The Austin weekly statesman. (Austin, Tex.) 1883-1898, 1893-01-19

II fraudulent act tnr The purpose OF obtaining
money from some source. Money obtained In
fraud has ever been an 0hense against good
morals, and should be in all respects crime
against the laws OF every civilized country.
II is unnecessary to go any further than this
| proposition 20 point out the interest the pubic
has in checking the growth Of fictitious secu.
mites OF every class II is the duty of the gov.
eminent TO make the acquisition Of property
| through fraudulent practices a crime. She
| owes this much 10 good order, fair dealing and
| honesty. Aside from this view, considering q
feature OF perhaps more general Importance,
the fact must not be lost sight OF that after all
the bonds OF railways must be paid or repudi
| ated. Their payment Is necessarily confined "a
| the source OF revenue collected through traffic
tolls or taxes laid on the commerce carried by
railways. II may be contendcd, that as they
are void under tho constitution, they cannot be
| collected. This proposition Is certainly sound
under reasonable conditions which unfortu-
nately do not exist under the laws nor in the
| courts OF Texas. few men own the stock OF
the railways. Directors and officers are elected
| TO carry out their will. A resolution is passed
| In pursuance of which Understanding bonds
are issued and the railway property mortgaged
TO pay them. They are hoated, sold or ny
| pothecated for cash. Neither the property nor
| the public receives dollar of this money; but
| the stockholders or the owners of the road APP
propriate t. If q line continues to be operates
| by such stockholders and owners, to meet the
| interest ON such fictitious bonds, train forced
and section gangs must be reduced wages OF
| employees decreased and traffic charges raised
TO the highest point permitted by law or that
the traffic will bear. Within few years By
this process the property becomes improver-
ished and wrecked the public badly served at
high expense; default OF interest follows and
foreclosure of the mortgage given to secure
these bonds the result. Under the laws and
Jurisprudence of this state IL would be quite
impossible for the Incorporation, composed Of
the directors, stockholders and officers
who perpetrated the fraud, to en-
ter court and successfully resist judg
ment on the bonds. II not estopped by
laches, they could not be permitted TO take ad-
vantage OF their own wrong. SO the process
OF foreclosing the mortgage and establishing
the amount Of the fictitious indebtedness upon
the road by judgment OF the court, proceeds
unobstructed, IL is strange enough to say, but
II IL nevertheless true, that the state govern.
ment Is now, under the present laws, unable to
appear In such case or raise its voice against
the fraud. socalled reorganization gener-
ally follows such judicial proceedings None
OF tho bonds or stocks are cancelled but are
generally increased, sometimes to double or
quadruple the former amount, by continued
abuse OF corporate franchises Thus the prop
erty OF the people Is threatened with ultimate
confscation, and their liberties imperiled
No question now confronts your honorable
bodies, or that may probably arise In this
state within the next fifty years. that can
promise moro interesting consequences to the
people than this one. II II Is judicousy set
tied, IL will take but short time for the ma.
terial interests OF this state to bear the whole.
some fruits In great abundance. On the other
hand II 1t IL avoided or temporized with its
wealth producing citizen OF this ate. Its mo.
mentous Importance certainly cannot be de.
MED now by any intelligent man, since the for
eign bondholders, through federal court have
obtained temporary injunction suspending
the rates fixed by the railway commission, upon
the complaint, among other things, that they
were not high enough, after paying he *.
penseS OF the roads to meet the interest upon
their bonds, many millions OF which. with
tn light OF truth shed on them. would ap.
pear 10 be the deprayed offspring OF corporate
a 00 Ia Nt....xs
the state constitution. by that action the
point Is boldly, sharply made, and the traffic
rates In this country must be maintained to
pay interest on all the railway bonds. II is
material to the public therefore, that none but
honest bonds, Issued IN pursuance and within
the limits OF the constitution directly, shall be
permitted.
To ect this evil and to prevent its con
tinuance u law en- bodying the following feat
ures Is hereby respectfully recommended to
your honorable bodies:
l. That under the direction OF the railway
experts shall examine and report
under oath the fair valuation OF the railroads
in this state which when approved by the com,
mission shall be filed In the office of secretary
OF state as the official standard for the Issue OF
bonds and stocks In the future
e. That no railway bonds or stocks shall be
authorized or executed, except for limited
amount, for the purposes mentioned In the con.
and then only at the railway genera,
Office In Texas
s. That they shall not be negotiated hypoth-
ecated; or sold until after the railway commits
sion shall have given Il certificate that they
have been Issued within the limit for the pur
poses, and in obedience to the provisions OF the
constitution and laws, and not then until they
have be- duly registered by the secretary OF
state In n record kept for that purpose.
d. That all co tracts with construction or
improvement companies shall be fair and rea
sonable and be submitted TO the railway COM
mission for inspection and approval before any
bonds or stocks over IN amount prescribed by
the law shall be authorized,
b. That all railway property placed in the
hands OF receivers under foreclosure proceed.
lngs shall DC sold to satisfy the debts OF the
within given time. The purchas-
ers to take the property clear OF membranes
0. That the charter OF any company yiolat
Ing any provision OF the law, by issuing, hypo
or selling fictitious bonds or stocks,
Or otherwise Illegally incumbering Its property,
shall DO forfeited.
GER agreeing to or participating in such illegal
act or who shall divert any bond or stock OF
The proceeds thereof from Its legal purpose
shall be guilty OF and punished for II penal
s. That II shall be the duty Of the state, as
plaintiff or intervenor. acting through the at
torney general, or such an attorney as the gov
ernor especially employ therefor, to enter any
court having Jurisdiction of the case and TO
or contest the validity of such stocks
,r bonds and 10 enforce the laws with respect
10 them.
bill embodying substantially these provis
ions passed the house Mt the special session of
the twenty second legislature but did not pass !
The senate. Since then the fictitious increase
Of bonds and stocks has continued without n
check, and will go on at a lively rate until leg
slative action is taken. Gathering ar und the
capitol will be many lobbyists against this
who will try to frghlen he peoples
representatives out OF yielding obedience to the
demands OF their constituents upon the pretext
md plea, rs specious AS II is, that such course
will deter capital from investing in Texas and
pr vent the further building of railroads in the
state. IL might rs well b said here that II tie
advent or continuance Of new capital, or the
further building Of railroads In Texas, depends
upon the absolute surrender Of the rights OF the
people in this respect 1t would be well now TO
let Tn m part with us forever. Fictitious bonds
are not capital nor the representatives OF CAPT
al. They are the fruits OF crime. threateningto
zap the lii OF commerce, and 10 create in
this government ramps aud milliOnaires at
he expense OF the liberties OF the people.
Texas has granted to her railway companies
y, 0UO,OO0 acres, or territory sufficient To make
! number OF respe ctable states. She has OK
lcted less OF them, and has conferred more
privileges, franchises and wealth upon them
inion. She has taxed them lighter than most
any other country, and stands ready yet 20
encourage them by every legitimate measure
consistent With fair dealing and justice to her
4, ople. The law under consideration, II cafe
Iully and strongly drawn and passed, will pre-
vent the practice OF such frauds and swindlos
10 long perpetrated through this abuse OF cor
pora fran, hses, and will encourage the In
Testment OF honest capital in railway i'm
provrment IL will protect commerce frum
unjust burdens, guard the people from bank
ruptcy and servility, and add strength and re.
spectacle ity to the Independent autonomy of
he state government, which must in time