^^1
BANCROFT
LIBRARY
<
THE LIBRARY
OF
THE UNIVERSITY
OF CALIFORNIA
6,
SENATE.
1st Session. ' \ \ Part 6.
)TH CONGRESS, ) SENATE. j Ex. Doc. 51,
Session, j
TESTIMONY
TAKEN BY
HE UNITED STATES PACIFIC RAILWAY COMMISSION,
APPOINTED
UNDER THE ACT OF CONGRESS APPROVED MARCH 3, 1887,
ENTITLED "AN ACT AUTHORIZING AN INVESTIGATION
OF THE BOOKS, ACCOUNTS, AND METHODS OF
RAILROADS WHICH HAVE RECEIVED AID
FROM THE UNITED STATES, AND
FOR OTHER PURPOSES,"
EGBERT E. PATTISON, OF PENNSYLVANIA, Chairman,
E. ELLERY ANDERSON, OF NEW YORK,
DAVID T. LITTLER, OF ILLINOIS,
Commissioners.
VOLUME V.
REPORTED BY
CHARLES P. YOUNG, of New York,
I SECRETARY AND STENOGRAPHER TO THE COMMISSION.
WASHIKGTOK:
GOVERNMENT PRINTING OFFICE.
1887.
P R VOL V 1 2331
pt
TESTIMONY
TAKEN BY
THE UNITED STATES PACIFIC RAILWAY COMMISSION,
AS TO
THE WORKING AND FINANCIAL MANAGEMENT OF THE RAILROAD*
THAT HAVE RECEIVED AID FROM THE GOVERNMENT IN BONDS.
OFFICES OF THE CENTRAL PACIFIC RAILROAD COMPANY,
San Francisco, CaL, Monday, July 25, 1887.
The Commission reconvened upon the call of the chair, all the Com-
missioners being present.
y EDWARD H. MILLER, JR., being duly sworn and examined, testi-
fied as follows :
By Commissioner ANDERSON :
Question. Where do you reside? Answer. In Alameda, Alaineda
County.
Q. Do you do business in San Francisco ! A. Yes, sir.
Q. How long have you been in business in San Francisco ? A. Since
1873.
THE CENTRAL PACIFIC OF CALIFORNIA.
Q. What has been your connection, if any, with the Central Pacific
Railway? A. I have been secretary and am a director of the com-
pany.
Q. When was your first connection with the company f A. In 1863.
Q. When was your original connection ? A. My original connection
was as book-keeper, for about one year.
Q. And that was for the Central Pacific of California, as it was then
known ? A. Yes, sir.
Q. Where were their headquarters f A. At Sacramento.
Q. Had they any office in San Francisco at that time ? A. No reg-
ular office. But President Stanford was in San Francisco a great deal
of the time. He had an office here.
Q. But the headquarters of the company were at Sacramento ? A.
At Sacramento.
Q. Please state what your connection has been with the company
since 1803 to date *? A. For one year, about, I was book-keeper for the
company. Since then I have been secretary continuously.
Q. How many years have you been a director ? A. I think the whole
time that I was secretary. I think I was elected director at the same
time I was elected secretary.
3333
2334 U. S. PACIFIC RAILWAY COMMISSION.
Q. Please state for what companies you have been secretary, indicat-
ing at the same time the changes in the corporate title of the railway ?
A. It has been the Central Pacific Eailroad Company of California, and
then a change of title occurred.
Q. That was from 1863 until 1870, was it not ! A. Yes, sir.
THE CONSOLIDATION.
Q. What happened in 1870 ? A. In 1870 a consolidation with two or
three other companies took place.
Q. Will you name them, please 1 A. There were several consolida-
tions, and I cannot name them without reference to books.
Q. Will you name what you can ? A. There was the Western Pacific
Eailroad Company.
Q. Kunning between what points ? A. Between San Jose" and Sac-
ramento. The San Francisco, Oakland and Alameda Kailroad Com-
pany, from Alameda, or including the line between San Francisco and
Niles. No, I am mistaken ; it was between San Francisco and Oakland
and Alameda. It was a branch. It had two lines, one to Alameda and
one to Oakland. I will explain them. There was a ferry from San
Francisco, both to the Alameda wharf and to the Oakland wharf, and
then local trains ran out from Oakland and also from Alameda, which
were two different points on the opposite side of the bay.
By the CHAIRMAN :
Q. Have you a map on which you can point those roads out ? A.
Yes, sir ; I can furnish you one.
THE CENTRAL PACIFIC INCLUDED.
By Commissioner ANDERSON :
Q. What other company was included in this consolidation in 1870 ?
A. I do not remember.
Q. Was the Central Pacific itself included ? A. The Central Pacific
itself. I am not sure whether the California and Oregon was consoli-
dated at that time or at a previous consolidation. There were three
different times when the consolidations were made, and we are getting
it in consecutive form.
Q. I understand you remained secretary to the new company, as you
had been to the old ? A. Yes, sir.
PREVIOUS CONSOLIDATIONS.
Q. How many consolidations were there ? A. The consolidations as
they appear were several before these roads were consolidated with the
Central Pacific of California, Several of them had had previous con-
solidations with other roads. I cannot give it to you in consecutive
form without getting a statement I need for that purpose.
Commissioner ANDERSON. As I understand the method pursued, the
several roads, consisting themselves of minor parts, had a species of
integration among themselves, and then the whole was integrated into
the Central Pacific Railway, about 1870.
The WITNESS. Yes, sir.
Q. And you do not remember how many of these consolidations took
place? A. Yes, sir; I can remember how many, but I cannot give you
the dates, I can name all the companies that were cousolidateci.
EDWARD H. MILLER, JR. 2335
ARTICLES OF CONSOLIDATION.
Q. Was the process of consolidation always by entering into articles
of consolidation? A. I think so ; but as to some of the roads that had
been consolidated previous to their coming into the consolidation with
the Central Pacific, I do not know how they were consolidated with one
another.
Q. Of the records of these consolidations, what have you on hand ?
A. I have the minutes of the Central Pacific Railroad Company (and
possibly of some of the other companies that were consolidated), which
show the dates and facts of the consolidation.
Q. Have you the articles of consolidation ? A. Yes, sir.
Q. Of the Central Pacific alone, or of some of these others also ? A.
I think I have of some of the others, but I certainly have those of the
consolidation of the Central Pacific.
Q. Will you please produce for our information all the articles of con-
solidation i A. Yes, sir.
OFFICERS OF THE CENTRAL PACIFIC.
Q. As to the present organization of the Central Pacific, who is the
president ? A. Leland Stanford.
Q. He resides here in San Francisco ? A. San Francisco.
Q. Please state the other officers by name, or at least the principal
officers ? A. Leland Stanford is the president, and C. P. Huntington
is first vice-president.
Q. Mr. Huntington residing in New York? A. Residing in New
York. Charles Crocker is second vice-president.
Q. Mr. Crocker also residing in New York? A. Residing in New
York.
Q. And he is now in Europe? A. Yes, sir.
Q. Do you know when he will return ? A. I do not.
Q. Can you ascertain for us ? A. I do not know how I can.
Q. Can you tell us where we can have his deposition taken abroad,
if desired? A. I do not know where he is in Europe. I can ascertain,
probably.
Q. Mr. Charles F. Crocker is his son, is he not ? A. Yes, sir. I can
ascertain from him, probably.
Q. What other officers are there ? A. Charles F. Crocker, third vice-
president.
Q. Is that Colonel Crocker ? A. Yes, sir.
Q. Is he residing here? A. Residing in San Francisco.
Q. Who else? A. E. H. Miller, jr., is secretary. Timothy Hopkins
is treasurer.
By the CHAIRMAN :
Q. Where does he reside ? A. In San Francisco.
By Commissioner ANDERSON :
Q. Who is your land agent ? A. William H. Mills.
Q. He is also residing here ? A. Yes, sir ; also residing in San Fran-
cisco.
RAILROAD COUNSEL.
Q. Who are your present counsel? A. Col. Creed Haymond and
Judge Harvey S. Brown.
Q. Does Mr. Haymond reside here in San Francisco? A. Yes; in
San Francisco.
