In the spring of 1873, a railway line had already accomplished the greater part of its journey: it existed in the advertisements, in the promises, and in the printed figures. Between Memphis and El Paso, and thence from ocean to ocean, it was depicted as an enterprise vast enough to engage the savings of the French public. As for the rails themselves, they remained for the most part yet to be laid.
On May 21, the Paris Court of Appeal took measure once more of that distance between the paper and the soil. Before the bench, the defendants were not called to answer merely for an enterprise that had miscarried. The judgment recites a sequence of maneuvers designed to make it appear far sounder than it was: contracts for rolling stock, mortgages, financial journals, reputations on the Bourse, and names of persons whose authority might reassure the subscribers. On the following day, the Gazette des Tribunaux printed the decree. Reading through its grounds, one traces almost in reverse the path taken by the money: from the hands of persuaded investors to the men who had organized their trust.
A Great Line, Fragile Guarantees
The Memphis and El Paso company possessed a concession in Texas, yet the Court portrays a corporation destitute of resources and credit, which had constructed nothing beyond a few earthworks and operated not a single mile of its track. French subscribers, however, had been brought to believe that the undertaking stretched across the continent and enjoyed numerous guarantees. The bonds offered themselves as negotiable instruments capable of converting a railway promise into a solid investment.
It was no single assertion that had rendered the operation persuasive. The Court identified a concerted body of fraudulent contrivances. Contracts for the supply of equipment had been held out as proof that great French manufacturers stood behind the venture. The company claimed to be secured by a mortgage upon Texan lands. Yet according to the decree, this security was contingent upon the completion of the works prior to 1876—a deadline that the bankrupt company was utterly unable to meet. The promised safeguard thus vanished at the very moment it ought to have shielded the bondholders.
A ruling of the Supreme Court of the United States, delivered subsequent to a decree of forfeiture, was likewise urged in the defendants’ explanations. The French appellate court observed that this decision had by no means removed the impending lapse of the concession: it had merely spared the bondholders immediate ruin and left open the possibility of a composition with whatever company might replace the Memphis and El Paso to build through Texas. The American ruling had not converted the venture into a viable railway.
The advertisements, for their part, had already crossed the Atlantic. They set into circulation the promise of a transcontinental trunk line, and thereafter the prospect of a triumph upon the financial markets. The judgment makes mention of the bonds being admitted to the Paris quotation list, alongside assertions concerning New York. The Court held that these marks of credit had been obtained through corrupt influence and culpable practices, and in no way through any genuine prosperity of the company. In the eyes of a distant investor, the prestige of a quoted security was accepted as material proof.
Men of Letters and of Business
The dossier does not rest solely with the promoters of the American venture. The financial press played its part. The Court examined the participation of Crampon, who contended he had been nothing more than an intermediary between the company’s agents and Paradis. The judges rejected this portrayal. He had had a hand in articles published in France, signed or written for the Moniteur des Tirages financiers, and the Court ascribed to him an active share in these untruthful publications. According to the ruling, these texts contained deliberate inventions concerning the enterprise and the guarantees it offered.
Crampon likewise maintained that he himself might have been deceived. The Court opposed to this defense the facts it considered established: he knew that the bonds had never been quoted in New York and could not be; he had personally solicited a listing in Paris, fully aware that the valuation was suspect. He had not merely reproduced information supplied by Lissignol; he had added fresh elements which he knew to be false. The boundary between him who transmits an advertisement and him who constructs it dissolves when the transmitter assists in manufacturing credit.
The position of Poupinel was examined with comparable care. The Court described him as a participant in the management of Paradis’s affairs, admitted to a share of the profits, and engaged in the publicity. The decree noted the substantial sums he had received from Paradis, as well as the close relations subsisting between them. The issued securities, the articles, the understandings, and the emoluments formed, in the view of the judges, a single continuous chain, rather than a sequence of detached acts wherein each participant might plead ignorance of the ultimate result.
The name of General Frémont also figures among the accused. Care must be taken not to confuse him with other personages bearing the same name in French history. In this cause, the Gazette recounts the appeal from a correctional conviction pronounced against several individuals connected with the company and its publications. The appellate decree affirmed the convictions while specifying the sentences. The journal names, among others, Auffermann, Probst, Crampon, Gauldrée-Boileau, Lissignol, and Poupinel. The diversity of their roles—publicity, organization, subscription, and brokerage—explains the lengthy development of the judicial reasoning.
The Court laid stress upon their conscious cooperation. As to Gauldrée-Boileau, Lissignol, Crampon, and Poupinel, it found a concert intended to persuade subscribers of the existence of imaginary enterprises and chimerical credit, thereby raising hopes of an illusory success and obtaining their money. The judicial phrasing is precise: the swindle arose from a combination of machinations, and not merely from the bankruptcy that supervened at the close.
The Missing Sum
The decree established at 1,987 the number of bonds held by Crampon following his final treaty with Probst. It recalled as well previous issues and the arrangements for the division of profits. The certificates had become units of account; yet behind them stood living persons whom the promise of dividends and guarantees had moved to part with their funds.
The Court of Appeal confirmed the terms of imprisonment and the fines, ordered the necessary confiscations, and held the defendants jointly and severally liable for damages owed to the civil parties, to be assessed upon formal presentation of claims. The penalties were not uniform: the decision distinguished the respective roles and appeals. The Gazette records, in particular, five years’ imprisonment and a fine of 3,000 francs for several defendants, four years for Crampon, three years for Gauldrée-Boileau, two years for Lissignol, and one year for Poupinel, with the pecuniary fines specified in the formal disposition. The judgment of the court of first instance remained otherwise in force.
The decree did not bring the iron rails any nearer. It did not declare that each subscriber would be reimbursed, nor what portion each might recover. Nor did it turn every financial notice into evidence of criminal intent without scrutiny. On the contrary, it identified the acts, the knowledge, and the interests which the court considered bound up with the fraud.
Within the courtroom, the enterprise had been portrayed as a work in progress. On paper, the lands, the mortgage, the contracts, and the official listings seemed to furnish the capital with a direct road to Texas. The decree dismantled that map point by point. The company held a concession, but lacked the means to complete the line; it held bonds, but their pledge was conditional; it had articles in the press, but the judges pronounced them deceitful. A railway proclaimed from ocean to ocean had been constructed, above all, in the minds of those who had funds to venture.
The Gazette printed the verdict at the hour when the promises had already spent their power. What remained was the cold precision of a court of law: those who had circulated the image of the railway could not, in the eyes of the magistrates, shield themselves behind the distance separating Paris from Texas, nor behind the title of intermediary, nor behind the printed form of an announcement. The train had never arrived. The money, however, had indeed changed hands.