CORNELL UNIVERSITY LIBRARY CORNELL UNIVERSITY LIBRARY 3 1924 092 564 529 The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://archive.org/details/cu31924092564529 No. 993— In Equity, "■ i t i . - i ' "■ i 1 1 IN THE Circuit Court of the United States, DISTRICT OF UTAH. THE UNITED STATES OF AMERICA, Complainant, v. THE UNION PACIFIC RAILROAD COMPANY ET AL., Defendants. EVIDENCE AND PROCEEDINGS BEFORE THE SPECIAL EXAMINER. Volume I -Complainant WMHINGTOH ; QOVCHNMENT PMHTIHQ Of PiOK t 1»0» No. 993— In Equity. IN THE Circuit Court of the United States FOR THE DISTRICT OF UTAH. THE UNITED STATES OF AMERICA, Complainant, v. THE UNION PACIFIC RAILROAD COMPANY; THE OREGON SHORT LINE RAILROAD COMPANY; THE OREGON RAILROAD & NAVIGATION COMPANY; THE SAN PEDRO, LOS ANGELES & SALT LAKE RAIL- ROAD COMPANY; THE ATCHISON, TOPEKA & SANTA FE RAILWAY COMPANY; THE SOUTHERN PACIFIC COMPANY; NORTHERN PA*- CIFIC RAILWAY COMPANY; GREAT NORTHERN RAILWAY COM- PANY; FARMERS' LOAN & TRUST COMPANY; EDWARD H. HARRIMAN, JACOB H. SCHIFF, OTTO H. EAHN, JAMES STILLMAN, HENRY H. ROGERS, HENRY C. FRICK, and WILLIAM A. CLARK, Defendants. EVIDENCE AND PROCEEDINGS BEFORE THE SPECIAL EXAMINER. Volume L — Complainant. WITH LIST OF WITNESSES AND EXHIBITS. £.V. INDEX OF WITNESSES AND EXHIBITS IN VOLUME 1. WITNESSES. Original. Print. Alexander Millar 4 3 William Mahl 123 230 William D. Cornish 490 270 W. V. S. Thorne 314 284 David Willcox 522 289 J. C. Stubba 524 290 Julius Kruttschnitt '. 611 343 E. O. McCormick 623 351 J. A. Munroe 639 361 Henry Halm 666 377 E. Newbegin 669 378 T. H. Honeyman 683 387 O.O. Hall 692 393 J. K. Gill 696 395 W. A. Montgomery 7C1 398 Edward Ehrman 707 401 Thomas McCusker 711 404 LouisLochman 737 420 Fletcher Linn 749 428 OttoBreyman 758 434 George H. Kelly 762 436 J. F. Meyer 789 452 E. H.Jenkins 823 474 W. O. McBride 826 475 K. D. Miller 840 484 EXHIBITS. Complainant's Exhibit 1 12 8 Complainant's Exhibit 2 23 18 Complainant's Exhibit 3 '. 28 21 Complainant's Exhibit 4 51 32 Complainant's Exhibit 5 58 36 Complainant's Exhibit 6 65 39 Complainant's Exhibit 7 71 42 Complainant's Exhibit 8 78 46 Complainant's Exhibit 9.L , 82 48 Complainant's Exhibit 10 89 52 Complainant's Exhibit 11 90 52 Complainant's Exhibit 12 91 53 Complainant's Exhibit 13 92 53 Complainant's Exhibit 14 94 54 Complainant's Exhibit 15 95 55 Complainant's Exhibit 16 101 58 Complainant's Exhibit 17 110 63 Complainant's Exhibit 18 127 72 Complainant's Exhibit 19 130 74 Complainant's Exhibit 20 132 75 Complainant's Exhibit 21 '. 135 76 in IV INDEX OF WITNESSES AND EXHIBITS IN VOLDME I. Original. Print. Complainant's Exhibit 22 136 77 Complainant's Exhibit 23 138 78 Complainant's Exhibit 24 139 79 Complainant's Exhibit 25 .' 141 80 Complainant's Exhibit 26 143 81 Complainant's Exhibit 27 145 82 Complainant's Exhibit 28 146 83 Complainant's Exhibit 29 148 84 Complainant's Exhibit 30 152 86 Complainant's Exhibit 31 196 109 Complainant's Exhibit 32 220 122 Complainant's Exhibit 33 250 137 Complainant's Exhibit 34 255 140 Complainant's Exhibit 35. 260 143 Complainant's Exhibit 36 263 145 Complainant's Exhibit 37 283 155 Complainant's Exhibit 38 295 162 Complainant's Exhibit 39 302 165 Complainant's Exhibit 40 334 182 Complainant's Exhibit 41 '... 339 185 Complainant's Exhibit 42 344 187 Complainant's Exhibit 43 356 194 Complainant's Exhibit 44 357 195 Complainant's Exhibit45. 359 196 Complainant's Exhibit 46 375 204 Complainant's Exhibit47 385 210 Complainant's Exhibit 48 388 211 Complainant's Exhibit49 , 390 212 Complainant's Exhibit 50 ± 391 212 Complainant's Exhibit 51 392 213 Complainant's Exhibit 52 393 214 Complainant's Exhibit 53 394 214 Complainant's Exhibit 54 395 215 Complainant's Exhibit 55 399 217 Complainant's Exhibit 56 428 234 Complainant's Exhibit 57 428 234 Complainant's Exhibit 58 450 247 Complainant's Exhibit 59 451 248 Complainant's Exhibit 60 454 249 Complainant' s Exhibit 61 457 251 Complainant' s Exhibit 62 465 256 Complainant's Exhibit 63 467 257 Complainant's Exhibit 64 468 258 Complainant's Exhibit 65 471 260 Complainant's Exhibit 66 473 261 Complainant's Exhibit 67 478 263 Complainant's Exhibit 68 479 264 Complainant's Exhibit 69 480 264 Complainant's Exhibit 70 481 265 Complainant's Exhibit 71 482 265 Complainant's Exhibit 72 483 266 Complainant's Exhibit 73 505 279 Complainant's Exhibit 74 567 318 (For complete index see end of last volume.) 1 IN THE CIRCUIT COURT OF THE UNITED STATES FOR THE DISTRICT OP UTAH. United States of America, Complainant, v. The Union Pacific Railroad Company, The Oregon Short Line Eailroad Company, The Oregon Railroad & Navigation Company, The San Pedro, Los Angeles & Salt Lake Railroad Company; The Atchison, Topeka & Santa Fe Railway Company; The Southern Pacific Company ; Northern Pacific Railway Company; Great Northern Railway Com- pany; Farmers' Loan & Trust Company; Edward H. Harriman, Jacob H. SchifF, Otto H. Kahn, James Stillman, Henry H. Rogers, Henry C. Frick and William A. Clark, Defendants. Pursuant to the order of Honorable Sylvester G. Williams, the Special Examiner in above-entitled cause, dated at Denver, Colorado, November 14, A. D. 1908, the parties hereinafter named appeared by counsel before the said Special Examiner, in Room 515, Custom House Building, Bowling Green, City of New York, on Tuesday, the first day of December, A. D. 1908, at 10 : 30 o'clock A. M. Present : The following solicitors and counsel : Messrs. C. A. Severance, John G. Milburn, Maxwell Evarts, W. R. Kelly, James F. Horan, Edward H. Blanc, Paul D. Cravath and John M. Freeman. The following appearances were entered : On behalf of the complainant: Hon. Charles J. Bonaparte, 2 Attorney General of the United States; Hon. Hiram E. Booth, United States Attorney for the District of Utah; Messrs. F. B. Kellogg and C. A. Severance, Special Assistants to the Attorney General of the United States. On behalf of The Union Pacific Railroad Company, The Oregon Short Line Railroad Company, The Oregon Railroad & Navigation Company, Southern Pacific Company, and Edward H. Harriman: Messrs. John G. Milburn, John C. Spooner, R. S. Lovett and Maxwell Evarts. On behalf of The San Pedro, Los Angeles & Salt Lake Railroad Company and William A. Clark: Mr. W. R. Kelly. 1 2 MILIAR. On behalf of The Atchison, Topeka & Santa Fe Eailway Com- pany : Mr. Walker D. Hines. On behalf of The Farmers' Loan & Trust Company : Messrs. James F. Horan and Edward H. Blanc. On behalf of Jacob H. Schiff and Otto H. Kahn: Mr. Paul D. Cravath. On behalf of James Stillman and Henry H. Rogers: Mr. James M. Beck.' On behalf of Henry C. Frick: Messrs. D. T. Watson and John M. Freeman. The Examinee. Are you ready to proceed now, Mr. Severance? Mr. Severance. We are all ready. The Examinee. Very well. Mr. Severance. It is proposed at this hearing, or whatever hear- ing may be had in the next few days, that no oral testimony be 3 taken owing to the unfortunate illness of Judge Lovett, who expects to be present at the taking of all the oral testimony. But we have arrived at an arrangement by which there may be read into the record certain of the testimony which was taken before the Interstate Commerce Commission during the investigation which began in the City of New York on the 4th day of January, 1907, and continued at various places through the country during the six or eight weeks next ensuing. I think all the counsel stipulate to the use of this testimony, together with the exhibits accompanying the evi- dence of the witnesses, with the same force and effect as though the testimony had originally been taken before your Honor. It was all taken under oath. Therefore, we will offer certain of that testimony in evidence pursuant to this stipulation. The Examiner. Have you the stipulation? Mr. Seveeance. We have not any written stipulation. We will enter the stipulation on the record. Is that all right ? Mr. Evaets. You will make that stipulation as you introduce the testimony of each of the witnesses. Mr. Seveeance. First, we will offer, pursuant to this arrange- ment, portions of the testimony given by Alexander Millar, a witness before the Interstate Commerce Commission, who testified on the 4th day of January, 1907, at the City of New York. I understand that it is agreed by all parties that this testimony may be written into the record and have the same force and effect as though Mr. Millar were upon the stand giving the same testimony. 4 Mr. Evaets. Yes. Mr. Severance. Quite a little of this testimony is imma- terial to this issue, and we will indicate that. The Examinee. As you read it ? Mr. Severance. As we put it in. I will proceed to read this evi- dence. We will have to read at least the testimony of the first wit- ness, question and answer, in order to get the exhibits in their proper places. MITiTiAB. d ALEXANDER MILLAE testified : Examined by Mr. Kellogg : Q. Your name is Alex. Millar? A. Alexander Millar. Q. You are the secretary of the Union Pacific Railroad, are you not? A. Yes, sir. Q. And of the Oregon Short Line Railroad ? A. Yes, sir. Q. And of the Oregon Railway & Navigation Company? A. Assistant secretary of that. Q. And of the Southern Pacific Company ? A. Yes, sir. Q. You have the minutes of the meetings of all those companies? A. Yes, sir. Q. Are you also an officer of the steamship lines belonging to the Union Pacific, the Short Line, or the Navigation Company ? A. The Oregon Railroad & Navigation Company is the owner of steamships ; the other companies, do not, so far as I know, operate steamships. Q. The Oregon Navigation Company is the owner of steamships? A. Yes, sir. But no separate company. 5 Q. Does the Union Pacific own any steamship lines ? A. No, not to my knowledge. Q. Does it own any stock in any steamship line ? A. Not to my knowledge, no, sir ; except so far as the Navigation Company is a steamship company. Q. Isn't it a stockholder in the Occidental & Oriental Steamship Company? A. Yes, sir; it is. Q. From what ports do the steamers of the Navigation Company run? A. From Portland, Oregon, to points on the Columbia and the Willamette Rivers, and also to San Francisco. The San Francisco and Portland Steamship Company go to San Francisco as successor to the Oregon Railway & Navigation Company. Q. Does the Navigation Company have steamers engaged in east- ern trade with China and Japan ? A. Not to my knowledge. Q. Does the Navigation Company have any stock in any company engaged in traffic between this country and the Orient? A. Not to my knowledge. Q. Where do the steamers of the Occidental & Oriental Steamship Company ply? A. I cannot tell you that. Q. Do you know whether the Union Pacific Company controls that company by stock ownership? A. It is a joint ownership, so far as I know. 4 MILLAB. Q. Equal ownership? A. Equal with what ? I don't get the idea. Q. With any other company. A. I think in the minority holders there are individuals as well as corporations owning the stock. 6 Q. What corporations own stock in the Occidental & Ori- ental Steamship Line? A. I can only talk from a general impression. I think the South- ern Pacific is a part owner. Q. You are also the secretary of the Southern Pacific, you say ? A. Yes, sir. Q. And of many of its subsidiary corporations ? A. A very few; very few. Q. The Southern Pacific owns and controls a line of railway ex- tending from Portland, Oregon, through San Francisco, California, Arizona, New Mexico, Texas, and Louisiana to New Orleans, does it not? A. I understand it to be a leasing and owning company of the cor- porations that do operate between those points. It owns through stock ownership the companies operating the railroads between those points. The Southern Pacific Company is a stock owner and lessee of the lines operating between the points named. Q. And controls them? A. I should think possibly. Q. And you are the secretary of the Southern Pacific Company of Kentucky? A. Yes, sir. Q. Where is the general office of the Southern Pacific Company; I mean its corporate office, under the laws of Kentucky ? A. We have an office in Beechmont, Kentucky, and also in New York; the general offices are in San Francisco and Oakland at the present time. Q. Under your articles of incorporation, they provide for a general office in Kentucky, do they not ? A. Beechmont, Kentucky. Q. Where is Beechmont? A. In the suburbs of Louisville. 7 Q. That is your corporate headquarters under the laws of Kentucky ? A. I so understand, yes, sir. Q. Are you an officer of the Morgan's Louisiana & Texas Kailroad & Steamship Company? A. M. B. Bergeron is secretary of the company and I am assistant secretary. Q. Where is the principal office of that company ? A. In New Orleans. Q. The Southern Pacific Company owns all the stock of that company, does it not ? A. I am not able to testify to that. I don't know the facts. MILLAR. 5 Q. It votes it, does it not, at meetings ? A. It votes the stock it owns, but what proportion I am unable to tell. Q. It votes the control, does it not, Mr. Millar ? A. I think substantially, yes. Q. And it owns a line of steamships, you know, in a general way, running in connection with the Southern Pacific system from New Orleans to New York? A. Yes, sir. The Southern Pacific does not connect at New Or- leans with the steamship line. Q. Where does it connect? A. The Southern Pacific Company as an operating company con- nects at El Paso. Q. The Southern Pacific company owns the stock of and controls the line of railway clear from Portland to New Orleans, does it not? A. Yes, sir ; by stock control and lease. Q. And speaking of the companies which own the physical prop- erty from El Paso to New York as belonging to the Southern 8 v Pacific Company by stock ownership, the steamships connect with the Southern Pacific system at New Orleans, don't they ? A. Well, in a loose way of talking, yes. Not as I look at it. Q. State why. A. Because the Southern Pacific Company has no line in Texas or Louisiana. Q. What company owns the lines through Texas and Louisiana? A. Beginning at New Orleans, the Morgan's Louisiana & Texas Line goes to the Sabine River. Q. Goes from New Orleans to the Sabine River? A. In connection with one other company, the Louisiana Railroad Company. Q. Who owns the stock of these companies? Does the Southern Pacific Company? A. I think so. Q. The steamship line connects with that railway at New Orleans, doesn't it? A. Yes, sir. Q. So that, by steamship and rail, the Southern Pacific Company controls lines of transportation from Portland, Oregon, through San Francisco, California, New Mexico, Arizona, Texas, Louisiana, and New York City? A. Yes. Q. And the Southern Pacific also owns the stock of and controls and operates by lease the Central Pacific Railway, does it not? A. Yes, sir. Q. Which line extends from San Francisco to Ogden? A. Yes, sir. Q. And the Union Pacific owns the line of railway from Council Bluffs and from Kansas City to Denver and to Ogden and Salt Lake? A. Yes, sir, that is the Union Pacific Railroad Company. b MILLAB. 9 Q. And the Union Pacific Company owns all the stock of the Oregon Short Line? A. Substantially, yes, sir. Q. And of the Railway & Navigation Company? A. I think not. Q. Well, the Oregon Short Line owns it, doesn't it ? A. Part owner, I think. Q. And the Union Pacific Company controls the lines by owner- ship of stock from Council Bluffs and Kansas City to Portland ? A. I think so, yes, sir. Q. All these companies known as the Pacific Companies, the Southern Pacific, Union Pacific, the Short Line and the Navigation Company, have the same president, have they not? A. Yes, sir. Q. Mr. E. H. Harriman? A. Yes, sir. Q. And the same vice-president, Mr. W. D. Cornish ? A. Judge Cornish is vice-president of all of these companies, but there are other vice-presidents. Q. And you are secretary or assistant-secretary of all of them? A. Yes, sir. Q. You are secretary of all of them? A. Except the Navigation Company. Q. You are assistant-secretary of that company? A. Yes, sir. Q. They have the same traffic director? A. Yes, sir. Q. Mr. J. O Stubbs? A. Yes, sir. Q. The same assistant traffic managers? A. Yes, sir. Q. The same comptroller? A. Yes, sir. Q. The same general auditor? A. Yes, sir. Q. And the same director of maintenance and operation ? A. Yes, sir. 10 Q. The same director of purchases? A. Yes, sir. Q. And the same attorneys and counsel — general counsel, I mean ? A. Hardly. Q. Is Mr. Lovett the general counsel of the Union Pacific ? A. Yes. Q. And in charge of the legal department ? A. Yes. Q. And general counsel of the Short Line and Navigation Com- pany ? A. Yes, sir. Q. And of the Southern Pacific? MILLAE. I A. Judge Loyett is counsel in New York for the Southern Pacific. Q. And has general charge of the legal department, hasn't he? A. Yes, sir. " Q. I show you a list of the directors of the Union and Southern Pacific for the years 1900, 1901, 1902, 1903, 1904, 1905 and 1906, Mr. Millar. I don't know whether you have checked that up, but, subject to correction, we will take it. A. Yes. I have examined for the years 1905 and 1906, and I think they are correct, but would like to identify the others subject to veri- fication. Q. They are taken from Poor's Railroad Manual. A. Yes, sir. Q. Of course, you furnish that information to Poor's Manual, don't you? A. We do. Q. Now, subject to any corrections which you may make in this, I will ask you if this is a correct list of the directors of the company during those years. Mr. MnjBtrEN. He may say yes. Q. Now, were you connected with the Union Pacific in any capacity prior to 1900? A. Oh, yes; yes, sir. II Q. You were secretary from the time of the organization of the present company in 1897, were you not? A. Yes, sir. Q. Of the Union Pacific Company? A. Yes, sir; December of 1897. Q. Prior to that you were with the receivers? A. Yes. Q. And prior to that with the old Union Pacific Company ? A. Yes. Q. I show you a list of the executive committee of the Union Pacific Eailroad Company for the years 1900, 1901, 1903, 1905, and 1906 ; and I think 1904 ; I am not sure. A. Yes. Q. And 1904. Also, a list of the executive committee of the Southern Pacific during the same time, the Oregon Short Line Railroad Company, and the Oregon Navigation Company ; was that made by you? A. Yes. Q. Or under your direction? A. Yes. Q. Is this correct? I understand all these documents are subject to any corrections, and your testimony may be so understood. A. I believe it to be substantially correct. Mr. Severance. I now offer in evidence Complainant's Exhibit 1 (Millar), being the list of directors and executive committee of the Union Pacific for the years named, and the list of the executive com- mittees of the Southern Pacific, the Oregon Short Line Railroad 8 MILLAR — COMPLAINANT 's EXHIBIT 1. Company, and the Oregon Eailroad & Navigation Company during the years stated, this exhibit being Millar's Exhibits 1 and 2 in the record of the hearing before the Interstate Commerce Commission. Complainant's Exhibit 1 (Millar) is as follows: 12 Complainant's Exhibit 1. (Millar.) UNION PACIFIC RAILROAD CO. — BOARD AND EXECUTIVE COMMITTEE. Directors Elected October 10, 1899. Oliver Ames, Horace G. Burt, George Q. Cannon, T. Jefferson Coolidge, jr., John W. Doane, Louis Fitzgerald, George J. Gould, E. H. Harriman, Marvin Hughitt, James H. Hyde, Otto H. Kahn, Eoswell Miller, Winslow S. Pierce, Jacob H. Schiff, James Stillman. Executive Committee Elected November 15, 1899. E. H. Harriman, Chairman, George J. Gould, Marvin Hughitt, Otto H. Kahn, Winslow S. Pierce, James Stillman. Directors Elected October 9, 1900. Oliver Ames, Horace G. Burt, George Q. Cannon, T. Jefferson Coolidge, jr., John W. Doane, Louis Fitzgerald, George J. Gould, E. H. Harriman, Marvin Hughitt, James H. Hyde, Otto H. Kahn, Eoswell Miller, Winslow S. Pierce, Jacob H. Schiff, James Stillman. May 8, 1901, Mr. Miller resigned and Thomas T. Eckert was elected; and Frederick P. Voorhees and Alvin W. Krech were elected to succeed Messrs. Doane and Cannon, who had died. 13 Executive Commitee Elected November 8, 1900. E. H. Harriman, Chairman, George J. Gould, Marvin Hughitt, Otto H. Kahn, Winslow S. Pierce, James Stillman. Directors Elected October 8, 1901. Oliver Ames, Horace G. Burt, T. Jefferson Coolidge, jr., Thomas T. Eckert, Louis Fitzgerald, George J. Gould, E. H. Harriman, Marvin Hughitt, James H. Hyde, Otto H. Kahn, Charles A. Pea- body, Winslow S. Pierce, Henry H. Eogers, Jacob H. Schiff, James Stillman. Executive Committee Elected October 16, 1901. E. H. Harriman, Chairman, George J. Gould, Marvin Hughitt, Otto H. Kahn, Winslow S. Pierce, James Stillman. MILLAK COMPLAINANT'S EXHIBIT 1. 9 Directors Elected October 14, 1902. Oliver Ames, Horace G. Burt, T. Jefferson Coolidge, jr., Thomas T. Eckert, Louis Fitzgerald, George J. Gould, E. H. Harriman, Marvin Hughitt, James H. Hyde, Otto H. Kahn, Charles A. Pea- body, Winslow S. Pierce, Henry H. Eogers, Jacob H. Schiff, James Stillman. Executive Committee Elected October 30, 1902. E. H. Harriman, Chairman, George J. Gould, Marvin Hughitt, Otto H. Kahn, Winslow S. Pierce, James Stillman. 14 Directors Elected October 13, 1903. Oliver Ames, Horace G. Burt, Thomas T. Eckert, Louis Fitz- gerald, George J. Gould, E. H. Harriman, Marvin Hughitt, James H. Hyde, Otto H. Kahn, Charles A. Peabody, Winslow S. Pierce, Henry H. Eogers, Jacob H. Schiff, Joseph F. Smith, James Stillman. Executive Committee Elected November 12, 1903. E. H. Harriman, Chairman, George J. Gould, Marvin Hughitt, Otto H. Kahn, James Stillman. Directors Elected October 11, 1904. Oliver Ames, Thomas T. Eckert, Henry C. Frick, George J. Gould, E. H. Harriman, Marvin Hughitt, James H. Hyde, Otto H. Kahn, Charles A. Peabody, Winslow S. Pierce, William G. Kockefeller, Henry H. Eogers, Jacob H. Schiff, Joseph F. Smith, James Stillman. June 20, 1905, Messrs. Gould and Pierce resigned, and E. S. Lovett and Wm. D. Cornish were elected. Executive Committee Elected March 9, 1905. E. H. Harriman, Chairman, George J. Gould, Marvin Hughitt, Otto H. Kahn, James Stillman. June 20, 1905, Mr. Gould resigned and E. S. Lovett was elected. 15 Directors Elected October 10, 1905. Oliver Ames, Wm. D. Cornish, Thomas T. Eckert, Henry C. Frick, E. H. Harriman, Marvin Hughitt, Otto H. Kahn, E. S. Lovett, Charles A. Peabody, Wm. G. Eockefeller, Henry H. Eogers, Jacob H. Schiff, Joseph F. Smith, James Stillman, P. A. Valentine. April 10, 1906, Messrs. Eckert, Kahn and Schiff resigned, and A. J. Earling, Eobert W. Goelet, and David Willcox were elected. 10 MILLAR COMPLAINANT'S EXHIBIT 1. Executive Committee Elected November 9, 1905. E. H. Harriman, Chairman, Marvin Hughitt, Otto H. Kahn, E. S. Lovett, James Stillman. April 10, 1906, Mr. Kahn resigned and Henry C Frick was elected. Directors Elected October 9, 1906. Oliver Ames, Wm. D. Cornish, A. J. Earling, Henry C. Frick, Eobert W. Goelet, E. H. Harriman, Marvin Hughitt, R. S. Lovett, Charles A. Peabody, Wm. G. Rockefeller, Henry H. Rogers, Joseph F. Smith, James Stillman, P. A. Valentine, David Willcox. Aug. 8, 1907, Wm. Mahl was elected to succeed Mr. Willcox, who had died. 16 Executive Committee Elected October 25, 1906. E. H. Harriman, Chairman, Henry C. Frick, Marvin Hughitt, R. S. Lovett, James Stillman. (No change to end of year.) SOUTHERN PACIFIC COMPANY BOARD AND EXECUTIVE COMMITTEE. Directors Elected April 5, 1899. George Crocker, W. H. Crocker, C. P. Huntington, H. E. Hunt- ington, Thos. H. Hubbard, J. Kruttschnitt, Charles G. Lathrop, Edward F. Searles, N. T. Smith, J. C. Stubbs, Russell J. Wilson. May 25, 1899, Mr. W. H. Crocker resigned and Charles E. Green was elected. June 29, 1899, Messrs. Green and Searles resigned, and Vaughn M. Coyne and E. H. Pardee were elected. July 26, 1899, Mr. Smith resigned and Frederick Foster was elected. Dec. 28, 1899, Mr. Lathrop resigned and D. O. Mills was elected. March 1, 1900, Messrs. Coyne, Geo. Crocker, Foster, and 17 Wilson resigned, and there were elected — August Belmont, Wm. E. Dodge, John W. Mackay, and Charles H. Tweed. (No Executive Committee elected in 1899.) Directors Elected April 4, 1900. August Belmont, John B. Haggin, Edwin Hawley, Thos. H. Hub- bard, C. P. Huntington, H. E. Huntington, John W. Mackay, D. O. Mills, John D. Probst, Edward F. Searles, Charles H. Tweed. Sept. 6, 1900, James Speyer was elected in place of C. P. Hunting- ton, who had died. Dec. 21, 1900, Mr. Probst resigned and Charles M. Hays was elected. Jan. 23, 1901, Mr. Probst was added to the board, as per change in by-laws. MTTJiAtt — COMPLAINANT'S EXHIBIT 1. 11 Executive Committee Elected June 13, 1900. E. Hawley, C. P. Huntington, D. O. Mills, J. D. Probst, Charles H. Tweed. Sept. 6, 1900, James Speyer was elected to take the place of C. P. Huntington, who had died. Dec. 21, 1900, Mr. Probst resigned, and was re-elected Jan. 23, 1901. 18 Directors Elected April 3, 1901. T. J. Coolidge, Jr.,. George J. Gould, E. H. Harriman, Edwin Hawley, Charles M. Hays, H. E. Huntington, James H. Hyde, Otto H. Kahn, John W. Mackay, D. O. Mills, Winslow S. Pierce, Jacob H. Schiff, James Speyer, James Stillman, Charles H. Tweed. June 6, 1901, Mr. Speyer resigned and Martin Erdmann was elected. Sept. 24, 1901, Mr. Erdmann resigned and Mr. Speyer was re- elected. Executive Committee Elected April 3, 1901. George J. Gould, E. H. Harriman (Chairman), Edwin Hawley, Otto H. Kahn, Jacob H. Schiff, James Speyer, James Stillman, Charles H. Tweed. June 6, 1901, Mr. Speyer resigned and Martin Erdmann was elected. Sept. 24, 1901, Mr. Erdmann resigned and Mr. Speyer was re- elected. Directors Elected April 9, 1902. T. J. Coolidge, Jr., Wm. D. Cornish, George J. Gould, E. H. Harriman, Edwin Hawley, H. E. Huntington, James H. Hyde, Otto H. Kahn, John W. Mackey, D. O. Mills, Winslow S. Pierce, Jacob H. Schiff, James Speyer, James Stillman, Charles H. Tweed. 19 June 26, 1902, Mr. Speyer resigned and Martin Erdmann was elected. Oct. 23, 1902, Mr. Erdmann resigned and Mr. Speyer was re-elected. Executive Committee Elected April 11, 1902. George J. Gould, E. H. Harriman (Chairman), Edwin Hawley, Otto H. Kahn, Jacob H. Schiff, James Speyer, James Stillman, Charles H. Tweed. June 26, 1902, Mr. Speyer resigned and Martin Erdmann was elected. 12 MILLAR COMPLAINANT'S EXHIBIT 1. Oct. 23, 1902, Mr. Erdmann resigned and Mr. Speyer was re-elected. (In consequence of an injunction there was no election of Di- rectors in 1903) Directors Elected April 6, 1904. Wm. D. Cornish, Maxwell Evarts, George J. Gould, E. H. Harri- man, Edwin Hawley, H. E. Huntington, James H. Hyde, Otto H. Kahn, D. O. Mills, Winslow S. Pierce, Jacob H. Schiff, James Speyer, James Stillman, Charles H. Tweed, A. K. Van Deventer. June 9, 1904, Mr. Hawley resigned and Maryin Hughitt was elected. Sept. 8, 1904, Mr. Schiff resigned and M. L. Schiff was elected. 20 Executive Committee Elected June 9, 1904. George J. Gould, E. H. Harriman (Chairman), Jacob H. Schiff, James Stillman, Charles H. Tweed. June 27, 1904, Mr. Harriman resigned and Wm. D. Cornish was elected. Sept. 8, 1904, Mr. Cornish resigned and Mr. Harriman was re- elected ; Mr. Schiff resigned and M. L. Schiff was elected. Directors Elected April 5, 1905. Wm. D. Cornish, George J. Gould, E. H. Harriman, Marvin Hughitt, H. E. Huntington, James H. Hyde, Otto H. Kahn, Clarence H. Mackay, D. O. Mills, Winslow S. Pierce, Jacob H. Schiff, James Speyer, James Stillman, Charles H. Tweed, David Willcox. April 13, 1905, Mr. Schiff resigned and M. L. Schiff was elected. June 20, 1905, Messrs. Gould and Pierce resigned, and Maxwell Evarts and E. S. Lovett were elected. Executive Committee Elected April 13, 1905. George J. Gould, E. H. Harriman (Chairman), M. L. Schiff, James Stillman, Charles H. Tweed. June 20, 1905, Mr. Gould resigned and E. S. Lovett was elected. 21 Directors Elected April 4, 1906. Wm. D. Cornish, Henry W. de Forest, Maxwell Evarts, Eobert Goelet, E. H. Harriman, Marvin Hughitt, H. E. Huntington, E. S. Lovett, Clarence H. Mackay, D. O. Mills, Ogden Mills, James Still- man, W. V. S. Thorne, David Willcox, A. K. Van Deventer. MILLAR COMPLAINANT'S EXHIBIT 1. 13 Executive Committee Elected April 10, 1906. Henry W. de Forest, E. H. Harriman (Chairman), R. S. Lovett, James Stillman, David Willcox. (No change to end of year) OREGON SHORT LINE RAILROAD CO. BOARD AND EXECUTIVE COMMITTEE. Directors Elected October 11, 1899. Oliver Ames, Francis S. Bangs, Horace G. Burt, Samuel Carr, T. Jefferson Coolidge, Jr., Wm. D. Cornish, W. E. Glyn, George J. Gould, E. H. Harriman, Thomas R. Jones, Otto H. Kahn, Gardiner M. Lane, James Loeb, Oliver W. Mink, Winslow S. Pierce. Executive Committee Elected November 15, 1899. Oliver Ames, Horace G. Burt, Wm. D. Cornish, E. H. Harriman (ex officio), Otto H. Kahn, Winslow S. Pierce. 21-a Directors Elected October 10, 1900. Oliver Ames, Francis S. Bangs, Horace G. Burt, Samuel Carr, T. Jefferson Coolidge, Jr., Wm. D. Cornish, W. E. Glyn, George J. Gould, E. H. Harriman, Thomas R. Jones, Otto H. Kahn, Gardiner M. Lane, James Loeb, Oliver W. Mink, Winslow S. Pierce. Executive Committee Elected November 8, 1900. Oliver Ames, Horace G. Burt, Wm. D. Cornish, E. H. Harriman (ex officio), Otto H. Kahn, Winslow S. Pierce. Directors Elected October 9, 1901. Oliver Ames, Francis S. Bangs, Horace G. Burt, Samuel Carr, T. Jefferson Coolidge, Jr., Wm. D. Cornish, W. E. Glyn, Edwin Gould, George J. Gould, E. H. Harriman, Thomas R. Jones, Otto H. Kahn, Gardiner M. Lane, Oliver W. Mink, Winslow S. Pierce. Executive Committee Elected October 15, 1901. Oliver Ames, Horace G. Burt, Wm. D. Cornish, E. H. Harriman (ex officio) , Otto H. Kahn, Winslow S. Pierce. Directors Elected October 8, 1902. Oliver Ames, Francis S. Bangs, Horace G. Burt, Samuel Carr, T. Jefferson Coolidge, Jr., Wm. D. Cornish, W. E. Glyn, Edwin 71535—09 2 14 MILLAK COMPLAINANT 's EXHIBIT 1. 21-b Gould, George J. Gould, E. II. Harriman, Otto H. Kahn, Gardiner M. Lane, W. S. McCornick, Oliver W. Mink, Wins- low S. Pierce. Executive Committee Elected October 30, 1902. Oliver Ames, Horace G. Burt, Wm. D. Cornish, E. H. Harriman (ex officio), Otto H. Kahn, Winslow S. Pierce. Directors Elected October 14, 1903. Oliver Ames, Horace G. Burt, Samuel Carr, Win. D. Cornish, Edwin Gould, George J. Gould, E. H. Harriman, James H. Hyde, Otto H. Kahn, Gardiner M. Lane, W. S. McCornick, Oliver W. Mink, Winslow S. Pierce, W. V. S. Thorne, Paul M. Warburg. Executive Committee Elected November 12, 1903. Oliver Ames, Horace G. Burt, Wm. D. Cornish, E. H. Harriman (ex officio), Otto H. Kahn, W. V. S. Thorne. Directors Elected March 15, 1905. Oliver Ames, Samuel Carr, Wm. D. Cornish, Edwin Gould, George J. Gould, E. H. Harriman, James H. Hyde, Otto H. Kahn, Gardiner M. Lane, R. S. Lovett, W. S. McCornick, Oliver W. Mink, Winslow S. Pierce, W. V. S. Thorne, Paul M. Warburg. June 20, 1905, Messrs. George J. Gould and Pierce resigned, and Maxwell Evarts and Wm. Mahl were elected. 21-c Executive Committee Elected March 23, 1905. Oliver Ames, Wm. D. Cornish, E. H. Harriman (ex officio). Otto H. Kahn, R. S. Lovett, W. V. S. Thorne. Directors Elected December 5, 1905. Oliver Ames, Gordon M. Buck, Samuel Carr, Wm. D. Cornish, George E. Downs, Maxwell Evarts, E. H. Harriman, Otto H. Kahn, R. S. Lovett, Gardiner M. Lane, Oliver W. Mink, Wm. Mahl, W. S. McCornick, W. V. S. Thorne, Paul M. Warburg. Jan. 9, 1906, Mr. Lane resigned, and on April 10 Messrs. Kahn and Warburg. There were elected on the latter date — L. H. Cornell, H. B. Taylor, and P. A. Valentine. Executive Committee Elected December 14, 1905. Oliver Ames, Wm. D. Cornish, E. H. Harriman (ex officio) Otto H. Kahn, R. S. Lovett, W. V. S. Thorne. April 10, 1906, Mr. Kahn resigned and P. A. Valentine was elected. MILLAR COMPLAINANT'S EXHIBIT 1. 15 Directors Elected October 10, 1906. Oliver Ames, Gordon M. Buck, Samuel Carr, L. H. Cornell, Wm. D. Cornish, George E." Downs, Maxwell Evarts, E. H. Harriman, E. S. Lovett, W. S. McCornick, Wm. Mahl, Oliver W. Mink, H. B. Taylor, W. V. S. Thorne, P. A. Valentine. 21-d Executive Committee Elected October 25, 1906. Oliver Ames, Wm. D. Cornish, E. H. Harriman (Chairman), R. S. Lovett, W. V. S. Thorne, P. A. Valentine. (No change to end of year.) OREGON RAILROAD & NAVIGATION CO. BOARD AND EXECUTIVE COMMITTEE. Directors Elected September 7, 1899. W. B. Ayer, Wm. L. Bull, H. W. Cannon, H. W. Corbett, Wm. D. Cornish, W. W. Cotton, E. H. Harriman, W. M. Ladd, Wm. Mackin- tosh, A. L. Mills, A. H. Mohler, Miles C Moore, Winslow S. Pierce, Mortimer L. Schiff, H. W. Scott. May 1, 1900, Mr. Mackintosh resigned. Executive Committee Elected September 7, 1899. Wm. L. Bull, H. W. Cannon, Wm. D. Cornish, E. H. Harriman (ex officio), Winslow S. Pierce, Mortimer L. Schiff. Directors Elected September 6, 1900. W. B. Ayer, E. S. Benson, Wm. L. Bull, H. W. Cannon, H. W. Corbett, Wm. D. Cornish, W. W. Cotton, E. H. Harriman, W. M. Ladd, A. L. Mills, A. L. Mohler, Miles C. Moore, Winslow S. Pierce, Mortimer L. Schiff, H. W. Scott. 21-e Feb. 25, 1901, Mr. Ayer resigned and Wm. Crooks was elected. Executive Committee Elected September 6, 1902. Wm. L. Bull, H. W. Cannon, Wm. D. Cornish, E. H. Harriman, Chairman, Otto H. Kahn, A. L. Mohler, Winslow S. Pierce. Directors Elected September 29, 1903. John C. Ainsworth, E. S. Benson, Wm. L. Bull, Wm. D. Cornish, W. W. Cotton, Wm. Crooks, E. H. Harriman, James H. Hyde, Otto H. Kahn, W. M. Ladd, A. L. Mills, A. L. Mohler, Miles C. Moore, Winslow S. Pierce, H. W. Scott. 16 MILLAK COMPLAINANT'S EXHIBIT 1. Executive Committee Elected September 30, 1903. Wm. L. Bull, Wm. D. Cornish, E. H. Harriman, Chairman, James H. Hyde, Otto H. Kahn, Winslow S. Pierce. Directors' Elected September 29, 1904. John C. Ainsworth, Wm. L. Bull, E. E. Calvin, H. F. Conner, Wm. D. Cornish, W. W. Cotton, Wm. Crooks, E. H. Harriman, James H. Hyde, Otto H. Kahn, W. M. Ladd, A. L. Mills, Miles C. Moore, Winslow S. Pierce, H. W. Scott. Oct. 13, 1904, Mr. Cornish resigned and J. G. Wilson was elected. 21f January 6, 1905, Mr. Wilson resigned and Mr. Cornish was reelected. April 4, 1905, Mr. Calvin resigned and B. A. Worthington was elected. July 5, 1905, Mr. Worthington resigned and J. P. O'Brien was elected. Executive Committee Elected October 13, 1904. Wm. L. Bull, E. H. Harriman, Chairman, James H. Hyde, Otto H. Kahn, Winslow S. Pierce. Jan. 6, 1905, Wm. D. Cornish was elected. Directors Elected September 25, 1905. Wm. L. Bull, H. F. Conner, Wm. D. Cornish, W. W. Cotton, Wm. Crooks, Maxwell Evarts, E. H. Harriman, Otto H. Kahn, W. B. Litzenberg, R. S. Lovett, R. B. Miller, J. P. O'Brien, W. D. Skinner, H. J. Stirling, James G. Wilson. March 22, 1906, Mr. Kahn resigned. Executive Committee Elected September 27, 1905. • Wm. L. Bull, Wm. D. Cornish, Maxwell Evarts, E. H. Harriman, Chairman, Otto,H. Kahn, R. S. Lovett. 21g Directors Elected September 6, 1906. Wm. L. Bull, H. F. Conner, Wm. D. Cornish, W. W. Cotton, Wm. Crooks, Maxwell Evarts, E. H. Harriman, W. R. Litzenberg, R. S. Lovett, Wm. Mahl, R. B. Miller, J. P. O'Brien, W. D. Skinner, H. J. Stirling, J. G. Wilson. March 13, 1907, Mr. Stirling resigned and R. Blaisdell was elected. Executive Committee Elected September 6, 1906. Wm. L. Bull, Wm. D. Cornish, Maxwell Evarts, E. H. Harriman, Chairman, R. S. Lovett, Wm. Mahl. (No change to end of year.) MILLAR — complainant's exhibit 1. 17 Q. Prior to the acquisition of Southern Pacific stock by the Union Pacific Company or the Short Line Company, there were no directors in the Southern Pacific Company who were common directors in the Union Pacific Company, were there? A. I think not. Q. That was acquired by the Union Pacific, or in its interest, in about March, 1901, was it not ? A. Yes, sir, in the spring of 1901. Q. Since that time either the Union Pacific or the Short Line, or parties in their interest, have voted that stock at the meetings of the stockholders of the Southern Pacific Company, have they not? Either the companies or persons in their interest by proxy, 22 or persons holding the stock in their own names, for those companies ? A. I want to give you my best understanding of that. I put it this way, that such stock as has been owned by the Union Pacific or by the Oregon Short Line has been voted by them or in their interest. Q. I show you a paper purporting to show the date of the annual meetings of the Southern Pacific Company, the number of shares of stock voted at those meetings, both common and preferred, the number of shares of each class of stock owned by the Union Pacific, or the Short Line Companies. Is that a correct statement? A. Yes, sir ; as shown by the books. Paper marked Complainant's Exhibit 2 (Millar) . Mr. Severance. Complainant's Exhibit 2 was marked Exhibit 3 to Mr. Millar's testimony in the record of the hearing before the Interstate Commerce Commission, and I now offer the same in evidence. 18 MILLAR COMPLAINANT'S. EXHIBIT 2. Complainant's Exhibit 2 (Millar) is as follows : 23 Complainant's Exhibit 2. (Millar.) Southern Pacific Company. Date of Date of Closing of Books Shares Outstanding Owned by Hold- ing Co. Meeting Pre- ferred Common Pre- ferred Com- mon Apr. 4,1900 Mar 16,1900 1,884,471 Stock voted in person: C. P. Huntington . . . 398, 714 H.E.Huntington.. 15,000 N. T. Smith 5 Isaac L. Bequa.... 100 Stock voted by proxy... 1,446,974 Total 1,859,793 - - — Jan. 18,1901 Jan. 18,1901 1,978,080 Stock voted in person. . . 154, 600 " " byproxy... 1,581,960 Total 1,736,680 Apr. 3,1901 Mar. 16,1901 1,978,090 Stock voted in person: E. H. Harriman 750,000 Winslow S. Pierce... 200 Charles H. Tweed.. . 100 Stock voted by proxy. . . 991, 728 Total 1,742,029 Apr. 9,1902 Mar. 22,1902 1,978,492 TJ. P. 760,000 " " byproxy... 1,542,206 Total 1,573,892 Apr. 8,1903 Apr. 3, 1903 1,978,492 OSL 900,000 Meeting Adjourned by Order of the Court. Minutes Do Not Show who Voted in Person. Stock voted by proxy (as per list) 1,433,554 Apr. 6,1904 Mar. 18,1904 1,978,492 OSL 900,000 Stock voted in person (names not given) 2, 406 Stock voted by proxy (asperlist) 1,640,760 Total 1,643,166 (Continued on next page.) 24 MILLAE COMPLAINANT'S EXHIBIT 2. Complainant's Exhibit 2 — Cont'd. Southern Pacific Company. 19 • Date of Date of Closing of Books Shares Outstand- ing. Owned by Hold- ing Co. Meeting Pre- ferred Common Pre- ferred Com- mon Jul. 20,1904 Jul. 14, 1904 1,978,492 OSL 900,000 Stock voted in person (names not given) 20O Stock voted by proxy (as per list) 1,520,769 OSL 180,080 Total 1,520,969 Apr. 5, 1905 Mar. 15,1905 395,594 1,978,492 OSL 900,000 Stock voted in person (names not given) 200 Stock voted by proxy (as per list) 1,973,988 Total 1,974,188 Apr. 4,1906 Mar. 15,1906 395,688 1,978,492 OSL 180,000 OSL 900,000 Stock voted in person (names not given) 5 Stock voted by proxy Total 2,027,907 25 Q. According to this statement, the Union Pacific owned 750,000 shares in 1902? A. Yes, sir; March, 1902. Q. At that meting? A. Yes, sir. Q. That stock had been acquired by March, 1901 ? A. Yes, sir. Q. And at the next meeting on April 3, 1903, 900,000 shares were owned by the Oregon Short Line? Mr. Mtlbukn. This statement shows the figures given there, as voted by proxy and include the stock of the Southern Pacific Com- pany owned by the Union Pacific or the Oregon Short Line. The record may so state. Mr. Kellogg. Yes. Mr. Severance. This is admitted to be a correct transcript from the record? Mr. Milbttrn. Yes. Q. Then, the statement shows that at every meeting since and in- cluding April 8, 1903, the Oregon Short Line, by proxy, or in person through its officers, voted the majority of the stock present at each meeting of the Southern Pacific Company. (Addressing Mr. Mil- burn.) Do you admit that, Mr. Milburn? Mr. Milbuhn. Yes, sir. Our admission is that, based on that paper (referring to Exhibit 2) the majority of the stock voted at the election. 20 MILLAK. Mr. Kellogg. Yes. That is, the Union Pacific and Oregon Short Line voted at each meeting the majority of the stock which was voted at each of the Southern Pacific annual meetings for the elec- tion of directors? Mr. Milbuen. That is right. 26 Q. I offered in evidence Exhibit No. 1, showing the common officers. I notice by that — I do not care to go into the details of it — that a majority — not the statement you have here, but my Exhibit No. 1, that a majority of the directors of the Southern Pacific Company for each year, except one, since the Union Pacific or the Oregon Short Line acquired the Southern Pacific stock, are also directors in the Union Pacific Company. Is that correct, as you understand it? A. (After examination of Exhibit No. 1.) Yes, except as to 1906. Q. In the list of directors of 1906, 1 notice R. W. Goelet and Rob- ert Goelet. Are they the same person? A. No, sir, they are not. Q. Relatives? . A. I understand they are cousins. Q. Have an office together, do you know ? A. I believe they do. Q. I also notice that W. V. S. Thorne, who is a director of the Southern Pacific, is not a director of the Union Pacific. Is that cor- rect? (Handing paper to witness.) A. Yes, sir. Q. Who is Mr. Thorne? A. He is the director of purchases of all these four companies. Q. And he is a director in the Southern Pacific, but not in the Union Pacific? A. Yes, sir. Q. A. K. Vandeventer is a director in the Southern Pacific in 1906, but not in the Union Pacific. Who is A. K. Vandeventer ? A. He is assistant treasurer of the Southern Pacific Company. Q. Is he an officer of any of the other companies? A. Of the three other companies, no, sir. 27 Q. Is he not assistant secretary of one of the companies ? A. Well, not to my recollection. Q. Mr. Maxwell Evarts, I see, is a director in the Southern Pacific in 1906, but not in the Union Pacific Company. Officially, what position does Mr. Evarts hold in the Union Pacific ? A. Attorney. Q. He is attorney for the Union Pacific? A. Yes, sir. Q. Now, the board of directors elected in October, 1906, of the Union Pacific Company is the same board elected in 1905 and which is shown on this list, is it ? A. Yes, sir. Q. So we have the complete boards, if this is correct? A. Yes, sir. MILLAR COMPLAINANT'S EXHIBITS 3-9. 21 Q. From and including 1900 and down to the present time ? A. Yes, sir. (A recess was here taken until 2 o'clock P. M.) Q. I have identified the by-laws of the four Pacific companies, and I mean by that, the Union Pacific, the Short Line, the Navigation and the Southern Pacific companies, as Exhibits 4 to 10 inclusive. (These exhibit numbers are as they appear in the Interstate Com- merce Commission testimony.) Mr. Severance. I offer in evidence Complainant's Exhibit 3 (Millar), being the by-laws of Union Pacific Railroad Company, in effect January 7, 1904; Complainant's Exhibit 4 (Millar) , being by-laws of Union Pacific Railroad Company, as amended October 4, 1906; Complainant's Exhibit 5 (Millar) , being by-laws of the Oregon Short Line Railroad Company, March, 1897; 28 Complainant's Exhibit 6 (Millar), being by-laws of Oregon Short Line Railroad Company, as amended October 10, 1906; Complainant's Exhibit 7 (Millar), being by-laws of The Oregon Railroad & Navigation Company, as amended October 10, 1906 ; Complainant's Exhibit 8 (Millar), being by-laws of the Southern Pacific Company: Complainant's Exhibit 9 (Millar), being by-laws of the Southern Pacific Railroad Company, adopted March 24, 1902 ; amended Janu- ary 6, 1904, March 2, 1905, and November 2, 1905. Complainant's Exhibits 3 to 9 (Millar) inclusive are as follows: Complainant's Exhibit 3. (Millar.) BY-LAWS 03? UNION PACIFIC RAILROAD COMPANT. (In Effect January 7, 1904.) Article I. — Meetings of stockholders. Section 1. — The annual meeting for the election of , n ^» nual meet directors of the company and for the transaction of such other business as may legally come before it shall 29 be held on the. second Tuesday of' October in each year, beginning with the year 1898, at 12 o'clock, noon, at the office of the company in Salt Lake City, Utah, or at such other place in the State of Utah as shall be specified in the notice of the meeting. Fifteen Fifteen di- directors shall be voted for by ballot by the shareholders rec orB ' in person or by proxy. In case it should happen at any time that an election of directors shall not be made on the day designated in this section, the directors shall designate a time as soon as is reasonably practicable and Failure to within one year for holding a meeting of the, stockholders elect ' for the election of directors, and shall cause notice thereof and of the place where the same shall be held to be given in the manner hereinafter provided. 22 MILLAK COMPLAINANT'S EXHIBIT 3. \ B j}F cM meet " Sec - 2 - Special meetings of the stockholders may be held at any time by order of the board of directors, or whenever any number of stockholders owning not less than one-third part of the capital stock shall in writing make application therefor to the president, stating the object of such meeting. The business of all such meet- ings shall be confined to the objects stated in the notice thereof. If at any such meeting so called a majority in value of the stockholders are not represented in person or ournment. ^ wr i tten p r0 xy, said meeting shall be adjourned from day to day, not exceeding three days, without the trans- action of any business; and if, within said three 30 days, stockholders owning at least a majority in interest of the stock do not attend in person or by proxy and participate in such meeting, then the meeting shall be dissolved. m«£ttagi c e ° f Sec - 3 - Due notice of the time and place of holding any annual meeting, and any other meeting, of the stockhold- ers, shall be published for not less than twenty days pre- vious to such meeting by the secretary in some newspaper having a general circulation in the State of Utah, and once a week for four weeks in one daily newspaper pub- c ii o s l n g lished in the City of New York. The stock-transfer books shall be closed for at least ten days next preceding the date appointed for the holding of any annual or spe- cial meeting. voting. g EC _ 4_ Each share of stock shall entitle the holder thereof to one vote in person or by proxy at any election of directors or meeting of stockholders, provided the stock owned by such holder shall have been registered in his name upon the books of the company for at least ten holders* Bt0CiI( ^ a y s P" or to sucn election or meeting. The board of directors shall cause to be prepared an alphabetical list of the stockholders registered as such at the closing of the stock-transfer books, with the number of shares held by inspectors, each, for the use of the inspectors at any meeting of the stockholders. 31 Sec. 5. At each meeting of the stockholders the polls shall be opened and closed, the ballots and proxies shall be received and taken charge of, and all questions touching the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided, by three inspectors of election. How a p - Such inspectors of election shall be appointed before the meeting by the board of directors or by the executive com- mittee, and, if no such appointment shall have been made, then by the presiding officer at the meeting; and if for any reason any of the inspectors previously appointed MILLAR COMPLAINANT'S EXHIBIT 3. 23 shall fail to attend, or refuse or be unable to serve, then inspectors, in place of any so failing to attend, or refusing Filling va- or unable to serve, shall be appointed by the presiding canc ea ' officer at the meeting. A meeting at which a quorum of stockholders is repre- Adjournment, sented may adjourn from time to time until its business is completed. The time and place to which an adjourn- ment is taken shall be publicly announced at the meeting, and no further notice shall be necessary for the holding of any adjourned meeting. The polls for receiving ballots shall be opened as soon opening of as the organization of the meeting shall admit, and shall po be kept open for at least two hours under the su- 32 pervision of the inspectors of election. As soon as may be after the polls are closed the inspectors inspectors' shall examine and canvass the proxies and ballots, and repor make and sign a report to the meeting of the votes cast at the meeting, which shall be entered at large upon the records. Sec. 6. The chairman of the executive committee and tl0 ° rganlza " in his absence the president or vice-president shall call meetings of stockholders to order and act as chairman of an ^ nairman such meetings. In the absence of all of these officers, the board of directors may appoint a chairman of the meet- ing to act in such event; but, if the board should not make such appointment, then, in the absence of all of these officers, any stockholder or proxy of any stockholder may call £he meeting to order and a chairman shall be elected. Sec. 7. The secretary of the company shall act as secre- secretary, tary at all meetings of the stockholders ; but the board of directors or executive committee may designate an assist- ant secretary for that purpose before the meeting, and, if no such designation shall have been made, then such designation may be made by the presiding officer at the meeting. Article II. — Directors. Section 1. The general management of the 33 business and affairs of the corporation shall be vested in a board of fifteen directors, who shall be elected by the shareholders at their annual meetings. Sec. 2. Directors shall continue in office for one year and until their successors are elected and qualified by acceptance. Sec. 3. A majority of the board shall constitute a quo- rum at all meetings of the board. Management. Term. Quorum. 24 MILLAR— COMPLAINANT 'S EXHIBIT 3. Vacancies. Sec 4. Any vacancies in the board occurring between elections by the stockholders may be filled by the affirma- tive vote of a majority of the remaining directors, stated meet- Sec. 5. Stated meetings of the board shall be held at such place and hour as shall from time to time be agreed upon by the board. ta special meet- g EC . 6. Special meetings shall be called by the secretary at any time and place, at the request of the executive com- mittee or of any five members of the board, and may be called by order of the president, meeting e °* Sec. 7. The secretary shall mail or telegraph notice of the meeting to each director at least five days before such meeting. port™" 1111 re "34 Sec. 8. The board of directors shaU make a re- port to the stockholders at each annual meeting. Fees and ex- S EC . 9. Each director shall be paid a fee of $10 for each meeting of the board which he shall attend, and each director shall receive such transportation and other ex- penses actually incurred to and from his place of resi- dence to the meeting as the executive committee shall approve. Article III. — Executive Committee. Appoint- Section 1. There shall be an executive committee, to consist of five members of the board, who shall be elected by vote of a majority of the whole board, and the general counsel, who shall be ex officio a member of the commit- tee. One member of the committee shall be elected its chairman by the board. Such committee shall be chosen annually at the first meeting of the board of directors after the annual election, or as soon thereafter as possible, and shall, when the board is not in session, have all the powers of the board to manage and direct all the busi- ness and affairs of the company in such manner as said committee shall deem best for its interests in all cases in which specific directions shall not have been given by the board. Sec. 2. The executive committee may appoint Subcommit- 35 suc h subordinate committees as it shall deem neces- sary, and shall keep a full and accurate record of all its acts and proceedings, and report the same from time to time to the board. Meetings. Sec. 3. Kegular meetings of the executive committee shall be held weekly on days to be fixed by vote of a ma- jority of the executive committee, and special meetings Calling. of said committee may be called at any time by its chair- man, and shall be called at the request of any three mem- tees. i duties. MILLAR COMPLAINANT'S EXHIBIT 3. 25 bers of the committee. Notice of each meeting shall be Notice, sent by mail or by telegraph to the members of the com- mittee, not less than three days before the meeting. Sec. 4. Three members of the committee shall consti- Quorum, tute a quorum for the transaction of business, and the affirmative vote of three members shall be required for any action by the committee. Sec. 5. Each member of the executive committee shall Fees and ex " be paid a fee of $10 for each meeting of the committee which he shall attend, in addition to transportation and other expenses actually incurred to and from his place of residence to the meeting. Sec. 6. Any vacancy in the committee shall be filled vacancies, by the board of directors. 36 Article IV. — Chairman of the executive committee. Section 1. The chairman of the executive committee . Powers ana shall preside at its meetings, and, subject to the control ' and approval of the committee, shall represent it when not in session, and shall report to the committee. Article V. — Officers and agents. Section 1. The directors shall as soon as practicable Executive after their election meet and organize by electing the ex- chairman,' and ecutive committee, the chairman thereof, and the presi- e pres dent of the company, who shall be a member of the board. Sec. 2. The board may, in its discretion, appoint one vice-presi- or more vice-presidents, to whom may be assigned the su- pervision of any branch of the company's service. Sec. 3. The board shall appoint a secretary, a treasurer, other om- a general counsel, a general solicitor, and a general au- ditor. Sec. 4. The board may also appoint one or more assist- Assistants, ant secretaries and assistant treasurers, and such 37 other additional officers or assistant officers, and such committees, as the board may deem advisable. Sec. 5. Any two offices may be filled by the same person Joint offices, except as respects the offices of treasurer and general au- ditor. Sec. 6. The powers, duties, and responsibilities of thep^*^* 1 , , 11 !^ officers and employees of the company not prescribed in d u e j* ned In these by-laws shall be defined in rules or regulations which may be adopted and from time to time modified or changed by the board of directors. Sec. 7. In case a vacancy shall have occurred in the vacancies office of chairman of the executive committee, or of presi- dent, the board of directors shall fill the same as early as practicable. 26 MILLAR COMPLAINANT'S EXHIBIT 3. vacancies g EC# 8. In case of any vacancy in the office of vice-presi- filled otner- «/ «/ . . , wise. dent, secretary, assistant secretary, treasurer, assistant treasurer, general counsel, general solicitor, or general au- ditor, the chairman of the executive committee— or, in case of his absence or temporary incapacity, the presi- dent — may make an appointment fro tem. to fill the vacancy temporarily; or, in case of temporary incapacity or absence of any such officer, the chairman of the execu- tive committee — or, in case of his absence or tem- 38 porary incapacity, the president — may make an appointment pro tem. to act in place of any such officer or appointee so temporarily incapacitated or ab- sent ; but such appointment shall be subject to change by the board of directors at any regular or special meeting thereof. Removals. Sec. 9. All officers and agents shall be subject to re- moval at any time by the affirmative vote of a majority of all the members of the board, and all officers and em- ployees not appointed by the board shall hold their offices at the discretion of the officer appointing them. Article VI. — President. Powers and Section 1. The president shall have general care, su- pervision and control of the company's business, in all its departments, under control of the board of directors and executive committee. The offices of president and chair- man of the executive committee may be held by the same person. ,OT*E p ° l n * " ^ec. 2- The president may appoint such additional offi- cers and may employ such persons as he shall deem neces- sary for the proper management of the business and prop- erty of the company. 39 Article VII. — Vice-President. Powers and Section 1. The vice-president shall have such powers and perform such duties as shall from time to time be conferred and prescribed by the board of directors or executive committee. He shall report to the board and executive committee. Article VIII. — Secretary. Duties. Section 1. The secretary shall attend all meetings of the stockholders, the board of directors, and the executive committee, and record their proceedings, unless a tem- porary secretary be appointed. ments. MILLAR COMPLAINANT 's EXHIBIT 3. 27 Sec. 2. He shall give due notice of all meetings of the m< £ttagsi e °* stockholders, directors, and executive committee. Sec. 3. He shall be the custodian of the seal of the com- Custody of S6&.1 6lC pany and of its records, and of such papers and docu- ments as may be committed to his care by the board or the executive committee. He shall have power to affix the seal of the company to instruments to which the same is authorized by the board or executive committee to be affixed, and to attest the same, and shall perform 40 such other duties as may be assigned to him by the board or the executive committee, or as may be prescribed in the rules to be adopted by the board. Sec. 4. He shall have charge of the general books and^^^an^ °£ accounts of the company kept in New York, which shall New York - show, from time to time, the condition of the financial affairs of the company. He shall make such reports and statements of the company's affairs as may be directed by the board, executive committee, the president, or the vice-president. Keports shall be made to him by such E f p 2f ts t on officers and at such times as he may deem necessary, show- ing all receipts and disbursements for the company's ac- count, and copies of such contracts as may be required in the company's office in New York shall be furnished for his files. Sec. 5. He shall have the custody of all vouchers for Custody of payments made at the company's Eastern office, including coupons, bonds, and other evidences of indebtedness, which shall be duly canceled by him or under his direc- tion. He shall, under direction of the executive commit- v0 A $? e ™y al ot tee, prepare and approve for payment all vouchers for - disbursement of the company's funds in New York, and no such payments shall be made without such approval, unless otherwise specifically authorized by the di- 41 rectors or the executive committee, and shall per- form such other duties as the board of directors or the executive committee may prescribe. Sec. 6. The assistant secretary or secretaries shall per- sis D i n t t e sec Re- form such duties as may be assigned to him or them by tary. the board or by the executive committee, or as may be prescribed in the rules to be adopted by the board ; and, when specially authorized by the board or executive com- mittee, shall have power to affix the corporate seal to the negotiable bonds of the company, and to attest the same, and to sign the certificates of stock of the company. Article IX. — Treasurer. Section 1. The treasurer, either in person or through Duties, competent and faithful assistants, shall receive, keep, and 28 MILLAR COMPLAINANT'S EXHIBIT 3. disburse all moneys belonging to or coming to the com- pany; shall keep regular, true and full accounts of all Reports. receipts and disbursements, and make detailed reports of the same to the board of directors or the executive com- mittee at their regular meetings and at all other times when required. otier duties. g E0 . 2 . The treasurer shall perform such other duties in connection with the administration of the finan- 42 cial affairs of the company as the board, executive committee, or president shall assign to him or as may be prescribed in the rules to be adopted by the board, and shall give bond in such amount as shall be required by the board. Article X. — General counsel. Duties. Section 1. The general counsel shall be the consulting officer of the company in all legal matters, and, subject to the control of the board and executive committee, shall have general supervision of the legal department and of all the legal business of the company. Article XI. — General solicitor. Duties. Section 1. The general solicitor shall have charge of all the litigation of the company, and shall keep himself advised of the character and progress of all legal pro- ceedings and claims by and against the company or in which it is interested. Sec. 2. He shall, whenever requested so to do, give to any officer of the corporation his opinion upon any ques- tion affecting the interests of the company, and shall, when requested by the chairman of the executive 43 committee, the president, a vice-president, the general counsel, or by the board or the executive committee, give opinions in writing on any subjects that may be referred to him. Authority to Sec. 3. He shall have power and authority to execute in etc. ' the name of the corporation any and all bonds or stipula- tions for costs, or to operate as a supersedas, or for other purposes connected with legal proceedings and necessary for the protection of the rights and interests of the cor- poration, with respect to such proceedings, in any of the courts of justice. contracts 8,1 of ^ E0 ' *' "^ contracts of the company, where they have not been passed upon by the general counsel, shall be sub- mitted to the general solicitor for his approval as to form. MILLAR COMPLAINANT'S EXHIBIT 3. 29 Article XII. — General auditor. Section 1. The general auditor shall have charge of Duties, the accounting department at Omaha, and shall have the supervision and management of all the passenger, freight, disbursement, and land accounts of the company, and shall prescribe, enforce, and maintain the systems and the books, blanks, etc., for keeping the same, in which he shall have the co-operation of all departments. 44 He shall keep regular sets of books, showing a com- plete record of the general business transactions of the company, and for that purpose shall receive from the Reports from local treasurer and agents of the company such daily or agents > etc - other reports of receipts and disbursements as he may deem necessary. Sec. 2. He shall have the custody of all written con- Custody of. tracts for construction, equipment, repairs and supplies, or for other purposes made by any officer or agent of the company with individuals, corporations, and connecting or competing companies. Sec. 3. He shall render to the secretary in New York statements such statements of the affairs of the company, shown by fi°e. Eastern of ~ his books and records, as may be required for the informa- tion of the board and executive committee, and shall by proper distribution and classification of the accounts under his charge be prepared to furnish such reports as may be required by the board of directors, the executive committee, the proper officers of the states in which the company's property is located, and the proper officers of the United States. Sec. 4. He shall be assisted by an auditor of freight Assistants, accounts, auditor of passenger accounts, and an auditor of disbursements, and such other assistants as the necessi- ties of his department may require. 45 Article XIII.— Salaries and appointments. Section 1. The salaries of officers elected or appointed How axed, by the board of directors or executive committee shall be fixed by the board or the executive committee. The ap- pointment of all other officers shall be made and the salaries be fixed by the president or by the heads of de- partments, subject to the approval of the president; and the compensation of all officers shall be subject to the. compensa- control of the board of directors or the executive com- tion- mittee. Sec. 2. No special compensation shall be paid to any Special com- officer or employee unless authorized by the board or 71535—09 3 30 MILLAR COMPLAINANT'S EXHIBIT 3. executive committee nor unless such special compensation be entered on the pay rolls. B ail??e r s oval ot Sec. 3. No salary in excess of $3,500 shall be established except with the approval of the board or the executive committee. Article XIV. — Regulations relating to the execution and cancellation of negotiable bonds. sigt u brads. y t0 Section 1. No negotiable or mortgage bonds shall be signed by any officer of the company until an issue of the same has been authorized by the board of directors, and then only for the amount authorized. natoe u rf e tni§- 46 Sec. 2. All such bonds shall require the counter- tee ana officers, signature of a trustee, and shall, until otherwise provided by the board of directors, be signed by the presi- dent or a vice-president, and by the secretary or an assist- ant secretary thereunto authorized by resolution of the board or of the executive committee, cancellation. g EC 3 No bondg ghall be cancelled or destroyed except by order of the directors, except bonds certified and is- sued, pursuant to a deed of trust, in exchange for a like amount of registered bonds. — hw "attest Sec. 4. The destruction or cancellation of bonds, except ed - such as are excepted in section 3, shall be attested from personal knowledge by the chairman of the executive committee, the treasurer or assistant-treasurer, or the sec- retary, and also by the trustees, in case there should be such. Article XV. — Regulations relating to the issue and can- cellation of stock certificates. provided tot?" Section 1. The board of directors shall provide for the issue, transfer, and registration of the capital stock of the company in the City of New York. The board 47 may also make arrangements for the transfer and registration of the capital stock of the company in other cities, and may appoint the necessary officers, trans- fer agents, and registrars of transfers for that purpose. h^sfg^ed 3 " - Sec. 2. .Until otherwise provided by the board of direc- tors, stock certificates shall be signed by the president, or by such officer or officers for the president as may be des- ignated by the board or executive committee, and also be signed by the secretary or an assistant secretary desig- nated for that purpose by the board of directors or by the executive committee. flent s ce may re be Sec. 3. For the purpose of facilitating the execution of appointed t o s t oc ]j certificates of the company, the board of directors or the executive committee may appoint one or more officers, MILLAR COMPLAINANT'S EXHIBIT 3. 31 who need not be members of the board of directors, each bearing the title " Vice-President," and having power to sign stock certificates. Sec. 4. No new certificates shall be issued to a trans- Kuies of is- feree except upon surrender and cancellation of the old certificate. Sec. 5. The registrar of transfers shall in every case be Ee s lstrar - a bank or trust company, to be appointed by the board of directors, in accordance with the requirements of the New York Stock Exchange, and such registration 48 shall be performed in accordance with the rules and regulations of said exchange. Sec. 6. The stock-transfer books shall be closed and re- closing and opening or main closed, and no transfer of stock shall be made, dur- books, ing a period to be fixed by the board of directors or, executive committee preceding the day appointed for any annual or special meeting of the stockholders or for the payment of a dividend, provided that such period shall include at least ten days prior to such meeting or date for payment of such dividend, and the said books shall be reopened within ten days after the close of such meeting or after the date for the payment of such dividend. Sec. 7. The secretary or agents in charge of transfer List of stock- books shall prepare for presentation at all annual or holders - special meetings a certified list of stockholders entitled to vote at such meetings, and shall make such reports as the board or executive committee may direct. Article XVI. — Payments, advances, etc. Section 1. All payments of money, except for bond Approved , . • voncn6rs r©- interest, coupons, bills payable, dividends, transportation quired, balances due other railroad companies, and such other ex- penditures as the board or executive committee shall designate, shall be made only upon properly 49 authorized and approved vouchers and payrolls, and no liability for acquisition of property, except supplies, or for construction or new work, shall be in- curred without the approval of the board or of the execu- tive committee. Article XVII. — Seal. Section 1. The common corporate seal is, and, until of Description otherwise ordered by the board of directors, shall be, an impression upon paper or wax, circular in form, with the words, " Union Pacific Railroad Company " and " Utah " on the outer edge thereof, and the device of a shield with 32 MILLAR— COMPLAINANT 'S EXHIBITS 3-4. a diagonal space across the face of the shield, in which shall be the figures " 1897." Duplicates of. Sec. 2. The board of directors may cause duplicate stamps suitable to make an impression of such corporate seal to be prepared; and, when and as directed by the board of directors or the executive committee, the secre- tary or assistant secretary, or such officer as shall be designated by the board, may and shall use one or the other of such duplicate stamps for the purpose of im- pressing the corporate seal upon the deeds, indentures, or other obligations or instruments to be executed by the company under seal. 50 Article XVIII. — Fiscal year. fl Knds June Section 1. The fiscal year of the company shall com- mence on the first day of July of each year and end on the following thirtieth day of June. Article XIX. — Amendments. By-iaws— Section 1. These by-laws may be altered, amended, or liow amended, pgpgjjg,^ an( j additional or new by-laws adopted, by the board of directors, provided that any such alteration or amendment or any additional or new by-laws adopted shall not be inconsistent with the provisions of the Articles of Association of this company and with the constitution and laws of the State of Utah and of the United States, provided however that no such amend- ment or repeal shall be made or new by-laws adopted except at a meeting of the board held for that purpose, of which thirty days' notice shall be given. 51 Complainant's Exhibit 4. (Millar.) BY-LAWS OF UNION PACIFIC RAILROAD COMPANY, AS AMENDED OCTOBER 4, 1906. Section 1. There shall be an annual meeting of the stockholders of this Company for the purpose of electing directors and transacting any other business at the office of the Company in Salt Lake City, Utah, or at such other place in the State of Utah, as shall be specified in the notice of the meeting, at twelve o'clock M., on the second Tues- day of October in each year. The Secretary shall give at least three weeks' notice of the time and place of holding such annual meeting by advertisement in some daily newspaper published and having a general circulation in the State of Utah, and one daily newspaper published in the City and State of New York. MILLAB COMPLAINANT'S EXHIBIT 4. 33 Section 2. Special meetings of the stockholders may be held at any time upon order of the Board of Directors, or Executive Committee, or whenever any number of stockholders owning not less than one- third in amount of the capital stock of the Company shall in writing make application therefor to the president, specifying the object of such meeting. The business of all such meetings shall be confined to the objects stated in the notice thereof. The Secretary shall 52 give at least three weeks' notice of the object, time and place of holding any such special meeting by advertisement in some daily newspaper published and having a general circulation in the State of Utah, and one daily newspaper published in the City and State of New York. Section 3. The stock transfer books of the Company shall be closed for such time not less than ten days preceding the date appointed for the holding of any annual or special meeting of the stockholders, as the Board of Directors or Executive Committee shall specify. The Secretary shall cause to be prepared an alphabetical list of the stock- holders registered as such at the closing of the stock transfer books, with the number of shares held by each, for the use of Inspectors and of stockholders at any meeting of the stockholders. Each share of stock shall entitle the holder thereof to one vote in person or by proxy, in writing, at any meeting of stockholders, provided such stock shall have been registered in the name of such holder upon the books of the Company prior to the closing of the transfer books for the purpose of such meeting. Section 4. The President, and in his absence one of the Vice-Presi- dents, shall call meetings of stockholders to order and act as chairman of such meetings. In the absence of all of these officers, the Board of Directors may appoint a chairman of the meeting to act in such event ; but if the Board should not make such appointment, then, in the absence of all of these officers, any stockholder or proxy of any 53 stockholder may call the meeting to order and a chairman shall be elected. Section 5. The Secretary of the Company shall act as Secretary at all meetings of the stockholders; but the Board of Directors or Executive Committee may designate an Assistant Secretary for that purpose before the meeting, and, if no such designation shall have been made, then such designation may be made by the presiding officer at the meeting. Section 6. At each meeting of the stockholders the polls shall be opened and closed, the ballots and proxies shall be received and taken charge of, and all questions touching the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided, by three Inspectors. Such Inspectors shall be appointed before the meeting by the Board of Directors or by the Executive Committee, and, if no such appointment shall have been made, then by the presiding officer at the meeting ; and if for any reason any of the Inspectors previously appointed shall fail to attend, or refuse or be unable to serve, then Inspectors, in place of any so failing to attend 34 MILLAR COMPLAINANT'S EXHIBIT 4. or refusing or unable to serve, shall be appointed by the presiding officer at the meeting. Such Inspectors need not be stockholders. Section 7. If at any meeting of the stockholders, the holders of a majority in amount of the stock outstanding are not represented in person or by written proxy, the said meetings shall be adjourned by the stockholders present, or by the Secretary or an Assistant 54 Secretary of the Company, from day to day not exceeding ten days, without the transaction of any business; and if within said ten days, the holders of at least a majority in amount of said stock do not attend in person or by written proxy and participate in such meeting, then the meeting shall be dissolved. A meeting at which the holders of a majority in amount of the outstanding stock of the Company shall be present in person or represented by proxy may be adjourned to any day and from time to time as such meeting shall determine. The time and place to which an adjournment is taken shall be publicly announced at the meeting, and no further notice thereof shall be necessary. Section 8. There shall be fifteen Directors of said Company, who shall hold their office until the next annual meeting of the Company, and until others are duly chosen in their place and shall have quali- fied. Any vacancy occurring in the office of Director shall be filled for the unexpired term by vote of a majority of the remaining Directors. Section. 9. Eegular meetings of the Board of Directors shall be held at such times and at such places in the City and State of New York or elsewhere as the Board of Directors may from time to time prescribe. Special meetings may at any time be called by the Chair- man of the Executive Committee or any three members of the Board, to convene at such time and place as may be appointed. A majority of the Directors shall constitute a quorum at all meetings for the transaction of business. If a quorum be not present at any meeting, a majority of the Directors present may adjourn the meeting 55 until a later day or hour, and a minute of such adjournment shall be entered on the records by the Secretary, and no further notice of such adjournment shall be required. Section 10. The Board of Directors shall elect one of their num- ber to be a President, and shall appoint such Vice-Presidents as the Board may from time to time determine. It shall also appoint a Secretary, a Treasurer, and such Assistant Secretaries, Assistant Treasurers, and such other officers and agents as the Board may from time to time determine. Section 11. The President, Vice-Presidents, Secretary, Treasurer, Assistant Secretaries, Assistant Treasurers, and the other officers appointed by the Board, shall perform such duties and possess such authority as from time to time shall be conferred and prescribed by the Board of Directors or Executive Committee. Section 12. The Directors shall elect from their number an Executive Committee of five members. Such Committee shall hold office until the next annual election of Directors, and shall, when the MILLAR COMPLAINANT'S EXHIBIT 4. 35 Board of Directors is not in session, have all the powers of the Board of Directors to manage and direct all the business and affairs of the Company in such manner as said Committee shall deem best for the Company's interests in all cases in which specific directions shall not have been given by the Board of Directors. The Chairman of the Executive Committee shall be elected by the Board of Directors, and, subject to the control and approval of the Executive Commit- 56 tee, shall represent it when not in session. He shall, from time to time, report to the Executive Committee. Any vacancy which" may occur in said Committee shall be filled by the Board of Directors. Regular meetings of said Executive Committee shall be held at such times and at such places in the City and State of New York or elsewhere as the Committee shall from time to time determine,. Special meetings may be called at any time by the Chairman or any three members of the Committee, to convene at such time and place as may be appointed. Three members of the Committee shall constitute a quorum. If a quorum be not present at any meeting, a majority of the members of the Committee present may adjourn the meeting until a later day or hour, and a minute of such adjournment shall be entered on the records by the Secretary, and no further notice of such adjournment shall be required; or the members present, whether constituting a quorum or not, at their option, shall have the power to appoint a substitute or substitutes from the members of the Board of Directors to act during the temporary absence of any member or members of the Committee. Section 13. The shares of stock of this Company shall be trans- ferable on the books of the Company, kept for the purpose by such officer as the Board of Directors or the Executive Committee shall from time to time designate. Transfers may be made by any stock- holder, or his attorney, duly authorized in writing. It shall be the duty of the designated officer to keep such transfer books, and also a stock ledger and certificate book, and prepare new certificates upon the transfer of shares and surrender of old certificates, and to 57 keep a register of old certificates returned, and of all certifi- cates issued. Section 14. The common corporate seal is, and until otherwise ordered by the Board of Directors, shall be, an impression upon paper or wax, circular in form, with the words, "Union Pacific Railroad Company " and " Utah " on the outer edge thereof, and the device of a shield with a diagonal space across the face of the shield, in which shall be the figures " 1897." Section 15. These by-laws may be altered, amended or repealed at a general meeting of the stockholders by a majority vote of those present in person or by proxy, or at any meeting of the Directors by a majority vote of all the members of the Board. 36 MILLAR. COMPLAINANT'S EXHIBIT $. 58 Complainant's Exhibit 5. (Millar.) BY-LAWS OF THE OREGON SHORT LINE RAILROAD COMPANY, MARCH, 1897. Article I. — Annual meeting. Section 1. The annual meeting for the election of Directors of the Company, and for the transaction of such other business as may legally come before it, shall be held on the second Wednesday of October, 1898, and thereafter on the second Wednesday of October in each year, at 10 o'clock A. M., at the office of the Company in Salt Lake City, Utah, or at such other time and place in said city as shall be duly notified in the manner provided in Section 2 of this Article. The stock transfer books shall be closed for ten days next preceding the date appointed for holding said election. Fifteen Directors shall be voted for by ballot by the shareholders in person or by proxy. Each share of stock shall entitle the owner to one vote. Sect. 2. Due notice of the time and place of holding such election shall be published for not less than twenty days previous to the meet- ing by the Secretary in some newspaper having a general circulation in the State of Utah, and once a week for four weeks in one daily newspaper published in Boston and New York. The Board of 59 Directors shall cause to be prepared an alphabetical list of the Stockholders, registered as such at the closing of the Stock Transfer Books, with the number of shares held by each, for the use of the inspectors on the day of election. Sect. 3. The polls shall be opened by the inspectors at the time and place appointed, and kept open for at least one hour. The inspectors of election shall be judges of the qualifications of voters, and shall proceed to canvass the votes as soon as the polls are closed, and shall sign and deliver to the Secretary or some other officer a certificate of the result of the election. Article II. — Special meeting of stockholders. Section 1. Special meetings of Stockholders may be held at any time by order of the Board of Directors, or whenever any number of Stockholders owning not less than one-third part of the capital stock shall in writing make application therefor to the President, stating the object of such meeting. Sect. 2. Thirty days' public notice of the time and place of such special meetings shall be given by publication in the same manner as notices for annual meetings, and shall state the object of such meetings. Sect. 3. The business of all such meetings shall be confined to the objects stated in such notices. 60 Sect. 4. No Stockholder shall be entitled to vote at any election of Directors, or meeting of Stockholders, unless the stock owned by him shall have been registered in his name upon the books of the Company for at least ten days prior to such election. MILLAR, COMPLAINANT'S EXHIBIT 5. 37 Article III.- — Meetings of the board of directors. Section 1. Stated meetings of the Board shall be held at such place and hour as shall from time to time be agreed upon by the Board. Sect. 2. Special meetings shall be called by the Secretary, when ordered by the President, or on the written request of five or more Directors. Sect. 3. At the first meeting of the Directors after an election, or as soon as a quorum can be convened, before any business is taken up, the Secretary shall read the certificate of election, when the Board shall proceed to organize by the election of a President and one or more Vice-Presidents, and shall appoint a Comptroller, Sec- retary, Treasurer, and such other officers as the Board may designate. Article IV. — Powers of the hoard. Section 1. The Board of Directors shall have the whole charge and management of the property and effects of the Com- 61 pany, and may delegate power to an executive committee to do any and all acts which the Board is authorized to do, ex- cept such acts as by law or these By-laws must be done by the Board itself. The Board shall have power, in the absence of the President and Vice-President or Vice-Presidents, to appoint a chairman pro tempore. Sect. 2. A majority of all the members is necessary to a quorum, but less than a quorum may adjourn from time to time. Sect. 3. The Board of Directors shall have power to delegate au- thority to do and perform specific acts, not inconsistent with the Charter, to special committees to be appointed by the Board, or the presiding officer, at the option of the Board. Sect. i. The Board of Directors shall have power to fill any va- cancy that may occur by reason of death, resignation, or otherwise, of any director. Sect. 5. The Board of Directors may prescribe the duties and pow- ers of the Secretary, Treasurer, Comptroller, General Manager, and all subordinate officers and agents, fix the salaries of all officers of the Company, make all needful rules and regulations for the trans- fer of the stock of the Company, the issuing of certificates of stock, keeping the records and accounts of the Company, the management and disposition in particular of the stock, property, estate, and effects of the Company, and the construction and operation of its road. 62 Article V. — Officers and their duties. Section 1. The officers of the Company shall consist of a Presi- dent, one or more Vice-Presidents, a Comptroller, a Secretary, a Treasurer, a General Manager, and such other officers as the Board may designate. All officers shall hold their offices during the pleas- ure of the Board of Directors. 38 MILLAR COMPLAINANT'S EXHIBIT 5. Sect. 2. The President shall preside at all meetings of the Board of Directors when present; shall have general care, supervision, and control of the Company's business in all departments under direction of the Board of Directors, and shall have such other powers and per- form such other duties as the Board may from time to time confer or prescribe. He shall call meetings of the Board when he deems it necessary. Sect. 3. It shall be the duty of the Vice-President, in case of the absence, death, sickness or other inability of the President, to exer- cise the powers and discharge the duties of the President until his return to duty. Sect. 4. The Comptroller shall have charge of the general books and accounts of the Company, which shall be kept in his office. He shall be responsible for the system of accounting which may be adopted by the Board of Directors. Eeports shall be made to him as often as he may deem necessary, by such officers as he may direct, showing all receipts and disbursements for the Company's account. Copies of all contracts made by any officer or agent of the Company shall be transmitted to and kept on file by the Comptroller. 63 Sect. 5. It shall be the duty of the Secretary to notify offi- cers and directors of their election; to give timely notice to all the directors of the stated and special meetings of the Board; to attend such meetings, and to keep accurate minutes of the same in the books provided for the purpose ; to affix the corporate seal of the Company when directed by the Board or the President, and attest the same; and generally to discharge all the ordinary duties of a Secre- tary, and such as may be required of him by the Board. Sect. 6. The Treasurer shall have the custody of all funds and securities of the Company ; shall collect and receive all moneys earned by, or in any manner due to, or held by, the Company, and shall deposit all receipts in such banks or places of deposit as the Board or Executive Committee shall direct. He shall make all payments on the Company's account for current business, and all vouchers, before being paid by him, shall be approved by the President or the Comptroller. He shall sign all checks and discharge such other duties connected with the finances of the Company as may be required of him. Sect. 7. The General Manager shall have the general direction of all business relating to the operation of the railroad. All general orders in these departments shall be issued or approved by him. He shall have the care of the railroads operated by the Company, and of the property owned by it. He shall keep the President promptly and fully advised of all important occurrences and transactions in his department. 64 , Article VI. — Executive Committee. Section 1. The Board of Directors at its first or any subsequent meeting after each annual election may appoint an Executive Com- MILLAR — COMPLAINANT'S EXHIBITS 5-6. 39 mittee to consist of five members and the President, who shall be a member ex officio. Sect. 2. The Executive Committee by a majority of its members shall have and exercise all the powers and authority of the Board, and in the absence of one or more of its members, those present, whether constituting a quorum or not, shall have the power to appoint a substitute or substitutes from members of the Board of Directors to act during the temporary absence of such member or members of the committee. Sect. 3. The record of all proceedings of the committee shall be kept, in a book provided for that purpose, by its Secretary, and certi- fied by him, which shall be read, when required, at the next ensuing meeting of the Board of Directors. Sect. 4. The Secretary of the Committee shall call meetings of the committee on the request of any two of its members. Article VII. — Aw*endments. Section 1. These By-laws may be altered or amended by the Direct- ors prior to the first annual meeting of stockholders and there- after at any meeting of the Stockholders, providing due notice of such alteration or amendment shall have been given in the notice of such meeting. 65 Complainant's Exhibit 6. (Millar.) BY-LAWS OF OREGON SHORT LINE RAILROAD COMPANY, AS AMENDED OCTOBER 10, 1906. Section 1. There shall be an annual meeting of the stockholders of this Company for the purpose of electing directors and transacting any other business at the office of the Company, in Salt Lake City, Utah, or at such other place in the State of Utah as shall be specified in the notice of the meeting, at 12 o'clock M. on the second "Wednesday of October in each year. The Secretary shall give at least three weeks' notice of the time and place of holding such annual meeting by advertisement in some daily newspaper published and having a general circulation in the State of Utah, and one daily newspaper published in the City and State of New York. Section 2. Special meetings of the stockholders may be held at any time upon order of the Board of Directors or Executive Committee, or whenever any number of stockholders owning not less than one- third in amount of the capital stock of the Company shall in writing make application therefor to the President, specifying the object of such meeting. The business of all such meetings shall be confined to the objects stated in the notice thereof. The Secretary shall give at least three weeks' notice of the object, time and place of holding any such special meeting by advertisement in some 66 daily newspaper published and having a general circulation 40 MILIAR COMPLAINANT'S EXHIBIT 6. in the state of Utah, and one daily newspaper published in the City and State of New York. Section 3. The stock transfer books of the Company shall be closed for such time not less than ten days preceding the date ap- pointed for the holding of any annual or special meeting of the stockholders as the Board of Directors or Executive Committee shall specify. The Secretary shall cause to be prepared an alphabetical | list of the stockholders registered as such, at the closing of the stock transfer books, with the number of shares held by each, for the use of Inspectors and of stockholders at any meeting of the stock- holders. Each share of stock shall entitle the holder thereof to one vote in person or by proxy in writing, at any meeting of stockhold- ers, provided such stock shall have been registered in the name of such holder upon the books of the Company prior to the closing of the transfer books for the purpose of such meeting. Section 4. The President, and in his absence one of the Vice- Presidents, shall call meetings of stockholders to order and act as chairman of such meetings. In the absence of all these officers, the Board of Directors may appoint a chairman of the meeting to act in such event; but, if the Board should not make such appointment, then, in the absence of all of these officers, any stockholder or proxy of any stockholder may call the meeting to order and a chairman shall be elected. 67 Section 5. The Secretary of the Company shall act as secre- tray at all meetings of the stockholders; but the Board of Directors or Executive Committee may designate an Assistant Secre- tary for that purpose before the meeting, and, if no such designation shall have been made, then such designation may be made by the pre- siding officer at the meeting. Section 6. At each meeting of the stockholders the polls shall be opened and closed, the ballots and proxies shall be received and taken charge of , and all questions touching the qualification of voters and the validity of proxies and the acceptance, or rejection of votes shall be decided, by three Inspectors. Such Inspectors shall be appointed before the meeting by the Board of Directors or by the Executive Committee, and, if no such appointment shall have been made, then by the presiding officer at the meeting ; and if for any reason any of the Inspectors previously appointed shall fail to attend, or refuse or be unable to serve, then Inspectors, in place of any so failing to attend or refusing or unable to serve, shall be appointed by the pre- siding officer at the meeting. Such Inspectors need not be stock- holders. Section 7. If at any meeting of the stockholders, the holders of a majority in amount of the stock outstanding are not represented : in person or by written proxy, the said meeting shall be adjourned by the stockholders present, or by the Secretary or an Assistant Sec- retary of the Company, from day to day not exceeding ten days, without the transaction of any business ; and if within said ten 68 days, the holders of at least a majority in amount of said stock MILLAR COMPLAINANT'S EXHIBIT 6. 