The Sun.
London, England, 1870-04-28 00:00:00

THE SUN, LONDON, THURSDAY EVENING, APRIL 28, 1870.

PROGRESS OF 'IHE ERIE WAR.

The next move was Mr. Burt's reply before the
' Committee on Railroads of the New York Assem-
bly on the 30th March. Mr. SLie Armen attended
to defend the directors and the Classification Act
of 1869. Mr. Burt brought up Mr. Eldridge's evi-
-1 donee as to the payment of $70,000 of the Bos-
ton, Hartford, and Erie money to Jay Gould to buy
proxies to secure the Erie election of 1857, and ex-
' plained the devices by which Gould, Fisk, and Lane
got a majority of the votes in 1863 and 1869. At
the latter election there were 160,000 shares in the
names of Smith, Gould, Martin, and Co., most of
which shares had been sold to foreign hollers, but
not transferred, and many thousand other shares
in the names of people doing business with Gould
and Fisk, and whose votes were thus obtained. The
Clae-sfication Act was a clear breach of trust in the
directors, and was ig rinst law. Parliament would
pass no Act without the approval of the stockhold: rs
in general meeting, nor could mortgages, bonds, or
new stock be issued without the stockhol !era' con-
sent. The improvident and wasteful management
he termed a calamity an 1 a disgrace ; the issue of
$32,000,000 of the new stock a fraud alike on old
stockholders, and the new his clients, who thought
they were buying part of a total capital of 116,000,000
instead of $78,000,000. The committee hearing the
old story looked the very little impression it made ;
indeed they seemed rather to regard it as a joke
until Mr. Burt brought the matter strongly home
by likening it to the purchase by a committee man
of a barrel of whisky marked with a high-class
brand who found it to be good, but the next, one-
third water, and the third one halt water, though
branded as the first, and the illustration told. Only
11,000,000 dollars had been accounted for of the
32,000,000 new issue, and the election of 1869 was a
sham devised by the directors to get another year
of office. Mr. Burt defended the combination in
England as ab:olutely necessary for the protection
of the stockholders, who could not otherwise cope
with Gould and Fisk, the holders of the company's
purse. He ridiculed the idea that this was a na-
tional question, as Gould sought to make it. He
doubted Gould's statement that he had been obliged
to pay a seining a share on 20,000 shares, said to
be carried by his party in England ; but if it were
true it was the " sweetest morsel" he had tasted in
that country, while expecting that at the next Exe-
cutive Committee, at which Gould, Fisk, and Lane
were present, the president would present a bill of
$5,000 expeOded in England on behalf of the com-
pany, and the controller (Mr. Fisk) would examine
the account, and find it correct, the treasurer (Mr.
Gould) would be ordered to draw a check for the
amount, which he would instantly do, so that the
Britishers would after ail pay three-fifths of it. Then
taking up Mr. Crouch's address, he represented him
as a contributor to Punchinello and the Sun, and the
writer of a pamphlet called " Another Chapter of
Erie." Mr. Fisk, Crouch said, ha, i taken him over the
line and treated him like a prince. That gentleman
had been written up a speculator, operator, an.l Ad-
miral, but not, as Mr. Crouch was aware, as railway
manager ; so, added Mr. Burt, Crouch rushed for
the vacant place, and getting it, thus frankly be- '
gins " All matters pertaining to charges of wa-
tering stock, gold cornering, unlawful appropri-
ation of hods, &c., preferred against Messrs. Fisk
and Gould, must be ruled out of this chapter as
altogether irrelevant." Instead of 5,000 shares, Mr.
Crouch's holding should have been entered $5,000 ;
and he had no shares when the book was written:
Burt calls him the literary laureate of Fisk and
Gould, and he proceeds in a severe strain of cliti
cism to handle the laureate's work, finally using
these words of Crouch before the Senate Commit-
' tee to convey his opinion of the statements con-
tainedin the pamphlet, "No better illustration of the
sublime impudence with which the English stock-
holders have been imposed upon from time to time
by their American friends is needed." Crouch
naively asked, " No better illustration than what?"
and was quickly answered, "Than your book." Mr.
Crouch desired to explain, but
,Mr. Burt refused
to give was and he went on showing up that
curious production for the edification and amuse-
ment of the Committee. Pointing out that the
$2,000,000 of shares Gould says he carries in Eng-
land are the identical $2,000,000 Crouch asserts be
represents, he concluded by asking the Committee
to remember, "that if at any time you should
see in 'he newspapers a statement that I have re-
signed my office of agent for the Erie Committee
in London ; if it is announced that I have failed
in serving papers on _Messrs. Fisk and Could at the
Opera-House in New York ; if you see it sta ed
that I have been et: timed off the floor of the
Senate or the Assembly in Albany, that there is no
chance of your passing this bill; it I am descrihed
as a weak Tiling man cowering under Mr. Gould's
eagle glances ; if there are any no:ices of me of
tits kind in the newspapers—you will remember,
will you not, that Mr. Crouch is the author of
' Another Chapter of Erie ?' " Mr. Shearman, in
reply, stated that he was aware that some of Mr.
Burt's assertiens were untrue; he meant no dis-
respect personally, for he entertained a high reeetrd
for Mr. Burt.. lle-cribing Mr. Gould as a man abun-
dantly able to take care of himself, he said that he
would have personally answered, but he thought it
fairer to Mr. Burt that a lawyer should reply to p.
him as a lawyer. He regretted, for Mr. Burt's own
sake and that of the bar, that he Occupied his pre-
sent position. Not one of thy, cases of litigatipn
against the directors bad been conduct d in a fair,
el raightforward manner, nor had a stockte ever
yet made ariehonest demand to see the accounts of
the company. What right bad the editors of the Tri-
bune and the Times to ask that these accounts should
be made public, or the World that it should be ac-
quainted With the company's internal affairs? Mr.

