Los Angeles daily herald., 1888-03-04
DEEPLY IN DEBT.
Investigation of the Union
Pacific's Affairs.
AN ADDRESS BY ANDERSON.
Greed Raymond Speaks on Behalf
of the Central Pacific
Company.
Associated Press Dispatches to the H.nAIDi

Associated Press Dispatches to the HERALp I
WAsHNeTou, March 3.-The Sen
ate special committee, to which was
referred the reports of the Pacific
Railway Commission, gave further
hearing to-day on matters relating to
affairs of the Union Pacific.
Commissioner Anderson addressed
the committee, explaining substau-
tally, as he had previously explained
to the House Committee the provisions
OF the Commissioners bill. At the.
meeting he was led by inquiries to ex-
plain by way of illustration the
methods Of the Central Pacific.
Briefly, he said this company, inst cad
OF devoting its earnings to dividends,
had invested them in collateral enter
prises without, however, charging the
money taken to the account Of earn
ings. Some years subsequently Il
had declared dividends apparently
within the letter of the law, be-
cause its earnings still showed
AN UNDIVIDED SURPLUS.
When, in fact, the money had been
expended. So the property SO pur-
chased had deprecated in value.
Money to pay dividends had been bor-
rowed or obtained from any source
available. 1t was to prevent trsnsac-
tions OF this kind in the future that
the commission proposed to limit the
power to declare dividends to the
amount of the net earnings of the pre-
ceding years, holding that the inter-
vening time was insufficient to merely
endanger the value of any pro 9erty
purchased; while as a guard against
fraud, there was provision requiring
the assent of the President OF the
United States to any investment Of
this kind.
MORGAN ASKS A QUESTION.
During the Commissioner explain
alton of the nature Of the security
now possessed by the Government
for the Union Pacific debt and that to
be given by the company under the pro-
visions either of the Commissioners
or the Outhwaite bill, Senator Morgan
asked if he (Anderson) was prepared,
as lawyer, to assert that the Gov
ernment has no right to declare Z
statutory lien now for further security
bonds upon any property that may be
possessed by the company.
To this Anderson replied that he
was prepared to make that assertion !;
that while the United States might
require the company to do anything
in reason, it could not extend it's lien
over one inch of property that was
not authorized by statutory provision.
AN OPINION BY MORGAN.
Later, during the hearing, Senator
Morgan read the following, which he
had in the meantime written out, COW
ering his views of the point thus
raised.
"The legislative power is able to
give remedy by legal or equitable at
tachment. according to the nature of
the property sequestered, and to con-
tract with a creditor whose demand IL
not yet due; and an attachment can
also be prescribed in the stat
ute, according to the iudg-
ment of the legislature. In this
case the necessity of doing this
by the general law, (if there
is any such necessity is avoided BY
the reservation of the power to alter
or amend the statute. l suppose that
the reservation has as much reference
to providing for the security of the
mortgaged estate as to any other pos
sible need for legislative interference,
and that under its provisions Congress
could give such remedy against the
consolidated company"
Anderson contended that If the
question thus raised shall come up at
all, it will come not as against the
Union Pacific, which now offers am
pie security for the debt, but against
the Central Pacific.
ATTORNEY HAYMoND's VIEWS.
To this Mr.. Raymond, attorney for
the Central Pacific, rejoined that the
reputation and integrity of the Gem
tral Pacific directors having been as
sailed, they would assent to no bill
which proposes to settle the question
upon mere moneyed basis. They
would assent to any bill which pro-
vides for fair investigation Of all
these facts by the courts, and would
hear all questions of the statute Of
limitation, and all questions az
to whether they were bound to
the Government, and would agree
with the United States upon
the same principles that governed
the transactions of guardian with
his ward. They claimed that they
had done no wrong to the United
States. That was why he had pro-
posed to the Commissioners q few
days ago to 60 over this case upon an
entirely different basis, because be
was advised that the directors of the
Central Pacific would not make :
moneyed settlement. They could
afford to lose this property but they
could not afford to trade upon their
reputation, character and standing.
The New Chinese Treaty.
New YoRK, March ga Washing
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