Of course, it is true that the bondholders had honestly put up their money through the purchase of the bonds from Jay Cooke and I make that statement based upon an affidavit filed by Canfield in the Villard suit; in other words, I am not drawing that out of the blue skies. Touching on that briefly, Senator, Mr. Canfield in this affidavit filed in the Villard suit (p.) as a part of the Northern Pacific pleadings, said: At the time the suit to foreclose the mortgage, which is described in the 'complaint in this action, was brought, there had been constructed something over 525 miles of road; and besides the certificates under the agreement with Jay Cooke & Co., which were immediately issued upon the execution of that agreement to the holders of proprietary shares, certificates had been issued of were about to be issued at the time such foreclosure was commenced in respect of the 21 sections, or more, of road which had been completed, and after such certificates the holders of such proprietary shares claimed to be entitled to the whole residue of the capital stock of the company. Upon the commencement of the said foreclosure suit this claim was made by the holders of proprietary shares, and it was further claimed in their behalf that they had an interest in the charter of the company which could not be cut off by the foreclosure; and differences and controversies arose between the parties in interest with respect to such asserted rights of so grave a character as, in the opinion of those immediately interested in the foreclosure, to imperil all interests by protracted litigation, during which the railroad and property would be in the hands of a receiver, who would not have the funds to go on and complete the construction of the road, and in consequence of which it was feared that there might be a loss of the land grant and of substantially whatever was valuable in connection with the road. That is Canfield's own statement. Following the foreclosure proceedings of 1875 and the plan of reorganization of that date, there was some difference of opinion among the owners of the proprietary interests as to the amounts of stock that they were entitled to and the board of directors of the Northern Pacific appointed a special committee to inquire into this matter, and that committee reported back to the company and filed its written report. The report I have here is the copy that I obtained from the files of the Northern Pacific in New York last summer and it is headed: Northern Pacific Railroad Co. Board of Directors, May 16, 1877. The Common Stock. I would like to read one or two paragraphs in that, to show you just exactly how the members of the Northern Pacific looked upon this reorganization: The undersigned special committee appointed by the President under the resolution of the November 15, 1876, to ascertain and determine the names and addresses of all persons now entitled to be or become shareholders of the common stock of this company, and the amount of said common stock to which each person is or may be entitled, as specified in the three resolutions respecting said common stock adopted on the 20th day of September then last, and in accordance with the plan of reorganization adopted at the meeting of the first mortgage bondholders held June 30, 1875, respectfully report: First. That all persons are now entitled to be shareholders of the common stock of this company who hold and own certificates of the stock of the former organization of the Northern Pacific Railroad Co., and to receive each and all of them certificates of the common stock of this company, share for share, to the extent of and in exchange for, such certificates aforesaid now severally and respectively held and owned by them, upon their depositing such their certificates properly indorsed with the Farmers' Loan & Trust Co. of the city of New York, for the use and benefit of the purchasing committee, in pursuance of and in accordance with, the plan for reorganization aforesaid; but that this committee can not ascertain and determine the names and addresses of all such persons. Digressing just a moment, this report indicates very clearly that on the date of the report of May 16, 1877, and when the Northern Pacific at that time had been reorganized it was regarded as a separate and distinct and different organization from what the Northern Pacific was prior to the reorganization of 1875. Second. That by agreements between J. Gregory Smith and his associates of the one part, and such persons as should become subscribers thereto of the other part-one dated January 10, 1867, recorded in the company's contract book, page 75-and another supplementary thereto dated July 31, 1867, recorded in the same book, page 77-the whole ownership of the Northern Pacific Railroad Co. enterprise was divided into 12 equal shares. There it is on the records of the company, as baldly and plainly stated as A, B, C. Continuing: and by subsequent agreements between the Northern Pacific Railroad Co. and Jay Cooke & Co. of the other part, one dated May 20, 1869, and another supplementary thereto, dated January 1, 1870 These are the agreements to which I have been referring this morning to be seen on pages 1 and 3, respectively, modified by still another dated March 4, 1873, and a letter dated March 13, 1873, to be seen on pages 132 and 135 in the same contract book-the said whole ownership