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About Morning Oregonian. (Portland, Or.) 1861-1937 | View Entire Issue (Feb. 28, 1907)
Jtiiftiitiy i wpttm- VOL.. XLVI. SO. 14,423. PORTLAND, OREGON, THURSDAY, FEBRUARY- 28, 1907. PRICE FIVE CENTS. r - RENEWS ATTACK ON ALTON DEAL Commission Learns of More High Finance. ROAD MORTGAGED BEFORE BUILT No Money or Security Re mained for Building. MOST GENEROUS BANKERS Member of Kuhn, Loeb & Co. Says Stocks Were Sold to Union Pacific Below Market Refuses to Tell Business Secrets. NE"vV YORK. Feb. 27. Counsel for the Government renewed their attack on the financial methods of the Harriman group In the Chicago & Alton Railroad before the Interstate Commerce Commission this afternoon when they called Charles "W. Milliard, controller of the road, as a wit ness. Mr. Hilllard testified that he be came controller In October last, when, under the Joint arrangement for the man agement of the property, the Rock Island took its turn. Mr. Hilllard said his first task was to find money to carry on the Improvements under way. There was money in the treasury for current expenses, but not enough to carry on the improvements, which included a cut-off of 433 miles of road from a point near Murrayville to Springfield. There was not enough money to complete the build ing of this line, said the witness. "I looked into the question of raising money by mortgage." he continued, "an 1 discovered that it had already been mortgaged." Mortgaged Before Built. "To I understand that this road had been mortgaged before it was built?" asked Commissioner I.ane. "Yes; I was told that It was covered ht H mortciffe of 1!1. mul there was noOdng that could be done except to put a second mortgage cn it, which would have been poor security," said Mr. Hil llard. Mr. Kellogg then read the mortgage to show the line had been covered by it and the witness said: "All the bonds were gone. I found from the hooks that the J13,00,0n0 had never been paid to Mr. Stanton for the stock, but that the J22.fl0O.0O0 in bonds had been turned over to the syndicate who delivered the stocks and the road through the intermediary, Mr. Stanton." The Commissioner wanted to know what the books showed had been actually ex pended in connection with the handling of the. property, but, while the witness was searching for the records, the ses sion was adjourned until tomorrow. Mr. Hilliard will be recalled tomorrow morn ing. Kuhn, Loeb & Co.'s Commission. Kdward H. Harriman concluded his tes timony at the morning session, and his examination brought forth nothing of spe cial importance. He was succeeded on the stand by Otto H. Kahn, one of the lead ing members of Kuhn, Loeb & Co., which lias financed many of the Important deals of the Harriman party, and a former director of the Union Pacific. Mr. Kahn remained upon the stand until mid-afternoon and under examination of Mr. Sev erance, of counsel for the Government, told of the reorganization of the Union I'acifio. There was a special inquiry as to the commissions paid to Kuhn, Loeb & Co. and the interrelations of the firm, the witness and Jacob Schiff with, the Union Pacific. The witness said the firm had received a commission equal to 6 per cent on the purchase of Southern Pacific, a commis sion of 5 per cent divided with other un derwriters on the issue of Union Pacific convertible bonds at a reduction of 6 per cent. The witness spiritedly defended the acts of his firm, and cited Instances where it had sold stocks to the Union Pa cific at a figure below the current mar ket. Mr. Kahn made an extended defense of the Alton transaction, based on the methods and conditions of the time. Still Refuse to Answer. Mr. Harriman during his testimony again involved the question of private business as against Interstate commerce and refused to answer interrogations as tu his individual stock deals, and Mr. Kahn refused to divulge anything spe cific as to the business transactions un dertaken by his firm on behalf of clients: in or outside of the Union Pacific direc torate. He and his counsel, Paul D. Cra vath, urged the same objection made by Mr. Milburn in behalf of Mr. Harriman and added the special plea of the con fidential privilege between a banker and his clients. The Commission ruled against all ob jections and the record was in each in stance properly completed for reference to the courts. William H. Moore and Daniel G. Reid, directors of the Rock Island, testified as to the contracts