Daily capital journal. (Salem, Oregon) 1903-1919, 1914-05-26
Asserts the Money Was Spent
in Effort to Strengthen
the Corporation
SAYS CITY CHARTER
PREVENTED EXPANSION
Believed Policy Of Extension
Only Hope for the Stock
holders Of Company

New York, May 26.-In long
statement printed here today, Patrick
Calhoun, former president of the Unit
cd Railroad of San francisco, admitted
that he used $l,096,000 of tae corpora
tion s money as charged by the Califor-
railroad commission, but asserted it
was spent in an effort to strengthen
the corporation $ interests outside of
San Francisco.
After declaring that he went into
the Solano Irrigated Farms company
with the knowledge and consent of the
corporations s directors, Calhoun says in
part:
"The United Railroads of San Fran
cisco is hemmed in by the provisions
of city charters and prevented from
expending within the limits Of tle city
Where growth ends senility begins
Two policies then were and are now
open to the United Railroads. One is
to conserve its present lines during the
life of>its franchises and at their ex-
piration turn them over to the city at
fair price for its physical properties.
In that way lies certain death, and in
thit way, in my Judgment, lies small
hope for the stockholders, for, with in
creasing municipal competition and a
large bonded indebtedness to be paia,
the return of the stockholders must be
small.
"The other policy is one of expan-
sion. As the United Railroads cannot
expand within the city it must expand,
if at all, outside the city. Finally the
directors resolved TO invest in the So
lanO project. 1t is well conceived and
at first | intended that only the United
Railroads should be interested in the
deal. Subsequently I increased the
area l originally had intended to buy
and to allow a participation to certain
parties who desired it, taking also a
participation myself, but retaining a
control for the railroads. These parties
Internationally agreed to pay their
subscription when called. Thus the
enterprise stood in July, 1913, waer
it may be safely asserted, it was the
most promising land enterprise evel
inaugurated in the state. 1t required
only $4,000 to fully complete the irri
cation system and the roads on the
lands then being offered for sale. Al
this stage some of my associates OBJ
jected to the expenditure of any mor'
the United Railroads, and al
though I had the power to do so die
not care to exercise this power afte
the objection raised by some to thu
expenditure of $l,096,0O0." 2"
President Issues Def.
San Francisco, May 26.-"If any
crime has been committed, the door il
wide open for prosecution"
This was the def here today of Jess
w. Lilienthal, president of the United
Railroad of San Francisco, in an inter
view relative to the diverting of 81,
096,000 of the corporations s funds t.
help finance the Solano Irrigated
Farms project.
81 have not characterized the Sola
no affairs as a crime, but if Grim
has been committed, don't think any
body could be held morally to blam
except Patrick Calhoun himself. Yo
know Mr.. Calhoun 3 way. He was mas
terful, dominating.
"Again l want to say that if an.
crime was committed, nothing has bee
done by anyone that would obstruc
prosecution of that crime. l have ha
that thought in mind ever since be
came president of this company an