| Show I HARRIMAN PASSED P VP UP THE HARD Fill Lull Some History Regarding Finan Financial Financial Financial cial Operations of the Union Pacific Paci c J Interstate Commerce Commission Trying to Get at Facts acts in inthe inthe inT T the Alton f licate Deal H Harriman Sew ew York It F Fib SoE pa system spent tad of the th of C portions s of the In Int in a I t day redo O the te financial operations hI bI associates before the t h e ec c r himself If and a nd which h i f te commerce in j 1 behalf ehalt of oC the thc United States Q S and corn com relations between tinn of f lt n communitY of oC IntErest there 4 oJ t thIr rates f s and pr practices dIces t COunsel for or the government particular attack on the 3 a and of 01 the Chicago 8 a on rail roH by the Harriman and u tM Be with a challenge e ear p I aT ar for the railroads of 01 the rl right h t f the Ih Interstate commerce commission inquire into private prinle of an and d final the tb two chief q i its of the days proceedings Declined to Answer Mr r Harriman declined to tf t tell what wha t portion of the preferred stock of the tn sold soH to the Union Pacific belonged t y F him and the way Us Dad for taking the question into the tIle tIled d ral courts roum TIle The point raised involves n II i material limitation on the inquisitorial iwer Jw r of If the commission and is of or ser oer seris is importance to the whole question if tf f interstate corporation ration investigation There Tb re was Wall an effort to show that there fad bern been n an enormous Inflation of oC the securities I and liabilities of the Al At Alton Alton ton mu that the Harriman syndicate had unfair profits by declaring a divi i ed id d of X 3 p per r cent CHIt from the th proceeds proe eds of oC oCI 1 I first tint sale ale of bonds bon amounting to torry toI I rry ty million dollars that the syndicate h id ad SOld Gold itself Its lf the bonds at an unreason tew iO 10 figure only to resell them at profit that the Harriman syn sync c lJ ate ale tad had in the th Alton Aiton capitalized the tho thoI i af at t former stockholders In the road ind nd d the th money which had hen been n spent by byi b bI i ti old oil management for betterments over OYer overa 0 a period of ten years had already been arged t to Li operating expenses that the looks inks of the tM company had ben been doctored I nd ed that for an Increase of the stock nd liabilities from about forty millions t on ont ost hundred hUldred and sixteen l millions 1 i r i was ws nothing to show except an n ex cx i of million mullen In Im fm on the property Denied All Aft Charges Sr Mr r testimony was waR a denial 4 all ali the charges and an he madean x tended explanation ex and the mc th he lie ct dd were w iy re lh nv UtI ed by bj the conditions m n lr Jm 1 of ot the time mid had been in the open Harri Harrl m nu lasted for five hours d wu was unmarked by acrimony The declined to 10 be le led into an at t explain the details of the Alton and constantly referred his histo I to th records of the Aton Alton Mr Hammans testimony began with 11 t f of one hundred million of bonds by b the Union Pacific I 1 r the purpose primarily of paying for J b be Pacific In 1901 and then led the purchase In connection with i 1 Short Line of oC the Northern tek nock ock Asked Ask tI to Explain Mr I 1 harriman Hamman identified a statement J win wing mj that since sin the first day of last i t the he Union Pacific and Oregon 71 1 tare hare purchased stocks at a cost of and million dollars L 1 Mr j Kellogg the governments at t v sought to show that figured by b es s In the market today toda there had f Ti n a loss Ios of Jose eleven million on the In s ment Sir Harriman says ys that this Possibly true tru and Slid when further e a ked permission P to explain The lie witness Md said if It Northern Pacific reat GIf t Northern maintained their pro pre pT prices the profIt 1 in the thc Northern t Ilk fir t would amount to bout The witness s was was taken r I the eT total and sales sates ma made le the he t Pacific and Oregon Ore on Short and in the end denied that they d t been tta made mad for speculative purposes Purchase of Baltimore Ohio The th then n related the story of r k purchase o of of million of f the the Baltimore ore Ohio for r wh h payment a ment would he saW said be completed March and September next He had the ase with the late Pres catt of the Pennsylvania rail rall road and but nothing had llad been en eald said as to the and no conditions were attached to s about the Pacific C taft hale pur Qi f tr tb 1141 first firs nock In the Alton Atton led the way wa Harriman objectIon of ot counsel c for Mr Mrk Ir k Sa to a questIon as to the amount the tte Alton AIton witness had hail held In the ee be WIt and explained the sale of f tock stock that ho I i had on the WI He Ui then thee Which had bad fixed fired the price at any of the was asked If It he had owned Jr Ir Stock when It u was as deposited ready obJected ted sayIng his clien ts to Lace IDee to ti the lend every possIble assist ll that at It raw gaVe and that they rejoiced na away man many them 2 o opportunity PP to clear s He denied an and 1 unjust st re rethe however that the ques I tion lion had any an bearing on the question of Interstate commerce He said the com corn mission had great powers but there was a n limit and he ho thought it was to the interest of the commission properly to de do d fine its 18 powers Declined to Answer Chairman Knapp said the suggestion of Mr fr Milburn seemed to draw a distinction between the transaction of the company compan and the action of or its It officials and asked If this could be called the transaction of an individual There was an extended discussion of the th question and anti it was stated the commission would confer and nd announce Its Itt decision later At the afternoon sea ses es eton sion the question was renewed in another form and the commission c decided that it bad had a right to make the Inquiry tion was noted not in the record Ifford and the wit ness neIs formally declined to make answer The of or the entire Alton AIton transaction then began and consumed most of or the afternoon Mr Harriman first told of oC the formation of or tho tha th syndi syndicate rate cate which ho hI said aId contained d many man per sona and which was represented by b him self James Stillman George Glorge Gould and Mortimer per cent of the stock of the Alton was acquired Oo having haIng