Litchfield enquirer., 1878-04-11
LEGISLATIVE DOCUMENTS.

LEGISLATIVE DOCUMENTS. REPORT OF THE SPECIAL COMMITTEE
 APPOINTED. MARCH 13, 1878, TO
 INVESTIGATE THE ALLEGED
 FALSE RETURNS OF RAIL-
 ROAD COMPANIES.
 HoUsE OF ENTERTAINMENTS. JANUARY SESSION OF THE GENERAL AssEMBIT I,
 A. D. 1878.
 The Special Committee of the House of Representatives, appointed under resolution authorizing the Speaker to appoint commit tee to invest gate railroad returns, and ''b as- certain and report, at as early day as isprac- ticable, whether or not it is true that the rail- road companies, or any of them, have been and now are in the practice of making fase re- turns to the Railroad Commissioners, as aleged in repeated representations made to the 4ener- al Assembly and if it be true, how farand to and to what extent the Railroad Commission CTS are responsible for not having thereturns corrected; also, whether any of the sailroad companies (and if any, which of them have issued capital stock unwarranted ty bona tide investments of actual values, or lave is- sued capital stock in exchange for fictitious or watered capital stock previously issuet by oth- CT companies and are compelling the public to pay dividends on the.s same by charging high rates for the transportation of passengers and freights also, the amount of fictitious or wa tered capital stock issued or exchanged by said companies respectively, and the manner and the means by which the issue or exclange of said capital stock has been concealedor cover ed up. That said committee also report, by hafo ,l>o% layr this fictitious or watered capital stock has been issued or exchanged and whether any legisla tion, and if any, what, is necessary to prevent repetition of such evil practices" respect fully
 REPORT.
 That charges of incompleteness and inaccu- racy ln the returns made by several of the rail- road companies to the Railroad Commissioners have been preferred to the General Assembly in different forms since the year 1871, by Mir. ii. l.. Goodwin, who that year was a member Of the House of Representatives from East Hartford.
 Before your committee, the said H. L. Good win made and submitted to their consideration the following charges and specifications against the Hartford & New Haven the New York and New Haven the New York, New Haven < Hartford; the Danbury & Norwalk the Shore Line :; the Naugatuck, and the New Ha- ven & Northampton Railroad Companies, and the Railroad Commissioners, to wit ALLEGATIONS AGAINST THE HARTFORD & NEW
 HAVEN RAILROAD COMPANY.
 1. That said Hartford & New Haven Railroad Company reported to the Railroad Commissioners ip 1865, that the capital of the company paid in since the last report (made in 1864 was, $65O, 900 whereas $470, 900 of the $65O, 900 was not paid in, but was issued as stock dividend of twenty per cent.
 3. That said company in 1868 reported it's 'capital paid in since last report" (made in lS57), was $500, 900, whereas large portion ot this $500, GOO was not paid in.
 3. That in 1871, the said company re- ported $1, 800, 900 as paid in since the last an- nual report, whereas only $750, ,000 was paid in during that year.
 4. That in 1871, the said company re- ported it's capital paid in," at $5, GOO, ,OOO, whereas not exceeding $3, 500, 900 had been paid i'll at that time.
 ,. That in 1869, said company reported the cost of it's equipment at Ss254, 900, and that in 1870, the company reported the cost of it's equipment at $500, 900. That during the year within which these two reports were made the company added to it's equipment only four passenger cars, and eighty -four baggage or freight cars, the cost of which could not have $S0, 900. That, consequently, either one or the other of the statements of the con- pany as to the cost of it's equipment must have been untrue.
 G. That said company, in reporting to tMe Railroad Commissioners, did for several years, suppress it's surplus earnings for the year." and also it's ''total surplus" or undivided earn lngs notwithstanding the law required report of both to be made annually, and that this surplus was reported to the railroad commis- sioners in 1872, to be $7O6, 751.
 2. That within few months after the payment to the company by the stockholders of $1, 300, 900 of capital in 1872 there was paid back to the stockholders, not as divi- dend of earnings, but in addition to the divi- idends of 12 per cent for the year the sum of $671, $50, so that of the $1, ,5O0,000 paid in. that year, only $828, $50 remains invested in the company, and that consequently, of this $3, GOO, 900 of increased capital issued in 1870 and 1872, only $1 ,5S5, ,550 was actually in- vested by the stockholders.
 8. That in reporting it's dividends to the Railroad Commissioners it suppressed and omit ted the stock dividends of 20 per cent which dividend was 4, TOO shares the market value of which was $1, or, 800. or 45 per cent on the outstanding capital of $2 350,OO0 AGAINST THE NEW YORK & NEW
 HAVEN RAILROAD COMPANY.
 1. That in 1867 the New York $ New Haven Railroad Company reported Capital paid in since last report (made up to Septem- Der 30, 1S66), was $2,017. 1885," which report was untrue I; The report of the directors made to the stockholders showing that between April 1866, and April 1868, period of two years, only $996, 900 of capital stock has been paid in.+
 9. That in 1867, (Mr. Bishop being then the president), the company reported to the Railroad Commissioners the cost ofits road and equipment on September 30, 1867, at ST. 720, S46, while in April 1868 (seven months later) he reported to the stockholders the cost of the road and equipment at only $5, 27O, ell; and that in this report to the stockholders he as part of this $5, 270, 611, the 'Rail- road, franchise, right of way, grading, mason ", bridging. fencing, superstructure, iron, sta- shops, fixtures, machinery, engin- eering, interest, discount on bonds, etc."
 3. That said company did, during the year (and without informing the of the fact) include as part of the cost of the road, the sum of $1, TT, ,869, it be- ing the amount of the ''Loss by the Schuyler fraud, and that that year the market value of tHc stOCh O1 tuc COlnpduS, dS TcpOTtcO to tn0 Comptroller for taxation, was increased from $120 to $13S per share.
 4. That said company reported to the Railroad Commissioners that it had surplus of $722, 351 on the Both of September, 1868, whereas, instead of surplus, it's capital was impaired at that time to the extent of $1, ,05O,- O16, it being the amount of the previously .ad- mitted loss by the Schuyler fraud ($1, ,772, ,S68), less the amount of undivided earnings $772, S5D.
 5. That in violation of the law of 1867, which makes it misdemeanor for the officers of any corporation to declare dividend when it's capital is impaired (see p.280 General Stat utes, Section 16), the company declared from 1867 to 1872, although its capital was during all that time impaired
 6. That said company untruthfully re- ported in 1871 it's paid-in capital at $7, 5OO,- 900, whereas its paid-in capital did not ex- ceed SC, 500, 900.
 ALLEGATIONS AGAINST THE NEW YORK, NEW
 HAVEN 6 HARTFORD RAILROAD COMPANY.
 1. That from 1872 to 1876 inclusive, the New York, New Haven 6 Hartford Company reported its capital actually paid in'' at $15.- xxyha~ dnf