The New York herald., 1879-08-24

Mr.. Jewett answered that the bonded debt was not
increased dollar during his administration; he
had noticed that the construction account was
largely enhanced by stock issued for improper pur-
poses. though he did not know it for fact 1t was
before his connection with Erie; the settle
ment with Gould was during Jewetts con-
nection; if but ten. twenty or, thirty pc, per
lied by the company the balance would be
a charge upon the company. and its capital wouiu
be correspondingly increased; l do not thihk ~
proper that the of capital to the extent OF
the stock issued by Gould should properly De
charged to construction account; YET IL must 70 70
capital or construction account as there Is no o.ner
account to which it can be charged; IL can oe
charged to the profit and loss account as that ac-
count extinguishes all items charged to IT, -
Q. Why should not this item be so extnguished?
/ ask you as an expert railroad manager. A. lam
not an expert. do not think this item should be
carried to the construction account at the sale OF
the Erie road under tho second consohdated mort
gage. there were several bidders; IL was soiu Tor
So 600 and in the reconstruction scheme 1t was
intended 10 protect all stockholders who might
otherwise be cut oil by this foreclosure sale.
Mr. Sterne offered in evidence report of stephen
Little auditor of the Erie, made October !, 1878,
showing that 81, 100000 OF the proceeds from the
sale of the bonds which McHenry had sold in Eng
land had been paid ont III dividends upon the com
mon and preferred stock of the Erie company. in
violation OF the statute of 1880 holding directors liza
bic for the sums paid out in dividends which had
not been earned.
Mr. Little was called to the stand and identified the
statement as authentic.
Mr.. Jewett also called to the stand and identi-
fed the statement as authentic.
IL Identify. Mr.. Jewetr said, "the joint letter of
don't read Ut was in answer to charge OF the
Chamber of Commerce that large amount of stock
and bond Indebtedness forfcitures and that the
construction account did not represent the actual
amount expended tor construction, but was largely
increased By amounts improperly charged thereto
In answer to the question to how he reconciled
the letter with his testimony. he said he did not
wish to comment on his own production.
Looking at the portion referred to, Mr.. Sterne said
that it might justify his construction.
Mr.. Jewett did not wish to take single paragraphs
and answer questions as to those paragraphs; the
Era hadi ip1n rsa1ca rtaiu Of ha N
Great Western Railroad the amount OF which he could
not name define. which have not been provided
for in the reconstruction scheme; they may be
lien upon the property of the Erie in his hands
receiver but Indebtedness of the New York.
wiped out by the foreclosure sale under the second
consolidated mortgage bonds The New York, Lake
Erie and Western Railroad represents the property
of the Erie, less the amount which the Court may
determine not included in the sale to it, which
is now the subject OF litigation.
Mr.. Jewett knew little about Mr.. Watson's invest
ments coal lands; to Eries Endorsement of Bos
ton, Hartford and Erie bonds, at that time Mr..
Watson anxious for Chicago connection.
to make Chicago connection. and this
was step in that direction. Mr.. Wat
Mr.. Evarts to his authority to make the guaranty
he advised to make it, and did make it; the in
dorsement to the extent Of about 100000
THE GRANT BONDS.
Mr.. Jewett did not consider this valid obligation
of the road he thought it not in the power Of
the commission to make this guaranty; the road re-
celyed no property or advantage to represent IT. the
connection was not obtained; this was done under
the Burdell and Eldridge administration, and the
Atlantic and Great Western Endorsement made
under the Watson administration: all Mr.. Jewett
knew about what are called the Grant Bonds was
that they deposited by the Great Western Rail-
way with Grant for SALE he never saw the pros
pectus and terms Of the first consolidated mortgage;
it was for $S0.ooO.ooo and provided for the re-
tirement of all preceding mortgage bonds, which
amounted to about 900, including bonds
of the Buffalo branch road; they were all to be de-
posted with the Farmers Loan and Trust Company,
and only to be issued the existing bonds OF
the road were presented and cancelled; the balance
was for rais for improvements these bonds
were an encumbrance and the Farmers Loan and
Trust Company asked to be relieved of them; they
remain now in the vaults of the Erie Company un-
executed. in compliance with the terms OF the mort
gage and the arrangement.
Mr.. sterne here again questioned Mr.. Jewett in re-
lation to the fraudulent construction account
Mr.. Jcwett said he believed the construction
count of Erie much larger than 1t ought to be; IL
the bonds were issued and converted into stock and
gold reported, it was great wrong. and II there
is no law by which the parties can be punished
there ought to be- and tho General Assem-
a railroad company ought to be required to keep
correct accounts. that parties interested in it and
the public could upon investigation. tell the pro-
else financial condition OF tho road; but in this
construction account the cost to the company
just precisely what the report shows 1t is just
if the chairman OF this committee pought
piece OF property supposing there were no
prior liens and should discover that by the greatest
fraud there was a lien. and to protect what he had
bought had invested twice, the original amount
would represent the actual cost he further said the
first time he examined the present law he knew
ports made under it would not give to the public
what they ought to know.
Mr.. Sterne questioned Mr.. Jewett regarding the
suit begun in the name OF the Erie Road against
Commodore Vanderbilt to the 81, 600 UU0 OBJ
tanned by Vanderbilt from Gould Fisk and Drew, di-
OF the Erie Road whether after the complaint
had been dismissed at q Special Term, which dis
missal the General Term reversed. and stipulation
had been entered into under the code to have judg
ment absolute entered against the defeated party in
the Court of Appeals, the suit not settled pend
ing such decision by withdrawal OF the same.
Nr. Jewett said the suit settled by him,
ceiver. under order of the Court Mr. Sterne claimed
that the motive of settlement fear that Van
derbilt would join the McHenry party; that Wander
bilt had threatened to league himself with McHenry
with, and Mr.. Sterne produced cablegram
sent by Mr. Jewett, June 2, 1875 to Sir Edward Wat
kin. London. explaining the motive of his settle
ment with Vanderbilt. Judge Shipman strongly
objected to further inquiry into these matters aud
the counsel still in controversy the mat.
ter when the hour OF adjournment arrived.
COMMERCE" RETURNS TO THE ATTACK.
To EDITOR OF THE HERALD:--
In your paper of the 4th inst. under the heading
of "Railroad Freight Determinations" a CORE.
spondent the signature of Truth" while ut
the outset affecting impartial criticism of the
communications that recently appeared in your
journal signed respectively Legislator and "Com-