The sun., 1903-04-02
mind, and he said that he would do nothing
vithout informing me.

IN the autumn oil lSOZ, through various
Z porBons, ] was Informed that Mr.. Edward
1auterbach and Mr. Talbot j. Taylor would
make trouble for US unless we settled In
I some way with them. Mr.. Lauterbach
. tried In various ways. through such third
persons, to get an interview with me. and
/ 1t one time called me on the telephone
fof. such purpose. but declined to see him.
and during the autumn and winter Of 1902
and winter OF 1908 had several calls on
tho telephone from Mr.. Lamar, but my
ungwer, througirthe messenger announcing
the call, was that was too much engaged
20 talk with him.
-Some time in January, 1908, Mr.. Lauter-
bach approached mutual friend. man
OF high standing and well known, and
made to him statements that made him
believe that 1t would be to my interest
20 take the matter up. and he telephoned
- oquesteo an in,erview WIN me
- FOR ksENEs STOCK; 10 FOR FOOLS
AT the interview he explained TO me
that Lauterbach had said to him that Mr..
Asene represented a pool holding about
10000 or i75, 900 shares and that Mr.. keene
himself held about 10000 shares; that they
contemplated action which would make
{ " . great deal Of trouble that might be
Q1oAstrous to our int rests. especially lay
ing stress upon the large expenditures We
wore making upon the Central Pacific
PORTION OF the Southern Pacific properties
tmiees we purchased said shares from them
ehsf ne would sell the pool shares at about
70 and his own shares at about 7s.
explained to this friend that there was
nothing in the situation which we had to
>Jear rom those people. or In the manage
ment OF the company which would JUSTIFY
any criticism or objection upon the part
~c,,iX not IN fnrcaS hv fear ~ snvthing
thew might do into recommending a course
which would be adverse to the interests
I of the general body of stockholders Of the
Southern Pacific. had two interviews
~~sA IL. l.s- Ia. n.
TALLY as above stated, he in the second
interview having informed me that lie had
communicated What l had stated to Mr.
Iauterbach. Since that time there have
been several attempts made by Mr. Iauter-
bach and Mr.. Lamar TO take the matter up
direct with me, but without success"
IAurKRHAcH ALrERNArIyr TO KAHN
Otto H. Kahn of Kuhn, Loeb & Co, saws
in his affidavit:
sDuring the last twelve or eighteen
months Mr.. Edward Lauterbach. OF coun-
sel for complainants in this action. re-
peatedly spoke to me on the subject OF the
Keene POOLS holdings OF Southern Pacific
stock. The substance of his statements was
the effect that he had been retained by
James r. keene in connection with con-
templated action TO bring suit 10 oust the
interests at present in control of the South
ern Pacific Company; but that he thought
IL desirable. in a frendliness te both in
forests, that no such conflict should take
place, but that there were only Two ways
Of avoiding hostile proceedings, namely.
either to buy the holdings Of the Keene
pool at the price OF about 20 or to start
the payment of dividends on the stock at
y rate Of not less than per cent. per annum.
Y REyusEp ro auy POOL, HOLDINGS
" ,.,I -.
X ansMereo iauIerpach tnat we wo9id
noS o ~ Piro',ak Ia.akp uir popI r nUlu-
mBA anu YIN. IA eie'eI lliiiIihe 'hs Poncy
o cobp ~ draa II, ressau a 'o H,oiue,nd
Pyl Paymls.s ino oiecs t ao' "eIe - aSens, iii, ahd
wouId oSn'm9e 20 ac,' III ace1ruance Nun
tneir Dest- Juoen,ent, anu Nouau not ahoW
any otuer oonsioeia,,o 10 ini.uehcr theII
un uoT ~ toneo os tisS u uouoissoEe
nueauon iIon pursuing Mhs.; a,ter CON
scasnuoIs s osmDeraion - s I'm tney & ters 70 oe ,he
onIy Iieht coufse ior 'ue ''i'e'es'S Vi 'ho
property
REASONED WITH .LAUTERBAcH.
Il pointed out TO him that the funded
debt AZ the Southern Pacific system reached
tho biSh total Of almost SAOO 600 OOO a deht
out OF ali proportion TO that of its com.
petitors. Who had had a large part OF tbeir
hxed oharges changed into merely con.
tinrent charres through their reorganza-
lions: that the necessity Of immediate com.
nrshensive improyements TO bring tho road
IN 10 The standsrd of its comr,etitoys waa
i,i,i versaIlv Admitted: that IL was a o,,estion
of either borrowing the funds wherew;tb
10 do 70 by a new issue of bonds or using
the earnin9s for that purpose: that in The
Ah00nCa OF unmOrtQARpd road nfh hpr
substsntisl free assets on which s,,cb nav
honda could be made n lien s,,cb hnnds
could ~ soid n ar ali only nj s,,oI, di.9
count as IN make the TRANSACTION extrrmelv
exnensive IN the comnanv. thai to incrass 10
] shs alresdv ercessiye f,nded dehi w;,h
1hich the nronertv was bnrdened in ordar
10 ~ AHA To nav eIividands was q metbod
Of 6nsnoing repuenant 10 sound and con-
seryative views and opposed 10 the safe
financial policy which the railroads had
|, learned to adopt as the result Of the severe
lessons between 1892 and 1894, when nearly
oue-hah the mileage OF the country went
into receivers hands in consequence Of
having practised the very policy which he
QAuterbaohl advocated. /. r., paying
dividends when the conditions Of the re-
spective properties were such as TO re-
Quire outstanding OF their resources; that
We would not stand for any policy which,
for the sake OF gaining temporary ad-
vantage or relieving ourselves OF nuisance,
would jeopardize the permanent interests
OF the property with the administration Of
which We were intrusted.
Il remember two distinct occasions
when interviews OF this nature took place;
one on last Oct. 9th or 10th at his Office
(where had gone to see him. at his re-
quest, In connection with some other busi-
ness( and another one at luncheon at the
Midday Club, toward the end OF February
Last On this occasion Mr. IautprhaCl