The San Francisco call., 1896-05-30

sums pdlu out, OUT MT. w 1l1cutt Stlll chung
to the tags. He supposed that the treas
urer had entries in his cashbook OF those
tags with the appropriate dates.
On cross-examination by Mr.. Frieden-
rich MIR. Willcutt said that the item of
81, 600 in the trial balance sheet for
permanent way and franchise had been
swelled by the addition of "what you
might call an artificial amount in order
to make the books balance.
"There was nothing to prevent it being
$4,000. .000?" inquired Judge Wallace.
Nothing at ALL"
'Tt was simply based upon imagina.
tionP"
"Yes, SIR"
Coached by Mr.. Freidenrich the witness
explained the sums entered on the trial
balance sheet by saying that they did not
mean at all what they appeared to mean;
that when S2l, 900 was set down it
didn't mean S21, 100000, because it was
largely fictitious, but he could not tell
how much of it was fictitious and how
much real. He said that the items repre-
sented all the expenditures made by the
consolidated companies before and after
the consolidation for cars, equipments,
etc., and had nothing whatever to do with
the value of the property. They repre-
sented moneys expended by the COM
panies from the date of their organization
up TO March %, 1895, and some of those
companies had gone out of existence. In
those items was also included the original
cost of car horses which had run their
course and died.
Then there were items of expense of con-
struction, including superintendents' sal
aries and roads changed from ons system
TO another, all of which did not represent
any property whatever.
Judge Wallace remarked that the COM
panies before the consolidation were rival
business concerns, and despite these large
sums of money that were wasted or thrown
away they were enabled to keep their
bonds in the market above par and to pay
6 per cent interest on them. This was an
| indication to the mind of the Judge that
| the bonds represented tangible values.
In the afternoon Secretary Willcutt re-
lated instances of several railway compa-
nies sold under the hammer for prices
much less than the par value of the bonds
or of the capital stock. Thus the San
Diego cable-road, bonded for S225, 900 and
with capital stock of $500 coo, was sold
bonded for So, 00O, 600 and with q capital
of $4,000 900, sold for 81, SOC, 600.
These citations were made by Secretary
Willcutt for the purpose of establishing
the,rule that the bonds and capital stock
of railway company, like the trial bal
ance of the Market-street Railway Conn
pany, was no indication of values what
ever.
Judge Wallace seemed very much in
terested and edited with this state ment OF
figures that mean cfphers and bonds and
stock that represent imagination, and he
pointedly asked whether the stocks and
| bonds of the companies mentioned were
sold at par, but Mr.. w illcutt did not know
what their market price was.
The ability of the company to pay the
interest on its bonds was the criterion. In
some cases he knew where companies had
borrowed money to pay the interest when
due, and that, in his opinion. was the
beginning of the trouble.
The witness did not know that Assessor
Siebe ever looked at the inventories. Mr..
Siebe had never called upon the witness
for an inspection of them.
| Here Judge Wallace enlivened the Sahara
OF the proceedings with the oasis of Joke
! tinged with sarcasm.
"If Mr. Siebe asked you for the inven-
tories,' said the Judge, "you would not
let him have them without an order from
the board of directors, would your"
''Oh, yes" replied the witness, who did
not appear to perceive the keen point of
the sarcasm.
eff all the stock were thrown on the
market to-day" replied the witness to
question by Clunie, ''I would not be will
ing to pay more than $40 per share. You
see, l would have to look at the future
prospects, the increase of taxation, the fact
as to whether the enemies of the company
would increase or decrease, the probability
of hostile legislation and so FORTH"
'Take a gloomy outlook, for instance,
suggested Clunie pleasantly, stake the
outlook that this company should be re-
quired to pay taxes on its real cash value,
now much would you give for the stock
then?"
81 wouldntbe willing to give more than
$40 share, but when you speak of cash
value the question arises as to what is cash
value" and the witness went on over the
same story of dead horses and trans
formed cable roads and earnings and
operating expenses and the rest of the
items that are keeping the rags and tat
ters of poverty on the backs OF the rail-
road magnates.
Then Mr.. Willcutt was let go, and Ed
ward Barry, secretary of the Stock and
Bond Exchange, told how Secretary Will
cutt had made written applicati to have
the stock and bonds of the Marx et-street