41 do not attend in person or by written proxy and participate in such meeting, then the meeting shall be dissolved. A meeting at which the holders of a majority in amount of the outstanding stock of the Company shall be present in person or represented by proxy may be adjourned to any day and from time to time as such meeting shall determine. The time and place to which an adjournment is taken shall be publicly announced at the meeting, and no further notice thereof shall be necessary. Section 8. There shall be fifteen Directors of said Company, who shall hold their office until the next annual meeting of the Company, and until others are duly chosen in their place and shall have quali- fied. Any vacancy occurring in the office of Director shall be filled for the unexpired term, by vote of a majority of the remaining directors. Section 9. Regular meetings of the Board of Directors shall be held at such times and at such places in the City and State of New York or elsewhere as the Board of Directors may from time to time prescribe. Special meetings may at any time be called by the Chair- man of the Executive Committee or any three members of the Board, to convene at such time and place as may be appointed. A majority of the Directors shall constitute a quorum at all meetings for the transaction of business. If a quorum be not present at any meeting, a majority of the Directors present may adjourn the meeting until a later day or hour, and a minute of such adjournment shall be 69 entered on the records by the Secretary, and no further notice of such adjournment shall be required. Skction 10. The Board of Directors shall elect one of their number to be President, and shall appoint such Vice-Presidents as the Board may from time to time determine. It shall also appoint a Secretary, a Treasurer, and such Assistant Secretaries, Assistant Treasurers, and such other officers and agents as the Board may from time to time determine. Section 11. The President, Vice-Presidents, Secretary, Treasurer, Assistant Secretaries, Assistant Treasurers, and the other officers ap- pointed by the Board, shall perform such duties and possess such authority as from time to time shall be conferred and prescribed by the Board of Directors or Executive Committee. Section 12. The Directors shall elect from their number an Execu- tive Committee of five members. Such Committee shall hold office until the next annual election of Directors, and shall, when the Board of Directors is not in session, have all the powers of the Board of Di- rectors to manage and direct all the business and affairs of the Com- pany in such manner as said Committee shall deem best for the Com- pany's interests in all cases in which specific directions shall not have been given by the Board of Directors. ' The Chairman of the Execu- tive Committee shall be elected by the Board of Directors, and, subject to the control and approval of the Executive Committee, shall repre- - sent it when not in session. He shall, from time to time, report TO to the Executive Committee. Any vacancy which may occur in 42 MILLAR COMPLAINANT'S EXHIBITS 6-1. said Committee shall be filled by the Board of Directors. Regular meetings of said Executive Committee shall be held at such times and at such places in the City and State of New York or elsewhere as the Committee shall from time to time determine. Special meetings may be called at any time by the Chairman or any three members of the Committee, to convene at such time and place as may be appointed. Three members of the Committee shall constitute a quorum. If a quorum be not present at any meeting, a majority of the members of the Committee present may adjourn the meeting until a later day or hour, and a minute of such adjournment shall be entered on the records* by the Secretary, and no further notice of such adjournment shall be required ; or the members present, whether constituting a quorum or not, at their option, shall have the power to appoint a substitute or substitutes from the members of the Board of Directors to act during the temporary absence of any member or members of the Committee. Section 13. The shares of stock of this Company shall be transfer- able on the books of the Company, kept for the purpose by such officer as the Board of Directors or the Executive Committee shall from time to time designate. Transfers may be made by any stockholder, or his attorney, duly authorized in writing. It shall be the duty of the des- ignated officer to keep such transfer books, and also a stock ledger and certificate book, and prepare new certificates upon the transfer of shares and surrender of old certificates, and to keep a register of old certificates returned, and of all certificates issued. 71 Section 14. The common corporate seal is, and, until other- wise ordered by the Board of Directors, shall be, an impression upon paper or wax, circular in form, with the words, " Oregon Short Line Railroad Company " on the outer edge thereof, and the words and figures " State of Utah, Incorporated, 1897 " in the centre thereof. Section 15. These by-laws may be altered, amended or repealed at a general meeting of the stockholders by a majority vote of those present in person or by proxy, or at any meeting of the Directors by a majority vote of all the members of the Board. Complainant's Exhibit 7. (Millar.) BY-LAWS OF THE OREGON RAILROAD AND NAVIGATION COMPANY (AS AMENDED OCTOBER 10, 1906.) Section 1. There shall be an annual meeting of the stockholders of this Company for the purpose of electing directors and transacting any other business at the principal office of the Company in the City of Portland, Oregon, or at such other place in the State of Oregon as shall be specified in the notice of the meeting, at twelve o'clock M., on the first Thursday of September in each year. The Secretary shall give at least three weeks' notice of the time and 72 place of holding such annual meeting by advertisement in some daily newspaper published and having a general circula- MILLAR COMPLAINANT'S EXHIBIT 1. 43 tion in the State of Oregon, and one daily newspaper published in the City and State of New York. Section 2. Special meetings of the stockholders may be held at any time upon order of the Board of Directors or Executive Committee, or whenever any number of stockholders owning not less than one- third in amount of the capital stock of the Company shall in writing make application therefor to the President, specifying the object of such meeting. The business of all such meetings shall be confined to the objects stated in the notice thereof. The Secretary shall give at least three weeks' notice of the object, time and place of holding any such special meeting by advertisement in some daily newspaper published and having a general circulation in the State of Oregon, and one daily newspaper published in the City and State of New York. Section 3. The stock transfer books of the Company shall be closed for such time not less than ten days preceding the date appointed for the holding of any annual or special meeting of the stockholders, as the Board of Directors or Executive Committee shall specify. The Secretary shall cause to be prepared an alphabetical list of the stock- holders registered as such, at the closing of the stock transfer books, with the number of shares held by each, for the use of Inspectors and of stockholders at any meeting of the stockholders. Each 73 share of stock shall entitle the holder thereof to one vote in person or by proxy in writing, at any meeting of stockholders, provided such stock shall have been registered in the name of such holder upon the books of the Company prior to the closing of the transfer books for the purpose of such meeting. Section 4. The President, and in his absence one of the Vice- Presidents, shall call meetings of stockholders to order and act as chairman of such meetings. In the absence of all of these officers, the Board of Directors may appoint a chairman of the meeting to act in such event ; but, if the Board should not make such appointment, then, in the absence of all of these officers, any stockholder or proxy of any stockholder may call the meeting to order and a chairman be elected. Section 5. The Secretary of the Company shall act as secretary at all meetings of the stockholders; but the Board of Directors or Executive Committee may designate an Assistant Secretary for that purpose before the meeting, and, if no such designation shall have been made, then such designation may be made by the presiding officer at the meeting. Section 6. At each election of Directors the President, if present, shall act as Inspector of Election, and certify who are elected Direc- tors. If the President be not present at any election of directors or other meeting of the stockholders, then the polls shall be opened and closed, the ballots and proxies shall be received and taken 74 charge of, and all questions touching the qualification of voters and the validity of proxies and the acceptance or rejection of votes shall be decided, by three Inspectors. Such Inspectors shall be 44 MILLAR COMPLAINANT'S EXHIBIT 7. appointed before the meeting by the Board of Directors or by the Executive Committee, and, if no such appointment shall have been made, then by the presiding officer at the meeting; and if for any reason any of the Inspectors previously appointed shall fail to attend, or refuse or be unable to serve, then Inspectors, in place of any so failing to attend or refusing or unable to serve, shall be appointed by the presiding officer at the meeting. Such Inspectors need not be stockholders. Section 7. If at any meeting of the stockholders, the holders of a majority in amount of the stock outstanding are not represented in person or by written proxy, the said meeting shall be adjourned by the stockholders present, or by the Secretary or an Assistant Secre- tary of the Company, from day to day not exceeding ten days, with- out the transaction of any business ; and if within said ten days, the holders of at least a majority in amount of said stock do not attend in person or by written proxy and participate in such meeting, then the meeting shall be dissolved. A meeting at which the holders of a majority in amount of the outstanding stock of the Company shall be present in person or represented by proxy may be adjourned to any day and from time to time as such meeting shall determine. The time and place to which an adjournment is taken shall be pub- licly announced at the meeting, and no further notice thereof shall be necessary. 75 Section 8. There shall be fifteen Directors of said Company, who shall hold their office until the next annual meeting of the Company, and until others are duly chosen in their place, and shall have qualified. Any vacancy occurring in the office of Director shall be filled for the unexpired term, by vote of a majority of the remaining directors. Section 9. Eegular meetings of the Board of Directors shall be held at such times and at such places in the City and State of New York or elsewhere as the Board of Directors may from time to time prescribe. Special meetings may at any time be called by the Chair- man of the Executive Committee or any three members of the Board, to convene at such time and place as may be appointed. A majority of the Directors shall constitute a quorum at all meetings for the transaction of business. If a quorum be not present at any meeting, a majority of the Directors present may adjourn the meeting until a later day or hour, and a minute of such adjournment shall be entered on the records by the Secretary, and no further notice of such adjournment shall be required. Section 10. The Board of Directors shall elect one of their num- ber to be President, and shall appoint such Vice-Presidents as the Board may from time to time determine. It shall also appoint a Secretary, a Treasurer, and such Assistant Secretaries, Assistant Treasurers, and such other officers and agents as the Board may from time to time determine. Section 11. The President, Vice-Presidents, Secretary, 76 Treasurer, Assistant Secretaries, Assistant Treasurers, and the 45 other officers appointed by the Board, shall perform such duties and possess such authority as from time to time shall be conferred and prescribed by the Board of Directors or Executive Committee. Section 12. The Directors shall elect from their number an Ex- ecutive Committee of five members. Such Committee shall hold office until the next annual election of Directors, and shall, when the Board of Directors is not in session, have all the powers of the Board of Directors to manage and direct all the business and affairs of the Company, in such manner as said Committee shall deem best for the Company's interests, in all cases in which specific directions shall not have been given by the Board of Directors. The Chairman of the Executive Committee shall be elected by the Board of Directors, and, subject to the control and approval of the Executive Committee, shall represent it when not in session. He shall, from time to time, report to the Executive Committee. Any vacancy which may occur in said Committee shall be filled by the Board of Directors. Eeg- ular meetings of said Executive Committee shall be held at such times and at such places in the City and State of New York or else- where as the Committee shall from time to time determine. Special meetings may be called at any time by the Chairman or any three members of the Committee, to convene at such time and place as may be appointed. Three members of the Committee, shall constitute a quorum. If a quorum be not present at any meeting a 77 majority of the members of the Committee present may adjourn the meeting until a later day or hour, and a minute of such adjournment shall be entered on the records by the Secretary, and no further notice of such adjournment shall be required; or the members present, whether constituting a quorum or not, at their option, shall have the power to appoint a substitute or substitutes from the members of the Board of Directors to act during the tem- porary absence of any member or members of the Committee. Section 13. The shares of stock of this Company shall be trans- ferable on the books of the Company, kept for the purpose by such officer as the Board of Directors or the Executive Committee shall from time to time designate. Transfers may be made by any stock- holder, or his attorney, duly authorized in writing. It shall be the duty of the designated officer to keep such transfer books, and also a stock ledger and certificate book, and prepare new certificates upon the transfer of shares and surrender of old certificates; and to keep a register of old certificates returned, and of all certificates issued. Section 14. The common corporate seal is, and, until otherwise ordered by the Board of Directors, shall be, an impression upon paper or wax, circular in form, bearing the following words and figures : " The Oregon Railroad and Navigation Company, Incor- porated July 16, 1896." Section 15. No mortgage of the property of the Company or any part thereof shall be valid unless authorized or 78 approved by the holders of a majority of both the preferred 71535—09 4 46 ' MILLAR COMPLAINANT 's EXHIBITS 7-8. stock and of the common stock of this Company ; and no lease or sale of any part of the railroad or telegraph lines of this Company shall be valid unless the same shall be authorized or approved by the holders of a majority of both the preferred and the common stock, and no guaranty of this Company of the bonds or obliga- tions of any other company shall be valid unless the same has been likewise so authorized or approved. Section 16. These by-laws, with the exception of Section 15, may be altered, amended or repealed at any meeting of the stockholders by a majority vote of those present in person or by proxy, or at any meeting of the Directors by a majority vote of all the members of the Board. Complainant's Exhibit 8. (Millar.) by-laws of the southern pacific company (as amended june 9th, 1904.) Article 1. There shall be an annual meeting of the stockholders of said company, for the purpose of electing directors and doing any other proper business, at the office of the company in Beechmont, Jefferson County, Kentucky, on the Wednesday following the 79 first Monday in April in each year. The Clerk shall give two weeks' notice of the time and place of holding such annual meeting by advertisement in a newspaper published in each of the cities of Louisville, in the State of Kentucky, of New York, in the State of New York, and San Francisco, in the State of California. Article 2. Special meetings of the stockholders may be held at any time upon order of the Board of Directors or Executive Committee, and the Clerk shall give notice of such meetings in the same manner as notices for annual meetings are given. All meetings of the stock- holders shall be called to order by the President, and in his absence by one of the Vice-Presidents. In the absence of all of these officers such meeting shall be called to order by the Clerk or Assistant Clerk of the Company. The Chairman of the meeting shall be elected by a stock vote of the stockholders, and he shall appoint from among the stockholders present three inspectors of election, who shall also act as a committee on stock and proxies. Article 3. There shall be fifteen directors of said company, who shall hold their office until the next annual meeting of the company, and until others are duly chosen in their place. ■ Article 4. Regular meetings of the Board of Directors shall be held at such times as the Board of Directors may from time to time pre- scribe. Special meetings may at any time be called by the Chairman of the Executive Committee or any three members of the 80 Board, to convene at such time and place as may be appointed. A majority of the Directors shall constitute a quorum at all meetings for the transaction of business. MILLAB — COMPLAINANT'S EXHIBIT 8. 47 Article 5. The Board of Directors shall elect one of their number to be a President, and shall appoint such Vice-Presidents as the Board shall from time to time determine. It shall also appoint a Treasurer, a Clerk and Secretary, an Assistant Clerk, and such Assistant Treas- urers and Assistant Secretaries as the Board may from time to time determine. Article 6. The President, Vice-Presidents, Treasurers, Secretary and Clerk, Assistant Treasurers, and Assistant Secretaries and Clerks shall perform such duties as shall be from time to time conferred and prescribed by the Board of Directors or Executive Committee. Article 7. The Directors shall elect from their number an Execu- tive Committee of five members. Such committee shall hold office until the next annual meeting of stockholders and shall, when the Board of Directors is not in session, have all the powers of the Board of Directors to manage and direct all the business and affairs of the company in such manner as said committee shall deem best for the company's interests in all cases in which specific directions shall not have been given by the Board of Directors. The Chairman of the Executive Committee shall be elected by the Board of Directors, and, subject to the control and approval of the Executive Commit- 81 tee, shall represent it when not in session. He shall, from time to time, report to the Executive Committee. Any vacancy which may occur in said committee shall be filled by the Board of Directors. Regular meetings of said Executive Committee shall be held at such times as the committee shall from time to time determine. Special meetings may be called at any time by the Chairman or any three members of the committee. Three members of the committee shall constitute a quorum. Article 8. The shares of stock of this company shall be transfer- able on the books of the company, kept for the purpose by such officer as the Board of Directors or the Executive Committee shall from time to time designate for the purpose. Transfers may be made by any stockholder, or his attorney, duly authorized in writing. It shall be the duty of the designated officer to keep such transfer books, and also a stock ledger and certificate book, and prepare new certificates upon the transfer of shares and surrender of old certificates; and to keep a register of old certificates returned, and of all certificates is- sued ; and on the day of the annual election the Secretary shall fur- nish for the use of the stockholders an alphabetical list of the names of all the stockholders, with the number of shares so held by them respectively. , Article 9. The office required by the charter to be kept in the State of Kentucky shall be kept at Beechmont, Jefferson County, Ken- tucky, until the Board of Directors shall otherwise order; and the general offices of the company, outside of the State of Ke'n- 82 tucky, shall be in the City of Sail FrancisCo, in the State of California, or in the City of New York, in the State of Ne* York. 48 MILLAR COMPLAINANT'S EXHIBITS 8-9. Article 10. These By-laws may be altered, amended or repealed at any meeting of the stockholders by a majority vote of those present in person or by proxy, or at any meeting of the Directors by a ma- jority vote of all members of the Board. Complainant's Exhibit 9. (Millar.) BY-LAWS 0¥ THE SOUTHERN PACIFIC BAILEOAD COMPANY, ADOPTED MAECH 24, 1902, AMENDED JANUARY 6, 1904, MARCH 2, 1905, AND NOVEMBER 2, 1905. Section 1. Annual Meetings of the Stockholders of this Company shall be held at the office of the Company in the City and County of San Francisco, on the second Tuesday of April in each year, at twelve (12) o'clock noon, or at such other time as shall be appointed by a resolution of the Board of Directors, at which an election for eleven directors shall be held, to serve for the ensuing year and until their successors are elected, and such other business transacted as may come before the meeting. Section 2. The Chairman of the meeting, together with 83 two stockholders, both to be chosen a.t the annual meeting for that purpose, shall act as the Judges of Election, receive, count and canvass the votes and declare the result without delay. The Sec- retary shall be tally clerk and shall keep a tally list of all votes cast at said election and preserve the same in his office. The vote for the election of directors shall be taken by ballot, and each voter shall in- dorse on his ballot his name and the number of votes cast by him. The said Judges of Election and Secretary shall certify the result thereof to the Board of Directors. Section 3. At all meetings of the Stockholders absent members may vote by proxy duly authorized in writing, signed by the re- spective stockholders granting them, and such proxies shall be filed with the Secretary. When the proxy is included in a general power of attorney, a copy thereof shall be filed with the Secretary and the original produced to the Judges of Election, if required by them. It shall be the duty of the Secretary, previous to every such meeting, to make an alphabetical list of all stockholders, with the number of votes each is entitled to cast, and have the same present at such meet- ing for the use of the officers thereof. Section 4. Meetings of the stockholders may be called at any time during the interval between the annual meetings, by the Board of Directors, or by any number of stockholders owning not less than one-half in value of the stock. In the case of meetings called by stockholders, such calls must be in writing and addressed to the Sec- retary, who must thereupon give notice, in the manner pro- 84 vided by law for the annual election of directors, of the time and place of the meetings, and by whose order it is called. When any such meeting is called by the stockholders, the particular MILLAR COMPLAINANT'S EXHIBIT 9. 49 object of such meeting shall be stated in such call, and also in the notice, and no other business shall be transacted at such meeting. Section 5. Eegular meetings of the Board of Directors shall be held on the first Thursday of each month, at 12 o'clock noon, at the office of the company, and six or more directors shall constitute a quorum at all meetings for the transaction of business. Special meet- ings of the Board may at any time be called by the President or either of the Vice-Presidents, or any three members of the Board, to convene at such time and place as may be appointed. All the meetings of the Board, both regular and special, may be adjourned from time to time for want of a quorum. Section 6. There shall be elected by the Directors from among their number a President, Vice-President and Second Vice-President. The Board shall also elect a Treasurer and an Assistant Treasurer, and a Secretary and Assistant Secretary, and may elect or appoint such additional Vice-Presidents and Assistant Secretaries as may be deemed expedient; such additional Vice-Presidents and Assistant Secretaries shall have such power as shall be conferred upon them by the Board. They shall also elect or appoint a Comptroller, who shall have such powers and perform such duties as may be conferred and pre- scribed by the Board of Directors from time to time. 85 Section 7. The President of the Company shall have a general supervision, subject to the order of the Board of Directors, of the business and affairs of the company, and shall, when present, preside at all meetings of the Board of Directors and of the Stockholders. The Vice-President or Second Vice-President shall exercise all the powers and duties of the President whenever the President shall be absent or unable from any cause to discharge his duties in person. In the absence of the President and both Vice-Presidents, a Presi- dent fro tern, may be appointed by the Directors, who shall discharge the duties of President. Section 8. The Secretary shall be the recording officer of the company. He shall keep full and complete minutes of all meetings of the stockholders and of the Board of Directors. He shall be the custodian of the corporate seal and shall affix the same to such instru- ments as shall be authorized by the Board of Directors. He shall perform such other duties as legally pertain to his office, or as may be required of him by the Board of Directors. Section 9. The Treasurer shall safely keep, or cause to be kept, in the name of the company, all monies belonging to the company, and shall disburse the same in such manner as the Board shall direct. He shall also take charge of and safely keep all securities and 86 evidences of debt appropriately belonging to his department. He shall sign all notes, checks and drafts of the company, under such restrictions and regulations as the Board of Directors shall prescribe. 50 MILLAR — COMPLAINANT'S EXHIBIT 9. Section 10. The capital stock of the company shall be represented by certificates therefor to be signed by the President or any Vice- President of the company and the Secretary or Assistant Secretary of the company, under the corporate seal, and shall be in such form as the Board of Directors shall approve. Certificates of stock shall be issued only for fully paid stock. Such stock shall be transferable on the books of the company, by indorsement on the certificate by the signature of the proprietor, or his attorney or legal representa- tive, and the surrender of the certificate to be transferred. The sur- rendered certificate shall be canceled by the Secretary before a new certificate is issued. Section 11. These by-laws may be repealed or amended or new by-laws adopted by the Board of Directors upon the concurrence of a majority of the full Board at any regular meeting, after notice given at a previous meeting of the Board. 87 Q. Mr. Millar, the Southern Pacific Company's meeting is held in April every year, is it not ? A. The annual stockholders', yes, sir. Q. Along about April 6th? What day? Do you remember? A. No, sir. Q. Monday or Tuesday ? A. (Eef erring to book.) The Wednesday following the first Mon- day in April. Q. The Wednesday following the first Monday ? A. Yes, sir. Q. About when are the books of the Southern Pacific closed for this annual meeting? A. We have not had any fixed date. I think the effort has been to give sufficient time to make up the lists — about thirty days. Q. About thirty days? That is, the executive committee of the board of directors of the Southern Pacific Company close the books on a certain day, about thirty days before the annual stockholders' meeting, in order to allow you to make up the list of stockholders appearing of record as the stockholders of that company on that date? A. Yes, sir. Q. This is the usual custom in all railways, is it not ? A. Yes, I think so, with some exceptions. Q. They close their books on a certain day ? A. Yes, sir. Q. And the stockholders appearing on that day vote the stock? A. Yes, sir. Q. Now, the books of the Southern Pacific Company showing its stockholders on the day are of course, and have been, under your control since the Union Pacific acquired its stock, have they not? A. The stock-books, yes, sir. Q. And no one but you or the officials of that company have 88 access to those books? MILLAE — GOMPIAINAN T 's EXHIBIT 10. 5,1 A. Not ordinarily, no, sir. There have been exceptions. Q. Ordinarily not, you say ? A. Yes, sir. Q. When the books have been closed, you, as secretary, or under your direction, have prepared a list of the stockholders of the South- ern Pacific Company who are entitled to vote at its annual meeting? A. Yes, sir. Q. Those are the stockholders who show of record on the date the books are closed ? A. Yes, sir. Q. Now, as a matter of fact, you then send out proxies? A. Yes, sir. Q. To each stockholder who appears of record on the books of the Southern Pacific on the day they are closed ? A. Yes, sir. Q. Those proxies are sent out with the names of certain persons which you have inserted to vote their stock, are they not? A. I think generally, yes, sir. Q. Generally three names ? A. Yes, more than one, usually. Q. They are usually ofiicials, or somebody connected with your organization ? A. Yes, sir. Q. I show you a Southern Pacific proxy. (Handing proxy to witness.) This purports to be the proxy for the annual meeting of the Southern Pacific Company to be held at Beechmont, Jefferson County, Kentucky, Wednesday, the 4th of April, 1906. The names of the parties inserted as voting the Union Pacific or Short Line stock at that time are E. H. Harriman, Alex. P. Humphrey and W. D. Cornish. Mr. Harriman and Mr. Cornish are, respec- ' 89 tively, the president and vice-president of the Union Pacific Railroad Company, are they not? A. Yes, sir. Q. Who is the other? A. I think a lawyer in Louisville, not identified with the Union Pacific, according to my knowledge. Q. I show you copies of proxies. Are those the forms of proxies sent out by you or under your direction to the stockholders of the Southern Pacific Company at each annual meeting since 1900 for the election of directors? A. It is admitted by Mr. Evarts that they are such. Mr. Severance. I offer the form of proxy sent out for the year 1900, prior to the acquisition of the Southern Pacific stock by the Union Pacific. The same was marked Complainant's Exhibit 10 (Millar) , and is as follows: 52 MILLAR COMPLAINANT'S EXHIBITS 10-11-12. Complainant's Exhibit 10. (Millar.) Know all men by these presents, That I do hereby con- stitute and appoint and or either of them, At- torneys and Agents, or Attorney and Agent, for me and in my name, place and stead, to vote as my proxy at the annual meeting of the stockholders of the Southern Pacific Company, to be held in the City of San Francisco, California, on the fourth day of April, 1900, or at any adjournment or adjournments thereof, according to the number of votes that I should be entitled to vote, if then personally present, with power of substitution and revocation, hereby revoking nil proxies previously given. 90 In witness whereof, I have hereunto set my hand and seal this day of March, 1900. Sealed and delivered in presence of Mr. Severance. I offer the form of proxy sent out for the meeting for the year 1902. The same was marked Complainant's Exhibit 11 (Millar) , and is as follows: Complainant's Exhibit 11. (Millar.) Proxy. Shares. SOUTHERN PACIFIC COMPANY. Know all men by these presents, That I, do hereby con- stitute and appoint Edward H. Harriman and Charles H. Tweed, or either of them, Attorney and Agent for me, and in my name, place and stead, to vote as my proxy at the Annual Meeting of the Stock- holders of the Southern Pacific Company, to be held on the 9th day of April, 1902, and at any and all adjournments thereof, according to the number of votes that I should be entitled to vote, if then per- sonally present, with power of substitution and revocation. In witness whereof, I have hereunto set my hand and seal this day of one thousand nine hundred and two. Sealed and delivered in the presence of: , Post Office Address. 91 Note. — Please date and sign this proxy in the presence of a subscribing witness and return it in the enclosed envelope to Alex. Millar, Secretary, 120 Broadway, New York City. It will also be a convenience if you will add your correct post office address. Mr. Severance. I offer the form of proxy sent out for the meeting for the year 1903. The same was marked Complainant's Exhibit 12 (Millar), and is as follows: MILLAE — COMPLAINANT'S EXHIBITS 12-13. 53 Complainant's Exhibit 12. (Millar.) Proxy. Shares. SOUTHERN PACIFIC COMPANY. Know all men by these presents, That stockholder in Southern Pacific Company, hereby constitute and appoint E. H. Har- riman, Alex. P. Humphrey and Maxwell Evarts, or any or either of them, or such person or persons as they or a majority of them may substitute and appoint their attorney or attorneys in their place and stead, lawful agents and attorneys of the undersigned, for and in the name and stead of the undersigned to appear and to vote, in respect of all stock standing in the name of the undersigned at the Annual ^Meeting of the Stockholders of said Company, to be held on Wed- nesday, the eighth day of April, A. D. 1903, and at any and all ad- journments thereof, for the purpose of electing directors of 92 said Company and for the transaction of any other business which may come before said meeting, with power in the name and on behalf of the undersigned, to vote at said Annual Meeting upon any and all questions and matters, as though the undersigned were personally present and voting. Authority is hereby given that any of said attorneys or their substitutes may act in the absence of the others. All proxies heretofore made or given by the undersigned are hereby revoked. In witness whereof, have hereunto set hand and seal this day of , 1903. (L.S.) Witness : Please date and sign this proxy in the presence of a witness and return it in the enclosed envelope to Alex. Millar, Secretary, 120 Broadway, New York City. Mr. Severance. I offer the form of proxy sent out for the meeting for the year 1904. The same was marked Complainant's Exhibit 13 (Millar), and is as follows: Complainant's Exhibit 13. (Millar.) Proxy. — Southern Pacific Company, Shares. Annual Meeting, April 6, 1904. Know all men by these presents, That the undersigned stockholder in Southern Pacific Company, hereby constitute 93 and appoint E. H. Harriman, Alex. P. Humphrey, and W. D. Cornish, or any or either of them, or such person or persons as they or a majority of them may substitute and appoint their attorney 54 MILLAB COMPLAINANT'S EXHIBITS 13-14. or attorneys in their place and stead, lawful agents and attorneys of the undersigned, for and in the name and stead of the undersigned to appear and to vote, in respect of all stock standing in the name of the undersigned at the Annual Meeting of the Stockholders of said Com- pany to be held at Beechmont, Kentucky, on Wednesday, the sixth day of April, A. D. 1904, and at any and ali adjournments thereof, for the purpose of electing directors of said Company and for the transaction of any other business which may come before said meeting, with power in the name and on behalf of the undersigned, to vote at said Annual Meeting upon any and all questions and matters, as though the un- dersigned were personally present and voting. Authority is hereby given that any of said attorneys or their substitutes may act in the absence of the others. All proxies heretofore made or given by the undersigned are hereby revoked. In witness whereof, have hereunto set hand and seal this day of , 1904. (L.S.) • Witness : Please date and sign this proxy in the presence of a witness and return it in the enclosed envelope to Alex. Millar, Secretary, 120 Broadway, New York City. 94 Mr. Severance. I offer the form of proxy sent out for the meeting for the year 1905. The same was marked Complainant's Exhibit 14 (Millar), and is as follows : Complainant's Exhibit 14. (Millar.) Proxy. — Southern Pacific Company, Shares. Annual Meeting, April 5, 1905. Know all men by these presents, That the undersigned stockholder in Southern Pacific Company, hereby constitute and appoint E. H. Harriman, Alex P. Humphrey and W. D. Cornish or any or either of them, or such person or persons as they or a majority of them may substitute and appoint their attorney or attorneys in their place and stead, lawful agents and attorneys of the under- signed, for and in the name and stead of the undersigned to ap- pear and to vote, in respect of all stock standing in the name of the undersigned at the Annual Meeting of the Stockholders of said Com- pany, to be held at Beechmont, Kentucky, on Wednesday, the fifth day of April, 1905, and at any and all adjournments thereof, for the pur- pose of electing directors of said Company and for the transaction of any other business which may come before said meeting, with power in the name and on behalf of the undersigned, to vote at said Annual Meeting upon any and all questions and matters, as though the under- MILLAB — COMPLAINANT'S EXHIBITS 14-15. 55 signed were personally present and voting. Authority is 95 hereby given that any of said attorneys or their substitutes may act in the absence of the others. All proxies heretofore made or given by the undersigned are hereby revoked. In witness whereof, have hereunto set hand and seal this day of , 1905. (L. S.) Witness : Please date and sign this proxy in the presence of a witness and return it in the enclosed envelope to Alex. Millar, Secretary, 120 Broadway, New York, N. Y. Mr. Severance. I offer the form of proxy sent out for the meeting for the year 1906. The same was marked Complainant's Exhibit 15 (Millar), and is as follows : Complainant's Exhibit 15. (Millar.) Proxy — Southern Pacific Company, ™ fPreferred Annual Meeting, April 4, 1906. I Common Know all men by these presents, That , the undersigned stockholder in Southern Pacific Company, hereby constitute and appoint E. H. Harriman, Alex. P. Humphrey and W. D. Cornish, or any or either of them, or such person or persons as they or a majority of them may substitute and appoint their attorney or 96 attorneys in their place and stead, lawful agents and attorneys of the undersigned, for and in the name and stead of the undersigned to appear and to vote, in respect of all stocks standing in the name of the undersigned, at the Annual Meeting of the Stock- holders of said Company, to be held at its office at Beechmont, Jefferson County, Kentucky, on Wednesday, the fourth day of April, 1906, and at any and all adjournments thereof, for the purpose of electing directors of said Company and for the transaction of any other business which may come before said meeting, with power in the name and on behalf of the undersigned, to vote at said Annual Meeting upon any and all questions and matters,, as though the undersigned were personally present and voting. Authority is hereby given that any of said attorneys or their substitutes may act in the absence of the others. All proxies heretofore made or given by the undersigned are hereby revoked. In witness whereof, -have hereunto set hand and seal this day of , 1906. (I, S.) Witness : Please date and sign this proxy in the presence of a witness and return it in the enclosed envelope to Alex. Millar, Secretary, 120 Broadway, New York, N. Y. 56 MILLAK. Mr. Severance. I will state that I requested the form of proxy for the year 1901, and was told by Mr. Lovett that he was unable to furnish it as there was none left in the files. 97 Q. (Eef erring to these exhibits.) From what office are they sent out? A. Southern Pacific Company. Q. In New York? A. Yes, sir. Q. Under your charge? A. Yes, sir. Q. The same office the Union Pacific has down here ? A. Yes, sir. Q. 120 Broadway, isn't it? A. Yes, sir. Q. All these four companies, Pacific companies, have common offices here in New York, have they not? A. Yes, sir, they are in the same building. Q. The principal offices are in the same building? A. Some of them, yes, sir. Q. The president and vice-president, you have already told us ? A. Yes, sir. Some of the departments are entirely separate. Q. Yes, but the secretary's office and the comptroller's office and the president's office and the vice-president's office, and the counsel's office are all common? A. Yes, sir. Q. I notice by looking at each of these proxies that a majority of the persons to vote the Southern Pacific stock were Union Pacific officials or employees; is that not true? A. Yes, sir. Q. Now, when you make up these stock lists for the annual meeting for the election of directors of the Southern Pacific, you usually pre- serve them, do you not? A. Yes, sir; that is our intention. Q. You have never obtained at a meeting of the Southern Pacific Company since you became its Secretary, a full vote of the stock- holders, have you? A. No, sir. Q. It is not usual, taking into consideration the number 98 of stockholders of the company, to have anywhere near a full vote of the stockholders, is it? A. Some of our companies have a full vote and some do not. Q. The only companies you have which have a full vote are those where the Union Pacific owns all the stock, isn't it? A. Yes, sir. Q. Or the Southern Pacific owns all the stock? A. I limit my answer to the Union Pacific. Q. In the Southern Pacific Company, out of $197,000,000 and a little over, of common stock, state about the average amount of stock represented at a meeting. MILLAR. 57 A. At the meeting of 1900, out of 1,884,000 shares, 1,859,000 shares were voted. Q. That was before the Union Pacific's control, wasn't it? A. Yes, sir. In 1901, out of 1,978,000 shares, 1,736,000 were voted. At a second meeting of the same year, 1,742,000 shares were voted. In 1902, 1,573,000 shares were voted, and up to 1904 about the same number of shares were voted. In 1905, after an increase of the capital stock, 1,974,000 shares were voted ; and in 1908, 2,000,000 — a little over 2,000,000 shares were voted. Q. And the Oregon Short Line owned and voted more than a majority, a large majority, of the stock voted at meeting. Mr. Kellogg. Is it admitted? Mr. Milbuen. Yes, sir, it is on the record. Q. I show you pages 151 and 152 of Vol. 2 of the executive com- mittee of the Union Pacific. Is that the original record? A. Yes, sir. Q. Of these executive committee meetings of the Union 99 Pacific Railroad Company? A. Yes, sir. Q. Will you please read the resolution by which the Union Pacific designated the directors to be voted for in the Southern Pacific, with the names of the directors ? A. Yes, sir. The record reads as follows : " March 21st, 1901. Attention having been called to the approaching stockholders' meet- ing April 3rd, of the Southern Pacific Company, it was, on motion duly made and seconded, unanimously resolved that the stock held for and on behalf of this company be voted for the following list of directors : " T. J. Coolidge, Jr., George J. Gould, E. H. Harriman, Edward Hawley, Charles M. Hays, H. E. Huntington, James H. Hughitt, Otto H. Kahn, John W. Mackay, D. O. Mills, Winslow S. Pierce, Jacob H. Schiff, James Speyer, James Stillman, Charles H. Tweed." Q. Mr. Millar, who gave you the names of the persons to vote the Southern Pacific stock as proxies, to put in the printed proxies which you sent out ? A. Do you mean every year or in one particular year? Q. Every year. Who directed it ? A. I do not recall it. Q. Well, you know one year there the Union Pacific did it, don't you? A. The committee ordered that list, yes, sir, that year. Q. The Executive committee of the Union Pacific is composed of how many directors ? A. There are five at the present time. Q. By your by-laws they are given all the power of the 100 board, are they not ? A. Yes, sir, when the board is not in session. 58 MILLAR COMPLAINANT'S EXHIBIT 16. Q. I will show you the by-laws in a printed form. Take the Union Pacific; they are all the same, I see. Section 12 provides: " The directors shall elect from their number an executive committee of five members. Such committee shall hold office until the next an- nual election of directors, and shall, when the board of directors is not in session, have all the powers of the board of directors to manage and direct all the business and affairs of the company in such manner as such committee shall deem best for the company's interest in all cases in which specific directions shall not have been given by the board. The Chairman of the executive committee shall be elected by the board of directors, and subject to the control and approval of the executive committee, shall represent it when it is not in session." Q. Mr. Harriman is chairman, isn't he ? A. Yes, sir. Q. Of each executive committee of all the companies? A. Yes, sir. Q. And the companies have uniform by-laws practically on that subject? A. Practically. I have not compared them carefully. Mr. Severance. They are in evidence anyway. Q. Who designated the executive committee to be elected ? A. The board of directors. Q. You simply know they were elected ? A. Yes. Q. I show you a resolution of the board of the Union Pacific, 101 adopted August 29, 1899, and certified by you. Is that a cor- rect certified copy of the resolution of that date? A. Yes, sir. Mr. Severance. This paper I offer in evidence as Complainant's Exhibit 16 (Millar) . It is meeting of the directors of the Union Pa- cific Railroad company of the date stated, and refers to Oregon Short Line stock and bonds and Oregon Railroad & Navigation stocks, and acquisition of Short Line and Navigation securities. This exhibit was Exhibit 24 in, Mr. Millar's testimony in the Interstate Commerce Commission record. Complainant's Exhibit 16 (Millar) is as follows: Complainant's Exhibit 16. ' (Millar.) UNION PACIFIC RAILROAD CO. (Directors, Aug. 29, 1899.) O. S. L. Stock & Inc. Bds. & 0. R. & N. Stocks. Acquisition of Short Line and Navigation Securities. The Chairman of the Executive Committee laid before the Board the action of the Committee at its meeting of August 24, 1899, at which a resolution calling the present meeting was adopted. He MILLAB COMPLAINANT'S EXHIBIT 16. 50 briefly reviewed the relations through 'Ownership and control of se- curities, which this Company bears towards the Oregon Short Line Eailroad Company and, through that Company, to the Oregon Rail- road and Navigation Company, calling attention to the fact that this Company owns substantially all of the stock of the Oregon 102 Short Line Railroad Co., and that the latter Company owns, subject to the pledge under its Income B. Mortgage $16,281,400 out of $24,000,000 of the outstanding common stock of the Oregon Railroad and Navigation Company and also $976,900 of the preferred stock of that company. He referred to the amount of outstanding Income A 5% Bonds and Income B 4% Bonds of the Short Line Company and of the out- standing preferred stock of the Navigation Company as follows : Short Line Income A. 5% Bonds $7,185,000 Short Line Income B. 4% Bonds 14,841,000 Navigation Preferred Stock 11, 000, 000 Navigation Common Stock (exclusive of Short Line Holdings) 7, 718, GOO He pointed out the considerations which in his view and that of the other members of the Executive Committee suggested the expedi- ency of the acquisition by this Company of the Short Line B. Bonds and the Navigation preferred stock through the issue of not exceed- ing a corresponding amount at par of the preferred stock of this Company, the acquisition of the Navigation Common stock (exclu- sive of holdings of the Short Line Company pledged under its B. Mortgage) through the issue of not exceeding a corresponding amount of the common stock of this Company, and the acquisition of the Short Line A 5% Income Bonds through the use of reserved bonds, or cash resource of this Company upon such a basis as to save to this Company (in view of its proprietary interest in the Short Line) 1% per annum upon the outstanding A. Bonds. 103 In this connection he discussed the obligatory and burden- some conditions of the Short Line Income Mortgage as affect- ing and hampering the financial policy of the Short Line Company, and its power to apply its current revenues to such improvements as experience indicated to be necessary in order to get the best and most permanent results from the operation of the property. The Chairman also submitted statements of the financial results of the operations of the Union Pacific, Short Line and Navigation properties for the year ending June 30, 1899, and showing the com- parative surplus results in proportion to the securities of each Com- pany upon which interest or dividends were paid. He also compared the relative market prices for the several classes of securities affected by the proposed operation. He stated that the acquisition of the Navigation preferred stock and the Short Line B. Bonds on the basis indicated would secure the control of the Navigation property and complete the extension of this Company's system to the Pacific Coast, would strengthen this Company's proprietorship in the Short Line, and substitute stock, upon which dividends would rest in the sound 60 MILLAR — COMPLAINANT'S EXHIBIT 16. discretion of the Company, in the place of bonds upon which the interest charge is now practically obligatory. The Chairman concluded by recommending that appropriate action be taken by the Board to secure the following results : 1. An increase of the preferred stock of this Company by the amount of $25,000,000. 104 2. An increase of the common stock of this Company by the amount of $7,718,600. 3. An application of this increased preferred stock, or such part of it as may be necessary, to the acquisition of the outstanding B. In- come Bonds of the Short Line Company, and of the preferred stock of the Navigation Company. 4. Application of the increased common stock, or such part of it as may be necessary, for the acquisition of outstanding Navigation common stock (exclusive of that owned by the Short Line Company). 5. The acquisition by this Company through the use of reserved bonds, or other cash resources, of the Short Line Income A. Bonds on such a basis as will impose a charge not to exceed 4% per annum on the corresponding obligations or investments of this Company. Upon full consideration of the statements and views submitted by the Chairman of the Executive Committee and of the subject-matter of his recommendations, the following preambles and resolutions were, upon motion, duly made and seconded, unanimously adopted: Whereas this Company is the owner of substantially all of the outstanding capital stock of the Oregon Short Line Railroad Com- pany, whose lines of railroad in the States of Wyoming, Utah, Idaho and Oregon include a main line extending from a point on this Com- pany's main line at Granger, in Wyoming, to Huntington, in Oregon, and said Oregon Short Line Railroad Company is the owner of a large majority of the outstanding common capital stock of the Ore- gon Railroad and Navigation Company, whose lines of rail- 105 road in the States of Oregon, Washington and Idaho include a main line extending from Huntington to Portland, in the State of Oregon, and, Whereas the lines of Railroad of said Oregon Short Line Rail- road Company and said The Oregon Railroad and Navigation Com- pany constitute extensions and auxiliary lines of the railroad of this Company, and are not parallel or competitive therewith and, Whereas in the opinion of the Board of Directors it is desirable that the outstanding preferred stock of the said The Oregon Rail- road and Navigation Company, amounting to $11,000,000, should be acquired by this Company, and it is believed that such acquisition can be accomplished, or substantially accomplished, by the issue and use therefor of this Company's preferred stock in an amount not to exceed the amount of preferred stock of said The Oregon Railroad and Navigation Company so acquired, and Whereas in the opinion of the Board of Directors it is also de- sirable that the outstanding common stock of The Oregon Railroad and Navigation Company (exclusive of such stock owned by the MILLAR COMPLAINANT'S EXHIBIT 16. 61 Oregon Short Line Railroad Company and pledged under its In- come B Mortgage) should be acquired by this Company, and it is believed that such acquisition can be accomplished, or substantially accomplished, by the issue and use therefor of this Company's com- mon stock in an amount not to exceed the amount of such common stock of the said The Oregon Eailroad and Navigation Company so acquired, namely $7,718,600, and Whereas in the opinion of the Board of Directors it is 106. desirable that the outstanding Collateral Trust Non- Cumu- lative Income B Bonds of the said Oregon Short Line Rail- road Company should be acquired by this Company, and it is be- lieved that such acquisition can be accomplished, or substantially accomplished, by issue and use of this Company's preferred stock in an amount not exceeding the amount of such Income B Bonds so acquired, and Whereas, for the purposes aforesaid, an increase of the preferred capital stock of this Company by the amount of $25,000,000 and an increase of its common capital stock by the amount of $7,718,600 are required, and to this end an amendment of the Articles of Associa- tion or Charter of this Company, authorizing such increase of its preferred and common capital stock, is necessary ; Resolved, That the Board of Directors of Union Pacific Railroad Company hereby recommends to the stockholders of said Company that the following amendment of this Company's Articles of Asso- ciation be adopted and made as and in the manner provided for by the laws of the State of Utah ; Know all men by these presents, that Union Pacific Railroad Com- pany, a corporation organized .and existing under the laws of the State of Utah, does hereby, for the purpose of increasing its pre- ferred capital stock by the amount of $25,000,000 and its common capital stock by the amount of $7,718,600 amend its articles of asso- ciation by substituting as Article 4 thereof, and in the place of said Article as amended and heretofore existing, the following: Article 4. The amount of the capital stock of the said 107 corporation shall be one hundred and ninety-six million one hundred and seventy-eight thousand seven hundred dollars ($196,178,700), which shall be divided into and represented by one million nine hundred and sixty-one thousand seven hundred and eighty-seven (1,961,787) shares of the par value of one hundred dollars ($100) each, and each of which shares shall be entitled to one vote at any meeting of stockholders. Of such capital stock one million (1,000,000) shares of one hun- dred dollars each may be issued as preferred stock and nine hundred and sixty- one thousand seven hundred and eighty-seven (961,787) shares of one hundred dollars ($100) each may be issued as common stock. Such preferred stock shall be entitled in preference and priority over the common stock of said corporation to dividends in each and every fiscal year at such rate not exceeding four per cent, per 71535—09 5 62 MILLAR COMPLAINANT'S EXHIBIT 16. annum, payable out of net profits, as shall be declared by the Board of Directors. Such dividends are to be non-cumulative, and the preferred stock is entitled to no other or further share of profits. The directors may adopt proper by-laws to carry into effect the provisions of this Article. Further Resolved, That a meeting of the stockholders of Union Pacific Railroad Company be and the same is hereby called to be held at the office of the said Company at Salt Lake City, in the State of Utah, on the ninth day of October, 1899, at twelve o'clock, noon, for the purpose of considering and acting upon a proposed amendment of the Articles of Association of this Company, increasing 108 its preferred capital stock by the amount of $25,000,000, and its common capital stock by the amount of $7,718,600, and of authorizing the issue and use of such additonal stock, and of taking all suitable action in this behalf ; and that the books for the transfer of stock (both common and preferred) be closed for the purpose of the meeting at the close of business on Saturday, September 9th, 1899, and reopened on the 11th day of October, 1899, or in the event of any adjournments of said meeting or of the annual meeting of stockholders to be held on October 10th, 1899, then on the day fol- lowing the date of the last of any such adjourned meetings. . Further Resolved, That the Secretary of this Company be and he is hereby authorized and directed to give and publish notice of the special meeting of the stockholders of this Company as required or provided by law and by the by-laws of this Company, and in addi- tion thereto to mail to each registered holder of stock of this Com- pany, at the closing of the books on September 9, 1899, a copy of the foregoing resolutions. Further Resolved, That all matters connected' with the various exchanges contemplated in the resolutions this day adopted, includ- ing any adjustment of interest or dividends on securities affected thereby, and the time and manner of carrying out the substantial purposes and plan of the foregoing resolutions, be and they are hereby left to the Executive Committee with full discretion and power. Further Resolved, That the officers of thife Company be and they are hereby authorized to acquire on its behalf the outstanding Col- lateral Trust Series A 5% Income Bonds of the Oregon 109 Short Line Railroad Company, and to pay therefor an equiva- lent amount in the First Mortgage four per cent Gold Bonds of this Company, and that, to this end, the Secretary of the Com- pany is hereby authorized and directed to issue to the holders of Oregon Short Line Railroad Company 5% Series A Income Bonds a notice and offer in the following form : Union Pacific Railroad Company, desiring to acquire a ma- jority of the 5% Income Bonds, Series A, of the Oregon Short Line Railroad Company, offers to holders of such bonds to ex- change the same for its own First Mortgage four per cent Gold Bonds, bond for bond, interest to be adjusted as accrued to Sep- tember 1st. MILLAR — COMPLAINANT'S EXHIBITS 16-17. 63 This is not to constitute a standing offer, but it is intended this offer shall cease without further notification as soon as sufficient bonds have been exchanged for the purposes of Union Pacific Railroad Company. Holders of the Oregon Short Line 5% Income Bonds, Series A, desiring to avail of this offer will promptly tender their bonds for exchange, either to the Old Colony Trust Company, Boston, or the Union Pacific Railroad Company, 120 Broadway, New York. Further Resolved, That the foregoing offer shall be subject to ter- mination at any time by action of the Executive Committee, to which committee the subject of the extent to which the Series A Income Bonds of the Oregon Short Line Railroad Company shall be acquired is referred with full power. , 110 Q. State generally what that resolution is. Isn't that the resolution for the acquisition of the securities of the Oregon Short Line and the Navigation Company by the Union Pacific ? A. It provided for the acquisition of the Income A Bonds and the Income B Bonds of the Oregon Short Line Railway Company, and a part of the preferred and common stock of the Navigation Company. Q. Yes, sir. The Union Pacific already owned the stock, or most of it of the Short Line, did it not — 1899, if you recollect ? A. I do not recall the dates, Mr. Kellogg. I think that is probably the fact. Q. I show you Complainant's Exhibit 17 [Exhibit 25, I. C. C. record]. Is that a certified copy of a resolution? A. This is a certified copy of a resolution adopted by the Board of Directors of the Union Pacific Railroad Company February 20, 1901. Q. That was for the acquisition of the Southern Pacific stock, was it not? A. It had in view the purchase of some shares of Southern Pacific. Mr. Severance. I offer in evidence Complainants' Exhibit 17 (Millar). Complainant's Exhibit 17 (Millar) is as follows: Complainant's Exhibit 17. (Millar.) UNION PACIFIC E. K. CO. (Board of Directors, Feb. 20, 1901.) Purchase of Southern Pacific Go. Stock and Issue of Union 111 Pacific Convertible 4% Bonds. The Chairman submitted to the meeting the record and resolutions of the Executive Committee at its meeting held on February 5, 1901, which were read as follows: "The Chairman submitted to the Committee a letter from Messrs.. Kuhn, Loeb & Co., as follows: 64 millar complainant's exhibit 17. " February 4, 1901. "To the Executive Committee of the Board of Directors, Union Pacific Railroad Co. " Gentlemen : We have purchased 432,700 shares of the Southern Pacific Company of Kentucky, to be paid for as follows : " 144,233 shares on February 11th. " 288,467 shares on, or at our option before, July 10th, with inter- est at 4% per annum from February 11th, all said shares to be depos- ited with a Trust Company until entire payment is completed. " We have further purchased the following shares : " 200,000 shares to be paid for on, or at our option before, March 4th. " 45,000 shares to be paid for, one-half on February 5th, and one- half on February 8th. " The average price at which we have made the above purchases, exclusive of interest accruing, is $50.6146 per share. " We hereby offer to transfer to you our entire purchases as above specified, upon the terms and conditions as entered into and 112 set forth above, your Company to take over and assume the contracts of purchase. " In order that your holdings of Southern Pacific stock may aggre- gate 750,000 shares, we agree to sell to you on March 4, 1901, 72,300 additional shares at the same price, viz.: $50.6146 per share, plus interest at the rate of 4% from February 11, 1901. " In addition to the above purchase prices, we are to be paid by your company two and one-half dollars ($2.50) per share upon said 750,000 shares, as profit to us for the risk assumed in making these purchases. " If you conclude to accept this offer, please advise us promptly, and we are, " Yours very truly, "(Signed) Kuhn, Loeb & Co." Upon consideration of the proposition of Kuhn, Loeb & Co., and upon motion duly made and seconded, it was Resolved, That this Company will and does hereby accept the proposition of Messrs. Kuhn, Loeb & Co., as contained in their com- munication to this Company, dated the 4th day of February, 1901, and now submitted to this Committee. Further Resolved, That, for the purposes of meeting present and future financial requirements of the Company, and for such lawful corporate purposes as may hereafter be determined by the Board of Directors or Executive Committee of this Company, this Company will create an issue of gold bonds to run for a term of ten years, to be known as "First Lien Convertible Four Per Cent. Gold 113 Bonds," to be coupon bonds, with provision for registration, all to be dated on the first day of May, 1901, to bear interest at the rate of 4% per annum, payable semi-annually on the first days of MILLAB COMPLAINANT'S EXHIBIT 17. 65 May and November in each year, both principal and interest being payable in the City of New York, in the gold coin of the United States of America, of the present standard of weight and fineness, without deduction for United States, State, County, or Municipal taxes, which the Company may be required to pay or to retain there- from under any present or future law, and said bonds to be converti- ble at the option of the holders, on or at any time before May 1st, 1906, into the Common Stock of Union Pacific Railroad Com- pany, at par, that is at the rate of ten shares of stock for each bond, with an adjustment of current or accrued interest and dividends as between the said bonds and the stock into which the same may be converted, and said bonds to be redeemable at the option of the Com- pany at a premium of two and one-half per cent., on any interest day after said first day of May, 1906 ; that the total issue of said bonds for all purposes shall be limited to the aggregate principal sum of $100,000,000, and all of said bonds shall be equally secured by an indenture or deed of trust to a responsible Trust Company of the City of New York as Trustee, which said mortgage or deed of trust shall contain the full, usual and ordinary covenants and provisions for the security of railway bonds of like character, and shall embrace and cover the following, among other, properties and assets, namely : the unmortgaged lines of railway of this Company, and all or such 114 parts of the securities belonging to this Company and within its control as shall be agreed upon between this Company and the purchasers of, or guarantors of the subscriptions for said bonds or the initial issue thereof hereinafter provided for. Further Resolved, That $40,000,000 First Lien Convertible Four Per Cent. Gold Bonds of this Company, of the issue which is author- ized by the foregoing resolution, shall be offered to the holders of the Common and Preferred Stock of this Company for subscription, at par, with any necessary adjustment of interest, provided that the offer of the said bonds for subscription by the stockholders may be in such proportions to the outstanding shares of stock as will enable an easily practicable apportionment — for example, one bond may be offered for subscription to the holder of 50 shares of stock, and any balance of unsubscribed bonds remaining after such apportionment may be disposed of at par (less reasonable commission) in such way as shall be found most expedient, and that out of the payments made upon said subscriptions and the proceeds of the sale of said $40,000,000 of bonds this Company will pay for the 750,000 shares of the Capital Stock of the Southern Pacific Company, the specific acquisition of which is authorized by the preceding resolution. Further Resolved, That whereas it is important to the Company to insure at once funds for present commitments and future require- ments, that the sale of said $40,000,000. of bonds be definitely assured, and that pending the necessary proceedings for the creation of said bonds, such funds as may be necessary to meet such commit- 115 ments and requirements be available, Messrs. Kuhn, Loeb & Co. be and they are hereby requested and authorized to agree to 66 MILLAR — COMPLAINANT'S EXHIBIT 17. underwrite the subscription by the stockholders of this Company of said $40,000,000. of the First Lien Convertible Four Per Cent. Gold Bonds of this Company, and this Company hereby undertakes that it will pay to Messrs. Kuhn, Loeb & Co., or such syndicate as they may form, a commission of two and one-half per cent, upon said $40,000,- 000. of bonds, and to said Kuhn, Loeb & Co., for their individual serv- ices a further commission equal to two and one-half per cent, upon said $40,000,000. of bonds; provided, however, that if for any reason the stockholders of this Company should fail to confer the necessary au- thority for increasing the Capital Stock, and otherwise consummat- ing the plan contemplated in these resolutions, then, at the option of the holders, the bonds above provided for, or such other evidences of debt as the Company may have issued in anticipation as against advances made to it, will become due and payable on July 1, 1901, upon not less than thirty days' notice to this Company, and, in such case, the syndicate is to refund one-half of the commission, namely one and one- fourth per cent.; the nature and extent of the security for said bonds and other evidences of debt to be subject to the ap- proval of Messrs. Kuhn, Loeb & Co., and the form of the mortgage or other papers to the approval of their counsel, and Messrs. Kuhn, Loeb & Co. to have the option to take, upon like terms, any additional bonds of the same issue which this Company may hereafter issue prior to May 1, 1906. Further Resolved, That the Chairman of this Committee 116 be and he is hereby authorized to communicate to Messrs. Kuhn, Loeb & Co., the acceptance on the part of this Company of their offer to sell 750,000 shares of stock of the Southern Pacific Company and the terms or substance of all resolutions adopted at this meeting, such communication of the Chairman to serve as this Company's undertaking to Messrs. Kuhn, Loeb & Co. in the premises. Further Resolved, That the proper officers of this Company, under the direction of the Chairman of the Executive Committee be and they are hereby authorized and directed to take any and ail action necessary or proper, or by the said Chairman deemed desirable, to carry out each and all of the foregoing resolutions, except in such respects as the execution of such resolutions is specifically entrusted to the Chairman. Further resolved That, except as to the fundamental conditions of the new issue of bonds heretofore authorized — such as the maxi- mum amount thereof and their rate of interest — discretion and latitude in the variation of the foregoing plan are hereby entrusted to the Chairman of this Committee, with power to carry out the general and substantial purposes of the plan in these resolutions con- templated as in his judgment may be practicable and desirable. Further resolved That, pending final and complete action in the execution of said plan, temporary provision for any of the purposes expressed in these resolutions may be made by the Chairman of this Committee in the name and on behalf of this Company, through 117 the issue of any obligations or certificates of indebtedness of MILLAR — COMPLAINANT'S EXHIBIT 17. 67 i this Company, or by the sale or by the pledge or other temporary disposition of such property and assets of this Company as may in his judgment be required for such purpose. Thereupon, the following preamble and resolutions were unani- mously adopted: "Whereas, this Company, by action of its Board of Directors and Executive Committee, has authorized an issue of $100,000,000 of Ten- Year Four Per Cent. Gold Bonds, to be known as " First Lien Convertible Four Per Cent. Gold Bonds," convertible at the option of the holders on or at any time before May 1, 1906, into the com- mon capital stock of Union Pacific Railroad Company at par, that is at the rate of ten shares of stock for each bond, said bonds to be redeemable at the option of the Company at a premium of 2 \ per cent, on any interest day after said first day of May, .1906, and to be secured by a first mortgage- upon unmortgaged railway belonging to the Company, and by the pledge of securities owned by it and held in its treasury; and, Whereas, $40,000,000. of said bonds, are to be underwritten and offered to the stockholders of Union Pacific Eailroad Company at par; and, Whereas, an increase of the common capital stock of the Company by the amount of $100,000,000 is required, and to this end an amend- < ment of the Articles of Association or charter of this Company au- thorizing such increase of its common capital stock is necessary ; 118 Resolved, That recommendation is hereby made to the stock- holders of the Union Pacific Railroad Company that the fol- lowing amendment of this Company's "Articles of Association be adopted and made as and in the manner provided for by the laws of the State of Utah, viz: AMENDMENT TO ARTICLES OF ASSOCIATION OE UNION PACIFIC RAILROAD COMPANY. Know all men by these presents, That Union Pacific Eailroad Com- pany, a corporation organized and existing under the laws of the State of Utah, does hereby, for the purpose of increasing its common capital stock by the amount of One hundred million dollars ($100,000,000) amend its Articles of Association by substituting as Article 4 thereof, and in place of said article as originally and hereto- fore existing, the following : Article 4. The amount of the capital stock of the said corporation shall be Two hundred and ninety-six million one hundred and sev- enty-eight thousand seven hundred dollars ($296,178,700), which shall be divided into and represented by two million nine hundred and sixty-one thousand seven hundred and eighty-seven (2,961,787) shares of the par value of one hundred dollars ($100) each, and each of which shares shall be entitled to one vote at any meeting of stockholders. Of such capital stock', one million (1,000,000) shares of one hundred dollars ($100) each may be issued as preferred stock, 68 MIL.LAK COMPLAINANT 'S EXHIBIT 17. and one million nine hundred and sixty-one thousand seven hundred and eighty-seven (1,961,787) shares of one hundred dollars ($100) each may be issued as common stock. 119 Such preferred stock shall be entitled in preference and priority over the common stock of said corporation to divi- dends in each and every fiscal year at such rate, not exceeding four per cent, per annum, payable out of net profits, as shall be declared by the Board of Directors. Such dividends are to be non-cumula- tive and the preferred stock is entitled to no other or further share of the profits. The directors may adopt proper by-laws to carry into effect the provisions of this article. Further Resolved, That a meeting of the stockholders of Union Pacific Railroad Company be, and the same is hereby, called to be held at the office of the said company at Salt Lake City in the State of Utah, on the 23d day of March, 1901, at 12 o'clock noon, for the purpose of considering and acting upon the proposed amendment of the Articles of Association of this Company increasing its common capital stock by the amount of $100,000,000, and of authorizing the issue and use of such additional stock, and of taking all suitable action' in this behalf and in the premises, and that the books for the transfer of stock (both common and preferred) be closed for the purpose of the meeting, as well as for the purposes of the dividends already declared, at 12 o'clock noon, on February 23, 1901, and re- opened at 10 A. M. on March 25, 1901. Further Resolved, That the Secretary of this Company be, and he is hereby, authorized and directed to give and publish notice of the special meeting of the stockholders of this Company as required or provided by law or by the by-laws of this Company, and, in addition thereto, mail to each registered holder of stock of this Company at the closing of the books on February 23, 1901, a copy of this action. 120 Upon motion, duly made and seconded, it was unanimously Resolved, That this Board hereby approves the action of the Executive Committee as set forth and contained in the resolutions of said Committee now submitted to this Board, and that such action and every part thereof is hereby adopted as the action of this Board in the premises. Mr. Schiff and Mr. Kahn were excused from voting, and did not vote upon the foregoing resolution. Upon motion, duly made and seconded, it was unanimously Resolved, That for the purposes of meeting the present and future financial requirements of the Company, and for such lawful cor- porate purposes as may hereafter be determined by the Board of Directors or Executive Committee of this Company, this Company will create an issue of Gold Bonds to run for a term of ten years', to be known as " First Lien Convertible Four Per Cent Gold Bonds," to be coupon bonds with provision for registration, all to be dated on the first day of May, 1901, to bear interest at the rate of 4% per annum, payable semi-annually on the first days of May and Novem- MILLAR COMPLAINANT'S EXHIBIT 17. 69 ber in each year, both principal and interest being payable in the City of New York, in gold coin of the United States of America of the present standard of weight and fineness, without deduction for United States, State, County, or Municipal taxes which the Company may be required to pay or to retain therefrom, under any present or future law, and said bonds to be convertible, at the option of the holders, on or at any time before May 1, 1906, into the com- mon stock of the Union Pacific Railroad Company, at par, 121 that is, at the rate of ten shares of stock for each bond, with an adjustment of current or accrued interest and dividends as between the said bonds and the stock into which the same may be converted, the said bonds to be redeemable at the option of the Company at a premium of two and one-half per cent, on any interest day after said first day of May, 1906; that the total issue of said bonds for all purposes shall be limited to the aggregate principal sum of $100,000,000, and all said bonds shall be equally secured by an indenture or deed of trust to The Mercantile Trust Company of the City of New York, as Trustee, or to such other responsible Trust Company of said City as shall be selected by the Executive Com- mittee, which said mortgage or deed of trust shall contain the full, usual and ordinary covenants and provisions for the security of railway bonds of like character, and shall embrace and cover the following lines of railway of this Company, and the following securities owned by it and held in its Treasury : The lines of railway to be covered by said mortgage are as follows : The line of railroad, together with its appurtenances, formerly belonging to the Echo and Park City Railway Company, extending from its Junction with the main line of the Union Pacific Railroad at Echo, in Utah, to the terminus of said line at Park City, in Sum- mit County, Utah, a distance of about 30.19 miles. The line of railroad, together with appurtenances, formerly be- longing to the Union Pacific, Denver, and Gulf Railway Com- 122 pany, and known as the Julesburg Branch, extending from Julesburg in the State of Colorado to La Salle in said State, a distance of about 151.53 miles. The line of railroad, together with its appurtenances, formerly belonging to the Junction City and Fort Kearney Railway Com- pany, extending from Junction City in the State of Kansas to Belle- ville in said State, a distance of about 88 miles. The line of railroad, together with its appurtenances, formerly belonging to Kearney and Black Hills Railway Company, extending from Kearney in the State of Nebraska to Callaway in said State, a distance of about 65.72 miles. The lines of railroad, together with their appurtenances, formerly belonging to the Omaha & Republican Valley Railway Company, and consisting of a line of railroad extending from Valley in Douglas County, Nebraska, southerly to Manhattan, with branch to Blue Springs and a branch from Valparaiso to Stromsberg in Nebraska; also a line extending from Columbus, Nebraska, to Norfolk, Nebraska, 70 MILLAR COMPLAINANT'S EXHIBIT 11. with a branch line extending from Oconee to Albion, and a branch from Genoa to Cedar Eapids, Nebraska; also a line of railroad ex- tending from Grand Island, Nebraska, to Howard, Nebraska, with a spur from Scotia Junction to Scotia, Nebraska, and a line extending from St. Paul in Howard County, Nebraska, to Loup City, in Sher- man County, Nebraska, and also a line extending from Nantasket to Pleasanton in Nebraska, in all consisting of about 482.02 miles of railroad. The line of railroad formerly belonging to the Salina and South- western Railway . Company, with its appurtenances, extending from Salina, Kansas, to McPherson, Kansas, a distance of about 35.47 miles. 123 The line of railroad formerly belonging to the Solomon Railroad Company, together with its appurtenances, extending from Solomon, Kansas, to Beloit, Kansas, a distance of about 57.04 miles. The line of railroad, together with its appurtenances, formerly belonging to the Union Pacific, Lincoln & Colorado Railway Com- pany, extending from Salina, Kansas, by way of Oakley to Colby, Kansas, a distance of about 225.52 miles. t Total mileage about 1J.35.51 miles. The securities owned by this Company and to be covered by said mortgage are as follows: Oregon Short Line Railroad Co., Series A, Income Bonds $6, 591, 000 Oregon Short Line Railroad Company, Series B, Income Bonds 14, 590, 000 Oregon Short Line R. R. Co.'s Capital Stock 27, 337, 650 Oregon R. R. & Nav. Co.'s Capital Stock : Common Stock 7, 649, 800 Preferred Stock 9, 855, 506 Also such further bonds, stocks, and other securities and property now owned or hereafter acquired by this Company as this Company may, by action of this Board or of the Executive Committee, specifi- cally pledge under said mortgage. Upon motion, duly made and seconded, the following preamble and resolutions were unanimously adopted : Whereas, This Company, by action of its Board of Directors 124 and Executive Committee, has authorized an issue of $100,- 000,000 of Ten-Year Four Per Cent. Gold Bonds, to be known as " First Lien Convertible Four Per Cent. Gold Bonds," convert- ible at the option of the holders on or at any time before May 1, 1906 into the common capital stock of Union Pacific Railroad Com- pany at par, that is at the rate of ten shares of stock for each bond, said bonds to be redeemable at the option of the Company at a pre- mium of 2| per cent, on any interest day after said first day of May, 1906, and to be secured by a first mortgage upon unmortgaged rail- way belonging to the Company, and by the pledge of securities owned by it and held in its treasury ; and MILLAR COMPLAINANT'S EXHIBIT 17. 71 Whereas, $40,000,000 of said bonds, are to be underwritten and offered to the stockholders of the Union Pacific Railroad Company at par; and, Whereas, an increase of the common capital stock of the Company by the amount of $100,000,000 is required, and to this end an amend- ment of the Articles of Association or charter of this Company au- thorizing such increase of its common capital stock is necessary : Resolved, That recommendation is hereby made to the stockholders of the Union Pacific Railroad Company that the following amend- ment of this Company's Articles of Association be adopted and made as and in the manner provided for by the laws of the State of Utah, viz : " AMENDMENT TO ARTICLES OF ASSOCIATION OF UNION PACIFIC RAILROAD COMPANY. " Know all men by these presents, that Union Pacific Railroad Com- pany, a corporation organized and existing .under the laws 125 of the State of Utah, does hereby, for the purpose of increasing its common capital stock by the amount of one hundred million dollars ($100,000,000) amend its Articles of Association by substi- tuting as Article 4 thereof, and in place of said article as originally and heretofore existing, the following : "Article 4. The amount of the capital stock of the said corporation shall be Two hundred and ninety-six million one hundred and seventy-eight thousand seven hundred dollars ($296,178,700) which shall be divided into and represented by two million nine hundred and sixty-one thousand seven hundred and eighty-seven (2,961,787) shares of the par value of one hundred dollars ($100) each, and each of which shares shall be entitled to one vote at any meeting of stock- holders. Of such capital stock, one million (1,000,000) shares of one hundred dollars ($100) each may be issued as preferred stock and one million nine hundred and sixty-one thousand seven hundred and eighty-seven (1,961,787) shares of one hundred dollars ($100) each may be issued as common stock. " Such preferred stock shall be entitled in preference and priority over the common stock of said corporation to dividends in each and every fiscal year at such rate, not exceeding four per cent, per annum payable out of net profits, as shall be declared by the Board of Di- rectors. Such dividends, are to be non-cumulative and the preferred stock is entitled to no other or further share of the profits. The directors may adopt proper by-laws to carry into effect the provisions of this article." 126 Further Resolved, That a meeting of the stockholders of Union Pacific Railroad Company be, and the same is hereby, called to be held at the office of the said Company at Salt Lake City, in the State of Utah, on the 23rd day of March, 1901, at 12 o'clock noon, for the purpose of considering and acting upon the proposed amendment of the Articles of Association of this Company increas- 72 MILLAR — COMPLAINANT'S EXHIBITS 17-18. ing its Common Capital Stock by the amount of $100,000,000, and of authorizing the issue and use of such additional stock, and of taking all suitable action in this behalf and in the premises, and that the books for the transfer of stock (both Common and Preferred) be closed for the purpose of the meeting, as well for the purposes of the dividends already declared, at 12 o'clock noon on February 23rd, 1901, and reopened at 10 a. m. on March 25th, 1901. Further Resolved, That the Secretary of this Company be, -and he is hereby, authorized and directed to give and publish notice of a special meeting of the stockholders of this Company as required or provided by law or by the by-laws of this Company, and, in addi- tion thereto, mail to each registered holder of stock of this Company at the closing of the books on February 23, 1901, a copy of this action. Q. I show you Complainant's Exhibit 18. Is that a certified copy of a resolution of the Board of Directors of the Union Pacific Com- pany adopted January 31, 1901, for financing the Union Pacific matters ? A. Yes. 127 Mr. Severance. I offer in evidence Complainant's Exhibit 18 (I. C. C. record, Millar Exhibit 26). Complainant's Exhibit 18 is as follows: Complainant's Exhibit 18. (Millar.) UNION PACIFIC RAILROAD CO. (Certified Copy.) (Directors, Jan. SI, 1901.) Securities of other Companies. The general subject of making financial provision for contem- plated acquisitions of securities of other companies, and for branches and extensions of this Company's system, and the subject of protect- ing the properties of the separate companies embraced in the system, and of unifying the operation of the several lines constituting the system, were considered and discussed at length, and, upon motion duly made and seconded, it was Resolved: 1. That reference be and it is hereby made to the Executive Com- mittee, with full power, of the subject of making immediate provi- sion for present and future financial requirements of the Company, including provisions for financing acquisitions, now or hereafter con- templated in the interest of this Company, of securities of any other company or companies, and including full power to conduct and pro- vide for all measures, proceedings, and actions to carry out 128 such acquisitions; and among the measures which may be so taken for said purpose, or for any of the purposes expressed MIli,AR COMPLAINANT'S EXHIBITS 18-29. 73 in these resolutions, the Executive Committee is hereby authorized to provide for the issue and negotiation of bonds and obligations of this Company, in an amount not exceeding $100,000,000. Said Committee may determine the terms and period, or periods, of said bonds and the rate of interest, not to exceed four per cent., which the same shall bear; and for the purpose of securing the payment of the principal and interest of said bonds, as the same shall mature, the Executive Committee may authorize the making, execution, and delivery by this Company of a mortgage, deed of trust or pledge, upon such terms, conditions, and trusts as said Committee may determine, of lines of railroad, franchises, stocks, bonds, assets, and properties of any kind belonging, or which may belong to this Company. 2. That any such new bonds which may be issued by this Com- pany may be made convertible at any time, at the option of the hold- ers, into the common stock of this Company, and the Executive C° m_ mittee may take any and all steps necessary and considered by it proper to provide for such increase of the authorized issue of this Company's common stock as will enable such conversion of all such new bonds as may be authorized for issue and negotiation by this Company. 3. That, pending such final and complete action as may be deter- mined by the Executive Committee and taken by this Company in the premises, temporary provision for any of the purposes herein expressed may be made by the Chairman of the Executive Com- 129 mittee, in the name and on behalf of this Company, through the issue of any obligations or certificates of indebtedness of this Company, or by the sale or by the pledge or other temporary disposition of such property and assets of this Company as may in his judgment be required for such purposes. 4. That all matters touching the financial and operating relations between this Company and any and all other companies of the sys- tem are hereby referred to the Executive Committee, with full power ; and said Committee is hereby authorized to provide in its discre- tion for settlement of accounts between said companies and the acqui- sition of any property and any assets of any other of said companies, and for any lease or operating agreements, and for any control or use of the properties and assets of said other companies that said Committee may deem advisable, and upon such terms, conditions and guarantees as said Committee may determine or approve. Q. I show you Complainant's Exhibits 19 to 29. Are these exhibits certified transcripts from the record books of the Board of directors, stockholders and executive committee of the Union Pacific and Short Line companies, as they purport to be — certified by you? A. Yes, sir. , Mr. Severance. I offer in evidence the following: Complainant's Exhibit 19 (I. C. C. record, Millar Exhibit 27) ; Complainant's Exhibit 20 (I. C, C. record, Millar Exhibit 28) ; Complainant's Exhibit 21 (I. C. C. record, Millar Exhibit 29) ; Complainant's Exhibit 22 (I. C. C. record, Millar Exhibit 30) ; 74 MILLAR — COMPLAINANT'S EXHIBIT 19. Complainant's Exhibit 23 (I. C. C. record, Millar Exhibit 130 31) ; Complainant's Exhibit 24 (I. C. C. record, Millar Ex- hibit 32) ; Complainant's Exhibit 25 (I. C. C. record, Millar Exhibit 33) Exhibit 34) Exhibit 35) Exhibit 36) Exhibit 37). Complainant's Exhibit 26 (I. C. C. record, Millar Complainant's Exhibit 27 (I. C. C. record, Millar Complainant's Exhibit 28 (I. C. C. record, Millar Complainant's Exhibit 29 (I. C. C. record, Millar Complainant's Exhibit 19 is as follows: Complainant's Exhibit 19. (Millar.) UNION PACIFIC RAILROAD COMPANY. (Certified Copy.) (Executive Committee, Dec. 13, 1906.) Equipment Association Organisation. The Chairman stated that in his opinion it was advisable to have a corporation formed for the purpose of purchasing equipment to be used by this Company and its allied lines, the intention being that the Equipment Company should take title to the rolling stock and then lease it to the various associated companies, or at all events should hold the title thereto until such rolling stock should be distributed among the said companies; that, pursuant to this plan, he had here- tofore caused a corporation to be organized under the laws of the State of Utah, known as " Union Pacific Equipment Association," with an authorized capital stock of $100,000, and had caused the entire amount of this stock to be subscribed for account of 131 Union Pacific Railroad Company as follows : W- H. Bancroft, 996 shares ; P. L. Williams, W. S. McCornick, E. Buckingham, and C. J. McNitt, 1 share each ; that under the laws of Utah it was necessary that 10 per cent of these subscriptions should be paid in in cash at the time of the organization of the Company, and that he had directed the Union Pacific Railroad Company's treasurer to pay this sum, namely, $10,000 into the treasury of Union Pacific Equip- ment Association, which had been done. On motion, duly made and seconded, it was unanimously Resolved, That the action of the Chairman of the Executive Com- mittee in causing the organization of Union Pacific Equipment As- sociation under the laws of the State of Utah, with a capital stock of $100,000, and in causing the said stock to be subscribed for account of this Company, and in directing that 10 per cent, thereof be paid in cash ; and the action of the treasurer of this Company in paying $10,000 into the treasury of Union Pacific Equipment Association upon said subscriptions be and the same is hereby ratified, approved, and confirmed. MILLAR — COMPLAINANT'S EXHIBITS 19-20. 75 Further resolved, That the treasurer of this Company be and he is hereby authorized and directed to pay into the treasury of said Union Pacific Equipment Association the remainder of said subscrip- tions, namely, the sum of $90,000 when and as the same shall be called by the Board of Directors of said Union Pacific Equipment Asso- ciation. 132 Complainant's Exhibit 20 is as follows: Complainant's Exhibit 20. (Millar.) UNION PACIFIC KAILEOAD COMPANY. (Certified Copy.) (Executive Committee, Dec. IS, 1906.) Pacific Fruit Express Company Organization. The Chairman stated that the contract between this Company and Armour Car Lines with reference to the transportation of fruit and other perishable freight, contained a provision authorizing the ter- mination thereof upon six months' notice from either party, and that the latter had given notice of its intention to terminate such contract; that he was advised that under the Interstate Commerce Act as amended Railroad Companies are required to provide refrigerator cars and to show the charges for such cars and for the service of re- frigeration, ventilation, etc., in their tariffs, and to include such charges in their freight bills ; that under the circumstances it seemed advisable for this Company and the Southern Pacific Company to provide for the incorporation of a Company, whose stock should be taken by them, to acquire and furnish them and their allied lines refrigerator cars required by them, and to take over and carry on the business of furnishing cars for traffic originating upon their lines which require refrigeration and ventilation, and of attending to the icing and ventilation of such cars; and that, pursuant to this plan, he had heretofore caused a corporation, known as " Pacific 133 Fruit Express Company" to be organized under the laws of the State of Utah, with an authorized capital of $12,000,000, and had arranged with W. H. Bancroft to subscribe for 11,996 shares, and P. L. Williams, D. E. Burley, J. A. Reeves, and F. H. Knicker-. bocker each to subscribe for 1 share, of such capital stock, and that such subscriptions had been made for .account of Union Pacific Rail- road Company and Southern Pacific Company each to take one-half of the shares so subscribed for. He further stated that, under the laws of the State of Utah, it was necessary that 10 per cent, of the authorized capital stock should be paid in in cash at the time of the organization of the company, and that he had directed the treasurer of the Union Pacific Railroad Company to pay that amount, one- half of it to be repaid to said company by the Southern Pacific Com- pany. The Chairman further stated that, in furtherance of this plan, he had some time ago authorized the purchase for account of said Pa- 76 MILLAR COMPLAINANT'S EXHIBITS 20-21. cific Fruit Express Company of 6000 refrigerator cars at a cost of $1700 each, amounting in the aggregate to $10,200,000, some of which cars were about ready for delivery, and it was hoped that the others would be delivered by the time or very soon after the expiration of the contract with Armour Car Lines Company under the notice here- tofore given; and he further stated that, in order to provide the Pacific Fruit Express Company with the funds necessary to pay for such cars, it should issue its stock from time to time, and the Southern Pacific Company and Union Pacific Railroad Company each should take one-half of such stock when and as issued at par. The Chairman further stated that it might be necessary 134 or advisable to admit some other railroad companies as stock- holders of said Pacific Fruit Express Company, but that this could be done later by the sale by the Southern Pacific Company and Union Pacific Railroad Company of portions of the stock so taken by them to such other railroad companies. On motion, duly made and seconded, it was unaimously Resolved, (1) That the action of the President of this Company in causing the incorporation and organization of Pacific Fruit Ex- press Company under the laws of the State of Utah, with an author- ized capital stock of $12,000,000 and in arranging for the subscrip- tion on account of this Company for 6,000 shares of such capital stock, and for the payment into the treasury of said Company of 10 per cent of the authorized capital stock, be and such action is hereby ratified and approved. Resolved, (2) That the President of this Company be and he is hereby authorized to subscribe and pay for and receive, or to arrange for the subscription and payment for and receipt of, one-half of the remaining capital stock of said Pacific Fruit Express Company, from time to time, as issued by said Company, pursuant to the rec- ommendation of the Chairman, as above set forth. Resolved, (3) That this Company, as a subscriber to the capital stock of said Pacific Fruit Express Company, hereby assents to the purchase by said company of 6000 refrigerator cars at a cost of $1700 each, amounting in the aggregate to $10,200,000, as above stated by the Chairman of this Committee. 135 Complainant's Exhibit 21 is as follows : Complainant's Exhibit 21. (Millar.) OREGON SHORT LINE R. R. CO. (Certified Copy.) (Executive Committee, March 13, 1903.) Authority to Sell Southern Pacific Stock. The Chairman reported that the 900,000 shares of the capital stock of the Southern Pacific Company, sold to this Company in accord- MILLAR — COMPLAINANT'S EXHIBITS 21-22. 77 ance with the resolution adopted by this Committee on March 11, 1903, had been delivered to this Company. Upon motion, duly made and seconded, it was unanimously Resolved, That the Chairman be and is hereby authorized to sell and dispose of all or any part of the shares of stock of the Southern Pacific Company held by this Company at not less than its cost to this Company, upon such terms and conditions as he may deem advisable. 