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VBPAY We realize that inone The Manning Times g ofshelled corn we will dollars. We do this ir them in exchanging c above the market pric The Times. This Offer Holds G 1THE N HOW WALL SIR[[T "MILKED" ONE RAILROAD By CHARLES ALBERT COLLMAN The average stranger, sauntering committee of the board of directors through the financial district of New of the company. By this action they York, with but a hearsay knowledge made themselves managing directors. of its life and doings, is generally in- And every step that was taken in the timidated by outward impressions. operations which I am about to de The effect of its huge structures is scribe, was authorized by these two undoubtedly overpowering. The men. Blankers' Trust Building-what a stu- Afnesovtraladwsowo pendous pile! What an oppressive b aeafobl ntehnso sense of marbled splendor in the wvide,fiaclgou.Teincera unfrequented halls of the Mutual Lifenocdththewreautoi Building! What stately majesty in agrt acnevtv n rtc the long, frowning colonnade of thetie(eloenadexnso"f National City Bank! tecmayslns Instinctively the thought arises that Ths hoavgindctlc here, behind these wvalls of granite, prec ypaigtermnyi marble and limestone, the profoundest smlrvnuemy~elsudrt problems of our economic life are be-cyismothswl-nnfnail mng grappled wvith and solved. For lhae here at wvork aie the masters of Am- Lestafieyrslethtw erican finance, the men "who live inbakrquelan vtotpli a higher sphere," to use the words ofanocentrsied fo th a Wall Street corporation lawyer, wvhomageetothprety spoke in dlefense! o fthe greatest rail- Tvlemnh fewri a road financier of his time. sdel nlolcal aekov But 'here are certain haunts in that ta h ala opn a ak same district, where one may find rpisepytesr aiga(c congregatedl the old veterans of the fcto ilos vieisscr~e Street, the "Shadows," the "Ghosts," t h muto ery$5,0,0 the men who barely survived or wvereweeitehadofhepbcorn broken in its savalge struggles. And tevut fgetlf nune these men will tell you that in Newcopnealreatofhmwrh York finance there is no cogitation of lso ihpicpladitrs weighty prioblemii, and that its opera-ovruanupid tions are simp~le as a child's game. A WaltrcNerPysfrIs game such as boys play, growvn-up Wek boys, it is true, andl mighty ones, Whtadhpedtoheslni trainedl in skill and cunning, playingpretyithshotl)Cofea? with all the selfishness, indifferenceWhhatetw mn(eerdi? and thoughtlessness of boyhood. o hdaltiscm abuT This article is intendled to describe dt thsrmie ytr.I one of these financial plays-one ofisteponcofhisortod which the Street knows very little, coetefcs and the country nothing at all. In tmyb adatti ucue Wall Street, this game is known as h~eeta o i o~ er h "milking a railroad dry." rira a akut t il n b Road Soon lilt Financial Rocks liainupid Ashrtmego Some years ago, two powerful Wall o ob oeeat nNvme 2 Street financiers, each of them the19,tvolreJwsbaknhu head of a arct banking institution,esiWalSrtanocdththy acquired, with their associates, con-hadveoelapnfrte"ia trol of a railway. Theie two menclregaitonofheomny were not novices in the financial man- Ti lncnit ntepooe s agement of railroads. Each wassesetothim vrsedtck backed with a wealth of experiencehodrtoheun of$8400. in this particular pursuit. Th1e roadFoyuseWlStetfncir they had bought had been built up tesle ee a h il fpo andl carefully managed over a long prista rml opee ne period of years by John D. Rockefell- terhns er and Willami Rockefeller. ,Anually I rvosyas e n oe it earned a large surplus over all ox- hdbe nue ypasbepbi penses and charges, and this net sur-ciytoivttiersinsnth plus in its treasury at times amount-$7,000wotofhesckfte ed to ujhany millions,.opn.Teesars iha rg The road, with Its splendid record ia aevleo 10ecaea of earnings andl its uninterrupted pro- tepeetw~igbigfoble fits, enjoyed the public confidence nsamnthbrksofheNwYk an investment property. Its securit-StcExhneaapreof$an les wet'e regarded as gilt-edged. It $ ahfra nrvdsdkcri was, therefore in excellent conditionfcte to be exploite. To. mrcnIvsosaeak To carry on the plans thoy had e opyfrtefliso h l formulated, the two financiers ofbaknmnge nt ho.plc whom I speak, elected themselves, or wekdtera.I hscuty ther rpreentatioeto he xectiv the stompany. the p tic ion tey $1.00PER FOR CORN! y is scarce and corn is plentiful. Now, it D to every household in Clarendon Count send' you The Times one year, which i; i order to show the people that we wani ur product for their's; at the same time e for your corn, and charging only tf ood Until March 1st, 1922. IANNING' railroad and industrial stocks is one cause of his cold-blooded characteris of