was divided and the same now stands, as if thus originally divided, into 24 equal shares; and after setting apart under the agreements of May 20, 1869, and January 1, 1870, $19 999,999 out of the entire $100,000,000 of the capital stock of the company to be used in paying commissions for services to be rendered the company, it was determined and provided that there should be issued $93,400 in full paid stock immediately to each of such 24 shares, and thereafter $40,500 to each of said 24 shares whenever and as often as 25 miles of the company's railroad should be completed so as to be run over by cars. For what? What did they put up for it? Nothing. Then this report proceeds to state the names of the various persons and the amount of stock they were entitled to. Senator KENDRICK. You spoke a moment ago of the fact that the Northern Pacific organization seemed to regard itself as a different corporation from the original corporation. Do you mean by that that they indicated that they were by any process of liquidation and change of incorporation absolved from obligation to the Government to carry out the original contract? Mr. McGowAN. No; I do not think that they felt that they were absolved from carrying out their contract, because they thought at that time and this digresses a moment and gets into another feature of the case-they thought when they reorganized in 1875 that the Federal franchise had passed to the reorganized company by reason of the reorganization; later they ascertained that it did not pass, so they found themselves in a situation of being the Northern Pacific Railroad Co. on one side of the fence with the Northern Pacific Railroad franchise under the act of July 2, 1864, on the other side, and they proceeded under that theory from 1875 down to 1882, when they made a redeed of all of their property, the rolling stock and everything they had, back to the Federal franchise that did not pass under the reorganization of 1875. But this was in the interim, and at this particular time, and before the thought occurred to them along in 1882, it showed that between 1875 and 1882 they did regard the reorganized company as something separate and apart and different from the old Northern Pacific prior to 1875. The CHAIRMAN. It is now 5 minutes to 12. The committee will stand adjourned until to-morrow morning at 10.30. (Whereupon, at 11.55 o'clock a. m., the committee adjourned until 10.30 o'clock a. m., Thursday, June 17, 1926.) JOINT CONGRESSIONAL COMMITTEE ON THE RAILROAD LAND GRANTS, The committee met at 10.30 o'clock a. m., Hon. N. J. Sinnott (chairman) presiding. The CHAIRMAN. The committee will come to order. Mr. KERR. Mr. Chairman, at the session yesterday a question arose as to the date of the resolution adopted by the board of directors of the Northern Pacific canceling the subscriptions to the 20,075 shares of stock. It had been previously stated by Mr. McGowan that this cancellation took place in 1870. Mr. MCGOWAN. You said that too, did you not? Mr. KERR. Yes. Yesterday Mr. McGowan stated that it took place on December 4, 1867, and he produced a statement showing that in Volume A, page 131, of the records of the board of directors of the Northern Pacific the resolution appeared. The suggestion was made that the record book be brought here from New York, but it was agreed that a certified copy of such portion of the books as bore on this matter would be sufficient. I therefore procured from Mr. E. A. Gay, the secretary of the Northern Pacific, a certified copy of the resolution adopted February 2, 1870, which is found in Volume A, pages 131, 132, and 133, showing the cancellation of this stock. I also have here for inspection a certified copy of the whole of the proceedings of the board meeting of December 4, 1867, which appears in Volume A at pages 124 to 126. I offer the resolution of 1870 and submit for Mr. McGowan's inspection the resolution of 1867 [handing the papers to Mr. McGowan]. From this it very clearly appears that the cancellation took place on February 2, 1870, and not, as suggested yesterday, on December 4, 1867. (The papers referred to follow :) NORTHERN PACIFIC RAILROAD Co.-DIRECTORS' MEETING DECEMBER 4, 1867 The directors met pursuant to adjournment. Present: Messrs. Smith, Rice, Stearns, Sweatt, Ogden, Thomson, Reed, Cass, Fargo, and Canfield. The president laid before the meeting the resignation of I. S. Withington, treasurer, which, on motion, was accepted. The board proceeded to elect a treasurer to fill the vacancy. The ballots having been canvassed, Mr. A. W. Barney, of New York, was elected. The president then laid before the board the resignation of Col. W. S. Rowland as commissioner, which, on motion, was accepted. The following resolution was then submitted by Mr. Rice and adopted: "Resolved, That the treasurer of this company be, and hereby is, authorized to enter into an agreement with the holders of certificates of fully paid-up stock of this company (amounting nominally to $600,000) to transfer to them the first-mortgage bonds of this road (when authorized to issue the said bonds by Congress) to an amount not exceeding 25 per cent of said stock; 10 per cent of said bonds to be issued on the completion of each 20 miles of said road; and in case of failure to obtain such authority from Congress within three years from the 4th of March next, the holders of such agreement