New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1894-08-17

rARIo AND WESTERNS AC-
COUNTING TO STOCKHOLM
ERs-REMEDIEs PRO-
POSED FOR RAIL
WAY EVILS
ia q serious discussion going on in finan-
..,es as to the best method OF securing
IN railway arrangements and preventing
F.,,on Of the disgraceful scandals that have
i", made railroad honor a byword and re-
immense injury has been inflicted upon
FI..n railroad credit abroad as we'll as here
disclosures of the bookkeeping methods
.tchison. Topeka and Santa Fe. following
e.,rndering Of Northern Pacific by Henry VII
~,.,d the outrageous wrecking Of Philadelphia
paadng by A. A. Mcleod Much of the
wv. dome BY the panic Of 1898 was accentuaied
:. the final exposure of the means by which the
.v,.., destruction Of Northern Pacific was car
"a ont and by the discovery of McLeods specu-
.'s,r in the securities and assets Of the
alag Each Of these properties was
..a Nv methods that differed in character, but
So, together with Atchison. have suffered
the same principle or rather lack Of prin-
aple. .sx, ,so
,.runary loss by the CO.dpSe OF tiitse
r,r, railway systems. but terrible blow was
Lvsn 10 public confidence in all American rail-
Ids The impression produced abroad was pro-
,,u,d This Is the testimony alike of bankers
,o.e business is TO negotiate loans for the roads
and large investors who still hold stock or bonds
!, American transportation lines. The recovery
,,vaues that is bound to come with the gradual
easing away of the conditions following the
r,sh Of last year will be retarded materially If
.rp radical steps are not taken 10 rehabilitate
,n.rican railway credit The investor realizes
Nimpor.ance to himself Of reform in the system
u,der which the scandals of this year and last
rear were possible, and the banker knows
nat his business existence depends upon
. restoration Of confidence. The subject Is one
Interest 10 the honest railroad manager or d.
rector who needs at times 10 seek fresh capital
IN the market for the development OF the property
be controls. To the speculative element, too II
must be apparent that the life Of its operations
vii, be extinguished If the stains now resting
upon the railroad escutcheon are not wiped away.
Ills probable that the first step in the direction
Of reform and safeguarding will be taken by
stockho,ders themselves. The bankruptcies OF
the last year or two have taught the owners OF
the roads how dear is the penalty paid for care
lessness or indifference TO the manner In which
their property is managed. To Judge from the
talk heard in financial and railway circles the
lesson will be needed. An agitation has already
begun for the establishment Of a system of indie
pendent exper; inspection Of the books OF railroad
explorations by independent accountants working
solely for the stockholders. The bondhoiders,
as creditors, may demand recognition in this pro-
posed scheme OF independent audit Already such
system is conspicuously in practice on the New
York. Ontario and Western. and In similar de-
gree on the Denver and Rio Grande The Stock
Exchange. should ii desire. could do much 10 pro-
vet investors against manipulation of accounts
Ninside managers and officers Of the roads. The
naange affords the market necessary for the
srwing Of money by corporations, and few cor
n5;ons are strong enough 10 refuse 10 yield If
kmand were made 10 submit its books to oc
aaona examinations in the interest Of the pub
.c The subject has been discussed often among
he Stock Exchange governors. but IT les neg
ec,ed at present while these wise men are study
lg means 10 prevent "arbitrage" transactions In
tocks which swell the volume OF general ousi-
ness at the Board. The plans OF reform required
n these circumstances will doubtless have to rest
for execution upon men whose interests "a own
ers and debtors TO mortgage bondholders are the
most vital.
ATCHISON DISTINCT WARNING.
II has been pointed out by some observers
that the recent Atchson scandals furnish dis
tinct warning against the practice OF security
holders permitting by their supineness or dis
Ike OF trouble the reorganization unquestion-
!ngy Of railroad properties by the same men
under whose control the misfortune OF insolvency
cane. There are instances where roads became
insovent through no fault Of the managers. but
there are others where a reorganization simply
facilitates the plans fol a renewed wreckin9 OF
roperties for personal profit. II the Reorganiza-
ton Committee Of Atchison had not undertaken
a. Independent examination and auditing OF the
eonpany's accounts the secrets Of the Reinhart
methods OF concealing rebates and swelling In
s'me fct,iously might never have been brought
slight "Reorganized" by the same managers.
D. need of a fresh reorganization might nave
Ten question Of only few years
Thomas p Fowler president Of the New-York'
ontario and Western Railroad Is well known as
IN Efficient and capable railroad man. and any
ming he says on railroad management is receiver
With interest and pleasure. Mr.. Fowler believes
'naa railroad should not be run for the directors
but for the public and the stockholders, and he
c'noemns without reserve the pernicious Pi"o-
tees Of many railroad officers. as instanced IN
~ vase VI the AlCIlsOH tilc isN"'"o
northern Pacific. In speaking yesterday on the
reckless management Of railroads. he SAID:
The great trouble with so many Of our raliroaps
mat they are run for a clique, ana not iol tIIe
EOpN who have invested their money IN o., M ~
saey are run for the directors and not Ior ,lie
s~sxnolders. There should be some ranCa' oi,e
SSvsnetnng should be done which wouid mahe ~, =.
s,possele for specializing directors ana @ 10 20
Lsvsopriate to their use money Which ~
s uSs TO stockholders. and which wouid De a SAL
sssva against the running Of the roads iii.o re
sssivers hands The stockholders should be repre-
Ss,ss BY their accountants and tne ,isiu
rnkng OF the companies should not De seer ,tc
%sOntar,o and Western road has followed tne
M MN custom. which is TO have an acc0un'a IN
works for the stockholders and not LOT tne
NJ "a The road employs no regular auuit on
Fss.st oeounts managed by accountahts en-
e ensw seh year. who make II possible for every
are NJ " NOW what the company Is doing The DOCKS
fancv sspt and juggled with to suit the directors
ers Z ne auditor employed by the security-hoiu-
and dependent Of the officers and d,recS T,s
n mskes his report TO the shareholders. rms
sueh osst remedy know Of for the prevention
pranxn methods Of running railroads as have peen
"ced by the Atchison and other roads.
"oAsE THAN THE LOCUSTS OR DEBS