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PAGE TWELVE
Wants Harriman Prosecuted for Violating Lalos
(The New York Herald.)
That the inquiry conducted by the
Interstate Commerce Commission into
the conduct of railroads controlled by
E. H. Harriman will result in prose
cutions was plainly shown by the pub
lication in the New York Evening
Telegram recently of the report and
recommendations of Messrs. Kellogg
and Severance, counsel for the com
mission. The commission will soon
take up this report, vote upon it, and
send to the Department of Justice the
evidence tending to show the Harri
man school of railroad financiering
has operated in violation of the Sher
man anti-trust laws and other stat
utes.
The exclusive publication of this
important report by the Evening Tele
gram proved a decided shock to some
members of the commission.
The document submitted to the
commission by Messrs. Kellogg and
Severance, who have been unrelent
ing in their search for facts connected
with the absorption of railroad after
railroad by Mr. Harriman, covers twen
ty-five typewritten pages. It has yet
to be considered by the commission as
a whole, but this has simply been de
ferred because there are one or two
points into which the commission de
sires to probe further.
Points of the Report.
The main points of the report re
cite:
That railroad competition has been
absolutely ended in an area equal to
one-third of the United States, in
which Mr. Harriman is absolute mas
ter.
That Mr. Harriman’s contracts with
the Rock Island, Southern Pacific,
Santa Fe, Illinois Central and San
Pedro railroads are in violation of the
anti-trust act, and counsel is in favor
of proceedings against them by the
government.
That the purchase of the shares of
one railroad by another is an evil
practice that should be stopped by
law.
That there should be new and ef
fective laws to prevent inflation of se
curities like that of the Alton reor
ganization.
That the profits of the great rail
roads of the far west are being used
to buy and control railroads in the
east, instead of building more roads
for the development of the west.
The report is based on develop
ments in the Harriman hearings. The
Southern Pacific has voluntarily ab
rogated the contract with the San Pe
dro route, which Messrs. Kellogg and
Severance have repeatedly said they
believed was in violation of the Sher
man law.
Laid Before President.
Facts revealed as to use of west
ern railroad profits to buy control in
other railroads have been made the
basis of informal recommendation by
some members of the commission to
President Roosevelt in the interest of
further legislation.
In its report the commission tells
briefly the story of the Union Pacific’s
reorganization and of the establish
ment of Harriman’s control; of its ac
quisition from the Huntington estate
of control of the Southern Pacific; of
the elimination of competition be
tween these two roads. It is declared
that these two systems are naturally
and inevitably competitors for a vast
traffic between the east and the west
and to the Orient, and that their joint
control by owe Interest is a violation
of the Sherman law. Prior to the
passage of the Interstate Commerce
law they belonged to the trans-conti-
WATSON’S WEEKLY JEFFERSONIAN.
nental pool, in which each road was
awarded a fixed percentage of the
traffic.
Under the Union Pacific organiza
tion, the report points out, the ma
jority of directors in each of these
companies has also constituted the
majority in the other. Mr. Harriman
has been president and chairman of
the board in each and as chairman
he has been delegated all powers of
the board when it was not in session.
He is absolute in both. Their by-laws
have been amended and made approx
imately uniform, so that Harriman has
all the powers of the directors and
the executive committee. All the huge
financial transactions have been made
by him and later approved by his
dummy directors.
Making Clark Surrender.
The commission’s report tells the
story of Senator Clark’s effort to build
and operate the San Pedro road as
an independent line. He was well on
the way to completion of his line when
Harriman blocked him. Part of the
iky
EDWARD IL HARRIMAN.
Head of Union Pacific, South
ern Pacific and other railroads.
right of way which Clark was using
consisted of a route through a canyon
about sixty miles long, in Nevada,
known as Meadow Valley Wash. This
route had once been owned by the
Oregon Short Line, but had been re
linquished many years before. When
Clark was ready to build through the
canyon the Oregon Short Line revived
its claim, started a litigation, began
building a road through the pass and
threatened Clark that if he construct
ed his line it would parallel every
mile of it, and, having all the connec
tions for handling through business,
would make his road absolutely profit
less.
Clark finally surrendered and en
tered into the contract with the Har
riman system by which the latter se
cured half the stock of the San Pe
dro road and absolute domination in
all traffic matters. Since the investi
gation announcement has been made
that the Union Pacific has bought the
other half of the stock and now owns
absolutely the whole road. Thus was
killed the last attempt to secure com
petition in this great region.
Clark is reputed second wealthiest
man in the world, and he felt that he
had a grievance against the Southern
Pacific because of the high rates
charged him on the ores from his cop
per mines. But even his great wealth
was not enough to enable him to fight
the Harriman system. It was the end
of competition throughout that. area.
The Santa Fe was brought into sub
jection, Harriman and his associates
buying stock In it till they were able
to force two of the Union Pacific di
rectors, Henry C. Frick and H. H.
Rogers, on the Santa Fe directory.
Some time afterward the Southern
Pacific and Union Pacific, each own
ing some minor pieces of road north
of San Francisco, planned to develop
these into more important routes, and
to connect them up into important
lines along the northern Califor
nia coast, As they would have
been competitors, an arrangement
was completed by which the
Northwestern Pacific road was or
ganized, took over all these minor
lines, and undertook to develop them
into a single system, which should be
jointly owned by the Santa Fe and the
Southern Pacific, each holding control
for a year at a time in alternation.