136 Complainant's Exhibit 22 is as follows : Complainant's Exhibit 22. (Millar.) OREGON SHORT LINE R. R. CO. (Certified Copy.) (Executive Com. Mar. 11, 1903.) (Southern Pacific.) Purchase of Southern Pacific Stock. There was presented to the meeting a certified copy of a resolu- tion adopted by the Executive Committee of the Board of Directors of Union Pacific Eailroad Company, offering to sell to this Company, upon the terms and conditions set forth in said resolution, certain snares of the capital stock of the Southern Pacific Company, which resolution is as follows : " On motion, duly seconded, the following preamble and resolution were unanimously adopted: Whereas the sale of certain securities to Oregon Short Line Eail- road Company authorized by resolutions adopted by the Board of Directors of this Company on February 26, 1902, has not been con- summated with reference to the 900,000 shares of the capital stock of the Southern Pacific Company, and it is desired that as respects said shares the sale thereof shall be had upon terms modified and fixed as herein provided ; and 137 Whereas Oregon Short Line Railroad Company has con- sented that the sale be so made and consummated, Resolved, That this Company sell to Oregon Short Line Eailroad Company 900,000 shares of the stock of the Southern Pacific Com- pany, for the sum or price of $55,428,183.38, and that in partial pay- ment for such purchase price this Company accept, at their par value, 162,814 shares of the. common capital stock of Oregon Railroad & Navigation Company, the balance of said purchase price, upon the settlement of the accounts between this Company and the Oregon Short Line Eailroad Company, to be paid by the issue to this Com- pany of obligations of- the Oregon Short Line Railroad Company bearing four per cent interest and payable on demand. 71535—09 6 78 MILLAR COMPLAINANT'S EXHIBITS 22-23. Further Resolved, That the proper officers of this Company be and they are hereby authorized to arrange and carry out such sale." " I, Alex. Millar, Secretary of Union Pacific Eailroad Company, do hereby certify that the foregoing is a true copy of a preamble and resolution duly adopted by the Executive Committee of the Board of Directors of said Company at a meeting of said Committee held on March 11, 1903. Attest : [seal.] Alex. Millar, Secretary.'''' Upon motion, duly made and seconded, it was unanimously Resolved, That this Company hereby accepts the offer made to it by Union Pacific Eailroad Company to sell to this Company 900,000 shares of the capital stock of the Southern Pacific Company upon the terms and conditions set forth in said offer. 138 Further Resolved, That the proper officers of this Company be and they are hereby authorized and empowered to take such action, execute such instruments, and execute, deliver, or receive such securities and obligations, as may be necessary or proper to carry out and complete such sale. Complainant's Exhibit 23 is as follows : Complainant's Exhibit 23 — (Millar.) OREGON SHORT LINE R. R. CO. ( Certified Copy. ) (Directors, Nov. 1%, 1903.) (S. P. Co.) Sale and Purchase of Southern Pacific Stock. The Chairman reported that, in pursuance of a letter received from Mr. Wm. Eockefeller, dated November 5, 1903, and submitted to the Board, he had closed the transaction in respect of the 300,000 shares of- the capital stock of the Southern Pacific Company, and that the officers of the Company had paid the principal amount involved, together with interest and commission ; Wherefore, on due consideration and discussion, and on motion duly made and seconded, it was Resolved, That the action of the Chairman in the transactions with Mr. Eockefeller relating to said stock of the Southern Pacific Co. be in all things adopted, ratified and approved. 139 Complainant's Exhibit 24 is as follows : MILLAR COMPLAINANT'S EXHIBIT 24. 79 Complainant's Exhibit 24 — (Millar.) UNION PACIFIC RAILROAD CO. (Certified Copy.) Executive Committee, March 11, 1903. Release of S. P. Stock from First Lien Mtge. On motion, duly seconded, the following preamble and resolutions were unanimously adopted: Whereas, by Article Twelfth of this Company's First Lien Mort- gage and Deed of Trust, dated April 15, 1901, to the Mercantile Trust Company, as Trustee, it is. provided among other things that this Company has the right at any time or times, by resolution of its Board of Directors or Executive Committee to require the said Trustee to deliver to this Company fully discharged from the lien and trusts of said mortgage, any and all shares of the capital stock of the Southern Pacific Company pledged with the said Trustee upon the delivery to the said Trustee, in substitution therefor, of certain securities in said Articles mentioned, such substitution to be upon the basis of valuation in said article fixed; and ■ Whereas, this Company desires to secure the delivery to it, fully discharged from the liens and trusts of said mortgage, 495,140 .140 shares of the capital stock of the Southern Pacific Company, and to deliver to the said Trustees, in substitution therefor, the following described securities named in said Articles, viz. : 162,814 shares of the par value of One Hundred (100) dollars each, of the common capital stock of the Oregon Railroad & Navigation Com- pany; $8,476,000 par value, of the Income B Bonds of the Oregon Short Line Railroad Company. Resolved that the Mercantile Trust Company, the Trustee of this Company's First Lien Mortgage and Deed of Trust, dated April 15th, 1901, be and it is hereby required to deliver to this Company, fully discharged from the lien and trust of said mortgage, 495,140 shares of the capital stock of the Southern Pacific Company pledged with said Trustee under said mortgage, and to accept, in substitution therefor, the following described securities mentioned in Article Twelfth of said mortgage, and which, by the terms of said article, may be received by said Trustee in substitution for the shares of the capital stock of the Southern Pacific Company, viz.: 162,814 shares of the par value of One Hundred (100) Dollars each, of the common stock of the Oregon Railroad & Navigation Company ; $8,476,000, par value, of the Income B Bonds of the Oregon Short Line Railroad Company, which said bonds are stamped or to be stamped as follows : "With the consent of the owner and holder of this bond the 162,814 shares of the common capital stock of the Oregon Railroad & Naviga- 80 MILLAR — COMPLAINANT'S EXHIBITS 24-25. tion Company pledged with the Trustee of the mortgage referred to in said bond have been fully released from the trusts of said mort- gage and delivered to the Oregon Short Line Eailroad Company." Further Resolved, that the proper officers of this Company 141 be and they are hereby authorized and empowered to execute such instruments and take such action as may be necessary or proper to carry out the foregoing resolution. Complainant's Exhibit 25 is as follows: Complainant's Exhibit 25. (Millar.) UNION PACIFIC E. E. COMPANY. (Certified Copy.) Executive Committee, March 11, 1903. Release of Southern Pacific Stock from First Lien Mtge. On motion, duly seconded, the following preamble and resolution were unanimously adopted : Whereas by Article Twelfth of this Company's First Lien Mort- gage and Deed of Trust, dated April 15th, 1901, to the Mercantile Trust Company as Trustee, it is provided, among other things, that this Company shall have the right, by resolution of its Board of Directors or its Executive Committee, to require said Trustee to deliver to the Eailroad Company, fully discharged from the lien and trusts of said mortgage, any and all securities pledged and deposited under said mortgage upon the delivery to the Trustee of a certified copy of a resolution of the Board of Directors or Executive Com- mittee of this Company, calling upon the Trustee to make such deliv- ery or release, and specifying the securities to be withdrawn, 142 and upon the payment by the Railroad Company to the Trustee in cash or in bonds issued under said mortgage, taken at their face value, of an amount equal to and at the rate of the valuation attributed or affixed to the securities so withdrawn ; and Whereas the valuation attributed or affixed to the capital stock of the Southern Pacific Company pledged under said mortgage is fifty (50) per cent of the par or face value thereof; and Whereas by Article Thirteenth of said mortgage it is provided among other things, that all bonds issued thereunder and converted by the holders into common stock of this Company and cancelled shall be available to this Company, at their face value, as payment for securities withdrawn at the valuation mentioned in Article Twelfth of said mortgage ; and Whereas bonds issued under said mortgage, in the par amount of $12,743,000 have been converted by the holders thereof into common stock of this Company, and this Company desires to deliver said bonds to the Trustee of said mortgage for destruction, and to receive MILLAR — COMPLAINANT'S EXHIBITS 25-26. 81 the release from the terms and provisions of said mortgage of such an amount of the capital stock of the Southern Pacific Company pledged thereunder as by the terms of said mortgage is deliverable against said bonds ; Resolved, that the Mercantile Trust Company, the Trustee of this Company's First Lien Mortgage and Deed of Trust, dated April 15, 1901, be and it is hereby required to deliver to this Company fully discharged from the lien and trust of said mortgage 254,860 shares of the capital stock of the Southern Pacific Company pledged under said mortgage upon delivery to said Trustee of $12,743,000 face value, of bonds issued under said mortgage and converted by the holders into common stock, together with all unpaid coupons pertaining thereto. 143 Complainant's Exhibit 26 is as follows : Complainant's Exhibit 26. (Millar.) UNION PACIFIC RAILROAD CO. (Certified Copy.) Directors, Feb. 26, 1902. Sale of Stocks to Oregon Short Line. Upon motion, duly seconded, the following resolution was unani- mously adopted : Resolved, that this Board hereby authorizes a sale to the Oregon Short Line Eailroad Company of the securities below described owned by Union Pacific Eailroad Company for the sum of $69,347,129.13, to be represented by certificates of obligation of the Oregon Short Line Eailroad Company in the same general 'form and tenor as those heretofore executed by said Company in respect of the shares of the Northern Pacific Eailroad Company, and in the re- spective amounts below set opposite the securities hereby authorized to be sold, namely: 900,000 shares of the stock of the Southern Pacific Co $51, 796, 179. 13 76,684 shares of the common stock of the Oregon Railroad & Navigation Co 7, 668, 400. 00 98,825.50 shares of the preferred stock of the Oregon Railroad & Navigation Co 9, 882, 550. 00 and the following shares of stock, to be paid for in like man- 144 ner, in the sum of $1,000,000 (or in cash) : $5,000,000 face value, Occidental & Oriental Steamship Co.'s stock. 150,000, face value, Ogden Union Depot & Eailway Company's stock. 2,400,000 face value, Pacific Express Company's stock. 5,000,000 face value, Union Pacific Coal Company's stock, 82 MILLAR COMPLAINANT'S EXHIBITS 26-27. such sales to be subject to the lien of the First Lien Mortgage and Deed of Trust of this Company as to the securities above specified which are therein embraced, and deliveries of said securities to be made to the Short Line Company against its said certificates of obligation as such securities are from time to time released and dis- charged from the lien of said mortgage. Further resolved: That the Executive committee and the proper officers of this Company be and they are hereby authorized to arrange and carry out such sale, and to make and deliver or receive on behalf of this Company such contracts, agreements, or indentures as may be advised by counsel for the purpose of carrying, out such sale, and to take such steps and proceedings as may be necessary to withdraw from the trust of the First Lien Mortgage and Deed of Trust of this Company such of the above mentioned securities as are embraced therein, and to arrange for the investment of the proceeds resulting from the withdrawal of such securities or any other cash which may be in the hands of the Trustee. 145 Complainant's Exhibit 27 is as follows: Complainant's Exhibit 27. (Millar.) UNION PACIFIC RAILROAD CO. (Certified Copy) (Executive Committee, March 11, 1903). Sale of Southern Pacific Stock to Short Line. On motion, duly seconded, the following preamble and resolution were unanimously adopted : Whereas the sale of certain securities to Oregon Short Line Kail- road Company authorized by resolutions adopted by the Board of Directors of this Company on February 26, 1902, has not been con- summated with reference to the 900,000 shares of the capital stock of the Southern Pacific Company, and it is desired that as respects said shares the sale thereof shall be had upon terms modified and fixed as herein provided; and Whereas Oregon Short Line Eailroad Company has consented that the sale be so made and consummated. Resolved, that this Company sell to Oregon Short Line Railroad Company 900,000 shares of the stock of the Southern Pacific Com- pany for the sum or price of $55,428,183.38, and that in partial pay- ment of such purchase price this Company accept, at their par value, 162,814 shares of the Common Capital Stock of Oregon Eailroad and Navigation Company, the balance of said purchase price upon the settlement of the accounts between this company and Oregon 146 Short Line Eailroad Company, to be paid by the issue to this MILLAR — COMPLAINANT'S EXHIBITS 27-28. 83 Company of obligations of the Oregon Short Line Railroad Company bearing four per cent, interest and payable on demand. Further resolved, that the proper officers of this Company be and they are hereby authorized to arrange and carry out such sale. Complainant's Exhibit 28 is as follows: Complainant's Exhibit 28. (Millar) UNION PACIFIC E. E. CO. (Certified Copy.) (Executive Committee, March 11, 1903). Release of 0. R. c& N. Stock from Short Line Income B Mtge. On motion, duly seconded, the following preamble and resolutions were unanimously adopted: Whereas this Company is the owner of $14,779,000, par value of Collateral Trust Income B Bonds of Oregon Short Line Railroad Company, being all of the bonds issued and outstanding under said mortgage with the exception of $62,000, par value, thereof; and Whereas there are deposited with the Trustee of said mortgage, as a part of the security for the bonds issued thereunder, 162,814 147 shares of the common capital stock of the Oregon Railroad & Navigation Company; and, Whereas the Oregon Short Line Railroad Company desires to ob- tain the release by the Trustee of said Income B Mortgage of the shares of the common stock of the Oregon Railroad and Navigation Company held by said Trustee, Resolved, that this Company, as owner of $14,779,000, par value, of the Collateral Trust Income B Bonds of the Oregon Short Line Railroad Company, does hereby consent to the withdrawal from said mortgage of the shares of stock of the Oregon Railroad and Navi- gation Company deposited with the Trustee thereof, and the Trustee of said Mortgage be and it is hereby requested to release said stock from said mortgage and deliver the same to Oregon Short Line Rail- road Company. Further Resolved, that the proper officers of this Company be and they are hereby directed to cause the Income B Bonds owned by this Company, together with the coupons annexed thereto to be stamped as follows: (Stamp for Bond) With the consent of the owner and holder of this bond the 162,814 shares of the common capital stock of the Oregon Rail- road and Navigation Company pledged with the Trustee of the 84 MILLAR COMPLAINANT'S EXHIBITS 28-29. Mortgage referred to in said bond have been fully released from the trusts' of said mortgage and delivered to the Oregon Short Line Railroad Company. (Stamp for Coupon) Security partially released. See bond. 148 Complainant's Exhibit 29 is as follows: Complainant's Exhibit 29. (Millar.) UNION PACIFIC HAILEOAD CO. (Certified Copy.) (Executive Committee, July 17, 1902.) Correspondence with Kuhn, Loeb & Co. re Oregon Short Line Par- ticipating Bonds. The Chairman submitted certain correspondence between himself and Messrs. Kuhn, Loeb & Co., which correspondence is as follows: " New York, July 16, 1902. Messrs. Kuhn, Loeb & Co., 27-29 Pine Street, New York. Dear Sirs: The Oregon Short Line Railroad Company has de- cided to create an issue of Oregon Short Line Four Per Cent, and Participating Twenty-five year Gold Bonds, redeemable at the option of the company on any semi-annual interest day at one hundred two and one-half and accrued interest. These bonds are to be secured by the pledge and deposit with a New York Trust Company, subject to an indenture of trust, of ten shares of the Common Stock of the Northern Securities Company for every $1,000. face value of such bonds, and the holders of the bonds are to be entitled for each year, beginning with 1903, to any dividends in excess of four per cent, per annum which shall be paid for such year upon such deposited stock. 149 " The Union Pacific Railroad Company will become the owner of a large amount of the above-mentioned bonds, and proposes, before July 25, 1902, to offer to its stockholders the privi- lege of subscribing for such bonds to a face amount, equal to fifteen per cent, of the par amount of the stock which they respectively hold, at ninety (90) and accrued interest, under the terms of an offer of subscription of which a draft is submitted herewith. " In order to insure the necessary funds to provide for present com- mitments and future requirements, I am instructed by the Execu- tive Committee of the Union Pacific Railroad Company to request you to agree to purchase, or form a guaranty syndicate which shall MILLAR COMPLAINANT'S EXHIBIT 29. 85 agree to purchase, at said price of ninety and accrued interest, upon the terms of said offer of subscription, such part of $31,000,000. of said bonds as may not be subscribed for by the stockholders upon 'the proposed offering. " I should be obliged if you would state the terms upon which you will agree to make such purchase or undertake the formation of a Syndicate for the purpose. Yours truly, (Signed) E. H. Harriman, Chairman of Executive Committee." " New York, July 17, 1902. E. H. Harriman, Esq., Chairman, Executive C ommittee, Union Pacific Railroad Company, 120 Broadway, City. 150 Dear Sir: Referring to your letter of yesterday's date, we beg to advise you that we will undertake, upon the terms stated below, to form a guaranty syndicate which will agree to pur- chase at ninety (90) and accrued interest, upon the terms of the pro- posed offer of subscription to the stockholders of your company, such part of $31,000,000. of Oregon Short Line Four Per Cent, and Par- ticipating Twenty-five Year Gold Bonds as may not be subscribed for by the stockholders of your company upon such offering. " 1. Your company to pay to the syndicate which we form a com- mission of two and one-half per cent, upon the face value of said $31,000,000 of bonds. " 2. Our firm to have, as compensation for our services in forming the syndicate (in addition to any commission we may receive as syn- dicate participants) , a commission of one per cent, upon the face value of said bonds, and a firm option to purchase all or any part of $20,- 000,000 additional of said bonds on or at any time before August 1, 1903, at ninety (90) and accrued interest less a commission of one per cent. " 3. The form of the bonds and of the trust indenture under which they are to be issued to be subject to the approval of ourselves and our counsel, counsel fees to be borne by your company. Yours truly, (Signed) Ktjhn, Loeb & Co." " New York, July 17, 1902. Messrs. Ktjhn, Loeb & Co., 27-29 Pine Street, City. 151 Dear Sirs — I beg to acknowledge receipt of your letter of this date, setting forth the terms on which you are prepared to purchase so many of $31,000,000 of Oregon Short Line Four Per Cent, and Participating Twenty-five Year Gold Bonds as are not subscribed for by the stockholders of the Union Pacific Railroad Company upon the proposed offering. The conditions stated by you 86 MILLAR COMPLAINANT'S EXHIBITS 29-30. are satisfactory, and your offer is hereby accepted on behalf of the Union Pacific Railroad Company. Yours truly, (Signed) E. H. Hareiman, Chairman of Executive Committee. Upon motion, duly made and seconded, it was unanimously Resolved, that the action of the Chairman as set forth in the correspondence between himself and Messrs. Kuhn, Loeb & Co., sub- mitted to this meeting, be and the same is hereby in all things rati- fied, approved and confirmed. Q. I show you a certified transcript of a resolution of the stock- holders of the Oregon Short Line Railway Company, adopted Octo- ber 14, 1903, and headed "Approval of San Pedro Agreements, Con- veyances, etc ; " is that a certified transcript of the record of the meetings of the stockholders of the Company of that date ? A. It is. 152 Mr. Severance : I offer that copy in evidence as Complain- ant's Exhibit 30 (Millar), the same being Exhibit 39 in I. C. C. record. Complainant's Exhibit 30 is as follows: Complainant's Exhibit 30. (Millar.) OREGON SHORT LINE E. R. CO. (Certified Copy.) (Stockholders, October 14-, 1903.) Approval of San Pedro Agreements, Conveyances, Etc. Upon motion, duly made and seconded, it was unanimously Resolved, that all and singular the action of the Board of Directors and Executive Committee, as set forth or referred to in their respec- tive minutes, be and they are hereby ratified, approved and confirmed. Resolved further, that all the acts of E. H. Harriman, as Trustee, and the acts of each of the officers of this Company, in making the arrangements, contracts, and conveyances between E. H. Harriman, Trustee, and W. A. Clark, Trustee, the said Harriman and Clark, as Trustees, and the San Pedro, Los Angeles and Salt Lake Railroad Company, and each of the other arrangements, contracts, and convey- ances made in connection with the settlement of controversies with said San Pedro Company, and to provide for acquiring and holding an interest in the capital stock of the said San Pedro Company, and MILLAR — COMPLAINANT'S EXHIBIT 30 — CONTRACT 1902. 87 to provide for certain traffic arrangements, all of which are set forth in full in the minutes of the Executive Committee ; in- 153 eluding the making, execution, and delivery of conveyances by the Oregon Short Line Eailroad Company, the New East Tintic Railway Company, the Utah & Pacific Railroad Company, the Utah, Nevada & California Railroad Company, and by W. H. Bancroft, as Trustee, to the San Pedro, Los Angeles & Salt Lake Railroad Company; and also including the making of assignments of the capital stock of the New East Tintic Railway Company, the Utah & Pacific Railroad Company, the Utah, Nevada & California Railroad Company, and the Utah, Nevada & California Railroad Company in California, to the said San Pedro, Los Angeles & Salt Lake Railroad Company; and including also the execution and de- livery of a certain agreement between W. A. Clark, trustee, for him- self and as Trustee, as the party of the first part, and E. H. Harriman,, as trustee, as party of the second part, and the Farmers' Loan & Trust Company, as party of the third part, and the assignment and delivery to said Farmers' Loan & Trust Company of the stocks in said agreement specified; and also in executing a certain agreement between said W. A. Clark and E. H. Harriman, as Trustees, and the said San Pedro, Los Angeles and Salt Lake Railroad Company, dated June 8, 1903, providing for the loan of certain capital stock of the said San Pedro Company, to be pledged as therein provided, and all of the acts of the said E. H. Harriman, as Trustee, done or performed, and all of the acts of each and every officer of this Company required or deemed necessary to be done to fully perform and execute the terms and conditions of each of said contracts and arrangements; including that certain contract of July 9, 1902, made between W. A.. Clark and E. H. Harriman, and each and every one of them, be and the same are hereby ratified, approved and confirmed. 154 Q. Will you get the contract of 1902, between Mr. Harri- man and Mr. Clark, and referred to in this resolution ? A. Yes. This contract [Millar Exhibit 52, I. C. C. record] reads as follows : This agreement made and entered into this ninth day of July, 1902, by and between William A. Clark, hereinafter designated as. Clark, Trustee, for his own account and upon account of his asso- ciates, who are, with himself, owners of approximately seventy per cent of the capital stock of the California Improvement Company hereinafter called the California company, and of the capital stock of the Empire Construction Company, hereinafter called the Empire company, and who own or control, through stock or otherwise, the San Pedro, Los Angeles & Salt Lake Railroad Company, hereinafter called the San Pedro company, and Los Angeles Terminal Land Company and Los Angeles Terminal Railway Company, as party of the first part, and Edward H. Harriman, hereinafter designated as Harriman, Trustee, as trustee for the Oregon Short Line Railroad Company, hereinafter called the Short Line company, or such com- 88 MILLAR CONTRACT 1902. pany or companies as he may declare parties to said trust, party of the second part, witnesseth : Whereas, said California company is a corporation existing under the laws of the State of Illinois having an issued capital stock of $2,599,000, but no funded or other debt, and is the owner of all the capital stock of the said Los Angeles Terminal Land Company in the amount of $300,000, and is also the owner of all the capital stock of the said Los Angeles Terminal Railway Company in the amount of $3,000,000, all of which- capital stock of said two last named 155 companies is now in the treasury of said California company; and the said California company also owns 25,000 shares of the capital stock of the San Pedro company in the aggregate amount of $2,500,000 par value, which stock of said San Pedro company is now issued to and held by William A. Clark and E. C. Kerens in trust for the stockholders of said California company, as their in- terests may appear; said capital stock of all said companies being divided into shares of $100 each; and also owns and claims the right to receive and obtain from said San Pedro company, to be delivered to W. A. Clark and R. C. Kerens as Trustees for its stockholders as their interests may appear, $2,500,000 par value, of the first mort- gage bonds of said San Pedro company when the same shall be here- after issued ; and Whereas, all of the railroad, franchises, rights of way, terminal facilities and railroad property, and all other property, real, personal and mixed, acquired by the Los Angeles Terminal Railway Com- pany, has been by said company sold and conveyed to the San Pedro company; and Whereas, the Empire Construction Company is a corporation of the State of Utah organized for the purpose of providing for the financing, construction and equipment of the railroad of said San Pedro company, with a capital stock of $1,000,000 divided into shares of $100 each, par value, all of which capital stock has been sub- scribed for and has been fully paid up and issued ; and Whereas, said William A. Clark, for himself and his said associates in whose behalf he now owns or directly controls approximately seventy per cent of the capital stock of 156 the California company, the Empire Construction Company and the San Pedro company, and the remainder of said capital stock being approximately thirty per cent of said capital stock of said companies, is owned, held or controlled by others not directly represented by said Clark ; and Whereas, the assets of said Empire company consist of its claims against, and contracts with, the said San Pedro company for money advanced, work done and material furnished on account of the im- provement and acquirement of railroad property for said San Pedro company; and Whereas, the San Pedro company is the owner of the railroad, equipment, rolling stock, terminal properties, station grounds, and all real, personal and mixed property formerly owned by the Los MILLAR — CONTRACT 1902. 8& Angeles Terminal Kailway Company, and also owns certain other railroads, railroad properties, franchises, rights of way, road beds, stations, station grounds, water stations, equipment, rolling stock,, tools, machines, machinery, supplies and other property procured for and intended to be used as a part of the railroad property of the said San Pedro company, and situated in the states of California,, Utah and Nevada, all of which property is free and clear of any debts, incumbrance or charges execpt the indebtedness to the said Empire company, and its promise to execute and deliver, when 157 issued, its said first mortgage bonds in the aggregate par amount of $2,500,000 to William A. Clark and R. C. Kerens, Trustees for said stockholders of said California company, as afore- said; and Whereas, the said Los Angeles Terminal Land Company is the- owner of certain real estate situated in Los Angeles County, Califor- nia, including a tract of real estate situated on or near the harbor of San Pedro in said county and state, all of which property of said Los Angeles Terminal Land Company is free and clear of all in- cumbrances, liens and claims of every kind; and Whereas, said Short Line company is the owner of and controls- and operates a system of railroads generally described as follows: A line of railroad extending from Granger, Wyoming, to the west- ern boundary of said state, thence across the State of Idaho and to a terminus at the town of Huntington, Oregon, with branch lines con- necting therewith; Also a line of railroad extending from Salt Lake City, Utah, northerly through Ogden, Utah, to the northern boundary of the state of Utah, and thence North across the State of Idaho to a ter- minus at Silver Bow, Butte and Garrison, in the State of Montana, with branch lines connecting therewith ; the line between McC amnion and Pocatello being common to both said lines; Also a line of railroad extending from Salt Lake City, Utah, south- erly through Juab to Milford and Frisco, Utah, together with 158 a branch line extending from Lehi Junction into the Tintie Mining District, and the branch lines connecting therewith, and also a branch line known as the Terminus line, together with various controlled, owned and auxiliary lines of railroad in the above named states, and the States of Nevada and California. The Short Line company, through ownership of capital stock, also owns and controls the railroads of the Utah & Pacific Railway Com- pany, the Utah, Nevada & California Railroad Company (in Ne- vada), and the Utah, Nevada & California Railroad Company in California, and the new East Tintie Railway Company ; and Whereas, the said railroads of the Short Line company are op- erated in harmony with and as connections of the railroads of the Union Pacific Railroad Company extending from its terminus near Ogden, Utah, easterly through the States of Utah, Wyoming, Colo- rado and Nebraska to a terminus at Council Bluffs, Iowa, and extend- ing from Cheyenne, Wyoming, to Denver, Colorado, and thence east- DO MILLAR CONTRACT 1902. erly through the State of Kansas to a terminus at Kansas City, Missouri, with branch and auxiliary lines in the States of Utah, Colorado, Kansas and Nebraska; and said lines of railroad of the Short Line company are also operated in connection with a certain line of railroad of the Southern Pacific Company commencing at Ogden, Utah, and extending westwardly through Utah and Nevada, and into California and beyond ; and Whereas, the San Pedro company and the Short Line company, and its auxiliary companies, under their respective charters each have power to construct a line of railroad between Salt Lake 159 City and San Pedro Harbor in Southern California, via Los Angeles; and Whereas, the parties hereto desire to provide for the establishment, construction, ownership and operation of a line and system of rail- road between said terminii by using therefor a part of the lines of railroad how owned or controlled by the Short Line company, and all the railroads and properties of the San Pedro company now owned by it or owned in its interest or for its use, and by connecting said several lines either by the construction of a new line or by secur- ing leasehold or trackage rights over other lines of railroad to so connect said lines, and by means thereof to make one connected through line of railroad between said terminii, to the end that the same may constitute a new through transportation line for the use of the business of said San Pedro company and said Short Line company and their connections, and for the carriage of business which may originate on or be destined to points on or beyond their respective lines, or which may be delivered to them, or either of them by connecting railroads, and for the carriage of business between stations on their respective lines, and between all points on or beyond their respective lines, as well as to all points on or beyond the lines of railroad owned or operated by the connections of said Short Line Company, or said San Pedro company, as aforesaid, upon through tariffs to be jointly made and lawfully published and upon just and fair divisions of through rates and charges upon interchanged business. Now therefore, for the purposes aforesaid and to accom- plish the same the parties hereto have covenanted and do 160 hereby mutually covenant and agree to and with each other as follows : ARTICLE FIRST. Section 1. The said William A. Clark, for himself and as Trustee for his said associates, in consideration of the premises and of the undertakings of said Edward H. Harriman, as Trustee as aforesaid, hereby covenants and agrees to and with the said Edward H. Harri- man, as Trustee as aforesaid, as follows : That he will sell at the prices denned in section 2 hereof, and within six months after the date hereof cause to be assigned and delivered to said Harriman as such Trustee, or otherwise as provided MILLAR — CONTRACT 1902. 91 by Section 4 of this article, an equal undivided half interest in ap- proximately seventy per cent, of the capital stock of each of the com- panies below named, that is to say : (a) An undivided half interest in said approximately seventy per cent of the capital stock of the California Improvement Company held by said Clark and his associates as aforesaid, and through the medium of said stock an undivided half interest in said approxi- mately seventy per cent of $2,500,000 par value of the first mortgage bonds of the said San Pedro Company by it agreed to be issued and delivered to said William A. Clark and R. C. Kerens, Trustees as aforesaid. (b) An equal undivided half interest in said approximately seventy per cent of the outstanding capital stock of said San Pedro company owned by said Clark and his associates but held in the names of 161 Clark and Kerens, Trustees, and one-half of the outstanding qualifying shares issued to the names of the present stock- holders of said company, about sixteen in number. (c) An equal undivided half interest in said approximately seventy per cent of the said capital stock of the Empire Construction Com- pany. (d) An undivided half interest in said approximately seventy per cent of the capital stock of the Los Angeles Terminal Railway Com- pany. (e) An equal undivided half interest in said approximately seventy per cent of the said capital stock of the Los Angeles Terminal Land Company ; And that he will endeavor to secure all of the remainder of the stock of said several companies to and for himself and his associates as to one undivided half thereof and to and for said Harriman, Trustee, as to the other undivided half thereof, and at prices satis- factory to the parties hereto as hereinafter provided. Section 2. In consideration of the foregoing the said Harriman as Trustee as aforesaid undertakes to buy an undivided half of said approximately seventy per cent of said outstanding capital stock of each said California company and said Empire company, and to pay therefor amounts to be determined as follows : For such of said stock as is sold to him by said Clark individually he shall pay, and said Clark shall receive payment at the amount and rate which the same cost the said Chirk; with four per cent interest thereon from the time he acquired the same, less any amounts which the said 162 Clark shall have received directly or indirectly as dividends or profits from said companies or in connection with said stock; provided, however, that if no dividends or profits have been so received the entire earnings of said properties since the purchase of the stocks thereof by said Clark shall have been applied or used in the operation, betterments or extensions of the said properties, or shall now be in the treasury of the said companies ; and that as to the stock the undivided half of which is so purchased by said Harriman, as Trustee, from the associates of said Clark, the prices and condi- 92 MILLAR CONTRACT 1902. tions of sale shall be the same as above provided for the purchase of the said Clark's individual stock as above provided, unless the parties hereto shall hereafter otherwise agree. Section 3. The said Harriman,' as Trustee, further covenants and agrees that he will join with said Clark, Trustee, in the purchase at prices satisfactory to both parties hereto, of the remaining outstand- ing approximately thirty per cent of said stocks, and that the same when so purchased for joint account of said Clark and himself as such Trustees shall be transferred and assigned to and held jointly in the names of himself and said Clark as hereinafter provided, or to and held in the name of a trust company as trustee as in Section 4 hereof provided, it being the intention of this agreement that the said Clark and his associates, and the said Harriman, as Trustee as aforesaid, as such Trustees, shall own each an equal undivided half of all of the capital stocks of all of the above named companies. Section 4. It is hereby agreed that all of said capital 163 stock in which an undivided half interest as aforesaid shall be purchased by said Harriman, Trustee, under the provision of said Sections 1, 2, and 3, hereof shall be transferred upon the books of said several companies either to " William A. Clark, Trustee for him- self and his associates, and Edward H. Harriman, as Trustee," and that all of the capital stock of the San Pedro Company now outstand- ing, so to be held by joint title as above provided, shall, unless the parties hereto otherwise agree, be in like manner transferred to and stand upon the books of said companies in the names of said Clark and Harriman, Trustees, together with all of the stock of the San Pedro company which shall be hereafter issued, and as the same shall be issued, and shall be represented by certificates in the joint names of " William A. Clark, as Trustee for himself and his associates, and Edward H. Harriman, as Trustee," and each of the parties hereto shall have the possession and custody of certificates representing one- half in number and par value of said stock when so transferred to the parties hereto as aforesaid, and neither party hereto shall in any man- ner dispose of said holdings of the said capital stock of the said Cali- fornia company, or said Empire Company, or of said San Pedro company, or any part thereof, or any interest therein, for the full period of ten years after the opening for business of said through line of said San Pedro company as in this agreement provided, without first obtaining the consent of the other party hereto, nor at any time without giving said other party hereto the right to purchase such holdings, or interest therein, so offered for sale, on as favorable 164 terms as the same are offered for sale or agreed to be sold to any other person or company. At the end of said period of ten years the said then jointly held stock and the certificates thereof may be, and shall be, at the request of either party hereto, divided between said Harriman and Clark as Trustees according to their respective interests; provided, however, that if the parties hereto shall agree upon a trust company to be the holder of said certificate of stock, as trustee for the said " William A. Clark, Trustee, for himself and his MILLAR — CONTRACT 1902. 93 associates, and Edward H. Harriman, as Trustee," all of the said several shares of stock and certificates representing the same referred to in this section shall be transferred upon the books of the said sev- eral corporations to said trust company as trustee, and certificates duly issued to it therefor as trustee, to be held by it in trust for the parties hereto, in accordance with and subject to the terms of an agree- ment to be executed between the parties hereto and the said trust com- pany concerning the holding of said shares. The said last named agreement shall, among other things, provide first, that said trust company shall issue to the parties hereto certifi- cates of interest running to the said " William A. Clark, Trustee, for himself and his associates, and Edward H. Harriman, Trustee," jointly, each party hereto to have possession of certificates represent- ing one-half in number of the shares and one-half in par value thereof, which may be deposited with the said trustee, and second, that said trust company will, from time to time, when jointly re- quested by the said " William A. Clark, Trustee, for himself and his associates, and Edward H. Harriman, Trustee," give and issue 165 to such person or persons as said parties hereto may direct,, a proxy or proxies authorizing the person or persons named in said proxy or proxies to vote any and all of said stock at any meet- ing of the stockholders of said several companies; and, third, that said trust company shall pay over to the parties hereto, or such per- sons as they shall jointly direct, any and all dividends, whether of stocks, bonds, moneys or property of any sort belonging to any of said several corporations, and which may be paid to or received by said trust company in any manner by reason of its holdings of any of said capital stock as aforesaid, together with such other provisions as may be hereafter agreed upon touching instructions which may, from time to time, be given to said trustee jointly by the parties hereto, said certificates of interest above named to be held and possessed by the parties hereto, but neither party shall in any manner dispose of said certificates of interest, or any part thereof, or of any interest therein, before the full period of ten years after the opening for business of said through line of said San Pedro Company, as in this agreement provided, without first obtaining the consent of the other party hereto to such transfer, nor at any time without giving such other party hereto the right to purchase such holdings or certificates offered for sale on as favorable terms as the same are offered for sale or agreed to be sold to any other person or company. At the end of said period of ten years said certificates of interest may be surrendered by the parties hereto, or by the holders thereof to said trust company, which shall thereupon assign and de- 166 liver the said stock certificates so held by it, to the said holders of said certificates of interest, in number and par value of shares named in such surrendered certificates of interest, and said shares of stock may then be transferred upon the corporate books of said several companies accordingly. At any time thereafter said 71535—09 7 94 MILLAR CONTRACT 1902. certificates of stock issued jointly to said " Clark, Trustee and Hani- man, Trustee " may upon demand of either party hereto be divided between them according to their respective interest, yet subject, how- ever, to the right of either party hereto to purchase said stock from the other party hereto at the price and on the terms in this section hereinbefore provided. Section 5. It is agreed by the parties hereto that pending the car- rying out of this agreement no further stock of the California com- pany or of the San Pedro company shall be issued. Section 6. Upon the completion of the sale and purchase of the said one undivided one-half of the capital stock of said companies, now owned by said Clark, Trustee, will whenever requested by said Harriman, Trustee, cause one-half of the membership of the director- ate of each of the several companies to be vacated, and will cause directors to be nominated and named by the said Harriman, Trustee, to be elected to the directorate to fill such vacancies in each and every of said several companies, but said Harriman, Trustee, appre- ciating the advantage to be obtained by preserving the independent character of the San Pedro Company, and to that end disturbing as little as may be the present organization of said company until the through line of said San Pedro Company in this agreement 167 mentioned is completed and in operation, will not exercise the right herein given him to name one-half of the said boards of directors unless he shall deem the exercise of such right necessary to the protection of the interests which he represents. Section 7. The contract relations between the said Empire Con- struction Company and the San Pedro company not having been definitely agreed to, it is mutually covenanted and agreed between the parties hereto that within six months from the date hereof a contract shall be entered into between the said Empire company and the said San Pedro company which shall be in terms satisfactory to the parties hereto. Section 8. It is mutually agreed that in all matters pertaining to the construction, opening for business and operation of the railroad of the San Pedro Company, including the purchase of equipment, the making of contracts for construction and the purchase of material therefor, and anj^ and all contracts establishing relations of trackage or traffic with other railway companies, the parties shall act jointly, and no such contracts or arrangements, or any of them, shall be made, nor any corporate action taken by said San Pedro company, the Cali- fornia company or the Empire company without the approval of both parties hereto, and that in all such matters each of the parties hereto may be represented by an agent or agents to be apointed by them respectively with power to act for and in the names of their respective principals, and the said parties shall also act jointly in naming and prescribing the accounting and other officers and agents to be engaged in the operation of said companies, and each 168 of them, and the auditor of said Empire company shall be a person selected by the said Harriman, Trustee, and upon the MILLAK CONTRACT 1902. 95 request of either party hereto any of said officers or agents shall be removed. Section 9. It is understood that pending the carrying out of the terms of this agreement said Harriman, Trustee, may by his agent or agents inspect and examine the corporate records, books, accounts, rights and franchises of each of said several companies. ARTICLE SECOND. Section 1. In consideration of the covenants of the said Clark, Trustee, for himself and his associates, and also on behalf of the San Pedro company, in this agreement written, the said Harriman, Trustee as aforesaid, covenants and agrees with said Clark, as Trus- tee, that he will in the time hereinafter stated, negotiate with said Short Line company, and obtain from said Short Line company the sale and lease to said San Pedro company of the property hereinafter mentioned as follows : (Parcel 1.) A conveyance from said Short Line company to said San Pedro company, by good and sufficient deed, free and clear of incumbrance, of all of the following described property: The line of railroad known as the Terminus branch of the Short Line rail- road from a point or points beginning at the connection pf said branch with the yards of the Short Line company to be agreed 169 upon when said yards are defined as hereinafter provided, in Salt Lake City, County of Salt Lake, State of Utah, and extending in a generally westwardly and southerly direction to a point near Terminus in the County of Tooele, State of Utah, together with a branch line of railroad extending from Saltair Junction to the salt works, in Salt Lake County, State of Utah, except that part of said line the right of way for which is to be surrendered to the United States, and also the partially completed railroad and right of way, surveys and maps thereof, and railroad property, other than equipment, acquired by the Short Line company for or used in con- nection with the construction of its proposed new line of railroad now under construction extending from a point of junction with said Terminus line above named southerly to a point known as Leaming- ton Junction, upon payment therefor by said San Pedro company as hereinafter provided. (Parcel 2.) A conveyance from said Short Line company to said San Pedro company by a good and sufficient deed containing a cov- enant to save and protect that said San Pedro company harmless from the lien or charge of the Consolidated Mortgage of the Oregon Short Line Railroad Company, dated March 1, 1897, and from the liens of the Income A and Income B mortgages of said company, for all and singular the following described property: All the line of railroad extending from a point near Sandy and about ten miles south of Salt Lake City, Utah, to be hereafter definitely fixed by a description and agreement between the parties hereto, and running from said point southerly through Provo, Juab and Leamington to 96 MILLAR CONTRACT 1902. Milford, Utah, and thence a further distance of about 17 miles 170 to a terminus of said line of railroad at Frisco, Utah, and also all those certain other branch lines of railroad owned by said Short Line company which extend into what is known as the Tintic district, and which are generally described as follows : A line extend- ing from Lehi Junction to the Tintic district, together with all branches and interest in joint tracts connecting therewith. (Parcel 3.) A lease from the said Short Line company for the term of ninety-nine years granting to said San Pedro company the general and common use for its sole and separate business in common with the Short Line company of that part of the main line or lines of the said Short Line company's railroad extending from the north- erly yard limit point thereon Southerly through the City of Salt Lake for a distance of about ten miles south from the southern limits of said Salt Lake City to a point on said main line to be hereafter definitely fixed but which is to be so fixed as to admit the Short Line company and the San Pedro company to the unobstructed use of the side tracks and switches necessary or convenient for use of and access to the side tracks, switches and properties of either of said companies, or to any or all of the smelters or other industrial insti- tutions now existing or that may be hereafter established upon or near to said main tracks, together with all side tracks, stubs, spurs, switches, crossovers, standing places for cars, stations, signals, buildings, coal chutes, shops, roundhouses, turntables, and every other facility or property used in connection with or appurtenant to the property or business of the Short Line Company between 171 said northerly yard limit and said point near Sandy about ten miles south of the southerly boundary of said Salt Lake City, as above indicated. It is agreed that the lease to be executed by the Short Line com- pany to the San Pedro company, providing for the said use of the properties of the said Short Line company from the north yard limit in Salt Lake City to the said point near Sandy, including the termi- nal facilities of the Short Line company in Salt Lake City, Utah, shall be upon the consideration that the San Pedro company shall pay, in monthly instalments a rental based upon a four per cent, interest charge upon an agreed valuation of said property, and the cost of any capital additions thereto hereafter made, apportioned between said Short Line company and said San Pedro company upon the basis of use, but with a fixed minimum proportion to be paid by said San Pedro company, and also a proportionate amount of the expense of maintenance, improvement and operation of said prop- erty, including taxes, special assessments and insurance, the amounts of which rental and other payments, and the rules for ascertaining the same, together with rules for governing extensions and better- ments, and the cost, rental and use thereof, and rules governing the operation of said yard, shall be agreed to by the operating officials of said Short Line company and said San Pedro company subject to the approval of the parties hereto, and which shall then be in- MILLAR — CONTRACT 1902. 97 corporated in said contract of lease, together with all formal pro- visions usual to such contracts. The said property, the use of which for its own separate busi- ness is let to the San Pedro company, shall be managed and 172 controlled by the Short Line Company, provided, however, that for cause upon demand of the San Pedro company, after thirty days written notice to be given to the general manager of the Short Line company by the San Pedro company, a competent super- intendent for the same shall be jointly chosen by the respective presi- dents of the San Pedro company and the Short Line company, who shall be charged with the care, management and operation of said property, to the end that the rights and privileges of the said parties thereto under this agreement shall be fully secured and preserved. Said superintendent shall be removed or discharged upon reasonable notice upon the written demand of either party to said lease given to the other party. (Parcel 4.) The Short Line company is the owner of all of the capital stock and first mortgage bonds of the Utah & Pacific Rail- way Company which owns a line of railroad extending from Milford, Utah, to the Nevada-Utah state line at a point known as Uvada, and said Short Line company owns all of the capital stock of the Utah, Nevada and California Railroad Company, a corporation of the State of Nevada which owns a railroad extending from the Utah-Nevada State line, at the point aforesaid, southerly to Cali- entes in Lincoln County, Nevada, and a right of way and partially constructed road bed for a line of railroad extending from said Cali- entes to a point near Pioche in said Lincoln County, and also a right of way and partially constructed road bed for a line of road extend- ing from said Calientes southwesterly across the State of Nevada to the Nevada-California state line; and said Short Line com- 173 pany also owns all of the capital stock of the Utah, Nevada & California Railroad Company in California a corporation of the State of California which claims or owns a right of way extend- ing from the Nevada-California state line to a point on the railroad of the Santa Fe company near Ludlow, Cal., and other railroad prop- erties; said Short Line company also owns all of the capital stock of the New East Tintic Railway Company, which last named com- pany owns a line of railroad in the Tintic district. The said Harriman, Trustee, undertakes and agrees to procure from the Short Line company an agreement to sell to the San Pedro company, upon payment of prices to be fixed as hereinafter provided, all of the capital stock and first mortgage bonds of each of the following named companies: The said Utah & Pacific Railway company; the said Utah, Nevada & California Railroad Company, the said Utah, Nevada & California Railroad Company in California, and the said New East Tintic Railway Company ; and an agreement from' the Short Line company that it will, upon the request of the San Pedro company, if necessary, act with the said San Pedro company in procuring from each of the said several com- 98 MILLAK CONTRACT 1902. panies lastly above named, a cancellation of the first mortgage bonds and the release and satisfaction of the said first mortgages, and also in procuring conveyances to said San Pedro Company from each of said four companies above named, of all the railroad, franchises and other property owned by said companies, respectively, so as to vest the said San Pedro company with the full title to and owner- 174 ship in all of said railroads, franchises and other property in this paragraph mentioned. (Parcel 5.) The said Harriman, Trustee as aforesaid, undertakes and agrees that said Short Line Company will sell and convey to the San Pedro Company such a proportion of its equipment appro- priate and proper for use upon and heretofore assigned to use upon its lines of railroad south of Salt Lake City above referred to, as may be determined between the chief operating officers of said companies, upon being paid therefor the value of said equipment as the same shall be found and determined by the joint action of the superin- tendent of motive power of the parties hereto, and said Clark as Trustee undertakes that said San Pedro Company will buy said equipment and pay for the same on the delivery thereof at the price so found and determined. Section 2. The said Clark, Trustee as aforesaid, in consideration of the covenants and agreements of the said Harriman, as Trustee as aforesaid, as written in this article, hereby undertakes and agrees that he will negotiate with and obtain from said San Pedro company a covenant and agreement on its part that it will buy from the said Short Line company and pay for all of the properties referred to and described in this article as Parcels 1, 2, 4, 5, and that the value of the said railroads and properties to be conveyed by the Short Line company described in said parcels shall be ascertained and deter- mined, except as to said equipment, in the following manner: 175 By a fair estimate of the value thereof to be agreed upon by the parties hereto, based upon the cost, which is to be the mini- mum factor and upon the earning power of the said railroads, fran- chises and properties, capitalized at four per cent per annum, re- spectively described in said several parcels in this article, and that the aggregate value of all of said several properties referred to in said several parcels shall constitute the purchase price thereof to be paid by the San Pedro company to the Short Line company upon making the conveyance, transfers and assignments as aforesaid. Said agreement shall provide that said San Pedro company will and shall assume all the obligations of the Short Line Company to contractors and others in respect to the location, re-location, construc- tion and reconstruction upon the premises described in Parcel 1 hereof, and will carry out, fulfil and perform all of the said Short Line company's obligations in respect to said work, and will use the said new work when completed as part of the San Pedro com- pany's main line of railroad, and that said San Pedro company will accept said lease for the property described in Parcel 3 on the terms above written. MILLAR- - CONTRACT 1902. 99 All said conveyances, assignments and transfers and said lease to be made and delivered, and considerations therefor paid, contem- poraneously with the exchange of stock, and the execution of the agreement hereinafter mentioned, are to be accomplished within six months from the date hereof. ARTICLE THIRD. 176 Section 1. The said Harriman, as trustee, further covenants and agrees that he will not negotiate with the Southern Pacific Company and if possible obtain from said company the right for the San Pedro company to use the tracks of the Southern Pacific company from the point of its junction with the tracks of the South- ern California company at or near Colton, to the point of junction with the tracks of the San Pedro company at or near Riverside, at a rental that will not exceed four per cent, per annum on one-half the valuation of the property of the Southern Pacific company so used, and a share of the cost of maintenance thereof, including taxes, in proportion to the use of said tracks and property on a wheelage basis. Section 2. The said Harriman, as Trustee, further covenants and agrees that he will riegotiate with the Southern California Railroad Company, and if possible obtain from said company the right for the San Pedro company to use the tracks of the Southern Cali- fornia company from the point of its junction with the tracks of the Southern Pacific company at or near Colton, to the point of junction of its tracks with the tracks of the Santa Fe Pacific com- pany at or near Barstow, at a rental not exceeding four per cent per annum on one-half the valuation of the property of the Southern California company so used, and a share of the cost of maintenance thereof, including the taxes, in proportion to the use of said tracks and property on a wheelage basis. Section 3. Said Harriman, as Trustee, further covenants and agrees that he will not negotiate with the Santa Fe Pacific 177 Railway company, and if possible obtain from said company the right for the San Pedro company to use the tracks of the said Santa Fe Pacific company between Barstow and Ludlow, California, or other point of connection of junction with the pro- posed line of railroad of the San Pedro company, at a rental which shall not exceed four per cent per annum on one-half the valuation of the property of the said Santa Fe Pacific company so used, and a share of the cost of maintenance thereof, including taxes, appor- tioned upon the use of said tracks and property upon a wheelage basis. Section 4. Each of the several trackage contracts referred to in this article may also contain provisions requiring the San Pedro company to pay to each of said lessors for water, fuel and other sup- plies, labor or material furnished to and for the sole use of the San Pedro company while upon the tracks of said several companies, and 100 MILLAK CONTBACT 1902. also the usual conditions and agreements for payment by the San Pedro company to said several lessors for. losses and damages to per- sons or property arising from the negligence or wrong doing of its sole employees. ARTICLE FOURTH. The parties hereto, as Trustees aforesaid, hereby covenant and agree to and with each other that the said San Pedro Company and the said Short Line company shall and will, on or before the date named in Section 2 of Article second hereof, enter into an 178 agreement for a term of ninety-nine years with each other concerning the new line of transportation and traffic substan- tially to the effect following : (a) The said new transportation line shall consist of the line of railroad to be created, secured, constructed and operated under the charter and franchises of the San Pedro company. Its main line shall commence at the City of Salt Lake, Utah and run southerly via Garfield, Leamington, Milford, Calientes, and thence through the States of Nevada and California to a junction with the line of rail- road of the Santa Fe Pacific company, and thence by trackage ar- rangements over the lines of the Santa Fe Pacific Company, the Southern California company and the Southern Pacific Company to a connection with the San Pedro company's line in California at Riverside, and thence via Los Angeles to San Pedro Harbor. (b) But if for any reason any of said trackage arrangements referred to in Article Fourth cannot be obtained, then upon and along a line of railroad to be otherwise acquired or to be constructed by the San Pedro company in lieu thereof, making and constituting a through line of railroad from the City of Salt Lake to San Pedro Harbor via Los Angeles in California. (c) The branch lines of said new through transportation line shall be the lines of railroad heretofore operated by the Short Line com- pany and described in Parcel 2 above mentioned and the branch lines of the San Pedro company in southern California, and such other branch lines as may be constructed or acquired hereafter by said San Pedro company, it being understood that the San Pedro conv 179 pany shall not hereafter extend its main line of railroad as herein defined, or any branch lines of railroad, or construct or build any line of railroad, or aid any other company or companies in the constructibn or building of any line or lines of railroad, nor assist or advise in building or constructing any other line of railroad northward or into the territory northward of the parallel of Salt Lake City, Utah. (d) Said agreement shall further provide that should conditions develop hereafter which require the construction of branch lines con- necting with the said San Pedro company's road south of Salt Lake City the construction of such lines shall be subject to agreement before the commencement thereof ; providing, however, that if either MILLAK — CONTRACT 1902. 101' party objects to the construction the other may build said branches and connect the same with the main line of said San Pedro company and be entitled to an interchange of traffic with it upon reasonable terms, it being understood that said branch lines shall not directly or indirectly invade the territory of the Short Line company north of Salt Lake City, nor be built for the purpose of diverting business naturally tributary to the Short Line company's road north of Salt Lake City. On the other hand it is agreed and understood that the Short Line company shall not build branch lines which will invade the territory of the San Pedro company south of Salt Lake City or divert business which would be naturally tributary to the San Pedro company's road south of Salt Lake City. Section 2. The San Pedro company will, in said contract, 180 agree to construct the railroad, from a junction on the line of the Santa Fe Pacific company's road above mentioned, near Ludlow, or some other agreed point on said line in California, to a connection with the Short Line company's present road at Calientes, Nevada, and that all of the line of railroad constructed, recon- structed or to be constructed by the San Pedro company, and which is to become a portion of the main line thereof, shall be constructed with not less than seventy-five pound rail, and shall be completed and equipped as first-class in every respect, the construction and equipment to be of a standard equal at least to that already adopted by the San Pedro company upon that portion of its road heretofore constructed in southern California. Section 3. The Short Line company will in said contract under- take for itself and its connections, the Union Pacific Railroad Com- pany, and the roads of the Southern Pacific company, to join with the San Pedro company in forming through lines of service necessary for the interchange of any and all business which can be carried over said Short Line and its connections in conjunction with said San Pedro company's road to and from all points which may be reached via Salt Lake City on as favorable terms and conditions as are offered by any carriers competing for the same business. Section 4. In said 'contract provision shall be made by the parties thereto for the adoption of classifications governing through or inter- changed traffic, for the making of through and joint tariffs and 181 rates, and the maintenance thereof, and the publication thereof as required by law, and provision shall also be made for just and equitable divisions of all such agreed through rates and charges respecting all interchanged business. Section 5. Said agreement shall also contain the following pro- vision : " It is agreed that the interchange of traffic by and between the San Pedro road on the one hand, and the Short Line company and the Union Pacific company on the other hand, as against any competitor of said Short Line company or said Union Pacific company, shall be preferential, but not exclusive, except as hereinafter provided, in favor of said Union Pacific company ; and, in like manner, that the 102 MILLAR CONTRACT 1902. interchange of traffic by and between said Short Line company and said Union Pacific Company on the other hand, and the San Pedro company on the other hand, as against any competitor of the said San Pedro company, shall be preferential, but not exclusive, except aS hereinafter provided, in favor of the San Pedro company ; " That is to say, "Whereas, the value of the Short Line company of its lines in XJtah south of Salt Lake City, the transfer of which to the San Pedro company is hereinbefore provided, consists largely of their relation as feeders of said Short Line company and said Union Pacific company, and, whereas, it is not practicable to capitalize the value to said Short Line and said Union Pacific company of said lines south of Salt Lake City as feeders of traffic, or in any other manner to compen- sate said Short Line company and said Union Pacific company 182 for the loss which would result from the diversion to other car- riers of the traffic moving to and from points on said lines in Utah south of Salt Lake City. " Now, therefore, it is mutually agreed and understood that all traffic which is either taken up or laid down on the lines of the San Pedro company in Utah for transportation to or from any and all points which can be reached with reasonable expedition by way of the lines of said Short Line and said Union Pacific company, and their respec- tive connections, shall be forwarded exclusively, in so far as that may lawfully be done, by way of and over the lines of said Short Line and said Union Pacific company. In consideration whereof said Short Line and said Union Pacific company undertake and are bound hereby to solicit the transportation of traffic to or from points in Utah reached by the roads of said San Pedro company, exclusively in con- nection with said San Pedro company against any and all said San Pedro company's competitors. "Whereas, the owners of said Short Line and said Union Pacific company had projected and proposed to build a railroad from Cali- entes, Nevada, to Los Angeles, Cal., or to a connection with a railroad already constructed which would give entrance to Los Angeles and other points in Southern California; and, whereas, the value to said Short Line and said Union Pacific company of said projected line from Calientes to southern California consisted largely in the profit to be derived from the carriage over the line or lines of road north of Calientes, Nevada, and east of Ogden, Utah, now owned and 183 controlled by said Short Line and said Union Pacific company, or by persons or companies friendly to said Short Line and said Union Pacific company, of the traffic interchanged by points on the line of, or to be reached by way of, the line of said projected line between Calientes, Nevada, and Los Angeles, California, with points north of Calientes, Nevada, and Ogden, Utah, reached by or by way of the roads owned or controlled by said Short Line and said Union Pacific company, or by companies friendly to them ; and, whereas, by the sale of, or by the transfer by lease or purchase, to the said San Pedro company, of the lines of said Short Line company south of Salt MILLAR CONTRACT 1902. 103 Lake City, Utah, and the Utah, Nevada & California Eailroad be- tween Calientes, Nevada, and Uvada, and the Utah & Pacific Eailway between Uvada and Milford, Utah, and the abandonment of its pro- jected line between Calientes, Nevada, and Los Angeles, California, in favor of the line proposed to be built by the San Pedro company, the said Short Line and said Union Pacific company are deprived of the profit to be derived from the ownership and control of a railroad line from Salt Lake City, Utah, to Los Angeles, California, which might be lawfully conducted in the interest of said Short Line and said Union Pacific company. " Now, therefore, it is covenanted and agreed, in part consideration of the transfer to said San Pedro company of the ownership or control of the lines of the Short Line company south of Salt Lake City, in Utah, and of said Utah, Nevada & California Eailroad between Cali- entes, Nevada and Uvada, and the Utah and Pacific Eailway 184 between Uvada and Milford, Utah, and the abandonment of its purpose to build said projected line from Calientes, Nevada, to Los Angeles, California, or to said point of connection with a railroad Which would give it entrance to Los Angeles, Cal., as follows : " To unite the roads now owned by said San Pedro company, or transferred to it by this instrument, or hereafter constructed by it, to form a connected line of railroad between Salt Lake City, Utah, and Los Angeles, California, and other points in California and the roads of the Short Line and Union Pacific company so as to form a through line of transportation service between points in California on the said San Pedro company's roads and points east of Ogden, Utah, on or to be reached by way of the Union Pacific company's lines and its connecting railroad lines. It is further understood and agreed that in so far as it may lawfully be done and profitably, that said through line shall be operated and worked as a unit with respect to all traffic which is, in whole or in part, the subject of competition by other carriers. To this end it is understood and agreed that each of the parties hereto will work, in so far as they lawfully may, to pro- mote the interests of said through line against any other line compet- ing in whole or in part for the same traffic, and each party to said through line is bound in good faith in every lawful way to preferen- tially promote the interest of said through line in the conduct of all traffic which may be lawfully, reasonably and profitably conducted by said through line against any and all competitors of said through line. " But this obligation of pref erence'is not to be understood 185 or to be construed as requiring either party hereto to refuse or neglect to receive and properly forward any of the traffic referred to in this sub-division which shall be offered for transporta- tion by other connecting carriers nor so as to require either party hereto to refuse or neglect to receive and duly forward in accordance with shipper's instructions any traffic for which the shipper thereof shall have given or tendered written instructions directing that said traffic be delivered for forwarding to destination to a connecting car- 104 MILLAB — CONTRACT 1902. rier other than a party hereto; provided, however, that the through rates and the subdivisions of said through rates for traffic thus pro- vided to be interchanged with carriers other than parties hereto shall not be less than those which at the same time are offered and in effect by or by way of the said through line, and each of the parties hereto is bound to the other party and agrees not to join any connection in through rates which are lower than those which are at the same time in effect or obtainable by the use of said through line, nor to engage with any carrier in any device or practice whatsoever designed to, or which shall have the effect of giving said connection an advantage or preference over said through line or any part thereof in soliciting or carrying the business properly subject to carriage by said through line." Section 6. Said agreement shall also contain the following provi- sion : " No arrangement, contract, covenant or agreement for shipment or carriage of persons or property shall be made, permitted or 186 suffered by either party hereto with any other transportation company or carrier by means whereof any such carrier or trans- portation company shall have or enjoy directly or indirectly any bet- ter rates or have any better divisions of through rates, or better trans- portation facilities or service than are had or enjoyed by either of the parties hereto with the other party." Section 7. Said agreement shall also contain the following provi- sion: " Nothing contained herein shall be construed as limiting the rights or provileges of the Union Pacific Railroad Company or of the South- ern Pacific Company or of the Short Line company in respect to interchange of traffic each with the other." Section 8. Said agreement shall also contain the following provi- sion : " Said Short Line company is bound for itself, and undertakes to secure a like obligation upon the part of the Union Pacific company and the roads of said Southern Pacific company to deal with said San Pedro company in the matter of interchange of traffic in respect to rates of charge for all traffic and the divisions of said rates and in respect to class and quality of service as they, respectively deal with each other or with the most favored connection, and not to dis- ' criminate in any respect in favor of each other or of any connect- ing line to the prejudice and disadvantage of said San Pedro company." 187 Section 9. Said agreement shall also contain the following provision : " It is covenanted and agreed that said Short Line company and its connection, the Union Pacific Railroad Company, and each of them, shall have the right to name and make the through rates be- tween points (that is, in both directions) on or reached via their respective lines, and points on the line of said San Pedro company in Utah, for business which said Short Line Company or said Union MILLAE — CONTRACT 1902. 105 Pacific company might give to or receive from said San Pedro com- pany, in competition with any and all other connections of said San Pedro company ; provided, however, that on demand said Short Line company and said Union Pacific company shall join said San Pedro company in any through rates necessary to meet the rates offered by any competing through line for such business." Section 10. Said agreement shall also contain the following pro- vision : " Each party hereto hereby covenants and agrees with the other party that it will not discriminate in any manner whatever against the other party hereto, or any of said other party's connections, in favor of any of the competitors of either of said parties, or in favor of any other connecting carrier in respect of the class or quality of its service, or in any other respect whatever affecting rates or service." Section 11. Said agreement shall also contain the following pro- vision: " Neither party hereto shall or will agree with, or make any 188 convention with a competitor of the other party hereto in any respect designed to, or which shall have the effect of excluding such other party from the full and free opportunity to meet any rate or grant any facility offered by such competitor for any and all traffic of every sort, and that the rates and facilities necessary to meet the offers of such competitor shall be held to be common to both parties hereto, subject to established divisions." Section 12. Said agreement shall also contain the following pro- vision : " Said San Pedro company hereby covenants and agrees that it will not now or hereafter interchange traffic with any carrier connecting with it at a point in Utah south of Salt Lake City, or in Nevada, upon more favorable terms as to character or quality of service, nor at any lower rate of charge or lower divisions of rates, nor in any respect whatever than those governing the interchange of the same or similar traffic with the Short Line company at Salt Lake City." Section 13. Said agreement shall also contain the following pro- vision : " Said Short Line company hereby further undertakes and agrees to negotiate with, and secure if possible, from said Southern Pacific Company, an undertaking and agreement on its part for the inter- change of traffic in southern California with said San Pedro Com- pany in like manner and upon as favorable terms and conditions as said Southern Pacific Company has for the interchange of traffic with the Southern California Kailroad Company. " The San Pedro company covenants and agrees that it will 189 make a covenant or agreement with the Southern Pacific Com- pany for its, (said San Pedro company's) performance of an undertaking that it will in the first instance adopt all lawful rates, tariffs and charges used by said Southern Pacific Company, for the handling of local traffic by said San Pedro company which is or may be subject to competition between said Southern Pacific Company 106 MILLAR CONTRACT 1902. and said San Pedro Company, and that thereafter neither party shall change said rates without the consent of the other party, unless it may be made necessary so to do to meet the rates, charges or tariffs of another competing line of railroad." Section 14. Said agreement shall also contain the following pro- vision : " The parties hereto mutually covenant and agree to establish a daily through passenger train service, consisting of not less than one train each way, over their respective lines, and over the lines of rail- road of the Union Pacific company to its terminus at Council Bluffs, Iowa, and thence via its connections, if it can accomplish the same, between Council Bluffs, Iowa, and Chicago, Illinois, through to Los Angeles, California. Such joint through passenger service shall be so established and put in operation whenever either party hpreto shall give to the other written notice of its desire so to do. When so estab- lished the trains necessary therefor shall be made up of such cars as the managing officials of the parties hereto shall determine. The equipment of such trains shall be of the latest modern design, and in all respects the equal or superior of that of competing lines. 190 Each party shall furnish its just quota in proportion to length of haul of such equipment. The time schedules for such joint passenger train shall be no greater in point of time than the shortest time of the trains of competing lines between the same points, and the time established shall be divided pro rata per mile, reasonable allow- ance to be made for difference in physical conditions, unless otherwise specifically agreed. Either party hereto shall receive the through passenger trains of the other party upon delivery and dispatch the same regularly without any delay other than the ordinary station service required by through trains of like class, to their respective destinations. Each party hereto shall maintain all equipment used in such joint passenger service upon its own line, and car mileage at usual rates shall be paid for all cars of either party used upon the the lines of the other in the joint business." Section 15. Said agreement shall also contain the following pro- vision : " It is further covenanted and agreed by and between the parties hereto that for the performance of the joint through freight service over said through line each of the parties hereto shall furnish its pro- portion of the cars necessary or Convenient for use in the transportation of through freight, and that each party shall pay to the other the usual rates allowed for car service; that all joint through freight rates for competitive business shall be divided between the parties hereto and their respective connections, the Union Pacific Railroad Company and the Oregon Railroad & Navigation Company, pro rata per mile in proportion to the length of the haul performed by 191 each, but all arbitrary rates, including the customary Missouri River bridge arbitraries, shall be first deducted and the remain- der of the joint or through revenue then divided upon said basis; provided, that neither party shall be required to perform any service MILLAR CONTRACT 1902. 107 other than switching service in connection with the other party for less than one dollar per ton, except as may be mutually agreed upon from time to time. Joint through rates for business other than that which is subject to the competition of rival carriers, shall be divided fro rata per rate, that is to say, each party shall receive of such through rate a share equal to the proportion its separate local rate for identical service separately performed bears to the sum of said local rates of both parties." Section 16. Said agreement shall also contain the following provi- sion: " Each party shall be liable for all damages to persons or property in its possession or under its charge for the purpose of transportation or storage. When the injury for which damages are claimed cannot be located or arises from concealed or unknown causes the damages shall be jointly paid by the parties hereto in the proportion in which the through rates are divided, as hereinafter provided. Cars of each of the parties hereto received on the lines of the other shall be promptly returned, preference being always given to loaded cars. All carload freight shall be sent over the lines of the parties hereto without transfer, when the cars so loaded are in good condition." 192 Section 17. Said agreement shall also contain the following provision : " It is further mutually covenanted and agreed by and between the parties hereto that all joint through passenger rates shall be divided in the following proportions: " 1. When the joint passenger rate is made of the sum of the pub- lished local rates of the parties, each party shall receive its local rate. " 2. If the through passenger rate shall be less than the sum of the two or more local rates, made less to meet competition, or to promote the public interest, each party shall receive its loGal rate reduced in the precise proportion that the through rate is less than the rate made by the sum of the locals, and neither party shall in any divi- sion receive more than its published local tariffs." Section 18. Said agreement shall also contain the following pro- vision : " Any difference that shall hereafter arise as to the meaning or the proper construction of this agreement, or any part thereof, or as to the performance of any of the covenants and agreements herein con- tained by either party, shall first be referred to the two presidents of the said parties for settlement, and to that end the party complain- ing shall deliver to the said presidents a concise written statement of the matter regarding which complaint is made. If the two presi- dents within thirty days after receiving such complaint, are unable to settle such difference so submitted, then the same shall, within thirty days thereafter be referred to a committee of the two boards of di- rectors to be created as provided in this article. Notice of 193 the time and place of hearing thereof by said committee shall be given by them to the parties hereto at least ten days before 108 MILLAK CONTBACT 1902 COMPLAINANT'S EXHIBITS 31-42. the same shall be heard. Each party may submit such evidence and statements as it may think proper for the consideration of such com- mittee at such hearing, and the decision of such committee, when re- duced to writing and signed by them or a majority of them, shall be binding upon the parties hereto, and such written decision shall thereafter be taken and held to be a part of this agreement." ARTICLE FIFTH. It is further agreed between the parties hereto that all contracts necessary to carry out the provisions of this agreement shall be for- mulated and entered into by the parties appropriate to such contracts, whether hereinabove expressly provided for or not. It is understood and agreed that the execution of this agreement by the party of the second part is subject to ratification and approval by the Executive Committee of the Short Line Company, and that the party of the first part shall be furnished with evidence of such approval when the same shall have been given. In witness whereof the parties hereto have hereunto set their hands the day and year first above written. William A. Clark, In Tust for himself and his Associates.^ Edward H. Harriman, As Trustee, as in above instrument recited. 194 Mr. Severance : I now offer in evidence Complainant's Ex- hibits 31 to 42 (Millar) inclusive, which are admitted to be copies of the originals, and the same may be used with the same force and effect as the originals. (Mr. Evarts assents to this.) These exhibits were Millar Exhibits 40 to 51 inclusive in the Inter- state Commerce Commission record. Complainant's Exhibit 31 (Millar) is Stock Trust Agreement be- tween William A. Clark individually and as trustee, Edward H. Harriman as Trustee, and The Farmers' Loan & Trust Company. Complainant's Exhibit 32 (Millar) is a Traffic Agreement between Oregon Short Line Railroad Company, San Pedro, Los Angeles and Salt Lake Railroad Company and Union Pacific Railroad Company. Complainant's Exhibit 33 (Millar) is a Traffic Agreement between Southern Pacific Company and San Pedro, Los Angeles and Salt Lake Railroad Company. Complainant's Exhibit 34 (Millar) is a Deed, Leamington Cut-Off, Oregon Short Line Railroad Company to San Pedro, Los Angeles and Salt Lake Railroad Company. Complainant's Exhibit 35 (Millar) is Guaranty of Union Pacific Railroad Company to Release Lien of Present and Future Holdings of Income A or Income B Bonds, and is an agreement made between the Oregon Short Line Railroad Company, San Pedro, Los Angeles and Salt Lake Railroad Company and Union Pacific Railroad Com- pany. MILLAR COMPLAINANT'S EXHIBITS 31-42. 109 Complainant's Exhibit 36 (Millar) is a Lease from the Southern Pacific Company and Southern Pacific Railroad Company to 195 San Pedro, Los Angeles and Salt Lake Eailroad Company of the line from Riverside to San Bernardino. Complainant's Exhibit 37 (Millar) is a Deed of Lines south of Salt Lake City ; Oregon Short Line Railroad Company to San Pedro, Los Angeles and Salt Lake Railroad Company. Complainant's Exhibit 38 (Millar) is a Deed of the Terminus Branch, Oregon Short Line Railroad Company to San Pedro, Los Angeles and Salt Lake Railroad Company. Complainant's Exhibit 39 (Millar) is a Salt Lake Yard Contract between Oregon Short Line Railroad Company and San Pedro, Los Angeles and Salt Lake Railroad Company. Complainant's Exhibit 40 (Millar) is a Deed from Utah and Pa- cific Railroad Company to San Pedro, Los Angeles and Salt Lake Railroad Company. Complainant's Exhibit 41 (Millar) is a Deed from Utah, Nevada and California Railroad Company to San Pedro, Los Angeles and Salt Lake Railroad Company. Complainant's Exhibit 42 (Millar) is a Deed from New East Tintic Railway Company to San Pedro, Los Angeles and Salt Lake Railroad Company. These are all offered in evidence. 196 Complainant's Exhibit 31 is as follows : Complainant's Exhibit 31. (Millar.) William A. Clark, Individually and as Trustee, Edward H. Har- riman, as Trustee, and The Farmers' Loan and Trust Company. STOCK TRUST AGREEMENT. This agreement, made and entered into this 7th day of June, A. D. 1903, by and between William A. Clark, of the City of Butte, in the State of Montana, contracting for himself and as trustee for his as- sociates, as party of the first part, Edward H. Harrimari, of Arden, New York, as trustee, as party of the second part, and The Farmers' Loan and Trust Company, a corporation created under the laws of the State of New York, hereinafter called the Trustee, as party of the third part, witnesseth : Article I. Section 1. The parties of the first and second parts, in considera- tion of the sum of one dollar to each of them in hand paid, the receipt whereof is hereby acknowledged, and in further consideration of the acceptance by the Trustee of the trust hereby created, do jointly and severally sell, assign, deliver and set over unto said Trustee 197 under the terms of this instrument, and to the successor in 71535—09 8 110 MILLAR COMPLAINANT'S EXHIBIT 31. trust, if any, of said Trustee, all and singular the following cer- tificates of capital stock and the stock interest therein or thereby represented, viz. : 1. 25,990 shares of the capital stock of the California Improvement Company ; 2. 10,000 shares of the capital stock of the Empire Construction Company ; 3. 3,000 shares of the capital stock of the Los Angeles Terminal Land Company; 4. 