Daily Kennebec journal., 1913-07-10

len III giving MS pSISond1 nOteS 10 MS
own company for stock are discussed
at length by Commissioner Prouty
His statement was that the amoun'
! had been used in campaign expendi-
lures during the summer and fall of
1904, that this had been done by d-
rcction of his directors, and that they
had subsequently ratified his act
These campaign contributions call fol
no comment from us. The act of the
New Haven was not peculiar to that
company at that time. What may
be open to criticism is the lax way in
which this matter was handled be-
tween an officer of this company and
its directors. The special account
shows payment to Mr.. Mellen Of
$4,000 in cash, which he passed over
to the Republican National Cam
paign Committee. 1t shows d second
payment to Mr.. Buekland, now the
vice president of the company, OF
s6500, which was turned over to the
Republican State Committee of Rhode
Island"
The investigation disclosed that
such stock transactions extended over
a considerable period and from time
to time Mellen was given various
large sums for various purposes un.
stated on the hooks of the company,
He explained that the amounts he re-
ceved were for campaign contribu-
tions and for other expenses includ-
ing one item of S33 spent in con-
] neetion with certain leases of dock
property in New York City" Com
missioner Prouty says the commission
doubts the propriety of this laxity in
the keeping of accounts between Mr.
Mellen and his company. If" says
the report, the president of this cor
: poration expends money in connection
with the purchase of a Nfease. he
should take voucher for the same
If the expenditure is not such that n
voucher can be taken. it ought not to
ne made" 1t is pointed out that all
of Mr. Mellen's notes to the New
Haven have been liquidated, except
one for $4,000, but many of them in
volve transactions which are not dis
closed by the books
Marine Equipment Manipulation.
The marine equipment of the New
Haven was manipulated according to
the report. in way To defy analysis
The New Haven earnestly in
sists" says Commissioner Prouty
that all these involutions and evolu-
tions, all these Kaleidoscope trans
format ations, injure nobody. This may
be true, but the purpose of book
keeping is to exhibit a plain history
| of the financial operations covered
The purpose, or at least the effect,
! of this New Haven bookkeeping is to
utterly becloud those operations so as
| to render any intelligent understand
ing of them impossible. If the thing
| done is legitimate. why not do it in
a direct way? If the purpose be hon
est, why clothe it in the habiliments
of the mountebank? The use of such
methods in the management of public
utilities should not be tolerated.
/ Wastefui Financial Operations.
| Our general conclusion is that the
| outside financial operations of the
New Haven Company for the last nine
| years have been wasteful in the ex
| treme and that the methods by which
| those operations have been conducted
are unnecessarily involved and COM
plex. The reason for this is as ap-
parent as the fact itself The pres
| ent management of that company
| started out with the purpose of con-
! trolling the transportation facilities
of New England In the accomplish
nlent of this purpose it bought what
must be had and paid what must be
paid. To this purpose and its at
tefapted execution can be traced
every one of these financial misfe:-
tunes and derelictions."
1T seems proper TO add that While
the financial operat ton Of this COM
pany have resulted in heavy losses,
there is nothing to indicate that its
solvency has been impaired. The COM
pany has expended in the last nine
years upon its road and equipment
over $4,000 a mile, sum almost
equal to the average capitalization of
the railroads of the United States at
the beginning of that period. While
this expenditure has been made with
| a free hand, there is nothing to show
that it has not been wisely made and
| much to indicate that the result has
| fully justified the outlay. The out
lay The outside properties of the
| New Haven have been acquired at
extravagant prices. They are for the
| most part of substantial vaule. and
| in many instances are kind of prop
| erty the value of which should i'm
prove. The financial condition of the
company calls for careful considera-
ton and prudent action, but gives no
occasion for hysteria."
| The 3. & M. Crisis.
Incidental to the acquisition of the
| control of the Boston & Maine by the
New Haven, the report discusses the
| financial condition of the former. OF
| the showing for the f1scal year which
| ended, June 80, Commissioner Prouty
| says:
| The time seemed imminent when
| the Boston & Maine. which had for
Z. years declared regular dividends,
would not earn its fixed charges. To
| declare this company insolvent and
place it in the hands of a receiver
would not only infiict hardship upon
| it's stockholders, but would be a source
| of serious inconvenience to the terri
| tory in which it operates, and would
shake the confidence of railroad i'll
vestment as "a whole. No such ex-
tremity should be permitted unless
some fundamental reason requires it"