Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-04-04
AS TO ANSWERING QUESTION
Which He Had Refused to Answer in
New York.
ADMISSION BY HIS COUNSEL
That Federal Supervision Was Neces-
sary Over Issue of Stocks of Rail-
roads and Other Corporations.

Hartman hearing before the interstate
commerce commission today was the adj
mission drawn from Paul Cravath, the law
yer for the Hartman interests, that federal
supervision was necessary and desirable
over the issue of stocks and bonds of rail-
roads and other corpora tions.
This was entirely aside from the main
purpose of the hearing. Today was the
day set for the presentation of briefs be-
fore the commission from the Hartman
lawyers and the special counsel of the
commission on the question of compelling
Mr.. Hartman to answer certain questions
that he had. on the advice of counsel, re-
fused to answer in New York. There was
an imposing array of counsel. Paul D.
Cravath. the representative of Kuhn, Loeb
& Co. and of Mr.. Hartman In the Alton
deal led the Hartman forces and Incl
dentally put in few good words for HUM
Loeb & Co.
He was assisted by John Miiburn and
Judge Robert Lovatt. On the side of the
commission were Messrs. Kellogg and Sew
GRANGE. the specially retained counsel in
the case. There were number of railroa d
men present and several lawyers who had
dropped in to listen to the proceedings
The First Question at Issue.
The question first at issue will be whether
or not the commission shall apply to the
New York courts for an order compelling
Mr. Hartman to answer the questions that
he had so far evaded. Then the commission
will decide what course to take with the
testimony accumulated during the inquiry,
and Will put it before the Attorney General
as to whether Mr. Hartman and his asso-
clatcS shall be proceeded against under the
Sherman antitrust law.
Mr. travath was the first speaker of the
day. He had voluminous printed brief
he mi tiO,,
ana recapitallZation of the Alton road and
explained step by step me way that earn
lnSs had been transferred to the capital
STOCK account and how the various MEM
bers o. the syndicate lad Jared in the bOnds
they had bought and sold. He explained
that the whole transaction was entirely
regal and regular. though admitting that
the popular view of such high financial
transactions had changed in recent wears
and that the moral aspect of the case night
not be now what it was then In the course
OF TINS explanation he dropped the remark
that the time was undoubtedly coming if
1t had not already arrived when federal
supervision would be necessary and desjr-
apie over the issue of corporate securities
"hen he had finished this part of his ad-
dress Commissioner Lane rather branched
on from the immediate subject and said.
Mr. Cravath. seeing that you have al
luded to the federal supervision of the issue
OF corporate securities suppose you extend
your remarks in that direction and tell us
what you think is necessary and desira BILE -
There was general pricking up of ears
in the room. and Mr.. Crayath paused as
though he had stirred up little different
brand of discussion from that he was pre-.
pared for. He said, however that in a
general way he in favor of a federal
commission that would have control over
the issue of corporate securities: that he
mad opposed one bill drawn for that burmese
because some of its provisions We're bad
but he thought there should be a fedora
COMMISSION OF some sort to oversee that
sort of thing. He thought in a general
way that the federal government ought to
be able to control the application as well as
the amount of new securities issued
You do not mean to say continued
commissioner Lane, that you would favor
giving us tthe interstate commerce COM
mission the supervision Of the amount OF
securities issued by railroads."
MI Cravath was not sure whether he
would or not. but he thought that some
general sort of federal supervision was de-
sirable. He said. however that this was
largely his personal opinion rather than
his professional opinion a lawyer
Much Misconception and Misrepresen-
tation.
On the general subject of the reorgani-
cation and recapitalization of the Alton
Mr.. Cravath said that there had been much
public misconception and misrepresenta-
ton The whole deal was not put through
Stillman. He said that they acted as rep
resentatives for a syndicate Of about one
hundred individuals and firms who shared
in all the benefits of all the transactions
No one, he said. was frozen out and no one
Disseminated against. He said all the
transactions were known in detail to
thousands OF persons, and that any intelli-
gent investor could have at any time got
ten all the Information he wanted from the
railroad manuals published.
Following the recapitalization of the road
step by step Mr.. Cravath said that eacn
move was entirely legal and generally rec
ogniZed in railroad practice at the time,
however they might now be looked upon
He wound up with reorganization of his
position, saying:
1.-The following conclusions with respect
to the various proceedings In the Chicago
and Alton recapitalization confidently
submitted:
Recapitulation of His Position.
They We're conducted lawfully.
"They We're conducted openly. and all of
the essential facts were given wide pub
ncity and have at all times been accessible
to the stockholders and to investors in
Chicago and Alton securities.
They were in accordance with the ap-
proved methods which were at the time in
vogue in recapitaliZing other railroad COM
panies and largeindustrial enterprises.
'They were conducted for the equal bene-
fit of all stockholders, and there was no
discrimination or injustice.
While the Chicago and Alton transac-
tons may be regarded typical of class
of financial tri&sactions which have been
common in the past and which have ren-
orally been regarded as proper and what
ever basis there may now be for objection
to such transactions Il class. there is no
basis for singing out for special criticism
the Chicago and Alton transactions and
the gentlemen by whom they were con-
Quoted"
Questions by the Commission.
Judge Clements at this stage put a ques-
/ ton. Then is it not true that If you
take a good conservatively managed road
earning good dividends and free from debt
1t is shining mark for the gentleman
of means who can buy and recapitalize
ii and put its securities in such shape that
the burden of paying the dividends on
them falls on the people of the future?"
Mr. Cravath said 1t was true that the
capitalization of the road had been re-
organized so that the fixed charges on the
bonds and preferred stock should be met
by the earnings of the road and the earn
ing of dividends on the common stock
was left to future development But he
insisted that the actual value of the road
more than covered all its outstanding in
debtedness.
Commissioner Clark said it appeared from
the explanation they had received that the
preferred securities of the road had been