The New York herald., 1921-12-06
SHEFFIELD TO TELL
! OFI.R.T.'S $SOO,OOO
Shearn, in Transit Inquiry,
Wants to Know More
About Interborough.
.B. r. II. HEARING TO START
Nicholas F. Brady, Col. Will
Jams and Garrison to BE
Before Commission.

Although Brooklyn Rapid Transit
Company affairs will occupy most OF
this weeks sessions of the Transit Com
missions examination, Clarence J.
Shearn. its examining counsel, is not
through with the Interborough.
His first witness when tho hearing IS
resumed this morning at 40 Lafayette
street probably will be James r. Shelf
held. trustee In bankruptcy for the In
terborough Consolidated Corporation.
Sheffield Is eyrected to clear up addi-
tional points concerning the borrowing
by the I. r. I. of 100000 from the
treasury OF the Interborough Console
dated only twenty-four hours before the
latter. which is tho holding company. ap-
piled to tho court for relief acknowledge
ing itself insolvent.
This transaction, which Mr.. shearn
referred to as the transferring of a large
sum from the treasury of concern on
the eve OF its insolvency. was consun-
mated at time when large loans were
being negotiated by the L r. L. directors
on that company's demand notes, and
heavy dividends were being distributed
by them. It was brought out last week
that when Mr. Sheffield became trustee
IN bankruptcy for the Interborough
Consolidated he at once demanded and
received the restoration of the $500. 900
into the Interborough Consolidated
treasury.
Though the personnel OF the directors
OF the two corporations was indenticaL
the operating company and the holding
corporation had widely divergent bodies
or creditors, fact which has caused
his deal to be severely criticised as an
injustice to the Consolidated. Mr.. Shelf
field will be asked to explain just how
the restoration of the 100000 loan was
made
Hedley TO Explain Coal Prices.
Frank Hedley. president OF the Inter
borough Rapid Transit Corrpany, will re-
sumo the witness chair at his own re-
quest to explain the apparent discrepancy
IN prices paid for coal by his own COM
pany and the 3. r. L. There was testi-
mony to show that though both corpor-
ations bought from the same wholesale
coal dealers. the Brooklyn lines were
paying an average of AZ cents ton
less for their fuel than the Interborough.
When Mr.. Hedley was examined last
week he was unable to explain the diff
ference. 1t Is understood he has dis
covered that the B. r. T. burned in its
power houses, in part, anthracite SCREEN
ings. a cheaper grade OF hard COAL thus
accounting for a yearly difference of
about S332,000.
Another phase ,of the Interborough's
finance is likely to be reopened before
the end of the week It will be recalled
as one of the episodes OF last weeks
evidence that when the banking house of
J. p. Morgan & Co. in 1918 undertook to
market the s49,000.000 interborough
per cent. notes II stipulated as condl-
ton OF the agreement that no more Inter-
borough dividends In excess of 9 per
cent. annually were to be paid unless
they were earned from operation. Study
OF the minutes OF the j. r. t. directors
meetings indicated that this compact was
violated almost as soon as II was made.
Mr.. Shearn expects to put on the wit
ness stand Dwight w. Morrow, the men,
bcr OF tho Morgan firm most familiar
with these facts, and to question him
concerning the banking houses protests
against the Interborough's persistent
payment of big dividends into the Golfers
Of the Consolidated.
n. II. II. Directors to BE Called.
When the p. n. II. investigation gets
under way Howard Abel comptroller;
w. 8. Menden. general manager, and
L.Indley M. Garrison. receiver, will be
witnesses. The .. r. It. board OF direc-
tors Is not to remain exempt from inter-
rogation. Nicholas r. Brady, chairman
of the board, and Col. Timothy $. Will
lams, president OF the company before
the receivership and member of its
board OF directors. have been invited to
sppear for examination. SUst as We're the
marlborough directors, who last week
declined to sign immunity waivers and
therefore were dismissed.
From such study as Mr.. Shearn has
been able to give TO tho minute books
and accounts OF the p. r. T.. It Is not
expected to yield such sensational reve-
iations as are left in the tran of the In
terborough The Brooklyn comDany's 6
per cent. dividend IN 1911. however, is
criticised in some quarters, because at
the tims IT was voted, il Is held, the
managers OF tho road should have been
able TO SEQ that mounting wartime prices
and wages soon would make extraordi-
nary demands on their surplus. which
was down at the time to not more than
arout a10 600 600.