The Wilmington daily Republican. (Wilmington, Del.) 1890-1902, 1893-05-16
EXPERT RICE'S REPORT
On Ex-President MoLeod's Big
Railroad Deals.
WHAT THEY COST THE READING.
The Loss to tho Company. According to
Mr.. Rice's Figuring. Amounts to n
Million and . Hsif-rhe Allegations
Against Mr.. MoLeod's Manneemept.

Against Mr.. McLeod's Management.
PHILADELPHIA, May 16--Isaac L. Rice,
who under the regime of Mr.. Mcleod was
the foreign representative of the Reading
Railroad company, with Offices in London,
and who after the appointment of the re-
ceivers for the road made an examination
OF the company's books In the interests of
the bondholders, makes public the result
OF his examination. Mr.. Rice prefaced his
report proper with personal explanation
of his connection with the Reading COM
pany. In his explanation Mr Rice says
that he was sent to Europe by Mr.. Mcleod
in July last with the object of making tho
conditions of tho property better known to
foreign investors and thus to enhance tho
company's credit and increase the market
for its securities. Mr.. Rice says that 1t was
through him that the company negotiated
thesale Of securities and advances amount
ing to s5,5Oo,0o0 with Spcyer G. Co., the
New York bankers. Mr. Rice says that
when he negotiated the loan he was given
to understand that the raising Of the above
amount would pay off the entire floating
debt OF the company and leave q large
amount applicable to other purposes.
Mr.. Rice says that he was greatly aston
ished to receive cablegram on Feb 10
announcing the financial distress of the
company, and that q receiver was possible.
Mr.. Rice heard nothing more until Feb.
81, when he received notice to suspend pay
ment of interest on the third preference
bonds. Mr. Rice sailed for this country,
arriving March Is.
An abstract of Mr.. Rice's report on the
Boston and Maine aud New York and
New England deals follows:
On or about Sept. 25. 1899, Mr.. Nc
Leod entered into certain individual stock
transactions which resulted in the pur-
chase of "a ,03G shares of the stock of the
Boston and Maine and 80 900 shares of the
New York and New England. On Oct.
Is, 1892, Mr.. Mel cod withdrew from the
treasury OF the company, without having
previously obtained the authority of the
board of managers, and without saying
for what purpose he intended to use the
securities, $50, 900 general mortgage bonds
of the company, which 1t afterwards ap-
peared he used as margin at that time In
the stock Transaction. Subsequently,
upon dates ranging from Oct. 28 to Dec in
elusive, he withdrew from the treasury for
the same purpose and in the same manner
ST13,0o0 Of collateral trust bonds and S99, 900
third preference income bonds.
No reference whatever is made to these
stock transactions on the books of the
company, excepting the mention of the
withdrawal of securities against the per-
referred TO on the minutes of the board of
managers prior to Dec. "a, 1892 On that
day the board passed preamble and reso-
luton partially ratifying the action of Mr..
Mcleod. OF this action Mr.. Rice says
Without attempting to define what this
preamble and resolution actually means,
it does not in express terms engage the
company In the purchase of "a, ,O36 shares
of the Boston and Maine railroad and 25,-
900 shares of tho New York and New Eng
land Railroad company at cost of over
100000 above the market price of the day,
and involving liability OF over g., ,0oO,-
600. and there is no other record on the
minutes with reference to these transac-
tious
As for thu ratification expressed in the
resolution it will be noticed that it only
includes $4,000 of the collateral trust
bonds which had been used, although tho
total amount used at the time was S7i3,.
COO; nor does it include the S30, 900 general
mortgage bonds and 100000 third prefer
ence bonds which had been used
No further move appears to have been
made until Jan. II, 1898, when the presi-
dent deposited as further margin $3.50 600
additional collateral trust bonds, making
total Of s9e3, 600 Of those bouds deposited
as margiA.
In summing up the report Mr. Rice says
that the loss to the company ON the Boston
and Maine stock transaction amounts to
over Soa5, 900 and on the New York and
New England S57S, 900, total loss of over
81 800 000 considering the collateral used
as obligations of the company now out
standing.