2336 U. S. PACIFIC RAILWAY COMMISSION.
Q. Where does Judge Brown reside ? A. He resides in Oakland.
Judge L. D. McKisick is another.
Q. Residing where ?- A. In San Francisco. John Foulds, residing
in tSan Francisco.
Q. What counsel have you in New York ? A. Charles H. Tweed.
Q. Have you any other counsel elsewhere? A. No other counsel reg-
ularly employed.
ITS WASHINGTON COUNSEL.
Q. Have you permanent counsel in Washington now? A. I do not
think there is any one in Washington exclusively employed by the com-
pany. When I say permanently employed I mean employed exclusively
in the business of the company, to give their exclusive attention to the
business of the company.
Commissioner ANDERSON. You may give us the name of your Wash-
ington occasional counsel, if there be one.
The WITNESS. Henry Beard, I think it is.
Q. Has he succeeded Mr. Sherrill and Judge Franchot ? A. No, sir.
Q. In what respect does his employment differ from that of others ?
A. His employment has been to look after the accounts of the company
a great deal and to attend to general business.
Q. That is, the adjustments between this company and the Commis-
sioner of Railroads ? A. The Government ; yes, sir.
THE BOARD OF DIRECTORS.
Q. Of how many members does your board consist ? A. Seven.
Q. Will you please give us their names as the board is constituted
to-day? A. Leland Stanford, C. P. Huntington, Chas. Crocker, Chas.
F. Crocker, W. Y. Huntington, Timothy JHopkins, and E. H. Miller, jr.
Q. W. V. Huutington is what relation to C. P. Huntington? A.
Nephew.
Q. Where does he reside ? A. San Francisco.
Q. Has your board always consisted of seven ? A. I am not sure. I
have an impression that at one time it was five, but it was a long time
ago. I do not recollect. The report of 1872, I think, will show that it
consisted of seven.
Q It has ever since 1872 consisted of seven? Do you remember
whether there was any change prior to that ? A. I do not remember
distinctly, but I am now inclined to think that there was never any
change ; that it was always seven.
COURSE OF CONSTRUCTION.
Q. Will you please state the course of construction of this road in
point of time ?
The WITNESS. From the aided line ?
Commissioner ANDERSON. In point of time ; yes, sir. A. I cannot
do that without referring to some papers documents.
Q. Will you state which portion was first constructed ? A. The line
from Sacramento to Ogden was completed May 9, 1869.
Q. But was that from Sacramento to San Jose constructed before the
railroad east of Sacramento ? A. No, sir.
Q. How far had the railroad east of Sacramento progressed when the
line between Sacramento and San Jose was completed ? A. To Ogden*
The line from Sacramento to Ogden was completed first.
EDWARD H. MILLER, JR. 2337
Q. Before the road from Sacramento to San Jos6 ? A. Yes, sir.
Q. Was any part of that road which lies southwest of Sacramento
completed before the railroad east of Sacramento was completed ? A.
Yes, sir.
Q. Between what points! A. Between San Jos< and Mies.
Q. Was it after the act of 1862 had been passed I A. Yes, sir.
Q. How many miles is it from Sacramento to Mies ?
The WITNESS. Allow me to refer to papers.
The CHAIRMAN. Certainly. Eefer to anything that will give you the
information.
Commissioner ANDERSON. You will find it on page 5 of the report of
1872.
The WITNESS. This gives only the total from San Francisco.
By Commissioner ANDERSON :
Q. I will put this map in evidence. Please examine the map now-
shown you, and state whether the names of the roads and their lengths
are correctly given ?
The CHAIRMAN. You will find here, on this map, the consolidations,
with the distances of the different roads given.
The WITNESS. Yes, sir ; it is correct at the time of its date, May,
1878, but there may have been some little changes in the lengths of the
lines since, although I do not see how there could be. The Southern
Pacific Bail way Company has extended its line since the date of this
map.
Q. Your answer merely shows that it is correct at the time ? A. Yes,
sir.
THE WESTERN PACIFIC.
Q. What is the corporate name of this railway constructed from Sac-
ramento to Mies?
The WITNESS. What is it now?
Commissioner ANDERSON. What was it at the time ?
The WITNESS. The Western Pacific Eailroad Company.
Q. Which was built first that portion of the Western Eailroad Com-
pany from Mies to San Jos6 or the portion from Niles to San Francisco ?
A. The portion from Mies to San Jose, is my recollection. It was built
before the portion between Mies and Oakland.
Q. Was the portion between Mies and Oakland constructed before
the consolidation of 1870 ? A. Yes, sir.
Q. So that when the consolidation of 1870 took place the Western
Pacific Eailway Company was substantially completed from Sacra-
mento to San Jos6 and to Oakland, was it not ? A. Yes, sir.
THE SAN FRANCISCO BAY RAILROAD.
Q. What was the name of the company from Oakland to Mies 1 A.
The San Francisco Bay Eailroad Company.
Q. That was consolidated into the Western Pacific then, was it not ?
A. No, sir ; that was consolidated into the Central Pacific.
Q. Was that in 1870 u ? Was there more than one consolidation to
which the Central Pacific was a party f A. Yes, sir.
COMMENCEMENT OF CONSTRUCTION OF CENTRAL PACIFIC FROM SAC-
RAMENTO.
Q. When was the construction of the Central Pacific from Sacra-
mento commenced! I do not refer to the day of the month, but with
reference to the acts of Congress.
2338 U. S. PACIFIC RAILWAY COMMISSION.
The WITNESS. Do you mean what year!
Commissioner ANDERSON. The first act of Congress was passed in
1862. How soon after that was it that construction was commenced on
the Central Pacific east of Sacramento?
The WITNESS. The first actual work done on the construction was
January 1, 1863, 1 think.
Q. That was east of Sacramento ? A. At Sacramento.
Q. And going east? A. Starting east ; yes, sir.
METHOD OF CONSTRUCTION.
Q. Under whose direction were the first contracts ? A. The board of
directors.
Q. How was it done, I mean. Was it a large contract for the whole
railroad, or was it let out in small sections under specific contractors
at first? A. The first contracts I think were in small sections, consid-
ering 18 miles to be a small section, and then in subsections or other
sections of from 2 to 4 or 5 miles.
CONTRACT OF CHARLES CROCKER & COMPANY.
Q. Who took the first large contract for any portion of the work ?
A. Charles Crocker & Co.
Q. Is that the same Charles Crocker who is now second vice-presi-
deut ? A. Yes, sir.
Q. Was he at the time a director in the company ? A. Not at the
time he took the contract.
Q. Who were the directors at the time he took the contract f A. I
will have to look.
Q. Will your book of minutes show ? A. Yes, sir.
Q. Does your company keep a book of contracts ? A. No, sir.
Q. What disposition do you make of contracts? A. We file them
in the office.
Q. Between what parties was this contract, the Central Pacific and
Charles Crocker & Co ? A. Yes, sir.
Q. Who were the members of the compauy besides Mr. Crocker ?
A. I do not know.
ITS TERMS.
Q. Do you remember for how many miles this contract extended?
A. I think it covered the first 18 miles from Sacramento.
Q. Do you remember the rate per mile ? A. I do not.
Q. Do you remember how frequently that contract was modified?
A. I do not remember that it was ever modified ; it possibly was, but I
do not remember it.
Q. You remember nothing about the terms of that co n tract, or what
do you remember about the terms ? A. 1 do not think the contract was
specific per mile ; my recollection is that the contract was not specific,
so much per mile, but that it was so much in the aggregate for the 18
miles, or else there were specifications which had prices fixed for grad-
ing and other work, masonry, bridges, &c. I cannot remember dis-
tinctly which it was.
CUSTODY OF THE CONTRACT.
Q. In whose custody was that contract ? A. In mine.
Q. Has it always remained in your custody? A. No, sir.
Q. In whose custody did it pass ? A. I do not know.
EDWARD H. MILLER, JR. 2339
Commissioner ANDERSON. If it were in your custody you must have
delivered it to some one.
The WITNESS. I did not.
Q. Where did you keep it? A. In a vault, or in the safe, at Sacra-
mento.
Q. When did you last see it ? A. That I cannot tell you ; a great
many years ago.
