The Penn's Grove record., 1907-03-01
HARTMAN TELLS OF DEALS
Rich HauIs For Engineers of the
Alton R. R. Purchase.
Magnate Says He'll Not Reveal Inter.
est in Sales Unless Courts
Make Him.

riman, master of the greatest railroad
power welded by any one group of
financial interests in the world, went
on the witness stand before the In.
terstate Commerce Commission here.
1t was the resumption of the Federal
inquiry n the operation of the Har-
riman railroads begun in this city
early in January and continued in
Chicago and elsewhere in the inter-
vening time. From now on it will be
pushed to it's conclusion in New York.
Driven into a corner by Frank B..
Kellogg and c. "A. Severance, counsel
to the Interstate Commerce Commits
sion, Mr.. Hartman refused to reveal
what his personal profits had been
from the sale of a large block of Chi
cago and Alton preferred stock to the
Union Pacific. His refusal to give
this information came as a shock not
only to the members of the commits
sion and their counsel, but also to the
hundreds who had crowded into the
court room on the third floor of the
Federal building TO hear Hartman
testify.
There was striking analogy to the
oll1llldl oCCAC JuSI.d ySdI dSO, WH6u
Henry H. Rogers, the dominating
power of the Standard Oil Company,
took the same position, and said to
another inquisitor out of the West,
Hadley, of Missouri, Il decline to an
swer by advice of counsel" They
made short shrift of Rogers, for the
courts quickly ground his defiance
into submission.
So far as Hartman would disclose
the facts only the surface of his rail-
way deals was scratched, but the fol-
lowing was admitted:
Hartman, Mortimer Schiff, George
J.. Gould aud James Stillman, Kuhn,
Loeb & Co., acting as the agents,
purchased the Chicago and Alton
Railway for about $22, 0OO,O 900, be-
coming owners of about ninety-seven
per cent. of the stock. Hartman put
a bond mortgage of $4,000, 900 on
the road. 1t was decided to sell $32,-
000,0 600 of this at $3.50 a bond, and
these bonds were taken by Kuhn,
Loeb & Co. for the syndicate that
purchased the stock.
Then Kuhn, Loeb G Co. sold these
bonds, purchased at 65, we'll above
80. The sum of $4,000, 900 was
sold to the New York Life at 95 and
$1,000,000 to the Equitable at 90.
All the bonds up to $32,000,000
were sold-frst to the syndicate at
65 and then for the syndicate above
80, this same syndicate owning the
stock of the road and Mr.. Hartman
controlling it. Mr.. Hartman gen.
erously called it a dividend to the
stockholders.
The Chicago and Alton stock, load
ed down with a 100000 bond
issue and an old bond issue of S.
500, 900, was not then sc good a pur-
chase as when the Hartman combine
took it minus the SAC, 900 bond
obligation; so Mr.. Hartman and two
fellow directors in Chicago and Alton,
the stock having been boosted in the
market, sold a block of $40 900
of Chicago and Alton stock to Mr..
Harriman's Union Pacific; Mr.. Harri-
man, as the whole Union Pacific road,
deciding that it would be good to
buy it of Mr.. Hartman of the Chi
cago and Alton.
1t was when Mr.. Hartman was
asked how much of this $10,00O,00O
block he actually-owned as a private
individual when he sold it to the
loading up the Union Pacific with
an unnecessary obligation, that he de-
clined to answer.
This refusal lays the ground for
Hartman to decline to answer how
much he paid in his syndicate for
Illinois Central; how much profit he
made by selling it othe Union Pacific
after he decided that that line should
be loaded up with the Illinois Central
stock. His refusal to answer will
also prevent the Interstate Commerce
Commission from finding out what
profits Hartman and his syndicate
made by purchasing Southern Pacific
or other stocks from the Union Pa
cific treasury.
1t was brought out that to finance
the purchase of Southern Pacific, the
st. Joseph and Grand Island and
other roads Hartman issued $780,
100000 of convertible bonds of the
Union Pacific and also out the Oregon
Short Line in for $45, 100000, using
this sum to purchase Northern Pa
cifc and Great Northern as we'll as
other stocks mentioned. AS the
Northern Pacific and Great Northern
went up through the manipulation of
the market he unloaded $116,000,0 900
on the public and used the money SO
obtained to purchase other stocks.
Mr.. Hartman modestly admitted
that through his control he was really
the Union Pacific and the Oregon
Short Line himself; that when he de-
cided to swell the obligations of the
company he was able to do so, and
that when he decided to use the
money raised by bond issues, to pur-
chase stocks in other roads controlled
by him-through s%yndicates formed
on the outside-he was able to do so,
but he insisted that this was not
speculation, but investment for the
Union Pacific.