New-York tribune., 1918-06-08
Canadian Car and
F oundry Inquiry
UrgeelbyC Committee
Charge Directors With Au.
thorizing Commissions
Secretly

An investigation Of the affairs of the
Canadian Car and Foundry Company is
demanded in circular to the stock
holders from a special committee rep
resenting Montreal and New York in
terests. The committee, which made
public its letter yesterday, invites
proxies to be voted at the annual meet
ing on July Is.
Among other things the committee
says "it appears from the records that
commissions running into millions
have been directly or indirectly au-
thorized by the board without details
being disclosed" The commissions on
the company's S83,000,O00 contract
with Russia, obtained in 1915, it was
charged, apparently exceeded the
whole net profits on that transaction.
Call Dividends a Sop
1t was also charged that since the
publication of the company's last an
$4,000 was authorized to be paid to
the president as O consideration for his
Endorsement of a subsidiary company's
note amounting to 100000. In this
connection the committees letter
stated that the recent declaration of
a 3A per cent dividend on the pre-
ferred stock was intended as a sop to
win back the favor of the stockholders
and balx the investigation which the
proxy committee deems essential. The
full statement bearing on the Russian
contract says:
'In 1915 the company obtained from
the Russian government shell con-
tracts aggregating $83,000,000, and at a
time when the management expected
apparently to make a profit of ap-
rroximately S15,0OO,O0O the president
obtained from the board the adoption
OF resolution Transforming to him
personally half of all net profits of
the company from such contracts. over
and above $5,000,000. Consider the re-
suit of such an unusual bargain be-
tween the company and its chief offl-
GER 1t the arrangements estimates
mad been even approximately realized
the company would have made $1O,00O,-
600 profit and the chief executive S.
100000. True, the company made no
such profit, and neither did the presi-
dent, but very bad principle, indeed.
was involved and consecrated"
The stockholders of the Canadian
Car and Foundry Company, Ltd" the
committees circular added, "have ex-
perienced most profitable investment
Tor the past fcw years: the suspension
of dividends, the tremendous shrink
age in share values and an undercur-
rent of rumors Of which bad manages
fnent' has been the mildest expression.
Last year the shareholders repre-
senting over two million of both pre-
ierred and common stocks endeavored
to ascertain the reasons for this most
unfortunate condition of affairs. more
especially in view of the huge profits
which the management predicted would
now from the war contracts of the
company At the instance of the above
stockh olders A. Hicks Lawrence was
elected director at the last annual
meeting, his nomination being accept
ed by the management with full knowl
edge on their part of the generally
widespread demand from stockholders
to ascertain the reason for this great
depreciation in the value of their hold
lngs. 1t was expected that every facil-
ity would be offered the shareholders
representatives in his endeayor to
carry out this investigation, and it
was indeed matter of surprise and re-
gret Tor the undersigned to learn that
ne has instead been persistently ham
pered and blocked by the MANAGEMENT.
ne records of the company reveal
that Mr.. Lawrence has insisted that It
IS not only within the province but in
fact the foremost duty of director to
ascertain all facts relative to corporate
transactions, not only of the parent
company but of its four subsidiaries.
Ihis elementary principle, it appears,
has been ignored by heads of depart
ments, who, with the support of the
active management, have not only re-
fused his repeated specific demands for
information in regard to the transac-
tons negotiated and carried out bv the
management, but have openly denied
the right of director to obtain such
information. 1t is incomprenensible to
tins committee and other large stock
holders VINO are in support of this
movement that the directors of the an
parent standing Of the present board
should openly support their officers in
their refusal to furnish information as
and when required by member Of the
board WIG
Ask Stockholders to Meet
That satisfactory inyestipat;o,
could not be carried out under snoh
conditions is self-evident. However
and Notwithstanding it all. the cow
mitsee are now in possession Of car-
tam facts of which they feel the sbars.
holders should be apprised in order
tnat they may advisedly pass iudement
On the board and its policy at the an.
nuai meeting of the company. which ;s
called for July Is next "Nn 10
.o me members of the proxy commit
1ee are LOUIS G. Beaubien and Michael
Harrv HHarrOi'g' g;,, Montreal; Willard H. Jones,
man. of New York City. Hunt t. Hill nirIS &