The sun. [volume] (New York [N.Y.]) 1833-1916, 1916-06-29
CAUSES OF ARECO
FAILURE EXPLAINED
President Boynton Lays Trou-
ble to Methods Of Connec-
ticut Commission.
TESTIFIES AS TO PROFITS

Edward =. Poynton. president ~ the
American Real Estate Company. noN IN
the hands OF receivers. intimsted yester-
day that the failure OF the big realty
corporation could be laid directly TO the
dilatory tactics Of a Connecticut state
commission sent here TO investigate the
resources Of the to which the
Connecticut Banking Department had re
fused "a license 10 do business IN that
state. IL was Mr.. Boynton'S first public
statement concerning the failure and g
was made at a hearing ON the affairs OF
the company held before George G. Holt.
special master In bankruptcy. In tho
United States District Court IN the Wool
worth Building.
finder questioning by George W. Wick.
ershan, attorney for the receivers. Mi.
Roy uton said the refusal OF the COM
reCticut authorities TO issue a license was
based on their examination Of the com
pany's AFFAIRS. but no ground was given
for the refusal. Statements were per-
Iritted 10 yct 10 the press. he said. Of
the insolvency 81 the COMPANY, hut NO
such statement was made 20 the COM
iauN. pcior To- that time, Mr.. Boyuto1
continued. "a large percentage OF inyes-
tors IN American Real Estate Company
bonds had reinvested as their hords fell
in. and many new bonds were sold.
Following the Connecticut action ev.ry
bond due was surrendered for payment
and every means was used to obtain pay
Uert OF those not YET due. Mr.. Boyuton
said the only business his company did
In Connecticut was 10 borrow money on
bonds
Coming down 10 the actual cause OF
the failure Mr.. Bovnton said
Following the refusal Of the Building
Loan commissioner to issue a license TO
us his office was abolished by the Leg
stature. n i've days later II was
merged with the office OF the State Bank-
Ing Commissioner. We appealed to the
Banking Commissioner FOR a hearing and
six weeks later he refused TO entertain
the appeal. telling us our only hope lay
~ an appeal TO the superior Court. We
made the appesl. and IN December. 1915.
a commission was appointed 70 take tes-
'imony That commission first met IN
February. 1915. took some testimony and
employed appraisers 10 place a value on
F our property.
The Douglas Robinson. Charles 8.
Brown Company and Others we're the
appraisers. but they had given no tes'i-
'uouy ~ TO tho time Of the rece!vership
Testimony st',l was being taken when
The receivers were appointed. The hear
ings were adjourned from week TO week.
with l!ttle done. Meanwhile our bond
holders we're making claims for pay
nent We could have gone on paying
claims for a lorg time. but Il would
have been at a sacrifice o. our assets.
and the officers ~ the company decided
they would not do that
The intina;ion that Mr.. Royn.on
gave was that had the Connecticut state
Commissioners done their wcrk promptly
and made a report based on their ind
.ngs and sppralssis investors In The
conpany's bonds would not have been
scared into calling Tor payments He
sad tina. at the time OF the crash the
company Has doing - normal business.
s.,h as Ia TIC pas: had melted svHS:da
iial profits.
Statements nled YESTERDAY show that
in January and October. 1918. n total of
s2oo, 900 was paid 10 officers OF the COM
pany in the matter OF deferred salaries
for the i've years preceding. The pay
rnents were made In & PEI cent certif-
Gates AZ face value. which certificates
ia;er were surrendered 10 the company
for 80 per cert % Their face value IN
cash, and subsequently, tho officers paid
100000 into the company. taking IN
lieu second mortgages a; par,
Speaking % the profits tho company
made out OF which 10 pay interest on It's
bonds NJ. Boynton said thai, from the
FORMATION OF tte company N 1855 %
1919 vacant property 90 'he value 81
s352l. 900 had been sold, the cos. o.
which. including all carrying chargse,
was S2.l35,Oo0. He said the average
yearly profit on vacant land sold up q
that time was 2+si per sent To show
that the officers had not voted them
selves increased salaries ~ a bad time
in the company $ business Mr.. Boyntor
said the appraised value OF property a.
the time OF the salary increase was
Si.3l6.62j IN excess ~ BOOK values, and
that Il was the practice of the company
TO ald each year 20 the book vaiue a
large pc~ccutage Of any increase shown
by appraisal.
The hearings will he continued or
TUESDAY, July u, AZ . o'clock in the
afternoon,