New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1915-06-05
Action Without Directors
Consent, Commerce Com
mission Finds.
SOUGHT TO AVOID
UNDUE PUBLICITY
Arthur c. James and ogden
Mills Testify of COmpany's
Condition.

cago. Rock Island & Pacific Railway
Company was sent into the hands OF
receivers six weeks ago was described
to-day when the Interstate Commerce
Commission resumed its investigation
Of the roads financial troubles. The
inquiry may be completed tomorrow.
Roberts Walker. Of counsel for the
Rock Island, declared no prepared the
petition presented TO Judge Carpenter
Of the Illinois Federal Court, asking
that receivers be appointed. and also
framed the answer by which the com
pany consented, without formal action
by the board Of directors. He said q
receivership was the only way IN which
the property could be maintained, and
that the consent OF the vice president
Of the road 70 a rece!yership was as
effective as that of the board Of drec-
tors BY the method adopted, he
added. publicity was avoided which
might have resulted in injunction pro-
ccetings if the board lad acted for
mally
For several hours Samuel Untermyer.
counsel for minority stockholders ot
the Rock Island, cross-examined Mr..
Walker as 70 the authority upon which
he acted. The witness explained that ne
consulted with william II. Moore, +.
/. Hine and I. VI. Schumacher. Of the
board Of directors, and that they had
assured him OF the attitude Of others
on the board.
Directors Not Consulted.
Two Of the directors of the road,
Arthur Curtiss James, OF the Phelps
Dodge interests, and ogden Mills, were
examined by the commission. Mr.
James said the first he knew Of the
proposed receiyership was on April 49,
the day before the receiver was ap-
pointed On that day, he said, Mr..
Schumacher came 70 his Office and re-
ported he had by accident learned at
the Rock Island Offices that application
was to be made for a receivership. The
witness told Of a conference partlcl-
pated in by himself, Mr.. Schumacher,
w. Emlen Roosevelt and other directors
10 consider the course TO pursue, at
which. after agreeing that q receiver
ship was inevitable, they decided not to
oppose the move.
81 was surprised az the application.
he added. land if / had been consulted
| would not have advised II"
As TO his own holdings, he said, mem
bers Of Phelps, Dodge e. Co. had bought
in 1910 100000 worth Of stock in the
Rock Island holding company, organ
lied In New Jersey, and had lost heav-
ily.
Mills Tells of Stock Sale.
Ogden Mills testified he had hoped
the new directors would be able TO
keep the company going, and hence was
willing to aid in the March 81 loan. tie
told of selling 5000 Of his 10000 shares
Of Rock Island for S36 share on April
Is, d few days after the directors cleo
ton, and four days before the receivers
were appointed
Artificial conditions il the market,
created in perfectly crazy way,
showed somebody was pushing the
market up" he said, land felt en-
titled TO take advantage of it,"
Didn't you know papers had been
prepared for a receiver" inquired
Chief Counsel Folk, for the commits
sion.
81 didn't know any papers had been
prepared for the appointment, but any
body with any intelligence knew that
conditions had not improved" the wit
ness answered.
Every financial institution in New
York knew of the obligations coming
due and the condition the company
was in. The figures which were placed
before the board of directors on April
- showed the situation. | hoped that
the new directors might find means
of escaping"
you sold your stock TO escape"
suggested Mr.. Untermyer, who recalled
that the Rock Island stock sold by the
witness at $50 had gone from $50 to
S3S during April and fell 10 points on
the day of the receivership.
81 sold because the stock was too
high" said Mr.. Mills.
Mr.. Mills said he had no information
as 20 who manipulated the market. He
said that in late years William H.
Moore. Daniel G.. Reid and W. b. Leeds
in his lifetime were the controlling
forces in the company, and that of late
the management had been considered
in the hands of Phelps. Dodge & Co.