The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1894-09-15
CHEERED BOTH
Continued from Third Page.

L
given great deal OF thought and study tn mic
question, including The general problem Of
eliminating the monopoly element from tho
~TanfoAd highways OF the country and The hest
heth9u Oh deailng with the bond-aided Pacific
railroads. Ii Is unnecessary, in the presenee
q d 0"IAo' 1T" auulehee' 10 review the history
OF {le L mon and Central Pacific railroads or
Of their relations to the Government TTa
companlrs which constructed them were suh-
sldz oY the Federal Government bv prsnts of
empires OF lands and tens of millions of dollars
IN government bonds equivalent to mouev
lucy ouilI the roads -ln accordance
with the terms OF the Federal statutes. granting
suosloies aed concessions which induced Them
10 build For the loan 10 the Central Pacific
Railroad COMPANY OF S27 600 600 In honds
bearing interest at the rate OF 6 ner cent ner
annum' payable thirty years after their issu.
ance' tue central Pacific Railr DAD system and
All ol tne property aud assets of the Central
. acme haliroad Company was MADE subject 10
2 mortgage IN favor OF the Government. Since
Ihr issuance Of these bonds the Government
mas PAID, and must pay to the date OF their
1Hdtu Ilty, S5O,OOO,000 IN interest for the bene-
III OF that company. The time for the payment
oil the principal and interest upon those bonds
LAS nearly arrived. That railroad system I'M
UeI Tue authority OF an act OF Congress, was
also privately mnt!gaged TO the amount OF
81, ooo.oOO additional, and that mortgage was
ny the same act made prior to The Govern
nfenps lien. The entire railroad system was
asceltained by the Pacific Railway Commission
TO be worth only $345O0,ooo in 1887 leaving,
therefore, according 10 its estimated market
value, margin of less than $4,000 above
the FIRST mortgage TO meet The Governments
second mortgage OF ST., 100000.
Ii Is claimed that the accumulation In a sink
Ing fund, created under the require men is Of the
law, will reduce the first mortgage indebted
iaaV
most ST. 100000 of market value which could
certainly not be realized upon a forced sale of
the road TO meet this great obligation 10 the
Government.
:: 1t Is admitted by those who control the Gen.
trial Pacific Railroad Company that no other
provision has been made for meeting the In
debleGness TO the Government, and that the
company Will be wholly unable to meet that
obligation at maturity. III this state of The
case lie Government has been asked 10 refund
the entire Indebtedness OF the Central Pacific
hallway system, including the Government
mortgage the first mortgage OF which 1 have
spoken, and private mortgages upon several
branches of the Central Pacific system, amount
ing in the aggregate 10 about S133 900, 600 :;
and the Government is asked TO refund this
great Indebtedness by Issuing bonds bearing
Interest at the rate OF 2 per cent, payable in
attachments during the period Of 100 years
and we are Informed that the company will not
be able TO pay Its Debt TO tile Government upon
. any other terms.
>: Now, it appears from the report of the Pacific
. Hallway Commission which fully Investigated
:. his whole matter several years ago, that the
:. directors of the Central Pacific Railway COM
pany - Stanford, Huntington, Hopkins and
-tCrocKer-by contracts fraudulenty made with
themselves under the cover Of various names.
diverted 10 their own privaIe uses S62, 100000
~oftA OF the assets of the Central Pacific Rail-
n
Ject 10 the lien Of the Government for the paw
mept:of the mortgage. And we find that at The
TIME the obligation TO the Government 8 in
CURED these directors-Stanford, Huntington
Hopkins and Crocker-were the owners Of all
ornearly all of the STOCK issued by that COM
pany, andthat they were the OwDers of that
stock in about equal proportions. Under the
laws of California, under which that corpora
ton was organized, the stockholders are made
liable for the debts of the corporation in the
same proportion which the stock held by each
etoekholder at the time the obligation was In
cured bore 10 all OF he stock issued at that
time; and that under the laws of California the
stockholders obligation will not accrue until
all or the assets Of the corporation have been
applied TO The satisfaction OF the debt. The
Pacific Railway Commission further finds that
by fraudulent dealings with themselves these
four directors of the Central Pacific Railroad
Company diverted further assets and earnings
OF that company themselves; and under the
principles Of equity Jurisprudence universally
recognized and applied in private transactions
throughout the world the assets so secured by
directors of corporation through contracts
made with themselves constitute a trust prI-
marIly for the benefit OF the corporation, and
secondarily for the beneft of any creditor en-
titled by law or by contract to lien upon sue b
assets.
IL is matter of general notoriety that these
hair YalA
.*Ceeds of those diverted funds, constituting in
:: their hands private fortunes greatly in excess
" 10 the aggregate OF the Indebtedness OF the
:. Central Pacific Railroad Company to the Gov
eminent. The proposed refunding OF the Cen
tral Pacific Railroad debt win unquestionably
and cOBfessedly operate to release those men
and their estates from their present liabil-
ily 10 the Government as stockholders and as
fraudulent directors.
In Congress l have steadfastly resisted the
refunding of that debt, and 1 have steadily H.
sisted upon the enforcement OF the laws under
Which. the obligations OF the Central Pacific
RAILROAD Company arose. and have insisted
upon enforcing the legal and equitable rights
Ofthe Government against those directors and
stockholders aud their estates, in order to
recover for the Government the deficiency
which, Will remain upon that obligation after
applying the assets OF the corporation to its
=: payment.
wish here TO say that have made no de-
fnand IN this matter which imposes even a
feathers weight of burden or obligation upon
these men or their estates beyond that which
they voluntarily ssGmed when they accepted
The advantages Of the statutes granting the
concessions and subsidies; L have made nc
assault upon these people or upon their for
tunes save and except TO demand that they
shall be compelled 10 obey the laws which we
ali obey as individuals; that they shall be sub
ordinated TO the law, that their liabilities,
whatever they may be. shall be measured by
: existing laws and shall not be RENTED by the
massage OF laws practically giving over to them
. absolutely and forever from S50,0O0,000 TO
$4,000, 600 OF the peoples money
But the question at issue between the rail-
roads and the Government means greatly more
than The mere collection OF this indie btedness
II means first the weak aud wrongful condOna-
ton of fraud and crime deliberately practiced
by long standing conspiracy against the Gov
eminent for the purpose OF defraudng it OF
100000.
The Government, In my opinion. cannot
afford to condone that colossal crime-it cannot
abandon its rights without expressly condon-
myth fraud; and beyond all that, IL the debt
shall be refunded the burden will be steadily
upon the people of the State Of California and
for fifty years they will be compelled to pay In
excessive freights and fares across this CONT
nent enough OF money beyond the fair cost of