The Birmingham age-herald., 1903-04-02
SOUTHERN PACIFIC
 FILES AN ANSWER Afiants Say Ii's Not Operated
 for Union Pacific. MANY AFFIDAWTS FILED Hartman Declared He Would Not Be Forced By Fear Into Anything That Would Be Adverse to the
 Stockholders.
MANY AFFI0AVlTS FILED

New York, April 1.-The affidavits in the answer of the Southern Pacific company to the suit of Talbot J. Taylor X Co., against the Southern Pacific and Union Pacific, deny that the Southern Pacific Is operated in the interest of the Union Pacific. The most important affidavit is made by E. II. Hartman. In it he sets forth that a mutual friend of himself and Edward Lauterbach told him tiarri- man) that James R. Keene represented a pool holding 10000 or 175,OOo shares of Southern Pacific. and that MT. Keene held himself about 10000; that they eontem- plated action which, says the affidavit would make us a great deal of trouble, unless we purchased said shares from them; that he would sell the pool shares at about TO- and his own shares at about 7s MT. Hartman declares he replied that he would not be forced by fear into anything that would be adverse to the interests of the general body of stock holders of Southern Pacific.
 Only Two Ways.
 E Otto H. Kuhn of Kuhn Loeb Ss Co., director of the Southern Pacific, says in a sworn statement that Edward Lauter- bach told him there were only two ways to avoid hostile proceedings, either to buy the holdings of the Keene pool at the price of about 70 or to start the payment of dividends on the stock at a rate of not less than 1 per cent per annum. Other affidavits by J. Krutchnitz, fourth vice president and general manager; J. c. Stubbs third vice president, and other officials, represented to show that the Southern Pacific is operated in the inter- ests of the stockholders and not for the benefit of the Union Pacific.
 E. H. Harriman's affidavit denies that any of the expenditures for improvements of the Southern Pacific complained of were prompted by consideration for the Union Pacific. but asserts that they were demanded by the interests of the South ern Pacific alone and wholly irrespective of any relations between the two systems, that they were planned before the Union Pacific became interested and that they were designed and recommended by the Southern Pacific officials and were au- thorlzed by MT. Hartman only after thorough personal examination of the lines, whereby he became convinced of the absolute necessity for the improve ments. He denies the allegations that the Union Pacific interests were planning to take over the Central Pacific line from the Southern Pacific and asserts that no such step has been contemplated or even dis cussed.
 Lamar Made Proposition.
 Mir. Hartman then relates that in the autumn of 1901, Edward Lauterbach intro duced David Lamar to him (Harriman), and that Lamar said he had friendly re- lations with James R. Keene, large stockholder in Southern Pacific, and that Mir Keene was contemplating some &C., ton against the management of the Southern Pacific He Q.amaD, stated that he would like to work with me" continued MT. Hartman, "and that If would make an alliaDce which would be of some advantage to him. that he had such influence over MT. Keene that he could induce him not to instigate any ad- verse action against myself and allied n- terests."
 This proposition Mir Hartman did not accept. Several interviews with James R. Keene followed on this point The afh- davt has the following:
 MT. Keene stated to me that he had large holding in Southern Pacific stock; that he, would like to join with me in purchasing the shares in the markets; that he believed there could be great deal of money made thereby and that he would act for me, either in purchasing for our joint account or for myself if I wished it; that it would be advantageous for the Union Pacific to take all Southern Pacific stocks and issue It's 4 per cent bonds therefor, and he stated that he was an adept in carrying out successful large stock-market operations that he had shown his capacity in the manage ment of United States Steel stocks"
 Would Be a Mistake.
 To this Mir Hartman replied that he believed that it would be a mistake to create speculation in the shares of stock and advance their price to basis that would justify the buyers in expecting a dividend in the near future; that 1t was also necessary to make such repairs and improvements with surplus earnings so far as they would go in order to es- tablish for the company a basis of credit upon which it could refund the bonded indebtedness of its subsidiary companies large portion of which would mature in a few years.
 Mir. Keene then gave assurances that he did not want to act in any way antag- onistic to Mir. Hartman. In the autumn of 1902 MT. Hartman says he was in- formed that Edward Lauterbach and Talbot J. Taylor would make the bill for t9ts hiitSo VIC Stltitu III SOIut Wdy WlIn them"
 Afhdavlts were also filed by William s. Proute. freight traffic manager, and E. o. Mccormick, passenger traffic manager of the Southern Pacific, wherein those officers testified that neither has at any time received any directions or instruc- tons to favor the Union Pacific, as against the interests of the Southern Pa- cific, and that they have not done so but that each in the agreement of the department under his supervision has worked exclusively for the interest of the Southern Pacific
 Kuhn Files Affidavit.
 Otto Kuhn. member of the firm of Kuhn, Loeb & Co.,, and a director of the Southern Pacific. filed an affidavit in which the following appears:
 During the last twelve or thirteen ! months, Edward Lauterbach of counsel for the complainants in this action, re- peatedly spoke to me on the subject of the Keene pools holdings of Southern
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