The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1915-02-27
REID SAYS JOKE
COST 100000
81 Was Foolish" He Admits,
in Explanation Of Why He
Spent Fortune.
BIG SUMS WON AND LOST
Witness Shows How SIS 100000 OF
Stock Was Pyramided Into
$3OO,O0O.OOO.
BIG SUMS WON AND LOST

7
the Chicago, Rock Island and Pacific Rail
\ way Company and its erstwhile holding
companies, the Rock Island Company of
New Jersey, and the Chicago. Kock Is
land and Pacific Railroad Company OF
New Jersey that Daniel G. Reid was
the dominating figure in the companies
from 1872 practically down to the time
: he severed his connection the latter ParI
of 1914
The testimony of Mr.. Reid and others
gave a pretty good picture as to now
| tho 81 o,o 90 of stock of the Rock Island
Railway was pyramided into more than
500 OoO OsD of stocks and bonds from 1907
down. and how all this water was wiped
out by the foreclosure proceedings 1nsti-
tuted last fall ny the Central Trust Com
pany of New York, trustee under an
! agreement. and how the only tanelhle
| thing that now remains Is the SIo."nW1
stock of the railway company Itself.
Believer. Fortune Was Lost.
In brief the thing worked itself around
| in a circle but in the working It is con-
| tended by the Interstate Commerce tom-
mission that something like S22o,oW.~
! of stocks and bonds were created, sold
and wiped out.
| ROBERT MdtntT. VI s'N $780,,
Island system. expressed an opinion that
senator James Hamilton Lewis. of Hi
no;s should be jailed for his connection
with the suit of c II. Nenner against
the Rock Island, in a telegram TO X. A.
jackson. general counsel for the ROCK
Island according to documents read by
Counsel Folk.
F. I.oree, who quit the presidency of
the Baltimore and Ohio Railroad to be-
come the head of the Rock Island lines,
was forced out by Reid, I.oree testified.
The name of David Lamar got into the
record Yesterday. Mr.. Reid testified that
Lamar tried to get in touch with him,
apparently to head on Congressional In
vestig alton or agitation, but that he re-
fused to see him under any circum-
stances This was in January. 1911. and
Representative Green. of Iowa, intro
duced the resolution which led to the
present investigation on February S. Rob-
ert Walker, attorney for the Rock Island
Railroad. stated
II is possible that as the result of tel
egrams and correspondence placed In the
record yesterday by Chief Counsel Joseph
W Folk. senator James Hamilton Lewis
and Clarence II. Nenner, of New York
NAV be called as witnesses. Thursday
II developed that Senator Lewis was
Nenner's attorney when the latter Sc
cured s2500N0 from the Rock Island Rail-
way Company for stocks of railroad
company and a construction company
which only existed on paper. 1t was
shown that the money was really paid to
induce Venner TO withdraw a suit he in
stituted in Cook County. Ill. to prevent
the formation OF the two holding COM
panics.
How Reid Engineered nea1.
Mr.. Reid stated that himself. the Moore
brothers, William H.. and James H.. and
William Il. Leeds In 1901 and 1902 &C
Iuired about one-third of the stock OF
the Chicago. Rock Island and Pacific
Railway Company outstanding. Mr..
Reid said he paid from sl45 to s115 for his
stock. and he fixed the average at about
sl15 He was uncertain as to how much
he bought at particular times, or the
amount paid He said that he and his
associates. the Moore brothers and Will
lam B. Leeds. bought in all about 81,
GO.OOo of stock, the Moore brothers about
sI2 800. GO and Leeds and himself about
s. go each.
The net result was that you accumu-
lated about s6.6bo.Ooo. said Chief Counsel
Joseph w Folk. and then YOU ex-
changed that stock for Iowa bonds and
common and preferred stock of the New
500. zoo. so that you received 900 for
your investment of sf,5D.OI.'
Reid admitted that this was substan-
TALLY correct.
In reply TO a question by Mr.. Folk as
to why two holding companies were
formed instead of one. Mr.. Reid said,
That is a lawyers explanation"
Mir Reid maintained that not all of the
issues of the two holding companies got
into the hands of the public.
Spurn. Railway as Gift.
He declared that under present condi-
tions he would not accept as gift the
control Of any Western or Southwestern
railroad conditions, he said. being now
different.
Mr.. Reid admitted loss of So. 900 nm
by the railway company in the Frisco
deal loss of IS. 900 90 in the Chica go
and Alton deal, and other losses. and
also that the acquisition of the control
OF these properties was a mistake.
You said yesterday that you found
the Rock Island Railway a streak OF
rust said Mr.. Folk. How do you ex-
plain the fact that for the four years
following your control You spent loss
upon that property by far per mile than
the four years preceding your control?''
There was not much in the way OF a
The Rock Island was a joke in the Wcs,
| among railroad men"
1T was paying good dividends" said
Mr.. Folk.
Yes. sir
You spoke Of il being a joke Why
did You spend s5.Ooo.oco or 5000. 900 in a
joke?"
ITO he frank" said Mr.. Reid. q was
foolish
Mr.. Reid said that william B. Leeds
had induced him to go into it. He also
admitted that at the time control was
secured the railway company had a sur
plus of $4,000.
Says Public Was Deceived.
W. W. Stevenson. comptroller of the
Rock Island Railway from 1902 to 1896
| was also witness during the day. test
flying as to property or securities carried
on the books of the company as assets
His testimony ELECTED from Commits
sioner Clements the comment that the
sysem OF bookkeeping described by Mr..
Stevenson resulted in misrepresentation
to the public and that the public Was
asked to invest on situation of affairs
II knew nothing about. and that state
ments which appeared in the books were
untrue"
The hearing will be resumed this
morning. when Ogden Mills. of New
York, former director of the Rock
Island Railway. will testify.
NF:..:>~>-, MN C->~h