with Mr. Harriman and his associates for Joint control of the Alton, and that there was no other written or verbal agreement. Mr. Moore said that while the contract was still be ing fully observed, its effect was nomi nal. He and his associates had expected benefits from the arrangement that had not materialized and their earlier plans in the connection with the project had not been carried out. Purchase or Grand Island Road. Mr. Harriman testified that the Union Pacific had purchased the St. Joseph & Grand Island since last year. The price paid was $2,022,000. and the witness had owned the property and sold it to the Union Pacific. Objection was made to questions as to when he bought the stock of the St. Joseph & Grand Island, and what he paid for it, and the witness declined to answer. The Commission ruled that he must an swer, and there was the usual formal re fusal. The witness said the St. Joseph & Grand Island was not a parallel and com peting line. Mr. Kellogg asked of whom the New York Central stocks, acquired by the Union Pacific,' were bought. Mr. Har riman said they were bought in the open market. Were you or any of your associates ' . ( .'!WY A Senator Thomas M. Fatt-erson, of Colorado. Who Advocates Govern ment Ownership of Railroads. Interested in the sale at the time of the Union Pacific purchase?" asked Mr. Kel logg. Mr. Milburn objected, and Mr. Harri man declined to answer. Mr. Kellogg asked If It was not a fact that of the J22.O0O.OO0 said to have been spent upon the Chicago & Alton, J2,74O,0O0 was made up of car-trust certificates and $1,000,000 from Kuhn, Loeb & Co., so that the expenditure on the line out of the new securities sold were only about $18,000,000. Mr. Harriman said that possibly the figures were correct. He simply knew that $22,000,000 had been spent upon the line. Kahn rciilc Bank Grafted, The witness was excused and Otto Kahn, of Kuhn, Loeb & Co. took the Btaml. Mr. Severance took up the exam ination of Mr. Kahn and asked a few questions as to the organization of his firm. The firm of Kuhn, Loeb & Co. was bankers to the reorganization committee and Mr. Severance asked the witness con cerning the stock issuance, bonding and general handling of the old Union Pacific securities and that issued by the reorgan ization. Mr. Kahn replied from printed reports and for some time the proceedings were confined to a recital or oetaiis. Mr. Kahn said that both himself and Jacob H. Schiff remained upon the Union Pacific board until a year ago. He Paid he desired to say that in going upon the board they did so because they felt it a duty to the public which held the securi ties. At "the same time they wished it un derstood that they did so as bankers and at no time ceased to be bankers, and that in dealing with the Union Pacific they did so at arms' length. At no time had they ever charged the Union Pacific more than a banker's regular commission and often rendered valuable services for nothing. About a year ago they felt that the ne cessity which caused them to go on the board had passed and also the demands of their own banking business had in creased: the credit of the Union Pacific had become firmly fixed and he and Mr. Schiff resigned from the board of the Union Pacific. Bought Southern Pacific on Chance. Mr. Kahn said his firm had purchased the Southern Pacific stock control which afterwards passed to the Union Pacific, but he insisted that it was not bought with the understanding that the Union Pacific would take it, the only understand ing being that it was to be offered to the Union Pacific. Mr. Harriman, he thought, was in favor of purchasing, but his firm took a big risk in buying the Southern Pacific stock, as the remainder of the board might not approve of it and it would be left on their hands. The witness said Kuhn, Loeb &' Co. were paid a commission of 2Va per cent upon the purchases of Southern Pacific stock made for the Union Pacific. Mr. Severance showed that, as the stock had been bought at 60 and the commission was upon the par value, the commission was really at the rate of 5 per cent. The witness said the usual bankers' commission had been charged and that his firm had taken a risk of securing the stock. Mr. Severance showed, for the purpose of minimizing the risk to the un derwriting syndicate, that the sharehold ers of the Union Pacific had taken J25, 000,000 of the issue, but the witness insist ed that there had been a risk in the issue, which was a