The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-08-22

blameless. Two issues OF equipment
notes were sold in October. 1911, over
the counter to bankers on a 8 per cent.
basis with IN per cent. commission. or
at 1894 for one Issue and 97.6S for
the other. The bankers resold them to
investors. presumably making n mod
crate profit. In the following January
the railway had funds on hand to a
maturities OF the mex twelve months
or so. The funds were earning only 2
per cent. or so. as a deposit. while the
railway was paying 5 per cent. on the
debentures sold to produce the funds
and was also paying interest on the
equipment notes. 1t was manifestly ad-
vantageou to buy in all the notes
readily obtainable.
This was quietly done and o
100000 were bought back at an aver
age price Of less than l02 and interest.
II was good business to do 1t at that
price. II would have been good BUSH
ness at even a higher price. They were
sold less commission and were bought
plus the commission and also plus what
holders thought they were worth over
and above the commission The ten
dency of bonds to approximate par as
they approach maturity" has nothing
whatever to do with the case. The
whole transaction, It may be added, In
yolved the repurchase OF 100000 Of
notes. and the difference between cost
and sale price. disregarding accrued in
terest In each case, was about 100000.
Uses Com missions Figures.
Is, As to the commissions state
ment tina commissions aggregated more
than $1,000, 900 in connection with
" ala NA@NNN A.
OF more than s17.7O0. 900: Taking the
Interstate Commerce Commissions own
figures, these $500, 900 commissions
were on about 1880 900 OF increased
debt, or less than 1 per cent. commits
sion. AS a fact the 81 1900 900 includes
the same money turned over twice or
more. in some cases, and is an average
commission OF less than eight-tenths
Of 1 per cent. Few railroads can show
any cheaper financing.
10. The discounts of sl7.I0o,000 are
a strongly immateriai figure to drag in.
A discount depends on the rate and term
OF the security. BY itself II Is meaning
less. The bulk OF the Rock Island =
financing has peer in 4 per cent. bonds,
due in 1894. Up to June so. 1914. all
the railways financing had been made
on better than a "a per cent. basis
The discounts resulted from selling 4
per cent. bonds In a ) per cent or 81
per cent. market. II Is either wilful or
ignorant or both for the commission to
specify this ST.. 1906 900 discount item
In such a contract as to imply that II
was a loss.
20. The amount of gain accruing 10
w. n. Leeds. D.. q. Reid, W. II. Moore
and J. ". Moore through their control
and manipulation OF the raj way COM
pany are probably not ascertainable,''
says the report.
Leeds died in 1905. W. II. II J.
II. Moore were not placed on the stand.
though W. II. Moore was "subpunaed and
present at the February hearing. Mr..
Reid was not 'interrugated with a view
10 ascertainihg his profit from the varl-
Gus transactions hut only his stock
market transactions. lie testified only
that he burned his brokers statements
from month To month. No examine or
witness breathed a suspicion that Reid
or either Moore or anybody else prohted
by or was concerned in any corporate
transaction. The records show that
there were no syndicates nor participa-
tion. and hat all sales OF securities were
made over the counter to outsiders. Mr..
Reid was not asked by Folk or anybody
else whether he had made any proht.
Denies I.6OO,OOO Deacit.
81. As 10 alleged misrepresentation OF
assets in the company's reports: or
this matter let two things be said. I,
that all these items were in good faith
carried at par, as permitted and re-
quired by the commission ., that nc
appreciation Of good items (Chiragc
terminal, &c.D was ever made. ReStated,
by Wiping out items as the commission
desires. but by enhancing valuzble items
shown at original cost the books would
still show a surplus and not "a dehcit
OF over 1900. 900"
p. on the head OF receivership II Is
merely suggested that tho record itself
De read. II Will not tally with the
commissions resume.
20. Amster's testimony is accented a,
face value, But Amster was shrewd
enough not TO say what the plant com
mission quotes him as saying He
never claimed Assurances for the fur.
n!shing of the money" but only that
one brokerage house and one small
banking Arm had said they would be
interested TO handle g. e., 10 try 10 soil
10 investors) sue an issue OF notes ms
Amsier described. These parties made
no point OF rate, term or details of the
collateral security. II vas the least
INV hSNuliIlfN OF any DOOF n0lF-
p%arlers that ever toe place in a GUS
toners room.
"a The commission complains that 81,
Is n forceful commentary on the methods
by which n great railway may be
manipulated into a ~receivership wher
T. is noted that the general counsel
after drawing a bill for the receiver.
ship. sold his stock and the local coun.
sei, who represented the railway com
pany in the receivership proceedings
owned no stock in the railway com
pany."
The general counsel sold his stock, a.
he testified, at "A loss to himself OF over
$500.
Since when must n local counsel owr
stock In a defendant corporation? How
many United States bonds does Com.
missioner Clements or Mr.. Folk own