The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1903-01-22
Story of the Shrewd Work Done in
the Louisville & Nash
W Vile Deal. .
Morgan's Assumption Of Superior
Morality Makes the Gates
People Angry.
In the Deal Gates Made s. ,OOO,O 900
and Morgan Dragged Out
$2,000,000.
Hnaciai To Thu Journal.

Chicago jan 22.-William E. Curtis In
a New York special to the Record-Herald.
speaking of John W. Gates desire to be
heard by the interstate commerce com
mission in regard to the, LoulSVille q
Nashville DEAL says: John W. Gates has
appealed to the Interstate commerce COM
mission for, opportunity to answer
the testimony given by Pierpont Morgan
during the investigation of the Louisville
& Nashville transfer here the other DAY.
Mr.. Morgan represented that he hao
bought the road from patriotic motives
because John w. Gates was dangerous
man to handle valuable property that
it was unsafe to trust him with the great
interests involved in the Louisville d
Nashville system and because he (Mor-
gam was anxious to promote the pros
perity and the welfare Of the south
The associates of Mr.. Gates are very
Indignant at this assumption Of superb
or morality on the part Of Mr. Morgan.
and declare that the latter was actuated
by purely selfish motives. which he Is
now trying to conceal. They say that 1T
was nothing more than an ordinary stock
jobbing operation. which Mr.. Morgan
went into to make money for hlmself,
to secure the Louisville & Nashville road
for the Atlantic Coast Line system and
to prevent Gates from selling it to the
Seaboard Air Line company, with which
the latter was in negotiation Mr.. Nor
gan represented in his testimony that
he had nothing whatever to do with the
original negotia lions, which were 1n1-
tiated by some Of the boys in his office,
and that he knew nothing Of them until
they were very nearly concluded when
he learned the situation over In England
and took the matter up himself. The
facts of the case stated by some of the
Chicago associates of Mr. Gates are en-
tirely different from those related to the
interstate commerce commission In Mr.
Morgan's testimony and Mr.. Gates, who
Is spending few weeks down on the gulf
coast, near Galveston, has telegraphed
that he will come north and demand {
hearing.
Has the Deal Started. a.
In the early spring of 1901 Mr.. Gates,
associated with Isaac L. Ellwood, John
Lambert Charles A. Dupee of Chicago
and several other friends commenced to
buy Louisville g. Nashville stock, which
was then quoted at ,1O5 on the market.
Six hundred thousand shares were OUT
standing, and of these Harris, Gates &.
Co., the Chicago brokers. obtained by
purchase 204,O00 shares. Edwin Hawley
OF the Southern Pacific system had 1922
900 shares. BY combining their interests
the Gates party and Hawley controlled
n majority of the stock and entered into
negotiations with John Shelton Williams
and w. A. Reed Of the banking house
Of Vermilyea & Co. to sell the road to
the Seaboard Air Line upon a guarantee
Of : per cent annual dividends for q
definite term Of years.
Perkins Discovers the Game.
The negotiations were discovered b,
George w. Perkins Of Morgan &. Co., who
knowing that Mr.. Morgan wanted the
Louisville & Nashville road for consolida
ton with the Southern system and wa
to int Of
competitors the Seaboard Air. Line cablet
that gentleman the facts at his LOndol
address and requested Mr.. Gates not t.
close with Williams and Reed until h
had received a reply.
Mr.. Morgan cabled Perkins authorit
to buy. and the latter paid $3.50 shar
cash for Hawley's 100000 shares and Sc
cured from Harris, Gates & Co. an optiO
upon their 100000 shares at $3.50 a share
The contract covering this option wa
drawn by. Mr.. Stetson, who is Mr.. Nor
gan's attorney and it provided that MI
Morgan should have an opportunity t
formulate plan for the reorganization G
the road. If he succeeded in doing so t
his satisfaction he was to buy the Gate
stock. If he did not succeed he agree
to sell Gates the 102. 900 shares he had al
ready bought from FIawley at $3.50 share
the price he gave for it.. This contrac
was made in the name Of Mr.. Morgan, an
the Gates party say that he advise
by cable Of every step Of the negotiations
and that on several occas ions they wer
compelled to postpone matters until h
could be communicated with in London.
Morgan Buys and UnIoads.
The result of the negotiations was ths
MIR. Morgan bought the entire block
b.. 204.00O shares of stock from Mr.. Gates g
$3.50 a, share This gave him total {
100000 shares, which cost him an averag
of S143 a share. He then transferred h
entire holdings to the Atlantic Coast lin
for $3.50 a share. thus making profit {
' ST share. or something over $4,000 90
and it is believed he was given and ST
holds a large block of the stock.
Mo High Moral Motives
Profits to the Gates party were eve
larger. They commenced to buy at 81
share. and are supposed to have divide
. something like $5.000,0 900 as their prof
: from the speculation. Mr. Gates does ~
pretend to have gone into the schen
with any high moral motives, such as NJ
Morgan claims to have had: !, His frien,
say that it was not a phanthropic NOV
- ment. but purely. a business transaction