Q. More than ten years ago ? ^A. I cannot specifically say whether
it was more than that, but it was more than seven.
Q. How many copies were there ? A. But one that I remember.
Q. Did not the contractors have one ? A. Yes, sir ; doubtless they
did, but I do not remember.
Q. Were there two copies? A. I do not remember.
Q. Do you remember in whose handwriting it was ? A. No, sir.
Q. Do you remember how many pages it covered ? A. No, sir.
Q. You do not remember how many pages it covered ? A. No, sir.
NOT ENTERED IN FULL ON MINUTES.
By Commissioner LITTLER :
Q. Was the contract entered on the minutes of the company ? A.
Not in full, I think.
By Commissioner ANDERSON :
Q. Can you give us no further information as to its terms than you
have heretofore given ? A. Not until I make an examination of the
minutes ; there may be something in the minutes.
Commissioner ANDERSON. We will ask you to do so.
CONTRACT MISSING.
By the CHAIRMAN :
Q. Where is the contract now ? A. I do not know.
Q. You do not know because you have not examined the safe for a
number of years ? A. No ; I do not know because I have examined the
safe and I cannot find it.
Q. When did you make the last examination ? A. Within a few
days.
Q. When did you make an examination prior to that time ? A. I had
made no special examination for the contract prior to that time.
Q. Within a few days did you make a thorough examination f A.
Yes, sir 5 it was called for by the general accountant of the Commission.
NO MEANS OF ASCERTAINING ITS WHEREABOUTS.
By Commissioner ANDERSON :
Q. Has not this contract been called for in four or five litigations
within the last four or five years ? A. I do not remember that it has,
but I have no doubt that it has.
Q. Was it not called for in the Colton suit ? A. I do not remember
that it was.
Q. Was it called for in the Stewart suit ? A. I do not remember.
Q. Was it not called for in the Hopkins's accounting ? A. I do not
remember.
Q. Do you not remember, as a matter of fact, making several searches
for it ? A. I do not remember, as a matter of fact, although I doubtless
did.
2340 U. S. PACIFIC EAILWAY COMMISSION.
Q Do you not remember talking with different persons as to this
contract and its whereabouts ? A. No, sir.
Q. Have you not talked with Governor Stanford as to its where-
abouts? A. No, sir.
Q. Have you not talked with Mr. Huntington as to its where-
abouts'? A. No, sir.
Q. Have you not talked with Mr. Charles Crocker as to its where-
abouts'? A. No, sir.
Q. Had you not, before Mr. Hopkins's death, talked to him as to its
whereabouts'? A. No, sir.
Q. And you declare positively and in good faith that you have no
means of ascertaining anything as to the disposition made of this
paper ? A. I do.
Q. Have you any suspicion as to what has been done with it? A.
No, sir.
Q. Have you any idea as to what has been done with it I A. I have
not.
By Commissioner LITTLER :
Q. Was anybody interested in its destruction? A. I do not know
that there was.
PAPERS MISSING OWING TO FREQUENT USE IN SUITS.
By the CHAIRMAN :
Q. Were you in the habit of missing papers from your vault? A.
Yes, sir.
Q. Did you miss other papers? A. Yes, sir.
Q. How many other papers ? A. A great many.
Q. What kind of papers? A. Papers that were taken in any lawsuit
and given to the lawyers given to our lawyers or to the other lawyers.
It became of very frequent occurrence that they never caine back.
By Commissioner ANDERSON :
Q. Did you give up such papers as these without taking a receipt for
them ? A. Yes, sir, I did ; but we do not do it any more.
Q. Who gave up the papers without taking a receipt for them ? A.
I do not say anybody gave any specific papers up, but I mean those
papers that went to court in lawsuits. We became very much annoyed
in one case, the Winchester case. The same question was asked me if
papers had been missing frequently, and I said "yes." The result of the
examination brought out just what I am now saying, that probably they
were in court or h,ad been taken to court. A gentleman who was pres-
ent went to court, and among its files found the very document they
were asking for.
Commissioner ANDERSON. Somebody, on behalf of your company,
must be in the habit of parting with these papers.
The WITNESS. I myself do that.
Q. You do not mean to say anybody could go in and get them, do
you ? A. I was myself in the habit of giving them to our lawyers with-
out taking receipts.
Q. Who was the lawyer you gave such papers to ? A. Any one of
our lawyers.
PERSONS HAVING ACCESS TO VAULTS CONTAINING PAPERS.
Q. Who had access to your vault and safe ? A. No one but clerks
in our office and myself.
EDWARD H. MILLER, JR. 2341
Q. Had the clerks unlimited access, except under your supervision ?
A. They had unlimited access, to go in and out when they chose.
Q. Had they any interest in taking these papers and losing them, or
delivering them to any one without your knowledge or without confer-
ring with you ?
The WITNESS. Do you mean these contracts ?
Commissioner ANDERSON. Yes.
The WITNESS. No, sir ; not that I know of.
Q. Had Governor Stanford access to your vaults ? A. I do not think
he was ever in them.
Q. Could he go there if he wanted to ? A. Certainly ; if he under-
took to go there I should never attempt to prevent him.
Q. And the safe was open all day long ? A. Yes, sir.
Q. Who were these attorneys to whom you parted with these pa-
pers ? A. They were the various attorneys of the company for all the
time.
COUNSEL EMPLOYED AT TIMES PAPERS WERE MISSED.
Q. Give the names of those who were attorneys at the time you missed
the papers ? A. Robert Kobinson. I cannot specify any particular
time.
Q. Give the names of all the attorneys, and their residence ? A. E.
B. Crocker.
Q. He is dead, is he not? A. Yes, sir. Kobert Eobinson, S. W.
Sanderson.
Q. Is he dead ? A. Yes, sir. Judge Eamage. His first name I do
not remember.
By the CHAIRMAN :
Q. State if he is living, and where ? A. I do not know. He was a
resident of Sacramento. I think he is dead, but I do not know. I can-
not think of all of them.
Commissioner ANDERSON. To limit this set of names, I think you
stated you had seen this contract within seven years ?
The WITNESS. No, sir.
WHEN CONTRACT WAS LAST SEEN.
Q. When did you last see it ? A. I do not remember.
Commissioner ANDERSON. You know you saw it twenty-five years
ago?
The WITNESS. Yes, sir.
Q. Can you come down from that date and say when you last saw
it? A. It is very difficult to do that. I do not know that I have seen
it within fifteen years.
Q. Do you know that you did see it as far back as 1879, before the
consolidation ? A. I saw it when it was made.
Q. That was in what year ? A. That was in 1863 or 18G4.
Q. Did you not see it frequently after it was made ? A. I probably
did, during the time of the construction of the 18 miles.
Q. How long did that last ? A. A little over a year, I think.
Q. After it was completed do you not know that you frequently saw
that contract, with other contracts, in your safe ? A. I cannot remem-
ber that I did. I will say, doubtless I did but I do not remember hav-
ing seen it.
2342 U. S. PACIFIC RAILWAY COMMISSION.
Q. Do you remember the fact that the first time you \vere asked to
look for it you found it had disappeared ? A. I do not remember that
fact.
Q. Do you not remember looking for that contract in the Colton
case f A. No, sir.
Q. Do you not remember being examined as to this contract and other
papers in the Colton case ? A. I do not remember that I was exam-
ined as to this contract. I was examined, of course, as to papers.
Q. Do you not remember the fact that you were examined at great
length in the Colton case ? A. Yes, sir.
Q. Who else was examined on behalf of your company in regard to
the custody of these papers ? A. I do not know that anybody was.
OTHER CONTRACTS.
Q. What was the next contract made after the 18 miles that you have
referred to? A. There were contracts made with Cyrus Collins & Bros. ;
C. D. Bates & Co., I think ; S. T. Smith ; and, I think, there was another,
but I do not remember the name.
Q. These were all small contracts, were they not f A. All small con-
tracts ; yes, sir.
Q. Were these contracts in your custody ? A. They were ; yes, sir.
Q. What has become of them $ A. There is one of them I found the
other day. [Producing it,]
Q. Where did you find it"? A. I found it in the vault.
Q. Just alone by itself, without companions ? A. Without any com-
panions of that nature.
