Evening star., 1896-12-15

MIR. = KEYSER'S COMMENTS

A meeting of the reorganization commit
tee, which was selected some months ago
by the companyss security holders in Bal
timore, has been called to take place in a
day or two. The exact time is being kept
secret, In order to begin active steps to find
out what is the real condition of the COM
papy. .-...-,.-
AS originally constituted this committee
was composed of Major Alexander Shaw,
chairman; C. Morton Stewart, General
John Gill. Joshua Harvey, E. Edward Ham
bleton, James L. McLane, William A.
Fisher and Derrick Fahnestock. with John
NJ Nelson secretary. Since then
Messrs. Fisher and Fahnestock have re-
signed and their places will. 1t Is under
stood. be filled at the first meeting of the
statute Liability.
In speaking to Star reporter about the
unfortunate condition of the Baltimore and
Ohio Railroad Company. member of the
reorganization committee said that 1t was
question whether the directors Of the COM
pany had not, by giving their countenance
to the annual reports. made themselves
liable for the amount of over-payments OF
dividends The basis for this belief lies
in the fact that Mr.. Little In his report
distinctly charged that unearned dividends
were paid by the former management OF
the company.
On this point article XIII, section 81.
public general laws OF Maryland Is appM-
cable: IF the trustees, managers or d.
rectors of any such corporation shall de-
clare and pay any dividend. the payment
of which would render it ipsoivent or
would diminish the amount OF the capital
stock they shall be jointly and severally
liable for all the debts OF the corporation
then existing and also for all that snail
thereafter be contracted while they shaii
respectively continue in office. even al.
though the whole amount of the capital of
said corporation be paid in.
ruearned Dividends.
1T is not to me conceivable" said a mem
ber of the reorganization committee to a
Star reporter: that great corporation
like the Baltimore and Ohio should have
been permitted to default and be placed
in the hands of receivers because some
S3 300 900 had according to Mr.. Little's re-
port, been paid out Illegally, in the shape
of unearned dividends.
This is not my idea of what caused the
downfall of the company. l am not an
expert accountant, but l have watched the
mana cement and manipulat ton of the Bal
timore and Ohio company. and, IN my opln-
ion, the relations of the company with
some of. it's AensedL and operated lines have
had more to do with the present 'unfor-
tunate condition Of the property than the
payment. of. unearned dividends. Besides,
no dividends were paid for considerable
time previous to StheyreceiverShip.
"Mr. Little says: If adequate capital can
be obtained with which to fund it's floating
debt and furnish facilities for the enlarge
ment of its business and the economical
handling of the same. there is nothing dis
couraging in the prospects of the ability
of the company to earn the interest and
more all its direct obligations now out
standing
."There are several things to be consid-
cred in this connection. The obtaining of
new capital imposes additional fixed
charges. The receivers have already issued
s10.OOOOOO receivers certificates, and will
probably be compelled to issue more. In
addition. the company has floating debt
of $16WO.OOO, of which amount probably
$10OO.WD are unsecured. New capital to
the amount of at least So. 100000 must be
raised when a reorganization of the COM
pany shall be effected to pay off receivers
certificates and floating debt and to pro-
vide new capital for repairs. improvements
betterments and equipment This is mod
crate estimate.
Interest Capacity.
Now. what l and many others should
like to have learned from Mr.. Little's re-
port is not whether the company can earn
the interest upon its present direct obliga-
tions. but whether it can earn, In addition,
| the interest on the new capital and it's in
| terest obligations, Endorsements guaran-
| tees etc."
Mr.. William Keyser, who for some years
| during the administration of the late Presi-
| dent John w, Garrett, was first vice presi-
dent of the Baltimore and OHIO Railroad
Company. said in speaking of the present
! troubles of that company:
when l was in London recently Lord
! Rothschild, the head of one of the grea test
| banking houses of that city, said to me that
| there were two things In connection with
American railway management which need
| ed radical reform before confidence on the
part of foreign investors In American rail-
way securities could be restored
1.-The one was the abolition of the one
| man power In the president and the other
a more rigid supervision by competent and
/ disiEterested experts of the system and cor
rectness of American railway accounting
''The report of Mr.. Little on the affairs
! of the Baltimore and Ohio Railroad Com
pany just issued strikingly confirms the
correctness Of this criticism. A careful
study of this report, based upon somewhat
accurate knowledge of this conpany's at
| fairs and its history, induces me to call the
striking instance of American railway mis-
management, ending in almost unparalleled
financial disaster. and what; to- every right
minded man, is far worse, resulting in be-
smirching the reputation Of the city whose
| name Is SO prominently Identified with this
/ great work. Ia 555-st,5;7,s ~, II s..,,"
Nos the sFfrsf Investigations.
''Whep, we ,bk at the facts in this case
and -conSader tbe, character and reputation
/ of the noen, tnxwhom the MANAGEMENT of
| this property ~as confided and the outcome
| of 1t all one iss disposed to ask II there Is
| any thing stnhefefpt IN the American railway
| system whishnflouds the intellect and so
| warps and biases the judgment as Of neces-
| figures ttbe 5dggied with: = - ~ :e''D
UNFORTUNATELY, this is not the first in
f'vesagatisn 10 o which the Saffairs of this
| companys have been subjected within late
| years, nor Is 1tbthe first time the accuracy "
| of its accounts has been called in question
| and clearly shAFn to be unreliable and un-
| trustworthy.
+" "In'1SsS a cJFhmitfee or Investigation Of
| which WAS chairman. after an exhaustive
examination. sF5rotes OF as worthless some
| $25, ,0OQ, ,OQ. which asian asset never had an
| existence, and which only appeared to the
| credit of the profit and loss account as the
| result of systematic manipulation Of the
accounts, upon q theory Of fiuaAce not only
| unsound in principle, but unknown in any
! system of bookkeeping.
"At the tiIpe of, This examination the
| committee, having secured the services Of
| an expert acoountant,s had the books Of the
company reSkated and; changes made in