New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1914-03-07
EARLING DENIES
WRONG INTENTION
Explains "Apparent Overvalua-
ton" of the Puget Sound Ex-
tension Investment.

Chicago. March s.-An explanation OF
conditions on which were baseu inc
charges made to-day by the Interstate
Commerce Commission against the Chi
cago. Milwaukee & St Paul Railroad WAS
made tonight by A. j. Earling' presioeht
of the road. Mr. Earring gave the reason
for the apparent generalization Of the IN
vastuent in the Puget Sound extension
nd asserted that there had been mo in
tertion TO make other than accurate
statements OF its operating or nhahc'a'
condition for the purpose OF promo'lhe
The sale of its stock, or Tor any o'hel
purpose"
The statement says that the Original
stock OF the Puget Sound Company was
100000 When the construction OF the
extension was nearly completed 1t was
found that a mortgage FOR e-"'"'voV
would be needed to complete the con-
struction and for equipment ana 10 PRIV
vide for future extension
4 mortgage for 500 ooO was issued.
The statement says that the laws OF
the State Of Washington. in which the
Puget Sound Line is Incorporated. provide
that bonds issued by railroad companies
should at no time exceed double the
amount of the stock. Accordingly. the
capital stock was increased from 10000
to $lO0Uc,OoO.
Certificates representing this amount
Of stock" says the statement, were
delivered to the Chicago. Milwaukee
St. Paul Railway Company January 2,
1909. This company has ever since held
these certificates. 1t has never parted
with a single share of this stock. and
never Will.
"This statement was carried on the
books of the ST. Paul company at
100000 until January /, 1918. when ii
purchased the Puget Sound company:
and since then It has been treated by the
ST. Paul company and carried on its
books az a imminent OF title.
1T was carried on the books Of the
Puget Sound company at 10000. 900 in or
der 10 make it valid stock under the laws
of Washington. While this was not In
strict compliance with the accounting
rules OF the Interstate Commerce Com
mission. IL was necessary under the laws
of Washington, i'm order 10 make IL valid
stock, and II was necessary that this
stock be valid in order To give validity to
the bonds.
About year ago the commission called
attention 10 the accounts of the Puget
Sound company. in connection with rs
construction and early operation. After
several conferences with a member of the
commission it was agreed that the ac-
counts which had been questioned should
he revised. Practically all the accounts
have been revised In conformity with the
requirements of the commission.
These differences In accounting during
tho transition Of the Puget Sound lines
from a construction 10 an operating CON
dition cover three years or more. Con-
structlon and operating work was carried
on simultaneously, necessarily leading 10
accounting discrepancies I'm auditing re-
ports of large numbers OF new men who
were not familiar with the classification
of accounts as prescribed by the commits
sion
THE allusion In the dispatch to the
sale Of Puget Sound bonds has reference
10 the sale OF s95.0O0.OW Of the first mort
gage bonds OF the company In the spring
Of 1911. Nothing In connection with the
revision of these accounts can have any
effect upon the assets of either company
or tho value Of Puget Sound bonds or
tho security behind them"
The statement was several hours IN
the preparation. Mr.. Earring being In
conference with legal counsel Of the rail- |
road and several other officials