CONTENTS OF THE BOX OF CONTRACTS.
Q. Was it by itself or was it mingled with other papers that it did
not pertain to ? A. No; it was in the box of contracts, or that which
I call a box.
Q. In a box of contracts ? A. In a file of contracts.
Q. What other contracts did you find with the Cyrus Collins I A. I
do not remember which one I found.
Q. What other contracts did you find with the contract you did find ?
A. I cannot specify, because I was not looking for any but the con-
tracts for building, but there was quite a package.
Q. Were they construction contracts ? A. No, sir.
Q. Were they contracts that belonged to the Central Pacific Com-
pany ? A. Yes, sir.
Q. Were they of the same date as the one you have found, or were
they more recent contracts ? A. No ; they were of all dates.
Q. Were some of them as old as the one you discovered ? A. I think
not. Yes ; about the same date. Contracts for iron, &c.
Q. When did you make this discovery ? A. Within the last week,
or within the last two weeks.
Q. Did you go over any of those papers yourself personally ? A.
Yes, sir.
Q. All the papers in that box ? A. Yes, sir ; all the papers in that
box.
Q. Did you find any other contracts relating to the construction of
this road f A. I did not.
Q. You say you do not remember the name of the contractor as to
the contract you found ? A. No, sir ; I do not remember which one it
was.
EDWARD H. MILLER, JR. 2343
Q. It was one of these small contracts ? A. Yes, sir.
Q. As to all the others you have no information to give us I A. 1
have not.
TIME NEEDED TO THOROUGHLY EXAMINE THE VAULT.
By the CHAIRMAN :
Q. Have you made such examination of the vault as to swear now
that the missing contracts are not in the vault ? A. I could not posi-
tively swear that, because the vault contains so many papers; but I can
swear to the best of my knowledge and belief it is not there.
Q. Will you make such an examination as to be able to swear posi-
tively to this Commission that the missing contracts are not in the
vault ? A. I will if you will give me a year. It will take at least a
year to do that.
By Commissioner ANDERSON :
Q. Why "? A. The vault contains an immense number of papers, and
we would have to go through every box and every paper to be able to
swear it was not there.
The CHAIRMAN. We will give you all the assistance needed by de-
tailing men to aid in going over the contracts, if you will give us access
to the vault and to the old contracts.
The WITNESS. I have no objections to that.
Commissioner ANDERSON. I suppose you refer us to the president in
answer to that ; but we want to be perfectly satisfied that those papers
are thoroughly examined.
The WITNESS. You ask me to swear to something that I cannot swear
to. If you ask me to swear that it was not in this room, I could not
swear to it.
POSITIVE CROCKER CONTRACT IS NOT IN THE VAULT.
The CHAIRMAN. We want to know that when you swear that the
missing contracts are not in the vault you swear with positive infor-
mation to that effect, having made such an examination as to enable
you to do so.
The WITNESS. I have made such an examination that I am willing
to state positively that it is not in that vault.
Commissioner ANDERSON. That conclusion may be reached in two
ways: one, by having searched the vault, and the other by having
information as to where the contracts may be.
The WITNESS. I tell you I have no information.
By Commissioner ANDERSON :
Q. Have you no direct or indirect information I A. No direct or in-
direct information.
THE NEXT LARGE CONTRACT WITH CROCKER.
Q. What was the next large contract made after these small contracts
you have referred to? A. The next contract, I think, was made with
Charles Crocker & Co. (calling the sections about a mile each, although
they were not exactly a mile), for sections from section 31 east. I do
not remember how many miles.
Q. Was it to Camp 24 that it went ? A. I am not sure of that. Camp
24 was named, I think ? but it is indistinct in my mind,
2344 U. S. PACIFIC RAILWAY COMMISSION.
Q. How many miles was it ? A. I cannot remember specifically how
many miles, but my impression is to about section 58. That would be
about 25 miles. I am not positive about that, however.
Q. When was that contract made ? A. I do not remember.
Q, Was the second Crocker contract made after the completion of
these small pieces 9 A. I think the second contract was made before
they were entirely completed. They went on with the work beyond
section 31.
Q. Was this firm of Charles Crocker & Co. the same firm that had
taken the prior contract ? A. So far as Charles Crocker was concerned
it was. As to the company, I do not know.
Q. You do not know anything about that ? A. No, sir.
Q. Was there any company? A. Not that I know of. I do not
know.
Q. Charles Crocker was the only person you dealt with ? A. The
only person I know.
WHO COMPOSED THE BOARD OF DIRECTORS.
Q. Who negotiated that contract ? A. The board of directors made
it. Whether the negotiation was referred previously to any committee
or not I do not remember. In some cases it was.
Q. Who composed the board of directors at the time the Crocker con-
tract No. 2 was made ? A. I will have to look to ascertain that.
Q. Perhaps you had better look. You can ascertain that in a mo-
ment, can you not I A. I can, by going into the office. I can bring the
list of directors from the commencement.
Commissioner ANDERSON. We would like to have that. Also bring
the contract you found in the vault The Last Rose of Summer.
The WITNESS (after returning). I can state now that the directors
were nine instead of five for a certain time, if you care for that.
Q. Will you give their names in 1864, 1865, and 1866 f A. In 1864,
Leland Stanford, C. P. Huntington, Mark Hopkins, A. P. Stanford, E. H.
Miller, jr., Chas. Marsh, arid E. B. Crocker. Those were elected Octo-
ber 8, 1864. If you want those in office during 1864 I will have to go
back.
Commissioner ANDERSON. Give us those in office during 1864.
The WITNESS. Elected July 14, 1863: Leland Stanford, C. P. Hunt-
ington, Mark Hopkins, A. P. Stanford, James Bailey, T. D. Judah,
Chas. Marsh, D. W. Strong, L. A. Booth, and John F. Morse.
E. B. CROCKER.
Q. What relation is E. B. Crocker, who appears in the year 1864, to
Chas. Crocker 1 A. Brother.
Q. What were their business relations ? A. They had no business
relations together. One was a lawyer and one had been a merchant.
Q. Was E. B. Crocker the lawyer 9 A. Yes, sir.
Q. Did not Mr. Chas. Crocker become his assignee subsequently !
A. Yes, sir ; some time subsequently, though.
Q. Did you not know enough of their relations to say whether they
had business relations together or not? A I never knew that they had.
Q. You say this second contract was made before the completion of
the first con tract f A. I did not say that positively, but I think so.
SECOND CROCKER CONTRACT ALSO MISSING.
Q. Have you looked for that contract No. 2 ? A. Yes, sir.
Q. When did you look for that contract 1 A. The same time I looked
for the other one, two weeks ago.
EDWARD H. MILLER, JR. 2345
Q. Have you not also looked for that contract on other occasions ?
A I presume I have ; I do not remember.
Q. When I asked you a few moments ago whether you had any suspi-
cions as to who had removed these contracts you hesitated. Please tell
me, did the name of any person occur to your mind at that time I A. No,
sir ; I hesitated simply
Q. (Interposing.) Wait a moment. Did anybody's name present it-
self to you at that time ? A. No, sir.
Q. You thought of no one ? A. I did not. I will explain that now.
Commissioner ANDERSON. You may do so now.
The WITNESS. I hesitated for the reason that I thought it was a proper
question for me to decline to answer. That was the only cause for hesi-
tation.
By the "CHAIRMAN:
Q. Did you ever talk to anybody about the missing contract ? A.
A. No, sir ; except to Mr. Richard F. Stevens, your general accountant.
Q. Prior to that time did it occur to you that it was an unbusiness
like method to have contracts on so important a matter as the construc-
tion of the road missing ! A. No, sir ; I do not think it was.
Q. Did it make any impression on you at all ? A. You are getting
by inference a statement that I have not made.
STATEMENT AS TO MISSING CONTRACTS.
Q. What is the statement that you have made"? A. The statement I
have made is that I found the contracts missing within the last two
weeks, and that I do not remember ever having searched for them be-
fore.
Q. When you discovered within the last two weeks that the contracts
were missing did you discuss the question with anybody then? A. No,
sir.
Q. Did you not think it important to report it to your superior officers
at that time ? A. I did not.
