The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1873-03-23
THE ERIE INVESTIGATION.
Testimony of Charles F. South.
mayd and Charles Day.
The Story Of the Heath and Raphael Movement
Against Gould and the Old Directors.

inquiry yesterday morning at the Fifth Avenue
Hotel. All the members were present, and in adj
dition there were two lawyers-Mr. stickney on
the part of the committee, and Mr.. Mcfarland
representing the Erie Railroad.
Charles F. SOuthmayd was the first witness called.
He said IL was counsel for the Erie stockholders
In the year 1871 took measures in conjunction
with General Barlow, to compel the Erie Railroad
managers to make restitution to the stockholders;
the law at the time was that suits OF this nature
were only brought against corporations by the
Attorney General; application was made
to General Barlow to institute proceedings
OF this kind; Mr. Evarts and myself
were the persons who called upon him;
he assented that the proceedings should be carried
on asking that he, Attorney General, should re-
tain control of the suit he at the time stipu
lated that tile State should be Unidentified for any
expenses that might be incurred; was in doubt
whether the Attorney General was legally entitled
to pay for his services; we, of course would have
preferred to pay HIM, but on looking over the law
of the matter he finally came to the conclusion
that he would receive pay directly or lndrectly
General Sckles soon after made another applica-
ton OF the same nature ours on behalf Of an
other set Of stockholders and the question came
up whether there any inconsistency between
US; the parties
REPRESENTED BY GENERAL SICKLES
were largely interested In the Atlantic and Great
Western Railroad, and we supposed it was their
intention to make Erie subservient to the former;
we were somewhat jealous OF them, but finally we
concluded to unite our forces and drive out the
common enemy, and then, If q fight came later be-
tween ourselves let it Gomez from the state of the
judiciary in New York city at the time we knew it
was OF use to apply to courts here, so it was
arranged that the suit should come on in Albany,
and lawyers were retained In that city; Mr.. Bar.
low suggested that counsel should be employed
who resided there, and Mr.. Lyman Tremain, Mr..
Smith and Mr.. Matthew Hale were re-
tanned at a fee OF $1,000 each; Mr.. Carpenter was
appointed associate counsel in this city; the APP
pOintment OF Mr.. Henry smith was fully assented
to by me- he was q member OF the Assembly at the
time, and he afterwards became Speaker, but this
had nothing whatever to do with his selection as
one OF the counsel in the suit; did not know Mr..
Smith personally at the time; IL was arranged that
the preparation Tor the bill OF compliant should be
In my hands; we decided that we should support
our allegations against the managers by direct
evidence. and we thought 1t better to set some
smart fellows to work to find out details some time
in March the bill Tor the repeal OF the classification
act was reported tavorably in both houses; in
Sickes, OF which we knew nothing; the retaining
OF Mr.. Smith had no earthly connection with his
BELONGING TO THE LEGISLATURES;
know nothing OF money beng used to effect egis-
laton, except 81 900 which was gwen to Mr. Good
rich, member, but this was for services rendered
aitSmpt TO bride legislators against the directors
OF the Erie RAILROAD; the 10000 given to General
harlow was dlsbursed by himself; the forwarding
OF money by the Bschoffsheim party was volun-
tary and could not be called llegitlmate.
was the next WITNESS Ms eaaa pS Se following is his
IN Hs0'i the Erie Erie Railroad, but knew Of
had frequent conferences with General Sickles on
the subject; ! have no personal anowledge
re Gesgn me Of that aG Know nothing; know that Mr.;
Crouch received $4,000 for his services; l received
myse, w of any oher am not
positive by whom the payments OF the $3oo,oo0
named in previous testimony were made ! nave
no knowledge OF a further sum OF $45O,COO being
paid II 1t was paid was In Europe ut the time;
there was some discussion last FAN at meeting OF
directors to refund the sum Of $4,000 which was
PROCURE LEGISLATION IN ALBANY;
the New York Central was equally Interested in
the bill that was being carried through, and they
made claim on Erie TO pay its
share OF the expcnses the claim was made made
was a good deal of discussion over the
matter, but the final conclusion reached was the
passage OF bill appropriating $4,000 to pay the
claim; there was opposition made to the payment
of the claim on several grounds; one oil them was
that money should not be used in this way for the
purpose Of influencing legislation; don't know
whether the New York Central received the money;
Legislature had been influenced; returned from
Europe in time for the election in July, 1872;
don't know OF any money being ee q. t tnat re
ton; there was a meeting OF the Board after re-
turned prior to the election; there was no discus
special mission on behalf OF the Erie
Railroad while was in Europe; while
ir Europe saw Mr. BischoHsheim very frequently:
l had some conversation with him relative to the
Erie loan which was placed upon the market; there
were several conferences held relative to the l0ans
except myself there was
present. and was not there in official capacity;
at one Of the conferences there were three OF the
directors OF the Erie present In an ON
terms OF the contract were arranged be-
tween the Erie Railroad and BischOnshem: accord
ing to the agreement the latter was to be paid ouI
OF the proceeds OF the sale OF the bonds for money
advanced by him. there was some disagreement
about the terms which BischOnsheim wanted for
negotiating the bonds one Of the directors thought
that the commission should be less but their terms
were finally agreed upon; Bischoflsheim said tnat
a small matter in consideration Of the services
which his firm performed in bringing about the
reformation in Erie; Vie Board OF Directors who
came in not particularly In the interests OF
the English stockholders; the sole object OF the
| change was to secure an honest administration OF
the afYairs Of the company; don't know at what
price the bonds were put upon the London mar
ket; there were about $i6,OOo,OOO Of the con-
solidated bonds deposited In the Farmers Trust
| Company and about S5,0O000O deposited with J.
Morgan & Sons, and out or the sale OF the bonds
| which were placed upon the London market these
| parties were to be paid their commission know
nothing about the claims made by the Farmers Loan
& sons about one per cent; paid General
Sickles' expenses here; Mr.. Crouch left New YORK
back in January, 1872 the services rendered by Mr.
Crouch were various; ne was well acquainted
with the members OF the old Board ana was
used as a kind OF g0-between; he was In the city
all the time; he may have gone 10 Albany 0hee or
| twice, but knew nothing about 1t; don't know
whether that $4,000 paid to Crouch was part OF
| the 100000 or not; 1 heard that Mr. O'1Oherty
| was paid $4,000 for services rendered BY HIM
previous to March don't think Mr.. Crouch had
anything TO do with the arrangement made BY
/ General Sckles with the directors; made some
| OF the disbursements myself to which have re-
| ferred; have no personal knowledge OF the
payment Of the $780, 600 for Legislation In
| Albany; to my knowledge there was no
action taken by the Board of Directors in dis
bursting money after the old Board retired; have
no knowledge OF any money being used directly or
indirectly to bring about the change from the DIX
| TO the Watson administration; have no know-
edge of any money being paid to BischOishem for
| advances made; the subject OF the makeup OF
! the Watson administration was the subject Of Q