The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1907-02-26


Kellogg, who had done the questioning,
said that they had tried TO give him one
during the day.
Yes, but you've blown out all the
candles" said Hartman, with a smile.
I'm thinking Of retiring when I'm sixty,
II / get time 30 think about it."
Before Hartman appeared this morning
the counsel for the commission put in evil
dence another issue of Harriman's selling
stock owned by him to his own company.
This was the sale OF 81 per cent of the
ST. Joseph and Grand Island road. There
was put in evidence the resolution Of the
executive committee directing that this
be bought from Hartman.
Afternoon Session.
At the beginning Of the afternoon ses-
sion Mr. Kellogg produced letters from
former presidents Of the road showing
that in 1889 Mr.. Blackstone, then presi-
dent, reported to his directors that he
thought such a sum might be added to
the capital account, or, in other words.
that the losses OF the old stockholders
might be capitalized, but that nothing was
done about 1t in the ten subsequent years.
the old directors evidently not approving
OF il at elI Mr. Hartman did not think
It made any difference whether or not the
stockholders who had suffered the loss
got the dividends
Did you direct this entry Of Sl2,444, GOO
to be credited?"
II think not"
you simply took advantage OF 1t when
Il was done?'
we acted-I acted as one Of the board
upon the report made by the officers Of
the company" ne explained
Mr.. Kellogg got from Mr.. Hartman
that the four men who were the Alton
road. as Mr. Hartman had put It, had
paid 200 for the old preferred stock and
10 for the common. Then they bought
the St Louis. Peoria and Northern Rail-
road. a ffty-eight-mile road. After pay
ing themselves virtually the 80 per cent
dividend on the stock they had In the old
company, issuing 80 O00. 600 Of bonds. Of
which they took 81 per cent at s.. they
formed the Chicago and Alton Railway
Company. Mr.. Hartman said this was
in the spring OF 1900. To this company
they proceeded TO transfer all their com
mon and preferred stock in the old COM
pany, 81, 722. and 1928 common, for which
AtAtt tAatA Ecll Ftf'fNJ'fNNts oAAt& AAtC III -
eight-mile railroad, which was turned In
for S2c76.600.
The stock, IL appeared, was placed in
the treasury Of the new company and a
mortgage Of 81, o00.Go0 was made on Il.
Then Sl942s.o00 par value Of preferred
stock and 1852. 900 common stock in the
new company was issued. making about
$40 000,000 Of stock and so, 900 Of bonds.
"Tn other words" said Mr.. Kellogg.
'you proceeded to capitalize $50 10000 OF
the preferred and common stock OF the
Alton for $50 coo 000?"
THAT is as you put e." said Hartman,
who wanted to know if he couldn't ex-
plain #. He did not get a chance then.
Mr. kellogg wanted 10 show that this
had been done through the four gentle
men turning over their stock In the old
Alton railroad 20 one Lewis stanton and
selling 10 him the ffty-eight-mile rail-
road. The next step was for MF. stanton,
whom Mr. Hartman didn't seem to re-
member very well. TO offer the Alton
Railroad Company the 34,722 shares OF
the preferred Alton stock for $4,000 90
and the little railroad for 100000. Har-
riman said that he did not remember the
details. though he was present at the
meeting al which Stanton made his offer
Il have no recollection of IL whatever, %
he said. The books were produced and
showed IT, In return for this offer the
company gave the same Stanton, ap-
parently, the So. go 31-2 per cent
bonds issued upon the stock OF the old
company turned over-at least that is the
way Hartman put Il. A resolution was
shown by which the directors. however,
authorized a sale OF only $1,000, 900 Of the
bonds. the proceeds to be paid to Stanton
for the old preferred stock and the little
railroad.
Kellogg asked If the stock turned In for
SO. 10000 hadn't cost the four 1874 400.
Hartman said that the common and pre-
ferred had been bought by the four at
one transaction Kellogg tried to get
what they had paid for the fifty-eight-
mile railroad. Hartman didn't remem-
Der how they had got that road
las a matter Of fact, il cost you less
than 81. 0c0000. didn't it,"
Hartman said that he didn't think so;
that it was more than that He didn' t
remember that IT had cost 81. $4,000 in
bonds, although he had been one of the
syndicate that had organized the road
These bonds were defaulted were they
not2" asked Kellogg
Il have never been a member of q
railroad that defauIted on its bonds. a"
said Hartman, angrily. 1T is a small
transaction. and has gone out of my
mind"
He said that he didn't know what
Stanton really got, but he did know that
for what was turned in the four men got
the 81 CO0.000 of bonds and all of the
common and preferred stock.
The hearing was adjourned until to-
morrow morning with Hartman still on
the stand.
Mr. Milburn attempted TO come to the
rescue Of his client in the morning ses-
sion by declaring that Mr.. Hartman and
Messrs. Stillman. Gould, and Schif had
merely acted as representatives for a
large syndicate in the Alton deal.
Hartman Shows Annoyance.
"You are trying TO create the impress
sion," he continued. turning to the gov
ernment's lawyer, that these four gen.
tlemen acted alone in this transaction -
The quick use which Mr.. Kellogg made
of his opponents objection did not add
anything TO the comfort Of the wiry little
man in the witness chair.
Very well" said Mr.. kellogg. who
were the members OF that syndicate which
you represented. Mr. Hartmann"
Il don't know" said the witness.
The Union Pacific's president, accord
ing 70 his friends, appeared as a willing
witness. He was sworn by Mr.. Knapp
the chairman, and after a barely percep-
tible bow to the FIVE commissioners, sat
down, crossed his legs after the manner
of a man who expected to occupy the
same seat for some tine to come, threw
back his coat, thrust both hands into his
trousers pockets, and was ready for the
questions which Mr.. Kellogg Immediately
began to fire at him.