Note 256 — Chapter X

In 1885 the Central Pacific directors authorized the issue of $10,000,000 in bonds to pay off the floating debt. (United States Pacific Railway Commission, p. 3019, testimony C. F. Crocker.) There is some reason to suspect that Stanford was individually embarrassed in 1878, as a result of the financial stringency in California. Huntington telegraphed Colton in September of that year to let him know Stanford’s financial condition as near as he could ascertain it, and proposed to have the Western Development Company assume Stanford’s indebtedness, taking Southern Pacific bonds from Stanford in exchange, at 65. Colton replied that the Western Development Company would have to take about $3,000,000 in Southern Pacific bonds under such an arrangement to cover Stanford’s obligations. The French bank in San Francisco had just closed its doors, and he, Colton, was anxious about Stanford’s collaterals. He thought that Stanford had $800,000 of United States bonds in that institution. Michael Reese’s executors were calling for money. It does not appear what conclusion was finally reached.