Arizona republican. [volume] (Phoenix, Ariz.) 1890-1930, 1907-02-26
A SEARCHLIGHT
ON HARTMAN
The Much Talked of H.
quiry Under Way
An Interesting Question
Raised as to the Limita-
tiOns of the Inquiry.

New York, Feb. 25.-E. II. Hartman
spent today in a recital of portions Of
his story of the financial operations Of
himself and his assistants before the
Interstate Commerce Commission,
which is investigating the consolida-
tions and combinations of carriers,
their rates and practices. Special
counsel for the government made
particular attack on the re-organiZa-
tion and financing of the Chicago and
Alton by the Hartman system and
their action was challenged by coun-
sci for the railroads of the right of
the interstate commerce commission to
inquire into the private transactions of
individuals. These constituted the two
chief events of the day.
Mr. Hartman declined to tell what
proportion Of the preferred stock Df
the Alton sold to the Union Pacific or
belonged to him individually and the
way was paved for taking the question
To the federal courts. The point rails
ed involved a material limitation Of
the inquisitorial power of the commits
sion and is of serious importance to
the whole question Of interstate COM
merce commission investigation.
There was an effort to show that
there had been an enormous initiation
of the stock. securities and liabilities
Of the Alton; that the Hartman syn
dicate had taken unfair profits by de-
claring a dividend of thirty per cent
from the proceeds of the first sale OF
bonds. amounting to S4O,OOO.OOO: that
2 IN ha a
an unreasonably low figure only to
resell the bonds at enormous profits;
that the Hartman syndicate had in
Alton capitalized the loss of former
stockholders in the road and that the
money had been spent by the old man.
agement for betterments over a period
Of ten years and already charged to
operating expenses: that the books OF
the company had been dOctored. and
that for the increase of stock and LA
bilities from about S4O.O0O,0OO to SIG
100000 there was nothing to show ex-
cept an, expenditure of s22.0OO,O0O in
improvements on the property
Mr. Harriman's testimony was a de-
nial of all charges. He made an eX-
tended explanation in defense of his
transactions. which he contended were
fully justified by the conditions and
circumstances Of the time and had
been conducted entirely in the open.
Mr.. Harriman's examination lasted five
hours and was unmarked by acrimOny.
The witness declined to be led into an
attempt to explain the details Of the
Alton operations and constantly re-
ferred his questioner to the records Of
the Alton.
Mr. Harriman's testimony began
with the issuance Of 500. 100000 con-
vertible bonds by the Union Pacific
for the purpose primarily OF paying for
Southern Pacific in 1901 and then led
through the purchase in connection
with the oregon Short Line OF North
ern Pacific stock
Mr.. Hartman identified a statement
showing that since the first of last
July the Union Pacific and Oregon
Short Line have purchased stocks at
a cost OF s10.OO0.0OO and Mr.. Kellogg.
the governments attorney sought to
show that. figured by the price in the
market today. there had been a loss
Of s11.OOO.0OO on the investment Mr.
Hartman said this was possibly true
and when further questioned asked
mission to explain.
The witness said that If the North
ern Pacific and the Great Northern
maintain the present price the profit
in the Northern Pacific investment
would amount to about S61.00O.000. The
witness was taken over the total in
vestments and sales made by the I'm
ion Pacific. the oregon Short Line and
in the end denied they had been made
for speculative purposes.
The witness then related the story
OF the purchase Of $40. 100000 Of stock
OF the Baltimore and Ohio. payment for
which would he said. be completed in
March and September next.
Inquiry about the Union Pacific pur-
chase Of stock in the Alton led the way
to the first objection Of counsel for
Mr.. Hartman to a. question. as to the
amount of stock the witness held in
Alton. The witness explained the sale.
The witness explained the sale Of
the stock and testified that he served
on the committee which had fixed the
price at 81 1-2. He was asked if he
owned any OF the stock when it was
deposited. Mr. Milburn objected say
ing his clients We're ready to lend
every possible assistance to the inquiry
They were rejoiced that 1t gave them
AN opportunity to clear away many
.scandalous and unjust reports. He de-
MED. however, that the uestion had
any bearing on the question of inter-
state commerce.
There was an extended discussion.
At the afternoon session the commits
sion decided that it had a right to