New-York tribune., 1918-12-14
Shonts Replies
TO Venner Attack
On Note Offering
-
J. 2. Morgan 4 Co. Makes
Public Letter From Inter-
borough Head Denying
Income Statement Was
Inaccurate, As Charged

On December 5 last c. H. Venner
4 &c. issued a circular in which it
Was asserted that a "painfully critical
situation of the Interborough Rapid
Transit Company is disclosed bv care
full analysis Of the annual report" and
charged. among other things that the
syndicate headed by 7. P. Morgan &
Co., in its recent circular offering
$33 400 600 of three-year per cent
notes of the Interborough, had made
representations as to gross earnings
and interest and sinking fund charges
that were not in accordance with facts.
Yesterday J. P. Morgan & Co re-
piled to the Venner attack in a state
ment which follows:
MANY investment houses have had
requests for information as to the
statements made by C. II. Venner re-
garding recent circular issued in re-
gard to the three-year per cent notes
of the Interborough Rapid Transit
Company. AS all statements in the
circular in question wer based on in
formation furnished by the company
such inquiries have been referred to
Mr.. Theodore P. Shonts, president Of
the Interborough Rapid Transit Com
pany, who writes the following letter:
Shonts' Answer
The letter by Mr.. Shonts, made pub
lie by the Morgan firm, follows:
New York, December II, 1918.
Dear Sirs: 'The circular of c. f.
Venner e. Co., dated December 8, en-
titled, "Warning Interborough Rapid
Transit Company per cent bonds-7
per notes." mas come to my attention.
"The investing public by this time
is so familiar with Venner's methods
of attempting to tear down the credit
Of stable properties like the Inter-
borough, New York Central, ect. that
it seems hardly necessary for me to
say to you that his present circular
is entirely misleading, and false in the
inference that it seeks to convey.
The income statement as set forth
In my letter of August 81, 1918 (repro-
duced by you in circular forml is cor
rect, and is made up in accordance with
regulations laid down, not only by the
Public Service Commission of New
Yerk, First District, which has iuris-
dlctlon over the operations Of the Inter
borough Rapid Transit Company, but
also prescribed by the Interstate Com
merce Commission in dealing with in
terstate railroad income accounts. The
facts with which Venner cannot but be
1amlllar are that interest is chargeable
against income only to the extent that
tiie properly is completed and in opera
tloh. interest on property during con-
structlon is charged against construc
tion until the property goes into opera
Iloh, when it is presumed that it will
pe earning revenue. The necessity of
charging. as part of the cost of con-
structon, the interest upon securities
ISSUED Tor construction purposes and
outscandlng during the period of con-
structlon is so obvious that a man Of
hr. Venner's long experience in searcS-
ing corporate income accounts conld
not nave tailed to learn this basic
principle heretofore.
-. ri. Venner is the we'll known nro-
1esslonal litigant who for more than
thlrty years has made it his business
TO acquire, either in his own name o.,
IN the name of another controlled bv
nm, few shares of stock in larpe
railroad and industrial companies ard
then to issue circulars or to bring or
threaten to bring lawsuits.
Venner's !. r. T. Holdings
"1n January, 1906, he acquired in the
name of the Continental Securities
Company 300 shares of the cap;taj
stock of the lnterborough Rapid Tran
SIT Company, fifty shares of which he
had transferred to his own name in
April, 1910. -
"ln 1908 and 1910 he brought suits
against the Interborough Rapid Tran
SIT Company and it's directors, in all of
which he has been defeated in the
courts of last resort.
I'm one of those suits the chairman
OF the lnterborough board of directors
August Belmont, denounced him when
on the witness tand as practical
blackmaler.
"Thereupon, in 1912, he brought an
action for libel against Mr. Belmont.
demanding damages in the sum of
S250000. Mr.. Belmont answered, iusti-
tying the charge and setting up full