Los Angeles herald., 1907-02-28
RENEW ATTACK
ON HARTMAN
AND METHODS
Governments Counsel
Gaining Ground
Witness Testifes That Certain Off.
olaIs Mortgased Property Before
Work Was Even Started
on the Line
By Associated Press.

By Associated Press.
NEW YORK, Feb. 27.-Counsel for
the government renewed their attack
on the financial methods of the Harri-
man group in the Chicago & Alton rail-
road before the interstate commerce
commission this afternoon, when they
called Charles w. Hilliard, controller of
the road, as witness.
Hilliard testified that he became con-
troller In October last when, under the
joint agreement for the management of
the property the Rock Island took it's
turn.
Hilliard said his first task was to find
money to carry on the improvements
under way.
There was money in the treasury
for current expenses, but not enough to
carry on the improvements, which in
cluded cut off of thirty-four and one
half miles OF road from a point near
Murrayville to Springfield. There was
not enough money to complete the
building of this line, said the witness.
Il looked into the question of raising
money by mortgage" he continued,
and 1 discovered that it had already
been mortgaged."
Mortgaeed Before Built
DO you understand that this road
mad been mortgaged before it was
built?" asked Commissioner Lane
Yes, I was told that it was covered
by the mortgage of 1900, and there was
nothing that could be done except to
put second mortgage on it, which
would have been poor security" said
Hilliard.
Mr.. Kellogg then read the mortgage
to show the line had been covered by It,
and the witness said
"All the bonds were gone. found
from the books that the $13,000,00O had
never been paid to Stanton for the
stock, but that the $22,000,OOO in bonds
had been turned over to the syndicate
who delivered the stock and the road
through the intermediary, Mr.. STAN
tom
| Tne commission wanted to know what
the books showed had been actually ex-
pended in connection with the handling
or the property, but while the witness
was searching for the records the ses-
sion was adjourned until tomorrow.
Mr. Hilliard will be recalled.
Hartman Leaves Stand
Edward H, Hartman concluded his
testimony at the morning session and
MS examination brought forth nothing
of special Importance. He was sue
ceeded on the stand by Otto H. Kahn.
one of the leading members of the firm
OF Kuhn, Loeb & Co., which has
financed many of the important deals
of the Hartman party, and a former
director of the Union Pacific.
Mr.. Kahn remained upon the stand
until midafternoon, and under exam
ination of Severance of counsel for the
government, told Of the reorganization
of the Union Pacific.
There was a special inquiry as to the
commissions paid to Kuhn, Loeb e.
Co. and the inter-relations of the firm.
the witness and Jacob Schiff with the
Union Pacific.
The witness said the firm had re-
ceived commission equal to 5 per
cent on the purchase of Southern Pa
ciflc, commission of per cent diyi-
dend with other underwriters on the
issue of Union Pacific convertible
bonds at reduction of per cent. The
witness spiritedly defended the acts of
! his firm and cited instances where it
has sold stocks to the Union Pacific at
figure below the current market.
Mr. Kahn made an extended defense
Continued on Page Two.o