The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1907-02-28
HARTMAN GROUP AGAIN
ATTACKED BY GOVERNMENT
CONTINUED FROM PAGE H.

ttONItN tGD FNOM PAGE Id
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lures on the line out or the new seeuri-
ties sold were only about SIS 600 600
Mr. Hartman said that possibly the
figures We're correct. He simply knew
that SO 100000 had been spent on tina
lines.
The witness was then excused and Otto
Kahn, of Kuhn, Loeb & Co.. took the
stand.
Kahn on Stand
Mr. Severance took up the examination
of Mr.. Kahn and, asking a few questions
as to the organization of his firm, led
him back to the days of the reorganiza-
ton Of the Union Pacific
The firm of Kuhn, Loeb e. Co. we're
bankers to the reorganization commit
tee, and Mr.. Severance piled the witness
with questions concerning the stock is
suahce, bonding and general handling of
the old Union Pacific securities and thas
issued by the reorganization. Mr. Kahn
replied from printed reports, and for
some time the proceedings were confined
to recital of the details.
Mr.. Kahn said that both himself and
Joseph II. Schlff remained on the Union
Pacific board until a year ago lie said
lie desired to say that In going on the
board they did so because they felt it a
duty to the public which held the secar-
tiles. At the same time they wished 1t
understood that they did so as bankers,
and at no time ceased to be bankers and
that in dealing with the Unon Pacific
they did so at arms length At 10 time
had they ever charged the Union Pacific
more than a bankers regular ommis-
sion, and often rendered valuable serV-
ices for nothing. About a year ago theTs
felt that the necessity which causeu
them to go on the board had passed, and
also the demands of their own banking
business had increased: the credit Of the
Union Pacific firmly fixed, and he and
Mr. Schim resigned from the board of
the Union Pacific.
Mr. Kahn said his firm had purchased
the Southern Pisllc stock control after
ward passed to the Union Pacific but he
insisted that 1t WAS no; bought with the
understanding that the Union Pacific
would take II. the only understanding
being that It was to be offered to the
Union Pacific. Mr.. Hartman he thought
was In favor OF purchasing, but his firm
took a big risk In buying The Southern
Pacific stock. as tile remainder of the
board might not approve of Its purchase
and 1t would be left on tleir hands.
2H Per Cent Commission.
The witness said to the question Loeb
e Co. were paid commission of 2la per
cent on the purchase of Southern Pacific
made for the Union Pacific. Mr.. Sever
ance showed that the stock had been
bought at fifty and the commission on the
par value was really at the rate of
per cent.
The witness said to a question that
Loeb e. Co. had received II commission
of 2i9 per cent for guaranteeins the sue
cess of the issue of forty million OF bonds
by the Union Pacific.
Mr.. Severance showed that for the
purpose of minimizing the risk to the
underwriting syndicate that the share
holders of Union Pacific had taken s25.-
100000 of the issue, but the witness In
sisted that there had been a risk In the
issue which was n novel one.
Mr.. Severance then went into the mat
ter of the acquiring Of the Northern Pa
cific control by Union Pacific. Mr. Kahn
told of the inception of the idea when
the Northern Pacific, by Its purchase of
the Burlington, seemed TO threaten the
best interests of the Union Pacific. He
had talk with Mr.. Hartman and they
agreed that 1t would be wise If the Union
Pacific should try for control of tho
Northern Pacific with the resulting af-
hliations with the Great Northern and
Burlington. In 1901 Kuhn. Loeb & Co.
offered the Union Pacific some s250o9,oo0
of Northern Pacific stock.
Again Mr.. Kahn denied that there was
any agreement that the Union Pacific
should buy the stock.
Much the same testimony occurred re-
garding subsequent sales of Northern Pa
cifc to the Union Pacific. His firm con-
tlnued to buy Northern Pacific. They
felt moral obligation to offer it to the
Union Pacific but at the same time he