250,000 shares of the capital stock of the San Pedro, Los Angeles and Salt Lake Railroad Company (including those held by the di- rectors of said Eailroad Company) , subject to the pledge and deposit of all the foregoing shares with Kuhn, Loeb & Co., duly assigned in blank, as part of the collateral for a loan of $25,000,000 made by said Kuhn, Loeb & Co. to said Railroad Company, and in order to secure the transfer of which hereunder the said parties of the first and second parts have executed an order to said Kuhn, Loeb & Co. as follows : New York, , 1903. To Messrs. Kuhn, Loeb & Co.: There have heretofore been deposited and pledged with you under the terms of a certain Agreement dated June 3, 1903, between your- selves and the San Pedro, Los Angeles and Salt Lake Eailroad Com- pany, as part of the collateral security for the loan therein provided for, two hundred and fifty thousand shares of the capital stock 198 of the said San Pedro, Los Angeles and Salt Lake Railroad Company ; all except directors' shares being owned by William A. Clark and Edward H. Harriman. This is to authorize and direct you, upon the payment of the loan described in said Agreement with the interest thereon, and upon the satisfaction of the obligations therein contained, to deliver all of the said shares of stock to The Farmers' Loan and Trust Company, of the City of New York, to be held by said Trust Company under the terms of a certain Stock Trust Agreement dated June 7, 1903. If hereafter you decline to make the additional loan described in said first mentioned Agreement, and are called upon to surrender the two-sevenths in par amount of said shares of stock as provided in said Agreement, this directs you to deliver the stock so to be surrendered to or upon the joint order of William A. Clark and Edward H. Har- riman, their Executors and Administrators. San Pedro, Los Angeles and Salt Lake Railroad Company, By and Notice of above direction accepted: Kuhn, Loeb & Co; President. -, Secretary. William A. Clark. Edward H. Harriman. MILLAR — COMPLAINANT'S EXHIBIT 31. Ill So soon as the said shares of stock so transferred hereunder shall be received by the Trustee, the same shall at once be transferred upon the books of said respective corporations into the name of the 199 Trustee, and all of the terms and conditions of this instrument shall at once attach thereto and all property in the said stock shall be deemed vested in the Trustee as fully and to the same extent, and with the same force and effect, as if actual transfer and delivery of said shares of stock had been, at the time of the execution of this instrument, duly made to the Trustee hereunder. In case Kuhn, Loeb & Co. shall hereafter decline to make the addi- tional loan of $10,000,000 provided for in their Agreement with said San Pedro Company, dated June 3, 1903, and shall surrender to the parties of the first and second parts two-sevenths in par amount of the capital stock of the San Pedro Company, the said parties of the first and second parts hereby covenant with each other that they will use the same or so much thereof as may be necessary as part of the collateral security to be given to some other lender who shall make a loan of not exceeding $10,000,000 to said San Pedro Company, and that, upon making said loan by said other lender, the parties of the first and second parts, will execute and deliver to said lender an order for the delivery of said shares of stock by said lender to the Trustee, in like form as said order hereinbefore set forth, requiring said lender, upon the payment or other satisfaction of the loan and lien under which said shares may be pledged to him, to deliver said stock to said Trustee for said account of said parties of the first and second parts as such Trustees; and that in all other respects any shares of stock so surrendered to them by said Kuhn, Loeb & Co. shall be deemed sold, transferred and delivered to the Trustee, and shall be subject to 200 and bound by all of the terms of this Agreement. Section 2. The parties of the first and second parts further covenant and agree to and with each other, and to and with the Trustee, that from time to time, and when, individually or as Trus- tee, they shall or may hereafter jointly secure by purchase or other- wise any additional shares of the capital stock of either or any of said several Companies named in Section 1 of this Article, whether such stock be now issued or hereafter may be issued, they will im- mediately sell, assign, deliver and set over to the Trustee any and all such shares of stock, subject to all the terms and trusts of this agreement. Section 3. The parties of the first and second parts further sever- ally covenant and agree to and with each other, and to and with the Trustee, that in case either of the parties of the first or second parts or their respective oestuis que trust shall hereafter secure, by pur- chase or otherwise, any further or additional shares of capital stock of any of the said companies mentioned in Section 1 hereof, and not theretofore deposited with the Trustee, whether such capital stock be now issued or at any time hereafter be issued by any of said com- panies, such acquisition, however made, shall be for and upon their 112 MILLAR COMPLAINANT'S EXHIBIT 33. joint account, at joint cost, and for the equal benefit and ownership of the parties of the first and second parts and their respective ces- tuia que trust, and that the same shall be, whether it be stock now issued or stock which may be at any time hereafter issued by any of the said companies, if, and when the cost thereof shall be borne or paid jointly by the parties of the first and second parts 201 hereto, in like manner immediately assigned, transferred and delivered to the Trustee, and shall be and become subject to the terms hereof. But if the other of said first party or said second party shall not, on demand of the party who made such acquisition, or for whom such acquisition was made pay one-half of the cost thereof to the party acquiring the same, then such party who has acquired the same, may, but not otherwise, hold and own such addi- tional shares as his own, and free from the terms of this agreement and free from any claim of interest therein by any other party hereto. Section 4. The parties of the first and second parts further cove- nant to and with each other, and to and with the Trustee, that in case they or either of them shall in any manner or at any time here- after secure or acquire any of said additional shares of said capital stock in any of said companies, which is now issued or may hereafter be issued by any of said companies, he or they will immediately in- form and advise each of the other parties hereto of the time, manner, terms and price at which such stock was secured or acquired, with an offer to subject the same to the terms of this agreement, and also that they will at once cause the Trustee to be fully informed of any increase in capital stock of any of said companies which may at any time hereafter be authorized or made, and of the terms and conditions upon which the same is provided to be issued or is issued. Section 5. The Trustee shall HAVE AND HOLD all of the said shares of said capital stock of the each of the companies mentioned in Section 1 of this Article, and the certificates representing the same, and which are, on the execution hereof, delivered to said Trus- 202 tee, as well also as any and all such shares of capital stock mentioned in Sections 2 and 3 of this Article, which may here- after be delivered to the Trustee, its successors or assigns, upon the trusts hereinafter specified, from and after the execution hereof and for the term of ten years from the day when the railroad of the San Pedro, Los Angeles and Salt Lake Railroad Company, or its suc- cessor, shall be opened for business from Salt Lake City, Utah, to San Pedro, California. Article II. — Directors 1 qualifying shares. Enough shares of capital stock in each of the said Companies men- tioned in Article I. hereof, to qualify the directorate in each of them, shall be reserved from the disposition of said shares of capital stock hereinafter provided, and the same shall be assigned and transferred . by the Trustee to the names of the persons selected to be or who shall be from time to time elected to such directorate. Such directors' qualifying certificates of shares, however, shall be at once assigned in MILLAR COMPLAINANT'S EXHIBIT 31. 113 blank by said directors and be delivered to and held in the custody of the Trustee, to be used for said purpose, but subject to the terms of this instrument. Article III. The Trustee, its successors and assigns, shall cause all of the said shares of capital stock, (except those necessary to qualify the direc- tors as aforesaid,) and all the certificates thereof mentioned in 203 Article I. hereof, as well as all other shares of capital stock which may at any time hereafter be delivered to the Trustee under this instrument, to be immediately and from time to time trans- ferred to it as Trustee, upon the respective transfer books of the said several companies, and thereafter the Trustee shall be possessed of and hold all of the said stock and certificates as Trustee under this instrument, with full power to hold the same as the owner of the legal title thereto, but subject, as between the parties to this instrument and their assigns, to all the trusts in this instrument declared. Article IV. Section. 1. The Trustee shall issue " Certificates of Interest " against all of said shares of capital stock and the certificates of capital stock which may now be, or which may hereafter be at any time, issued by any of said several companies, and by or for the parties of the first and second parts deposited with, and assigned to the Trustee, to be and to become subject to the terms of this instrument, which said Cer- tificates of Interest shall be issued by it to and in the names of "William A. Clark, Trustee, and Edward H. Harriman, Trustee," duly certified and issued under the hand of its proper officers, and entered upon correct books of record which shall be kept by the Trustee, showing the details of the issuance and transfers of such Certificates, in the usual manner and form of well organized corpora- tions dealing with such matters. 204 Section 2. Said Certificates may be in substantially the fol- lowing form: The Farmers' Loan and Trust Company certificate of INTEREST IN (Insert name of proper company.) No. shares. This Certificate of Interest is issued to , pursuant to the provisions of a certain Stock Trust Agreement dated June 7, 1903, made by and between William A. Clark, contracting for himself and as trustee for his associates, as party of the first part, Edward H. Harriman, as trustee, as party of the second part, and the undersigned, as party of the third part, and reference to said 114 MILLAR COMPLAINANT'S EXHIBIT 31. Agreement, an original of which has been lodged with the under- signed, is hereby made. This Certificate of Interest is based upon shares of the capital stock of the of the par value of one hundred dollars each, which have been sold, assigned, delivered and transferred to the undersigned as Trustee under said Agreement. This Certificate is not negotiable and not transferable, except upon the written consent of William A. Clark, Trustee, and Edward H. Harriman, Trustee, in the form of transfer and consent endorsed on this Certificate, nor until this certificate shall be surrendered to the undersigned for cancellation, as provided by said Agreement. The holder or holders of this Certificate of Interest is 205 and are entitled to receive the net proceeds (after paying the cost of collecting and disbursing the same, including the Trustee's fees) of any dividend or dividends declared or to be de- clared, and of any funds which may come into the possession of the undersigned as the holder or owner of any of the shares of cap- ital stock of the said Company in respect of which this Certificate is issued. At the end of the full term of ten years from the day, on which the railroad of the San Pedro, Los Angeles and Salt Lake Railroad Company shall be opened for business from Salt Lake City, Utah, to San Pedro, California, the registered holder of this Certificate may surrender the same to the undersigned; and, upon payment of any sums due or to become due to the Trustee under the terms of said Agreement, shall be entitled to receive from the Trustee, Certificates in the name of such holder for the shares of capital stock in respect of which this Certificate was issued. By the acceptance of this Certificate, the holder thereof shall be bound by all the terms and provisions of said agreement, dated June 7, 1903, as fully and to the same extent as if such holder were a party thereto and had duly executed an agreement to abide thereby; and no holder thereof, other than " William A. Clark, Trustee, and Ed- ward H. Harriman, Trustee," whether the cestui que trust of said Clark, or of said Harriman, nor any other persons, shall have any interest, legal or equitable, in this Certificate, or in the shares of capital stock upon which the same is issued, unless or until 206 the said Clark, Trustee; and said Harriman, Trustee, shall have each in writing consented thereto. When so . assigned, this Certificate shall be transferred only upon surrender thereof to the Trustee and upon the execution by the trans- feree of an agreement in the form prescribed by the said Stock Trust Agreement. The Farmers' Loan and Trust Compaky, Trustee, By Attest : Secretary. MILLAB,— COMPLAINANT'S EXHIBIT 31. 115 There shall be endorsed upon said Certificates of Interest a form of assignment substantially in the following form : ASSIGNMENT. For value received, hereby sell, assign and transfer unto — _ the within Certificate of Interest based upon shares of the capital stock of the , and all of interest therein, and do hereby irrevocably appoint attorney to transfer said Certificate upon the books of The Farmers' Loan and Trust Com- pany, with full power of substitution in the premises. Dated No such assignment shall become effectual to pass any title 207 to, or right or interest in the said Certificate, or in the shares of capital stock upon which the same is based, until there shall have been endorsed in writing thereon, a consent substantially in the following form: " Consent is hereby given to the above assignment of this Certifi- cate, and to the transfer thereof, to " William A. Clark, Trustee. " Edward H. Harriman, Trustee. " In presence of : Nor shall such assignment or consent be received from any intended transferee by the Trustee for any purpose, until such intended trans- feree shall have executed and delivered to the Trustee, by endorsing the same upon such certificate so to be transferred, an undertaking in the following form: " The undersigned accept this Certificate, subject to all the terms and conditions of the agreement dated June 3, 1903, therein men- tioned, by which the undersigned agree to be fully bound as if a party thereto, and agree to hold all interest acquired thereby, and by any new Certificate of Interest, if any, issued in respect thereof under and subject to the terms of said Agreement." Upon the due execution of all of which and the presentation thereof to the Trustee, it may, but not otherwise, cause such transfers to be made and entered of record. Section 3. Said Certificates of Interest as to the shares of stock in each of said several Companies shall be issued and delivered to 208 the parties of the first and second parts in their joint names, in equal amounts, so that each of the parties of the first and second parts shall respectively receive from the Trustee, each one- half in number and one-half in par value of the capital stock in each of said Companies now, or from time to time, transferred or deliv- ered to the Trustee, and in respect of which said Certificates of Inter- est may be issued. 116 MILLAB COMPLAINANT'S EXHIBIT 31. Section 4. No transfer of any such Certificates of Interest shall be made by the Trustee upon its books or otherwise, unless such Certifi- cates shall be first surrendered and returned to the Trustee for cancel- lation, and shall have been by it canceled ; nor unless the same shall each bear endorsed thereon the written consent to such transfer signed by" each of said parties of the first and second parts, nor until such proposed transferee shall in writing consent to all the terms of this instrument, and agree to be bound thereby as if a party thereto, and to be bound and limited by the terms and conditions written in and endorsed upon said Certificates of Interest. Section 5. The Trustee may from time to time make such reason- able rules respecting the making and issuance of Certificates of Inter- est, and the transfer thereof, as it may find necessary ; and upon the written request of all the holders of outstanding Certificates of Inter- est, it shall make, adopt and enforce any rule or regulation concern- ing the assignment or transfer of such Certificates of Interest, 209 which all of said holders of outstanding Certificates of Interest may so request. Article V. Section 1. The Trustee may collect any dividends paid or payable, declared or to be declared, by any of said Companies, and any funds due to any of them from anj' source whatever, in respect of the said shares of capital stock so held by the Trustee, and, shall immedi- ately, upon such receipt and collection of any such dividends or funds, pay over any such dividends or funds to the parties of the first and second parts, or their successors or assigns, ratably and according to their respective holdings of said Certificates of Interest represent- ing the stock upon which such dividends or funds has been paid as appears by the records of the Trustee, and may also pay over the like ratable proportion of any such dividends or funds to any registered holder of such Certificates of Interest, whose holding thereof was acquired by any assignment of such Certificates of Interest, with and upon the written consent of the parties of the first and second parts, and upon the said transfers, consent and undertaking, as provided by Section 4 of Article IV. of this Agreement. Section 2. The Trustee will at any time, upon the written' request of the parties of the first and second parts^ or the successor in trust of either of them, issue to the persons jointly named by said parties of the first and second parts, or said successor, its proxj or proxies upon all of the shares of capital stock of each of said several Com- 210 panies then held by it and registered in its name, to be voted at any annual, special, adjourned or called meeting of the stockholders of any of the said Companies. Section 3. At least sixty days before the day of the annual meet- ing of the stockholders of any of the said Companies, the parties of the first and second parts shall, in writing, either jointly or sepa- rately, notify the Trustee of the names of the persons to whom the MILLAR COMPLAINANT'S EXHIBIT 31. 117 Trustee shall issue the proxy or proxies mentioned in Section 2 of this Article. If the names so notified to the Trustee are not identi- cal, the Trustee shall transmit to each of the parties a copy of the said notice of the other party, and unless thirty days before the day of such annual meeting the parties of the first and second parts shall have lodged with the Trustee an agreement or consent to the names of the same persons to whom such proxies shall issue, it shall then be the duty of the Trustee, not less than twenty days before the day of such meeting of the stockholders, to call, in writing, upon each of the parties of the first and second parts to each nominate a number of persons, not more than one-half of the number of persons to be elected as directors at such meeting,, and thereupon the Trustee shall issue its proxy or proxies to such person or attorney as it may select to ap- pear at such annual meeting, and there to vote all the shares of capital stock in such Company so held by said Trustee, for directors thereof, one-half of the number of directors to be the persons so nominated to it for such purpose by each of the said parties of the first 211 and second parts, respectively. Any communication provided to be made hereby may be made between the parties or their duly appointed attorney by letter or by telegram sent at the expense of the trust. In case the number of directors to be chosen for any such Company shall be an odd number, then the President of the. Trustee shall be elected as one of said directors, unless said parties of the first and second parts shall jointly nominate another person to be so elected, and the remaining directors shall be elected, one-half from the persons nominated for such office by the party of the first part, and one-half from the persons nominated for such office by the party of the second part. Section 4. If the said parties shall include in their said nomina- tions of persons to be voted for as directors by the Trustee, as pro- vided for in Section 3 of this Article, the names of the same person or persons, the Trustee shall, by letter or by telegram, notify each of said parties of the first and second parts, of the fact of such double nomination, and in such case either of said parties may withdraw the name of the person so twice nominated and substitute the name of another person to be voted for by the Trustee or its attorney in fact; but in case either of said parties of the first or second parts shall fail to nominate some person in lieu of the person so nominated by both parties, then the President of the Trustee shall select some managing officer of the Trustee to be voted for as such director in lieu of one of said double nominations by one of said parties. 212 Section 5. In case it shall happen at any time while the capital stock of the said several Companies, or any of them, remains deposited with the Trustee, that the stockholders in any of said Companies shall be called at any regular or special meeting, to act upon any question other than the election of directors, the Trus- tee shall issue its proxy upon said capital stock to the person or per- sons whom the said parties of the first and second parts may jointly 118 MILLAR COMPLAINANT'S EXHIBIT 31. request. In case the said parties shall not agree as to the person so to be appointed, the Trustee shall select some discreet and proper person to vote upon such question in such meeting in the manner and as the parties hereto may in writing request; and in case no such request shall be jointly made by said parties, then the Trustee shall vote upon such question upon the stock so held by it, in the manner and as the President of the Trustee shall determine. Section 6. The initiative in all matters in this Article provided shall be taken by the parties of the first and second parts hereto, and the Trustee shall not be charged with any duty except as in this Article provided, in case of a failure of the said parties of the first and second parts to agree in direction to the Trustee as in this in- strument provided. Article VI. Section 1. None of the stock held by the Trustee under the terms of this Agreement, and none of the Certificates of Interest 213 issued thereunder, shall, until the end of the full term of the ten years hereinafter created, be in any manner or for any pur- , pose sold, assigned or transferred, or otherwise disposed of, nor shall any interest therein, or right thereto, legal or equitable, be sold, transferred or assigned or otherwise disposed of by either the party of the first or the party of the second part hereto, except upon .the consent in writing of the other of said parties, first had and obtained and lodged with the Trustee ; nor unless the party hereto desiring to effect such sale, assignment or transfer or other disposition shall have first offered the other of said parties hereto the right and oppor- tunity to purchase the same stock certificates, interest, legal or equita- ble, or right, on as favorable terms, and such party shall neglect to avail himself of such opportunity for the space of thirty days. Section 2. Nothing in this Article, however, shall be construed to prohibit either of the said parties of the first and second parts, re- spectively, from making and delivering to himself or to his cestuis que trust, or associates, receipts, or other instruments, in form ne- gotiable or otherwise, hereinafter termed " Certificates of Interest," in respect of the number of shares of stock in each of said Companies which he has or which such associates or cestuis que trust have de- posited under said trust, or with their said respective personal trus- tees under some agreement satisfactory to such personal trustee and to the owners of such capital stock so deposited with the said per- sonal trustee; but such agreement or arrangement shall be so 214 made as to provide that none of the owners of such Certificates of Interest so issued by either one of the said personal trustees shall, by virtue of such ownership, or otherwise, in any manner in- terfere with the control, ownership, use, custody and possession of said third party of the capital stock so deposited by said personal trustee with the Trustee under this Agreement, nor shall any such arrangement or agreement charge the Trustee under this Agreement MILLAR- -COMPLAINANT'S EXHIBIT 31. 119 with any duty to any holder of any such personal trustee Certificate, nor shall the party of the third part be required to recognize any such personal trustee Certificate in any manner, or for any purpose whatever. Section 3. At the end of the term hereby created, the parties of the first and second parts covenant to and with each other and to and with the Trustee to surrender to the said Trustee any and all Certifi- cates of Interest issued by the Trustee and respectively held by them,' or either of them, and thereupon the Trustee may, and it hereby cove- nants and agrees to and with each of the other parties hereto that it will, upon the request of either of said other parties, assign the capital stock, or capital stock certificates represented by said surrendered Certificates of Interest, jointly to and in the names of the parties of the first and second parts, and shall deliver to each of the said parties of the first and second parts the certificates of capital stock in any of said several Companies which are represented by the Certificates of Interest issued against the said capital stock by the Trustee, 215 and which shall be surrendered to the Trustee by said respec- tive parties, or it may, upon a like surrender by the hold- ers thereof, assign into the names of such holders of its Certificates of Interest and deliver to such holder or holders of its said Certificates of Interest the number of shares of capital stock in any of said Com- panies and in the par value in respect of which the Trustee had issued its said Certificates of Interest, provided that such holder or holders of said Certificates took and held the same under the terms and upon the written consents of the said parties of. the first and second parts, and upon the other conditions provided for by this instrument ; and upon such assignment and delivery, the said capital stock may be transferred upon the books of the said several companies into the names of such assignees. Upon any such assignment and delivery of said shares of capital stock by the Trustee to the holders of any Certificate of Interest issued by the Trustee, the Trustee shall not thereafter be charged with any duty or liability in respect of any of said capital stock or Certificate of Interest. Section 4. Each of the parties of the first and second parts cove- nants with the other, that any and all shares of stock and stock cer- tificates received by him, under the terms of Section 3 of this Article, will not be sold or offered for sale at any time after receiving the same, until the other of said parties shall have been given the right to purchase such shares of capital stock on as favorable terms as the same or any part thereof are offered for sale or agreed to be sold, or sold, to any other person, firm or company ; it being the inten- 216 tion of each of the parties hereto to give to the other a prefer- ential right to purchase any of said shares of capital stock upon any sale or other disposition thereof. Article VII. Section 1. In case the parties of the first and second parts, respec- tively, may desire to wind up the business, distribute the assets or 120 MILLAR, COMPLAINANT'S EXHIBIT 31. otherwise bring about a dissolution of the said California Improve- ment Company, the Empire Construction Company and the Los Angeles Terminal Land Company, or some of them, or for any other purpose to withdraw the shares of stock of any of said Companies from the trust hereby created, then upon the surrender of the Certif- icates of Interest issued by the Trustee in respect of the shares of the capital stock of any such Company, the Trustee may, and upon the joint request of the parties of the first and second parts, shall assign the said stock certificate and deliver the same to such person or per- sons as may be named in such request; and thereupon the Trustee shall not be further charged in respect to any stock in, or business of such Company, and this Agreement shall no longer affect the same. Article VIII. Section 1. The provisions of this Agreement shall be binding and in full force and effect from the date hereof, and for the further full term of ten years from the day on which the railroad of the San Pedro, Los Angeles and Salt Lake Railroad Company 217 shall be opened for business between Salt Lake City, Utah, and San Pedro, California; and the parties of the first and second parts covenant and agree that they will cause the San Pedro, Los Angeles and Salt Lake Eailroad Company to certify to the Trus- tee the date at which it is so open for business, and that the said Certificate shall be conclusive as to the fact so stated. Section 2. It is nevertheless agreed by all the parties hereto that this Agreement may at any time be modified, changed or abrogated, in whole or in part, upon the consent of all of the holders of record of the said Certificates of Interest issued by the Trustee, if and when the same is approved in writing by the Trustee. Article IX. Section 1. The parties of the first and second parts jointly and severally covenant and agree to and with each other, and with the Trustee, to indemnify it and to save and keep it harmless from any loss, charges or damages which the Trustee may incur by reason of its holding the legal title to or the ownership in and custody of the said several shares of capital stock in any of said several companies. Section 2. They also covenant and agree to pay each one-half of the reasonable compensation to be paid to the Trustee for itself and for its agents, servants or attorneys, for anything done or to be done by them or any of them in the performance of the duties of the Trustee under the terms of this instrument, and any costs, 218 damages or expenses incurred by the Trustee in any suit or action which may be brought or conducted by any person hav- ing or claiming to have an interest in the subject-matter of the trust estate and in which the Trustee may be sued or if it elect in which it may voluntarily appear. MILLAR COMPLAINANT'S EXHIBIT 31. 121 Article X. Section 1. In case the said William A. Clark shall at any time die or resign as Trustee for his said cestuis que trust, or if he shall for any reason be unable to discharge the duties of his trust, then the holder or holders of Certificates of Interest, issued by said William A. Clark to himself and to the persons who deposited any of said capital stock with said Clark, may, by a majority vote of all shares represented in said Certificates, select some other person to be Trustee in lieu and in place of said William A. Clark; and, upon said se- lection being certified to said Trustee by the written certificate of the said holders of said Certificates, the cestuis que trust making such selection, the said person so selected in place of said Clark may exe- cute the copy of said Agreement in the custody of the party of the third part, and thereafter shall in all respects, rights, duties, privi- leges, conditions and matters be substituted for said Clark to all in- tents and purposes as if such person had been originally the party to this instrument instead of said Clark. Section 2. In case the said Edward H. Harriman shall at any time die or resign as Trustee for his said cestuis que 219 trust, or if he shall for any reason be unable to discharge the duties of his trust, then the holder or holders of certificates of interest issued by said Edward H. Harriman in respect of said capital stock, may, by a majority vote of all of said certificates of interest, select some other person to be Trustee in lieu and in place of said Edward H. Harriman; and upon said selection being certi- fied to said Trustee by the written certificate of the said holders of said Certificates, the cestuis que trust making such selection, the said person so selected in place of said Harriman may execute the copy of said Agreement in the custody of the party of the third part, and thereafter shall in all respects, rights, duties, privileges, conditions and matters be substituted for said Harriman to all intents and pur- poses as if such person had been originally the party to this instru- ment instead of said Harriman. In testimony whereof, the said party of the first part and the said party of the second part have hereunto subscribed their names and affixed their seals; and the said party of the third part, for the pur- pose of signifying its acceptance of the trusts herein and hereby cre- ated, has caused these presents to be signed by its President, sealed with its corporate seal, and attested by its Secretary, the day and year first above written. Signed in triplicate. W. A. Clark (l. s.) W. A. Clark as Trustee (l. s.) Edward H. Harriman, as Trustee, (l. s.) The Farmers' Loan and Trust Company, Trustee. [seal.] By E. S. Marston, President. Attest : Sam Sloan, Jr. Sec'y. 122 MILLAR COMPLAISANT 's EXHIBIT 32. 220 Complainant's Exhibit 32 is as follows: Complainant's Exhibit 32. (Millar.) Oregon Short Line Eailroad Company, San Pedro, Los Angeles and Salt Lake Railroad Company and Union Pacific Railroad Company. traffic agreement. This agreement, made and entered into this 18th day of June, 1903, by and between Oregon Short Line Railroad Company, a corporation organized and existing under and by virtue of the laws of the State of Utah, hereinafter called the " Short Line Company," party of the first part ; San Pedro, Los Angeles and Salt Lake Railroad Company, a corporation organized and existing under and by virtue of the laws of the State of Utah, hereinafter called the " San Pedro Company," party of the second part, and Union Pacific Railroad Company, a corporation organized and existing under and by virtue of the laws of the State of Utah, hereinafter called " Union Company," party of the third part, Witnesseth : Whereas, said Short Line Company formerly owned and operated certain railroads lying south of Salt Lake City, Utah, which it has conveyed or is about to convey to said San Pedro Company ; and Whereas, said Short Line Company owns and operates certain lines are eligible. their entire time to Union .racinc Jtiailroad Company or to that company and some other railroad company or companies jointly. In case of such joint employment the Board of Pensions shall decide the amount of the employe's monthly pay that shall be used in determining the pension allowance. ■haiF P o? ye ma y W be *' ( a ) A11 officers and employes who have attained retired and pen- the age of seventv vears shall be retired. S10D6Q. " Such of them as have been twenty years in the service shall be pensioned. (b) Locomotive Engineers and Firemen, Conductors, Flagmen and Brakemen, Train Baggagemen, Yard Masters, Switchmen, Bridge Foremen, Section Foremen and Supervisors, who have attained the age of sixty-five years, may be retired. Such of them as have been twenty years in the service shall be pen- sioned when retired. (c) Officers and employes between sixty-one and seventy years of age, who have been twenty years in the service and who have become incapacitated, may be retired and pensioned. In case an employe between sixty-one and seventy years of 362 age claims that he is, or should his employing officer consider him incapacitated for further service, he may make application or be recommended for retirement, and the Board of Pensions shall determine whether or not he shall be retired from the service. Physical examination shall be made of employes recommended for retirement who are under seventy years of age, and a report thereof with the recommendation of the Chief Surgeon shall be transmitted 198 MILIAR COMPLAINANT'S EXHIBIT 45. to the Board of Pensions for consideration in determining such cases, employ "s^when ^. Eetirement shall be made effective from the first effective. d a y of the calendar month following that in which the person shall have attained the specified age, or from the first day of a calendar month to be determined by the Board of Pensions. * . ™ fl = nl « S^.S 6. The terms " Service " and " In the Service " will t e rms Service . ... . and „ " In tne s * rv_ refer to employment upon or in connection with any of the railroads forming the Union Pacific System at present, comprising Union Pacific Eailroad Company, Oregon Short Line Railroad Company and The Oregon Eailroad & Navigation Company; and the service of any employe with this Company shall be considered as continuous from the date from which he has been continuously employed upon such railroads, whether prior or subse- quent to their acquisition by Union Pacific Railroad Company, Oregon Short Line Eailroad Company, or The Oregon Eailroad & Naviga- tion Company. term m wn? 426 A. None that I now recall. They are all published in the annual report. Q. Now, Mr. Mahl, you, as comptroller of the Union Pacific, have information as to the ownership of any stock in any steamship lines or any steamships directly owned by that company ? A. Yes, sir. Q. Do they own any ships or any stock in steamship lines, steam- ship corporations? A. I think the annual report shows that. (Counsel hands report to witness.) Witness. I think we show in the table of assets here for the Union Pacific, that they own the steamers Aragonia and Numantia. Q. They belong to the Union Pacific? A. Yes, sir. Q. Do you know anything about the steamship company called the Occidental & Oriental Gompany ? Hasn't the Union Pacific stock in that company? MAHL, — COMPLAINANT'S EXHIBITS 56-57. 233 A. Yes, sir. Q. Now, Mr. Mahl, what steamships, if any, does the Oregon Rail- road & Navigation Company control or own? A. None that I know of. She is a river line. I think it is stated here in the annual report. She is a water line from Portland, Oregon,, to Ilwaco ; about 258 miles of river line along the Columbia River to- various points. Q. Did they in 1905 have any ships ? If so, what hase become of them? A. I couldn't say now, unless I referred to the report. Q. I call your attention to the fact that at a meeting of the executive committee of the Oregon Railroad & Navigation 427 Company held on the 13th of April, 1905, it appeared that. " the chairman, Mr. Harriman, stated that when the steam- ships 'Arabia,' 'Aragonia,' ' Nicomedia,' and ' Numantia ' were char- tered by the Portland & Asiatic Steamship Company (capital stock of which is owned by this company) it was understood that this com- pany would indemnify the Hamburg- American Line, the owners of such steamships, against loss and damage arising by reason of the arrest, detention, seizure or confiscation of any of said ships by the Russian and Japanese Governments, due to or caused by the carrying of contraband of war." Do you know anything about a corporation known as the Portland & Asiatic Steamship Company, the stock of which is owned by the Oregon Railroad & Navigation Company ? A. Yes, sir. Q. That Company is still in existence, is it not? A. So far as I know. Q. Will you kindly have made up in your office a statement show- ing the original stocks and bonds of the Union Pacific and the dates and amounts of increase, and the amounts received for such increased stock and bonds? I asked Judge Lovett for it the other day, but I understand you have not yet made them up. A. Yes, I have it. Q. Oh, I beg your pardon. Judge Lovett has just handed me the statement. (Paper marked Complainant's Exhibit 56 (Mahl), which was Mahl Exhibit 1 in Interstate Commerce Commission record, and paper marked Complainant's Exhibit 57 (Mahl), which was Mahl Exhibit 2 in Interstate Commerce Commission record.) Mr. Severance. It is admitted that Complainant's Exhibits 428 56 and 57 (Mahl) are correct copies of Exhibits 1 and 2 in Mr. Mahl's testimony before the Interstate Commerce Commission, concerning which latter exhibits Mr. Mahl gave the following testi- mony: Q. I show you exhibits 1 and 2 (Mahl) and will ask you if those papers were prepared under your direction in your office? A. They were. Q. And they are correct, are they? That is your be- lief? A. Yes, sir. Mr. Severance. I offer in evidence Complainant's Exhibits 56 and 57 (Mahl). 234 MAHL — complainant's EXHIBITS 56— 57. Complainant's Exhibit 56 is as follows : Complainant's Exhibit 56. (Mahl.) UNION PACIFIC RAILROAD COMPANY. Common capital stock authorized, issued, and outstanding December 81, 1906. Authorized. Outstanding. Remaining to be issued. Date. Amount. July 1,1897 961,000,000 27, 460, 100 7, 718, 600 100,000,000 961,000,000 27,339,300 7,690,600 99,450,000 $120,800 28,000 October 9, 1899 March 23, 1901 Total 196,178,700 195,479,900 Purposes for which stock was issued or was to he issued. $61,000,000. Issued to Keorganization Committee. 27,460,100. Issuable against $27,460,100 shares capital stock Oregon Short Line E. E. Co. 7,718,600. Issuable against $7,718,600 shares common capital stock of the Oregon Railroad & Navigation Co. 100,000,000. Issuable against a like amount of Union Pacific B. E. Co. First Lien Convertible 4% bonds. Stock to the amount of $99,450,000 face value were issued in ex- change for convertible bonds. W. M. January 2, 1907. Complainant's Exhibit 57 is as follows : Complainant's Exhibit 57. (Mahl.) UNION PACIFIC RAILROAD COMPANY. Preferred captital stock authorized, issued, and outstanding December 31, 1906. Authorized. Outstanding. Remaining Date. Amount. issued. July 1 , 1897 $75,000,000 14,841,000 10,159,000 975,000,000 14,669,500 9,899,800 $171, 600 259,200 100,000,000 99,669,300 . MAHL COMPLAINANT'S EXHIBIT 51. 235 430 Purposes for which stock was issued or was to be issued. $75,000,000. Issued to Reorganization Committee. 14,841,000. Issuable against $14,841,000 O. S. L. E. E. C. Income B. Bonds. 10,159,000. Issuable against $10,159,000 O. E. E. & N. Co. Pre- ferred Stock. W. M. January 2, 1907. Q. Is it not a fact that the Oregon Short Line this fall declared a dividend of 50 per cent on its stock held by the Union Pacific, which nearly exhausted its surplus? A. It declared a dividend of 50 per cent, the accumulation for a number of years. Q. Yes, I understand that, but did it not take $13,000,000 and more to pay that dividend and was not the entire accumulated surplus only $16,000,000, or something of that sort? A. That surplus is an operating surplus, a surplus from opera- tion — transportation operation. It is not a surplus of money from the sale of securities. Q. Now, Mr. Mahl, I will ask you generally whether outside of these summaries, by Mr. Young, that are sent to you, you have any persons along the line that send you any reports? A. I receive a report, for instance, from the officers of the Texas & New Orleans Eailroad, not from Mr. Young. 431 Q. From the Pacific Mail? A. Yes, that is a separate and distinct corporation. Q. And you have an auditor of the Pacific Mail in San Francisco, haven't you? A. Yes. Q. And he reports to you ? A. No, he reports to Mr. Young. Q. How is that? A. He reports to Mr. Young. Q. Do you get any reports at all from the Pacific Mail ? A. Yes. Q. From whom? A. From the auditor in San Francisco. Q. That is what I asked you a moment ago. You said he reported to Mr. Young. Doesn't he send you reports, too ? A. Yes. Q. And what is his name. A. Mr. Eailton, I think it is. It is given in the last report of the company. Q. So that he sends a report to Mr. Young and also to you? A. Yes. Q. And Mr. Young has his office at Omaha, doesn't he? A. Yes. 236 MAHL. Q. And he is the general auditor of the Union Pacific and the Southern Pacific and of the Pacific Mail ? A. I believe so; the reports will show it. (Referring to paper.) Yes. Q. Where is the auditor who has immediate jurisdiction over the accounts of the line of steamers running from New York to Galveston and New Orleans? A. In New York. Q. What is his name ? A. Parker. Q. Do you know his first name ? A. I don't recall it. Q. W. C? A. Yes. Q. To whom does he make reports ? A. He makes reports to myself and I think also to Mr. Young. 432 Q. Mr. Young and yourself? A. Yes. J Q. Now, as long as the Occidental and Oriental Steamship Com- pany was in operation, were any reports of any sort, of their opera- tion sent to you? A. Yes, a financial statement at the end of a month. Q. You still get that, don't you? A. I cannot say that I do now. Q. You don't know ? A. I would have to ascertain. Q. Who is the auditor of the O. E. & N. ? Where is his office? A. Portland. I think his name is Mr. Sterling; I think Mr. Sterling is auditor. Q. Yes, Mr. Sterling. Does he send reports to you ? A. Yes. Q. How often? A. Once a month. Q. Where is the office of the auditor of the Short Line ? A. Salt Lake City. Q. And who is the auditor? A. C. J. McNitt. Q. Does he report to you? A. He sends his statements to me. He reports directly to Mr. Young. Q. Therefore, you get from them — well, you also get a report from Mr. Young or somebody at Omaha, don't you, in connection with the Union Pacific? A. Yes. Q. So that each branch of this system, the Southern Pacific, the Union Pacific, the Short Line, the O. R. & N., and the steamship lines both on the Atlantic and Pacific, in some form make a report to you once a month of their financial operations so that you keep in touch with all of them? MAHL. 237- A. Yes. Q. And that is sent to you here in New York? A. Yes. Q. Does Mr. Young, the general auditor, make a report to you ? A. Yes. 433 Q. Can you tell who has charge of the division of joint office expenses where the same offices are used by the different parts: of the system? A. For the offices out on the line I think that is done in the general auditor's office. Q. That does not come under your jurisdiction? A. That does not come under my jurisdiction. Q. You don't know about that. A. No. Q. And you could not state anything in connection with that sort of thing? A. No, sir, nothing. Q. Who could tell us that — Mr. Young? A. I should think so, yes. Q. And you don't know, I suppose, who makes the division ; that is, who fixes the amount that should be charged to each company ? A. No. Q. Now, how are the expenses of maintaining the offices of traffic director, director of maintenance and operation, director of pur- chases, secretary, general auditor-, comptroller, and so forth, divided ? I show you a memorandum that I think was prepared by you ? A. Yes. The director of maintenance and operation is paid in Chicago, and I don't know who could furnish that information. The traffic director, the director of purchases, the secretary and the comp- troller, are paid in New York, and the apportionment is made in New York. Q. On what basis? A. On the basis — I think in nearly all instances the expenses of the office of director of purchases, allotted in proportion to the num- ber of locomotives and cars owned by the respective companies. Q. Now, by respective companies, you mean the Southern 434 Pacific, the Union Pacific, the Oregon Short Line, and the Oregon Eailroad & Navigation Company? A. Yes. Q. All right, go ahead. A. Expenses of the transfer office allotted actually to the various companies as near as those can be ascertained. That is the stock transfer. Q. The stock transfer is allotted to the various companies? A. Yes. And all salaries and expenses in New York, including salaries of Mr. J. C. Stubbs, Mr. E. O. McCornick, Mr. P. C. Stohr and Mr. H. B. Thrall, allotted on the basis of gross transportation receipts. 71535—09 16 238 MAHL. Q. That is to say, Mr. Stubbs is the director of traffic at Chicago for all the lines, isn't he? A. Yes. Q. And Mr. Stubbs' salary and the expenses of his office are divided between the Southern Pacific, the Union Pacific, the O. E. & N., and the Oregon Short Line on the basis of the gross trans- portation receipts of those respectively? A. No, let me correct this. Q. All right. A. Not the expenses. I don't know anything about the expenses of those. Q. You don't know about the expenses ? A. No. I don't know anything about the salaries of his office. This merely has reference to his own salary. Q. That is, by your testimony, then, you mean that the salaries of Mr. Stubbs, the director of traffic, Mr. E. O. McCornick, Mr. P. C. Stohr, assistants to Mr. Stubbs, and Mr. H. B. Thrall, who is the railway agent of all the lines, are divided on the basis of the 435 gross transportation receipts, of the respective lines? That is correct, is it? A. That is correct. Q. And those amounts are paid from here? A. Yes. Q. As far as their expenses are concerned and the expenses of maintaining their offices, from what source can you ascertain the information as to that provision? A. I should think you would have to obtain that at Chicago? Q. From whom? A. I suppose from the offices. Q. Mr. Young wouldn't have that? A. He might and might not. Comr. Knapp. Do the gross receipts which you referred to there, which are the basis of division of salaries of the officials named, include receipts from passenger traffic as well as freight traffic? A. Yes; receipts from all sources, rents, and so forth. Q. Can you tell what person or what committee or party decides how the salaries paid to these gentlemen who are acting for all the companies are to be divided or apportioned among the lines? A. I don't know. Q. Well, your own salary, for instance, is apportioned to the four lines, isn't it? A. Yes. Q. Who employed you or appointed you ? A. The chairman of the committee. Q. Mr. Harriman? A. Yes. Q. Who directed you as to the method in which you should appor- tion your salary? MAHL. 239 A. I don't think there was any particular direction given about that. I believe we followed what was established out on the line of the road, and it is customary by all railroads to allow salaries 436 of traffic officers along certain lines or divisions, for instance by transportation receipts. I think the companies just fol- lowed what is customary elsewhere. Q. Mr. Mahl, you did not assume, did you, without direction from some person, to charge to the Southern Pacific a certain amount per month or per year, and the Union Pacific a certain amount, and so on, to make up your salary? You were instructed by some one, were you not? A. I can not recall now how that division was made. I can go back to the papers and find out and see. Q. You merely know that it was made? A. Yes, sir. Q. And you know you were employed by Mr. Harriman, but as to whether he directed that kind of a division you do not know? A. I do not recall now. Q. , Who directed you as to the method of dividing the salaries of other officials than yourself, where the officials were common all over the system ? or did you do that of your own motion ? A. No; I think it was done through Mr. Young, or rather upon conference with him or following the practice which was followed out on the line of the road in similar instances. Q. Who had this conference with Mr. Young? Did you have it? A. No, sir. Q. So you think that Mr. Young made this division without authority from the board, or boards of directors, or executive com- mittees or the chairman? A. No ; that might have been originally agreed upon, and I think we simply followed in that matter what was established. 437 Q. When you came there ? A. Yes. Q. Now, in making these divisions, you do not separately charge the steamship lines, do you, with their proportion? or do you make a separate charge against the steamship lines ? A. We make a separate charge against them; yes, sir. Q. Against the Pacific Mail you make a specific charge because you only own a part of the stock, but do you make any division of that charge as between the rail lines of the Southern Pacific and the steamship lines that are directly owned by the Southern Pacific? A. I do not think so. I don't know. Those divisions are made in the general auditor's office. Q. Do you know, Mr. Mahl, from anything that is in your office, as to who has charge of the distribution of purchases, such as cars and locomotives, between the different lines, or would you have to get that from Mr. Thome? A. We would have to get that from Mr. Thorne. 240 MAHL. Mr. Severance. Judge Lovett suggests this to refresh your recol- lection, that one or the other of the companies in the first instance pays these various salaries, and then a charge is made against the other companies for their respective proportions. Witness. That is correct. Q. That is the way it is done ? A. Yes, sir. Q. It amounts to the same thing? A. Yes, sir. Q. Have you made up a statement, Mr. Mahl, of the persons in whose names the 900,000 and the 180,000 shares of Southern Pacific stock appear of record? A. I haven't anything to do with that. Mr. Lovett. "We will furnish that. I didn't ask Mr. Mahl 438 about that. We will furnish a list of the names of the in- dividuals who hold the stock. I neglected to ask Mr. Mahl for them. Q. Mr. Mahl, you can, I assume, without great difficulty, make up for us a statement of the aggregate tonnage hauled by the various lines of the system, can't you? That is reported in your office. A. The annual report shows the entire tonnage hauled. Q. We can find that ourselves by looking at the reports ? A. Yes, sir. Q. Are the Oregon Short Line and the Oregon Railroad & Navi- gation kept separate from the Union Pacific? A. They are; and it is reported in the reports to the Interstate Commerce Commission. Q. Separately? A. Yes, sir. Q. Now, Mr. Mahl, do you make up the statistics that go into the annual reports of your company? A. Yes. Rather, I should amend that by saying that I aggregate them and compile them from those reports which come in from along the roads. Q. And you make up the items or compile the items, showing the total mileage, the revenue per ton per mile, and the ratio of net to gross earnings, operating expenses, cost of conducting transporta- tion, gross earnings per mile, and the net earnings per mile ? A. Yes, sir. Q. And those statements as submitted, are, to the best of your be- lief, correct? A. Yes, sir. Q. Did you prepare the figures upon which, or do you prepare figures upon which the board of directors or executive committee- men act in determining the rate of dividend to be paid ? 439 A. Yes, sir. But let me qualify that. I prepare the state- ments for them that they want, the purpose for which they do not always tell me. I am not asked about them. I submit statements to them of the operations of the companies from time to time. MAHL.. 241 Q. Now, the Union Pacific at present is paying dividends at the rate of 5 per cent each half year, isn't it ? It was put on at a 10 per cent basis last summer? That is true, isn't it? A. There wasn't anything at all about the basis it was put on. We declared a dividend of 5 per cent. Q. Wasn't that stated in the resolution of the board, that it was a 5 per cent semi-annual dividend? A. That would not be for me to answer. I don't know anything about that. Q. Now, let me ask you when you made up this statement for the consideration of the Union Pacific board, before they declared that dividend, did you include among the net earnings applicable to the payment of dividends any profits in the handling of stocks or se- curities, or did you simply take the profits that were earned in the operation of the railroad? A. The operations of the railroad as well as the income from investments. Q. As well as the income from investments? A. Yes, sir. Q. By " Income from investments " do you mean the interest or dividends received upon stocks or bonds owned by the company ? A. Yes, sir. Q. That is all you mean? A. Yes, sir. Q. You don't mean money that might be made by buying stocks or bonds at a certain figure and selling them afterwards at 440 a higher figure? A. No, sir. Q. Have you, Mr. Mahl, where you can readily lay your hand on it in your office, the statement which you prepared for the use of the directors at that meeting? A. I think I could — I might find it. Q. We would like to have that produced. A. The statements that are submitted there are submitted every week. Comr. Lane. Mr. Severance, I understood Mr. Mahl a moment ago to answer to the effect that if the profit was made in a stock transaction that it did not go into the fund from which dividends were paid. Mr. Severance. That is what he stated. Comr. Lane. Well, now, is that so ? Mr. Milbuen. I misunderstood the question, if that was it. That is, if there was a profit realized on an actual transaction, I don't know what the witness would answer, but the question put was, as I under- stood it, whether on realized profits, that is, stock had gone up Mr. Severance. No, I said, Mr. Milburn — I asked whether if stocks or bonds were purchased at a certain figure and were there- after sold at a profit, at a higher figure, whether the profit so made 242 MAHL. went into the gross profits which he submitted to the directors and was applicable to the payment of dividends, and he said they did not ; but only dividends upon stocks held by the company, or the bonds held by the company. Witness. There might have been some few minor instances; possibly not more than $50,000 or $100,000 that might have 441 gone into it. Q. That would be contrary to your custom ? A. No. The annual report shows exactly what has gone into the profits. Q. You can produce this statement? I am not speaking of the annual report. We do not want to have you make any mistake. Mr. Lovett. I think that statement which was referred to can be produced. I think it was filed with the secretary; and that, of course, would be the best evidence of what it shows. We have no objection to informing you as to how that statement was made up. We will produce it. Comr. Lane. You will produce it? Mr. Lovett. Yes, sir ; we will produce it. I think it was filed with the secretary. Comr. Lane. This statement, Mr. Severance, won't show whether they bought a block of stock and that stock went up and money was made on it, whether that money made on it went into the fund out of which dividends were paid, will it ? Mr. Milbuen. Judge Lovett says it will. Mr. Lovett. As a matter of fact, it only shows the income from the transportation business, and the income from the investments, which Mr. Mahl has stated. I understand it as Mr. Mahl does. We will get the statement and that will show. If any profits of that sort were included they will appear from the statement. Q. Will you show me on this annual report the item showing the surplus, the increase in the surplus during the year represented by that report, covered by that report ? 442 Comr. Harlan. What report is that ? Mr. Severance. The Union Pacific annual report for the year ended June 30, 1906. Witness. This. [Indicating.] Q. That is, the surplus of the Union Pacific on the 30th day of June, 1905, was $34,943,194.42, and on the 30th of June, 1906, the profit and loss surplus was $42,796,026.39, or an increase of a little over $8,000,000? A. Yes, sir. Mr. Lovett. To guard against a misapprehension there, I would like to call your attention to the fact that that is a combined state- ment of the Oregon Short Line, the Union Pacific, and the Oregon Railroad and Navigation Company, and not the Union Pacific Rail- road Company alone. These income accounts and balance sheets are shown separately in the annual ^reports of each of these companies filed with-the Commission. Mr. Mahl then combines these figures in MAHL,. 243 a report for the information of stockholders ; that is a consolidated statement of the three companies. Mr. Severance. Would those various items, the three items, make up this total shown in the annual report made to the Commission ? Mr. Lovett. Yes. Q. Of course, Mr. Mahl, whatever profits are made by the Oregon Short Line, or by the Oregon Railroad & Navigation Company, go into the treasury of the Union Pacific, do they not, directly or eventually ? A. All in the net dividends? Q. Yes, certainly in the net dividends; and from time to time dividends are voted on those stocks which are held by the 443 Union Pacific, and the money goes into the treasury in that way ? A. Yes, sir. Q. And out of those dividends, and out of the surplus from opera- tions, the Union Pacific makes its dividends as well as its income from other stocks or bonds it may hold ? A. Yes, sir. Q. You treat them all in the same way, do you not ? A. Yes, sir. Q. Is the annual report of the Union Pacific here ? Mr. Lovett. You have it in your hand. Q. I mean the report made to the Commission. A. It is not here. Q. Who makes up these reports to the Interstate Commerce Com- mission ? Do you make those, or does Mr. Young ? A. No, I think they are usually made up in my office. The oper- ating details are filled out on the line of the road, and we add the financial details. Q. Do you keep an account, Mr. Mahl, which shows the profits realized by the Union Pacific Railroad Company in its stock and bond operations arising from the purchase and sale of stocks ? A. Not always, exactly. On those lines we do not always. When we sell a stock we do not always make a division ; sometimes we do, and sometimes we do not. We do not always write up and make a division as to the profit, and again in some cases we do. Q. Well, now, take for instance, Mr. Mahl — I think it was the Oregon Short Line that bought a large amount of stock of the North- ern Pacific Eailroad Company; did it not? A. Yes, sir. 444 Q. And that stock was converted into Northern Securities stock, was it not? A. Yes, sir. Q. Exchanged for it, I mean? A. Yes, sir. Q. And then afterwards the Northern Securities stock was ex- changed for Great Northern and Northern Pacific stock, in certain proportions ; that is, such of it as you did not sell in the meantime ? A. Yes, sir. 244 MAHL. Q. You had sold some of your Northern Securities stock as such, hadn't you ? A. Yes, sir. Q. And you afterwards sold a considerable amount at least of the Northern Pacific and Great Northern? A. Yes, sir. Q. Have you sold it all yet? A. I can not recall now. I don't know. Q. Don't you keep a summary which shows the profits that the Oregon Short Line made on that transaction ? A. No, I don't think I did in that case. If you will give me the annual report, I will state just what has been done. Q. You may go ahead. You were going to read something from the report? A. In the annual report for the year ending June 30, 1906— — Q. (Interrupting.) That is, the report to your stockholders? A. Yes, sir ; of the Union Pacific, there is this statement under as- sets and liabilities. There were sold during the year stock of the Northern Securities Company to the amount of $2,850,000, par value; preferred stock of the Great Northern Eailway Company to the amount of $9,960,089.49, par value; common stock of the Northern Pacific Railway Company to the amount of $14,830,082.15, par value; and stubs of the Northern Securities Company to the 445 amount of $18.71, par value. The amounts realized from the sale of these stocks were credited against the cost of the stocks owned. Q. Well, now let us understand what that means. You buy — we will say you buy Northern Pacific stock, as you did in this case, and you charge that into your account, so much paid for Northern Pacific stock. Now, when you sell that Northern Pacific stock what kind of entry do you make? A. Simply credit Northern Pacific stock that amount received on sale. Q. When the Northern Pacific is all liquidated, you strike a bal- ance between what it cost and what you got and credit that to profit and loss? A. I do not know. Q. Is not that your custom? A. I do not know. Q. Let me ask you this : You did buy a large amount of Northern Pacific stock which took about the course I stated in my former question. You sold most of that. Your accounts show the amount of money you paid for this stock, and also show the amount you have received up to date by sale of that stock. By taking those two amounts together you could easily make a statement showing the profits you had realized out of the Northern Pacific venture, could you not? A. So far as it has been sold, yes. MAHL.. 245 Q. Well, will you be kind enough to make up such a statement and also give the number of shares you still have on hand of the Northern Pacific, the Great Northern and the Northern Securities Company? Mr. Lovett. Before that statement is passed, I would like to 446 state that I do not understand that there would be any entry in the books as the basis of a statement of that sort. Mr. Mahl, as I understand, you testified that there has been no credit to profit and loss on that account yet. Of course, they might lose money on the rest — I do not know — but there is no basis in the books, as I understand, for a statement of that sort. Comr. Lane. Have you had any stock transactions with this com- pany? (Addressing Mr. Severance.) Find out what has been done as to such transactions — if a profit was made and to what account the credit was given. Q. Let me ask you this : From your own recollection — you remem- ber, don't you — you have already sold more than enough Northern Securities, Great Northern and Northern Pacific to pay back all you paid for the Northern Pacific stock you bought ? A. I do not remember about that, no. Q. You do not? A. No. Q. Will you make up a statement showing the total amount that the Union Pacific or the Oregon Short Line paid for this Northern Pacific stock, and also a statement of the receipts from the Great Northern and Northern Paeific and Northern Securities stocks and also the amount you have on hand ? Make it in that way. The Chairman. The books will show those items. Mr. Severance. Yes, he can pick it out and make it into a state- ment. Comr. Lane. Have you made a profit on any of the stocks which you have bought and sold? Witness. We do not know until the transaction is closed. 447 Comr. Lane. Has any transaction been closed? Witness. None of these ; they are all open yet. Comr. Lane. Has any stock transaction been closed? Witness. You mean of these three stocks? Comr. Lane. No, I mean any stocks you have bought and sold. Witness. Possibly there has. Comr. Lane. Don't you recall that you have had some transactions by which you have bought stocks and sold them again and a profit has been realized? Witness. I do not recall now. If there has, it has been a small amount. Comr. Lane. You do not recall that there has been any transaction of that kind? Witness. I do not. Comr. Lane. And the basis for the answer, as I understand it, is that some of the stock is still held. Witness. Yes, sir. \ 1 246 MAHL. Comr. Lane. And when any of the stock is still held you do not credit anything to profit? Witness. That varies. Comr. Lane. How does it vary? Witness. It depends on what stocks they are. We might have a small amount of stock and it would he closed at a profit, but as in cases like the Northern Pacific stock and the Great Northern the transaction is not complete. Comr. Lane. Is there a separate rule in the corporation as to where profits of such kind shall be credited, or is that 448 subject to direction? Witness. I think that is always subject to the order of the board of directors. Comr. Lane. That is the thing I was getting at some time ago. When you take the money of the Union Pacific and you buy stock with it, and you make a profit with it upon the transaction, then you regard the profit as subject to the direction of the board of directors and you can not recall that you have had a transaction of that kind this year? Witness. Not that I have any knowledge of. Q. Now, so that we may know exactly what we are getting at here, I will ask you to prepare a statement which will show, first, the Northern Pacific stocks purchased. They were bought, were they not, by the Union Pacific, and afterward turned over to the Short Line — you know the purchase I mean, the large block of stock in 1901. Put that down on one side of the sheet. On the other put down the total receipts from the sale of Northern ^Securities, Great Northern and Northern Pacific stocks; then put on that sheet the amount of Great Northern and Northern Pacific stock you still hold, and perhaps we will be able to work it out from the market values of those stocks how you have come out, or approximately so. A. Bear in mind that many of those transactions occurred before my time. Q. Is it all on your books? A. Yes, but I am not familiar with them. Q. I am not asking you out of your own head, but from your books. Bring it down to to-day. A. Yes. 449 (A recess was here taken until 2 o'clock p. m.) Q. I show you an exhibit marked " 5-Mahl." Was that made up by you, Mr. Mahl? A. Under my direction. Q. It is a correct statement of what it purports to show, is it not? A. Yes, sir. Q. (Referring to Exhibit No. 5.) This is " Oregon Railroad and Navigation Company; statement showing holdings of Portland & Asiatic Steamship Company stock;" 993 shares in the name of E. H. Harriman, chairman, and 1 share each in the names of W. W. Cotton, MAHL — COMPLAINANT'S EXHIBITS 58-59. , 247 William Crooks, W. D. Cornish, E. P. Schwerin, H. D. Conner, E. S. Lovett, W. E. Litzenberg, making a thousand shares in all. Comr. Lane. Those are the individuals? Mr. Severance. Yes, sir, 993 shares in the name of Mr. Harriman as chairman. That thousand shares of stock in the Portland & Asi- atic Steamship Company all belongs to the Oregon Eailroad & Navi- gation Company? Witness. Yes, sir. Q. I now show you exhibit marked " 6-Mahl," consisting of two sheets. Was that prepared under your direction? A. It was. Q. And is a correct statement of what it purports to show ? A. It is. Mr. Severance. This is a statement (Eef erring to Exhibit No. 6.) which shows the names of the persons in whom there is registered the Southern Pacific common stock and Southern Pacific preferred stock that belongs to the Oregon Short Line Eailroad Company ? Is that true? 450 Witness. That is right. Q. Aggregating 900,000 shares of common and 180,000 shares of preferred? A. That is correct. Papers marked Complainant's Exhibits 58 and 59 (Mahl), the same having been Exhibits 5 and 6 Mahl, respectively, in Interstate Commerce Commission record. Mr. Evarts. It is stipulated that they are true copies. , Mr. Severance. I offer in evidence Complainant's Exhibits 58 and 59 (Mahl). Complainant's Exhibit 58 (Mahl) is as follows: t Complainant's Exhibit 58. (Mahl). OREGON RAILROAD & NAVIGATION CO. Statement showing holdings of Portland <& Asiatic S. S. Co. stock. 993 shares in name E. H. Harriman, Chairman, 1 1 1 1 1 1 1 it tt it ft it it tt ti a tt W. W. Cotton, " Wm. Crooks, " W. D; Cornish, " R. P. Schwerin, " H. F. Conner, R. S. Lovett, W. R. Litzenberg Dtal — 1000 shares January 5, 1907. Wm. Mahl. 248 MAHL — complainant's EXHIBIT 59. 451 Complainant's Exhibit 59 (Mahl) is as follows: Complainant's Exhibit 59. (Mahl.) OREGON SHOET LINE RAILROAD CO. Statement showing holdings of Southern Pacific Co. Common stock. 100 shares 100 100 400 5,000 756, 950 20 100 100 ,430 100 100 9,600 100 15, 700 100 HI, name of J. P. Adams, " " T. Jefferson Coolidge, Jr., " " Geo. J. Gould, " " C. D. Haines, " " J. J. Hanauer, " " E. H. Harriman, " " Siegfried Haymann, " " James H. Hyde, " O. H. Kahn, " Kuhn, Loeb & Co., " Winslow S. Pierce, " Jacob H. Schiff, " " S. Siegman, " " Rich. E. Pestel, " E. S. Steinan, " " James Stillman. 900,000 shares Wm. Mahl. January 5, 1907. OREGON SHORT LINE RAILROAD CO. 452 Statement showing holdings of Southern Pacific Co. preferred stock. 180,000 shares in name of E. H. Harriman. "Wm. Mahl. Januabt 5, 1907. Q. Now, it is a fact, is it not, that all this stock is under a mort- gage of the Oregon Short Line ? A. It is. Q. What company is the trustee under that mortgage? A. The Equitable Trust Company. Q. Can you state by reference to your report there what the date of the deposit of that stock was? A. They were deposited shortly after the mortgage was dated — within a few months, undoubtedly. Q. Is the holding of the Oregon Short Line of 180,000 shares of preferred stock also under that mortgage? A. It is. Q. When was that deposited? A. About the same time. Q. How many bonds were issued against that deposited stock? MAHL COMPLAINANT'S EXHIBIT 60. 249 A. One hundred million were issued against the stocks now re- ferred to and other stocks. Q. The one hundred million of stock was Oregon Short Line stock? A. Bonds. Q. What were the other stocks put under that mortgage aside from the Southern Pacific stock? A. (Referring to papers.) $2,564,000, face value, Oregon Short Line Railroad Company, Income A, 5% bonds; $23,907,300 Oregon Railroad & Navigation Company common stock; $10,866,800 Oregon Railroad & Navigation Company preferred stock. 453 Q. That is all, is it? A. Yes, and the Southern Pacific stock referred to. Q. Now, Mr. Mahl, when were the One Hundred million dollars of bonds that are secured by the Southern Pacific stock and the other stocks and bonds you mentioned issued and sold ? A. I cannot give you the dates. I can furnish the dates. I do not recall them now. Q. Was the whole issue put out? A. The whole issue was put out and sold. Q. Can you tell what was done with the proceeds of that large bond issue? A. I believe that part of that was used to retire the $82,000,000 of participating bonds that were outstanding. Q. I show you, Mr. Mahl, Exhibit No. 7. Was that made up under your direction? A. It was. Q. That is a correct statement of what it purports to show ? A. Yes, sir. Q. And is taken from other items picked out of your last annual report ? A. Yes, sir. Paper marked Complainant's Exhibit (60) Mahl, which was Mahl Exhibit 7 in Interstate Commerce Commission record, Jan. 5, 1907. Mr. Severance. It is admitted that Complainant's Exhibit 60 (Mahl) is a correct copy of the exhibit marked Mahl No. 7 intro- duced before the Interstate Commerce Commission January 5, 1907, just referred to in testimony, and I offer the same in evidence. Complainant's Exhibit 60 (Mahl) is as follows : 454 Complainant's Exhibit 60. (Mahl.) UNION PACIFIC RAILROAD COMPANY. Annual Report, Year Ending June 30, 1906. Credit to Profit and Loss, June 30, 1908 $42, 796, 026. 39 Credit to Profit and Loss, June 30, 1905 34, 943, 194. 42 Gain during the year $7,852,831.97 250 MAHL — complainant's EXHIBIT 60. Distributed as follows : Expended for extensions $506,903.56 Expended for betterments and additions (after deducting amount appropriated from income and proceeds of lands and other property sold which was applied to betterments and additions) 1, 593, 224. 30 Increase in assets 8, 861, 239. 02 $10, 961, 366. 88 Deductions : Increase in capital $2, 174, 836. 00 Increase in contingent liabilities 933, 698. 91 3, 108, 534. 91 $7, 852, 831. 97 Januaby 5, 1907. Wm. Mahl. Q. Now, Mr. Mahl, this statement shows that on the 30th of June, 1905, the credits to profit and loss of the Union Pacific Railroad Com- pany was $34,943,194.42, and that same item on the 30th of June, 1906, one year later, was $42,796,026.39, or a gain during the 455 year of $7,852,831.97. Now, out of what kind of items are those credits made up ? A. I think they are mentioned there in your statement. Q. Well, I understand an increase is shown here. A. Yes, sir. Q. But what I want to get at is this : does this credit to profit and loss — that is the surplus account ? A. That is the gain between the two years. Q. This is called " credit to profit and loss." That shows a surplus of $42,000,000? A. Yes, sir. Q. That is what you call " operating surplus ? " what was called yesterday " operating surplus ? " A. Not altogether. A profit and loss balance takes in all trans- actions of every kind and character. Q. Let me see if it does. This does not take in any profits you make by buying and selling stocks and securities? A. Not in this instance. Q. That is what I mean. A. No. Q. So that this surplus, or the increase in the surplus during the year, of $7,852,831, was made up in this way, wasn't it: first, you took your gross receipts from traffic, and you substracted from that the operating expenses and struck the balance; you took out of that your dividends and your interest and rentals and other things of that kind; then you added the result so obtained your income by way of interest on investments or dividends on stock investments, and in that way you got this increase in surplus? Isn't that true? A. Not entirely. Q. Just state how you did do it. A. For instance, we received during the year $1,463,000 for 456 the sale of lands. MAHL — COMPLAINANT'S EXHIBIT 61. 251 Q. That went in % A. Which, under the various provisions of the mortgage, we were required to again apply in the purchase of other lands ; but, on the other hand, we expended, mind you, on these betterments and addi- tions, $6,263,000. Now, this money which we apply here, we really used that to write off our betterment account. A part of the better- ment account which is not written off in that way comes out of the earnings, and increases the profit and loss ; and in that seven million dollars there is a certain sum of money for betterments, and I think that is shown on that statement. Q. This statement shows, " Expended for extensions, $506,903.56. Expended for betterments and additions (after deducting amount appropriated for income and proceeds of lands and other properties sold, which was applied to betterments and additions) , $1,593,224.30. Increase in assets, $8,861,239.02. Total, $10,961,366.88;" and from that you decrease — that sum would decrease by an increase in capital of $2,174,836 and an increase in contingent liabilities of $933,698.91, leaving a net balance that I have stated, a gain during the year ? A. Yes, sir. Q. That did not include any profits whatever that you made in handling securities, did it ; that is, buying and selling ? A- No, there was none charged at all. Q. Now I show you Exhibit No. 8. I will ask you if this is the statement submitted to the board of directors of the Union Pacific at their meeting on August 15, 1906, at the time they voted the divi- dend of 5 per cent ? A. Yes, sir. 457 Q. That was prepared under your direction ? A. That is a copy of it. Paper marked Complainant's Exhibit 61. Mr. Severance: Complainant's Exhibit 61 (Mahl) is admitted to be a copy of a document entitled " Mahl Exhibit No. 8," introduced into the record of the Interstate Commerce Commission January 5, 1907, and I now offer the same in evidence. Complainant's Exhibit 61 (Mahl) is as follows : Complainant's Exhibit 61. (Mahl.) Statement Submitted to the Board of Directobs or the Union Pacific RAILBOAD CO. AT THEIB MEETING AUGUST 15, 1906. UNION PACIFIC SYSTEM. Estimated Income for the 12 Months Ending June SO, 1906. 1906 1905 Gross receipts $67, 281, 542. 60 $59, 324, 948. 66 — $7, 956, 593. 94 Operating expenses 35, 261, 170. 84 28, 252, 702. 04 — 7, 008, 468. 80 Net $32, 020, 371. 76 $31, 072, 246. 62 — $948, 125. 14 Taxes $1, 702, 602. 32 1, 492, 012. 39 — 210, 589. 93 Surplus ,. $30, 317, 769. 44 $29, 580, 234. 23 — $737, 535. 21 Surplus as above $30,317,769.44 252 mahl — complainant's EXHIBIT 61. Receipts from rentals and from other sources in excess of mis- cellaneous expenses $7, 767, 491. 42 Total $38, 085, 260. 86 Less: Fixed charges, including rentals 8,883,416.03 Surplus, after payment of fixed charges $29,201,844.83 Four per cent, dividend on preferred stock 3, 982, 032. 00 Balance $25, 219, 812. 83 458 $6,657,305.36 Expended for Betterments and Additions. 17,230,919.40 Expenditures for construction of new lines and for equip- ment, for 12 months ending June 30, 1906, dealt with as a free asset (estimated). There is charged in the above expenses and taxes and credited to the reserve fund for betterments, equipment and general extraor- dinary repairs, subject to the action of the Board of Directors the sum of $2,206,610.39. Wm. Mahl. January 5, 1907. Q. Now, Mr. Mahl, this statement shows that your gross receipts in 1906 were $67,281,542.60, an increase of $7,956,593.94 over the preceding year. Your operating expenses were $35,261,170.84, or an increase of $7,008,468.80, leaving a net profit in 1906 of $32,020,- 371.76; out of which you took your taxes, leaving a surplus for the year of $30,317,769.44. Now that is surplus arising from operation, isn't it? A. Yes, sir. Q. Traffic? A. Yes, sir. Q. And that does not include any money you have received from handling securities, does it? A. Investments and interest. Q. What? A. Is the interest on investments stated in there ? Q. But that is afterwards. That is receipts from traffic over and above operating expenses and taxes? A. Yes, sir. 459 Q. That is, you had applicable to dividends and bond interest solely from your business, as a railroad company, aside from your business, as an investment company, thirty millions and a fraction over as the proceeds of the year's business ended June 30, 1906? A. That is right. Q. Now, you also received from rentals and other sources $7,767,- 491.42, didn't you? A. Yes, sir. Q. Does that include the interest on bonds that you own and divi- dends on stock that you own ? A. Yes, sir. It is stated here in that report. MAHL. 253 Q. Now that made an aggregate income of $38,085,260.86. Now, the next item in this statement is, " Less fixed charges, including rentals, $8,883,416.03." Now, these fixed charges include the interest on your outstanding bonds ? A. Yes, sir. Q. And any rentals that you have to pay ? A. Yes, sir. Q. So that you have left a net surplus of $29,201,844.83 applicable to dividends on your stock? A. Yes, sir. Q. Without including any income whatever from the profits you may have made by buying securities at one price and selling them at a higher price ? A. That is correct. Q. Now, the next item is " 4 per cent dividend on preferred stock, $3,982,032," and that leaves a balance of $25,219,812.83 applicable to dividends on your common stock ? A. That is right. Q. Your common stock outstanding amounts to about $195,000,000, doesn't it ? A. Yes, sir. Q. Is that right? A. A little over. Q. It is not a million over? A. No, sir. Q. And that would, putting it on a 10 per cent basis, take 460 $19,500,000 to pay the dividend for the year, would it not ? A. Yes, sir. Q. That would leave you, assuming that your business for 1906 and 1907, up to June 30, 1907, is no greater than up to June 30, 1906, about six million dollars over and above paying this 10 per cent divi- dend, without counting in any profits that the Union Pacific would have made by buying securities or bonds or stocks at one price and selling them at a higher price ? Mr. Lovett. And without including the dividends on Southern Pacific stock ? Witness. I was just going to call attention to that. This state- ment when it was made up did not include the dividends which we received, of $2,250,000 on the Southern Pacific common stock. Q. That is, the dividends you are to receive beginning last July ? A. That were received last July. Q. And that dividend is not shown ? A. No ; at that time it had not been declared. Q. But you are able to earn from the sources that have been de- tailed here, have you, the amounts that I have stated without in- cluding any profits from these stock investments ? A. Yes, sir. Q. Now, Mr. Mahl, I see on the bottom of this statement a memo- randum of $6,657,305.36, expended for betterments and additions. 71535—09 17 254 MAHL. Out of what funds were those expended and what were they charged to ? A. They were expended out of current funds, or any moneys 461 that came in; those were expenditures, really, of what you might call a capital account. They were simply put there as a memorandum to show what has been expended on capital account. Q. You mean that that was expended out of capital account al- ready acquired by the sale of securities, or out of capital account to be hereinafter reimbursed out of the sale of additional securities? A. I cannot tell. We are going right along spending money for betterments and additions, and we take it from any of those which are in the treasury. Q. You would even take it from the profits on stock if you happen to have it on hand ? A. Take it from any fund we might happen to have. Q. The next item in this memorandum is $17,230,940 expenditures for construction of new lines and equipment for twelve months end- ing June 30, 1906, dealt with as a free asset, estimated. Now, will you state what that expression means — " dealt with as a free asset? " A. Property against which no securities of any kind have been issued. Q. That is, no securities specifically issued against that property, but you don't know but what there still remain in your treasury money realized from the sale of securities heretofore put out by your company which will be sufficient to cover that? A. That would not be taken in. Q. Then, this is in the nature of a suspense account to be here- after dealt with? A. Yes, securities issued against it. 'Q. Here is another memorandum. There is charged in the above expenses and taxes carried to the reserve fund for better- 462 ments, equipment and general extraordinary affairs subject to the action of the board of directors, the sum of $2,206,610.39. Now, that amount of $2,200,000 is included in the $35,000,000 of operating expenses, isn't it ? ■ A. Yes, sir. Q. So that you have, in figuring up the operating expenses to be set over against your gross receipts, included an item of $2,200,000, that may properly be charged to capital account except that you deemed it wise to absorb that much as part of operation? A. No. Q. Will you explain what that item means ? A. That money has not been expended but has been charged against the year's income, and a fund created, against which hereafter any extraordinary expenses, such as washouts, damages, etc., which would ordinarily have to be charged to operating expenses will be charged against that reserve. Q. If that is the case, why do you say betterments and extraor- dinary affairs? MAHL. , 25'5 A. Yes ; it might be used for that. Q. Consequently your operating expenses for the year are $2,206,- 000 really less than shown in the aggregate of $35,000,000, because you have taken out from your receipts this $2,200,000 extra money and put it in a reserve fund to be used in the future ? A. Yes, sir. Comr. Lane. Is that the beginning of that, or have you had suck a fund before? Witness. We have had such a fund before. Q. What is the amount of it all together ? A. Something like $4,000,000. Q. Can you make up a statement of that account showing 463 the amounts that were put into it, and the charges against it? A. There have been no charges against it. Mr. Kellogg. He has got the amount right there. Witness. $4,474,610.39, to the good of that account at the close of the year. Q. And up to this time there have been no charges against it what- ever? Comr. Lane. Is that in the treasury of the company ? Witness. It is more in the nature of a book account; the money is there in the common treasury. Comr. Lane. All of the funds went into the treasury and you draw on them indiscriminately, and you keep these common accounts as matter of segregation? Witness. Yes, sir. Mr. Kellogg. Did you make up Exhibit No. 3 (the same being Complainant's Exhibit 2 (Millar) or is that made up by the secre- tary? Witness. Made up by the secretary. Mr. Kellogg. Your books show, do they not, the amount of South- ern Pacific stock owned by the Oregon Short Line Company from and after its acquisition, or the commencement of its acquisition of Southern Pacific stock, at all times ? Witness. Yes, sir. Mr. Kellogg. Can you state from memory how much Southern Pacific stock the Short Line owned during the entire years of 1903 and 1904 and since? Witness. No. Mr. Kellogg. You can not state ? 464 Witness. No. I can state how much they owned June 30, 1906. Mr. Kellogg. Well, June 30, 1906, they owned $108,000,000, didn't they, of the Southern Pacific stock— $90,000,000 and $18,000,000— common and .preferred, I mean? Witness. That is correct. Mr. Kellogg. Have you got the annual report so that you can tell me the amount the Short Line owned at all times ? 256 mahl — complainant's EXHIBIT 62. Witness. No ; I can only show it to June 30th. I can show it at the end of each year. Mr. Lovett. Mr. Kellogg, we can have a statement made out at any particular day. Do you want the date of the annual meeting? Mr. Kellogg. This statement shows this, Mr. Lovett: That the Oregon Short Line Company voted 900,000 shares of stock at a meet- ing, at an adjourned meeting of the Southern Pacific Company held on April 8, 1903; the books closed on April 3rd, 1903, and I would like to know the amount of stock that the Short Line Company did actually own in the Southern Pacific Company on April 8, 1903, and April 3rd, 1903, and at all times thereafter until December 1st, 1903. Witness. I can furnish that from the books. Mr. Lovett. Your books will show that? Witness. They show that. Mr. Kellogg. And I suppose after that time the amount has not been changed? Mr. Lovett. Except by the preferred stock. Mr. Kellogg. Now, do you recollect a transaction that 465 is shown in the minute book of the Short Line Company, the sale of 300,000 shares of Southern Pacific stock to William Eockefeller on March 31, 1903 ? Witness. I do not now recollect it. Mr. Kellogg. You have no recollection of it whatever ? Witness. No. (And the following from the record of Interstate Commerce Com- mission testimony taken in New York February 25-28, 1907:) By Mr. Kellogg: Q. I show you Mahl Exhibit 1 (I. C. C. testimony, New York, Feb- ruary 28, 1907), which is the statement of purchase and sale of the Northern Securities Company's stock and the substituted stock, Northern Pacific and Great Northern stock; is that correct? A. It is. Q. That is made up from your books ? A. Yes. Paper marked Complainant's Exhibit 62 (Mahl) . Mr. Severance. It is admitted that Complainant's Exhibit 62 is a correct copy of said Exhibit 1 in Interstate Commerce Commission record of February 28, 1907, and the same is offered in evidence. Complainant's Exhibit 62 (Mahl) is as follows : Complainant's Exhibit 62. (Mahl.) Northern Securities Co. stock. 824,918.71 shares, cost $79,459,091.36 100, 000. 00 " , sold for 16, 880, 019. 46 724, 918. 71 Balance, exchanged for : 216, 520. 8949 shares Great Northern 281, S28. 8215 " Northern Pacific 7, 249. 1871 " Northern Securities stubs. MAHL — COMPLAINANT'S EXHIBITS 62-63. 257 466 Northern Pacific stock. 281, 828. 8215 shares received in exchange for Northern Securi- i"i ps stools 240,300.8215 " sold for i $50,166,357.97 41, 528 " unsold. Great Northern stock. 216, 520. 8949 shares received in exchange for Northern Securi- ties stock. 37, 444 " acquired under rights, costing $3. 744, 400. 00 253, 964. 8949 Total. 163,600.8949 shares sold for $49, 801; 576. 47 90, 364 " unsold. Northern Securities stuos. 7, 249. 1871 shares received in exchange for Northern Securi- ties stock. .1871 " sold for $56.13 7, 249. " unsold. Great Northern ore certificates. 90, 364. shares received on account of Great Northern stock. Wm. Mahl. Februaey 15, 1907. 467 Q. I show you Mahl Exhibit 2, which is a statement of the purchase of the Northern Pacific by the Oregon Short Line, headed, "Northern Pacific purchase money certificate," showing the face value of purchase money certificates, and the balance furnished in cash by the Oregon Short Line ; is that correct ? A. It is. Paper marked Complainant's Exhibit 63 (Mahl). Mr. Severance. It is admitted that Complainant's Exhibit 63 (Mahl) is a copy of Mahl Exhibit 2 in the record of the Interstate Commerce Commission of February 28, 1907, and I offer the same in evidence. Complainant's Exhibit 63 (Mahl) is as follows: Complainant's Exhibit 63. (Mahl.) OREGON SHORT LINE R. R. CO. Northern Pacific Purchase Money Certificates. Under an agreement dated May 28, 1901, the Union Pacific R. R. Co. sold to the Oregon Short Line R. R. Co. $37,023,000 face value Northern Pacific Ry. Co. common and $41,085,000 face value North- ern Pacific Ry. Co. preferred stock for the sum of $88,334,545.01. The Union Pacific R. R. Co. was to receive in payment therefor : $61,000,000 face value Northern Pacific Purchase Money Certifi- cates bearing interest at rate of 4% per annum, from July 1, 1901; $27,334,545.01 in cash. 258 MAHL — COMPLAIN ANT's EXHIBITS 63-64. In June, 1901, the Oregon Short Line E. R. Co. assumed, in pay- ment of the above cash indebtedness, loans to the amount of 468 $27,500,000 which had been made by the Union Pacific R. R. Co. for account of the purchase of these stocks. The difference between the amount of cash to be paid and the amount of loans assumed was credited by the Union Pacific to the Oregon Short Line in its account. Wm. Mahl. February 23, 1907. Q. I show you Exhibit 3, which is a copy of a resolution of the board of directors of the Union Pacific Railroad Company, dated January 31, 1901, provision for financial requirements, which is cer- tified by Mr. Alex Millar ; you admit that is correct ? Mr. Lovett. Yes. Paper marked Complainant's Exhibit 64 (Mahl) . Mr. Severance. It is admitted that Complainant's Exhibit 64 is a correct copy of Mahl's Exhibit 3 in the record of the Interstate Com- merce Commission February 28, 1907, and the same is offered in evidence. Complainant's Exhibit 64 is as follows: Complainant's Exhibit 64. (Mahl.) UNION PACIFIC RAILROAD COMPANY. Board op Directors, January 31, 1901. PROVISION FOR FINANCIAL REQUIREMENTS. The general subject of making financial provision for con- 469 templated acquisitions of securities of other companies, and for branches and extensions of this Company's system, and the subject of protecting the properties of the separate companies em- braced in the system and of unifying the operation of the several lines constituting the system, were considered and discussed at length, and, upon motion duly made and seconded, it was Resolved: 1. That reference be and it is hereby made to the Exec- utive Committee, with full power, of the subject of making imme- diate provision for present and future financial requirements of the Company, including provisions for financing acquisitions, now or hereafter contemplated in the interest of this Company, of securi- ties of any other company or companies, and including full power to conduct and provide for all measures, proceedings, and actions to carry out such acquisitions, and among the measures which may be so taken for said purpose, or for any of the purposes expressed, in these resolutions, the Executive Committee is hereby authorized to provide for the issue and negotiation of bonds and obligations of this Company, in an amount not exceeding $100,000,000. Said Com- MAHL COMPLAINANT'S EXHIBITS 64-65. 259 mittee may determine the terms and period, or periods, of said bonds and the rate of 'interest, not to exceed four per cent which the same shall bear ; and for the purpose of securing the payment of the princi- pal and interest of said bonds, as the same shall mature, the Execu- tive Committee may authorize the making, execution and delivery by this Company of the mortgage, deed of trust or pledge, upon such terms, conditions, and trusts as said Committee may determine, 470 of lines of railroad, franchises, stocks, bonds, assets and prop- erties of any kind belonging or which may belong to this Company. 2. That any such new bonds which may be issued by this Company may be made convertible at any time, at the option of the holders, into the common stock of this Company, and the Executive Commit- tee may take any and all steps necessary or considered by it proper to provide for such increase of the authorized issue of this Com- pany's common stock as will enable such conversion of all such new bonds as may be authorized from issue and negotiation by this Company. 3. That, pending such final and complete action as may be deter- mined by the Executive Committee and taken by this Company in the premises, temporary provision for any of the purposes herein expressed may be made by the Chairman of the Executive Commit- tee, in the name and on behalf of this Company, through the issue of any obligations or certificates of indebtedness of this Company, or by the sale or by the pledge or other temporary disposition of such property and assets of this Company as may in his judgment be required for such purposes. 4. That all matters touching the financial and operating relations between this Company and any and all other companies of the system are hereby referred to the Executive Committee, with full power; and said Committee is hereby authorized to provide in its discretion for settlement of accounts between said companies and the acquisition of any property and any assets of any other of said com- panies, and for any lease or operating agreements, and for any con- trol or use of the properties and assets of said other companies that said Committee may deem advisable, and upon such terms, con- ditions, and guarantees as said Committee may determine or approve. 471 Q. I show you Mahl Exhibit No. 4, which is the proceed- ings of the executive committee of March 19, 1903, of the Union Pacific, showing the loans, amounts loaned and amounts bor- rowed ; is that correct ? A. It is. Mr. Lovett. It may be admitted. Paper marked Complainant's Exhibit 65 (Mahl). Mr. Severance. It is admitted that Complainant's Exhibit 65 is a correct copy of Mahl's Exhibit 4, just referred to, in the record of Interstate Commerce Commission testimony, February 28, 1907, and I offer the same in evidence. 260 MAHL. — complainant's exhibits 65-66. Complainant's Exhibit 65 (Mahl) is as follows: Complainant's Exhibit 65. (Mahl) Union Pacific Railroad Company, Executive Committee, March 19, 1903. AMOUNTS LOANED AND AMOUNTS BORROWED. The Chairman submitted a memorandum showing the amounts borrowed by the Company, and also the amounts loaned by the Com- pany to the Southern Pacific Company, the Chicago & Alton Rail- way Company, the Kansas City Southern Railway Company, and the Union Depot & Railway Company of Denver; Whereupon, on motion duly seconded, the amounts borrowed and also the loans made by the Company were approved, and the action of the Chairman in arranging for the same was ratified and con- firmed. 472 UNION PACIFIC AND AUXILIARY COMPANIES. Loans. Due to National City Bank $2,000,000.00 Due to Other Banks 3,750,000.00 Total $5, 750, 000.00 Cash requirements. Estimated payments for operating office for remainder of month $233, 500. 00 Unpaid interest and dividend requirements 127, 900. 00 Total $361, 400. 00 Cash available. Cash in Bank $68, 655. 93 Estimated remittances for balance of March 321,000.00 Total $389, 655. 93 General. The Union Pacific has advanced to the Southern Pacific Company $9, 000, 000. 00 Chicago & Alton 250, 000. 00 Kansas City Southern 430,000.00 Denver Union Depot Co. for redemption of bonds 300, 000. 00 Total $9, 980, 000.00 New Yoek, March 18, 1903. Wm. Mahl. Q. I show you Mahl Exhibit No. 5, which is a statement of the dates and amounts received from sale of the Union Pacific 473 convertible, 4 per cent gold bonds ; is that correct ? A. It is. Paper marked Complainant's Exhibit 66 (Mahl). Mr. Severance. It is stipulated that Complainant's Exhibit 66 (Mahl) is a correct copy of Mahl Exhibit No. 5 of the record of the Interstate Commerce Commission February 28, 1907, and the same is offered in evidence. MAHL, — COMPLAINANT'S EXHIBIT 66. 