Los Angeles herald., 1907-04-05
HARTMAN CASE
ARGUMENTS MADE
ATTORNEYS DISCUSS ALLEGED
COMBINATION
Theory Advanced That the Exchanging
Of Stock Between Railroads Is
Within the Letter Of
the Law
BY Associated Press.

in the Hartman case, which was heard
by the interstate commerce commits
sion few weeks ago i'm New York,
were begun before the commission to-
day.
The proceedings are not in the ma
ture of a hearing but merely an argu-
ment involving the question whether
the Union Pacific and Southern Pa
cific railroads are competing lines.
In his testimony before the commits
sion in New York Mr.. Hartman in
sisted that the two lines were not
competing lines. In the arguments to-
day Mr.. Harriman's side of the case
was presented by John G. Milburn
and r. $. Lovett, so far as the South
ern Pacific is concerned and by Paul
D. Cravath, who, it is reported, will
explain the deal respecting the Chicago
& Alton railroad. which was brought
out at the New York hearing.
The interstate commerce commission
will be represented by its special at
torneys, F. b. Kellogg and c. A. Sew
erance.
on the results of the argument may
depend whether Mr.. Hartman and his
associates are to be prosecuted as
combination in restraint of trade un-
der the provisions of the Sherman anti
trust law. When upon the stand in
New York Mr.. Hartman declined by
advice of counsel to answer certain
inquiries put to him by the commits
sion concerning the transfer of certain
Union Pacific stock
1t has not been determined yet
whether the commission will endeavor
to force Mr.. Hartman through pro-
ceedings in the United States court to
answer this question or not.
1t was stated positively by members
of the commission that the question
not only had not been decided, but it
had not even been considered to any
considerable extent. 1t is not likely
that any decision in this matter will
be reached for some time, certainly
not until the commission has obtained
through the arguments begun today
and from other sources all the light
that may be thrown upon the matter.
Harriman's Contention
Mr.. Harriman's contention was that
the transactions about which he was
questioned had no relation to interstate
commerce and that the commission
therefore had no right TO the informa-
tion which it asked
1t is probable that the commission, |
after it has gone thoroughly into the
matter, will announce what action, if
any, it proposes to take affecting Mr..
Harriman's refusal to answer it's
questions. 4
Commissioners Clements, Lane, Har-
Ian and Clark were upon the berich
to hear the arguments. Judge Lovett,
representing the Hartman interests.
presented few papers and directed
attention to certain parts of the hear
ing held in New York.
Paul d. Cravath, representing the
Hartman interests, stated that a
had been created in
the public mind as to the Alton tran
sactions and as to the purposes of the
recapitalization of the line
Mr.. Cravath said that the time had
come for much stricter regulation of
the issue of stocks and bonds of semi
public corporations.
THE liberal laws that have existed
in this regard" said he, have ma
terially aided in the development and
growth of the country. The watering
of stock, in my opinion. has been help
full in the past. The time has come,
however, in the development of the
country, in the balancing of advan-
tages and evils, for a much stricter
issuance of the stocks and bonds"
Methods Well Understood
Mr. Cravath asserted that in the
Chicago & Alton deal the officials were
distributing money to the stockholders,
and that all these transactions were
we'll understood by the financial in
terests of the country. He asserted
that no secret was made of these
transactions and that they were pre-
sented fairly to the public by all the
financial agencies.
That no court had ever held that a
bona fide purchase by one company of
. CT DF fe, ~,
the antitrust act, Mr.. Lovett asserted
with emphasis.
He admitted that there had been
some combinations between the Union
Pacific and the Southern Pacific, but
declared if the volume of business had
been much larger it would have no
bearing upon the purchase of one road
by the owners of the other, as that
purchase was i'm itself a legitimate
business transaction of such a charac-
ter that the courts will not interfere
with it.
There could be no curtaiment of
the right to buy property under the
antitrust act.
Clements Seeks information
Suppose the motive of the purchase
was to get rid of competition" asked
Commissioner Clements.
II believe the purchaser would still
have the right to buy"
do you apply that doctrine to pub
lie utility corporations" asked Com
missioner Clark.
Assuming that they have the power
under their charters, l should say
yes
"And you regard the suspension of
competition as merely incldental?" Mr.,
Clark asked.
Il am inclined to that opinion" an
swered Mr., Lovett. He contended,
however, that I'm the Southern Pacific
Union Pacific transaction the suppress
sion of competition had been so remote
as to remove that feature as motive
for the transaction. He also attempted
to show that 1t was the design OF
congress that the Pacific roads should
be operated as one line regardless of
the diversity Of the ownership and re-
ferred to the earlier purchase of the
Central Pacific by the Southern Pacific
as a precedent for Mr.. Harriman's ac-
QUESTION of the Southern Pacific.
ReVerting to the question of the sup
preston Of competition. he outlined the
situation with reference to the Union
Pacific. which had just emerged from