Evening star., 1909-09-10

over bv syndicate of which Hartman
was an inconspicuous member lie hao
spent twenty-eight years amasslns a
working fortune and perfectlng work
| ing knowledge of railroading: now ne
| intended to make results. I'm not
1O-per-cent man." he once said: ana
want something that will grow. LOOK.
| ing over the wrecks left by the panic he
hit upon the Union Pacific, which had
been given up as bad job. 1t was ap-
parently smashed beyond repair. Harri,
Lman. through Kuhn, Loeb 4 Co, formed
a syndicate, of which the Vanderbilts
old owners were members. The prlce
paid for an 1,SOO mile, poorly equipped
and broken down road, running 1.om
Omaha and ending .'in the air. at Ogden;
S27 600 600 was credited to reimburse the
old first-mortgage bondholders The
country Immediately credited the deai
to the Vanderbilts; none thought OF
Hartman. In three years the syndicate
got back its money in profits.
Hartman by that time stood for the
syndicate. He had reorganized the COM
pany, issued 100000, 600 in bonds. SI5,o
600 in preferred stock and Sol,uo'oe oe
in common stock. The syndicate, OF
course took over the stock, and shorty
afterward rumors became current that the
Union Pacific was to be merged WIN
the Chicago and Northwestern and the
New York Central. AS all three were
| cIassed as Vanderbilt roads. there was
nothing surprising about the rumor. which
grew in Wall street until IT mad market
effect in advancing Union Paeihc Sc
cIIrities. No one seemed to know exactly
where the rumor started. Mr.. Hartman
| smiled and refused to deny it. W. X
| Vanderbilt denied it. Nothing came OF
| the merger, but the price of Union Pacihc
had made a big advance MeanWnie,
since the Vanderbilts declined to join
| the Central and Northwestern TO the
| Union Pacific, Mr.. Hartman and his
| bankers were forced to carry their plans
| along alone. Before Mckinley.s hrst
term was ended the road had met its pay
ments. paid preferred stock dividends ana
1 foated more securities.
| Purchase of the o. r and N.
The Oregon Railway and Navigation
Company and the Oregon Short Line were
bought in by the road about this time.
The purchase of the Oregon Short Line
proved most advantageous, as it had a
broad charter and was used Immediately
as a holding company. Through the
| power conferred by the charter of this
small railroad the Union Pacific was per-
mitted to acquire other lines and to take
| liberties which would have been lmpossl-
BILE under it's own charter.
Working under this charter the road be-
gan to branch out. Kansas City South
ern. running from the gulf at Galveston
inland to Kansas City, came under the
L eye OF MT. 11dTTIIHdH diiu oOoh Shdh6Oa
owners. Bankers by this time had great
confidence in the new railroad mans
| foresight and judgment, and when ne
sought the ownership of the Chicago and
Alton funds were readily offered. The
Chicago and Alton deal reflected little
credit on him in the eyes of many, and
perhaps during his entire life Mr. Har-
riman received no heavier public ~censure
| than that which followed the exposure of
| that transaction at the time of the inter-
CT "a commission investigation
after President Roosevelt and Mr.. Harri-
man were at loggerheadS. The Chicago
and Alton was known as free lance
road It declined to make working agree
ments with certain other railroads desir-
ing them. and since 1T occupied a strate-
gic position in the middle west it proved
something of a thorn in the side of rail-
road men. AS a few of the roads officers
held a controlling share of the stock, an
out and out purchase was necessary to
Mr.. Harriman's plan- These officers re-
fused to sell even at top price. high
one too, unless all stockholders should re-
ceive the same offer. No road could
stand such purchase. and Mr.. Hartman
hit upon the syndicate idea again, and
the road was taken over by a group in
terested in the other railways most bene-
| fitted by the purchase at the price de-
manded, $4OOOO,OOO. From later devel-
opments on the witness stand it came out
| that in the reorganization Hartman and
| his associates converted $S.OOO,0O0 of old
bonds and the old stock, amounting to
| SO 100000. into $54, Co., coo new bonds and
$4O.OOO,0O0 stock. Though this imitation
of securities and watering was pretty
| well understood in Wall street before the
| interstate commerce commission got to
work. half dozen years later, the tes-
timony of Mr.. Hartman and his asSo-
ciates was such that the country criti-
| cised the methods used severely.
1t was shown that the members OF the
syndicate had voted themselves a 30 per
cent dividend shortly after the reorganiza-
| ton of the road, and after taking over the
new bonds at 65 put them on the market
at 96 and sold them at that figure. At
least one big life insurance company had
proved desirable customer. 1t was also
shown that Improvements In the credit of
the road were not responsible for the ad-
yanced price of the bonds. but little de-
| sirable legislative work had made them
ings banks, insurance companies and the
4 like. Charles Z. Hughes, when conduct
/ ing the insurance investigation, probed
deeply into this matter, which involved
/ the intimate friendship Of Mr.. Hartman
and Gov. Odell. and Mr.. Hartman got OF
| q now familiar joke at the expense of Mr..
Odell.
1T has been charged, MI. Hughes SAID.
4 that through your relations with Mr..
Odell you have political influence. What
have you to say to that?"
| WELL" came the reply, Il should say
that Gov. Odell had political influence be-
cause of his relations with me-"
The Hill-Harriman Fight.
| The great Hill-Harriman fight which
eliminated in the panic Of May Q. 1901
now came on. Mr.. Hartman was look
ing around for a way into Chicago and