261 Complainant's Exhibit 66 (Mahl) is as follows: Complainant's Exhibit 66. (Mahl.) Union Pacific R. R. Co. First Lien Convertible Four Per Cent. Gold Bonds. (Mortgage dated April 15, 1901.) STATEMENT SHOWING DATES AND AMOUNTS RECEIVED FROM SALE OE BONDS. Bonds sold to subscribers, for the purpose of providing for the payment for shares of stock of the Southern Pacific Company pur- chased, as per advertisement of February 13, 1901 : Month of March, 1901. 1 $17, 500 2 7, 500 4 16, 250 5 23, 750 6 55, 750 7 98, 000 8 54, 500 9 63, 250 11 81, 000 12 64, 000 13 78, 000 14 179, 250 15 115, 250 16 198, 000 18 567, 750 19 1, 616, 250 20 8, 272, 500 21 384, 250 22 55. 250 23 7, 500 25 500 26 10, 250 27 1, 500 28 1, 500 29 6, 000 30 19, 500 Total, March $11, 994, 750 Month of April, 1901. 1 $20, 000 2 52, 500 3 1, 126, 500 4 i 38, 500 5 35, 000 6 23, 500 8 150, 500 9 663,750 10 _ _ 8,024,000 11 196,750 12 129, 250 13 26, 250 15 22, 250 16 73, 500 17 14, 250 262 mahl — complainant's EXHIBIT 66. 18 $20, 000 19 12, 250 20 5, 750 22 16, 250 23 98, 750 24 18, 000 25 15, 000 26 15, 250 27 1, 750 29 8, 500 30 27, 750 Total, April $10, 835, 750 Month of May, 1901. 1 $5, 250 2 38, 250 3 4, 250 4 6, 500 6 2, 750 7 9, 500 8 12, 750 9 ' 9, 000 10 22, 250 11 3, 250 13 222, 250 14 38, 000 15 65, 000 16 147, 250 17 337, 500 18 1 716, 500 20 7, 143, 500 21 89, 250 22 43, 250 23 19, 500 24 2, 250 25 13, 500 27 24, 750 28 9, 250 29 12, 750 31 2, 000 Total, May $9, 000, 250 Month of June, 1901. 1 $1, 000 3 26, 000 4 18, 750 5 155, 500 6 147, 250 7 445, 250 8 298, 750 10 6, 904, 000 11 98, 500 12 16, 750 13 6, 750 14 29, 000 17 12, 750 18 500 19 3, 750 20 2, 250 21 1, 000' 26 250 Total, June $8,168,000 MAHL — COMPLAINANT'S EXHIBITS 66-61-68. 263 On July 26, 1901 500 On September 12, 1901 750 Total bonds sold to subscribers $40, 000, 000 Bonds sold to Kuhn, Loeb & Co. : April 24, 1901 $35, 000, 000 " 30, 1901 25, 000, 000 Total bonds sold to Kuhn, Loeb & Co $60, 000, 000 Total $100, 000, 000 Jantjaby 5, 1907. Wm. Mahl. Q. I show you Exhibit No. 6, which is a condensed statement of the operations of the Union Pacific for five months ending 478 November 30, 1901, marked Mahl Exhibit No. 6; is that correct ? A. It is a long time since I have seen it, but if my name is to it, it is correct. Paper marked Complainant's Exhibit 67 (Mahl). Mr. Severance. It is agreed that Complainant's Exhibit 67 (Mahl) is a correct copy of Mahl Exhibit No. 6 shown in the record of the Interstate Commerce Commission under date of February 28, 1907, and the same is offered in evidence. Complainant's Exhibit 67 (Mahl) is as follows : Complainant's Exhibit 67. (Mahl.) Union Pacific System. Condensed statement of operations, five months ending November SO, 1901. Average miles of road operated 5, 739. 09 Gross transportation receipts $21, 548, 858. 85 Operating expenses and taxes 10, 890, 118. 73 Receipts over operating expenses and taxes $10, 65S, 740. 12 Income from investments— 2, 910, 540. 00 Total income $13, 569, 280. 72 Fixed charges 5, 790, 306. 75 Balance, surplus $7,778,973.97 New Toek, January 9, 1902. Wm." Mahl. 479 Q. Mahl Exhibit No. 7, which is a statement of the stocks deposited on March 9, 1905, with the Equitable Trust Com- pany under the collateral trust mortgage of the Oregon Short Line Railway Company; is that correct? A. That is correct. Paper marked Complainant's Exhibit 68 (Mahl). Mr. Severance. It is agreed that Complainant's Exhibit 68 is a correct copy of Mahl's Exhibit No. 7 in the Interstate Commerce 264 MAHL — complainant's EXHIBITS 68-69. Commission Record, Feb. 28, 1907, and I offer Complainant's Exhibit 68 in evidence. Complainant's Exhibit 68 (Mahl) is as follows: Complainant's Exhibit 68. (Mahl.) OREGON SHORT LINE R. R. CO. FOUR PER CENT. REFUNDING TWENTY-FIVE TEAR GOLD BONDS. Statement of stocks deposited on March 9, 1905, with Equitable Trust Co., Trustee, as collateral under Oregon Short Line Railroad Company's Four Per Cent Refunding Twenty-five year gold bonds. 900,000 shares Southern Pacific Company Common Stock, 180,000 shares Southern Pacific Company Preferred Stock, 200,000 shares Oregon Railroad & Navigation Co. Common Stock, 100,000 shares Oregon Railroad & Navigation Co. Preferred Stock, 50,000 shares Northern Securities Company Capital Stock. January 5, 1907. Wm. Mahl. 480 Q. I show you Exhibit No. 8, which is a condensed statement of operations of the Oregon Short Line from July 1st, 1897, to June 30, 1906, marked Mahl Exhibit 8. Is that correct? A. Yes. Paper marked Complainant's Exhibit 69 (Mahl). Mr. Severance. It is agreed that Complainant's Exhibit 69 (Mahl) is a correct copy of Mahl's Exhibit No. 8 in the record of the Inter- state Commerce Commission of February 28, 1907, and I offer the same in evidence. Complainant's Exhibit 69 (Mahl) is as follows: Complainant's Exhibit 69. (Mahl.) OREGON SHORT LINE RAILROAD CO. Condensed Statement of Operations from July 1, 1897, to June SO, 1906. Gross transportation receipts $94, 675, 501. 21 Operating expenses and taxes 44,700,006.12 Receipts over operating expenses and taxes $49,975,495.09 Income from investments 25,965,301.45 Total income $75, 940, 796. 54 Fixed charges 49, 989, 301. 36 Surplus $25, 951, 495. 18 Appropriation from income 11,235,106.17 Surplus $14, 716, 389. 01 Dividend 13, 675, 350. 00 Balance — Surplus $1, 041, 039. 01 Febbuaey 8, 1907. Wm. Mahl. MAHL — COMPLAINANT'S EXHIBITS "70— 71. 265 481 Q. I show you Exhibit No. 9, which is a statement' showing the issuance and sale of the 4 per cent and participating bonds of the Oregon Short Line Railway Company. That is correct ? A. Yes. Paper marked Complainant's Exhibit 70 (Mahl). Mr. Severance. It is admitted that Complainant's Exhibit 70 (Mahl) is a correct copy of Mahl's Exhibit No. 9 in the record of the Interstate Commerce Commission, February 28, 1907, and I offer the same in evidence. Complainant's Exhibit 70 (Mahl) is as follows : Complainant's Exhibit 70. (MahL) OREGON SHORT LINE RAILROAD CO. Statement showing Issue and Sale of Four Per Gent, and Participating Bonds. $82,491,000 face value, issued as of July 17, 1902. July 18, 1902. $31,000,000 face value sold to subscribers under circular of this date for $27, 900, 000 Jan. 23, 1903. 5,000,000 face value sold to Kuhn, Loeb & Co. for : 4, 500, 000 June 8, 1904. 500,000 face value sold to Kuhn, Loeb & Co. for 474, 375 June 22, 1905. 45,991,000 face value exchanged for a like amount of Oregon Short Line R. E. Co. Four per cent, Refunding Bonds. $82,491,000 Total Febeuaey 8, 1907. W. M. Mahl. 482 Q. I show you Exhibit No. 10, which is a statement showing the sale of the 4 per cent refunding bonds of the Oregon Short Line Railway Company. Is that correct ? A. Yes. Paper marked Complainant's Exhibit 71 (Mahl). Mr. Severance. It is admitted that Complainant's Exhibit 71 is a correct copy of Mahl's Exhibit No. 10 in the record of the Inter- state Commerce Commission February 28, 1907, and I offer the same in evidence. Complainant's Exhibit 71 (Mahl) is as follows : Complainant's Exhibit 71. (Mahl.) OREGON SHORT LINE RAILROAD CO. Statement showing Sale of Four Per Gent Refunding Bonds. Jan. 31, 1905, $40,000,000 face value sold to Kuhn, Loeb & Co. for $38, 400, 000 June 22, " 45, 991, 000 face value sold to Union Pacific R. R. Co. in exchange for a like amount of four per cent and Participating Bonds 45, 991, 000 " 23, " 14, 009, 000 face value sold to Union Pacific R. R Co. for 13, 168, 460 $100, 000, 000 Total $97, 559, 460 266 MAHL — complainant's EXHIBITS "71-12. $5,000,000 face value of the bonds sold to the Union Pacific R. E. Co. were subsequently sold by them to Kuhn, Loeb & Co. for $4,785,625.. The remaining $55,000,000 face value of bonds' are in the Treasury of the Union Pacific R. R. Co. February 8, 1907. Wm. Maul. 483 Q. And Exhibit No. 11, showing operating surplus at the time the $100,000,000 stock issue was authorized showing re- sources from February 28, 1901 (when stock issue was authorized) down to June 30, 1901, and how applied. This is a statement of the Union Pacific Railway Company marked W. D. C. No. 2 in the corner ? A. Yes. Q. That is correct ? A. Yes. Paper marked Complainant's Exhibit 72 (Mahl). Mr. Severance. It is admitted that Complainant's Exhibit 72 (Mahl) is a correct copy of Mahl's Exhibit No. 11 in the record of the Interstate Commerce Commission February 28, 1907, and I offer the same in evidence. Complainant's Exhibit 72 (Mahl) is as follows: Complainant's Exhibit 72. (Mahl.) W. D. C No. 2. UNION PACIFIC RAILROAD CO. Operating surplus at the time the $100,000,000 stock issue was authorized — showing resources from February 28, 1901 (when stock issue was authorized), to June 30, 1901, and how applied. RECEIPTS. First Lien Convertible Bonds Issued $100, 000, 000. 00 Convertible into common stock 6, 043, 000. 00 $93, 957, 000. 00 Common stock issued in exchange for Con- vertible Bonds $6, 043, 000. 00 Common stock issued in exchange for O'. S. L. and O. R. & N. Stocks 23, 200. 00 6, 066, 200. 00 484 Preferred stock issued in exchange for O. S. L. Income "B" Bonds 30,000,00 Preferred stock in exchange for O. R. & N. Preferred stock 13, 300. 00 43, 300. 00 Total receipts for securities issued $100,066,500.00 Decrease in cash on hand $25, 254, 762. 58 Less: Increase in other assets 1,763,585.21 23, 491, 177. 37 Total receipts $123, 557, 677.37 MAHL COMPLAINANT'S EXHIBIT 12. 267 DISBURSEMENTS. $61,000,000 face value, Northern Pacific purchase money cer- tificates $61, 000, 000. 00 $75,000,000 S. P. Co. Common stock 41, 866, 627. 48 $1,000 Par value O. S. L. Capital stock 1,000.00 $22,200 O. It. & N. common stock 22, 200. 00 $13,300 " preferred " 13,300.00 $30,000 O. S. L. Income " B " Bonds 30, 000. 00 Adjustment in cost of securities acquired from receivers 16, 381. 50 Total $102, 949, 508. 98 Less : Green River Water Works Co. Bonds sold 2, 000. 00 Total payment for securities $102,947,508.98 Capital expenditures 668, 325. 25 Decrease in Liabilities: Loans paid off $25,254,762.58 Less : Increase in current liabilities 11, 088, 810. 17 14, 165, 952. 41 $117, 781, 786. 64 485 Decrease in Profit and Loss, viz : February 28, 1901 $10,182,234.19 June 3D, 1901 4,406,343.46 5, 775, 890. 73 Total disbursements $123, 557, 677. 37 MEMOB. OF PBOFIT AND LOSS. Dr. Cr. Balance February 28, 1901 $10,182,234.19 Gross transportation receipts, 4 months 8, 042, 632. 63 Other income 1, 89Q, 900. 39 Expenses and taxes, 4 months $5, 020, 116. 41 Interest on Funded Debt, 4 months 1, 959, 713. 34 Dividends 4 months I 2, 714, 004. 00 Appropriation 4 months 250, 000. 00 Dividends prior to Mar. 1, 1901 5, 265, 590. 00 Appropriation prior to Mar. 1, 1901 500, 000. 00 $15, 709, 423. 75 Balance June 30, 1901 4,406,343.46 Total $20, 115, 767. 21 $20, 115, 767. 21 JANTJABY 5, 1907. WM. MAHL. 486 By Mr. Lovett : Q. On the previous hearing of this matter by the Commission in this city in January last, there was introduced a resolution which seemed to have occasioned considerable surprise, passed by the board of directors or the executive committee of the Union Pacific, I believe, in July or August last, authorizing Mr. Harriman — or amending, rather, a resolution adopted in 1902, authorizing Mr. Harriman to borrow money needed by the company, the amendment being to au- thorize him also to pledge collateral. Will you please state at whose instance that resolution was passed, and whether Mr. Harriman had any knowledge of it before it came before the committee. A. He did not. The resolution was passed at my request. It be- came necessary. Some of the California banks wanted, in addition to the authority to borrow money, they wanted also the authority to 268 MAHL. show that the chairman had the right to pledge collateral for the loan. This happened in possibly one or two instances, and I recall now an instance here in the city, and I therefore thought it best to introduce and adopt a general resolution, as these resolutions were asked for from time to time, and I think I had talked to Judge Lovett about drafting a resolution. Q. And a similar resolution was passed then by the Union Pacific, Southern Pacific and Oregon Short Line to meet the situation arising in connection with the ordinary financial transactions of the company? ■ A. Yes. Q. And did Mr. Harriman have any knowledge of that so far as you know before it came before the board ? A. No. There is a resolution, I think, in that connection. 487 Mr. Lovett. I would like to introduce in that connection a resolution passed by the board of directors of the Southern Pacific Company at the time that Mr. Huntington was president. I will read it: "The following resolution was submitted to the board, and, on motion of Mr. Thomas H. Hubbard, seconded by Mr. H. E. Hunting- ton, was unanimously adopted, viz : "Resolved, that the president of this company, or the vice-presi- dent thereof, be, and he is hereby authorized and empowered to bor- row money from time to time, from such persons or corporations, and for such times and on such terms, as in his judgment may be for the best interests of the company, such sums of money as he may deem necessary to carry on its business, and, to that end, to execute, in the name and on behalf of the company, promissory notes or other evi- dences of indebtedness, and, to secure the same, to pledge or hypothe- cate securities, stocks, bonds, or other personal property, or mortgage any real property of this company ; and that the assistant treasurer of this company be, and he is hereby authorized to withdraw any securities now or hereafter held to secure such promissory notes or other indebtedness of this company and replace the same by others whenever such change shall in his judgment be advisable, and said assistant treasurer is hereby authorized to receive and receipt for matured or maturing coupons appertaining to any such hypothecated bonds." " I, Alex. Millar, secretary of the Southern Pacific Company, do hereby certify that the above and foregoing is a true copy of a 488 preamble and resolution duly adopted by the board of directors of said company, at a special meeting of said board, held at the office of Mr. Thomas H. Hubbard, first vice-president of said com- pany, No. 23 Broad Street, in the city and state of New York, on the 26th day of January, 1900, at which a quorum was present. In Witness Whereof, I have hereunto subscribed my name and affixed the seal of said company this 13th day of February, 1907. (Signed) Alex. Millar, [seal. Secretary. Southern Pacific Company, Kentucky. MAHL — COENISp. 269 Q. That is a copy of the resolution passed by the Southern Pacific board on the 26th day of January, 1900. Who was president of the Southern Pacific Company at that date, the 26th of January, 1900? A. C. P. Huntington. Q. Is there anything unusual in resolutions of this character? Are they customary in financial institutions in this city, in borrowing money ? A. In all companies that I have been connected with, the president is always authorized to borrow money as may be needed. Mr. Kellogg. Do you remember when that last resolution authoriz- ing the president to borrow monejr and pledge stocks was passed? Witness. I think some time in July. Mr. Kellogg. Has any money been borrowed on that other than shown by the statements you have furnished us? Witness. None that I recall. 489 Mr. Kellogg. One question I would like to ask you. Mr. Harriman said that monthly statements of the earnings of railroads were sent to the stockholders. Witness. Yes, sir. Mr. Kellogg. That is, a condensed statement of the gross earnings every month, is it not? Witness. No, it is the gross earnings less — we state the gross earn- ings and then the operating expenses and taxes and then the surplus. Now, any one who is familiar and who can familiarize himself with the fixed charges of the company from its annual report can make a statement of just what surplus is left for payment of dividends after payment of fixed charges. Mr. Kellogg. The net is not arrived at until two or three weeks after the closing of the books for the month, is it ? Witness. No, we are generally able to furnish that information to the stockholders about the 3d or 4th of the month following. Mr. Kellogg. About a month later? Witness. Yes. Mr. Kellogg. Now, the Southern Pacific, for some months before the making of that dividend, furnished no statements, did it? Witness. It did not, no. An adjournment was then taken until the morning of Thursday, December 3, 1908, at 10.30 o'clock. 490 Eoom 515, Custom House, New York, City, Thursday, December 3, 1908—10:30 A. M. The hearing was resumed before the Special Examiner, Hon. Syl- vester G. Williams, at the above time and place. Present: On behalf of the Complainant: Mr. C. A. Severance; on behalf of the Defendants, Mr. Maxwell Evarts. Mr. Severance. I next offer in evidence, pursuant to our stipula- tion, portions of the testimony given by William D. Cornish, a wit- ness before the Interstate Commerce Commission, who testified on 71535—09 18 270 COKNISH. the 5th day of January, 1907, at the city of New York. I under- stand that it is agreed by all parties that this testimony may be writ- ten into the record and have the same force and effect as though Mr. Cornish were upon the stand giving the same testimony. Mr. Evaets. Yes. WILLIAM D. COKNISH testified : Examined by Mr. Kellogg : Q. Mr. Cornish, you are vice-president of the Union Pacific Com- pany, are you not? A. I am. Q. And of the Oregon Short Line Company ? A. Yes, sir. Q. And of the Oregon Railroad & Navigation Company ? A. Yes, sir. Q. And of the Southern Pacific Companv ? A. Yes. Q. Are you a director or an officer of the San Pedro Company? A. I am a director. 491 Q. And on the executive committee of the San Pedro Com- pany? A. Yes. Q. You are a director in each one of those railways I mentioned? A. Yes. Q. You are familiar in a general way with the Pacific system, including the Union Pacific, the Short Line, the Navigation Com- pany and the Southern Pacific and its subsidiary lines, are you not? A. I am. Q. You were a master in chancery of the court during the receiv- ership of the Union Pacific? A. Yes, sir. ' Q. And were familiar with the acquisition of the Union Pacific and its subsidiary lines by the Union Pacific Company ? A. I was and am. Q. Prior to the acquisition of the stock of the Southern Pacific Company in March, 1901, the Union Pacific controlled, by stock ownership, directly or indirectly both the Short Line and the Naviga- tion Company's lines, did it not? A. Yes. Q. That is, it controlled by the ownership of a majority of stock the Short Line Company? A. Yes, sir. Q. In a general way, the lines of the Short Lines extend from Granger on the east to Huntington on the west, and from Salt Lake on the south, north to Butte ? A. To Silver Bqw. Q. And the Short Line owned and controlled the various lines south of Salt Lake and southwest? CORNISH. 271 A. They were part of the property. Q. The Short Line or the Union Pacific, prior to the acquisition of the Southern Pacific stock in 1901, controlled the Navigation Com- pany ? A. Yes, I think they both had stock. 492 Q. Since that time, or at about that time, the Union Pacific got all of the stock, substantially, of both companies, didn't it ? A. Yes. Q. So that the Union Pacific operates now under joint operation the entire lines from Council Bluffs and Kansas City on the east to Portland on the west? A. I don't regard it so, Mr. Kellogg. The separate companies operate their own property. Q. You make a joint report in the annual report? A. That is the financial report made in New York. Q. You consolidate the earnings? A. For that purpose. Q. The operating officials lap over from one onto the other? A. They do in part ; not the managing officials, no. Q. Mr. Bancroft operates a part of the Short Line? A. Operates all of the Short Line. Q. And part of the Union Pacific? A. At present part of the Union Pacific west of Green Eiver. Q. The manager of the Oregon Railroad & Navigation Company operates the Oregon Railroad & Navigation and the lines of the Central Pacific in Oregon, does he not ? A. The lines of the Southern Pacific as far south as Ashland. Q. The lines of the Southern Pacific as far south as Ashland, which is about the south line of the state of Oregon ? A. State of Oregon. Q. So that it is a fact that both the operating and traffic officials operate the entire system as far as Portland, do they not ? A. Well, each road has its own traffic officials, I think distinctively confined to the line. 493 Q. Yes, but they have common traffic officials and common operating officers? A. To the extent that you have stated, yes. Q. Now, the ownership of the various sub-companies of the South- ern Pacific are accurately stated in the annual reports, are they not? A. I believe so, yes, but I have not been over them. Q. In a general way, the Southern Pacific Company, which, is a corporation in Kentucky, operates under lease and owns substantially all the stock of the lines from Ogden to San Francisco and from Portland to the Texas line? A. Yes. Q. And controls by stock ownership all of the Texas and Louisiana lines as far as New Orleans? A. Controls and owns a majority of stock of those lines. Q. I say controls by stock ownership. 2?2 COKNISH. A. They control the company through the stock. Q. Now, what steamship line does the Southern Pacific control by stock ownership? A. The line of steamers which is running from New York to New Orleans belongs to the Southern Pacific Company. The Pacific Mail is controlled through a slight majority of the stock by the Southern Pacific Company. The Occidental & Oriental is partly owned by the Union Pacific, but I have forgotten just how that stands. It used to be held partly in public and partly by the Union Pacific. Q. You think the Union Pacific owns the control of the Occidental & Oriental Steamship Lines now? A. I can't just remember how it stands; I have not looked. 494 Q. Does the Southern Pacific own any of the stock of the Occidental & Oriental Steamship Company? A. I think not. Q. Now, the Pacific Mail operates lines of steamers from San Francisco to Japan and China? A. Yes, sir. Q. The Sandwich Islands? A. They stop there on some trips. Q. They also operate a line of steamers from San Francisco to Panama, do they not, or to the connections with the Panama Railroad? A. I believe they do. There was some question about that a while ago, and yet there was so little to it I don't know. Q. What company owns by stock ownership the Portland & Asiatic Steamship line? A. My recollection is that the stock belonged to the Navigation Company. Q. You understood that it did belong to the Navigation Company? A. Yes. Q. Where do those ships run from? A. Those ships run from Portland to the Orient. Q. If that company belongs to the Navigation Company, then the Union Pacific Company has a through line of railway and steam- ships through its stock ownership, from Council Bluffs and Kansas City to ports in the Orient via Portland, does it not ? A. It would amount to that, yes. Q. And the Southern Pacific has a through line of transportation from New York via Southern Pacific and San Francisco to the Orient, by steamship and rail? A. Yes, through their control of the Pacific Mail. Q. Through their control of the Pacific Mail and the Eastern steamship lines. Judge Cornish, prior to the construction 495 of the San Pedro road, the Oregon Short Line, you say, owned or controlled by stock ownership various lines of road south of Salt Lake City and southwest? A. As far south as Milf ord and Frisco in Utah, yes. Q. About what time was it that Senator Clark undertook the con- struction of that road? CORNISH. 273 A. I think it was in 1901. Q. After that time there was a contest in the courts between the San Pedro Company and the Short Line Company, was there not, as to some right of way which each company was claiming? A. The San Pedro Company under its present organization was operating a small piece of road in California, but had no road east or towards Salt Lake from about Los Angeles. There was another company, another corporation, of which I don't remember the name, which started a controversy in regard to a grade in Nevada with the Short Line. It was not the San Pedro Company, but it was a com- pany which I assume it controlled, because it disappeared after- wards, and that controversy went into the Courts, and there was an injunction issued; the effect of which was that the Short Line retained the then -existing grade which had been graded some ten or twelve years before, and built its line down to Calientes, on that grade, having bought the intervening section between Milford and the state line. Q. That is, some years before the Short Line Company had pro- jected a road substantially along the same line through Nevada that the San Pedro road afterwards constructed on ? A. As far as Calientes. Q. As far as Calientes? 496 A. But in an entirely different route, but towards the same section of California. Q. Yes, toward the same section of California, and the Short Line Company had constructed a grade part of the distance?* A. Yes, sir. Q. Through a canyon? A. Partly — about 40 miles through a canyon. Q. There was not room for two railroads through that canyon, was there? A. Yes. Not 200 feet right of way each, but there was room. Q. Both companies were struggling for that right of way ? A. Yes, sir, particularly because it had been constructed and the grade was nearly perfect, and there were five tunnels there, and it was worth something. There was another route over the hills. Q. After the Short Line got or retained possession by permanent injunction, there was a settlement, was there, between Mr. Harriman and Mr. Clark, of this difficulty? A. The contract that has been offered in evidence, dated in 1902, was the result of about a year's negotiations that were had. Q. Prior to that contract, there was about a year's negotiation be- tween Mr. Harriman, representing the Short Line, and yourself, rep- resenting the Short Line, and Mr. Clark, was there not? A. Yes. Q. You finally reached a settlement with Mr. Clark ? A- Yes. 274 COBNISH. Q. That settlement contemplated the conveyance to the San Pedro Company of 512 miles of railway of the Short Line Company, did it not? Q. Yes, sir, about that. Q. West, south and southwest from Salt Lake City towards 497 California? A. From the neighborhood of Salt Lake City, yes. Q. And those lines were conveyed by the deeds that you have fur- nished ? A. Yes. Q. That settlement also contemplated the construction of the San Pedro Line to California — to Los Angeles ? A. Except as to such trackage as it might obtain that was contem- plated in the contract. Q. I mean it contemplated the construction of the line to about San Bernardino and leasing certain track rights into Los Angeles ? A. I have forgotten the exact terms of the contract. They were building a line down to Riverside and completed it, and contemplated trackage over the Southern Pacific to San Bernardino, and over to Daggett. Q. Well, that contract contemplated the construction of a line of railway and the acquisition of trackage rights so the San Pedro would have and control a complete line from Salt Lake to Los An- geles ? A. Yes, and to San Pedro and Pasadena. Q. San Pedro is the seaport beyond Los Angeles, is it not? A. Yes, sir. Q. Over what tracks does the San Pedro run from Los Angeles to San Pedro, the seaport? A. It runs over its own tracks. Q. At what place does the Southern Pacific reach the Coast ? A. At San Pedro ; that is, in that vicinity and other points near by. Q. And Santa Monica, does it not ? A. Yes. Q. That is, near Los Angeles, I mean. A. Yes, sir'. Q. Mr. W. A. Clark is president of the San Pedro Line, is he not? A. He is. 498 Q. W. H. Bancroft is vice-president? A. Yes, sir. Q. Mr. Bancroft is the manager of the Union Pacific lines and the Short Line — the Union Pacific lines west of Green Eiver and East Huntington, is he not ? A. Yes, sir. Q. Living at Salt Lake? A. Yes, sir. Q. He has direct control of the operation of the San Pedro Line, has he not ? A. No, sir. COBNISH. 275 Q. Who is J. Ross Clark? A. A brother of Senator Clark. Q. He is second vice-president? A. Yes, sir. Q. Who is K. E. Wells? A. General manager of the San Pedro Line. Q. From what line of road did Mr. Wells come to the San Pedro? A. From the Santa Fe or one of its subsidiary lines. Q. Who are the directors of the San Pedro Line ? A. Senator W. A. Clark, J. Ross Clark. Q. E. H. Harriman? A. Yes. I will try to give them all to you. (Referring to book handed to witness.) Did not you have a letter with the lists? Q. (After examining papers on his table.) Oh, yes, I think we did — yes, I think they are in. They are the directors elected pur- suant to these letters signed by Mr. Clark and Mr. Harriman? A. Yes, sir; February Q. 1906? A. Xo, Q. The directors elected in 1906 were W. H. Bancroft, whom you have just described. A. Yes, sir. Q. H. I. Bettis (referring to paper), who is he? A. The auditor of the company. Q. Is he also an officer of the Short Line ? 499 A. No, that is his sole duty. Q. Was he ever in the employ of the Union Pacific? A. He was. Q. When* A. Well, until about 1903 .he was chief clerk in the Omaha office. Q. He went from the Union Pacific to the San Pedro Line about 1903? A. I think so. Q. W. D. Cornish and E. H. Harriman, I see, are also directors? A. Yes, sir. Q. (Referring to paper.) W. R. Kelly at that time was general solicitor of the Union Pacific? A. Mr. Kelly has just gone into the board this fall. He was form- erly general solicitor of the Union Pacific, but left a year ago on account of his health, but having recovered, he took up this work. Q. He is now solicitor for the San Pedro Line? A. General counsel, yes, sir. Q. Did you not get Mr. Kelly elected or suggest his election to the board and his appointment as attorney ? A. I think I am a very good friend of Judge Kelly. I tried to get him something to do, yes, when he recovered his health, but I did not have control of it. Q. Who did — Mr. Harriman? A. Mutual suggestions — suggestions came to me really from W. A. Clark. 276 COENISH. Q. Agreed to by both parties ? A. Yes, sir. Q. (Eef erring to paper.) Who is W. G. Kerckhoff? A. A citizen of Los Angeles, not connected with the Southern Pacific or Union Pacific, so far as T know. 500 Q. What is his business, do you know? A. He is a business man. I have forgotten what his busi- ness is. Q. E. C. Kerens is of St. Louis, is he not? A. Yes, sir. Q. And Thomas Kerns? A. Of Salt Lake. Q. T. F. Miller? A. He is a citizen of Los Angeles- I do not know his business. Q. W. H. Comstock? A. He is secretary of the company. Q. Where did he come from — what company? Do you know? A. No, I do not. He was with the company before I knew any- thing about him. Q. Judge Cornish, the Union Pacific and Southern Pacific organ- ized an express company within the last few years, did they not ? A. What companies? Q. The Union Pacific and Southern Pacific — the Pacific Express. A. No, sir ; that company existed before the receivership. Q. Before the receivership? A. Yes, sir. Q. What is the Pacific Express Company? A. It is a commercial express company operating over the so-called Gould system and over the Union Pacific system. Q. What company owns it? A. The Union Pacific owns 40 per cent, the Wabash 20 per cent, and the Missouri Pacific 40 per cent. Q. Does the Southern Pacific own any of that? A. No, sir; not to my knowledge. Q. Now, about March 23, 1901, I notice that the Union Pacific was authorized to issue one hundred millions of common stock — I will show you the statement. (Handing paper to witness.) That was authorized about March, 1901. A. I believe so. 501 Q. About that time one hundred million dollars of convert- ible bonds were issued by the Union Pacific, were they not? A. I believe so. Q. Those bonds were convertible into that common stock, were they not, at par? A. Yes, sir. Q. And those bonds have been converted into the common stock of Union Pacific Company, have they not, with the exception of about $500,000? A. So I understand. COENISH. 277 Q. So, about $99,450,000 of those bonds have been converted into $99,450,000 of common stock of the Union Pacific Railway ? A. Something like that ; I can not verify your figures. Q. That $100,000,000, realized from the issue of the Union Pacific common stock, is the money that has been used for acquiring stocks of various railway lines, is it not? A. I do not know how I could trace that. The money came into the treasury and property has been bought and lines have been con- structed and grades changed, and improvements of every kind made and money paid out of the treasury, and at the same time stocks have been bought and sold — and I do not know. Q. About 1901, about the time that stock issue was authorized, the Union Pacific Company bought over $80,000,000, par value, of the stock of the Northern Pacific Railroad, did it not? A. I can not remember. Q. Well, you remember that in 1901 it bought over 400,000 shares of the preferred stock and over 370,000 shares of the common stock, don't you? A. If I say Yes, Mr. Kellogg, I would verify the figures. I have not thought of that for years. Q. Well, you know there was $155,000,000 of Northern 502 Pacific stock, don't you? A. I know there was a large quantity of it ; yes, sir. Q. About $155,000,000, was it not? A. About that, yes, sir. Q. And you know that the Union Pacific acquired, about the time that stock was issued, the majority of the stock, preferred and com- mon, together? A. I so understood ; yes, sir. Q. Well, now, the Union Pacific did not have the money in the treasury from operation of its lines to buy any such amount of stock? A. I assume not. I did not understand it so. Q. And that issue of convertible bonds and that issue of stock of $100,000,000 was primarily made to enable the Union Pacific to buy such stocks, was it not? A. I think not. I did not understand it so. Q. Well, was not that the real purpose ? A. I think not. Q. That is what it was used for, is it not? A. As I have explained, money must have gone into the treasury and money must have been used out of the treasury, but my recollec- tion is the contrary as to that, that that was the purpose of it. Q. There was not money enough in the treasury to buy it but fo* that bond issue, was there? A. No; but my recollection, Mr. Kellogg, is that the Northern Pacific purchase had nothing to do with the issue of the bonds or the purpose of issuing the bonds at the time the bonds were issued. It was something that came a little later. 278 THORNE. Q. Let us see about that. The Northern Pacific purchase was made about March, 1901, was it not? A. I can not remember the dates. 503 Q. Between March 1st and the 8th of May, 1901, the Union Pacific bought that stock, did it not ? A. I do not remember the dates. Q. What? A. I do not remember the dates. It was along in that spring. Q. They did not buy anything after the day of the panic, did they? A. I did not buy any, and had nothing to do with the purchase. I do not know what they did. Q. Who did that? A. It must have been done under Mr. Harriman's direction, I suppose, or the executive committee. I had nothing to do with it. Q. Have you had anything to do with the purchase and sale of these various stocks? A. No, sir. Mr. Lovett. Mr. Kellogg, here is the resolution under which the convertible bonds were issued by the Union Pacific (presenting book to Mr. Kellogg), and here is a copy of the circular (presenting paper). This is a copy of the circular I referred to yesterday as probably explaining somewhat the purpose. It refers only to forty millions applied to the purchase of the Southern Pacific stock. Mr. Severance. The resolution was put in yesterday. Mr. Lovett. That goes on in that connection, that at the same meeting where the issue of a hundred millions of convertible bonds was authorized, it was found necessary to increase the authorized capital stock of the company to a like amount, so that, as the bonds were offered for conversion, stock could be issued. That proceeding is explained in the resolution. As to the details — as to what was done with the rest of the money — I have not got that informa- 504 tion yet. I suppose the resolution states it in a general way. The Chairman. Judge Lovett, do the minutes of the Board of Directors or the Executive Committee authorizing the issue of those securities, and the circular issued at that time, purport to show the purpose of their issue? Mr. Lovett. Yes, Mr. Chairman. Of' course, you understand that in the form of resolution authorizing the issue of bonds of that sort, general terms were used. The Chairman. Of course. Mr. Lovett. Quite general terms are used in the resolution. The circular then states that the proceeds of forty millions of bonds are to be applied to the purchase of Southern Pacific stock or to the pay- ing for Southern Pacific stock that has been bought. Mr. Severance. That is forty millions. Mr. Lovett. Yes, forty millions. As to what appropriation was made of the rest of it I do not know. That will appear from the books. COBNISH — COMPLAINANT'S EXHIBIT 73. 279 Q. In a general way, Mr. Cornish, it was not necessary to borrow one hundred millions on convertible bonds and issue one hundred millions of stock at that time to finance the road unless it was going to buy or did buy some stock, was it? ' A. My recollection is that the company was quite heavily in debt on account of purchases of road and betterments. Extraordinary betterments had accumulated and they had not been financed, as the phrase is, and the purchase of the Southern Pacific being in con- templation, the subject of financing for the advances, as they 505 call them, and the purchase of the Southern Pacific was con- sidered, and they made up this form of bond, providing for $100,000,000 of bonds, and I think it states there (referring to circu- lar) that bonds not required in that purchase be used for corporate purposes, or left it open to the board of directors to make disposition of the bonds as occasion might arise. I can not recall the items, but I remember such items as the purchase of the Julesburg Cut-Off, and other large sums had not been taken care of. Q. The first circular issued in reference to the $100,000,000 of bonds states that forty millions are now offered for subscription for the purpose of buying the Southern Pacific stock? A. Yes, sir. Q. (Kef erring to circular.) That is the first circular? A. Yes, sir. Q. I will have that marked. (Same is marked Exhibit 1 Cornish.) Paper marked Complainant's Exhibit 73 (Cornish). Mr. Severance. It is admitted that Complainant's Exhibit 73 is a correct copy of the paper marked Exhibit 1 (Cornish) in the record of the Interstate Commerce Commission, New York hearing, January 5, 1907. I offer Complainant's Exhibit 73 (Cornish) in evidence. Complainant's Exhibit 73 (Cornish) is as follows: Complainant's Exhibit 73. (Cornish.) UNION PACIFIC RAILROAD COMPANY. First Lien Convertible Four Per Gent. Gold Bonds. 120 Broadway, New York, Feb. 13, 1901. To the holders of preferred and common stock of Union Pacific Railroad Company: 506 This Company, by action of its Board of Directors and Executive Committee, has authorized the issue of $100,000,000 of ten-year four per cent. Gold Bonds, to be known as First Lien Con- vertible Four Per Cent Gold Bonds, to be secured by a first mortgage upon uhmortagaged railway belonging to the Company and by the pledge of securities owned by it and held in its treasury. These bonds will (subject to the authorization of the necessary increase of the Company's Common Stock) be convertible at the option of the 280 -CORNISH — complainant's EXHIBIT 13. holder, on or at any time before May 1, 1906, into the Common Stock of the Company at par — that is, at the rate of ten shares of stock for each bond. All or any of such bonds may be redeemed by the Com- pany at a premium of 2£ per cent, on any interest day after the first day of May, 1906, upon notice published in two newspapers in the City of New York, and in one newspaper in the City of London, England, once a week for eight consecutive weeks preceding such interest day. In case part of the bonds are redeemed, they shall be chosen by lot. The bonds will mature May 1, 1911, and bear interest from May 1, 1901, at the rate of four per cent, per annum, payable semiannually on the first days of May and November, in each year. Both principal and interest will be payable in gold and free of tax. The bonds will carry coupons for interest and the usual provision will be made for their registration. For the terms and provisions of the bonds and the mortgage reference is made to forms of those instruments, inspection of which, when completed, may be had at the office of the Company. 507 For the purpose of providing for the payment for shares of stock of the Southern Pacific Company purchased $40,000,000 of said bonds are now offered for subscription, and holders of the common and preferred stock of this Company, of record at the closing of the transfer books February 23, 1901, may subscribe for said bonds at par at the rate of one bond for every fifty shares of stock held by them. Subscriptions must be made on or before the 20th day of March, 1901, at the office of the Company, 120 Broadway, New York, where blanks will be furnished upon which subscriptions must be made. Payments on account of such subscriptions must be made at the office of the Company in New York in instalments and at dates as follows : 25 per cent, at, the time of making the subscription, namely : on or before March 20, 1901 ; 25 per cent, on or before April 10, 1901 ; 25 per cent, on or before May 20, 1901 ; 25 per cent, on or before June 10, 1901 ; As the average date of the foregoing payments, viz : May 1, 1901, is the date from which interest runs on new bonds, no adjustment of interest will be required, but all deferred payments may be antici- pated under a discount at the rate of two per cent, per annum, wheij full paid certificates will be issued. 508 No subscription for a fraction of a bond will be received, but, as rights to subscribe may be assigned in accordance with a blank form which will be furnished upon application at said office of the Company in New York, any holder of certificates of stoek, for a number of shares which cannot be divided by fifty without leaving a remainder, may, before making a subscription, buy or sell enough rights to make his holdings so divisible. The Company will not itself buy or sell rights. CORNISH COMPLAINANT'S EXHIBIT "73. 281 The right to subscribe will expire at three o'clock P. M. March 20, 1901. A syndicate has been formed to take at par any portion of said $40,000,000 of bonds which shall not have been subscribed for within the period above specified. Failure to pay any instalment of the subscription, when and as payable, will forfeit all rights in respect of the bonds subscribed for, and any instalments previously paid. Subscriptions accompanied by payment of the first instalment of 25 per cent., must in all cases be in the hands of F. V. S. Crosby, Treasurer, 120 Broadway, New York, before 3 o'clock P. M., on March 20, 1901. Subscription certificates transferable by delivery will be issued to subscribers. The bonds bearing coupons from May 1, 1901, or interim certifi- cates representing said bonds, will be deliverable on surrender of sub- scription certificates, with all payments of instalments receipted thereon, at the office of the Company in New York, on or after June 10, 1901. By order of the Board of Directors. Alex. Millar, Secretary. 509 Q. Is there anything said there about financing the road and paying for improvements? (Handing circular to witness.) A. No, I think not, in this. (Referring to circular.) Mr. Lovett. I can furnish a copy of the mortgage, also. Witness. I think it will be found in the mortgage. The Chairman. I want to ask you one or two questions myself to clear up a matter. When did this new line from Salt Lake City to Los Angeles go into operation ? Witness. The line was completed about May, 1905. The Chairman. It has been in operation for a year or more. Witness. The through line, yes, sir ; the line operated as a road in California and in Utah and Nevada ; and the delay was in connecting the two ends. That was concluded, so that the line was put into full operation about May, 1905. The Chairman. When did it become available in connection with the Union Pacific as a through line for freight and passenger travel to Southern California? Witness. They commenced shipping freight in a very small way about May, 1905, and the business has grown up from that time, both passenger and freight. The Chairman. When were through passenger trains first oper- ated, or about when ? Witness. I think about the time I stated ; I should say about the first of June, 1905. The Chairman. About what is the distance from Salt Lake City to Los Angeles ? Witness. About 780 miles. 510 The Chairman. Less than from Salt Lake City to San Fran- cisco ? 282 CORNISH. Witness. Yes, sir. The Chairman. And about what is the distance from Salt Lake City via Ogden to Portland, Oregon ? Witness. I don't remember just offhand; I will furnish that for the record ; I don't remember. The Chairman. Probably about the same as from San Francisco? Witness. About ; I should think about 800 miles. By Mr. Mile-urn : Q. Judge Cornish, in a contract or traffic agreement that was re- ferred to yesterday, a provision was called attention to which re- ferred to the rates, tariffs, and charges of this San Pedro road for any local business which might be the subject of competition between it and the Southern Pacific Railway Company. What is the terri- torial region of any such possible competition in local business? A. It is all in southern California, below Mojave, practically con- fined to the lines from San Pedro, Los Angeles and Pasadena, and then from there over to San Bernardino. Q. All confined to traffic in that region which you have mentioned, of southern California ? A. Yes, sir. Comr. Lane. And that is the practical interpretation which you have given to that clause? Witness. Always, yes, sir; that is our understanding of the con- tract. Mr. Milbtjrn. It says local business in the agreement, 511 which may be the subject of competition between these two roads. Comr. Lane. Yes. I suppose the word " local " is a word of various meanings, as applied to railroads. Mr. Mile-urn. Yes, but it would be confined to that region. Comr. Lane. It might be a narrow region or more extensive. I was wondering if this word " local " might not extend through Ne- vada. Witness. I have always understood not. Mr. Kellogg. You know nothing about the traffic end of it? Witness. No, I don't know anything about the rates, but I hear a good deal of discussion and have a good deal to do at times about traffic matters. Mr. Kellogg. Local business is a matter of business which might be entirely done on the rails of the San Pedro Company, is it not? Witness. Not in that case with reference to that contract, no. Comr. Lane. It is any business which you choose to call local, is it not? Witness. I think I would always have a reason, and the reason in this case with reference to this contract, Mr. Commissioner, is that there was an effort here to harmonize the handling of the ter- ritory of southern California in the Los Angeles district, and the San Pedro Company wanted to get in on the Southern Pacific lines CORNISH— THORNE. 283 so as to handle business in and out, and it only went as far north as Los Angeles, and it was conceded in the contract by the 512 Southern Pacific that it should do business as far as the par- allel of Mojave, giving it a right into the Southern Pacific territory below that; and as a part of the understanding and con- sideration of that, the San Pedro undertook as far as this territory and this business was concerned to not interfere unduly, with the Southern Pacific's own business on its own lines, or in competitive territory. Comr. Lane. Does the Santa Fe run over Southern Pacific lines in Southern California? Witness. From' Mojave to Needles, yes, sir. Mr. Kellogg. I see the San Pedro leases some trackage from the Santa Fe also. Witness. From a point between Cplton and San Bernardino over to Daggett, or over the hill. Mr. Kellogg. Is there a contract between the San Pedro and Santa Fe under which they shall maintain rates ? Witness. Not that I know of. Mr. Kellogg. Prior to the construction of the San Pedro line, the only way from Southern California to Ogden or Salt Lake was via Sacramento, was it not ? Witness. Yes, sir. Mr. Kellogg. And now there are two lines, one via Sacramento and one via the San Pedro line ? Witness. Yes. Mr. Kellogg. And business going from Southern California to Salt Lake entirely over the lines of the San Pedro is local business, is it not, — ordinarily local business? Witness. No, I should call that through business. 513 Mr. Kellogg. Well, it is local to their line, is it not? Witness. It is their line of business, yes, sir. Mr. Kellogg. It is local to that line, isn't it ? Witness. I should not use that phrase, no. Mr. Kellogg. It does not go on any other line? Witness. No. Mr. Kellogg. Ordinarily in railroading, local business is business that is local to the particular line, isn't it? Witness. I do not understand it so. Mr. Milbuen. It says local business which is competitive. Mr. Kellogg. It is business from Salt Lake, and is competitive? Witness. Yes. Mr. Kellogg. It is local business that is competitive that they agree to maintain under that contract ? Witness. No, the Southern Pacific has no business to Salt Lake. 514 Mr. Severance. I next offer, pursuant to the stipulation, the testimony given by W. V. S. Thome, a witness before the Interstate Commerce Commission, who testified on the 5th day of 284 THOBNB. January, 1907, at the city of New York. I understand it is agreed by all parties that this testimony may be written into the record and have the same force and effect as though Mr. Thome were upon the stand giving the same testimony ? Mr. Evaets. Yes. W. V. S. THORNE, testified : Examined by Mr. Severance: Q. Where do you live, Mr. Thorne ? A. New York City. Q. What is your business? A. I am director of purchases of the Union Pacific, Oregon Short Line, Oregon Railroad & Navigation Company, and the Southern Pacific Company. Q. Will you kindly state what your functions and duties are as director of purchases of these various lines ? A. Well, they are to purchase locomotives, cars, rails, bridges, or any other material which the railroad companies use in large quanti- ties and where it is advantageous to make an agreement direct with the manufacturer where we can concentrate our business with one manufacturer. Q. Well, now, do you have on the various lines of the system purchasing agents also? A. We have local purchasing agents. Q. And where are these local purchasing agents located, and who are they? A. Mr. J. W. Griffith is local purchasing agent of the Union 515 Pacific at Omaha. Mr. Hutchinson is purchasing agent of the Oregon Short Line at Salt Lake City. Mr. Koehler is purchasing agent of the Oregon Railroad & Navigation Company. Mr. I. O. Rhoades is purchasing agent of the Southern Pacific Com- pany at San Francisco ; and Mr. N. P. Randolph is purchasing agent of the Morgan's Louisiana & Texas Railroad and Steamship Com- pany at New Orleans. Q. Is the Pacific Mail Steamship Company under your juris- diction ? A. No, sir. Q. You don't have anything to do with the purchases for the ships? A. In some of the contracts which I make, which cover material used by the Pacific Mail & Steamship Company, I add a clause, if I think it desirable, whereby the manufacturer agrees to furnish the material covered by the agreement to the Pacific Mail Company, the Pacific Mail Steamship Company, at the price that they quote to the railroad companies, if the steamship company desires to buy it, and then I send a copy of that agreement to the general manager of the steamship company, and he can make use of it or not, as he pleases. In some cases he does, and in some cases he does not. I do not make any agreement that will bind the steamship company ; and I am not an officer of that company. THOBNE. 28& Q. Now, Mr. Thorne, you named those various gentlemen who are purchasing agents of the different lines of roads. Do they make reports to you of their action ? A. Not unless I ask them particularly about something. Q. They do not? A. No. Q. But you do call on them for information ? A. Oh, yes. 516 Q. And that is sent to you? A. Yes, sir. Q. Now, do you make contracts with manufacturers in which you act for more than one of these lines at the same time? A. Yes, sir. Q. That is, I suppose, you buy a lot of cars or locomotives; do you sign as director of purchases, say, the Southern Pacific and the Union Pacific, or the Southern Pacific and the Oregon Short Line? A. Well, in buying locomotives we generally buy them in large lots, say, 250 at a time. And the contract would then be made in the name of the Union Pacific Company and later, when the locomo- tive builders get these locomotives under construction, the informa- tion is then sent to them as to which part of the different lines they are to be assigned to, and at that time, after they have that informa- tion, they make their bills against whatever railroads the locomotives are assigned to. At the time the locomotives are originally ordered, we do not know where they are going, and we do not furnish that information to the locomotive builders sometimes until six months after the locomotives are ordered. Q. So that, in the first instance, you make a contract for an entire consignment of locomotives in the name of the Union Pacific Eail- road? A. Yes, sir. Q. And then afterwards distribute them as may be determined? A. Yes, sir. Q. And the invoices are made against the particular line to which they are assigned? A. Yes, sir. Q. How is it with cars, freight cars? A. The same way. Q. And with passenger cars? A. The same way. 517 Q. The same way? What official of the allied lines deter- mines what number of these locomotives or cars shall go to one system or the other? _ A. Well, Mr. Kruttschnitt, the director of maintenance and opera- tion. Q. He distributes them ? A. He gives me information as to what is wanted, and then that request goes to the Executive Committee for approval, and then comes to me. 71535—09 19 286 THOESTE. Q. You say, "goes to the Executive Committee." You mean the Executive Committee of the Union Pacific ? A. Well, the Executive Committee of the company concerned, I suppose. I don't know where Mr. Kruttschnitt gets authority from. Q. Well now, Judge Lovett suggests how this is done. See if that is your understanding. That you will, for instance, give an order for 250 locomotives. Now, when these locomotives are com- pleted, or a substantial number of them completed, Mr. Kruttschnitt determines how many he will send to one line or another line, and then he makes up, signing on behalf of the Southern Pacific, we will say, or the Union Pacific, as the case may be, a requisition for so many locomotives? A. Yes, sir. Q. He sends these requisitions in to Mr. Harriman, who is the chairman of the executive committee of all the lines, and Mr. Krutt- schnitt's requisitions are voted by the executive committee of the particular line to which Mr. Harriman refers these requisitions; is that right? A. Yes, sir. Q. That is the modus operandi of distributing these locomotives? A. Yes, sir. 518 • Q. You don't remember of any case, do you, where Mr. Kruttschnitt's recommendations or requests were disapproved? A. I have no means of knowing whether they are disapproved or not, until approved and come to me approved. Q. You haven't known of any such case where he has made a dis- tribution which has been disapproved? A. I do not get the distribution until after it is approved. UXilVLlUJX.. 355 A. There is also a through service with the Northwestern and the Union Pacific and the San Pedro. Q. Now, the lines extending from Chicago to California, connect- ing at El Paso; for instance, the Rock Island, they run a through service with the Southern Pacific? A. It is afforded the same facilities, as well as the Texas and Pacific, which is a part of the Gould System, officered over by Mr. Jeffery. And each line also is afforded through service by way of Ogden to such an extent that the Southern Pacific has not a single train 6ver its road that Mr. Jeffery's line has not through cars on; no train. We even handle them on the Overland Limited now. Q. Now, take another case. The rates on passenger business, win- ter tourists business, from St. Paul and Minneapolis, through Kan- sas City, and southwest, connecting with the Southern Pacific to Cali- fornia, are the same as by the Union Pacific, are they not ? A. I didn't quite catch that. You mean from St. Paul ? Q. St. Paul and Minneapolis; and tourists cars are operated from St. Paul and Minneapolis tri-weekly ? A. Yes, sir. There are tourist cars from St. Paul and Minneapolis out over the Southern Pacific, and via Kansas City and the 630 Santa Fe, and the other lines to California. Q. At the same rates? A. I mean, for instance, the Omaha line had a tourist sleeper from Omaha, and then over the Union Pacific and the Southern Pacific. Q. And also by way of Texas ? A. I am not sure whether we have that now, a through car from St. Paul by way of El Paso, or not, but we have had. Q. You had in the past ? A. Yes, sir. Q. Two years ago, for instance, the Chicago Great Western oper- ated that way ? A. They never closed those gateways to any one. Q. So that the entire passenger business of this country practi- cally to the Missouri Eiver can to a greater or less extent, and does go via the Southern Pacific or the Union Pacific, as the passengers wish to go or come ? A. The entire passenger traffic in N the territory described could at will select any one of the lines, the Southern Pacific, the Union Pa- cific, the Rio Grande and the Sante Fe, and those lines have through service for the same rates. Comr. Lane. Does that include the Northern Pacific and the Great Northern as well? Witness. If a passenger goes out by way of St. Paul and Portland, and over what is called the Shasta route of the Southern Pacific, and back, there is another — there is an arbitrary charge for that 778 miles between Portland and San Francisco, a higher rate than if he went direct. Comr. Clements. What does that amount to ? 356 m'cobmick. Witness. That would be a little less than 2 cents a mile 631 for the round trip ; about $15 to the round trip, I think $7.50 for a one-way ticket, on account of the excessive haul ; a little less than 2 cents a mile. Q. Hasn't that been in existence all the time ? A. Yes, sir. Q. So that a passenger cannot go by way of the Northern Pacific at the same price? A. It has not been changed to my knowledge — the passenger rates to the coast have not been materially changed, to my knowledge, in 25 years. Q. But the rates via the Union Pacific and the San Pedro lines are the same? A. Yes. Q. And the rates via the Union Pacific and the Navigation Lines to Portland are the same ? A. How is that? Q. And the rates via the Union Pacific and the Navigation Line to Portland are the same ? A. Well, the Union Pacific and the Navigation around over the Union Pacific through to Portland ? Q.' Yes; they are the same as the rates via the Southern Pacific? A. You mean around that way to San Francisco ? Q. Yes. A. No. Q. They are not the same ? A. No. There is a difference in that rate, an arbitrary on account of the Shasta route, by reason of that excess of 778 miles haul. Q. Has that always existed ? A. Yes. It was higher Comr. Lane. Did I understand you to say that the passengers rate to California had not changed in twenty-five years ? Witness. No. I mean this way, that the method of applying the rates has not changed materially. But they have changed very greatly because since 1901 we have had a fifty dollar round- 632 trip rate to the Coast freely, and then since 1901 we have had a remarkably low colonists rate, as may be evidenced by the increased sale of land and business there; rates as low as $25; and now I believe ordinarily $33 through, the lowest through rates in the world. Q. Prior to 1901 there was at times a very sharp competition by the various Pacific Lines for this business, was there not; and rates at times were reduced very much ? A. Well, prior to 1901 I was connected with the Vanderbilt sys- tem, the Big Four Lines, in a strongly competitive territory from here, and we furnished business for the Southern, as well as the Northern Route, via Union Pacific, as it does today, and prior to that time on one occasion there was quite a severe rate war that I remem- ber between the Santa Fe and the Southern Pacific Lines and its m'coemick. 357 connections. Ordinarily the rates to the Coast have been fairly firm* with the exception of surreptitious cutting, because they are very low ; the round trip to the Coast has always, since it was $110, been less than 2 cents a mile that is very low, taking into consideration the service performed. Q. That is on the long haul ? A. "Well, the lowest rates in the world exist in California itself. The Southern Pacific road didn't get 2 cents a mile for some of it, and rarely got 3 cents a mile; while the rate between Philadelphia and New York is 3 cents and between Chicago and Buffalo is 3 cents a mile. Q. You mean locally in California they do not get 2 cents ? A. Locally in California; in fact they don't get 3 cents a 633 mile locally in California today on some of their rates. Q. Now, the emigrant business from eastern seaports to California points is quite large at times, isn't it? A. Yes, sir. Q. And that is a business which the railroads have in the past- years bad sharp competition for, isn't it? A. Well, yes ; territorially speaking I would say so, but not in the past number of years to California. There has been no particular competition for that, because when there was competition there were such crimes committed by people, hotel-keepers and runners in New York, that an attempt was made to control that business and have it in the hands of the United States Government officials at the Island, and they sent it out over various lines, guarding them from the as- sault and robbery that had been committed so that there has never been very much of a competition on that business. Q. Well, there used to be years ago. A. It is a long time ago. Q. You don't remember, do you, prior to 1901, during those years when the Southern Pacific was making a struggle to open its line as a popular California route, there was a great deal of competition in those rates at that time; don't you remember that? A. You mean emigrant? Q. Oh, in all kinds of business. A. To the Coast? Q. Yes ; to and from California points. A. I don't think I quite catch that; because the Southern Pacific was the old and direct line to the Coast. Q. I am talking now about the Sunset route. A. Well, I mean via that line. The Southern Pacific has 634 always opened its line to its connections in a most peculiar manner ; even when it was the only line to the Coast, its divi- sions were practically on a mileage basis via Ogden, just as they are today. Q. I am speaking of the Sunset route, not the Ogden Line. A. It was the same with the Sunset route. 358 m'coemick. Q. I know that they opened their line to all eastern lines, in fact invited the eastern lines by the most liberal allowances, didn't they, to use that line ? A. No. I don't think anyone has ever accused them of excessive liberality. Q. I thought you said that it made very liberal mileage divisions? A. Not liberal, not excessively liberal. Q. What do you mean by liberal ? A. "What I said was that it was practically on a mileage basis. Q. You said liberal divisions? A. I may say that they are liberal divisions, but I never heard that charge specifically, that they were excessively liberal in naming divi- sions. Mr. Milbuen. This is the first time that I have ever heard the charge of liberality resented. Q. Then they were not liberal ; is that it ? A. Yes; they were fairly liberal, because they were on a mileage basis. If you run up to the connection of a road and you have the use of that road beyond that point on a mileage basis, it is just as good as if you had your own road. You couldn't do it any better; you escape the maintenance of that road, and you gain the benefit of it. Q. Who has the advertising for all these lines, the passenger lines? A. Each officer of each line individually. 635 Q. Doesn't Mr. Stubbs have general charge of the adver- tising ? A. No, sir. Q. Isn't it divided up, any expense? A. Oh, is a division made? Q. Yes. A. I can give you it definitely. Once a year our lines meet and decide on what they will have to have for the next year in an adver- tising way, and they ask for an appropriation, and they get it, and they must say at the time what they propose to use it for, and then they are held to a strict use of the money in that way. Q. Whom do they ask for this appropriation ; that is the point. A. The appropriation — the request comes to Mr. Stubbs for ap- proval. Q. And Mr. Stubbs has to approve or disapprove it? A. Yes, sir. Q. And he makes the division of the expense between the various Pacific lines? A. No, he does not. Q. That so appears? A. No, it doesn't appear. Mr. Fee asks for his money and Mr. Lomax asks for his money. Q. You say there is no common expense that is divided by Mr. Stubbs between the lines, do you? m'cormick. 359 A. Regarding advertising matter, no, sir. Q. None whatever? A. No, sir. Not only is that taken into consideration, but our con- nections also confer regarding the advertising of through trains. For instance, I have a request now from the Milwaukee & St. Paul road, to whose through service I have just referred, asking if we would participate with them in the expense of this through advertising? Q. Well, the requisitions have to go to Mr. Stubbs for approval or disapproval ? A. Yes, sir. 636 Q. Have you seen a letter which was put into evidence in New York where Mr. Stubbs divided up certain advertising expenses and proportioned them to each line for the year? You haven't seen that letter? A. No, sir. Q. Well, if he did that you would not deny it? A. Well, I wouldn't deny anything that Mr. Stubbs did. Q. I didn't think so. That is all. Mr. MiLBTfEN. It is quite conceivable, isn't it, that as these local officials make their requisitions on Mr. Stubbs, that he should submit to the executive committee of these companies in New York for ap- proval the aggregate appropriation, and show in that statement the division that had been made in the manner you have indicated, isn't it? Witness. That is just the way it is done. Comr. Clements. Now, in respect to the regular passenger traffic, how do the rates now compare with what they were ten years ago, leaving out the emigrants and the homeseekers and traffic of that kind? Witness. They are lower, because recently our lines in Utah, Wyoming, California, Arizona and New Mexico reduced their rates. The facilities were better and the traffic was larger and they were reduced from 5 cents to 4 cents locally. Comr. Harlan. What about the reduction of through rates, did that enter into it? Witness. No, it did not figure to any very great extent in the through rates. Comr. Harlan. How do the through rates today compare with the through rates ten years ago ? Comr. Clements. Say from New York to San Francisco, 637 or the eastern territory ? Witness. Well, I think the through rates, say one way pas- senger rate, and the round trip tourist rate, which grants to every- one stop-overs ad libitum, during the last fifteen years the rates have been so very greatly reduced by reason of these very many round trip convention rates, that I would say the aggregate rates for the last fifteen years for through business have not been two-thirds as high as they were before. 360 m'cormick MUNROE. Comr. Clements. Leaving out the conventions and the home- seekers and the immigrants, and all those special classes, how about the regular passenger rates for ordinary travel ? Witness. I do not think that the through rate from the River to California on the one way ticket has been reduced in that period. I am not sure when the last reduction did take place, but Mr. Lomax can give you that definitely. By Mr. Lovett : Q. All those rates' that you put in are open to all connections, are they not? A. Very freely to all connections. Q. Prior to 1901, which seems to be the date which Mr. Kellogg takes as eventful in this examination, how did the Union Pacific work its California passenger business, over what lines ? A. Over the Southern Pacific. Q. FromOgden? A. From Ogden. Q. Has there been any change in that condition since then? , A. None whatever. Q. Has there been any change in the policy respecting the inter- change of business, joint passenger business and joint passenger rates with connecting lines since 1901 ? 638 A. None that I know of. They were free and open to all connections in 1901 as they are today. Q. And prior to 1901 ? A. And prior to 1901, even when the Southern Pacific was the only line into California. Q. And this rate war that you referred to as having occurred at one time between the Atchison and the Southern Pacific, on which side was the Union Pacific in that contest? A. Well, I should say very strongly on the Southern Pacific side. Q. On the Southern Pacific side? A. Yes, sir, as to connections, as it would be today. Q. It would be impossible, consistent with its interests, to take sides with the Atchison in any such contest, would it not? A. Yes, sir, it would be physically impossible. It could not do so at all. Mr. Lovett. I believe we have no further questions. (Witness excused.) 639 Mr. Severance: I next offer in evidence, pursuant to our stipulation, the testimony given by J. A. Munroe, a witness before the Interstate Commerce Commission who testified on the 10th day of January, 1907, at the city of Chicago. I understand it is agreed by all parties that this testimony may be written into the rec- ord and have the same force and effect as though Mr. Munroe were upon the stand giving the same testimony? Mr. Evarts. Yes. MUNEOE. 361 J. A. MUNEOE testified : Examined by Mr. Severance : Q. What is your official position, Mr. Munroe? A. Freight traffic manager of the Union Pacific lines east of Green River. Q. How long have you held that position? A. I do not recall the exact date, two or three years. Q. Prior to that, what was your position ? A. Freight Traffic manager of the U. P. E. E. Q. How far west did your jurisdiction go then ? A. Ogden. Q. You lost jurisdiction over the lines west of Green Eiver, two or three years ago? A. Partially I did, but not entirely so. Q. What relation have you to the business west of Green Eiver now? A. Mr. Eeeves as general freight agent of the Oregon Short Line has jurisdiction locally over the U. P. lines subject to my general ap- proval. I leave these local matters very largely in his hands, 640 but as to other business I am at liberty to confer direct with the lines west of Ogden, the Southern Pacific. Q. Mr. Beeves A. J. A. Eeeves. Q. Does he have jurisdiction over the Southern Pacific as far west as Sparks? A. I understand so. Q. He also has jurisdiction over the Union Pacific as far east as Green Eiver ? A. He does. Q. And over the Short Line? A. Yes, sir. Q. How many years were you general freight agent of the Union Pacific? A. Well, I have been freight traffic manager of the Union Pacific since the organization of the present company, February 1st, 1898, and I was also Freight Traffic Manager during the receivership, back in 1893 and have been associated with their traffic department since as far back as 1882. Q. What was your position prior to 1893, were you general freight agent ? A. I have been general freight agent. I do not recall just the date that my title was changed from G. F. A. to Freight Traffic Manager. Q. How many years have you been in charge of the Union Pacific traffic locally, there at Omaha, as either general freight agent, or general freight traffic manager? A. Well, I have been identified with the traffic department, as I said before, since 1882, the latter part. 362 MTTNEOB. Q. But at first, what was your position? A. Assistant general freight agent. Q. When were you made general freight agent? A. I do not even recall that date, but I can give you those dates if you want them. 641 Q. It was a very short time after 1883 ? A. No, in October 1884 I was transferred to Kansas City and made first assistant general freight agent making a specialty of the Kansas Division lines as then in operation. I remained there until January 1st, 1886, and on my return to Omaha I was made general freight agent. Just how long that continued until I became freight traffic manager I am not clear on at this moment. Q. You have been general freight agent or freight traffic manager since the first of January, 1886 ? A. Yes, sir. Q. The first of January, 1886? A. 1886. Q. Now, to whom do you report ? A. Mr. Stubbs. Q. And you have done so since July 1st, 1901 ? A. I have. Q. Prior to that time, to whom did you, report ? A. To Mr. Burt as president. Q. As president of the Union Pacific ? A. Yes, sir. Q. Previous to. that time you commenced reporting to Mr. Stubbs, previous to the time you commenced doing that, and after you had been made general freight agent, you had at all times reported either to the general manager or to the president of the Union Pacific itself, had you not? A. I reported to the receivers during the receivership, and to President Burt subsequent thereto. Q. And prior to the receivership ? A. To the vice-president, general manager or general traffic man- ager, as the case may be. Q. So that you did not, until July 1st, 1901, you did not report to any person who was an officer of any other railroad 642 system outside of the Union Pacific? A. I did not. Q. What is the nature of the reports which you make to Mr. Stubbs and how frequently do you make reports to him? A. We have no specific dates for making reports to him. I under- take to keep him advised of conditions and fully posted as to what is current in the way of events, and what is going on. Q. That is, you keep him as fully advised as you formerly did the general manager, when you were under his supervision? A. I do. Q. So that Mr. Stubbs is at all times kept in close touch with all operations? A. He is. MUNEOE. 363 Q. Now, Mr. Munroe, prior to the time that Mr. Stubbs took charge of the traffic, it was your custom, was it not, to represent the Union Pacific at freight meetings with other roads? A. I did often. Q. For very many years ? A. Yes, sir. Q. You remember, do you not, prior to 1887 (the time the Inter- state law was enacted) that there had been a pool of the transconti- nental lines? A. I did not come in close contact or have any discussion about those pool matters. Transcontinental business, under those condi- tions, was not within my purview. I do not know anything about it, and did not have anything to do with it. Q. Well you knew about it, didn't you ? A. I had a very general knowledge, but it was so superficial, that I could not give any information of any value on it. In fact I paid no attention to that business at that time. Q. So you did not attend the meetings at which these matters 643 were discussed? A. I did not on the pool. Q. But, after January 1st, 1886, down to the time Mr. Stubbs took charge, you did usually represent the Union Pacific at their freight meetings ? A. I did at some of the freight meetings, and more especially what we call the trans-Missouri meetings referring to the traffic of Utah, Colorado and East. The transcontinental meetings were largely at- tended by my superior officers. I did attend some. Q. After you became traffic manager you attended the meetings? A. Yes, I attended several. Q. Now in those meetings you represented no one but the Union Pacific interests, did you? A. That is all. Q. At those meetings the Southern Pacific was separately repre- sented, was it not ? A. Let me correct that a little bit there. Prior to the receivership of the Union Pacific (which was October 13th, 1893) we did repre- sent the line from Granger on to Portland. Q. That is the Portland line? A. But I have had no direct connection with the O. R. & N. Com- pany since July 4th, 1894. Nor have I had any connection with the Oregon Short Line since the date of the formation of the new com- pany. I do not recall the exact date, but it is several years. Q. But the Southern Pacific was represented in those meetings by another gentleman when Mr. Stubbs was not there, was it not, repre- sented by Mr. Stubbs, or some one for him ? A. Some of the Southern Pacific officials. Q. Now, since Mr. Stubbs' appointment and his coming here, 644 has it not been customary for him, or one of his assistants, to represent both the Union and the Southern Pacific at these meetings? 364 MUNEOE. A. No, there has been no material change in the representation. Each company has had its representative at the meetings. I am referring now to the trans-continental matters. Q. And you come to the meetings as well ? A. I come or Mr. Wood or someone, as the case may be. We always endeavor to have direct representation of the Union Pacific road at each one of those transcontinental meetings. Q. But, of course you are under the supervision and direction of Mr. Stubbs? A. Certainly. Q. And any suggestion he would make to you as to the attitude you were to assume at these meetings, of course you would follow ? A. Certainly. Q. Now I think you just stated that you had nothing to do with the freight business of the Short Line or the Oregon Railroad and Navigation Company? A. I have not. Q. But you had formerly ? A. Under the old organization, prior to 1898, but not for a number of years. Q. Do you have a general freight agent under you ? A. I do. Q. At Omaha? A. At Omaha. Q. Who is that? A. Elmer H. Wood. By Mr. Lovett: Q. Has there been any change in your relations to these conferences since Mr. Stubbs' jurisdiction was extended over the Union Pacific, Mr. Munroe? A. There has not. 645 Q. You attend as many, or as great a percentage of them, since as before? A. Precisely. Q. Over what line does the California business or the transcon- tinental business of the Union Pacific move ? A. Largely over the line from Council Bluffs west, through Green River, and to Ogden, in connection with the Southern Pacific as to California, transcontinental business for Oregon points, via Green River, Granger and Huntington and also for Southern California points via the Union Pacific to Salt Lake and San Pedro line and points south thereof. Q. When was the San Pedro line opened for through business? A. About two years ago. Q. In 1905? A. That is my recollection. Q. The line was then competing A. May 1st, I think, 1905. MUNEOE. 365 Q. Has there been any change in the movement of that traffic, I mean excluding the San Pedro line, leaving that out? A. No, sir. Q. How long has it moved that way ? A. Ever since I had anything to do with the Union Pacific. Q. No change has been made in the movement since the jurisdiction of Mr. Stubbs was extended over the Union Pacific ? A. Some of the business that is moved down by way of the San Pedro line giving the Union Pacific tonnage by reason of it on account of the inability of the line via Sacramento to haul that business, but the relation to the pro-rating arrangements via Ogden, as between the Union Pacific and Southern are the same as they were. Q. The only change being that resulting from the completion of the San Pedro line? A. That is it. 646 Q. You testified I believe that prior to the receivership of the Union Pacific line (which occurred I think you stated in October, 1903), your jurisdiction extended over the line to Portland, over the Oregon Short Line and the Oregon Railroad & Navigation Company ? A. Yes, sir. Q. At that time, how did you move your transcontinental business? A. Our California business moved by way of Ogden, and the other business by the way of Granger and Huntington. Q. Has there been any change since then? A. No. Q. Did any considerable amount of traffic for San Francisco or other California points ever move by way of Portland, and then by steamer ? A. It did not. Q. Is that a practicable route and a feasible route for the Union Pacific, Mr. Munroe, as against the connection with the Central Pacific? A. We never have so considered it. Q. Why? A. Because we have always felt it would always cost us more to route San Francisco traffic via Portland, that we would lose more than we would make by it. The line is unnatural in this, that when you arrive at Portland, you are about as far from San Francisco as you are at Ogden. Again, San Francisco is the only point on the Pacific Ocean from which the boats from Portland, or at which boats from Portland touch. There are in California a number of points in common with San Francisco, to which a very large and handsome tonnage is attached, and we always felt that our possible gain by using the Portland route for San Francisco business would be much more than offset in value to the Union Pacific by the re- sultant action. There was a large business eastbound — I am 647 giving you the thoughts that occurred to me at the time. If I am too long about it stop me. 71535—09 24 366 MTJNEOB. Q. No, I wish you to make it as full as possible. A. There were at that time about 8,000 carloads of perishable fruit at points substantially local to the Southern Pacific, the rout- ing of which to the Missouri River we satisfied ourselves they could control, and we had hard enough work to hold our share of it any- way. We did not wish to add to our burdens and we felt that the line by way of Portland was not on a parity in service with the line via Ogden; that we would have to have a differential to San Francisco to do any business and the bad effects of the differential would cost us more than the business which we would gain by the Portland route would represent. To illustrate, we have never felt that it would be wise to accord to San Francisco a lower rate via Portland and water, than we accorded Portland direct for the all- rail service. We did not care to advocate what we thought, an un- natural freight rate basis of adjustment by charging the Portland man for less service more than we charged the San Francisco man for the greater, when both competed more or less in the territory in- termediate as between Portland on the north and San Francisco on the south. Those are some of the reasons which actuated us not to open the Portland line for business. Q. If you were to attempt to open that Portland line even by a reduced rate to San Francisco, I suppose, of course, that the reduc- tion would be met by the Central Pacific? A. Certainly. Q. And the same relative facilities would continue ? A. They would. 648 Q. Well now, the interchange as to the volume of traffic, the interchange with the Central Pacific at Ogden, and the amount of revenue derived from that; how would that compare with the volume and the amount that under any conceivable practicable con- ditions you could hope to get by way of Portland ? A. Oh, very much larger. Q. What do you know of the organization of the Oriental and Occidental Steamship companies, Mr. Munroe? A. Scarcely anything. Oriental traffic as far as the Union Pacific is concerned, is left in the hands of our direct western connection serving the port of San Francisco. Q. How long has that been the case? A. Always. Q. You mean the Southern Pacific? A. I do. By Mr. Kellogg : Q. All of it? A. There is a limited amount of that Oriental traffic which is moved by w"ay of Portland ; limited, for the reason that the Portland sailings have averaged about one a month, sometimes an extra ship %ere and there, but there has been no regularity of the sailings via Portland, as there has been via San Francisco. We have had an MUSTBOE. 367 average sailing from San Francisco of about one every ten days, and we have had at times nine first-class ships in that service. By Mr. Lovett : Q. What ships from San Francisco for the Asiatic ports have you worked ? A. The Pacific Mail, The Oriental & Occidental and the Japanese lines. Q. You have worked all of those lines? A. Yes, sir. Q. In handling such Asiatic traffic as comes to you, as 649 originates on your line, or comes to you from the east, have you always worked that by way of San Francisco ? A. Always. We had some, as I said, a limited amount by Port- land. Q. Has that amount that has gone by way of Portland — is that sub- stantial or insignificant? I want to know something about the rela- tive amount. A. It is very small compared with that which moves via San Fran- cisco. Q. How long has that condition been in existence? A. Always as far as I know, except this, that the Portland line is more or less of a new creation. It has not been in operation I should say, beyond the last ten or twelve years. The San Francisco line has been in operation for years prior to that. By Mr. Severance : Q. How are the rates by the San Pedro line over to the East from your line, from Southern California points, as compared with the rates via the Southern Pacific and Sacramento ? A. They are uniform. Q. They are just the same. A. They are. Q. But at the present time you say you get a larger percentage of the revenue by sending the stuff over the San Pedro ? A. No, I said we were getting some increased business by reason of having the shorter line. To explain that, the distance from Ogden to Los Angeles via Sacramento is substantially 1100 miles, whereas it is a few hundred miles shorter via Salt Lake. Q. Quite a number of miles shorter, isn't it? 650 A. About 300. The Union Pacific found that business very sharply competitive. The strongest competitor is the Atchi- son line via Albuquerque and the longer line via Sacramento has ruled us out of a large amount of it in the past because we could not equal the service of the Atchison road. With the San Pedro line we are better fixed and we can duplicate it. Q. Then there has been competition down there between the Santa Fe and the Southern Pacific in the way of quick service, even if there has been no competition in rates. 368 MUNBOE. A. There has always been competition in Los Angeles. Q. Now do you get the same division of the through rate with the San Pedro that you do with the Southern Pacific on Los Angeles business ? A. They are in different groupings. Q. Well, take Los Angeles, that group. A. There may be some variance, I would not want to testify from memory on those percentages. We have a group I know, that Los Angeles group as far as the Southern Pacific is concerned, which commences up in Central California. There may be some variation at specific points. Q. The Southern Pacific have to haul commodities 300 miles fur- ther than the San Pedro to deliver them to you. Does the Southern Pacific get any more for doing that than the San Pedro does for haul- ing it the lesser distance? A. The original basis, as I recollect it, was a mileage pro-rate from Omaha, via Sacramento and Los Angeles. The application of that same principle, via the shorter line, would give the Union Pacific proper of course more money on an individual shipment. 651 Q. Is it divided on the mileage basis, or does the San Pedro line get the same amount of revenue? A. My recollection is that it is a mileage basis. Q. That the through rate is just the same? A. The through rate is just the same. Q. Consequently if you can divert traffic via San Pedro you can get the same money out of it? A. Yes, sir. Q. Could you make up a statement of that, showing those divi- sions? Comr. Lame. You have the division tables in your office, have you not? Witness. I presume we have. By Mr. Severance: Q. Now, Mr. Munroe, you have stated in answer to Judge Lovett that no substantial amount of the California traffic ever moves by Portland. Now the divisions with the Central Pacific line were satisfactory to you, were they not, from the standpoint solely of the Union Pacific? A. Yes, sir. Q. Now don't you know it to be a fact that the possession of that line to Portland, would be influential in preventing the South- ern Pacific (if it was independent from you) from making an unfair demand on you as to divisions? A. I don't think I catch the idea. Q. As a railroad man, don't you know that the possession of a through line to the coast so that you could go into that San Fran- cisco business, if you saw fit, by way of Portland, was a strong weapon in your hands to prevent the Southern Pacific from making an unfair demand on you as to divisions ? MTJNBOE. 369 652 A. No, I don't think it would be. Q. You do not think it was of any value whatever? A. I think there was a small value to the Southern Pacific in that fact that they have a line from Ogden to Portland, via Sacramento, but the total amount of business to and from the east and Portland handled by the Shasta Route was so insignificant as compared with the direct lines that I do not think it would have any influence at all upon the Southern Pacific, on their traffic. Q. You do not understand my question. My question is, was not the fact that the Union Pacific in the old days, when it was not amalgamated with the Southern Pacific, that the Union Pacific had a line composed of itself, the Oregon Short Line and the Oregon Railroad & Navigation Company ; and a line of steamers from Port- land to San Francisco, the fact that it possessed such a line, was not that a weapon in its hands which would prevent by self interest, the Southern Pacific from demanding an undue or unfair share of the through rate from the Union Pacific? A. I do not think it would prevent the Southern Pacific from very materially advancing their division on the Union Pacific interchange. Q. Will you answer my question just as asked it? A. Well, I will have to say no. Q. You say no? A. I do. Q. You do say then that the possession of a through route to the coast, to Portland, with steamships from there to San Francisco is of no value whatever to the Union Pacific as a weapon against 653 an unfair exaction on the part of the Central Pacific ? A. I don't say it is of no value, I say it is of a minimum value. Q. You said a moment ago A. Pardon me. You ask me if I thought I could use that as a club, against an unfair division. I say I do not think it is possible. I do not think the possession by the Union Pacific of a Portland-San Francisco line would make it possible for that company to prevent the Southern Pacific from materially advancing their percentages of the through rates for the service west of Ogden. Q. Now let us see. The route to San Francisco by way of Port- land, and the sea, is not nearly so roundabout a route as the route to San Francisco by the Sunset line and the Morgan steamers, isn't that true ? There is not naturally near the difference ? A. It is about twice as far from Ogden to San Francisco, as it is direct. Q. That is not anywhere near as much additional mileage as there is by the Morgan line, around the south coast of Florida, to the Southern Pacific, up to San Francisco as against the straight line across the continent. A. I will admit Q. Isn't that so? It is not anywhere near as great a difference in mileage? 370 MITNROE. A. No, you are not correct on that. Q. I am not? A. No. Q. What is the difference in mileage between the Sunset route, taking in the Morgan line of steamers to New York and a straight line by rail across from New York to San Francisco ? A. My recollection is that the distance by sea from New York to New Orleans, is 1,800 miles and from New Orleans to San Francisco 2,500 ; in round numbers 4,300 miles. From New York via Chi- 654 cago and Omaha, to San Francisco, it is 912, 488 and 1,003 and 794. Q. That is 3,100 then, a difference of 1,200 miles? A. Whatever it may be. Q. Is there a difference of 1,200 miles in favor of the route from Ogden direct to San Francisco as against the route around via Portland? A. There is not. Q. Then I was correct, and you were incorrect? A. No. The Chairman. It is 1800 miles from New York to New Orleans. Witness. And 2500 miles from there to San Francisco. I under- stood your question (without wishing to argue this) that the dis- tance was " many times greater " or something of that nature. By Mr. Severance: Q. Now, for many years there has been a competition via the Sunset route and that line of steamers, not only to the extent of putting in the same rates from New York, but in addition the South- ern Pacific interests have paid the freight from points out nearly to Pittsburg and Buffalo into New York and taken it around, and that would be a difference of 400 miles more to that haul, would it not? A. It would- Q. Now with that object lesson in front of you, don't you think that a good active working of that line via Portland and boats in San Francisco would have made it impossible from motives of self- interest alone for the Southern Pacific to have demanded an unfair division of the through rate as against the Union Pacific? A. No. Q. You are still of the same opinion, are you ? A. I am. Q. Now you say that the Portland and Asiatic Company does carry some Oriental traffic? A. It does. 655 Q. Does that come to you ? A. Part of it. Q. Where does the rest of it go ? A. They have a large local traffic from Portland in flour, which represents the bulk of their outward bound tonnage. Their inward MIUNKOE. 371 tonnage consists of the products of the Orient, notably tea and rice, curios and silk occasionally, and that is scattered all the way from Portland east, according as the point of consumption varies. Q. And you bring that over your lines? A. We handle it over our lines. Q. The bulk of it? A. The bulk of it ; that is, the Portland part of it. Q. That has been the case — east of Portland the Asiatic company or its predecessors — that has been the case for a period of 10 years or so? A. Approximately. Q. For several years prior to 1901 ? A. Yes, yes. Q. The effort was made, was it not, to send as much traffic as could be sent over that line because the O. E. & N. owned the line ? A. Yes ; they tried to fill their ships,. Q. Both ways. How often did you say the sailings were? A. About once a month. Q. You advertise them once every 20 days, do you not ? A. I have not seen the advertisement recently, and I do not know what it is now. Q. Did you not find prior to 1901 that the Southern Pacific was competitive with the Union Pacific, the Short Line and the Oregon Railroad and Navigation Company into Portland? A. Just the same as it is now. 656 Q. Is it competitive now ? A. It is. Q. Then there is competition? A. There is. Q. Then it is not a fact, as was suggested by Mr. Stubbs yesterday, that there never had been any competition between the Southern Pacific and the Union Pacific. You think there is competition^ now ? do you ? A. I think there is competition between various lines. Q. Business moves from New York and Atlantic seaboard points by the Sunset route up to Portland ? A. I cannot testify as to that, I do not know. Comr. Lane. I did not ^understand Mr. Stubbs to say that there was not any competition. Mr. Severance. He said both. He said at one time that there never had been any, and at another time, I think he said, that there was still competition. It will all be found in the record. Mr. Milbuen. To the record we appeal. By Comr. Clements : Q. Is there any pool or committee or agency or official to which the several transcontinental roads, or some of them, report their tonnage or their business, either on the basis of mileage or revenue or ton- 372 MUNBOE. nage or something of that kind so that each one of you may know approximately about what percentage of the whole you are getting? A. No, sir. Q. Has there ever been such an institution ? A. There used to be years ago a statistical compilation of figures, but there has not been now as I recollect for several years. Q. Do you have any idea from time to time as a representa- 657 tive of the Union Pacific road, what your competitors on each side of you are doing, whether their business is growing or de- creasing, I mean their proportion of the through business east and west? A. We watch it with very great care through solicitors actively in the field, both at the points of destination and points of origin. That is part of our business to keep just as close tab on them as we can by every legitimate method. Q. But there is no system of reporting one to the other? A. None whatever. Q. Or to any agency ? A. No, sir. Q. Whereby the various officers can be kept posted ? A. No, sir. Q. How long since that was done ? A. Why, several years, I don't know the exact date. Q. Has it been done since 1900 ? A. I do not think it has. Q. Well, do you know whether or not the proportion or percentage generally of the Union Pacific line, as you represent it, is greater or less than it was in 1900? A. I know that our business has been steadily increasing both in the total and in specific cases. I satisfy myself with that showing, and such information as I can get from other sources as to what our competitors are doing. Q. Do you think you are getting a greater proportion of it now than before ? A. I think we are. Q. Can you approximate about how much your proportion has in- creased in that time ? A. No, sir, I cannot. Q. Can you make any estimate about it? A. Why, I would think that our westbound takings of trans- continental trade in percentage would be five to ten per cent. 658 more than they used to be. Q. Than they were how long ago ? A. Ten years ago. Q. Do you have any basis for a like estimate in regard to the Sun- set route? A. No, sir, I have not any information as to the Sunset. MUNEOE. 