Business & Finance: The St. Paul

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The latest investigation of the bankruptcy a year ago of the Chicago, Milwaukee Railroad (the St. Paul) opened in Manhattan last week under the presidency of Frederick I. Cox of the Interstate Commerce Commission. For the Commission, Walter L. Fisher of Chicago was special counsel.

The I. C. C., stirred up by the St. Paul's creditors,* seeks to learn why, how and with what benefits the road three and a half years ago leased the 96-mile Chicago, Milwaukee & Gary belt line and the Chicago, Terre Haute & Southeastern.

The St. Paul has claimed a saving from these two leases at $2,042,018.41. This Field Supervisor W. H. Carleton of the I. C. C.'s bureau of accounts flatly denied; asserted that his corps of 50 accountants had discovered great overestimates of profits and some irregular bookkeeping, that actually the St. Paul has lost $403,210.19 on the leases.† This learned, Commissioner Cox called for other witnesses.

Percy A. Rockefeller was the first important one. He is now middle-aged (48), very tall, indeed taller than his deceased father, William, his cousin, John Davison Jr. (four years younger), or his revered uncle, John D. Sr.** Spectators noted his heavily tanned and freckled complexion, his horn-rimmed spectacles in their gold frame, his slanting forehead, his meticulously parted hair. He answered questions for the most part readily, always frankly, in a mild, almost diffident voice. One trick of his amused the attendants. He pinches his lips between thumb and forefinger every time he must reflect for a phrase.

His testimony indicated that he now owns very little stock of the St. Paul, had resigned as a director after the leasing (at his recommendation) of the two short roads in question, had taken a directorship in the puny belt line chiefly to get free pass privileges on other roads††, believed the St. Paul profited from the leases, knew of no scandal.

Confusing to the minds of many was the $300,000 lease brokerage fee paid jointly to Benjamin L. Winchell of St. Louis and Samuel Pryor of Manhattan. Mr. Pryor put his $150,000 split into the Owenoke Corporation, of which he, Percy Rockefeller and Frederick B. Adams are equal partners, to complete (according to Percy Rockefeller's testimony) his capital share thereof. The implication was that Percy Rockefeller, who had recommended the leasing, had personally profited by $50,000, the partnership third of Mr. Pryor's brokerage fee. "But only in a sense," hearers of the admission were good enough to whisper to one another.

After Percy Rockefeller was excused, came President John McHugh, made a St. Paul director in 1923, why he did not know. He enlightened the investigators not one whit.