New-York tribune., 1921-12-09
[. r. T. Paid
37R% Over
Bank Protest

(Continued from page one)
George McAneny, chairman of the
commission, pointed out the commits
sion purrosed to do, adding that Mr..
Garrison did not altogether have a
clear understanding of the plan.
| For the purpose of introducing the
Morgan n-Interborough correspondence.
Horace NJ. Fisher, secretary of the IN
terborough, was recalled to the stand.
He identified two memorandums trans
mitted on July 26, 1917, to Mr.. Shonts
by A. NJ. Anderson, of Morgan & Co.
One was a survey of the Interborough's
| financial condition prepared by Lee,
Higginson Co, of Boston. 1t referred
to the fact that there was outstanding
at the time $16o,0o0,00o Interborough
| first and refunding 5s, that $11 900 900
more had been authorized and that the
company proposed to have $4,000 900
additional authorized
Suggestion for Economy
"The position for these bonds looks
all right" the memorandum said, "but
it appears probable that the company
is approaching a period when it will
not earn the full interest on the Inter
Met AIS, or anything whatever on the
preferred stock of the Interborough
Consolidated. 1t would seem advisable
for the l. r. I. to reduce it's dividends
so that the ]. c. G. would no, longer
pay dividends on its preferred stock,
which requires s2.744, ,43o year"
In the second memorandum, pre-
pared by statistician of the Morgan
house, retrenchmeht of surplus was
urged
Mr.. Fisher identified letter from
Morgan & Co., dated September
10, 1918. which confirmed the purchase
by the banking group of the s20,900,-
900 principal of per cent gold notes.
Among the stipulations on which the
! the Interborough would not pay divi-
dends in excess of 10 per cent per an
mum on any of its capital stock unless
the surplus earnings of the company
subsequent to September /, 1918, were
sufficient to pay the entire amount of
all dividends declared subsequent to
that time On November IS, 1918, un-
took s6016,000 additional Z per cent
notes.
Fare Increase Expected
Mr.. Shearn attached Importance to
two other letters which he read in
eViOeHCe DIS DedIiHS vi tuS oupduy $
expectation of an increased fare. One
was dated January II, 1919, and ad-
dressed by William II. Porter, Of Nor
gan & Co, 10 Mr. Shonts.
Before Mr.. Morgan went abroad"
the letter said, you had agreed with
him that the next dividend on Inter
borough Rapid Transit Company stock
would not be paid unless the fare in
crease had been secured and that the
i
! sidered without our understanding and
agreement that the bonds would not
be jeopardized by such payment. Will
you be good enough to advise US that
| our understanding on this matter is
correct?"
The other letter was Mr.. Shontss re-
ply under date of January Is, 1919. 1t
ed: "Mr. Berwind and | did have a
talk with Mr.. Morgan in respect to
this matter and stated that no dividend
would be paid upon Interborough Rapid
Transit stock until after taking the mat
ter up with his firm"
In response to a question by Mr..
Shearn, the Interborough secretary said
he had been unable to find in the files
any further correspondence on the sub
ject of dividends.
In addition to his criticism of the
(
son said he thought the security holder
would watch "unfavorably" the group
ing of his holdings with weak asso-
clateS."
"Personally, | never was much i'm
pressed with the idea that you gain
much by putting everything that ran
on wheels into one company" said Mr..
Garrison.
Boards Theory Approved
In concluding the discussion of the
plan, Mr.. Shearn asked:
as it correct to sum up what you
have said by stating that if the board
of control feature were modified or
altered as you suggest, and but for the
mechanical difficulty that you suggest
about the bonds or securities, you are
in quite hearty accord with the COM
mission and it's plan?"
81 am in hearty accord with the
theory the commission has worked up"
replied Mr.. Garrison, "but l don't like
some of the details.
Before giving his views on the plan
Mr. Garrison was questioned concern
ing the affairs of the lines under his
supervision. He explained that he was
familiar with matters of general policy,
but had left the details of operation
to his technical advisers. He frequent
ly sought information from w. s. Men
den. his general manager, who was
present and was the last witness of
the day.
Mr.. Garrison testified that prior to
the receivership there we're 1908 free
transfer points on the B. K. T., which
since August, 1919, have been reduced
to $50, and that at 1850 other points
an additional charge of two cents had
been instituted.
The investigation adjourned till Man
day morning.