This is exactly the plan under which
the Union Pacific and Rock Island
jointly control the Alton; and the
commission finds that in both it is in
violation of the anti-trust act, and
recommends that the attorney-general
proceed against it.
Remarkable Stock Watering.
The famous financial irrigation pro
ject in Chicago and Alton receives
more attention in the text of the re
port than any other one matter. It
is declared “the most remarkable
story of manipulation and stock wa
tering.” The men named are E. H.
Harriman, Mortimer H. Schiff as rep
resentative of Jacob H. Schiff, James
Stillman and George J. Gould. When
they bought up the shares of Alton it
had a complete capitalization of $33,-
900,000 —stocks, bonds and floating
debts. In seven years they increased
this to $114,000,000, and in that time
they spent only $18,000,000 in better
ments and extensions. In other words,
the report says, they added $65,000 per
mile to its capitalization without “one
dollar of consideration.”
The story of how this was done is
told in detail, but for the first time in
understandable fashion. It has been
repeatedly outlined in the newspaper
reports of the hearings several weeks
ago. Some sharp accusations are
made against Harriman.
The investment by the Union Pa
cific of more than $182,000,000 in the
securities of other railroads is ana
lyzed in detail, and a table is given
showing in what roads Union Pacific
money has been invested. Since June
30, 1906, these purchases are stated
at $132,000,000, consisting in the main
of $10,000,000 of Santa Fe, more than
$45,000,000 of Baltimore and Ohio,
more than $6,000,000 of Chicago, Mil
waukee and St. Paul, $41,000,000 of
Illinois Central, $20,000,000 of New
York Central and $2,000,000 of St. Jo
seph and Grand Island. The Union
Pacific is shown to hold, besides com
plete control of the Southern Pacific,
21 per cent of the common and 12 per
cent of the preferred in the Baltimore
and Ohio, 29 per cent in Illinois Cen
tral, nearly 8 per cent of Santa Fe.
6 per cent of Chicago, Milwaukee and
St. Paul, 8 per cent of New York Cen
tral and control of St. Joseph and
Grand Island. It owns practically all
the bonds and stock of the Oregon
Short Line and all the stock of the
San Pedro road, amounting to $25,-
000,000. It holds in addition to all this
about $20,000,000 worth of securities
of the Hill system, and has sold $116,-
000,000 worth of Hill road securities
which wore purchased a number of
years ago.
Abandon Ocean Line.
Prior to the Union Pacific’s acqui
sition of a big Interest in the Santa
Fe, the latter system operated a line
of steamships from San Diego to the
Far East, connecting with the rail
road. Now that has been abandoned,
and the Pacific Mail, controlled by
the Southern Pacific, has a monopoly
of this ocean going business, conduct
ing it in connection with both roads,
the Santa Fe and Southern Pacific at
present getting equal shares of the
tonnage derived from this source.
The commission finds that for sev
eral years, under the Southern Paci
fic-Santa Fe agreement, there has been
absolutely no competition in the fruit
traffic from California east. Sixty per
cent of this business is tributary to
the Santa Fe, but the traffic is divided
in the proportion of 45 per cent to
the Santa Fe, 45 per cent to the South
ern Pacific and 10 per cent to the San
Pedro line. Right after the Los An
geles hearing, when all these things
were made public, these three lines
simultaneously announced a 10 per
cent reduction in rates on fruit, which
will save the growers about a million
dollars a year. The commission ven
tures the opinion that the reduction
was the direct result of the publicity.
Taking up the relations of the Un
ion Pacific to the Illinois Central, the
commission finds that there is no
doubt about Mr. Harriman’s absolute
control of the latter system. It points
out further that control of this road
is of the greatest importance in order
to enable the Harriman system to
fence in the immense area surrounded
by its various lines, to have a route
from the grain district to the Gulf,
and to stop competition of the Illinois
Central with the Alton. In fact, in
the immense area west of the Mis
souri, dominated by the Union and
Southern Pacific, Santa Fe, San Pe
dro and their related lines competition
has been utterly killed.
WHERE CAIN KILLED ABEL.
(London Tit-Bits.)
While cycling around Kettering I
was startled to see what appeared to
me to be two men fighting in a field.
On reaching the field I dismounted and
climbed over the fence to see what
it was, and discovered that it was a
stone statue representing Cain slaying
Abel. It is unique. Cain has one knee
pressing Abel to the ground and one
arm uplifted ready to strike. The
statue must be hundreds of years
old, and is supposed to be on the ex
act spot where the murder was com
mitted.
THE GREATEST MIGRATION.
(Geographical Magazine.)
No migration in history is compara
ble to the great hordes that have
crossed the Atlantic during the last
twenty years to enter our territory.
In 1905 1,026,499 immigrants were ad
mitted; in 1906 1,100,735, and in the
present year the total will exceed the
record of 1906 by many thousands.
Since June 20, 1900, 6,000,000 have
been admitted, of whom probably
5,500,000 have settled permanently in
the United States.
OLD MAGAZINE WANTED.
Does any reader of The Jeffersonian
happen to have The Southern Review
for 1873?
This was the magazine published in
Baltimore under the auspices of the
Methodist Episcopal Church, South.
The editor was Dr. A. T. Bledsoe.
Mr. Watson would be glad to bor
row, or buy, those numbers for 1873
containing the series of articles writ
ten by Dr. Samuel Tyler, and enti
tled, “Peggy O’Neal; or, the Doom of
the Republic.”
Mr. Watson will greatly appreciate
the kindness of any friends who may
tell him where the desired back num
bers of The Southern Review can be
found.