New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1907-03-01
HARTMAN INQUIRY END
MAY ASK FOR RULING.
C. w. HdEard Tells of Large Capt.
taIization of C.. & A.

The Interstate Commerce Commission CON-
pleted yesterday morning the taking Of testi-
mony In this city in the inquiry to determine II
there had been violation Of the federal laws
governing transportation between the states By
the Hartman railroads. 1t was announced that
the commission would give a hearing to cOun-
sci on the testimony some time in April IN
Washington, but there was no decision as 70
taking any additional testimony in the mean
time. 1t is understood that no further testi-
mony will be taken unless the commission de-
cides to ask the United States District Court
IN washington for a ruling on the refusal OF
T. H. Hartman and Otto H. Kahn to answer
certain questions
Messrs- Kellogg and Severance. counsel for
the government in the inquiry will Join meme
oers OF the commission in Washington to-day
70 confer about the report to be made. They
declined last evening to give any statement as
to what they regarded the most important revs-
latfons in the inquiry or whether they intended
to ask the aid of the courts in compelling Mr..
Hartman or Mr. Kahn to tell what directors OF
the Union Pacific had been interested in tho
sale OF Chicago Alton and Illinois Central
stock to the Union Pacific
Ihe chief witness at the INQUIRY Yesterday
morning was Charles w Hiriard. controller OF
the Chicago & Alton whose testimony threw
some new light on the large capitalization Of the
company in Mr.. Harrimans reorganization os
It, He said that the directors who reorganized
the road after syndicate composed Of Mr..
Hartman. George J. Gould. Mortimer L. Schifr
and James StilIman had acquired its stocl-
ordered changes i'm the books by which over
Sl2'OOO.OOO which had been credited to con-
struction expenditures Uncapitalized. was cred-
lted 10 capital account. Against this was charged
dividend OF 80 per. cent on the company's cap
ltaI stock, which went to the syndicate. The
money to pay the dividend was taken. the con-
troller said from the s1S,0 900 raised bv an
issue of SS2.OOOOOO OF Chicago & Alton bonds.
In connection with MIR. HflIiard's testimony
Commissioner Harlan raised the point that Sec
tion IS of Article II Of the constitution OF uIf1
nois forbids issues Of railway bonds except for
purposes of improving the road and provides
that "all stock dividends and other fictitious in
crease OF the capital stock or Indebtedness OF
any such corporation shall be void"
I doubt Commissioner Harlan said. whether
you could issue stock dividend TO take up this
accumulated surplus to capital account or is
sue bonds for the same purpose"
This statement led to talk in financial circles
in this city later in the day that suits mIghr
be begun to compel the members OF the syn
dicate to pay back into the Chicago q Alton
treasury the value Of the bonds. It was said
that the bonds having been widely distributed
as the property Of institutions and persons
who had purchased them in good faith. could
not be invaldated. In that connection aIsO IL
was recalled that the New York Legislature had
passed an act 20 enable savings banks 10 iIl-
vest money in second mortgage bonds ike the
Chicago & Atoms issue Of $22OOOOOO It was
remembered that at the time of the passage
Of the act there was talk about the purpose 10
increase the sale Of the Chicago & Alton bonds.
The syndicate got the bonds at S6 and sold
part of them at 96 little later
President FELTON, of the Chicago & Alton was
q witness in the morning to verify statement
that the sum spent i'm improving the Chicago
& Alton property did not exceed $19OO0OOO
since the reorganization of the company in
1899. This placed in contrast with the
testimony that the capitalization Of the COM
pany had been increased from $50. .935 SS7 at the
end of 1895 to more than $122OOOOOO by the
raNrganiZati