Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1907-02-26
ALTON UNDER FIRE
r. n, Hartman Examined at Length
Regarding Purchase Of Road.
OIL. sTloNs ABOUT IMITATION OF STOCK
Reason for Nearly Fifty Millions in New
Securities Not Explained.
SYNDICATE SELLS BONDS TO ITSELF At 65
Witness Unable to Tell Frioo at Which
They Are Sold.
QUESTION Or JURISDICTION IS RAISED
Nir. Hartman Declines 10 Tell of
Amount of stock Held by Indi-
VidunI--Question VIII He
Appealed to Court

NEW YORK Feb B-E. r. Hartman,
heid OF the Union Pacific system. spent
today in a recital Of portions OF the init
mate history Of the financial operations
Of himself and his associates before the
Interstate Commerce commission, which in
behalf of the United states government
e. investigating consultations and com
bnations Of carriers, relations between car
riafs and G, immunity Of interest therein,
thrir rates facilities and practices. spe-
clIl counsel for the government made par
''ruItr attack on the reorganization and
financing OF tho Chicago & Alton railroad
by the Hartman syndicate and this action,
with q challenge by counsel for the rsil-
roads Of the right OF the Interstate Com
mercc commission to inquire into the pri-
vatc transactions Of an individual constl-
tutcd the two chief events of the days
proceedings
Mr. Hartman declined to tell what pro-
portion Of the preferred stock of the Alton
sold 20 the Union Pacific belonged to him
individually, and the way was paved for
taking the question into the federal courts
The point raised involves material
limitation on the inquistorial power Of the
commission and is Of serious Importance
20 the whole question Of Interstate cor
poration investigation
stock - Inflated.
There was an effort to show that there
had been an enormous imitation of stock
securities and liabilities Of the Alton; that
the Hartman syndicate had taken unfair
profits by declaring a dividend of 20 per
cent from the proceeds Of the first sale
OF bonds. amounting to $iO.O0O.OOO; that the
syndicate had sold itself the bonds at an
unrcasonahly low figure only to resell
them at enormohs profit; that the Harri-
man syndicate had in the Alton capital
tied the loss Of former stockholders in
the road and the money which had been
spent by the old management for better
ments over period of ten years and al
raudy charged TO operating expenses; that
the books Of the company had been doc
tored and that for an increase OF stock
and liabilities from about S4OOOo,0oO to
si6.COOoo0 there was nothing 10 show ex-
cept an expenditure Of $22OOO,0OO In i'm
provements on the property.
Mr. Harrimans testimony was denial
of all the charges, and he made an ex-
tended defense Of the transa actions. which
he coutended were fully justified by the
conditions and circumstances Of the time
and had been conducted entirely in the
open Harrimau's explanation lasted for
five hours and was unmarked by acrimony
The witness declined to be led into an
attcmrt TO explain the details Of the Alton
operations and constantly referred his ques'
, tioner to the records Of thh Alton company
Northern Pacific Deal.
Mr. Harriman's testimony began with the
issuance Of 100000 of convertible bonds
bv the Union Pacific for the pUpOse pri'
marIly OF paying for the Southern Pacific
I'm 1901 and then led through the purchase
IN connection with the oregon Short Line
Of the Northern Pacific stock Mr., Harri
man Identified statement showing thai
since July l the nion Pacific and Oregon
Short Line have purchased stocks at G
cost of S1S1. 1900, and Mr.. kellogg the gov
crnment's attorney, sought 10 show that
figured by prices In the market today
there had been a loss of S11OOO,OOO on the
investment.
Mr. Hartman said that this was possibly
true. and when further questioned asked
permission TO explain. The witness said
that II Northern Pacific and Great North
ern maintain their present prices the profits
IN the Northern Pacific investment woulC
amount 10 about $6l, 10000. The witness
was taken over the total investments anC
sales made by the Union Pacific an'
Oregon Short Line and in the end denied
that they had been made for speculative
purposes
The witness then related the story of tn
purchase OF S45.OOOOOO Of the stock Of tn
baltimore q Ohio, payment for whicl
would he said. be completed In March AM
September next He had discussed IN
pyrchase with the late president OF tn
Pennsylvania railroad, MI Cassatt pu
nothing had been said as TO price and n
conditions were attached TO the purchase
objection from Hartman.
VTANn MI '
chase OF stock in the Alton led the way
the foundation of counsel for Mr.. Harrima
% a o,.estion as to the amount of stoc
the witness had held in the Alton. TIL
wit-,.ss explained the sale OF the stock an
t.s,ined that he had served on the com
Imittee which had fxed the price at Sih
He then was asked n he had owned an
n the stock when II was deposited. Nj
Muburn obiscted saying his clients wer
ready 10 lend any possible assistance
the inquiry and they rejoiced that It CAV
them opportunity TO clear away man
scandalous and unjust reports. He denie'
however that the question had any hearin
on the question OF interstate commerce
IL said the commission had great power
but there was a limit and he thought
was 10 the interest of the commission PROF
erly 20 define us powers
Chairman Knapp said the suggestion {
Mr. MiIburn s emcd 20 draw distincuo
between the transaction OF the compan
and the action OF its officials, and aske
n this could be called the transaction
an Individual.
There was an extended discussion Of n
question and IL was stated that the con
mission would confer and announce its d
cIston later
Al the afternoon session the question va
renewed In another form and the commi
sion decided that II had right 10 mai
the inquiry Objection was noted In n
reC1rd ana the witness formally decline
90 make answer.
Alton Deal Taken Up.
Tho examination VI the entire Alto
Transaction then began and consumed mo-
o. the aftcraoCn. AR, Hartman frst TO
q the fori-a alton ef the syndicate whiC
hs said contained many persons and whiC
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