New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1889-04-24
RAILROAD INTERESTS.
AFFAIRS OF THE HoUsAroNIc.
LEGISLATIVE COMMITTEE REPORT on IT'S OVER.
ISSUE OF STOCK AND BONDS.

LEGISLATIVE COMMITTEE REPORT on IT'S OVER.
ISSUE OF STOCK AND BONDS.
Hartford April 80 tSpeclan The majority report Of
tho Committee on Railroads on tho resolutions Of In
quiry as 10 the overissue OF stock and bonds OF the
HOusatonlc Railroad was submitted to the House this
afternoon and tabled The committee gives history
OF tho original charter of the company, the amendment
Of 1870, the general lazy Of 1873 In relation TO stock
increase, and the general law OF 1882 in relation 10
bonds 1t finds that the preferred stock was issued
under a contract made IN 1ai6 under which per
cent dividends should be declared out Of net earnings
II any, before any dividend could be paid on the com
mon stock. II finds that betwesn 1870 and October,
1887, q period OF seventeen yenrs no action was
taken by the Housatonic Railroad Committee under
the amendment Of 1870, and that in 1887 a few men
in NewYork purchased o large majority Of the COM
mon and preferred stock and thus obtained complete
control Of the corporation that in October 1887, the
stockholders agreed to pay TO each holder OF preferred
stock 500 in cash and to give him two shares Of So
called new preferred stock of 300 each. The cash
required to effect this settlement raised by sale
Of bonds to the amount Of 81 10000. II finds
changes Of stock for preferred so as to mako 4
stock increase OF 81 10000 an1 bond Increase Of
S1,9eo,0Oo; that the Housatonic Railroad Company
claimed upon the hearing that the amendment OF 1870
was not repealed by the act Of 1873 or 1882. 1t
finds THAT large part Of the 100000 item Of In
CIbeso III Represented money eApenued
upon leased roads in Massachusetts, which were In
sense a part Of the cost OF construction
OF tho Housaonlo Road and which the Superior Court
OF this State hac decided in the tax were not
part OF the property OF the Housatonic Road. A
true statement Of the construction account Sepbem-
Der 80, 1885, would DO 1894 IL Onehalf OF that
would DO e1,163, 224 o8; the total amount OF bonds
outstanding September 90 $1,000 900, and there
fore the amount OF bonds outstanding In excess Of
onehA the cost Of construction was about 81 800 o0o
The report states that Il was claimed py the
Houseonic Company mat Il had the right under the
amendment Of 1870, to issue bonds without regard
10 tho amount expended In construction. The CONT
mitee finds that tho Housatonc Company in 1885 had
guaranteed the bonds Of the New. En- gland Terminal
to the amount Of $500 ooo and that was not claimed
that these bonds wore issued under authority Of tho
act Of 1870 in settlement OF accumulated dividends.
The officers OF the company testified before the
committee that their construction account
had been marked up in the manner above sot forth
BY advice OF counsel after the bonds and stock
had been issued In order 10 make the construction
and equipment accounts agree With tho stock and
bond issues or they stated It, to make the accounts
balance No other reason was given for this increase
In tho construction account The report says In
conclusion:
".Your committee can but express decidedly their
condemnation OF the manner in which tho accounts
Of the HOusatonlc Railroad Company have been
written up. As 10 tho Issues OF stocks and bonds
regarding the same rSiher than their conclusions
OF law. Many Of these bonds have been passed into
the hands Of bonAnde purchasers. The questions In.
lativs and win undoubtedly ultimately Be decided in
our courts,