The San Francisco Call. Newspaper, January 26, 1896, Page 6

6 THE SAN FRANCISCO CALL, SUNDAY, JANUARY 26, 189€. ARE DIVIDED ON FORECLOSURE: Committee of the State Con- vention Splits on a Word. ALL AGAINST FUNDING. But M. M. Estee’s Draft of a Memorial Stops Short at That. SECONDED BY MAYOR DAVIE. Henry E. Highton Insists That the Convention Should Not Be Misrepresented. Three memorials have been prepared by three members of the Committee of Seven appointed by the late State convention to protest to Congress against the passage of the fur One of them was pre- ee, chairman of the v Henry E. Highton, €0, and the third by John T. Doyle. Each of theze three urges the adoption of s draft, and asa result neither of them en adopted. s committee was appointed with full r to draw up a memorial to Congress to follow the resolutions already forwarded, and give further expression to the temper of the convention. The differences among members will probably defeat that purpose. The committee, it appears, has split up the word *‘foreclosure. They are united in their opposition to the funding bill, but a few of them stop go further and insist that Congress shali be cailed upon to fore- close upon the railroad mortgage. M - Estee, in his drait of a memorial arraigns the railroad severely, but refuses to ask for foreclosure. In this he is sec- onded by Mayor Davie of Oakland. Both Henry Highton and John T. Dorle go further and stand for foreclosure and the collection of the debt from the estates of the railroad quartet. The committee has neld a number of meetings and discussed the problem in all its phases. The three named have drafted and redrafted their suggestions for the memorial in an effort to bring them within the requirements called for by the others. Yesterday these three held.a meeting, at which they concluded that their differ- ences were irreconcilable. They there- fore decided to submit the papers for pub- lication, and for the possible acceptance of & majority of the committee at a meeting that may be held this week. There has been considerable feeling among the members of the committee in this matter, and deep regret is expressed over the division of sentiment. At the meeting yesterday Mr. Estee pre- gented his draft for thelast time, and it being rejected by both Mr. Highton and Mr. Doyle, he signed the names of A. Caminetti, J. L. Davie, Marion Cannon, E. M. Gibson, members of the committee, saying that he had been authorized by those gentlemen to do so. In stating his reason for refusing to sign the Estee memorial Mr. Highton said: *Mr. Estee has arraigned the railroad com- pany in masterly style. He has mar- shaled his factsin a manner thatis con- vincing. I have not seen it better done by body. But he stops at that. He leaves Congress to inquire *What then? What is your proposition? Then again he leaves two things to stand out for the possible use of those whom we are fighting—use to their own advantage. Heshows how high the debt of the company rises over the as- sets. And he suggests no remedy—no method by which the Government can come at its own. Now, with Mr. Hunting- ton in Washington, he might turn that into a weapon for his own defense. ‘If the debts are so great,” he might say ‘and the assets so comparatively small, what can you do about it, but refund and give us time? Here is a memorial from my enemy that sets forth the hopelessness of your case. Itdoes not ask you to foreclose? That argument might be very effective.”’ In response to these arguments which bave been presented time and again at the meetings of the committee Mr. Estee remodeled his draft, suggesting that the Government might proceed against Hunt- ington to recover, but it is said to be so worded as to protect the estates of those of the quartet who are dead. Mr. Estee defends his position by de- claring that the convention was called to Totest against the passage of the funding ill; that the defeat of that bill leaves the law in the case of a mortgage due and un- paid to take its course; that no further action is necessary from the people here. Mavyor Davie 2lso supports this view and says the memorial will have greater weight if it stops at that. Mr. Highton does not agree with this view, as stated, and feels very strongly upon the subject. He says the temper of the convention, the temper of the people and the temper of the press are for fore- The convention exvressed itself done. The Mavor appointed Mr. Estee and elf,” said Mr. Highton, ‘‘among others the committee on resolutions and then submitted his draft to that committee. Mr. Estee came also prepared with a draft and read it. I was so taken with the strong array of facts that I suggested that it be incorporated in a memorial toat might be attached, and suggested the appointment of & committee for the purpose. Mayor Sutro acted upon the suggestion and named Mr. Estee first in appointing it, by virtue of which he was chosed chairman. “This difference that has arisen on this important point is very untortunate, to say the least. Mayor Sutro was not at the meeting yesterday, but was represented by Taylor Rogers, his secretary. The Mayor is strongly in favor of my position.” Mr. Doyle’s memorial covers common ground with both of these and is out and out for foreclosure. He would join with Mr. Highton if the latter's memorial could be adopted. Following is Mr. Highton's araft for the memorial : MEMORIAL AN RESOLUTION ANTI-FUN DAY, JA XED TO PREAMBLE AND S ADOPTED BY STATE G CONVENTION, SATUR- AY, )2 HELD AT MET- ROPOLI » SAN FRAM >0, CAL., PREPARED BY COMMITTE AP POINTED FOR THAT PURPOSE BY THE CONVENTION, WITH FULL POWER TO ACT. The undersigned, & committee appointed for that purpose, with full power to act, by the anti-funding convennen, held at Metropolitan “Temple, San’ Francisco, on Ssturday, January 18, 1596, Tespectiully memorialize the Senate and House of Representatives of the United Stetes against each and every measure for re- funding the secured indebteaness of the Cen. tral Pacific Company, and in favor of strict foreclosure of the morigages given to secure that indebtedness. Expressad in e sentence the people of this State consider the welfare of the State itseli to be invoived in the new schemes of Mr. Hunt- ington and his associat earnesiness and determination of men defena- ing their property and their lives, denounce any conceivable plan of refunding and any tailure or delzy in strict foreclosure as destruc- z tive to themand to their descendants, as purely fraudulent, and as designed to place them completely and indefinitely at the mercy of those who are and have been their greatest enemies. T'he issues to be considered in this memorial, while of the greatest pecuniary importance, and to Mr. Huntington and his associates of no consequence in any other aspect, neverthe- less transcend all purely monetary consider- tions, for the reason that they iouch the sacredness and the supremacy of the law, and, in that way, the honor of the Government itself. With the greatest respect, but positively, we object to any action whatever by Congress, or its committées, in the matter of the debt of the Central Pacific Railroad Company as an un- warranted interference, opposed to the