The San Juan islander. [volume] (Friday Harbor, Wash.) 1898-1914, 1907-03-02
HARTMAN TALKS
p,URoAD AAGNATE BEFORE In.
TfRSTATE Commission.
rw,Ia;ns in Detail How He Sc
cured Control of Union and
Southern Pacific and Other
Ra;lroads.-Does Not Consider
Il as Speculation.

Now Yonrk, Feb. 26.-E. FL. Harri-
man, the railroad magnate, was che
srst witness here before the interstate
nommerce commissions investigation
If the operation of the Pacific rail-
uoads. He explained in detail bow he
.ocured control of the Union Pacific,
couthern Pacific and half a dozen
other great lines. The story lays bare
one of the most gigantic stock specula-
tions in the history of finance.
Commissioner Knapp presided, Glenn
onts, Lane, Prouty and Harlan being
tbe other members present. Paul Ora
7ath and John F. Milburn represented
Hartman, while F. B. Kellogg and
C, A. Severance were the attorneys
for the commission.
Hartman began with the issue of
800 900, 900 in convertible bonds on
the Union Pacific and later turned
these into stock for the same amount.
On top of this hundred million the
Oregon Short line raised 5000, 900.
Through Kuhn, Loeb & Co., $50, 900
shares of the Southern Pacific were
purchased for ST. 600, 900, $50, 600, 900
being used to purchase Northern Pa
cifc stock. Eigheen millions were
used to improve the Southern Pacific
and stock for this amount was subse-
ouentIy taken. This first step gave
Hartman three great transcontinental
lines.
D~af:4el d, Mer~>r n:..o1,,S:~-
Hartman told the commission that
when the supreme court dissolved the
Great Northern merger he found that
the Great Northern and Northern Pa
cifc stock which he received together
were worth about 800, ZOO, and
subsequently, increased in market
value. The income from both was
small, only about $4,000, 900 a year.
Therefore he sold all, realizing aoout
$4,000, 900. The testimony devel-
oped that it was this money which
helped Hartman to further conquest.
He bought into the Illinois Central,
the Baltimore & Ohio, the Chicago &
Alton, the Milwaukee and other roads.
Close questioning revealed that Har-
riman became interested in the Balti-
more & Ohio with little actual transfer
money. He had arranged to buy $685.
342 shares of B. & o. common at 1920
per share, 70, 600 at $94. so, but only
a tri6e of the $4,000, 600 was paid,
Hartman expecting to take up the re-
mainder during the year. He said he
got into the Alton in similar man.
ner. The witness said the profits
would not depend upon whether the
stocks go up or down. He explained
that the Union Pacific and Oregon
Short Line together made ST., 200, 600
through the increase in value of stock
purchased. By buying other stocks
of greater dividend paying quality he
increased the stock income $4,000
600.
81 do not consider it speculation, F"
said Hartman.
Hartman Must Give Facts
Attorney Milburn protested against
Kellogg's questions about the Chicago
q Alton. He said it was private
matter not concerning interstate COM
MERGE
Kellogg CURLY replied that the COM
mission intended to prove that the
stock was inflated beyond all reason.
He said:
I'VE believe this stock is not worth
Il. wish to find out the process and
persons responsible for the imitation"
Knapp insisted that Hartman must
tell
Mr. Hartman thereupon explained
In detail the syndicate operations by
which they acquired the Chicago &
Alton. He was forced to admit that
ne sold 10000 bonds to the New York
Lille Insurance Company, making a
proht of $500 per bond. Asked if
'nls price was not high, Hartman
said:
The insurance companies could
iook out for themselves.