New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-04-26
SUBSIDIARIES FIGURE
IN NEW HAVEN DEALS
Exchanges of Securities Among
Them Told by Commerce
Commissions Accountant.
TAKING UP MELLEM'S NOTES
Financing of New York, West
chester & Boston Road Dis.
cussed-Circuitous Meth
cd of Paying Notes.

~ ~ @H6 >'NeNo'
Boston. April 25.-Financial transactions
between the New York New Haven g.
Hartford Railroad Company and its SUBJ
salaries. as indicated by their books.
were described to-day at the Interstate
Commerce Commissions investigation Of
the New Haven system, by David F..
Brown, the commissions examining ac-
countant.
Ward Prouty sat as examiner in the alb
sence of his father. Commissioner Prouty.
and by direction Of the Commissioner the
proceedings were limited TO the examna-
ton Of Mr.. Brown by LOUIS d. Brandes
The latter appeared as a citizen of Mas.
sachusetts," having Withdrawn his APP
peardnce as counsel for the Boston Fruit
and Produce Exchange.
Mr.. Brown testified that on April s. 1901.
the New England Navigation Company.
New Haven subsidiary, acquired 7l95
shares Of New Haven stock from the New
Haven Company at $3.50 a share in OK
change for debenulres Of the Consolidated
Railway. another New Haven subsidiary.
having face value Of $isi5.0C0. At the
time New Haven stock was selling IN the
market at from i73 10 10.
This transaction. the witness said.
created a capital liability by the New
Haven of S7,iO6.5 500 and an inye stment
value of sl4,Sl3.oO0. giving the New Haven
a premium showing Of S7,i06Jo0. This and
other similar transactions showed on
the books Of the New Haven Company an
apparent profit Of S,JCo.000. while the
Navigation Company's records indicated
that by selling the stock back To the Now
Haven at an advance over the original
price a profit OF sG4i 900 was obtained.
The witness told OF money RENTED AZ
various times by the Navigation Company
for the purchase Of stock OF the Norces-
ter Nashua & Rochester Railroad for
President Mellen. j. H. Billiard \. K.
Robertson, Samuel Ainsley and j. S.
Hemmenway, all directors Of the New
Haven road, These remittances were Sc
cured by demand notes At per cent
given by the directors named. The stock
of the Worcester. Nashua & Rochester
was later sold to the Boston & Maine
Railroad another New Haven property.
All Of these notes. which aggregated on
their face more than 10000, " re sub
sequently liquidated.
Financing New Road.
The financing Of the New York. West
chester & Boston Consolidated Rai!waJ
Company and the construction OF its line
received considerable attention and let
ters from President Mellen to Oakleish
Thorne and Marsden j. Perry. who were
connected with the construction Of the
road. were read. Mr.. Brown said the ROAD
was built AT cost of about $4,000 a
mile. and the reports for the frst two
quarters of it's operation showed that the
operatlng expenses were in excess OF tn9
earnings.
Asked regarding entries on the New
Haven's books showing loans 10 President
Mellen. Brown told Of loans of 1ooi'6-o.
and mentioned additional notes Of &s.a.-
al.
one OF the note transactions opened up
the matter of the construction Of the
New York. Westchester & Boston ROAD.
Brown testified that i'm November. 1905. the
railroad placed nearly 100000 on deposit
with J p. Morgan x TO. This money
Was RENTED by check through the office
OF the third vice-presden1 of the rail-
road. and the checks were accompanied
by letter from that official. which di-
rected that the money bee placed 20 me
credit of a special account. III ans iui-
Their information is needed in the mat
ter" the letted added. please consult
with ]. F. Morgan
\ letter from President Mellen 20 OAK
leigh Thorne was read. II directed Thorn9
n acquire AT least 50 per cent of mo
stock Of the projected New York west
chester a. Boston Railroad and the ~"
York & Port Chester Railway. and 49,
thorized him to decide which road u
would be more advisable 10 constr ieI
The letter indicated that the New itdFeR
road would finance the operations.
Later the stock Of the AIlbrook COM
many. with which Thorne and MarsdeR
!. Perry were connected and which vas
constructing the Westminster road, was
taken over by the New Haven aud ne
construction agreement was Terminated.
on account of this cancellation Ihoiho
and Perry received S2I5,OOO.
Eventually the New York. Wsetchestef
a Boston ana the New NOlh " tolt 'iit'
ter were merged under the name OF me
New York. Westchester 4 Boston con-
solida ted Railway Company. Under tue
terms of the consolidation stocknoluelS
we're 10 receive one share OF the new
company for every -four shares OF sloVN
IN the TWO merged properties.
Keeping Out Melien's Name.
Mr. Brandeis then took up the payment
of some of Mellen's notes in connection
with the Westchester road TRANSACTIONS
\ series OF notes. Brown SAID Nel7
liquidatcd on April H. 1909. by a CO,
tincate of deposit, which came ttom ths
New Haven road. FOR Si,o2iO.2 on INC
National Shawmut Bank. OF Boston ~
favor Of the Second National Bank o.
New Haven Mellen's name did not ap'
pear I'm the transaction.
The Second National Bank OF New IL
ven drew a check on its own account iot
the amount OF the original certlncate OF
deposit on the First National BANK
Boston. This check was deposited WIN
the National Shawmut Bank 10 the ctedh
of the New England Navigation COM
pany. New Haven subsidiary.
What was the necessity for TINS CIR
cuitous method" asked Brandeis
Witness replied that he had asked thls
question of Cashier Bowman, of the New
Haven road who replied that tnis
Ill