The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1907-02-26

New York, Feb. 2j-The enormous over
capitalization of the Chicago and Alton
road. after Mr. Hartman and his asso-
.ciates bought il in lS9S. and the subsequent
dealings with its securities. by which the
four men who purchased the road got
bonds at 65 and sold them in a few
months for prices ranging from s. to %.
which was the price paid by the New York
Life Insurance Company for $l0000,000 OF
them, was brought cut to-day when Mr.
Hartman was put on the stand in the in
vestigation the Interstate Commerce Com
mission is conducting into his operations.
Not only were vast profits reaped on the
sale Of the bonds, but they also took some
OF the proceeds OF these bonds imme-
diately after they had acquired o. per cent
Of the roads stock and paid themselves
on that stock AN extra dividend Of 30 per
cent. or nearly S7W00 600 The Alton was
then and had been for some time paying
per cent. Il did not apparently have any
surplus account out of which 20 pay this
extra dividend when Mr. Hartman and his
three friends got it. but 10 Justify the div
idend it seemed they discovered that
the bonds of the company were wrong,
that So 00o.000 which had been lost by the
old stockholders should really be capital
lied, and so the capital account was in
creased so much.
Ready with Explanations.
Mr.. Hartman, who was on the stand
all day. was loaded with explanations for
all OF his transactions in connection with
the Alton, and it began to look as though
the lawyers for the commission would get
everything they wanted from him When
he was asked. however. if he had. or was
the owner of some Of the l03 43l bonds
ostensibly sold by Kuhn. Loeb q Co, in
October 1884, 10 the Union Pacific. Of
which Hartman was, and is, president,
Harriman's lawyers raised their first de-
cided objection to the scope of the in
quiry, and in long argument contended
that this was an invasion of the rights
of the individual investigation. if the case
was that of a man selling stock to his
own company. When the commission,
after the noon recess, directed Hartman
to answer the question as being peril
nent where Overcapitalization had been
shown, Hartman refused 20 answer, It
was subsequently admitted by his lawyers
that the testimony had shown that he
was the owner of some of the Alton stock
sold and the question for the Supreme
Court to decide should be whether he
could be compelled to state how much
stock he had sold 10 his own railroad
Whether or not the attorneys for the
government viii ask the Supreme Court
to compel Hartman to answer viii de-
pend upon later results
Hartman was on the stand all day to-
day. He was an easy witness at first and
had carefully prepared himself for the
examination with typewriter statements
covering the different deals he thought
the commission would go into. The only
matters taken up to-day were the pur-
chase of the Northern Pacific stock by
the Union Pacific, which was made, il was
shown through part Of the proceeds of
the S1G0,000.00O issue of convertible bonds
by the Union Pacific. and the Alton mat
ter.
Two Millions, but Small Profit.
Hartman did not half ill the witness
chair, ne is so little. Figures that the
ordinary man would not have in his mem
DRY Hartman had ut his finger tips, but
when it came TO his own profits on Alton
bonds and such matters he didn't remem-
Der, didn't keep any books, and regarded
profit to himself of s2.OOO,000 as too small
a matter to keep in his mind
His defense, which he was allowed to
give at the end of the day. was that
everything had turned out beautifully. and
that overcapitalization to the extent Of
some $60000,00) was justified, owing to the
conditions of the times and the risk he
and his friends ran. He denied that he
and his friends had any idea then Of sell
ing their Alton stock to the Union pa
citic, but it seemed to be shown in ? circu-
lar issued about the time by some of the
syndicate. Some of the Rock Island Off
cialS, who now control the Alton. were
present to-day and seemed to be aiding
the governments attorneys to probe the
Atoms finances while it was under Har-
riman.
II was HaTTiman's 1fty-ninth birthday
When he quilted the stand he said be
wanted to have time for a party. Mr.
CONTINUED On SECOND PAGE,