been paid for or the preferred and Slid for the thc common rommon and an 1 the total In vestment amounted to Bonds to the amount of OOOO were Issued and the th shareholders subscribed for them at 65 00 6 and from rom the proceeds of oC the sale of bonds a dividend of 30 t O per cent was I declared The rhe witness denied tion I In a sale lc of bonds at 96 6 to York lork Life Insurance company Could Not Remember Mr lIr Kellogg asserted that the bonds had hall been regularly quoted in Wall all street at from 83 to W 6 but the thc witness said he ho could not remember what they the thO were sell JS lug at The witness denied deniM knowledge of ot the whereabouts of oCtile the record of the syn I n which handled them Mr Milburn representing Mr Harriman Hamman objected to I what he hc called an effort to create the Im that Mr Harriman and the other trustees owned all the stock purchased I by the syndicate s Why hy not lump to what you want ant to I I prove pro e asked the witness Ill help you Oll to do It ItAH AH All right sir thank you OU very eo much said Mr Kellogg I J want to prove that after you Trough those th e bonds for 63 6 you i sold them for some other price But Butt witness riot rem for fOIt fo shat t were wern and who were th syndicate i l at managers m Mr llo showed sl owed that thal of ofin In terest on the prior lien Hen bonds was be ing lug carried as an nn asset on the books of the company but the witness could not explain Books Were Wrong He said the books might have han shown a surplus of only OOOO but the books were wron and had been corrected Twelve million dollars had been taken from the the road and expended in Improvements Mr Kellogg out that the old management had never Increased lt Itc capital stock st k and then questioned the witness s at length as ao to the action of or the new company compan oring to show among other things that the stock In tho names of the tha new directors really belonged to the thc syn The witness then told of oC the transfer of the Alton Allon Railroad company to the Al AI ton Railway company When hen the stock was placed place In the treasury of the latter company compan a mortgage of was wa placed on It and preferred stock to the value of and common stock to the value of at par Issued it itIn ItIn itIn In other words you capitalized the ri of or the Alton stock for asked Mr Kellogg That is as you yiu put it t answered Mr Harriman Millions of Water The witness said the now company as assumed assumed the mortgage e of issued by the old one and Mr Kellogg Kellog declared that th stock and liabilities of the com coni company company pany has thug thus be swelled to Counsel for the railroads insisted that these figures were In th excess of correct ones and Mr Kellogg saying that he would admit the difference asked what the roads had to show sho for tho In Increase Increase crease creaSA of or more than In except the spent In better betterments betterments betterments ments He declared that the difference was water There was a It long discussion of tho the manner in which certain errors had been charged in the thc statement of the Alton and while the witness could not explain the matter matt cr he denied that it represented an nn attempt at concealment I Explanation Mr tr Hammans general gen ral explanation of the Alton Aiton deal was as follows The syndicate found Itself In the J position OI tion Uon of having hayIng paid for the stock and property mentioned less 6 whIch It had received In dividends on the stock of the railroad company or Now the return of about S1 L 1 a year ear Is less than 4 44 per pel cent on that amount Invested It would seem that It was not a very cry liberal distribution I Continued on Page 5 HARRIMAN PASSED PASSED UP I THE HARD QUESTIONS Continued from Page 1 on the thc amount of money m ne invested but we took the chances of what tho the mar markets markets markets might be and the common stock that was issued by the railway company was WiUS somewhat in relation to what you might say discounting the future and to enable us to put cut out a security which might be bea bea bea a prior lien that is our 3 per cent bonds By dividing the tho risk we wa could sell soil sella soila a Z per cent rent bond to some advantage and still retain either the preferred or common stock for purposes of or control or we could sell soil the whole of o the preferred stock or part of it and still retain com corn common mop mon mOl stock for the purpose of control Big Killing Made In SIn ISS we were just beginning to emerge from a series of years of depres depression depression sion aba resulting from the panic of 1833 and andI I might say the shock of that is the political campaign and the result of the Venezuela message which I think probably probably probably ably you will 1111 remember had a I very ery seri serious serious ous oils effect because of the possible difficulty culty which it might get us Into with England In we were just beginning to emerge from those conditions which were ere conditions of ot economy econom and restriction restriction restriction tion and tn on the part of the cap capitalists capitalists capitalists and it was doubtful whether we WI with all aU the stock of the Chicago Alton AlLen Railroad company would have hae been able abl ablat at the time to have sold our 3 I per cent bonds bondt as high as 63 65 in the market but It was wa the change chang in conditions between the end nd of 1898 and the fall fait of 1899 which brought about a conditions which enabled the tho marketing of the 34 3 per c cent nt bond bends the 3 Z I per cent bonds and the preferred stock which the syndicate subscribers held to advantage to themselves without any disadvantage to the shippers s or any anybody anybody anybody body that was using the Chicago Alton Railroad company as Is shown by the fig figures fl figurea ures urea I have havo given you ou Denied Knowledge of Circular Examination as to purchase of o Alton stock by the th Union Pacific commenced just before fore adjournment The witness said the first purchase of or Alton by b the syndicate was made without any an refer reference care ence to the Union Pacific and when Mr Kellogg produced a circular issued In stating the advantages of or a Union Pa Pacific Pacific Pacific connection to the stockholders er of or orthe the Alton the tho witness denied knowledge of its issuance Mr r Harriman will continue his test tsU testimony mony mon tomorrow |
