The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-05-29


a point Of order raised by Senator Reed
Of Missouri. who declared that Il was Of
SO much Importance that In his Judgment
II should have the consideration Of a. com.
inittee Of the Senate before being passed.
Mr.. Norris consented to have the resolu-
ton lie over for 4 day and Il will come
up In the morning hour tomorrow.
McReyno1ds May Block IL.
1t will not necessarily follow that the
information or opinion sought will be
forthcoming. Tho Attorney General may
take refuge behind an ancient privilege
and reply to the Senate that Il would
not be compatible with tho public inter.
est to say what the Government Is plan
ming to do in a certain matter that may
involve criminal prosecutions or dlssolu-
ton suit under the. antitrust laws
Many here believe they see In the Nor
rls resolution an effort by the friends of
Joseph W. Folk to Smoke out" tho Attor-
ney-Genoral. Folk and McReynoldY have
been at loggerheads over the New Haven
inquiry.
Senator Norris gave II az ILLS opinion
recently that tho New York Central was
just as deserving Of an investigation as
the New Haven. lilo aid not take the mat
ter before tho Interstate Commerce CON-
mission because that body Is admittedly
overworked just now.
Apparently tho intentlon Is to force
from tho Attorney-General sonlo admis-
sion that will servo al a basis for another
resolution Of investigation.
Fowler's Letter 10 board.
Representative Fowier's letter to the
Interstate Commerce Commission asking
for the investigation:
'Tt appears that under a contract or
contracts entered into on or about June
1, 1909. between tho Baltimore and Ohio
Railroad Company. tho Cincinnati, Ham
iuon and Dayton Railroad Company, and
J. T. Morgan & Co. tho Baltimore and
Ohio company has become liable directly
and Indirectly for approximately 100000
600 Of the obligations of the Cincinnati.
Hamilton and Dayton Company. as. fol-
lows:
FIRST and rcfunding ( per cent. mort
gage bonds, $7J.000,000: general mortgage
bonds % per cent to July j, 1916. there
after a.. per cent?, sec. 00o, 900; Gin
cinnati. Hamilton and Dayton stock. pur
chase price yet to be faxed by arbitration.
sJ,00o,000.
THE contracts covering these transact
tons arc already In evidence before your
commission as part of record In the pend
ing application OF tho Eastern railroads
for authority to impose an advance OF
8 per cent. OH all rates.
II respectfully refer tho commission
TO certain factors In concrete example
which In my opinion are material In de-
termlning whether IL Is proper for the
commission 10 permit these railroads to
secure addltloual revenue which would
be available for the purpose of enabling
them to meet their obligations under
contracts sucli as arc herein referred to.
- Quotes Eaperts' Figures.
First. Poor's Manual OF Railroads for
1896 gives the total indebtedness OF the
Cincinnati, Hamilton aud Dayton Rail
road as s2i.o00.ooo with net earnings
for the preceding year OF sl,6O0.000.
Second. Poors Manual Of Railroads
for 1914 gives the Indebtedness OF the CHI
c!nuati. Hamilton and Dayton Railroad
Company at more than S7C.o0o,o0o. with
net earnings for the preceding year OF
$1,000, 900. From the foregoing 1t 10 APP
parent that the Indebtedness OF tho Gin
cinnati, Hamilton and Dayton Railroad
Company was increased during the period
between 1896 and 1914 by more than
$4,000. 900. with all Increased income
yield of only 100000.
at appears that this enormous increase
Of Indebtedness without corresponding In
crease In earnings represents tile results
Of series OF transactions by which the
directors fastened upon the Cincinnati,
Hamilton and Dayton Railroad Company
the purchase OF securities of other rail-
road corporations at fictitious prices and
In consequence OF which the directors in
divlduslly made enormous profits at the
expense OF tho corporation. AS an Illus
traitor:
During the year OF 1904 tho Cincinnati.
Hamilton and Dayton Railroad Company
was made to buy sl1,oO0,000 OF the COM
mon stock of the Pere Marquette Railroad
Company az "A time when the Pere Mar
quette company was In reality bankrupt
and the stock worthless, as may be evil
denced by tfo fact that shortly. after the
purchase aforesaid tho Pere Marquette
company Oh confession OF bankruptcy
was placed In the hands Of receivers.
where 1t still remains.
Stock Has No value.
AS appears from the reports OF the
receivers an enormous deficit exists and
the common stock has not now and never
has had any real value and was originally
issued without consideration.
"On page 974, volume 81. OF the Ft,tdn-
ctdi Chronicle under date OF September
90, 1905. It appears that the Erie Rail-
road Company purchased s5.O00,oo0 OF
the stock of the Cincinnati. Hamilton and
Dayton Railroad Company from ]. p.
Morgan g. Co. and OH page 1,314 of same.
under date of October 26. 1905. that the
Erie company assumed control or the CHI
cInnati. Hamilton and Dayton.
'On page 1.4e2 OF the same. under date
OF November IS, 1905. II appears that the
directors OF the Erie had received infor-
nation which caused them 70 doubt the
propriety of the purchase. On page 1909
OF tile same. under date OF December 2,
1905. IL appears that the directors OF the
Erie compelled j. p. Morgan a. Co. 20
rescind the transaction under which the
purchase had been made.
On page 1864 Of the same, under date
OF December 10 1905. appear copies OF
letters exchanged between j. p. Morgan
and II. X. Hollins,. the latter being the
broker who had acted for the owners OF
tho s5.o0U,v00 of the g.. H. a D. stock,
Which had been sold through Morgan Il
the Erie Railroad Company. In which
Mr.. Morgan dceo not disclose his real
identity in said TRANSACTION.
Asks Broad Inquiry.
In my opinion It becomes necessary
that your honorable body should investi-
81 -N..AG .l... Ia