Spearman was closely questioned on the subject that
no shareholder had applied for information, bat
he confined the assertion to himself as counsel. lie
did not approve of the Classific ition Act being
made applicable to the present Board, but the
shareholders had sanctiem,ed it at a regular meet-
ing, or which due notic had been given. " Where,"
a ked Mr. Burt?" "In the newspapers." answered
Mr. Sheartnan, "for thirty days before the election."
A conversation about the shares on a hiett the votes
had then been taken followed ; Mr. Shearman as-
serting the right of the directors if they owned
a majority'of the stock to pass what resolut'ons they
pleased, and:co make them binding on the subse;
quent shareholders. Among the names of the voters
for the resolution w. re R. RaPl,ael and Sons, Mr.
Burt's clients. This, however, Mr. Bert denied on Mr.
Gould's evi lence, but Shearmau maintained its truth,
that they had notice, and couldact through the tele-
graph. Of the proxies held by Gould not one had
been paid for. "Do you say tt, at as a lawyer ?"
asked Mr. Burt. " Yes," was the answer, " and
as represented by clients upon whose truth I can
rely." Gould and Fisk had been put in for the
longest periods with the con,ent of the other di-
rect ors, and in all his professional intercourse with
the company he had seen the desire prevail of
doing what was best for the road. He had never
been able to discover where the fraudulent acts
ch,trged had been committed. nor where the vil-
lainy had come in, though looking closely for it.
When he entered the service of the company, it was
amid a clamour on the part of the newspaper s, which
he thought were edited by men so much wiser than
himself that there h.u..t he something wrong, and he
commenced his duties with ft•ar and trembling, hut
found no occasion. " Doyou :till speak as alawyer?"
asked Mr. Lit; lejohn. " No, sir, as a man." As a
proof of that, a lawyer of a Quixotic sense of hon-
our, Mr. David Dudley Field, had become ad-
viser
to the company. New York St rte had given
the company $3,000,000, and had therefore some
tight to interfere with the road; the non-payment
Of dividends showed the Erie to be the opponent of
monopoly, and on the Board the only fault found
was the low rate for freights. A new board, re-
presenting the stockholders, would double these
rates, and quickly pay dividends to the injury of
the State, whole the Legislature ought carefully to
protect. Taking the flavetn Railroad, be showed
how the directors broke faith after many cottages
had been builtalongtheline. Railruids had norights
superior to those of the community, as with their
charter goes the notice hat they shall be adminis-
tered in the interest of the people, its well as of the
stockholders. The combination represented by Mr.
Burt forc?s the payment of a shilling per isl.are from
the stockholders oh the penalty of exclusion from
the Lon lon Stock Exchange, the market which fixes
the price of Erie all over the world. Mr. Burt
here emphatically denied that any such resolution
had been passed by the London Stock Exchange. It
was opt'onal; but Mr. Burt did not add, that as job-
bers would only buy unstamped shares at a heavier
discount it became in effect compuls Ty. When Mr.
Shearman appealed to the newspapers as the autho-
rity for h's statement, Mr. Burt at once quickly
replied, "You have cautioned me against saying
what 1 don't know ; now don't you say what you