spirit of our institutions, with the due and orderly administration of the law. The entire ques- tion is now ripe for judicial action, through the_executive, and, according to all precedent &and in harmony with the distribution of pow- | ers in the constitution, should be treated ex- | clusively through those branches of the ch-l ernment. As the chairman of the present Committee of the Pacific Railroads of the House of Representatives has already rounced, if Congress takes any action in this matter it must act through the virtual exercise of judicial powers, and this is opposed equal- ly to the theory of our governmental system and toall just practice in the history of the United States. To arrive at a finding of | inctand a conclusion upon which any enac ment could be intelligently based Congress would be compelled to investigate enormous records and intricate facts which have ac- cumulated within thirty years, and which, ina proper sense, are even tow sub judice, and if this work be not done under the rules and principles which govern courts and with ju- | dicial “thoroughness and completeness, the | basis for any possible legislation that would even wear the garb of justice would be want- ing. And this essential process of investiga- tion would uecessitate the decision of numer- | ous und complicated legal issues, for the deter- mination of which the judicial department has | been established. The contracts between the Government and the Central Pacific Railroad Company are matters for judicial, and not Congressional, in- terpretation. The facts which have transpired under and in relation 1o these contracts are obviously within the range of judiciary in- quiry and decision. We submit, therefore, that this preliminary objection to any proposed legislation ought to be controlling.” After foreclosure and such | other action as the courts may take, but not | before then, it may be Proper, or even neces- sary, for Congress 10 intexfere. : But if you do not agree to this preliminary objection, then the merits of the controversy are to be considered. The proposition to Congress of the Central Pecific Railroad Company, personified by Mr. Huntington, may be condensed as follows: “When this corporation wes formed the four gentlemen, of whom I was one, who ultimately acquired substantially all its stock, were not | worth more than halfa million. It was a pe- | riod of civil war and a transcontinental rail- road was needed for military and mail facili- | ties. The patriotism of the people was intense. | The four availed themselves of the opportunity and the railroad was constructed to Promon- tory. They formed originally & parternership, and afterward a corporation, named the Contractand Finarce Company,which wassuc- ceeded, for other enterprises, by the Western Develebment Company and the Pacific Im- | provement Company, and all these corpora- | | | tions, directed by the same men, dealt with each other. The upshot of the business wss that, largely out of the securities which the Government and other bondholders nominally | held, while the management was vested in their gebtor, and by innumerable transfers and conversions of the property and income of the Central Pacific, the Southern Pacitic Railroad, 1o which the business of the original corpora. tion was diverted as rapidly as possible, the | California and Oregon Railrond, and numerous other local lines, were constructed and ac- quired, and the four gentlemen referred to, and theirheirsand devisees, have accumulated | roperty to the value of atleast & hundred and | ity millions. Now, through these proceedings, the chief assets of the Central Pacific have passed to other comvanies and to private ownership. That corporation, in its present condition, is | unable to provide for or pay its debts. I, C. P | Huntington, the survivor of the four and | representing the Ceniral Pacific Railroad Company, which will cease to_exist in 1911, ask you, the Congress of the United States to | refund its indebtedness for one hundred years, | 10 establish two per centum per annum as the rate of interest and to ratify and confirm all the trausfers and conversions to which I have alluded, to forego every legal remedy the Gov- ernment now possesses and to give me the power to collect as much of the refunded debt as I, ormy successors, may choose to pay, primarily; from the ?mduun of the Pacific Coast, and, secondarily, from the people of the United States.” This, in fairness and justice, is the substance | of the proposal Mr. Huntington makes to Con- gress, thus invoking the legislative arm of the Government to thwart and parslyze the ex- | eeutive and judiciary, and, speaking of him in his representative 11 as his personal ca- pacity, to intrench him and his accumulations with fortifications that would defy the consti- tution and the laws and every principle of justice and of right. The mere fact that such & monstrous demand can be boldly and even defiantly made is such & commentary upon the times as no words could emphasize. If the public response, though filtered through conventions of solid and deliberative character, is thick with in- dignation, and sometimes couched in language unusually direct and severe, it is no ground for surprise and scarcely for criticism. If an average citizen perjures himself, or commits larceny or embezzlement, he is tried and pun- ished and there is no application to a legis lative body to condone his crime or to oblit- erate the facts he has created. Under a constitutional government, resting upon law and order, depending upon equality of right lmnny free citizens, and supposed to be quickly and effectively moved by the enlight- ened opinions of &n educated constituencr, it | would be indeed surprising if the people could tamely and frigidly accept such false, bound- less and oppressive assumptions and preteness as constitute this entire appeal of Mr. Hunt- ington and the Central Pacific Railroad Com- pany. The whole issue about the railroad dabts is now covered b{ the Constitution, the Federal statutes and well establishad legal principles. The solution of the question demands only the faithful application of the law to unquestion- able facts. It is the duty of the executive de- partment of the Government to set the Ju- dicial De‘plrlment in motion. The attitude of our people is that the existing law should and can determine the controversy and preserve the rights and interests of the Government and its constituents. If the manipulators of the railroads, in the act of managing the se- curity, have wasted, diveried and coaverted to their own use the greater part of its value, then they and the estates of those deceased are trustées. Let the security be rehabilitated and the mortgage foreclosed in the same pro- ceedings, within the broad and well-defined rules of equity. The railroads should be treated like other débtors. Probably your constituents, at least those among them whose covetousness trans- cends their patriotism, would like to have their debts refunded by SHAIEHIII Congress at 2 per cent per annum, while the Government borrows money to keep up its reserve fund at double that rate of interest. Suppose that Pproposition was before you, how long