Birmingham state herald., 1896-08-20
In Discussing Rail $. Reorganization Before
 the Amer : Bar Association.
ScATHING cR c;lsM OF METHODS USED
Two Thouss ; People Were at the Or sn- ing 5ess of the Assooiation-Lord Rus e and His Distinguished
 Companions.

l ence of the American Bar association in l Convention hall at 10:30 o'clock this
 morning brought out an audience of
 nearly 2O00 persons. Among the first to arrive were Lord Russell, Sir Frank l Lockwood, Montague Crackenthorpe and the ladies of the English party. Their entrance was the signal for great ova- tion.
 When the president, Mir Moorfeld Sto- ry of Boston, called the meeting to order
 at 10:40 o'clock there were present on the
 platform Lord Russell, J. Randolph | Tucker, Ward J. Phelps. Montague l Crackenthorpe, William Allen Butler, l Henry Hitchcock, Charles C. Allen. | Francis Rawle, James c. Carter and Sir l Frank Lockwood.
 l Presidents Address.
 The annual address of President Story, | which required an hour and half in de- | livery, was frequently applauded The | address of the president was upon The most noteworthy changes In statute law on points of general interest made in several states and by congress during the preceding year." as required by the constitution.
 He pointed out that the legislation in different states, though widely separated and representing both the oldest and the newest civilization, strongly showed the essential unity of this country in deal ing with the same problems that con- front all the states He pointed out that while the past year has been marked by much discontent among the people. that
 the laws show only profound peace and | general prosperity. Discomfort does not | affect legislation. Another noticeable point is the rapid | growth of a disposition to assert the general interests of the community at the expense of individual freedom" The underlying principle of socialism | that everything that a man owns he | holds for the state, is asserted more and i more frequently The statutes of every | state contain laws that would have | seemed unwarrantable invasions of pri- l yate rights. not. many years ago. Such l legislation is the collateral inheritance
 tax, the graduated income tax, the grad
 uated tax on the estates of deceased | persons when adopted, and the character
 and number of the uses for which money
 is now realized by taxation.
 l Railway Reorganization. l The most important and longest part | of the address is devoted to railway re- | organization. It Is based upon a stat | ute of Kentucky, which, for the first | time, attempts to deal with this subject, and which the address considers as a step In the right direction, as 1t enables the courts to protect the interests of the investors by making every reorgani- zation of a railway the subject of judi
 
 interest hearing. The address points out that the great railway systems of this country have been built up and
 equipped with borrowed capital. Many of the securities represent investments
 of more than their face value. Capital
 stock has been frequently issued with out payment, often as a bonus to go with the bonds. In this way the money of creditors has been invested, and the | control of the property retained by the 1ebtnr-thp railway cOmDanX. Great | systems of railroads have been built up | by contracts between companies, some | times in the form of leases and some | times of traffic agreements, carefully | drawn by astute counsel, and providing | for the protection of the properties thus
 consolidated in-case of a failure to make | the payments stipulated In the agree | ment but the last three years have
 shown that these contracts cannot be | enforced in the courts, that the rights | that they are intended to secure are not | recognized and that for all practical l purposes the creditor is
 At the Mercy of the Debtor
 and obliged to accept, substantially,
 such terms as the debtor chooses to of- l fer.
 | As matters now stand counsel must | advise their clients that they can draw | no instrument of this character with the least assurance that it's provisions will | be respected.
 I | the managers united and fully prepared | for the emergency, which they inevita- | bly, have foreseen, while 1t finds the cred l tors scattered, ignorant, frightened and | entirely unready to act What has hap pened in practice? We have seen the | managers, while stoutly denying up to | the last moment that any such step was | contemplated or that the property was | in any way embarrassed. secretly prs pare | a bill In equity, and without notice to anyone interested file 1t in court | of the United States asking for the ap- l pointment of receivers.
 | As a matter of fact, in every case the | proceedings have been colusive. The | ma nagcrs of the insovent company have | controlled both sides of the litigation. | The bills ba Ve alleged that the company cannot meet Its obligations and that thus | the system will be disintegrated and the | nsovent company suffer. Upon this al- | Legation the company asks the court, In l the interest of the debtor, to deprive the l creditors Of their rights, or at least to
 restrain the creditors from exercising | them The representatives of the debtor | ask that to preserve for 1t property to l winch cobfessedly 1t is not entitled the creditors De dcpr,ved of that to which | they are entitled. To disguise | The Naked Effrontery
 | of this position the bills have generally | alleged that the public interest will suf-
 fer from the disintegration of the sys-
 lem. but 1t may be doubted if thele is any | ground for tlis claim. It certainly has | rever been established after argument. for no opportunity to litigate 1t has been | given If it is for the interest of every
 one conl cined that the railroad should 1 be run there Is little danger that the
 public will suffer from au interruption | Of service.
 MT. Story asserts that with scarcely an -xception whenever a great railway has passed into tfNS>eontrol of the court the l c;editors have first learned the fact
 through the newspapers. He holds that