Omaha daily bee., 1907-02-28
JOINT CONTROL OF ALTON
More About Deal Between Rock Island aud
Union Pacific.
LINE MoRTGAeED BEFORE IT WAS BUILT
Moore Crowd Found Treasury Almost
Empty and Bonds Issued for Inn
prOvements All GOne-Harri-
man and the Bankers.

financial methods Of the Hartman group
in the Chicago & Alton railroad before the
Interstate Commerce commission this att
ernoon, when they called Charles w. Hill
lard, comptroller OF the road. as a witness.
Hillard testified that he became comptrol-
Ter in October last, when, under the joint
arrangement for the management Of the
property the Rock Island took its turn.
Hillard said his first task was to find
money to carry on the improvements un-
der way. There was money in the treas
ury for current expenses, but not enough
to carry on the improvements, which in
cluded a cut-off of 341h miles Of road from
point near Murrayville to Springfield.
There was not enough money to complete
the building of this line, said the witness.
II looked into the question of raising
money by mortgage" he continued, and
discovered that 1t had already been
mortgaged."
do 1 understand that this road had been
mortgaged before 1t was built?" asked Com
missioner Lane.
Yes, 1 was told that It was covered by
the mortgage of 1900, and there was moth
ing that could be done except to put a sec
ond mortgage on 1t, which would have
been poor security" said Hilllard.
Mr.. Kellogg then read the mortgage to
show the line had been covered by 1t, and
the witness said: "All the bonds were
gone. I found from the books that the
$1S,OOO,OO0 had never been paid to Stanton
for the stock, that the 100000 had never
been paid to Stanton for the road, but that
the s22,OO00OO in bonds had been turned
over to the syndicate who delivered the
stock and the road through the intermedl-
ary, Mr.. Stanton"
The commission wanted to know what the
/ 4. nd
in connection with the handling of the
property. but while the witness was search
! ing for the records the session was ad-
! journed until tomorrow
| Mr. Hilliard will be recalled tomorrow
morning.
Commissions to Bankers.
Edward H. Hartman concluded his testi-
mony at the morning session and his ex-
animation brought forth nothing of special
| Importance. He was succeeded on the
stand by Otto H. Kahn, one of the leading
| member of the firm of Kuhn, Loeb & Co.,
which has financed many of the i'm
portant deals of the Hartman party and
a former director of the Union Pacific.
Kahn remained on the stand until mid
afternoon and under cross examination OF
| c.. A. Severance, counsel for the govern
ment told of the reorganization of the
! Union Pacific There was a special inquiry
! as to the commissions paid to Kuhn, Loeb
| & Co., and the inter-relations of the
| firm, the witness and Jacob Schiff With the
Union Pacific. The witness said the firm
had received commission equal to per
cent OF the purchase of the Southern Pa
eific, a commission OF per cent, divided
with other underwriters, on the sael of the
Union Pacific convertible bonds at a re-
duction OF per cent. The witness spirit
edly defended the acts of his firm and
cited instances where 1t has sold stocks to
the Union Pacific at a figure below the
market NY Kahn made an extended de-
fense of the Alton transaction. based on
the methods and conditions of the time.
Mr.. Hartman, during his testimony,
again invoke the question OF private bus
mess as against interstate commerce and
again refused to answer interrogations as
to his individual stock deals and Mr.. Kahn
refused to divulge anything specific as to
the business transactions undertaken by his
firm in behalf of clients in or outside of
the Union Pacific dlrtcorate. He and coun-
sci, Paul d. Cravath, urged the same OBJ
lection made by Attorney Milburn in be-
half of Mr. Hartman and added the special
plea of the confidential privilege between
! banker and his clients.
The commission ruled against all OBJ
Jections and the record was in each in
stance properly completed for reference to
the courts.
William H. Moore and Daniel G. Reid,
directors of the Rock Island, testified as
to the contracts with Mr.. Hartman and
his associates for joint control of the Alton
and that there was no other written or
~
while the contract was still being fully OBJ
served its effect was nominal He and his
associates had expected benefits from the
arrangement that had not materialized and
their earlier plans in connection with the
project had not been carried out.
Purchase of Grand Island Line.
Mr.. Hartman, in answer to Mr.. Kellogg,
testified that the Union Pacific had pur-
chased the st. Joseph & Grand Island since
last year. The price paid was $2022, 900 and
the witness owned the property and sold
1t to the Union Pacific.
Objection was made to questions as to
when he bought the stock OF the ST. Jo-
seph & Grand Island and what he paid for
II and the witness declined TO answer
The commission ruled that he must an
swer and there was the usual formal re-
fusal.
The witness said the St. Joseph & Grand
Island was not a parallel and competing
line
Mr.. Kellogg asked of whom the New
York Central stocks acquired by the Union
Pacific were bought. Mr.. Hartman said
they were bought in the open market
Were you or any of your associates in
terested in the sale at the time of the
Union Pacific purchaser" pursued Mr.. KeI-
logg
Mr.. Milburn objected and Mr.. Hartman
declined TO answer.
Mr.. Kellogg asked the witness II 1t was
not fact that Of the 100000 said to
have been spent on the Chicago & Alton,
S274O,OOO was made up of car trust certin-
Gates and 100000 loan from Kuhn, Loci
& Co, so that the expenditures of the
lines were about Sls.OOo.OOo. Mr.. Hartman
said that possibly the figures were correct
} He simply knew that s22OOO,OOO had been
spent on the line.
STUYVEsANT FISH TALKS