would it stand? Why should Mr. Huntington and the special interests he represents be favored be- yond the mass of American citizens? Why should you be invited to discriminate for the benefit of & ratlroad corporation against the entire country in general and the Pacific States in particular? If to the Southern Pa- cific Railroad and private fortunes the security ledged to the Government and the other ndholders, or its proceeds to the amount of two hundred millions or more, have been traced, let the deficiency be reached there and not made up by enforced contributions from our capital and labor. But it is said that it is wrong to express or convey suspicions of Congress and its commil- tees. "No one on this coast has expressed or implied those suspicions. They are a mere as- sumption of the railroads, made to influence youraction. We have referred only to the ast, with Mr. Huntington as our authority, 8 it not notorious that great reputations were tarnished by association with railroad frands? And when Mr. Huntington wrote confiden- tially to his friend and business associate, David D. Colton, did he not himself accuse the Congressmen of that day of corruption and ex- press his opinion of them in languege that would redden the cheeks of any ordinary American? Why snould he be permitted now to. maintain a lobby and work secretly and selfishly at Washington, to carry on new schemes of plunder, in order to transfer his burden to the people, and retain the money and property to which the Government is en- titled and which it can secure without an ad- ditional stroke of legislation ? Let any member of either branch of Con- gress read the report of Hon. Robert E. Pat tison of Pennsylvenia, as & member of the United States Pacific ilway Commission in 1888, and see how every phase of the present situation is anticipated. That report is crammed with facts and figures, arrayed with- out heat or prejudice and answering every pos- sible element of the argument for refunding d_ageinst foreclosure. If, September 18, P! 1 1871, the president of the Central Pa. cific Rallroad swore in the Depart- ment of the Interior that the ‘paid up stock of that corporation was $54,283,190, When, in truth, it was only $760,000, is ‘that statement less false now than it was then? If December 31, 1886, the net earnings of the Centrel Pacific had been $124,940,013 87 does that show any tendency toward bankruptey? If, in pools, subsidies, rebates, etc., the Ceniral Pacific had paid out $9,882,799 61, is not the Goverument entitied to the benefit of that fact, with ail the additions since? If by fraudulent methods, by contractin with themselves, which is the worst frau that trustees can perpetrate, the manip- ulstors of the Cenursl Pacific had issued to themselves bonds and stock representing | in whatever form the; | the corporation established, and the whole in- ?82,727.800. is this circumstance now to be ignored? If Stanford, Huntington, Hopkins and Crocker, through the Contract and Finance Company, the Western Development Company and the Pacific Improvement Company and dividends of the Central Pacific, received in cash and securities more than %142,000,000, and also rentals aggregating $29,91: 34918 this to be condoned because Mr, Huntington now says the Central Pacific is unable to pay its debt? If other frauds, includin construction, the handling of lan grants and numerous unclassified items, had been exactly ascertained, when Governor Pattison 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 lheéwaple? 1f books and vouchers were destroyes 1se liabilities created, and five or six mil of dollars disbursed for cor- rupt purposes, does it not follow, as Governor Pattison said, in relation to the Central Pa- cific, “‘that no part of its indebtedness can be | recovered except through immediate compul- sory legal processes,” and that extension of the time for payment, therefore, means an in- crease of the amount of the debt and the mak- ing of its recovery more hopeless. 11 the debt be refunded and the time of pay- ment extended for & hundrea, or even for fifty y2ars, moreover, what will be the condition when the corporate existence of the Central Pacific ce: at the end of fifty years from its oreanization? If the principal aebtor expires, ‘\ivl;al new complications will surround the ebt ? These are matters which cannot be elaborated in the midst of the present controversy, but which are so well understood &s to be part of the authentic history of the times, and thay all point to the unavoidable conclusion that refunding and the defeat of foreclosure are only designed to obliterate legal responsibility, to condone such frauds as are almost without precedent, to preserve enormous private for- tunes and the Southern Pacific Railread 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 accumulations of those who aspire to be their masters. Republicans, Democrats, Populists, citizens of all shades of political’ opinion, who have made the Pacific States what they are, and have stood by the Union and the Government, are virtually unanimous against refunding and for strict foreclosure. As practical statesmen, what do you, gentiemen 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 ilseif, stronger than ihe 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 10 have debanched our politics, and, to some extent, our law, and to have interfered with and controlled our’ business, paralyzed our enterprize and checked our progress, while they heve ab- sorbed not only our profits but large parts of ourcapital, we answer that in those phases of the controversy which are purely local we are interposing, and propose 10 {nterpose, our strength as citizens and voters, but thatin that portion of the fight which hes been transferred 10 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, &s we hope, in practice also, rep- resents the people and their rignts and their interests, and not railroad monopolists and corruptionists. 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 notinsolvent if its entire assets, as under the law they ought 10 exist, are sufficient to pay its indebtedness. Third—That its assets have been transferred and converted to an amount more than ade- qua‘le to the complete rehabilitation of the se- curity. Fourth—That, in a suit for foreclosure, the withdrawn assets can be restored, wherever or exist, the solveney of debtedness collected. Fiith—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 & commitiee virtually | 10 usurp the functions of two co-ordinate de- partments of the Government. Sixth—That, without denying or even dls- 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 Railroed Compan: and the Government, nevertheless, it 1s obyie ous that under existing conditions such an in- quiry is not only inexpedient but improper. Seventh—That it is manifest, therefore, that the present situation of the secured indebted- ness should be left to the action and the de- termination of the executiveand judicial de- partments. Eighth—That, after foreclosure, and the ju- dicial determination upon the facts and ihe law of the precise condition of the secured in- debtedness of the Central Pacific—in other words, when the proportion