The Chairman. Yes, that will be all right.

Mr. Quackenbush.— Here it is (indicating).

The Witness. I thought I had it, but I have forgotten it. Yes, Frank T. Fraser.

Mr. Quackenbush:

The Chairman.- What is this? Those are the three names. There is no question about these.

The Witness.- Charles M. Connfeldt and Phillips A. Clark.

Mr. Burr.—I do not recall their names as shining in the financial world.

Mr. Quackenbush.- That, Mr. Burr, if you want me to save time, was a mere method of getting rid of the $100 par value of the common stock of the Interborough Metropolitan Company, creating a merger with this corporation and the Interborough Metropolitan into the present Interborough Consolidated Corporation.

Mr. Burr.—I just want to have it spread on the record so that Mr. Fisher may be responsible for the statement as to what this company was and how it was organized.

Mr. Quackenbush.- I will have him verify what I say.

Mr. Burr.-I want to ask him that.

Mr Quackenbush.-All right. Certainly.

Q. Was this a foreign corporation? A. No, sir; it was a domestic corporation.

Q. What was the date of its organization? A. I think it was the same year that the consolidation was brought about, in 1915. Q. What was the amount of its capitalization? A. As I remember it, $500.

Q. There was another $50, I think. A. It might have been $550.

Q. There was $550 preferred and five shares of common. Is that right? A. That is right, yes, sir.

Q. And that was consolidated with the Interborough Metro

politan by agreement made by the stockholders June 1, 1915? A Yes, sir.

Q. And this company got half of the stock of the Interborough Consolidated Company? A. No, sir. The stock was exchanged share for share except that the par value of the stock of the Interborough Metropolitan Company was taken off.

By the Chairman:

Q. How much of the Interborough Metropolitan stock did this Finance and Holding Company get? A. They just got a share for each share of theirs. For the preferred stock they got one share of preferred stock. For each share of preferred stock they held they got one share of preferred stock; that is, five shares. And for the common stock they got one share of common of the nominal value of $5 each for each share of the common which they held.

Q. How many shares of common? A. Five, I think.

By Mr. Burr:

Q. Is it not a fact — if I am not correct, I wish you would correct me that the finance and holding company got control of the Interborough Consolidated, and the Interborough Consolidated got control of the Interborough Rapid Transit Company?

The Chairman. You mean the Interborough Metropolitan. Mr. Burr.- Yes.

A. No, sir. As I understand it, it was simply a vehicle used for the purpose of consolidating, for the purpose of removing as counsel has just said the par value of the stock of the Interborough Metropolitan, so that we could pay dividends out of surplus which we had on hand.

Q. And these three men whose names you have given are the only people you know who were identified with that company? A. I think they are the only people who were identified with the company.

Q. Is the agreement in existence? A. Yes, sir.

Q. Under which that arrangement was made? A. Yes, sir. Q. Will you produce it? A. I will, sir.

Q. Have you also a separate account, with regard to the real estate of the Interborough Company? A. Of the Interborough Company?

Q. Yes. A. Yes, sir.

The Chairman.- That is the Interborough Rapid Transit.

Mr. Burr.- Yes.

The Witness.

The Interborough Rapid Transit Company.

Q. Where does that appear? A. Sir?

Q. Where does that account appear? A. Our real estate department has an account of it. You mean the real estate not required by operation, or the real estate in connection with the operation?

Q. Both. A. Yes, sir, both. We have them both.

Mr. Quackenbush. It is included in a list which I expect to prove by Mr. Gaynor.

Mr. Burr.- Well, can you get, or do you intend to give us a detailed statement, Mr. Quackenbush.

Q. Mr. Fisher- or (addressing Mr. Burr), if I may make a statement, Mr. Burr, which I might subsequently establish by proof if necessary, the operation between the Finance and the Holding Company and the Interborough Metropolitan Company was the result of the enactment by the legislature in 1915, if my recollection be correct, of a law authorizing the organization of corporations in this state with no par value capital stock. In order to get the benefits of that statute it was deemed wise by counsel for the corporation to create entirely a new corporation, called the Finance and Holding Corporation; to merge that corpo

ration under pre-existing statutes, with the Interborough Metropolitan, calling the new corporation the Interborough Consolidated Corporation.

The results of that was that the preferred stock of the Interborough Metropolitan, aggregating forty-five odd millions of dollars was exchanged dollar for dollar for the preferred stock of the merged company, namely, the Interborough Consolidated Corporation. The next result, the important result to be attained, was to change the $93,000,000 plus all common stock of the Interborough Metropolitan Company into 930,000 shares of non par value stock of the Interborough Consolidated Corporation. Under the statute which I mentioned, the law required a nominal value of five dollars a share at least to be placed upon such stock, so that, today, the Interborough Consolidated Corporation has instead of the $93,000,000 of common stock, having a par value of $100 per share $930,000 odd of shares of stock with no par value, the result being that the capitalization of the Interborough Metropolitan Company was written down to the extent of the difference between $5,000,000 and $3,000,000.

The remark Mr. Fisher has made was that at that time the Interborough Metropolitan Company had in its Treasury funds which it could not disburse until this stock was written down, could not disburse to the preferred stock, because with the $93,000,000 of common stock outstanding there would be a question as to whether they would not be impairing their capital. When the capital was reduced to $5,000,000 for the common stock no such question remained.

The Finance and Holding Corporation was entirely, as Mr. Fisher has described it, a mere vehicle for the translation of the Interborough Metropolitan into its successor, the Interborough Consolidated Corporation.

The Chairman.- Do you ever get a headache, Mr. Quackenbush?

Mr. Quackenbush.- Every day. About four o'clock every day.

The Chairman. The old saying is that it would take a Philadelphia lawyer to understand that, but I think you got that down pretty fine.

Mr. Quackenbush. You see I come from Onondaga County in the central part of the state, and I have got some of the same qualifications that they have got in Philadelphia.

The Chairman. It is very hard to remember all that.

Mr. Quackenbush. And of course that very holding company was used to get the two together into a new one. That is the whole thing. It was a merger of the Interborough Metropolitan into the Finance and Holding Corporation, the child of the Interborough Consolidated Corporation, all of which was develped and gone through with in the usual procedure of stockholders' meetings and everything of that kind. It was entirely public at the time, and instead of increasing or inflating the securities it decreased them.

Mr. Burr.- Mr. Quackenbush, does Mr. Fisher know about the Queens investment that Mr. Gaynor referred to this moning and that the President referred to.

The Witness.-I probably know something about it.

Mr. Quackenbush.- Well just tell what you do know. By Mr. Burr:

Q. When was that company acquired, the New York and Queens County? A. 1903 and 1904.

Q. Do you know why it was acquired? A. Yes, sir. It was acquired solely for the purpose of creating a feeder for the subway. At the time the subway was building it was thought there would not be sufficient traffic to earn a return on the investment.

The Chairman.- What was secured for a feeder? I did not get that?

The Witness.- The New York and Queens County lines. The Chairman.- The New York and Queens County lines. The Witness. And for the purpose of having a feeder into the subway at the Grand Central station the New York and Queens County were acquired and the Steinway tunnel franchise was acquired, the idea being to feed the Queens lines into the