Year: 1879


attracted large attendance at the Railroad Invest
eating Committees session. The committee. by its
action on several questions propounded by Mr.
Sterne. manifested disposition to concede the point
first raised by Mr.. Jewett. that their prov
ince is to ascertain facts in relation to
railroad management and railroad business that may
be used aid in shaping intelligent legislation.
and not persecute the railroads of the State or to
assist the enemies of any railroad corporation on
damaging it's interests deprecating the value OF
its property. This change brought about by
the position taken by Mr.. Jewett yester-
day, and by the impressions his objections
to Mr.. Sterns's course made upon some of the men,
bers of the committee. great portion of Mr..
Sternes questions to-day related to the corrupt
practices common under former managements OF
the Erie Railway, such stock watering. the de-
claring of unearned dividends. unwise leases and
endorsements, and similar misconduct. These,
Mr. Sterne insisted were pertinent to the inquiry.
inasmuch the new corporation. the New York
Lake Erie and Western Company. had assumed the
bonds and capital stock OF the old company, with
all the frauds covered up in them. The object
however defeated by the witness frank avowal that
such practices were unjustiiable and ought to
be prohibited by law. He made an ex-
cellent impression by signfying his desire
to aid the committee to the extent Of





would effectively stop such practices and punish
those who rcsorted to them But he illustrated the
true position Of the new company by the statement
that if the chairman OF the committee should buy
house at certain price. on the understanding that
it free from mortgage. and after he paid
the money should discover that mortgage
did exist he would have choice but to pay the
mortgage lose the property After he had paid the
mortgage the price the house cost him would be the
honest sum and the fraudulent sum in addition, and
amounts combined he would be telling the truth
aud not making false statement


CHARACTER THE INVESTIGATION


A rumor prevails to the effect that members
of the committee contemplate making proposition
that the investigation and inquiry be resumed by
the committee and taken out OF Mr.. Sternes con-
troll and that the counsel be asked to make any sug
gestions he may please to the committee
sess, like other Witnesses under oath.
member of the committee, being questioned
to the foundation for this rumor sad:-"I do not
think any such proposition has taken shape, but
doubt the committees work ought to be done i'm
partially and it ought not to be marred by any per-
Becuton prosecution OF any particular corporation
in the interests Of Mr. McHenry any other party
Neither ought the present inquiry be suffered to
become nest egg Ior stock specniators by SEEM
such artfully drawn questions AS sharp lawyer
might concoct. have no doubt Mr.. Sterne is
tirely honest, but do not like tho tone of of
his questions and fear he may be used by others.


q. What interests could be subserved by endeavor-
ing to Tx the responsibility for past corruptions in
Erie the new company and the new management,
A. Well grand grab has been attempted by certain
men, who have endeavored to secure legislation
giving them the bernie bank Of the
canal as the roadbed of a railroad through
the State; they are opposed by the other
roads, and If they smirch the other rail-
roads the projectors Of this steal, by which tho
profits of rapid transit i'll New York would be
success with the Eric road. There is in addition
the suits pending in England involving
ties to these suits adverse to the Erie road can
create the impression that the whole reorganization
business has been corrupt. and that Legislative
committee by its course OF examination believes
great advantage might be gained by them in their
attempt to the judgment that has been given
against them these men pay very large sums of
money in legal fees and sharp in their
efforts to manufacture evidence in their own favor
of course our committee cannot consider or care
who may be injured or. whom benefited by the facts
they elicit; but my own fear. must confess, is that
carefully and cunningly framed questions. such
lawyer can get up, especially when answered cate
goricaly, calculated to distort facts and to
misiead the public than to bring out the clear. i'm
partial truth the Legislature desires to do and
the committee ought to aid it in doing.


q. Have you any reason to suppose that the coun-
sci conducting this examination Is retained in the
McHcnry interest? A. Oh Lone ut all; but Mr.
Jewotts production OF q London paper, in which Mr.
Sterne is as saying very harsh things of
Mr. Jewctt makes evident that the parties in London
who being sued for restoration Of Erie property
by Mr.. Jewett must regard Mr.. Sterne on their
side. and they no doubt would give him Information
to aid him in his assault on Erie.


=. Then you regard Mr.. Storne as making
sault on Erie? A. Well, as to that don't suppose
that he would pretend that he is not tnmca to Erie;
IL his enmity would enable us to get at facts we
ought certainly to avail ourselves OF it, but then
do not think we should confne this examination
prejudiced parties alone; We want to obtain facts
whoever or wherever they hit; must confess that
was much impressed by Mr.. Jcwett's candid offer
to AID our inquiry by every means IN his power: 1t
seems to me most significant that he has for his
enemies all the men who stole from and broke
down the old Erie Company; for my own part
should place much reliance on the voluntary state
ments OF such a man, and certainly he has shown
more practical knowledge OF railroad matters than
any witness we have yet had before us; think it
our duty to take reliable information where we can
get IL. and not to be all the time fighting the battles
of the enemies OF railroad corporation: Mr.. Jewstt
examination viii be continued Oh Monday.


JEwETT STAND.


During his examination to-uay MIR. Jewett said he
had not the slightest idea OF how much of the first
consolidated mortgage was actually recoyed by the
Erie Railway Company; can't tell how much of the
proceeds was used in constructing the Erie; but the
committee can go over the accounts and trace every
pose to which they applied: the condition OF
the road between 1874 and 1873 altered very little


MIR. Sterne-And yet you advanced on c., c., c. aud
!. money for the account of McHcrry2


MIR. Jewett-lcs; that was easily accounted for; at
that time had no idea that Nc Henry had any evil
design upon the Erie; Travers & Co. neld the stock
and notice came that the stock would be unless
money borrowed upon II was repaid; the money
was advanced to help Mcicnry and protect our
selves was not then nor / now aware of
the existence OF a statute prccluding holding
stock In another corporation; do not consider this
transaction ~ coming within such provision: the
first advance was made before my connection with
tho road; Mr.. Barlow acted as the agent of Mr. Me-
Henry at the time, and also a director OF Erie
and one OF the counsel; this the subject
matter OF litigation between BischoTsheim. Gold
schmidt and the London Banking Association and
this railroad, and / submit to this committee
whether this matter should be gone into here.


The Chairman stated that the purpose of the com
mittee was only to ascertain whether the proceeds
OF these s250O0o0) bonds had been received the
company, aud If not such state OF affairs should
be guarded against in future by legislation. The
fact is all we want.


Mr.. Jewett stated that he also thought there
should be such law; the company has never
realized the full value OF those bonds; the COM
pany is now seeking TO recover those proceeds
and the parties settling Devoe's deficiencies;
IL the committee to get statements here to be used
against the Erie at the rial OF those cascsr II the
committee would come to his Office ho would submit
all the books accounts; but he objected to this
mode of inquiry.


Mr.. StcrIe sand he simply seeking to draw
from Mr.. Jcwett only what already appeared of
ord in previous judicial proceedings wherever 1t
appeared that the c., c., G. and transaction was
the outgrowth of a conspiracy between Messrs.