FIFTH ANNUAL YEAR BOOK — PART I 39 



class of business we can afford to work closer than we can on 

 business we have to -go and gather up from station to station, 

 and which goes to all sorts of different gateways. We are 

 shipping stock now on our road, to seven different markets; 

 whereas, the meat goes practically all to Chicago, or eastern 

 lines via Chicago. 



. On the subject of stock watering, that I dwelt on in my paper, 

 and the gentleman spoke of — supposing the old Rock Island 

 road was sold to a syndicate and that they issue a lot of paper 

 certificates for it, and those new issues are not earning any 

 money ; they are still dependent on the old Rock Island road 

 for what it can earn, and I don't see that anybody gets hurt by 

 that deal, except the fellow unfortunate enough to dabble in the 

 stock market; and by the same process the original holders of 

 the Burlington stock had a proposition of that kind put up to 

 them. It was not my fault they accepted it. They were told 

 they could exchange stock which would pay 5, 6 or 8 per cent 

 dividend; for every one dollar of stock they could get two 

 dollars in a thing called a bond. Now, what was that bond? 

 It was not a mortgage bond ; it was simply what they call in 

 finance a collateral trust bond. That meant, if the Chicago^ 

 Burlington & Quincy paid 8 per cent on its stock, that bond 

 paid 4 per cent. If the Q didn't pay 8 per cent on its stock, 

 the deficiency would be made good by the guarantors of 

 that bond, which were the Northern Pacific and the Great 

 Northern roads. I appeal to you in frankness, that is not 

 stock watering at all. If you were holders of stock you 

 simply had an option of giving it up or holding it. Ninety- 

 seven per cent gave it up and exchanged it for this collateral 

 trust note or bond. Every cent the Chicago, Burlington & 

 Quincy is earning goes back, and if we only earn 7 per cent, 

 we only pay 7 per cent. So far as the stock is concerned, 

 it is precisely the same, only the people who owned it 

 changed the form of their certificates. 



A Member : Does it cost more to start an engine from the 

 Missouri River and pick up and get a full load, or to start out at 

 the Missouri River and haul a full load? 



Mr. Delano: Not much; the train crew might be a good 

 deal longer on the road than the train starting with a solid load 

 at Omaha. The cost of the stock business where we are gather- 

 ing it up from branches, is a great deal more expensive; we 



