The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-03-27
DENIES WATERING OF
ROCK ISLAND STOCK
Counsel for Holding COmpa.
MES Says S145.O 900, 900
Never Reached Public.
CALLS FINANCING HONEST

wAspINGroS. March 2s.--In a state
nient flied with the Interstate Commerce
Commission to-day denial Is made that
the stock Of the Chicago. Rock Island
aud Pacific Railway Company was
watcred from $4,000. 900 TO something
like $3.50. 600. 900. az alleged by the ex-
port examiners Of the commission and
it's chief counsel, Joseph W. Folk, dur
ing the recent hearings on the Rock Is.
lands affairs.
The statement was filed by Robert
Walker on behalf OF the two holding
companies, the Chicago. Rock Island
the Pacific Railway Company OF Iowa
and the Rock Island Company Of New
Jersey. lie says that S1t5, 900 900 81
the stock of the Iowa company has been
continuously held in tho treasury of the
company and was never outstanding.
The net result" says Mr.. Walker.
"was that s196, 706. 900 Of the two hold
ing companies securities supplanted
sTi.353.0o stock OF the operating COM
pany. or an Increase in nominal par
Ndlue VI dUVbl SisotSV5sVNNs
Impouuded Securities.
"Srenuous efforts were made at the
hearing by the commissions counsel
and examiners TO make out a total OF
$3.50, 900, 900 OF additional securities.
This attempt must fail. both because IL
wilfully insisted on including i~mpounded
securities In the hands OF the public and
because II further ignored the issuance
OF Iowa stocks In connection with the
Frisco purchase and the delivery of
New Jersey ommon stock AGAINST
Frisco stock, which manlfestly must ROT
be taken into account in any honest
treatment of alleged watering of the
stock OF the operating company"
Concerning the formation OF the hold
Ing companies, which was engineered by
n. G. Reid. W Ii. Moore, W. Il Lang
and two or three others, Mr.. Walker
GAYS
When the holding companies were
created every stakeholder OF the oper-
atine company received a circular set
ting forth in precise detail the nature
Of the holding companies and their Sc
c%irities. There was not the slightest
concealment or Misrepresentation.
Every shareholder could readily sell out
and thousands were doubtless so ad.
vised by their lawyers or bankers tina,
the New Jersey stock would have no
claim on the operating company shares
in the event of the foreclosure Of the
Iowa bonds.
Precisely that thing has happened.
The Iowa bonds nave been foreclosed
the New Jersey stock is Of nomina,
value, and the operating Conpan stock
has been redelivered to the Iowa bond.
holders.
"It such bordholders were originally
stockholders in 1902 of the operating
company. then they have got back
what they formerly possessed. II they
have in the meantime sold their New
Jersey stocks others than they havs
suffered the losses in the shrinkage OF
New Jersey securities.
The one important fact, however. is
that the old stock was exchanged u
1902 for securities OF other companies
has now come back to its orisina
form precisely as was provided and con.
templated by the 1902 arrangement.
h stock Values.
"NobOdy ever thought that this ar.
rsngement ordered any values than pa
values. and the course Of events has
completed the cycle to the very place
Mt which the operating company stock
holders stood in 1892.
While, however, this is true a. 3
matter Of outstanding stock 1t IL no
= u as to what Is behind the stock. The
stockholders OF the operating company
without Increase Of the meagre amount
or outstanding stock above It's ole
figure Of SIS 900. 900 are now interested
In a railroad Of twice the length nj
the 1902 line, with new connections an,
sources of trafi" and physical condi.
tions that npat with any Of IL
nolghbors.
'ln 1909 the company had a surplus
and a rather poor and considerably
neglected roadbed In 1901 the surplu,
account may contain some items Of un
certain value, but the physical railroad
is 4 creditable, safe and we'll manage,
affair.
"1he chapter as far a. financial re-
sources are concerned Is a sad one. bu
II is only sad for the holding companies
The operating company Is a sound ant
valuable property. with an honorable
past and hopeful future"