The producers news. [volume] (Plentywood, Mont.) 1918-1937, 1927-02-11
JOHN DIS ITCHING PALM BALKS
RAIL. EFFICIENCY

How private ownership Of the railroads per-
mits single profiteer to block more efficient
transportation until his e1horbitant demands
met, is illustrated in the Wheeling & Lake Erie
hubbub. In this instance the greedy multmilliOn-
are is the elder Rockefeller without question the
richest man in America" says Leland Odds, Eco
nomic Expert.
"The country's interest requires that small rail
roads like the Wheeling & Lake Erie be merged
into larger systems The transportation act,
which ended government control provided for
solidaton under supervision of the Interstate Com
merce Commission as a substitute for government
ownership Following out this provision two
workable plans have been devised for the Wheel
ing & Lake Erie.
"Can this road be brought into line at a fair
valuation? 1t cannot. For Rockefeller, although
owning less than 1870 of the roads outstanding
securities, is in complete control.
"Rockefeller's control results from his owner
ship of $11 3961O0 of the $11 $4,000 of prior lien
stock. According to the stipulations covering the
issue of this Stock the right to elect majority
of the directors lies with the prior lien stockhold
ers as long as their dividends remain unpaid for
five consecutive years. Dividends on this stock
have piled up but remain unpaid since November
1, 1916 and now amount to 71@6. Consequently
Rockefeller elects a majority of the roads direc-
tors
"In 1926 Wheeling & Lake Erie made a profit
of $4,000 after all charges equivalent to $29.51
a share on the Rockefeller stock, while in 1925
the profit was $3,2S6,279 or $2765 share. AL
together in the last four years the profits total
more than $75 per share, but no dividends have
been authorized the control has remained with
Rockefeller
Larger railroads now attempting to OBJ
tain the Wheeling & Lake Erie for the consolida-
lions as provided by congress. 1t is rumored
that Rockefeller has been offered the par value of
his stock plus the II per cent accumulated divi-
dends plus interest on these unpaid dividends and
he has refused the offer Aside from getting an
even better price another reason for his refusal is
suggested. The Wall Street Journal says:
within the last year it is understood negotia-
tons were resumed but the Rockefeller interests
turned down offer of par plus accumulated
dividends and interest. 1t is quite possible that
the Rockefeller interests take the position that a
further decrease in income taxes is probable in the
next or years and that such a development may
considerably reduce their income taxes on the ac-
cumulated dividends and interest on the divi-
dends"
So this Croesus, whose wealth undoubtedly ex-
ceeds S1,OOO,OOO000 and whose income rolls in at
the rate Of perhaps $2O,OOO,OOO to $8O,OOOOOO
year, appears to be placing his avarice ahead of
the public interest in unified transportation svs-
tenn. AS matters stand the cost of breaking the
Rockefeller stranglehold on the road will initiate
the capitalization of the resulting merger
The roads capital issues total $89, ,3OO or
$l01,2OO per mile. Adding the 7195 due on Rookie
fellers prior lien stock would bring the caDitaliza
ton to more than $98,OOOOOO or $2O4, 900 mile
But the interstate commerce commissions valua
ton OF the road even if we add all subsequent in
vestments, is only $56536,4OO or S117,7OO a mile
In the process of merger either the public or the
common stockholders will get soaked in order that
Rockefeller can get his extra pound of flesh As
the common is largely held by banking houses the
odds are heavily against the public