New Britain herald., 1914-07-13
ROAD DIRECTORS HELD
 CR|N|NALLY NEGLIGENT
Continued from First Page.)

which we are confronted arc those arising out of the acquisition of the Boston and Maine stock, the New
 York, westchester and Boston stock and the Rhode Island trolleys.
 "A summary of the losses is as follows:
 Boston and Maine, $23.223,725.6s.
 New York, Westchester and Bos- ton, 1,457,156.os.
 Hartford and Worcester Street Railway, $73,394.27.
 Springfield Railway companies. $203,221.15.
 Worcester Consolidated Street Railway, $1o.5oo.oo.
 Worcester and Southbridge Street Railway, $15,5S0.O0.
 Connecticut company, $12,535,- 3s6.01.
 Rhode Island company, $1s.352,-
 336.41.
 Totals, $65,s71,2ss.61.
 There was a loss in the recent sale of the New Haven interests in the Merchants and Miners Steamship company of $3,594,500.
 Reasonable Loss Estimated.
 From all of the foregoing, it Is submitted that reasonable estimate of the loss to the New York, New Ha- ven and Hartford railroad company by reason of waste and mismanage- lnent will amount to between $6O,- 000. 1000 and $90,000,00o.
 "The splendid property of the New Haven railroad itself will be called upon for many year to make up the drain upon it's resources resulting 5k1 transactions outside the proper field in which stockholders supposed their moneys were invested.
 But honesty and efficiency ot management of this property as a railroad only will undoubtedly, in time, restore it's former standing. 3S8 Subsidiary Corporations. .'It was found in the investigation of the New Haven system that there were 336 subsidiary corporations ana the books of the New Haven road proper reflect upon a small part of | the actual financial transactions of | tho railroad. Many of these subsi- diary corporations served no purpose save an evil one. They were used to cover up transactions that would not l bear scrutiny. The commission should have the right to examine these subsidiary companies. :. The revelations in this record make 1t essential for the welfare of l the nation that the reckless and pro- i f1igate financiering which has blight | ed this great railroad system be ended.
 'In the search for truth the com mission had to overcome many ob- stacles such as the burning of books, letters and documents and the ob- stinacy of witnesses.
 States Laws Violated. .'In the course of the investigation, many instances were uncovered Uf violation of the laws of different states. As pointing to. violations of state laws, we have turned over the
 evidence concerning local occurrences in New York city to the district at l torney of the proper district, and the testimony relating to irregularities in Massachusetts and Rhode Island have been laid before the proper authori- l ties of those states.
 The difficulties under which this l railroad system has labored in the past are internal and wholly due to 1 it's own mismanagement. It's troubles have not arisen because of regulation 1 by governmental authority. It's great est losses and most costly blunders were made in attempting to circun- vent governmental regulation and to extend its domination beyond the lim- it's fixed by law
 Capitalization Was Increased. It is pointed out that the capitaliza- tion of the New Haven system was increased from s93,00O,000 to SAIL 100000 since June 30, 1903. This was exclusive of stock premiums making an increase of $324, 1000, 900. "Of this increase says the com 1 mission, Approximately $120,0OO,00O was devoted to it's railroad property and was expended for betterments l and equipment. This leaves the sum l of $204, 100000 which was expected for operations outside of it's railroad sphere"
 1 The report then goes on to deal with various financial transactions
 which were under investigation. Story of Profiigate Waste. 1 Of the New York, Westchester and
 Boston road the report said it was a ! story of profiigate waste of corporate ] funds. The road was not necessary l as a part of the New Haven system.
 The sum of $S6,434.173 was expended l for road only 1903 miles in extent.
 It's earnings must increase four and a
 half fold before it can pay it's opera ] ting expenses and fixed charges. Its l acquisition was executed by 0 commits l tee of Morgan, Rockefeller and Miller, with President Mellen as chairman 1 The report continues: After all
 the large expenditures which this
 company had made in acquiring
 the stocks of these companies there was still outstanding 34,053 1-2 shares l of the stock of the company which l nrnved t0 he the insfr1lYnanf of da-