The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1904-01-16
Special to The Journal.

Special to The Journal.
New York, Jan. 16.--Some light is
thrown upon the Alton mystery by the
agreement under which the preferred
stock is deposited with Kuhn, Loeb &
co. This firm is the accredited bank
lng-house that does the general bank:
ing business of E. H. Hartman,
Jacob Schiff is the strong personal adj
wiser of Mr.. Hartman and has been
beside him in all his great fights. He
is also head of the firm of Kuhn Loeb
& Co. e,,l - =,
Under the agreement the STOCKHOLM
ers who deposit their stock surrender
all rights to vote SO long as the agree
ment lasts. 1t is stipulated that it
may last until Sept. so, 1904. That is
the banking house asks the preferred
stockholders of Alton to give the
banking house a right to vote their
stock In the next annual election.
That would practically amount to CIV
ing the firm the power to elect the
board until September, 1905. This
appears to be the meat in the cocoa
nut, SO to speak. '' ~ - "~-.. -
Mr.. Hartman evidently has not the
control of Alton. He recognizes that
there have been two strong men buy
ing the common stock He fears
that the control Of the road will pass
from his hands. He wants to keep
the control but to be free to sel1s@his
stock, or at least his common stock,
on the boom that. has been created by
the general scheme. Mr.. Hartman
appears to desire control without own
ership. II the deposits under this plan
are fairly heavy, it looks. as tho he
would get.it. r:.. ~, ,-,2a.,. :, 81:
Absolutely the only right that de-
posltorS have under the plan. of ,, de-
post is the right to draw dividends.
The bankers reserve the right to trans
fer the stock deposited to any name
they please, to sell'it, give it away, or
do what they like with it. They do
not stipulate any price at which It may
be sold or may not be sold. It is a
blind pool Of absolutely the blindest
sort. People2who go into it, go in on
a sublime faith in the firm in Dues
ltion. ,...v -f- '.'.'
+ Under the terms also the firm can
iselltthe stock and take in payment S
per cent notes of one or more railroad
companies that pay dividends' Sc
cured on the stock ITSELF. In other
words, suppose Burlington wanted
Alton. 1T could take the stock from
Kuhn, Loeb & Co., deposit it with a
trust company, and issue 5 per cent
notes against it to hand oversto Kuhn,
Loeb & Co. That would be all that
1t would cost. If Burlington bought
the stock at 80, 1t would be practically
buying Alton for nothing. That
sounds strange but it is true. Alton
preferred pays per cent per annum. j
stock would underlie each 800 Of the
5 per cent bonds. On IN shares Of /
Alton preferred stock Burlington
would receive just IS per annum;--Or
enough to pay the interest on the
per cent note 1t would not cost Bur
lington anything but the expense Of
paying for the printing Of the notes
and paying the clerks to look after |
the interest o. coupons. Under such
circumstances the road might be con-
sidered cheap at $50 for the preferred. |
This WOULD, of course, be true only
80 long as%the preferred paid divi-
idends. Ifn3&it stopped paying divi-
idendS the annual charge against Bur- J
lington would be 100000, or per
cent on $16,0QO.0Q0.. -..--,.-. .-,. |
Mr.. Hartman is anxious that the |
plan shall 4 Succeed tand that one or
more of theGFoads shall buy Alton. If
pretty certainsthat the strong men |
mentioned above. namely Edwin Haw-
ley, president OF minneapolis & ST. |
Louis, and, b. r.. Yoakum, president /
/ of st. Louis & San Francisco. will take
possession of the road by virtue of
stock that they and Mr. Gates and
various other men have accumulated. |
That would not be a very delightful |
position Of holding a big block Of |
ALTON preferred without the control of
the road. To prevent such con-
Itingency, Mr.. Hartman has formed
this pool, In order that the other in
iterests must take all the preferred |
stock, Or none at all. That would |
eliminate the minority. 1t would also
let Mr.. Hartman out beautifully, |
with handsome profit. E.# |
G. N. TraInmen Elect. - - |