The sun. [volume] (New York [N.Y.]) 1833-1916, 1903-05-05
OBSERVATION-DISCLOSURES
ms ACCOUNTANT REPORTS THAT
JHEY ARE MOONSYJNE.
s,sc,ac charges Against the Metropolitan
"Entirely without Foundation. So Far
n. They Involve Criminal WrOng.
ho,nC"-Exit the Criminal Bureau.


n. They Involve Criminal Wrong.
,,onC"-Exit the Criminal Bureau.
District Attorney Jerome dropped Amory,
Yesterday, concurring in the report of his
.xpert accountant, Arthur w. Teele, that
there Is nothing In their specific criminal
charges against the Metropolitan Street
Railway Company management. Mr.. Jerome
gave out "A statement. in which he said:
I'm rrn last of November. 1907. Mr.. Amory
submitted to me certain accusations in re-
.prrt to the financial management Of the
Notropolitan street Railway Company and
it, leased lines, which, If well founded. wonlc
undoubtedly have involved the commission
of crimes in the county of New York. en-
ploycd MIR Arthur ". Teele ns an accountant,
and asked the officers Of the Metropolitan
Stree, Railway Company to permit Mr.. Schur-
man and Mr.. Tcele to examine their books,
10 Determine whether the charges were well
founded or not. The officers of the company
a--erted 10 this. Thereupon ! submitted to
Mr. Teele the report of Accountants Hertle
and roichman, together with statements
rmbodying all of Mr.. Amorys charges not
contained in those reports. with instructions
to carefully and fully investi gate the matters
In those reports and in Mr.. Amory's charges
and report to me the results Mr.. Teees
report Is very clear and full and takes up each
and every finding of Messrs. Hertle and
Iechman and each charge made by Mr..
Amory to Mr.. Schurman. This report is
on file in my office. and access may be had to
It at any proper time by any one. One of
Mr. Teele's findings Is follows:
The reports by the Metropolitan Street
Railway Company to the Railroad Com
m--ioners are not full and complete state
ments of their financial condition
This, read in connection with Mr. Tecles
full that their methods OF
making their quarterly and annual state
ments are faulty and are properly the sub
ject of criticism from the standpoint of cor
porate accounting: but this investigation
has clearly shown that it is the method that
i, at fault. and that the final results shown.
- far as the actual present financial condi-
tion Of the company is conceTned,, are not
Affected by. the course adopted Mr.. Teele
Hertle and Teichman and the specific charges
OF Mr.. Amory are entirely without founda-
ton. so far as they involve criminal wrong
doing, and in this view Mr. Schurman and j
concur.
The investigate made, has been CON
OF Messrs ITertle and Techman and those
made By Mr.. Amory. orally to Mr.. Schmr-
Wssrea wSh poweTs Is oVer CO..
lions, and. in the ABSENCE Of apparently well
founded Information. it is not his duty nor nor
Of corporate management. That no mis-
understanding as to the scope of this inquiry
must be remembered that the following sub
iacts were not generally investigated:
First-whether dividends have been paid out Of
Ssud nave paid ID operans
Second Whether an overvaluat ,ea has been
ssiSss
paid in construction for labor and services rendered
charges have been made fe,
were. In fact, not made for such purposes
do n that nil of
these four things were done. have no
evidence that any Of them was done, The
sev manths % and aeS Would nYove the ex
of o bs dSas
pan 1: and the Metropolitan Securities Com,
M 4epcr s
CHARGES in respect to these matters es Ihe
tThe results Of my sHamin ation may be
or!fy fha asGie e Gs By Messr H.e
and ar in is facet at he she5
other than taxes. would. when brought into
the balance sheet. add assets of CORE
'.tb1 The theory upon which it is claimed
that dividends paid were nnwarranted or
Te tnue by she Street
Railway Company, to the Railroad Commits
soners are not full and complete statements
claimed we're issued without consideration
the applications for Increase of capital made
to the state Railroad Commissioners.
sns aG' re and
will agree with the balance sheet or income
~ Marked differences do exist between
the balance sheets of March 81. 1902, as rem
dared to the state Board Of Railroad Com
mi-sioners and to the New York stock Ex-
CHANGE These differences from an
evident lack of uniformity and care in the
tnlins of balance sheets, and the method,
while open to criticism for not giving fuli
and complete presentation of the company's
financial condition. does not result in ANY any
apparent advantage TO the company or detri-
ment to its stockholders.
"rgI The difference between the net income
al oWn oy 10 the atoce Eschen9 eand the
difference between the afndavit OF Mr.. lree-
land in the ,Wormser suit and the quarterly
not directly chargeable to the current period
reported. These adjustments are aot I'M
visual and are of little consideration when
explained The differences bet ween the items
al the income in the two reports are due
entirely TO reporting in one case Gross ngureSs
and in the other case part gross flgures ana
part net
hi The increase in the Investments at
the various dates specified Is due to actual
u The changes noted in the balance
ierred to. OF the Thirty-fourth Street Cross
town Railroad Company and OF the twenty
eighth and Twenty ninth Streets trosstoWn
Railroad Company. are due to regular trans
j. The increase of ss.oooooo in the Bal
ance due from lessor companies. June 80.
1901 is due to regular transactions not
specifically reported
"RJ The 81 900 900 Second Avenue Railroad
Company bonds have been iSsued in accord
ance with the provisions of theSdeed OF trust.
ID The s35O,OOO South Ferry Ralirond
Company bonds and the 81 SOC, 900 Broadway
Surface Railway Company bonds we're omitted
from the balance sheet on advice OF counsel.
on the ground of there being question OF the
direct liability of the Metropolitan street
Railway Company for the same. The $3.50, 900
South Ferry railroad Company bonds have
since been brought on to the metropolitan
Street Railway Company's books, and, in my
opinion the 81. SOC, 900 Broadway surface
Railway Conipanys bonds should be brought
on with the asset of corresponding value.
"In conclusion, ! beg to repeat that my
examination of the books and accounts OF
The Metropolitan Street Railway Company
has been confined strictly to the points raised
In the findings or conclusions reached py
Messrs Hertle and Teichman and in the
Questions submitted to me by you. FOR this
purpose the officers of the company, have
afforded me every facility RespeTGt i SUD-
nitted. a. ". TELL
Certified Public Accountant
In Mr.. Teele's detailed report he has
this to say on point made much of by
anI philhin.