The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1873-04-02
Further Development Of Proofs Of the Pay
ments Made for extra Legal Services"
One Million Dollars to William M.
Tweed i'm Three Years.
Legislative Expenses" The Delavan House
and Congress Hall Items-Archer's
Contracts The Southern I'm
provement Company.
THE DIVIDEND THAT SWELLED THE DEBT.

onthe resumption Of the investigation Ofthe affairs
ofthe Erie Railway Company yesterday morning all
-ofthe committee were present and also M 81 L. n.
Barlow, counsel for The directors; MI. Whham A.
Beach, counsel for the stockholders, and Mr. Stick
-ney. counsel for the committee. The testimony
which was ELECTED from the witnesses during the
forenoon was not OF very startling nature, nut
better and more complete achievements were
!, hoped for by the Senator's What are now most
earnestly desired the names Of the legislators
who were Influenced by the money which was used
;Sor lobbying and other equally corrupt purposes.
Mr. Watson, president Of the company, was present
during most OF the session, and looked upon the
proceedings with smiling, but ct times rather
7. disturbed c0untenance.
The nrst witness was
MR.. SAMUEL d. BABCOCK,
director who testified in relation to the declara-
tion Of the dividend. He said IL was one OF the
1osr directors who opposed declaring dividend
and voted against 1t; ] had no doubt OF the COR
rectness of the financial statement made by the
President, but could not agree to distribute among
the stockholders money which was needed for re-
pairs OF the road; the proceeds of the $10,00OOO0
convertible bonds were to have been devoted to
construction; don't know that they were used to
pay the dividend; think and give my opinion
as banker, that the commission paid Bischoffs.
helm Co. was excessive. The larger part
Of the Erie stock is held abroad and
the reason for declaring the dividend was
20 show the foreign holders Of stock the good
result Of the change In the directors, and the
honest and economical management which the
new ones had initiated; was opposed to the div-
Aend because thought the net earnings should be
used in hquidating the debt and for construction;
n there had been no heavy debt Iwould have voted
FOR the dividend / believe considerable sum
spent for construction; - but LIDO not think that
anything was charged to the construction account
that did mol add to the permanent value OF the
property OF the Erie Railway; ] considered the
statement OF the net earnings Of the road
over the signatures OF the directors would
have the same moral effect in strength
ening the stock OF the company
% the declaration Of dividend, except in London
where such large amount OF the stock is neld;
believe the directors had legal right to declare the
dividend, but considered that il would have been
much better policy to have reduced the noating
debt; 1t is perfectly right for company, il 1t has
spent it's net earnings in extending tracks other
permanent construction, to declare dividend on
che net earnings and pay it out Df The sale Of new
bonds issued to cover the necessary expenditure;
thie would Of course increase the Indebtedness OF
the company to the amount OF the dividend paid;
In q company which changed hands very
often consider that the profits for the
current time should be distributed among the
stockholders or with equal propriety should be
used In paying of the floating debt OF the company
value or stock IN the latter cases would indemnify
the stockholders for the lack OF dividend; IL was
represented to me that the disgorgings OF Gonld
were laid aside to pay the floating debt, and hence
the earnings could be devoted to paying div
dend; have no idea of the value that could be re-
company.
Mr. O. II. p ARCHER
was recalled to be examined IN relation to tile
amount of his profits under the freight contract
which he held. He read the following statement Of
his receipts and expenditures
Receipts from the Erie Railway Company for the go
EsSendiares Tor the Erie Railway Company for ''s
abe year ls72... sse,2lo
Mr.. Archer declared emphatically that the con-
tract was not profitable enough to suit him, and
that he was anxious to relinquish 1t. In response
70 question by one OF the committee he said IL
did not say on my Former examination that was
losing BY this contract but that did not want to
NJ. Lncoln-would yen be willing to make it
over to the committee and let them remit on the
witness.fes, ' W would and iexcitediy you
could not run 1t at present prices SO that It would
s yss S to s
expenses OF the business there are not brains
enough among the station agents Of the Erie Rail
way to make out the complicated statements In.
sisted on by watson the dividend was not earned
during 1872, twenty-six engines were damaged by
. none Of them have been replaced, only part OF
chem have been repaired; they were year in
and U@ rs p cent aoa
common stock should have been applied to the
arrears on common stock; on the day before
sand they would have to effect loan for the COM
pany OF 100000 for current expenses, aid Mr.
6hesrman, the Treasurer asked me to negotiate
II, and did negotiate 1t with Mangam's Trust Com
mission paid for the kind OF gotlation which was
made by Bischonsheim Co.; its OBJECT was to
bring up the price Of stock in the market; ! was
Informed that the new directors who came in were
nominated by Bschofsheim a. Co.
To Mr.. Barlow-The dividend was based upon
Mr.. Watson's statement OF the affairs OF the COM
pany; did not examine the accounts from which
u was made, and never saw them; Vice
President Of the Board OF Directors from Decem-
TO Mr. Babcock-ln February, 1872 the project
Of the south Improvement Company was proposed
- me BY Mr.. Watson; the capital was to be
S1O000,000; 1t was supposed that 1t would be able
20 control all shipments OF oil from the oil regions;
3hey proposed contracts with the New York Cen.
trail, Pennsylvania and Erie roads, the three trunk
lines by which 81 40 per barrel was to be paid as
have rebate on these rates Of 81 10 per barrel,
-, "1 Ue1 nsy Of soe S tSe
Pennsyivania road and to divide reights on
the balance Of the oil product between the
Central and Erie whether they carried the
the control OF the sale Of oil to the agents OF
she southern Improvement Company In New York,
barrel Of oil produced the Contract was made, put
sne prsJect never was executed; some idea OF the
GAccno VI .his monopoly may be gathered from the
yact That about 5000, 600 barrels OF oil were then
being shipped annually.
After giving this testimony Mr. Archer took his
handkerchief out the crown OF his NAT. which was
lying on the table, and wiped his forehead.
ne was tnen questioned by Mr.. StickEey regard
ing the voucher produced on the day before IN the
presence OF the committee. and recognized his sig
mature. he said Il approved the expenditure sup
posing II to be for legislative purposes: / don't
Know whe received the amounts or what the
amounts set opposite 'Delaran House and econ
gress Hall' were for; did approve them without
any knowledge OF what the payments were Tor, ex-
cept upon the statements Of Mr.. sherwood: have
no knowledge OF the payments to Mr. BARLOW:
j met Mr.. butcher while in Albany:
saw him In relation TO Erie matters:
also saw some OF the gentlemen whose names
are on The vouchers; when I approved the