New-York tribune., 1903-01-17
SEVEN MILLIONS PROFIT.
JOHN ". GATES Made III.
august Belmont 1estitfes at Ions
u1He and Nashville Hearing.

Of the voting trustees of the southern hail"aS
Company. gave testimony yesterday before the
Interstate Commerce Commission, in the near
ing which that body is conducting on the
charges of the Kentucky Railroad Commission
that the Atlantic Coast Line Railroad Company
the Southern Railway and other railroads oper-
ating in Kentucky have violated the Interstate
Commerce act 10y pooling freight and other an
terests
Mr Perkins liz his testimony expressed an
opinion similarly unfavorable to that OF MY
Morgan on Thursday in regard TO John w
Gates and named the prices at which he under
stood Mr. Gates and his associates had acquired
and sold their Louisville and Nashville STOCK
from which it would appear that their net
profit on the transaction was about s'''vu"V"
Mr.. Belmont was the first witness
When cid you first know that Harms Gates
& Co had got control OF the Louisville and
Nashville road?' asked Colonel Young. of coun-
sci for the Kentucky Railroad Commission
Not until they had" Mr. Belmont answered
Mr.. Belmont said he had nothing to 90 Win
the appeal. if any had been made, to- j. T.
Morgan & Co to get the shares from John w
Gates and his associates. He was present at the,
meeting of the directors At which had been'
adopted a resolution approving the sale OF the
controlling interest TO the Atlantic Coast Line
Railroad Company The following cross-exam-
ination then took place:
oIad you ANYTHING to do with that TesolufSn: M
A.-1es i approved II before the meeting MI
o%You approved it because it came from j. P
Morgan e Co who controlled a majority of the
stock? A--Hardly for that reason: ), coIsulrgu i
stances that ~as the best thing do
oWhen did it first occur S to y9u fns1 1Re te
duties OF the Louisville and Nashville to the public
better than you could? Alt has not occurred 10
Q.-Then the change made was due to circum-
stances beyond your control? Alt was
STILL HAVE CONTROL OF STOCK.
o-You have not now the control you had before
The stock was conveyed to the Atlantic Coast Line
Company? AUST the same ,rs,,ordoroso >
2-Then why did YOU pass the resolution approv,
policy of the road acquiesee in the holding -, .
rosd the Atlantic Coast Line Company were 9Th the
] hold proxies for 10000 or s0ooo shares
Did you think you had any right to represent
proxies When You Voted to pass the control of the
road 60 corporation which did not own mile OF
biiity In my opinion the interests of all the stock
iroI to known and conservative anagement rather
10 let il drift TO unknown authority -,
Rv Mr. Stetson-Have YOU ever heard any crlu-
cisrn of your action from any of the stockholders
Of the Louisville and Nashville? A-Not one word
Mr. Belmont said that. so far he knew,
there was never any competition between the
Louisville and Nashville and the Atlantic Coast
Line.
In reply to Commissioner Prouty Mr.. Belmont
said the stock Of the minority holders has ad-
vanced twenty-five points under the new con-
troll.
is il not true" Colonel Young asked. that
the highest price ever reached by the stock was
during the time Mr.. Gates held the majority or
The stock"
Il think that is true
Then" asked Colonel Young. with smile,
Il ho
said to have been even more successful than
the present management"
His market management, yes. replied MI
Belmont His railroad mana cement, no..
Mr. Perkins was the next witness. He SAID
he had no direct interest in the Southern. ana
that before the transfer Of stock was MADE TO
the Atlantic Coast Line counsel had decided
that the Atlantic Coast Lire was not parallel
or competing line with the Louisville and Nash
willie but that the Southern was both parallel
and competing For that reason no action was
taken 20 sell the Louisville and Nashville con-
1rol to the Southern. He was cross examined
in part as follows;
DID NOT DARE TO TRUST GATES.
Odd veu know before you got that stock that
tho !, and y and Southern Railway, acting to-
-o+b.r had gained control of the Monon system?
-1t is not true The l. and y. got an option
on the Monon system after the l. and y stock was
in .F,e hands of J. p. Morgan d Co.
o-Is if not a fact that the l. and n and the
o,++,.r,, could control the freight and traffic Of
the Monon system? Al do not know II they
could control They could use the system Jolnuy-
after 7 p Morgan & CO. had obtained an option
on the l. and " stock from Harris, Gates and
others We heard that majority OF the Monon
stock could be bought what was considered Ia
1,orable terms Both the Southern and the L.
and n wanted 10 get into Chicago. We submitted
10 both roads plan by which they could jointly
effect that result.
4 Co in purchasing the J.. and y. stock was TO
n,Iiet the market and improve the general slIua-
tion7 A-That was our one ana controlling motive
C-what price was paid for the stock? Ave
loueb. la2 GO shares az l39 and pook option on
2o4 600 at $50 with the further agreement that Har-
,is Gates &, Co should have the right 10 snare IN
anv plan adopted
o-Did YOU seek Harris. Gates & Co, or did
,tev seek YOU? Ave sought them. We thought
the Atlantic Coast Line Company would purchase
the stock If We showed them it was 10 their ad-
vantage to do So
o-In leading UP to the transaction. what did you
Sav TO the Atlantic Coast Line Company, and what
,ia they say>to you? A.-The negotiations lasted
three or four months We were anxious as to
where the control Of the should finally land.
We knew If il remained with Mr.. Gates no one
could tell what would happen. The Gates people
had told me their plan TO pey high dividend
and then dispose OF the road in the market. We
felt We owed a great deal TO the interests of the
minority stockholders, tnat the rosn haa Deeh do-
r7irsbiv managed in the past, and IL continued in
as good or better hands the future interests of
ali would be safeguarded- We knew that the
Southern Company in which we were largely in
terested. could not take II. There were only two
pJaces for il go-the Atlantic Coast Line or the
Seaboard We went first to Mr.. Walters, and
am glad 10 say. after long negotiations Mr.. Wal
terss company took the road
o-what about the rumor that Mr. Gates had
secretly got the shares in interest of J. p.
Morgan e. Co? A.-Not q word of truth in il.