The Caucasian. (Clinton, N.C.) 188?-1913, 1897-10-21
THE FRAUD
INVESTIGATION
The Caucasian has an Interview
With Col. Averitt, Who
Throws Some Light on
the Subject.
FRAUD AND DECEPTION,

S"oer FORMER Lease WA bad Or I'll.
Books were IrrekuIarIy k.pt-Gsorxt..,
Methods OF Leading the Proper,x-o.s,
to all Bidders and Awarded IN
ssnce OF the Public.
The hearings in the North Carol;p.
lease case have been suspended. mend.
ing decision by Judge Simonton on
the question Of the contempt of soms
witnesses who refused to testify when
summoned by the State, and until
Judge SimontOn determines whethe,
or not certain witnesses shall be com.
PEELED TO allow an inspection of the
southern Railway books in Washing.
ton, which the State claims conceal,
fraud. Mr.. Philip w. Avirett. who
mss been one of the counsel for the
North Carolina Railroad, and who has
attended all of the hearings, stated to
CAUCASIAN reporter yesterday. tina,
ne believed that the State had made out
suinclently strong case to Justify
ana indeed compel, the court to SET
aside the lease for fraud. He stated
tnat at the hearings in Raleigh before
commissioner Craige, the State had
oHered to prove the insolvency of the
Southern Railroad at the time it made
TINS lease, and the fact that its officers
mad that in contemplation when they
leased this property, He stated at
TINS same hearing they also had shown,
by Mr.: L. ID. Cowan, a systematic fal-
sihcatIon OF the books of the Richmond
q Danville Railroad Company in Or
Der TO make it appear that the North
Carolina Railroad was an Improbable
property when they had it. And in
New Ork he had taken even these fig
ures, and by comparing them with the
SOuthern's reports had shown up such
an enormous increase in the operative
expenses of the n orth Carolina road I'M
der the Southern management as to
compel expert after expert to testify
that it was impossible for any such sur
OF money to have been spent for the pur-
pose Indicated in the printed reports,
lie said, further, that at Salisbury he
had established that no portion of the
decreased earnings Of the North Caro-
lima Rraiiroad as compared with the
earnings of other roads was due to
lower freight rates in North Carolina.
That on the contrary freights rates in
North Carolina are higher by a differ
entail than they are in Georgia. And
that he had shown that the Western
d Atlanta road, which belongs to the
State of Georgia, had been operated for
1898 geo in 1896 when it was earning
| $50 900 gross, and when the North
Carolina road with higher freight rates
and double the mileage, nearly, wat
only earning $l,225,000 gross while is
took $3.50 900 TO operate it.
Col. Avirett continuing said: 81
showed by the testimony of Governor
Gordon, in Georgia, that it was against
all custom ana against the unWritten
law OF all State, IN making contracts
TO lease properly in which they have
an interest, to make said contracts
without advertisement of the invita-.
ton of bids, the requiring of security
other than the bonds of the lessee, and
the payments of the rents other than
| i n way to suit the convenience of
the lessee. We showed by Governor
Gordon, that in 1890, when he was
Governor of Georgia, he leased the
Western & Atlanta Railroad, 139 miles
long, for 30 years at $25 900 a month,
payable monthly. That the State of
Georgia required that its own State
bonds, and not the bonds Of the lessee
be put up for security for the lease
money, though at no time could the
AS0SSO OS ANVIL CAod Fpc,OOU III OCldult,
as the rent is payable monthly. We
then showed by Governor Gordon
that In Georgia they advertise all over
the United States for bidders for their
property, that no lease was made until
after such advertisement, and this then
existing lease had expired. That the
bids were received under seal at the
Capitol and kept until the hour ap-
l mi Mt Tod fnH
opened in the Senate Chamber IN
| THE PRESENCE OF THE PUBLIC with
| open doors, and that each and
every bid had to be accompanied by
evidence of the financial responsible.
ity of the bidder. We showed that in
Georgia when the lessees of this same
road, under the lease of 1870, came int
| court and threatened when their lease
expired to take away improvement
they had put upon. it, that the Gov.
ernor of Georgia instead Of covering
LIKE wHIPPED HOUND at the threat
offered to call out the posse comm,
tatus and stated that if it took ever!
armed man in the State, he woul(
prevent such an outrage, We thini
that this c0ntrasted with the action o
Elias Carr, the de tdcto Governor o
North Carolina, at the time the leas,
of 1895 was made. is the most fearful
of this conspiracy that it is possible t
make.
I The expert testimony reported il
the afrai gnment in New York paper
is substantially correct. From one O
them l take the following report @
this evidence. The witness on tn
; stand was Mr.. Earnest Moore, VIII
! detected the frauds in the Union Pa
cihc Railroads books for the Govern
, ment.
Mr.. Moore was asked Assuming tina
, railroad has only $4,000 worth {
> equipment and purchases no me-
equipment that it is very singular
should spend in single year $1,000
| in order to maintain that same equip
ment and at the same time spend S104
610 for car mileage balances and $40
: 900 for hiring equipments for use o
: the same property p? Ans. I do indee'
will ask you if on a road 223 mile
y long with gross earning of 81 .225 OK
L a year it is not remarkable that so lare
q sum as 1856 900 should be spent in
> single year for the single items I
, maintenance of equipment, car mill
= age balances and hiring of equipmen
- Ans. It is fits books are fairly KEEP
5 will ask you if you know of ar
other railroad owning 223 miles who's
e gross earnings are not more than s.
De, 600 which spends more than on
: fifth of its entire gross earnings in
:, single year for maintenance of equi
meDt, car mileage balance and hiriI
- of equipment if it owned sny equi
ment at all of its own?
Ans. do ne. unless it be utteral
insolyent.
I ask you if you do not consider til
e railroad whose gross earnings in
"a year decreased from 81 ,251 .495 to S
225 ,593 should show some decrease
its operating expenses
Ans. 1t shoald. Yes.
Al l will ask you if as general PROV
b. sition when gross earnings decrease 9
I'd Grating expenses should not also &
ar crease
US Ans. Always.
Id will ask you If when gross earnin
Re. decrease $4,000 in q single year TIT