The Nome daily nugget., 1907-06-12


 It appears that E. II. Hartman is the supreme power in the Oregon Short Line. the Central Pacific, the Union Pacific and the Southern Pacific. He Is dominant in the New York Central the Baltimore & Ohio and the Illinois Central. He exerts a powerful infiu- ence in the Atchfson railway. the Chi cago & Alton and few other lines.
 Hartman has been charged with graft; with hand ng rake-offs; with the dual transaction, rebate and dis crimination; bribery and speculation. All these features of his management are said to have discouraged the great body of enterprise, executive ability. engineering and operating skill, and to have prevented them from developing the resources of the country.
 Hartman was brought before the interstate commerce commission. It is understood that he was induced to give evidence as to railway operations under a promise of immunity from prosecution. When under examna- tion he made admissions which the New York Evening Post characterizes as "extremely damaging"
 On the other hand, he has made it clear that his management, however irregular in it's methods, brought pros- perity to the roads over which he ex- tended his control and to the territory they served.
 On one occasion, when questioned about transaction of which he had no record on his books and no distinct memory, yet which was said to have yielded him a profit of $2,O0O,000, he remarked that "a little matter of two millions doesn't amount to much one way or the other"
 He only recalled with effort the fact that he had at one time served as pres ident of the Alton railroad. lie ad- mitted the necessity of public regula- tion and approved the idea of grant, ing more power to the interstate com- merce commission if, in return for this, the liberty to enter into reason able combinations and agreements with each other should be granted the railroads.
 1.-The most sensa&ianal~ feature of his evidence was in the details of the Alton "readjustment." This deal ranks along with the South Sea bubble, the Mississippi speculation and the Erie imitation as one of the great specula- tive promotions of the centuries. Hartman had three associates in this transaction-George Gould, James Stillman and Mortimer Schiff. They bought 97 per cent of the stock of the Chicago & Alton for SAP, 1000, ,OOO. While the deal was in progress they drew for themselves a 30 per cent dividend thereby reducing the cost of the prop erty to themselves to $36,00,0OO. They then increased the capitalization to 3IZ,UUU,UUU. OI InlS immense sum only $22,OOO,00O was spent on improve ment of the road and the rolling stock Harriman's railroad management has never been equaled in daring con- ception and audacious execution. The underlying principle that governs the earnings of corporations is that the dividends be declared only from the interest or net profits earned and actu- ally received. The enormous divi- dends which Harriman's railways de- clared were not eaned-no part of them was net profit. He simply paid the dividends out of the capital.
 Hartman is still under examination. It is questionable if anything can be done to him, but his revelations will go far to indicate what may be done in getting the railroads under some form of state control