373 By Mr. Severance : Q. You say that through your commercial agents you keep tab on on your competitors as far as you can ? A. Yes, sir. Q. What roads do you mean by your competitors ? A. I mean — well, of course, it depends on the business. Q. We are talking about trans-continental business. A. Speaking now of the San Francisco business for the purpose of illustration, all lines east of Ogden other than the Union Pacific; all lines east of El Paso, including the through route of the Sunset line from New York to San Francisco, and incidentally, of course, all the lines operating via the northern gateways. Q. Now, you say that you go to some trouble and expense to have your commercial agents put you in touch with all the information they can get with reference to the business done by those competitors of yours. That is true, isn't it ? A. It is. Q. You regard that as of advantage to you in conducting com- petition, don't you ? A. We do. Q. And you regard it as of advantage to you to keep that informa- tion as far as possible from your competitors, don't you ? A. Although I have Q. As to your own line I mean. A. We do not announce it to them, but we have no idea but 659 what they get it. Q. They get it if they can ? A. Certainly. Q. You don't want them to get it? A. I would not offer it to them. Q. In the case of one of those competitors, the Southern Pacific that you call a competitor, you have the same commercial agent at Chicago, the same commercial agent at Pittsburg, the same at Cin- cinnati busily engaged in covering up this information. They are also engaged in gathering up this information for you in reference to the business of your competitors. You don't try to keep that infor- mation then from the Southern Pacific, do you ? A. We do not regard the Sunset line as a competitor on Chicago business. Q. Oh, that is it. A. No, sir ; and we never have. Q. It is a fact, is it not, that you don't make any very great effort to keep this information from the Sunset management, or the South- ern Pacific management, not any such effort as you do to keep it from the Atchison? And you don't have to hunt half as far to find out what the Sunset is doing, as you do to find out what the Atchison is doing, do you ? 374 MUNBOE. A. We don't ask anything about the Sunset. I do not recollect an average of one communication a month to a Sunset man. They are just as separate and distinct from us as the Atchison road is. Q. And I suppose Mr. Niemeyer is very separate and distinct, too? A. No, he is a joint agent. Q. He is not separate and distinct? A. He is not. 660 Q. You think that he finds as agent of the Sunset what Mr. Niemeyer as agent of the Union Pacific is doing? A. I don't think I ever asked Mr. Niemeyer for a bit of information as to the Sunset takings in his territory, because Q. Now then, sir, don't you know Mr. Lovett. Just a moment. Because what? Witness. In the first place, as I have said, we have never regarded the Sunset line as a competitor on Chicago business. Q. Did you hear the testimony to the effect that a large amount of traffic has moved via the Illinois Central to New Orleans and thence to the Coast? A. Under abnormal conditions I recognize that the Illinois Central has taken some business. I say the Illinois Central simply as a line between here and New Orleans, but they have taken it for the reason, almost by 100 per cent., of congested conditions by the normal and direct line. I never can be convinced that when you have to carry the freight from Chicago to New Orleans and when you get to New Orleans you are farther away from San Francisco than when you started, that that line will be an active competitor of the Council Bluffs-Union Pacific-Ogden route. Q. What about the lines from Kansas City to El Paso ? A. The lines from El Paso are much more a competitor. Q. They are competitive to the Union Pacific ? A. They are. Q. Chicago traffic moves that way, doesn't it ? A. It does, and we recognize that competition as an active and con- trolling force. Q. Then as to Chicago business, the Union Pacific on the one 661 hand, and the lines made up from here to El Paso and the Southern Pacific from there on are competing lines? A. They are. Comr. Clements. Isn't there some territory somewhere south of this where both of these lines would naturally be competing? Witness. The line naturally falls about the Ohio River. Mr. Severance. Anything that originates south of the Ohio Eiver would naturally get better service via New Orleans than via Omaha, and anything that originates north of there would go via Omaha. Comr. Clements. Cincinnati is about on the dividing line ? Witness. About on the dividing line. By Mr. Kellogg : Q. You call that a natural dividing line, do you? A. I do. MUNEOE. 375 Q. And business north of that line has at times moved via the El Paso gateway and business south of that line via Ogden ? A. Occasionally. Q. And Pittsburg would be pretty strongly competitive territory then, wouldn't it, as it is right on that line ? A. Pittsburg is very strongly competitive. Q. As between the Southern Pacific and the Union Pacific? A. As between all the gateways^ Q. Is it not a fact that all points east of Kansas City on each side of that dividing line to the Atlantic seaboard are competitive terri- tory for those two lines ? A. To a limited extent the territory south of the Ohio River is competitive, and the territory north of the Ohio naturally moves by the northern gateways. Most of those places move on parallels. Q. It don't always. 662 A. It don't always ; there is no inflexible rule. By Mr. Lovett : Q. What are the lines leading from Chicago that take business be- tween California and El Paso? A. The direct line is the Rock Island system, in connection with the El Paso and Southwestern ; then the lines radiating from El Paso; the Texas Pacific, with their various connections via such points as Texarkana, Iron Mountain, Ft. Worth, and the M. K. & T. Q. When those lines competing by way of El Paso get that busi- ness, what do they do with it ? A. Deliver it to the Southern Pacific. Q. Is there any other way for them to get it to California ? A. I do not know whether any of them have prorate arrangements with the Atchison for the back haul or not, but I think not. In practice it is almost entirely Southern Pacific. Q. The Atchison has its own line from Chicago to California? A. It has. Q. When you get this business from them, that is in competition with them, and you get it to Ogden, what do you do with it ? A. Deliver it to the Southern Pacific for California points. Q. The Southern Pacific has the Pacific coast end of both of these roads, hasn't it? A. It has. Q. You cannot make a rate to California without the consent of the Southern Pacific, can you? A. We cannot. Q. Now, this Portland business that is in competition between the Oregon Railroad & Navigation Company, and the Southern 663 Pacific of about what volume and importance is that? That has been in competition between the Southern Pacific and the Oregon Railroad & Navigation Company, is it large or small in volume ? A. Very small. 376 MUNBOE. Q. In this contest or possible contest between the Union Pacific and Southern Pacific that Mr. Severance assumes in his questions to you, giving you the Portland route as a club to use on the Southern Pacific on the question of divisions at Ogden and giving the Southern Pacific as a club to use on you, the Denver & Eio Grande, which do you think you Id get the worst of that contest, the Union Pacific or the Southern Pacific? A. The Union Pacific. Q. Your loss and sufferings would be manyfold greater than the Southern Pacific in that contest? A. It is very evident to my mind that they would. The Examiner. Will counsel now make their statement in regard to the matter of the adjournment, so we will have it in the record? Mr. Severance. It is stipulated that an adjournment may be taken until 10.30 o'clock on the morning of the 5th day of January, 1909. The Examiner. I would like the record to show the ground of the adjournment. Mr. Severance. This adjournment is taken because of the illness of Judge Lovett, who is one of the counsel for the Union Pacific, the Southern Pacific, the Oregon Railroad & Navigation Company, 664 the Oregon Short Line and E. H. Harriman, and is the par- ticular counsel to whom has been delegated the duty of taking testimony. He is at present seriously ill in bed, and for that reason we have agreed to postpone the taking of oral testimony until the date stated, so that he may be present. The Examiner. This is at the request of the defendants, is it ? Mr. Evarts. It is stipulated between the parties. The Examiner. Very well; we will adjourn until the date named, at the same place. An adjournment was accordingly taken until January 5, 1909, at 10.30 a. m., at Room 515, Custom-House, New York City. 665 Room 508, Custom- House, New York City, Tuesday, January 5, 1909 — 10.30 a. m. The hearing was resumed before the special examiner, Hon. Syl- vester G. Williams, at the above time and place. Present on behalf of the complainant, Mr. Frank B. Kellogg, Mr. C. A. Severance, and Mr. G. E. Husted ; on behalf of certain defend- ants, Mr. Maxwell Evarts ; on behalf of the Farmers' Loan and Trust Company, Mr. Edward H. Blanc. Mr. Severance. Mr. Evarts has asked to have the oral testimony stand' over until this afternoon and to go ahead with some of the documentary evidence. We have agreed to that at his suggestion, and will go on with the oral testimony this afternoon. I would like to have you, Mr. Examiner, announce that the witnesses who have been subpoenaed may be excused until two o'clock this afternoon. The Examiner. Very well. The witnesses who have been subpoe- naed on behalf of the complainant will be excused until two o'clock this afternoon. You may proceed, Mr. Severance. HAHN. 377 Mr. Severance. I now offer, pursuant to agreement, a portion of the testimony given by Henry Hahn, a witness before the Interstate Commerce Commission, who testified on the 24th day of January, 1907, at the city of Portland, Oregon. I understand it is agreed by all parties that this testimony may be written into the record 666 and have the same force and effect as though Mr. Hahn were on the stand giving the same testimony. Mr. Evarts. Yes. HENKY HAHN testified : Examined by Mr. Severance : Q. Mr. Hahn, where do you live ? A. Portland. Q. How long have you lived here? A. Sixteen or seventeen years. Q. What is your business? A. Merchant. Q. Wholesale or retail ? A. Wholesale grocery. Q. Wholesale grocery ? A. Yes. Q. What firm are you connected with? A. Wadhams & Company. Q. Have you been in that business during the entire period of your residence in Portland ? A. All but about one year; that was at the beginning; about six- teen years. Q. And where else have you been in business in Oregon aside from Portland, if anywhere ? A. At Prineville, Crook County. Q. Have you still interests in that part of Oregon ? A. We have, or I have. Q. What is the nature of those interests ? A. Live stock, cattle business and sheep business. Q. Mr. Hahn, in getting goods for your store from the east prior to 1901, what lines or road did they come over? A. Oh, they came over the Union Pacific, the Southern Pacific, the Northern Pacific, and the Great Northern. Q. Prior to 1901, so you will understand the reason that I 667 use 1901, you will recollect of hearing of the acquisition of the stock of the Southern Pacific by the Union Pacific road, I pre- sume, several years ago ? • A. I do. Q. That was the year. Prior to that will you state whether or not you and your firm were solicited for shipments of goods from the east by these different lines of road that you have mentioned ? A. They were, yes. 378 HAHN NEWBEGIN. Q. The Southern Pacific and the Union Pacific, or the Oregon Short Line? A. Yes. Q. And the Oregon Railroad & Navigation Company? A. Yes. Q. And the Northern Pacific? A. Yes. Q. Also the Great Northern? A. Also the Great Northern. Q. And the Southern Pacific and the Oregon Railroad & Naviga- tion as a part of the Union Pacific system had separate solicitors, did they not? A. Separate organizations; yes, sir. Q. Seeking to get business for their respective roads? A. For their respective lines. Q. At the present time is there competition between these lines in the solicitation of business? A. Not that is apparent to us. Mr. Lovett. In what line? Witness. By the same solicitors. Q. By the same solicitors? A. By the same solicitors, yes. Mr. Lovett. Between what lines? Q. I am speaking as between the Oregon Railroad & Navigation and the Southern Pacific. A. The Union and Southern; yes, sir. Q. These roads are all represented by a single solicitor, so far as your observations go? 668 A. Yes, so far as we are aware. Q. And there is no competition between one road as against the other for your business? A. No, sir; none that we know of. 669 Mr. Severance. I now offer, pursuant to agreement, a por- tion of the testimony given by E. Newbegin, a witness before the Interstate Commerce Commission, who testified on the 24th day of January, 1907, at the city of Portland, Oregon. I understand it is agreed by all parties that this testimony may be written into the record and have the same force and effect as though Mr. Newbegin were on the stand giving the same testimony. Mr. Evahts. Yes. E. NEWBEGIN testified : Examined by Mr. Severance : Q. Mr. Newbegin, where do you live? A. Portland. Q. And how long have you lived in Portland? A. About eight years. NEWBEGIN. 379 Q. Where did you come from when you came to Portland ? A. Seattle. Q. What is your business, Mr. Newbegin ? A. Agricultural implements. Q. What is the name of your firm? A. R. M. Wade & Co. Q. Do you deal in all kinds of agricultural implements? A. I can't say that we do. We deal in that class of implements that is used in this territory, but not all kinds. Q. What kinds do you deal in ? A. Well, plows, harrows, wagons, and drills, garden tools, and such stuff as used on the farm in this territory. Q. You have a very large warehouse across the river here, 670 haven't you? It may not seem large to you, it seems large to me. A. Well, that might depend on what would be called large; we have a warehouse. Q. Well, it extends from one street to the other. A. Some people might call it large, but some would call it small ; a farmer would probably call it large. Q. Well, it extends through from one street to the other, doesn't it? A. Yes, sir ; it is a whole city block. Q. And that is the warehouse at which your office is located, isn't it? A. Yes, sir. Q. And at which you transact this business. A. Yes, sir. Q. What railroad tracks, if any, come by your warehouse ? A. Well, the main lines of the Southern Pacific go by, and we have a switch of the O. R. & if. on one side. Q. Now, Mr. Newbegin, you recall, do you not, the time that it first became public in 1901 that the Union Pacific had acquired the Southern Pacific stock? A. Well, I can't say Q. I don't ask you to give the date, but do you remember the cir- cumstance ? A. I can't give the date, but like most any one, I am familiar with the newspaper reports of such affairs ; but I am not posted on it. Q. I understand, but you knew at the time the report was made public five or six years ago ? A. I probably knew it at the time, yes. Q. Yes ; now, prior to that time, Mr. Newbegin, over what line of road did you ship your goods from the East? A. Well, we shipped most of our freight, that is my pred- 671 ecessor had been routing most of the freight Southern Pacific, and I followed his footsteps. Q. Well, by Southern Pacific, which route do you mean, both routes, or one? 380 NEWBEGIN. A. No, by Ogden; that is, the major part of it, of course not all of it; but the larger portion via Ogden via Sacramento. Q. Yes, sir. Did the Southern Pacific connect with some road east of Ogden at that time over which your goods came, aside from the Union Pacific? A. Well, I don't know in regard to the connection. We used to route our stuff by the Rio Grande to Ogden and some connecting line of the Rio Grande road, I think, from Ogden. I am not positive on those roads back there ; I have never been East ; it was the Rio Grande road and the Colorado Midland, I think. Q. And thence over the Southern Pacific to Sacramento and up to Portland? A. Yes. Q. Did the Southern Pacific have a separate solicitor of traffic at that time? A. Yes; I think so. Q. And did the other roads coming into Portland have solicitors for traffic? A. How is that? Q. And did the other lines of roads coming in here have solicitors of traffic? A. I think they all did from the number of them. Q. And they were constantly calling on you soliciting business, weren't they ? A. Yes. Q. From what part of the East do you get your goods? A. Well, we ship it from various parts. We ship some from Missouri, Indiana, Illinois, New Jersey, Pennsylvania, Mich- 672 igan, Minnesota — different parts of the Eastern States. Q. Now, Mr. Newbegin, over what line are you getting your goods at present? A. Well, we ship partly over the Union Pacific and partly the Northern lines. Q. By the Union Pacific do you mean via the Oregon Railroad & Navigation ? A. Yes, the Oregon Short Line. Of course the Union Pacific gets in here now by the Oregon Short Line and the O. R. & N. Q. And do you ship now over the Sacramento route ? A. No. Q. Are you solicited to ship by that route by the agents of the Southern Pacific? A. Not to my knowledge. Q. Are you still called on by soliciting agents of the other lines? A. Yes. Q. And the Northern lines? A. Yes. Q. And the O. R. &N.? A. The O. R. & N. and Union Pacific, yes. NEWBEGIN. 3HS1 E. NEWBEGIN (recalled) testified : Examined by Mr. Cotton: Q. Mr. Newbegin, in testifying yesterday you did not mean to say that the Ogden gateway was closed to the Denver & Eio Grande via Huntington, did you? A. No, I didn't say that. Q. I did not so understand you, but just understood that the Ogden gateway was closed. A. What I mean by that was, Mr. Cotton, that the gateway was closed for bringing cars via Sacramento. Q. Yes, but the Ogden gateway via Huntington is still open ? 673 A. Now, I don't know enough about the railroads back there ; whether you come via Ogden to come to Huntington, I don't know. Q. Yes; you come from Ogden and come by the Short Line to Huntington in connection with the D. & R. G. A. I am not familiar with the railroads up there and I don't want to testify about that ; I know nothing about them except in a general way. Q. Well, the D. & R. G. still interchanges business with the 0. R. &N.? A. With the O.R.&N.? Q. Yes. A. I don't know as to that. Q. You don't know whether that is closed or not? A. Not now. I do know this, that you can't ship cars via Ogden to Sacramento. Commissioner Lane. You can ? Witness. You can not. Q. But you don't know whether you can ship by the O. R. & N. and the D. & R. G. or not ? A. At this time ? Q. Yes. A. I could not say; no. Commissioner Lane. I didn't so understand him to testify. Mr. Cotton. But he said the Ogden gateway was closed. Witness. What I refer to as the Ogden gateway, and I think you know what I referred to, is this : that to-day you can not ship a car via Ogden via Sacramento to Portland, transcontinental freight. Mr. Cotton. With my road I did not regard that as closing the Ogden gateway ; that is, the O. R. & N. Mr. Severance. Well, the stockholders of the Southern Pacific might. 674 Mr. Cotton. That is a different matter; that is a matter that is very easily explained — why it is closed. If your honor would like to know about that feature, it is very easily explained. 71535—09 25 382 NEWBEGIN. Commissioner Lane. I presume you will put on some railroad offi- cials while we are here ; is that your intention ? Mr. Severance. I intend to call Mr. Miller, and he will explain that. Mr. Lovett. It is not our intention to call any witness, your honor', anywhere. Commissioner Lane. Did you intend to call them ? Mr. Severance. I intend to call Mr. Miller; he can explain that, of course. Q. Now, Mr. Newbegin, you stated some transaction about the diversion of a car or cars ; when did that take place ? A. Well, when I left here yesterday, when the court excused me, I was the happiest man in the room; I thought I had something easy, and I went over to the office and got two young men to help me, and we started in to find records. Well, like anything that you never expect to use again, when that thing transpired I never had any idea that I would be called to testify on it any more than a man expects his daily transactions of to-day to be put on the witness stand five or six years from now, and I could not find anything positive. The only thing I could find was this : that in 1902, the fall of 1902— I think it was September and October — we had two cars by Ogden via the Eio Grande into Portland by the Southern. Q. Sacramento? 675 A. Yes; Sacramento; and that leads me to believe — now, I would not want to swear positively, because if any of you gentlemen would go back five or six years it would be very hard to place those things — that the diversion of the cars happened in the winter of 1902-3; that is to say, that we ordered the goods in No- vember or December, and they were shipped after the first of 1903, and were diverted and came into Portland over the O. B. & N, when our intention was that they should come by the Southern Pacific. Q. The reason given you was that the Sacramento-Ogden gateway was closed, there were ho longer any rates. A. We had been shipping largely Southern Pacific, and, as I recall it now, after picking up a piece here and there yesterday, I got after the Southern Pacific for diverting cars before that, and they made an exception in my case, and I think that is the reason why these two or three cars came in in September ; and on the strength of these cars coming in in September we gave them some' freight to come Southern, and that came, I think, over the O. E. & N. in 1903. Q. Now you can ship by the D. & E. G. and the O. E. & N. or any other line — the Northern Pacific or Great Northern — down into the Willamette Valley, can't you? A. How is that now, Mr. Cotton? Q. I say you can ship from the east via the D. & E. G. at Hunting- ton or the Northern Pacific and Portland or the Great Northern and Portland down into the Willamette Valley to Southern Pacific points, can't you, to-day? NEWBEGIN. 383 A. Well, I will say that shipments as a rule via the Great North- ern and the Northern Pacific to the Willamette Valley are 676 not satisfactory. Q. What is the trouble? A. You will have to ask somebody that knows more about it than I. Q. Well, where does the trouble occur? A. Well, they usually try to transfer it to a boat or something of that kind. Anyhow, they happen to make it uncomfortable for you — so uncomfortable we always route ours Union Pacific so as to have no trouble. Q. Who makes it uncomfortable? A. I would not like to say, because I don't know. Q. Don't the Northern Pacific control their own traffic out of here ? If they don't want to send it by rail and prefer to send it by boat* that is their business, isn't it? A. Well, I don't know ; they might think they control it, but there might be conditions which they have no control over. Q. Well, if the route is open by rail, who transfers ? Do you sup- pose the Southern Pacific goes to an N. P. car and puts it on a rival boat line? A. That would be a matter, I should think, the railroad men could speak of better than I. Q. Well, now, could you imagine that Mr. Severance. Well, now, I don't suppose we want a mere specu- lation, your honor? Mr. Cotton. Well, he is speculating the other way, as if we were interfering with it. Commissioner Lane. I will let him answer. A. I will say this: In making our shipments in the Willamette Valley we find it to our advantage to ship by the Union Pacific in preference to the Northern, anyway. 677 Q. Why? A. Because with them we get better service. Q. Where does that bad service occur, from Portland into the Val- ley by way of boat, or from Portland into the Valley by way of rail ? A. Well, that is hard to say. We might say that the objection to transferring goods from rail to boat might have something to do with it; we might say, Mr. Cotton, that the objection in regard to claims might have something to do with it, — that is for damages. Q. Yes; claims against whom, the Southern Pacific? A. Either the Southern Pacific or the Great Northern. For in- stance if we have a claim against the U. P. or the O. R. & N. it is easier to get it fixed up than it is the Southern Pacific or the Great Northern. Q. I see. Recently you have been shipping over the Union Pa- cific? A. Yes ; largely with them. Q. Is that a matter of your preference or compulsion ? &84 WEWBEGIN. A. Well, I judge it is our preference ; we usually pay the freight. Q. You don't know of any limitation upon your ability to ship other than by the Sacramento route, do you? A. No. Q. And therefore your shipments this way are just a matter of your own convenience and because you think you get better service that way? A. Yes. Q. That is all, sir. Examined by Mr. Severance: Q. Mr. Newbegin, prior to the time that the Oregon Eailroad & Navigation and Southern Pacific interests were together, I be- 678 lieve you testified yesterday that the bulk of your business came via Sacramento? A. Well, I think so. Q. Yes. A. I think so. Q. And at about the time you speak of, 1902 or 1903 you were unable to ship at all to Sacramento, but the shipments had to come via the O. E. & N. ? A. Well, I think the railroads could fix the date very easily, be- cause they know just as well as I do — no, they know a great deal bet- ter than I do just when Mr. Harriman, or whoever had charge of that, ordered that gateway closed. Q. Well, but it is a fact you can't ship that way now ? A. It is a fact you cannot ship a car from the east; that is, unless it has been changed recently ; to my knowledge you can't ship a car via Ogden via Sacramento to Portland. Q. That is what I thought. Now you say — Mr. Cotton asked you if it was not a matter of preference with you to ship by the Union Pacific; that preference arises out of the fact that it is more com- fortable for you, and you get better service than if you attempt to ship over some other line; isn't that it? A. Just at this time the Union Pacific route is open and the Great Northern is closed, and we naturally ship the Union Pacific. Q. Certainly ; but so f aT as shipments up into the Willamette Val- ley are concerned, when you ship over some line other than the O. E. & N., do your cars go through ? A. Yes; certainly they go through. If we ship Northern Pacific or Great Northern they will go through as far as Albany and Salem, because there are boat connections; you can transfer to boat from here. For instance, if a car came over the Great Northern you can transfer it to the boat. Q. That is not what I am speaking of; do the cars them- 679 selves come through, or do they have to transfer to boat here at Portland? A. Now, Mr. Severance, I would not say but my understanding is most of the shipments are transferred to boats here. I don't know NEWBEQH*. ' $85 •positively, I don't want to swear to these things, because I am not posted. Q. That is, transferred to boats A. I will say this : we usually ship our cars now for the William- ette Valley by the Union Pacific, Oregon Short Line, and O. R. & N., care of the Southern Pacific, because we think we get better service. Q. That is, the cars go right through all rail ? A. Yes ; all rail. Q. There is no transfer to boat ? A. Not if they come Union Pacific and Oregon Short Line. Q. That is what I mean if they come Union Pacific; that is all, I guess. Examined by Mr. Cotton : Q. When they are transferred here to a boat, to whose boat are they transferred? A. Well, I guess that does not matter much, because it is just the same whether it is Mr. Graham's boats or yours ? Q. Well, going up into the country above Salem it is Mr. Graham's boat, isn't it? A. Well, I would not say, I don't know ; but it does not make any difference, the rates are the same, and as I understand it you have a working agreement; I don't know it, but that is what I have been told, it is generally reported. Q. But if your car goes to Albany it don't go by boat, does 680 it — the Northern Pacific car? A. Some times of the year it could go by boat. Q. I mean don't they actually; or have you made any shipments that way ? A. As I stated awhile ago we usually ship by your lines, Mr. Cot- ton, because we think Q. How long ago, Mr. Newbegin, did you make shipment by the Northern Pacific to Albany ? A. I could not say. Mr. Severance. Have you any recollection of how long ago it was? Witness. The last recollection I have very vividly was we had a claim against the Great Northern amounting to about $35, and we had so much trouble getting that claim — it was a just claim, and in getting it adjusted we always felt that you folks, I don't say that you did, I can't swear that you did, I can't say, but we always felt, that is, I felt as manager for our firm that you folks didn't get after the Great Northern as much as you should to pay their part, in order to let us feel that your line was the way to ship the freight, and we had such a time getting that claim we said in, the future we would ship the way that we would have no interference. Q. Do you know where the loss occurred ? 386 NEWBEGIN. A. You could not tell whether the freight was damaged between • here and Salem, or between Council Bluffs and Huntington, could you ? Q. No. It was not between Council Bluffs and Huntington when it came in on the Northern. A. You could not tell whether it was between Portland and Salem; it was damaged in the car; you could not tell where it was damaged. 681 Q. Possibly the railroads might have had some record as to rough handling, or something of that sort? A. That I don't know ; I don't know where it was damaged. Q. Do you remember the number of your claim ? A. No. Q. Have you any papers that would indicate this claim of $35 ? A. Excuse me; don't ask me to look up any more papers five or six years old. Q. How old is it ? Possibly we have a system and we could find it in our office. A. I think it would be five or six years, Mr. Cotton. Q. Because of that claim and the difficulty you had in getting it paid you stopped shipping by the Northern lines substantially? A. Well, I don't know ; I would not want to swear it was because of that claim alone, Mr. Cotton. Q. I mean because of that and other little difficulties. A. Yes, I mean to say this: We thought it was policy and we would get better service all around to ship that way. Q. Do you ship any stuff in and out of Portland over the Northern Pacific? A. In and out of Portland? Q. Yes. A. How do you mean ; do you mean on the northern lines ? Q. Yes. A. Why, I think so. Q. Well, I mean through stuff from the east; do you have through stuff from the east coming in here over the northern lines to Port- land? A. Sometimes. Q. Well, I mean now A. Yes, I think we have got three or four cars on the northern line now that we wish were on your line, too, just now, because we would get a little better service. 682 Q. The bulk of your business, however, comes in over the Union Pacific to Portland? A. Yes, sir. Mr. Severance. The blockade on the Northern Pacific is occa- sioned by the snow blockade now, isn't it? Witness. We don't have quite as much trouble on the Northern Pacific as there is on the Great Northern, but it is the snow blockade, I understand ; I don't know. HONEYMAN. 387 683 Mr. Severance. I now offer, pursuant to agreement, the tes- timony given by T. D. Honeyman, a witness before the Inter- state Commerce Commission, who testified on the 24th day of Janu- ary, 1907, at the City of Portland, Oregon. I understand it is agreed by all parties that this testimony may be written into the record and have the same force and effect as though Mr. Honeyman were on the stand giving the same testimony. • Mr. Evaets. Yes. T. D. HONEYMAN testified. Examined by Mr. Severance : Q. Where do you live? A. Portland. Q. And what is your business? A. Wholesale and retail hardware. Q. How long have you been in business, Mr. Honeyman ? A. About thirty years. Q. Twenty years here in Portland? A. Thirty years; yes, sir. Q. In the same line of business? A. Yes, sir. Q. From what points, Mr. Honeyman, do you import into Port- land your stock that you handle? A. Our goods originate in all the manufacturing centers in this country. Q. That means the Atlantic seaboard and the interior states? A. Yes, sir. Q. You remember of hearing several years ago of the acquisition of the stock of the Southern Pacific road by the Union Pacific, do you not, Mr. Honeyman? 684 A. I remember when the matter became public, yes. Q. Prior to that time will you state whether there was any competition here at Portland between the soliciting agents of the Oregon Railroad & Navigation Company and the Southern Pacific as well as the Northern Pacific on shipments from the east ? A. Yes, there was competition. Q. That was rather active at that time, Mr. Honeyman ? A. Yes. Q. And over what lines did you ship your goods coming into Port- land in those days? A. Over all the transcontinental lines, the Southern Pacific, O. R. & N., Northern, and the Great Northern. Q. By the Southern Pacific do you mean both the Sunset route around by boat and rail by the south, anl also the Sacramento route ? A. The Sunset route by boat and rail to the south ? Q. Yes. A. We shipped some goods via Sacramento. HONEYMAN. Q. Yes; and also shipped over the Union Pacific, the Short Line and theO. R. &N.« A. Yes. Q. And the Northern road? A. Yes, sir. Q. Now at the present time, Mr. Honeyman, are you solicited for shipments via the Sunset route? A. The details of solicitation, or the details of shipments I have turned over to employes. Q. To Mr. Hall? A. Yes. Q. And you don't meet the solicitors at all yourself now ? A. No, sir. Q. Now in those days was there also another method of shipment by way of Panama, thence by boats of the Oregon Railroad & Navi- gation Co.? A. Yes, that still exists. Q. That still exists, and you ship that way at times? 685 A. Yes, we move large quantities that way. Q. And were there soliciting agents working that line, too, who called on you? A. No. Q. That was routed east? A. It was a rate, or the route was of common knowledge on account of the rates being much less than the railroads, and it didn't need solicitation. Q. Yes. Now were there also lines of boats coming around Gape Horn up to San Francisco and thence transshipped here via the O. R. &N.? A. Yes. Q. And still are? A. Yes. Q. And did you ship by that route at times? A. Yes; great quantities. Examined by Mr. Cotton: Q. Mr. Honeyman, how many lines of transportation are there competing here at the present time for your business — that is, over which you can ship ? You have mentioned two water lines, have you not? A. We have the American Hawaiian line and the Panama line. Q. And the Northern Pacific? A. The Northern Pacific. Q. Great Northern? A. Great Northern. Q. Union Pacific? A. Union Pacific. Q. And Southern Pacific Sunset ? A. And I presume the Southern Pacific Sunset is still in existence. HONEYMAN. $89 Q. You don't know where you get your goods from, do you ? That is, do you ship from the Atlantic seaboard at all ? A. Sunset from the Atlantic seaboard? Q. Yes. A. We do not, Mr. Cotton. The rates — the Sunset being the same as the northern lines, it is not to our advantage to ship Sunset ; it is a long, circuitous route. 680 Q. Then the goods you ship from the Atlantic seaboard which might be in competition with the Sunset you usually bring in here by ocean, do you not ? A. Yes. Q. By the Panama line or the American Hawaiian line. A. Yes. Q. Are your shipments by the Panama line and the American Hawaiian line large or small? A. They are large. Q. You are quite heavy ocean shippers,, are you not? A. Yes. Q. Comparatively? A. Yes. Q. Have you any objection to telling, relatively, what proportion of your goods are received by ocean and what proportion by rail in this city? A. I would be unable to tell that. Q. From the Atlantic seaboard ? A. I would be unable to tell that without referring to our figures, but the tonnage is a considerable item. Every pound that we can move that way we do. Q. You move everything by sea you can from the Atlantic sea- board ? Therefore you are not interested in the Sunset route as such ? A. No. Q. Now from the railroad country in the interior — Missouri^ Chi- cago — do you ship from Missouri, or only from Chicago ? A. From Chicago and points east. Very little this side of Chicago. Q. Very little this side of Chicago ? A. Yes ; very little this side of Chicago. Q. Now, from that section of the country what competing lines are there? A. The solicitation competition from that territory has always been done by the Middle-West lines, with the Missouri 687 River lines. Q. About how many of the Missouri River lines are solicit- ing your business from Chicago points here at the present time? A. Well, from the number of solicitors that come into the store, I think that all the lines are represented, which would include the Burlington, the Great Northern, the Milwaukee Q. Eock Island? A. Rock Island. 390 HONEYMAN. Q. Northwestern? A. I think the Northwestern; yes. Q. Illinois Central? A. Illinois Central. Q. And all the so-called Iowa roads are working for your business at the present time? A. Yes. Q. And they are routed either over the — are the Rio Grande so- liciting business too ? A. I don't know, Mr. Cotton. Q. These Iowa roads route their business into this city either over the Northern Pacific, or the Great Northern, or the Union; isn't that right? A. Yes. Q. You ship all three ways ? A. Yes. Q. The Great Northern reaches this city by what route? A. Over the O. E. & N. Q. It comes in over the O. R. & N. from Spokane ? A. From Spokane; yes. Q. You do much shipping that way ? A. Yes, we have given them quite a little business. Q. And all of these roads have their solicitors, and they are all visiting you? A. Yes. Q. And as far as your business is concerned you have many ways of shipping besides the Harriman line, haven't you ? A. We have plenty ways to get goods in here. 688 Commissioner Lane. Do you route your own business, or do you leave that to the consignor? Witness. We route our own business with the exception of pos- sibly some stuff that is controlled by some of the larger corporations who insist on making their own deliveries, referring to the U. S. Steel Co., for instance. Commissioner Lane. You route your own business with the ex- ception of some of the large corporations, such as the U. S. Steel Co., who insist on the right to route their own business? Witness. Yes. Commissioner Lane. That is all, Mr. Honeyman. Examined by Mr. Severance: Q. Just one moment, Mr. Honeyman. In the old days, when you were shipping as you said somewhat by the Sunset, and by the Mr. Cotton. I don't understand that the witness said he ever shipped by the Sunset. Mr. Severance. He said he did. Witness. Yes, we shipped by the Sunset. Mr. Cotton. In the old days? HONEYMAN. 391 Witness. Yes. Mr. Severance. That is what he said; I remember that brought out the question whether the Sunset was still in existence. Witness. We ship by the Sunset when it is to our advantage; owing to conditions. Q. I was going to ask you if in the old days the Sunset route and Southern Pacific into Portland did not compete by way of reducing rates as against the Union Pacific and its connections? 689 A. The Sunset route used to make low rates into San Fran- cisco, forced by steamer conditions to that point, and we used to take advantage of them by adding the steamer or rail local from San Francisco here, which made a lower combination. Q. The soliciting agents of the Sunset and these' other lines in the old days, and of the Sacramento route, all of them used to compete at times by way of reducing rates, didn't they, so you could get a better route by one line than by the other. A. The published tariffs that were in effect to San Francisco made it to our advantage to ship Q. I understand that, but there were some times when shipments made to Portland — and I don't mean recently, but years ago — when these competitive differences existed much less than published rates, were they not? A. We never had any offers from the Southern Pacific officials better than Q. Better than the published rates ? A. Yes. Q. But that difference in the rates that you have spoken of existed and enabled you to A. Yes ; combination of rates. Q. Yes; bettered you to ship that way? A. Yes. Mr. Cotton. There was a time, Mr. Honeyman, in the old days to which Mr. Severance refers, practically every transcontinental ship- ment coming in here, except on a few of the lines, came in at a rate less than tariff, isn't that so? Witness. Yes. Mr. Cotton. And are you referring to those old days when you are talking to Mr. Severance? Witness. I was referring to those days ; yes. 690 Mr. Cotton. But you say you did not receive any offer of a cut rate in those old days from the Southern Pacific ? Witness. I never had an offer from the Southern Pacific. Q. But you did from the O. R. & N., as competing with the South- ern Pacific and the Sunset Route? A. Well Q. To the best of your recollection ? A. Would I be compelled to answer a matter ? 392 HONEYMAN HALL. Q. You have already answered everything moved in here on Ipw rates. I don't care whether you answer it, if you don't want to. Mr. Cotton. I would just as soon have him answer, so far as I am concerned. Commissioner Lane. There was a time when that was universal. Mr. Severance. Yes ; that was universal. Commissioner Lane. I don't understand the witness to testify, however, that it was because of competition in rebates between the two lines that he shipped over the Southern Pacific. Q. Let me ask the question in this way, Mr. Honeyman: When that combination existed which gave you a low rate over the South- ern Pacific and Sunset Koute, didn't the Oregon Railroad & Navi- gation Company at its eastern connection with the Union Pacific meet that by a cut in the published rate in order to get business? A. No; the rates were established from the Atlantic to the Cali- fornia points to meet water competition. Q. I understand that. A. And existed for a long time before the Northern lines followed suit. Ultimately they were forced to it and published the same rates. When they did that the business began to move north. Q. You stated in answer to Mr. Cotton a moment ago there was a time when nearly everything moved in there at less than a 691 published tariff. A. Yes. Q. Now, that was a time when these roads were all competing for business, wasn't it? A. But it did not necessarily apply between the O. R. & N. and the Sunset route. Q. Oh, I don't mean simply between them, but all the lines were competing for the business and were cutting the rates. A. Yes. Q. At that time, weren't they ? A. Yes. Q. Trying to get the business as against the Sunset, and as against the O. R. & N., and as against the Northern Pacific, and all of them, each one trying to get the business ? A. Yes ; cutting the rates below the tariff. Q. To get the business ? A. Yes ; that was all stopped by the interstate commerce law. Q. Yes ; that is all. 692 Mr. Severance. I now offer, pursuant to agreement, the testimony given by O. O. Hall, a witness before the Interstate Commerce Commission, who testified on the 24th day of January, 1907, at the city of Portland, Oregon. I understand it is agreed by all parties that this testimony may be written into the record and have the same force and effect as though Mr. Hall were on the stand giving the same testimony ? Mr. Evarts. Yes. HALL. 39$ O. O. HALL testified : Examined by Mr. Severance : Q. Mr. Hall, where do you live? A. Portland. Q. What is your business ? A. Employed with the Honeyman Hardware Co. Q. In what capacity do you work for them, sir ? A. I look after their freight shipments. Q. How long have you been with them ? A. A little over four years. Q. Before that time what was your business ? A. I was employed with the O. E. & N. Company. Q. Are you called on at your office, Mr. Hall, by gentlemen solicit- ing freight ? A. I am ; yes, sir. Q. Quite frequently? A. Not so much as I was in the past. I shut them off a little. Q. But they have been around? A. Oh, yes ; they come around. Q. Now, when the contracting freight agents of the Hatri- 693 man lines, so-called — as that expression was used by Mr. Cotton a few minutes ago, I will assume to use it — when those gentlemen come around to see you do they solicit freight for the Sunset route or the Sacramento route, or simply for the Harriman line? A. They solicit for the Harriman lines ; they don't mention which routing. Q. Now, you ship a good deal of your stuff over the O. R. & N., don't you ? A. Yes, sir. Q. And how does that come out from the east; take it from the Atlantic seaboard territory. A. Well, by the various lines ; that means all of them ; and by all of them, I mean the majority of them; there might be some that we don't use. Q. Well, Mr. Hall, take the shipments to — I suppose you make shipments by the lakes, don't you, having heavy stuff to ship ? A. Yes, sir. Q. To what ports on the lake does your stuff go ? A. You mean the western port ? Q: To what upper lake ports do you ship from the east ! A. West Superior, Duluth, Chicago, Milwaukee. Q. And from thence how does your stuff move? A. From .the Northern ports it would move Great Northern and Northern Pacific; from the Chicago and Milwaukee ports it would move by some of the Iowa lines. 394 HALL. Q. To Omaha? A. To Omaha. Q. Do you sometimes also move stuff Duluth to Omaha by the C. St. P. M. &0? A. Yes, frequently. Q. You are solicited to ship by the Northern Pacific, are you not; their solicitor calls on you, doesn't he? A. Yes, sir. Q. And the Great Northern ? A. Yes, sir. 694 Q. The Canadian Pacific ; or don't they come in ? A. No, sir. Examined by Mr. Cotton : Q. Mr. Hall, you are solicited now by the freight agents of all the Iowa roads, are you not ? A. With the possible exception of one or two, yes, sir. Q. And they ship over the Union Pacific, also over the Northern Pacific, don't they too ? A. If we route it that way, yes, sir. Q. And there has been no limitation on the manner in which you can route your freight ? A. None whatever. Q. What? A. None whatever on the freight that we control. Q. You route your freight in here anyway that you want to ? A. Yes, sir. Q. Now, when your stuff comes over the lakes and comes out here by way of the Great Northern, how does it reach Portland from Spokane ? A. By the O. E. & N. Q. On the O. R. & N. line ? If it comes out by one of the Iowa lines that delivers it at Omaha, it comes in here by way of Huntington? A. Yes. Q. The Northern Pacific is actively engaged in busipess here and brings some stuff for you, doesn't it ? A. Yes, sir. By Mr. Severance : Q. And there has been no limitation on any route you know of to your knowledge over which you can send your goods. A. None whatever, to my knowledge. Q. In the case of the Harriman lines you say they merely 695 solicit business for the Harriman line ; they route it all by way of the Oregon Railroad & Navigation in here, do they not? A. They don't route any of it ; I route the freight. Q. Well, you bring it in that way ; it does not come by Sacramento, does it? A. It does not come by Sacramento, no, sir. HALL — GILL. 395 Q. And you are not solicited by anybody representing the Harri- man lines to allow it to come that way, are you ? A. We are not requested to let it come that way. Q. No, sir; nor are you requested to let it come by the Sunset route, are you ? A. Yes, sir. Mr. Cotton. You can ship Sacramento or Sunset if you want to, can't you ? Witness. Now, I don't know whether the rates apply to Portland ; I think they do; I have a copy of the tariff, but I don't keep up on it. Q. You do your own routing, do you ? A. Yes, sir. 696 Mr. Severance. I now offer, pursuant to agreement, the testimony given by J. K. Gill, a witness before the Interstate Commerce Commission, who testified on the 24th day of. January, 1907, at the city of Portland, Oregon. I understand it is agreed by all parties that this testimony may be written into the record and have the same force and effect as though Mr. Gill were on the stand giving the same testimony. Mr. Evaets. Yes. J. K. GILL testified : Examined by Mr. Severance : Q. Where do you live, Mr. Gill? A. Portland. Q. How long have you lived here ? A. About 35 years. Q. What is your business ? A. Wholesale and retail stationery and books. Q. You have the principal store of that kind in Portland, do you not? A. Yes ; we carry a large line of stock. Q. Mr. Gill, you remember prior to the time in common talk that the Southern Pacific and Union Pacific united, or the stock of one was owned by the other, which way your goods were routed out here from the east? A. Why, they were routed a variety of ways. We have always shipped some goods by water and some by rail. Q. Some by water and some by rail ? A. Yes. Q. And over what lines of rail did you ship in those days? A. Generally by the Union Pacific and the O. E. & N., and some- times by the — well, we used all the lines, but mainly the O. E. & N. and Northern Pacific. And were you in those days solicited for shipments by the 697 Q. Southern Pacific and did you sometimes ship that way? 3&S GILL. A. Yes; we sometimes shipped that way, but not frequently. Q. No; not frequently. The most of your goods came over the other roads ? A. More direct; yes, sir. Q. But in those days you were called upon and solicited for ship- ments that way, were you not? A. Yes; we were occasionally. Q. And did your shipments that way come both by the Sunset route and by Sacramento in response to those solicitations ? A. Usually by the Sunset, by the American water lines. Q. The Morgan Line of boats and the rails? A. Yes ; we used that route mostly in those days, when we came by the Southern route. Q. Now, at the present time are you solicited for shipments via that route by any representative? A. Not to my knowledge. I don't meet as many of the solicitors; one of our men handles the freight; but I think we are seldom solicited to ship that way, if at all. Q. You don't know that you are solicited to ship that way at all, do you, Mr. Gill? A. I don't know; my impression is we are not. Q. Who is the gentleman in your store who is met by these solicitors ? A. Mr. Montgomery, manager of our wholesale department, would see more than I would, or the young man that handles the freight. Q. You are still solicited for shipments by the other lines at times? A. Why, by the lines of the middle west, the lines east of Omaha ; we have solicitations from them frequently. 698 Q. And for the Northern Pacific and Great Northern? A. Not so much from them ; occasionally from the Northern Pacific and the Great Northern; not often. Examined by Mr. Cotton : Q. You have always comparatively been a heavy ocean shipper, have you not, Mr. Gill? A. Yes; that is true. Q. By the Panama route until the American Hawaiian line re- cently giving better service. A. Yes; formerly by the sailing vessels and later by the Panama lines. Q. Are you still an ocean shipper? A. Yes. Q. Your Atlantic seaboard stuff comes in largely by ocean, doesn't it ! A. The heavy lines do; yes. Q. And the other lines come what way? A. Why, most of our stock originates in New England and New York points, and if it does not come by water it comes mainly by the Union Pacific and the O. R. & N. Q. And your manner of shipment has not changed now from what it was, but it has practically gone along in the same way, hasn't it? GILL. 397 A. Why, I won't say, except we might perhaps — I think we do ship a larger proportion of rail stock by the O. R. & N. than we for- merly did. Q. But that has not been a diversion from the Sunset route of the Southern Pacific particularly? A. No, not at all. Q. The Sunset route and Southern Pacific are still open to you if you wish to ship that way, are they not? A. Yes ; we could ship that way. 699 Q. You don't know of any limitation upon your routing or manner of shipment? A. No, I do not. Q. That is all, sir. By Mr. Severance : Q. Mr. Gill, I think you stated in answer to my question that you did at times ship by the Sunset in the old days and by Sacramento? A. I did, yes. Q. And you do not do so now ? A. No, I am not aware that we route any ; occasionally a shipment may go that way that is routed by the shipper Who pays the freight and has the right to route it. Q. But when you route it yourself? A. Oh, no. Q. But in the old days you did ? A Yes. Q. Owing to the solicitation of the agents ? A. That had something to do with it, no doubt, but usually the rate would affect it. Commissioner Lane. What other reason? Witness. There might be a personal reason that might lead us to give a man a carload or shipment over his route when there was no other particular reason for doing it. We might be interested in that man and say Yes, we will give you this shipment; that is the only . reason to which I referred. Commissioner Lane. Any difference in time? Witness. Yes ; it would take a little longer that way than by the all-rail routes. Commissioner Lane. So it would be an act of personal preference to give it to the Sunset route ? Witness. Yes; it would be some personal consideration or 700 something like that; friendship perhaps; that would be all there would be in it. Q. Well, sometimes I suppose owing to congested conditions by the all-rail routes, the time made would be fully as short or shorter by the Sunset; isn't that so? A. Well, that is true ; that might happen, but that is an incident we never can foresee. We never route anything in any special way to avoid congestion, because the congestion does not arise until after the 71535—09 26 398 GILI/ — MONTGOMERY. Q. After the stuff is started? A. Yes ; and we don't know of it until afterwards. Q. That is all, Mr. Gill. Mr. Cotton. You don't know how the distance compares from New Orleans to Portland as compared with the distance from New York to Portland, do you ; you don't happen to remember ? Witness. I don't know in miles ; I have been over it a great many times ; of course it is very much longer by the southern route. 70X Mr. Severance. I now offer, pursuant to agreement, the testimony given by W. A. Montgomery, a witness before the Interstate Commerce Commission, who testified on the 24th day of January, 1907, at the city of Portland, Oregon. I understand it is agreed by all parties that this testimony may be written into the record and have the same force and effect as though Mr. Montgomery were on the stand giving the same testimony. Mr. Evarts. Yes. W. A. MONTGOMERY testified : Examined by Mr. Severance : Q. Where do you live, Mr. Montgomery? A. In Portland. Q. What is your business ? A. I am in the stationery business. < Q. You are in the company with Mr. Gill, are you not? A. Yes, sir. Q. Mr. Gill just stated on the stand, Mr. Montgomery, that you meet the freight solicitors more than he does these days ? A. That has been true during the last four or five years; yes. Q. Now, Mr. Montgomery, are you at the present time solicited by agents of the Southern Pacific road for shipments by the Southern Pacific? A. No, sir. Q. You say you are not? A. No. Q. And your goods chiefly come out by the O. E. & N., do they not? A. Yes. Q. And the Union Pacific? A Yes, sir. 702 Q. You ship some over the Northern Pacific? A. Yes, some. Q. And some over the Great Northern ? A. We have occasionally, but not as much as the Northern Pacific Q. And also by water? A. Yes, largely by water. Q. Largely by water; and to what points — by what lines do you ship by water ? MONTGOMERY. 399 A. By the American Hawaiian nearly altogether. Q. That line comes from New York around the Horn or through the Straits to San Francisco, doesn't it? A. Yes. Q. Then how do you bring your stuff up from San Francisco ? A. Well, the rate we have on that is taken by the American Ha- waiian. It nearly all comes by the O. E. & N. or by the line of boats down there, but I don't know anything about it; it may come by several different lines so far as we know, because the rate is given us from New York. Q. The American Hawaiian gives you a net rate into Portland? A. Yes, they make us a rate. Q. And it comes up by some boat, does it ? A." Yes. Q. In no case by rail from San Francisco ? A. I don't recall any case when it has come by rail. Q. Do you buy any goods in California ? A. Very few. Q. What class of goods, if any, do you buy in California? A. It would be merely shorts of lines that we handle from the east; that would be all; in our lines of books and stationery. Q. And how do they come up from San Francisco ? A. Sometimes by boat and sometimes by rail. Q. Sometimes by the O. ,E. & N. boats and sometimes by rail. That is all. 703 Examined by Mr. Cotton : Q. Mr. Montgomery, the stuff that comes here from the east via the Great Northern reaches Portland over what route from Spo- kane ? A. Over the O. R. & N. Q. It comes in over the O. E. & N. Now you say you ship largely by water at the present time in the American Hawaiian line ? A. Yes. Q. That is at less rates than the rail rates, isn't it ? A. Yes, sir. Q. And that is the cause of your making your shipments that way ? A. Yes, sir. Q. Are their rates stable, or are they being cut from time to time in order to make cargoes? A. The rates have been stable so far as I know. Q. You make your engagements in advance, do you, now ? A. Yes. Q. And therefore you have to contract for space and agree to pay i current rate ? A. Yes. Q. Now when the stuff comes in by the American Hawaiian line at lesser rates than the rail rates, it reaches San Francisco and comes to Portland in what way? 400 MONTGOMERY. A. We have received it nearly altogether by boat. Q. And those boats are boats belonging to the O. R. & N. Co. ? A. Yes. Q. Yes. And therefore the O. R. & N. steamboat lines are the con- nection between Portland and San Francisco of the American Ha- waiian lines? A. Yes, sir. Q. Operating in opposition to all of the railroads in the 704 country ? A. Yes, sir. Q. And they are in direct and intense opposition, aren't they? A. Well, so far as we are concerned, it would be because of their rates. Q. They get your business most of the time ? A. Yes, sir ; heavy goods, I mean. Commissioner Lane. Is the rate you pay a through rate from the east to Portland, or is it the rate to San Francisco and you pay the local? Witness. No, it is a rate through to Portland. Commissioner Lane. Who pays the rate over the O. R. & N. steam- ship from San Francisco up? Witness. The American Hawaiian line. Commissioner Lane. Do you know what that rate is ? Witness. I do not, no. Q. Now, on your San Francisco stuff, some of it you say comes by rail and some by the O. R. & N. boats ? A. I should have said altogether by boat. I referred to, I think I referred to one or two instances where it came by rail in case of some long delay perhaps, where the agents of the American Hawaiian had brought it that way ; that had nothing to do with us, except I recall the case ; but it would not form the rule. Q. I mean your short orders. A. Oh, our short orders; I thought you meant the American Ha-, waiian shipments. Q. No, no. A. Short orders we can take the boat or rail, which ever we choose. 705 Q. You say you are not separately solicited, or no Southern Pacific solicitor solicits you; what do you mean by that? A. Not that I know of ; I don't know that any solicitor has come to us representing himself to be for the Southern Pacific. Q. Alone? A. Alone. Q. Are you solicited by many railroad men now for your business? A. I don't know that we are solicited by as many as formerly. We use the O. R. & N. in our business, because of the time concerned largely. Q. You would prefer the O. R. & N. line so far as the rail, rather than shipping around by the Sunset or Sacramento, wouldn't you? MONTGOMERY — EHBMAN. 401 A. Well, we would almost have to use it. Q. You would not route that way if they insisted on it, would you? A. The Southern Pacific? Q. Yes, Sacramento. A. No, we would not. Q. There is a substantial difference in time and always has been, hasn't there? A. Yes, I think on the average there has been. Q. Do you know of any limitation upon your routing or the manner in which you can route goods in this country by reason of any railroad restrictions of any kind ? A. I do not. Q. You are free to ship any way that you want to, aren't you ? A. At least during the time that I have been acquainted with the road. Q. That has been how many years? A. Oh, that has been practically since 1901 ; I knew about the route before, but Mr. Gill received more of that previous to that. Q. But ever since that time you have known of no limitation 706 of your routing goods in this city in any way whatsoever ? A. No. Q. That is all. Mr. Severance. Whatever might be your action in case you were solicited to ship by the Sacramento route, you don't get any such request now, do you ? Witness. No. Mr. Severance. That is all. 707 Mr. Severance. I now offer, pursuant to agreement, the testimony given by Edward Ehrman, a witness before the Interstate Commerce Commission, who testified on the 24th day of January, 1907, at the city of Portland, Oregon. I understand it is agreed by all parties that this testimony may be written into the record and have the same force and effect as though Mr. Ehrman were on the stand giving the same testimony. Mr. Evarts. Yes. EDWARD EHRMAN testified : Examined by Mr. Severance : Q. Where do you live, Mr. Ehrman ? A. Portland. Q. How long have you lived here? A. Twenty years. Q. What is your business? 402 BHBMAN. A. Wholesale grocer. Q. Have you been in that business all the time you have been living here ? A. Yes. Q. From what points do you procure the goods that you sell ? A. From what points? Q. Yes, from what points do you procure the goods you sell? From where do you ship them ? A. Where do we ship them? Q. From where do you ship goods to your store? A. From all points east. Q. Atlantic seaboard and the middle states. A. The Atlantic seaboard, west, and south. Q. And has that been the case during all the time you have been in the business ? A. Yes. Q. Prior to the time the Southern Pacific and the Union Pacific came under the same management, were you called on by solicitors of the Southern Pacific and of the O. R. & N. both ? 708 A. Yes, sir. Q. And did they ask for your business? A. Yes, sir. Q. One against the other ? A. Yes. Q. Is there now any solicitation for business by one of these lines against the other? A. No, sir. Q. What lines do you ship over, Mr. Ehrman ? A. We use all the lines, the Union, Southern, Great Northern, and Northern Pacific. Q. What goods do you get over the Southern Pacific now ? A. Well, mostly goods originating in the South. Q. Yes, originating in Texas? A. Texas and Louisiana. Q. Texas or Louisiana ? A. Yes. Q. And California ; do you get goods from California ? A. We do some. Q. Fruits, canned goods? A. Yes. Q. Do you bring up commodities from San Francisco to some extent ? A. To some extent, yes. Q. And how do they come, by boat or by rail ? A. Well, they come both. ways. Q. And has that always been the case, they always came both ways? A. Yes, sir. EHEMAN. 403 Q. Now the steamship service between here and San Francisco is called now the San Francisco & Portland, being the same ships as the O. E. & N, formerly called the O. R. & N. ? A. Yes, sir. Q. And do you ship over that line, or have you always shipped over that line more or less from San Francisco ? A. Yes, sir. Q. And have been solicited for business over that line? A. Yes. Q. Are there other ships running up here from San Fran- cisco ? 709 A. Yes, sir. Q. Any other regular line? A. Yes ; there is a regular line. Q. What is the name of it? A. I don't know the name of it; I don't know the name of the line. Q. Do you know the name of the manager? A. No, sir ; I do not. Q. Are there also independent boats, tramp boats ? A. Yes, sir. Q. And some business is done over them ? A. Yes, sir. Q. To what parts of the Northwest do you wholesale goods, Mr. Ehrman? A. Well, through the States of Oregon, Washington and Idaho. Q. Did you formerly ship goods from the east by the Sunset route ? A. To a limited extent only. Q. And that was largely by reason of active solicitation from their agents, wasn't it? A. Yes, sir. Q. Now, you do not ship that Way ? A. How? Q. Do you ship that way now, except goods coming up from Louisiana and Texas ? A. We would rather not ; we don't care to ship that way. Q. No. I suppose you would not be able to tell, Mr. Ehrman, without reference to books, the number of carloads of stuff you get in here every year, could you ? A. No, sir; I could not tell you that; our freight men might; I could not. Examined by Mr. Cotton : Q. You can ship by the Sunset if you want to? A. Yes, sir. Q. But you don't want to ? A. We prefer not to.; it takes longer. 710 Q. It takes longer? 404 EHEMAN M'OUSKEE. A. Yes, sir. Q. Now you spoke about a regular line of boats; did you mean a regular line in addition to the O. E. & N. steamers? A. I think there is a regular line; they come here regularly; I think they are a regular line. Q. Yes. Then in addition to that there are quite a number of tramp boats ? A. Yes, sir. Q. You know of no limitation upon your routing the freight in any way whatsoever in this country, do you ? A. No; the railroads usually respect our routing that we give them. Q. You route any way that you want to; isn't that right? A. Yes; as far as I know. Q. That is all. Mr. Severance. And you are sometimes, or used to be sometimes by personal solicitation induced to route a certain way ? Witness. Well, that is mostly different connecting lines, the Omaha and Iowa lines. Mr. Severance. That is, at present that is the case ? Witness. No ; it always was that way, I believe. Mr. Severance. Well, I asked you about the Sunset routing be- fore. That is all. Mr. Cotton. Now, Mr. Ehrman, when you shipped by the Sunset why did you ship that way in the good old days ? Do you want to say why? Witness. Well, I had no particular reason. Mr. Cotton. Was that because of the personal solicitation of the agent, or what was it? Witness. Well, perhaps it was. 711 Mr. Severance. I now offer, pursuant to agreement, the tes- timony given by Thomas McCusker, a witness before the Inter- state Commerce Commission, who testified on the 24th day of Jan- uary, 1907, at the City of Portland, Oregon. I understand it is agree by all parties that this testimony may be written into the record and have the same force and effect as though Mr. McCusker were on the stand giving the same testimony. Mr. Evarts. Yes. THOMAS McCUSKEE testified : Examined by Mr. Severance : Q. Where do you live? A~ Portland. Q. How long have you lived in Portland ? A. Eighteen years, a little over. Q. What is your business? m'ctjsker. 405 A. The real estate business now. Q. How long have you been in that business ? A. Since the 1st of December, one year ago. Q. Prior to that time what was your business? A. For about sixteen years with the Southern Pacific, and about a year ago, in October, I believe, I was with the Harriman lines as Assistant General Agent of the O. R. & N., the Union Pacific and Southern Pacific. Q. What was your position with the Southern Pacific road ? A. Contracting Freight Agent. Q. During all the time that you speak of ? A. No, a part of the time. First, I was handling claims and work in the office. 712 Q. How many years were you contracting freight agent prior to 1901? ' A. I think I was contracting freight agent for the Southern Pa- cific for thirteen or fourteen years. Q. Now, during that time, Mr. McCusker, what were your duties? A. As contract freight agent they were to solicit freight for the Southern Pacific both via the Sunset Gulf line, the Sunset all rail, and the Southern Pacific via Ogden and Sacramento. Q. Now during those days prior to 1901, did you in soliciting freight by way of Ogden work in connection with any line leaving east from Ogden other than the Union Pacific ? A. I worked with the Missouri Pacific, the Rock Island, Burling- ton and the Rio Grande. Q. What road was your strongest competitor for business into Port- land when you were representing the Southern Pacific alone ? A. We considered the Union Pacific and O. R. & N. the strongest competitors. Q. What classes of goods did you solicit shipments of ? A. All classes of merchandise. Q. And from what points? A. All points east ; the Atlantic seaboard, Chicago territory, Pitts- burg territory, Missouri River territory. Q. And in general who were the persons solicited for shipments; were they wholesale men here in Portland? A. Wholesale men and retail men. Q. And did you also solicit shipments out of Portland ? A. Yes, sir. Q. To points competitive with the Oregon Railroad & Navigation Co. and Union Pacific? A. Yes, sir. 713 Q. State what classes of commodities were shipped out of here in competition with the Southern line. A. Hops and prunes, hides, and I don't know about the lumber shipments ; that is, so far as the Union Pacific was concerned. Q. Speak a little louder, I can't hear you. 40'6 m'ctjsker. A. I say regarding the lumber I don't believe that we solicited the lumber in those days in competition ; in fact, I know we did not via Ogden ; those were the principal commodities. Q. Hops and prunes? A. Hops, prunes, potatoes and hides, and things of that kind. Q. Well, is the production of hops large or small in this com- munity ? A. Large. Q. And whereabouts? A. Principally in the Willamette Valley. I presume 90 per cent of the growth, that is the Oregon hops grown, Oregon and Washing- ton hops grown perhaps are within the Willamette Valley. Q. That is a very large traffic, isn't it? A. Yes, sir, quite a territory. Q. How is that? A. Quite a territory ; yes, quite large ; grown in Linn, Lane Coun- ties, Marion County, Washington County, Polk County, and some in Multnomah County. Q. How did the hops, the shipment of which you solicited, move to the east ? A. Largely Sunset; any Atlantic seaboard and European ship- ments went Sunset, Sunset Gulf. Q. Was the Oregon Railroad & Navigation Company and the Short Line and Union Pacific a competitor with you for that 714 business? A. Yes, sir. Q. And was it your strongest competitor? A. Yes, I considered it so. Q. How did they get their hops into Portland from the Willamette Valley? A. The boats of the O. R. & N. Company and of the Oregon City Transportation Company, and frequently via the Southern Pacific lines. Q. Who would bring them into Portland ? A. The shipments that originated in the valley were solicited not only by the O. R. & N., and Union Pacific, but the Northern, Great Northern, all lines. Hops were, an average year perhaps running,— oh, from seventy -five to a hundred thousand bales. Q. How many carloads would that make ? A. Well, it is a hard matter to tell in carloads; an average car would not exceed over 15,000, and that would be a pretty large car. Q. Fifteen thousand pounds? A. Yes. Q. How many pounds in a bale? A. From 180 to 200, 1 think, in that neighborhood. Q. Now the Oregon Railroad & Navigation Company had boats on the Willamette, didn't they? A. Yes, sir. Q. How far up did those boats run ? m'ctjskek. 407 A. When the water would permit, they would run to Corvallis. Q. How far is that? A. About ninety miles. Q. Ninety miles from Portland? A. Yes, sir. Q. By rail or by boat? A. By rail. I don't know what the river distance would be. Q. Well, you say they went up as far as Corvallis when the 715 water would permit. A. Yes. Q. At times they were unable to get there. A. Oh, yes, frequently unable to. Q. Then how far up would they go? A. Well, they would go to Salem, Dayton, Independence — they would go as far as they could. Q. Well, they always went as far as Salem, didn't they? A. Well, I could not say as to that; it is possible sometimes they would run only to Dayton. Q. Run what ? A. To Dayton. Q. Dayton? A. Yes, sir. Q. How far is Salem from here ? A. 52 miles by rail. Q. Now, is the Willamette Biver in the center of this hop district? A. Yes, I should say it was. Q. So the hop district is tributary to boats on the river ? A. Tributary to the boats ; yes, sir. Q. And it is also tributary to the rail line of the Southern Pacific? A. Yes, sir. Q. And the same hops could be shipped either way ? A. Yes ; that is, a good portion of it ; it would have to be hauled to the river the same as it would the cars. Q. How is that? A. It would have to be hauled to the river the same as it would to the car. Q. I understand; but the river line of steamers and the Southern Pacific Railroad Company tapped the same territory to a large extent? A. Yes, sir. Q. And that is the territory in which these hops are grown ? A. Yes. 716 Q. Now when hops moved over the O. R. & N. they were brought to Portland by the boats and then put into cars here, were they not ? A. Yes, by the boats, as I said, or rails; sometimes we brought them in, if they happened to be in our possession and routed that way. Q. And you had soliciting agents at work in the valley and you worked there yourself ? 408 m'cuskeb. A. No, I didn't work in the valley. The traveling freight agents and the local station agents solicit the valley business, but a great many of the shippers or dealers were located in Portland. Q. And those shipments were solicited by you ? A. A great many of them were solicited by me, but largely by our traveling representatives. Q. That is in the valley ? A. Yes. Q. But I mean as far as the shipments controlled by the men here in Portland ? A. Yes. Q. They were under your jurisdiction? A. Yes. Q. And the O. R. & N. had agents actively at work soliciting the same traffic? A. Yes, sir. Q. Now, Mr. McCusker, when those hops came into Portland by boat did they always go out all rail, or would they sometimes go by the O. R. & N. boats to San Francisco? A. I don't think they went by boat to San Francisco; I don't re- member of any going by boat. Q. They went east by the O. R. & N. and its eastern connections? A. The O. R. & N., the Northern or Southern. Q. Yes. Well now, did you also route hops east by Sacramento? A. Yes, sir. 717 Q. When you were soliciting for the Southern Pacific? A. Yes. Q. And from Ogden, how would they move on to the east? A. Via the Rio Grande in connection with the Burlington, Rock Island, or Missouri Pacific, or Union Pacific. Q. Yes, or the Union Pacific? A. Yes. Q. Did these lines east of Ogden, such as the Rio Grande, the Mis- souri Pacific and Rock Island have soliciting agents here ? A. Yes, sir. Q. And did you work with them in securing traffic — through traf- fic, I mean? A. I worked with them providing they were not soliciting against the Southern Pacific. Q. Well, that is what I mean, when they were soliciting business? A. I frequently had to compete with the Rio Grande or these other lines trying to solicit it by the O. R. & N. Q. When they were working with the O. R. & N. ? A. When they were working, of course when they were working for or willing to ship via Southern Pacific, why I worked with them. Q. Your sole duty was to get all the traffic you could over the rails of the Southern Pacific. A. That was the point exactly. Q. Either via Ogden or via the Sunset? M'CTJSKEK. 409 A. Yes, sir. Q. And without reference to what road it might move over after it reached Ogden? A. Yes. Q. Now in a general way in soliciting business for the Southern Pacific, was there any difference made in the effort by you to 718 handle orders by reason of the point of origin of the traffic; that is, would you endeavor to throw any class of business via the Sunset and another class via Ogden, or how ? A. The Atlantic seaboard business we tried to get via the Sunset Gulf. Q. So as to get the entire haul ? A. To get the long haul on it; that was the object, yes, sir. If we could not get it via Sunset we would take it via Ogden, of course. Q. How did Chicago business move in those days so far as the Southern Pacific's share of it is concerned ? A. Via Ogden. Q. Via Ogden, and Sacramento, or not? A. Yes. Commissioner Lane. When was that? Witness. That was prior to the consolidation of the Southern Pa- cific with the Union Pacific. ~ Commissioner Lane. For how long a period prior to that ? Witness. Ever since my connection with the company. Commissioner Lane. A large body of freight moved that way? Witness. Considerable freight moved that way, yes, sir. Commissioner Lane. The same rates you have via Ogden to Port- land that way ? Witness. Yes; the same rates were in effect via Ogden as via all the other lines. Q. And you would get that business at Ogden from what line ? A. We would get it from the Rio Grande or the Union Pacific. Q. And the Eio Grande when it came that way would get it at Denver, I suppose, or Colorado Springs, from the Rock Island or Burlington or the Missouri Pacific ? A. Yes, sir. Q. And sometimes you got it also from the Union Pacific, did you not? A. Yes, sir. 719 Q. Now, were you under any instructions in those days to favor one line or the other east of Ogden in working for business ? A. No, sir. Q. You did not care which way it moved so long as you got the haul from Ogden to Portland ? A. So long as I got the haul ; I worked with all lines so long as I got the haul. Q. And that was done with the consent of your superiors, wasn't it? A. Oh, yes. 410 m'ctjskee. Q. Who was, or who were, the parties representing the Oregon Eailroad & Navigation Company at Portland at that time, who occu- pied a position similar to yours with the Southern ? A. Mr. A. A. Morse. Q. Mr. A. A. Morse? A. Yes. Q. Where is Mr. Morse now ? A. I saw him in the building here a while ago in the room. Q. What is his business at present? A. Well, I don't know; he is special agent of some kind for the O. R. & N. He was General Agent, he was Contracting Freight Agent, and then became General Agent, and has been succeeded by Mr. McCorquodale, and he is Special Agent of some kind; I don't know what his duties are. Q. Of what company was Mr. Morse the General Agent? A. The O. R. & N. and the Union Pacific. Q. And Union Pacific? A. Yes. Q. He was not an officer, not an official of the Southern Pacific? A. He was, yes, about a year ago, I believe — two years ago, rather. My connection — when I went from the Southern Pacific to .the 720 : R. & N. he became General Agent of all the lines, and I became Assistant General Agent of all the lines. Q. That is, Mr. Morse was then your immediate superior ? A. Yes, sir. Q. When you were representing all the Harriman lines here ? A. Yes, sir. Q. Who is the other gentleman you spoke of, Mr. McCorquodale? A. Yes; he is the present General Agent of the O. R. & N. and Southern Pacific lines. Q. And was he here in the days when you were connected with the road? A. Yes ; he has had several positions ; he has been in the office, and, I believe, traveling freight agent. Q. For what road ? A. The O. R. & N., and I believe at one time he was connected with the Short Line when they were all separate, had separate solicitors. Q. For the Oregon Short Line? A. For the Oregon Short Line when they had separate solicitors. Q. That is, as distinguished from the O. R. & N. ? A. Yes ; and he was also at Spokane with this company, I believe. Q. Now, at the time you were the contracting freight agent of the Southern Pacific prior to the acquisition of the Southern Pacific stock by the Union Pacific, who was your immediate superior officer? A. Mr. E. P. Rogers, for a number of years, and Mr. C. H. Mark- ham and Mr. R. B. Miller and Mr. W. E. Coman. Q. Now, take them up backwards; who is Mr. Coman? M'CTJSKEB. • 411 A. Mr. Coman is now assistant general freight agent of the 721 Harriman lines in Oregon. Q. Both lines? A. Yes. Q. Southern and O. E. & N. ? A. Yes. Q. And who is Mr. Miller? A. Mr, Miller is general freight agent of these lines. Q. And what are the other gentlemen ? A. Mr. Markham was general freight and passenger agent of the Southern Pacific lines in Oregon. Q. Where is he now ? A. He is now in Beaumont, Texas, connected with the McGuffey Oil Company. Q. Oh, he has left the railroad service ? A. Yes. Q. After the two roads were working in harmony here, what posi- tion did Mr. Markham have here, if you remember ? A. After ? Q. After 1901, yes. A. He left Portland and went to San Francisco, I believe, as assist- ant traffic manager, and from there to Texas as general manager of one of the lines ; then he severed his connection with the company and is manager of the McGuffey Oil Company now. Q. Do you know a gentleman here named Qverbaugh? A. Yes, sir. Q. What is his first name ? A, Charles, I believe. Q. And what is his business ? A. I believe he is now superintendent or assistant superintendent of the water lines. I saw from the papers Q. Well, you would simply know from the paper ? A. Yes. Q. Was he working for the O. E. & N. or any of these companies when you were employed by them ? A. He was traveling freight agent of the O. E. & N. 722 Q. Now, Mr. McCusker, after the spring of 1901, when the two companies commenced operating together, when Mr. Stubbs took charge of the traffic of all of the lines in July, 1901, after that time was there any difference in your duties, or were you acting under any different instructions as to soliciting traffic ? A. Not immediately afterwards. Q, When were you, if at all ? A. I can't say just when, but some little time after that we were called in a meeting with Mr. Campbell. Q. Mr. Ben Campbell? A. Mr. Ben Campbell, who was traffic manager, I believe, at that time here, or general freight agent of the O. E. & N. We were told 412 m'ctjskeb. to solicit Atlantic seaboard business via Sunset; that is, certain busi- ness where the local to New York would not be too great; and other business west of there, while I was not told to actively solicit that, at the same time I was told to influence it via the Union Pacific. Q. Well, were the same instructions given to the Oregon Railroad & Navigation Company's represenatives ? A. Yes, sir. Q. At that time ? A. Yes, sir. Q. Was any reason given why it was desired that the business should be divided in this way, Mr. McCusker ? A. Well, the reason was that they wanted the most revenue for the least service, was about the way I figured it. They did not want to perform the long service for the same revenue that they would get for a short service, and they wanted the freight from the territory that would give them the best revenue for the system. Q. And by bringing it all the way Sunset from New York 723 all the revenue came to the Southern Pacific ? A. All except the local, which they would have to absorb from the point of origin. Q. And if it came by the Union Pacific of course they only got the routing west of Omaha. A. Yes. In the solicitation of that business, however, if the man did not want to ship Sunset, of course we did not try to force him to ship Sunset, to jeopardize his business; they would ship it the other way ; but we were told to influence it that way. Q. That is, if you were unable to procure that business to move Sunset, then you were instructed to obtain it over or via the Union Pacific? A. Yes, sir. Q. And you were also instructed at that time to work the Southern Pacific Ogden route with the Union Pacific ? A. No, sir. Q. You did not solicit business by Sacramento in other words, is that the case ? A. The Ogden gateway was closed to business for Portland via Sacramento. Q. Via Sacramento? A. Yes, sir. Commissioner Lane. When was that done? Witness. That, I could not say the date, but it was after the con- solidation of the lines; in fact I believe the divisions don't apply that way now today via Ogden and Sacramento to Portland on any business. Commissioner Lane. How did they close it ? Witness. I presume they closed it by withdrawing the rates, or the divisions rather. Commissioner Lane. Was that done? M'CTJSKEB. 413 Witness. Yes. We arbitrarily diverted freight by the 724 Union Pacific. Q. By the Union Pacific you mean A. By the Short Line. Q. By the Short Line? A. Yes. Commissioner Lane. You mean that all the previous existing rates by way of Ogden and Sacramento were withdrawn ? Witness. The division was changed in some way, I don't know just what; but we had instructions not to solicit any business via Ogden. Commissioner Lane. Who gave you those instructions? Witness. They came from Mr. Campbell, Traffic Manager. Q. That is, you say solicit by way of Ogden; you mean from Og- den here by way of Sacramento ? A. I mean when I say via Ogden, we figured that Southern Pacific via Sacramento. Q. Yes, that is what you mean ? A. But then via Ogden was the gateway; Sacramento was not the gateway, Ogden was the gateway. Q. Then the substance of it as I understand it, is that the instruc- tions given to all these gentlemen that were handling this matter of soliciting business were not to solicit business by way of Ogden, Sac- ramento to Portland, but Ogden direct by the Short Line ? A. Yes ; anything west of the Atlantic seaboard was to come Union Pacific, Short Line and O. R. & N. Q. And not by Sacramento ? A. No, sir. Q. Now prior to this amalgamation of interest, Mr. McCusker, was lumber shipped out of here into say the Eocky Mountain territory over the Southern Pacific ? A. I don't think so. Q. You don't think so ? A. No. 725 Q. You don't know of lumber moving over it? A. I don't think any lumber moved that way; not to my knowledge ; I can't recall if it did. Q. You don't remember that? A. No. Q. Mr. Campbell said the other day at Seattle that it did. A. Well, I would not say that it didn't ; it might have done so. Q. What about the movement of wool from this region to the Atlantic seaboard ; take the Willamette Valley wool. A. The Willamette Valley wool we tried to ship via Sunset, Sunset Gulf, solicit it that way, and tried to, — we competed for it strongly in that way. Q. I did not hear that. Mr. Stenographer, read that answer. (Answer read.) 71535—09 27 414 m'cuskee. A. You understand that wool was sometimes brought to Portland to be baled here. Consequently, when it' got here it might be a mat- ter of competition for all hands. Q. Well, did the wool in the old days prior to the amalgamation move to the east both Sunset and Ogden? A. I could not say; I presume that it did, yes; I could not say; that is, Valley wool, I mean. Q. Yes ; that is what I am talking about, the Valley wool. A. Yes. I could not say about Ogden, because the wool shipments were to Boston points and we tried naturally to get that via the long haul; I could not say whether it moved via Ogden or not; I presume that some of it did, but I would not swear to that. Q. Did any live stock move from this region to the east? 726 A. Via the Southern Pacific? Q. Yes. A. I don't think so. I don't think they would solicit that on ac- count of the mountain haul and the extra distance. Q. Well, you don't remember of soliciting live stock? A. No, I never solicited any live stock. Q. That is what I mean. A. No. Q. Now, Mr. McCusker, was there any competition here in those days for passenger business between the Southern Pacific and the Oregon Railroad & Navigation? A. Yes, sir. Q. How was it on passenger traffic between here and San Fran- cisco ? A. Now you understand that I was not in the passenger depart- ment. Q. Oh, you were not in the passenger department? A. No ; I only know that there was the competition. Q. Yes; but you were not soliciting passenger business? A. No, I was not in the passenger business. Q. Your work was confined to freight? A. Yes. Q. Now do you remember whether years ago there was any compe- tition between the Southern Pacific and the O. E. & N. and its eastern connections in rates? A. Yes, there was competition between all lines regarding rates. By Commissioner Lane: Q. Now was that condition different in 1900 from what it was in 1896 or 1897? A. Yes, sir. The rates in recent years have been the same rate via all lines ; the same tariff was applied. There was a time, but it is a number of years ago, that I hear them referring to what they call " old times," when there was a tariff to San Francisco proper. 727 Using the combination from San Francisco to Portland, it gave the Southern Pacific an advantage of ten cents a hundred. iVX UUOiYHjIt. 415 It was a published tariff, however, and we handled considerable business both carload and less than carload on that rate. Q. From here there. A. From the east here; and of course vice versa on New York business. This was called the Sunset tariff, or Southern Pacific tariff, to San Francisco. Then by agreement or pressure brought by the other roads the tariffs were amended to correspond on all lines so that at the time of the consolidation there was no difference in favor of the Southern Pacific as against the others, and for some time prior to that. Q. So that in 1901 when this consolidation took place the condi- tions as to the tariffs were just the same as they are to-day? A. So far as I know, yes. Q. How many years before 1901 had that condition existed? A. Well, a number of years ; I could not say how long, but it must have been at least five, possibly more; I don't believe that that old tariff had been in effect for ten years or possibly more than ten, when that was straightened out. I can't give you the dates; of course they have got the tariffs on file; that could be obtained. Q. Up to that time was there considerable i competition in rates between the Sunset Route and the Union Pacific for the Portland business ? A. Well, up to that time I presume there was more or less — I pre- sume you nave reference to cutting the rates? Q. Yes. 728 A. Possibly at that time there might not have been so much cutting of rates for the reason that ten cents differential took the business to the Southern Pacific. Then in order of course to meet that the other lines had to cut the rate or meet that competition prior to the readjustment of the tariff. Q. But they did not do that by filing a new tariff? A. Yes, they did subsequently, but not at that time. They filed supplemental, I believe, making a tariff change; there was some change anyhow; the tariff was readjusted. The cut rates, however, were in effect after the rates were all the same when they got actively engaged in competing for business. Q. Now did these cut rates exist up to 1901? A. No, I don't — well, possibly they did; yes. Yes, I guess they did. There was more or less cutting of rates, I could not say just how much. Q. That was as against the Union Pacific, the Southern Pacific would cut a rate? A. No; as against any line; the Northern Pacific or the Great Northern ; it was one road trying to get the business. It frequently happened that the line west, possibly the Union Pacific west, the Northern or the Great Northern did not cut the rate, but the trunk line or the Missouri River lines did cut the rate ; but the solicitor who got that would offer the inducement over his connections. 416 m'ouskeb. Q. Was the Union Pacific at that time in the same position that thfc Great Northern was and Northern Pacific as to the cutting of rates as against the Southern? A. They were all on a par at that time, yes, sir. Eates were the same by all lines. Q. That is all. 729 By Mr. Severance: Q. Is there a large amount of potatoes raised here in the Valley? A. Yes, sir. Q. And in the days that these lines were competitive was there active solicitation for the shipment of those potatoes ? A. The shipments of potatoes from the Valley went via Southern Pacific into Texas and Louisiana, and down in there, and I pre- sume, — I don't know, I could not say whether they were competing for that particular business, but I presume they were; that was as a rule solicited by the outside men. Q. By the men that were up in the Valley ? A. Yes. Q. Now what about fruits to the east, apples ? A. We handled no fruits via Southern Pacific. Fruits coining from Southern Oregon went over other lines for the reason that they had to use refrigerator cars, and I believe the Southern Pacific's charge, or the charge via on the refrigerator cars was fifty dollars that way; it was more anyhow; it was enough to turn the business this way; and the service being a couple of days longer the shipper naturally wanted to get quick action. Q. On fruit? A. Yes ; no fruit could be shipped of course via the Sunset. Q. I see. Did no fruit go via Southern Pacific and Sacramento? A. No, I don't think so, unless local. You mean east ? Q. Yes. A. No, I don't think so; that is what I meant; I don't think it went that way. Q. You said the Sunset. A. I say no fruit was taken that way. Q. I understand ; but did any go via Sacramento and Ogden? 730 A. It is possible some did ; I can't say. Q. You don't know about that ? A. No. Most of it went the other way though. Q. Now you stated what was said at a meeting by Mr. Campbell about endeavoring to throw the seaboard business obtained to the Sunset route, if that could be done; what further instructions, if any, did you have as to the effort you should make with reference to that business, if the shipper objected to sending it Sunset? A. Our instructions were then to endeavor to get it for the Union Pacific. Q. Well, did you after that time act under those instructions? A. We always acted on those instructions ; yes, sir. M 'CUSKEB. 