An Embarrassing Situation

A Boston dowager once dismissed Frederic Christopher Dumaine, 84-year-old president and chairman of the New York, New Haven & Hartford Railroad Co., in a single frigid sentence: "Mr. Dumaine is the sort of person who spits in the fire." When he heard of the remark, improper Bostonian Dumaine turned to a friend, asked blandly: "Well, what the hell? Doesn't everybody?"

Last week, hardfisted, hardheaded old Fred Dumaine disdainfully spat on the hot fire stirred up under him at the New Haven's annual meeting. Stockholders were asked to approve the purchase of the outstanding 5% debenture bonds of the long-bankrupt Boston & Providence Railroad Corp. for $3,250,000. Who owned the debentures? None other than Chairman Dumaine and a few of his friends. They had bought the bonds for $2,256,800 in 1945 when Dumaine was just a New Haven director. Now they stood to clear a $993,200 profit on the deal.

To former Massachusetts Governor Joseph Buell Ely, who represented Dumaine at the meeting (the old man's physician had told him to stay at home), this was "an embarrassing situation." But to dividend-hungry Stockholder Eugene Havas, the situation was far worse. "Nothing like this has happened since the days of Fisk and Gould!" he yelled. "This is shameful!" Havas wanted to know why the New Haven was paying $3,250,000 for the Boston & Providence bonds when the New Haven hadn't distributed a preferred dividend in two years. Ely explained that the New Haven needed the debentures as the first step in the acquisition of the smaller road, whose 44 miles of double track form the best right-of-way from Providence to Boston.

That explanation didn't satisfy Havas any more than it did Attorney H. C. Mandeville, who represented U.S. Ambassador to Norway Charles Ulrick Bay. Bay is a New Haven director, and president of the Connecticut Railway & Lighting Co., which owns 45,893 shares of New Haven common. Said Mandeville: "The purchase of the debentures . . . at a profit to the seller is improper and illegal."

But Dumaine and his friends have voting control of the railroad, so the stockholders had to agree to give them their profit. They still face an obstacle: the ICC must approve the deal.

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