“The character of these ‘services’ may be surmised by anybody familiar with the history of the recent bribery and Graft Prosecutions in San Francisco. But surely the public and the stockholders and creditors of the United Railroads are entitled to specifications.
“It is largely that corporations may not bribe in secure secrecy, or otherwise commit criminal acts without detection, that the Progressive states are bringing them under strict regulation and inspection by proper authority.”
The Railroad Commission of California, in its Decision 1536, made May 22, 1914, held “that the methods pursued by the former officials of applicant in handling the funds in their care amounts to nothing more than a fraud, not only upon the public forced to use an inadequate and unserviceable system, but upon the bond and note holders of such company.”
Of one transaction, in which President Calhoun was permitted to take $1,096,000 of the company’s funds, which it was claimed he had invested in a land project in Solano, in which Mr. Calhoun was interested, the Commission said:
“No proof was made to this Commission that any part of this money was actually invested in the so-called Solano project, but we are confronted by the fact that Mr. Calhoun, under authority of the board of directors, and ratified by the stockholders, took from the treasury of applicant $1,096,000, and whether he invested it in the Solano project or not is unimportant in the consideration of this railroad company as a public utility.
“It seems that upon the taking of office by Mr. Jesse Lilienthal, the present president of the railroad company, Mr. Calhoun was forced to execute a promissory note for $1,096,000, payable one day after date, in favor of the railroad company, secured by stock of the Solano project; but the judgment of the value of this promissory note is perhaps best indicated by the fact that Mr. Lilienthal immediately wrote this note down in the books of the company as of a value of $1.00.
“We hesitate to put in words a proper characterization of this transaction. In plain terms, Mr. Calhoun took from the funds of this public utility corporation over $1,000,000, when every available dollar was sorely needed properly to increase the facilities of this company so as to serve the community of San Francisco, and at a time when this same company was urging upon this Commission the necessity of issuing further bonds to pay off maturing obligations, and also at a time when admittedly the outstanding obligations could not be paid at maturity by approximately $20,000,000.”
This enormous sum had been taken in gold at various times, ranging in amounts from $250 to $85,000.