Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-03-16
A RAILROAD FIGHT
War Of Two Capitalistic
Interests.
THE ISSUE DEFINED
ONE TO MAKE MONEY THROUGH
MANIPULATION OF STOCK.
The Other Through the Earning Ca
pactty Of the Road-Contest Be-
tween Keene and Hartman.
THE ISSUE DEFIN Ed

interests both OF which claim control Of the
great Southern Pacific railway system.
These two Interests represent, respect
lively. the two ways OF making money out Of
railway property-one through the manipu-
lation of the stock and the other through
the legitimate earning capacity of the road.
These two interests are classified popularity
under the James R.. Keene pool of Southern
Pacific securities, organized solely to profit
by the manipulation of the stock of the
company and depending for its success on
the good showing made financially by the
road, in order that SPECTATORS might be
induced to invest, and the Hartman Kuhn
Loeb Company, holding the substantial con-
troll of the Southern and Union Pacific roads
and committed to the policy Of turning the
earnings of the respective roads into better
ments Of the lines. both as to grades and
equipment
The latter interest has announced that the
demands Of the physical features Of the
railroad problem require that the enormous
earnings of these two trans-continental
lines should be diverted solely to better
ments of the systems for at least ten years
longer. while the Keene people are clamor-
ing for the payment of dividends on the
stock OF the roads that investors may Sc
cure immediate returns for their money.
Mr.. Keene's Methods.
The issue Is thus clearly defined and the
fight is now on in Wall street. with all of
its attendant spectacular features.
The James R. Keene speculative Southern
Pacific pool has been perfected with fifty
to sixty brokers and capitalists behind It,
Mr.. keene is empowered to purchase a
maximum of 100000 shares Of Southern Pa
cific stock, reselling and buying again at
will, so long as he does not incur net loss
for his combined subscribers. This agree
ment. which has been on since January
1902, expires April 80, next. The effect Of
this pool has been that Southern Pacific
stock has been manipulated up and down,
with steady advance upward, from So to
81, which latter figure 1t touched In Sep
TENDER. To bull" this stock every means
was employed The public was informed Of
the immense earnings of $50, 100000 q year
the medium Of handsomely bound
and illustrated pamphlets.
The direct point Of issue between the two
interests comes when the investor must be
given assurance of dividend on his money.
This Mr.. keene demands, and 1t Is on this
point that he comes into direct issue with
the Hartman people. who declare that
their policy OF diverting the earnings OF
the roads to their betterment shall not be
To effect this end in the game Mr.. Keene
Is adopting two methods First he Is
making an appeal for proxies to be voted
at the annual meeting OF the Southern Pa
this meeting which Mr. Keene can control
will be for the purpose of divorcing the
Southern and Union Pacific roads from the
same control
An Injunction Obtained.
Supplementing this. he has also taken
the matter Of this joint control into the
courts, and Friday obtained q temporary
injunction from the United States circuit
court In Kentucky restraining the Union
Pacific Railway Company from voting tho
stock OF the Southern Pacific at its meet
ing. This injunction was granted on a bill
Of complaint filed by Senator Foraker Of
Ohio. Edward Lauterbach of New York
and Augustus Wilson Of Louisville attor-
neys for the Keene pool. In this bill Of
complaint, upon which the temporary in
junction was granted, 1t was set forth that
the Union Pacific and Southern Pacific are
parallel lines, competing for Transportation
and their union subverting the intent of the
interstate commerce law. In this connec-
ton the complaint charges that traffic has
been and Is being systematically diverted
to the Union Pacific, to the detriment Of
the Southern Pacific road and In the inter
est of the Union Pacific. and that vast
sums taken from the Southern Pacifc's
earnings are being spent wastefully to give
to the Union Pacific. over the lines Of the
Central Pacific, which Is leased to the
Southern, direct and shorter line to San
Francisco from Kansas City and Omaha.
A Circular Issued.
In his appeal for proxies for the annual
meeting, Mr.. Keene sets forth the case
through his agents in a circular, which
states the situation on their side in part as
1.-The directors of the Union Pacific rail-
road have for over two years controlled and
directed. through large holding of stock
Of the South Pacific company, the policy
and management of the Southern Pacific
and they expected at the coming
election, which will take place on April o,
1903, to continue their management.
Prom examinations of the statements of
the Southern Pacific company and informa-
ton given by one Of it's directors, we find
that over 500 100000 has been expended for
betterments and improve
ments on this property, but the operating
expenses still continue to be, as they have
been during the last two years from ten to
fifteen per cent higher than any road COM
peting for transcontinental business, which
indicates either gross mismanagement or
wiilful intention to deceive the stockholders
as to the true net earnings OF the company,
and by this means depress the market
value Of the stock. that they may acquire
II at their own price
1.-The Union Pacific railroad connects with
the Central Pacific railroad "a branch of
the Southern Pacifc) at Ogden. and de-
Ponds entirely on the Central Pacific to
reach San Francisco. Vast sums Of money
have been and are being expended on the
Central Pacific out of Southern Pacific
funds, while the disbursements for better
ments and improvements on the main line
Of the road. which furnishes over Is per
cent of it's earnings, are very light In COM
parison and grossly out of proportion to
the amount OF the entire expenditures.
Injury Predicted.
1--WE believe that the Union Pacific direc-
tors in the Southern Pacific company-who
are in the ma1ority-in pursuing this policy
are actuated by the Interior purpose OF
taking over the Central Pacific upon
terms which will seriously injure the South
ern Pacific company. and that the stock
holders will discover, when too late, that a
most formidable rival has been built up
with their own money. That some such
motive suggests and dominates the atti-
tude OF the Union Pacific interests Is fur
Their evident from the fact that the policy
of paying for reconstruction, betterments
and improvements solely out Of the earn
ings instead OF by issue Of securities Is
different from that pursued by
the Union Pacific company. or any other
corporation in the country with
which Union Pacific interests are connect
ed, or whose management and operation
they control.
I'VE represent a very large interest In the
Southern Pacidc company for many pee-
r,1a nd FOR 3opR fima hava c,(xap