New-York tribune., 1919-07-17
Goethals Urges
Changes in Cuba
Cane Management
Finds Charges Against Com.
pany Correct and Makes
Recommendations fOrBet-
ter Direction of Its Affairs

General George w. Goethals, who
was retained early in March of this
year to make an exhaustive investiga-
ton of the affairs of the Cuba Cane
Sugar Corporation, yesterday told the
directors of the organization that he
found some of the charges made
against the management to be sub
stantially correct. He submitted
voluminous report to the members of
the board, who met at the Guaranty
Trust Company and referred the find
ings of Mr.. Goethals to a special COM
mittee for consideration.
summary of the results of the
survey was prepared, with General
Goethals's approval, for publication,
but the directors refused to comment
on any Of the points made.
The following broad characterize
tions of the management of the cor
poration were made by General
Goethals:
"The wisdom of the corporations
selling contract is questioned
"Changes IN the management are
recommended, although it is admitted
the location of the properties, the alb
sence of suitable habitation at many
of them, the lack of any social en-
vironment and the peculiar tempera-
ment of the people. 1t is believed,
however. that this can be ultimately
accomplished if done with the hearty
cooperation of the present manage
ment, and this cooperation seems as
sured because of the type of men at
present in charge of affairs and their
undoubted desire to make a success of
the enterprise.
"The amounts expended on improve
ments indicate clearly that the mills
were originally in rather poor condi-
tion, and sufficient time has not
elapsed for the improvements to be re-
flected in the earnings.
Equipment Inadequate
"The equipment of the corporations
railroads, with one exception, is in
good condition, though not altogether
adequate. Such inadequacy, however,
is made up to some extent by rental
of cars from outsiders. The machin-
cry plants of the corporation are as a
whole in good condition. The operat-
ing results Of the various plants have
been compared with their competitors,
and, although some of the centrales
show poor returns, the result of such
comparison is, on the whole, favorable
to the corporation. Moreover, the COM
pany is steadily improving it's manu-
featuring efficiency.
eT'axes, freight rates, war insurance,
labor costs and the cost of material
and supplies have increased largely.
This is partly due to abnormal condi-
tions over which the corporation has
no control. The decrease in profits
has been largely due to the failure of
the corporation in the past to take ad-
vantage of the opportunities for econ
omy afforded by centralized manage
ment.
at is recommended that the cor
poration establish it's own purchasing
department."
After explaining how the corporation
was formed early in 1915 through the
purchase of other institutions, General
Goethals says: "These corporations
originally lacked working capital. The
properties were taken up on the books
at cost of $48,120,000. The stock issue
was for $5o;oo0,Qo0. After additions
rroximately only $3,so0,OoO of working
capital. This lack of working capital
las forced operating profits to be used
tor extensions and improvements, in
cludlng the purchase Of the Stewart
property. The earnings of the Stewart
property have not yet justified the pur-
chase price paid"
1ne report recalls how the CORPORA
tion came into being through the acoui
sitlon of seventeen properties bought
for it by Manuel Rionada. The general
declares that the plantations bought
were not owned either in whole orin mart
by the CzarnikowRionada Company or
Manuel Rionada or any member Of his
family. The report declares further ,,
that Mr.. Rionada received no money
consideration for his services. Refer
ring to the transactions by which he
acquired stock, General Goethals saws:
these transactions call for no criti-
cism."
Attacked by Henry Evans
The investigation into the affairs Of
the corporation is the outcome Of an
attack made by Henry Evans and other
sharehoIders sna on the proposed issue of
$Zo,O00,O0O of notes early in the wear
and on the general management of the
institution The board of directors had
approved the new financing for add;- L
tlonal working capital, and referred f.
10 the stockholders, but Mr.. Evans
and his supporters fought it at the
stockholders meeting. A compromise
was reached, resulting in the annoint.
ment OF General Goethals as an i'm
partlal investigator. The notes have
not yet been issued.
T. among other queries raised, Mr..
Hvans last January asked why "the