Omaha daily bee., 1903-01-17
HISTORY OF A GATES DEAL
Witnesses Tell Of the Corner which
He Attempted 60 Run I'm Lou
isville stock.

NEW YORK. Jan. l6.-The Interstate
Commerce commission continued today the
investigation OF the charges Of the Ken
lucky railroad commission that the Allan
tic Coast Line company and the Louisville
& Nashville had violated the interstate
commerce act.
August Bcmont testified that he was. and
still is. chairman Of the board Of directors
Of the Louisville G Nashville.
when did you first know that Gates and
his associates had secured control Of the
road?" was asked.
Not until they had he replied.
Mr.. Belmont said he had nothing to 10
with the appeal. IL any was made. to J. P.
Morgan & Co. to secure the shares from
John w. Gates and his associates.
In replying to a question, Mr.. Belmont
said it had not occurred to him that the
Atlantic Coast Line company could dis
charge the duties Of the Louisville & Nash
Vile to the public better than he could.
Then the change made was due to cir
cumstances beyond your control?" was
asked.
ut was" replied Mr.. Belmont. After
Mr.. Gates got control of the majority Of
the stock there was nothing to be DONE"
Witness said he had the same control
now as before the Louisville G. Nashville
stock was converted to the Atlantic Coast
line and that his board approved the change
in the holding to legalize the control Of the
road by a foreign corporation.
Mr.. Belmont denied that there was any
agreement between the Louisville & Nash
VILE and the Atlantic Coast Line company
which in any way conflicts with the inter-
state commerce law. He had assumed the
responsibility Of representing stockholders
who had not given proxies when II was
voted to pass the control OF the Louisville
& Nashville to a corporation which did not
own any track in Kentucky.
Mr.. Perkins, a member OF the firm OF ].
P. Morgan & Co., said he had no direct in
terest in the Southern railway. He said
that as a result Of a conference before the
Louisville & Nashville stock was trans
terred to the Atlantic Coast Line company
no action was taken to sell the Louisville
& Nashville control to the Southern Rail-
way company The road was both parallel
and competing with the Louisville & Nash
Vile, while the coast line was not. The
witness learned in April of the Gates &C
QUESTION Of Louisville & Nashville stock
and that II was for sale.
That was the first intimation anyone in
terested in the general market had that
Mr.. Gates had got the stock. Mr.. Perkins
said the Louisville G. Nashville secured an
option on the Monon after the Louisville
& Nashville stock was in the hands of ]. p.
Morgan & Co. He did not know whether
the, Louisville & Nashville could cont oil
the trafic of the Monon, but they could use
the system Jointly. The Monon was bought
to give the Southern and the Louisville &
Nashville an entrance to Chicago.
1t was brought out at this point that ].
p. Morgan & Co. bought OF Gates 102. 900
shares Of Louisville & Nashville at 100 and
took an option of 100000. shares at $50,
with the agreement that Harris, Gates &
Co. should have the, right to share in any
plan adopted. 'oIU'7
Ibid you seek Harris Gates & Co., or
did they seek your" was asked.
I'VE sought them. We thought the At
lantic Coast Line company would purchase
the stock II we showed 1t was to their ad-
vantage to do So, said Mr.. Perkins, who
continued as follows;
We were anxious as to where the control
of the road should finally land. We knew
IL 1t remained with Mr.. Gates no one could
tell what would happen. The Gates people
had their plan to pay a high dividend and
then dispose of the road in the market.
We felt we owed a great debt to the in
terests Of the minority stockholders. that
the road had been admirably managed in
the past, and II continued in as good or
better hands, the future interests of ali
would be safeguarded. There were only
two places for II to go-the Atlantic coast
line or the seaboard. The coast line was
approached first and took the property.
Mr.. Perkins said his impression was
hat Mr.. Gates paid between 1O2 and 10
for 100, 900 shares OF Louisville & Nash
Vile and an average of las for the ball
ance. When the Atlantic Coast line took
the shares Mr.. Gates refused to lake the
securities offered, but demanded cash.
George f.. Baker, one of the voting trus-
tees of the Southern railway, said he au-
thoriEAd The signing Of his name to the
circular advising stockholders of the South
ern to make no change in the roads man
agement until certain pending arrange
ments were completed.
The commission adjourned to meet In
Chicago on Tuesday next.
Val e CTlInEMTC