The sun., 1919-08-28
HYLAN TODIG DEEP
INTOI. R. T. FINANCES
Asks Particularly What Be-
came Of S1O,O00,000 of an
S18,OOO,0OO Surplus.
HINTS BAD MANAGEMENT
Mayor Talks Of "Dry Treas
uries Watered With New
Securities"


word, Mayor Hylan wrote last night to
Frank Hedley, vlce-president and gen.
eral manager, saying that the city was
preparing to make searching financial
day that 1t took over the original sub
way fifteen years ago.
The Mayor asked Mr. Hedley to In
form him at once whether the company
was willing to throw open to auditors
employed by the city all the books, 40
counts. vouchers and payrolls and TO
explain any entries which might not be
readily understood.
The Mayor suggested that possibly the
management of the company had been
injudicious in its expenditure OF its in
come and, IL II had accumulated a sur
plus, would not be so hard pressed as II
asserts 1t is to-day. He stated that later
he would ask for facts as to the methods
OF financing the corporation and its in
vestments. 1t Is not quite clear to him,
the Mayor said, what had become of
S10,000,000 of the Interborough's sur
plus, referred to when It was floating
an issue of bonds. Mr.. Hedley testified
county trolley lines which were not pay
ing.
Hylan's Letter to Hedley.
The letter to Mr.. Hedley reads:
when Mr.. Quackenbush and you ap-
peared befora the Board OF Estimate on
Saturday, August 16, you said that you
would welcome investigation of your
finances by the city.
After careful consideration I have
decided to accept your suggestion.
take il that you meant that the investi-
CATION by the city would be helped by
the PETERBOROUGH anG, OF course, this
would mean that not only the books and
accounts but also the vouchers as well
would be open for the inspection of the
city.
will you please make it clear by re-
turn mail If you mean that you will
throw open not merely such books as
might bear out your contentious con-
corning the company's finances, but that
all of the books, accounts vouchers pay
rolls, &c. will be Immediately open to
study and that you will explain to our
Investigators the true meaning of any
entries which are not readily understood.
Assuming that you meant you would
welcome a real investigation I am in
structing auditors to prepare at once for
this investigation, and as a preliminary
step may 1 ask that you provide US with
complete list of all expenditures OF
the Interburough company and its sub
salaries and predecessors back to the
time you took over the original subway
about fifteen years ago.
II would like you to segregate these
, expenditures so that we will get all the
costs of legal work. construction, prop
erty, equipment, coal. printing and
stationery costs of all salary lists out
OF each six months during the fifteen
years. &C.
From this you can readily see what
am aiming at. Fifteen years ago you
had in hand certain railroads along
with their assets and obligations and
certain cash in hand. Since that time
you have taken in annually a very large
scm Of money from the New York pub
lc in the shape OF cent fares. 1 want
the clty's auditors to examine this mass
Of data so they can tell us exactly what
you have done with that income during
these years.
ut is possible that you have been
inJudicious with your income and that
a different method of expanding your
Income might have left you at this time
with n very large surplus. Obviously IL
Sou had very large surplus you would
be in an admirable financial position
right now.
II have found with many public utili.
ties companies there has been a DISPOSE
ton to take out of the treasures I'M
warranted sums for dividends. bonuses,
legal expenses and all sorts Of queer
expenditures. This usually leaves the
treasures dry, and In the past the treas.
uries have been then watered with new
securities.
Sometimes an item is reported as
an asset when It is desired to sell
securities for a corporation, and then
that same item appears as n liability
short time later. A case in point is
your explanation OF the Interborough's
$4,000 900 surplus to the public when
you were floating lot of new bonds.
When We asked you the other day be-
fore the Board OF Estimate about this
$4,000 900 surplus you swept 1t aside
by explaining that about $4,000, 900 of 1t
had been invested by your company In
Queens county trolley lines, which have
suddenly become worth very little In
your eyes. II Isn't quite clear TO me
yet what became OF the other SIC, 00O,-
600 surplus.
After l have received the records
requested herein / shall ask you to
lay before me some further details as
to your methods OF financing. your in.
vestmerts. &C.. but TO Start with 1 will
thank you to advise me at once II l
may expect a fulilment OF my present
requests. You will please understand
that l would like to have not merely
lists of expenses. but details accom-
panied by vouchers showing TO whom
the money was paid"