The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-03-20
COMMITTEE CLEARS
LOCOMOTIVE HEADS
American Company Officers
Vindicated From
Gates Charges.
REFORMS ARE SUGGESTED
Bone Leading Changes Already
Made, and Directors
Promise Others.
REFORMS ARE SUGGESTED

Officers and directors OF the American
Locomotive Company are cleared by the
committee Of inquiry. reporting yesterday.
Of the charge Of corrupt practices made
BY Isaac NJ. Cate, a leading stakeholder.
Recommendations. however. for reforms
In the management Of tho company are
made several OF which already have been
put into practice. These substantially
meet some Of the strongest criticisms
q operation made by Mr.. Cate.
John Havron. expert In the locomotive
Business. who was accepted by both sides
- impartial reported to the committee
Of inquiry:
1T 10 only proper TO state that after
over three months investigation during
which time n careful scrutiny Of bids.
bills and correspondents covering the en-
tire period of the company's existence was
made. not a bit Of evidence of corrupt
practice on the part OF the company's
oflcials was found"
"Your committee Is happy to b able
70 report that they fully confirm and In
dorse this statement" says the committee.
composed Of John w. GrigEs and Albert
n. Wiggin. directors Of the company. and
Thomas Thatcher. It's counsel The COM
Uk1ivtoo OF inquiry tuily cxOneI8teU
dent W. H Marshall who was the centre
Of attack.
The advisory committee, william n
Wilcox. former Public Service Commits
saoner. and L. Clark Seelye. formerly
Drssiden~ emeritus Of Smith College. rep
reoenting the minority stockholders who
demanded reform. says:
We agree with the committee In md
ting no valid evidence OF fraudulent or
unlawful dealings by the officials Of this
company. and no facts SUFFICIENT to Justify
or to ubstantiate the most serious charges
and implications Of Mr.. Gates letter al
though In our judgment there have been
some errors In business policy. notably
in the making OF automobiles, and some
undesirable practices now happily dis
continued"
Among leading reforms already
adopted 10 that OF weekly meetings Of
the executive committee Of the board OF
directors to approve all important con-
tracts. Bonuses to chief officers In add
ton to their salaries also have been done
away with.
The inquiry committee recommends that
no officer Of the company serve as officer
Or director Of any company with which
the American has dealings. The ad-
vfsory committee goes further. recom-
mending that officers Of the company
should hold no stock In companies from
which large purchases are made.
The inquiry committee also recon-
nends:
'That special care be taken in deal
ings with companies in which relatives
Of officers are interested to SEQ that the
locomotive company receives fair treat
mont.
THAT the system Of purchase and sale
Of scrap. now done through contract with
IN individual. be examined BY the execu-
tive committee and officers to see X q
more satisfactory system may be OBJ
sAined.
'srhat the board OF directors consider
carefully the question OF reducing salaFies
Of the higher officers.
..That the directors consider whether
savings can be made by the company
by manufacturing instead Of purchasing
springs. tires. castings. bolts and other
articles. and whether general expenses
can be reduced specifically through re-
moving the general office from New York
b Schenectady.
One OF the most interesting sections OF
the report Is the explanation Of the stock
transaction with Harvey Fisk & Sons
during the panic OF 1907. when the COM
pany sold 5000 shares OF it's preferred
stock at 80 TO the bankers. purchasing in
y practical exchange $4,000 shares Of the
common at As. which the bankers held.
The bankers at these prices got $4,000
more than the highest market price OF
tho stock on October 80. the day Of the
transaction. and In addition got the bene-
~ Of possession of the preferred stock.
which was more marketable than the
common
There was no motive for this TRANSACT
tion." says the inquiry committee In justi-
flying II. Except tho desire on the part
Of the management to strengthen the POSI-
ton OF Harvey Fisk x Sons at that time.
This was not because that house was in
any greater danger of suspension than
other first class banking concern.
but because In the condition which gen.
orally prevailed at that time there was
mono whose position was certainly as
sured against disaster. The action of
this company may be said to have been
altruistic. Certainly II was not IN any
degree Influenced by the direct interest
Of any Of the officers"
The bankers. says the COMMITTEES, had
stood behind the company In the panic In
Its payrolls on its note when currency was
exceedingly scarce.
The directors issued statement prom
Using careful consideration Of all the rec
0mmendations and reassuring stockhoid-
ers as to the value of their investment.
President Marshall adds that although the
company may not do more than earn its
operating expenses In the last half Of the
hscal year. due to slack business. II earned
In the first half year to December 81 last
S2,63i.Ss7 net. over all charges, sufficient
TO pay fixed charges for the remainder
OF the year and the preferred dividend for
the entire year II has So, 900 600 in casl,
and has purchased 100000 Of ttu
notes