The Boise citizen. (Boise, Idaho) 1906-1910, 1907-03-15
HARTMAN
DENOUNCED
Methods Dishonest and
Unlawful
REVIEW OF The ALTON DEAL
Same Old Plea Set Up in D6f6nS6
of ThiGV6ru
REVIEW OF The ALTON DEAL

ns The public press continues to deal
with the astounding facts brought out
- in the evidence of E. H. Hartman be-
X fore the interstate commerce commls-
L. sion, especially is this true of the Alton
areadjustment" as it was termed, by
which Mr. Hartman and three associa-
trt tes-George Gould, James Stillman, and
M Mortimer Schiff-bought 81 per cent OF
the stock of the Chicago & Alton for
s42oOO,OOO. While the deal was in prog
~ ress they drew for themselves 30
Der cent dividend, thereby reducing the
'ei cost to them of the property to $780,
100000. They then increased the cap
italization to approximately S122,OoO,-
al 600. OF this only some S22,OOO,OOo was
m spent on Improvement of the road and
the rolling stock. Says the New York
Sun:
4. ''We know Of no instance in the his
tory of railroad management in this
country or in any other country so dar-
ing in conception and so audacious IN
execution. Dividends should be de-
clared dependent upon the profits OF
each particular year, and accumulated
& earnings held by corporation are part
of its corporate property, and the inter
est therein is capital and not income
e When directors act in good faith three
courses are open to them, according to
the Supreme Court of the United States.
A corporation may distribute its earn
ings at once to the stockholders as in
come, or it may reserve part OF It's earn
ings of a prosperous year to make up
for possible lack of profits in future
wears, or it may accumulate portions OF
its. earnings and invest them in its own
plant so as to increase the permanent
value of its property. But the underly-
ing principle is that in every instance
dividends shall be declared only from
the interest or net profits earned and
actually received.
"The enormous dividend declared had
not been earned-no part OF 1t was net
profit. But it was, in fact, an approprI-
alton Of the capital OF the corporation
under the guise of the declaration o.
dividend. AS to its moral aspect there
can be but one opinion"
The New York World calls attention
to the criminal violation OF the laws
of Illinois in this matter and declares the
bond issue as invalid, saying:
"The constitution of Illinois provides
that no railroad corporation shall issue
any stock or bonds except for money,
labor. or property actually received and
applied to the purposes for which such
corporation was organized. All stock
dividends and other fictitious increases
of the capital stock or Indebtedness OF
any such corporation shall be void
There is hardly phrase in this ar
ticle of the Illinois constitution which
Mr.. Hartman and his associates have
not violated in their juggling OF the
Alton. vet the governor and the attor-
ney general OF Illinois never seem to
have troubled their head sabout it. They
were as little concerned about Mr.. Har-
riman's constitutions defying financial op-
erations as was the government OF New
York about the systematized criminahty
of its life-insurance companies.
rs it not a logical conclusion that this
S61,oOO,ooo out of S122,OOO,Ooo in the
Alton case represents roughly the
amount for which Mr.. Hartman was
able to capitalize official neglect of duty
in Illinois ?"
The New York Times comes forward
with the old, old plea that nobody has
been injured by this reckless and mon [
strous wrong, as follows:
while 1t is true that Mr.. Hartman .