q trife on II. Earnest efforts had
been made TO adjust the difficulties
without resorting TO the expedient of
default on the collateral trust bonds.
but the complications encountered were
too great. The situation now is that
Rock Island & Pacific Railway Com
pany, is to suspend dividends upon its
stock These dividends have been the
sole source Of payment of the interest
on the per cent collateral trust bonds
Of the Chicago, Rock Island & Pacific
Railroad Company, the entire capital
stock of which is owned by the Rock
Island Company, the holding company.
Control Of the entire system has rested
in the majority ownership OF the Rock
Island Company's preferred stock, of
which about S50OOO,OOO is outstanding;
but that control, which has had value
IN the form Of dividend returns, has
now virtually passed TO the holders Of
the collateral trust bonds. But il is
competently estimated that the Rock
Island needs upward of S25, 100000 for
physical rehabilitation, TO enable it TO
become again the sound money making
property which It was fifteen years or
so ago; and the bondholders, accept
ing that estimate, are naturally not de-
sirous Of putting up that great sum,
and therefore are likely to make con-
siderable concessions to the holders OF
the preferred and common stock pro-
vided these shareholders will agree 10
pay the assessment. The Rock Island
plan from its inception, a dozen years
ago. has been looked upon as unwise
and perilous, because so framed as to
lodge the control of the system in a
comparatively small proportion of the
stock, and the abandonment Of that
plan has long been believed proba BILE
in course Of time.
II the Chicago, Rock Island g. Pacific
Railway Company is obliged to suspend
the payment OF dividends, other roads
appear TO be headed in the same drec-
ton, and will have to reduce their divi-
dend disbursements before long unless
they can secure additional revenue
through the increased freight charge
which they have so long been urging
the Interstate Commerce Commission
TO authorize. Business is by no means
in a booming state, yet gross reve-
nues Of the railways are showing good
increases, but in disconcerting contrast
net earnings are diminishing, as a rule,
the January statements OF some of the
principal roads. issued last week. being
the most recent examples Of this trend,
and the report OF the Pennsylvania
Railroad for the calendar year 1913
showing, with gross earnings about
10000, 900 in excess OF those for 1912,
decrease I'm net operating income OF
s1,510,o 900 and in the years surplus Of
more than $1,000, 900
Federal Control Urged.
These disquieting results led Pres-
dent Rea. of the Pennsylvania to sug-
gest that all regulation Of the railways
be concentrated in one federal control,
suggestion similar 10 that made a
few days ago by the head of another
important system, who expressed his
desire for compulsory federal incor-
poration OF the railways. President
Rca, in his remarks 10 his stockhold-