Q. Do I understand you to swear that that was the first indication,
two weeks ago, that you had that those contracts were missing ? A. I
do not swear to anything of the sort. I do swear that I do not remem-
ber ever having looked for them before, or ever having known that they
were missing.
Q. Why do you hesitate to swear that you had not information prior
to two weeks ago that the contracts were missing ? A. Because I do not
remembeir that I had.
Q. Do you swear that the contracts were not called for in the Colton
case ? A. I do not. I swear that I do not remember that they were.
DOES NOT BELIEVE THE PAPERS ARE IN THE VAULT.
Q. Then I understand, as you stated before, that you are not prepared
to swear now that the contracts are missing ? A. I am prepared to
swear that I have made an examination and a search for these contracts
in the place where they ought to be, or the place where I supposed
where they formerly had been, and that I do not find them, and I do not
believe that they are in the vault ; that is, the vault in my office.
Q. Are you prepared to swear that the contracts are not in your
vault $ A. I believe I have answered that before.
Q. I do not think you have, yes or no. I would ask you to answer
that question yes or no. A. You know very well, Mr. Chairman, that
2346 U. S. PACIFIC RAILWAY COMMISSION.
I cannot possibly answer that question yes or no, after the explanation
I have previously made to the same question.
The CHAIRMAN. I will repeat my question, and call for an answer.
Mr. Stenographer, you will read it to Mr. Miller.
The STENOGRAPHER (reading) : " Then I understand, as you stated
before, that you are not prepared to swear now that the contracts are
missing ? A. I am prepared to swear that I have made an examination
and a search for these contracts in the place where they ought to be, or
the place where I supposed where they formerly had been, and that
I did not find them, and I do not believe they are in my vault; that is,
the vault in my office."
The WITNESS. Will you repeat the question ?
By Commissioner ANDERSON :
Q. Are you prepared to swear that the contracts are not in your
vault ? Answer yes or no. A. If I understand that question there is
nothing to it except whether I am prepared to swear whether the con-
tracts are in my vault or not. Is that the way it reads ?
Q. Are you prepared to swear that the contracts are not in your
vault ? Answer yes or no ? A. No. I suppose I have a right to ex-
plain ?
The CHAIRMAN. Certainly.
The WITNESS. I am not prepared to swear, because there is such a
large mass of papers in my vault that I had not recently gone through
all those papers. It would take a long time to do so. But I am pre-
pared to swear that to the best of my knowledge and belief, after hav-
ing examined thoroughly the place where those contracts should be, if
they were in the vault, that I think that I said to the best of my knowl-
edge and beliefthe contract is not in my vault-
TERMS OF SECOND CONTRACT.
Q. What do you recollect as to the terms of that second contract?
A. The best of my recollection is that that contract was made under
certain specifications which required payment to the contractor at a spe-
cific price for grading per cubic yard, of all natures, rock work, &c., and
for masonry and for iron, &c., furnished, to complete the road. ' I dp
not mean the rails, but iron work necessary for bridges, &c., at speci-
fied prices.
Q. Not including the rails ? A. Not including the rails, I think, but
it may have included the rails.
HOW PAYABLE.
Q. Do you remember whether the amounts payable under that con-
tract were payable in dollars or in bonds or in stocks ? A. My recollec-
tion is that it was payable, a portion in cash, a portion in bonds, and
another portion in stock.
Q. Can you give the percentages ? A. I think it was five-eighths cash
and three-eighths in bonds and stock. Of that, however, I am not posi-
tive. I do not recollect.
Q. Do you remember whether the percentages were altered from time
to time ? A. My recollection is that the percentages were not altered.
Q. Will your minutes show ? A. I do not know whether the minutes
will show or not, but the books of the company will show. The accounts
will show.
EDWARD H. MILLER, JR. 2347
Q. That is to say, the entries in the books of account of the company
will show f A. The entries in the books of account of the company will
show.
METHOD OF KEEPING THE BOOKS.
Q. What distinction did you make in the entry of an issue of bonds
on these contracts, or a payment of cash f A. I do not quite compre-
hend.
Q. Did you debit in one case "cash 77 and in the other case u bonds,"
or what is the distinction made in your books I A. We opened an ac-
count with the contractors, crediting them with the work done and
charging them with the bonds and cash and stock when paid.
Q. In what account will the counter-charges be made, showing from
whence the bonds came and from whence the cash came and from whence
the stock came ? A. The contractor being charged with cash, the cash
would take credit ; and if with bonds, the bonds would be credited ;
and if with stock the stock would be credited.
CHANGES MADE IN CONTRACT.
Q. So that by following the contract down from the inception of that
contract to the end, if there were any changes in its terms they will ap-
pear in your books ? A. Yes, sir 5 but I think I can explain it.
Commissioner ANDERSON. We will take any explanation you can
give.
The WITNESS. This is the contract as I remember it. The stock was
to be issued at 50 cents on the dollar, and there was a change made in
the percentage to 30 cents.
Q. In the percentage of cash or the percentage of stock ? A. No,
sir ; the percentage of cash remained the same. The percentage of
bonds, as I recollect it, remained the same. But as to the percentage
of stock, the stock was not paid at par. First it was paid at 50 cents
on the dollar and afterwards at 30 cents on the dollar.
Q. Do you remember the aggregate amount of stock, bonds, and cash
which this contract called for ? A. Eo, sir.
Q. Can that be ascertained from your books ? A. Yes, sir.
THE CONTRACT AND FINANCE COMPANY.
Q. What was the next construction contract which this company
entered into ? A. As I remember it, the next contract was with a cor-
poration called the Contract and Finance Company.
Q. When was that company organized ? A. My recollection of dates,
especially of those so long ago, is so poor that I cannot give it. I will
explain that I do not remember my own age, without counting back to
the year I was born.
Q. Was it organized shortly before taking this contract? A. Yes,
sir.
SPECIAL OBJECT OF ITS ORGANIZATION.
Commissioner ANDERSON. It was organized especially for the taking
of these contracts. I am quoting from Mr. Huntington.
The WITNESS. That was its business. Undoubtedly it was.
Q. Who were its officers ? A. That I cannot say. I knew at the
time, but now I do not recollect.
Q. Who were the principal stockholders ? A. I do not know.
Q. Who kept the books of the Contract and Finance Company ? A,
William E. Brown.
P R YOL iv 2
2348 U. S. PACIFIC RAILWAY COMMISSION.
Q. Where is lie ? A. He is here.
Q. Is he president of the Southern Pacific Company 1 ? A. No, sir.
Q. What is his office ? A. He is one of the directors of the Southern
Pacific Company at present.
Q. Does he reside in San Francisco ? A. His office is here in the
building.
Q. Is he present now ? A. I presume he is.
Q. Can you obtain from him a list of the officers and stockholders of
this company at the time it took the contract I refer to ? A. I think I
can.
Commissioner ANDERSON. We will excuse you for that. We would
like to have that list now.
The WITNESS (after returning). Mr. Brown does not recollect. He
was secretary himself. He recollects that, and can give the names of
two other directors, but whether there were mo re than three he cannot
say. He will ascertain, however.
ITS MEMBERS.
Q. Who were the directors he named? A. Wm. E. Brown, T. J.
Millikin, and B. K. Crocker.
Q. As a matter of fact, were not Mark Hopkins, Leland Stanford, C.
P. Huntington, and Chas. Crocker the holders of substantially all the
stock of this Contract and Finance Company ? A. Not to my knowledge.
Q. Have you not heard them say so in litigations? A. No; I do not
think I have. I presume that to be the fact. But that is my presump-
tion.
Q. Have you not heard them say so 1 A. No, sir ; I never did.
Q. Have you not heard them say that Mr. Millikin, Mr. B. F. Crocker,
and Mr. William E. Brown were holders of small portions of the stock
for the purpose of qualifying them to act as directors ? A. I never
heard them say that.
Q. You never heard any one say that ? A. I never heard any of them
say that.
Q. Have you ever heard anybody say that? A. I could only say for
myself. That is my presumption. Nobody knew.
