Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-07-14

line and the Union Pacific and Southern
| Pacific.
Ownership of Stock.
1T appears that the Union Pacific also
owns $10,00,0oo. par value, of the stock
| Of the Atchison, Topeka and Santa Fee
Railway Company, and about S30,00o.0 o
more is owned by individuals connected
with the Union Pacific. making siO,0oo.OyO.
| or substantially II per cent Of the entire
! capital stock of the Santa Fe Company.
| Who owns this stock outside Of the &c.,
900 900, Mr.. Hartman declined to state.
| Two directors of the Union Pacific are
| also directors OF the Santa Fe Company;
and there is now division of the oriental
| traffic by the Pacific Mail Steamship Com
| pany between the Union Pacific and the
Santa Fe systems. 1t appears that there
| has also been division of the fruit traffic
| between certain California territory and
| the east, each taking a certain, percentage;
; and that north of San Francisco the Union
Pacific and the Santa F. have Joined and
amalgamated their interests IN the North
western Pacific railroad, and that a joint
control has been naugurated similar to
| that of the Alton.
Prior to the acquisition of the Southern
Pacific by the Union Pacific. tn, Denver
and Rio Grande system, extending from
Denver, where it connects with various
| lines to the east, to Salt Lake and Ogden,
| was given equal faci.it over tn, Cent? al
Pacific, and thereby practically formed an
amalgamation OF the Union Pacific and
Southern Pacific, and the construction of
| the San Pedro road this line has been d.
MED equal facilities in the receipt and
transportation of freight over the Central
Pacific and the San Pelro lines. Its bust
ness, therefore, has decreased. and its abii-
Southern Pacific impaired. Ga this &C
count the Gould lines are aiding the con-
struction of another line from Og len to
San Francisco.
I ~,
the Union Pacific and the Chicago, Rock
Island and Pacific Railway Company has
undoubtedly eliminated competition be-
tween the Alton and the Rock Island be-
tween Chicago. st. Louis and Kansas City.
These are conspicuous illustrations of the
development Of the theory of community
Of interest and harmony of maHag =
ment,' which Mr.. Hartman suggested
when he demanded representation upon tn
Santa Fe board.
IF the policy of purchasing and controlling
stocks in competing lines is permitted to
| continue, it must mean suppression of COM
petition.
Bankers Richly Rewarded.
incidentally, it may be observed that the
bankers who manage these operations APP
pear to be richly rewarded. The testimony
shows that Kuhn, Loeb & Co. received 5
per cent or S5GOO,C0O, on the S1GO,0OO.C0O of
Union Pacific convertible bonds above men
toned, one-half of which was retained by
them and the other half given to the syndi-
cate to whom the bonds were sold. On the
1913, $50 shares of Southern Pacific which
the Union Pacific purchased at S50.61 per
share. tie same banking house received
commission of $50 a share. They received
like commission of 500 per share on the
Chicago and Alton stock sold to the Union
Pacific at SS650 per share. 1t is significant
| that member of this firm refused to dis
close the extent Of It's interest in these Sc
curitieS.
Indefensible Financing.
from this brief synopsis of the exploita-
ton of the Chicago and Alton, 1t is evident
that it's history is rich in illustrations of
various methods of indefensihle financing"
the commissioner says, after reviewing that
case thoroughly. First came the profit to
the stockholders arising out OF the sale to
themselves of So, G00,tsU of bonds at g.
which sod fer several succeeding years for
S2ls to 81. Second came the 30 per cent
dividend based on amounts expended from
income for improvements, much of it nearly
thirty years before, and recently capital
| lied. Third came the pseudo transfer to
Stanton and his contract under which the
new company paid S10,O00,O0O in cash for
preferred stock which had cost less than
$1,000, coo.
Fourth came the conversion Of 1873 224
shares of common stock in the railroad
company into 1929 shares of common
stock plus $50 shares of the preferred
was sold to the Union Pacific at S6Ia a
share Fifth came the sale of the St. Louis,
Peoria and Northern for $3.Oo0,O0O cash
Sixth came whatever interest the syndicate
may have had in the sale to Kuhn, Loeb &
Co Of $22G0O.OG0 of bonds at 60 cents on
the dollar. Seventh came the fee of $780,
OGO to Mr. Hartman for financing the en-
terprise. This analysis is no doubt ncom-
plete. but 1t is suggestive.
Attempts to Justify Acts.
by way of justification or excuse we are
told that the methods of the financing of
railroads which prevailed in the year 1850
are now obsolete owing to higher degree
of conscient!ousness among financiers; and.
moreover that the Chicago and Alton should
not be regarded an Isolated instance, in
asmuch as it was dealt with much as many
other roads were at that period.
1.-The first of these statements Is. we trust
true; the latter statement Is not calculated
to uphold the value of American railroad
securities.
1T is true. however. as contended, that q