The Bennington evening banner. (Bennington, Vt.) 19??-1961, 1913-04-22
MONEYFOR MELLEN
IN NEW HAVEN
STOCK DEALS
Profit Of 100000 Out of Two
Transactions
COMMISSION INVESTIGATING
Federal Expert Says System Of Ac-
counting Makes Examination
Difficult.

Boston, April 21.-Herbert E. Brown
Government accountant, testifying
before Charles A, Prouty, Interstate
Commerce Commissioner regarding
the affairs of the New York, New Hav'
en- G. Hartford Railroad today, said
that Charles s. Mellen, President OF
the Road, had made personal profit
of nearly 100000 in certain deals in
stocks of the New Haven system.
Mr. Brown testified that on March
4. 1904, Mr.. Mellen bought of the New
Haven Company 1855 shares of New
Haven stock at $3.50 a share. Two
weeks later 10,9S0 shares were sold to
Mr.. Mellen, his demand notes being
given in each instance. This stock
was later sold to persons whose names
did not appear in the records. The
proceeds, the witness said, were re-
mitted to the credit of Mr.. Mellen's
special account Mr.. Mellen returned
to the company dividends on the stock
in his name. The balance in Mr.. Mel.
lens favor, the accountant said, was
100000
Mr. Brown told of the New Haven
Company's acquisition of the Rhode
Island Company, which operates troll.
ley lines in Rhode Island, and said that
the New Ravens ownership of less
than s10,000,000 worth of stock cost
the railroad $4,000, 900. He had found
nothing, he said, that would justify
the New Haven in paying such price
for the stock.
The merger of the New Haven and
the Boston G. Maine systems also was
described. In 1907, Mr.. Brown said
the New England Navigation Company
New Haven subsidiary operating
steamship line, agreed to buy from
the American Express Company 55,-
600 shares of Boston & Maine stock
giving one share of New Haven stock
for each share of Boston & Maine
In the same year the Navigation Com
pany agreed to purchase from Lee
Higginson & Co. Of this city all the
Boston & Maine stock it could acquire
giving share for share in New Haven
stock. The result of these agree
ments was that 109,94S shares of Bos.
ton & Maine we're acquired by the
Navigation Company, which sold them
in June, 1908, to ]. L. Billiard for 3d.
S4S,5O0. Later, Mr.. Brown said, the
New England Navigation Campony
bought back the Boston & Maine stock
from Billiard for $3.50 a shart. The
books of the company. Mr.. Brown said,
did not show that any of this profit ev-
er went back TO the New Haven Com.
pany
Louis ID. Brandeis, representing the
Boston Fruit and Produce Exchange,
questioned Mr. Brown, dealing princi.
pally with technicalities of accounting.
Mr., Brown said that the New Haven S
system of bookkeeping was very diff
ferent from that employed by other
railroad companies. II was difficult,
he said, to tell by an examination of
the books what was and what was not
cash"
The New England Navigation Com
pany's affairs were Investigated at
length by Mr.. Brandeis, who drew from
the witness the statement that while
the gross earnings of the navigation
company for the year ended June 80,
1912, showed a decrease of nearly 1924.
600, as compared with the figures for
the year ended June 30, 1906, the gross
earnings of the New York. New Haven
G. Hartford Railroad increased from
$51,s40,O70 in 1906 to s64.9S9,O64 in
1912.
Mr. Brandeis called attention to an
increase in the Navigation Companys
assets OF S3,5O6,000 in one year, which
was set down as goodwill" Mr..
Brown said the books indicated that
the company took its outstanding de-
bentures and divided them by four, Civ
ing the increased assets.
Then the more they owed the rich
er they WERE" commented Commits
sioner Prouty.
The hearing will be resumed tomor-
row.