Q. I will read for you from Mr. Huntington's testimony, taken before
us, referring to this Finance Company: "The stock of that company
was nearly all held by Governor Stanford, Mr. Hopkins, Mr. Crocker,
and myself; there were some few stockholders, but I could not say
who." Are you satisfied that that statement is correct ? A. Yes, sir.
BOOKS OF THE CONTRACT AND FINANCE COMPANY.
Q. Have you ever seen any of the books kept by the Contract and
Finance Company ? A. Yes ; I saw them.
Q. What books did you ever see ? A. I saw the day-book and ledger,
or journal, I suppose; cash-book, day-book, and ledger, probably.
Q. When did you see these books ? A. They had an office in the
same building with me in Sacramento, and I saw them when I went
into their office.
Q. At Sacramento ? A. Yes, sir ; I saw them in use by their book-
keeper.
Q. That was while this contract was under way ? A. Yes, sir.
Q. Have you never seen them since ? A. No, sir.
EDWAKD H. MILLER, JR. 2349
THAT CONTRACT ALSO MISSING.
Q. Where is that contract between the Central Pacific Company and
the Contract and Finance Company ? A. That is missing.
Q. How many miles did that embrace ? A. It embraced a large por-
tion of the road east of the contracts that have been mentioned pre-
viously.
Q. When did you last see that contract ? A. I do not recollect.
Commissioner ANDERSON. That contract embraces, as you say, a large
portion of the construction of the Central Pacific ?
The WITNESS. Yes, sir.
Commissioner ANDERSON. It is a contract of great magnitude and
importance.
The WITNESS. Yes, sir.
Q. You say you never observed that it was missing until within the
last few weeks ? A. I do not remember that I ever did.
THE COLTON CASE.
Q. Do you not remember being examined particularly with reference
to all the papers of the Contract and Finance Company in the Colton
case ? A. 1 do not remember.
Q. Do you not remember being asked if those books were in Lou-
don? A. I do not remember that.
Q. Or if they had been purposely destroyed ? A. I could not possi-
bly know that.
Q. I asked you if you remembered being asked that question 1 ? A.
No ; I do not remember being asked that.
Q. By Mr. Hayes ? A. No, sir.
Q. You know Mr. Hayes ? A. Yes, sir.
Q. You know he asked you a great many questions in the Colton
suit three or four years ago ? A. Yes, sir.
Q. Do you not know that it was a question of public talk as to the
disappearance of the books of this company, at that time ? A. I say I
do not remember. I do not remember anything about it.
Q. You do not remember that the subject was discussed in San Fran-
cisco at all at the time of the trial of the Colton case ? A. No, sir.
Q. Will you swear that you and Governor Stanford did not talk this
matter over, of the disappearance of these books, during the trial of the
Colton case ? A. I will swear that I do not remember ever having
spoken to him about it, or his having spoken to me about it.
GOVERNOR STANFORD'S DEPOSITION.
Q. Do you not remember Governor Stanford's deposition was taken
at great length I A. Yes, sir.
Q. Where was he when his deposition was taken ? A. In New York,
I think.
Q. When he came back here, did you have no conversation with ref-
erence to that subject ? A. Not that I remember. Not only that I do
not remember, but I do riot think I ever did. I do not believe I ever
did.
Q. Was no surprise expressed by any of the officers of the company
as to the disappearance of such important papers as this contract? A.
Not that I remember.
Q. Was the subject never brought up in the board of directors when
you were present ? A. No, sir.
2350 U. S. PACIFIC RAILWAY COMMISSION.
Q. Has no fault ever been found with you for having permitted these
papers to disappear ? A. No, sir.
TERMS OF CONTRACT AND FINANCE COMPANY CONTRACT.
Q. What do you remember about the terms of the contract made with
tbe Contract and Finance Company ? A. I do not remember the details
of it at all.
Commissioner ANDERSON. From Camp 24 to Ogden ? That is, sub-
stantially, from the boundary of the State to Ogden, through Nevada
and Utah.
The WITNESS. Does that say " Camp 24, the boundary of the State"?
Commissioner ANDERSON. It was substantially.
The WITNESS. Then I misstated the miles.
Q. I read to you from Mr. Huntington's testimony. He was asked :
Q. What was the subject of their contract? I want to know between what
points ? A. It was Camp 24, if I remember right. I am not certain that I ever saw
the contract.
Q. It was the road substantially after leaving the State of California ? A. Yes, sir.
Camp 24 I think is on the State line. It was a contractor's camp, you know, and it
was from that point to the point of junction.
In other words, the whole of this road in the State of Nevada and
Territory of Utah. You can tell us nothing as to the terms of that con-
tract ? A. No, sir ; only what appears upon the books of the company
now.
Q. Do you know whether it was an agreement at so much per mile ?
A. I believe it was.
Q. Do you know whether the rate per mile was the same throughout
the entire length of the road from Camp 24 to Ogdeu, or to Promontory
Point ? A. I do not recollect that.
Q. Do you know whether the rate per mile was payable in money or
in bonds, or whether it was mixed? A. I think it was mixed.
Q. Do you know whether the payment included the Government
bonds ? A. It did not.
Q. Do you know, as a matter of fact, that none of the Government
bonds went to the Contract and Finance Company ? A. Yes, sir.
Q. They did not? A. They did not.
GOVERNMENT BONDS SOLD FOR ACCOUNT CENTRAL PACIFIC.
Q. How were the Government bonds disposed of? A. They were
sold in New York by Mr. Huntiugton, almost wholly ; possibly a por-
tion may have been paid out directly on contracts for locomotives, en-
gines, iron, &c.
Q. Do you know whether they were sold for account of the Central
Pacific Company or on account of tbe Contract and Finance Company?
A. They were sold for account of Central Pacific Railroad Company.
Q. Do you remember that the price per mile was about $100,000 in
the Contract and Finance Company's contract, payable in stocks and
bonds ? A. 1 not remember that. I believe that was about the cost,
as entered up on the books under that contract.
COST PER MILE, IN SECURITIES AT PAR, $100,000.
Q. Do you mean, when you say "cost," the amount of stocks and
bonds issued at par ? A. The stocks and bonds paid to them.
Q. Taken at par it would amount to $100,000? A. Yes, sir. The
stocks, bonds, and cash, at par, amounted to about that amount.
EDWARD H. MILLER, JR. 235 1
Q. Do you remember that the amount of bonds issued per mile was
$64,000?
The WITNESS. I do not think I understand your question. The
amount of what bonds ?
Commissioner ANDERSON. The amount of bonds issued to the Con-
tract and Finance Company.
The WITNESS. I do not remember that.
CHARACTER OF SECURITIES ISSUED TO CONTRACT COMPANY.
Q. What bonds were issued to the Contract and Finance Company ?
What character of bonds'? A. The company's first-mortgage bonds, if
any.
Q. Are you positive that any bonds were given to them ? A. No, I
am not positive.
Q. Will your books show ? A. Yes, sir.
Q. And you have never examined them for the purpose of ascertain-
ing whether they received any bonds or not ? A. I know, but I do not
remember. I know perfectly weil if 1 can look at the books.
Q. Do you not know perfectly well that the Contract and Finance
Company did get bonds'? A. No, sir; I do not. You are asking posi-
tive questions.
Commissioner ANDERSON. No, I do not ask positive questions.
The WITNESS. Possibly I am technical in my answer, but I do not
remember it. The books would show very plainly what they did get.
Q. How much of this contract with the Contract and Finance Com-
pany is entered in your books of minutes ? A. I do not know that any
of it is.
THE WESTERN DEVELOPMENT COMPANY.
Q. What other large construction contracts has the Central Pacific
made? A. They made a contract for constructing the
Q. (Interposing.) Well, I will follow my own order. Did it make a
contract with the Western Development Company? A. I do not think
it did.
Q. Was the Western Development Company subsequent in time to
the Contract and Finance Company ? A. Yes, sir.
WHAT BECAME OF CONTRACT AND FINANCE COMPANY.
Q. What became of the Contract and Finance Company? A. It was
disincorporated, I think.
Q. Was it wound up by judicial proceedings? A. Not that I know of*
Q. Where was it last located? A. At San Francisco, I think.
Q. In what building? A. This building.
Q. In what room? A. Room No. 1, on the first floor, at the side en-
trance.