the most disheartening on record. tics and lack of scruples, was known For years the people have been delud- as "The Man of Ice." Ile was thcn ed with the notion that if they buy owner of the Minneapolis & St. Louis such stocks, they can rest in idleness, and Iowa Central systems, and for while the real workers of the land niny years he had been identified will toil and make them rich. But a with Western railway lines, which he new era has dawned in the manage- and his associates had iiquirel, not ment of public corporations, bearing for the purpose of servi ig the pub with it the promise of a cure for this lice, but to make money for them delusion. selves. Twenty years ago, a small railroad, The covetous eyes of this financier little more than 2,000 miles in extent, became centered upon the Katy. He traversed a territory in the South- observed its steady growth and its west, from Kansas City and St. Louis prosperity. Now that the interests on the north, dowvn to Galveston. It tithdbiti phd lf h carried the wheat, lumber, oil and cot-borlesvanplruitfoa ton of the West diown to the Gulf of Poial da. uhdaso i Mexico. And since it traveled throughanlhsatnrhdofebeni three large states, it wvas namedl the acdb h edo ag Jws Missouri, Kansas & T1exas Railroad,lritebnnghuenNev ok more piopularly and for the sake of adh neetdti akri h abbreviation, known as the "Katy." Poet In Missouri its lines wvere fed by In10caete noueet Hfannibal, St. Louis, Kansas City; and ta tc oto fteKt a in Kansagj it touched .Junctioni Citybenotie byafnniilgup andh Parsons. It cut south through lcie y''eMno e n i Oklahoma into the great state of.J'ihascte TeKtywsov Texas, on its way touching Denison,inctrlfapovralXIISet Dallas, Waco, ilouston and Galveston. "ii' idmieybuh ijrt The small ine had grown up in suc-oftetik.Taenbdismn cessive years, wvith v'arying fortunesbrstdovhtvrtewiedvti from a 300-mile fragment, known inteKt.''e eetdtesle 1872 as the Southern Branch of the t h lrcoae io okcnrl Union Pacific Railway. It had wvax- Imdaeytecnevtv.plc ed, until, as I say, some 20 years ago, ta a ul pteriwypo it was a line of 2,197 miles in extent,letyva etrnl.'ierasy owned by the two leading miemibers hnhaacunLltlmny ilos of the Rockefeller family, who had wssityepid h upu gainedl ownuershiip five years before,.hthn cuiuae nteKt At this period its gross earnings ag-sic10,amutdo$79,0. gregated $12,000,000, and after pay- Ti u vsa neepnldo nment of the expenses of operation, "mrvnet n etret, n there was left $4,000,000 to dlevote tocudgseraotriem.Tes interest and sinking fund charges,plswsithtrauyntefoi leaving as a rule a surplus over allofbns'1heakigouetwic charges andi~ expenses of some $500,- teebnswr odotie h For 10 years the railwvay was nurs- fr fdsonsadcnnisos ed quietly into a larger existence, the Th"cnevtead hrteiv surplus funds being placedl back into dvlpet hc a eaddb the property, so that fewv new bondth evlicorcnit(lintep issues were needled for financing itschsbyteefncirofue requirements. 'The conipany becanmeoutemialansbidryalod entirely free froni floating dehbt. Notlroeiswch eeatcedo once in all its years had it incurredthmanstesoteKtyTee a deficit. Indleedh, its surplus in 1903lroetewrebuhatigpics amiountedl to $1,099,916; in 1905 to adterfrtmrgg od vr $1,267,190; in 1907 it reached thegurnedpicialndntesb large figure of $3,682,311.thKty The Katy by this time had sent its Ishlgieoexape fte arms out in all directions. It had clbro h rpris~lihwr reached Joplin, Missouri; Shreveport, tu odduo h ayb h In Louisiana, and had extended to "ig" Ti vsasalrira Wichita Falls and San Antonio, ln nildtehutn&Bao Texas, on the West. It had gained aVaeyrahwichabenakup rail length of more than 3,000 miles,fofveyas Ithdfidto et and its gross earnings had doubled,. t ie hre nteya 98b In other wordls, the railway was de- $,1.I 92 hs(eii a n veloping along natural, healthy lines.craeto$18. Thsln ws Wall Street, that narrow, caverousbogti193inwchyais - thoroughfare, thoitsands of miles fctjme o$786 nteya away, where men gambled on pros-folwnitpucaethdectws pets andl the work of others, was $226 h ite poet a searocely a. factor in its entity. Thebakutefritprcaeyth KatV was serving it. territory, andl"ig"adi asbe akutee growing with its growth. sne But events important to the small A hsvr ie hr eeot line's destiny were impending now. saoi ,i h ad fidvdas The Rockefellers had dlisposed of their wohdtutnl netdtcrsy interests and retired from the board. igadi h also aig IHiding Debts to Fool Investors bnsad isrne cmais There was in Wall Street, at this$200,00othsrioa'soc, tim ataiwa nanicausoee bond and nodblodcarcers rage Three is our desire to have . For two bushels 3 equivalent