The sun. [volume] (New York [N.Y.]) 1833-1916, 1908-04-24
NINBTY.FTVE PER CENT WATER
~ RAILROAD STOCKS PRICE TO
1855, SiTD RYAN.

~. -" wv
r-'tan street Railroad that not a dollar
ND been paid originally for 05 per cent.
NJ he stock Of the railroads Of this country
NO 10 lss5-all but 5 per cent. Of the railroad
-'ock was water, IA MIR. Ryan expressed
~ He made this statement to show the
Grand Jury how the other railroads com
r3red with the Metropolitan, which, he
sard, had s3il per cent. Of its So, 900, 900
capital stock paid in.
lr Ryan had read his formal statement
about the organization Of the Metropolitan
from its inception, and he concluded il with
this remark:
That is in answer TO the statement that
has been made for the last five years that
tha Metropolitan Street Railway stock
n, all water
'Nr. Ryan said Mr.. Jerome. you. have
been connected with a large number Of
corporate ventures, both in street railways
and steam railwaysl"
Yes, sir said Mr.. Ryan. Mr.. Jerome
wanted 10 know about the percentage Of
water in railroad stock.
"Nlnety-1ve per cent. Of the railroad
stock Of this country never cost a dollar,
said Mr.. Ryan, which made some Of the
jurors sit up.
YOU mean that 10 per cent. Of the stock
oi he railroads Of this country is water?'
asked Mr.. Jerome
'Ninety-fve per cent. Of the roads within
The last-these great speculative years
that We have had have put up stock in the
last ten or twelve years when it was easy
10 raise money on stocks and bonds-but
up to ISIS, 9j per cent. of all steam railroads
and all street railroads and all industrial
corporations Of this country never put in
one dollar on their stock except a little
organization expenses that were required
for a few shares Of stock in the beginning.
80 your experience u.s. said Mr.. Jerome,
that Ss3l3 paid in for every 500 in stock
is exceptional
Yes. SIR said Mr.. Ryan. up To 1873
there was not a dollar paid in on st. Paul.
Northwestern, Omaha or any Of those rail-
roads said Mr.. Ryan.
III you took the stock Of those roads
as they stand to-day said Mr., Jerome.
Including the roads that have been reor-
gained and supposed to have been put on
a sound basis-taking them as a whole,
both in steam ~railroading and surface rail-
roading-would $50 in cash for every share
4 500 par-would that be a large percent
age Of cashl'
A large percentage Of them-9O per
cent. Of them.' said Mr.. Ryan, haven't
had anything. Not only that; in the reor-
ganization that took place from 1900 up to
1907 they assessed stock and gave bonds.
We understand, then,' said a juror,
that the roads only cost about 5 per cent
of the capital issued-they were built with
bonds
They we're built with bonds replied
Mr.. Ryan. THE Union Pacific Railroad
is built with bonds and got a land grant
worth t25O,OOO,OOO from the Government
besides" ~
And Atchison the same?' asked a juror.
Il was speaking Of the Union Pacific.
Atchison the same, : said Mr.. Ryan.
In his testimony about the so-called
looting Of the Metropolitan, Paul ID. Cravath
-ald that William G. Whitney was a re-
sOurceful and brilliant man, yet In the light
NJ present events il would seem that he
was not a good prophet or a close student
n the Metropolitan properties or their
financial condition. There had been a great
deal Of criticism Of the decline and fall Of
the surface lines, MIR, Cravath said.
Il hear it right along he added, "and
this is the natural reasoning, that the sur
face lines Of Manhattan and The Bronx,
the greatest city Of u country, must be
II untold value For some reasons the
people do not understand that these lines
have d~eteriorated physically, and %financi-
ally have been bankrupt. The directors
have lost many times $40, OO0, 900 In the
decline OF those securities, and yet the
Ing men like Mr.. Whitney and his estate
and Mr.. Widener and Mr.. Dolan are rich,
and therefore the suspicion is a perfectly
natural one and usual one that some one
must be 10 blame, and that this system
was looted, and that the footing OF this
system, tho maladministration OF his
system, ara responsible for the present
misfortune Of the surface lines
Mr.. Cravath said he would he very glad
10 give the Grand Jurors his views on ii,
and they told him TO go ahead. Before
taking up tho modern period-the period
from 1902, when the Metropolitan Securi-
lies Company was formed-Mr. Cravath
said he would have to comment on the
mistakes and m~iscalculations which had
taen made prior to that time. He said:
Mr.. Whitney. who was the leader Of the
party, a very able gentleman, was a man OF
very remarkable intellectual qualities and
NJ most brilliant powers Of achievement.
II became. soon after 1885, his ambition
IN bring together all those surface lines
under one system and TO operate them
with mechanical traction in some form,
and he used wonderful ability and power
m devising means TO bring about the result.
But | think you must now admit in the
light Of recent events that, brilliant as he
was, he was not a close student OF the physi-
cal conditions OF these properties, nor was
fe a close student Of their financial condi-
tons or a good prophet as to the future.
He was a very powerful, resourceful, ag-
Cnesslve man. and in carrying out this
great plan Of his he was often willing to
sacrifice what turned out 20 be an Ultimate
rrort for the sake Of taking another step
M this great scheme Of consolidation"
As a result some OF the leases made by
Whitney turned out 10 be very expensive,
~aId Mr.. Cravath. Business increased 20
that Mr.. Whitney and his friends thought
there was no limit 10 it. The company
vas most lavish in It's expenditures for
improvements. There was a quick change
from cable 10 the electric system, but Mr..
Whitney and his friends we're confident that
they could afford II no matter how great the
expense.
There are interesting chapters in the testi-
'0ony about the purchase Of the Wall and
'ortlandt Street Ferries Railroad franchise
by the Metropolitan Securities Company.
1r the first time there is the eKplanationof
lhomas P, Fowler, who, as president OF the
securities company. signed the $685., 600
heck that went 10 Anthony n. Brady.
Mr. Jerome wanted 10 know on whose ad-
Woo the directors and officers OF the COM
any relied for the value Of the property.
NIr. Cravath's firm, Mr.. Fowler said, and
huhn, Loeb a Co., the bankers who had
Nurtractad 10 ref the franchise at q nrica