Evening star. [volume] (Washington, D.C.) 1854-1972, 1893-12-28
GIG FRAUDS ALLEGED.
Sensational Charges Against North
ern Pacific Directors
BILL TO DISSOLVE THE RECEIVERSHIP.
Officials Who Sold to Themselves
at a Profit.
THE PETITION AT MILWAUKEE.

MILWAUKEE,. Wis, Dec. ga highly
sensational turn was given TO the Northern
Pacific railroad receivership situation today
when Silas W. Petit of Philadelphia the
general counsel Of the corporation, appeared
before Judge Jenkins in the United States
circuit court for the eastern district of Wis
consin and filed petition for the removal
OF the present receivers. Messrs. Thomas +.
oakes, Henry c. Payne and Henry c. Rouse;
ana for the appointment OF other receivers
In their place
Not hint of this extraordinary ana I'M
precedented move on the part OF the corn-
pany mad been allowed TO become pul,lic
properly, and even the court was In igno-
ran rance OF the motion about to be made. when
tae eminent lawyer from the Quaker City
stepped TO the bar. As soon. however as
tne nature OF his application became noised
apoot the building. the court room vas
,hass yuashg nneo by members Of the bar. and
enese. IN turn, were soon reinforced by ctti-
zens interested In Northern Pacific afrsi-s
me peution In extent is accordingly voiu-
mlnous, covering 2Oo type-written pages OF
legal cap. 1t makes serious and sensa tionaI
charges against Receiver and ex-Presidant
Thomas +. Oakes. Henry Willard and Ros-
wen o. Rolston, president Of the Farrers.
Loan ana Trust Company OF New York, al
the instance of which company the hill for
receiver was filed w
NO charges are made. however apa,nst
hecelVers PAYNE and Rouse, whose names
,,o,,a1 aheiu1ea N the general petition fo- re-
movai solely because they were nonnina TEA
oy the coterie against whom the proceed
ohes are directed and are Consequently a.
suheo 70 be subject 10 and working under
the control or that influence
Summarizing the Charges.
summarized. the road has applied for a
eaanse OF receivers upon the ground that
al the time the receivers were appointed
IL practically had no hearing; that fits man.
ayers mad In less than a year saddled IL
WIN the interest OF seo000ooo for properties
whicn Were OF no value to It, bat In many
OF which they Were personally interested
ana out OF which they made large profits.
ana that when the insolvency produced tv
this fraud and mismanaeenent resul,at
tne president OF the company and the pres-
ioent OF the trustees of the MORTGAGE. who
mas participated in the fraud and misman-
asenent. colluded together 10 put the road
In the hands of receivers who were NOM
mated by them for the purpose Of ana
with the effect Of perpetratine the came
ruptcy. -,
In the light Of these facts," saad the
counsel, lit is plain that Il will be impos-
sipie 10 reorganize the road unless and un-
VI its control and management is put In
the hands Of competent people and as ths
Oakes management has shown conclusiyely
that II cannot be trusted IL would seem i'm
possible TO reorganize IL until IL is taken
Certainly II cannot be expected that the
stockholders or the bondholders OF the
Northern Pacific Railroad Company will
| supply the money needed for its reorea niza-
ton SO long as IL continues under the con-
troll OF men who have already sQuandered
such enormous sums did the Oakes-
Rolston management, and hence Il is that
the petition prays for the appointment OF
new receivers, who are not in any manner
identified with or chosen by them.
In brief, the petition says that Thomas r.
oakes was elected president OF the COM
pany In October. 1882 by the board OF d.
/ rectors that was then elected. ana who
| were reelected for three years in October
1880. and that Mr.. Oakes, as president Of
the company, appointed Roswell c. Roi-
ston. the president of the Farmers Loan
and Trust Company. which is trustee Of
most OF the main and branch line mort
cages OF the Northern Pacific Railroad
| tee of said board
The netition then states that when ssia
Oakes-Rolston board took charge Of the
Northern Pacific pronertv n was tn vnoA
| financial condition ana in high credit: that
II had s2.ooo.ooo in cash in its treasury.
How the Expenses Were Increased.
The petition then goes on to show how
the Oakes-Rolston board managed TO in
crease the interest charges Of the Northern
Pacific Railroad Company for branch lines
from S26.O00000 to upward of ss6. .00o. .0o0 all
in one year. and for the acquisition OF prop
critics. no one of which except a small
line costing less than S.00O.00O) ever has
paid the cost of operation and fixed charges,
and many of which do not even pay the
cost OF operation; and the petition further
| charges that I'm several Instances. and those
the most disastrous TO the company, the
officers and board OF directors were them
selves interested in selling the properties to
the Northern Pacific Company at an ex-
orbitant profit to themselves.
The story Of the wreck Of the Northern
Pacific Railroad Company is then set out In
! great detail. naming particularly each OF
the railroads which were purchased or leas-
ed and their bonds guaranteed. or other
! wise acquired by the Northern Pacific COM
pany. and which completed its ruin within
one year Of the oakes-Rolston board get
| ting into power.
Out of the $4,000. 600 OF bonds that were
set aside for new branch lines. there were
expended for additional construction on old
branch lines s50s3. 600 of consolidated mort
| gage bonds. none of which extensions paid
| the cost of operation and fixed charges; and
sl3, 3,224.000 of said bonds were expended for
the construction and acquisition OF lines OF
| railroad which do not pay the cost OF opera
tion, and In most of which. notably the
United Railroads of Washington, the Rocky
Fork and Cooke City railroad. and the
Northern Pacific and Manitoba railroad.
| some of the board OF directors were person.
ally and directly interested
How the Directors ProAted.
The pc tition AYERS that In the construc-
tion of the United Railroads OF Washing
| ton the members OF the board derived Q
profit of sl,15O.OO0. while the operation Of
that road cost the Northern Pacific Rail-
road Company in the year ending June 30.
1893, sl55.eo2.sS.
The petition AYERS that the Rocky Fork
| and Cooke City railroad was owned by Q
| syndicate called the Rocky Fork Coal
| Trust" Of which Willard was president and
| in which many OF the board OF directors OF
| the Northern Pacific Railroad Company
were participants. who divided among them
selves S4,oeoo0o of trust certificates. s. Co.,
90 of which represented the Rocky Fork
Coal Company. which owns certain coal
lands which had cost including the ex-
pense of opening and developing ready for
mining about $aO0,O0 and the other &, O00-
90 of trust certificates represented the
ownership of the Rocky Fork and Cooke
City Railroad Company, which was organic
ed to build a railroad from the main line
of the Northern Pacific at a point near
Laurel to the coal mines. a distance Of about
forty y-five and one-haf miles. and which
railroad cost not over ss00.0Oo.
Buying From Themselves.
The North Pacific directors caused the
Northern Pacific to buy from themselves
as owners Of the Rocky Fork and Cooke
CITY Railroad Company the said raflroad