New Britain herald., 1914-07-13
Loss to Road Through Waste and Mismanage- ment Estimated at Be-
 tween $6O,OOO,OOO
 and $9O,OOO,OOO

and $9O,0OO,OOO
 Washington, July 1S.-"One of the
 most glaring instances of mal' administration revealed in all the history of American railroading," is l the interstate commerce commission s characterization of it's findings in the ! investigation of New Haven Railroad l financial affairs, reported today to the
 senate.
 1 In a report of thirty thousand 1 words, probably the most drastic in l terms of any ever made by the com 1 mission, the New Havens directors
 were pronounced "criminally negli- 1 gent Evidence pointing to viola l tion of law has been transmitted to l district attorneys in Massachusetts,
 Rhode Island and New York and the i federal department of justice.
 Loss Over $8O, ,OOO, ,OOO.
 l "A reasonable estimate of the loss 1 to the New Haven by reason of waste and mismanagement,'' says the re- 1 port, will amount to between $60,- O00,0O0 and $90,O00,00O." Directors should be made individually liable to 1 civil and criminal laws for the man
 ner in which they discharge their trust. . All the commissions strictures
 were upon the management of the New Haven system under Former
 President Mellen. In justice to the
 present management. the commission IA
 man Howard Elliott and Walter D. Hine, special counsel, "have CO.,
 operated with the commission and
 rendered it substantial assistance
 throughout this investigation"
 Commerce Commissions Report.
 The report says:
 Marked features and significant incidents in the loose, extravagant, improvident administration of the fi- nances of the New Haven as shown in this investigation are the Boston and Maine despoilment: the inequity of the Westchester acquisitions; the double price paid for the Rhode Is- land trolleys; the recklessness in the purchase of Connecticut and Massa- chusetts trolleys at prices exorbi- tantly in excess of their market value; the unwarranted expenditure of large amounts in educating public opin- ion; the disposition, without knowl- edge of the directors of hundreds of thousands of dollars for influ- encing public sentiment; the habitual payment of unitemized vouchers with out any clear specification of de- tails; the confusing inter-relation of the principal company and its sub sidiaries and consequent complications of accounts; the practice of financial legerdemain in issuing large blocks of New Haven stocks for notes of the New England Navigation company and manipulating these securities back and forth; fictitious sales of New Haven stock to friendly parties with the de- sign of boosting the stock and un- loading on the public at the higher market price; the unlawful diver sion of corporate funds to political organizations; the scattering of re- tainers to attorneys of five states, who rendered no itemized bills for ser vices and who conducted no litigation to which the railroad was a party; extensive use of a paid lobby in the matters as to which the directors claim to have no information; the
 
 press by substituting reporters; pay ment of money and the prof1igate is- sue of free passes to legislators and their friends; the investment of $4OO,- 900 in securities of a New England the regular employment of political bosses in Rhode Island and other states, not for the purpose of having them perform any service but to prevent them, as Mr. Mellen ex- pressed it, from becoming active on the other side; the retention by John L. Billiard of more than $2,700, 900 1 in a transaction in which he repre- 1 sented the New Haven and into which he invested not a dollar; the of Oakleigh Thorne to ac- count for $1,032,000 of the funds of | the New Haven entrusted to him in l out the Westchester prop !! osition; the story of MT. Mellen as ] to the distribution of $1,2O0,OO0 for !! corrupt purposes in bringing about 1 3 mendm ents of the Westchester and l Portchester franchises; the domina- l -ion of all the affairs of this railroad | by MT. Morgan and MT. Mellen and 1 lhe absolute subordination of other | members of the board of directors to | the will of these two; the unwar- | ranted increase of the New Haven fla Utilities from $93.oo0.ooO in 1903 to S417 900 in 1913; the increase III hoatlng notes from nothing in 1905 1 10 approximately $40, 100000 in 1913; l the lnue1enslble standard of business ethics and the absence of financial | acumen displayed by eminent finan- ciers in directing the destinies of this railroad in it's attempt to establish 9 monopoly of the transportation of New England. A combination of all