The Manning times. (Manning, Clarendon County, S.C.) 1884-current, February 15, 1922, Section One Pages 1 to 8, Page Page Three, Image 3
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