of the actual, not the nominal, security to the debt has been ascertained, and the isual and ordinary means of rehabilitation and coliection exhausted— then, and not before then, legislation by Con- gress may become proper and expedient. Ninth—But that, meanwhile, the supremacy of the law, tke inviolability of contracts, and the rights and interests of the Government should be sacredly maintained, and there should be no condonation, through legislative sction, intercepting judicial proceedings, of fraudsand conversions, and no sacrifice of the people, at the mere behest of Mr. Huntington and his associates, who are incompetent 10 sit in judgment upontheir own cause. HENRY E. HIGHTON. Followin% is the text of the report drafted by Estee: To the Honorable the Senate and House of Rep- resentatives of the United States: The under- | signed, a committee duly appointed by a State conventionwf the citizens of California, held at San Francisco on the 18th day of January, 1896, respectiully submit to the Congress of the United States, and to our fellow-citizens everywhere, some of the reasons why the peo- le of Celifornia are opposed to the passnge hdv ongress of any bill refunding tne indebted- ness of the Central Pacific Railroad. I It 1s not true that the Central Pacific Rail- road Company is az honest debtor, or that it is entitled to favorable 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, as now, that ‘“each stockholder of & corporation or joint stock as- sociation shall be individually and personally liable for his proportion of its debts and liabili- ties.” (Sec. 36, art. 4, constitution of 1849.) The Supreme Court of the State of California interpreted this section of the constitution in the case of French vs. Teschamacker, 24 Cal., 518, as follows: “It is unconstitutionsl for the Legislature to relieve & stockholder of a corporation of his individusl liability. And as each stockholder of the Central Pacific Railroad Company, under the constitu- tion of the State of California, is bound for his proportionate share of all the debts and lia- bilities 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 itsindebtedness. The direc- tors of & corporation are trustees of an express trust; they are held to a strict accountability for all they do &s such trustees. Their posi- tion is one of confidencs, and, when they violate their duty in that regard, they are amenable 1o the law, and neither the great politicel or financial power of the individual or of the corporation of which heis a stock- holder and director can be justly or legally in- voked to relieve any such’ director from the performance of these duties orfrom the respon- &ibility which & non-performance of them im- poses upon him. Says Marowitz on corporations (section 243 “The directors of a corporation occupy & po: tion of the highest trust and confidence, and the utmost good faith is required in the exer- cise of the powers conferred upon them."” 1L FOUND IN GENEROUS MOOD. The admitted facts show that four men, living in Sacramento, in the State of Califorria, namely, C. P. Huntington, Mark Hopkins, Charles Crocker and Leland Stanford, incor- porated the Central Pacific Railroad Company and esssyed to build its road. None of these men were capitalists. The assessed valuation of all their property did not reach $250,000. They were unable to build the road from their own resources. The Civil War was then going on. The Eastern and Western States of the Union demanded closer and more intimate connection with each other. The time for building a National highway across the conti- nent was thus propitious, and so Congress was spurred to un unusual generosity. The people of Californis, though few in number, were generous to a fault, and the most munificent grants and donations ever made by & Government or by a generous Ppeople o a private citizen or corporation were &t that time meade to the Central Pacific Rail- road Company. The following is a statement of some of the principal grants and donations of land and money made. Congress granted to this corporation every other section of land for twemi miles on each side of its contemplated rail for the whole length thereof, and also on the Oregon branch of that system, amounting in the aggregate to &bout 10,000,000 ecres, of the value of fully $12,500,000." It is reported they have slready obtained about that amount from sales of tifose lands. The Government fixed the value of its own adjoining land at $2 50 an acre. x At c{n:o“x:“ time the Nfixnnn\ ?lovcmment ss e that compan second mortgage bonds in- the sum of ‘w.ooo,ooo (in round numbers), which now amounts, principsl and interest, 1o $58,000,000. GUARANTEED INTEREST. In addition thereto, the State of California guaranteed the interest on $1,500,000 of the bonds of the company, and also granted to it 30 acres of land in and around Mission Bay, in the City of San Francisco, of a value of not less than ,000, which land is now mort- gaged by the same company for $12.285,000. i ’l;lli’e several counties of the szg:e contr:bufid o the company in money and property $1,- 500,000; the city ofs:crmynemo deeded_to it its river water irontof the estimated value of :000,000, and the same corporation acquired without consideration, snd contrary to the plain principles of Iaw, more than teri miles of the water front of the bay of San Francisco, forming the entire harbor of Oakland an partsof the harbors of Alameda, Berkeley and San Francisco, which is of the estimated value ofnot less than $10,000,000. It also obtained from Wells, Fargo & Co. $1,500,000 of its stock in_consideration of fa- Yorable transportation facilities accorded to said company. The foregoing grants reached the enormous amount in value of $57,000,000, which is in- finjtely more than the entire cost of the road. Add to the above and foregoing the interest which Mr. Huntington and his associates ob- teined in every town through which the rail- road passed, and also the acquisition of health Tesorts, of donations of land for town sites, depot purposes and, in fact, of every known kind of property, and you cannot but appre- ciate the vast accessions of this corporation. NOT A GIFT. These donations of 1and and money were not intended as a gift to Mr. Huntington and his associates, but they were intended to secure the early construction of a continental line of railroad to be thereaiter operated in the inter- ests of the General Government and of the peo- ple of the far West, and always under govern- mental surveillance and control. The incorporators of the Central Pacific Rail- road Company were to all intents and pur- poses the agents of the Government and of the people. This Nation confided to theirjkeeping the largest amount of property ever in modern times granted by any Government to an indi- vidual or & corporation. 