Northern Wisconsin advertiser. [volume] (Wabeno, Wis.) 1898-1925, 1907-07-18


long.
, To raise the s13,000,OOO in cash,
:, the shares of the old railroad company
were first mortgaged for s22, O00, 600,
and the bonds were nominally sold to
Kuhn, Loeb & Co. for $4,000, 900 cash,
or little less than go cents on the
dollar. AS matte u fact, ls appears
by the testimony of Mr.. Hartman
that Mr.. Stanton never owned any
| of the stock or the railroad, but was
a mere Intermediary.
| What these bonds were worth does
not appear, but it does appear that
they were sold in the market, from
1900 down to the present time, at
from 1919 to S61s; and that during
two or three years after the issue
+, thereof they ranged from IS to S61s.
Mr.. Hartman testified that he had no
books to show the profits on these
bonds and had no knowledge of what
he and his associates made in the
transaction.
During all these years Mr.. Harri-
man was chairman of the executive
committee of he Chicago & Alton
! Railroad company and had charge
of its financial affairs, and was
voted s1O4,722.22 for his services as
chairman of the executive committee
from 1900 to 1904.
The investigators conclude that this
was conspicuous illustration of the de-
velopment of the theory OF com
munity of interest" and harmony of
management" which Mr. Hartman
suggested when he demanded repre-
sentation upon the Santa Fe board.
If the policy of purchasing and con-
trolling stocks in competing lines is
permitted to continue, it must mean
suppression of competition.
| Recommendations
The function of a railroad corpor-
alton, declares the report, should be
confined to the furnishing of transpor-
tation. Railroads should not be per
mitted to invest generally in the
stocks, bonds, and securities of other
railway and of steamship companies,
except connecting lines, for the pur-
pose of forming through routes of
transportation, including branches and
feeders. 1t is in the interest of the
public to facilitate the consolidation
of connecting lines, The credit of a
railway company is founder upon the
resources and prosperity of the coun-
try through which it runs. Its sur
plus funds and credit should be used
for the betterment of its lines and in
extensions and branches to develop
the country contiguous to it. The
testimony taken upon this hearing
shows that about $4,000 square miles
of territory in the state of Oregon,
surrounded by the lines of the Oregon
Short Line Railroad company, the
Oregon Railroad & Navigation COM
pany, and the Southern Pacific com
pany, is not developed; while the
funds of those companies which could
be used for that purpose are being in
vested in stocks like the New York
Central and other lines having only a
remote relation to the territory in
which the Union Pacific system is To-
Gated
1t is contrary to public policy, as
well as unlawful, for railways to ac-
iquire control of parallel and compel
ing lines. This policy is expressed in
the federal laws and in the constitu-
lions and laws of nearly every state in
the union. We have examined the
constitutions and laws of all the
states, and find in about forty of them
prohibitions against consolidation of
capital stock or franchises of Compel
ing railways, or the purchase and ac-
lquisition by a railway Of competing
lines. Competition between railways
as we'll as between other industries is
1.-THE established policy Of the nation.
And while the acquisition of a small
minority of the stock Of competing
line might not decrease the competi-
ton, yet the acquisition of any con-
siderable amount of stock, with repre-
sentation on the board of directors of
lsuch railway, unquestionably has the
EFFECT of diminishing competition and
,lessening to that extent it's effective
mess.
The time has come, says the COM
mission in closing, when some reason
able regulation should be imposed up
on the issuance of securities by rail-
ways engaged in interstate commerce.
We are aware that in the construction
lof new lines of railway, developing
new territory. 1t has been necessary
in many instances to sell railway Sc
'curities at large discount, and to sell
bonds with stock bonuses, and even
lin such cases it has many times been
difficult to raise the necessary capital.
Men will not invest their money and
take the risk for small rates of in
lterest.
m n nll N ra