The herald., 1894-07-29
DEVELOPMENTS OF
RAILWAY MANIPULATION
How It IA. F.r.d with tn. SAINT. +.

has the following with regard to the
inner workings of the accomplished gen.
tlemen who have had the management
OF the account rendered between the
Santa Fe railway and its eastern and
European stockholders. II speaks for
itself:
The meeting OF the Atchison, Topeka
and Santa Fe reorganization committee
Friday evening developed an astounding
surprise. 1t had been expected that
Expert Little would make his financial
report, which would about agree with
the committees estimates, and the re-
organization plan could be put forth
complete in every detail. The general
plan has already been announced, and
it lacked only the official financial state
meut.
MIR. Little, however, did not make the
expected report. Instead. he said that
while examining the books he found
evidence of figure-juggling in the mat
ter of rebates to freight shippers. The
amount was very large, and instead OF
being charged to proper expense ac-
count had been shifted to other chan
nels, so that the statements OF income
and earnings were incorrect.
Coi ccNctul uhye pacb tucto udN6 U66u
rumors that Atchison finances we're not
what was expected, but the committee
was not prepared for q report that the
discrepancy amounted to millions of
dollars. 1t may result in the overthrow
of the whole plan of reorganization and
depressing the bonds and stock of the
road.
Demand was Immediately made of the
officers OF the road for explanation. The
reply was that two sets of books were
kept, one In the west and the other in
the east. Mr.. Little had evidently ex-
amined the western books, where it
was necessary for the rebates to be con-
cealed. The officers asserted that the
charges were properly made on the
eastern books, on which public state
ments were based.
Upon receiving this reply Mr.. Little
was required to look into the eastern
books. He hastily ran over them, and
late last evening the following guarded
statement was made by Secretary Her
man Kobbe, Of the reorganization COM
mites:
''The secretary OF the Atchison reor-
ganization com mmittee makes the follow
ing statement in behalf OF the
committee:
'Mr. Little has returned. He has had
every opportunity TO examine the books
OF the company and of the receivers.
He has not yet been able to complete
his report, bat he states that during the
period from July, 1892, the date of the
last reorganization, to December. 1898,
the date of the appointment of the
receiver. the income of the company,
has, in his opinion, been overstated in
an aggregate amounting to about
E,000,000. He finds that the accounts
of the receivers have in all respects
been accurately stated.
HE expects to make detailed re-
port to the committee Tuesday afternoon
as to his examination of the western
books. and meanwhile il examining the
eastern books"
Seven million dollars is vastly mofe
than any one anticipated. Strongest
opponents OF the Atchison had not esti-
mated more than 81. COG, 900 discrepancy,
and yesterday members OF the COM
mittea said the amount ia much smsller.
Whether all tho sum ia Tor rebates 10
not known, but it is certain that q very
large percentage went in that way. Re-
bates are direct violations of the inter-
state commerce law, which is one rea-
son for the figure juggling.
"Secret rebates are common on all
railroads." said Secretary Kobbe yester-
day, "but the president. yics-president.
secretary and general manager are sup-
posed to know nothing about them. A
shipper. for example, sends freight to
the amount OF $1,000 and pays in tho
money. Previous to this, however.
there has been an understanding with
some official, and few weeks later an
agent hands him 5000 in bills which the
treasurer has sent him.
"Instead of charging this to expense
account, go as to Offset the income &C
count and make proper balance, such
payments appear to have been con-
cealed by burying them under other
heads. Thus the earnings are made to
appear more than they really are, and
that is what stockholders and investors
always watch"
Before knowing to what a large
amount the juggling had been carried
Mr.. Knobbe stated that the disclosures
could in no way affect the plan OF re-
organization already announced, az 1t
had been based on the financial state.
inent for the fiscal year ending June Both
last, during which time there we're no
discrepancies.
Nevertheless the disclosures Will cause
great uneasiness among bondholders, es-
peclally foreigners. who were induced
with much difficulty to approve the
plan. One OF the strongest arguments
used was the roads great earning ca
pacity, based on the showing OF the last
half dozen years.
Under the new plan the second mort
gage bondholders we're induced to ex-
change their mortgage bonds. with in.
terest guaranteed, for income bonds de-
pendent on the earnings. In view of
the disclosures OF doctored Statements.
it is very probable that there will be a
great row in London and Amersterdam,
where nearly all the bonds are held.
The financial statement OF the Atchl-
son system for the first two weeks OF
July shows q decrease in earnings Of
$Sl9, 9,493S3, but this 10 principally due
to the strike.
When the company was rsorganized
in 1889 George G. Msgoun OF New York
was chosen chairman Of the board Of
directors; A. Marvel of Chicago, presi-
dent; ]. W. Reinhart. Boston, fret vice.
president and general auditor; A. A.
Robinson, Topeka. second vice-president
and manager; ]. F. Goddard. Chicago.
third vice-president; +. Wilder. Topeka,
secretary and treasurer; G. l.. Good
win, Boston, assistant treasurer. Tho
principal Offices are in Topeka, Kan,