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Show I Interstate Commerce Commission Com-mission Condemns Financial Finan-cial Operations of Directors. MERGER ATTACKED AS BEING ILLEGAL New Haven, Boston & Maine and Trolley Lines May Be Forced Apart in the Near Future. WASHINGTON, July 9. Financial operations of the Now York, Now Haven Ha-ven & Harlford railroad, its ownership of trolley lines and control of allied New England railways, are condemned in unmeasured terms by the interstate commerce commission in the report of its investigation niado public hero today. to-day. The commission's conclusions aro: That tho '.'outside" financial management man-agement has been "wasteful" in tho extreme and had .the New Haven con-iined con-iined itself to actual railroad activities under tho same conditions that, prevailed pre-vailed in other respects, it could have paid a dividend or S per cent for tho fiscal year 1912, and carried to surplus account; $1, 794:000, instead of showing a deficit of $490,000. I Agreement Illegal. That tho New Haven 's agreement with Boston and Maine is "violative of the spirit of the statute against the icstraint of competition and should be canceled." "In our opinion," says the commission, commis-sion, "this line should be kept entirely free from New Haven control." No order was made by the commission, commis-sion, but in its opinion "the following propositions which have application to all railroads lie at the foundation of adequate railroad regulation: "Every interstate railroad should be prohibited from expending money or incurring liabilities or acquiring property not in tho operation of its railroad or iu tho legitimate improvement, improve-ment, extension or development of that railroad. "No interstate railroad should be permitted per-mitted to lease or purchase any other railroad nor to. acquire the stocks or securities se-curities of any other railroad nor to guarantee guar-antee the same, directly or indirectly, without the approval of the federal government. gov-ernment. Government Control. "No stocks or bonds should be issued by an interstate railroad except for the purpose sanctioned In the two preceding paragraphs, and none-should be issued without the approval of the federal government gov-ernment " Commissioners Clements and Marble submitted a. concurring opinion, in which they "agre heartily with the report," but make their position clear as to some of the Issues mentioned. The inquiry resulting In today's report was begun about a year ago by the commission com-mission upon its own lntltiatlvc in consequence conse-quence of numerous persistent complaints of the railroad rates, regulations and service ser-vice In New England. The carriers particularly par-ticularly investigated were the New York. New Haven & Hartford, the Eoston fc Maine and the Maine Central. Months were devoted to exan.lnation of books and accounts, and thirty-seven days were devoted to public hearings, in the course of which more than six thousand pages of testimony were talcon. Report Exhaustive. The report is divided under four general 'leads. "Service." "Rates," "Finances" and "The Remedy." Commissioner Prouty. who lias devoted much of his time to the inquiry, discusses exhaustively each phase. The report aggregates nearly 30.000 words, or approximately twenty-five columns in the average newspaper. In an exhaustive discussion of the financial finan-cial affairs of the New Haven and the Boston & Maine, Commissioner Prouty Indicates clearly that the Investigation was not into the solvency or Insolvency of the New Haven company, but rather the character of its financial operations. The transactions of President Mellen In giving his personal notes to his own rompany for stock are discussed at length hy Commissioner Prouty. Campaign Contributions. On transactions in New Haven stock bought with such notes the report says, there were profits of $102,000. but the New Haven's books do not show to what use the money was put. Commissioner Proutv Fays: "His statement wa that the .amount had been used in campaign expenditures during the summer and fall of 1904 by direction di-rection of his directors and that thev had subsequently ratified ills act. The special account hIiowr a, payment to Mr. Mellen of 550,000 in cash which he passed over to the Republican national campaign committee. com-mittee. It shows a second payment to Mr. Buckland, now the vice president of the company, of $6500 which was turned over to the Republican state committee of Rhode Island. "The investigation disclosed that such stock transactions extended over a considerable consid-erable period and from time to time Mel-: len was given various large sums for various purposes unstated on tho books of the company. He explained that tho amounts ho received were for campaign contributions and for other expenses including in-cluding one itom of 533,000 spent in connection con-nection with certain leases of dock property prop-erty In New York City." Propriety Doubted. Commissioner Prouty says the commission commis-sion doubts the propriety of this laxity In the keeping of accounts between Mr. Mellon and his company. "If," says the report, "the president of this corporation expends money In connection with the purchase of a lease he should take a voucher for the same. If the expenditure expendi-ture is not such that a voucher can be taken it ought not to be made." It is pointed out that all of Mr. Mellen's notes to the New Haven have been liquidated li-quidated except one for $5000, but many of them Involve transactions which are not disclosed by the books. Resigns One Place. PORTIAND. Me., July 9. Charles S. Mellen resigned the presidency of the Maine Central railroad at the monthly meeting of the directors today. Vic President and General Manager Morris McDonald was elected to succeed him. The Maine Central Is a subsidiary of the Boston & Maine, the presidency of which Mr. Mellen resigned yesterday. |