don't know." After a little sparring, Mr. Shearman
continued. The money paid by Mr. Eldridge to Mr.
Gould imputes nothing against Mr. Fisk, nor indeed
against Gould till evidence was forthcoming that he
knew where it came from. The English shareholders
had ample time to oppose the Classification Bill,
but they sent Mr. Burt to oppose the law and reverse
the fixed policy of the State only after they had
formed a hostile combination. The policy of the
State had not been adopted purely for the Erie nor
for the stockholders, but fir the interest of all;
and the Erie had never been so well managed nor
so safe as now, though.the improvements were at
the expense of present dividends. As regards the
$32,000,000 alleged to have been received, it never
had been received, stock to that amount was issued,
but Erie has not reached 40 per cent. for a long time,
and that issue did not fetch 40, but had it done so,
$12,800,000 would then have been the sum, while
Mr. Burt admits $11,000,000 had been accounte I
for. "I do not,'-said Burt ; Crouch says that, but
Ido not believe it." Mr. Sh. artuan prdceeded to
explain how a sum amounting to $18,000,000 had
been expended, a full account of which at the pro-
per time would be given ; but their business at
l►resent was to discuss what was for the advantage
of the Commonwealth. The next day Crouch read
a long paper in defence of. the Fisk and Gould
management and against the repeal of the Classi-
fication Act ; and in his reply Mr. Burt likened
Crouch to the dog which always gets on the race-
course at Epsom before the Derby begins:—
" His shareholders are bogus, and his protest was bogus,
written in New York. No one in London knew anything
of it. No one in London would have,used the expression
'Board of Stockholders.' There was no such body in
England, but there was in New York. As to his creden-
tials, he paced in the chairman's hands powers of attorney
from London stockholders stated by Mr. Gould to hold
60,000 shares. He had 100,000 more shares in New York
ready to produce, and there were 100,000 more in London
ready to be sent over. And he would produce a declara-
tion of the Secretary of the Loudos Committee that 470,000
shares had been registered by the committee, and sup-
ported their action. it was, of course, impossible to get
power of at:orney from 200 or 300 persons. As to Mr.
Shearman's complaint of his appearing i❑ the character
of stockholder and advocate, that complaint was unrea-
sonable."

Shearman spoke now as an individual, then as
a lawyer, and again as a third party ; while he
• (Burt) was only a small shareholder to secure a
locus standi. Mr. &warm= knew some of his
charges to be incorrect ; but why did he not specify
and disprove them ? his assertion that Mr. Goul I
is able to take care of himself no one doubts ; but
the stockholders wanted a president to take care
of them ; he was their trustee and representative,
and should look first to their interest. If Shear-
man's clients owned half the stock, why oppose
the bill, which was not to turn Fisk and Gould out,
or to deprive them of their hard earnings as tr a-
surer and president, vice-president and contr,
tiler,
or to remove the elegant monogram-, (G. and F. in-
tertwined) which now adorned the temple of the
Muses and the railroad. bu. simply to get the
sense of the shareholders. He had not been invited
to examine the accounts, nor had Gould promise I
his influence to appoint the (thee- ors he shoed no-
minate. For four weeks h c9uld not get a copy of
the bye-laws, nor did Gould answer letters asking
information as to the regulations. After showinlz
the fallacy of the arguments in favour of the Classi-
fication Act, Mr. Burt took up the main reason,
that the bid protected the State of New York
against the road being made an irtstrnin,nt of ex-
tortion and freights raised, and he ridiculed the
notion that it was necessary for the welfare of the
Empire State that Fisk and Gould, the anii-
monopolists, should be made by law inanal.n.rs of
the Erie Road for five years. The Erie Charter
did not differ from other railroad charters, and
if the classification laws were required for State
reasons, they would be imperative, not permissive,
and applicable to all. The following exr c:s from
reports of the company to the State Engineer showed
that the management was not conducive to tae in-
terests of the people :

