Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1916-01-12

financing" Under such circumstances
an article by George KEENAN, in the
January number of the North Ameri-
can Review on THE Chicago 4 Alton
Casa Misunderstood Transaction, :"
should arouse considerable interest,
particularly in this part of the coun-
try.
The writer makes a very favorable
case for Mr.. Hartman. He quotes ex-
Cellent authorities on the condition of
the Alton at the time Mr.. Hartman be
came connected with it showing that
it was far below that of its COMPETE
tors. The standards of construction
were those of Is years before. The
track was laid with steel rails, but
these were only 70 pounds to the yard.
The bridges were in good condition.
but were too light for heavy engines.
The capacity Of the sidings and sec
ond track was inadequate to handle
large increase in traffic. The COM
pany had not maintained a sufficient
depreciation account, and its property
had not been kept up to standard, al
though it had paid large dividends and
its stock had sold far above par. The
gross earnings for the year 1898, the
year before Mr.. Hartman assumed
control, amounting to s6.2S6,000, were
gradually falling since 1887.
On Jan. l, 1899, Mr.. Hartman or
ganized a syndicate, which purchased
81 per cent of the capital stock of the
Alton for $3S,S15,0O0 in cash. This
syndicate credited to surplus. the sum
Of s12,444,000, which the old managers
of the road, in previous years had
taken out of current income and invest
amount thus credited to surplus &c.
$4,000 was distributed to the new
stockholders in the form Of 80 per
cent dividend on the old stock. The
company was then recapitalized at a
total figure of S101, OS6, 900, of which
1852 100000 represented 3 and 3h2 per
cent bonds. The 3 per cent bonds to
the par value of s31, 9ss,000 we're Of
fered to and taken by the new stock
| holders at 65, or a total of s20,792,20
| The new owners afterward purchased
the Peoria Northern line for S3,000,0 200
and the expenses of the whole trans
action amounted to 100000. The syn
dictate, therefore paid a grand total OF
500, 107, 200 for the property.
! Mr.. KEENAN, ably defends every move
made by Mr.. Hartman while connect
ed with the Alton. He points out that
hostile criticism of the reorganization
did not begin until 1906-seven years
after the Hartman syndicate bought
the road. 1t came about as the result
Of the break in friendly relations be-
| tween President Roosevelt and Mr.
Hartman over contribution made by
Mr.. Hartman to the republican cam
paign fund in 1904 Following this
rupture of friendly relations the inter
state commerce commission began al
investigation of Mr.. Harriman's pas
activities and brought in a report II
which the Alton organization was
characterized as "indefensible financ
ing" The points particularly dwell
upon in this report were the 80 PEI
cent dividend, the sale of the 3 PEI
cent bonds to the new stakeholder!
and the alleged watering of the stock
Mr.. KEENAN, considered thorough!
these three points, as well as other
connected with the reorganization, ant
his article leaves strong impression
that Mr. Hartman has been misrepre
scented or at least that the public ha
not heard or given attention to his sid
of the case.