Railroads -- United States; Railroads -- United States -- Finance
About the time that it was struggling to reach the Gulf the Rock
Island took hold of the Chicago & Alton in the north in order to have
another and a more direct line between Kansas City and Chicago. A
strong minority interest had previously been bought in the Alton by
Mr. Harriman, and a board of directors had been elected. In 1904 the
Rock Island bought within a few hundred shares of absolute control,
and since the classification of the board prevented the displacement
of its opponents for two years, arranged a compromise. Between them
the Harriman and the Rock Island interests deposited a controlling
number of Alton shares with the Central Trust Company of New York, to
be held in a voting trust. Each of the rival interests was to have five
directors, and the odd director was to be in alternate years first a
Harriman and then a Rock Island man.[677] The Rock Island was, further,
to have an option on the Harriman holdings for two years. It was an
unfortunate time to buy. Mr. Harriman had previously displayed his
splendid dividend producing ability in Alton finance, and the road was
short of money. Market conditions were unfavorable, bonds were hard
to sell, and, after all, the Alton was not of vital importance to the
Rock Island, although it opened up new territory of some considerable
importance. By 1907 it seems that the Moores had become tired of
their bargain. In June of that year they served notice on the Union
Pacific that the compromise agreement of 1904 was illegal and should
be abrogated;[678] and shortly after they sold their holdings to the
Toledo, St. Louis & Western.[679]
All in all the growth of the Rock Island has been astounding. Instead
of the limited number of 7123 miles which the system possessed in 1903,
or the 3819 of 1901, it comprises 14,270 miles of line operated in
1907. Gross earnings are $112,464,000 in 1907 as against $25,365,000
in 1901; net income $40,828,000 instead of $8,901,000; capitalization
about $525,000,000 instead of $118,081,000. In fact, the very size
of the system and the diverse nature of its interests make the
economical management of the whole almost beyond the capacity of any
one man. The Rock Island handles traffic from the West and South to
Chicago, St. Louis, and Birmingham, and connects with the trunk lines
to the Atlantic coast; it is also striving to receive and care for
the constantly increasing business from the Northwest to the Gulf.
It reaches into Mexico; it extends into Colorado, and sends branches
into the Northwest; while at the other end it connects Kansas City,
Memphis, and St. Louis by a triangle of lines. It was remarked a year
ago that a contrast between the operations of the Rock Island and of
the Atchison lines in the Southwest disclosed what might be called
demoralization on the part of the former, and it is in the multiplicity
of its operations that the cause must be sought.
Public-domain text, read in full here on John Shaqi.
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