The evening world. [volume] (New York, N.Y.) 1887-1931, 1921-11-21
| R. 7. AUDITOR CONFESSES
POWER COST FOR QUEENS CO.
IS CHARGED AGAINST SUBWAY
Admits This Means a Delay in
City Participating in Prof
its of Lines.
NEVER PAID A DOLLAR.
Interborough Has Earned So )
867,S7S and Has DiSburSel
S65,625,OOO in Dividends

Edward i. Gaynor. chief auditor
OF the Interborough. confessed on the
witness stand before the Transit
Commission this afternoon that the
cost OF the power used by the bank
rupt New York & queens Railway
Co., which is supplied by the Inter
borough and the Manhattan Elevated,
is charged against operations IT the
subway and the Elevated The con-
fession was made under pressure Ut
close questioning by Clarence }.
Shearu, counsel to the Commission.
The Queens County concern has
never paid a dollar for the power.
Mr.. Gaynors confession means that
the city has been paying Il share OF
the cost Of operating the street rail-
ways in Queens, in which 1t has no
interest whatever.
Does not this system OF making II
charge against the Interboroush for
the cost of power furnished to a sub
sidiary company OF the stockholders
of the Interborough tend to postpone
the day when the city will begin to
get return from the city-owned SUD
NaNs?" asked Mr.. Shearn
Mr.. Gaynor equivocally admitted
that the effect would be to delay the
participation of the city in the prof
its Of city-owned subway lines.
Earlier in the day Mr.. Gaynor ad-
mitted that the financial reports OF
the Interborough submitted to the
old Public Service Commission and to
the Transit Commission did not prop
srly set forth the true condition OF
the corporation.
The Transit Commission ordered
row copies of the proceedings of the
Board OF Directors in 1918 and 1919
to ascertain when, how and why div
idends were declared and who voted
them at a time when dividends were
declared and paid but not earned.
The admission was drawn by Mr..
Shearn by questions about an item
of 1885. 900 listed as sn asset by the
!. r. T. representing the value Of the
New York and Queens County Rail-
way when as a matter of fact the
New York and Queens County Rail-
way as a part of the Interborough
has produced an operating deficit OF
$4,OOO,OOO,
Delving into the history of subway
construction, Judge Shcarn called at
tention to assets Of $l2,000,000 as the
cost of the Rapid Transit Construc-
ton Company which was organized
by those who procyred the original
contract between the late John b
.~McDonald and the City of New York
10 buil,, the first subway. The Rapid
Transit Construction Company had q
three quarters interest in the con-
tract.
Mr.. Gaynor said the Interborougt
Company paid 81, 2,OOO, 900 for the cupi.
tai stock of the Rapid Transit Con
struction Company by issuing $9,6OO,'
900 in stock and paying cash amount
ing to $2,400,000.
.. And you had In addition to that
IN order to get the contract, to pay
Mr.. Mcdonald S2,5OO,OOO? Yes. sir.
Q. For his quarter interest, anC
there was issued to Mr. Belmon
Sl,50O,Oo0 OF stock, wasn't there? A
Yes, sir.
Q. For his services in procuring thu
contract? A. Yes.
Mr.. Gaynor admitted that in nine
teen years that have elapsed since tn,
Interborough invested $16,000,00 il
the subway lease $320,000 a yea
should have, by correct accounting
been charged of, or a sum in excess
OF 5000, 900 deducted.
O. And that has not been done. A
II has not.
q. 30 that II that had been done
what you have reported here as
Nsurplus would have been a deficit
IA 1uld 1t not? A. Wen, II would hav,
Nouqnusd on siItssnth RASSJ