In October, 1903, the Rock Island operated 7123 miles of line. Its tracks stretched southwest from Chicago to Santa Rosa, New Mexico, west from Memphis to Tucumcari, and northwest from Rock Island, Illinois, to Minneapolis and St. Paul, and to Watertown, South Dakota. This extensive mileage surrounded, however, instead of occupying, a large territory in Missouri, Kansas, Indian Territory, and Arkansas, and could claim no share in the vast traffic passing up and down the Mississippi Valley. One of the first acts of the Moores was to remedy this defect. In May, 1903, the Rock Island made a formal offer to purchase any and all shares of the St. Louis & San Francisco Railroad Company, providing $22,500,000 in par value should accept, at a rate of $60 par value in the common stock of the Rock Island Company and $60 par value in a new issue of 5 per cent gold bonds of 1913 of the Chicago, Rock Island & Pacific Railroad Company, for each $100 par value of Frisco common stock deposited; the new bonds to be secured by the stock acquired. This Frisco Company, it will be remembered, was the same that had previously been acquired and given up by the Atchison, Topeka & Santa Fe. Since that time it had greatly extended its mileage, had gained control of the prosperous Chicago & Eastern Illinois, with entrance into Chicago, and was altogether more valuable than it had been before. In relation to the Rock Island it possessed precisely the mileage which was required. It connected the latter’s terminus at Chicago with the terminus of the Choctaw, Oklahoma & Gulf at Memphis; it traversed Southern Illinois, Southern Missouri, Southeastern Kansas, and Indian Territory, to say nothing of lines in Oklahoma and in Texas; and by means of a line from Memphis to Birmingham it gave entrance into the heart of the South. In brief, it filled the gaps in the southeastern part of the Rock Island system, and afforded a solid foundation for further expansion. Good authorities consider the price which the Rock Island gave for the Frisco to have been too high. It is certain that the Frisco stockholders jumped at the chance. By June 1, 1903, the necessary $22,500,000 worth of stock had given their consent and only technical details remained to be carried through.[669]
With the St. Louis & San Francisco under its control the Rock Island could make a final advance to the Gulf. An attempt to complete a road through Texas occurred simultaneously with the Frisco purchase in 1903. The Moores, that is, arranged with the Southern Pacific for the purchase of a half-interest in the Houston & Texas Central, from Fort Worth to Houston and Galveston, with a branch to Austin, Texas; the Houston, East & West Texas, extending north from Houston to Shreveport, Louisiana; and the Texas & New Orleans, from Dallas to Sabine Lake on the Gulf of Mexico. As a part of the agreement the presidents of these lines were to be selected by the Rock Island Company.[670] This would have established a line to the coast in a very satisfactory manner. Connection between Dallas and Fort Worth was to be completed in December, 1903, and from this point the two lines of the Houston & Texas Central and the Texas & New Orleans would have furnished direct outlets to the Gulf. The scheme did not go through, because the Texas Railroad Commissioners pronounced the contracts contrary to the state constitution, in that they amounted to a consolidation of the corporations concerned, and to the establishment of a community of interest between the Rock Island and the Southern Pacific, which would preclude competition between them in respect to their Texas business.[671] The Rock Island was at first disposed to test part of the decision in the courts.[672] It later decided that discretion was the better part of valor, stopped the transaction, and cancelled the stock which it had issued as part of the purchase price.[673]
What the company could not do in Texas it could do, however, in Missouri, Louisiana, and Arkansas. As early as November, 1902, the St. Louis & San Francisco had purchased the entire capital stock of the St. Louis, Memphis & Southeastern Railroad, a line which was opened from St. Louis in 1904 to a junction with a branch of the Frisco above Memphis. From Memphis the Kansas City, Memphis & Birmingham stretched southeast through Mississippi into Alabama. These roads formed a basis for extension which was practicable though less convenient than the western route. Accordingly, in 1904, trackage agreements were concluded which gave to the Rock Island system:
(1) Trackage rights over the Mobile & Ohio and the New Orleans & Northeastern between Tupelo, Mississippi (on the Kansas City, Memphis & Birmingham), and New Orleans, Louisiana.
(2) Trackage rights over the St. Louis, Iron Mountain & Southern and the Texas & Pacific from a point opposite Memphis, Tennessee, to a point opposite Baton Rouge, Louisiana.
(3) Trackage rights over the Yazoo & Mississippi Valley between Baton Rouge, Louisiana, and New Orleans, Louisiana, and over certain tracks in the latter city.
This afforded alternative routes of considerable directness from Memphis to the Gulf, while from the junctions of the Frisco with the Southern roads freight could be sent north to St. Louis and Chicago over the Rock Island system’s own rails. Arrangements were made for the construction of terminals in New Orleans by a subsidiary company whose stock was to be owned and whose bonds were to be guaranteed by the Southern and the St. Louis & San Francisco companies.[674]
At the present time the Rock Island is reaching south at two points other than those so far mentioned. Under the name of the Rock Island, Arkansas & Louisiana Railroad Company,[675] it has built almost due south from Little Rock, Arkansas, while from New Orleans to Houston it has completed a line which connects at Eunice, Louisiana, with the Rock Island, Arkansas & Louisiana, and at Houston with the Trinity & Brazos Valley Railway.[676] This last line runs from Houston to Fort Worth and Dallas, Texas, and is controlled by a half-interest in its capital stock. The Rock Island is thus in fair shape to share in the south-bound grain movement from Kansas, Nebraska, and the Dakotas, and to take a part in the north and south business of the Mississippi Valley. There is no question but what the company is making a bold bid for an enormous traffic, and that failure will not be due to any narrowness of view.
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.