Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1914-07-13
New Haven Stockholders
to Sue Morgan, Rookie
feIIer and Others.
Is CRIME OF CENTURY
Interstate Commerce Commits
sion Recommends ProSeGu-
ton of MeIIen and Allies.

Boston, Mass, July 13. - Attorneys
representing minority stockholders
in the New Haven railroad have de-
manded that the directors join their
clients in a suit to recover 125.000,000
alleged to have been wasted by the
management. Suits will be filed this
week against the estate of ]. p. Nor
gan, William Rockefeller and others.
Washington, d. c., July 13.-One of
the most glaring instances of mal-ad.
ministration revealed in all the history
of American railroading is the inter.
state commerce commissions charac-
terization OF the findings in the inves-
tigation of the New Haven railroad
financial affairs reported today to the
senate in a report of 10000 words,
probably the most drastic in terms of
any ever made by the commission.
The New Havens directors were pro-
nounced criminally negligent. Evf-
dence pointing to violations of the
law has been transmitted to the dis
trict attorneys of Massachusetts.
Rhode Island and New York and the
federal department of justice.
Reasonable estimate of the loss to
the New Haven by reason of waste
and mismanagement, says the report,
will amount to between sixty and nine
ty million, and the directors should be
made individually liable to the civil
and criminal laws for the manner in
which they discharged their trust.
MelIen Under Fire.
All of the commissions structures
were upon the management of the New
Haven system under former President
Mellen. The present management, the
report says, cooperated with the COM
mission and rendered substantial as
sistance in the investigation. The re-
port cites these significant incidents in
the loose, extravagant and improvident
administration of the finances of the
New Haven:
Boston & Maine despoilment.
Iniquity of the Westchester acquisi-
ton.
Double price paid for the Rhode Is
land trolleys.
Recklessness in purchase of Con-
necticut and Massachusetts trolleys at
prices in excess of the market value.
Unwarranted expenditures of large
amounts in educating public opinion.
Disposition, without knowledge of di-
rectors, of hundreds of thousands of
dollars for influencing public senti-
ment.
Financial Legerdemain.
Habitual payment of unitemized
vouchers without any clear specifica-
tion of details.
Confusing interrelation OF the prin- |
cipal company and subsidiaries and |
consequent complication of accounts.
Practice of financial legerdemain in |
issuing large blocks of New |
Haven stock for notes of the New Eng
land Navigation company and manipu- |
lating these securities back and forth. |
Ficticious sales of New Haven stock |
to friendly parties with the design of |
boosting the stock and unloading on the |
public at higher than market price.
Unlawful diversion of corporate |
funds to political organizations.
Scattering of retainers to attorneys |
Of five states who rendered no itemized |
bill for services and who conducted no |
litigation to which the railroad was
party.
Extensive use of paid lobby in mat
ters which directors claim they have
no lHIOTmdtlOn.
Attempts to control utterances of
press by subsidizing reporters.
Payments of money and profiigate
issue of free passes to legislators and
their friends.
Investment of 100000 in securities
of New England newspaper.
Political Bosses flushed.
Regular employment of political
bosses in Rhode Island and other
states. not for purposes of having them
perform any service, but to prevent
them, as Mellen expressed it, from be-
coming active on the other side.
Retention by John L. Billiard of more
than S2.700.000 in a transaction in
which he represented the New Haven
and into which he invested not a dol
lar.
Story OF Mellen as to the distribu-
ton of $1.200.000 for corrupt purposes
n bringing about amendments of the
and Port Chester fran
chises.
Domination OF all affairs of this rail-
road by Morgan and Mellen and abso-
ute subordination of other directors to
the will of these two.
Unwarranted increase of New Haven
liabilities from $4,000, 900 in 1903 to
;417. 900. 900 in 1913.
Increase in floating notes from moth
ng in 1903 TO s4O.ooO,O0O in 1913.