New-York tribune., 1907-08-13
ORDER FOR HARTMAN.
MUST SHOW CAUSE.
He and o. II. Kahn Nay Hare to
4ns7cer Interstate Questions.

-i,,,t Court yesterday by United States Attor-
- stimson marked another effort on the part
!, .ba rlenartrnent of Justice and the Interstate
,-,r,f-ce Commission to force Edward H Har-
a,sn and Otto H. Kahn, of Kuhn, Loeb & Co.
- answer those questions to which they refused
-.r,iss during the investigation by the commits
.ion into the business of the Union Pacific and
tbe southern Pacific The petition is based on
.r order 10 show cause. signed by Judge Hough
o,s was fled with Commissioner Shields as
~ of the court. The petition is returnable
:, october q. when counsel for the two finan-
;srs viii file briefs and make their arguments
= 70 the reasons why Messrs. Hartman and
x-shn should not answer the questions.
The main questions under dispute are those
-sls-ing 10 Mr. Harriman's operations in the
I~Eicsgo & Alton stock on this point Mr. Kahn
;s desired 10 give explanation. as we'll as to
,su the part his firm played in the purchase OF
1A5Ga0 shares of Illinois Central stock for the
T-,ion Pacific The commission tried in vain TO
1sern from Mr.. Hartman the facts as to the
-ool alleged TO have been made by him with H
2 Rogers and II. c Frick. Al the time of the
INQUIRY last winter Mr. Earrimans refusal was
hacked UP by his counsel. the grounds that
ssrtain matters in railroad manipulation We're
rvtssde the field Of the commissions power Mr..
gshn's counsel pleaded that he would be vo-
lzrng mis- confidential capacity as stock broker
4 he gave inside" Information as 10 what he
lid for his clients
ORDER SERVED ON COUNSEL.
Copies of The order to show cause in the pres
ert petition were served yesterday afternoon
BY United States Marshal Henkel. He could not
ali MT Hartman Mr. Kahn, the former
being on q two weeks trip in the West, and
TIE latter being at his home in MorristOwn.
Accordingly the papers We're accepted by a
member Of the firm Of Guthrie. Cravath & Hen
derson. as counsel for Mr.. Kahn. while for Mr..
Hartman they were taken by ex-Judge r. S.
Iovett- his chief counsel Paul d. Cravath,
-.presenting aIr. Kahn said last night: Il have
not had tine read the papers in the case.
don't care 10 discuss the matter in any way"
Ex-Judge Lovett said he had read the petition,
but had comment 70 offer
The petition begins by setting forth the law
under which ttle Interstate Commerce Commits
sion was created. March 2, 1889, and details the
mowers OF the commission Il states that the
commission has the right examine into the
accounts and annual reports Of all common
carriers Included under the act, and make q
report concerning them on December OF each
year The petition goes TO say that pursuant
10 an order 20 Investigate the Union Pacific and
The Southern Pacific lines. issued on November
z 1906 the commission met in the federal
building. in this city. on December Is, 1906. and
then adjourned January 1. 1907. Attached TO
The complaint are eight large volumes OF printed
testimony taken by the commission at New
York, Chicago Portland. San Francisco, Seattle
and Los Angeles in January and February.
WHAT UNION PACIFIC CONTROLS. -
FloIn this testimony. according TO the petit
ton, il appeared that the Union Pacific Rail-
way organized under the laws of Utah in 1891.
mas owned virtually ali Of the stock OF the
Oregon Short Line and the Oregon Railroad and
Navigation Company. and controls those lines
Il is also charged that the lines are operated as
one property with the lines Of the Union Pacinc
EDlr
company was created under the laws Of Ken
lucky by special charter in 1854. and controls
system Of roads from Ogden. Utah, TO san
Francisco. from the latter point TO Portland,
Ore also from San Francisco to New Or
leans, and a steamship line from New Orleans
20 New York, and controlling interest in the
Pacific Mail Steamship Company, running from
San Francisco to Honolulu and Oriental points,
and tnat The Oregon Railroad and Navigation
Company operates and owns similar hne-
The petition says that from the testimony
taken il appeared that after the reorganiZa-
fion Of The Union Pacific road z II Hartman
and Otto H Kahn became directors or the
Union Pacific and that NJ Hartman has SO
continued; that for many years Mr. hartman
has been the president Of the Union Paclnc, the
Oregon Short Line and the Oregon Railroad
ant Navigation Company; that about 1901
Tie Union Pacific company purchased 4D-io per
cent Of the capital stock Of the Southern Pacinc
company: that later when the stock OF the
southern Pacific Increased
company acquired its proportion of the in
crease.
SOME UNION PACIFIC PURCHASES.
L is further charged that the Union Pacific
company dominates and controls the Southern
Pacific as well as the steamship lines. and that
The officers and directors are elected and ap-
pointed by the Union Pacific, Also, il states
Gr. Hartman has been president OF the South
ern Pacific nearly all the time since lSo2 Both
companies, il alleges, are controlled by MI mar
flLnan- The inquiry also satisfied the cofiiiiS-
son that the Union Pacific. either in Its own
ilsrne il the name of the Oregon Short Line
has purchased large amounts Of stocks In otner
Hallway companies and had at times SOLD such
Stocks. II also points out that from tile tesu-
mony Of Mr.. Hartman il appeared that the
Union Pacific had issued S1Ooooo.ovO OF con-
rertibIe bonds that were turned into common
stock Of the Union Pacific
the complaint then takes UP the issuing OF
sleo0r|0epD of refundng bonds by the Oregon
Short Line whereby the Union Pacific acquired
q mortgage on the road. II also refers 10 the
fact that the Union Pacific has notes outstand-
ING for S:sG,3.t3 49,. used in buying the caplI4i
stock OF the Baltimore & Ohio. 1T declares that
The total obligations of the UnlQn Pacilc ana
ne Oregon Short Line for use IN purcfasihs
stock Of other roads amount 10 S1SI'b3".4.b-'
while Mr Hartman admitted the stand that
the Union Pacific had spent in the purchase OF
stock s1s2 5ss. Gas The petition taxes UP ule
Specific instance of the purchase OF Chicago q
Alton stock through Kuhn. Loeb & Co, as an
example OF Mr. Hartmann s activities IN uliS
fne- Excerpts from his testimony Wheh ho
refused To give the answers requested. are IN
Guided in the complaint, as are the discussions
between counsel and the commission as TO tile
commsson's right TO expect answers on these
points The Union Paciacs investments III Chl-
cago & Alton were stamped by Frank B- heI-
logg. Of counsel for the commission as tfils
most reaa rla HE transaction OF the purchase OF
sl3000e0o or sl4Go9o.ooa Of stock.