Two facts appear from these charges on which emphasis was laid from different points of view: (1) That for four years the Atchison had been persistently violating the law by the granting of rebates. (2) That to conceal these rebates, and for other purposes, the books had been so systematically falsified as to defy detection, and to deceive not only the investing public but the whole railroad world. The report was handed to Mr. Reinhart, and an answer was requested by the following day. The answer was made, and proved inadequate; for though Mr. Reinhart pointed out some half-dozen items which he argued that Mr. Little had wrongly excluded, he explained no one of the charges directly brought against him.[440] There is no doubt at the present time that Mr. Reinhart was guilty, though perhaps because of the difficulty of fixing legal responsibility he was never prosecuted for falsification of the books. He resigned, of course, and Major Aldace F. Walker was appointed receiver in his stead. Two months later he was indicted with other officers of the company and certain shippers, not for falsifying the books, but for the illegal granting of rebates. His defence was that he had been, at the time the rebates were given, only the general auditor at Boston, and had had no part in the fiscal or executive business of the road.[441] The Government failed to prove connection, and the case fell through. All this completely altered the requirements to be met by a reorganization plan. A more sweeping reduction in charges, and a more general distribution of losses was needed than before had been the case. Old proposals were laid aside once and for all, and a new scheme was built up from the beginning. The mortgage indebtedness of the Atchison in 1895 was $233,595,247, of which the first and second mortgage bonds comprised $217,258,276. The reorganization of 1889 had done its work in one respect at least, and the reorganization managers were able to concentrate their attention on two issues. The annual net earnings, according to the company’s reports had been: 1890 $7,632,348 1891 7,631,598 1892 10,953,896 1893 12,126,866 but as corrected in Mr. Little’s report were: 1891 $5,204,880 1892 7,853,173 1893 8,085,608 1894 5,956,615 Inasmuch as Mr. Little had discovered annual deficits of 1891 $1,964,285 1892 60,938 1893 134,825 1894 3,008,242 it was very evident that a reduction in interest charges was called for. As in 1889 the salvation of the company was sought in the substitution of securities on which payment was optional for securities bearing an obligatory charge.