The San Francisco call., 1907-02-26
{. 4. HARTMAN DENIES
WATERING The STOCKS
Explains Gigantic Railroad
Deals to Interstate
Commission
INITIATION, PROFIT
Magnate Evades Questions
Concerning Own Share
in Transactions


NEW YORK, Feb. 25.-E. H Har-
riman, head Of the Union Pacific sys-
tenn, spent today In a recital of por-
tions of the intimate history of the
financial operations of himself and his
associates before the Interstate Com
merce Commission, in whose behalf the
United States Government is investigat-
ing consultations and combinations of
carriers, relations between carriers and
community of interests therein, their
rates, facilities and practices. Special
counsel for the Government made par
ticular attack on the reorganization
and financing of the Chicago and Alton
Railroad by the Hartman syndicate,
and their action, with a challenge by
counsel of the right of the Interstate
Commerce Commission to inquire into
the private transactions of an indi-
vidual, constituted two chief events of
the days proceedings.
Hartman declined to tell what pro-
portion of the preferred stock of the
Alton sold to the Union Pacific belonged
paved to force the question into the
Federal courts. The point raised in
wolves a material Limitation on the in
quisitorial power of the commission
and is of serious Importance to the
whole question of interstate incorpo-
ration Investigations. There was an
effort to show that there had been an
enormous imitation of the stock Sc
curities and liabilities OF the Alton;
that the Hartman syndicate had taken
unfair profits by declaring a dividend of
80 per cent from the proceeds of the
first sale of bonds. amounting to S40,-
600, 900; that the syndicate had sold
itself the bonds at an unreasonably low
figure, only to resell them at enormous
profits 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 betterments
over a period Of ten years and been
charged to operating expenses; that the
books of the company had been doc
tored; that for an increase of the stock
and liabilities from about $4,000, 900 to
s116, 900 there was nothing to show
except an expenditure of s22, 900 in
Improvements on the property.
DENIES ALL THE CHARGES
Harriman's testimony was a denial
of all the charges. He made an ex-
tended explanation and defense of the
transactions, which he contended were
fully justified by the conditions and
circumstances of the time and had been
conducted entirely in the open. Har-
riman's examination lasted five hours.
1t was marked by acrimony The wit
ness declined to be led into an attempt
to explain the details of the Alton op-
erations and constantly referred his
questioner to the records of the Alton
company.
Harriman's testimony began with
the issuance of 500, 100000 of convert
ible bonds by the Union Pacific for the
purpose primarily of paying for the
Southern Pacific in 1901, and then led
through the purchase in connection
with the Oregon Short Line of the
Northern Pacific stock.
Hartman identified a statement
showing that since the first day of last
July the Union Pacific and Oregon
Short Line have purchased stocks at a
cost of s131, 100000, and Mr.. Kellogg.
the Governments attorney sought to
show that, figured by prices in the
market today, there had been loss
of S11, ,000,0 on the investment Har-
riman said that this was possibly true
and when further questioned asked
permission to explain.
The witness said if Northern Pacific
and Great Northern maintained their
present prices the profit in the North
ern Pacific investment would amount
to about 100000 The witness was
ttaken over the total investments and
sales made by the Union Pacific and
Oregon snort Line, and in the end de-
MED that they had been made for
speculative purposes.
PURCHASE OF THE "B. & o.
The witness then related the story
of the purchase of S45.000,00O of the
stock of the Baltimore and Ohio, pay
ment for which, he said, would be com
pleted in March and September next
He had discussed the purchases with
| the late President Cassatt of the Penn
sylvania Railroad, but nothing ha6
been said as to price and no condition:
were attached to the purchase.
Inquiry about the Union Pacific pur-
chase of stock in the Alton led the way
to the first objection of counsel 70,
amount of stock the witness had held
in the Alton.
| The witness explained the sale al
| stock and testified that he had served
on the committee which had fixed The
! price at S435. He then was asked If he
had owned any of the stock when Il
| was deposited.
Milburn objected. saying his clients
were ready to lend every possible as.
sistance to the inquiry and that the,
rejoiced that 1t gave them opportunit,
! to clear away many scandalous and
unjust reports. He denied. however
| that the question had any bearing or
| the question of interstate commerce
He said the commission had great pow.
ers, but there was limit and he
! thought it was to the interests Of th.
commission properly to define 1t:
/ powers.
| Chairman Knapp said the suggestion
| of Milburn seemed to draw a distinc
| tion between the transaction of the
company and the action of it's official:
and asked If this could be called tn,
| transaction of an individual
There was an extended discussion o
the question, and it was stated that tn,