The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1907-04-04
Famous Railroad Lawyer
Expresses His Personal
Views.
B ellie YES Government
Should Have Control
Over Stock Issues.
Says Alton Deal Would
Be Considered Shady
Today.

Paul D. Cravath, Of New York, at
1orney for Kuhn, Loeb x Co. and the
Hartman interests told the Interstate
Commerce Commission today, in the
course OF long argument defending
the Hartman reorganization OF the Al
Ton road, that there was nothing in
that proceeding which, at the time, was
inharmonious with the vie@s then pre-
Valeut of good morals or good bust
ness. But he added that he believed
there ought to be- Government reguIa-
lion Of capitalization ISIS rs, and, when
put on the grid 10y nduisitive commits
sioneTs. declared that Government
authority should have power TO wise, and
limit all issues.
MT. Cravath was embarrassed Wien
the direct questions were put to him
which drew out these expressions. lie
said he doubted if q lawyer, arguing a
case, ought to be drawn into his per-
Sonal views of public policy; bat being
Expressed, he admitted the feeling that
what may have been consonant with the
financial properties when Hartman re-
organized the Alton. would not be to-
day.
COMMISSIONS Harlan called his atten-
zion to the Minnesota supreme court de-
S-ision that the State had no power 10
restrict issues of capitalization by A
corporation
Il was surprised and sorry 20 learn
of it. and do not believe it would be fol-
lowed in New York Is replied Mr.. Cra-
Nath.
Speaking of the Hughes puollc utili-
Fies bill. Mr. Cravath said he was able
30 indorse its principles in the main. bur
could not agree that in case of consoH-
dalton no increase ia capital should be
allowed.
Commissioner Lane asked whether it
was necessary 10 give commission
power 10 forbid or 10 limit issues of Sc
cuTdies. or whether il would be SUI
ficient To allow corporations To i'sue Sc
eurities as they pleased. with Govern
ment supervision 10 assure that the pro-
ceeds were honestly spent on the prop
critics of the corporation.
Il think little would be gained +" re-
piled Mr.. Cravath unless some public
authority WAS empowered 10 limit the
issues. ] believe The gain from reason
able regulation would be greater than
The loss"
Unfair to Single Out Alton
But while declaring for such reguIa-
ton in future. Mr.. Cravath insisted it
was unfair 10 single out the Alton re-
organization for special attack because
il followed methods that. at that time
were employed by many railroads and
more industrials and not questioned by
anybody He analysed the capitalization
of the Alton before and after the re-
organization, ard insisted that the sub
stitudon of a large amount OF secur-
tiles, bearing a low rate OF interest. for
a smaller amount bearing higher rate.
was not improper Moreover ne said
the syndicate did not make the i'm
meEse profits credited To If. its profits
were only in the ratio OF six and one
half millions 10 thirty-nine millions ON
this point commissioners sharply dis
agreed with him and insisted that the
profits were vastly greater
Reorganization a Speculation.
Commissioner Harlan insisted that the
reorganization was simply specuia-
ton: that the syndicate bought the
road. reOrganized it by vastly increas-
ing its securities sold the new issues TO
the public and got out with great
profits. Therefore he declined To accept
the theory OF Mr.. Cravath that the syn
dicate bought the property for the sake
of applying better railroad methods to
IT, II they had bought it for that pur-
pose. he said. they would not have sold
out their holdings of the new securities
as soon as possible.
john G. Milburn and Judge p 3
LoVett also appeared on behalf of the
Hartman interests. their especial pur-
pose being to present the argument that
tie Union and Southern Pacific are not
parallel and competing roads within the
meaning of the sherman anti-tTast law.
and. therefore that there is no viola
ton of that law in their common con
troll by the Hartman interest
Messrs. Kellogg and Converse attor-
neys for the commission, sat with close
attention during the argument ON the
Alton case. and 1t was said that they
would probably make a reply later in
ghe day.