The San Francisco call., 1896-01-26


Company, the Western Development Company
and the Pacific Improvement Company and
dividends of the Central Pacific, received in
cash and securities more than $142, 900 900,
and also rentals aggregating $29, ,912,373 40 Is
this TO be condoned because Mr.. Huntington
now says the Central Pacific is unable TO
pay its debt? If other frauds, including
construction, the handling of land
grants and numerous unelassifed items,
had been exactly ascertained, when Governor
PattlSon wrote his report, and have been fear
fully augmented since, do these facts appeal
to Congress on behalf of the railroads or on
the side OF the people? If books and vouchers
were destroyed, false liabilities created and
i've or six millions of dollars disbursed for cor
rupt purposes, does 1t not follow, as Governor
Pattlson said, in relation TO the Central Pa
cine, that no part of its Indebtedness can be
recovered except through immediate compul-
sorry legal processes" and that extension of
the time for payment, therefore, means an in
crease OF the amount OF the debt and the max
ing OF its recovery more hopeless.
Ii the debt be refunded and the time of pay
ment extended for hundred, or even for fifty
years, moreover, what will be the condition
when the corporate existence OF the Central
Pacific ceases at the end of fifty years from its
organization? If the principal debtor expires,
what new complications will surround the
debt?
These are matters which cannot be elaborated
IN the midst of the present controversy but
which are so well understood as to be part of
the authentic history of the times, and thay
all point 10 the unavoidable conclusion that
retunding and the defeat of foreclosure are
only designed TO OD1terate legal reSponSl billty,
TO condone such frauds as are almost without
precedent, to preserve enormous private for
tunes and the Southern Pacific Railroad from
all possible attack, TO shift the burden of the
Indebtedness from those who contracted it,
and to force the people, who actually built the
Central Pacific, to pay for it two or three times
over, out OF their own resources, and without
diminishing the fraudulent accumula tions of
those who aspire TO be their masters.
Republicans, Democrats, Populists, citizens
OF all shades of political opinion, who have
IN a6 q pfncH1 rI,aff Z
stood by the Union and the Government, are
virtually unanimous against refunding and for
strict foreclosure. AS practical statesmen, what
do you, gentlemen OF both houses of Congress,
say to this demand? Is Mr.. Huntington
stronger than five or six of the sovereign States
OF this Union, stronger than the Union Itself,
stronger than the law, than justice, than COM
mon honesty? We do not believe that he is,
and we confidently appeal TO you for protec-
tIon. To the argument that we ought to protect
ourselves against those whom we claim TO have
debauched our politics, and, to some extent, our
law, and to have interfered with and controlled
our business, paralyZed our enterprise and
checked our progress, while they have alb
sorbed not only our profits but large parts of
our capital, we answer that in those phases of
the controversy which are purely local we are
lnterposing, and propose to interpose, our
strength as citizens and voters but that in that
portion OF the fight which has been transferred
TO Washington we are forced to rely upon the
most powerful legislative body in the world
the Congress of the United States-which owes
its existence TO the people, and which, in theory
at least, and as we hope, in practice also rep
resents the people and their rights and their
interests, and not railroad monopolists and
corrupuonlStS.
The conclusions we desire to formulate are:
First-That, even though the Central Pacific
Railroad Company be technically insolvent,
still refunding is not and foreclosure is ex-
pedient.
Second-But that corporation is not insolvent
II It's entire assets, as under the law they ought
to exist, are sufficient to pay its Indebtedness.
Third-That its assets have been transferred
and converted to an amount more than ade-
quate to the complete rehabilitation of the Sc
curity.
Fourth-That, in suit for foreclosure, the
withdrawn assets can be restored, wherever or
in whatever form they exist, the solyeney of
the corporation established, and the whole in
debtedneSs collected.
Fifth-That, in order even to consider all
these questions Congress has in effect, to ex-
ercise both executive and judicial powers, and
by the investigation of q committee virtually
TO usurp the functions of two coordinate de-
partmentS OF the Government.
Sixth-That without denying or even dis
cussing the abstract proposition that Congress,
by mere inquiry, may determine for itself
the status in fact and in law of the relations
between the Central Pacific Railroad Company
and the Government, nevertheless, it Is obvi-
Gus that under existing conditions such an in
Qulry is not only ineXpedient but improper.
Seventh-That it is manifest, therefore, that
the present situation OF the secured indeb bted-
ness should be left to the action and the de-
termination OF the executive and judicial de-
partments.
Eighth-That, after foreclosure, and the ju-
dlclal determination upon the facts and the
law of the precise condition of the secured in
debtedness of the Central Pacifc-in other
words, when the proportion of the actual, not
the nominal, security to the debt has been
ascertained, and the usual and ordinary means
OF rehabilitation and collection exhausted
then, and not before then, legislation by Con-
gress may become proper and expedient.
Ninth-But that, meanwhile, the supremacy
OF the law, tie inviolability of contracts, and
the rights and interests of the Government
should be sacredly maintained, and there
should be no condonation, through legislative
action, intercepting judicial proceedings, of
frauds and conversions, and no sacrifice OF the
people, at the mere behest of Mr. Huntington
and his associates, VINO are incompetent TO sit
In judgment upon their own cause.
HENRY E. HIeHToN
Following is the text of the report
drafted by Mr.. Estee:
To the Honorable the Senate and House of Rem
Tese1tGttUes Of the United States: The under
signed, a committee duly appointed by State
conventions of the citizens of California, held
1896, respectfully submit TO the Congress OF
the United States and to our fellow-ciTiZens
everywhere, some of the reasons why the peo-
pie OF California are opposed to the passage by
Congress of any bill reminding the indebted
ness OF the Central Pacific Railroad.
1t is not true that the Central Pacific Rail-
road Company is al honest debtor, or that tits
enutleQ 10 1hVOraDIe treatment at the hands OF
Congress.
The facts are that in 1861 the Central Pacific
Railroad Company was incorporated under the
laws of California. The constitution of Cali
fornia prescribed then, now, that "each
stockholder of corporation or joint stock as
sociation shall be individually and personally
liable for his proportion OF its debts and liabli-
ties" (Sec 36, art. A. constitution of 1849.)
The Supreme Court OF the State of California
interpreted this section of the constitution in
the case OF French VS.. Teschamacker, "a Cal,
518, as follows:
at is unconstitutional for the Legislature to
relieve q stockholder of a corporation OF his
individual liability"
And as each stockholder of the Central
Pacific Railroad Company, under the constitu-
tion of the State of California is bound for his
share of all the debts and liza
bfllties OF the corporation, no act of Congress
can now be legally passed which will legally
relieve him from such responsibility. The
directors of this corporation are also personally
liable for much of its Indebtedness. The direc-
tors OF corporation are trus tees OF an express
trust; they are held to q strict accountability
for all they do as such trustees. Their posi-
tion is one of confidence, and, when they
violate their duty in that regard, they are
amenable TO the law, and neither the great
political or financial power of the individual
or OF the corporation of which he is q stock
holder and director can be justly or legally in
voked to relieve any such director from the
performance of these duties or from the respon- |
81 bllity which on-performance of them i'm