New-York tribune., 1907-11-14
HARTMAN TELL?
Z. p. STOCK PURCHASES.
Before I. c. Commission
on Legality of inquiry.

on LeSdtity OI inquiry.
Argument as to whether tho Interstate Com
merce Commission had the right 20 put certain
questions to Edward H. Hartman and Otto II.
Kahn IN regard to the investment transactions Of
the Union Pacific Railroad Company. which Ques
tons they refused 10 answer at the hearing held
in this city last February. was heard yesterday
before Judge Hough in the United States Circuit
Court. The argument came up the petition of
the commission 10 compel Mt. Hartman and Mr..
Kahn, who IS a member Of tho banking nrIn OF
Kuhn. Loeb a Co. fiscal agents for the railroad
company. to give answer to the questions.
Tho commission, which represented by
Henry L. Stmson. United States Attorney; Frank
B. kellogg and Cordenlo A. Severance. of st. Paul,
and Felix Frankfurter. Assistant United States
Attorney. contends that the information II seeks
from Messrg. Hartman and Kahn is essential to
its work in the investigation OF common carriers
to enable it to make proper and full report 20
Congress as the basis OF future legislation for tho
regulation of Interstate commerce
The general purpose of the inquiry. which
conducted by the full commission OF tve mem
bers TO ascertain whether there certain
pool of directors in the Union Pacific the members
(which. aside from their nominal duty Of advancing
and safeguarding the development Of the transpor-
taton business OF the road. had found II TO their
advantage and profit 10 sell stocks 20 the company
at prices and under circumstances which meant
raid the funds OF the company, TO the great
disadvantage OF the stockholders. The specific
queries that Mr.. Hartman and Mr.. Kahn declined
90 answer on the ground that the commission had
power to ask them those in relation TO the
purchase by the Union Pacific OF about So 10000
OF the stock of the Chicago & Alton Railway Com
pany from the Hartman syndicate the purchase OF
5000 shares Of stock in the Illinois Central Rail-
road from Mr.. Hartman. II. II. Rogers and James
Stillman all of them directors IN the Union Pacific
and another block of 105.0e shares from Kuhn Loeb
& Co.. the fiscal agents. the acquisition OF 100000
Of stock in the Santa Fe road. competing line
In which Mr.. Hartman. Mr.. Rogers and II. H
Frick directors and the purchase OF s. 2425fO
of stock in the st. Joseph & Grand Island Rail-
way Company. OF which Mr.. Hartman was presi-
dent
Mr. Hartman also held his tongue when asked
by the commission whether he or his associates in
the Union Pacific had profted by the purchase Of
stock in that road when the famous 10 per cent
dividend declared in August. 1906 This was
the dividend the announcement OF which re-
ferred to the executive committee, Of which Mr.
Hartman was chairman, and deferred by it
two days after the dividend had been voted Mr.
Kahn also refused TO give any information this
point.
The virtual autocrat' of the Union Pacific was
not in court yesterday to hear this designation Of
himself by Mr.. Stimson in opening for the Inter
state Commerce Commission, did he present
himself during the day TO listen TO the argument
to whether II any of the commissions bust
ness, IN its task OF regulating interstate commerce.
TO inquire into the stock investments OF the rail-
road company. That It OF tho commits
sions business was the main contention or his at
torneys John G. Milburn. ex-senator John g
spooner of Wisconsin, and ex-Judge II. s. Lovett
Their plea was supplemented by that Of Walker D.
Hines. who appeared for Otto IL Kahn. and who
protested that Congress had no right to delegate to
a commission inquistorial powers into private af-
fairs.
Mr. Stimson and Mr.. Kellogg, who made the
gument for the commission, insisted. the other
hand that the commission was practically Con-
gressionai committed 1t the intention OF Con
Av,T1N rupE ff4aEy rfaH In
matters Of Interstate commerce. that 1t might be
able TO report back to the lawmaklng body with
suggestions which would be the basis for further
regulations OF the common carriers. They contend
ed also that the questions to the purchases OF
stock by the Union Pacific were especially peril
nent as these purchases might have direct bearing
on rates, to regulate which the commission was
especially created.
Ex-senator Spooner. while careful to pronounce
his belief in the constitutionalty Of the law Gre
ating the Interstate Commerce Commission and the
amendments thereto, declared that Congress never
intended to delegate "visitortaF rights over state
corporations to the commission Had there been
sny cause he said, TO suspect the bona fide char
a.tar oP the transactions by which the Union Pa
cifc acquired hundreds Of millions of dollars worth
of stock from Mr. Hartman and his associates.
the state which created the corporation had full
mower to make investigation and punish wrong
doing as we'll to provide remedial measures
against the further commission Of similar acts
In his opening argument Mr.. Stimson declared
that the real significance Of Mr. Harrinan's re-
fusal TO answer questions propounded to him by
the commission amounted to this. that the virtual
autocrat'' was seeking desperately to prevent Con-
gress from getting at facts which might cause
that body to consider statute that would seri-
o,sy AFFECT his dominance OF the railroad situation
In the Southwest. After discussing MI Hartman s
influence In the Union Pacific, the Southern Pa
cjac the Oregon Short Line and the Santa Fe, an
influence he said, that meant harmony Of action
among apparently competing common carriers in
violation of the Sherman antitrust law Mr.. stn-
son declared:
.'They are trying TO cut Congress off from in
ouiring into facts upon which legislation may be
based The position is extraordinary one
Your honor has been sitting for week or moro
,earinr argument the constitutionality of the
s0eent gas law for the city of New York There
the great wall of the corporation is that the Legis
rature of this state did not make proper inquiry
before adopting the law complained OF. In this
.ss the government Is sndeavorinE 20 make such