Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-01-12
KEENE LOST THE DEAL
How Hartman Saved Southern
Pacific From Him.
HAD new BOARD READY
Transfer to Rockefeller as It Will Be
Described.
MAY RISK CONTEMPT OF COURT
Only Way to Save the Day Was to
Stay Out, and Hartman
Did It.
Nay RISK CONTEMPT OF COURT

NEW YORK, January 12.-When the in
terstate commerce commission resumes in
this city later in the month it's investigation
into the affairs of the Hartman railroad
system Wall street will probably learn the
details Of a story perhaps never surpassed
in interest in the annals of struggles
for railroad control. At the same time
will come out what is probably the real ex-
PLANTATION of the sale by the Union Pacific
to William Rockefeller in 1903 Of huge
block of Southern Pacific stock, which Mr..
Rockefeller later resold to that road. The
chances are that the story in detail will be
told by E. H. Hartman himself, who, of
course, will be called to the stand to
round out all the information already OBJ
tanned from other Union Pacific witnesses.
How very near, indeed, the Union Pa
cific came to losing control of the Southern
Pacific, in which 1t had invested $40 600 900
IN cash, is brought out very clearly by the
fact, which now comes to light that James
X keene was so confident of the success
or his campaign to Gust Mr.. Hartman
from the control of the Southern Pacific
that he had all his plans laid for the man.
agement of the road during the ensuing
year.
Chose the Directors.
Mr.. Keene had his directors chosen and
the officers who were to manage the prop
erty had been picked out. Some Of those
who were to have been made directors be-
sides Mr.. Keene himself were his counsel,
Edward Lauterback; his son, Foxhall
Keene; his son-in-law, Talbot ]. Taylor and
the latter's brother, James Taylor.
The directors of the Southern Pacific at
that time, who would have been ousted by
Mr.. keene, were T. Jefferson Coolidge, jr,
w. d. Cornish, George ]. Gould, Edward H.
Hartman Edwin Hawley. H. E. Hunting
ton. James H. Hyde. Otto H. Kahn, D. o.
Mills, w. S. Pierce, Jacob H Schff. James
Speyer, James Stillman and Charles H.
Tweed
Mr.. Keene's friends thought then that
all that kept him from successfully car
rying out his plans was the failure of
Judge Lurton of the United States courts
to make permanent the temporary in
junction he had already granted, prevent
ing the Union Pacific from voting it's hold
ings of Southern Pacific stock. 1t would
seem, however. that plans had been care
fully laid to defeat the effort of Mr.. Keene,
even in the event Of the injunction being
made permanent. The sale of $50, ZOO 900
of Southern Pacific stock to Mr.. Rookie
Teller. with the understanding that the
Union Pacific was to take it back in year
or earlier at its convenience. will in all
this plan.
The Keene Pool.
The s3O.0Oo.OOO Of stock taken over by
Mr.. Rockefeller was Just the amount
known to have been held by the Keene
pool. The transfer of that amount to
powerful dummy who would be sure to vote
the stock in the interest of the Union Pacific
brought it within Mr.. Harrimans power
to offset the stock which Mr.. Keene would
be able to vote at the annual meeting on
April 8. 1903. Had all the Union Pacfics
$9O.O00.00O Of Southern Pacific stock been
tied up by injunction Mr.. keene's $50, OOO,-
600 of stock would have controlled the
annual meeting. with the result that the
Union Pacific would have been ousted from
the Southern Pacific management and left
without an effective voice in the direction
of its most important investment.
property he controlled pass to other hands
In this way, and be -jeopardized, as he
thought, by being placed under the man
agement of the Keene pool, as ]. P. Nor
gan was to see the Louisville and Nashville
remain in the hands of John w. Gates.
Apparently, he knowingly sailed lretty
close to the wind in the matter Of legal
technicalities to save his ship from what
seemed to him certain shipwreck.
1t was not irrevocable sale that was
made to Mr.. Rockefeller and Mr. Harri-
man and his associates, it is believed, will
not waste time trying to prove that it
was.
Question of Title.
The fact that the stock nominally sold to
Mr.. Rockefeller was included in the Union
Pacifcs annual report of 1903 among the
Oregon Short Lines holdings of stocks in
dictates that Mr.. Hartman looked upon
those 100000 shares as the actual property
of the Union Pacific, the arrangement with
Mr.. Rockefeller Notwithstanding 1t will
probably be found that title to the stock
never passed to Mr.. Rockefeller and that
the stock itself never went out Of the pos
session of the Oregon Short Line, which
helu it for the Union Pacific.
1t was recalled yesterday that final pay
stock made nv Mr.
Rockefeller. IL paid only $6,OOO,OO0 on &C
count and the Union Pacific will probably
contend that until The full amount had
been paid the stock was still its own,
though bill Of sale had been made out to
be used in case of emergency. Indeed, Mr..
Rockefeller appears to have assumed the
which case an injunction might have been
obtained against preventing the resale of
the stock to the Union Pacific.
Rockefeller's Attitude.
Mr. Rockefeller personally would then
have become the owner of $3OOOOOOO of
Southern Pacific, which at the ,ime he may
have had very little desire to own, especial
ly if by any chance the property had passed
into the hands of interests hostile to those
with which he is identified. From this
point of view Mr.. Rockefeller may say that
he thought he was performing the service
very cheaply when he did 1t for per cent
interest and commission OF hVe-elghths
of l per cent.
AS it turned out, the temporary injunc-
ton granted on March 81, the day after the
nominal sale of $30,OOO,0OO Southern Pa
cific to Mr.. Rockefeller by the Union Pa
cific which had foreseen the possibility of
an Injunction, was not made permanent,
and when April came the Union Pacl..c
was free to vote it's 100000 shares directly
and 100000 shares through Mr.. Rockefeller
"a total OK 100000 shares-against which
Mr.. Keene's 100000 were powerless.
1t was a narrow escape for Mr.. harri-
man and the Union Pacific, and according
to these new facts there is little doubt
that the refusal of Judge Lurton to make
the temporary injunction permanent was a
source Of no small relief to Mr. Hartman
and his associates, despite the precautions
which they took to make the injunction
nugatory had it been granted.
ELECTED TO PRESIDENCY.