The Washington times., 1915-08-18
High Finance Exposed
In Rock Island Report
Startling Disclosures of the Influence of Holding
Company in Manipulating Great Railway Are
Made by Interstate Commerce Commission.

subsidiary stocks which cost the Rock
Island millions.
Throughout the report syndicate man.
agement and what Is popularity known
as high finance" are blamed for the
dissipation Of great and paying rail-
way property.
Vouchers approved by the syndicate
management for general expenses"
contributions to campaign committee
FOR the benefit of the railway con-
pany." and FOR advertising in editorial
and news columns" Of n Denver news
paper arc among the unexplained items
listed by the commission In condemn
Ing the practices of the syndicate
Gratuitfes and bonuses to officers. 1t IL
alleged, were common.
tion OF the syndicate. the commission
shows that In 1901 the Reid Moore
Leeds combination acquired about 500
10000 Of the railway company's stock.
and soon controlled the board OF direc.
tors In 1902, the capital Of the Rock
Island was increased to SIS 0oO. .O00-from
an original capital Of $50, coo, ,O0o-'and
the board authorized President Leeds to
sell to certain individuals portions OF
this Increased stock at par. although at
Revealing the high finance" methods
In the organization of the holding com
panies, which followed soon after. the
report says:
Secured Domination.
THE authorized capitalization Of the
Iowa company was $l25, 100000 in stock
and $75.00O.O00 in per cent collateral
bonds. That Of the New Jersey com
pany was $50, 100000 In stock, of which
*54 900 was preferred and 500. 900. .OOO
common. In the latter company the
preferred stock only had voting power
to elect directors of the first class,
Which directors under the bylaws con-
stituted majority of the board. The
directors of these two corporations first
later members of the syndicate became
directors OF both companies and con-
trolled them.
The New Jersey company and the
as fully paid. whereas no payment was
made on either. Then upon motion OF
d. G. Reid. the. Central Trust Com
pany Of New York, of which J. n. wal
as trustee. and an arrangement was
made with that company whereby the
entire bond issue OF the Iowa company
and stock issue of the New Jersey COM
agreement that they were to be ex-
changed for stock of the railway COM
pany In the proportion Of 500 In Iowa
company bonds. and so in preferred
Jersey company for each 500 In stock
of the railway company, or 500 face
value of the holding company securi-
ties for each 500 par value of the rail-
way company stock
Under this agreement the members
Of the syndicate deposited railway stock
as follows: d. G. Reid. s5,e15. 437 so
W. II. Moore. &6,l1s,e75: j. H. Moore,
81. o59. 1880; w. B. Leeds. s5.597 100 max
ing a total Of 500. 600. 175. for which they
received 500, 775 in the Iowa COM
pany's bonds and the same amount in
the common and Si 1850 in the pre-
ferred stock of the New Jersey COM
pany. a total of SIS, So, ,092
Under the terms of the trust agree
ment the railway stock deposited was
to be held by the trust company as
collateral to secure the Iowa company s
bonds. and the trust company was au-
thoriZed to sell the railway stock upon
default Of payment of interest on any
of the bonds.
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
affairs Of this transportation system"