novel one. Lawyer and witness fenced over the matter or questions and Mr. Kahn said Mr. Severance was unfair. Fistht for Northern Pacific. Mr. Severance went Into the matter of the acquiring of the Northern Pacific con trol py union Pacific. Mr. Kahn told of the Inception of the idea, when the Northern Pacific, by its purchase of the Burlington, seemed to threaten the best Interests of the Union Pacific. He had a talk with Mr. Harri man, and they agreed that it would be wise if the Union Pacific should try for control of the Northern Pacific, with the resulting affiliations of the Great' North ern and Burlington. In 1901, Mr. Kahn said. Kuhn, Loeb & Co. offered the Union Pacific some $26,000,000 of Northern Pacific stock. Mr. Kahn denied that there was any agreement that the Union Pacific should buy the stock. His firm regarded it as a good buy. Much the same testimony occurred re garding subsequent sales of Northern Pacific to the Union Pacific. - His firm Concluded on Palo 4.) I 7 A i V JH E HIS FIXED POLICY Trying to Prove Thaw Still Insane. GRILLS EVANS, THE ALIENIST Will Call Hamilton to Sustain His Theory. EVELYN THAW RECALLED She Denies Telling Brother Thaw Was Cruel to Her Trial Will F.nd Early Next Week Thaw Makes Statement. NEW YORK, Feb: 17 Interest in the Thaw trial today centered) in the maneuv ers of District Attorney Jerome, who seemed to give further indication of his purpose in the near future to apply for a commission in lunacy to report on the present condition of the defendant's mind. The witness stand for the greater part of the day was occupied by Dr. Britton D. Evans, director of the New Jersey Hospital for the Insane at Morris Plains, an alienist for the defense who was up for cross-examination. Mr. Jerome seemed to direct his efforts at getting from Dr. Evans information as to the exact recognized forms of insanity from which the expert declared Harry Thaw was suf fering at the time of the ."brain storm" which resulted in the killing of Stanford White. Says Mania May Recur. Dr. Bvans had testified that in his will Thaw displayed evidences of a melan cholic state of mind. The District At torney dwelt for an hour or more on the subject of melancholia, and asked the expert if it was not true that in acute melancholia there is a recurrence of the affliction in at least one-third of ail cases. Dr. Evans said there was. Mr. Jerome said he intended 'calling as a witness in rebuttal Dr. Allah- McL,ane Hamilton, the alienist, who was first em ployed by the Thaw defense, but who has not heretofore figured in the trial. Dr. Hamilton recently returned from Europe and in a published interview just after he landed was reported to have said that he came to the conclusion that Thaw was insane at the time of the tragedy and that he is insane now. Tells of Thaw's Delusions. The District Attorney also stated that he would call Dr. Charles F. Bingaman, of Pittsburg, the Thaw family physician, in rebuttal. Dr. Bingaman was on the stand for a short while today, but Mr. Del mas objected when Mr. Jerome started to cross-examine the physician as to the Insanity in the Thaw family, on the ground that the witness had not qualified as an expert. Dr. Bingaman told today of visiting Thaw 'last August, when the prisoner seemed much depressed and suffered from the delusion that a conspiracy had been formed against him, complaining that hd was not allowed to put paper over the grating in his cell d-oor, because they PURSUES THIS HAIR WAS GROWN WHILE WAITING FOR HARRIMAN IN OREGON. TESTIMONIAL "After using Harrlman's Promise tonic, we can truthfully say it has accomplished more than we expected of It. We recommend It to anybody who can wait long enough or live long enough. It is a sure antidote for -hurry." And we can prove it- . . wanted the cold air to blow in' and give him pneumonia, so he would die and his case, never come to trial. Brother Against Sister. By recalling Evelyn Thaw to the stand for a few questions which he had omitted on his long cross-examination, Mr. Jerome early today indicated that he would call Howard Nesbit, her brother, to contradict her in a matter of credi bility. He asked Mrs. Thaw if she had not told her brother that Thaw had treated her cruelly while abroad, be cause she refused to tell lies about Stan ford White and say he had drugged and mistreated her. He wanted to know if the brother had not bought her a pistol with which she might defend herself against Thaw. The defendant's