Arizona republican., 1914-07-14
Story Of Reckless and Prof
ligate Financial Opera
tions of Railroad Is Re
vealed in Report Of Com
mission.
FUNDS ARE USED
LIKE STAGE MONEY
Monster Game with All of
New England as Prize
Results in Passing of
Company's Dividend and
Loss to Stockholders.
ASSOCIATED PRESS pIsPATcH1

ASSOCIATED PRESS DIsPATcH1
WASHINGTON, July 13.-The story !
OF the reckless and p:ofligate' fl !
financial operations Of the New Haven !
railroad, one of the most remarka- ,
Bile chapters in the history of Amer |
lean railroad and American finance, |
was revealed in part by the Inter- |
state Commerce Commission in d
report to the senate of its investi- |
cation of that road. 1t told of mil |
lions used like stage money and |
corporations employed as pawns in |
monster game with all New Eng
lands transportation as the prize, |
which led the New Haven in the ten
years just passed from the height of
prosperity to a point where the div
idend has been passed, where a dis
| solution suit is threatened and where
criminal indictments of many direc-
tors who figured in the deals at
| least are a possibility.
! Hampered by unwilling witnesses,
| by burned books and all the mazes
which lawyers have invented to cov9l
er the trail, the commission estimat-
| cd that in the progress toward the
monopoliZation of New England
| transportation New Haven stock
holders have lost between $1,000
| 600 and s90,OOOO0O but little of
which they may recover
In return for money lost, the re-
port said the stockholders have on
their hands properties which pay no
dividends which eat into the earn
| inc-c af H.,
will be burden on it's capacity for
many years to come. The report
| deals with the management of the
/ New Haven under Former President
| Charles S. Mellen, of the present di-
recting head, Chairman Howard Eli
Oft and Walker d Hines, special
counsel and says:
They have co-operated with the
commission and rendered it substan-
tial assistance throughout this in
Vestigdtion. The combination reared
by the hands of Mellen and approved
by the late J. Pierpont Morgan and
| William Rockefeller, the commission
finds to be clearly a violation of the
| Sherman antitrust act. and a mon
| opoly in virtual control of the trans
| rortation of five states The COM
missions report is unusual in the
manner in which the directors of the
New Haven are scored for their
deeds. 1t speaks of criminal malad-
ministration and negligence and as
serts with positiveness that the d-
! reetoTs knew they were perfecting
an Illegal combination.
| The New Haven, the commission
says, employed dummy directors.
manipulated accounts, used question:
able methods in increasing its own
stock. paid dividends to subsidiaries
to make showing and used many
other devices to deceive the stock
holders and the public. 1t dipped into
lpoitics, was factor in the "invisi-
BILE government" made large cam
paign contributions to two dominant
political parties. bought officials and
tried to distort public opinion All
this it did the commission says. to
carry out scheme Of private trans
portation monopoly imperial in its
scope"
IF these directors who were faith
less of their stewardship, were held
responsible in the courts and at the
bar of public opinion for their fail
ure to do those things they should
have done, the lessons to directors
who do not direct would be very
salutary,' says the report.
Most directors of the New Haven
accepted their responsibility lightly
They failed to realize that their
names gave confidence to the public,
and that their connection with the
corporation led the public to invest.
When these directors were negligent
land serious losses resulted therefrom
they were guilty of grave dereliction
of duty and breach of trust that
morally was wrong and criminal in
its fruits
Directors should be made indi-
}vidually liable to civil and criminal
laws for the manner in which they
discharged their trusts. Corporations
can be no better or worse than those
who operate it 1t should be just as
grave a crime to plunder stockhold-
ers of the public through a railroad
corporation as is personally to rob an
individual"
OF all the millions lost te New
Haven stockholders, the commission
, estimates that possibly eight million
, can be recovered by proper action.
, Evidence in it's possession tending to
show violation of the laws of New
York, Massachusetts and Rhode Is
land has been turned over to the
proper executives in those states
r The department of justice has been
i furnished with a complete record of
1.-THE testimony obtained the COM