Morning journal and courier., 1889-02-14
THE RAILROAD HEARING.


 Raised on the Books to Balance the
 Bond LiabfllaIes-An Exciting Le-
 gal Contest Again Festerday-Gen- |
 eral Legislative Matters.
 HARTFORD, Conn.,, Feb. 13. Especial Correspondence of the JOURNAL AND CoUR-
 IER.1
 The most interesting development in the | railroad fight was the admission under oath | to-day of President Starbuck that he had, by | advice of Prof. Simeon E. Baldwin, caused the valuation of the property of the Housa- tonic railroad company to be raised about $2, ,0OO, 900, so that it would appear on the books at figure twice the amount of the outstanding bonds of the road previously is- sued, as the law prohibits railroads from issuing bonds to an amount greater than 50 cent. of their construction and equipment accounts. In other words, President Starbuck admitted having first issued $2, 200, 900 in new bonds, and then by advice of Prof. Baldwin subsequently revalued and raised his assets l to make them large enough to meet the pro- portion between assets and bonds required by law. The admission furnished quite sensation at the hearing before the railroad committee, which began in the representa- tives' chamber at 2:30. Fully as large an at tendance as yesterday heard the proceedings. The railroad committee held an executive ses- sion previously and took action upon the obs 1 jection raised by the Consolidated at the first | hearing that the Housatonic petition was not properly before them because the petitioners had not furnished maps of the new routes over which they intend to build branches. The committee decided that the petition was properly before them and the hearing should be continued. The committee also decided | that the hearing on the resolution of inquiry s,4< k11o. oE fAv,io Ga
 should be conducted coincidently with permission ts build thirty miles branches so as to save time. This decision, of course, gave counsel for the Consolidated road much more latitude for their inquiry into the methods of the fnanceers who now control the Housatonic. Attorney Perkins of Hartford addressed the committee and said he represented certain stockholders in the Housatonic who were dissatisfied with the operations of the directors and were in favor of the resolution of inquiry. If there was anything ommitted in the present hear ing that he felt part of his case he desired opportunity to put it in later. Such per mission was granted.
 Prof. Baldwin wanted to know who he represented, and said that he had not heard before that there was any dissatisfaction with the management
 Lawyer Perkins said his clients did not care at present to have the officers of the Housatonic know who were dissatisfied. The committee decided that Mir. Perkins need not divulge the names of clients until he put in an independent case against the manage ment.
 House Chairman Brown of North Stonine- ton suggested that the hearing had got to such point now that it would be well to swear the witnesses, and President Starbuck was put under oath. In response to ques- tions from ex Judge Harrison MT. Starbuck was unable to tell what the fare from Pitts field to New York was, but said that their desire to build branches from Norwalk to the State line was to carry passengers to New York more cheaply. The witness said he did not own the majority of the stock of the Der by road and could not tell now much the ex- tension to Botsford had cost, but he thought about s400,0 0,000, which was paid for by the Housatonic.
 "How did the Housatonic raise this moneya" MT. Harrison asked, and Prof. Baldwin ob- jected.
 i've believe" said Mr. Harrison, "that they have built this branch with more of their bonds. After overlooking the Housa- tonic with bonds without any stock subscrip- tions they build this branch by more bonds alone, and we think men who illegally issued these bonds ought not to be allowed to build parallel roads in the same manner"
 The question was admitted.
 "How was this money obtained?'
 HIn the usual way, by issuing bonds," an- swered President Starbuck, who testified in response to a series of questions that in the last year and half &, 200, ,000 of bonds had been fosted by actual sale to provide for necessary funds for the work of the road ,and pay $1, 100, 900 of dividends on preferred stock.
 s'What has been done with the cash bal anoe of $950, ,00Ot' asked MT. Harrison. President Starbuck did not know, he said. MT. Harrison wanted to know if he would DrOduc0 his books this item. "I don't know but it would be 8 good plan for me to send the books of the Housa- tonic over to the Consolidated railroads office," said MT. Starbuck. "This is not tke Consolidated road" re- piled Mir. Robinson, ''this is the State of Connecticut. Mir. Starbuck, don't make that mistake again."
 On the redirect examination by Professor Baldwin the witness said that about $4, ,00O,- 900 of guaranteed dividends had to be paid by the issue of stock, and that nothing hal been done without advice, as he had con- suited outside of Connecticut Sidney Bart lett of Boston, Everts, Southmayd and Choate and Mir. Sullivan of New York. 'Why is it," asked MT. Robinson, .'that you want to build branches instead of build ing under the general railroad law?" ] President Starbuck's reply to this very universally asked question was as follows: eve want to do it by branches, so that it will be the Housatonic road and all the Housatonic system"
 On the erecross-examination he said that he had written opinion from Sullivan & Crom- \ we'll of New York, but could not say that the I S903, GOO item of betterments had been sub mitted to any other lawyer or upon what data ! any of them had given opinions as to the | legality of the recent increase of bonds. "Mr. Starbuck," continued Judge Harri | son, "did you consult any of your lawyers as \ to the right of the Housatonic to guarantee | to the extent of $500, 900 the bonds of the \ New England Terminal company, whose en- | tire stock to but $500, ,000F' 'sI did,"
 ''Did he say you could load up your road ! in this wayt"
 "Chock to the muzzle," replied Mir. Star buck.
 The witness was unable to tell what prop ' erty the New England Terminal company had got, but his company had indorsed them l sale of bonds The New England Terminal company had a pier and dock privileges at New York, making up 8 $200, 900 plant, he ! believed. The following, which concluded President Starbuck's examination, furnished \ the sensation of the cay:
 MT. Harrison-"Did you not in fact make I a revaluation of the Honsatonic plant several months after issuing this $2,200,000 more | bonds?"
 l President Starbuck-"We made a revalu- l ation by advice of counsel to make the books right. This revaluatlon was advised by | Simeon E. Baldwin and was made by three | disinterested men. Mr. Harrison-"You marked up the books ! to make them balance 50 that having in-
 cured liabilities of $6, 0O0 900, on real assets 1 of $4, ,000, ,000 you chalked up the assets to
 balance the liabilities.
 ! Can you conceive any reason why Prof. Baldwin told you to change these figures ex- | cept to make the books balance and the pub lie believe that you have property enough to | cover the liabilities?'
 President Starbuck said he was not there 1 to answer such question.
 | Colonel W. H. Stevenson next took the stand as the second witness. | Colonel Stevenson said he was vice presi- dent of the Housatonic and general manager and had twenty-three years experience in railroading, fifteen of which was in connection with the Consolidated. He said the Housa. tonic, by special charter provision passed I many years ago, could build but ten mile
 branches, and other roads could build
 branches thirty miles long. They wanted to be put in the same position as other roads. | They desired to build branches from Bridge port to Milford and to the Darby road in | Orange, four miles from New Haven, and