Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1911-11-22
Property in Mesaba Range is Put Up
as Collateral.
UNABLE TO PAY ON CALL
Land is Now Property of United
States Steel Corporation.
ENGINEER ORDERED TO SELL
Securities Now Paying Two Hum
dred Per Cent Dividends Dis
posed of at Thirty Dol
lars share.

WASHINGTON, Nov. 2l.-How John
ID. Rockefeller gained control of the
valuable Duluth, Mesaba & Northern
railroad through a loan of S1,OOOOO0 how
the value of the railroad property Is said
10 have been padded to make It APP
pear worth more than SOOO.OO0 and how
the road is now earning more than $500
= share in dividends were told to the
Stanley Steel trust investigating com
mittee today by Charles II. Martz,
formerly chief engineer of the road.
Mr. Martz, with some bitterness, told
how he once owned forty-nine shares of
the stock in the road but had lost Il to
the Rockefeller interests for $50 share,
In order, 1t was claimed. to make his Job
secure.
Alfred Merrett of Duluth, first pres
tdent of the Duluth, alesaba & Northern
testified that he and his associates
turned over to John ID. Rockefeller in 1898
property i'm the Mesaba ore regions as
collateral for the loan of the S1,OOO,OO0.
This they lost later on call and the
property, Merrett declared, Is practically
the same as that now owned by the
United States Steel corporation and val
ued, according to recent estimates of
Charles NJ. schwab. at $7OOOOO,OoO
ROckefelIer Takes over Road.
Mr.. Martz said the Merrett Bros, who
built the Duluth, Mesaba & Northern,
borrowed S1,OOOOOO from John d. Rookie
fOller in 1892 to extend their railroad into
Duluth.
He testified that through this loan the
road was extended to Duluth and that
the total cost of the road and docks
amounted to s1,7O0,000. Soon aIterward,
in 1898, Mr.. Martz declared that the con-
troll of the road was taken over. by Mr.,
Rockefeller When the Minnesota Rail-
road and Warehouse commission brought
suit against the road for a reduction of
ore rates he said that he, as chief en-
gineer. was directed by counsel for the
road. IN the presence of MIR. RoekafelleT's q
counsel,"to make a report that the total
costrhad- a s5OoO.OOo
The report Mr.. Martz made at that
time was submitted to the committee.
Chairman Stanley said he expected to
show that abnormal rates are charged
by this road and that last year It made
a profit of more than 80 per cent
Ordered to Give Up stock.
AIr. Martz testified that he had owned
forty shares of stock in the railroad.
Officers of the company borrowed nine
teen shares which they said was for the
purpose Of raising money in New York.
This stock Mr. Martz declared he never
saw again.
After that" said Mr.. Martz, "Mr.
Rockefeller sent the general manager to
inform me that 1t was against the policy
of the company for employees to own
stock in the road and asked me to sell
for $50 a share. ] did sell and that stock
is now paying a dividend OF $500 share
Mr.. Martz said that the total valuation
OF the. railroad was placed at 1885,, 900
In his report to the Minnesota Railroad
commission he said he had padded" the
cost considerably and had placed 1t al
f4,SS2oOO. The road outside OF equipment
could have been reproduced for 50, ,5Oo, 900
Martz said he made his report under
direction Of Joseph b. Cotton, attorney
for the railroad.
But Mr.. Murray, private counsel fol
Mr.. Rockefeller" he added. first told
me that it was necessary to show yalu
alton of $SO0O.OO0 for the road"