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Show :;, HARHIMAN HEARIHG J IN NEWYGRK ENDED Mm Capitalization of the Chicago Jl & Alton Road Again Wjf r Considered. I MAHIj contradicts m HARRIMAN'S TESTIMONY II Uiicstion of Legality of Thirty fjg per Cent Dividend of Alton a ft Raised. S r N'FAV YORK, Feb. 2S. The .Interstate 'ff Commerce commission todny concluded I Its New York hearing "Pon the inveBtljjn- I tfon of the operations and relations of fcifl" tJie fnion Pacific syptcm. and while there ?3 -will be oral arguments heard at Wasli- j R' InBlon in April, on a date to be decided ' ' ; later, the testimony has probably all been : i taken. There lias been no decision yet - . ah to an appeal to tho courts to com-pel com-pel Edward FL Harrlrnan and Otto Kahn - to answer the many Important questions I JA' declined by them, but the question will he In- considered after tho commission returns 5 if. to Washington. "We will discuss the ! ' ijueptlon at Washington," said Commls- ! ? sioner "Lane after adjournment today, ' I I" and there decide if wc arc to ask that i the stomach pump be applied to these Mi witnesses." l'i The closing hours of the hearing '$ brought a statemcut from Controller Mnhl P that financlui statements were not. sent If to Southern Faclfic stockholders for sev-fe sev-fe -rI months before the dividend meeting fr In July last, this belnp in contrad lotion Si' of Mr llarrhnan's testimony; a sugrges-W- tlon from Commissioner Harlan that- the IK "n pt cent dividend on Alton was Illegal ft undT the Illinois ronstltution; n partial m learlng awav of the aspersion In regard Vf t the mortgaging of the Mnrrayville-p Mnrrayville-p SpWngfleld riii-off IWorc It was built, A an l a" lengthy discussion of the propriety I S" vi i aplinllslng ths old expenditures ror, I S, . "iiernients upon the Alton. I Before the hearing began it was said , that, contrary to expectations, William 1 if. O. Rockefeller would not be called to IM testify regarding the alleged sale to him K by Mr. Harrlrnan of ,100.000 shares of f r'nion Pacific at the. lime of the soft so-ft called Keene raid in 100.?. If Samuel -Felton. president of the "!hl-i) "!hl-i) rago & Alton since 1S3I. was called to j. show that about $1,000,000 from Income iM 2W agalnpt proceeds from the sale of se-'"W se-'"W ' Wlirllles was Included in the statement f . liat showed that 522.000.000 had been e.v-'1 e.v-'1 pended in Improvements. The $22,000.-000 $22,000.-000 also included ?2,7S0,000 expended since ! last .Innc and port! for by car trust cer-iir.'atcs. cer-iir.'atcs. Tills roduccd the expenses from ; s:tlo of securities In the Alton lo between j SIS.i'OO.noo and 519,000,000. iHillarcl Modifies Stateinont. f'lmrlos W. liillard, controller of tho Chicago & Alton, who vras upon the rfand when the hearing adjourned last pveniiig, was then called. He explained inai the branch line or cut-off from a roint near Murrayvllle to Springfield, ' El w''lr,h '" .vsterday testified had been ' inortgnnd before It was built, war. one ; she Alton had a right lo build. The pro-r pro-r ; reeding was not unusual. The expense as) and the method of mortgaging were legitimate. le-gitimate. : T'ie lino of Ijiquiry was evidently meant ' tc correct the Impression left by coun-1 coun-1 ier'"Viiestlonp' and Mr. Illllard s replies JL . 'StenJny. ' Vr TI1E" Mi" Kellogg asked a series of lE questions, eliciting a statement of the Bf '"''Irago & Alton's assets and liabilities Bfc. In ISPS, before Mr. Harrlrnan entered the Wj, property and at the present time. These rK "cures wcro taken from an annual report. showing- that before 1898 Its capitalisation was In round numbers $33,000,000 against I122.S72.328 on June 1 laut. The witness said tlie car trust Certificates Certifi-cates were not included In the capitalization, capitaliza-tion, so tho total should really be ?125,-000,000, ?125,-000,000, and not J122.000.000. Mr. Kellogg examined the witness at length as to the books of the company, and had him produce. Identify and explain ex-plain many of the accounts already covered cov-ered by evidence. The witness produced a record showing the stock standing In the name of tho syndicato managors. Capitalizing Old Debts. Mr. Kellogg endeavored to show that the Harrlrnan management of the Chicago Chi-cago & Alton had capitalized the debts of the old .loliet k Chicago road prior to IS63. but Mr. Hlllard said his knowledge of tho road's affairs did not go back to that date. It was elicited, however, that there never had heen a. foreclosure of tho Chicago & Alton railroad or railway, while the old Jnliet k Chicago had been foreclosed The witness was examined as to the J 12. 