The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1907-02-28

NEW YORK, February 27.-Counsel
for the government renewed their at
tack upon the financial methods OF
the Hartman group In the Chicago and
Alton Railroad before the Interstate
Commerce Commission late this after
noon. when they called Charles W.
Hilliard Comptroller Hilliard said he
became / comp troller In October last,
when under the Joint arrang gement for
the management Of the property, the
Rock Island took itsaturn.
Hilliard said that his first task was
to find money to carry on the im-
provements that We're under way.
There was money in the treasury for
current expenses. but not enough to
carry on the improvements, which in-
Guided a cut off OF thirty-fo four and q
half miles OF road from point near
Murrayyille to Springfield.
There was not enough money to COM
plete the building OF this line. said the
witness.
Mortgaged Before It Was Built.
II looked into the question OF raising
money by mortgage" he continued ''and
I discovered that it had already been
mortgaged.''
do / understand that this road had
been mortgaged before 1t was built?''
asked Commissioner Lane.
Yes; was told that 1t was covered
by the mortgage of 1900 and there was
nothing that could he done except put a
second mortgage on 1t. which would have
been poor security" said Hilliard.
Mr.. Kellogg then read the mortgage
to show the line had been covered by it,
and resuming, the witness said: "All
the bonds wera gone. l found from the
books that the 13000,0 900 had never been
paid for the bonds; that the $lo,00O,O0O
had never been paid to Stanton for the
stock; that the 100000 had never been
paid to Stanton for the road, but that
the $4,000. 900 In bonds had been turned
over to the syndicate, who delivered the
stock and the road through the inter-
mediary, Mr.. Stanton"
Wanted to Know Price Paid.
The commission wanted to know
what the books showed had been
actually paid In connection with the
handling of the property, but while
the witness was searching for the
records the session was adjourned un-
til tomorrow.
Comptroller Hilliard will be recalled
to- morrow. and 1t is expected that
the hearing of the commission will
be concluded about midday.
E. II. Hartman concluded his tes-
timony at the morning session, and
his examination brought forth noth-
ing of special Importance. He was
succeeded on the stand by Otto H.
Kahn, one of the leading members OF
Kahn, Loeb and Company, which has
financed many of the important deals
OF the Hartman party, and a former
director of the Union Pacific.
Kahn remained on the stand until
mid d-afternoon, and c. A. Severance, o
counsel for the government. told Of tn.
reorganization of the Union Pacific.
What Commissions Earned.
There was special Inquiry as to thu
commissions paid his firm and the inter,
relations OF tho Arm, the witness ant
Jacob sck,fr with tho Union Pacific. Thf
witness said the firm had received q com.
mission equal to- five per cent. on thu
purchase of Southern Pacific, commits
sion Of five per cent. which was divided
| with other underwriters. on the Issue
OF Union Pacific convertible bonds at {
reduction OF. five per cent. Tho witnes!
spiritedly defended the acts OF his firm
and cited Instances where 1t had solt
stocks to tho Union Pacific at n figure
below the current market. Before leav
| Ing the stand. Mr.. Kahn mndo nm ex
| tended defense OF the Alton transaction
4 based on the methods and conditions
| the time
Kahn Declined to Answer.
Before he left the stand Mr. Hartman
again invoked the question OF priyat
business as against Interstate commerce
and refused to answer interrogations a
to his individual stock transactions. an
Mr.. Kahn refused to dIvulge anythinl
specific as to the business transaction
undertaken by his firm In behalf o
clients In or outside OF tho Union Pacla
Iirectorate. He urged the samn objpc
tions made In behalf Of Hartman. an
added the special plea az the contldentia
lcontInued on Third Page,l