The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1896-12-15
They Object to Huntington's
Proposed Refunding
Scheme.
Propositions to Convert Third and
Fourth Mortgages Into First
Mortgages.
Mcguire Says That Powers Accepted
the Plans of Coils Without
Asking Questions.

WASHINGTON, d. c., Dec. 14.-Sena-
tors and Representatives IN Congress have
received from New York the following
circular:
son behalf of substantial and represen-
tative interests in the Union and Central
Pacific railroads we respectfully sub NIT
that the rights of the Government, as well
as of the individual security holders of
those roads, will be best subserved if the
debate on the Pacific Railroad debt be not
advanced to date anterior to February /,
1897. The grounds of this position are the
following:
"As to the Union Pacific: The bill is
nothing more than a proposition to con-
vert third and fourth mortgage bonds into
first mortgage bonds on this railroad.
The majority of the committee has been
misled into this anomalous position. If
Congress were to consent to subject the
Governments second mortgage to third
and fourth mortgages (which we do not
for moment believe) the present first
mortgage bondholders, whom we repre-
sent, would never consent to share their
prior lien with inferior umbrances. If
the bill should pass they would fight this
scheme in the courts. Hence, NO time
would be gained, even if measure 80 re-
pugnant to the sense of justice were to be
enacted.
''As to the Central Pacific, the stock
holders of this road are not engaged in the
prosecution of plan of reorganization,
based on the assessment of their shares
for the payment of $34, 600, 600 cash into
the United States treasury, in considera-
ton of the transfer to them of the Govern
ment's second mortgage. AS about $751;
OOo, 900, out of the $68, 100000 of capital
stock of this road, is held in Europe, the
few weeks of time indicated above, are
necessary to consummate this arrange
ment so desira BILE for the Government.
Moreover, the proposed bill requires the
consent of the Central Pacific Railroad
Company to changes in its lease TO the
Southern Pacific Company, in order to
make the proposed legislation effective.
This consent, we can confidently say, the
stockholders of the Central Pacific Rail-
road Company will not give, as such con-
sent would constitute the annulment OF
their rights in the property. Therefore,
time would be merely wasted in consider
ing or passing a measure confessedly sub
ject to the performance of an impossible
condition.
s.Being amenable to the objection of
uselessness as well as injustice we submit
that this measure should not be fastened
until the real parties in interest can pre-
sent formal propositions, now maturing,
and more favorable to the Government
than the pending bill. Very respectfully,
sL J. MORRISON"
spondent tonight: Il am not at all sur
prisad at the communication. 1t repre-
sents substantially the condition of affairs
we have long known to exist. In the mat
ter of the Central Pacific Railroad Com
pany the directors and others, who have
been urging the passage of the various re-
funding bills, have been doing SO in utter
contempt and disregard OF the right of the
No proposition has ever as
vet been made TO the Government by the
stock ho ers, or by any person or persons
authorized to represent them in the
matter.
.If it be assumed that the directors
have any such authority by virtue of their
been consulted) yet even the directors
have never submitted or suggested
proposition. The House committee seems
to have proceeded upon the presumption
that the directors are authorized to act
for the stockholders and that Mr.. HINT.
ington controls the directors. The Pow
ers bill represents Mr.. Huntington's
plan, accepted without any questions be-
ing asked as to whom he represents or by
what authority he presents a plan. OF
course our light against the bill is based
on other objections altogether. but from
the standpoint of the United Stat es Gov
eminent these considerations are i'm
portant.
81 heard a rumor to-day that the re-
funding bill would be taken up this week.
but members of the Pacific roads commit
tee denied il"