000.000 which it 1b clnlmed Harriman already ndded to the capital of the. Alton, because that amount had been expended on Improvements or had been lost by former shareholders. Mr. I.ovett. of counsel for Harriman. objected to Mr. Kellogg assuming that 510.000.000 of the amount represented loss lo an old set of stockholders through foreclosure. It developed that neither witness nor counsel knr-w If there had heen a foreclosure, so Mr. Kcllocg amended his question to Include "improvements "im-provements or losses, or both." The witness said thai tho $12,000,000 In question had previously been paid and the accounts were written off. He did not know If other railroads ever added to their capital in that way. Mr. Kellogg then asked a series of questions tending to show that certain utorprIses also had been capitalized by the Alton, hut th" witness did not adnlt this. Certain construction expenses had heen so charged, he said. Mr. Kellogg elicited the admission that the discount upon the bonds had been so charged; that while the books disclosed it, the annual an-nual report would tend to confuse the public in regard to this Item. What Becomes of the Money7 In answer to questions from Commissioner Commis-sioner Lane, the witness questioned the right of the directors of the Alton In 1 going back over their books for a period of many years and capitalizing the. expenditures. ex-penditures. Ho said that each succeeding succeed-ing board of directors had each year passed upon the accounts, and he thought that such acts should have been final. The witness repeated his testimony of lost evening as to the transfer of tho Alton from the railroad company lo the rallwav company through Louis Stanton, and said that It was evident from the hooks that the, syndicate had simply handed over the 22,000,000 in bonds and had received the preferred stock and the ! St. Louis, Peoria & Northern property. Mr. Lane aaked him how much the Harriman Interests had paid for the Chicago Chi-cago fc Alton, and how much they got out of the transaction. Mr. Illllard was unable to stale tho profits. He ha1 no means of knowing. As Mr. Lane continued lo press for somo Information on this point. Mr. Kellogg remarked: "Nobody knows." "Oh, yes," rejoined Mr. Severance. "W'o can figure that out. It will show they did not lose any." Mr. Cravat h again drew attention to tho statement of the witness last evening even-ing about tho mortgage of the cut-off from Murrayvllle to Springfield before it was built, and said that the transaction had been perfectly proper from both a legal and a moral standpoint. Commissioner Lane said he had understood under-stood that, but he wanted to know what had become of tho money. Mr. Severance said that railroads often did similar things, but the money had usually been kept to build the road- Against tho Constitution. Counsel Lovctt and Mr. Cravalh cross-examined cross-examined Mr. Hlllard briefly, hut he maintained his position firmly, particularly particu-larly as to the propriety of capitalizing the old expenditures upon the Alton. Mr. Mahl. controller of the Hnrrlman lines, was then recalled and Identified a number of exhibits. Mr. Hnhl explained that tho resolution resolu-tion of the hoard of directors of the Union Un-ion Pacific aillhorlzlng Mr, Harriman to borrow money In the name of the corporation cor-poration was a puroly formal matter. It was done to meet a requirement of certain cer-tain California bankers. Mr. Lovett showed by the witness that the late C. V. Huntington had like authority from ! the Southern Pacific board and that it j was n common business practice. I During the discussion between Mr. Lovett and Mr. Illllard. Mr Harlan read an extract from tho constitution of Till nols which prohibited the payment of I stock dividends from the salo of securi-, securi-, ties, raising the point that tho Alton's 30 per cent dividend probably was illegal ; Mr. Severance Informed the commls i sion that counsel for the Government hurl no more witnesses at this time and would ask for an adjournment without date. Chairman Knapp then announced that the hearing was postponed to a date to be fixed, and adjournment was taken. |