New-York tribune., 1918-09-07
Director McAdoo
Blanes Morgan for
Railroads F failure
Excessive Interest and
Commission Charges
Are Alleged
Statement Is Issued
Default of Western Indiana
System Is Charged to
Financier
tSpee,ol DISPATCH to The Tribnne,

iSpcctGl Dispatch TO me rfOtnel
WASHINGTON, Sept 6.--Charging
that j., P. Morgan & Co. asked exces-
sive and unwarranted interest and
commission charges for renewal of the
one-year per cent trust notes upon
which the Chicago & Western Indiana
Railroad defaulted September /, Di-
rector General of Railroads William G.
McAdoo issued public statement to-
night in which he inferred that the
bankers had been responsible for the
default. The Director Generals state
ment sets forth that j. T. Morgan g.
Co. asked 2 total of %. per cent year
on good security and with interest
charges guaranteed by the government.
The statement charges that the
banking house failed to make known
its intention not to provide for the
notes until noon on Sunday, eptember
!, the date on which the notes fell due.
The Director Generals statement
follows:
"Commenting upon the failure Of the
Chicago and Western Indiana Railroad
Company to meet at maturity, Septem-
ber /, $15.00O,000 one year collateral 6
per cent trust notes, New York news
paper stated that the Federal Railroad
Administration was to blame because 1t
had declined to advance the necessary
funds and had refused the company
permission to borrow at a rate highe r
than per cent. The statements are
misleading
"The facts are that some weeks ago
~ of
of the Director General regarding this
maturity note issue and stated that ne
goeiations for its renewal were pend
ing with the companys bankers. The
company was advised to pursue nc
gotiation; with bankers and if unable
to renew with them to try elsewhere.
On August 23 the company advised the
railroad administration that it's bank
ers lad made no progress toward the
renewal of the loan. Telcgraphic in
auiry was then addressed to the bank
ers, Messrs. j. p. Morgan & Co., as to
the prospect of renewal.
Asked Increased Commission
"This inquiry developed on August 90
the position of Messrs. Morgan & Co.
that if the Director General in writing
would have the government guarantee e
rentals sufficient to pay interest on
try to renew the loan for one year at a
cost to the company of approximate
934 per cent. of which u per cent was
interest and PA per cent commission
for syndicating, handling and selling.
They indicated further that if the com
mission was increased to pa per cent
they would attempt, if desired. to place
the loan for two years orr the same
basis.
Excessive Interest Charged
"On August % the director of the
division Of finance telegraphed Messrs.
j. r. Morgan g. Co. that the Director
General is willing to insure the Chi
cago &. Western Indiana Railroad Com
pany rental, which. added TO its other
current income, will be sufficient to en-
able the company to pay the interest
on its present outstanding bonds and
cne-year notes and sinking fund re.
1urements on bonds, and also taxes
and other miscellaneous RENTALS and
pointed out that this would enable the
company during the period Of govern
,nent control to pay promptly interest
upon the S15,000,O00 issue at the rats
of per cent per annum-