Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1915-08-18
ROAD IS WRECKED
BY HIGH FINANCE
Undoing of Great System Scath-
ingly Denounced by Com
merce Commission.
MILLIONS ARE THROWN AWAY
Syndicate Grows Rich by Devi-
Gus Methods, While Stock
holders Lose All.
MILLIONS ARE THROWN AWAY
I Special to The rimes. .Dispo,cn !


w y II y G T o y, August 1.-THE
wreckins of the Chicago. Rock Island
and Pacific Railway Company by high
finance is described in scathing re-
port by the Interstate Commerce Com
mission made public to-day.
That the syndicate which came into
possession OF the Rock Island by devi-
Gus stock speculation deals has "manip-
ulated the road into a receivcrship." is
charged in the report of the commits
sion Despite the richness Of the ter
ritory traversed by the Rock Island
and the enormous tonnage il carries,
the commission says, manipulation of
stock. through holding companies and
otherwise. forced the stock Of the com
pany from 5000 a share in 1902 to $50
share In 1914. Yet the earnings of
the railway proper, the report says.
have increased steadily. "and in 1914
were the largest In its history"
Syndicate control by Daniel c. Reid
w. H. Moore. ]. II. Moore and W. p.
Leeds and the consequent formation of
holding companies and subsidiary prop
critics. the commission says. brought
about the undoing of the system
NEED OF LIMITATION
on ISSUANCE OF STOCKS
'By this case" the report concludes.
the need OF some limitations on the
Issuance Of stocks and bonds by com
mon carriers. whether directly or
through holding company devices or
otherwise, is again demonstrated"
In its conclusions, the commission
asserts:
1T Is forceful commentary on the
methods By which n great railway may
be manipulated into a receivership
when II is noted that the general coun-
sci. after drawing the bill for a re-
cefvership. sold his stock. and the local
counsel. who represented the railway
company in the proceedings. owned no
stock In the railway company, and that
none of those directly participating in
the receivcrship proceedings had any
financial interest in the railway COM
pany. The real owners of the railway,
the stockholders, the security holders
and the directors, except those COM
prising the syndicate and in its conf
dence, were in ignorance of the re-
ccivership application"
The commission adds that "the gen
eral counsel for the railway company.
who planned the rcce!vcrship in obedi-
ence to the Will OF the syndicate is
now counsel for the receivers. The
property OF the railway company will
be called upon for many years to make
up the drain upon its resources result
Ing from transactions outside the
proper sphere in which stockholders
had n right to suppose their. moneys
were invested. This record emphasizes
the need OF railway directors who ac-
tually direct. There are too many pas
sive directors who acquiesce In what is
heinE done without knowledge and
without investigation.
DIRECTORS SHOULD
DE HELD RESPONSIBLE
"A director of a railroad is a quasi
public official who occupies a position
OF trust. 4 director who submits blind
ly TO the exploitation of his company
is n party to It's undoing, and he should
be held responsible to the same extent
as II he had been a principal instead
OF an accessory before the fact"
This indictment OF the commi ssfon
followed an extended resume of the
domination Of the Rock Island direc-
torate by the Reid -Moore-Lccds syndi-
cate. which held practically full sway
without inquiry or investigation by
other so-called directors"
Among the derelictions charged to
the syndicate mana cement OF the Rock
Island by the commission are the pay
ing OF fancy salaries 10 officers, the
payment of unexplained bonuses to
favorite officials, Campaign contribu-
tions." unaccounted for miscellaneous
expenses. the large upkeep of holding
companies and the manipulation Of sub
sidiary stocks which cost the Rock
Island millions
After review of these methods of
high finance" the commission says:
THE aggregate losses sustained by
the railway company in connection with
the foregoing transactions may be
summarized as follows:
Expenses of maintaining and hous-
ing holding companies. more than $780,
900; Frisco deal, approximately s6.-
100000: Alton deal approximately S.
10000: Trinity and Brazos Valley
Railway deal, more than $4.500.0O
Consolidated Indiana and DerinR Coal
Companies. at least $1,000, 900: contribu-
tions or gratuitics to officers and di-
rectors. about s1,0Oo.oo0; Venner trans
action. $217, 900: miscellaneous and un-
explained expenditures, S7o.52S-show-
Ing total loss TO the railway company
Of more than s20,000,000.
I'm addition thereto. 1t is to be noted
that prior to June 80, 1914. the railway
company paid to financial institutions.
in connection with the issuance of
bonds. commissions agGregating more
than $1,60G,000 and suffered discounts
Of more than S17700.000.
ALWAYS BURNED BOOKS
AT END OF EACH MONTH
The amount of gain accruing to
w. B. Leeds, D. G. Reid. w. II. Moore
and j. II. Moore through their control
and manipulation Of the railway com
pany arc probably not ascertainablc
Reid. when interrogated about his
profits, s3id he always burned his
books at the end Of each month.
THE quotations placed In the record
of