41* Q. What difference or change was there in your duties after you became assistant general agent of all lines here ? A. Then I solicited for all lines, still following those instructions of getting it Sunset or via the Union Pacific. Q. But you did not solicit for one line except to get the best haul ; you did not solicit one line against the other, but you tried to get it for your lines ? A. Yes, sir ; that is all. Q. That is all, as against the other lines. A. Against the Northern lines ; in fact, the Missouri lines, or any line; we competed all the way to Omaha, of course. Q. So that instead of the Southern Pacific standing alone here for business from the east and working indiscriminately with any other line with which it might connect and from which it could get busi- ness, it worked solely with the Union Pacific. A. Yes, sir. Q. And they did not attempt to take business from each 731 other, as you had formerly? A. No, sir. Q. Did you have anything to do with soliciting Oriental business? A. No, sir. Q. Now, what class of business was there moving between here and San Francisco for which you solicited ? A. I really could not say now the business. There was occasional hides; of course the lumber went down there, but that was not against the 0. R. & N; schooners would take the lumber cheaper. These box shooks was one commodity. Q. Box shooks; now just state what box shooks are. A. Well, they are knocked down boxes; the boards to make a box before they are nailed up, in other words. Q. Well, I knew what they were but I could not pronounce it; I wanted to have you explain it. Now, these were shipped from here to San Francisco? A. Yes, and different points in California. Q. Over your line of road ? A. Yes, sir. Q. Did they also move to San Francisco over the boats of the O. R. & N? A. Yes. Q. Or by the boats of the O. R. & N? A. Yes. Q. Where were these articles made ? A. Right across the river, some of them; the Standard Box Com- pany, and some of them right up here at Jefferson street. Q. And was that business actively solicited by the O. R. & N. boats and yourself as representing the Southern Pacific? A. I know it was solicited by me, and I presume it was by them. Q. Because they got a part of it? 418 M'CUSB.EE. 732 A. They got some of it. I know I was trying to get it away from them on certain shipments I remember of. Q. Now you spoke of hides ; where did the hides come from ? A. Portland. Q. That is from the packing houses here at Portland? A. From the dealers here. They came in carloads and less than carloads from the country into Portland, and they were baled and shipped both to San Francisco and to the east from Portland. Q. How did those hides move from here to San Francisco? A. They moved by rail and water. Q. And were you soliciting that business as against the O. R. & N. boats? A. Yes, sir. Q. Now on shipments of hides ; I have asked you about shipments of hides to San Francisco ; now what about shipments of hides to the east; how did they move? A. They moved via the rail lines and they moved via the Sunset. Q. Did they move via the O. R. & N. and the Union Pacific ? A. I presume so; they got their share of them; possibly more so than we did; we didn't get so much of them; we solicited them, however. Q. Solicited them from those people to whom they were brought in Portland, and who baled them ? A. Yes, sir. Q. And you got some, did you, by that solicitation? A. Yes, sir. Q. Now after the common management here how were they so- licited, if you know ? A. They were solicited via the Union Pacific, and I am not 733 positive whether we solicited that via Sunset or not; I would not say as to that, but I presume that we did. Q. Well, you solicited it without caring which way it went as long as you got it? A. No ; we usually on Atlantic seaboard business we aimed to get the long haul. Q. To get it for the Sunset, if you could ? A. Yes. Q. And did some of the hides go to the Atlantic seaboard points? A. Yes, sir. Q. Are there paper mills up here in the Valley ? A. Yes, sir. Q. Where does the paper go ? A Well. I think that that is local consumption; I never solic- ited that, because it is out at Oregon City and up the river. Q. You had nothing to do with the paper ? A. No, I had nothing to do with that. Mr. Cotton. You say you had nothing to do with paper? Witness. No, sir. Mr. Cotton. Didn't solicit it? m'cuskek. 419 Witness. No, sir. Q. He said it was out of town. The reason was because it was out of the city ? A. It was out of the city and the traveling freight agent, or some- times the arrangement was made in the office. Q. Well, you don't mean by that then that your road did not solicit it, but that you personally did not? A. No, no ; I mean that I personally didn't solicit it. Q. One thing I forgot to ask you; which way did Cincinnati common points business move to Portland ? A. When it was Southern Pacific before the consolidation 734 it moved by the Queen & Crescent, or the L. & N. to New Orleans, then to Portland via the Sunset all rail; that was our solicitation; some of it moved, however, via Ogden when we could not get it the other way. Q. If you could not what? A. When we could not get it via the long haul we would take the short haul, take it at Ogden and Sacramento. Q. And did considerable business come out that way for those two roads ? A. Yes, sir. Q. What class of business ? A. Well, there was whiskey and merchandise of different classes, canned goods, I think vehicles sometimes in that neighborhood; I can't say; it was just the general class of merchandise that would come from that particular territory. Q. Well, was there any difference, so far as came under your ob- servation, in the movement of that class of commodities from that territory after the amalgamation of the roads? A. Well, the instructions were to get it via Union Pacific and Omaha. Q. And did it largely move that way rather than the Southern route ? A. I think that any business that we had afterwards moved via that line. Q. How is that? A. Any business that we had to my knowledge moved via the Union Pacific. Q. I think that is all I have to ask Mr. McCusker. Commissioner Lane. You desire to cross-examine, I suppose? Mr. Cotton. Yes. 735 THOMAS McCUSKEE (recalled) testified: Cross-examination by Mr. Cotton : Q. Mr. McCusker, you stated that no livestock, or practically none moved via the Sacramento, because of the mountain haul and the extra distance. 420 M'CXJSKEB — LOCHMAN. A. Yes. Q. Kindly explain about that extra distance and the mountain haul. A. I believe there is a law in Oregon regarding the unloading at certain points within certain time, of livestock, and to my knowledge I know I have not solicited any of the freight. I do not believe any one has ; it is possible, but I do not know it. I know I was told not to solicit any livestock. Q. That was long prior to 1901 ? A. Yes. Q. Now, what about the extra distance ; how much farther is it to Ogden via Sacramento Eoute than by the O. E. & N. and the Oregon Short Line, do you know ? A. No, I do not. The mountain haul takes it a little bit longer; we figure it a couple of days against us on Chicago; at least two days. Q. It is practically the increased distance from here to Sacramento, is it not?. A. It is possible that it is; that is, the extra mountain haul, you cannot make the time on the mountains that you can by the other route. Q. How far is it from here to Sacramento ? A. It is about 680 miles, I should say, or in that neighborhood. Q. And when you get through taking freight by Sacramento, you would get it to Ogden ? A. How is that? 736 Q. After you hauled freight down to Sacramento and then hauled it East you would get it at Ogden ? A. Yes. Q. And that is as far as the Southern Pacific got it ? A. Yes, sir. Q. Just exactly as when the Union Pacific gets it today, taking it down on the O. E. & N. and the Short Line? A. I think they get it by Granger, don't they ? Q. Don't they get it either way ? A. Possibly, yes, but I think they take it by Granger. 737 Mr. Severance. I now offer, pursuant to agreement, the testimony given by Louis Lochman, a witness before the Inter- state Commerce Commission, who testified on the 24th day of Janu- ary, 1907, at the City of Portland, Oregon. I understand it is agreed by all parties that this testimony may be written into the record and have the same force and effect as though Mr. Lochman were on the stand giving the same testimony. Mr. Evaets. Yes. LOUIS LOCHMAN testified : Examined by Mr. Severance : Q. Where do you live ? A. Salem. LOCHMAN. 421 Q. What is your business? A. Hop business. Q. How long have you been in the hop business in Salem ? A. Fifteen years. Q. Prior to 1901 what was the fact up there as to whether you were frequently solicited for shipments of hops by representatives of different railroads? A. Yes, sir; we were solicited by the representatives of all the different railroads; the transcontinental lines. Q. Were you solicited separately by the Southern Pacific and the Oregon Railroad and Navigation Company and its Eastern connec- tions? A. We were. Q. Are you now ? A. No, sir. Q. Mr. Lochman, how did you ship your hops to the East in those days, over what lines ? A. The Southern Pacific, Union Pacific and D. & E. G. 738 Q. Did they move by Sacramento to Ogden and then over the Union Pacific or D. & E. G. ? A. No. Q. How did they move ? A. They moved over the O. E. & N. and Short Line and then by the Denver & Eio Grande. Q. How did they come to Portland from Salem ? A. By the Southern Pacific. Q. By rail? A. By rail and boat. Q. That is, the O. E. & N. boats? A. Yes, sir. Q. How long ago did those boats quit running? A. Two or three years ago I think, probably longer. Q. Do you ship hops by the O. E. & N. now starting them by boat from Salem? A. No, sir. Q. They go by rail now, do they? A. We cannot ship them by boat from Salem over the O. E. & N. now ; the boats are not running. Q. But I didn't know whether you could ship over the other line of boats that has been spoken of. A. Yes, we can. Q. Do you? A. We do. Q. To what points do you consign hops that you ship down as far as Portland over that steamboat line ? A. New York and London. Q. How do they move to the East? 422 LOCHMAN. A. The hops that have been shipped by boat have nearly all gone by the Rio Grande lines and then the connecting lines from Denver east. Q. Have you made any effort to route cars directly from Salem by the Eio Grande ? A. Yes, sir. Q. Will you state just what success you had in doing so? 739 A. We have had no success. Q. What has been the trouble ? A. Well, the agent at Salem notified all parties in order to ship by Eio Grande lines it would be necessary to secure Eio Grande cars, and in their absence we had to go either Union Pacific or Southern Pacific. Q. Is any distinction made as to the kind of car you are compelled to use if you ship over Union Pacific or Southern Pacific? A. The Southern Pacific Sunset cars went Sunset; Union Pacific went over Union Pacific. Q. But I am speaking at the present time. At the present time you can ship either on the Southern Pacific or Union Pacific in any car that happens to be in the yards, can't you ? A. Yes. Q. But if you want to consign anything over the Eio Grande you must procure a Eio Grande car ? A. Yes, sir. Q. Have you by reason of that fact been able to make shipments over the Eio Grande ? A. We have not. Q. Did you formerly make large or small shipments that way? A. Large and small. Q. And you have been in the business for fifteen years ? A. Yes. Q. What soliciting agents are now in the field up there requesting consignments of hops ? A. You mean of the transcontinental lines ? Q. Yes. A. The Eio Grande man is about the only one, except the local agent at Salem for the Southern Pacific and Union Pacific. Q. The local agent at Salem represents both the Union and 740 Southern? A. Yes, sir. Q. How do your hops mostly move now ? A. By rail. Q. You don't move any hops to the east by Sunset ? A. No; they don't care to have the business apparently. Q. Have you since 1901 shipped hops that way ? A. Very largely, yes. Q. Up to what time? A. Up to a year ago. Q. Who routed them? LOCHMAN. 423 A. We did. Q. How did you happen to commence shipping by rail ; who sug- gested it to you, if. anybody I A. Well, there was no special reason. If the business was going to the Atlantic seaboard naturally the Southern Pacific wanted the long haul, and preferred /to have them go Sunset. If we declined to ship them Sunset they were willing to take them for Omaha. Q. You say at the present time it is going all rail ? A. All rail. Q. By all rail do you mean that it goes by Omaha ? A. I mean via Omaha, or else Rio Grande line, what hops might be shipped by boat. Q. But you don't ship by Sunset Route now ? A. No. Q. Who made that change in routing; was it the railroad officials that changed it from Sunset? You said they preferred formerly to ship that way. Q. The agent at Salem notified us that they preferred to have the business go by Union Pacific. Q. Notified you to that effect? A. Yes. Q. How long ago ? A. Four or five months ago; at the beginning of the hop sea- son. 741 Q. And it has gone that way, has it ? A. Yes, sir. Q. Now in the old days of competition up there in the shipment of hops, what extra facilities, if any, were rendered you or what assistance was rendered you by the agents of the respective lines competing for the business ? A. Well, up to a year ago we could go to work and ship hops in transit to any point north of Eugene; for instance, to Salem and consolidate them there, or we could ship them to Portland without paying a local freight, and consolidate them there and get free storage. Q. Where? A. At any point for sixty days, on the line of the Southern Pacific. Q. How is it now ? A. That is all done away with now. We have to pay local freight and storage from the time the hops are put in the warehouse. The Southern Pacific say now they are acting purely as warehousemen. Q. They used to be a transportation company, didn't they ? A. Yes, sir. Q. Now, Mr. Lochman, what facilities, if any, were formerly fur- nished you when you shipped Sunset ? Were there any special facili- ties furnished you there ? A. We got thirty to sixty days free storage on the Southern Pacific dock at New York. Q. Do you still enjoy that privilege? 424 LOCHMAN. A. No, sir. Q. In fact, your stuff don't go that way now ? A. Very little of it. Q. Was there any help furnished you in marking your hops and assisting you in getting out your shipments when those men 742 were all competing with one another? A. Yes, sir, there was. It was not of any consequence, but if we wanted to make a shipment, and a competing line wanted the shipment, the agent would say : " Well, I will come down to the warehouse and help you mark the bales and weigh them up," and the shipper would invariably give that particular line the business in consideration of that assistance. Q. That was the sort of competition that was in vogue there years ago? A. Yes, sir. Q. And that has disappeared as between the Southern Pacific and theO. E. &N? A. Yes, sir. Q. How far from here is Dayton ? A. Twenty or twenty-five miles I guess. Q. When did the competition for business between the Southern Pacific and the Oregon Eailway and Navigation Company stop; it was about 1901 or later? A. About that time. Q. Dayton is this side of Salem ? A. Yes, sir. Q. The O. K. & N. boats run as far as Dayton, don't they ? A. They do. Q. And the other line runs further up ? A. As far as Corvallis. Q. How far is Corvallis from here? A. About 100 miles up the river. Q. Are these boats that are run by the other line pretty fair boats? A. Very good. Q. It appeared at Seattle the other day that the O. E. & N. boat above Salem, I believe, was a skimming dish. Those boats 743 running up there now are not skimming dishes, are they ; they are pretty good boats, are they not, that run up to Corvallis? A. Yes, they take six, seven or eight or ten carloads of hops at a shipment. Q. There is some stage of water in the Willamette Eiver habit* ually? A. Yes, sir. Q. Do you know of any reason why there is not water enough to run the O. E. & N. boats up there as well as the boats of the other line? A. No reason that I know of. Q. That is all. LOCHMAK. 425 Examined by Mr. Cotton : Q. How long does this boat run up to Corvallis each year? A. Until the water becomes so low. Q. How long does the water stay high enough so it can rim? A. Probably until June or July ; perhaps a little bit later. Q. What period during the year? A. That they run up there? Q. Yes. A. From about December, depending a good deal on the volume of water in the river. Q. Do thev run a boat daily? A. To Corvallis? Q. Yes. A. No, sir, I think every other day, if I remember right. Q. They give just as good service as the O. E. & N. ever gave, or a little better? A. I wouldn't say so. Q. Just as good? A. Just as good. Q. But they were running there when the O. E. & N. boats were running for a while, were they not? A. Yes, sir. Q. Do you know what became of the O. E. & N. boats? 744 A. I do not. Q. Were they, not worn out and lost? A. I don't know. Q. Do you know whether they are on the river now or not ? A. I think one is. Q. It took more than one boat to keep up the route, didn't it? A. Yes. Q. Do you know what happened to the other boat? A. I believe she sank. Q. Did they wreck boats very frequently on the Willamette Eiver ? A. Well, they settle on a sand-bar or strike a snag and are tempo- rarily laid off until they pull them off with a line. Q. Deep water navigation up there consists of a boat drawing about six or eight inches of water, doesn't it, up to Corvallis? A. That is my understanding; yes. Q. And it is rather of a skimming dish proposition, isn't it, most of the time? A. No expert on the subject. Mr. Severance. Do you want the impression to go out, Mr. Cotton, that the O. E. & N. is too poor to buy a new boat ? Mr. Cotton. I think that may be. Q. Now, Mr. Lochman, in regard to this service; the O. E. & N. is running one boat to-day to Independence, isn't it ? , A. Not to my knowledge. Q. Eunning up to Dayton? 426 LOCHMAN. A. Yes, sir. Q. The only boat they have left that is useful for that Willamette River business — it still is on the run, isn't it? A. I suppose, to Dayton. Q. Is the Northern Pacific and the Great Northern and the 745 Denver and Rio Grande man up there now helping to weigh hops ? A. No, sir. Q. He has stopped weighing, too, hasn't he ? A. The Great Northern and the Northern Pacific haven't been up there soliciting business for the past two years to my knowledge. Q. The Northern Pacific and the Great Northern have not been up there soliciting business for two years? A. Perhaps more. Q. Does the D. & R. G. man go up and help you weigh hops now ? A. No, sir ; he comes up there frequently and solicits business. Q. The O. R. & N. and the Southern Pacific continued the practice of helping you weigh up hops and gave you free storage and ware- house until about six months ago, didn't they ? A. They gave us free storage and free in transit movement. Q. Until about the 20th of August of this year ? A. Yes, sir. Q. When the new interstate-commerce act went into effect? A. I don't know ; I think that was the time. Q. And the O. R. & N. and the Southern Pacific therefore con- tinued these practices up until the 28th of August, which the North- ern Pacific and the Great Northern discontinued two years ago. Is that right? A. I didn't catch the question. Q. Up until the 28th of August this free storage continued, didn't it? A. It did. Q. And stopped only then ? A. It did. Q. That was the 28th of August, 1906? A. Yes, sir. 746 Q. The Northern Pacific and the Great Northern have not solicited your business for about how long? A. Oh, quite a number of years ; three or four or five years, maybe. Q. And the D. & R. G. man — when did he stop ? A. He continues to solicit it by river shipments. Q. Then these arrangements that you have referred to were not discontinued by virtue of anything which took place in 1901 ? A. Which arrangements? Q. This free weighing and all that sort of stuff ? A. I don't quite understand you, Mr. Cotton. Q. I say this free weighing and free storage A. I don't know what you mean by free weighing. We did our own weighing, but frequently a competing line would assist us in LOCHMAN. 427 weighing up a lot of hops, but very rarely; it was not common prac- tice, but occasionally happened. Q. But the free warehouse and consolidation of shipments at given points continued up until this year? A. Yes, sir. Q. And did not cease in 1901 ? A. No, sir. Q. That is all. By Mr. Severance : Q. Mr. Lochman, you said that the D. & R. G. shipments came down to Portland by boat? A. Yes, sir. Q. Why is that necessary ? A. Because we could not ship it in Southern Pacific cars over the D. & E. G. ; couldn't get the cars. Q. When you got to Portland where there was competi- tion 747 Mr. Cotton. Mr. Severance, there was another question I would like to ask Mr. Lochman. Mr. Sevekence. Very well; proceed now. Mr. Cotton. You have shipped this year more or less by Northern Pacific and Great Northern ? Witness. No, sir. Mr. Cotton. None at all? Witness. No, sir. Pardon me, Mr. Cotton. We did make ship- ments of probably four or five cars by boat to the Northern Pacific, but none by the Great Northern. Mr. Cotton. I see. That is all. Q. Mr. Lochman, I was asking you at the time Mr. Cotton asked this last question about those shipments over the D. & R. G. You say in order to make a shipment over that route you have been com- pelled to ship into Portland by boat? A. Yes, sir. Q. When you get into Portland where there is competition for the east between the Harriman lines and the Northern Pacific, you are able to get a car to go over the D. & R. G ? A. When we ship our hops from points on the river, when we ship them right through to destination, and we control the routing then. In other words, we ship over the O. C. T. Co. boats right through to London, New York, Chicago or any other point, and send that receipt to the O. R. & N. Company, and it issues a bill of lading on the O. C. T. Company's receipt. Q. And that is because you get the stuff into Portland without putting it into the car ? A. Yes. Q. When you get here you can get a car? A. Yes, sir, I presume so. 748 Q. Well, that is what happens anyhow ? 428 LOCHMAN — LINN. A. I presume they put them in a D. & E. G. car, but I don't know. Mr. Cotton. Who did? Witness. I say I should assume they used a D. & R. G. car if it is routed that way. They may have been put in a Short Line car and transported to Ogden and there transferred, and we ship them from the point of origin to destination and take no further interest in it. Q. They went over the D. & E. G. line ultimately?, A. I don't know. Q. You don't know about that? A. No, sir. They were routed that way. Q. You presume they went that way ? A. Yes, sir. Q. Whose bill of lading did they give you ? A. The O. E. & N. Company. Q. And the cars were loaded here at Portland and went out over the O. E. & N. to Ogden? A. I presume so, we never made any personal examination or super- vision over that. Q. You have no difficulty in making shipments of that kind when you send them down by boat, do you? A. None whatever. Q. There was no refusal to send the business over the D. & R. G. road by the O. E. & N, was there? A. No, sir; we got our receipt at Salem billed to destination, and got the bill of lading. Q. You got your cars at Portland? A. I don't know ; I presume so. Q. But you could not do that at Salem? A. No, sir. 749 Mr. Severance. I now offer, pursuant to agreement, the testimony given by Fletcher Linn, a witness before the Inter- state Commerce Commission, who testified on the 25th day of Janu- ary, 1907, at the City of Portland, Oregon. I understand it is agreed by all parties that this testimony may be written into the record and have the same force and effect as though Mr. Linn were on the stand giving the same testimony. Mr. Evakts. Yes. FLETCHEE LINN testified : Examined by Mr. Severance : Q. Mr. Linn, where do you live ? A. In Portland. Q. What is your business ? A. I am manager of the Oregon Furniture Mfg. Co. Q. You manufacture furniture here in Portland? LINN. 429 A. Yes, sir. Q. And ship it out from here? A. Yes, sir. Q. Do you bring commodities in from the east ? A. Not very much now, no, sir. Q. Principally outgoing shipments? A. Nearly all outgoing. Q. Previous to 1901 how did you ship from here to San Francisco, if you ship that way at all? A. Previous to 1901? Q. Yes. A. Well, we shipped by rail or boat. Q. At that time was there competition as between the boat and the rail lines ; were they each soliciting business from here to San Fran- cisco ; I mean did they have solicitors out ? 750 A. Well, I don't recall whether they did at that time or not. Q. Well, several years ago; I won't put it in 1901. A. We never had much soliciting done for freight in California at all, and I could not state. Q. Isn't it a fact, sir, that these two lines were trying to get your business, the boat line and the rail line, from here to Sail Franeisco and California points? A. Not that I recall, no, sir. Q. Did you ship both ways ? A. We shipped principally by rail, not very much by boat. Q. But some by boat. A. Very little ; the rates were about the same and we shipped afto- gether by rail ; it was more convenient for us. Q. The rates were about the same, were they ? A. Yes, sir. Q. Now has there been any change made recently in freight rates from Portland to San Francisco by boat? A. Yes, there is on furniture. Q. That is what I mean, on your goods. What change was th«re? A. Well, the rate has been made so large by boat we can't ship by boat any longer. Q. Was there some change made in the method of computing the weight ? A. Yes ; it was formerly taken by weight and now by measurement. Q. Now by measurement ? A. Yes. Q. And that increases the freight rates how much by boat? A. Well, it is about four times the rate by rail. Q. About four times the rate by rail on furniture? 751 A. Yes. Q. So that you have to move everything now A. By rail. Q. By rail. That is all. 71535—09 28 430 LINN. Examined by Mr. Cotton : Q. No change in the rail rates? A. I think there has been a slight increase in the last three years. Q. Well, but I mean within the last — when the steamship rates were made? A. No, I think not. Q. The rail rates remained the same ? A. Remained the same. Q. And prior to this change you shipped largely by rail, didn't you? A. Yes. Q. And the rail rates have not gone up ? A. No. Q. Therefore, the raise in the ocean rates has not affected your shipments ? A. It has affected us, because we can't get service to get our goods out, and the result is we can't ship them at all now. Q. That is, you can't get the service on the rail ? A. We can't — that is, for carload business; we have to ship every- thing for less than carload lots. Mr. Severance. How is that? Witness. You can't get cars to load full cars; we have to haul everything and ship it in less than carloads. Q. You don't know, Mr. Linn, anything about ocean conditions and the demand for lumber from here to San Francisco, do you ? A. Not — Oh, I know there is a big demand for space; we 752 can't get space by steamer very well at all. Q. There are other lines of steamers besides those of the O. R. & N. running. A. Well, there are a couple of lines; I don't know just who are the owners of them. Q. The raise was common to all the ocean lines, wasn't it? A. Yes, sir. Q. It took place how long ago, sir ? A. About — I think four or five months ago perhaps. Q. Four or five months ago ? A. Yes; perhaps not so long. Q. I thought it was only about thirty days ago. A. No ; it is longer than that ; I know it has been three months. Q. Three months? A. Yes ; because we have claims that are that old. Q. That is all, is it? By Mr. Severance: Q. Just one question. You say you can't get cars to ship to San Francisco to ship in carload lots and you have to ship L. C. L. ? A. Yes, sir. Q. How long has that been the case? A. Four or five months. LINN. 431 Q. Since the time these steamer rates went up ? A. No ; it was before that. Q. Before that? A. Yes. Q. Have you formerly shipped carload lots to San Francisco ? A. Yes, sir. 753 Q. From whom did you get the information that you would be obliged to ship L. C. L. ? A. We simply can't get cars. We order cars and we can't get them ; we have to get them out some way or other, and we have to notify our customers the only way we can get them out is in a wagon load at a time. Q. That is all. Commissioner Lane. Is there a general car shortage in this system out here ? Witness. It seems to be at our place; I think there is a general shortage, but I think there are general conditions that make it a little worse where we are located. Commissioner Lane. What are those conditions? Witness. Well, we are on the west side of the river and do not have access to the terminal grounds at the present time, and there are few cars on that side. Commissioner Lane. You don't find that there is any difference between your condition and anybody else's condition ? Witness. Well, not on this side of the river; I think people who have access to the terminal grounds get more than we do. By Mr. Cotton : Q. How far is that factory from the terminal grounds? A. It is about three miles in a direct line. Q. How far does a car have to go from the terminal grounds in order to reach your factory, how far does it have to travel ? A. I judge about eighty miles; forty miles out and forty 754 miles back; still on California business there is no — it is a direct route. Q. Yes, but you know there has been an embargo against California shipments at various times this year on the Southern Pacific line owing to the congestion of traffic down there, hasn't there been ? A. Well, that has been principally at Oakland and San Francisco. We have found trouble getting cars for any part, but as I stated, I think it is due to the location of our factory at the present time, a pure shortage in that district. By Mr. Severance : Q. What track is your factory on ? A. On the Southern Pacific. Q. The Southern Pacific? A. Yes. 432 unn. Q. Well, then, what has the location of your factory got to do with the failure to get cars? A. Well, we are on the west side of the river on the branch, not the main line of the Southern Pacific. Most of their business comes in on the main line into the terminal grounds, and of course that is where they have most cars. Q. They have a connection, haven't they ? Mr. Cotton. Forty miles from town. A. It is about forty miles out and forty miles back; it is a haul of about eighty miles. Q. Well, your rates are just the same as they are from any other part of Portland, are they not? A. Just the same, yes. Q. And still they won't set cars over there for you to ship carload lots to California ? 755 A. Well, we have not been able to get them recently. Q. Kates are much higher L. C. L. than carload lots, arent they? A. Yes, much higher of course. Q. How much higher, do you remember? A. I should judge almost double. Q. How far do you have to team to get to their tracks where they will allow you to put a little in cars occasionally ? A. About three miles. Q. That is an expense you have to pay yourself? A. Yes. Q. And that has been going on for four or five months, you say ? A. Yes, about five months, I should judge. Q. That is all. By Mr. Cotton : Q. Can't you ship carloads from Portland as well as anybody else? A. From what point do you mean? Q. Well, the A. Terminal grounds? Q. Yes, the terminal grounds. A. Yes, we can. Q. You can ship all the carloads from there you want to, cant you? A. We will ship them if they will give us the cars. Q. Well, but I mean just the same as any other Portland merchant. A. Well, I don't know ; we can't get cars ; I know that others do get them. Q. Well, but I mean from the A. Terminal grounds? Q. Yes, from the terminal grounds. A. Yes ; we would like to get some cars right now, if we could get them. Q. There is no difference between you and anybody else, is 756 there? LINN. 433 A. Well, I don't know ; I think there is, Mr. Cotton. Q. What? A. From what I gather I think others are getting cars at the ter» minal grounds ; that is the excuse given us, that if we had access to the terminal grounds we could get the cars more readily. We don't get them. I know we have not had any there for four months. Q. Have you asked for any at the terminal grounds ? A. Yes, we have an order in now. At the terminal grounds ? Q. Yes. A. We will take them whenever we can get them. Q. Have you any orders in at the terminal grounds? A. No, we have not, but I will get them in pretty quick, I think, after this interview. Q. Well, but you have been insisting upon these cars being deliv- ered to you around here eighty miles? A. No, we have not, Mr. Cotton ; we have ordered the cars and we have called up, I think, every department of the Southern Pacific in the course of a few days, and if they could have provided them one place or another we would have been glad to have taken them; I think they know that. Q. You have always ordered them on your own track down there ? A. We didn't order them any place particularly, but we ordered cars. Q. Well, but that was understood, wasn't it ? A. Well, I suppose it was perhaps understood. Q. Yes; and that service switching around there eighty miles for you has always been done free, hasn't it ? A. For switching around? Q. Yes; they have charged nothing for delivering cars 757 around there to you? A. Yes ; they would for California business, I suppose. Oh, do you mean taking a car in for California ? Q. Yes. A. No ; we only pay switching charges. Where we deliver to local parties, have a car shipped from there in to dealers in the city, we pay ten dollars for it. Q. But on a car going out of town you pay no switching charges ? A. No. Q. You have not asked for any cars here at the terminal grounds, have you? A. No, I have not; but I don't think I would have gotten them if I had. Q. Well, suppose you try. A. I will try, as I say, from now on. Q. You have read the. Oldsmobile song, haven't you? Suppose you try and see what occurs. A. But I have filed a good many complaints. I think your officials will say that I have had it up with them pretty actively. 434 LINN BREYMAN. Q. I expect you have. Everybody else has been pressing for cars. I expect most probably they have not felt very much like hauling a car eighty miles to save you a wagon haul into the city of Portland ; that is all. Mr. Severance. Still, years ago you did not have that trouble, did you? Witness. No, sir. Mr. Severance. That is all. Q. How long have you been out there? A. We have been shipping from there about two years. Q. Yes; that's all. 758 Mr. Severance. I now offer, pursuant to agreement, a por- tion of the testimony given by Otto Breyman, a witness before the Interstate Commerce Commission, who testified on the 25th day of January, 1907, at the City of Portland Oregon. I understand it is agreed by all parties that this testimony may be written into the record and have the same force and effect as though Mr. Breyman were on the stand giving the same testimony. Mr. Evarts. Yes. OTTO BREYMAN testified : Examined by Mr. Severance: Q. Mr. Breyman, where do you reside? A. Portland. Q. What is your business? A. Manufacturer of saddlery goods. Q. How long have you been in business in Portland here ? A. About fifteen years. Q. From what part of the country, Mr. Breyman, do you import your raw material? A. Leather we get largely from San Francisco, from California; and hardware, hames, and other things we get from the Atlantic sea- board largely. Q. Prior to the time that the Southern Pacific and the O. R. & N. became interested together, prior to 1901, was there competition for your shipments between San Francisco and Portland by boat and rail? A. There was, yes, sir ; we shipped largely by boat at that time. Q. How is that? A. About five years ago we shipped leather largely by boat. 759 Q. How do you ship now ? A. Rail altogether. Q. Why? A. We have no steamer service. Q. How long has that been the case? A. Well, some little time; several years; I would not say; it has been worse this last year. BKEYMAN. ■ 435 Q. Worse the last year. A. The last two years. Q. Been gradually growing worse ? A. Well, we have not made any attempt the past year to ship any leather to California. The only shipments we have by boat is the American Hawaiian shipments and Panama shipments. Q. That is, you bring goods around from the Atlantic seaboard by the American Hawaiian lines ? A. Yes, sir; some. Q. And then they are trans-shipped at San Francisco? A. Yes. Q. Aside from that you have given up trying to ship by boat from San Francisco? A. Yes, sir. Q. On account of the poor service, you say ? A. Yes, sir, entirely. Q. How were the rates years ago on your goods between San Fran- cisco and here? A. Well, rates on leather used to be 25 cents per hundred pounds, and the company also carried the insurance. Q. How are they now ? A. We made a contract every year with the O. E. & N. Company steamers to handle our leather, and in that contract they had an insurance clause, I believe. We paid 25 cents a hundred, and I think at one time we paid as low as 20 cents; but I would not be positive, it is so long ago. Q. What are your rates by rail ? 760 A. Well, from San Francisco it is 31 cents now; from Benecia it is the same; and I think it is 36 cents from Santa Rosa — I think it is, I would not be positive. Q. Now do you ship from the east somewhat by rail ? A. We do now, yes, sir. We would ship by water if we had the steamers between San Francisco and Portland. Q. I mean from the east. A. We would ship by water if we had steamers from San Fran- cisco to Portland, after we got our freight around the Horn. Q. But you ship by rail rather than send it around by the Ha- waiian line now ? A. Yes. Q. On account of the poor service. A. We have shipments down in San Francisco to-day, I think about 8 cases to it, that we have to be delivered here. We haven't got it all here yet; we have had two shipments or part shipments from San Francisco, and it has been on the road since June by steamer. Q. From New York? A. From New York; and it is down in San Francisco to-day, a part of it. Q. Mr. Breyman, you formerly shipped by water, did you ? 43© BBEYJH4W — KELLY. A. I never have to any great extent, for the reason that during the old Panama line the freight was handled in such bad shape. We have shipped more or less by the Panama line in the past. Q. What are your rates from the east, all rail ? A. On common saddlery hardware, $1.75, less than carload lots ; we never ship carload. We never asked for a carload rate, because 761 no jobber in Portland saddlery and hardware, could use it hardly ; they don't ship in large enough quantity. Q. Which way do goods come when they come all rail ? A. Well, when I have the business I always have favored the Union Pacific and Oregon Short Line of late years, the last few years; I have given some to the Northern Pacific, considerable; I aim to divide it up between the companies. Q. Did you formerly ship some by the Southern Pacific ? A. I used to patronize the Sunset route a great many years ago, not to any extent ; in the winter time I did in shipping shoe dressing, I wanted to keep from being frozen ; and do now in fact. Q. Did you ship by Sacramento ? A. No, sir; we shipped by the Sunset route; that was in connection with the Morgan line. Q. Well, I understand, but you don't ship that way any more? A. Yes ; not much ; one shipment came in this fall. Q. Do any solicitors come around and solicit you to ship that way? A. No, sir. Q. The Southern Pacific don't solicit your business now as against the O. R. & N. any more ? A. No; they do not. 762 Mr. Severance. I now offer, pursuant to agreement, the testimony given, by George H. Kelly, a witness before the In- terstate Commerce Commission, who testified on the 25th day of January, 1907, at the City of Portland, Oregon. I understand it is agreed by all parties that this testimony may be written into the record and have the same force and effect as though Mr, Kelly were on the stand giving the same testimony. Mr. Evaets. Yes. GEOEGE H. KELLY testified : Examined by Mr. Severance : Q. Mr. Kelly, where do you live ? A, Eugene. Q. How far is Eugene from Portland ? A. 123 miles, Q. What line of railroad are you on, if any ? A. The Southern Pacific. Q. What is your business ? A. I am in the lumber business. KELLY. 437 Q. How long have you been in that business? A. 21 years. Q. How long at Eugene? A. Well, I have lived right near there and there in the lumber business for the last ten years. Q. What is the name of your firm? A. Booth-Kelly Lumber Company. Q. How many mills, sir ? A. Yes, sir ; we operate four mills in Lane County. Q. Four mills? A. Yes, sir. 763 Q. Where are they,? A. There is one at Saginaw, one at Coburg, one at Spring- field and one at Wendling. Q. On what line of roads are these mills located ? A. They are all on the Southern Pacific. Q. How far is the nearest mill from Portland ? A. Well, I would say about 120 miles. Q. How far is the one that is farthest from Portland ? A. About 145 miles. Q. Are they on the main line ? A. One of them is on the main line and the others are on the branches, on the Woodburn and Natron and the Wendling branch. Q. How far off of the main line are these mills that are on tho branches? A. Well, the Springfield mill is a mile from the main line: the Wendling mill is 18 miles from the main line, and the Coburg mill is seven miles from the main line. Q. What is your annual cut at these mills ? A. Well, when we run full time about a hundred million feet. Q. To what parts of the United States do you ship ? A. Well, practically all over the United States except a little part of New England and the south. Q. Has there been any change in the rates on lumber from your points to any destination within the last two or three years ? A. Well, in some — there has been some change in rates east of Sacramento, between Sacramento and Ogden, and there has been some change in California rates, and there is another one contem- plated now that we just received notice of. We used to have rates to Arizona ; they were withdrawn. Q. I want to ask you about these Arizona rates; what was 764 your rate to Arizona points? A. Well, I think it was a mining timber rate, and I think it was about $16 a thousand feet, if I recall ; something like that ; it was a per thousand foot rate. Q. When was that rate withdrawn? A. Well, eight or nine years ago, I think. Q. Eight or nine years ago. 438 KELLY. Mr. Cotton. Prior to 1901? Witness. Yes. Q. Now, Mr. Kelly, is there any difference in the rates that you pay on different classes of lumber and timber that you ship ? A. Not to eastern points but to California points they make a dis- tinction between kiln dried machine lumber and rough green lumber and railroad ties. Commissioner Lane. What is the purpose of his testimony, Mr. Severance ? Mr. Severance. In the first place I want to show that they make a distinction between rates so as to prevent the shipment of ties, for instance, down in the territory where other lines of railroad are being constructed, and I want to show also the efforts made to induce shipments to new territory reached by the O. R. & N. and Colorado points, and others, as against shipments to the south. Commissioner Lane. A change in the policy that has been effected recently ? Mr. Severance. Yes. Commissioner Lane. Well, you may proceed. Mr. Lovett. Is there any contention that that situation was 765 affected by the relations of the Union Pacific and the Southern Pacific? Mr. Severance. That is my understanding; if it is not correct- that is my understanding — undoubtedly he will state the facts. You say there is a difference in rates on ties and other timber. Witness. Yes, sir. Q. Now, does this difference exist as between ties and other timber of the same character, except as to length ? A. That is all the difference that there is. For instance, a stand- ard railroad tie is seven by eight, eight feet long ; that is, that is the generally accepted standard. Now that tie, if it goes to a Bay point, San Francisco or a Bay point, takes a rate of five dollars a thousand, while a piece double that length, seven by eight, sixteen feet long or any other length, would go $3.10 — not $5 a thousand but $5 a ton; but the longer lengths would take the rate of $3.10 a ton. Q. How long has that been the case ? A. Well, I could not say. The distinction was made in Interstate Commodity Tariff No. 7, 1 don't recall the date of it. Q. About how long? A. It is not an old tariff; I think probably a couple of years; maybe less than that. Q. Within a couple of years ? A. Yes. Q. Now prior to that time had there been any such distinction? A. No, sir. Q. Do you know of any reason, sir, in the nature of any commodity shipped, or the difficulty of handling it, or anything of that sort, to account for this distinction ? KELLY. 439 A. No. A tie is about the lowest grade forest product ex- 766 cept a mining timber, and it will go in any kind of a car, where a long timber might require a special car ; it is easier handled and would be just as easy transported as anything else, if not easier. Q. Has that new rule, or rather that change of rate putting one at a higher rate than the other, had an effect on your business ? A. Yes. Q. What effect? A. Well, we can't make deliveries of any ties in San Francisco or stock in territory where the Western Pacific are trying to buy ties. Commissioner Lane. How long since that rate was put in ? Witness. Well, I could not just give the date, but I would say within the last two years; it is Interstate Commodity Tariff No. 7. It is a new tariff. Q. Now, Mr. Kelly, have there been any efforts made by the rep- resentatives of the Southern Pacific road to induce you to change the direction of your shipments to points ? A. Well, previous to 1901 everything that we shipped went south via Sacramento and Ogden, and since that time it all goes north via Portland and Ogden. Q. Why? A. Well, the rates were withdrawn south via Sacramento and Ogden, and the shipments were all diverted this way. Mr. Lovett. Shipments to what points ? Q. Shipments to what points, Judge Lovett suggests ? A. Well, to Colorado or any of that interior mountain country. Previous to 1901 we did not ship anything east of Denver; that is, we used to go down into New Mexico and down through there some- times in connection with the Santa Fe, but after the amalga- 767 mation of the Union Pacific with the Southern Pacific the rates were extended on through to Chicago via Portland ; but they never had that rate via Sacramento and Ogden. Q. Now what way do you mean the rates were withdrawn into Arizona ? Do you mean you can't ship there at all, no rates on what you ship? A. Well, there is a rate in there now; I think it is about 67 cents a hundred most of the points to Nogales for instance; that is, the clearing point between Arizona and Old Mexico; the rate is 65 cents a hundred, $13 a ton, from our mill ; now we can't ship beyond that. Q. What was your former rate there? A. Well, I think it was about $16 a thousand feet as I recall; it has been a good many years ago since we shipped in there. It was a per thousand foot rate instead of per ton rate. Q. In case of green timber how much does it weigh ? A. 3,300 pounds to the thousand feet. Q. Can you give an estimate, Mr. Kelly, of the extent of your traf- fic that now moves to Colorado points by way of the O. E. & N. that formerly moved by the Southern Pacific via Sacramento ? 440 KELLY. A. Well, that varies, owing to market conditions. A man always tries to sell where the. market is best. Now a couple of years ago the market was very bad in Colorado on account of the coal strike, and we shipped scarcely anything in there, and I think there is just about ten per cent of our cut goes into Colorado ; about seven million feet, I think, we shipped in there last year, and that all goes via Portland, that formerly went the other way. 768 Q. Are there any other points outside of Colorado points that are affected by this diversion of shipments around by the O. E. & N. that formerly went by the Southern Pacific? A. Yes ; everything in Utah south of Ogden. Q. Can you give an estimate of the extent of that traffic from your mills? A. Well, we never have had a very large business in Utah. It is the Portland mills that had that territory largely, and we never shipped in there much; I suppose maybe we shipped three million feet a year in Utah. Q. Then you say seven millions to Colorado, three millions in Utah, which would be about ten millions of feet in those two states. A. Yes, sir. Q. Is there any other traffic that is affected by this change aside from that of these two states you have mentioned ? A. No. You see before the Harriman people got the Union Pacific we shipped everything into Southern Utah, Colorado, California, Arizona and New Mexico. Q. That was your sole market. A. That was our sole market; and after the consolidation of the lines why we began to ship east then and go clear to the seaboard. Q. And you mean by that you made up what you lose in the Cali- fornia and Arizona markets by creating a new market east ? A. Yes, very much more in quantity of output. Our output is very much more than it was then, and some years it is a very much better market. We prefer the California market to any other, but still our shipments to the east have increased. In 1903 we 769 shipped about thirty per cent of our cut east — in 1904 I should say thirty per cent; in 1905 forty per cent, and in 1906 sixty per cent went east via Portland. Commissioner Lane. You have not been embarrassed then by the changes effected in 1901 ? Witness. No; while we have in a measure lost some territory, we have gained more territory. Commissioner Lane. Your field is widened? Witness. The field is widened, but we don't consider the market probably quite so good. The best of lumber going to California is $2 a thousand higher now than lumber going east; so a man would prefer to sell in California. Q. Explain that. How do you mean, that the best is $2 higher? A. Well, the market is better down there and the supply is — the California market is better. KELLY. 441 Q. You mean by that taking the rate and the market value of lumber both into consideration ? A. Your lumber brings you $2 a thousand more now under present conditions in California than it does if you ship east. Commissioner Lane. That was not so up to two years ago. Witness. Only in places. San Francisco usually is the lowest lumber market there is on the coast; that is a kind of a dumping ground for everybody ; but the last year it has been about one of the best markets, and of course the prices of lumber in interior Cali- fornia is fixed by the price of lumber at Bay points, and that is made a good market all over the State. 770 Commissioner Lane. So when these changes were effected, conditions were different in California — the price was better? Witness. Yes, as regards Bay points. Q. And what is the difference in regard to your shipments now in California ? A. Well, practically 40 per cent last year. Q. How was it prior to these changes in the rate, the adjustment of the rates ? A. Well, prior to 1901 I would think probably more than eighty per cent in California and Arizona. Q. That is all. Examined by Mr. Cotton : Q. You say in former years eighty per cent of your output went to California ? A. To California and Arizona. Q. Your output then was about how much per year ? A. Well, since 1901 we have increased our output about 35,000,000 feet. Q. Every year? A. No ; I say about 35 million is the increase in our annual output since 1901. We probably cut — we shipped probably 60 million feet. Q. And of the old 35 million feet, or of the old 25 million feet, about eighty per cent went to California ? A. Yes. Q. And a large part of that was Southern Pacific company ma- terial, wasn't it, or a substantial part? A. Well, it is yet; a good deal of our material is Southern Pacific material. Q. And about how much of this eighty per cent of the 25 million was company material in those days? A. Oh, I suppose twenty per cent of it. 771 Q. Twenty per cent? A. Yes, sir. Q. Then there was only about sixty per cent of 25 million feet that went to California for commercial usage ? A. Yes, sir. 442 KELLY. Q. How much are you shipping now to California, or would you ship on rates if you could get the cars ? A. That is pretty hard to say, because a man would take on a lot more business if he could get the cars. This week I have 1640 car- loads of lumber sold in California outside of company material. Q. Then the rates have not prevented you now from getting to California ; there is nothing in the rate adjustment which prevented you from getting there now ? A. Not until this new rate goes into effect that they have given us notice of. Q. Your old rate was $3, wasn't it ? A. $3.10 a ton to Bay points. Q. $3.10 a ton for how many miles ? A. Oh, I think something about seven hundred. Q. 700 miles ; that is considerably less than half a cent a ton a mile, and over the Siskiyou mountains ? A. Yes, it all goes over the Siskiyou. Q. And they have brought empty cars north to take away the busi- ness? A. Well, at times they do, and at times they don't; there haven't been any empties coming north lately. Q. There haven't been any empties moving any place; isn't that right, Mr. Kelly? A. Well, we have had a great many empties from the other , 772 way. We have had good car service except in 1903 and this year. Q. Now this year, Mr. Kelly, what would have been the effect on your business as you have observed it if a car pool had not existed between the O. E. & N. and Southern Pacific Company, and you had not been able to get cars over the O. E,. & N. ? A. Well, that depends; we always haul in the direction we think we are going to get cars. Now we always figure we are going to get a car shortage in the fall of the year, and when we used to sell lum- ber, — we used to sell Mr. Schwerin lumber we always took that into consideration, and so did he, that he would furnish cars, and so did he, that he could furnish cars in the fall of the year ; and our busi- ness now is best with railroads, because they will hustle to get you the equipment. By Commissioner Lane : Q. Do you find a difference in getting cars between orders you have for railroads and orders you have for other shipments ? A. Yes, you can't get a car for anything now only for railroad busi- ness ; you can't get a car for commercial business north or south. Q. The railroads always furnish you with plenty cars to move their material, do they ? A. No, not plenty, but then you stand a lot better chance. For in- stance, the Harriman people are building something like six thousand refrigerator cars. We took on that business, because we thought dur- ing the scarce time of cars we would get the cars. KELLY. 443 Q. Where are they building them ? A. At McKeesport, Pennsylvania, and Chicago; they are 773 scattered all around. Pressed Steel Company and the Amer- ican Car Company. Q. So that in the end these extra facilities they furnish you with cars would tend to relieve them ? A. Well, refrigerators won't do any good. They let you ship laths. Q. You can ship shingles in the refrigerators in the northwest, can't you? A. We don't manufacture shingles. By Mr. Cotton : Q. How far are your mills south of Portland? A. From 120 to 140 miles. Q. They make a common rate from these points east, do they not, the same as the Portland rate? A. Well, to most territory ; I don't know anything about the Port- land rates over the Northern roads in the territory, but into the territory of the Harriman lines we have the same rates. Q. The same rates as Portland? A. Yes. Q. And that condition of things has prevailed for how long ? A. Oh, I think five years, something like that. Q. What? A. Five years. Q. About five years? A. I would think about five years. Q. Formerly your rates on the Northern Pacific extended to a lim- ited western territory, didn't they? A. Yes, sir ; we very seldom got anything east of Denver ; if we did it was something we had to absorb a differential on. Q. Since 1901, since what has been termed the amalgamation, you can ship to any states in the east ? A. Yes, sir. Q. What is your rate, $5 to Missouri Eiver ? 774 A. Fifty cents a hundred. Q. Fifty cents ; I mean ten dollars a ton. A. Ten dollars a ton. Q. What is your rate to Chicago? A. Fifty cents plus a switching charge of two dollars. Mr. Severance. Just the same to Chicago as to the Missouri Eiver? Q. The same as to the Missouri Eiver. A. Yes, just the same. Q. And you pay no more than the Portland mills do ? A. Just the same rate. Q. Just the same rate ; and you are largely shipping in Union Pa- cific and O. E. & N. cars east, aren't you ? A. Well, we catch any kind of cars ; we get a lot of foreign cars. Q. Well, they are cars that come to you from the north ? 444 KELLY. A. Nearly all the car supplies come from the north now. Q. And that has been the case practically all this year? A. Yes ; we get no cars from the south except prior to the first of July we got a good many cars from the south, and along in December of 1906 we got a good many cars from the south; since then we have had no cars from the south. Q. If you had been working on the cars from the south say since about the first of July, you would have had to shut down long ago, wouldn't you? A. We would have been out of business long ago. Q. You also sell company material to other railroads besides the Harriman lines, don't you? 775 A. Yes, and nearly — well, all the great systems in the north nearly, the St. Paul, Northwestern, Rock Island, Illinois Central. Q. You get their cars down there, do you, for their material, or what kind of cars do you get for them ? A. Well, most any kind of a car that will go home that way. Now take the C. & N. W. material, we ship a great deal of that ; we have had their contract for a great many years and take most any kind of a car that will go east over the Union Pacific. Q. Your shipments now amount to about how many million feet per year; that is, say east of this old territory, east of Colorado? A. Well, I presume about forty million feet. Q. About forty million feet? A. Yes, sir. Q. That is more than your former total business ? A. Well, it was more than our business when we first went into business. Q. Well, more than your business in 1901 ? A. No. Q. What was your business in 1901 ? A. Well, about sixty million — sixty to sixty-five millions. Q. About sixty millions ? A. Yes. Q. Now, forty million feet of that goes into entirely new territory that was opened up as a result of the rates given by the O. R. & N. and Southern Pacific north? A. Yes. Q. Your Colorado shipments were about seven million feet per year ? A. I think that is about what we shipped in there last year; yes. Q. And in former years what did you used to ship, that is prior to 1901? A. Into Colorado? Q. Yes. 776 A. Well, that is hard to say ; but not so much though as we have shipped this year, because we didn't have the output, but about the same percentage of our cut, I think, went in there. KELLY. 445 Q. There has been no adjustment in the rates to keep you out of business in any way, has there, at all ? That is, the rate adjustments rather have been to increase your business than decrease it? A. Yes ; as I say the only places where we have lost territory has been the territory across between Sacramento and Ogden and in Arizona ; that is the only place where we have lost territory. Q. And that was on ties, wasn't it ? A. No; we shipped all kinds of material in there across Nevada. It is nearly all a low grade of building material. Q. Why did you lose territory in between Sacramento and in the Ogden territory ? A. Well, those rates all across Nevada were increased. Q. When? A. Oh, I don't know ; it has been several years ago ; it is an $8 rate from the state line all the way across to Ogden now. Q. And how long ago was that increased ? A. Oh, I could not say. Q. And your rates into Arizona, how are they ? A. Well, they are so high that we don't ship anything into Arizona except an occasional car of flooring we ship to Nogales, but we ship through there on south. Q. That raise took place about eight years ago, or thereabouts? A. I think so ; yes, it was a good many years ago, I know. 777 By Mr. Severance: Q. Prior to 1901 when you routed your stuff to Colorado, for instance, by the Southern Pacific around by Sacramento, how did it move from Ogden and over what line ? A. D. & R. G., and occasionally a car by the Midland. Q. How does it move now? A. North Union Pacific Denver business. Of course we have some local business at local points on the Rio Grande line. Q. Do you sell material to the Denver & Rio Grande and Western Pacific? A. In former years we sold a great deal of material to the Denver & Eio Grande, but lately we have not. We always try to give roads traffic and get some of their purchasing agents' business in that way, but we have sold the Rio Grande in the last two years a few small orders, but not much; we don't have the business that we used to have. Q. Why is that? A. Well, we don't give them any traffic. Q. You spoke in response to something asked you by Mr. Cotton about some new rates; what are the new rates? A. To California points? Q. Yes. A. The tariff has not been published yet, but the notice was to the effect that the five dollar rate would be the minimum to any Cali- fornia point. 71535—09 29 446 KELLY. Q. When did you get that notice ? A. Oh, I think it was Wednesday. Q. Wednesday? A. Yes. Q. From whom? A. From R. B. Miller, the general freight agent. Q. And is that on the same class that now pays $3.10? 778 A. The same thing, yes, sir. It is an advance from $3.10 to $5 as the basis. Q. When is that to become effective? A. The circular states the 15th of March, but the traffic officiate state that it will not go into effect so soon as that. Q. What traffic officials? A. Mr. Miller and Mr. Coman. Q. That is, Mr. Miller personally does not agree with Mr. Miller's circular ? A. Well, they found out that the time was too short to give ship- pers a chance to clean up business that was sold under the old rate. It would put a man out of business if they forced him to it. Q. I see; so you don't know the exact date that that will go intft effect? A. I do not. Q. Now when you ship material to these other roads in the east that you have mentioned as customers of yours, are you restricted in any way as to the kind of cars that you shall load for shipments? A. No, only this way, that they want a car to go home the way it came out ; for instance, if a car came out over the St. Paul they would want it to go back that way. Q. You say you sell a good deal to the Chicago & Northwestern? A. Yes. Q. What kind of cars do you load? A. Well, a car that came out over the St. Paul they would not want it to go back over the C. & N. W. Q. Do you ever ship to the Northwestern and the Chicago, Mil- waukee & St. Paul in Union Pacific and Southern Pacific cars? A. Yes, frequently. 779 Q. How long since you quit selling to the Denver & Rio Grande ? A. Well, we sold them a little last year and a little the year before, just a little business at Denver ; we have an office in Denver and our Denver people pick it up ; it don't amount to much. Q. What kind of cars do you ship their material in ? A. Well, we catch any kind of a car that comes west over the D. & R. G. Q. Mr. Cotton asked you whether you had lost any business by reason of the rate adjustments; do you know of any that you have lost other than the traffic in ties to the Gould people aside from your California and Arizona business and Sacramento points east? kelLy. 44? A. No, only this Rio Grande business ; we used to have lots of that ; we had both for the Eio Grande Western and the Denver & Rio Grande ; but of late years we haven't had that. Commissioner Lane. As I understand, they cut off the entire sales to the Western Pacific by the rate down there ? Mr. Severance. Yes ; that is what I understood, that the rates were prohibitive from here to San Francisco Bay. Mr. Cotton. Oh, no. Commissioner Lane. Well, that is a discrimination in the tariff. Mr. Cotton. Not San Francisco Bay. Q. Bay points, I understood; let's have that understood; that is what I understood him to say; what did you say about it? A. The tariff to Bay points reads rough green common lum- ber $3.10 a ton; then the tariff on railroad ties puts them 780 in with cross-arms and material of that kind; cross-arms, ties and so on, $5.00. Q. Well, now, you said something on your direct examination with reference to the effect that had on you making sales to the Western Pacific? A. Yes. They are wanting to buy ties delivered at Stockton, which is practically a Bay point, and it takes a $3.50 rate, but they can't get in there. Commissioner Lane. Now is that the general classification of ties? Witness. No; a tie should be classed under rough common green lumber. There is nothing any rougher or any more common than that. Q. Well, what is greener ? A. And nothing greener. Commissioner Lane. Is that a general classification that obtains over all the roads ? Witness. That is the only tariff I have ever seen that classification in. The tie is just as cheap a commodity as goes, and usually moves just the same as other lumber; and other roads shipping out on east- ern shipments don't make any distinction between plain lumber and rough lumber ; it goes so much a ton anyhow. Commissioner Lane. Is that same distinction made in shipping from Portland east over the Short Line? Witness. No, sir. Commissioner Lane. It is only from here down to California. Witness. From here to Bay points in California. Commissioner Lane. From here to Bay points in Califor- 781 nia ; what is the reason for that ? Witness. Well, they don't give any. Q. Have you inquired ? A. Yes. Q. From whom? A. Why, from different ones of the traffic officials. The way we came to get on to the thing, in the first place we sold the Western 448 KEULY. Pacific a big lot of ties supposing that a tie was rough green common lumber and shipped a great many thousand of them and got stuck for $2,200 on them. Q. You discovered your definition was wrong, did you? A. My definition was wrong, yes. Q. When applied to Bay points ? A. Yes. Q. And you went out of the Western Pacific traffic then on ties ? A. No; we have got to deliver them a lot more yet, but then we are trying to make them make a delivery to some other point; we are going to wait until they build their road to Marysville, and then deliver them there. Q. Well, you are not making any further new contracts with the Western Pacific ? A. Not with the Western Pacific, no. Q. That is all. By Mr. Cotton: Q. Do you know what they charge from Puget Sound to San Francisco Bay points on ties, what the freight rate is ? A. No, sir. Q. By water? A. I don't know a thing about Puget Sound rates. Q. Don't you know that it is much higher than $5 ? A. No, I don't know anything about charter rates from Puget Sound. 782 Q. You know there are steam schooners that are operating in connection with mills from Coos Bay ? A. No, I don't know that. Q. Tillamook? A. No. Q. The mouth of the Columbia River ? A. Yes, I know that. Q. Grays Harbor? A. Yes. Q. South Bend? A. Yes. Q. And Puget Sound? A. Well, I am not familiar with conditions on the Sound. Q. And they all go to San Francisco Bay points, don't they? A. Why, there are steam schooners, I presume, operating out of these ports. Q. Yes; and there is a tie supply at all these places? A. Naturally, yes; wherever they make lumber they make ties. Q. And you don't know what, the rates are, whether they are higher or lower than the $5 rate — the rate these steam schooners make on common rough green lumber from Portland at the present time? A. About nine dollars and a half. KELLY. 449 Q. $9.50 a ton? A. A thousand feet. Q. A thousand feet? A. Yes. Q. How much is that a ton? A. A thousand feet of lumber would weigh 3,300 pounds and that would be about Mr. Severance. About $5.00. Q. About $5.70, wouldn't it? A. $5.70, yes. Q. Now that is on the common green lumber on which you pay $3.10? A. Yes, sir. Q. They charge $5.70 from Portland by the steam schooner? A. Yes. 783 Q. And presumably the same or more on ties, or do you know? A. It is the same rate on all classes of lumber. Q. And how long has this $5.70 rate by steam schooner prevailed ? A. Just very recently charter rates have gone up. Most of the time the water rate is lower than the rail rate; it has been down as low as $4 a thousand feet when the rail rate was unchanged. Q. The rail rate from Portland for a long time past has been how much' A. $3.10 a ton. Q. From Portland? A. Oh, from Portland? Q. Yes. A. Oh, $5.00. Q. $5.00; and how long has the $5 rate on green lumber and ties and everything from Portland prevailed? A. I don't know. Q. About how many years. A. I don't know anything about that. Q. Well, it has been a long time past, hasn't it? A. Yes; it has been a great many years. Q. And the Portland mills, therefore, on common green lumber have had to pay $5 and you pay $3.10? A. Yes. Q. But you get your lumber transported to the east and all points east f&r the same rate that the Portland mills pay? A. Yes. Q. And then you have had the advantage, therefore, of the differ- ence between $5 and $3.10 on your common green stuff? A. Yes. Q. To California Bay points? A. To California Bay points ; that is, the Portland mills for years had a lower water rate than they have now; the water rate 784 was less than half as much as it is now. 450 5BLLY. Q. Yes; I know that. A. But this condition now where the valley mills have an advan- tage over the Portland mills has only been of very recent date. Q. But you have an advantage even on this $5 rate now of 70 cents, haven't you ; that is, when they raise their rate in March ? A. Yes; but charters will all go down in the summer time, and when they go down in the summer time then we won't have any advantage. Q. Yes; but we may have to put ours down. A. Well, they are easier to put up than down, I have found. Q. Well, we have found it harder to get them up than to put them down. A. I don't know ; they just send out a notice that they are going to raise them. Q. We have given you a pretty good long time notice. A. Mr. Lounsberry came up the other day and said: "We are going to raise the rates," and wanted to talk it over. I asked if he had made his mind up to change. He said yes. I said then there Was nothing to talk about. Q. He told you they were going into effect? A. The other day we got a notice, and we got another notice we would not be permitted to ship anything south of Ashland, so the cleaning-up process would take a long time under those conditions. Q. And does that condition exist now about shipping below Ashland? A. It was still in yesterday. Q. How long ago was this; how many days? A. Several days ago, the first of the week. 785 Q. It hadn't been all the time — on and off during the car congestion in California? A. It was mostly off. Q. If you had been doing business and depending on shipments to Colorado, Idaho, Arizona and elsewhere, you would have turned your toes up pretty long ago, wouldn't you ? A. Well, we pretty nearly did. We got Mr. Stubbs out here and he restored the $3.10 rate and we got a new lease on life. Q. I mean this last year, you would have had no cars at all prac- tically? A. Not since July. Q. That is, from the south. A. We have had practically no cars from the south since July. Q. You could not get any at all ? A. Practically none. Q. The empties were not coming back at all from San Francisco, were they ? A. No ; you could not even get them for company material. Q. You could not even get them for company material to the south ? 451 I Commissioner Lane. This embargo south of Ashland was due tp the fact you could not get any cars ? Witness. No ; it was the congestion of lines down there. Commissioner Lane. Yes ; they could not handle the business ? Witness. Could not handle the business. Q. Cars could not be unloaded, you understood ? A. The cars could not be unloaded and every side-track was full. Q. And they have been compelled to do that at various intervals from time to time during the summer in order to get a chance tp clean up? 786 A. Yes. This last embargo was on account of fuel. •Q. But you have had an advantage and have for some months past, of the $3.10 rate on common green stuff which you ship south as against a higher rate from Portland ? A. Except ties. Q. Except ties, and on ties you pay the same as the Portland rate. A. The same as the Portland rate. Q. And the proposal now is to make it all $5 ? A. That would be the minimum, as I understand it. Q. And that does not go into effect, they have just simply given you a preliminary notice that it may go into effect March 15th ? A. Well, the notice does not read that way. Q. Well, but it tells you that it will — that is not a tariff; they haven't sent you a tariff yet, have they ? A. No. Q. It is just a typewritten notice or printed notice? A. A typewritten notice. Q. A typewritten notice to give you warning that there may be a raise of these rates, so you may clean up your business accordingly ; isn't that it? A. Well, it says there will be a raise. Q. Yes ; that is all. By Mr. Severance : Q. One other question. Mr. Cotton was interrpgatjng you with reference to water rates from Portland to San Francisco; do those rates vary frequently ? A. Oh, yes ; water rates are up and down all the time ; they are not fixed. They are higher now than I have ever known them 787 since I have paid any attention to them, and they have been down as low as four dollars on the Columbia River, four dol- lars a thousand feet. At the time the $3.10 rate was put in by Mr. Markham, the water rate then was about — the charterers varied; steam schooners were getting, I think, about $5.50 and sailers about $5. Q. You mean $5.50 a ton or thousand feet ? A. No, thousand feet. Everything that goes by water goes by the thousand feet, and everything that goes by rail except mining timbers 452 KELLY MEYEB. goes by the ton, aud this $3.10 rate was just a compromise so as to cover the water rate at that time. Q. That is all. By Mr. Cotton : Q. When was that $3.10 rate put in and why was it made ? A. It was put in to let the Valley mills ship in to Bay points. Q. When? A. Well, it was when Markham was general freight agent here, I don't know just what year it was. Q. That was about 1901, or prior? A. Well, I think it was prior to 1901, but I would not say posi- tively. Q. And has been in ever since, hasn't it? A. No, sir. Q. It was taken out for a short period; how many months was that? A. Well, I think it was out about six months, something like that. Q. About six months, and raised to $5 ? A. Yes. Q. And then restored again? A. Yes. Q. Supposed to have been made in competition with the water movement from Portland, wasn't it? 788 A. That was the basis of the rate ; when it was put in it was supposed to just equal the water rate at that time. 789 Mr. Severance. I now offer, pursuant to agreement, the testimony given by J. F. Meyer, a witness before the Inter- state Commerce Commission, who testified on the 25th day of Janu- ary, 1907, at the City of Portland, Oregon. I understand it is agreed by all parties that this testimony may be written into the record and have the same force and effect as though Mr. Meyer were on the stand giving the same testimony. Mr. Evarts. Yes. J. F. MEYER testified : Examined by Mr. Severance: Q. Mr. Meyer, where do you live ? A. Portland. Q. What is your business ? A. Car service agent for the O. R. & N. Company and the South- ern Pacific Oregon line. Q. How far south do the lines you speak of as the Oregon lines of the Southern Pacific run ? A. To Ashland. Q. Just a little ways this side of the boundary, is it not? A. Yes. MEYER. 453 Q. Will you state in a general way what your duties are, Mr. Meyer ? A. General handling of equipments and movement of it. Q. By handling of equipments you do not mean of course that you are the superintendent. You have not charge of trains, have you? A. No, sir. Q. But have you charge of the distribution of cars ? A. In a general way. Q. Well, just what do you mean by a general way ? 790 A. Well, we have chief dispatchers that distribute cars on their respective districts, and when they have not got equip- ments they call on me. Q. How long have you occupied that position, Mr. Meyer ? A. On both lines? Q. Yes. A. Since July 1st, 1904. Q. Prior to July 1, 1904, what was your position ? A. Car service agent of the O. K. & N. line. Q. For how long a period had you occupied the position? A. Ten years. Q. Who was the car service agent of the Southern Pacific then ? A. I think it was Mr. Richards in San Francisco ; I presume so. Q. Why do you presume that ; don't you know ? A. Well, that is right. He was there; superintendent of trans- portation was his title. Q. He had charge then separately of handling the cars on the Southern Pacific as far north as Portland ? A. At that time, yes, sir. Q. You assumed that additional duty on the 1st of July, 1904? A. Yes, sir. Q. What kind of an organization have you in your office; that is, how do you handle the business, in a general way ? A. I don't quite understand. Q. What kind of records do you keep and what track do you keep of cars and what methods have you of distributing cars, and on whose requisition are they distributed ? A. We call on our connections for equipment. The records 791 of the cars themselves are kept in the auditor's office. The movement of individual cars, etc., is kept in the auditor's office. In the general supply of equipment we call on our connections for them. Q. What do you mean by connections ? A. Well, our connections like the Short Line, for instance. Q. What other connection ? A. Well, our immediate connection; that would be the extent of it ; the Northern Pacific or the Great Northern. Q. You call on them for cars for what purpose ? A. For return loading to their line. Q. Don't you send any of your equipment over other lines? 454 WYJ3B. A. We do, yes, sir. Q. Well, take a concrete example, take the mill of Mr. Kelly, who was on the stand just before lunch. He seated that he shipped a large amount of lumber to Southern California, Colorado and Utah points. What method or rule, if any, have you with reference |tp furnishing equipment to Mr. Kelly ? A. Conditions have a good deal to do with that. Q. Well, explain. I want to get at the facts. You know better what to say than I do what to ask you. A. Well, take it at that time we endeavored to fill orders of that kind, where they go East, with foreign equipment. At this time when we are short of cars for our own business we undertake to take care of that business with foreign cars and use our own cars for pur own business. Q. In doing that do you make any discrimination by reason of (he lines that the traffic is routed over ? 792 A. We say to shippers that a Milwaukee car, if the load is east of Council Bluffs, should go over the Milwaukee. By Commissioner Lane : Q. You say that whether the car comes in empty or loaded to you, do you ? A. That is the general rule. That is the rule, I believe, that is common in railroad law, and has been in effect all the time. Q. Is not that general rule that the car should go back by the gate- way that it came only when it comes to you empty ? A. In other words you mean to say that we can take a Milwaukee car that comes to us loaded and deliver it to the Great Northern? Q. Yes. A. That is right. Q. If it comes to you empty, you are to send it back by the same gateway that it came ? A. That is the idea, yes, sir. Q. Do you know whether you were the first to enforce that rule out here ? A. Which, returning the empty in that way ? Q. Yes, the rule that the car shall return by its own gateway. A. No, I cannot say for that. Q. What effect have you found in the management of this bureau that the pooling of your cars has had so far as the supply of your own line with equipment is concerned ? A. I think it has had a very decided effect to the advantage of the business. It makes freer movement of cars. Q. How far does your jurisdiction extend? A. It goes to Ashland, Oregon, on the South, on the Oregon line, and goes to Huntington on the East on the Navigation line. Q. Who is your superior? 793 A. Mr. Buckley, general superintendent. Q. Does he have general charge of all the equipment of all the associated lines? MEYEB. 4£*> A. He is general superintendent; I report to him on the same territory. Q. Suppose that you have — I do not know that this is entirely -within the scope of this inquiry, but I want to understand this system that you have here, because it has not been in effect elsewhere to the extent, nor is it perfected, I believe, as it has been on your system. When you find that you are in need of cars within your territory this side of Ashland, and that you have no cars yourself that you can draw in that territory, do you telegraph Mr. Buckley and he then draws cars, directs cars to be moved from some other part of the system to you ? A. No, sir. Q. You do not follow that rule ? A. No, sir; I call on the immediate connection myself for cars. Q. That is to say, you would call upon the Union Pacific, for in- stance ? A. No, I would call on the Oregon Short Line ; that is our imme- diate connection. Q. And supposing they have none, would they pass that word along to the Union Pacific ? A. I presume so. Q. You do not have any superior officer directing the car service, who, as it were, keeps his eye on the equipment of the whole system, to whom you can report and through whom you can obtain diversion of cars from the Southern Pacific to California or from Omaha to Oregon, if it is necessary ? A. Not myself. 794 Q. You just simply make your demand upon your immedi- ate connection ? A. Yes, sir. By Mr. Cotton : Q. But you do tell Mr. O'Brien, do you not, from time to time — the general manager — that you are not getting cars ? A. Yes, sir. Q. And then Mr. O'Brien corresponds with whom? A. Mr. O'Brien will correspond with either Mr. Bancroft of the Short Line, or Chicago. Q. Who is at Chicago? A. Mr. Kruchschnitt. Q. And Mr. Kruchschnitt has jurisdiction over all the Harriman lines? A. Yes, sir. Q. Only he communicates generally, that is, when it is, a general readjustment of the matter other than the connections, he does thaj; through Mr. O'Brien? A. Yes, sir. Commissioner Lane. Well, now, to whom dp you report the num- ber of cars that you have upon your system? Supposing you have a surplus of empties in your division. 456 MEYEB. Witness. I generally confer with the general superintendent or the general manager on it. By Mr. Severance : Q. Of what line? A. Of our own line, right here, Mr. O'Brien or Mr. Buckley. Q. You do not get any cars from the Northern Pacific at Silver Bow? A. No, sir. Q. Do you send any other their line that way, Northern Pacific cars? A. No. Q. Is there any embargo placed against the Northern Pacific 795 at that point? A. So far as we are concerned ? Q. Yes. A. To go by Silver Bow ? Q. Yes. A. We have never furnished any equipment to go that way. We have never furnished cars to go by Silver Bow. Q. You never have ? A. No, sir. Q. That is within the last two years ? A. At any time. Q. There is not free interchange of cars between the Northern Pacific, the Great Northern and yourselves for through business, is there ? A. In what way? Q. I mean this : that you do not permit your cars freely to go on Northern Pacific lines, nor their cars to come freely onto your lines? A. We let our cars go to the Northern Pacific when we are in shape to, and have supplied equipment. Mr. Cotton. How many cars does the Northern Pacific owe you at Portland today ? Witness. I could not say how many there is today. The last checks we had it was something like 800 to 1,000 cars. Mr. Cotton. That you have furnished the Northern Pacific at Portland 800 to 1,000 cars more than they have returned to you? Witness. Yes. Commissioner Lane. Yes, the Northern Pacific has a surplus of foreign cars. Have you any demand for cars from Pugejt Sound to Portland? Witness. We have some demand for cars between here and Tacoma. Commissioner Lane. That is all, Mr. Severance. 796 Q. Do you furnish your own equipments for through rout- ing to the East over the Northern Pacific? A. You mean O. R. & N. cars? Q. Yes, or Southern Pacific. Suppose commodities originating in the Willamette Valley, say a hop shipment that the shipper de- MEYER. 457 sires to route to the East over the Northern Pacific from Portland. Do you furnish your own equipment in case the Northern Pacific is unable to send any car? A. Not generally speaking, we do not. Q. Do you furnish your own equipment when the car is routed East over the O. E. & N. and Union Pacific? A. Yes, sir, we furnish our cars for that. Q. Do you furnish your own equipment if the car is routed by way of the Gulf and Sunset Route ? A. All of these associated line cars you know move almost in any direction. Q. That is, by the associated lines, you mean the Southern Pacific, the O. B. & N., the Short Line and the Union Pacific ? A. Yes, sir. Q. Do you treat all of the equipment belonging to any one of those lines as though it belonged to a single system ? A. They are at home on any part of the associated lines ; a Union Pacific car is at home on the O. E. & N. Q. And they are at home on the Southern Pacific and on the Short Line? A. I believe so, yes, sir. Q. Do you place any restrictions upon the use of your equipment for movement over the Denver and Rio Grande from Ogden? A. No, sir, not excepting as business demands. That is, in other words, if we have a congestion or are short of equip- 797 ment or cars we naturally load them for our own trade. Q. What do you mean by your own trade ? ' A. In other words we try to equalize the delivery and interchange of cars at the different junction points. By Commissioner Lane: Q. Is not that an extremely dangerous line of policy for the orig- inating road to follow out? The road upon which a great volume of traffic originates? You do not figure upon there being a perfect equipoise between eastern and western business? A. No, we cannot get it down to an exact interchange, but we hold it pretty close. We try to direct the car movement, when the shortage of cars is on. Q. There is more business that originates on these lines than east- ern business comes in, is there not ? A. Yes, sir, our preponderance of tonnage is east-bound. Q. Suppose that you followed out that rule of policy and deny a man a car, which goes off your line, unless you can get a car from a foreign line. Are you not hampering his business ? A. If they get the other car to take its place it is an even propo- sition. Q. Then you get a perfect equality ? A. Yes, sir. Q. But supposing you do not get a car? 458 MEYER. A. We would soon run out of equipment over here to take care of our business. Q. How can you get the car then, if you do not haul empties? A. We always do haul empties. Q. Then how many empties, or what is the proportion of empties that you would haul to the west for your east-bound business? 798 A. Our proportion of empties that we haul is pretty close on to twenty or thirty per cent. Q. Are those largely foreign cars ? A. Well, they are largely foreign cars, yes, sir; a good many for- eign cars. Q. They must be nearly all foreign cars, I suppose, if they are des- tined for east-bound business beyond your own line? A. Not necessarily. As I say, we use a good many associated line cars in east-bound through business. Q. You let them go off your line freely excepting in times of con- gestion ? A. That is the idea, yes, sir. Q. That is all. By Mr. Severance: Q. Now, Mr. Meyer, do you permit the movement of cars from the Willamette Valley to the east over the Kio Grande from Ogden as freely as you do over the Union Pacific from Ogden ? A. Will you repeat that, please ? Q. I asked you if you permitted the use of cars from the Willa- mette Valley region east on the Southern Pacific as freely when the shipper desires to route over the Eio Grande from Ogden as you do when he desires to route over the Union Pacific ? A. From the car standpoint, I do ; that is, to the extent of cars that we get, you understand. Q. I am not speaking of the cars you get. You have" some cars of your own? A. We have some few. Q. The Southern Pacific has cars ? A. Yes, sir. Q. And those cars are supposed to be used in th6 transportation of traffic, are they not ? A. Yes, sir. 799 Q. Do you use those cars in transporting traffic over the Union Pacific and the Southern Pacific, the Short Line and the Union Pacific? A. Yes, sir. Q. Do you use them as freely if the traffic is routed by the Eio Grande from Ogden? A. We use them for Eio Grande business, yes, sir. Q. Do you use them as freely as you do for Union Pacific business or do you try to get the Eio Grande to send in cars? MEYER. 459 A. We try to get the Rio Grande to send in cars. Q. So you do discriminate as between the Rio Grande and the Union Pacific in the use of Southern Pacific cars going east ? A. No ; I would not say that. Q. What do you mean by your answer? A. I say that when we have a good supply of cars there are no restrictions on any associated line cars moving east over the Rio Grande. Q. Suppose there is some shortage of cars; then do you impose a restriction on the Rio Grande when you do not on the Union Pacific? A. I can not say that we do. Q. Have you never done it? A. No, I do not recall that we have ever done that. Commissioner Lane. Your policy is to keep your cars at home on your own line and not let them get abroad? Witness. Yes, that is the idea. Commissioner Lane. And you treat the Union Pacific as your own line? Witness. Yes, sir. Commissioner Lane. And you treat the Denver and Rio 800 Grande as a foreigner? Witness. Yes, sir. Mr. Cotton. But, if the Union Pacific Mr. Severance. Mr. Cotton, can not we proceed a little more orderly, without the interruption? Mr. Cotton. Yes, I think we can. Q. Now, Mr. Meyer, I show you Meyer Exhibit 1. Did you issue that circular? A. Yes, sir. Mr. Severance. I offer that Meyer Exhibit 1 in evidence, which I will read into the record. This is headed : " Oregon Railroad and Navigation Company, Southern Pacific Lines in Oregon. Car Service Department. O. R. & N. Circular No. 287, S. P. Company Circular No. 86. Portland, Oregon, August 6, 1906. To dispatchers, agents, conductors: Effective at once and until further notice, you will not permit any cars to load with D. & R. G., R. G. W., and Western Pacific Railway Company material shipments, also commercial lading, excepting cars that belong to those lines, or that route that way. We have taken up with them the necessity of furnishing cars for this business. This action becomes necessary because our own company material ship- ments, that is O. R. & N., O. S. L., U. P. and S. P., have not been billed promptly. It is desired that you explain this fully to all con- cerned in such a way that they can not take exceptions. Also that 460 MEYER. we will not accept cars which are loaded for the above lines, except- ing as indicated. If you are not certain as to the routing take 801 it up with, this office, although a rate card should be on all foreign cars. Acknowledge receipt on enclosed card. J. F. Meter, Car Service Agent? Q. Mr. Meyer, do you think, having your recollection refreshed by that circular, that you made no distinction or discrimination, or have not made any, at any time, between D. & E. G. and Union Pacific ? A. I will say that when that circular was issued, it was issued through a misunderstanding. Q. Who had the misunderstanding? A. That was a misunderstanding. Q. Between whom was the misunderstanding? A. Well, in a general way, when I get out instructions of that kind, I confer with our general superintendent and other heads of departments, and issue these circulars. When this circular was is- sued, I found it was not the right thing, that it was a misunderstand- ing on my part in issuing it, the way I did issue it. Q. With whom was the misunderstanding? A. And I think that circular was recalled, a portion of it any- way, within a very few days after it was issued. Q. Well, you said it was the result of a misunderstanding. A misunderstanding between you and whom ? A. With the general manager and general superintendent. Q. What did you think the general manager had said to you, which it turned out he had not said to you ? What did you understand he said to you to make you issue this circular ? A. The discussion generally came up on that proposition as it is in the circular, and I understand it that way; I understood 802 that was the kind of circular I should issue, but it seems after I did issue it, that it was wrong. Q. That is, j^ou understood Mr. O'Brien, did you, that that was the kind of circular you should issue? A. Yes; or from Mr. Buckley, whoever it was that mentioned it. We were in conference together and having some discussion on the subject. Q. And this circular was issued, was it, immediately after this con- ference ? A. Yes, sir; or soon after; I don't know whether it was issued immediately after. Q. Is it usual or unusual for you to misunderstand your instruc- tions, Mr. Meyer ? A. Well, it is a very unusual thing that I misunderstand any- thing of that kind. Q. Is it not a fact that circular was withdrawn because of the pro- test of the Bio Grande people, and not because you had had a mis- understanding as to your instructions? A. Not to my recollection. •MEYER. 461 iQ. Are you sure of that? A. Quite sure of it. Mr. Cotton. You have all tfaun of i the (circulars these, To ■dispatchers, agents, conductors : Referring to the above circular, that portion prohibiting cars to load with commercial business via Eio Grande is hereby canceled. Commercial shipments may be taken care of the same as heretofore. Acknowledge receipt on inclosed card. (Signed) J. F. Meyer, Car^Servwe Agent. Exhibit 3 is headed the same as the other is and is dated Portland, Oregon, August 15, 1906. To dispatchers, agents, conductors: Instructions contained in above circular are'hereby modified to the extent that only O. R. & N., O. S. L., TJ. P., and S. P., and other cars belonging to the Harriman line must not apply on shipments • of R. G. W. and R. G. and Western Pacific Railway Company material shipments. Acknowledge receipt on inclosed card. (Signed) J. F. Meter, Car-Service Agent. The last one, Meyer Exhibit 4, is dated the 29th of August, and is headed the same as the others. It is addressed To dispatchers, agents, conductors: Effective at once circular changes. O. R. & N. No. 287, S. P. No. 86, Supplement No. 1 and No. 2, hereby canceled. The matter 804 of furnishing cars to load with R. G. W., D. & R. G., and Western Pacific Railway Company material should be handled the same as prior to issue of above circular. Acknowledge receipt on enclosed card. (Signed) J. F. Meter, Car-Service Agent. 71535—09 30 462 MEYEB. Q. From whom did you receive instructions to make the first modification of that order of yours? A. I think I got that from the general manager. Q. Mr. O'Brien? A. Yes. Q. From whom did you get instructions A. I want to add to that answer. I want to supplement it a little bit; that is my recollection. It may be that after the circular was issued — well, that is about the way of it as near as I can remember, that I got the instructions from the general manager or the general superintendent, I don't remember which one. Q. From whom did you receive instructions pursuant to which you issued the second supplement? A. I think the same source, and the further fact that we were a little bit easier on some equipment. Q. From whom did you receive your instructions which resulted in canceling this circular, which you did under date of August 29 ? A. Well, I cannot say positively, but the supply of cars was get- ting a little bit easier about that time. Q. Now, Mr. Meyer, you said a little while ago that you issued that original circular under a misunderstanding. Was that misunder- standing removed by the general manager between the dates of the issue of the circular and the date of the first supplement? A. I cannot say off-hand. 805 Q. Can you state now what that misunderstanding consisted in ? What did you include in your first order that was put in there under a misunderstanding? A. Commercial shipments. Q. Commercial shipments? A. Yes, sir. Q. It was not necessary however to prohibit the loading of ship- ments of material to be used by the D. & R. G., R. G. W. and Western Pacific in any cars except the cars belonging to those lines, was it? A. That was about the idea, but from the fact that we had taken up with the Rio Grande the necessity of furnishing cars for their eompany material shipments, we thought that so long as they wanted their material, it would be only right for them to furnish their equip- ment for it. We had a very heavy company material shipment of our own to take care of. Q. Well, do you know anything about the Western Pacific, whether that is under construction or not? Q. I understand so. Q. You speak of it here in your circular ; what was the nature of the material shipments that were to go down there that you desired to regulate by this order ? A. I suppose it was everything in the line of material required in the construction of a railroad in the way of ties and lumber. J.U..CJ a mix. 463 Q. Do you know anything about the Denver & Eio Grande people coming up here and being here at the time and protesting against this discrimination? A. No, sir. Q. You never heard of that? A. Only as hearsay. Q. Well, I asked you if you knew anything about it. Did you hear of that from Mr. O'Brien? 