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

The 10 per cent stock dividend declared
by the railway company on June 5, 1901,
had the apparently intended effect OF
creating a emand for the stock OF the
holding companies, the only revenue OF
which was from dividends on the stock
of the railway company and practically
all OF the stockholders OF the railway
company exchanged their stock. the total
amount deposited being approximately
81, 600, 900. or all but about $4,000 900
OF the railway stock. The par value OF
the holding companies securities issued
In exchange amounted to about $751;
900, 900"
There was never any 10 per cent stock
dividend in 1901. IL the right to sub
scribe at 500 n share created a demand,
1t was for stock OF the railway company.
Bearing In mind that this subscription
privilege expired July 81, 1901, 1t Is diff
cult to follow the commissioner argument
that thereby was created "a demand for
the toe of the holding companies"
which were not launched until after Au-
gust l, 1902. Every banker knows that
the memory Of Wan street and investors
In shorter thar this.
Incidentally. the syndicate was not
In the saddle when the stock was in
creased by the stockholders on June 5,
1901 w. "A. Moore was elected at that
meeting, and ID. q. Reid was elected at
a directors meeting held later In the
day. No other member of the syndicate
had any Official connection with the rail-
way company. The holding companies
had not been Incorporated nor even
thought of. IL the subscription privilege
had any Interior motive II wa a further
bait put out by the Cable Flower Field
party to whet the interest OF the Moore
Reid-Leeds party.
Reference to stock OF the holding COM
panies when only one company issued
stock to the public. namely. the New
Jersey company. is a minor illustration
OF inaccurate statements that invest the
report.
Say Connection Is Abstrusc.
As to the exchange OF railway stock,
as quoted above from the report, the
casual connection is indeed abstruse.
The essence of the Iowa company bonds
was that further stock Increases by the
railway were prohibited. Thus any fur
their stock subscriptions were barred un-
I'll 2OO2. How a subscription privilege
Tin l90l) could make holding COM
panies' stock Gin 1902 inviting when
the holding companies programme abso-
luteiy barred further subscription privi-
leges or stock dividends is beyond COM
prehension.
10. Again. the report says Thus
by the organization OF the two holding
companies, the syndicate. the members
of which held but little more than one-
fourth of the railway stock, secured
control OF and dominated the ana irs OF
this transportation system"
Thus" How? The syndicate
still had a one-fourth position. namely,
IL held o~ne-quarter OF the railway com
pany stock. The commission fails To
see the point. The creation OF the hold
ing companies did not bring this quar-
ter interest one mlllimeter nearer 10
control. II real control had been de.
sired. tho syndicate" would have had
to buy a majority OF the New Jersey
preferred. thus eltcting "A majority OF
the New Jersey company directors.
This feature-the really dubious one OF
these corporate arrangements-the com
mission fails to elucidate. It's thus
is an empty gesture.
IL. OF President Mudge's testimony
the commission says: while he re-
garded the wages OF these minor EN-
ployees clerks, telegraph operators,
conductors and brakemen) as having
partially Slapped the financial strength
OF the railway, he declared that the
salaries paid to the higher officers OF
the company had no a~preciable effect
on its expenses"