New-York tribune., 1910-03-08
GAfsVEN ON STORAGE KAHN ON RUy1NG
1DPISED BY LOVETT.
Says Union Pacific 1cquired
1900 Shares of SO. Pac.


@ 20, who was on the stand all day yes
terday in the hearing in the governments $
suit TO dissolve the Union Pacific merger.
expressed the opinion that the defence
would win. 1t was late in the afternoon
/ when [. a. Severance, of counsel for the
| government, reverted for a moment to the
purchase OF additional Southern Pacific
stock TO make up 80 per cent of the total
| in view of a proposed federal law, and
asked:
BY buying this 80 per cent of the South
ern Pacific stock didn't you expect to de-
! feat this suit?"
No. sir replied Mr.. Kahn; I'VE are
/ confident that we viii beat this suit on it's
merits
on the subject OF recent purchases of
Southern Pacific stock Mr. Kahn said that
seyenty-four thousand shares had been
bought by the Union Pacific or the Oregon
Short Line in January This purchase was
made on the advice Of Judge Lovett, who
now fills Mr.. Harrirnan's place in the
merger.
These shares we're purchased for the
following reasons said Mr. Kahn. "A
bill, we were informed, was introduced in
Congress, or was about to be introduced.
which would give the railroads that had so
per cent of the holdings of another rail
road-competing or otherwise-the right TO
retain that 90 per cent, and, if they chose,
10 purchase the balance In addition to that
! 90 per cent, while roads that had less than
20 per cent had no such assurance.
Southern Pacific Buying Stopped
'Thereupon, on the advice of Judge
Lovett it was deemed in the best interests
/ of the Union Pacific that its holdings of
SOnfbpTO
10 total of 30 per cent Of the entire out
standing amount of Southern Pacific stock
! A few weeks later Judge Lovett advised
the Union Pacific that the terms of the
bill as he understood them had been or
were to be changed, and that the provision
to which he referred and which was the
reason for the purchase Of the additional
Southern Pacific stock would not go into
the bill. The purchase OF additional stock
was thereupon stopped and no more stock
has been bought"
1t would have required l54O10 shares to
obtain a one-half interest, said Mr. Kahn,
and inasmuch 200 shares were sold
some time last summer, before the death
of Mr.. Hartman, the present holdings
were only 24,000 more than the original
purchase. These shares are held by the
Oregon Short Line. He said the total in
Short Line in the outstanding capital stock
of the Southern Pacific at present was 46
per cent.
Mr.. Severance asked what was the neces-
sity of the acquisition of 90 per cent of
Southern Pacific stock if, as alleged by the
defendants, there were no competition be-
tween the roads. Mr.. Kahn replied that
Judge Lovett would know more about that
feature of the case.
When Coils p. Huntington died the Union
PACING was forced TO purchase control of
the Southern Pacific, Mr.. Kahn said, in
order TO maintain and preserve connec-
tions 10 the Pacific Coast a previous effort
TO purchase the Central Pacific having
failed. For the purpose of financing the
deal an issue of $780, 100000 Union Pacific
convertible bonds was authorized Only
S40,e000o0 was required, said Mr. Kahn.
1T was always Mr.. Harriman's policy,
however, TO ask for more than was i'm
mediately needed he added.
Early Contest with Hill.
Mr. Kahn said another reason for the
large issue was the rumor that Hill in
terests were going to purchase the Burling-
ton. Later it developed that the rumor
was true. q. .e.&
Mr. Hill and Mr.. Hartman ar that
Kahn. MI Hartman was a newcomer
and aggressive. After they got to know
each other better they came to respect and
admire each other"
At that time, however, Mr. Hartman de-
termined TO protect the Union Pacific, and
served notice that the purchase of the Bur
iington by the Great Northern and North
ern Pacific was a hostile act Mr.. Kahn
said II was for this reason that the pur-
chase of the control OF the Northern Pa
cihc was made indirectly He termed il a
defensive act. He said if a monopoly had
been planned the result could have been
accomplished easily by the purchase of the
Atchison.
Coming down TO the purchase of the
Southern Pacific, the witness said it had
been made after counsel had advised that
it was legal.
Your counsel advised you that the North
ern Pacific purchase was legal but the
Supreme Court decided otherwise" COM
mented Mr.. Severance.
The court was divided on that question.
observed Mr.. Kahn.
Mr.. Severance inquired at the afternoon
session about the proposition that had been
made 10 purchase the Rock Island MI.
Kahn said Nj. Hartman had told Kuhn,
Loeb & Co. there was a chance to buy the
Rock Island, but they had advised him IL
leave !t alone. as he had enough on his
shoulders. The witness said he didn't know
what reason there would pe for tie pur-
chase Of the Rock Island. except to obtain
q monopoly in that country.
Except for just what yen are accused
i.ere" said Mr.. Severance.
He seemed to consider the explanation
made by Mr.. Kahn of the motives for tn,
purchase Of the additional "A 600 shares of
Southern Pacific in January as evidence
that the road was looked upon as 4 genuine
competitor OF the Union Pacific. MI Kahn
was a membcr OF the board of directors
and the executive committee of the latter
road, maintaining his connection with the
road from 1898 10 1905. lie returned to the
bcarh of directors few months ago
The hearing will be .sumed to-day !
when. according to expectations, il may be
ended.
HOG PRICES STILL SOAR.