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Show as to possible speculation in Union Pacific Pa-cific stock in July and August last, and particularly on the day the announcement announce-ment of the dividend was held up. Mr. Harriman first testified that he knew of no speculation, and , explained that the directors of the Toad already held much of the stock. Commissioner Lane wanted to know if the witness had himself him-self bought any stock after he knew that there was to be a dividend. Attorney John G. Milburn guickly blocked the question with an objection. The witness created laughter when he declared he had bought Union Paciflo at 25 in 1898 in expectation of the dividend, divi-dend, in 1906. , ; The objection was renewed through out the day whenever Mr. Kellogg referred re-ferred to the stock transactions of the witness in the railroads under inquiry, and so all examination alone that line was blocked. No steps have been taken yet for . testing the question in the courts, but Chairman Knapp has shown great care in laying the foundation founda-tion in the record every time the proposition prop-osition has occurred. Kellogg traced the purchase a of Southern Pacific stock by the Union Pacific and Oregon Short Line, carrying it down to the famous sale of 300,000 shares to William O. Rockefeller. "The sale was made on a reciprocal agreement made with Mr. Rockefeller," said the witness, ' ' by which Mr. Rockefeller Rocke-feller could sell us the stock back on May 1, 1904, if he desired, at the same price. Mr. Rockefeller paid $6,000,000 in cash and jjave good collaterals. It was a conditional sale. Had Formed a PooL' "The sale was a protective measure, pure and simple. There had been sions to those contentions, and most of the testimony was discussed between lawyer and witness as to the facts and conditions involved. '. ' ; " ' ' Mr. Harriman declared Union Pacific fates had1 been reduced 17 per cent, since he became president, and fell back on the assertion that the -expenditures for improvements -had developed the country and placed the system in condition condi-tion to handle the great traffic that has come in later years, and that he and his stockholders were entitled .to the benefits their enterprise had won. ' There was an interesting discussion of the per-ton-per-mile computation of i rates. , Mr. Harriman said the calculation calcula-tion was faulty because from the standpoint stand-point of a low rate it was adversely affected af-fected by high-class freight. Mr. Harriman Har-riman at first had remarked that he did not think it would necessarily be wrong for. a road to earn 15 per cent of its, capitalization. -J "Where would you fix the limit!" asked the commissioner. , "Why, 100 per cent if you like." replied re-plied Mr. Harriman, quickly, and then outlined his views. He said that as long as a road was properly conducted and gave proper facilities and at no higher rate than was charged by any other road it was entitled to its earn-1 earn-1 ings, no matter what they were. There was no reason why the stockholders i should not receive the benefits resulting 1 from good management, "What are you going to do with it!" he asked. "Are you going to donate it to the Government, or whatt" "There are several wayi bv which you could return it to the shippers," remarked Mr. Clements, to the amuse-ment amuse-ment of the room. - formed a pool to- speculate in the Southern Pacific stock. The pool had acquired 300,000 shares of stock, and appealed to the shareholders and courts and tried to get enough proxies to prevent pre-vent us from continuing in the management man-agement of the property. The pool planned to sell its own stock to advantage. ad-vantage. We feared that they would get a temporary injunction to prevent us from voting the stock. In order to prevent this we took this method ! to enable us. with other proxies, to protect ourselves against this speculative specula-tive interest." Mr. Harriman frankly admitted that the transfer of stock was to place it in the hands of someone who would act against this pool. I He said the question of. earnings first! came up at the July directors' meeting, and the estimate of earnings was so sur- prisin? that he asked them to consider the question of a dividend if the actual figures came up to the promises. The! Southern Pacific meeting was held in! the morning and the Union Pacific meet-J ing in the afternoon. The Southern Pa-j I eific first declared a dividend of 2Vi per cent, 45 per cent of which went to the Union Pacific, the owner of that much stock. Then the Union Pacific dividend of 5 per cent, 3 per cent traffic earnings and 2 per cent from investment earn ings, was declared, the directors deciding decid-ing to pass it to the executive commit tee for approval and announcement! which was customary. ( Mr. Harriman proceeded in his nan-ration nan-ration without interruption until this point. He spoke deliberately and without with-out hesitation. Mr. Kellogg questioned Dim closely in an apparent cnort to elicit some admission of motive in the delay in the announcement, but Mr. Harrir man's replies were direct. He admitted admit-ted that the delay in the announcement ! was unusual, but