Evening star., 1896-12-15

during this period Ghe correctness of both
the figures AID conclusions of which are
perfectly apparent to any one capable of
analyZtng fo. In which he clearly shows
that every statement furnished the public
during the seven years has been grossly
misleading and incIrrect-the outcome of a
persistent system OF theoretical bookkeep-
ing and dealing with figures TO make them
suit the supposed emergencies of the case
as each annual report was issued.
The Surplus in 1883.
When We consider that late as 1898
the surplus fund of this company. .repra-
senting capital derived from earnings
winch. to further Use the language of the
annual reports. was not represented by
STOCKS or bonds amounted to nearly SyO.-
E1.U0. and that the capital stock. includ-
Ing both first and second preferred. was
.ess M tnan $2o,oU.OO0. and that no iistr1bu-
tioh OF this immense so-called surplus has
ever been made, end for the period Of near
~ one-half Of the Intervening time no
dlVidends were paid In cash, and then Il
possible realize that the company is now In
the haEds of receivers unable to meet its
opngations with a floating debt, stated by
MT. Little as upward of $16.OO0,OOO to ne
PROVIDED for. the so-called surplus having
vanished into the air. and the shares Of
common stock fallen to Is cents on the dol
lar. think the inquiry becomes a per-
tiEent one. Who Is responsible?
mat the responsibility for entailing this
enormous loss Upon the investing public
rests somewhere cannot be denied While
during part of the time under review
business conditions were not favorable for
rallrCad earnings. 1t is well known tnat
well-managed properties have held treir
own and that a dimnution or Temporary
loss of dividends have been the only disad-
vtH,tages the stockholder has labored un-
der.
One-Man Power.
think In the case of the Baltimore and
ohfo Railroad Company the one-man power
mas 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
or the situation.
Gentlemen have for years loaned tbeir
respectable names to give currency to this
eohipdhy reports and inspire confidence
IN It's management. While the public at
large were openly criticising the state
ments and the business methods in yogua
tnese directors. who were the responsible
parties, seem to have contented Themselves
10 remain in profound ignorance of the ra-
lure ana bearing of the large transa ions
which have resulted in saddIlny unon the
concern immense losses and untold commit
catlons and Of the systems under which
.ne accounts We're being handled. and ap-
parently Indifferent as to the CORE ,,ness
or character of the reports for which th.v
were responsible '
The first step toward remedyiny the
e'Ho VI TIE past Is, IN my judgment to de-
termine clearly to what they are attributa-
PIE, and believe the incompetency and in
emciency OF the board of management lies
at the bottom Of the Baltimore and Ohio
Raiiroad Companys past troubles.
when the chairman of the finance COM
mlttee or a great corporation will content
nimseif to remain in absolute ignorance of
the financial condition of his company and
aenberateiy close LIS eyes when the air is
fuil of damaging rumors as to its oondi-
tlon 1t seems to me the time has come
when finance committees and their chair
men are no longer wanted, and the same
ma! be said of boards of directors
wholesome lesson may be learned
from the past, and the evils to some ex-
tent be Offset if a radical change can row
be inaugurated, SO that in the future this
and other similar companies can he man
aged by men who accept positions reccg-
nizing their responsibility to the lublic,
and who will see to it that no reports of
the president and directors are issued with
out at least ordinary precaution and dill
gence being used to make sure that the
hgures presented are based upon some
weli-recognized principle of bookkeeping"