rect. They were not correct, because the item of $6,000,000 of bonds was omitted. Hence the officers that swore to the reports were guilty of perjury, and, in a State where the laws are enforced, would have been sent to jail. But here was $6,000,000 of stock issued to take up the bonds. Where were the bonds? Exchanged for Metropolitan stock. So that the $6,000,000 of stock was merely a cover for $6,000,000 of bonds that had disappeared. "Who got the money?" asked a Wall Street journal, commenting dazedly upon this wondrous performance. It might well ask. Not the stockholders at large, certainly; not the public, not the road. To the doors of the syndicate it was traced. Beyond that golden portal it vanished. Who got the money? CHAPTER XV THE FATHOMLESS MYSTERIES OF HIGH FINANCE BUT the cream of all these operations of thrift grew out of the work of "changing the motive power" of the roads from horse to electric. New York City, in its street railroad service, had been far behind most other great American communities. Electricity, which by 1890 had been introduced almost everywhere else, was still unused in New York as late as 1893. One reason for this was the unconquerable determination of the people not to allow their streets to be disfigured with the poles necessary for the overhead trolley system, and the absence of any other device for car propulsion. More than once a street railroad company approached the Board of Aldermen with a proposal to install the overhead system, but on every such occasion the storm of public wrath and the keen memory of the Jake Sharp scandal, frightened the aldermen from granting the necessary permits. On the Broadway, Third Avenue, and another line, the cable system, the early dream of William C. Whitney and Charles P. Shaw (an endless iron rope drawn over pulleys in an underground conduit between the tracks), was substituted for horse-power; but this system, while economical, was clumsy, inefficient, and unsatisfactory. But meanwhile some Hungarian genius hit upon the idea of the underground electric trolley; the street railroads of Buda-Pest were operated successfully with this device; and in 1894 the syndicate adopted it, ostensibly for the entire Metropolitan system. To put it into operation required the reconstructing of tracks and roadbed, the building (in some instances) of power houses, and the installing of electrical machinery. This is the process to which I refer now as "changing the motive power." Among the important north and south roads acquired by the syndicate was the Second Avenue, with tracks from Fulton Ferry to Harlem River, and some branches. In 1898 this company issued $7,000,000 of bonds, whereof $1,960,000 were declared to be needed to meet certain obligations, and the remainder, $5,040,000, to pay for "changing the motive power" of the entire road. Up to the present hour the motive power has been changed on one-half of the road. The rest continues to be operated with horses. According to the company's reports, the amount of money expended in changing the motive power and installing electrical equipment (on twelve and three-quarters miles in a total of twenty-seven and three-quarters) was $1,933,171.47. All of this work was done, and all of this money was expended, in 1898. Since that date nothing has been done to change the motive power on any of the company's lines. Yet in its report for 1900 the company declares that it expended in that year for changing the motive power $4,329,390.02, whereas no such sum was expended, and no work of changing the motive power was done. Of the bonds issued for these improvements, $4,450,000 worth were sold. Of the money thus obtained, $1,933,171.47 was expended for the purpose designated when the bonds were issued. The difference between the real expenditure and the pre tended expenditure was $2,396,218.55. This sum has disappeared. Who got the money? The report for 1902 of the Thirty-fourth Street Railroad (part of the Metropolitan system) shows an expenditure of $245,435.63 for laying new rails in Thirty-fourth Street, between Lexington Avenue and Broadway. The reports of the same company for 1903 and 1904 show an expenditure of $51,347.64 for the same purpose, making a total expenditure on this account of $296,783.27. The exact length of track thus relaid was .48 of a mile. The rails used weighed 113 pounds to the yard, and cost $36 a ton. To lay .48 of a mile with such rails would cost $6,138 for the rails. Hence the company's reports would have us believe that the remainder of the item, $290,645.27, was spent for labor. But the labor required consisted of tearing up the old rails and laying the new, and the true cost of this work was not $290,645.27, but less than $15,000. How is this known? Very simply and surely. In its report for 1902 the Central Cross-town Railroad (at that time an independent concern, with its own directorate and management) gave the cost of taking up four tracks in Fourteenth Street and relaying them with heavier rails as $10,881.29 for the labor. The distance in Fourteenth |