said that the occasion was unusualv "It was staggering, V said ,Mr. Harriman. "It marked ah epoch, but if I could have been present at the hour for which the executive committee meeting was scheduled, the announcement of the dividend would have been in the usual way the morning after the directors' meeting." i Commission Lane asked what Mr. Harriman knew about the buying of the Union Pacific and Southern stock on the market between the time the directors decided on the dividend and the time it was announced. I Mr. Harriman declared he did not know of any unusual buying of Union Pacific stock, but when the question was applied with direct reference to himself, Mr. Milburn, his counsel, objected, ob-jected, and Mr. Harriman refused to answer. I "Did you or your associates buy any stock then in anticipation of this dividend divi-dend t" persisted Mr. Kellogg. I "I have always bought Union Pacific more or less." replied Mr. Harriman. Then suddenly he wheeled around aad said : I "I bought Union Pacific stock fn 1893 for $25 a share in anticipation of that dividend. I bought it at the time of the panic, when one of my associates asso-ciates declared I had more nerve than any speculator he ever knew, deeming i anAtnlotinn T Vvinfrht it than in An- HARRIMAN WOULD GET MORE ROADS IF ONLY LAW WOULD PERMIT NEW YORK, Feb. 27. E. H. Harriman, Harri-man, in his testimony yesterday afternoon, after-noon, went into details regarding the ousting of Stuyveeant Fish from the presidency of the Illinois Central rail-wav. rail-wav. Harriman said: "Yes, in 1903, Air. Fish deposited over half a million dollars of Illinois Central funds with the Trust Company of the BepubUc. We, the directors I mean, immediately directed the secre- ticipation of that very dividend. 1 1 bought it on the decline all around after the San Francisco fire, in anticipation of that very dividend." Commissioner Clement then asked Mr. Harriman why he objected to telling tell-ing whether he had or had not bought the stock. . . J "On a matter of principle, simplyl" replied Mr. Harriman. f 4 What i the principle involved, the reason t" Commisioner Clement persevered. perse-vered. . I Lawyer Milburn again put in his objection, ob-jection, and Mr. Harriman remarked aside: "I haven't any reason. I am in the hsnds of my counsel." I Bates Not Lowered. Attorney Kellogg devoted much time during the day to an effort to establish the propositions that rates on the Union and Southern Pacific had remained re-mained fixed, if they had not increased over a period of several years, during which time rates generally in the country coun-try had been reduced; that competition competi-tion had been destroyed in the territory covered by the Union Pacific system; that the purchase of stock in the Santa Fe was a move toward the neutralization neutraliza-tion of competition by that line, and that the vast sums devoted to betterments better-ments and dividends by the Union Pacific Pa-cific had been taken from unfair rates. The witness was not willing to make any concessions or any material admis- tary to withdraw tnis money, ana n was done." Mr. Harriman said that lateT in the same year Mr. Fish deposited with the Trust Company of America large amounts of Illinois Central funds, to "pad the trust company's statement." Notwithstanding the board's action, continued Mr. Harriman, in 1904, Mr. Fish again began to deposit money of the Illinois Central with certain trust companies, "in qrder to pad statements." state-ments." . , "In addition to that he loaned -to himself a large amount of money during that summer, without the knowledge, I believe, of the board of directors, and it was based on these things that the matter was taken up with the intention of having Mr. Fish deposed. I interfered inter-fered in the interests of Mr. Fish, 1 loaned him $1,200,000 to take up his obligations ob-ligations to the Illinois Central, and let it remain with him for two years. He paid it back gradually until the securities which henad up appreciated in value and he could arrange for the matter somewhere else or dispose of some qf it." Thought It Own Property. "The trouble with Mr. Fish," said Mr. Harriman. "was that he looked upon the Illinois Central as his personal VTlZ told how Mr. Fish had contracted for the construction of the Indianapolis & St. Louis company, and committed the company, without the consent or sanction of the board, when the board had previously expressed its jiisaTv provaL . x. hCSj;! In his explanation of the sensational incident, Mr. Harriman, for the first time, spoke with warmth. . There was a renewal of the obiection to the commission 's right to inquire into. Mr. Harriman private tranaac-tions, tranaac-tions, and the matter took the same course as the day before. The eornmi sion ruled that the questions must be answered; then followed a formal refusal, re-fusal, and the record was formally completed. com-pleted. The first objection was against revealing the amount of holdings of Mr. Harriman and his sssociates in the Santa Fe. and the second as to the existence ex-istence of a pool or private nnderstand-ingaa nnderstand-ingaa to stock in the Illinois Central. ThA most iaterestiius objection yrta |