The free lance. (Fredericksburg, Va.) 1885-1926, 1907-03-02
RAILROAD SECRETS
Interstate Commission Probing
Harriman's Financial Methods.
ROAD moRTeAeEo BEFORE BUILT
Chicago & Alton Had Hard limo
Raising Money to Complete Cut OF
Controller Shows How Road Was

Chicago & Alton Had Hard Time
Raising Money to Complete Cut OF
Controller Shows How Road Was
Paid For.
New York. Feb. 2S.-Counsel for
the government renewed their attack
upon the financial methods of the
Hartman group in the Chicago & Al
ton railroad before the Interstate COM
mcrce commission when they called
Charles w. billiard, controller OF the
road. as a witness Under examina-
ton by Frank h. Kellogg. billiard tes-
tilted that he became controller in
October last, when, under the Joint
arrangement for the management OF
the property. the Rock Island took It's
turn. billiard said that his first task
was to find money to carry on the
improvements that were under way.
There was money in the treasury for
current expenses. but not enough to
carry on the improvements. which in
cluded a cut OF OF 34i9 miles OF road
from a point near Murrayville TO
Springfield. There was not enough
money to complete the building Of
this line, said the witness.
81 looked into the question OF rails
ing money by mortgage he contin-
ued. and / discovered that 1t had al
readv hepu morfRaQpd "
do understand that this road had
been mortgaged before it was bullt?"
asked Commissioner Lane.
Eyes. am told that It was covered
BY the mortgage OF 1900. and there
was nothing that could be done eX-
cept put a second mortgage on ii.
which would have been poor security"
said billiard.
Mr.. Kellogg then read the mortgage
to show the line had been covered by
It. and resuming the witness said:
"All the bonds were gone. found
from the books that the $l3.OOO.OOO
had never been paid for the bonds,
that the slO.O0O.000 had never been
paid to Stanton for the stock, that the
81. 900 600 had never been paid TO
Stanton for the road, but that the
S22. 900. 900 in bonds had been turned
over to the syndicate, who delivered
the stock and the road through the
intermediary. Mr.. Stanton
Edward H. Hartman concluded his
testimony and his examination
brought forth nothing OF special i'm
portance.
lie was succeeded on the stand by
Otto H. Kuhn. one OF the leading
members Of the firm Ct Kuhn. Loeb &
Co. which has financed many Of the
important deals OF the Hartman
party. and a former director OF the
Union Pacific. Kuhn told OF the reor.
ganization OF the Union Pacific There
was special inquiry as TO the com
missions paid to the firm Of Kuhn
Loeb & Co.. and the inter-relatlons OF
the firm, the witness and Jacob Schin
with the Union Pacific The witness
said the firm had received a commits.
sion equal to per cent. on the pur
chase OF the Southern Pacific. a com
mission OF per cent, which was di.
vided with other underwriters. on the
issue OF Union Pacific convertible
bonds at a reduction OF per cent The
witness spiritedly defended the acts
OF his firm. and cited instances where
II has sold stocks to the Union Pa
ciic at a figure below the current mar
ket. Before leaving the stand Mr..
Kuhn made an extended defense OF
the Alton transaction based on the
methods and conditions OF the times.