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The day book. (Chicago, Ill.) 1911-1917, October 14, 1914, LAST EDITION, Image 3

Image and text provided by University of Illinois at Urbana-Champaign Library, Urbana, IL

Persistent link: http://chroniclingamerica.loc.gov/lccn/sn83045487/1914-10-14/ed-1/seq-3/

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SOME INTERESTING POINTS CONCERNING THE
STREET RAILWAYS CO. AND THE CITY
The city of Chicago is supposed
to get 55 per cent of the profits of the
street "railway companies. Whether
the city gets a fair split or is double
crossed depends a good deal on the
kind of bookkeeping the street rail
way companies have.
Through these facts there is a pub
lic interest in a report mailed this
week to stockholders of the Assets
Realization Co., capitalized at $10,
000,000. The president of this com
pany is Ira M. Cobe. chairman board
of directors of the Chicago City Rail
ways Co., and a director on elevated
road and several interurban lines.
Cobe is one of the six men named Nby
Montague Ferry, commissioner of
public service, as the six men who
control the public utilities of Chi
cago. The report is signed by G. M. P.
Murphy, an expert accountant, who
went over books of the Assets Real
ization Co. for a group of New York
bankers and a creditors' committee.
On this committee are Albert H. Wig
gin, president of the Chase National
Bank; Samuel McRoberts, vice presi
dent of the National City Bank, and
Benjamin B. Guinness.
Cobe's company was organized to
buy up bankrupt concerns having
good prospects, but temporarily short
of cash. Murphy's report shows that
properties were put on. the books of
the company and listed as assets at
prices far above what was paid for
them. No stockholder could get any
idea of what the company was worth
or where it stood
Loans of cash were made to per
sons on poor security or none, ac
cording -to Murphy's report.
There are so many crooks and
twists in the bookkeeping and so
much jugglery that Murphy says:
"I consider it impossible to make a
reliable appraisal of the company's
properties and I regret to say that in
my judgment the book values of Nov.
30 last were generally far out of line
with the real values.
"All assets when acquired were
placed on the books, not at cost, but
at 'realizable values.' Profits were
generally determined when property
was acquired instead of when it was
sold and were based not upon facts,
but upon expectations."
The report then goes on to show
that last November debts overdue
and coming due in 30 days amounted
to $3,455,734, while the vailable cash
was less than $200,000. "Concerns
in which the company's interests has
been estimated at $7,000,000 were
approaching insolvency."
Running the busted concerns
bought by Cobe and his associates
cost more than the income they
brought in. So Murphy's warning to
the creditors is that the longer the
company runs the less there will be
for the creditors, the deficit being
about $400,000 a year.
Murphy shoots holes into the Bit
ter Root Valley Irrigation Co. and the
$5,418,000 valuation it is given on
the books. Mortgage payments past
due run over $402,000, and out of
286 mortgages outstanding 211 are
in default, and out of 252 outstanding
contracts 115 are in default
One A. L. Ober was loaned $84,000
cash by the Assets Realization Co.
The report says: "It is doubtful if
$20,000 can be realized. Present ad
vices indicate that Mr. Ober is no
longer in active business. He is at
present without means and is sup
porting himself by raising poultry on
a small farm in Northern Minnesota.
"The San Jose Lumber Co.' is on
the books at a value of $133,400. An
investigation showed that the San
Jose property was valueless except
for grazing purposes."
Two coal mining properties were
on the books at $275,001. They were
sold to the Pennsylvania railroad for
$160,000.
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