The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1907-02-25
HARTMAN HEARD.
President of Union Pacific Tes-
titles Before Commission.
Explains Deals i'm Securities of
Other Roads.
ARE NOT SPECULATIVE
Mas Merely Trying to Increase
the Income of L. p.
Were Reinvestment of Northern
Securities Proceeds.

|
tion of the financial operations of the
Hartman group through the Union
Pacific railway undertaken by the in
terstate commerce commission in be-
half Of the United States government.
was resumed at the federal building
at 10 o'clock today.
f. H. Hartman, president of the
Union Pacific, was the first witness
and under examination by Frank KeI-
| logg, began al 1910 o'clock an ex-
PLANTATION of the financial operations
/ of his company, commencing with the
, issue of one hundred millions of con-
vertible bonds in 1901, for the pur-
chase of stock in the Southern and
Northern Pacific.
| The inquiry developed the fact that
after the decision of the supreme
court of the United States dissolving
the northern securities the interest Of
the Union Pacific company in that cor
poratfon was returned to them in
shares of the Northern Pacific and
Great Northern companies. These
subsequently were sold Mr.. Harri-
man explained because the revenues
derived from them were limited and
the proceeds invested in stock of the
Illinois Central Railroad company the
Atchison, Topeka and Santa Fe COM
pany, and the Baltimore & Ohio COM
pany.
I'm the first place. said Hartman,
1--WE had as the result of the Northern
Pacific purchase $S2,OOO,000 of North
ern Securities stock at a cost of about
$4,000, 900. Our annual report, our
statements. all show that. Then we
were forced TO take. by the decision
of the supreme court unjustly-it may
have been legal-Great Northern,
which we did not want a lesser
amount of Northern Pacific than we
had deposited with the Northern Sc
curities and for which we received the
Northern Securities stocks. At the
time that stock of the Great North
ern and the Northern Pacific was Civ
en- to us-forced upon us-it had d
market value of about O,000,000.
i will go back just a minute. We had
subscribed in the meantime to So
100000 of Great Northern. stock
which had been offered to the stock
holders. making the total cost of what
ever Great Northern and Northern
Pacific we had, about $50, 900, 900. In
stead of disposing of it at that time we
held it until the market price increas-
ed in value to somewhere near one
hundred and forty-f1ve million to one
hundred and fifty million dollars. We
sold some of it gradually as it went up
but at the value the returns from the
Northern Pacific and Great Northern
were less than three per cent on the
stock that we held. Therefore we
concluded that it was better to sell
ey in other securities that would give
up better returns"
Following this inquiry Mr. Harri-
man was questioned respecting the
purchase and reorganization of the
Chicago & Alton company in 1901 Mr..
Milburn of Mr.. Harriman's counsel
objected to the line of inquiry on the
ground that it did not fall within the
merce commission. Much depended
upon who fixed the market price of
stocks in such transa actions as that
just named" said Chairman Knapp.
"If men could fix the market and then
sell their own stock at the price it
would be a transaction to be properly
inquired into. Mr.. Hartman has said
that he and his associates fix the price
for the Chicago & Alton stock as a
committee.
DO you intend US to understand,
Mr.. Milburn, that you hold this com
mission has no right to ask whether
Mr.. Hartman was not himself an
owner and seller of a part of that
stock ."
Mr.. Milburn replied that he thought
such a question quite improper.
After some further discussion the
commission withheld it's decision on
this point before proceeding with the
inquiry respecting the sale of the Chi
cago & Alton stock of the Union Pa
cific: Throughout this examination
Mr.. Hartman insisted that none of
these transactions was speculative.
81 do not wish to give the impress |
sion that we have been speculating," !
he remarked as Mr.. Kellogg pressed |
him for replies concerning the purpose |
of the acquisition of stock of the Illi- |
nois Central, the Baltimore & Ohio. |
the Chicago & Alton and other roads !
''They are for income, reinvestment of
the proceeds of the Great Northern !
and Northern Pacific" said the wit |
ness.
Are they for permanent invest
ment, or do you expect to sell them |
again?' asked Mr.. Kellogg.
II have no expectation about it, >,
said Mr.. Hartman. Il never thought |
of that; it never crossed my mind. 1t
is for the purpose of receiving six
millions and a half of dollars a year
instead of three millions and a half |
declared Mr.. Hartman.
After the announcement of the |
chairman that the commissioners
would privately discuss the challenge
of their power to inquire into the |
identity of the vendors of the Alton |
stock, Attorney Kellogg resumed the !
of the Alton story, which |
he characterized as the most con-
spicuous modern example of imitation. |
He tried to show by the witness that |
Hartman, George Gould, James Still |
man and Mortimer Schiff had pur !
chased the road for forty million dol
lars and had rapidly expanded its cap |
itaI and outstanding indebtedness to
This he tried to show |
had been done by first placing mort
gage upon the road for $40.000,000 |
and he endeavored to prove that the |
syndicate had sold the bonds to them
selves for 65 cents on the dollar and
had imm ediately reso1d 10 million of |
them to the New York Life Insurance /
company at 96. He further tried to /
show that the syndicate holding a ma
jority of the stock had declared \