New-York tribune., 1919-03-22

To show just why the 1nterborough
Rapid Transit passed its dividends of
last February, an act which precpitat-
ed yesterdays petition, Mr. Shonts
read from a monthly report showing
how the company's deficit was conrin-
ulng: The net corporate income ain
red" or deficits, since last July, was:
:, July, $174ooo; August, $4,000;
September, $641 900; October, S544,
900; November. 1889, 900; December
$224,000; January, $341 600
The great increase in the deficit in
last August as explained by Mr.. Shonts
was due to the new increased wage
scale which vent into effect at that
Tins
Calls Receivership fortunate"
Mayor Hylan had not heard of the
appointment of a receiver until told
by newspaper men at City Hall. He re-
ferred his questioners to CORPORATION
Counsel William P. Burr, who refused
TO comment until he had read the mo-
tlon papers.
Everybody knows that the Inter-
borough Consolidated is the 'tail-end'
OF the old Metropolitan Street Railway
Company" said Controller Craig. at
was organized to unload on the public,
and 1t is fortunate thing that the
receivership has interfered with the
unloading process. Neither the re-
ceivership of the New York Railways
Company nor the Interborough Consoli-
dated affects in the slightest degree
the city contract with the Interborough
Rapid Transi, for the operation of
the city-owned subways and equip
ment."
Receiver Sheffield could not be
reached last night at his home, 45 East
Sixty Street. He was Fire
Commissioner under Mayor Stone, and
IS member of the legal firm of Shelf
field & Belts, at 50 William Street
Appointment Not Surprising
The appointment late yesterday OF
receiver for the Interborough Con-
solidated Corporation caused no sur
prise in financial circles, as it was
generally expected early in the day
that the passing of the New York
Railways to the jurisdiction of the
courts was but a prelude to the action
involving the holding corporation AS
matter of fact, it was thought late
Thursday that. the interborough Con-
solidated would be the first to 90 into
receivership.
While on Thursday it was the break
in the preferred stock of the com
pany that gave the first intimation Of
what was to follow, yesterday it was
the lnterborough Metropolitan A1a per
cent bonds that were weakest They
closed the day at 321a, a new low
record price. Early this year the price
was 43A, while the high for 1918 was
ooas. IN 1916 they touched 767s.
The per cent bonds of the New
York Railways Company, after opening
at 42%, declined steadily Throughout
the day and closed ab 40. This com.
pany's adjustment IS had already pret-
ty much discounted the receiyershin
proceedings, but closed heavy at II.
No Interest Expected April
or the 1nterborough- METROPOLITAN
bonds there are $65,315,OOO outstand
ing, and in the opinion of both the
company's officials and bankers. the
naming of q receiver for the INTERIOR
ough Consolidated is but another wav
OF stating that the April / coupon will
rot be paid, as the company has in
. .ne past PAID the interest on the In
ttSerborough- Metropolitan bonds from
1he dividends received from the Inter
borough Rapid Transit Company, which
early IN February passed the regular
quarterly disbursement of 21h nor
cent due at that time. - pN'
Protective committees have ajreadv
oeen organized to act IN behalf of the
security holders of the holding cornora1
'.;o .ion' Colonel Grayson NJ. P. Murphy,
CClce-presldent Ca of the Guaranty Trust
the Inter Metropolitan bondholdcrs,
committee, and E. V. R. Thayer, presi-
dent OF the Chase National Rank VS.
erected chairman of the proup formod
to protect the interests of the sharo1
holders. Associated with Mr.. Murnhv
we're John McHugh, vice president Of
fne p"n,, MechanIcs and Metals National
bank; Charles A. Peabody, president
OF the Mutual Life Insurance Com.
pany; Charles S. Sargent. Of KidJnr dJn,
Peabody & Co.; James A. Stillman
chairman OF the board of directors of
1ne 1a National City Bank, and Frederick
Strauss, of j. G. w. Seiigman & Co.
Others on Committee
Mr.. Thayer's associates are Harry
bronner, Mortimer M. Buckner presi-
cent OF the New York Trust COMPANY:
Gharles Hayden, Of Hayden, Stone &,
Co., and K. S. Marsden. president Of
the Farmers Loan and Trust COMPANY.
Both committees have issued calls for
deposit of the securities represented,
put have been experiencing some DIFF
ncui'ies que to technical construc-
tlon OF the stock transfer tax law.
Colonel Murphy announced that his
committee had been formed not only
to protect the interests of the sccuri-
ties that 1T represented, but also to
endeavor to assist in STRENGTHENING
out situation which threatens a great
number Of investors and which NAV
seriously affect the credit of the city
and state A thorough investigation
of the situation will be made at once,
and the action of the committee will |
depend on the facts developed by that
Investigation"
Critics of the Interboroughs finan- i
clal structure date the time of its
financial difficulties to the time when
the lnterborough Consolidated Cor
poration, the present holding company.
was organized by August Belmont and
his associates in June, 1915. That there
has been some justification for this
belief is borne out by recent state
ments of members of j. P. Morgan e.
Co. that the firm had never undertaken
any lnterborough Consolidated fnanc-
ing, although they have underwritten
several of the operating company's
fotations.
Controls Operating Company
The holding company, through own
arship of 339,128 shares of stock. not
only controls the lnterborough Rapid
Transit Company but owns 152765
shares OF stock Of the New York Rail
ways Company, operating surface rail
ways in Manhattan. The company is also
he holder of 532 shares of the Forty
second Street and Grand Street Ferry
Railroad capital stock, SIS shares Of
third Avenue Railway stock, and 1O1,-