wife de nied absolutely that there was any truth in any of the.e statements. Finish Early Next Week. Mr. Delmas announced that the defense would conclude its case this week. This, however, was on the assumption that the If wT7V XV. 8. Shallenberger, Second AsMist ant 1'OKtmagter-General, Who Has Rfeigned. District Attorney would conclude his cross-examination , of Drs. Evans and Wagner today. Mr. Jerome did not even finish with Dr. Evans, who will be re called tomorrow morning. John T. Deemar, the physician to Mrs. William Thaw's family, will follow Dr. Evans, and then will come Dr. Wagner. After these have testified. Mrs. William Thaw herself will take the stand, according to present plans. The defense may, there fore, conclude by Monday or Tuesday of next week. Only One or Two C'la.slies. i If Mr. Jerome moves for a lunacy com misfiioiv Jt Is nnderst-oi he will oY so during the taking of the rebuttal testi mony next week. It was expectpd that Dr. Evans and Mr. Jerome would have a lively . duel during the cross-examination of the wit ness, but there were only one or two clashes, in which the honors appeared to be about evenly divided. The examina tion dragged at times and Mr. Jerome seldom raised his voice above the low, placid tone he so frequently assumes. Thaw Makes a Statement. During the cross-examination of Dr. Evans, Thaw began to write rapidly and told the reporters he was preparing a statement. His action attracted the at tention of his lawyers, who apparently wlshed to dissuade the defendant from making a formal statement public. How ever, this, written upon a scrap of paper, finally reached the press table: "This - is ' the second statement Mr. Thaw has made since August 18. " 'With chances of a million to one against her, it is wonderful that Mrs. ( Concluded on Patfe 3.) RAILROAD STRIKE THREATENS WEST Ballot Will Be Taken by 30,000 Men. LAST WORD FROM MANAGERS Say Limit of Concessions Has Been Reached. DISAGREE ON OVERTIME Same Price for Trainmen and Con ductors on Run Regardless of Time Strike May Tie Up Forty-two Roads. CHICAGO, Feb. 27. (Special.) Ne gotiations between the railroad mana gers and the trainmen and conductors were abruptly terminated tonigrht with out an agreement being reached. The question of the greatest strike in rail road history is now up to the men. Committees representing 30.000 men on 42 railroad systems throughout the West left the city tonight, carrying with them the strike ballots io bo voted on. About 15 days will be re quired to take a secret ballot. That the vote will be in favor of accepting the compromise offer made by the railroads is not expected. The ballot places the two questions before the men whether they shall -accept the. offer or place the authority to order a strike in the hands of their execu tive officers. If a strike vote is car ried, the officers will again put the matter up to the jreneral managers be fore calling out the men. Managers Concede Xo More. Several concessions were offered by the general managers, but few of them were acceptable to the committee. To night the officers received a communi cation from the general managers stat ing that they had reached the limit and wouid go no further. The com mittees replied that they also male all the concessions from their original de mands that they felt justified in mak ing, and it was up to the rank and file of their respective organizations to de cide on the next step.. The offer made by the railroads av erages about 8 per cent increase in wages, with practically no change in the hours or working conditions. The men on all freight trains -were offered a flat increase of 10 per cent, while men on passenger trains were offered less than 7 per cent increase. The eight-hour day originally proposed by the men, which in reality means a speed of 12V& miles an hour Instead of 10 miles, as at present, was waived during the conference and a substitute of 11 miles an hour or a nine-hour day proposed. The managers refused to make any concession on the question of hours, e,xcept that on one or two roads, where the wages are now based on 12 hours a day, a reduction was of fered of 10 hours as a basis. In the original demands the men asked for time and one-half for over- TO BUILD NEW RAILROADS time. This demand they also waived and offered to accept a pro rata scale for overtime. On some of the roads no allowance was made for overtime. The men wero paid by the 100 miles, and if it required 15 hours to cover