Omaha daily bee., 1908-01-17
MUST TELL OF DEAL
FEDERAL circuit Court Directs E. H
Hartman 70 Answer Questions.
G0vERNlIEETs POINT Is GOOD
Commission Entitls . Facts About
Stock p 4
D1vmEED oUEsTIL CLUDED
II Contains No Factol = citing
Interstate CONNER ~
REGARDED AS GREAT Va ,EY
Cssrt says MsrtsaEing Rosa with
Funds - Speculate in Securities
Dividend oUEsTIL
II Contains No Factol
Interstate CONNER y
REGARDED AS GREAT Va ,GI
Csart says MsrtsaEing Road with
Funds - Speculate in Securities
Msy ARect Carriers Ability
60 Perforn ObliEsftoBs.


down today an opinion directing Otto II.
Kuhn, a member Of the banking firm Of
Kuhn, Loeb a. Co. to answer all questions
propogndsd 20 him BY the Interstate Com
inerce commission. Z. II. Hartman was
directed 10 answer all questions except
those relating to the purchase Of Union
or southern Pacific stock in connection
with the dividend Of August. 1913
While the exceptions were regarded as
important questions By the government
lawyers who were investigating the Chi
cago a. Alton railroad reorganization. they
constituted only q small proportion of those
that Hartman refused TO answer.
The clash between the witness and the
commission occurred on February . Of
last year. For several days the invesugat-
ors hsd been endesvoring to get at the
bottom Of Mr.. Hsrriman's railway manipu-
fations connected with the Chicago & Alton.
The question that marked the beginning
Of the controversy was this.
Did you own any Of the Chicago &
Alton preferred stock sold by the syndi-
cate 20 the Union Paoifie?
Immediately the railroad presidents law
yer. John G. Mfburn. contsnded that the
inquiry was not within the scope OF the
federal Investigation.
Frank B. Kellogg. the governments at
torney. TOOK the contrary view. The out
come. after prolonged arguments, was that
Hartman declined 10 answer a number OF
questions as to stock transactions. on the
ground Of personal privilege.
Government Makes Appeal.
Mr.. Kellogg and his associates appealed
10 the federal courts 20 compel the Wit
ness 70 answer. Among the lawyers who
represented Hartman in the court pro-
eeedinEs was John O. Spooner. former
tinted states senator from Wisconsin. who
had been prominently Identified with the
passage Of the law under which the gov
ernnent started its investigation.
Both Hartman and Kahn were exam
ined in relation 10 the affairs Of the Chi
caeo s Alton. the Atchison, Topeka a
sants PC, this Illinois Central. the ST Jo-
rrr Grams Island, tbe New YORK Esn-
,afie Railroad companies.
stock in these companies was acquired
by the Union Pacific company. Of which
Hartman was president by an issue Of
oonverfible bonds TO the amount Of tl0o.-
p0.oOO par In addition the Oregon Short
Line. one Of the controlled companies. is
sued bonds for Ss5.oe0o0 par Kuhn, Loeb
a Co.'S bank was stock depository for the
purpose OF facilitating the transaction.
Hartman declined to answer the ques-
tion whether he owned any Of the stock
deposited with the banking firm and Kahn
declined 10 answer questions relating to
The ownership By the directors Of the
Cnion Pacific OF any OF the Chicago &
Alton stock so deposited. Hartman also
1efrsed to say whether he had acquired
Any part OF the stock Of the Illinois Cen
raj with a view 10 selling il to the Union
lower price than that paid him by the
Union Pacific
Position of Government.
In the course of the arguments before
Judge oHugh the United States district
attorney. Mr.. StimsOn said:
what the commission is endeavoring to
earn IS whether the enormous stock in
restments made with Union Pacific funds
amounted 10 a waste Of the assets and i'm
pairfnent u the facilities Of an interstate
commerce carrier. and whether the matter
81 such Investments would be made sub
Iect 20 the regulation Of congress"
The questions % wnich Mr.. Hartman OBJ
iected related 10 iac purchase OF the stock
of other railroads in the interest of the
Union Pacific and 70 the Union Pacific
ai,idend. In regard 10 the Sssooo,oo9 OF
illinois Central purchased al l7s a share,
he questions which Mr. Hartman declined
10 snsNer are follows:
Were the so00o shares sold BY yourself.
Mr. Rogers and Mr. Stillman pooled.
Was II acquired for the purpose Of selling
q 10 the Union Paclficg
Was the stock plrehasea oy you al a
lention OF turning IL over 10 the Union
Pacific?
shares sold at the time BY Kuhn, Loeb g.
Cc- 20 the Union PacincE
Were the 1osOoQ shares acquired BY the
same pool for the purpOse Of selling 10 the
Union Pacificf
on the subject OF the Union Pacific
DIVIDEND. which adyarcrd from rate Of
20 10 per cent per annum on August Is,
isoe with a consequent rise in the stock.
Air. Hartman declined 10 answer the fol-
loving;
wefe you directly OF indirectly interested
in any stocks that were bought between
tho isth of July and nth OF August. that
Bid you or any director buy anv Union
Pacific and Southern Pacific stocks IN an
tlcipatisn of that dividende
Opinion of the COurt.
Tue grounds assigned By Messrs. HsrTi-
man snd Kahn for their refusal are thus
summarized BY Judge HOugh
I. Ths questions propounded are not
pertinent. relevant or material 10 any In
auiry stated OF defined by the resolution
of the Interstate Commerce commission.
said resolution OF order Vas an i'm
uroper method OF oriEfnatinE inquiry By
The commission.
g. the commission is not en-
powered either 20 pass the resolution OF
4, make the order or ask the questions by q
statutory grant of power.
4 lf, however. congress has assumed a.
grant statutory power authorizing such
procedure then such congressional
grant is unconstitutional inEsmuch as con
gress Itself could not ask these questions
because they do not relate tC commerct
among The several states
Judge Hough saws.
Whether the language Of the petitioners
resolution Is broad enough 20 Justify the
Questious depends upon the view taken OF
the Interstate Commerce law II u clearly
stated that the commission wishes 10 ascer-
tain whether the relations existing be-
tNeen carriers subject 20 The Act. and