Omaha daily bee., 1902-03-25
NOT A UNION PACIFIC SCHEME
Purpose Of Northern Pacific to Secure Bur-
lingtOn Denied by Stakeholder.
FORMATION OF THE MERGER IS AIRED
scheme said to Involve sale of north
ern Pacihc Common. Purchase of
Darlington and Organization of
Securities Company.

ern Paciac Common, Purchase of
Burlington and ORGANIZATION of
Securities Company.
NEW YORK. March 2I-The hearing in
the suit begun by Peter Power, in the
United States court for the district OF Min
%nesota, for the purpose Of determining the
standing before the law OF the purchase and
holding Of Northern Pacific and Great North
ern stocks by the Northern Securities COM
pany, was heard this afternoon before Rich
ard A. Mabie, a special examiner.
Jacob II. schih OF the firm Of Kuhn, Loeb
& Co., was the first witness. He was ques-
toned by a. NJ. Boutelle Of Minneapolis.
counsel for Peter Power. Mr.. Schiff said
he was a member Of the board Of directors
Of the Northern Pacific since the latter
part OF 1897 and had been elected a d.
rector Of the Chicago. Burlington & Quincy
railroad during 1901. He is also a director
OF the Northern Securities company. Up
to 1901 he was a director in the Great
Northern. He did not remember how much
stock he had in the Great Northern; be
had not held any Of 1t since the summer
OF last year. He was one Of a number OF
hnanciers who in 1896 purchased $26, 200. 900
worth OF Northern Pacific common stock,
at the time Of the reorganization of that
road.
Declines to Answer.
Was Mr.. Hill in that deal?" was asked.
Mr.. Hill can tell you replied Mr..
Schin.
The witness said he had purchased 1900
shares Of Burlington stock in 1901.
For whom did you act in purchasing
that stock?"
II decline to answer"
did you act for the Hartman inter
ests?" s
II decline 10 answer. l decline to answer
any questions regarding the business Of
Kuhn, Loeb q Co., unless compelled TO do
So was the reply of Mr.. Schin.
He said that the stock was not purchased
for the purpose Of securing the control Of
the Burlington for the Union Pacific. He
also declined to answer a question as to
whether he had acted for any railroad in
terests in making the purchase Of Burling-
ton stock.
Mr.. Schiff said his firm never represented
the Union Pacific or the Oregon Short Lipe
as bankers in the stock market. He de-
clined to say whether the firm had so rep
resented Mr.. Hartman. AS far as he could
recollect. the purchase made by his Arm
OF Northern Pacific stock before May 8.
last year. amounted to SIS, OOo, 900. A few
weeks later this stock was transferred,
part to the Union Pacific and part to the
Oregon Short Line.
Morgan Buys Union Pacific.
Mr.. schin said be did not learn Of the
fact that the Union Pacific was disposing
Of its Northern Pacific holdings until the
matter came before the board of directors,
of which he was a member. The stock was
sold to ]. p. Morgan & Co., and payment
was made In 80. 900, 900 or SIC, 600, 900 cash
and $50, 900. 900 or $50. 900. 900 in stock of
the Northern Securities company.
The witness said Mr.. Hill asked him to
take a place on the Northern Securities
board. Mr.. Schin said he first learned Of
the retirement Of the Northern PaciRe pre-
ferred stock at the time Of It's actual re-
tirement. He did not know whether Mr..
Hartman had been consulted in the mat
te-'.
Charles Steele Of J. p. Morgan & Co. was
called. He said Mr.. Bacon OF that firm had
conducted the purchases Of Burlington stock
made last year. The firm organized a syn
dictate to raise $50, OOO.o 900 cash, which was
necessary in order to buy control OF the
Burlington. The object Of the purchase,
he said, was to reap the profits that would
result from getting eastern and southeast
ern connections for the Burlington, there
being valuable grain and timber lands In
the territory traversed by the other COM
Dany.
No -Premeditated Plan.
Mr.. Steele said that there had never been
any ironbound agreements between Mr.. Hill
and Mr.. Morgan that they would hold on to
their Northern Pacific stocks. The plan Of
retiring Northern Pacific preferred had
come up before 1901. On May /, 1901, ]. p.
Morgan & Co. had about IS. 900, 900 worth of
Northern Pacific common and between May
! and May Z they bought about SIS, OOO, 900
worth. In the middle Of the summer they
sold $4,000 600 worth OF 1t to the Northern
Securities company, receiving stock of the
Northern Securities company in return.
The purpose of a conference Immediately
after the disturbance OF May 3, Mr.. Steele
said, was to ally public apprehension, and
to that end Hartman interests consented
to give Mr.. Morgan their Northern Pacific
proxies at the next election. This was
done, he said, because the public had conf
dence in Mr.. Morgan Five new directors
of Northern Pacific were elected at the
suggestion Of Mr.. Morgan. Mr.. Hartman
was placed on the Northern Pacific and
Burlington boards to quiet any apprehension
that might exist as to the intentions of
those In control Of Burlington.
Sale of NOrthern Pacific Common.
Next followed som testimony as TO the
sale Of the SIS. 900. 900 worth Of Northern Pa
cihc common to the Northern Securities
company. Mr.. Steele said the Northern
Securities company paid 500. 900. 900 for the
stock.
At this point the witness was turned over
to Mr.. Stetson, who is counsel for the Arm
OF J. p. Morgan & Co. The early part Of
Mr.. stetson's examination was for the pur-
pose OF disproving the assertion OF the
other side that negotiations for the North
ern Pacific common the Burlington pur-
chase. the formation OF the Northern Sc
curities company and the placing of Mr..
Hartman and other representatives OF the
Union Pacific interests on the boards of the
Burlington and the Northern Pacific, were
all part OF a pooling scheme. which oriRi-
mated and matured during the summer Of
1901, previous TO the formation Of the Sc
eurities company. with Mr.. Morgan, Mr..