New-York tribune., 1907-02-26

do not wish to delay and If we are wrong. Mr..
right then we feel that should stand for the
Mr, rKeIlogg-we will go on with the inquiry.
You decline, Mr. Hartman. to answer for that
reason do your
Mr. Harrman-As requested by counsel. yes.
Chairman Knapp suggested that Mr.. Hartman
really had admitted selling some of his stock,
since he had been one of the syndicate owning
all of the stock, and that the question should
be how much of his stock he had sold. The
question was put in that form. and Mr. Har-
riman, by direction of counsel declined to
answer.
MR. HARTMAN EXPLAINS.
Mr.. Hartman renewed his request to be al
lowed to give an explanation Of the Chicago
& Alton reorganization, and the commission
decided to hear him. Mr.. Hartman then said:
In the first place it seems to me that too mucn
Importance is attached TO what the counsel call
overcapitalization The capltaliZaton OF any fat az
basis OF the charge for interest which il assumes;
ralway companies a syndicate which purchased
the stock Of the Chicago Alton RaIT9ad Com, HI
in the neighborhood Of $2,OOG0O therefor The
Ht Rairoad ta Company eG amounted to about 81
5000 year At no tine since S the % Re aSee9I 9g
equal to that amount | think about loGSSGo SSI
cago & Alton Railroad Company as dividends on
The sock @ at @ has been sRpS6 SO m m h[ oq go
per cent bonds issued by the Chicago 60 e. "a Alton On
IonG RaTay aJ king te in ro9nd hTmbers-on
S2oOooOOo of the Chicago & Alton RaiLwaT :; .n Com
Alton Railroad Company for improvements and
betterments something over s220O60OO. The gross
income of the Chicago Alton resulting from
Geo in 1898 to about s 10000 in 1906 That increase
Is because Of me eXpans9a OF tnf bGagd
Alton Railroad. Those improvements have resulted
Fs io 90 acff f 0ue er % POO r m CENT ana passen
q
less. 80 and some hundTedthss per cent; IN i'm IN
something over 1870 per cent. Now, the interest on
$22@1oo0 at per cent is $1,000 year c Ihe
pany. or the consolidated company; are that
6S OIGas6 ~ Adeon ] nEoaG 4 Fi2 SonPai, ~ 81 H. S1 80 o.
the operations Of the chicago & Alton Railroad
served by it. TO expand its business threefod at
1888 than in ig5 TT II the same rate had prevailed
N ~ I 10 '5 bi VA "lSdgu "a Hit a o e ec
would have been s2,5Oo0oo more than was received.
Now as to tho sale Of those q per cent bonds. TO
long before June 1899. In other words the syndi-
cate which represented by the four men named
Of the % chaFo PR o6 R0d %
pany' through the medium Of the railway GGIH-
a low rate Of interest bond, to provide first, for
leIeFt Dohus OF the Fairpad company. IN, H9lef
necessary 10 improve it's property and the dlvl-
Alton Railroad of 100000 The price IS;
WhSa vi 6 was % placed f upon those bonds seemed
issued to the stockholders that price. which was
held to maturity or about "a per cent Immediate
returns returns It was practically The same result the
though they had issued per cent bonds at par.
The fact Of n ssII1T, @ or nsr cent bond M
Is.r 10 ITS stockhoders but the result Of issuing
paid s42 fnr tbs iS' stock m HS and propsPty
received
dends on the stock OF tho railroad company. or
IS less than AZ per cent on that amount invested
II would seem as though 4, we're not very liberal
the markets might be. and the common stock trat
iu relation tc what you might say dlscountnE the
future. and 20 enable us 10 put out security
a. per cent bond TO some advantage and still retain
- 2, control or we goui9 seu re Who.e 9t the pre- pre-
stock for the purposes Of control
The situation In 1855. compared with 1875. was
emerge from a series Of years ot depression result
shock % %of SIS u.s. dat 6a is the political Sampaien and
the result of the Venezuela messHEe, which l
might got US into with England In 1855 We were
Just beginning to emerge from those conditions,
which We're conditions OF economy and restriction
doubtful whether We. wi!h ali the stock Of the
per cent bonds as high as 65 in the market but
y y T @ ahG a ho aas4S2 @ a @ 1873 W6eh 6ogsa
condition which enabled the marketing OF the 80
ferred stock which the syndicate subscribers held
vantage To- the shipper or anybody that vas using
the Chicago & Alton Railroad Company. as shown
dgcon & 18 SrSs Of rate and c4 s net income only
sufficient pay per cent on the increased capital
put into the property.
THE DEAL WITH ROCK ISLAND.
Nir Mlburn-One thing you have not given, which
/ Want You to give. Nnat reasons @ Gld 'e si mon
FHglHc nave TOT occurring the ti @ S,o1H r+
but wanted to get rid Of the Chicago & Alton
4cG'Gm On I[ % m9 brTIfIte% s'oTS 10y s' nv e
Rock Island comctdent Win the neeotiatons
which were conducted for the purchase of the pre-
ferred stock OF the Chicago 4 Alton Railway Com
made with the Chicago K Rock Island Railroad
quire the Chicago Alton Railroad Companys
stock at all Ny part in that negotiation was TO
the other members Of the COMMITTEES in whose
charge IT very much aggrieved because I
compromise between what / thought they ought to
sell Il at and what they wanted
Now. then. we conducted the negotiation with the
Rock Island. which resulted in their agreeing 10
and enough common stock to make up, with
stock a majority Of the Chicago & Alton Railroad
company, under an agreement which gave us joint
control / might say here that II ts fact that
purchase Of Chicago & Alton preferred stock
nearly 50 per cent Of the holders of that stock de-
Of the negotiations we're such that The price we
naid was consijered a low one hv a, Iaest - ~ ,er
cent or ~ per cent Of the holders OF the stock Now
o. believe, you all have copy Of tho agreement;
But In the negotiations and what led to the final
% 4srGement on our part was the statement by the
acquiring tbe stock Of the Alton was 40 th9f tbey
would use the line from Kansas city Chicago FOR
ttI MtS IonEer ] HIa iTss eT(dt rf higher grade ana
UOul cost pDf tU.ir lfpa an,