earnings of the property would ever bring. With these objects the following plan was put through. Instead of one Chicago, Rock Island & Pacific Company the Moores now proposed to have three companies, of which one was to operate the railroad, one was to hold the stock of the operating company, and one was to hold the stock of the company which held the stock of the operating company. That is to say, the Chicago, Rock Island & Pacific Railway Company was left undisturbed, while in Iowa a Chicago, Rock Island & Pacific Railroad Company was formed to hold the stock of the Railway Company, and in New Jersey a Rock Island Company was organized to hold the stock of the Railroad Company, and of such acquisitions as might afterwards be made. The retention of the Railway Company made unnecessary the consent of creditors, for the lien and interest rate of outstanding bonds remained the same as before; the formation of the Railroad Company served apparently to meet legal requirements; and the organization of the Rock Island Company seemed likely to make more easy the purchase of parallel and competing lines. But the great advantage of the new companies lay in the opportunities for stock inflation which they presented, together with the lessening of the amount of capital required for control. This appears plainly in the following: The old Railway Company had a capital stock of $75,000,000; the new Railroad Company issued stock to the amount of $125,000,000 and 4 per cent bonds to the amount of $75,000,000. The Rock Island Company issued common stock to a total of $96,000,000 and preferred stock to a total of $54,000,000; and the aggregate, excluding the undisturbed bonds of the Railway Company, footed up to $425,000,000 instead of to $75,000,000 as before. From this total must be deducted $200,000,000, which represented issues of stock by one company to another, and $21,000,000 Rock Island Company stock and $1,500,000 Railroad Company bonds reserved for future extension, leaving a net increase from $75,000,000 to $202,500,000. This involved some increase in fixed charges, since 4 per cent on $75,000,000 became obligatory; but the true significance lay in the inflation of principal rather than in the increase of interest charges, opening as it did an opportunity for great profit to the managers in the sale of the new securities. An incidental result was the transformation of the Rock Island shares from investment securities to media for speculation. At the same time the investment required for control was diminished. $75,000,000 of Railway stock was exchanged for $75,000,000 Railroad bonds, $96,000,000 Rock Island Company common stock, and $54,000,000 Rock Island Company preferred stock. Of these the bonds obviously had no voting rights. To both the common and preferred stock the right to vote was given, but in unequal degrees. “Until the number thereof shall be increased,” read the certificate of