New-York tribune., 1921-12-09
[. r. t. Paid
37h% Over
Bank Protest
Dividends Voted i'm 1917
lib Contrary TO Advice
Given to Company by
Wall Street Financiers

The 1nterborough Rapid Transit Com
pany was urged by it's bankers in 1917
and 1918 to conserve resources and re-
duce dividends, according to docu-
mentary evidence introduced yesterday
at the Transit Commission inyestiea
ton.
A letter dated January IL, 1919,
shortly after a final dividend of 21a
per cent had been paid, and addressed
by j. P. Morgan & Co. to the late Theo-
dore P. Shonts, formerly president of
the 1nterborough, was the chief exhibit
in this contention. 1t called attention
to the fact that the company had agreed
in 1918 that the next dividend on
|. r. T. stock would not be paid unless
fare increase was secured, and that
the dividend question would not be
considered without an understanding
that the bonds of the company would
not be jeopardized.
Dividend Warning Unheeded
In spite of the warning from Wall
Street that the company should place
itself in strong cash position, the
1nterborough declared dividend of 20
per cent in 1917 and dividend of II II
per cent in 1918, it was pointed out by
Clarence j. Shearn, special counsel of
the commission, from testimony taken
at previous hearings.
Lacking the testimony of INTERIOR
ough directors, who last week refused
to take the stand, the commission yes
terday placed in evidence voluminous
correspondence between J. P. Morgan
& Co. and the Interborough to further
develop details Of the financial trans
actions of the transit company.
Besides these additional disclosures
I concerning the Interborough, yester-
days hearing was made important by
the appearance of Lindley M. Garrison,
Company and subs idiary lines.
The former Secretary of War added
tc the criticism that has been directed
at the proposed board of control in
the plan of the commission for re-
organization of the traction compa-
nies.
Garrison Debates Plan
/ Mr.. Garrison saw in the proposed
board the same flaw noted by other
transit men who have been invited to
give their views to the commission
the danger of politics. His comment
commission as to the merits of the
plan, Mr.. Garrison adhering to his con-
tention and the commission equally as
insistent that the composition of the
board of seven members left no loop
hole for political patronage
"Unless you expect to get what you
can't expect to get, men to serve on
this board who are superior in every
respect to men whom you have got to
serve as President of the United
States" said the former Cabinet off
GER, "they will inevitably take care OF
their camp followers, henchmen and
political helpers at the expense of the
system"
"My reason for making that emphatic
statement" Mr.. Garrison explained
'is that universal experience in every
part of our government shows that
| just as soon as you have any sort
of political management patronage is
an essential part of it,"
Expounding further on the subjec,
of patronage in politics, Mr.. Garrison
| said:
at is no discreditable thing to say
that for the last forty years, as far
back as my memory goes, there has
\
been suspected, and I imagine to some
extent properly so, of having used
patronage for party purposes. 1t is
inseparable from any kind Of political
activity.
Political Pressure Prevails
"I should say the same thing il
your public Offices were filled to-day
with men that l myself picked out
impartially from the entire city
because I do not believe men can re
sist political pressure in respect te
political affairs"
Mr.. Garrison paused and smiled
through his horned spectacles. ~ have
never known any one to do it," hi
added, "and l have had rather close
contact with political affairs at some
time in my life"
The only safeguard from politica
machinaton, Mr.. Garrison suggested
was to be found in keeping the boarc
of control out of direct Relationship
with operation, confining its duties tt
regulation and finance. This, in fact
Continued on pass thrse)