By Mr. Quackenbush:

Q. You have now before you a box containing certain papers. Will you state what they are, beginning at the first one, Mr. Gaynor, if you please. If you have No. 1, will you start at No. 1? A. (Witness produces paper.)

Q. You have taken from the box before you voucher No. 1 of Rapid Transit Subway Construction Company. Now, that and the paper attached is what? A. This is a voucher prepared August 1, 1902, to refund to the Rapid Transit Subway Construction Company advances made by that company to the Interborough Company to the amount of $2,668,250.80.

Q. Now what does that cover? A. This has no direct relationship to the equipment details to which I have testified. The Construction Company loaned the Interborough Company that amount of money and when the Interborough Company became in funds sufficient to pay it, it returned the sum to the Rapid Transit Subway Construction Company.

Q. Well, we will take Voucher No. 2.

The Chairman. - Well, which company do you mean when you say "The Interborough Company?" There are three of them.

Mr. Quackenbush. We will always in this investigation, Mr. Mayor, so we will have no misunderstanding about that,— whenever I refer to "Interborough Company" for short, it means the Interborough Rapid Transit Company, the operating company; and I may say in explanation that the Interborough Consolidated Corporation has no relation to these matters, had nothing to do with them. That, of course, as you know, is the company which owns the stock of the Interborough Rapid Transit Company. So that we will have no misunderstanding, whenever we say "Interborough" it will be the Rapid Transit Company, and whenever for short I say "Construction Company" I will mean the Rapid Transit Subway Construction Company, which is a contracting company.

Mr. Burr.- I think it would tend to a clear understanding of the facts as we proceed if, at this point, before developing these exhibits further in their relations to the Rapid Transit Construction Company and the Interborough, we should have some sketch so as to avoid repetition; or that in the future we should have some sketch of the development from the time that John B. MacDonald obtained the contract to the organization of the Rapid Transit Construction Company, and from the Rapid Transit Construction Company the development into the Interborough.

The Chairman. You mean the Interborough Rapid Transit Company?

Mr. Burr.- The Interborough Rapid Transit Company. And in that way we will have a clear understanding, I think, of what you are developing.

Mr. Quackenbush. - Now, I think that Mr. Gaynor is sufficiently familiar with that to make a general statement.

Mr. Burr.- Yes.

By Mr. Quackenbush :

Q. Will you take up the suggestion of the Corporation Counsel? Will you state the method by which the original subway was constructed under the contract with John B. MacDonald and the Rapid Transit Construction Company came into the situation, and then how the Interborough Rapid Transit Company came into the situation? A. I can state what I have learned with respect to those facts from the records which have come under my jurisdiction. My understanding is that the contract between the City of New York and John B. МасDonald was signed in February, 1900. Shortly thereafter the Rapid Transit Subway Construction Company was formed for the purpose of carrying out the obligations undertaken by Mr. MacDonald under that contract.

Mr. Burr.- Who composed that company?

The Witness.--- The Rapid Transit Subway Construction Company was a corporation of $6,000,000 capital. It proceeded with the work of constructing Contract No. 1, carried

that on until in 1902, in July - June or July, 1902, it undertook the work of constructing what is known as the Brooklyn Extension.

Mr. Burr.- Yes; but won't you tell us first who composed the company?

The Chairman. - Mr. Gaynor

The Witness. - That was a contract with the Construction Company.

Mr. Burr.- Who composed the company?

Mr. Quackenbush.-- The list of stockholders, you mean?

The Witness. The shareholders?

The Chairman. - No; directors and president.

The Witness. - I think Mr. Fisher, the secretary, having the custody of those records, would be a better witness on that point than I would be.

Mr. Burr.- I think you had better call Mr. Fisher.

Mr. Quackenbush. If you will just step aside then, Mr. Gaynor

Mr. Riegelmann. - Just let me ask Mr. Gaynor one question. Was this John B. MacDonald operating through the Rapid Transit Construction Company? Was this a corporation that he organized for the purpose of performing this contract, or was this a new interest that came in at that time? Do you know that?

The Witness. The contract was awarded to John B. МасDonald. The next step was to finance it. As I understand it, it was decided that the better way to finance that was to organize a company. That led to the organization of the Rapid Transit Subway Construction Company, with a capital of $6,000,000.

Mr. Riegelmann. - Was Mr. MacDonald performing his contract through a corporation that he organized? Is that the

The Witness. I did not - will you repeat that question?

(The question was read by the Reporter.)

Mr. Burr.- The corporation was organized for him?

The Witness. - Mr. MacDonald assigned three-fourths of his interests in the Rapid Transit Contract to the Rapid Transit Subway Construction Company, retaining at that time a remaining one-fourth interest.

Mr. Quackenbush. - Now, am I interrupting you, Mr. President?

Mr. Riegelmann.-- Not at all.

The Chairman.-- Let us get the

Mr. Quackenbush.---- I think now, in answer to the President of the Borough of Brooklyn, one further question will complete what he has in his mind.

By Mr. Quackenbush:

Q. You have spoken of the three-quarters interest of Mr. MacDonald's contract, and will you explain about his assignment of the remaining one-quarter; and then I will come to that in a moment?

The Witness.- Will you read the question? (The question was read by the Reporter.)

A. The remaining one-fourth interest in the construction contracts to which I have referred was afterwards assigned by Mr. MacDonald and his associates to the Interborough Rapid Transit Company.

Mr. Quackenbush.---- Now, that disposes of that.

The Chairman.-- Whom do you mean by "Mr. MacDonald and his associates?" Who were his associates?

The Witness.--- Will you read that question? (The question was read by the Reporter.)

The Witness. - His associates at that time, as their names recur to me, were Mr. Belmont

Mr. Quackenbush. - That is August Belmont?

The Witness. - Mr. August Belmont, Mr. Cornelius Vanderbilt, Mr. Walter G. Oakland, Mr. Andrew Friedman, Mr. William A. Reed. Those are the names which come to me.

Mr. Burr.- George W. Young? Mr. Young?

Mr. Quackenbush. - He asked if Mr. George W. Young was interested.

The Witness. - Yes.

Mr. Quackenbush. - I will supply the exact information through the secretary. Now, Mr. Mayor, shall I ask the secretary to

Mr. LaGuardia.-- I want to ask this witness a question, to get something straight in my mind. Do you understand that the Rapid Transit Subway Construction Company was organized after the contract of February 1, executed Contract No. 1, executed February 21, 1900?

The Witness. - I so understand it.

Mr. LaGuardia. - Good. And to this newly formed company Mr. MacDonald assigned three-fourths of his interest in this contract?

The Witness. - He did.

Mr. LaGuardia... Now then, did he receive anything for this assignment?

The Witness. - What was that?

Mr. LaGuardia.--- Was he paid anything for the assignment

of his three-fourths interest in the contract.

The Witness. - Will you read that question?

(The question was read by the Reporter.)