who own the stock today; because we know, as sensible business men, that when stock begins to fall in the market people begin to unload.

Mr. LaGuardia.-Dump it onto the poor

Mr. Quackenbush. So that probably-I am not speaking from knowledge-but probably you will find that the people who got the dividends when they were paying large dividends are not the people who have got the stock. That is one reason.

The Chairman.-Well, do you not think it would have been good business administration on the part of the Interborough Rapid Transit to conserve some of this money and not pay such large dividends, so that they could be tided over in time of trouble.

Mr. Quackenbush.- Quite correct; and they did it to the extent of twenty millions of dollars, between ten and eleven millions of which was in cash, and it was intended to

The Chairman.- Now

Mr. Quackenbush.-Now let me answer clearly, Mr. Mayorand was intended and was sufficient to carry the Interborough Rapid Transit Company through the lean period, until all calculations were thrown out by the war. That is the answer.

The Chairman. The auditor here practically says it was given over or loaned to a company that was practically on the verge of bankruptcy.

Mr. Quackenbush.-Owned 99 per cent., I think — he will get you the exact figure-by the Interborough Rapid Transit Company; loaned it to keep the lines in the County of Queens operating to carry the people there, and that done because they expected that if they tided that company over, that the Borough of Queens would grow as the Borough of The Bronx has grown, and that our investment there ultimately would be saved for our shareholders.

Mr. LaGuardia.—Are the surface companies of the Borough of The Bronx solvent?

Mr. Quackenbush.- Well, I do not represent them and perhaps I ought not to undertake to express opinions about them, but I really don't know. I did some years ago, when I should have answered that question.

Mr. Rigelmann.- Is the stock assessable or non-assessable?

Mr. Quackenbush.—- Oh, it is non-assessable; but I should hope, to answer the Mayor's question, that the shareholders, those existing now, would come to the rescue of the company rather than permit it to go into the hands of a receiver, Mr. Mayor. I would advise them to do so.

Mr. Hobbs. May I interrupt right here—

Mr. Riegelmann.-There is no power to compel them?

Mr. Quackenbush.-There is no power to compel them to. It would have to be a voluntary transaction.

Mr. Riegelmann.- No power under the law?

Mr. Quackenbush.- No, but still, answering his honor the Mayor's question, I should hope that if on the 1st day of April or the 1st day of July next our treasury does not contain sufficient funds to meet our fixed obligations, the stockholders will go into their pockets and voluntarily help us out.

The Chairman.-Don't you think under the circumstances they ought to go into their pockets instead of taking it out of the pockets of the people?

Mr. Quackenbush. To the extent that there is identity of ownership now they certainly ought to be willing to help to avert bankruptcy, but the amount that they earned- and the amount that they received was earned, it was earned before anybody anticipated the direful effects of this war; and as long as the effects of the war have been to put the whole world on a new level of prices of labor and materials, I assume that the public should get on a new level of payment for transportation service as they do for the price of newspapers or bread or clothing or anything else. That is economics.

The Chairman.-You don't think, do you, Mr. Quackenbush, that where these people have gotten 1872 per cent. profit in these years and put it in their pockets-now when things are possibly not as advantageous to the company, don't you think that they ought to go down in their pockets and put up the money, instead of extorting it from the people's pockets?

Mr. Quackenbush.- Well, I would not like to use the word 66 extort," because

The Chairman.- Well, we will say "take it from the people's pockets."

Mr. Burr.

because, as I say, Mr. Mayor, you appreciate that if it were possible and legally, of course, it is utterly impossible-to collect a single dollar of dividends paid out by any corporation, as were dividends paid here- but if it were possible to get it, it would be inadequate to meet the situation, it would be an entire it would be postponing for a short period the inevitable,

that is all.

The Chairman. But is it not a fact, Mr. QuackenbushMr. Quackenbush. Rather, things are on an economic basis, and we can't change it.

The Chairman. Isn't it a fact, Mr. Quackenbush, that the Interborough Rapid Transit Company has paid over sixty-five million dollars in dividends in the last 16 years?

Mr. Quackenbush.- Well, I will take your statement for it. I presume it is true, Mr. Mayor. There is no doubt of very large dividends having been paid.

Mr. Riegelmann.-Is there any reason to suppose that after the effects of the war have disappeared these roads won't earn just as good dividends as they did before?

Mr. Quackenbush. After the effects have disappeared they ought to, Mr. President.

Mr. Riegelmann.-Yes; they will go back on to a 20 per cent. basis then

Mr. Quackenbush.- Well, I would not expect that ever to come again.

Mr. Riegelmann.- Or 17?

Mr. Quackenbush.- No, we never could. I may explain that very briefly. Under Contract No. 3 we never can get from the subways more than $4,700,000-subways and the elevated together more than $4,768,000 a year, out of which we have got to pay the interest on the 42 per cent. bonds, which takes over three millions a year, so that the—

Mr. Riegelmann.- Well, if that is so, that would come out

Mr. Quackenbush.- Well, I will bring that out.

The Chairman.- Go right along.

Mr. Burr.-May I ask Mr. Gaynor one question?

The Witness.-I want to answer the question.

Mr. Burr.— Have you got the question?

The Witness.-The Interborough Rapid Transit Company is the owner of 32,048 shares out of a total of 32,500 shares of the New York and Queens County Railway.

Mr. Quackenbush.— And has been how long, Mr. Gaynor?

The Witness.- And has been since 1903, 1904 and 1905.

Mr. Quackenbush.- So there are no individuals, Mr. President, who could benefit by that payment, is what I wanted to make clear.

Mr. LaGuardia.-I know, but this is what I wanted to make clear: If at the time that this stock was acquired by the company that company was not on a paying basis, then it seems to me the remedy would have been to arrange matters within that company, and not assume this dead load on the new company. Now, I want to know all about that. Yes, I want to know all about it.

Mr. Quackenbush.-I will give you a complete statement.

Mr. LaGuardia.— The transfer of stock in that period.

Mr. Quackenbush.

Yes.

Mr. Burr.- By the stockholders.

Mr. Quackenbush.- The whole business.

By Mr. Burr:

Q. Having the war well in mind, Mr. Gaynor, I just wanted to ask you this question: Do you know what the net income was for the fiscal year 1918? A. Of which company?

Q. Of the Interborough. A. Yes, sir; I do.

Q. How much was it? A. (Witness refers to book.) the year 1918 the net corporate income was $4,662,758.92.

For

Q. Yes. Now, that was practically or approximately only half of the net income of the year previous, wasn't it? What was the net income for the previous fiscal year? A. The figure which I have just called off is for the year 1918.

Q. Yes. A. For 1917 I don't happen to have the record here. Mr. Quackenbush. Here it is. (Handing book to witness.)

Q. What was it? A. (Witness refers to book.) For 1917 it was $8,885,358.52.

Q. Now, what were the dividends declared during the fiscal year ending June 30, 1918? A. $6,125,000.

Q. That was 1712 per cent., wasn't it? A. 172 per cent.

Q. Now, if from the figures that you have just read it would appear that in the face of the fact that the net income of $4,600,000 for the year 1918, fiscal year, approximately amounted to only 50 per cent. of the net income of the previous year; nevertheless, dividends were declared during the fiscal year ended June 30, 1918, of 1712 per cent., amounting to $6,125,000, or approximately $1,500,000 more than was earned? A. During that year; but it had been earned prior thereto.

Q. Now, likewise during the 1919 fiscal year dividends amount ing to $1,750,000 were declared, despite the fact that operations resulted in an actual loss for that year of $3,810,000; isn't that true? A. That is true.