111 Soon after the organization of the Central Pacific Railroad Company, C. P. Huntipgton and his three associates incorporated another company under the name of the “Contract and Finance Company,” and the same men were the oOwners of and represented both the Central Pacific Railroad Company and the “Contract and Finance Company.” The directors of the Central Pacific Railroad Company contracted With themselves to build the road of that com- uny, uunder the name of the ‘“Contract and “inance Company.” They charged their own Fricel for the work and when completed they held most of itsassets, and some onc else owned most of its debts. Under these conditions the apparent cost of the road was about three times | &s much as its actual cost. Mr. Huntington said he did not own 100 | shares of its stock. He did not dare to own | stock in the eompany he had wrecked, because, | under the constitution of California, a stock- | holder is liable for a proportionate share of the | indebtedness of a corporation, and as a direc- | tor he was then and is still liable fcr these pal- pable frauds. SEEKING TO ESCAPE LIABILITY. These same individuals and their successors in interest are now asking the General Govern- ment to relieve them from the liability which arose by reason of their illegal and fraudulent acts in incurring this vast indebtedness by providing a legal means for refundine tha* 1llegal indebtedness; and, to accomplish this purpose, they propose to make & new contract under the forms of law whereby they will avoid their personal responsibility for the crea- tion of the enormous indebtedness now hang- ing over the corporation. In this eonnection it must be remembered that the bonded indebtedness, which th United States assumed and agreed to pay, is but a small part of the actual nominal indebt- edness of the corporation. According to Poor’s | Manual for 1895 the total liabilities of the Central Pacific Railroad Company reaches the vast sum of $202,491,584, while under the estimates made by the United States Railroad Commission in 1888, the total cost of building and equipping the Central and Western Pa- cific railroads did not exceed $40,000,000. 1v. Mr. Huutington and his associates, at differ- | ent times, organized three corporations through which to carry on their railroad busi- ness in California. 1. “The Contract and Finance Company,” which we have referred to, and under which corporation the Central Pacific Railroad was built, and whose books have been destroyed. 2. “The Western Development Company.” Exactly what this corporation was intended to ‘“develop” can only be a matter of conjecture, but it continued "in existence until its books became laden with facts. These books.tannot | now be found or its history traced. 3. “The Pacific Improvement Compan: This corporation still exists, but is now in the painful process of liquidation. OWNED BY HUNTINGTON. One of the reasons given for the organization of these corporations was that Mr. ntington | #nd his associates might own and control bridges and ferries on the line of the railroads, like the bridge over the Colorado River, on the | line of the Southern Pacific Railroad. These | bridges, although belonging to the railroad 4 | that State incor; Wways held a large part of the valuable assets of Mr. Huntington and his associates. At one time the “Contract and Finance Company” held for them $35,300,000 of their property. See Huntington’s letter of January 10, 1887, and Mr. Miller's answer of January 27, 1857, found in the report made in 1888 to the Presi dent and the Congress of the United States by the railroad commission appointed for that purpose. To make uncertainty more uncertain Mr. Huntington ana his associates not only de- stroyed the books of tha “Contractand Finance Company,” but according to the reports made by those who investigated their affairs it is claimed they aiso destroyed a part of the so- called “Record-book of Corporation Debts” (which book they were required by law to keep) namely: that part from page 48 to page 111 inclusive. What these pages so destroyed would bave disclosed remains & matter of sur- mise. But from a birdseye view of the whole affairs of the Central Pacific Railroad Com- Pany no one can_be surprised that in a few Years its railroad holdings increased from 1100 niles to 8035 miles; or that the incorporators wrecked fiity railroad corporations, large and smell, during the same period, or that they are now able to set at aefiance State and National laws and holdly destroy the security for Natiounal indebtedness, V. The ;nip;cms of freight and the passengers over the Central and Southern Pacific rail- roads must, in the end, pay all the indebted- ness, principal and interest, of those roads. HUNTINGTON IMMENSELY WEALTHY. For this reason the people of California are especially interested in keeping the amount of such indebtedness within its actual figures. In this connection it must be rememberel that C. P. Huntington and _his associates have be- come immensely wealthy in handling a cor- poration which they now say is bankrupt. Ac- cording to ‘‘Poor’s Manual,” before referred to, the assets of the Central Pacific Railroad Com- pany are exactly the amount of its labilities, viz., $202,491,584. It must be borne in mind that one fraud is the parent of others. The very destruction of these books referred to is, in law, prima facie evilence of frand, and in any court of justice would be taken strongly sgainst the parties ¥ho destroyed tnem. And insany department of the Government, if the amount invol was small, sueh an act would result in the im- mediate prosecution of the parties committing it, but the taking of $100,000,000 paralyzes be- lief, a'1d makes even honest men hesitate to attack such a bold and immense frand. In the report made to the President of the “United States by the Commissioners appointed under the act of Congress approved March 3, 1887, entitled *‘An act_authorizing an investi- gution of the books, accounts and methods of Tailroads which have received aid from the United States, and for other purposes,” it ap- pears that Mr. Huntington and his associates, Hopkins, Stanford and_ Crocker, received §142,000,000 in cash and securities through the Contract and Finance Company, the West- ern Development Company, the Pacific Im- Pprovement Company and the dividends of the Central Pacific Railroad Company, and it no- where appears they ever paid one dollar from their own funds toward the construction of said railroad. SAPPING THE REVENUES. In addition to this sum of $142,000,000, they also made large profits by the operation of other companies which were directly or re- motely snFKing the revenues of the Central Pacific. _The same company also expended $4,818,355 67, of which the manager declined 1o give any explanation or to permit any ex- planation to be made by others. It further -?pum from the same report that the gross earnings of the Central Pecific Rai road from 1863 to December 31, 1886, were $274,139,116 27, and that the operating ex- penses were $149,199,102 40, leaving the net earnings during the period above indicated, $142,940,013. This amount at that time would have more than paid the bonded in- debteduess of the road. The same committee (page 22 of their report) stated that the Central Pacific Railroad Com- any had paid $2,361,154 88 for services of awyers to influence legisiation. These uncontradicted iacts afford an insight into the methods adopted by Mr. Huntington and his associcies in handling the property of the Central Pacific Railroad Company. It is settled law that & mOTtgagor of