The sun. [volume] (New York [N.Y.]) 1833-1916, 1896-12-05
THE WRECKED B. N O.
6xPERT LITTLE,s REPORT ca USES
4 H. IN BALTIMORE.

The Garrett syndicnte's Methods Con-
demned - Dimcuity or Reaching Those
Whe Caused the Books OF the Road to
ne FnisIned-A Defence OF tho Oniciais.
BALTIMORE, Dec. 4.-Expert accountant Lit
ties exposition OF the affairs of the Baltimore
and Ohio Railroad was not altogether a sur
prise TO the loca, authorities. At the Same time
they did not anticipate that the affairs of the
company were in such bad shape or that the
books had been falsiled to cover a shortage. 1t
is generally acknowledge d now that the road
was insolvent long before it went into the hands
of the receivers, and 1t is also the general opin-
ion that ex-President Charles +. Mayer aud Re-
eeiyor John h. Cowen could be made tho de-
PENDANTS in litigation.
1t was In November, 1883, that Mr.. Mayer
succeeded Samuel j. Spencer as President OF
tho railroad, and It was during his ndmintstra-
tlon that all the crooked work was done. Mr..
Spencer is said to have realized the gravity of
the situation during the short time he was at
the helm, and he proposed, II 1t were possible,
TO lift the road out OF the slough into which the
CARROTS had dumped IL by using clean, practical
methods. His course, however. did not meet
with the approval of tho CARROTS. and with
the view OF carrying out the plans then already
formulated he was forced to give way TO Charles
=. Mayer.
But for the fear that the real inside workings
OF tue company WOulu DtCOHno huOWu, tuo VAR
rett syndicate, az 1t was known. would have
Increased Its bonded debt until scarcely u rail
remained to BIO hooked" That was the
only way left to raise money without issuing
stock. Had the latter course been adopted, the
syndicate itself would have been forced to do
the bulk of the buying in order to retain con-
troll Of the road. So 1t has always remained Il
close corporation, managing its affairs In its own
way. and giving to the public Just such informa-
tion as 1t cared to make known. When the
crash came, secrecy could no longer be main
tained. and the revelations made by the expert
accountant followed.
1t is a significant fact that while the minority
stockholders. who bought and held oil. thinking
they had made a safo investment. suffered, the
syndicate which owned the controlling interest
does not seem to have become any poorer. The
road has gone to smash, but the CARROTS and
their allies appear to be as prosperous as ever.
II they have sustained heavy losses the fact 10
not apparent. There is lots of talk of criminal
1t is only fair to say that the receivers OF the
road do not agree with Mr.. Titles report. An
their views SAID to-day in defence OF the road:
N Little ignores the fact that during the Pc
income of the COMPANY was invested in new
equipment through. car trusts. As to the
charges TO construction account, Mr.. Little fails
10 show that a single item is improperly charged
TO this account. Any extension OF plant legiti-
mately belongs to construction and should DO
represented by capital.
The inference from Mr.. Little's report is
that the Baltimore and Ohio has no capital
account. 1t had. however, over So. 000. 900 in
cash received from the sale of stocks and bonds
and other assets Of this character, which was
used for construction, purposes. suppose tho
Pennsylvania Railroad took It's construction
account of its income? 1t would not have been
able 10 pay a dividend for the past ten years"
The common stock. following the report of
the accountant. took a drop to-day. 1t sold
down to 131f and closed at 1875 asked and 10
bid.