The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-08-18
Commerce Board Scores
syndicate" for Putting
Road Into Court.
S25, 100000 LOSSES
FROM 1901 TO 1914
Directors Who submit
Blindly to Exploitation"
Taken to Task.

WASHINGTON. Aug. 1.-THE Interstate
Commerce Commissions report on the
Rock Island. handed down to-day. de-
scribes the recent court action which re-
suited in the appointment OF receivers as
mot a bona fide proceeding to collect
debt. but one instituted to carry out the
purposes and schemes of the syndicate
controlling the railway"
The report details losses to the railroad
sggrcgating $4,000, 900 since 1901, this
total including 100000 that was paid
a. "gratuities or contributions" to offi-
GERS and directors. In addition the rail-
way company paid to financial institu-
tons in connection with the issuance OF
bonds, commissions aggregating more
thar sl.6Oo,eoo and suffered discounts
OF more than s17,700, 900.
"The amount OF gains" says the COM
mission. "sccruing to W. b. Leeds. d. @.
Reid w. II. Moore and J. II. Moore
through their control and manipulation
Of the railway company is probably
not ascertainable. Reid. when interro-
gated with view to ascertaining his
profits from the various transactions, ex-
planned that he always burned his books
~ the end OF each month.
Little Of Value Left.
The quotations placed in the record
from the stock market OF the New Jersey
company stock and the railway company
stock showed wide fluctuations. What
ever have been the gains realized by
these persons It is certain that the pres
ent holders Of the stocks and bonds OF
the holding companies have that which Is
of little or no value"
The commission condemns the direc-
tors of the Rock Island Here are a
few OF the things It says:
This record emphasizes the need OF
railway directors who actually direct"
"A director who submits blindly to the
exploitation Of his company is a party
to its undoing and he could be held re-
sponsble to the same extent as II he had
been a principal instead of an accessory
before the fact"
at should be just as grave an offence
Tor an official Of a railway to be faith
!ess 10 his trust for financial gain as Il
10 for an elected official of the Govern
ment to betray his trust for money re-
ward
The commission contends that the case
OF the Rock Island again demonstrates
the necessity for legislation imposing a
limitation on the issuance OF stocks and
bonds by railroads.
History of the Road.
Before taking up the receivership pro-
ceedlngs the commission presents this
Island:
In 1902 the main line OF the Chicago
Hock Island and Pacific Railway Com
pany extended from Chicago to Denver
with branch lines to st. Paul, Mnneapo-
hs and Kansas City. The territory served
ls one of the richest and most prosper
Gus IN the country and the systems
ranification OF branch lines insures to 1t
large volume of tonnage
1T was then thriving and its pros
poets were promising. its stock selling in
the markets of the world at more than
WOO share. In 1914 the shares had
fallen TO $50 and the road Is now In re-
celvers hands The evidence shows that
the earnings of the railway company have
steadily increased and that in 1914 they
we're the largest in its history.
The results OF the management, which
IS the subject Of this investigation. may
be seen from the statement above made
as 10 the market value OF the stock and
from the table below. showing the capi-
taliZation, Indebtedness and operating
accounts for the years 1901 and 1914:
1901. 1914.
Capital stock ....Si9.92l,40o s7lg95la2
Funded debt. ...... 63,53s,ooo 2s5.24s, 900
M n