for bonds may demand and receive back the stock surrendered in exchange therefor. "Resolved, That the treasurer be appointed trustee to hold the stock for the benefit of the parties interested therein under the above note." On motion, Mr. Reed: "Resolved, That the President be instructed to appoint an executive com mittee, and in pursuance of this vote he appointed Messrs. Ogden, Thomson, Cass, Fargo, Rice, Stearns, himself being ex-officio a member, in accordance with the by-laws." On motion, Mr. Ogden, the following resolution was adopted: "Resolved, That the executive committee be charged with duly presenting the proposed amendment of the charter of this company to Congress for its action, and that they be authorized to raise such sum of money as may be necessary to meet the incidental expenses connected therewith." On motion, Mr. Reed: "Resolved, That the memorial to Congress herewith submitted be accepted and adopted by the board, together with the report of Mr. Johnson, the chief engineer of the company, accompanying, and Mr. Johnson be authorized to cause to be printed 2,000 copies with a map." On motion, Mr. Ogden; "Resolved, That the thanks of the board be presented to Mr. Johnson for his able and valuable report." THOS. H. CANFIELD, Secretary pro tem. I, E. A. Gay, secretary of the Northern Pacific Railroad Co., hereby certify that the foregoing is a true and complete copy of the minutes of meeting of the board of directors of that company held December 4, 1867, as shown by directors' records, volume A, pages 124 to 126, inclusive. Witness my hand and the seal of the company this 16th day of June, 1926. [SEAL.] E. A. GAY, Secretary. NORTHERN PACIFIC RAILROAD Co.-DIRECTORS' MEETING, FEBRUARY 2, 1870 The following preamble and resolution was then submitted, and on motion of Mr. Cheney, adopted. "Whereas by a vote of this board passed on the 16th day of January, 1866, an assessment of 90 per cent was laid on all the stock then subscribed for amounting to the sum of $2,000,000, which said assessment was made payable at the office of the company, at No. 5 State Street, Boston, as follows, to wit, 20 per cent to be paid on the 2d day of April, 30 per cent on the 1st day of May, and 40 per cent on the 1st day of June, 1866; and 44 Whereas notice of said assessments was duly published, according to law, and the subscribers of said stock were also notified that all stock upon which the said assessments as not paid would be declared forfeited absolutely, and all payments that have been made upon said stock would be forfeited without condition of redemption; and "Whereas the assessment of 90 per cent so called for was in no instance paid within the time limited in said notice, and all of the same remained unpaid to this day. Now therefore it is hereby "Resolved and declared by a vote of this board, That all of said stock as appears on the original subscription list to be hereto appended and made part of this record, is forfeited absolutely, and that all sums of money at any time heretofore paid by the subscribers to said forfeited stock are also declared forfeited without condition of redemption, as follows, to wit: Abiel Abbott... Cyrus Aldrich John A. Bass Shares 800 2,000 200 1 James M. Becket.. Charles Boughton_. L. D. M. Sweat_. K. B. Sewall. J. L. Sewall. John Toy E. H. Toy J. L. Withington_ Shares 1 2, 050 100 100 100 4,000 200 1 5 1 100 100 1 1,000 500 100 1 10 1 500 2,000 2, 100 1 1 1 2,000 100 2,000 Mr. Rice moved to reconsider the vote by which the foregoing preamble and resolution was adopted, and to lay the motion to recons der upon the table. which was agreed to. I, E. A. Gay, secretary of the Northern Pacific Railroad Co., hereby certify that the foregoing is a true copy of an extract from the record of meet ng of the board of directors of that company held on February 2, 1870, as inscribed in directors' records, volume A, pages 131, 132, and 133. Witness my hand and the seal of the company this 16th day of June, 1926. [SEAL.] E. A. GAY, Secretary. Mr. McGowAN. I offer no objection to those documents, Mr. Chairman. The only point yesterday was that I had this notation that seemed to indicate the earlier date, but the record as submitted by Mr. Kerr shows that the date given in Smalley's History is the correct one. At the close of the session of yesterday I was discussing the report of the board of directors of May 16, 1877, of the Northern Pacific Railroad Co., in connection with the common stock, which showed the specific recognition that had been given to it, and showed the plan of division with reference to the original interest agreements, which report also indicates the way in which the further stock should be distributed. I would like to offer this report of May 16, 1877, which I obtained from the files of the Northern Pacific in New York City, and with it an explanatory letter that was written by Mr. Henry Villard, president of the Northern Pacific, under date of November 28, 1881, to Mr. George C. Richardson, of 178 Devonshire Street, Boston, Mass., in which Mr. Villard comments upon the manner in which this original interest stock had been previously distributed. This letter, which was obtained by me from the Villard papers in the Harvard library, is several years subsequent in time to the date of the report, but I think it would be very helpful to anybody in the the reading of the report itself. |