The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1896-01-09

directors rs far as they survive and against their
representatives so far as they nave left assets,
for the restoration OF the funds misapPropri-
ated by them. Foreclosure is So obviously the
first rational step toward an end OF the whole
question that "piain people, are unGble1o I'M
derstand why it is not resorted to at once.
The only reason assigned to the contrary is
that there is a 'hrst mortgage" on the prop
erty which viii swallow up all the proceeds of
sale; but the priority of this so-called first
mortgage" on the Central Pacific road is chal-
lenged, on the strength OF facts impossible TO
deny, and not easy, II possible, within the line
OF adjudged cases, TO answer. The amount is
! $27 800 $50; too large sum to be deemed in
| significant or to be surrendered without
| struggle. The Union Pacific mortgage is per
| haps in similar predicament Here, there
fore, is lien OF from S27 600 900 10 500, O0O,-
600 which every one OF the various refunding
and extension schemes so far advanced pro-
poses to abandon gratis, and without even an
inquiry as to the rights or equities involved.
The Thurman act distinctly challenges the
priority of these so-called first mortgage bonds
in its recital that they are, If lawfully issued
and disposed Of prior lien to that of the Gov
eminent subsidy: but how if they were not law
fully issued ana disposed OF? Plainly in such
case they have no priority. Nov on their face
they evidently do not conform to the require
ments of the act OF 1864, and so were not law
fully issued, and as to the disposal of them
the report of the Railway Commission shows
that they were paid out by the directors of the
company to themselves under the thin dis
guise OF a construction company, of which
they owned all the stock, and hence were not
lawfully disposed of. Surely this question of
law involving nearly $2S 100000 is worth
the consideration Of court.
III. These refunding schemes all proceed on
the presumption that the Government is with
out remedy against the guilty parties for these
misappropriated millions, although no one of
the private suits brought against them on sim
liar grounds has failed to secure a settlement
satisfactory TO the plaintiffs. "The alIega-
tons" says the report OF the commission
(p. 73), CONTAINED in these complaints were
such as would compel men of honor, if these
allegations were false, to defend themselves a.
any cost. It appears from the evidence thatall
these suits were settled, and that the stock
owned by the plaintiffs was bought at rates
varying from $500 to $1,000 per share" Why
should an effort for redress by the United
States be less efficient than one of a private in
dividual? That railroad managers and their
partisans should favor an abandonment OF
these claims is easily understood thatitshould
be advocated by the surviving partner OF the
firm that did the wrong and secured the fruits
OF it is also natural enough; but that leglsla-
tors looking only at public interest should
even entertain such a proposition before all
all means of collection have been exhausted
passes com prehens1on.
". These railroad corporations are not in
fact so destitute of means to pay as is repre-
scented; on the contrary they have valid claims
Of large amounts against persons possessed OF
great wealth sufficient to materially reduce
the amount OF the debts, and, when added TO
the sinking fund in the treasury, perhaps to
extinguish the principal OF them. The Central
Pacific Company, for example, has a perfectly
valid claim against its guilty directors Tor al
even if the estates OF the deceased associates
prove beyond the reach of the law Mr.. Coils P.
Huntington yet remains. He is the surviving
partner OF the combination that did the wrong,
and II not the author OF the scheme was UNI
doubtedly guilty participant in the proceed
lngs. He and his millions are directly response
bic to the Central Pacific Railroad Company, and
TO ITS creditors, claiming in proper proceedings,
as such, Tor all the misappropriated moneys
he is an active promoter OF rounding. he an
nualIy leaves home to attend the National cap
ital, preparing, advising and advocating some
rounding bill. Why, at his advanced age and
possessed OF wealth beyond his power TO speno,
does he assume this toilsome, wearing, expen-
slve and odlous labor, which his confidential
letters to his associates, published by the Rail-
way Commission, show that he hates and de-
tests? Not be assured, because he feels any in
terest In seeing the Government debt paid, but
because ne knows that without the condona-
ton involved in reminding he will, in the
mere ordinary course of justice, be called
on to make res titutionl His whole interest in
the question is in the conformation that re-
funding or extension necessarily involves.
v. All of the Southern Pacific Railroad south
Oh Gllroy and Alcalde belongs equitably to the
Central Pacific Company. 1t was built dis
tinctly with the credit of that company di-
verted by unfaithful directors to the construc-
ton of a rival road This tact is of easy proof:
will go far to extinguish the Central Pacific
debt. This also is TOO valuable an asset to be
surrendered gratis.
vi. But lar more important than all other
considerations is the deep shame and dishonor
such legislation as proposed win bring on
our country and the Congress that enacts It,
Consider the simple facts as history will record
them.
The United States advanced for the construc-