New-York tribune., 1902-03-27


known by everybody that the amount Of pre-
ferred stock was only temporary thing until
could issue the common stock to take II up
The question when the directors should de-
eide that il was eXpedient to do it.
Q.-Then 1t became necessary TO raise a great
deal of money to retire this preferred stock?
At did
Odd your house provide that money? A.
The stock offered to the common stockhold-
ers. We financed the transaction.
Q.-This S75,0O0,0O0 was raised In cash? A
1t was
Q-Isn't it a fact that the most Of the stock
was held in very large blocks? A.-The transfer
books will show that. I suppose you have the
power to get them.
MR.. MORGAN OBJECTS.
At this point MI Lamb whispered aside
which no one but Mr.. Morgan seemed to over
hear.
Il don't think it's fair for you to make re-
marks like that" Mr.. Morgan said I'm will
ing to tell you everything under heaven, and
what l can't give you I'll tell you where to get
I'll tell you everything in regard to the North
ern Pacific transaction, everything
Mr. Boutelle-I want to say that we have been
met with unexpected frankness in this exam
ination. We have no desire to ask unnecessary
or impertinent questions. Al will tell You all
1 know, and how you can get the rest.
Q.-For mana ging that transaction, of course
the Northern Pacific paid your house! A.
They paid nothing whatever. That is one OF Ine
transactions which I spoke about a little Whie
ago one of the things that are done lor ho'it-
Ing.
Q-When was the stock paid off and whea
was il decided to pay Il off? Alt was palu
off on January /, 1902 and was decided by the
directors at their meeting on November 10
Q.-That is the same day that the Northerh
Securities Company was organized was IL ho'!
Al don't know.
Q.-I think the record will show that. Alt
was busy day, l know. UaughterD
Q-Your plan was to issue convertible GER
tifcates to the common stockholders Of the
Northern Pacific to acquire that stock? A
Yes After January l.
Q-As your house was very large holder
OF common stock at that time, that privilege was
one conferred upon you? Al didn't confer It,
Q.-Who did? A.-The Northern Pacific
Q.-YOu managed its affairs? Al beg your
pardon. The board of directors did
Q.-Mr Hill received great benefits? A-Ev-
cry stockholder did.
Q.-When did you first hear of the proposition
of negotiating to purchase the entire capital
stock, endeavoring to do So of the Burling-
ton by the Northern Pacific? A.-When 1t was
first started
Q.-When was that? Some time last summer?
Along before that. I went to Europe in
March. and il was before that.
THE BURLINGTON PURCHASE.
Q.-Who first suggested that to you? Aft
you will allow I will tell you the
whole transaction from beginning TO end.
think il was in 1898 or 1899 that l made up my
mind that it Was essential that the Northern
PaClnc should nave lis eastern terminus In CHl-
cago In the same way that the New-York Cen
tral, of which l director. has its western
terminus there. In other words that the trans
continental line should go from Chicago, and the
eastern line should 60 to Chicago. / talked it
over with several people, ard the question came
up to how it should be done. We were con-
fronted with the question a to whether the line
wanted parallel or competing line
From a study of the question l came TO the con
IL. fHp
St. Paul the Chicago Darlington and quincy
and the Wisconsin Central The Wisconsin Cen
tral we would not have taken anyway. Then
it came down to the other two. l wanted TO
take the St Paul. Soon af1er that l met Mr.
Hill, and said that the best thing we could 90
was to secure the st. Paul road 10 Chicago. If
you will come with CS," l said, we VIII do it
together" He wanted the Burlington and
wanted the St. Paul l said the financial re-
sponsiblity to take the St. Paul would be bet
ter He didn't agree with me, but acquiesced.
I took up the negotiations, and IN no secret man
went to the directors of the road and
told them what we wanted. Some were disposed
TO make the transaction and others were not.
Mr. Hill's opinion that the Burlington sys-
tenn offered better market for freight brought
from the Pacific Coast for distribution. But he
acquesced in my decision. These negotiations
went on for some time. and finally the directors
Of the st. Paul asked for a conference, and told
me they had decided that they would not
name terms, and that could not have the
road in that way. Being unwilling to buy the
stock. we decided to abandon the transaction.
I told Mr.. Hill to what he could do with the
Burlington and carried them through.
Q-When were these negotiations begun? :?
Al can't give you all the dates. There was
nothing secret about 1t, and it was perfectly We'll
known. Every newspaper in NeW-HOrk pub
lished exactly how IL stood. The negotiations
took place on about the dates given in the daily
press.
Q.-When did you direct Mr. Hin to start in
on the negotiations with the Burlington? A
little after the first of March the negotiations
began and the circular of the Burlington was
sent out in the latter part Of March 1901, The
10 alf hf.ff
to Europe in March 1t Il perfectly inde-
pendent transaction, and done to attack nobody.
Q-Your negotiations were made solely with
Mr.. Hill? Al had nothing to do with it, 1
don't think purchased a share Of stock.
When acting in a fducary capacity we
are not specializing in the stock market.
Q.-I had no intention of intimating that there
was a breach of fduciary trust. A.-That is
not our way Of doing business.
FIXING THE PRICE FOR BURLINGTON
Q.-Were the negotiations for the purchase of
the Burlington made by Mr.. Hill your house ?
A-Excusively by Mr.. Hill He was the man
who responsible for the success or failure
of the transaction. Mr Hill negotiated the pur-
chase of the Burlington road.
Q-How was the price of 5000 share for
Burlington stock brought about? A.-Between
Mr. Hill and the directors of the road
On view of its market price. why was such
price paid for the stock? A.-Simply because
could net get it any cheaper
Odd Mr. Hill fix the price? A-No; the
directors of the Burlington did
Q-And Mr.. Hill agreed to pay the price
asked? A.-When Mr.. Hill said we must pay
$500 share, said pay it.
Q.-Was that simply because that was the
only price at which II could be bought? A
Yes. l felt, and so did Mr.. Hill that the price
the best could obtain. Mr. Hill would
not make any transaction that he did not think
was profitable He felt that it was worth .
great deal more for the purposes for which we