New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1879-08-25
THE RAILROAD INQUIRY.

EXAMINING THE ERIE TRANSACTIONS.
PRESIDENT JEwETT EXPLAINS HIS CONNECTION
WITH WHRNRY IL TIE c., c.. c. AND 1. RAILROAD
MATTER-ERIE's OBLIGATIONS
SARATOGA, Aug. 24.-The examination of
H. j. Jewett before the Railroad Investigating Commit
tee continued yesterday. Mr.. Jewett said he had
the slightest idea how much OF the first consolidated
mortgage actually received by the Erie Railway
Company, or how much OF the proceeds was used in
constructing the Erie.
Mr. sterue-And yet you advanced on c., c., c. and
money tor the account OF McHeDryf A.-Yesj that
was easily accounted for. At that time had no idea
that McHenry had any evil design upon the Erie.
Travers Co. held the stock, and notice came that the
stock would be sold unless money borrowed upon II was
repaid the money was advanced to help McIenry and
protect ourselves. L not then nor am L now
aware OF the existence OF statute precuding our
holding stock In another corporation nor do consider
this transaction as coming within any such provision.
The first advance was made before my connection
with the road Mr.. Barlow acted as the agent OF Nc
Henry at the time and was also director OF Eric and
one OF the counsel This Is the subject meter Of
litigation between Biscofsheim, Godschmdt aud the
London Banking Association and this railroad and
submit to this committee whether this matter should be
gone into here.
The chairman stated that the purpose OF the commit
only ascertain whether the proceeds of these
S2 900 900 bonds had been received for the company
and II not such state OF affairs should be guarded
against IN future by legislation.
Dir Jewot stated that he also thought there should
be law prohibiting one railroad corporation own
ing the stock Of another The company has real
ICED the full value OF those bonds The company is now
seeking to recover the proceeds, and the parties are
settling up Devoe's deficiencies.
MI Sterue said he seeking to draw from Mr. jew
EFT what already appeared OF record in previous judicial
proceedings, wherever It appeared that the c., c. c..
and l. transaction was the outgrowth Of conspiracy
| rg.a. ~
L. Barlow. Watson and Mcenry, all Of which was peril
nen to this inquiry showing how under the existence
of the proxy SYSTEM parties actually owning stock
thereon and elect irresponsible boards OF admins
Mr.. Jewett was satisfied that neither Mr.: Barlow nor
Mr. Watson countenanced Inc project or McHenry ana
/ they were parties thereto. He conceded
with Mr. Sterno to the evils OF he proxy SYSTEM and
| was in favor OF LEGISLATION against it.
| The chairman stated that the committee simply
wanted 10 ascertain why and under what circumstances
the bonded udcb Jedness OF Erie increased what
became OF the proceeds OF the recent sale bonds.
| Mr.. Jewett answered that the bonded debt was
| not increased one dollar during his administration.
| He had noticed that the construction account
was largely enhanced by stock issued for improper
| purposes though he did not know it for fact It
| was before bis connection with Erie. The settle
| ment with Gould was during Jewetps connection. II
but TO- 20 80 cent OF the bonds or stocks sold
realized by company, the balance would be a charge
upon the company and Its capital would be correspond
Sir. srne offered 10 evidence report Of Stephen Lit
tie. Auditor OF the Erie made october lsIo showing
| bonds which McHenry had sold IN England bad been
|
stock of the Ens Company In violation OF ne statute OF
1850 holding directors liable Tor the sums paid out in
| dividends which had not been earned
Mr. Little called to the stand, ana identified the
statement authentic. Mr.. Jewett was also called to
SIidentlfy" said. the Joint letter of Mr.. Vanderbilt
and myself mover sign ANYTHING don't read"
that IT might justify his construction Mr. Jewett did
not wish TO take single paragraphs ana answer qies-
railroad the amount Of which had not been provided
| far Inc "A ip
upon property Of the Erie ID my hands receiver
but are not indebtedness Of the HewYok Lake Erie
| and Western Railroad they having been wiped out Dy
the foreclosure sale under the second consolidated mort
| gage bonds The New-lork, Lake Erie and Western
Railroad represents the property Of the Erie less the
amountwhch the Court may determine was not nclned
litigation. Mr. Jewet knew little about Mr. Watson's
Investments In coal lands. As TO Eries ndor cment Of
Atlantic Great Western bonds. that time Mr. Wat
son was anxious for Chicago connection there being
statute authorizing the Erie to make Chicago
ton, and this step m that direction as Watson
dersOOd lie took opinion OF Mr.. Eyarts his
authority 10 make the guarantee; lie was advised to
extent OF about St.OOO,OOO. Mr.. Jewett dId
slider tins valid Obligation OF IN, al He thought II
not IN the power OF the conn sion 90 make this
guarantee. Tine road received no property adyau-
agv represent IT, The connection not obtained;
tins was uone under the Burde aud Eldrldge admins
ratOn, aud he Atlantic aud Great Western indOrse-
| meut made under the Watson admmlstrtiOn.
| All Nj. Jeweu knew about what called the
Grant bonds" was that they were deposited by the
Great Western Railway with Grant for sale. He never
saw the prospectus ana terms Oh tht hf1t cohs9ndaed
mortgage. IL for S3OOOO,OOO and provided for the
|
amounted about sis 100000, including bonds OF
Buffalo Branch Road. Tuey were all to be deposited
with the Farmers Load and Trust Company, and were
only 10 he issued the existing bonds OF the road
were presented and cancelled The balance for
ralgiug money improvements. These bonds
Incumbraucc. and The Farmers Loan and Trust Com
pauy asked to be relieved OF them. They remain
p the vaults OF Ere Company unexecuted, In
ance with the terms Of the mortgage ana the arrange
ment.
Mr. sterne questioned Mr.. Jewott regarding the suit
BEGAN tue OF tnc Erle Road against Commodore
Vanderbilt to recover the S3.OUOOOO obtained by Van
derbt Gould. Fisk Bud Dew directors OF the Erie
Road whether after the complaint had been dismissed
Al succal Term, which dismissal the General Term
yetsed and stipulation had been entered into under
The code nave Judgment absolute entered against the
defeated party IN the Court Of Appeals the suit was
settled pending such decision by the withdrawal OF the
same. Mr.. Jewelt said the SUIT settled by him
redeiyer only under order OF the Court Mr..
sterne claimed that the motive Of settlement a fear
that Vanderbilt would iOn the McIIenTy party that
Vanderbilt had threatened league himself with Nc
Henry his demand Tor settlement not complied
with and Mr.. sterue produced oaOlegrBm sent by Mr..
JeWett june q 1875, TO Sir Edward Matkn, London,
manning motive OF his settlement with Vanderbilt.