property can- not by his own act destroy the vaiue of the Pproperty so mortgaged and_thus endanger the security; vet the Central Pacific Railroad Company has done this notoriously for years. VI In 1884 C. P. Huntington and his associates in the Central Pacific Railroad Company incor- gom(cfl the Southern Pacific Company in the tate of Kentucky under the especial provi- sions prescribed in an act of the Legislature of rating said company, and which act prescribed that said com‘pluy should never do business in the State of Kentucky. This provision has been eliminated by subse- quent legislation, Allin all this was the most extraordinary proceeding ever devised. From }iegl‘l’mxng toend it was an open, bald, giaring raud. THE TERMS INIQUITOUS. After the incorporation of the Southern Pa- cific of Kentucky (not a dollar of whose prop- system, built by its money or creditand form- m%-{un thereof, are get apparently owned by | C.P. Huntington and his associates. Think of | one corporation owning a railroad track on the land and another corporation owning a part of | the same line and belonslng 10 the same sys- tem over all the main bridges and ferries, and | imagine the rent the first company would have | 10 pay if the second company was unfriendly. | What show would a mortgage creditor h against such a combination, and especially | when the facts as to the side ownership ot the bridges and ferries were not thought of or mentioned in the original mortgage? What would be the effect of a foreclosure of amort- | gage on the main line under such circum- | stences? At most the mortgagee would only obtain pieces of s railroad track. An owner under a mortgage sale made pursuant to the terms of the Government mortgage could not move & train_over the line of the Central Pa- cific Railroad. Huntington and his associates in the Pacific Improvement Company would still command the situation. The whole scneme is a deception and a fraud The Pacific Improvement Company claims to own the great ferry and all its appendages on the line of the Central Pacific Railroad at Port Costa, also the stewmer Solano, which is the only ferry-boat in California that can carry a | train of cars across the straits of Carquinez at that point. OWNS, OR CLAIMS TO OWN. The same company owns, or claims to own, the railroad’s interest in the bridge at Sacra- mento. It owns the ferry-boat Piepmont that plies between Oakland and San Francisco, and which also forms a part of the Central Pacific line. It owns the river steamers Modoc and Apache, the railroad offic buildingse at the foot of Fourth and Townsend streets in the City of San Francisco; the Del Monte Hotel at Mon- terey; the principal part of the lands formerly belonging (o the old cowpany in and arouny North Berkeley, and the depots at Sacramento and Los Angeles; it claims to own the Santa Monica wharf property. The hotel at Lathrop before it was destroyed belonged to this com- pany. Italso owns the Southern Pacific Rail- road wharf at San Pedro. It formerly owned the Oskland water front and the Mission Bay property, but it is said these properties have Tecently ‘been transferred. It owns the coal mines in the State of Washington and in Mex- ico, from whence the Central Pacifie purchases its coal, and it is publicly declared that the Pacific Improvement Company nets two mil- lions of dollars & year from the coal It suppIies 1o the Southern and Central Pacific Railroad sompanies. It owns all the road newspapers in Cali- fornia like the Sacramento Record-Union and otber journals too numerous to mention. Every dollar's worth of all the above prop- erty, including the newspapers, forms a part of the Central Pacific Railroad system, and was bought on its credit. The Southern Pacific was also built on the credit of the Central, and the latter has wantonly been made bankrupt to build up and maintain the Southern. From the foregoing it can readily be seen how the Central Pacific Railroad people have used the money and the credit donated to it by the General Government and;by the people | of the State of California for the purpose of destroying the security given to the Govern- | ment for the very money it furnished to.build the road. CONTROL PRIVATE INTERESTS. The same men, viz.: Huntington and his associates, under the name of the “Pacific Im- provement Company,” hold contrel over the private business and a large amount of the | private property interests of California. To illustrate: They own all the street railroads in San Francisco but two, and most of the street rajlroads of Oakland. They have grid- ironed the City of San Francisco with lines actual and prospective. To do this ther com- menced by issuing $17,000,000 of bonds.” They froze out all the old street-raiiroad companies and now hold an exclusive monopoly of street railroading in this great City, and they con- trol not only the passenger traffic, but claim to control the politics of the City. hey also own vast grants of land in other parts of California, to wit: in Amador, Yolo, Monterey and other counties. They own ali the steamers in the bay of San Francisco and in the rivers of this great State. They control the only line of steamers via Panama to New York, and_they also_own the steam lines to China and Japan., They thus combine with the shipping interests by sea and land and fix the price of freight by both methods of trans. portation. They even run our hotels and_public resorts because they control the means of reaching them, by reason of their ownership of all the lines of “transportation in the interior of the State of California north of Tehachapi. They sell excursion tickets to their own resorts at prices that destroy all competition of oiher lowns or resorts which they do not favor. Itis true the people visiting the State are pleased Dby the apparent generosity of the railroad com- pany, but in the end the producers of Califor- nia are the sufferers and have to pay all amounts so expended. THE SIDE CORPORATIONS. These side corporations referred to have al- e | making this lease. erty was in that State) these same parties, viz. : Mr. Huntington and his associates, then leased from the Central Pacific Railroad Company all of its roads and equipments for a period of ninety-nine years, The terms of this lease are s0 iniguitous that any fair-minded man must admit that C. P. Huntington and his associates of the Southern Pacific Company succeeded in misleading C. P. Huntington and his associates of the Central Pacific Reilroad Company in We will not dwell upon the termsof that lease or its effect upon governmental or other securities, further than to say it shows fraud on its face. 1t is an undeniable fact that Mr. Huntington of the Soathern Pacific Railroad Company is still running & sharp bargain against Mr. Huntington of the Central Pacific Railroad compm§, because mostof the freight which was formerly transported east and west over the Central Pacific is now diverted from ! its natural channel and is transported over the Southern Pacific road, the evidentobject being to bankrupt the Central Pacific, and thisobject has been well nigh attained. When & shipper does not demand that his freight shall go by the Central (although des- tined to Chicago