The Bridgeport evening farmer., 1913-04-26
Brown Tells Of New Haven Roads
 Paper Profits"
TeStifieS That OvervaIuation of $1O,OOO,OOO Is Shown in One Transaction Brandeis Brings Out Fact That CircuitOuS Methods Are Used to Keep MelIen'S Name Out
 of Transactions

Boston, April 26.-Testimony ad- duced at yesterdays session of the In- terstate Commerce Commissions in quiry into the New Haven roads transactions was so extensive that David E. Brown, the commissions ac- countant was exhausted at the ad- journment and it was decided to hold no further inquiry until Monday to give Brown a rest.
 Brown testified that as far as could be ascertained there was $9,00O,00O in tangible assets of the New Y ork, West chester and Boston. Another point related to a liquidation of more than $1,500,O00 of the notes of that road through a certificate of deposit which went the rounds of three banks before being deposited finally with the Ma tional Shawmut Bank of Boston. This procedure was explained by Brown, who received it, he testified, from Cashier Bowman of the New Haven road. President Afellen. he said, did ed with the transa ctton.
 Testimony showing hcw the New Haven road appears to have put oh it's books huge profits which were seemingly only paper profits obtained by transfers of stock to and fro be- tween its subsidiaries was brought out from Brown.
 These apparent profits as they were termed by Brandeis, were used to swell the company's surplus ac- count of the books, Brown said.
 Accountant Brown cited one case in which he said the records showed that the New England Navigation Com pany bought shares of the New Haven road from the New Haven in exchange for debentures of the Consolidated Railway Company. As the result, said the witness, the New Haven put on its books a paper profit of about $7,00O,OoO, and the navigation com pany, by subsequent dealings in the debentures. recorded a book profit of $645, 900.
 The witness replied that the naviga- ton company held 215,O0O shares of the New Haven stock on June 30, 1912, which was rated on it's books at $34, ,659,657.
 What is the actual market value of that stock today?''
 ''On a basis of $111 a share the ac- tual value would be approximately s1O,0OO,oO0 less than the figures at which it stands on the company's books
 Brown testified that in 1907 Presi- dent Mellen wrote a letter to Oakleigh Thorne of New York saying that the public was getting dangerously near' the knoMl edge that the New Haven was financing the Port Chester and New York. According to Brown. the letter also said that it would not be the part of prudence to disclose the relations of the New, Haven to the line to either the public or the stockholders
 The New Haven road financed the suburban line in 1907 through the Millbrook Company and put $11,155,- 900 into the project, according to Brown. He testified also that the men who acted for MT. MeIlen were Thorne and. Marsden J. Perry of Providence.
 'Is this the same MT. Perry whom the Governor of Rhode Island or Con necticut recently appointed on Gov Foss' conference to solve the railroad problem of New England?" asked Brandeis.
 7 'I do not know" replied Brown.
 Another letter was addressed to Thorne and Perry. Up to the date of that letter $11,155,OOO had been trans ferred The letter referred to an agree ment between the New Haven and the MilIbrook Company for a railroad connecting the Interborough line in New York with that of Port Chester
 Letters to the Mfl1brook Company, to Thorne and Perry and to J. P. Morgan & Co. relating to the railroad deal were read by the witness. Asked how much money was left of the $11,- 100000 at that time, witness said he did not know.
 MT. Brandeis took up the payment of some of Mellen's notes in connec- ton with the Westchester road trans actions. A series of notes, Brown saod, were 1iquidated on April IT, 1909, by a certificate of deposit, which came from the New Haven road, for $1,- 524,072 on the National Shawmut Bank, of Boston, in favor of the Sec ond National Bank of New Haven. Mellen's name did not appear in the transaction.
 The Second National Bank of New Haven drew a check on its own ac- count for the amount of the original certificate of deposit on the First Ma tiona1 Bank of Boston. This check was deposited with the National Shawmut Bank to the credit of the New England Navigation Company, a New Haven subsidiary.
 What was the necessity for this circuitous method?" asked Brandeis.
 Witness replied that he had asked this question of Cashier Bowman, of the New Haven road, who replied that this method was pursued to prevent Mellen's name appearing in the trans action.