the distance they were paid for 103 miles, the same as if they covered the dis tance in 10 hours. Where these con ditions prevailed, the managers of fered to pay pro rata wages after 10 hours. The negotiations between the rail roads and- the trainmen and conductors have been carried on in almost daily conferences since January 21, and every-tnch of the ground has been con tested. Last Thursday both sides were on the verge of a break, but the following day the railroads made fur ther concessions, which prolonged the conferences. ' Tlfe last conference was held Monday and the offer of the roads waj rejected by the committees. They sent notice to the . general man agers of their action and waited to t : : ' I I . ;; $ 8 " f ' f fel , , i I - , ! , - ii Is iT ' 3 Vr- ' 1 s I - i t ! i V f i t i ' , t ? i -t v r - ' ' ; j K. C. Maddern. Third AHnUlunt Fowt-niafttr-(.eneral. Who Is About to hear the final decision of the railroads which was sent them toniprht. FEVER PROSTRATES CREW Battleship Connecticut May lose Many Men by Typhoid. NORFOLK, Va., Feb. 27. The battle ship Connecticut. proceeding from southern waters to New York with an epidemic of typhoid fever among her crew, was in communication with Norfolk by wireless telegraph tonight when off the Virginia capital. A message trout' the Connecticut says 15 of the men stricken with typhoid are in a critical condition. The ship should roach New York to morrow afternoon. CONTENTS TODAY'S PAPER Th Weather. YESTERDAY'S Maximum temperature, 32 deKrecs; minimum, 41. TODAY'S Showers; southerly winds. Foreign. British House of Commons votes to dises tablish church. Page 2. Skeleton found In dungeon of Russian pal ace. Page 3. Battle, between Russians and Chinese ban dits. Page National. Humphreys stirs up Democrats by speech on ship subsidy bill. Page 4. Oliver says Roosevelt promised him canal contract. Page 5. Senate passes bill expatriating Americans who reside abroad. Page ii. Important changes in PostofClce Department. Page 5. Pure food laboratory may be located in Portland. Page 3. Politics, Texas House exonerates Bailey and he de livers tirade against enemies. Page -il Governor Hughes warns Republicans to give good government or suffer defeat. Page 4. Filipinos excited by Senate vote against abandoning islands. Page Domestic. - Haskln writes on trust-busting. Page 1. Denver promoters accused of selling stock in bogus mine. Page 4.' Experts testify about Thaw's sanity. Page t. Interstate Commission learns more of Har rlman's high finance. Page 1. - Hermann scores two points In trial. Page 2. Employes of all Western railroads to vote on strike. Page 1. My. By waters and her sifter give utrong evidence in defense of brothers who killed Bywaters. Page 2. Severe restrictions on athletics proposed by Harvard trustees. Page 2. Pacific Coast. Washington Legislature passes many bills, and bankstock assessment measure la signed by Governor. Page 6. Steve Adams takes stand In his own defense. Page 0. St ate Land Board fixes terms for redemption of KeUiher certificates, page 6. First case lost in Sunday closing crusade at Tacoma. Page 6. Portland and Vicinity. South Portland Republican club organized and maps out campaign. Page Id. Union labor will nominate full city ticket at Spring elections. Page 1 1. Spicy details in Andrew divorce suit. Page 10. City officials question the experience and capability of expert accountant who has been working on city books, page 10. Total of $11100 a month now pledged to carry on state publicity work under di rection of Commercial Club. Page 10. Pure food legislation stripped of much of its vitality before being put Into effect. Page 14. William F. Walker, New Britain. Conn.. bank embezzler, was In Portland on night of February 18. Page 7. Southern Pacific Company applies to United States engineers for permission to build nigh bridge across Willamette River at Oswego. Page 5. Commercial and'Marlne. Potato and onion markets In a bad way. Page 15. Wheat lower at Chicago on heavy selling. Pag 15. Stock market again upset. Page 1. Steamer Ardmount chartered for lumber cargo to Australia. Page 14. VARIOUS WAYS OF BUSTING" TRUSTS Roosevelt First to Win Victories. TRUST FORMED TO FIGHTTRUST How Dark Tobacco-Growers Broke Monopoly. STANDARD OIL'S DEFEAT Kour Krothprs Hare Almost Driven It From Xpw England Earn hardt's War on Theater Trust. Bribes From Magnates. BY FREDERIC .T. NAPKIN. WASHINGTON. Fob. 22. (Spoclal.) "VVhile It would hp