or New York) it will be sent by the Southern Pacific via New Orleans. In a word, the Central Pacitic Company, though a citlzen of California and existing under its laws, is used s & most potential means of de- stroying the industries of the State. VI The people of California have other serious objections to the manner in which Mr. Hunt- ington and his associates control the railroad property on the Pacific Coast. OWE TAXES. For fifteen years last past the Central Pacific Railroad Company and the Southern Pacific Company have owed taxes to the State of Cali- fornia, always amounting to from $500,000 to 5 , and for four years of that time they ewed $£400,000 to the school fund of this State. It may be claimed that our people are to blame for this condition of affairs, Is thisso? Let us see. The Southern Pacific Compan; porated in 1884 in the State of Kentucky. In the same year, and immediately after its incor- poration, it leased the Central Pacific and be- came the arbiter and controller of all of its business affairs, and by reason of the fact that the Southern Pacific was a foreign corporation it has the option in all litigation to either bring suits or transfer suits already brought in the State courts to the courts of the United States. For instance, at this term of the Su- preme Court of the United States there is on the calendar for argument a case involving $535,000 taxes due from the Southern Pacific and Central Pacific Railroad companies to the State of California, and for taxes levied and assessed for the year 1887, yet the litigation involying these taxes has but just reached the calendar of the Supreme Court of ourcountry. The position thus assumed by the Southern Pacific Company of Kentucky is in most in- stances a denial of justice. No man who com- mences & mxnimnxnhn company or_against the Central Pacific Railroad Company, however just his claim,is certain when thé action is rought that it will not be transierred to the United States courts. California being a vast State territorially the citizen in such a case who asks the courts of justice for vindication is often deprived of anyrightsin the premises. VIIL The people of California are further inter- ested in opposing the re-funding of the indebt- edness of the Central Pacific Reilroad Com- 8‘“; because the success of the producers of fornia depends on cheap transportation. ACTUAL INVESTMENTS. The courts have held thata corporation is entitled to & fair rate of interest on its actual iuyestment. The question then presented s, What are the actual investments of the Cen- tral Pacific Company? If its liabilities are what it claims—viz.: $202,491,584—then the shippers of Californi if they undertake to pay the principal and in. terest on this vast sum, are hopelessly and for- ever bankrupt, though the interest be 3 per oent per snnum. WES nd again: No competing railroad com maintaitied by private paries can ever con. struct or maintain a contlinentll line to the Pacific Slope, if the Central Pacific Reilroad Company is allowed to re-fund its present in- debudnennzor31percempernnnnm,becmsg private capital will not invest and compete Wwith capital obtained at that rate. There can be no remedy for the present situation which leaves the Central Pacific Railroad Company in its present management, and in full contro; of this railroad property. It nas been epigrammatically said that *“Cal- ifornia is the last of the slave States.”” In rela- tion to its rallroad transportation and to the influence of railroad corporations in Northern and Central California, itis the *last and the worst of the slave States.” A UNITED SENTIMENT. was incor- ment ownership of a line of railroad from the Pacific to the Missouri River, there is but one sentiment among our people on the proposi- ons: 1. That there shall be no refunding act passed by Congress, and 2. That such steps should be immediately taken by the Government as will get back the money and property which have been fraudu- lently Appro?‘nlted by certain parties con- nected with the management of the Central Pacific Railroad Compa and to that end every department of the National Government should be called into immediate action. The honor of the American people is in- volved in this legislatiol The stock and bonds of the Central Pacific Railroad are scat- tered broadcast = throughout the financial world. The American Government has here- tofore given this company character and credit at home and abroad, and to-day it stands as sponsor for what this company does. And yet by an act of Congress passed in 1887 & commission was formed for the purpose, in part, of examining into the affairs of this com- pany and reporting the result to the President and Congress. That report was made to and now forms & part of the records of the execu- tive and legislative departments of the Gov- ernment. It shows a mass of uncontradicted facts, judicially and dispassionately arranged and considered, which prove that the Govern- ment and the other creditors of this company have been robbed of from seventy-five to one hundred millions of dollars,and these facts have never been successfully questioned. HAVE BEEN PROVEN GUILTY, 1In 2 word the officers of the Central Pacific Railroad Company were proven to have been ilty of frauds greater in amount and more criminal in character than those proven against Warren Hastings before the English Parliament; and yet some of these same men, s the representatives of the Central Pacific Railroad Company, now come before this Con- gress and demsand a certificate of character. The brazen effrontery of the demand has no parallel in history. The American people are honest, the American Nation is honest, and we therefore ask that neither time nor distance shall change or modify the relations of the Government witn this company or afford an excuse for the condonation of fraud. We do not ask that the dead be arraignea at the bar of public opinion, or that worthy women be sued, or that a great university be dismantled, but we do demand that the 1 ector and most commanding figure in this great fraud be brought to the bar of public justice. We are compelled to appeal to the Congress of our country for protec We ask that it carefully and deliberately consider the de- mands o! the people of the far West, with the hope thut it will be able to see its way clear to secure to the people of California the rights which they have been so long deprived of. 1f the General Government should now stand behind C. P. Huntington and his associates in their efforts to refund the indebtedness of the Central Pacific Railroad Company it would create a monopoly which would scon be more powerful than ikbé Government itself. IS CORRUPT LEGISLATION. It should not be forgotten in this connection that the very money which the Government of the United States and the people of California have contributed to this great railroad enter- prise has been and is being used to corrupt and misdilect the legislation of the country and thereby imperils the safety of the State. The men who represent thesé corporations now appear alike before the National and State legisiatures and even stand unabashed at the door of the temple of justice. They have no