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Show mined to extend tho Atchison system vest of Sau Francisco Hay. Wo thereupon entered negotiations to purchase stock of tho California & Northwestern. "While wo were trying try-ing to accomplish this the stock passed to tho Southern Pacific." Continuing. Mr. MoraweU said; "We then bought the Eel Klver Ac Fhircka Railroad company, owning a ihort Hue running out of Eureka. "During tho autumn or winter negotiations ne-gotiations were entered for a etUe-1 etUe-1 nent of differences between tho Southern Pacific' and Atchison as to the Northern California, 'Mr. Harrl-man Harrl-man objected to our building the Phoenix & Eastern, as ho icgarded It as an invasion of Southern Pacltic territory. He offered to buy the Phoenix Phoe-nix & Eastern, and I told him that if he -did bo. all difficulties as (to Arizona Ari-zona and Northern California would nave to be adjusted at the sam3 time, "1 then drew up. the agreement upon up-on which I was willing to settle and sell tho Phoenix & Eastern. We were to receive from the Southern Pacific one-half interest In the California Northwestern and in tho North Shore line, north of San Francisco, a dis-1 tance of 100 miles. We were to give j the Southern Pacific one-half interest ir. the Eel River & Eureka and alt roads to ,be constructed thereafter were to be open to the Atchison. "The construction of the low grade line from Phoenix to Deming, of which the Phoenix & Eastern was a part, was not contemplated when work on the Phoenix & Eastern extension vas being built. The Atchison had not enough money for the work of eon-Ftructlon, eon-Ftructlon, which would have cost $12-000,000, $12-000,000, and to acquire new mileage In Arizona." TESTIFIED IN UNION i PACIFIC MERGER HEARING New York. Jan. 12. Victor Mora-wc-tz was culled to the witness stand in the Union Pacific merger hearing this afternoon. He said ho was formerly form-erly counsel and then cnalrman or the executive committee of'the Atchison, At-chison, Topoka & Santa Ke Railroad company, but resigned last October. Mr. Morawotz testified: "In 1001 the Atchison company bought stock andf second mortgage bonds of the Santa Fe, Prescott A: Phoenix Railway company. Frank Murphy was president of the company. com-pany. Because of his ability and our confidence in him. wo asked him to continue as president. This he has none until today. "Mr. Murphy had a project to build a road from Phoenix to Benson. 1 did not think the prospect a good one, Mr. Murphy said he would build tho line anyway. I told Mr. Ripley if It was to be built we would build It curselves. We declined to build It to Dudley ville. Mr. Ripley was not dis-.por-ed to build it to Benson. Ho did not thiuk It would pay, 'in Him summer of 1902 wo deter- |