The herald., 1895-02-03
CENTRAL PACIFIC INIQU|TY.
How the California Big Four
Lined Their Golfers.
The Corporation Wrecked by Dis
honest Management.
vo-CaIied Equltie. Taken Up One by
on7 and shown to be Fall
lacious.
New York World.

Pacific Railway Company of Kentucky"
owned and managed by the came foul
persons who built and wrecked the
Central Pacific. This new company was
chartered by the state of Kentucky upon
the strange condition that it should do
no business within that state, as much
as to say, rob as you please, except that
you shall not rob us. The concern pro-
fesses not to own any railroads, but on
April l, 1885. its owners performed one
OF their favorite double-action tricks, by
leasing to themselves under one name
what they owned under another. Thus
the Central Pacific. and all the other
roads which the Four owned, are now
leased to this Southern Pacific company
OF Kentucky. All this 10 mentioned
here only to complete the narrative,
which has nothing more to do with this
last whirl OF the railroad kaleidoscope.
The lease Of the Central Pacific to the
new company is. however, probably IL
legal and void, for the reason that the
franchises of the Central Pacific cannot
be thus transferred. At any rate, 1t
does not change the legsl position or OBJ
legations of the Central Pacific under
the laws of California or towards the
United States,
NOT A FEDERAL CORPORATION.
The Central Pacific was organized I'M
der the laws OF California, and not, like
ths other roads. under those of the
United States. Two very important
consequences follow from this fact. The
first is that by the law OF California the
Central Pacific must be dissolved and
its business wound up at the end OF 50
years from its creation that is. in 1911.
The United States cannot continue 1t IN
life and have no authority over it, ex-
cept such as arises under the interstate
commerce law or under any contract
between the United States and the road.
As for the other roads. the United States
may continue their corporate lie lndeh'
nitely or may change or take aWsy their
charters at any time. 1t has been sup
posed by some that the so years. life OF
the Central Pacific might be computed
from one of the consultations OF the
road. which would date its death later;
but this ie an error, and 1911 is the
right date. At that time ita affairs must
be wound up, and if it's debts are paid
-
existence. Otherwise it must be sold
out, and the buyer mny recrganize it.
This disappearance of the rosd in 1911
is not even hiuted at in tbs Reilly re-
funding bill Dow bef3re congress, and
there 10 pretty good evidence that the
railroad men did not wish congress to
know nything about it. They wsre
wide awake to it themselves, however.
In arranging the dates in the Reilly bill
for paying the debt of the Central Pas
ciic to she United States they quietly
fixed three-qusrters of those payments
to be made in 1911; that is, they made
that part of the debt fall due when there
would be nobody to pay it.
The second consequence is that the
stockholders of California railroad
corporation are liable for ell its debts up
to the value of the stock they held when
the debt was incurred. This time, in
the case Of the Central Pscific, was from
May ~. 1865, to December 81, 1859.
This liability ia important because it ia
the only chance which this United States
government has had for recovering $64,-
600. 900 OF the debt due TO il by the Gem
trail Pacific. This mstter stands as fols
lows: The Central Pacific ia avowedly
bankrupt. Its dept to the United States
now amounts to nearly $7S,O00,0 900. and
by the year 1899 will amount to $122,-
600 900. Thia debt 90 the United States
was incurred in various amounts, as the
successive subsidy bonds were issued,
from May II, 1865, TO Decem Der 81, 1869.
1t falls due in corresponding successive
amounts as the separate bonds mature,
January 16, 1895, to July 16. 1899. When
tho issues OF the United States subsidy
bonds were complsted the Four held
stock of the Central Pacific to the
amount of ebout $4,000 They or
their estates are therefore liable (under
California law) 90 the United States in
thgt amount, which w9uld reduce the
debt of SIS, OOo. 600 to $14OOO.OO0. And
if the government would ,'ecover from
the Four tbsir unlawful gains of IS ,000,-
600 from lands alleged TO have belonged
to the Atlsntic aud Pacific railroad and
TO the California and Oregon railreNd
this $4,000, 900 would bs redassd to
Sc, 900. 00C. President Ole vslsud's alss
ssgs ia an uDsqni~acsl dsslarstion oil
his wish in tho matter. 1t will bs inter
esting Co sss what will bs dsne by Sac
rotary Carlisle and Attorney Genera
Olney to collsct the money.
FINANCIAL CONDITION OF THE ROAD.
lnId lH Bill piys hn nohbOucu huUVcf
hopeless bankruptcy, notorioualy and
openly avowsd by the railroad officials
themselves. John G. Stubba, their
traffic manager, swore befoTslthe railway
commission Testimony, page 2389) that
his opinion WAS that the Csntral Paci-
fic Railroad company will never be able
TO pay ito debs to the government, OF
any part OF it," not even $500. 900, and
that it will require all it's resources to
pay its obligations 70 the first mortgage
bondholders and the operating expenses
of the line. This ntate OF ruin Can be
verified any day by the quotations in
the money columns of The World. The
second mortgage bonds of the road are
worth more than par. because they are
guaranteed by the United States. The
stock, which shows the actual credit Of
the railroad itself, has for many months
been quoted at from 10 to 10 cents on the
dollar. Even at that rate there have
usua:lv been no sales, and such as there
were have apparently been wash"
sales-pretended sales to make show oil
value or to promote some stock-gam
bling operation. The whole amount o.
stock and bonds issued by and for tbs
Central Pacific was according to Mr.,
Reilly's report. psge ID: On June 30
1893. 1922, 616. $50; of other liabilities
s76. 687. S99. 50; total liabilities, $780,.
SOC. 5O9.5O. By putting into the column
of assets the road Itself "a worth ovel