The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1873-03-30
The Story Told by the Sick Man,
Frederick A. Lane
MORE DETAILS OF BRIBERY and CORRUPTION
The Testimony of President Wat.
son and the Auditor Dunan.
THE OLD DIRECTION AND THE new.


O'Clock at the Fifth Avenue HOTEL On Friday
night the committee sat in Mr.. +. A. Lanes house,
on Forty-second street. Mr. Lane was too Ill TO at
tend, and In consequence his evidence had to be
taken in his own room, where he lay SICK In bed.
His illness was OF so serious nature that he could
not bear up with the presence Of reporters, and
the attendance OF some half dozen members OF the
press was dispensed with, the committee consent
ing. 1t is difficult to understand how he could
have endured the fatigue OF the inquiry with his
enfeeblcd body, and it is still more difficult to con-
lecture how the presence OF the reporters who
would have sat still and said nothing, could
have been 80 Objectionable. The committee should
have insisted on admitting the members OF the
press, Mr.. Lane having no right to dictate to the
committee the manner in which the investigation
was to be conducted or who were to be present.
Mr. Beach, who represents Mr.. ODoherty, was ad-
mitted to the hearing, and cross-examined Mr..
Lane. Through the kindness OF Mr.. Wight, one Of
the members OF the committee, u very good sy-
nopss of the evidence rendered by Lane was fur
nished to the press 1t is given below. The evil
dence yesterday was not so sensational as that OF
the preceding day, but some interesting facts were
elected from President Watson and the Auditor,
Dunan. The inquiry was held yesterday in the
Board room OF the Erie Railroad office, the CON-
mittee having adjourned there after remaining
some time in private session at the hotel.
LANES TESTIMONY.
Was a director of the Erie Company before
March, 1872; q month or more before that time
met Mr.. Henry Thompson at the Erie ofices, ana
had conversation with him about change; told
him that IL o certain amount was paid thought
the directors would resign $780, 900 was suggested;
afterwards saw Mr.. Scott about it; he wanted the
whole Board to go out, and would do nothing
unless Mr.. Gould went out; Mr.. willard made
proposition to Gould to pay him large sum to go
out; afterwards, in q conversation with Mr.. Gar
diner, l concluded the best way would be to
make an arrangement with Mr.. McHenry
through Mr.. ODoherty; l called on him,
and he suggested he could get much
larger sum; the first despatch was sent
by Mr.. O'Doherty to McHenry; consulted
O'Doherty, because knew he was an intimate
friend of Mr.. McHenry, who depended on his word ;
then followed the various cable dispatches think
I saw all of them; made distinct point that I'M
der no circumstances would l undertake the re.
moval of Mr.. Gould; would only undertake TO
give them majority OF the Board and give Mr..
Gould the benefit OF their aid; thought him the
best railroad man in the country; he Is the only
man who appreciated the Erie road; negot Ia
tons went on Tor some time, until l was informed
by Mr.. Barlow, Mr.. O'Doherty or Mr.. Thompson
that other directors were
NEGOTIATING WITH MR. sICKLEs;
Mr.. Thompson told me some OF the party had sent
for him and had an interview with him; on the
same day Mr.. Barlow asked me TO meet
MIR. Sickles, and l met Mr.. Barlow and Mr.
Thompson that evening at Mr.. Barlows house
the subject of payment was talked over; they put
1t quite low; told them thought they ought to
leave margin; the next day Barlow wrote a
despatch leaving the amount to be filed in in
blank alter some talk | inserted an amount of I
think, some pounds my recollectIOn is that 1t was
about $4,000; had been connected with Barlow
In other matters my arrangement with him was
that was TO receive $1,000 counsel fee and that
during the year he would make me at least
s2o00Oo in other enterprises; ne wrote letter to
McHenry stating that after payment of expenses
there would be only small coming to me-
aud that he had made another arrangement with
Them have seen nothing oil the arrangement yet;
last year borrowed SIS, 900 OF McIenry. and gave
him my note and SAC, 900 In bonds as security he
told me he would; l received se7,5oo ut the
time OF the revolution; the check never went
through my bank account 1t went TO pay Tor iron
Tor another road made no arrangements with
the other directors anu no payments to them; the
circular now produced Is "a printed copy OF the pr-
vate circular had printed in England and 1
brought Two or three OF them to this country: dur
ing the negotiation and before / saw Mr. olckles
made up with Mr.. Barlow list OF directors that
thought would be satisfactory and named among
others, Mr. Barlow, O'D0herty ana Gardiner; alter
wards General Sickles objected to ODoheriy and
Gardiner; there was then liked compensation OF
5000 TO each OF them for taking their names OF
the list; Barlow fixed the payment afterwards oy
giving draft ON McHenry the drafts were ny mis-
~
a larger amount, and Barlow telegrapned TO
McHenry only to pay $4,000; went TO europe
three days before McHenrl arrived; he came with
large number OF promises to supervise the new
elecloni l Know nothing OF payments made by
nothing about the Biscnorsneim contract except
what saw in print; O'Doherty did everything lie
could IN Europe to keep down the bonds by long
statements that they were fraudulent and not
worth the paper they were written on, and tele-
graphed to McHeniy to know why he dared do
such thing as let his agents make the negotia-
tons; advised with Mr.. sharpe, an eminent bar
rister, who advised criminal action against Mr..
ODoherty for Matchmaking these securities | DO
not know OF a banker in London who would have
taken these securities AT that time; do not con-
slider the percentage large one was told that
Mr.. Sickles received CO. McHenry tod me that
he demanded 100000; but supposed that E20, 900
were paid by Bisctotisheim.
To Mr.. Beach-Mr. O'Doherty sent word to me by
Gardiner that he had published the circular.
PRESIDENT wATsOS's STORY.
Peter II. watson, President OF the Erie Railroad
Company, sworn-I was made President in July
1922 had no connection with the company pre-
vlously; am not acquainted with the measures
which brought about the change in March; have
learned more about the means used since this in
vestgatiOn commenced than ever knew before;
the last dlvldeud of this company was declared on
the 1lth oil February last: the rate was per
cent ON the preferred stock and one and three
quarters upon the common stock the last financial
statement was made upon the 3lst OF December,
1872; the accounts previous to the time we assumed
the statement made by us was got up alter great
deal OF labor and was based upon papers
and accounts IN the oace; the dividend was
only have declared 1t upon the fullest conviction
that the net earnings JUSTIFIED the declaration
the system OF keeping accounts in the ONCE has
been entirely changed; every dollar paid out is
now entered upon the books; when was elected
president the understanding was that, no matter
how small dividend was available, it should be
declared items are sometimes charged to the con-
structon account winch do not properly belong
10 IL; the extension OF the track the substitu-
ton OF iron Tor wooden bridges, iron culverts
ior wooden culverts, all properly belong to
the construction account; 1t would be possible
to charge sums 10 repairs which properly belong
10 Tue construction account; the business OF
larger relative To tho evnonaitnro ,bon ~ rra
vious years the Indebtedness OF the road might be
increased by our system OF declaring dividends SO
long as the construction OF the road was going on
Otherwise the profits would go to the stockholders,
and II they choose to buy up OF the capital,
these pronts would, OF course, be increased; II the
surplus earnings would be more than sufficient to
pay the usual dividend the surplus OF that might