The New York herald., 1879-10-16

An Investigation Into Their Management Begun
BY the Legislative Committee.
HEAVILY WATERED' STOCK
President Garrison and Mr. Navarro Exam
ined as to the Consolidation.
HOW II WAS RENDERED NECESSARY.

HOW III WAS RENDERED NECESSARY.
The Legislative committee appointed to investigate
railroad management in this State met again yester
day morning in the rooms OF the Chamber OF Com
merce at No So William street. and the investiga-
ton OF the al" railroads begun The testimony
showed remarkable amount Of stock watered
through the consolidation OF the New York and
Metropolitan roads into the Manhattan Company.
The terms of the arrangements between the corpora
tions fully discussed Mr. Simon Sterne conduct
ing the examination usual. At the afternoon
session Mr. Archbold. OF the Standard Oil Company,
for whom the committee have long been looking
appeared. but only very little satisfaction was had
from him witness. he refusing to answer several
important questions.
MANHATTAN COMPANY.
william r. Garrison. President Of the Manhattan
Railroad Company and formerly president of the
METROPOLITAN, was the first witness. The
lease by the two .L roads to the Manhattan was to
take effect January 81. the actual signing took
place on May 20; the Manhattan was separate
company organized under the rapid transit law: 1t
owned no railroad property; the Manhattan Com
pany was practically name for tho coalescing OF
the New York and metropolitan roads; the Manhat-
tan divided capital stock of $l3.OO0.000 between
the two other roads. half to each one; under
the terms Of the lease the Manhattan
was to pay ten per cent. upon the
capital stock of the original companies and the in
terest upon the bonds the capital stock OF the New
York Il" road was s6.5oO.OOO. and it's bonded in
debtedness $S.50O.0O0; the New York road had
right to construct north of the Harlem River. but
no further construction was contemplated as yet;
In the vent of more construction on the New York
road it was to furnish the money to the Manhattan
Company and the latter were to build it, the case
was the same with the Metropolitan; the Manhat-
tan road at present had money except the cur
rent earnings; the original stock Of the Manhattan
road was s2000.0OO. on which i've per cent or
100000. had been paid in cash.
O. When the capital stock was afterward increased
to sl3.O0oOOO any cash paid In? A. Not dollar.
The Metropolitan witness continued. actually
paid IN S. OOO0 capital stock. all paid in by
tract with the Loan and improvement Company; its
bonded Indebtedness was S5.sO0,0oO; all the stock
had been issued. but there were between three and
four millions in bonds yet to be issued. making the
sum total Of the Metropolitan capital $780, 900 in
bonds and SO. 500 00O in stock; when the stock
issued considerable part OF it was paid by the
successor; tho Board OF Direction OF the New York
Loan and I'm provement Company substantially
the same az the Board Of Direction Of the Metropoi
the stockholding interest was different.
Q. What proportion Of the ne net ,es earnings Of the
Five per cent. believe, they intended to pay.
Q. As to the Metropolitan. do they make any pay
two per cent of the dividends OF the Metropolitan.
They have declared no dividends.
Q. Has the New York road declared dividends3 A.
Yes.
Q. Do you separate the earnings of the New York
from those of the Metropolitan? A.. In the matter
of bookkeeping we do; but for the purposes Of di-
vision we do not
..EoUALHrNG" RAILROAD.
1.-The bonded indebtedness and stock capital"
Mr. Garrison said, "were supposed to be equal;
the Metropolitan Company had the right to make
its bonded indebtedness equal to that OF the New
York by spending the money on constructions the
Manhattan spends the extra money and charges it
to the road. taking the money from the common
more expensive than that of the New York road;
the Manhattan stock would get the benefit OF the
construction"
BY tho Chairman-The division of tho two
roads equally il arbitrary, Notwithstanding the
number Of miles or the profits on either road? A.
Yes.
The cost OF construction of the Metropolitan road
was not far from $S00.0O0 per mile; the cost
So 400 apiece and the engines $4,000 to $4,000 The
capital stock of the Now York Loan and Improve
ment Company was $3,0O0O0Os AL or which was paid
Q. Was that concern substantially dead one be-
fore the contract with the Metropolitan was made9
A. No; think not.
Q. Was not large proportion Of its capital stock
derived from the Equitable LIE Insurance &c, Com
ance Company. or anybody connected with it, ever
had . cent in the company. except. perhaps. fifty
shares owned by one gentleman.
o. Have you made any payments OF damages along
the line OF the Metropolitan? A. In two or three
have paid for moving cellar vaults, but
otherwise we have paid nothing at all.
Q. substantially. tnen. you have % not paid any
thing for the occupation OF the streets and the re-
q. Has anything been paid to the city, A. Not
yet We expect % pay the two per cent on our divi
o. The construction account. whatever that may
be- will show tho whole cost OF the roadf A. Yes.
All the items of the construction account were
cash expenditures; the Loan and Improvement
made a contract with the Gilbert to construct the
road tor consideration Of 5000 shares and $3.50 900
frst mortgage ana $750OOO second mortgage bonds;
the bonds were marketed and the stock divided
among the subscribers; the $C5oo,0o Of stock re-
cevsd the Metropolitan had not been ted,
but held in one block by the stockholders; 1t
would be distributed among the stockholders of the
Now York Loan and Improvement Company when
O. What was the function of the Manhattan Com
pany? A. To operate the road.
The Manhattan Company had made no dividends;
the now equipment was charged to the Manhattan
Company in lump: but ,1y. on the books each part
THE LOAN AND IMPROVEMENT COMPANY.
After Of half an hour Mr.. Jose II. Navarro.
Woe president of tho New York Loan and Improve
mont Company and director in tho Metropolitan
and Manhattan roads, took the witness stand.
Mr. John J. McCook then read several documents
which had been called for. The contract between
the New York Loan and Improvement Company and
the Gilbert road to the effect that the former
would construct the line and equip the road would
pay ten per cent the capital stock and would tnke
up the stock unti IT was all subscribed for. The
consideration 5000 shares and $750.000 In arst
and like amount in second mortgage bonds.
| Mr.. stern--Thst is 50. 100000 = mile.
The Chairman--It seems strange that bonds issued
should bo cancelled without any consideration.
MIR. Navarro-The consideration was the stock of
tho Metropolitan and the securities created for the
purpose Of taking the place OF the bonds
q. 10y tho Chairmanl-A certain number of gen.
tlemen contracted with themselves under the namo
| OF the ''New York Loan and improvement Com
pany' 10 build this road? A. No. sir; the purchase
was not made until year and half aftcrward; tho
capital stock then was 100000, OF which $4,000
had been paid in; their business the building of
public works.
Q. Had you then any public works in operations
| A. No. sir.
Q. II was your plan to buy that SOS, 900 original
| capital stock and organize the New York Loan and
Improvement Company upon different basis3 A.