Norwich bulletin., 1915-08-18
High" Finance of
the Rock Island
REPORT OF INTERSTATE CON-
MERGE COMMISSION.
$1,000, 900 IN DISCOUNTS
Stockholders Kept in Ignorance While
Officials ProHted by Transactions-
In Exchange of Stock the Road
Lost $2o,ooo,ooo.

Washington. Aug. 17.-The Inter-
state Commerce Commissions report
on Rock Island Railroad financial af-
fairs, made public here late today, says
the commissions investigation has
demonstrated the need. of legal limita-
ton of railroad security issues and has
emphasized the need Of a law to fix
responsibility for dissipation of cor
porate funds.
The report declares that "the pro-
perty Of the railroad company will be
called upon for many years to make
up the drain upon its resources re-
sulting from transactions outside the
proper sphere in which stockholders
had a right to suppose their moneys
were invested
Too Many Passive Directors.
This record" it adds, emphasizes
the need Of railway directors who act
ually direct There are too many pas
sive directors who acquiesce in what is
being done without knowledge and
without investigation
The report says is appeared to be
the idea Of those in control of the
Rock Island, that IL was no concern
of the public what became of the cor
sonabIe.
Losses by Exchange.
The aggregate losses found to have
been sustained by the railway COM
pany IN connection with the trnnsac-
tions respecting exchanges OF stocks in
connection with the St Louis and San
Francisco Chicago, Northern, Consoli-
dated Indiana Coal Company and Rock
Island Improvement Company and
others were $4,000, 900 besides pay
ments by the railroad prior to June
80. 1914. TO financial institutions in
connection with the issuance of bonds,
commissions aggregating more than
$1,60O,Oe0 and suffering discounts Of
more than 81, 900.
Officials Profted.
The report says that R. r. Gable,
former president of the Rock Island,
received securities worth $36S, 300 for
which he paid 100000; that H. A
Parker, first vice president. received
S27. 800 worth of securities for SIS 900;
that Robert Mather got s145.912 In
securities above what he paid and that
cash contributions to officials in ex-
cess of their salaries aggregated mil
lion dollars.
What Was Lost on Deals.
"ou the Frisco deal. the report says
Alton deal it lost S6,370,0e0; on the
Trinity and Brazos valley Railroad
deal it lost more than 81, 100000: on
the Consolidated Indiana and Dering
Coal Companies it lost at least 81, ,300,-
600 and on miscellaneous transactions
''The amount of gains accruing to
W. B. Leeds, d. C. Reid, ". H. Moore,
and ]. H Moore, says the report,
through their control and manipula-
ton of the railway company are prob
ably not ascertainabIe-"
Published Misleading Reports.
Misrepresentation of assets in re-
ports to stockholders" continues the
report appears to have been a prac-
tice of the directors. The publication
of misleading reports to stockholders
cannot be too severely condemned and
the individuals guilty of such acts
should be subjected to adequate penal
ties"
Kept Stockholders in Ignorance.
TT is forceful commentary on the
methods by which a great railway may
be manipulated into a receivership
when it is noted that the general coun-
sci after drawing the bill for a re-
ownership sold his stock, and the 10
cal counsel. who represented the rail-
road company in the receivership pro-
ceedings, owned no stock in the rail-
way company and that none of those
directly participating in the receiver
ship proceedings had any financial in
terest in the railway company. The
real owners of the railway, the stock
holders, the security holders and the
directors. except those composing the
syndicate and in it's confidence, were
in ignorance of the receivership appH-
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