PxtrrmHy difficult to biiTiR out for exhibition any broken pieces of a "busted trust," yot the effort to curb the combinations in Koing on and their power in the I'nlled States is not increas ing: as it was a few years nffo. FishtinK the trusts with the law is one thiiiK. and fightinR them with another trust is another. There is world-old belief that the only effective way to fight the devil Is with fire. The Sherman anti-trust law. under which the Federal anti-trust actions are brought, became a law just after the be ginning of President Harrison's adminis tration, rhiring- the Harrison regime four bills in equity were filed and three Indict ments were found. The total result wa. to enjoin a coal trust in Nashville, a freight traffic association In St. Ixiuls and a Northwestern lumber combination. The indictments all failed. DurliiR Mr. Cleve land's second administration the anti-trust law was invoked only aRainst combina tions of labor, not capital. During Mr Kinley's administration little was heard, of the anti-trust law. Three bills In equity were filed, but no indictments returned. Under President Roosevelt's administra tion thus far 11 bill in e.q-jhy have be:i filed and 13 indictments returned. In the equity proceedings six Injunctions have been granted and others are pending. From the Indictments one conviction has been secured, in one a plea of Immunity was made and the others are pending. Vntil the Roosevelt era the Government lost its cases under this law with start ling regularity. Now the Government wins with uniformity. There is apparent ly some virtue in the influence of public opinion, even upon the courts. Victory Over Tobacco Trust. There are a few instances in which the people have banded together to match their skill against tile encroachment of the combinations. In what is called the "Black Patch" of Kentucky and Ten nessee, the principal crop Is dark tobac co. This grade of the weed is soldi ex clusively In Kurope, most of it to Italy, Austria, France and Portugal, in which countries the tobacco business is a gov ernment monopoly. There is no American market for this heavy, dark tobacco. The American trust and its British cousin, the Imperial Tobacco Company, and The Regie, which buys for the Kuropean countries, went into a combine and- about five years ago the tobacco-growers awoke to find that there was but one customer on earth to whom they might sell their crops. And that customer would offer but 3 or 4 cents a pound for tobacco which had been selling for from & to 1'J cents. Jn 1902 a meeting was held at Guthrie, Kentucky, and the Dark Tobacco Plant ers' Protectiva Association was formed. It was resolved to limit the area planted and to hold the crop for high prices. Bankers and moneyed men of the sec tion and neighboring cities offered the necessary financial aid and the movement grew. The trust fought hard and tried to enforce its division of territory among its own buyers. It offered! to pay high prices to those growers who would not join the association and tried to tempt the members by the same means. There were riots and incendiary fires and ail but pitched battles. But last Fall the Italian government capitulated and the association sold Its Regie tobacco for from 6 to 10 cents a pound, or twice as much as the price fixed by the trust. The man who baa been the moving spirit and executive head of the association is Felix G. Bwing of Cedar Hill, Tennessee, a man of an aristocratic Southern family who lived over half a century without any care other than for his own farm, and then suddenly took up the gage thrown by the trust and led the "embattled farm ers" to victory. Thirty-five thousand tobacco.-growera cheered him at the an nual meeting in Guthrie last September and every one of them had made a per sonal sacrifice of money to aid in the successful fight against their common enemy. Standard Driven: From New England The Standard OH Company is the greatest of the trusts, and there Is a belief, perhaps well founded, that, when It falls, the whole system must BO. Al though scourged out of Missouri In theory, being driven from Texas, on the rack in Ohio and Indiana, and be ing prosecuted by various other states and by the Federal Government, the Standard Oil has known no fight so persistent, no enemy so annoying, as It has found in . the local competition In Central New England known as- the Four Brothers' OH Company. This independent concern has forced Concluded on Tags 2.J