The morning call., 1894-08-17
NOT TO BE PAID.
Congress Repudiates the
Claim.
RATHER A BODY BLOW.
Hard Lines for the Southern
Pacific Company.
SHOWN UP BY MR.. MAdUlRE.
Men In Default TO the Government
Want Pay for Carrying
Its Mails.

WASHINGTON, Aug. 16.-The California
Congressman to-day succeeded in knock
ing out cf she deficiency appropriation bill
81, S00,0 600 which the Senate Incorporated
TO pay the Southern Pacific Railroad Com
pany for transporting mail and army sup
plies. Huntington and his man, John
Boyd, succeededin getting the Senate Com
mittee on Appropriations to include this
item when the bill came to that commit
tee after passing the House a few weeks
ago, but they were again unable, as they
have been in past Congresses, to get it
through the House..
Kelly OF Pennsylvania, author of the
funding bill now pending, made the speech,
as 1t was announced he would in last
nights dispatches. He argued that this ap-
propriatiOn should not be made to South
ern Pacific stockholders who owed S77, ,OOO,-
900 on account of the Central Pacific. Some
members were inclined to be suspicious
of Reily's good intentions in this matter,
but Mcguire is disposed to credit him with
sincere motives.
Boatner of Louisiana, who was one Of
the minority of the Pacific Railroads Com
mittee to report against Reily's funding
bill, made speech in which he favored
the payment of the claim. Yesterday
Boatner announced, in the presence OF sew
eral California Congressmen and newspa-
per correspondents, that he was going to
oppose this item because he did not think
the money should be paid to the stock
holders Of the Southern Pacific, who were
the four partners in the Central Pacific,
owing the Government S77. 900 900 which
they could not pay. To-day, however.
Boatner surprised every one by making
speech taking an exactly opposite view.
He acknowledged to the Californians
atterward that he had made mistake in
that he failed to make distinction between
the Southern Pacific Company and the
Southern Pacific Railroad Company. The
Californians accepted this explanation in
good faith.
Representative Blair. another member
OF the Pacific Railroads Committee, and
who, next to Reilly. has been the most
active supporter of the funding bill, spoke
in favor of paying the claim. Culberson
of Texas. as expected, also spoke in favor
| of the approp priation.
Judge Mcguire. in closing the discus
sion, said: THE burden of argument in
favor Of paying this claim is that il rests
upon solemn Judgment in favor of the
Southern Pacific Company approved by
the United States Supreme Court: That
is all perfectly true; but the assertion is
mere begging of the question at issue
here. We don't deny the validity or the
correctness of that judgment. 1t was rem
dered upon valid legal claim of the COM
pany against this Government whicn ma
tured In 1889. We do not claim that the
Government has even now any valid Offset
against that Judgment Our position
briefly stated, is that the Central Pacific
Railroad Company is about to make>de-
fault to the Government of the United
States on an obligation amounting to
S77,O00,000. Or this we are advised
by the sworn and unsworn statements of
its officers and attorneys. We assert
that the directors of that company have
fraudu lebtly diverted to their own uses at
least S62, 100000 of the assets of that COM
pany which were subject to statutory
lien in favor of the United States. We asset
that the Southern Pacific Company, which
is claimant here. is close corporation, Or
ganiZsd, owned and controlled by the
fraudulent directors of the Southern Pa
cific Railroad Com psny and their estates.
We assert that it is a mere agent of tina
Central Pacific Railroad Company or of a
syndicate of fraudulent directors of that
company. and that this money, IL paid.
will simply go into the Southern Pacific
pocket of that syndicate, while the empty
and insolvent Central Pacific pocket Of the
same concern Is about TO become Indebted
to this Government in an amount more
than forty times as large as this claim
"It has been argued that refusal to paw
this claim will be an injustice to the lnno-
cent stockholders and bondholders of the
Southern Pacific Company, and testimony
has bsen read to show that there are a large
number of such innocent stockholders and
bondholders. but that testimony relates to
a different corporation, the Southern Pa
cifc Railroad Company which built and
now owns the Southern Pacific Railroad.
That company is not the claimant here,
The claimant is the Southern Pacific
Company which does not own one
mile of road in the world aud which
never sold a ebond or a share of stock
so far as know. unless the division of its
stock among Stanford, Huntington, Hop
kins and Crocker and their estates be
called sales. That company was organized
in 1885 for three fraudulent purposes.
First. to defeat certain provisions for the
payment of the bonded indebtedness of
the Central Pacific road; second, to divert
the surplus earnings of both the Central
and Southern Pacific systems to the pock-
cts of the members of the syndicate. and
third, to collect claims like the present one
from the Government without danger of
the assertion of right to Offset thsm
against the bonded debt.
''The Government has never been in a
position to assert this right of offset nor
any equita BILE claims. but it will be in that
position just as soon as the Central Pacific
makes default in payment of its bonded
debt. Then all of these equities can be
pleaded and adiudicated. This claim
should not be paid until that opportunity
arrives"
When Mcguire finished the item was
rejected on rising vote. Breckinrid idge of
Kentucky, Saysrs and Cannon of Illinois,
who were appointed as the new conferees,
Immediately met with the conferees on
the part of the Senate. and gave them to
understand that the House would never
agree to this item. After further confer
ence the Senators receded from their
amendment, and this report being made to