Q. When did you last see that room occupied by the Contract and
Finance Company ? A. By the book-keeper.
Q. When? A. I think in 1874.
JOHN F. MILLER.
Q. Whom did you see there then? A. John F. Miller.
Q. Is he a relation of yours ? A. No, sir.
Q. Where does he live? A. He lives somewhere on the Sacramento
River, in Sacramento County, I think.
2352 U. S. PACIFIC RAILWAY COMMISSION.
Q. Can you identify it a little better than that? A. No, sir ; I really
do not know.
Q. Who knows him here in this office? A. Almost everybody con-
nected with the office.
Q. So that we can find him ? Does Mr. Brown know where he can be
found ? A. I presume he does.
Q. You refer us to him ? A. Yes, sir.
By the CHAIRMAN :
Q. What is his business now ? A. Farmer.
BOOKS AND PAPERS OF THE CONTRACT AND FINANCE COMPANY.
By Commissioner ANDERSON :
Q. Were the books and papers of the Contract and Finance Company
in that room when you saw.it in 1874 ? A. I never saw the books there.
Q. You only saw Mr. Miller there ? A. Yes, sir ; I saw him.
Q. He had some books, I presume? A. Well, he was connected with
some other company Western Development Company I think ; and
whether he had any books of the Contract and Finance Company there,
I do not know. I never saw them.
THE WESTERN DEVELOPMENT COMPANY.
By the CHAIRMAN :
Q. Who composed the Western Development Company ? A. I do
not know.
By Commissioner ANDERSON :
Q. Who was its president I A. That I do not know.
Q. Do you know the names of any of its officers 1 A. F. S. Douty
was one of its officers. He was either president or secretary ; I do not
know which.
Q. Where is Mr. Douty ? A. His office is in this building.
Q. What position does he now hold? A. He is president, I think, of
the Pacific Improvement Company, or secretary of it.
CONTRACT FOR ROAD FROM SACRAMENTO TO NILES.
Q. What was the contract with the Western Development Com-
pany? A. I do not remember whether the contract for building the
Western Pacific Railroad from Sacramento to Niles was with the Pacific
Improvement Company or the Western Development Company.
Q. It was with one or the other ? A. I think so.
Q. When was that contract made ? Was it before the Contract and
Finance Company or after ? A. I think it was made very soon after
the completion of the Central Pacific road to Ogden.
Q. That is, soon after May, 1869 ? A. Yes, sir.
THAT CONTRACT ALSO MISSING.
Q. Where is that contract ? A. It is missing.
Q. Have you looked for that recently ? A. I have looked for all of
them.
Q. What can you tell us in regard to the terms of that contract? A.
My recollection of the terms is very indefinite.
Q. Can you refer us to any entries in your books, or the minutes, that
will furnish us with the terms of that contract? A. The entries on the
I
EDWARD H. MILLER, JR. 2353
regular books of the company will show the terms of that contract, but
not in detail. I do not think there is anything in the minutes of the
company in detail.
Q. How long did the Western Development Company continue to
work this contract ?
The WITNESS. In building that road "?
Commissioner ANDERSON. Yes ; from 1869 until when ?
The WITNESS. They finished it in about a year.
Q. What became of the company ? A. I do not know.
OFFICES OF WESTERN DEVELOPMENT COMPANY IN SACRAMENTO.
Q. Where was their office ? A. At that time I do not remember the
date of the organization of the Western Development Company, but
if I am right, their office must have been in Sacramento.
Q. Why do you say " must have been 9 " Is it because they were all
kept together ? A. Because there were no offices here.
Q. Is it not also because the whole business of the Central Pacific
was at Sacramento at that time ? A. Because the Western Develop-
ment Company, as I understand it, was successor to the Contract and
Finance Company, and they held their offices in the same place until
we moved from Sacramento to San Francisco, which was in 1873.
Q. Do you know who the stockholders of the Western Development
Company were ? A. No, sir.
Q. Do you not know that they were substantially the same persons
who were the stockholders of the Contract and Finance Company ? A.
I do not know ; but I presume they were. That is all I can say.
Q. You presume they were ? A. I think they were.
CONSTRUCTION OF CALIFORNIA AND OREGON BRANCH.
Q. What subsequent contract did the Central Pacific make with the
Pacific Improvement Company ? A. They made a contract I will not
say it was the Pacific Improvement Company, because I am not sure ;
but they made a contract with one of the three companies for building
the California and Oregon Branch road.
Q. It was the Pacific Improvement Company, was it not ? A. Prac-
tically the successor.
Q. That is, the north part of that road ? A. Yes, sir.
Q. From what point; from Bedding to the State line? A. No;
Eoseville was the beginning. I think they had a contract for building
some portion of the road between Eoseville and Bedding.
Q. Did they not have the contract for building the northerly 200
miles of that road ? A. Yes, sir.
THE PACIFIC IMPROVEMENT COMPANY.
Q. Who was the president of the Pacific Improvement Company ?
A. F. S. Douty, I think.
Q. When was this contract made ?
The WITNESS. The contract for building the northerly 200 miles, you
are speaking of ?
Commissioner ANDERSON. Yes.
The WITNESS. Last year.
Q. Was it not longer ago than that f When was that finished ? A.
It was just finished.
Q. Last year ? A. No, sir.
2354 U. S. PACIFIC RAILWAY COMMISSION.
Q. Finished this year ? A. Just finished within a month.
Q. Y/ho are the directors of the Pacific Improvement Company f
A. I do not know.
Q. Can you ascertain ? A. I presume that I can from Mr. Douty.
Q. Who are the stockholders ? A. I do not know that.
Q. Are they not substantially the same persons who were stockhold-
ers in the Contract and Finance and the Western Development Com-
panies ? A. I think so.
Q. Who keeps their books ? A. F. S. Douty.
Commissioner ANDERSON. I think you said he was president.
The WITNESS. He keeps the books also. They are in his charge, in
one office.
Q. Where is the office of that company I A. That is in room No. 3,
on the first floor of this building.
Q. What other persons are in that room besides Mr. Douty ? A.
There is Judge Underbill.
Q. What position does he hold f A. He is a lawyer.
Q. Is he the lawyer of the Pacific Improvement Company? A. He
does and has done considerable business for the Central Pacific Rail-
road Company, and now does for the Southern Pacific Company.
ITS CONTRACT PRODUCED.
Q. Where is this contract with the Pacific Improvement Company ?
A. I think I have it. At any rate it is entered in full on the minutes.
Recently I have adopted the plan of entering everything in full on the
minutes.
Commissioner ANDERSON. Please see if you can produce the con-
tract.
(The witness produced the contract between the Central Pacific Rail-
road Company and the Pacific Improvement Company, dated October 11,
1886. It is marked Exhibit No. 2, July 25, 1887," and is as follows :)
CONTRACT BETWEEN THE CENTRAL PACIFIC RAILROAD COMPANY AND
THE PACIFIC IMPROVEMENT COMPANY.