Total Total
No. of Passengers Mileage of persns persus
carried. passengers killed injured President
1866 2,444,935 157,725,808 57 62 Berdell
1867 2,245,180 128,491;241 58 57 Eldr dge
1868 2,194,348 124,312,881 104 1i.7 Gould
1869 2,497,113 128,455,158 75 114 Gould
Capital and Net Income, Exclusive of Railroad Rents and
Interest.
Capital paid in. Net Income. President.
1866 525,105,800 $3,288,911 Berded
1867 25,111,210 3,642,292 Eldridge
1868 46,302,210 2,660,709 Gould
1869 78,536,910 3,003,415 Gould
He denied that foreign stockholders had notice of
the bill, as four lines of small print in a New York
newspaper was to them no notice. Mr. Shearinan
was a highly respectable lawyer, but when he said
he had never been able to find where the alleged
villany comes in, and brought the employment. of
hims, if as the best proof of Fisk and Goa'd's
honour and integrity, Mr. Burt feared that his
sight had been obscured by clouds of $lOO and
$l,OOO bills. Mr. Burt had only just reached New
York, when he got a glimpse of the villany, for
16,000 Erie shares, properly stampd and endorsed
for transfer to Mr. Heath and Mr. Rapha .1, were
refused at the transfer office, which was next day
closed, and a collusive suit got up, a bill filed, and
immediately Judge Barnard granted as injunction
exa•-•tly as the gal asked, restraining all transfers
un it the suit. had been settled. Yet Mr. hearman
took no steps to protect the rightsof the s ockho ders
against this gross and fraudulent violation. " I
ask you," said Mr. Burt in conclusion, "to pass
this bill as an act of simple justice to the share-
hollers. The Leg/s'ature has tied our hands ; I
ask you to cut the bonds." George Crouch se-
lected April Fool's- Day to indit • a letter to the
press, pointing to Mr. Burt's assertion for the edi-
fication of newspaper men, that "he was nwhing
but a journalist. Complimentary, eh!'.' He had
his choice between law and journalism, and "chose
the latter as +he more respectable, while it is surely
equally honourable." Thereon Mr. t. roach says be
fears that Burt's contemituous expression may
have injure I the cau•e of his cdenrs, so he desires
in ch aity to suggest that the insidt was not in-
tentional. "It ii,ay be that journalists are de-
spis, d in England, and my learned friend has
made the unfoatunate mistake of imagining that
American journalists are equally de=picable. Sup-
pose we forgive h in. He has ouly been in this
bla-asted country' a short time, ' you know.' " It
is amusing to see how the Erie clique in America
and the limes in Eng/and try to give an interna-
tional turn to the Erie proceedings, the one to
secure support for a dishom st management by
arousing American prejudice, and the other to
injure American credit by making as general as
possible an isolated case, most strongly denounced
in the United States.—A nglo- America 22 limes.

THE Ku-KLUX IN TENYESSEE. --Mr A. J.
Fletcher, Secretary of Tennessee, gave evidence before
the Reconstruction Committee of the House, showing the
lawThss condition of the State. Iu Middle and West Ten-
nessee violence of all kinds has long been committed with
impunity. In one county the Ku-Klux assemble a hun-
dred men in a few hours to murder two. In another
they collect as many even in a shorter time. In the
loyal county of Carroll 150 were quickly got together to
take five men out of prison and aboot them. Mr. Fletcher
says the Ku-Klux is a military organization with de-
partments and districts, each having its own commander ;
acting quickly and precisely, and rarely failing in its object
numbering about 40,000 persons. The attempts of the
Legislature, of the State militia, and loyal citizens to Sup-
press the organization had been partially successful ; but
what was termed the Ku-Klux law was repealed last ses-
sion, and the organization immediately revived. Alarmed.
the Legislature passed a bill after much opposition to
punish masked marauders; but not being stringent it was
ineffectual. No one dare prosecute, and when the Ku-
Klux execute a man the chief anxiety of his friends is to
avoid a like fate, and those ma. ked usually fly the State,
glad to escape. with life; and though the outrages have
been going on for three years no case of punishment
has occurred. It is to correct this lawless condition
that Governor Center has applied to the President for
military aid. Confederate Generals pledged themselves to
see that peace was preserved if the Governor would dis-
band the militia, and for' a short time after he did so
crimes became less frequent, but the Order still asserted
its right to open gaols and execute criminals. They have
a peculiar whistle, which is said to be for sale in the hard-
ware stores of Nashville. Mr. Fletcher often saw the
masked bands and heard the whistle, and he gives au im-
mense number of cases of outrage and murder. In glanc-
ing over these the hatred to the Yankee is con-
spicuous, murders of Federal soldi-rs are frequent,
of which one case will suffice for illustiation. W. J.
M'Annalley, after his discharge from the U;.ion
Army became clerk in a store at Pulaski. One night, on
his way home, he was surrounded by a bancl.t)f masked
men who sent three bullets through bite, and left him for
dead. He recognised the voices of two of. the ruffians,
and when he was discovered and carried to his bed, the
first to appear to comfort him was the man who had shot
him, but instead of prosecuting them when he recovered
he left the place for Nashville. Another ex-Federal sol-
dier had a horse which a Confeder,te, named Dixon, told
his son to shoot " the d-d Yankee horse !" Suit was
brought, and the statement is that the Yankee paid the
costs, which means, we quppose, that he was murdered.