New-York tribune., 1907-07-14
HARTMAN REPORT OUT
HIS METHODS ARRAIGNED
Commerce Commission Makes No
Recommendations as to Prosecution.

man lines which has been In progress Tor SeNeral
months. The report. which was written by Com
missioner Franklin X Lane. is the unanimous
expression of the commission. Copies have been
transmitted TO President Roosevelt and the De-
Qartment of Justice
The commission expects that the President
and Attorney General Bonaparte will decide
from the statement OF facts given in the report
whether or not the government will institute any
sort of proceedings against Mr. Hartman or tho'
corporations involved in the inquiry. No recom-i
mendations that either criminal civil prose-i
cutions be instituted result of It's inquiry !
are made by the commission
The conclusion drawn is that the joining 90
the Southern Pacific and Union Pacific has re-
suited in stamping out transcontinental and
transpacifc competition in the carrying trade.
The recommendations that railroad cor :
poration's business should be confined to trans
portatiOn and it should not invest generally In
the securities of other carriers; that railroad
Is acting unlawfully and against public policyrj
in acquiring control of parallel and competin17
lines; and that the time has come for legtsla-i
tiOn control the issue of securities by rali>T
roads engaged in interstate commerce.
SUMMARY OF THE EVIDENCE.
The report is an exhaustive summary OF ths
evidence taken at the hearings held by thai
enters fully into discussion of the policy pur-l
sued by Mr.. Hartman in obtaining and MAIN
tanning control of the various lines IN the Har-
riman system and presents fairly complete his-'
tory of the operations OF these lines Extracts
from the testimony of Mr.. Hartman given
to show, stated in the report: That II Is ouyl
the law which prevents the concentration into
Mr.. Harriman's hands OF every railroad lins
lying between Canada and Mexico is the frank
a m Of Ir Hartman ar rh1l
hearing. To gather under head all existingi
transcontinental lines. many possible.
and to exclude the coming of all competitors
became manifestly the Hartman policy. which
was inaugurated in 1901 by the issuance OF
$10o,Oo,0OD of convertible bonds by the Union
Pacific"
Mr. Harrimans eventual control of many ot
the competing transcontinental lines pre-
vented IL is pointed out. by the Supreme Courts
decision in the Northern Securities case. II is
| said in the report that II has been part Os
! Mr. Harrimans policy to permit the properties
| brought under Union Pacific control TO decline.
as in every they better to-day than
| they were when Mr.. Hartman acquired them
Particular stress is laid by the report ths
| elimination of competition in transcontinentat
| business among the Hartman lines. and the
/ commission indicates that that is a matter OF
| large significance developed in it's inquiry
THE ALTON DEAL"
! Special reference is made 10 the deal by which
4
road and to the manipulation of the Chicago &
| Alton. careful synopsis of the financial opera
tions in both instances being given. Concerning
the Chicago & Alton transaction the commission
soys; 1t was admitted by Mr. Hartman that
there was about S6oO0tOOO OF stock and LA
hfties issued, against which no property had
| been acquired. and this is undoubtedly an ac-
curate estimate The commission further SAYS
4
It's history is rich in Illustrations Of various
methods Of indefensible financing
| There are sharp comments on the capitaliza-
tion OF the Chicago & Alton, Referring TO ths
fact that Sa73 ~ OF coupons on prior mortgage
bonds that should have been paid we're carried
as asset. Mr.. Lane says, thus in fact turn
ing a debt or obligation Of the company. which
should have been paid and cancelled, into an
asset. and captalizing the same" Again n
speaking of the liabilities of S11SS94OOo placed
the same road. the report says it was AN in-T
crease Of stock and liabilities upon the road for
which not dollar of tangible property had been
added Of practically S56,01DOop."
The defence or explanation made by witnesses
that the methods of financing in 1900
obsolete and that the road in question was noes
an isolated instance is dealt with sharply b;
Mr. Lane. who says, The first of these stats-
ments is, trust. true; the latter statement Is
not calculated TO uphold the value Of American
railroad securities
Incidentally says the report. cit may be OBJ
served that the bankers who manage these oper-
atiOns appear 20 he richly rewarded. The testi-
mony shows that Kuhn. Loeb & Co. received
per cent or $4,000. 600 on the 500, 900 900 OF
Union Pacific convertible bonds one-half Ot
which was retained by them and the other half
given % the syndicate 10 whom the bonds were
sold on the 100000 shares of Southern Pacific
which the Union Pacific purchased at $50 81 4
share the same banking house received COM
mission of 50 80 a share They received a Ike
commission of 50 30 a share the Chicago 81
Alton stock sold TO the Union Pacific at $50 so
a share. II is significant that member OF this
firm refused To- disclose the extent of its inter-
est in these securities.
PACIFIC RAILROAD OPERATIONS.
The report deals principally with transactions
of the Union Pacific Railroad and Southern
Pacific companies. with their purchase of the
stock of various other common carriers. COM
missioner Lane points out that within thres
years after the reorganization of the Union
Pacific in 1897 Mr.. Hartman. as chairman OF
the executive board, possessed powers that were
'weIlnIgh absolute" He shows that Mr.. Har-
riman was permitted 10 act without the consent
of the four other members and adds; 1T may
fairly be said therefore. that the policies and
purposes Of the Union Pacific have been those
OF Mr. Hartman II is said that the Union
Pacific has gained since its reorganization con-
troll OF every line Of railroad reaching the Pa
cific Coast between Portland on the north and
the Mexican border on the south" except the
Santa Fe Line. Mr.. Harriman's testimony that
he would take the Santa Fe any time the law
would permit ii is quoted Mr.. Lane states ms
belief that the stock of the Santa Fe is con-
trolled by the Union Pacific. and that such con-
troll has not been without effect.
The Southern Pacific company. which Is q
holding corporation, is listed owning a con-
trolling interest in the Southern Pacific. the