The news-democrat. (Providence, R.I.) 1906-1909, 1908-01-08

balance leave IL 10 dIspTeclaDlc DOrrOWln8
capacity" says Louis ID. Brandels, VINO
has Just completed an Investigation into
the proposed merger OF that road ana the
Boston and Milne.
Brandeis conclusions are Sc, forth In
!7-page pamphlet made public yester-
day,
The exclusion OF its securities from
the sphere OF saving bank Investment,
and the taxablity OF its stock In the
hands Of the holder must further con-
tract it's financial possibilities he goes
Oh.
Furthermore, the mere fact OF pracu-
cal consolidation of the two systems
would, under the most favorable condi-
tions tend 60 restrict the aggregate
amount. which any single Investor would
otherwise be willing to invest in The two
systems.
ION tine other hand. the burdens OF
management already assumed by the
New Haven must tax 10 the uttermost
the ability OF its officers. or years 10
come the closest attention TO the de-
veiopment of the properties la opera
tion and administration viii be essential
ir order that this company may carry
the financial burdens unwsely assuaned,
and ultimately recover from the eXcesses
OF recent years
Its officers have no surplus OF lime or
ability so give 10 the problems or the
Boston and Maine system"
Mr. Brandeis declares III sovency IL to
be maintained large reduction IN the
dividend rate is inevitable
He asserts The New Haven company is
not in a pos.,tion TO assume the additional
financial burdens OF the additional re-
sponsiblites OF railroad management
which the acquisition or the Boston and
Maine system would necessarily impose
upon it."
NOT EVBN A RAILROAD COMPANY.
His treatment OF the Boston and Maine
railroad is, on the whole. most compli-
mentary. while upon mis- Investigation into
the affairs Of the Now York. New Haven
aud Hartford railroad, he summarizes his
deductions as folows:
Il. The present company is new
Connecticut corporation. IL is not strictly
"A railroad company. II Is a general
transportation. lighting, power. water and
holding company
''2. About one-half OF its outstanding
capitalization represents properties other
than steam neutrality-suspicious. pur-
chased al exorbt1nt east 10 secure banks.
Its stock is not tax exempt.
80. It's securities are not proper invest
ments for Massachusetts savings banks.
Its stock rs not tax exempt.
n In six years the stock Of the COM
pany increased l2e.S per cent. and its
liabilities S56 per cent. With the addi-
tonsl $50 O2?.0o0 bonds about TO be issued,
the incre.te OF liabilities as compared
with Juno 80. 1901. Will be ~ per cent.
6. In the six years tho gross earn
ings Of all its railroads (steanD operated
increased only 3s.5 per cent. The re-
ported increase in net earnings from
operations was $50 per cent. The actual
increase (making up the accounts as
heretofore) was only 1883 per cent
"s In the six years it's other income,'
from street railways, steamships, cleo
fric light, gas, water and power plants
and from securities owner. has increased
largely, but such income is more pre-
aariouw.
81. In the aggregate SO, ,Oes. .sos.ci, ex-
psnded to make good equipment depre-
efafion which should have been charged
TO operating expenses, was charged 10
profit and loss and was paid for out OF
premiums received from sale OF stock
and bonds.
'S. Last years reported gain on profit
and loss transactions was merely a book
keeping device.
- Last year II the compsny's custo-
mary charge for maintenance had been
made the net income from all sources
you'd have failed by si.l71.59os2 TO pro-
tide sum sufficient TO pay the per
,ent dividend
10 In the last three years :he fxad
ind miscellaneous charges have about
ioubled. They will reach S300Oo,0oO this
year, ard will exceed by at least 100000
he net earnings from the operation OF the
steam roads, even as the accounts were
Kept last year
Il This years fixed and miscellaneous
charges will reach $50 0oo,0cO They will
De at least sS.0OOoo larger than last
years. They would exceed by at least
100000 the net earnings from operation
'f the steam roads if the accounts were
Kept as formerly.
''12. This years net income will prob.
,bly be less than last years. IL solvency
to be maintained a large reduction In
he dividend rate is inevitable"
CRITICIsES SECURITIES.
Mr. Brandeis points out that the bonds
ind notes of the old New York. New Ha-
zen and Hartford Railroad company
we're expressly made by Massac chusetts
aw savings banks investments. and that
was good savings bank collateral az
he stock Of a New England railroad
company which had paid regular divi-
lends OF not less than per cent on all
ssues OF it's capital stock OF FIVE years
preceding the date Of such note. Tho
,onds and notes OF the new company. he
rays, are not savings bank investments
and the stock cannot be accepted AS saw
ngs bank collateral because II IL now
4 new company and the Massachusetts
statute related 10 the old company.
Under the heading capitalization Mr..
oiahutls says OF inc STOCK OF the New
Haven company:
The outstanding capital stock of the
new New York New Haven and Hart
ford Railroad company on June 30, 1907
was sl2l,SIS,100 The old company had
outstanding on May 81. 1907. prior 10 its
Absorption by the Consolidated Railway
company. only s9i.S7s. 100. The Consoli-
slated Railway company had on that date
outstanding sS0.o00,0OO OF its capital
stock. Up TO April. 1907. Il had only
No.0O0.0o0 OF capital stock and durinr
The III months ending May 81. 1907 failed
oy sl1.65s.Si TO earn the per cont dIvl
lent which Il paid Oh that $4,000 600.
In April. 1907, the Consolidated Rail.
toad company purchased for $50 900 600
f Its stock the steamship properties
hen held by the New England Navigs-
ion company. another OF the New Ha-
ien's subsidiary corporations When
he Consolidated Railway company abb
iorbed the old New York. New Haven
md Hartford Railroad company. and