The Billings gazette. [volume] (Billings, Mont.) 1896-1919, 1907-02-26

New York, Feb. 25.--E. H. Harri-
man, head Of the Union Pacific sys-
tenn, spent today in recital Of por-
tiOns of the intimate history of the
financial operations Of himself and
associates, before the interstate COM
merce commission, which, in behalf
of the United States government, is
investigating consultations and COM
binations Of carriers, relations be-
tween carriers and community of in
terest therein, their rates, facilities
and practices. Special counsel for
the government made particular at
tack on the reorganization and finan-
cling of the Chicago & Alton railroad
by the Hartman syndicate and their
action, which, with challenge by
counsel for the railroads Of the right
Of the interstate commerce commits
sion to inquire into the private trans
actions of an individual, constituted
the two chief events of the days pro-
ceedings
Mr.. Hartman declined to tell what
proportion of the preferred stock OF
the Alton sold to the Union Pacific
belonged to him individually, and the
way was paved for taking the ques-
tion into the federal courts. The
Tann%av3oT 1fYv1.
itation on the inquisitorial power of
the combination and is Of serious i'm
portance to the whole question Of in
terstate Incorporation investigation.
There was an effort to show that
there had been an enormous imitation
of the stock securities and liabilities
of the Alton; that the Hartman syn
dicate had taken unfair profits by de-
claring dividend of 80 per cent from
the proceeds of the first sale Of the
bonds, amounting to $40,000,000; that
the syndicate had sold itself the
bonds at an unreasonable low figure,
only to resell them at enormous pro-
fit; that the Hartman syndicate had
in the Alton capitalized the losses
Of former stockholders in the road
and the money which had been spent
by the old management for better
ments over period of 10 years and
already charged to operating ex-
penses; that the books Of the COM
pany had been doctored, and that for
an increase of the stock and liabili-
ties from about forty millionms to
one hundred and sixteen millions
there was nothing to show, except an
expenditure of twenty-five million in
improvements on the property.
Mr.. Harrman's testimony was a
denial Of al the charges, and he made
an extended explanation and defense
Of the transactions, which he con-
tended were fully justified by the con-
ditions and circumstances Of the time
and had been conducted entirely in
the open.
Harriman's examination lasted for
five hours, and was unmarked by
acrimony. The witness declined to
be led into an attempt to explain the
details Of the Alton operations, and
constantly referred his questioner to
the records of the Alton company.
Mr.. Harriman's testimony began
wifi, tha issuance of one hundred
million of controvertible bonds by the
Union Pacific company for the pur-
pose primarily, of paying for the
Southern Pacific in 1901, and then
led through the purchases in con-
nection with the Oregon Short Line
Of the Northern Pacific stock.
He identified a statement showing
that since the first day of last July,
the Union Pacific and Oregon Short
Line have purchased stocks at cost
Of one hundred and thirty one mil.
lion dollars, and Mr.. Kellogg, the
governments attorney sought to
show that, figured by prices in the
market today, there had been a loss
OF S11,000,000 ON the investment. Mr.
Hartman said that was possibly
true, and when further questioned
asked permission to explain.
The witness said IL the Northern
Pacific and Great Northern maintain