The Savannah morning news., 1903-01-17
is WITHIN THE LAW
BELMONT so SAYS OF THE COAST
LINE DEAL.
INTERESTS THREATENED
WHILE GATES CONTROLLED THE
LOUISVILLE AND NASHVILLE.

Ruling Railroad Men Gave Further
Testimony Before the Interstate
Commerce Commission - August
Belmont Thought Public Interests
Were as safe with Him ms With
the Coast Line Management-Per-
lKins Said Gates Plan Was TO Pay
"A Big Dividend and Then Sell the
l.. & N.
New York Jan. 16-The Interstate
Commerce Commission continued to-
day the hearing of the charges of the
Kentucky Railroad Commission that
the Atlantic Coast Line Railroad Com
pany and the Louisville and Nashville
had violated the Interstate commerce
act.
August Belmont testified that he was
and is still chairman of the board of
directors of the Louisville and Nash
vile Railroad Company.
when did you first know that
Gates and his associates had secured
control of the road?'
Not until they had" Mr.. Belmont
replied.
Mr.. Belmont said he had nothing to
do with the appeal, if any was made.
to j. p. Morgan & Co., to secure the
shares from John w. Gates and his
associates. He was present at the
meeting of the directors which adopted
a resolution approving the sale of the
controlling interest to the Atlantic
Coast Line Company.
No Conflict with Law.
In reply to a question, Mr.. Bel
mont said it had not yet occurred to
him that the Atlantic Coast Line Com
pany could discharge the duties of
the Louisville and Nashville to the
public better than he could.
"Then the change made was due
to circumstances beyond your control?"
was asked.
1T was replied Mr.. Belmont. "Af-
ter Mr.. Gates got control of the ma
jority of the stock there was nothing
to be done"
The witness said he had the same
control now as before the Louisville
and Nashville stock was conveyed to
the Atlantic Coast Line, and that his
board approved the change in the hold.
ing TO legalize the eentrol of the road
by a foreign corporation. Mr.. Bel
mont denied that there was any agree
ment between the Louisville and Nash
vile and the Atlantic Coast Line Com
| pany, which in any way conflicts with
| the interstate commerce law. He had
assumed the responsibility of repre-
senting stockholders who had not given
proxies when it was voted to pass the
control of the Louisville and Nashville
to a corporation which did not own
any track in Kentucky
Gates Worked Quietly.
Mr.. Perkins, member of the firm
of ]. P; Morgan & Co., said he had no
direct interest in the Southern Rail-
way. He said that as a result of a
conference before the Louisville and
Nashville stock was transferred to the
Atlantic Coast Line Company, no ac-
ton was taken to sell the Louisville
and Nashville control to the Southern
company. That road was both parallel
and competing with the Louisville and
Nashville, while the Atlantic Coast
Line was not.
The witness learned in April of the
Gates acquisition of Louisville and
Nashville stock, and that it was for
sale. That was the first intimation any
one interested in the general market
had that Mr.. Gates had got the stock
Mr.. Perkins said the Louisville and
Nashville secured an option on the
Monon after the Louisville and Nash
vile stock was in the hands of J. p.
Morgan & Co. He did not know wheth-
err the Louisville and Nashville and
Southern could control the traffic of the
Monon, but they could use the system
jointly. The Monon was bought to give
the southern and the Louisville and
Nashville an entrance to Chicago.
1t was brought out at this point that
J. P. Morgan & Co. bought of Gates
1OO,O 900 shares, at $50, with the agree
ment that Harris, Gates & Co. should
have the right to share in any plan
adopted.
did you seek Harris, Gates & Co.,
or did they seek your" was asked.
What Gates Would Have Done.
eve sought them. We thought the
Atlantic Coast Line Company would
purchase the stock if we showed them
it was to their advantage to do so,''
said Mr.. Perkins, who continued as
follows
1--WE were anxious as to where the
control of the road should finally land.
We knew that if it remained with Mr..
Gates no one could tell what would
happen. The Gates people had told me
their plan was to pay a high dividend
and then dispose of the road in the
market. We felt we owed a great deal
to the interests of the minority stock
holders, that the road had been adj
mirably managed in the past, and If
continued in as good or better hands,
the future interest of all would be
safeguarded. There were only tive
places for it 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
that Mr.. Gates paid between 102 and
ITO for 100000 shares of Louisville and
Nashville and an average of 125 for
the balance. When the Atlantic
Coast Line took the shares. Mr.. Gates
refused to take the securities offered
and demanded cash.
George f. Baker, one of the voting
trustees of the Southern Railway, said
he authorized the signing of his name
10 the circular advising stockholders of
the Southern to make no change in
the roads management until certain
pending arrangements We're completed.
The commission adjourned to meet in