The sun., 1915-02-27
REID SAYS HE'S
HEAVIEST LOSER
IN ROCK ISLAND
Invested 6.5OO.OOO in "A
''JOke" Which Wiped
Out $225.OOO. 900.
EX-OFFICIALS TELL OF
$75O.OOO IN BONUSES


Reid. continuing his testimony before
the Interstate Commerce Commission
;o-day. gave "A description OF how $780,
600, 600 OF Rock Island stocks and bonds
were pyramided on the railway com
pany's original capital of $4,000. 600.
how most of this alleged water was
wiped out by the foreclosure proceedings
instituted last fall by the Central Trust
Company OF New York and how the only
tangible thing now remaining is the
$4,000 900 stock of the operating com
pany.
In the completion OF this circle IL Is
contended by the commissions counsel
that something like s225.0o0,00 OF
stocks and bonds were created. mostly
sold and then wiped out
Though others may have profted
through the financing Of the Rock
Island, Mr.. Reid apparently did not. lie
gave his own word to-day that he had
lost more money III it than any one per
son that he knew OF
Profit of 81, 100000 Indicated.
AT the same time it was brought
out that when the Rock Island holding
companies We're organized NJ Reid re-
ceived Sl1,50O.00O OF new stock for mas
original Investment OF $500, 900 in the
railway company This indicated
profit AT the time Of dbou. si1.0OO,O00.
Yesterday Mr.. Reid said he had dis
covered when he and his associates
bought the Rock Island that ii was just
"a streak OF rust" To-day he charac-
tcrized 1t as "a joke. but the conmis-
sions counsel. MI Folk. could no; un-
dersiand how Mr.. Red vas willing TO
invest s6,5OO.o0O of his own money in
"A joke.
Mr.. Reid also con;ended that he had
been actuated in the Rock Island iinnc-
ing solely by desire to improve the
value OF the property, but Mr.. Folk in
troduced figures showing that the out
lay on the maintenance diminished
steadily instead Of showing an increase
after the Reid group got control.
The testimony showed hat the Reid
management was prodigal in the dis
tribution of cash bonuses and gifts TO
officers who FOR some unexplained rcS-
son retired from the infringement.
l.. +. Loreo, who left the presidency
oi The Baltimore and Onio - become
the head tn, Rock Island lines. &C.
knowlcdgcd hc was virtually forced out
by Mr. Reid and that the latter gave
MIN fijO.O00 in bonds then selling at 81.
in settlement OF his contract for ser
vices
Il A. jackson counsel for the road
also resigned about tho same time,
taxing with him 100000 In cash.
Charles H. Warren. who WAS assist
ant to Mr. Loree, was fortunate "noug
TO receive upon his resignation S5O.UOv
cash and stock valued al sljo,O00.
All told. it seemed that about s15o,-
OO0 in cash or securities had been
paid to these officers who suddenly re-
signed during the Reid control
The uar,c OF David Lamar wa~
brought INTO the hearing to-day Mr.
Reid testified that Lamar tried % get
into touch with him apparently wiki
view to heading of a Congress onh
investigation or agitation, hut h' re-
fused to So" h'ih
Representative Green OF Iowa, who
was responsible for TN, inv stigntior.
testified that he did nYt know l.ama-.
had never seen him br any one rcp-
resenting him and that his resolution
OF inquiry was intI oduccd solely on his
. own initiative.
Got s.5 900, 1000 IN >t",L.
Nj. Reid said that he. tho Moore
brothers William II and lanes II
and William t. Leeds in 1901 and 1909
acquired about one-third Of the out
standing stock of the Chicago, Rock Is
land and Pacific Railway Company.
Mr.. fields stock on the average cost
him about s175 IA share. He and his as
sociatcs, the Moore brothers and MIR,
Leeds. bought altogether about $4,000
900 OF stock the Moore brothers about
1880, 900 and Leeds and himself about
Sc, SOC, 900 each.
THE net result was that you person
ally accumulated about $1,000, 900" said
chief Counsel Folk, "and then you eX-
changed that stock for Iowa bonds and
common and preferred stock Of the New
Jersey Company, making "A total OF Sl',-
500, ,000. So that you received l7.500,-
0O0 for your Investment Of s6,S00.000."
MIR. Reid admitted this was substan-
TALLY correct.
In reply to question by MI. Folk as
to why two Rock Island holding com
panies were formeI instead of one, the
witness pleaded that that was matter
for the lawyers TO explain.
Nj Reid maintained that not all OF
the issues of the two holding companies
got into the hands Of the public lie
said that under present conditions hs
would not accept as a gift the control OF
any Western or Southwestern railway
Conditions are SO different now from
those in the days when he bought Roch
Island
Mr. Folk wanted 10 know II this
. change had not been brought about by
Just such operations AZ in the Rock
Island case--fOr instance, the reporting
to stoc iSholders OF assets that were
worthless Mr. Reid differed with Mr.
Folk on this point He said conditions
. were changed by increased wages and
taxes and by regulation of the commits
sion
Mr. Reid admitted a loss of 10000.
0O0 by the railway company in the
Frisc, deal a loss OF t6,00O,OOO N the
Chicago and Alton deal, in addition tc
other losses also that the acquisition
Of the control OF these properties was a
mistake.
"you said yesterday that you founc
Rock Island hallway a streak OF rus
and started t., build it up" sad Mr.
} Folk "iIow do you explain tho fact
: that So. the four years following your
control you spent less Oh that propcrt,
by far per mile than was spent in thu
. four s"srs pv-"..lins your ""nir"i"''
Mr. Reid seemed to doubt this. but Mr.