political principles, they belong to no party, are faithtul to no trust and just to no man. The time has come when the people must make a declaretion of independence against this corporation or they will become bankrupt in fortune and in character. If this is not done private property interests in Cali- fornia will be destroyed, fortunes will be dissi- vated, industries will be imperiled and the whole Sgople will be politically and financially crushed by a corporation moreé powerful than the State. Morris M. E ed EE, hairman; A. CAMINETT], J. L. DAVIE, Mayor of Oakland; MARION CAN E. M. GIBSON. A SOLDIER'S INJURIES, His Furlough Brought Only Misfortune and Mutilation. Sergeant Lyons of Company D of the First United States Infantry has fallen into misfortune, and the result of it all will be that he will have to leave the ser- vice. His term expired a few months ago, and in accordance with the army custom he was given a furlough of five months, with the privilege of re-enlisting at the end of that time and have his service counted as continuous. Lyons wanted to leave the army, however, and he decided that he would spend his furlough in looking for work, and if he found occupation he would not return. With this object in view he made his way to Yuma, but he found nothing as he went along, and’ when he got that far he decided to return to the army. He had no money, and so tried to beat his way back again. An accident hapoened to the train on which he was riding, and as a re- sult his foot was crushed so badly that the railroad company’s surgeons found it necessary to amputate the foot at the ankle. He was sent here and on Friday he was taken to Angel Island. It was there found that through neglect tbe wound had become gangrenous, and yes- terday his leg was amputated above the knee. He will have to leave the service, and as he was beating his way on the train he can have no redress from the railroad. NEW TO-DAY. ‘677 99 FOR GRIP Hark!!! To the Voices of the Grateful. The greatest of all fame spreaders are the loosened tongues of those made well. FROM THE EAST. Mrs. J. SPARKS, 175 W. 95th St., New York City: “I have used Humphreys’ Specifics for years. I cannot praise them too highly. **77” has proved a blessing.” Mrs. W. F. HANCOCK, Marlboro, Mass, : ““1 used ‘77’ with great success.” FROM THE WEST. E. E. PIERCE, Pastor of Church of Christ, Clarion, Towa, writes: “77 has cured a bad Cold in my wife; she only used one-fourth of a bottle.” FROM THE NORTH. ‘W. R. STEVENSQN, Hallomet, Ottawa Co., Mich.: “I had a very bad Cold; I used three bottles of “77”; it cured me quick.” Mrs. FRED W. GILBERT, Chieago, I : ““I have used your specifics with the best results, especially “77" for Grippe.” FROM THE SOUTH. F. STILLWELL, New Orleans, La.: “I have found 77" very effective.” Mrs. HUGH MAYER, Princeton, Ky.: “I used “77” for Grip and Colds; am so much pleased with the success of it that I want some more.” 7 Small bottles of pleasant pellets—fit your vest ml:exz;flzu!d oy 'dm':lg‘i‘lou, g sent on receipt of 2 25¢; or 5 for $1.00. Humphreys' Medicin, Co., 111 and 113 William St., New York. > {BLOODPOISON; AL e ST e \ A remedy used exclusively by a physician of 80 years’ experience. A positive and unfailin; guaranteed care for primary, secondary an tertiary cases of blood diséase. No case in- curable. New cases cured in two weeks. Con- sultation and full information free. Whatever difference of oxlnian may exist among the people as to whether foreclosure of the Government mortgage on this progeny is the correct remedy, or whether such steps should be taken as will secure to the Govern- MOFFAT CHEMICAL CO., Toom 1, 632 Market St., San Francisco. NEW TO-DAY,. MUNYON Strong Testimony for His Im- proved Homeopathic Remedies. DRUGGISTS KEl;l‘ BUSY HANDING OUT THE CURATIVE LITTLE PELLETS. If You Are Sick Ask Your Druggist for Munyon’s Guide to Health—buy a 25-Cent Munyon Remedy and (ure Yourself. If You Are in Doubt as to the Nature of Your Compiaint a Personal Letter to Prof. Munyon Will Be Answered With Free Medical Advice for Any Discase. Mr. F. Heitmann, 102034 Larkin_street, San_Francisco, says: must give my testimony for Munyon'’s Blood Cure. My scalp was a mass of sores from eczema and although I had the best medical at- tention and tried all kinds of presc: tions, I never received any benefit until I bezan using Munyon’s Remedies. A few bottles of the Blood Cure removed every trace of the di e and made a complete - cure. Prof. Munyon may well be proud of his success in San Francisco, for Munyon’s Remedies are given preference over all other medicines in every drugstore.” v Munyon’s Rheumatism Cure seldom fails to relieve in.from one to three hours, and Cures in a few days. Price Zic. e Munyon’s Dyspepsia Cure positively cures all forms o} indigestion and stom- ach trouble. Price 25¢c. Munyon’s Cold Cure prevents pneumo- nia and breaks up a cold in a few hours, Price 25¢. Munyon’s Cough Cure stops coughs, night sweats, allays soreness and speedily heals the lungs. Price 25c. 5 Munyon's Kidney_Cure speedily cures ains in the back, loins or groins and all orms of kidney disease. Price 25¢. Munyon’s Nerve Cure cures all the symptoms of nervous exhaustion, such as depressed spirits, failure of memory, rest- less_and sleepless nifihts, pains "in the head and dizziness. It stimulates and strengthens the nerves, and is a wonderful tonic. Price 25c. Munyon’s Headache Cure stops headache in three minuies, Price 25c. Munyon's Pile Ointment positively cures all forms of piles. Price 25c. > nyon’s Blooa Cure eradicates all im- s of the blood. Price - Liver Cure corrects head- jaundice, constipation puri Munyon’s ache, biliousnes: and all liver diseases. Price 25c. Munyon's Female Remedies are a boon to all women. Munyvon’s Asthma Cure and Herbs are guaranteed to relieve asthma in three min« utes and cure in five davs. Price, 50c each. Munyon’s Catarrh Remedies never fail. The Catarrh Cure (price 25¢) eradicates tk disease from the system, and the Catarrn Tablets (price 25¢) cleanse and heal the parts. r Munyon’s Vitalizer imparts new life, re- stores lost powers to weak and debilitated men. Price $1. Munyon’s Remedies at all druggists, mostly 25¢ a vial. g Your druggist will present you free with acopy of the “Guide to Health,” a valn- able little medical publication that should be in every home. Personal letters to Prof. Munyon, 1505 Arch street, Philadelphia, Pa., answered with free medical advice for any disease. AGENTS WanTep SPECAL BOOK BARGAIN! AMERICANIZED ENCYCLOPAEDIA BRITANNICA, Revised and amended, 96 colored maps and nu- merous illusirations. 'A dictionary of Art, Sciences and Literature. 6902 pages of clear type on fine aper. Yfl VOLUMES CLOTH, Price 85.00 per set; worth $20. 10 VOLUMES SHEEP, Price §8.50 per set; worth $25. 5000 Titles Sheet Music - - 5¢ WALL PAPER! JAS. DUFFY & CO. Have REMOVED to No. 20 Geary Strekt. GREAT REDUCTION TO CLOSE OUT LAST SEASON'S PATTERNS TO MAKE ROOM FOR THE NEW WINDOW SHADES! Any Color, Size or Kind. WHOLESALE—AND—RETAIL. o NE‘\'V WESTERN HOTEL. ARNY AND WASHING STS. Rt aad enovares RGEOY, T8 nr. ro; PIO:; to c{hux:w. 33 kot and cold water eve) rwm-m“ m; "'. xo0m; elevator runs al night* L° o