The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1896-12-14
B. 10. %MISMANAGEMENI.
me question Of ite'pon,ibiiity for lis In.
solrtucr-A Statement BIZ Mr.. K.,.,r

Shh VI oiIuTuhy, nom The
pcn OF William kCyscr. long known ns
one OF tho baltimore &c oh!o's sblcst
executive officers:
When The writer wna In London re.
Gently, Lord Rothschild,tho head OF ono
OF the greatest banking houses OF Tim,
CITY, said to him chat there wcrc iva
Things In connection with American
railway management which needed
radical reform before confidence on
thc part OF foreign investors In hmcrl.
can securities could be restored, The
one was the abolition OF the one.man
power IN the President. and the other
n more rigid s"pcrviglOn by competGn,
nnu o':::G.tcrestcd experts OF the sys.
.c'n una correctness OF American rail-
Say accounting.
N report OF, Mr.. Little on the M.
talrs OF tho Baltimore & Ohio Railroad
company, Just issued, s~trikingly con-
nrtns the correctness OF this criticism,
a careful study OF this report. based
upon a somewhat accurate knowledge
OF thls company's AFFAIRS and its his
torS, induces me to call the attention Of
tue investing public 10 this striking IN
stance OF American railway mIsman-
nseinent, ending In almost unparalleled
hhahcinl disastcr. and, what to every
riEht.mlndcd ma Is far worse, result
,nS IN oesmirchlng the reputation OF
the city whose name Is so prominently
identified with this great work,
when we look ut the facts In this
case and consider the character and
reputation OF the men TO whom the
management, OF this property was ron.
nued and tho outcome OF Il all, one is
disposed 10 ask II there Is anything In.
heTent IN the American Railway sys.
ten which clouds the intellect and so
warps and biases the Judgment US OF
necessity 10 cause facts to be perycrt-
cd and figures 10 be jugEled with. I'm
fortunately. this IL not the first invcs-
legation to which the affairs OF this
company have been subjected within
late years. o Is It The first time the
accuracy or IFS accounts has been
called In question and clearly shown
10 be unreliable and untrustworthS.
lnlSSS a committee OF Investigation,
or which l was chairman, after an cx-
haustlve examination, wrote OF as
worthless some twenty-five millions OF
dollars which, az an asset. never had
an existence, and which only appeared
to The credit OF the profit and loss &c.
count as the result OF the systema,IU
manipulation OF the accounts upon Il
theory OF finance not only unsOund In
principle, but unknown In any correct
system OF bookkeeping.
a the time OF this examination the
committee, having secured the services
OF an expert accountant, had the books
OF the company reslated and changes
made In the mode OF keeping the nc.
counts, so as 10 make them conform 10
the latest and most approved staud-
ard OF railway bookkeeping. That
the expert then secured was In every
way qualified for ,his task no one who
KNOWS him can doubt. He has remain
cd In the service OF the company as its
comptroller ever since. and yet, at the
end OF even years Mr.. Little. another
expert accountant. has just furnished
the public with n detailed report OF the
conpany's affairs covering this period.
(thc correctness OF both the figures and
conclusions OF which are perfectly ap-
parent 10 any one capable OF analyz-
Ing ~. In which he clearly shows that
every statement furnished the public
during these seven years has been
grossly misleading and incorrect-shc
outcome OF n persistent system OF the
oret!cal bookkeeping and dealing with
figures 10 make them suit the sup
posed emergencies OF the case as each
annual report was issued.
When We consider that as late as
lSSS the surplus fund OF this company.
representing capital derived from
earnings which. 10 further use the
Language OF the annual reports. was
not represented by stocks or bonds
amounted to nearly fifty millions OF
dollars, and that the capital stock. In
Guiding both first and second preferred,
was less than twenty millions. and that
no distribution OF this Immense So
called surplus has ever been made. md
for the period OF nearly nnc-llalf OF the
Intervening time no dividends Herr
paid In cash. and then, II possible. re-
altZe that the company Is nov IN tbs.
hands OF receivers, unable 10 meet its
obligations. with a floating debt stated
by Mr.. Little al upward OF sixteen mil
lions OF dollars. to be provided for, the
sO-called surplus fund having vanish
ed into thin air and the shares OF
common stock fallen TO fGteen cents on
the dollar, | think the inquiry becomes
a pertinent one. who IL responsible?
That the responsibility for entail
Ing this enormous loss upOI the invest
Ing public rests Somewhere cannot be
denied. Whilst during a part OF the
time under review business conditions
were o favorable for railroad earn
lnEs, II is well known that well-man-
aged properties have held their own
and that n diminution or temporary
loss OF dividends has been the only
disadvantages the stakeholder has la
bored under.
II think In the case OF the Baltimore
& Ohio Railroad Company, the one-man
power has been largely responsible.
The board OF directors OF this property
have apparently never exercised any
control over its affairs or accounting
or kept themselves Informed Of the
situation. Gentlemen have Tor years
loaned their respectable anne to give
currency to this cOmp0ny's reports and
inspire confidence In its management.
Whilst The public nj large were openly
critIclsing the statements and the bust
hess methods in vogue, these dIrec-
tors. who were the responsible parties,
seem to have cOntented themselves to
remain In profound ignorance OF the
nature and bearing OF the large trans
actions which have resulted In Rld-
ding upon the concern immense losses
and untold complications and OF the
system under which the accounts were
being handled, md apparently entire
iy Indifferent as to the correctness or
character Of the reports for which they
were responsible.
The first step toward remedying the
evils OF the past Is. in my Judgment. to
determine clearly TO what they are at
tributablc. and I believe the incompc-
tenCy and inctfcicncy Of the board OF
management Hes at the bottom OF the
Baltimore &. Ohio Railroad Company's
past qtroubles. When the chairman OF
the finance committee OF n great cor
poration will content himself to remain
In absolute ignorance Of the financial
condition OF his company and dellbcr-
ntely close his eyes when the air is full
OF damaging rumo"s as to It's condition
II seems to me the time has come when
finance committees and their chairncn