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


hands to yours by foreclosure and sale under the
original mortgages. and the amount which your
company has expended for additional property not
that your company has never issued share Of
stock or any obligation of any kind that did not
represent its par value. an equal amount OF cash
or its full equivalent in property at the time
actually received, bat also that the original cash
eertained. is S1osS5S5S Is. or, in round numbers.
amount of the stock and bonds which your com
pany has issued or assumed. do you know where
A.-Are you speaking now of the Alton, or are you
taking into account the Joliet q chicago. which
al mean the old Joliet & Chicago line. which
they said the old stockholders lost money in. A
l don't know when that was built. The Chicago &
Alton made its first report in 1863
,,Q.-Then that foreclosure and loss which Mr.
Hartman capitalized must have occurred prior to
1853? Al absolutely cannot answer that .L..
you know OF? A-Not that l know Of. .,.,or
money expended on the property nor losses p!
stockholders. as stated or both, as stated by Nj.
the So, 600? A.-The balance was made UP by
a recasting of the annual statements. taking out
which had BEEN psid and appropriated out Of the
income account for each year. The amounts taken
out Of operating expenses and credited TO inns thl9
account of construction nc expenditures uncapnalz"
Q-Did YOU ever hear Of road charging befa4s t S
your experience as railroad aeco4 thet question
1 can't remember everything that has happened
HOW EXPENSES WERE CHARGED.
In reply TO Commissioner Clements, Mr.. Hill
lard said the recasting of accounts was done IN
December. 1899. by order of the directors, who
passed a resolution to that effect. Replying
again to Mr.. Kellogg. he said that $1,O47'l55 81
of additions to property had been charged to
income yearly from 1889 TO 1898.
go that in December 1899, this sl2OOo,0Oa was
simply taken out of an account the items 'ahen,
ings of the road and was charged to cost SI PROD
rect2 Accredited TO this account whlcl 'lleH
really capital account. construction eXpendi-
o2And then after paying these dividends out
Of the moTgage the money o9pr4Wf E Wa am Pi' a.
Yes that 80 per cent dividend was charged
o~What other item was charged against 1t? A. A.
considerable proportion of The discount S or g
any dollar any more than you can identity your p
eRtry here covers total credits Of Sil93 20. Of
which Sl244177 66 is construction expenditures rh-
ecnount STANDING 10 the credit Of income wers APP
Piled S. 66sis0 to the payment of the dividend and
l55,75l 80 TO discount on bonds II is c0iposlie
Y0g s4n TSicb 5e which OF 'hose a0
count bonds against that item? A.-Nhy, that
is a matter of judgnent Now ms construction n[
and they closed m out I'M the manner 1 have told
you; but having done what they did DO they had
profit and loss, and then discount bonds was
proper charge against profit and loss 1t amounted
o-But charging the discount on BONDS against
Ayes so far as the public was concerned. Any
man looking the books would see it, but any
c-oGf Of this 100000 mortgage that was
placed on the property you stated that $S6g o1 was
deposited with the United States Trust Company to
refund the prior lien bonds Now tell me If all
funded by that? A-With that amount of money
plus the accumulated interest OF per cent, which
there o5S 4''0"su Oy inc ''uS' Company WINE
Did they not take some of the coupons on the
nd a a
June 60 1901. item OF $593.9l2 funded interest
account. The next year it amounts to s97$,477, and
seems to have been carried in the funded interest
account until June so. 1905 when ii charged off,
in its statement Of the Chicago ( Alton Railroad
have tried TO get an explanation of that from my
predecessor. He explains il that the per cent
proceeds OF which were to be applied to refunding
all the prior lien bonds. including the matured in,
the proceeds of those sI500OOOO of bonds they
went into the next section. allowing the expendi-
ture of money for additions and improvements
They claimed. or they considered. that under that
mortgage they had capitalized interest on bonds
So when these coupons became due they set up an
account as an asset upon the books Of the com
coupons they paid. and they carried that the
the pro S of thpse bonds Until e ome TIME in the
year ending June 30 1906 they charged the amount
0,-Is it proper fer a railroad company to cap
Who is going to settle whether it is proper not?
PROFIT AND LOSS OF s2sl ,391.
o. notice in the report OF June 80, 1906. the
credit TO profit and loss account Of the Chicago &
Alton Railroad Company only S26l. 39l- So that
if these coupons had been charged to profit and
loss, and wiped out the company would not have
had money to pay its dividends would it? A
Well the profit and loss account would Of course
have shown a deficit Of 100000 a debit Of
about $4,000, instead Of a credit of $26l 900.
Replying to a suggestion of Commissioner
Lane that the directors Of the Chicago & Alton
could have charged the Sl2,000,0OO unpaid
dividends the theory that the dividends for
previous years had been too small. Mr.. billiard
said:
II seems 10 me have never known a casa like
this, where they have gone back from 1898 TO 1863
and capitalized moneys which have been appro-
priated. because each board of directors has per
feet right appropriate that. They have the
option pay it in dividends set II aside and
when they have exercised that option il is final.
No subsequent board Of directors can revoke H.
If they did, the principle would be just the same
regard to the appropriation for dividends. WHY
could not subsequent board revoke approprla-
tion for dividends, and why could not revoke
that 30 per special dividend now?
Commissioner Lane-That is Just my point ex-