Wheeling register. [volume] (Wheeling, W. Va.) 1878-1935, 1896-12-05

Years-Of Ovor Six Millions Paid
in Dividends, Less Than One Mill
ion Dollars Was Earned-Many
Items of Expense and Loss
Charged to Improper Accounts.
: Baltimore, December 1.-The report
/ of Stephen Little, the expert accountant
/ to the B. & o. reorganization commit
/ tee. is made public to-day The ac-
countant finds, among other things an
/ over statement of the net income
amounting 10 S2,72l067 from June 30,
1891, to June &c, 1895. This amount is
divided as follows: For 1892, $685.,
4I5 for 1893, Si43,3O1; for 1894 S701,-
063; for 1895, $G21 ,230. He also finds
that of $6269O07 paid in dividends dur
ing the period mentioned, only $751;
446 was earned.
The items withheld from operating
. expenses, and the methods Of swelling
the receipts in each year are given in
detail. by writing up the values Of
stocks owned and other such practices,
the net income was swelled by amounts
y that should have gone to profit and
/ loss. Two impoverished profit and
/ loss accounts were opened, one desig-
mated general adjustment account
and the other securities adjustment
account
Mr.. Little says there is a mischarge
! of worn out equipment to profit and
/ loss, instead of the income, amounting
/ TO S2,S43.59f.
Charges TO income Of $2,O64,71 were
/ improperly capitalized under the title
/ of construction, main stem, etc.
/ improvements and betterments of
leased and dependent roads. amount
/ ing to $3.50, 1873 We're improperly
! charged to capital account.
The total of these improper entrieJ
is $11.204S5S for the seven years and
two months ending November 30, 1898.
During the period under scrutiny there
/ were declared S2,256,920 in stock and
/ S3.312,0S6 in cash dividends on the
/ common stock. Concurrent with the
stock dividend Of per cent in Novem-
/ Der. 1891. was the sale to a syndicate
/ of S5.0g6000 additional COMMON stock,
/ aod in February. 1892 $21G1 500 more
/ common stock was issued i'm exchange
/ for 12O1C0 shares of Pittsburg and
/ Western common stock at SIS a share.
Mr. Little says that the liabilities OF
I the company as far as November 30.
1893. We're uuderstated by $5.4Sl,S3f,
and that the floating debt was Sl6.2l2.-
730. The net increase i'm liabilities in
+ the period under review has been $22,-
f lS0.O7S
Mr.. LitIcs report shows that for am
/ ascertaumeut of the causes that brought
about the financial condition OF the com-
uauv on November 90 1895. ne went back
TO Septcmber 80. lS,>. when. after am eX-
mort examination made under the aus
ri.rs OF it's board of directors. the COM
rrrv was considered insolv,ut
,tr Little saws iu regard to "the mis-
gr-.~oa of worn out equipment to profit
and loss" instead of income:
.Thcre is no fault TO 1e found with
but on the contrary. every commendauon
for-the wisdom OF writing off the equip
meut. as il disappeared from the hSis'
Having. however cleaned up so to speak
iu Jle fiscal year lNN> by 'h"IEI"- Sf.''''-
ono of this equipment TO proul ana Ioss'
There was mo proprcty in continuing TO
make the charge to- that account. II
sbouId. I'm my Judgment have been charg-
.4 to income. and for the purpose of as
,.~..i,ira the true income of each sue
....5ir... wear since 1>SS. have so dealt with
I'm commcntine ON the amount stated to
ba vrrongfuIv credited TO income under
3D.. "caoftaliz9tion of charges TO income
under the title of construction main STEM
efc.. etc." the expert says:
COON tr.sa improvements by whatever
mann. Won may. extraordinary or other
,s.. I,.f~ character is such that L can
... M nronrietv in capitaIizing them"
Concerning the payment of uncarned
dividends. the report says after pointing
ont for each year the difference between
the declared net income of the road ana
the income as it should have been accord
ing to Nlr. Lttles figures. he concludes
mis- treatment of this branch of the subject
by indicating that, if no unearned dlFI-
5.,ds had been paid during the period un-
dor consideration. the road would have
remained solvent MT. Llttle's words are
as follows:
Radical perhaps. as my treatment OF
the income account may oe consl'ei''
the facts will not ne disputed
tract bewteen the HeulouS anu '.'V
net earning capacity OF inns Ei'"' 49,
trtl Is. 10y -'' an '-'' fr,.l.,, IN
7ut Taking the year lSS' as an -..-,,,, .,l-s4 10
The situation tnere was ai'i -
for all charges ana 'ng .-l VI -, -
100000 on the ifst anu |,'',,' 49,
sto. KS. a oele'' ol S,''''',-, ,'1,., s,rn1ns of
oWiith's ol' an. o' 1T oa,, bo
'.''' SO .'..'' ., -. s.,,d t+s eo,,ire,
Obtained WIN ..''' ne. ror tho orl,ree-
debt and iurni-n I".lii'l'H '"l ''