Tulsa daily world. [volume] (Tulsa, Indian Territory [Okla.]) 1905-1919, 1915-02-26
Daniel G. Reid Tells Of Or
ganization Of the Hold
ing Companies,
2 HOLDING CONCERNS
That Price Paid for
Stock Is in Excess Of
Par Value.

WASHINGTON, Feb. 20 Financial
operations OF the Chicago, Rock Is
land q PRclfic Railway company be-
tween 1901 and 1914 were outlined to-
day by Daniel G. Reid at the rcsuup-
tion OF the Interstate Commerce Com
missions investigation OF the railroad.
His testimony bore mainly on tho
organization Of the roads holding
companies and the results OF those
transactions after 1904, in which year.
Mr. Reid said he ana Judge william
H. Moore and William Is. Leeds CON
trolled about $2O,OO0OO OF Rock Is
land stock, about one-third Of that
outstanding
The holding concerns as organized
in 1902, he said, were known. re-
spectiyely as the Iowa and New Jer-
sey companies, each capitalized at
$l6O.OO0, 200. He said the Iowa cor
porauon held the majority Of the
Rock Island railway, the operating
company while the New Jersey con-
Germ controlled the Iowa corporation
and the preferred stock OF the New
Jersey controlled that company
through special powers in the election
of directors
New York Concern Interested.
Securities of the holding companies
had been placed with the Central Trust
company OF New York, he added, on
condition that each share OF operating
stock turned In should receive stock
I'm the Iowa company and bonds and
stock in the New Jersey company
eQuuling an exchange of 30 for one
par value.
Then the directors Of the New Jer-
Sey corporation controlled the Iowa
company, which controlled the oper-
o. Nrh
the St Louis x San Francisco com
pany and the Choctuw, oklahoma y
Gulf railroad?" asked chief counsel
for the commission, Mr. Folk.
mot at all" replied Mr. Reid, Con
ditions I'm those days were entirely diff
ferent People were buying railroads
overnight. We did not want to have
one OF our fellows slip up and have
our money in the other fellows
pocket"
MIR. Folk asked II the result should
not have been to load up on the back
OF the operating company capitalized
at $6O,O00,O00. some $350,000,000 IN
capitalization to be kept up.
There was nothing to be kept up
on the $3.50, 100000" Mr.. Reid said,
| adding that stock in the Iowa COM
| pauy to that amount had never been
! taken from the Central Trust COM
| pany's vaults.
Then, instead OF being wntered
five times" asked Mr. Folk, "how
much was the stock OF the operating
company burdened, In your oplnion?'
Price Exceeds Par Value.
Mr.. Reid said a total of S71 900, ,00C
in Rock Island railway stock had beer
turned In under the plan, and tha'
belonging TO himself and his associ-
atcs had cost from Sl75 to $500 {
share. on the S7IO0O.OOO he said
$l91,0 900 in bonds or stocks OF tht
holding companies had been issued
the only source Of dividends in thi
sum being the earnings Of the operat
ing company.
f. c. sharood. an expert for tn
commission, describing the purchas
of the Choctaw, oklahoma & Gul
stock for the Rock Island, said tn
purchaser had paid approximate
b $4,000. 600 for stock which had q pa
valuo OF nearly sl6,000,0O0. He toll
also of stock payments by the Roc
Island to certain officers and director
of that company which, he said
meant a net loss OF s50i562 to tn
. COMPANY.