, 1873-05-22
THE ERIE RAILROAD INVESTIGATION

-A-S of'e~At%A N04AAA4ht1V EttOlltGA Wy Ell9 H9W
York Legislature to investigate tho affaira Of the
Eric Railroad has completed It's labors aud sub
mfttod report, which forms worry interesting
chaptcr IN tho history OF railroad management
in this country. The legal mattera having been
roforred to tho Attorney General, tho Committee
oonfncd lts attention to tho three following
topics: "'' 49,
Frst-Whether tho dividend declared upon tho stock
OF tho Company outstanding against 1t n February,
1e7o was paid ont Of tho net earnings Of the road.
seeond-AB to improper expenditure Of money by
foreign stockhodorB ofcars Of tho Company to cf-
feet tho transfer OF the management Of tho Company
In March, 1874 and to tho fact Of corrunt contract
In tho negotiation Of its bonds.
Third-As to tho payment Of money to influence
legislation.
With regard to the first point, the Committee
ia not at all olear, Tho dividend waa made upon
the statement Of tho Auditor OF tho road that
thore waB baauce sufficient to warrant It, aud
hlr. Watson, tho President Of tho road, claims
that tho dividends paid tho stockholders were duo
out Of tho net earnings for 1879. Tho testimony
Q. tho Comptroller Of the Pennsylvania Central
nailrond is also rcforred to as showing that tho
mothod OF making up tho Eric statement, upon
which dividends aro declared, il identical with
that OF tho former Company. Tho Committee
thereupon docldes that ii it is proper and in ac-
cordance with the Wow OF Mr.. Watson to carry to
capital account all additions to tho road not
necessary to keep 1t and its equipments in order,
thon It mny be claimed that tho dividend WIS
earned and properly declared. At tho samo
timo, while recommending the passage Of gen.
oral law applicable to all railroads. which shall
determine their right to greatly increase capital
IN this manner, tho Committee Expresses tho
utmost confidence in the ability and integrity OF
Mr. Watson, and ita belief that he is adminiB-
toring tho affairs Of tho road for tho solo pur-
pose Of re-establishing its credit aud economic
ing its royonues.
/ With regard to tho expenditure Of money by
tho foreign BtockholderB,' which ofrootod tho
coup detat in March, 1874 removed the Jay
Gould management, and put tho railroad
In tho control Of McHepry, tho Com
mitteo finds that the designations of sufficient
number Of Directors to change tho management
wero purchased for e750,0o0. Upon tho norate
Of this movement, tho Committee says: "Asido
from the motives which inspired tho, policy and
tho actions which resulted in tho overthrow Of
tho Gould Direction, the manner and the moaua
cannot but bo regarded with tho soyorost disap-
probation," and, in another place, adds: "Tho
Gould Directory was kept In power by lavish
and corrupt uso Of money. Those working in
tho name OF honesty and reform should have
Bhunnod the means which were denounced as
fraudulent In othors' use, Tho parallel which
tho Committee institutes is not fair ono.
Tho property Of the Eric Railroad was in
tho hnnds Of gang OF thieves. Tho honest
stockholders Ind sought iu ovory mannor to got
their property. They sought IT through tho
usual busincaa methods, and through tho LogiR-
1aturo, but those nu failod They then applied
to the Courts, only to fail again, because aomo
Of tho Judges woro in tho pay OF tho thieves.
and Barnard was always ready with all injunction
to Offset any advantage thoy might secure.
They wore thon roducod to this alternative,
either to surrender tho property to tho thievoa
or buy it baok from tlom. There VAS ITO other
hat w kob At3 AA0t AALA1A kAhI StFu ~ up AltU-
gethor, they bought 1t back, Us is done In ooua-
mercial circles worry often, mud thereby not only
secured thor property but wrestod tho whole
road from the gang Of thioyos and placed It in
tho hands Of al honost management ANY
othor action would llaye boon censurablo, as it
would have loft tho thioves in complete md I'M
disturbed poasogsion, mud would have giycn
them Htill creator advantages for carrying on
thoir systcm Of plnntlor.
As to tic payment Of money to influence log
lslation, tho Committee Expresses itself Us vol
Satisfied t4at allch was tho oaso, although it is
unable to specify those WHO wore bought, ow-
Ing to tho absence OF certain witnesaos
who hayo purpose1y kopt out OF tho
way. Tho amount spent for this purpose In
1868 alono was over million OF dollars. Mr,
Goula's memory 1Yas conveniently defective. but