806 A. I heard of Mr. Schlacks being out here. Q. What is his position in the Rio Grande ? A. I believe he is general manager. Q. He was here about this time, was he not ? A. I don't know whether it was at that time or later. Q. Is it not a fact, sir, that because of the representations of Mr. Schlacks made here, either at the time or shortly after you issued that circular, that you withdrew? A. No, I cannot say as to that. Q. From what portion of the country here were material ship- ments moving forward for use on the Eio Grande and the Rio Grande Western and the Western Pacific? A. I guess pretty much all those mills in this territory have orders in there. I cannot remember what mills it was moving from. Q. Did you notify those mills that were selling material to the Rio Grande or the Western Pacific, before you issued this circular? A. Before I issued the circular? Q. Yes. A. No, sir. Q. Did you have any consultation with them to ascertain whether or not it would interfere with their business? A. No, sir, I do not as a rule deal with the mills direct myself at all. Q. Did anybody else at your instance have any consultation with those mills to find out whether they would be incommoded by this rule before it was issued? A. Not that I remember. Q. Did you give a preference in furnishing cars to material ship- ments for the four Harriman lines as against commercial 807 shipments? A. No, sir, not excepting in cases where it is required — well, we do not ; ordinarily speaking we do not. Q. Did you hear the testimony of Mr. Kelly this morning in that regard ? A. Yes, sir. Q. And it is your impression that Mr. Kelly is mistaken about that, is it? A. No, sir, that part of it that he testified to, as to the car material shipments going to Chicago, we do give that preference; that is a little out of the ordinary of railroad material. 464 MEYEB. Q. But he testified as to other railroad material. You desire to say, do you, that commercial loading from these mills here has the same privileges and the same rates and the same service as you give to material that is going from the same mills for use by the Harriman lines, in their own construction ? A. Yes, sir, ordinarily we do. Q. Is that always so. A. Ordinarily, we do. Q. That is not my question, what you ordinarily do; I asked you if it is always true? A. Always, yes, sir. Q. Your jurisdiction is over the Southern Pacific in Oregon. 'How do you distribute cars as between commercial loading on the South- ern Pacific lines in Oregon and materials desired by the O. R. & N. or the Union Pacific ; which gets the preference ? A. There is no preference, generally speaking. Q. There are. a good many times, are they not, when you are un- able to furnish all the cars that are demanded ? A. Yes, sir, but they are supposed to take their turn, generally speaking ; commercial orders take turns with railroad orders. Q. Who puts in the railroad order? '808 A. It is all put in with the agent. Q. Where? A. The order for cars is placed with the agents. Q. Suppose the Union Pacific has bought some materials- to use in construction, out here at a mill in the Willamette Valley. With whom does the Union Pacific communicate with reference to cars? A. Sometimes communicates with our office, but most of the time it is placed with the agent. Q. You mean the local agent? A. Yes, sir. Q. You mean that the Union Pacific people in Omaha telegraph direct to the agent at such and such a place to get cars ? A. As a rule they have an inspector in this territory, and he places the order with the agent. Q. And it is your understanding that in no case does the Union Pacific get any preference in the order in which they receive cars over any other customer of the mill ? A. Not now, no, sir, and it has hot for some time. Q. Well, how long ago? A. Well, the general rule is that we do not do that, generally speaking. Q. Do you know of instances where you have done it ? A. I can not recall any right now. Q. Do you know, as a matter of fact, that you have at times given a preference to the railroad, and that they have received cars out of their order? Don't you know that is so, Mr. Meyer? A. Only as it was on some rush shipments, some important ship- ment. MEYEB. 4§§ Q. Who decides whether, the shipment is important? The, mill owner or the railroad company ? A. We generally get that from the railroad company. 809 Q. Suppose the purchaser of commercial loading is putting up a big. building somewhere ; he might thjnk that his ship- ment was important, might he not ?• A. I presume so. Q. But if in the judgment of the Union Pacific railroad its ship- ment was important it would take precedence, would it not ? A. Well, I think we give the commercial men as much benefit as we do the railroad company. Q. I am not asking you about benefits. I am asking you whether as a matter of fact, if the railroad company announces that it has, a shipment that is " important " as you put, it, it does not get the cars in preference to the commercial loading as it was practically testified to this morning by Mr. Kelly ? A. We try to take care of the orders in their turn. Commissioner Lane. You have no system of car apportionment here? Witness. No, sir, only as the business demands it. Commissioner Lane. How do you distribute your cars ? According to the demands put in by shippers ? Witness. Yes, sir. Commissioner Lane. You do not divide up your, mills and manu- facturing establishments, and give each one its proportion in turn? Witness. We try to take care of the loads ordered in the order in which it is supposed they are received. Of course individual orders are not placed with me; the individual orders are placed wi#i the agent. Commissioner Lane. But you have no way in which you ap- praise the capacity of the mill by a certain number of cars 810 each week? Witness. No, sir. Q. Who places, the orders ordinarily with the agent for the ship- ment out of the mills; that is, the commercial shipments? A. Who places it with the agent ? Q. Yes. A- I suppose the mill does. Q. You have had a good deal of trouble this year with car short- age, have you not ? A. Yes, sir. Q. But irrespective of that trouble you do not remember any case now excepting in the case of material for refrigerator cars, where the railroad company has been given any preference over, commercial shipments ? A. No, sir. Q. You do not remember any of them ? A. I do not remember any. 466 MEYER. i Q. Now, in this circular, Meyer Exhibit 1, you say the action becomes necessary because our own company material shipments — that is, the O. E. & N., O. S. L., U. P. and S. P. have not been filled promptly. Do I understand that you have no central authority over the distribution of these cars, except Mr. Kruttschnitt? A. We take care of the local business out here. When it comes to a matter of not knowing what to do it is referred to the general super- intendent or general manager and he in turn, I presume, refers it to Mr. Kruttschnitt. Q. You have frequent conferences with the general superintendent, Mr. O'Brien, here about the matter of distribution, of course? A. Yes. Q. You have a set of printed rules applicable to the Harriman system cars, the handling of cars among the lines of the Harri- 811 man system? A. Will you please repeat that ? Q. You know there are in existence among all the roads a regular set of car service rules ; you are familiar with them ? A. Yes, sir, general car service rules. Q. Now, have the officials of the various Harriman lines a set of rules governing the handling of the equipment of those lines ? A. Do you mean all the associated lines? Q. What do you mean by the associated lines? A. The Union Pacific, the Southern Pacific, O. R. & N., Oregon Short Line, and Sunset Lines. Q. Have they printed rules? A. No printed rules, no, sir. Q. Have you no rules? A. Not with this associated line equipment. Q. But have you not any kind of organization, any printed or written or typewritten instructions that are general instructions, applicable to the handling of business? A. No, sir. Q. Then by associated lines you mean this, do you not, Mr. Meyer — if I am not right, correct me — that you as an official of the Southern Pacific and of the Oregon Railroad and Navigation Com- pany, are instructed to treat all the cars of the Harriman system — that is, the Union Pacific, Oregon Short Line, Oregon Railroad and Navigation Company and Southern Pacific system — as though the whole of them together constituted one system ; you treat them all as your own cars? A. Yes, sir. Q. As distinguished from the cars of outside lines ? A. Yes, sir. 812 Q. And you make no distinction in the handling of that equipment by reason of the fact that it may belong to one line or the other? A. No, sir. Q. That is all. METER. 467 Examined by Mr. Cotton : Q. Mr. Meyer, an associated line car is at home no matter what its initials may be, wherever it is on an associated line ; is that it ? A. Yes, sir. Q. Before that arrangement took place an O. R. & N. car was at home on the O. R. & N. ? A. Yes, sir. Q. A Southern Pacific car on the Southern Pacific ? A. Yes, sir. Q. A Short Line car on the Short Line, and a*Union Pacific car on the Union Pacific ? A. Yes, sir. Q. And the car service rules govern and regulate the movement of all these cars between the several associated lines? A. Yes, sir. Q. If you turned over an O. R. & N. car to the Southern Pacific before this arrangement took place, the Southern Pacific could not load that car for California, could it ; they would have to return it to you at Portland? A. Treat it as a foreign car, yes, sir. Q. If you received a car from the Oregon Short Line at Hunting- ton you could not turn it over — you could not use it on your own line except as a foreign car? A. No, sir. Q. And you could not turn it over to the Northern Pacific at Wal- lula, or the Great Northern at Spokane? A. No, sir. Q. Or to the Southern Pacific at Portland ? A. No, sir. 813 Q. But you can now? A. Yes, sir. Q. And the same of course is true of Union Pacific ? A. Yes, sir. Q. Whenever you find an associated line car bearing any initial you treat it just exactly as they treat an O. R. & N. car? A. Yes, sir. Q. And you draw no distinction between the O. R. & N. and South- Pacific lines in Oregon? A. No, sir. Q. Referring to these circulars, the first one is dated August 6th. At that time do you know what rate the company was making, the O. R. & N. and Oregon Short Line, on D. & R. G. and Western Pacific Company material? A. No, sir. Q. You don't know what rate of charge they made? A. You mean freight rate? Q. Yes. A. No, sir. 468 METEB. Q. Was that company material regarded' and treated as commercial lading? A. I think so. Q. You refer here to D. & R. G. Company material, and: also to commercial lading in your circular. August 6th you say : " Effective at once, and until further notice you will not permit any cars to- load with D. & R. G., R. G. W. and Western Pacific Company mate- rial shipments," and also commercial lading, excepting in certain cases. Did the agent know the difference between commercial, lading and D. & R, G. material ? A. Excepting as it would be classified or billed perhaps, or some? thing of that kind. Q. You do not know what freight rate was made on D. & R. G. Company material at that time, do you.? A. No, sir. 814 C omm i ss i° nei ' Lane. Is that 1906? Mr. Cotton Yes. Commissioner Lane. Have you a classification now for company material, D. & R. G. material? Mr. Cotton. It was taken out on the 29th of August. Commissioner Lane. You do not have any particular rate on com- pany material as distinguished from any other material on a foreign line? Mr. Cotton. We did have up to the 29th of August half a cent a ton a mile, was it not, Mr. Miller? Mr. Miller. Yes. Commissioner Lane. You have not had it since ? Mr. Cotton. No, sir, and we have not got it now. Now, on Au- gust 9th, Mr. Meyer, your attention was called to the fact that your circular of August 6th was too broad and included commercial lading as well as D. & R. G. Company material? A. Yes, sir. Q. From some source, you have forgotten where, and you then issued that circular three days later? A. Yes, sir. Q. On the 15th of August, four days after, you issued this circular, and I will read it and ask you to tell me what it means : " Instructions contained in the above circular are hereby modified to the extent that only O. R. & N., O. S. L., U. P. and S. P. and other cars belonging to the Harriman lines must not apply on shipments of R. G. W., D. & R. G. and Western Pacific Railway Company mate- rial shipments." What did you mean by that? That you could use other 815 foreign cars? A. That we would use other foreign cars on the return move- ment home. Q. By that you meant that if you had a foreign car on your line, any foreign car, which loaded back to the D. & R. G., they could load it with D. & R. G. Company material ? A. Yes, sir. MEYBB. 469 Q. And it did not relate solely to D. & R. G. cars themselves?; A. No, sir. Q. Now on the 29th of August you issued this circular : " Effective at once, Circular O. R. & N. No. 287, Southern Pacific No. 86, Supplements 1 and' 2 is hereby cancelled. The matter of fur- nishing cars to load with R. G. W., D. & R. G. and Western Pacific. Company material should be handled the same as prior to the, issuing of the above circular." Do you know what freight rates that D.. & R. G. W. commenced paying on that day ? A. No, sir. Q. You don't know anything about that ? A. No, sir. Q. On the 29th of August you allowed D. & R. G. Company and; D. & R. G. Western and Denver Pacific material to move in any kind , of a car exactly the same as commercial shipments? A. Yes, sir.. Q. Without any distinction of any kind, character or description ? A. Yes, sir. Commissioner Lane. Was there a new tariff in effect, that day re- specting that, material ? Witness. I do not know. Q. Prior to the issuance of any of these circulars you had- applied to D. & R. G. Company to send you empty cars to load with their company material? A. Yes, sir. 816 Q. But they had not been able to furnish you the cars? A. They could not furnish them. Q. And you had furnished them at Ogden more cars than you had received from them ? A. Yes,, sir. Q. And they owed you cars ? A. Yes, sir. Our deliveries there were in excess of receipts. Q. And these cars, which you had delivered to them had been largely loaded with their company, material? A. Yes, sir. Q. And you thought it was about time for them to hustle up a few cars of their own? A. Yes,sir. Q. And for the purpose of bringing about that result you issued these circulars ? A. That is it. Q. You keep an account. If you should load cars here and not get any empties from the East, about how long would this road operate, taking the ordinary quota of cars which is necessary to do its gen- eral business ? A. Well, we would operate about thirty days, probably. Q. And at the end of that time you would not have a car on the, road? 470 METER. A. We would not have a car left on the Navigation line. Q. Therefore, it is necessary for you to receive at all times empty cars? A. Yes, sir. Q. And you keep track at Huntington, do you not, of the number of empties which you receive from the Short Line, and the number of loads you deliver ? A. Yes, sir. Q. And whenever they begin to owe you too many cars you call on them for cars, do you not ? A. That is right'. Q. You owe them quite a bunch of cars now, don't you ? A. Yes, sir. 817 Q. Of course this applies both ways; you keep track both of empties and loads? A. Yes, sir. Q. How many cars do you owe the Short Line at Huntington now ? A. Approximately perhaps 300 or 400. Q. Do you keep track with the Northern Pacific? A. Yes, sir. Q. You deliver cars to the Northern Pacific at Portland ? A. Yes, sir. Q. How many cars does the Northern Pacific owe you at Portland at the present time ? A. Approximately about 800. Q. In other words, they have received 800 more cars from you than they have given back? A. Yes, sir. Q. How long a time is that for ? A. That is beginning about last March, February or March, and up to — I have not checked it up very lately, but up to the 15th of November, along in there. Q. From February or March up to the present time they have gradually fallen behind in returning cars to you until they now owe you about 800? A. Yes, sir. Mr. Severance. Do you mean now, or the 15th of November? Witness. The last checks I made was about that time. Mr. Severance. So you do not know just what it is now ? Q. Do you know about what it is now ? A. I think it must stand pretty close to the same figure yet. Q. They have not equalized very much ? A. No, sir. Q. Do you deliver cars loaded to the Great Northern at Spokane? A. We do. Q. For delivery to Seattle ? A. In their own equipment at the present time. 818 Q. Do you receive cars from the Great Northern at Spokane connecting from the East ? MEYEE. 471 A. Do we receive cars from the Great Northern ? Q. Yes. A. We receive some cars. Q. Loaded and empties both ? A. Only loaded. Q. But you load back cars that way ? A. Yes, sir. Commissioner Lane. Only their equipment? Witness. Foreign cars that route that way also. Commissioner Lane. Not your own? Witness. Sometimes we let our own cars go to the Great Northern when we have a supply of them. Q. You equalize there and keep track of course ? A. We aim to equalize at Spokane. Q. In other words, there is a free interchange of cars except where somebody begins to get very much in your debt ? A. Yes, sir. Q. Or when you get in debt to somebody else ? A. Yes, sir. Q. And then, as gentlemen say, you try to square up a bit? A. Yes, sir. Q. That is what you mean by this occasional stopping of free inter- change ? A. Yes, sir. By Commissioner Lane : Q. That has been going on for some months, has it ? A. Yes, sir. Q. You have not given them any number of Union Pacific or associated line cars for a long time, have you ? A. We have tried for a long time to equalize the interchange 819 of cars ; more particularly at this time when we are so short. In other words, we cannot send too many of the cars off the line, because we would not have any left for our own business. Q. Do you know whether there is any rule by which you can com- pel the Northern Pacific or the Great Northern or any other line with which you connect to return cars to you ? As a practical rail- road man, what would be your suggestion on that point ? A. Well, I don't think that is hardly practicable. I believe in the pooling of equipment. Q. You think it would be a good idea to extend the system that you have over all of the associated Southern Pacific lines, to the Great Northern and the Northern Pacific and all other lines? A. I believe in the general pooling of all equipment; I believe that is the proper thing to do. In fact, there is an association started in Chicago now among some of the lines. Q. Is there any method you have to suggest by which, except by the increase of per diem, that you could get these cars returned to you? 472 MEXE)$.. A. No, I do not know of any: plan t&at wfluld work ij; out. Q. That is all. By Mr. Cotton : Q. Some question was asked you about Silver Bow. Is that in your jurisdiction? A. No. Q. Do you know what interchanage of equipment takes place be- tween the Oregon Short Line and the Northern Pacific at Silver Bow ? A. I do not. Q. But you interchange freely between Northern. Pacific 820 here, do you not? A. Yes, sir. Q. That is all. By Mr. Severance: Q. You were asked about the reason, for, the issuance of these cir- culars and you stated it was because you were. hard up for ca^s. Dur- ing your administration have you been compelled to issue any similar circular as referring to other railroads; that is, material shipments of other lines than the D. & R. G. and allied lines ? A. "We have instructions out now, not to load any of our cars to the Great Northern or the Northern Pacific. Q. I am asking you if you had at any time prior to the issuance of this circular of the 6th of August ever issued such a circular with reference to the material shipments to any other railroad ? A. I cannot recall any now, but no doubt we have issued them from time to time. Q. Have you any recollection of any such thing? A. No, I cannot recall it now. Q. Had you ever, prior to that time, or have you since, issued any circulars directing that commercial loadings should not be made where a car was routed over a certain line, unless it was made in the cars of that line? A. Will you please repeat that ?' Q. Have you ever issued any other circular like this one of August 6th prohibiting commercial loading where the cars were to route a certain way, otherwise than in cars of that line. For instance, here you won't allow commercial loadings over the D. & R. G. unless 821 they furnish D. & R. G. cars. Did you ever apply that rule to any other railroad? A. We had a rule in effect of that kind here some number of years ago. Q. Applying to what road ? A With the Oregon Short Line, practically the same thing. A carload that came west over the Union Pacific, could not go over the D. & R. G. and vice versa. We were confined to equipment routed D. & R. G. for D. & R. G. loading. MEtEfc — JENKINS. 4^73 Q. But that is not what this circular says. How long ago did you have that regulation ? A. That has been several years a,go. Q. Well, how long ago? A. Oh, off-hand, perhaps five or six years ago. Q. Wasn't it longer ago than that? Mr. Cotton. Have you the circular in your office now, Mr. Meyer ? Witness. I don't know ; I think perhaps I could find it, yes. Q. Have you at any time, since 1900 or 1901, five or six years ago, or six or seven years ago, ever had any such rule in -force? A. Similar to that one ? Q. Yes, as applied to Union Pacific. You say you had one that applied to Union Pacific; have you had such a one in the last six or seven years? A. Excepting as I said a minute ago. Q. But, Mr. Meyer, you testified a moment ago that five or six years ago you issued similar instructions so that you would not furnish cars for Union Pacific shipments unless they were 822 U. P. cars or that routed that way, and the same as to the Bio Grande. Now are you sure about that, sir ; have you done that within five or six, years? A. Well, it might be longer than that. Q. Don't you know it was before the Union Pacific bought the Short Line that that was done ? A. That might be ; I could not say offhand. Q. That is all. Mr. Cotton. Mr. Meyer, will you look and see if you can find that circular ? Witness. Yes. Mr. Cotton. Prior to this pooling arrangement where every car was at home on the associated lines, did you ever issue wires or circu- lars or directions against the Short Line similar to this D. & E. G. circular ? Witness. I cannot recall it positively. Mr. Cotton. Will you look and see? Witness. Yes. Mr. Cotton. That is all. Mr. Severance. That is all. 823 Mr. Seveeance. I now offer, pursuant to agreement, the testimony given by B. H. Jenkins, a witness before the Inter- state Commerce Commission, who testified on the 25th day of Janu- ary, 1907, at the City of Partland,. Oregon. I understand it is agreed by all parties that this testimony may be written into the record and have the same force and effect as though Mr. • Jenkins were on the stand giving the same testimony. Mr. Evaets. Yes. 474 JENKINS. R. H. JENKINS testified : Examined by Mr. Severance : Q. Where do you live? A. Portland. Q. What is your business? A. Chief clerk in the freight office of the Northern Pacific. Q. How long have you occupied that position ? A. Since the 1st of September of last year, last September. Q. Prior to that what was your business? A. I was a year with the Northwestern Improvement Company. Q. And prior to that? A. Prior to that I was with the Harriman lines, the O. R. & N. Q. What position did you fill with the Harriman lines? A. Various positions. I was at one time freight solicitor for the Harriman lines, on the street, and I was again chief clerk in the general agent's office. Q. When were you freight solicitor on the street ? A. From about 1898 up to about two years and a half ago, I think. 824 Q. Up to two years and a half ago, did the Southern Pacific and the O. R. & N. have separate solicitors out? A. Yes, sir. Q. Have they since that time? A. No, sir ; I think not. Q. Which company did you work for when you were freight so- licitor ? A. TheO. R. &N..Co. Q. What were the instructions or directions after 1901 as to the soliciting of traffic from the Atlantic seaboard and from the country west of the Atlantic seaboard, given to the agents of the O. R. & N. and the Southern Pacific? A. As to what route they should move over, do you mean? Q. Yes. A. Well, the impression we gave was that it was desirable that Atlantic seaboard business should move by Sunset Route if possible. If not, handle it by Union Pacific. Q. And as to shipments originating west of the Atlantic sea- board ? A. Those were, to move by Union Pacific if we could get them that way. Q. What change was made in the personnel of the soliciting agent at the time you say they ceased to have separate solicitors? A. I came off the street and went into the office as chief clerk for Mr. Morse. Mr. McCusker went on the street when I went into the office. Q. He went on the street for both lines, do you mean ? j ass KiJN B-MoKKIDE. 475 A. Yes, sir. Q. When was it you went into the office, and McCusker commenced to solicit for both lines ? A. About two years last November. I think it was in the fall of the year, about November. I was in the office about a year 825 before I quit the O. E. & N. Company. Q. Mr. Jenkins, it appears by some of the testimony here that the Ogden gateway was closed as to shipments by way of Sac- ramento. When was that? A. I do not remember just the time. I should say along in 1902 somewhere. Q. It was while you were still with the Southern Pacific or the O. K. &N. Company? A. While I was still with the O. K. & N. Company ; yes, sir. Q. That is all. Mr. Cotton. That is all. 826 Mr. Severance. I now offer, pursuant to agreement, the testimony given by W. C. McBride, a witness before the Inter- state Commerce Commission, who testified on the 25th day of Janu- ary, 1907, at the city of Portland, Oregon. I understand it is agreed by all parties that this testimony may be written into the record and have the same force and effect as though Mr. McBride were on the stand giving the same testimony. Mr. Evaets. Yes. W. C. McBEIDE. testified : Examined by Mr. Severance : Q. Where do you live ? A. Portland. Q. What is your business ? A. General agent for the D. & E. G. Q. How long have you been employed by the D. & E. G.? A. About ten or twelve years. Q. What kind of business do you transact for your company at Portland? A. The duties incidental to a general agent's business; the secur- ing of freight and passenger traffic, etc. Q. What kind of traffic do you work for here? A. All classes of traffic, freight and passenger. Q. Moving both ways ? A. Both ways. Q. Can you give me an idea how the business of the D. & E. G. compares now with what it was prior to 1901 out of Portland and the Willamette Valley? A. I could not give any percentages. I might illustrate it in other ways. Have you reference to figures? 4-76 M6BKIDE. 827 Q. Yes, if you have any figures ; if not give us percentages. A. I can only from memory, illustrating it by taking two years. Q. Go ahead. A. In the year 1900 from the Willamette Valley we secured in round numbers 27,000 bales of hops, or the equivalent of 320 carloads, of Which about 280 cars went by Sacramento and Ogden and about '40 cars cameby 'Portland andthe O. E. & N and Short Line. Inthe year 1902, or one year after the so-called consolidation, we secured less than 30 carloads of hops from the same territory. Q. How did they move? A. By the G. K. & N. and Oregon 1 Short Line. Q. How is your business now from the Willamette Valley? A. Nothing to be compared with what it was in 1901 and 'prior. Q. Is there any difference in the extent of the soliciting you did for business in 1900 and in 1902 j that is, do you still solicit that ter- ritory ? A. Oh, certainly, yes sir. Q. Any less actively than you did before? A. No, sir, more so ; or at least as much. Q. It appears by your statement 1 that the bulk of the traffic in hops that you secured at that time was routed over the Southern 'Pacific 'by Sacramento. Does any traffic go that way now from the Wil- lamette Valley ? A. Not Sacramento and Ogden ; no, sir ; not to my knowledge. Q. Where is the division line, if you know, on the Southern Pacific as to traffic moving to the east, if there is any division ? A. Ashland, if I understand. Q. That is, from Ashland this way ? A. From Ashland north it moves via Portland. 828 Q. What is the distance from Ashland to Portland? A. I think it is about 340 miles ; but I am not positive. Q. Do you know the distance from Portland by the Southern Pacific route to Ogden? A. I should think it was in round numbers about 1,350 miles; in that neighborhood. Q. Do you know the distance by O. R. & N. and Short Line? A. About 890 miles, or something in that neighborhood. Q. You say that all traffic that originates north of Ashland goes by Portland? A. Yes, sir. Q. In what part of the Willamette Valley are the bulk of the hops raised, taking Salem as an example? A. In the vicinity of Salem. Q. And Salem is 90 miles from here ? A. Salem is 53 miles from Portland. Q. And so that it appears the Southern Pacific Company secures 53 miles to Ogden instead of 1,300 miles to Ogden, as formerly ? A. Yes, sir. McBRIDE. 477 Q. Do you remember when the Ogden gateway was closed, and have you a circular about it? A. To all intents and purposes it was closed in the early summer, if I recollect right, of 1902. It was closed permanently, however, locked, on September 1, 1902. Q. Have you a circular with you? A. I have a circular. Q. Will you let me have it? Was this circular which you have handed me issued at that time? A. I presume so, yes. Q. That is the original of it? A. Yes, sir ; I took that from my file. 829 Q. From the files in your office? A. Yes, sir. Mr. Severance. I will read this into the record. It is headed : Southern Pacific Company, (Oregon Lines), Traffic Department, Portland, Ore., Sept. 1, 1902. Circular No. F-48. CLOSING OF SACRAMENTO-OGDEN ROUTE ON OREGON LINES BUSINESS. To agents and others interested: An understanding has been reached with Eio Grande lines to handle all business to and from points on the Oregon lines of this Company interchanged with Eio Grande Western Railway at Ogden via Portland and Huntington, and effective today, the Sacramento- Ogden route is closed for such business. Joint tariffs of these companies issued, Nos. 33-IT and 35-U, also Transcontinental Freight Bureau Tariff will be so amended, and on and after this date agents will not accept for shipment via Sacra- mento any business when routed via Ogden east in connection with the Union Pacific or Eio Grande Eailways. W. E. Coman, General Freight Agent. Q. How is business of the Eio Grande affected otherwise than the hop business since 1901 ; I mean the business out of Portland ? A. In about the same ratio, east-bound business. Q. Prior to 1901 did Eio Grande business solicited by your people here move over both the O. E. & N. and the Southern Pacific via Sacramento ? A. Yes, sir. 830 Q. Was there, or was there not, any competition between the Southern Pacific and the O. E. & N. to secure the business prior to 1901? 71535—09 31 478 MoBKIDE. A. I was not here, Mr. Severance, prior to 1901, and I cannot speak as to that. Q. You were not personally in charge? A. I was not. Q. When did you borne here ? A. In August, 1902. Q. Was your personal knowledge of those figures obtained from the records in your office? A. Yes, sir. Q. You keep a set of records in your office, do you ? A. Yes, sir. Q. Of which you are the custodian; they are in your charge, are they? A. Yes, sir. Q. Do you solicit lumber shipments in the Willamette Valley? A. Yes, sir. Q. How is your lumber traffic now ? A. Very light from that territory. Q. What makes your difficulty in getting traffic there now ? A. Adverse influence of the Harriman lines. Q. Adverse influence, how exerted and by whom, representing the Harriman lines? A. Agents ; through local favors. Q. What about the furnishing of cars to move traffic over your line, Mr. McBride? A. At certain times they are restricted, but not often. Q. Do you remember of the issuance of this circular on the 6th of August which I called Mr. Meyer's attention to? A. Yes, sir. Q. How soon after that was issued did you hear of it ? A. I heard of it right away, probably the same day or the day after; immediately. 831 Q. Was there any representative among the general officers of the D. & R. G. here at the time ? A. Not at the time the circular was issued. Q. How soon afterwards? A. The circular was issued on the 6th of August and our vice- president came here some time during the latter part of the month; I can't recall the date. Q. Do you know of your own knowledge of any representations made by him to the O. R. & N. or Southern Pacific people with ref- erence to that circular ? A. I have heard that the ■ Q. Were you present at any interview ? A. No, sir. Q. You keep track of the destination of traffic from its origin. Is that part of your business ? A. Such as moves to our line, yes. McBBIDE. 479 Q. Have you a pretty fair knowledge of the movement of all traffic, the way it goes ? A. Oh, generally speaking. Q. How are hops usually moved to the Atlantic seaboard? A. Under normal conditions the bulk from the Valley I would say would go by Sunset. Q. During what years have they moved by Sunset since you have been in Portland? A. More or less every year ; less this year than prior. Q. This year how have they generally moved ? A. I believe the bulk, probably a large percentage of them, will go through Portland, and east by O. R. & N. Q. Do you secure any traffic at Portland that comes in by boat from the Willamette Valley? A. Yes, sir. Q. What class of traffic ? A. Hops. Q. What percentage of hops that you move come in here by boat? 832 A. Thus far this season the largest per cent, I should say 75 per cent as an estimate. Q. To what point are those hops destined that you have shipped, or are now shipping, over that line ? That is, I mean what territory ? A. Various points through the east. Eecent shipments have been consigned to New York, and some to London. Q. How do they, as a rule, move east after leaving your lines at Denver or Colorado Springs? A. By the Rock Island ; the application of rates over the Southern Pacific lines south of Portland apply east of Colorado common points via Union Pacific and Rock Island only. Q. I think that is all. Examined by Mr. Cotton: Q. Mr. Schlacks was here about the first of September? A. He was here the latter part of August, to the best of my recol- lection. Q. By the latter part of August you mean about what day in the month ? A. Well, I could not say. Probably somewhere from the 18th to the 28th or 25th, in that neighborhood. I am not prepared to give the exact date he was here. He was here several days. Q. You do not know exactly, but your impression is that it was after the 18th? A. I would not say positively. Q. It was certainly after the 9th ? A. It was while the circular was in effect on company material. Q. But long after it had been taken out on commercial lading? 480 McBRIDE. A. Yes, sir. Q. There was no difficulty about getting it out on commer- 833 cial lading, was there? A, No, sir. Q. That you understood ? A. I understood that with Mr. Meyer. Q. That was a pure mistake ? A. I didn't understand that that was a mistake. Q. You didn't so understand? A. I didn't understand that it was issued through an error; no, sir. Q. Did you talk to anybody about it ? A. 1 talked to Mr. Meyer about it, Q. You didn't talk to Mr. O'Brien? A. No, sir. Q. It was in for three days and then taken out? A. Yes. Q. But you were about the only person you knew of that talked about it ? A. I don't know of any one else excepting our purchasing agent; our special timber agent was here at the time looking after our com- pany shipments. Q. But he didn't get his end of it out, did he ? A. No, sir ; it affected him more than the commercial end. Q. You could get out the part that really affected you, the com- mercial loading, without any apparent difficulty, except bringing it to the attention of Mr. Meyer? A. Of Mr. Meyer. Commissioner Lane. Did they haul any empties for the D. & B. G. to take east-bound business ? Witness. Yes, sir; at certain times, when it was necessary. We have done it. Q. Now in that connection, Mr. McBride, you have a record of the movement of stuff you have delivered to the Short Line at Ogden in the last year, have you not ? That is, destined for this country ? A. Yes, sir. 834 Q. And, as a matter of fact, the D. & B. G. lines have de- livered to the O. R. & N. during the last year 9,000 tons of freight ? A. I know the D. & B. G. does not deliver freight to the O. B. & N. Q. But I mean freight that originated on, and was delivered by, the D. & B. G. to the Short Line? A. Yes. Q. And afterwards delivered by the Short Line to the O. B. & N. Of such freight there has been about 9,000 tons delivered to the O. E. &N? A. I can't recall the number of tons. Q. That is about it, isn't it? A. I don't reduce it to tons in my figures. McBRIDE. 481 Q. Pounds, carloads, anyway? A. I could not say as to the amount. Your figures might not coin- cide with mine. I don't figure the tonnage. Q. How do you figure? A. I figure in carloads. Q. Well, how many carloads ; what deliveries in carloads have been made of that kind at Huntington to the O. R. & N ? A. For what length of time ? Q. During the year 1905. A. I could not say, sir, offhand. Q. Approximately. A. I could not even approximate. Q. Would you say that Mr. Miller's figures of 9,000 tons delivered to us by you, and 110,000 tons delivered by us to you were out of the way or not ? A. If they are taken from Mr. Miller's records I would say they were correct. Q. I.mean from your knowledge of the business. , A. The east-bound movement certainly is very much heavier than west-bound. Q. From your knowledge of the business you would think about 10,000 tons one way and 110,000 tons the other way would be about the relationship, would you not ? 835 A. I would not want to say until I checked it up; I could not. Q. From your general knowledge of the business you would think it was about that, would you not? A. I would say so. Q. Did you furnish empties to us to equalize that shipment ? A. No,, sir ; our deliveries were to the Short Line. We furnished the Oregon Short Line a great many thousand tons. Q. Yes ; but those cars didn't come out here, did they ? A. They came to the Oregon Short Line. Q. And the Short Line had to haul them out here empty in order to get your traffic, didn't they ? A. I don't know what the Short Line does with them. We turned them over a large number. Q. Do you know what the interchange between your road and the Short Line is, as to the relative relationship of each ? A. I don't know in tons ; no, sir. Q. In carloads for 1905? A. No, I do not. I don't keep track of the amount of tonnage moved into the Oregon Short Line's territory, but I know it is quite: heavy on account of the coke in Montana. Q. That coke moves in what class of cars? A. As a rule in box cars. Q. And that goes up to Butte, Montana, doesn't it ? A. To Anaconda and Butte. Q. It doesn't go out on the Short Line west of Pocatello ? /#** 482 McBBIDE. A. No, sir ; but the cars are on the Short Line. Q. About how far is it from Butte to Huntington ? A. 264 plus 326 miles. Q. But you know, as a matter of fact, don't you, that under the car service rules the Short Line could not deliver those cars to us at 836 Huntington, but must return them to you at the point at which they received them ? A. I am not positive as to that, as to the relations between the Short Line and the D. & R. G. on that thing. Q. You have a gateway open at the present time, have you not, via Huntington and Ogden? A. Yes, sir. Q. And that route is how much shorter than the route around by the way of Sacramento from Portland or the Willamette Valley ? A. Oh, it is probably 450 miles, roughly speaking. Q. Is the train service on the Southern Pacific faster than that on the O. R. & H. and the Short Line? A. No, sir ; I would not think so. Do you refer to the freight serv- ice or passenger? Q. Freight service. A. You mean as between here and Ogden via the different roads? Q. Yes. A. I should think the O. R. & N. would be the shorter route and the service better. Q. About how many days shorter would you think? A. Probably two days under ordinary conditions, probably three. Q. Are there any grades down there in the Siskiyou Mountains and over the Sierra Nevada Mountains on the Ogden route? A. Yes, sir. Q. And the other way it is practically a water level, with the ex- ception of the Blue Mountains, isn't it ? A. Yes, sir. Q. The rates are the same, are they not, as they are by the Sacra- mento gateway? A. Yes, sir; to my knowledge. Q. You still have joint rates? A. Yes, sir. Q. Through bills of lading and through loading? A. Yes, sir. 837 Q. From Portland and points in the Willamette Valley? A. Yes, sir. Q. Would you say that this route via Ogden and Huntington is a better or worse route than the route via Sacramento ? A. I would say that it was a better route. Q. And it has been open to you during all this period of time? A. Yes, sir. Q. And freely? A. Yes, sir. Q. For any business you could get out over it? McBKIDE. 483 A. Yes, sir. Commissioner Lane. You have not been embarrassed in get- ting business here by the difficulties of the Sacramento gateway ? A. Not particularly by the closing of the Sacramento gateway; no, sir. Q. Have you been at all by the closing of the Sacramento gate- way? A. I would not say that we have been embarrassed by the closing of the Sacramento gateway, no, sir. Q. Wherein, if at all, has your embarrassment existed in the move- ment of freight from Portland? A. As I said, the attitude of the Southern Pacific. Q. From Portland. I am taking it from Portland alone now. A. I will say it was the influence of the O. E. & N. Q. That is among the merchants and shippers here ? A. I am speaking of eastbound. You say the movement of freight from Portland. Q. Well, movement of freight from Portland. The influence of the O. E. & N. on mill men and people of that kind, you think ? A. Yes, sir. Q. And that is the same reason which you think prevails in 838 the Willamette Valley? A. Yes, sir. Q. But other than this adverse influence of rival agents, the trans- portation facilities which have been given you whenever you got the business have not been impaired or hampered in anyway what- soever ? A. No, sir; after we have secured it, and it is in transit it moves freely. Q. That is all, sir. By Mr. Severance.: Q. Mr. McBride, the traffic originating in the Willamette Valley; the only one of the Harriman lines which comes in immediate touch with it is the Southern Pacific at the point of origin. That is right, is it? A. Yes, sir. Q. Do you have the assistance of the agents in the Willamette Valley to secure the routing of traffic over the Eio Grande east of Ogden? A. The assistance? Q. Yes. A. No, sir. Q. What is the attitude of the agents at the initial points in the Willamette Valley in that regard? A. They look upon us as a competitor. Q. To whom do the shippers in the Willamette Valley have to apply for their cars? A. To the local station agent. 484 MoBEIDE — MILLER. Q. Are those the same agents that look upon you as a competitor? A. Yes, sir. Q. Before the Southern Pacific and O. R. & N. were working together were the Southern Pacific agents in the Williamette Val- ley Mr. Cotton. Mr. McBride was not here then, Mr. Severance. Q. Oh, you were not here then — what was your talk with 839 Mr. Meyer about this circular of August 6th? Mr. Cotton brought out the fact that you talked with him. A. Why, if my recollection is right, I spoke to Mr. Meyer about it, and he said that in a day or two that would be withdrawn. So I was very glad of that, and that is about the extent of our conver- sation. He stated that they would withdraw it so far as commercial business was concerned right away, and he did; it was only in effect three days I believe. Q. Was there anything said to you by him as to its having been put in through some misunderstanding ? A. No, sir. Q. That is all. 840 Mr. Severance. I now offer, pursuant to agreement, the testimony given by R. D. Miller, a witness before the Inter- state Commerce Commission, who testified on the 25th day of Janu- ary, 1907, at the city of Portland, Oregon. I understand it is agreed by all parties that this testimony may be written into the record and have the same force and effect as though Mr. Miller were on the stand giving the same testimony. Mr. Evaets. Yes. R. D. MILLER testified : Examined by Mr. Severance. Q. Where do you live ? A. Portland. Q. What is your business? A. Railroading. Q. With what corporations are you affiliated ? A. Oregon Railroad and Navigation Company and Southern Pacific Company. Q. And in what capacity ? A. As general freight agent. Q. Of both roads? A. General freight agent of the Navigation Company and gen- eral freight agent of the Southern Pacific lines in Oregon. Q. What are the duties of a general freight agent ? A. On the lines of the Navigation Company the duties of general freight agent are to look after freight traffic. Q. In what way look after it; solicit it, or have it solicited under him? MILLER. 485 A. The business is solicited under his instruction. He 841 makes the rate and is generally responsible for the freight traffic conditions. Q. That is, generally the duties of general freight agent, on any line of road ? A. Yes, sir ; I think so. Q. That answer of yours is a general one ? A. Yes, sir. Q. And it is the duty of a general freight agent, is it not, to secure all the business he can and get all the revenue he can for his road, so long as it is done in a proper manner ? A. I think so. Q. You occupy that position on the O. K. & N. ? A. Yes, sir. Q. And also on the Southern Pacific ? A. The Southern Pacific lines in Oregon. Q. So that you owe to the O. E.. & N. the duty of securing all the business and traffic you can for it, and to the Southern Pacific the duty of securing all the business and traffic you can for it ? A. Yes, sir. Q. The long haul ; is a long haul as a rule more profitable or less profitable to a railroad company than a short haul ? A. It would all depend upon the condition. Q. What would you say, taking a shipment from here to Chicago ; would it be more profitable to the Southern Pacific Railroad Com- pany to share in that haul to the extent of 1,300 miles, or to the extent of 50 miles ? A. That would depend altogether on what it earned for the re- spective hauls. Q. Well, come down to a concrete fact. Take a shipment from Salem, which I am told .is 50 miles from Portland. What does the Southern Pacific get, what percentage of the through rate for bringing in a shipment from Salem destined for Chicago? 842 A. What kind of freight? Q. Hops. A. Carloads or less ? Q. Carloads. A. The Southern Pacific would earn from Salem to Portland Q. What does it actually get; what is credited up to it by that kind of a shipment ? A. It would earn its local rates. Q. How large is that, how much ? A. About 20 cents per 100 pounds. Q. What is the through rate from Salem to Chicago? A. $1.50 for carloads. Q. In carload lots? A. Yes, sir. Q. So that the Southern Pacific Company secures on a shipment, of hops to Chicago 20 cents out of $1.50 ? 486 MILLER. A. Approximately 20 cents. Q. What is the through rate on hops to New York City? A. $1.50. Q. Just the same as to Chicago? A. Yes, sir. Q. So that whether the shipment goes to Chicago or New York, if it comes by the Southern Pacific to Portland from Salem and then on to Chicago or New York the Southern Pacific's revenue consists of 20 cents per hundred, and the revenue of the lines east of Portland consists of $1.30? A. Yes, sir. Q. When those hops moved to Chicago by way of Sacramento route to Ogden, what proportion of the through rate did the South- ern Pacific get? A. Well, applying the $1.50 cent rate via Sacramento and Ogden to Chicago, when that route was open for the traffic in question, 843 the Southern Pacific would earn from Salem to Ogden ap- proximately 60 cents per hundred. .Q. If the hops originated at Portland and were moved through to Chicago or New York by the Southern Pacific, what would the Southern Pacific Company get out of the through rate if they went by way of Sacramento and Ogden? A. About 60 cents a hundred. Q. A large amount of hops are shipped from Portland, assembled here and shipped out of Portland, are they not ? A. Yes, sir. Q. Under whose instructions was the Sacramento route closed? I see the circular is signed by Mr. Coman, but who gave the orders to close it? A. The circular was issued by Mr. Coman. I do not know who issued instructions to him to close it. Q. What was your position at that time? A. General freight agent of the O. E. & N. Co. Q. Were you not a party to the negotiations that led to the closing of that route? A. Yes, sir, I was. Q. Between whom were the negotiations conducted? A. As with Mr. Coman, \ do not know. Q. Well, with yourself? A. The discussion in regard to the matter was participated in by myself — I am wrong about that. I don't know that I had any dis- cussion with any one pertaining to closing the Sacramento route. Q. You were at that time only an officer of the O. E.. & N., were you? A. Yes, sir. Q. You must have hailed that order with delight which gave you all the business. Now don't you know from whence the order 844 proceeded ? A. I do not. MILLER. 487 Q. You don't know whether that order was issued under the in- structions of Mr. Stubbs? A. I do not. Q. You know nothing about it? A. No, sir. Q. And have never been told who directed that order? A. I don't think I was ever told. Q. Never have had any information on the subject? A. Not as to who issued the order cancelling the route. Q. You have no information — never have been told anything about it, except that Mr. Coman signed the order. Is that so, Mr. Miller ? A. I think probably that is true. Q. You do? A. I do not recollect who issued the instructions to close that route. Q. Had you done anything toward getting it issued ? A. Had I done anything towards what ? Q. Had you aided in the movement to eliminate the Sacramento route in any way, and have all the traffic move by the O. K. & N. ? A. No, I was not responsible for it. Q. That is not what I asked you. Did you do anything to secure the issuance of the order? A. I did not. Q. You had no conversation with any person in authority on the subject? A. I don't recall any conversation that I had on that subject. Q. Did you have any correspondence with any person on the subject? A. I think not. Q. Then so far as that particular matter was concerned, you had nothing to do with it, and knew nothing about it until it came out. Is that so? A. As to that I don't recollect. - Q. That is one of the things you can't remember, is it, 845 whether you knew anything about that before it was issued? A. Yes, sir, I don't recall the circumstances connected with that. Q. You think the chances are that that came as a beautiful sur- prise to you, don't you, Mr. Miller, that increase in your business? A. Well, prior to that time, prior to the issuance of that order, the traffic was influenced to move by the Portland route. Q. By whom ? A. It was solicited by the representatives of the Union Pacific and the representatives of the Southern Pacific influenced so far as they could the movement of that business via Portland. Q. Was it more profitable to the Southern Pacific to have the hop business go by the O. E. & N. rather than by Sacramento ? A. I think so. 488 MILLEE. Q. Take hops that originate in Portland, from which point you state a good many hops were shipped; is it more profitable to the Southern Pacific as a railroad company to have the O. E. & N. and its connections get all the revenue, or to have the Southern Pacific get 60 cents of the revenue for taking the stuff from Portland to Ogden? A. The hops taken from Portland originate on Southern Pacific territory in Oregon, and are brought in there largely by the Southern Pacific Company. Q. They are brought in also by boat ? A. To some extent. Q. To quite a considerable extent, are they not ? A. No, I don't think so. Q, Now consider yourself for a moment, Mr. Miller, not as an officer of the O. E. & N., but as an officer of the Southern 846 Pacific; just step over to the other end of the stage. In that case, as an officer solely of the Southern Pacific, do you say it is better for you to get no revenue out of hops that originate at Port- land, or to get 60 cents out of the $1.50 rate to Chicago — speaking solely as a Southern Pacific man ? A. A very large part of the hops shipped from Portland had pre- viously paid tribute to the Southern Pacific Company. Hops that might move from Willamette points to Portland that would not pay tribute to the Southern Pacific Company, it would, of course, be of advantage to the Southern Pacific Company to secure the hops to Portland that were brought to Portland by river, by boat. Q. That is better for you than to get no revenue, of course? A. Yes. Q. Well, now move over to the other side of the stage, and take your position as general freight agent of the O. E. & N. It is much to the interest of the O. E. & N. to have those hops move that way rather than by the Sacramento route, isn't it? A. Yes, sir. Q. Because otherwise it would get no revenue. A. Except as they received it on the river. Q. Now which would you say was the better— the river rate is the same as the railroad rate into Portland, isn't it — the local rate ? A. Substantially the same, yes, sir. Q. Now is it better for the O. E. & N. Co., do you think, to get the 60 cents for the through rate or the local rate for bringing the hops into Portland and having them sent thence over the Southern Pacific? 847 A. I think you will have to re-state that question. Q. Which is more profitable for the O. E. & N: to get its proportion of the through rate of taking the hops from Portland on to Ogden or to take its local on the boat into Portland and let them go forward over the Southern Pacific; which would be more profitable? MILLER. 489 A. I think it would be about a stand-off, as between the earnings on the river to Portland and the earnings of the Navigation Com- pany from Portland to Huntington. Q. That is, you don't think there would be any additional profit to either line in taking the hops forward, over and above the local into Portland. That is right, is it? A. Well, no, I don't quite follow your question. Q. I tried to make it clear. In either case you have a local into Portland. If they come in by O. R. & N. boat, we will say, the O. R. & N. gets that local. If they come in by rail the Southern Pacific gets the local. Now, whichever line ships them through to Ogden gets 60 cents, and the local rate in is 20 cents. Now, you say that that 20 cents includes in itself all the profits that there is in the 60-cent haul, so that it is just as well for either one of these roads to get the small local rate into Portland, and not participate in the through haul? A. I don't think that question is put in a way that I can answer it. Q. Oh, I think it is. I will put it again though, if you can't understand it. A. No, I don't understand it. Q. Well, take the situation as it existed here when the O. R. & N. ran boats up the river to Salem. They got 20 cents then for bringing hops down to Portland. A. Approximately 20 cents. 848 Q. Well, whatever it was, and at Portland hops became com- petitive as between the O. R. & N. and the Southern Pacific. Now, if the Southern Pacific takes them they have to absorb that local, which leaves them 40 cents to haul them to Ogden. The O. R. & N. has to absorb it, or pay it, if they haul them, and they get 40 cents more. Now, if they come in over the Southern Pacific there is the expense of that local, leaving 40 cents more for moving them to Ogden. Now, do I understand you to say that that 20 cents in- cludes, over and above the expense of handling, all the profits there is in the 60-cent haul, and that there is no profit in the 60 cents for the balance of the haul? A. Oh, there is probably a profit in the balance of the haul for either line. Q. Now we have that established. There is a profit then for either line hauling from Portland to Ogden after having absorbed this local of 20 cents. That being the case, how is it possible, Mr. Miller, for you as a general freight agent whose duties are to secure for his line all the business possible and all the revenue, to act at the same time for both the O. R. & N., who want to get this revenue, and for the Southern Pacific who wants to get it, or who ought to want to get it? Can you explain that? A. Well, let us take this shipment you refer to from Salem to Chicago. I assume that the proportion received by the Southern Pacific Company from Salem to Portland for its haul of 53 miles 490 MIIJ_,ER. is just as compensatory under the conditions as would be its propor- tion of the through rate for the haul from Portland to Ogden via Sacramento. 849 Q. Now let us take the other side of it. Suppose the Southern Pacific brings it in here and the O. R. & N. Co. takes it forward. A. That is the case I just referred to. Q. Well, suppose the boats bring it into Portland, the boats of the O. R. & N., and the Southern Pacific takes it, the same rule applies? A. In that case the O. R. & N. would earn this proportion of the through rate, which would be the local rate, and the Southern Pacific would earn the remainder. Q. So that you think each are making something? A. Yes, sir. Q. But it is the duty of an officer of a railroad company, is it not, to make all the money he can for his company, irrespective of what other companies may do ? Now can you explain to the Commissioner how it is possible for you, having a duty to the Southern Pacific to earn all the money you can for that company, and admitting that there is a profit in the through haul to Ogden, to perform at the same time a like service for the O. R. & N., which is competing for the same business? And that is not only applicable to you but to all officials who are joint officials of the two lines. Can you explain that? A. Well, as I answered your question a few moments ago, I assume that the proportion of those through rates which are earned by the Southern Pacific Company to Portland for the shorter haul are just as remunerative, under all the circumstances and conditions, as would be its proportion of the same through rate from Portland to Ogden via Sacramento. Q. Do you mean by that, Mr. Miller, that as much net 850 revenue will result to the Southern Pacific from the haul that it would have in here and getting the local 20 cents, as it would receive if it had the same shipment from Salem and brought it on to Ogden and earned the 60 cents ? A. That is what I am assuming, yes, sir. Q. Well, is it so, do you believe that ? A. I am not in a position to state the fact. Q. Do you believe that to be true ? A. I think so. Commissioner Lane. Is that generally true of all ? Witness. Taking the run from Portland to Ashland, I think that is true. Q. Is that usual in railroading, that all the money is made out of the short haul and no money made out of the long haul ? A. No, that is not true in all cases. Q. That is only a rule that applies to the Southern Pacific. A. I don't think so at all. MILLBB. 491 Q. Is it not a fact that the traffic man knows everywhere that the profit in the business consists in the long haul, so that you get revenue and only have the same terminal expenses as you have on the short haul? A. It all depends on the conditions under which the freight is transported. Commissioner Lane. Perhaps you have peculiarly remunerative rates in Oregon. Witness. Possibly that is so. Commissioner Lane. That short haul might be a better rate for you than the long haul, if you had a very large rate for your short haul. Witness. Yes, sir. 851 Q. And the same rule works both ways; so that you think it would be better for the O. R. & N. to have the Southern Pacific take its profit on the long haul to Ogden ; that is, you think the O. R. & N. could make more money if it could turn over the traffic at Portland and have it taken around by Ogden, by receiving its revenue on its little dinkey boat line from Salem to Portland. A. The O. R. & N. Co. would lose whatever might be its profit for the haul from Portland to Huntington. Q. Well, there is no profit in that, is there ? The profit is all ex- hausted when it gets the boat haul into Portland, the same as in the case of the Southern Pacific. A. No, the O. R. & N. is competing on the Willamette River with other companies who would carry it from Salem to the Southern Pacific if the O. R. & N. Co. did not ; and it is better for the O. R. & N. Co. to secure the river haul to Portland for delivery to the South- ern Pacific than to receive nothing at all. Q. That is very interesting, but it has nothing to do with the ques- tion. Are not you bound from your argument to take the position that the profit has all been earned by this little haul into Portland? A. No, sir. Q. That is the position you take as to the Southern Pacific. You say there is no additional advantage to the Southern Pacific in getting that long haul to Ogden, don't you ? Don't you claim that ? Answer yes or no. A. I can not answer yes or no without explaining. Q. Say yes or no, and then explain. Judge Lovett. Answer the question in your own way, Mr. Miller. A. I would say Yes, sir, but in referring to hops from Salem 852 to Portland, which is a short haul, I would add that hops originate a good deal farther south, where the revenue to Port- land is several times as great as it is from Salem to Portland. The rates from Salem to Portland are relatively low because of water competition. From points south of Salem they are higher according to the distance. Now in answering your question as to the relative advantages in the movement via Portland and via Sacramento, to the 492 MILLEB. Southern Pacific, we must take into consideration the higher rates which the Southern Pacific Company earns from points south of Salem, from the Rogue Eiver and other points in comparison with the rates from points nearer Portland where the rates are low. Q. Take hops brought, in here by this Independent Eiver line, so that neither the Southern Pacific nor the Oregon Short Line (O. E. & N.) gets any revenue until the hops land in Portland. It is a fact, is it not, that the Graham Line brings in hops? A. Yes, sir. Q. Can you see any particular advantage to the Southern Pacific, taking yourself as an officer of the Southern Pacific alone; can you see any advantage to the Southern Pacific road in being excluded from that traffic and having it all forced over the O. E. & N. ? A. It is not all forced over the O. E. & N. Q. As between the two it is all forced over the O. E. & N. A. No, sir ; it is not. Q. I am talking about shipments that go by Ogden to the east. I will put this question so definitely that you will not misunderstand it. Take the case of hops that are brought into Portland 853 by this river line, not controlled by either one of the rail- roads; can you see any advantage to the Southern Pacific Eailroad to have those hops move by rail east of Chicago over the O. E. & N. rather than the Southern Pacific ? A. The Southern Pacific would lose the earnings on the business. Q. Is that any advantage to them? Are the earnings any ad- vantage ? A. I think that is made up in other directions. Q. But I ask you, would that be of any advantage ? A. I would answer that question in this way, that while the South- ern Pacific Company might lose revenue on a very small or limited volume of business moving to Portland by boat, it would more than make up that loss in other directions as a result of the business mov- ing from its rail points via Portland. Q. That is a matter of opinion, isn't it ? A. That is a matter of what ? Q. Of opinion. A. Very largely a matter of opinion. Q. But that is an opinion you would not hold if you did not occupy this dual position, is it not? You would try to get all the business you could of every kind for the Southern Pacific, wouldn't you? A. I think I would hold the same position if I was other than a joint officer. Q. You think that would not make any difference; when it comes to a matter of opinion your opinion would be just the same. A. I think it would be just the same. Q. But your actions would not be the same; you would try to get that business, wouldn't you? If you were competing against MILLER. 493 the O. E. & N. and the business was going to move by way of Ogden and you were representing the Southern Pacific line you would go after that business and get it if you could, would you not ? 854 A. Not necessarily. Q. You would not? A. No, sir. Q. If you were interested only in getting traffic for the Southern Pacific, would you ? A. I would, provided there were no other conditions to consider. Q. For a good many years, Mr. Miller, traffic did move that way when they were separate lines and separate officers with the Southern Pacific and the O. E. & N., didn't it? A. Yes, sir. Q. And at that time there were not any special conditions that you know of that prevented the Southern Pacific from wanting to get all the business it could, were there ? A. No, I think not. Q. And in those days if you had been an officer of the Southern Pacific you would have been pretty hot after that business? A. Yes, sir, provided Q. Yes, provided you were not also an officer of the O. E. & N. ? A. No, sir, provided the arrangement for the interchange of traffic with the Navigation Company at Portland was different from what it is to-day. Q. Well, it is pretty easy Commissioner Lane. What does that mean, sir? What is the ar- rangement ? Witness. The arrangement between the Southern Pacific Com- pany and the Navigation Company, and the Short Line and Union Pacific companies on traffic moving via Portland is that the Southern Pacific shall receive for its haul to Portland, or from Portland 855 on traffic other than lumber when destined to eastern points, 40 per cent of the west of the Missouri proportion of the through rate subject to its local rate as its maximum. Q. Who made that arrangement? A. I think that arrangement was made by Mr. Sproule, who is the freight traffic manager of the Southern Pacific at San Francisco. Q. Who was acting for the O. E. & N. in making that arrange- ment ? A. Mr. Campbell was traffic manager at that time. Q. And they were both of them acting under the orders of Mr. Stubbs? A. Yes, sir ; I think they both reported to Mr. Stubbs at that time. Q. Then, as a matter of fact, Mr. Stubbs held one railroad in one hand and the other in the other, his hands being represented by Mr. Campbell in the one case and by Mr. Sproule in the other, and Mr. Stubbs agreed with Mr. Stubbs on that division; is that true? A. You will have to ask Mr. Stubbs about that. 71535—09 32 494 MILLEB. Q. And I have no doubt Mr. Stubbs, who is a very charming and able gentleman, thought he was doing the best thing he could for both companies. A. I am satisfied that Mr. Stubbs — >- Q. Forgetting that they had been at times two railroads. A. I am satisfied Mr. Stubbs felt that way, if he had anything to do with it. Q. Have there been any other negotiations carried on in that same way between the O. R. & N. and the Southern Pacific with reference to divisions? A. The statement I made covers everything I made except lumber and its products. 856 Q. One other thing I forgot to ask you. Were there not some other people concerned in that negotiation other than Camp- bell on one hand and Sproule on the other ? Didn't the poor Union Pacific and the Oregon Short Line have any representatives? A. I don't know whether the Short Line and the Union Pacific were represented at any conference between Mr. Campbell and Mr. -Sproule when those divisions were fixed or not. Q. You say this was a division of the through rate to the Missouri River. The Union Pacific and the Oregon Short Line make up a part of that through line, don't they ? A. Yes, sir. Q. But Mr. Campbell was only an officer of the Oregon Railroad & Navigation Co., was he? A. That is correct. Q. And Mr. Sproule of the Southern Pacific? A. That is true. Q. Did these gentlemen assume to divide up that through rate without any representation of the Union Pacific, which has a thou- sand miles to Ogden, and the Short Line which has several hundred miles to Huntington? A. I do not know what they assumed; I had nothing to do with fixing the divisions. Q. As a matter of fact, that division was made by Mr. Stubbs, was it not? A. I do not know whom it was made by, other than I assume it was made by Mr. Campbell and Mr. Sproule. Q. You assumed that the Union Pacific and the Short Line have nothing to say about it. A. I do not assume anything about it at all. Q. Who represented those roads then? A. I do not know. Q. You never heard of anybody except Campbell and 857 Sproule figuring on it? A. I never heard them figuring about it. Q. How did you find out that they made the division ? A. Mr. Campbell informed me of the divisions. Q. Did Mr. Campbell tell you that he and Sproule made it? IVJLlJjljJili,. 495 A. No, I do not think he did, although he may have done so. I was assistant general freight agent of the O. R. & N. Co. at that time, and issued the division sheets in accordance with the instruc- tions which I received from Mr. Campbell. Q. What are the divisions on lumber and its products ? A. As I recollect, on lumber the Southern Pacific received south of Portland 25 percent of the west of Missouri River proportion of the through rate subject to its local rates as a maximum on traffic, Q. Would not get as big a percent on that? A. No, because it is a lower grade of business. Q. Who made that deal? A. That was made at the same time as the arrangement on the other traffic. Q. The Union Pacific and Short Line did not figure in those nego- tiations so far as you know ? A. I do not know whether they did or not. Q. That includes all the traffic, does it ? These two percentages cover all the traffic originating on the Southern Pacific and moved to the east over the Union Pacific, Short Line and Navigation Com- pany lines. A. I think so ; that is, to the Missouri River and beyond. Q. It is a division on the rate to the river? A. Yes. Q. When were those deals entered into? When was that 858 division made? A. I think it was in 1902, possibly the latter part of 1901. Q. It appears by the testimony, Mr. Miller, that a good many hops have been shipped to the seaboard by the Sunset Route. A. Yes, sir. Q. Do you have a pretty hard struggle between that route and the Oregon Railroad & Navigation Company and its eastern connections for that business? A. That business for the Atlantic seaboard is divided about equally, as between the Sunset Gulf Route and the routes via Portland. Q. Who makes that division? A. The shippers. Q. The shippers? A. Yes, sir. Q. That is, half the shippers want to route it one way and half the other way ? A, Yes, sir. Q. Did you hear some of those shippers testify that you had re- fused at times to take it one way or the other ? A. Yes, sir. Q. Is that so? A. Yes, sir, depending upon the car supply and when we could furnish equipment. Q. Is it not a matter of fact that you move that stuff forward about as you please, and you decide which way to move it, when you 496 MILLEE. say which way you can do it most comfortably and easily on account of the car supply ? A. No, I do not think that statement is altogether correct. Q. Is not that a fairly accurate statement ? A. No, I do not think it is. Q. How far off is it? A. Well, the hop business for the Atlantic seaboard and for 859 Europe is solicited for the Sunset Gulf Route. Failing in our efforts to secure that business for the Sunset Gulf Route, then we undertake to secure it for the Union Pacific Route via Portland. Out of the business that moves to and via the Atlantic seaboard about 50 per cent is secured for the Sunset Gulf Route and about 50 per cent moves via Portland. Q. You say it is solicited. You mean that you have men out soliciting the business, do you ? A. We have men out and our local agents solicit the business. Q. But they endeavor to send it via the Sunset Gulf Route. A. For the Atlantic seaboard. Q. And as an officer of the O. R. & N., leaving out your position now as general freight agent of the Southern Pacific, you regard that as a very good thing for the O. R. & N., to have the Sunset Route get the business, don't you? You prefer to have it go that way, as an O. R. & N. man ? A. The seaboard business via the Sunset Route, and all the other business — business for all other territories — moves via Portland ; yes, I think it is a good thing for the O. R. & N. Co. Q. You think that is a good thing for the O. R. & N. Co. ? A. Yes, sir. Q. That is, you prefer to have the O. R. & N. excluded from any share of the business through to the seaboard. You think as an O. R. & N. traffic man that that is a good thing for them to get no revenue out of the business to the seaboard? A. Provided all the other business for the other territory moved via Portland. 860 Q. And so you gentlemen have parcelled out the business of the country, have you, in that way; instead of competing for the business, you decide to have all the seaboard business if pos- sible go by Sunset, and the other way by Union Pacific ? A. Yes, sir. Q. Is that right? A. We solicit and endeavor to influence the movement of sea- board business via Sunset, and business for other territories via Portland. Q. Then there is no very hot competition here between Sunset Route or Southern Pacific on the one hand and the O. R. & N. on the other as to the routing of competitive traffic, is there? A. The conditions are highly competitive. Q. I mean as between those two companies. Do you mean that they are highly competitive when you are acting for both of them? A. No ; there are other competitors in the field. MILLER. 497 Q. I understand there are, and we are very thankful for that; but as between these two roads for both of which you are acting there is no competition, is there, Mr. Miller ? You try to throw the busi- ness to one section one way, and to the other section the other way ? A. There is competition in this sense, that all that business can move by either route, and it remains with the shipper as to whether he shall consign it by one line or the other. Q. But, as you said a while ago, your agents and solicitors try to get it to go one way or the other. A. But we are not always successful in having it move the way we want it to. Q. You control it to the best of your ability ? 861 A. We endeavor to control. Q. So that on business to the seaboard there is absolutely no competition between the Oregon Railroad & Navigation Company on the one hand and the Southern Pacific on the other. A. Except in the sense I spoke of. Q. Well, that is not competition, is it? The Oregon Railroad & Navigation Company stands back and lets the Southern Pacific get it if it can, and if it cannot get it, then it tries to get it away from the other line. A. I think that statement is true. Q. And the reverse is the case as to all interior business. A. Yes, sir. Q. That is all, Mr. Miller. Examined by Mr. Cotton : Q. In years gone by which way did the hops move to the Atlantic seaboard; via Sunset or Union Pacific? A. They moved both ways. Q. Largely by what route ? A. By the Sunset Route. Q. That route is controlled by the Southern Pacific all the way to the Atlantic seaboard, is it not ? A. Yes, sir. Q. Any revenue accruing as the result of those shipments all goes to the Southern Pacific? A. Yes, sir; 100 per cent of it as I understand it. Q. Does it take a greater or less percentage now of the business than it did before ? A. I think there must be very little difference between what the Sunset Route is handling now and what it did prior to this year. Q. And that is true even with the adverse car conditions 862 on the Sunset? A. The adverse car conditions have had something to do with it. Much of the business that would have moved via Sunset has moved via Portland because of the car situation. Q. But prior to this year, and the car shortage conditions existing this year, how did the business go ; via Sunset or Union Pacific? 498 MILLER. A. A great deal of it went via Sunset; some of it went via Port- land and the Union Pacific; and in fact other lines via Portland. Q. The proportion of movement has been changed materially from what it was prior to 1901, or has remained about the same ? A. I think perhaps the movement via Portland — the percentage to the seaboard via Portland, has been somewhat in excess of previous years, but due to those causes, the car conditions. Q. I am excluding this year and the car shortage cutting out this year, and then I am going back and taking the years of 1895, 1894, 1893 (1905-1904-1903?) and comparing them with years prior to that. A. Substantially the same. Q. Are both routes free to shippers ? A. Yes, sir. Q. What efforts do you put forth to retard the movement either way? A. We do not retard it either way. Q. Don't you try to force the shipper by failing to give him cars, or hampering his facilities and to divert that business from the route which you do not favor to the one which you do favor? A. We do not. Q. And if a shipper should express a desire to one way or the other, would you accommodate him or not? A. We would. Q. You have some connections at Denver ? A. Yes, sir. Q. And you have some connections at the Missouri River? 863 A. Yes, sir. Q. Are they represented in this territory by traveling men? A. They are. Q. And they are trying to pull the freight over what route ? A. By the Portland route. Q. And the Great Northern tries to take it by what gateway? A. Via Portland. . Q. And what gateway to the north ? A. Spokane. Q. And the other roads? A. Via Portland. Q. And what other gateway towards the east? A. Via the Northern Pacific and the Eio Grande lines.. Q. The Northern Pacific goes out by what gateway ? Wallula ? A. It goes out by Tacoma. Q. You have no through rates via Wallula with the Northern ? A. I think so. Q. You have with the Great Northern via Spokane. A. No through rates at the present time to points north and south from Portland, but some traffic moves to Portland on the application of local rates. Q. There are how many agents in this country soliciting business by way of the Huntington gateway and representing what roads?! MILLEB. 499 That is, over whom you have no control of any kind, character, or description ? A. The Rio Grande lines, the Chicago, Rock Island & Pacific, the Burlington, the Northwestern, the Milwaukee, the Illinois Central, the Chicago-Great Western. Q. Are they all represented here in towns? A. Yes, sir. Q. Residing here in Portland? A. Yes, sir. Q. Having offices here? A. Yes, sir. 864 Q. Trying to attract as much attention to themselves and their roads as they can ? A. Yes. Q. Working the Willamette Valley? A. Yes, sir. Q. As far south as where ? A. Ashland. Q. For all classes of business? A. Yes, sir. Q. All connections of yours ? A. Yes, sir. Q. All contributing business to the Union Pacific line at Omaha? A. Yes, sir. Q. Are you anxious to please or displease those gentlemen by giv- ing them the best facilities you can for their business? A. We are very anxious to please those gentlemen. Q. If they secure any business in the Willamette Valley, which way does it go out? A. It goes out over their line. Q. And by what gateway? A. Via Portland. Q. And Huntington in the case of these other roads ? A. Yes, sir. * Q. Do you interfere with their getting the business or attempt to retard their efforts in that direction to any extent whatsoever? A. We do not. Q. When merchandise and shipments going in the direction of Chicago were undertaken to be pulled south by the way of Sacra- mento, or the Sunset Route and over the D. & R. G. and the Rio, Grande Western, then these agents were not so active in soliciting it, were they? And it went over the Sunset Route? A. That is true. Q. They are really rivals to the Sunset Route, are they not? A. They are competitors of the Sunset Route. Q. And they are trying to get the business to move via 865 Huntington? A. Yes, sir. Q. And this year most of it has moved that way, has it not? 500 MtLLEB. A. Well, I don't know ; I think probably the most of it has moved via Portland this year. Q. You spoke about this division of 40 per cent with the local as a maximum to the Southern Pacific. That applied to what classes of commodity? A. That applies to everything except lumber and its products. Q. Both east and west ? A. Yes, sir. Q. What are the locals down here in the Willamette to Ashland on first-class? A. Our first-class rate from here to Ashland is about $1.40 or $1.50 or $1.60 per hundred. Q. What are the other class rates; can you mention them? A. If the first-class rate was $1.50, and that is approximately correct from here to Ashland, the second-class would be about $1.35 ; third-class would be about $1.10; fourth-class about 90 cents; and fifth-class about 70 or 75 cents. Q. What are the rates to Albany? A. First-class rates from Portland to Albany I think are 40 or 50 cents a hundred. Q. Do you know what the divisions were prior to this 40 per cent division? A. Yes. Q. What was the division ? A. The division at that time on merchandise traffic other than lumber was 30 per cent of west of Missouri River proportion. Q. With the local as a maximum? A. With the local as a maximum. Q. You have stated I believe that on all of this business, 866 taking it up one side and down the other, 40 per cent would be better than the proportion of the rate which the Southern Pacific would receive if the stuff went to Ogden via Sacramento. What are the conditions which enter into your estimate in that regard ? A. The movement via Sacramento Route entails the lifting of the freight over the Siskiyou Mountains, and over the Sierra Nevada Range. It necessitates hauling all empties north to a greater or less extent. It involves a more costly service and a longer route.' Q. How much longer is the route via Sacramento than it is via Huntington ? A. From Portland to Ogden it is about six or seven hundred miles farther by Sacramento. Q. How far is it from here to Sacramento ? A. It is 682 miles. Q. How far is it from Sacramento to Ogden? A. About 800 miles. Mr. Stubbs. Call it 700 miles. Q. That makes how many miles that way ? A. That is 682 plus 700 would be 1382 miles. The difference from Portland to Ogden via Huntington is 885 miles. MILLEB. 501 Q. It is about 500 miles further the other way ? A. Yes, sir. Q. What is the character of the pull down here in the Valley; that is pretty hilly, isn't it, up and down and over the mountains? A. No, that is a very good route ; it is down grade to Portland. Q. A cheap haul, isn't it ? A. Yes, sir. Q. You have an increase of 10 per cent ; that is, the South- 867 ern Pacific did as allowing the freight to come this way? A. Yes, Q. That is, over the old rates. Now, these old rates had prevailed how many years — that old division ? A. Oh, a great many years. I think those were the percentages when the through rates via Portland were originally established ? ' Q. It would look very much as if Mr. Stubbs had made a very good trade for the Southern Pacific, wouldn't it? A. I think he made a very good trade for the Southern Pacific. Q. That is, assuming that Mr. Sproule did not really represent the Southern Pacific and that Mr. Campbell did not really represent the Union Pacific. A. Yes, sir. Q. Did the O. E. & N. receive some benefits as the result of this? A. It did, very material benefits. Q. What were the benefits ? A. Additional traffic. Q. The O. B. & N. got additional business by way of the Hunting- ton gateway ? A. Yes. Q. Did they receive any additional benefit as the result of having all of these east of Omaha agents routing for the line? A. They did. ■ Q. Did you have other competitors there in the way of Northern Pacific and Great Northern, who have now practically ceased in en- gaging in that business? A. We did; the Northern Pacific have not ceased engaging in the business however. Q. I mean are they getting much out of it ? A. No, they are not getting a great deal of it. Q. Do you know about what percentage of business the 868 Sacramento Eoute ever took from the Willamette Valley and Portland, or do you know ? A. I do not know, but it was a very small proportion. Q. You are still engaged in business with the D. & E. G; that gateway is open via Huntington, is it not ? A. Yes. Q. But during the last year about how much business have you received over the D. & E. G, lines? I mean during the year 1905. A. During the year 1905 we received via Eio Grande Western lines about 9,000 tons. Q. How much did you deliver to them? 502 MILLER, A. We delivered to the Eio Grande lines 110,000 tons. Q. What is the distance from New York to Portland via the Sun- set Gulf Eoute ? A. Approximately 5000 miles. Q. What is the distance from New York to Portland via the Mis- souri River route ? , A. About 3200 miles. Q. What is the distance from Chicago to New Orleans via South- ern Pacific and then the Illinois Central north or by any other road that may run north ? A. You mean Chicago to San Francisco ? Q. No, I mean from Chicago to Portland via New Orleans. A. From Chicago to Portland via New Orleans is substantially 4,300 miles. Q. What is it via Texas points ? A. What Texas points ? Q.. El Paso. A. I do not know what that distance is. Q. What is the distance from Chicago to Portland via Missouri River lines ? A. It is 2300 miles. Q. After the stuff got to Ogden via the Sacramento line, were there any other or different lines to interchange business with 869 at Ogden than there is if the stuff reaches Ogden via the Hunt- ington lines ? A. No, sir. Q. Identically the same roads to interchange with? A. Yes, sir. Q. And identically the same conditions present? A. Yes, sir. Q. So that the closing up of the Sacramento route simply involved a choice as to how the stuff would move from Portland to Ogden. A. That is correct. Q. Over the Southern Pacific in the one case, or the Oregon Short Line in the other. A. Yes, sir. Q. And now it is just as free to move from Ogden over any route as it ever was ? A. Yes, sir. Q. I mean from Ogden east. A. Yes, sir. Mr. Severance. But not from Ogden west. Q. From Ogden west you have no tariff via Sacramento, nor have you any tariff from here via Sacramento? A. That is correct. Q. But it is just as free to reach your line via Ogden from the east by any route and thence to come via Huntington as it ever was to reach Ogden and then come out via Sacramento, is it not ? A. Yes. MiLLEft. 503 Q. Mr. Miller, all of the distributive business in the Willamette Valley is taken from What point; that is, what jobbing point? A. Almost entirely from Portland. Q. The rate adjustment is such that Portland even sells San Fran- cisco products and California products in the Willamette Valley to the exclusion of San Francisco jobbers? A. Yes. Q. Then practically for all of this Willamette Valley country Portland has been for years the distributing centre ? 870 A. Yes, sir. Q. For example, I believe that you have a rate on sugar into Portland of 15 cents a hundred. A. I think so. I think that is the rate by rail. Q. And the rate by rail from here — the rate by rail from San Francisco to Ashland is what? A. About 65 or 70 cents a hundred ; but it is more than that. The rate from Portland is about 60 or 70 cents a hundred. The rate from San Francisco must be 80 cents a hundred. The rate from San Francisco to Ashland would be the rate from San Francisco to Portland plus the rate from Portland to Ashland. Commissioner Lane. These rates to Portland are fixed by water competition ? Witness. Yes, sir. Commissioner Lane. How effective is that now ? Witness. How effective is the water competition? Commissioner Lane. Yes. Witness. Well, there has always been more or less competition by steamer between San Francisco and Portland, and there is today. Commissioner Lane. How many boats run regularly between San Francisco and Portland? Witness. There is the Sap Francisco and Portland Steamship Company and there are other steamers engaged on the route; the steamer Eoanoke, and I think the steamer Elder is now on there, and there are one or two others whose names I don't now recall. 871 Commissioner Lane. How far up the Willamette do those boats run from Portland? Witness. The boats navigate as far as Corvallis when the water will permit. Commissioner Lane. Do you get your terminal rate from San Francisco to Portland ; that is, from places that are further up the Willamette? Witness. No, sir. Commissioner Lane. This is the Only centre at which you recog- nize water competition? Witness. Yes, sir. Q. You spoke about the " Elder." Is that the " Elder " that was formerly operated by the O. R. & N? A. Yes, sir. Q. One of the boats which we lost? A. Yes, sir. 504 MILLEB. Q. Mr. Miller, you know of no limitation other than shipping by the Sunset Eoute upon the movement of traffic, do you ? A. That is all. Q. I mean the Sacramento- Ogden route. A. The Sacramento route is all. Q. But you don't retard the movement of it in any way whatsoever so far as the shipper is concerned? A. No, sir. Q. In regard to this D. & R. G. movement of company material, prior to the 29th of August, what rate did you have in effect for the Rio Grande Western and the Denver & Rio Grande and the Western Pacific on company material? A. We made a rate of one-half cent a ton per mile in carloads from Portland and our Columbia River points to Huntington on company material for the Rio Grande lines. Q. That rate was published, was it not? A. Yes, sir. 872 Q. And filed with the Commission? A. Yes, sir. Q. And withdrawn on what date? A. It was withdrawn on the 28th or 29th of August last, the date the Interstate Commerce Law went into effect. Q. That was under the instructions which you had as to the meaning of the word "difference?" A. No, it was not. Q. Was that done supposedly by legal advice? A. Yes, sir, that was upon the advice of counsel. Q. And since that the D. & R. G., and Rio Grande Western and the Western Pacific are made commercial rates ? A. Yes, sir. Q. That is all. By Mr. Severance : Q. Mr. Miller, you have detailed in answer to Mr. Cotton the various considerations moving to and fro, certain in favor of the O. R. & N. and certain in favor of the Southern Pacific, in connec- tion with the closing of the Sacramento route. Now you think, taking it by and large, what the Southern Pacific gains in one way and the Oregon Railroad and Navigation Company gains in another way, that it is a pretty fair trade, do you ? A. Yes, I do. Q. You think Mr. Stubbs made a fair trade for **is company ? A. I don't know that Mr. Stubbs made it. Q. Well, assuming that he did. A. Assuming that he did, it was a good trade. Q. But you think, don't you, that it would be a very good thing if all the railroads could trade off business in that way in considera- tion of traffic they were to get in another direction? A. I can't answer that question. 873 Q. Well, as a general rule that is a pretty good way to do business, isn't it? MILLEK. 505 A. It depends altogether on the trade and the conditions of the trade. Q. That trade involves practically the same conditions as pooling the business, and giving up one thing and taking another? A. No, I don't think it does. , Q. That is to say, you give the O. R. & N. some traffic and the O. R. & N. gives you a little additional division on the part of the traffic ? A. Yes, but the O. R. & N. does not get all the business. Q. No, that is unfortunate. You stated in answer to Mr. Cotton that there were a lot of very active energetic men here soliciting business for the lines east of Omaha. I have forgotten what ad- jectives Mr. Cotton applied to them, but they were very active men, and you were asked if you were not anxious to please those gentle- men who were soliciting business in the Willamette Valley, and you said you were, and that is true, isn't it? A. Yes. Q. But that business that they get goes east over the O. R. & N., doesn't it? A. Not necessarily. Q. What way does it go? How can they get business east of Omaha unless it goes over the O. R. & N ? A. Handle it in connection with the Northern Pacific. Q. It would be rather a round-about way to take the business by the Northern Pacific to St. Paul and switch it to another road and carry it back down to Omaha? A. It would not necessarily have to go via St. Paul ; it might go via Billings. 874 Q. But Mr. Cotton was asking you about lines centering in Omaha, connecting with the Union Pacific in Omaha. A. Yes, sir, that is right. Q. You say you are anxious to please these gentlemen and glad to see them get business? A. Yes, sir, indeed. Q. And carry it east over the O. R. & N ? A. Yes. Q. You stated further in your examination, in answer to Mr. Cotton, that these gentlemen were in effect rivals of the Sunset Route ? A. Yes, sir. Q. You are an officer of the Sunset Route, are you not ? A. Yes. . Q. How is it then that you, as an officer of the Sunset Route, can enjoy this success of the gentlemen in getting the business as riva^f of the Sunset? Can you explain that? A. Well, these gentlemen represent lines which are also represented by gentlemen of probably equal ability in the east. They are solicit- ing business for other lines as against the Sunset Route. Q. And you look on them with complacency and pleasure too? Rather glad to have their friendship ; anybody who hates the Sunset Route is your friend; is that right? 506 MILLEB. A. Yes, I would be very glad to have him with me on my staff if he would only continue to talk it. Q. And that is so in spite of the fact that you are general freight agent of- the Sunset Route, and have defined the duties of a general freight agent as securing business and revenue for his road? That is so, is it, Mr. Miller? 875 A. Well, you must not refer to me as general freight agent of the Sunset Route, because I only represent a very small part of it. Q. It runs clear down to California? A. Well, I only have jurisdiction over 341 miles of it. Q. Well, sir, I think you ought to have more. A. Thank you. Q. And I hope you will get it. A. I hope you can arrange it so that I will. Q. I will use my influence with Mr. Stubbs. That is all. By Mr. Cotton: Q. Mr. Miller, you have no jurisdiction and do not represent the Sunset Koute any further south than Ashland? A. That is all; that is as far as my jurisdiction goes. Q. And you don't represent the Sunset Route at all, so-called, be- cause that commences south of San Francisco. A. I only represent it as being a part of the Southern Pacific Com- pany. Q. You work your business in your own jurisdiction as best you can, don't you? A. Yes, sir. Q. And as far as your individual road is concerned, that is, the road which is under your jurisdiction, this agreement is very greatly to your advantage, isn't it? A. Yes, sir, very greatly to our advantage. Q. And is not the effect of this whole arrangement to send traffic along the best route and along the line of least resistance ? A. Yes, sir, and very much in the public interest. Q. That is all. 876 By Mr. Severance : Q. Then this " divvy " was made in the public interest chiefly, was it; is that right? A. I don't know whether the public got any part of the " divvy " or not, but I regard it very much to their interest to have the freight move by the lines of least resistance, by the shortest and best route. Q. That is, you think it is to the interest of the public to move their traffic out of Portland over the O. R. & N., don't you ? A. Modesty prevents me from answering that question. (A recess was here taken until 2 o'clock p. m.) o