The daily morning journal and courier., 1894-08-10

an entire lack of motive for Q A>ong- full statement. To have stateS5 the earnings at less than the actual hAc,es would have been great injustice to,Se security holders. and particularly NS' the income bondholders. V
 In the short hours allowed me I havS found no difficulty In pointing some of the errors into which Mir. Little has fallen. l find that sl.1o0.0oo Of earnings of the Atchison system, deducted from its income account under the agree ment with the St. Louis and San Fran cisco railroad of 1887. as shown in the annual reports. and properly to be credited to the St. Louis and San Fran cisco Railway company are totally ig- nored; and yet all the stock of that company Is owned by the Atchison, Topeka and Santa Fe Railroad com pany, and certainly the stockholders of the latter company. who paid a large sum for the stock of the former com pany, are entitled to statement of such earnings. In other methods MT. Little ignores $1.100,O00 of actual earn ings of the Atchison railroad and gives that no place in his statement of the earnings of the system.
 I also find that MT. Little refuses to include a balance of $457.939 United States currency subsidy due from the Mexican government to the Sonora railway (one of the Atchison auxiliary companies) which Is an undisputed claim recognized by the Mexican gov ernment.
 find also that an item of s450,0 ,000 cov- ering earnings on freight in transit of through billing for the last week In each month has been ignored by Mir Little, notwithstanding the fact that such item was fully explained to him. This item was necessarily created by a change from a Forwarded" basis of freight accounting to received" basis, and is strictly in accordance with we'll es- tablshed and recognized methods of revenue accounting by other railroads of extensive mileage.
 I further find that MT. Little has either overlooked or refused to recog- nize s2,332, 900 of interest earned from January 1, 1890, to December 9, 1893 date of appointment of receivers) on advancesf made by the Atchison and SanFrancisco companies to the Atlantic and Pacific Railroad company, which interest so earned is an asset of these two companies and which in adjustment of the accounts of the three companies named must be treated as an asset of the Atchison and San Francisco compa- nies, belonging to their income account.
 Still further do I find that MT. Little has not included about $1, 800, 900 of prof it earned by the company upon its in- vestment in terminal properties.
 The items of $1,612,11O.55 and $152,- 951. .43 making an aggregate of $1,765,- O61.9S, which MT. Little also refers to-, were proper debits to the franchise and property accounts, for the reason that they represent expenditures made, out of the revenues of the organized com pany subsequent to October 1, 1889, but which applied to the operations of the property prior to the date of reorgani- zation and should have been cared for under the forty-two mortgages repre- sented under the old company instead of the two mortgages of the reorganized company. This asset was used to offset charges which affected the other side of the income account, and as MT. Little himself has stated in his report, "in the end the effect on the income account will be precisely the same"
 The items I have mentioned more than cover the alleged overstatement of incomes for the period of MT. Little's examination by about $5OO00O. have not time in the limited period allowed me to go into further details. To be strictly or technically accurate I too would have to do what MT. Little has done-take the books and the account ing forces of the system and spend con- siderable time in examination.
 MT. Little thinks that hundreds of thousands of dollars earned as a sub- sidy are not earnings; I think they are. He thinks that $1, 100000 deducted from Atchison earnings and given under con- tract to another line in the system are not system earnings; I think they are. He thinks $1,5O0,O00 of profits on invest ments is not income; think it is.
 I repeat that the above items are u dCCOuul lOl luS dli6SGu and $50O,00O more, their total being over $S,OOO,OOO, and fully justif1es every statement the company has ever made.
 MT. Little states that on the 30th day of June, 1893, the company did not have on hand the amount of cash shown by the books. While I fail to see what bearing this statement has upon the matters which MT. Little was called upon to examine in relation to the pro- posed reorganization of the company, I yet desire to state most emphatically that on that date the company actu- ally had on hand in cash and cash items the amount stated in its report on that date.
 Very respectfully yours,
 J. w. Reinhart, President.
 BRITANNIA WINS THE RAGE.