New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1907-03-01

a actIy The, could have said Instead Of per
anu alLa We should have '.ecl1r9d 10 per cert C.vi-
dividend Tor zen years pre- ,eding ana had g FER
Sft didend for the accumulation Of those ten
Mr.. Hiliard-I think there is another factor that
pany. having appropriated It's money and absolute
y disposed of il, would have a right again to pay
the money for the dividend iSs' anu sen OOi'S st
pr course the same principle. applies as to
operating expenses, does it not? Al think the
same principle, but 10 larger degree if anything
als0untants make 10 operating expenses are gen.
orally closely watched by the management. for
IletT own credit; the management don't allow any
doubtful charges to be made to operating expenses
operate on V.-hen they Get through Operating the
surplus belongs 10 the directors, and the manage
Is more important that operating expenses should
Ce CdTeIuIiy watched than it is that surplus income
should be carefully watched.
,Q:-llf those things could be done and revoked
from time to time. the directorate changes, would
not practice of that sort destroy the integrity and
TlI9ITmlty Of railroad accounts generally? Alt
would upset the whole system
CAsHBOOK INADEQUATE
Replying to Mr. Kellogg as to what the books
OF the Chicago & Alton showed regarding the
$13,OOOOO0 received for the issue of $50. 100000
of bonds at the time of the reorganization in
1893, Mr.. Hilliard said
There is no entry upon the cash book or other
S1o ks od the company showing the receipt of the
SlS,Ov9Uo' Neither is there any entry showing the
the payment Of the $lo9ooo9o and the same IN
indicate that following out this resolution of the
board Of directors, the $2zOOOO of bonds had been
q Co. for the SYNDICATE, in exchange or in con-
tween Springfield and Peoria.
stock Of the chicago Z Alton Railroad company.
amounting to lS224 shares which was owned by
Alton Railway Company? A.-194.S90 shares of pre-
tcrrtd and 1928 shares of common.
Q-AH that 100000 of bonds are outstanding,
and the company has been compelled TO issue IN
asddition to the $220ooooo, and in addition to the
over 100000 trust certificates has it not? A.
since. and there We're over 100000 on the books
on June 80 Up to the present date they have issued
Q.-And with tho 100000 first mortgage per
I'm addition 10 all OF its mortgage obligations, and
now has no money available for the completion OF
gage Of s GoGo? YES it has money n9 3Tc So
curities have men:ionedf A.-No' sir
Paul D. Cravath. of counsel tor the Hartman
roads asked if the witness meant to imply in a
part of his testimony if there moral or
legal improperly in mortgagng road au-
thorzed to be built and Mr. billiard said:
I fear the language used in answering the
question propounded yesterday was not as It should
taken as criticism of making mortgage upon
be very common thing. The question that was
asked was. explain the position of the treas.
it wanting money 10 build a railroad which it had
ALREADY ,mortgaged the funds gone and therefore:
new. 1t was the condition Of the treasury not the
statement as you make it, know it to have been
O. nv Mr. foyett; Yon don't know Wbetb 1 sny
OF those items that included went TO mako
up that $l2,O00O00 betterments additions
!6g oT not q tRe 6aye aT SR
stated that believe that those were proper add-
tons and improvements and at the time could
nave been jgstihably capitalized. am willing to
state that But having once been charged against
the income they are beyond the reach of subse
Q-You have never known Of similar instances
IN that Xe gne n BACK and aed az counts
bic errors and / ion't know that / can recall n
case Of that right now.
81 believe YOU also testified that corporation
had no right to sell bonds to get money 10 pay
dlvidend. Did understand you correctly? Al
;. Off the corporation had expended It's money,
ditions charged it to capital account You don't
think they would have the right TO borrow money
pose Of paying dividend? Al do not think you
quite see the point OF that. which u.s. II they had
charged these expenditures to capital account,
mere Wquld nave neen the same amount in addi-
lon 10 the credit OF profit and loss wouldn't there?
sqPP9se my Pr9 9 ana loss 6 @ mt We're
on the road, and the directors say charge it to
proht and loss; IT wipes out my profit and loss.
100000 10 profit and loss remains Under these
crcumstanees when you have got that credit you
can pay II out by selling stock. | have been ad-
yised by counsel that the purposes for which bonds
borrowed do NOT cover the payment Of divdends
Now, that Is all want to tell you; have been adj
vised By counsel.
ALTONs ISSUE MAY BE ILLEGAL
Commissioner Harian-Judge Lovett the point
you make OF course. is clear enough hut doubt
whether stock dividends may be declared where the
corporation is Illinois corporation this Is
In the eleventh article of the Constitution OF III
nos and thirteenth section, there is this provision
NO railroad corporation shall issue any stocks
or bonds except for money, labor property
Ualy received and applied 10 the purposes for
which such corporation created; and all stock
dividends and other fictitious increase of the cap
ital stock Indebtedness Of any such corporation
shall be void There Is also provision In the
statutes OF Illinois 10 the same effect; and while
legal point is perfectly clear. doubt whether the
application you made OF II would be proper under
the statutes OF Illinois. In other words, l doubt
whether you could issue a stock dividend TO take
up this accumulated surplus to capital account
issue bonds for the same purpose.
WILLIAM MAHL ON STAND.
William Mahl controller of the Hartman
lines. was called TO the witness chair at the
quest Of Mr.. Lovett. for brief examination.
Mr.. Lovett-On the previous hearing OF this mat
by the commission in this city in January last
there introduced resolution which seemed
To have occasiOned considerable surprise passed
h. he boar Of he