The Manning times. [volume] (Manning, Clarendon County, S.C.) 1884-current, 1922-02-15
HOW WALL Street
MIXED ONE RAILROAD
Continued from page three)
Now let us note the result.

Now let us note the result.
Out"ardiy the Katy was growing.
Gross earnings were larger from year
to year. But down at the core, dis
counts, banking commissions and in
terest were eating up the surplus ear
nlngs. Railway lines acquired, on
which the Katy had been compelled to
guarantee mortgage bonds, principal
and interest, created annual deficits
in growing volumes; the short IN
loans behind which, by this time, there
was scarcely any equity, were a grow
ing burden that could not possibly be
met
And these men knew it,
In the year 1914, the president of
the trust company, and the partner
of the alien banker quietly resigned
from the directorate of the Missouri,
Kansas & Texas Railroad. Such de-
partures are usually mentioned in a
companys annual report. In this in
| stance no announcement was made
that these men had left the board.
Financiers Get Out From Under
An old ship captain whose vessel
was interned in South America, once
told me a sailors yarn of how the
big tropical rats had devoured his
cargo and how, after they had clean
cd out the hold, they gnawed hole
in the ships bottom and sank her be-
fore they escaped.
Naturally, financicrs of such prom
inence could not be asked to face the
gathering storm. 1t would never do
to compromise the modern system of
"fnanciering" by letting pair of it's
bn sc
the Katy in case the road defaulted.
The $19,000,000 notes of the Katy
Railroad were due in May 1915. They
could not be met. In September,
1915, the Missouri, Kansas & Texas
railroad thundcrcd into bankruptcy,
with funded debt of moro than $173.
100000, and total obligations in a far
greater amount.
Now why, in this cmcrgenc, did
not the Jewish banker, and the prcsi-
dent Of the trust company come for
ward with the immense resources of
their institutions to relieve the needs
of the Katy? They had authorized
the successive financial operations
that led to the $19,00O,OOO note issue,
which had wrecked the road. And
they had profitcd immensely by them.
They knew that intrnsically, the Katy
was solvent property. In spite of
that, the Katy was deliberately doom
ed to bankruptcy.
More than a score Of "protective
committees" were Immediately or
ganized in Wall Street to guard the
interests" of t unfortunate security
holders. For Wall Street thrives on
reccivcrships. Large sums are made
through the reorganization of bank
rupt properties.
Yet these two men were bankers of
vast experience. The president of the
trust company possessed knowledge
second to no ma min the rcorganiza-
ton of bankrupt corporations For
years he had been the most striking
figure in the "protcctivc committees"
and reorganization committees" ad-
vertised in the financial columns of
the newspapers. He had that quality
known as personality, was large and
genial, and was never known to enter
his impressive Offices in Wall Street
without wearing a nosegay in his
buttonhole. He had reason to have
confidence in his judgment. Through
his management, he earned from SO
to GO per cent dividends annually up
on his company's stock That stock,
which had par value Of 800 a share
oCi' III VIC Ol l,IOU Il
share. At Christmas time, the indul-
gent directors, among whom was his
railroad associate, the Jewish banker,
were accustomed to present him with
a bonus of $4,000 in addition to his
generous salary, as token of their
appreciation Of his efforts in making
money for them.
The head Of the alien international
banking house, which financed the
Katy, is a small man, who may be
seen daily walking down Broad street
to the Midday Luncheon Club, wear
ing tall silk hat and frock coat to
disguise his short stature. He is
physically frail, and quite probably
that is the origin of his unfortunate
temperament, which has made him
unpopular in the Street. The finan-
cial district has often been enlivened
with stories of his quarrels with his
own partners. AS a matter of fact,
the German partner who represented
him on the Katy board soon after left
again for Germany to become head of
the National Bank Of Berlin, because
he could not get on with his associate.
Small as may be this Jewish bank
er's physique, he is endowed with
comprehensive brain. I met him on
II