The Logan Republican. [volume] (Logan, Utah) 1902-1924, 1915-08-21
Finance in
The Rock Island
Great Losses to the Stockholders and
Great Gains to the Holding Com
panies. Management Is Arraisr:d

on ltS investigation or the ROCK ISL
| and railroads financial affairs, made
public here today shows millions of
dollars in losses in stock transac-
lions, charges the railroad officials |
with Misrepresentation in their re.
| ports to stockholders, discloses great |
| profits to promoters of the Rock ISL |
and holding companies and arraigns
the syndicate operations which began
in the early nineties.
The department of justice has been
waiting to go over the report. The
interstate commerce commission
broadly suggests action by the legal
branch of the government. 1t says,
those guilty of misleading reports to
stockholders should be subject to
adequate penalties"
The aggregate losses to the Rock
Island in the Alton, Frisco and other
deals are summarized by the com.
mission as follows:
Losses Set Forth
rIlSNO utdl, dppIOAllndltly FVtoNN,'
000; Alton deal, approximately &c.
10000; Trinity & Brazos Valley rail
way deal, more than $t,5OO,OOO; Con
solidated Indiana 4 Dering Coal com
panies at least 100000 and $500.
600 additional advances made to the
coal companies cannot be collected;
contributions to expenses of maintain.
ing and housing holding companies
more than $4,000; transaction of c.
II. Venner, a stakeholder, $217,0O0;
miscellaneous and unexplained ex-
penditures, $72,523. The items show
an aggregate loss to the railway COM
pany of more than s2O,O0O,OOO.
I'm addition thereto" the report
says, sit is to be noted that prior to
June 80, 1914, the railway company
paid to financial institutions, in con
nection with the issuance of bonds,
commissions aggregating more than
$l,600,000 and suffered discounts of
more than $l7,7OO,OOO."
General Criticism
In general criticism, the commits.
sion says:
The property OF the railway com.
pany will be called upon for many
years to make up the drain upon its
: resources resulting from transactions
outside the proper sphere in which
stockholders had right to suppose
their moneys were invested. This
record emphasizes the need of rail
way directors who actually direct
There are too many passive directors
. who acquiesce in what Is being done
without knowledge and without inves.
y tigaton. A director of railroad is
a quasi public official who occupies a
: position of trust. A director who
submits blindly to the exploitation of
= his company is party to its undoing
y and he should be held responsible to
- the same extent as If he had been a
: principal instead of an accessory be-
fore the fact. The greater his prom.
inence, the greater his responsibility
and the greater his dereiction.
THE Clayton antitrust act, which
becomes effective October Is, 1916
will make 1t unlawful for any person
{ at the same time to be director In
. two or more competing corporations
e any one OF which has a capital, sur.
= plus or undivided profits aggregating
Il more than 100000 but common car,
y riers are expressly exempted from its
y application. It should be just as grave
q an offense for an official of a railway
to be faithess to his trust for finan
IS cial gain as it is for an elected Off
u cial of the government to betray his
$ trust for money reward.
y by this case the need of some lin
5 itations on the issuance of stocks and
II bonds by common carriers, whether
u directly or through holding company
" devices or otherwise, is again demon
Z strated."
i After pointing to the fact that in
u 1902 the Rock Island was thriving, its
prospects promising, its stock selling
c in the world markets at more than
e 5000 a share, the report says that in
1914 the shares had fallen to $50 and
that the road is now in receivers
hands, although the evidence shows
u the earnings of the company were in
r 1914, the largest in its history.
i. Syndicate Formed
In 1910, the report sets forth Dan
Il lei G.. Reid, w. H. Moore, j. II.
r Moore and w. b. Leeds, purchased
b. S2OOOO,O00 of the companys stock
Leeds became president and Reed
chairman OF the executive committee
syndicate was formed which pro
cured the election OF +. L. Hine
= | fnnHuA IN