incorporation of the Rock Island Company, “the number of directors shall be nine. There shall be five classes of directors. The first class shall contain a majority of the whole number of the directors as fixed at any time by the by-laws.... The holders of the preferred stock shall have the right, to the exclusion of the holders of the common stock, to choose directors of the first class....” In other words, to the preferred stock, which constituted a minority of the whole, was given the right to elect a majority of the board of directors; so that whereas in the old Railway Company 51 per cent of $75,000,000 common stock, selling at from 120 to 179, had been required for control, in the new combination of companies 51 per cent of $54,000,000 Rock Island Company preferred stock, selling at 83½, was sufficient to the same end, in spite of a doubling of the stock outstanding. To repeat: Two new corporations were formed, of which the Chicago, Rock Island & Pacific Railroad Company of Iowa issued $125,000,000 stock to the Rock Island Company of New Jersey, and in return received $127,500,000 Rock Island preferred and common stock. With this stock, and with $75,000,000 of its own bonds, the Railroad Company purchased the $75,000,000 stock of the Chicago, Rock Island & Pacific Railway Company, paying for every $100 in shares $100 in Rock Island Company common stock; 70 in Rock Island Company preferred stock; and 100 in its own 4 per cent bonds. The Railway shares acquired were pledged for the Railroad bonds, and from them came the total income of the Railroad Company; and dividends upon the Railroad shares, together with dividends upon shares of other companies which it might chance to own, constituted the total income of the Rock Island Company. After thus receiving indirectly the earnings of the Railway Company through two sets of dividends, the Rock Island Company paid dividends on its own shares, which were held by the public; the preferred stock being entitled to 4 per cent from 1903 to 1909 inclusive, to 5 per cent from 1910 to 1916 inclusive, and to 6 per cent thereafter.