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Show "High Finance" in The jtock Island Great Losses to the Stockholders nnd Great Gains to the Holding Companies. Com-panies. Management Is Arralgr.jd Washington, Aug. 17 Tho Inter-stato Inter-stato coinnierco commission's report on Its investigation of the Hock Island Isl-and railroad's llnnnclal affairs, made public here today .shows millions of dollars In losses in stock transactions, transac-tions, charges tho railroad officials with misrepresentations In their reports re-ports to stockholders, discloses great profits to promoter's of tho Hock Island Isl-and holding companies and nrralgns tho syndicate operations which began In the early nineties. Tlio department of Justice has been waiting to go over tho report. Tho Intcrstnto commerce commission brcadly suggests action by tho legal branch of the government. It snys, thoso guilty' of misleading reports to stockholders should be subject to adequate ponnltleB." Tho aggregate losses to the Hock Island In the Alton, Frisco and other deals are summarized by tho commission com-mission as follows: Losms Set Forth Frisco deal, approximately $0,500,-000: $0,500,-000: Alton deal, approximately $C,-370,000; $C,-370,000; Trinity & Brazos Valley railway rail-way dea', more than $1,500,000; Consolidated Con-solidated Indiana k Derlng Coal com panles at least $1,300,000 and 12,500,-000 12,500,-000 additional advances made to the coal companies cannot bo collected; contributions to expenses of maintaining maintain-ing and housing holding companies moro than $290,000; transaction of C II . Vcnner, a stockholder, $217,000; mlsccullnneous nnd unexplained expenditures, ex-penditures, $72,523. The Items show nn aggregate loss to tho railway company com-pany ot moro than $20,000,000. "In addition thereto," tlio report says, "it is to bo noted that prior to Juno 30, 19H, tho railway company paid to financial institutions, in connection con-nection with the Issuance ot bonds, commissions aggregating more than $1,000,000 and suffered discounts of moro than $17,700,000." General Criticism In a general criticism, the commission commis-sion snys: "Tho property of tho railway company com-pany will bo called upon for ninny years to mako up the drain upon its resources resulting from transactions outside, tho proper sphere In which stockholders had a right to suppose their moneys were Invested. This record emphasizes tho need of railway rail-way directors who actually direct. Tlicro aro too ninny passlvo directors who ncquicsco in whnt Is being done without knowledge and without Investigation. Inves-tigation. A director of a railroad is a quasi public ofllclnl who occupies a position of trust A director who submits blindly to tho exploitation of his company Is a party to Its undoing nnd ho should bo held responsible to the samo extent as if ho had been n principal instead of nn accessory beforo be-foro tlio fact. Tho greater Ills prom-Inenco, prom-Inenco, tho greater his responsibility nnd tho greater his dereliction. "Tho Clayton antitrust net, which becomes effcctlvo October 15, 191C, will mako It unlawful for any person nt tho samo timo to ho director In two or moro competing corporations, any ono of which has a capital, surplus sur-plus or undivided profits aggregating moro than $1,000,000 but common carriers car-riers nro expressly exempted from its application. It should bo Just ns gravo an offenso for an official of a railway to bo faithless to his trust for ilnan-clal ilnan-clal gain aa It Is for on elected ofll-clal ofll-clal of tho govornment to betray his trust for money rownrd. '"By this caso tho need of some limitations lim-itations on the Issuance of stocks nnd bonds by common carriers, whether directly or through holding company devices or otherwise, Is ngoln demonstrated." demon-strated." After pointing to tho fact that In 1902 tho Hock Islnnd was thriving, its prospects promising, Its stock selling In tho world markets nt moro than $200 a shnro, tho report snys that In 1914 tho shares had fallen to $20 nnd thot tho road 1b now In receivers' lunula, although tho evldcnco shows tho earnings ot tho company woro In 1914, tho largest in Its history. Syndicate Formed In 1910, tho report sets forth Daniel Dan-iel O. neld, W. H. Mooro, J. II. Mooro nnd W. 11. Leeds, purchased $20,000,000 ot tlio company's stock. Leeds becamo president and Heed chairman of tho executive committee. A syndicate was formed which procured pro-cured tho eloctlon of F. L. Hlno, Georgo McMurtry and Georgo T. Boggn as directors. According to the report, this syndlcato controlled tho board. In July, 1902, the syndlcato organized two holding companies of Iowa and of New Jersoy Practically all the road's stockholders exchanged their stock, depositing about $71,000,-000 $71,000,-000 of tho railway stock, while tho i par alue of tho holding companies'1 securities Issued in exchange aggregated aggre-gated $191,000,000. "By the organization of tho two holding companies," the report says, "the syndicate, tho tncmbors of which had but llttlo moro than one-fourth of tho railway stock, secured control of and dominated tho nffnlrs ot this transportation system." |