to two to co-operate with allowing you much e regular price for TIMES Our highest law designates the di- Other Lines Wrecked the Same Way rectors of a railroad comnpany the "But," I hear a reader exclai, 'you "trustees" of its security-holders! are unjust to the Stieet. You are In loading new properties of this citing n exceptional case--a line in kind upon the Katy, the financial the hands of a group of railroad "ring" made the mileage greater and wreckers." increased the gross earnings. The lo which I am constrained to re Katy was thus made to appear to he slonedI On the contrary, these are expanding at a rapid rate. But *.he the traditional methods of W,-l Street huge debt that was being piled up in finance. Operations such a these the background was kept invisible. wrecked the Rock Island. Financing Now the opportunities nor financing of this sort. hiought the New Havei were ripe. "Financing" means the Railroad to an evil pass It was creation of a large debt through the through this program of conservative sale of bonds and notes to the invest-Xpansion that the o i ment pubtlic. It is in this wise that ct h .H ) ube n us financiers make their profits, and itit was for this reason that the group in ''~ 'rmMnoIeadIis question had bought the Katy. tstit'teiC5ntlagruofrl But these ex periencedf men diid notrodginet. taledwhtem issue one large mortgage bond to fin- uldmntgth hor(I te ance their p~urchases. There wouId Kt siaig i Iie o ,wr have been hut small profit to them int pweflakiofVlIStie. that. TIhey adlopted a new and dang- Th motpmietfth(ewaa erous form of financing. They mtade,patnrith Iige ut(iitiod oive r a series of five yearis, a long fistInkighueamnofliiire (of bank loans and shtort-t erm note ai oeg ~ otfdyv tI a loanis, which were ten ewed from yearfie ns.ntiamigthKat. toi year, thits having the advmh age of Th neti opi'* newa te geinerious dIiscounts andt comm nissionis ~(s~(ito'. en n VlISre on each of the mntiiy transtiost'nls. frs '(1jaiyIiV helit dte ll!iw the "RIIing" Piled l'p HIuge D ebt s jte':toaIlki~a I etr It is a pecul iar' fact in WalIf St.reet's Th rastto anb eutIitd finance, t hat whenever a railroad~tt debtan titshtshtIfofo , eca becomes due, it is paidl for by mtak ingfloi.u bthem terfteain a much larger loan. Ini few insta:nces icte-t iii ak ~ os n h that have ever come under my obsecr-fIi'i(ftt(fle t't1(itpny vation , have loans beein mett with 'lhpatl('S oteK.ttvidis smaller loans, the bailance beinlg paidl((tnSnl tt st(Otesctct s from the net priofi ts oif the companfitiy. Si'sthyttli',daoutedtte Wall Street's theory is that no otem-- ntusS t If $iX5,f~ h plotrationt should ever' pay at debt. Tlh us Jvish aifc ol th $1(,0,0 funded dfebts ac(cuimulat e, roll up~ into(te-arto xoth 1ttd n110 vast sums, utnti inu a trtying molmeut nt 11 I ~ t'h teI Ol h in the corporatiton's life, the oli ga-$1250ttotw-ea otsttak ut tions cannot be paid. 'lThen haimk rupf-tte$tIO)ttt ites l I91,le tt'y ensues, which imeans that the per- itl'.eih ane solthe$1, sons who have invested in the securti- tti,~ii tst ie01tt'lt''ot ties (of thte 'omp janty lose at portion (If isu or all of their money. But Wall -- Stt'eet never loses. It has obtaiined (ot nie npg r its discoutittts andI made its comist - ________________________________ siotns, andl it s tties have ended~i hv loadling the burden oIf obligation's N''~~,' 'E)T uploni the pubil~ic. We shall see that. ~ this methtod was religiously followed Alpt'oshvn cais gis. itn the fin~anial fprogr'am of the K~aty teEtt I Jsp .Mt(htm e "'rintg." etelifIteetthm fiya When the "t'iing" bought the fitrsttetd Allh'snown tolsae terminail prtoper'ty andt loatded it upon ilmaepy ntt heutdsi the Katy ini the year 1909, theseeI(lafilExctosofa IEtt. gentlemen contracted a loatn fot' sixPoctiM Mthu, moths with a banking house, for' $2,- El .Mr n 000,000. At the etnd of the hialf-year'cg ~ ctos period, this loain wats met with anolther DviStio,.C, I11),Jn loan for tht'ee months, amnoitntintg to(1, 92 $3,600,000. Thus, in 1909, two batnk loants wet'e madle, amounting to( a total of $6,- ( ~ ( ~ ~ ' 600,000. When these mturted int~ . ' 1910, they were met with at onteearcese note loan of $10,000,000. This was met in the following year by a two year loan of $12,850,000. In 192 this loan amountedl to $17,500,000. In 1913, the loan had assiumedl the huge E E amount of $19,000,000. Sio, from thte original loan of $2,- C reul Ex ind 000,000 contracted by the dlirectors in lse ite , B o e 1909, we see in 1913 a debt rolled up essDu lctd into $10,000,000. What had the Katy to show for this debt? A terminal S tsato urned property or so, and a few minor pay men mde n isquimen.ha- r Line WrEe the Sam Way