New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1873-03-25
THE ERIE INVESTIGATION.

THE CONSOLIDATED LoAN-DhNhiNuo WIN
JAY GOULD.
The Assembly Committee appointed to in
xs,sate the circumstances attending the change in the
Erie management and TO Inquire into the alleged use of
money to influence legislators again met at the Fifth
Avenue Hotel. yesterday morning. Upon consultation
u was decided TO adjourn TO the Erie Office, at Twenty
thrd-st and Eghthsve TO avoid the necessity OF re-
moving the records OF the Company Accordingly. the
Committee assembled in the Erie Board Room. at IL
a. m. The only witness was s. l.. NJ. Barlow. who in
reply TO Mr. sckneys questions rccounted the cifcum
stances Of the change in the Erie Directory the dstr
button OF s3SOO9O among the old directors, Us bonus
paid by the English stockholders TO induce them TO
resign; the sale of the Erie consolidated bonds oy
Bischodsheim & Co.. and the compromise with jay
Gould. AT the close OF Mr.. Barlows examination the
Committee adjourned until p. IN. They met 10 exeeu-
tive session, at the Erie Offices at that Time ana
devoted time TO the examination OF the DOCKS III
order 70 develop their future line OF work Inc n'es
CATION will be resumed this morning. the Fth Avenue
Hotel
TESTIMONY OF MR.. BARLOW
Mr.. BARLOW testified was counsel for Mr. MeHenry
and Bischoshem Co.. at the time OF the change oil the
Erie Directory: Mr. Lane to me and said that II
opld NOT be difficult to effect change and 10 Obtain
Board who would be favorable to the English stock
hoIdcrs he demanded OF me first, that should not d.
vulge the plans without consulting him; second 'nat
should not ask any compensation for myseI; anu tn'
that should not seek 10 reduce his compehsationi
agreed 70 the first and third conditions and looked upon
the second JOKES thought IL aosuru 'ha' e"ou'U
give my services without chance to make some money;
I continued TO communicate with my friends on the
other side and finally Messrs Dix, Steb6ns Iravers'
sherman and seven or eight others were named as Ill
rectors afterward three stockholders who were in
London were added to the Board insisted upon taking
Gen sickles into counses this was opposed by Lane
for a time but he afterward gave way Cen siokes,
lg.xN, tho nrnTn
soul when the $4,000 which 1t was agreed should De
maid 10 the retiring stockholders sent from London
it came 10 him instead Of to me- very much to my graft
neatOn 1t was considered, not in the light OF compen-
saton but as indemnity against personal haolhty IL
was agreed that the money should be distributed wheu
the old directors had retired aud the new Board was le
galy appointed Gen. sickles placed the money to my
credit and distributed IL according TO agreement;
afterward, my own responsibility paid s2''OOo
each 20 Mr. Gardiner and TO MI OOoherty-
making $4,000 in all this was not designed
20 come out Of the Erie Company nut was considered
salvage paid by the English stockholders! Immediately
after the organization of the new board Gen siokles
stated that the English stockholders had paid him for
his services and be thought he entitled to large
sum- all OF which the Company should pay this was re-
ferred 10 committee consisting of Gen. McCelanland
Henry Stebbins who reported that the members OF
tue board only appointed to fill vacancies nothing
except actual expenses aud counsel Tees should De pau
by them; finally $4,000 was paid for expenses and
counsel fees; nothing further done until
July. when word was sent from the English
stockholders that their expenses had amounted
10 between $4,000 and SsO0yO0o; this included
the very large payments 80 Gen. Sckes and Mr. Crouch,
and the SOCOO paid the old stockholders, &c no por
lion OF this has been reimbursed the English stock
holders, far know earnest demands have been
made by the English stockholders for the payment OF
the money, or even half of it, which they have said
would satisfy them: this claim has never been dis
cussed 10y the new board; 1 think, and always have
thought. that the amount actually dsourSed In the IN
Of the whole Company was just charge against
IL; the only step taken to settle Bschofshelns &C
count its reference TO committee; know of
other expended beyond those named the $4,000
90 O'Doherty and his associate. the 100000 TO stbe
stockholders and the money paid to seSes, as counsel
fees. sc. DID,.
me CONSOLIDATED LOAN.
The consolidated bonds were placed in Bischoasheim g
hands 20 loan Of s2OOOO 70 save the Company
from immediate Bankruptcy with this money bought
up claims at 50 cents the dollar afterward we
raised S,OoaOOo further the same security; these
made for sixty days. and 1t became necessary
TO place the bonds the market Immediately; at the
same time entered into negotiation with Mr. Gould for
OOOOOO OF bonds held hy him these. with the s35OoOOO
bonds held by the Company, were sent TO BischOnshem
for sale the terms TO settled by the three English D
reotors residing London the contract made by them
was modified by myself aud ratified by
the board; and the result was the rapid
safe OF the bonds at profit TO
the Company Of s2.oDo0OG tbe money, as fast as real
zed was used the hQuidauou OF the old claims on
the lst January s20ODOoO bonds remained I'M
sold IN the hands OF Bischoshem these were sold TO
the London Banking ASSOCIATION; the $lo,OooOoo CON
yertibe bonds recently issued placed IN Bschoi
sheims hands for negotiation under new contract. by
which he was receive q per cent under the circum
stances this is thought be too high by experienced
bankers of the consolidated bonds S255O0OOO are now
in the Farmers Loan and Trust Company, in this city
and the commission cannot be claimed except as they
are sold IN deciding upon the commission, no doubt
the large sums advanced previous the sale taken
into consideration; cannot say what moneys arts
ing from the sale OF bonds have not been ac
counted FOR by BischOfsheim; the original contract
gave Bschofsheim n per cent ON the whole
fS0O0OOO consolidated lOan but subsequent
clause was inserted allowing commission only on the
bonds sold the only paid TO my rm, In connection
with this Erie charges u 900 for two months work
and SIX months salary paid at the rate of $4,000
wear; the bonds in the hands OF the Loan and Trust
Company are for the redemption OF the old bonds the
arrangements with this company we're made by the Old
direcory tine bonds 90 held are sufficient Tor the re-
dempton Of all the old bonds and il was only the sur
MUS whicbwas sent to London for sale; the commits
sion on the se35OaOOO has not claimed and such
claim would be invalid; commission all the sS00oOOo0
may be- claimed by Bischofsheim when they are SOLD
or converted matter when or by whom they are ne
gotiated this is in accordance with custom universal
among London bankers; this commission will amount
20 only $4,000 SS0OOOO, which may run
through a term of 80 years, while the actual
profit TO the Company arising from the Transaction
would pay this and leave 5000 beside for the 10000
900 issue Of convertible bonds we pay the same com
MISSION q per cent and receive par in currency, less
commission It was the most successful American loan
ever placed on the market when we came in, the
mortgage bonds were unstable; but these unsecured
bonds we're negotiated substantially at par the Farm
r Loan AID Trust Company hold the bonds only az Gus
todips when old bonds are sent them Cancelled they
ssna an canal amount of the bonds in their posses