This agreement, made and entered into on the eleventh day of October, 1886, be-
tween the Central Pacific Railroad Company, party of the first part, the Pacific Im-
provement Company, party of the second part, and the Southern Pacific Company,
party of the third part, witnesseth :
That whereas the Central Pacific Railroad Company is the successor in interest of
the California and Oregon Railroad Company, mentioned in the act of Congress of
July 25th, 1886, entitled "An act granting lands to aid in the construction of a rail-
road and telegraph line from the Central Pacific Railroad, in California, to Portland,
in Oregon ;" and
Whereas the said Central Pacific Railroad Company has constructed a portion of
the line contemplated by said act of Congress, to wit, that portion between Rose-
ville Junction, on the Central Pacific Railroad, and the town of Delta ; and
Whereas about one hundred and four miles of the line between Roseville Junction
and the southern boundary line of Oregon, as contemplated in said act of Corigress,
has not been constructed ; and
Whereas the Oregon and. California Railroad Company, charged by said act of Con-
gress with the construction of that portion of the said lino of railroad between
Portland, in Oregon, and the northern boundary line of California, has been in an
embarrassed condition and has been unable to complete its road to said boundary
line; and
Whereas until the whole of said line is completed, making a through connection
between Portland, in Oregon, and the city of San Francisco, in California, no part of
said line can be advantageously or profitably operated, nor the act of Congress in re-
lation thereto be carried into effect according to the spirit and intent thereof, to wit,
the construction and maintenance of a continuous railroad between the said cities,
which the Government of the United States may use for the transportation of its
EDWA&D H. MILLE&, JK. 2355
property, troops, and munitions of war when necessary, and to aid in the construc-
tion of which it has granted quantities of the public lands ; and
Whereas the completion by the said Central Pacific Railroad Company of its
own road to the southern boundary line of Oregon without assurance of the comple-
tion of that portion of the road from Portland to said boundary line would be a waste
of money, the road having to be constructed through a rugged and mountainous
country at great expense and without sustaining local traffic ; and
Whereas it is of the greatest importance to the Central Pacific Eailroad Company
that it should have an opening into Oregon, both for local traffic and the through busi-
ness of the two cities, and also to furnish business for its entire line from Ogden:
Now, therefore, for tho purpose of completing its said road, and of securing the com-
pletion of the road between the California State line and Portland, Oreg., thus
making a through line between said cities of Portland and San Francisco and a con-
nection with the Union Pacific Railroad at Ogden, and in order to secure the business
of the northern portion of the State of California and as much as possible of the busi-
ness of the State of Oregon, and to bring such business to its line from Ogden, and
for the purpose and with the intent of carrying into effect the provisions of said act
of Congress, the said Central Pacific Railroad Company hereby convenants and agrees
with the said Pacific Improvement Company
First. That the said Pacific Improvement Company shall, in a good workmanlike
manner, construct, finish, furnish, and complete the railroad and telegraph lino of the
said Central Pacific Railroad Company, commencing at a point near the said town of
Delta and running thence in a general northerly direction by the most practicable
route to a point on the southern boundary line of Oregon, there to connect with the
road of the said Oregon and California Company, a distance of 104 miles, as near as
may be, together with the rolling-stock, buildings, instruments, and fixtures thereof;
that is to say, to construct, finish, and complete all the clearing, grading, excava-
tions, embankments, ditches, drains, masonry, culverts, bridges, trestling, and nec-
essary fencing, and furnish all the ties, timber, rails, all the chairs, fish-plates, spikes,
frogs, and switches, lay and complete all the main line of track and all the side-tracks,
spur-tracks, and turnouts necessary, usual, and proper for a single-track railroad;
also all necessary and proper buildirgs and erections for stations, freight and pas-
senger depots, water-tanks, turn-tables, engine-houses, section-houses, work and re-
pair shops, with all the tools, furniture, and implements necessary and proper there-
for; also to furnish and place on said railroad all necessary and proper rolling stock,
instruments, and equipments, including locomotives, passenger, box, freight, baggage,
platform, dump, and hand cars for the proper and successful working and repairing
of said railroad and telegraph line, said rolling-stock to be furnished and delivered
as the same may be required by the said Central Pacific Railroad Company, not to.
exceed the following quantity and proportion, namely: One locomotive for every
eight miles of road constracted under the contract ; one passenger car for every five
miles of road ; three box and flat cars for every mile of road, the proportion of each
to be determined by the said Central Pacific Railroad Company ; one hand car for
every six miles of road ; such number of dump cars as may be required for maintain-
ing the line; said railroad to be constructed and completed to a point at or near the
Klamath River within twelve months from the date hereof, and to the southern
boundary line of Oregon as soon as the said Oregon and California Railroad is com-
pleted to said line.
Second. That the said Pacific Improvement Company shall furnish and pay for all
the engineer service necessary or requisite for the location and construction of said
railroad and its appurtenances, &uch location and construction to be subject to the
approval of the president or chief engineer of said Central Pacific Railroad Com-
pany, who may direct such changes to be made as they may deem proper, but the sal-
ary of the chief engineer shall be paid by said Central Pacific Railroad Company.
Third. That the said Pacific Improvement Company will pay all the costs, dam-
ages, and other expenses incurred in obtaining right of way for the construction
of said road, and to that end the Central Pacific Railroad Company agrees that it
may use the name of the said company in any legal steps found necessary to be taken
in securing such right of way.
Fourth. That the said Pacific Improvement Company will, within a reasonable time
and as soon as it can be done to the best advantage, purchase, obtain possession and
control of the said Oregon and California Railroad, or that it will, within a reason-
able time, purchase the whole of or a majority of the shares of the capital stock of
said Oregon and California Railroad Company, and in either event will within a rea-
sonable time complete or cause to be completed the said Oregon and California Rail-
road to a connection with the Central Pacific Railroad at a point on the boundary
line between California and Oregon, and, as the case may be, will enter into, or will
cause the said Oregon and California Railroad Company to enter into, a contract per-
petual with the said Central Pacific Railroad Company, its successors or assigns, that
the said Oregon and California Railroad shall be operated in harmony with the said
2356 U. S. PACIFIC RAILWAY COMMISSION.
Central Pacific Railroad, prorating for services and covenanting therein never to give
to any other railroad company any better terms for through traffic and for the inter-
change of business than it gives to the Central Pacific Railroad Company, its succes-
sors or assigns.
Fifth. That the said Pacific Improvement Company shall and will repay to the said
Central Pacific Railroad Company, within one hundred and twenty days from the date
hereof, all sums of money, with interest thereon at the rate of 6 per cent, per annum,
heretofore by the said railroad company expended upon that portion of its aforesaid
line of railroad and telegraph line lying north of Delta, and that if said railroad com-
pany has not fully paid all the costs and expenses incurred as aforesaid, the said im-
provement company will assume the whole thereof, and will, upon demand, pay oif
and discharge the same ; or that if the said railroad company is compelled to pay the
same or any part thereof, then the said improvement company will, within one hun-
dred and twenty days after notice thereof, pay to the said railroad company the full
amount of any such payments, with interest at the rate aforesaid.
And the said Southern Pacific Company, lessee of the said Central Pacific Railroad
Company, hereby covenants and agrees with the other parties to this contract that, in
consideration of the advantages to be derived by it from the bringing of business to
the main lines of the Central Pacific Railroad, it will, when said through line is com-
pleted, finished, and ready for operation, enter into an agreement in writing with the
said Central Pacific Railroad Company whereby it shall lease from said company
that portion of said line between Roseville Junction and the State line not now in-
cluded within its lease, and will increase the consideration of twelve hundred thous-
and dollars, guaranteed rental mentioned in the existing lease, as much in proportion
as 80,000 shares of the capital stock of said Central Pacific road shall bear to the
whole amount of capital stock of said company now issued, and will also increase
the limit of the maximum rental of thirty-six hundred thousand dollars therein provid-
ed for in like-proportion ; and that it will transport and convey, free of charge, over the
lines operated by it in California, north of San Francisco, all agents, laborers, and
employe's, and all provisions, tools, iron, and other materials, and all other property
employed or used, or to be employed or used, in and about the construction of said
railroad and telegraph line and their appurtenances by or for said Pacific Improve-
ment Company.
And the said Central Pacific Railroad Company hereby covenants and agrees to and
with the said Pacific Improvement Company that, in consideration of the premises
and of the faithful performance of the covenants herein contained to be kept, observed,
and performed by said Pacific Improvement Company, it will, upon the execution of
this agreement, issue and deliver to said company eighty thousand shares of its
capital stock, and in addition thereto it will pay to said Pacific Improvement Com-
pany four million five hundred thousand dollars in mortgage bonds, as follows : When
one-half of the work on said road between Delta and the Oregon line is completed,
it will pay and deliver to said Pacific Improvement Company all of its first-mortgage
bonds now unissued, part of an issue by it heretofore provided for, to be used toward
the construction of its railroad between Roseville Junction and said Oregon line,
and that it will pay to said Pacific Improvement Company the balance of said four
million five hundred thousand dollars of bonds, in its mortgage bonds, part of an issue
by it provided for in an indenture of mortgage by it made to William E. Brown and
Frank S. Douty, bearing date October 1, 1886, and that it will make said last-mentioned
payment as the work on said road progresses, and as sections of not less than ten
miles between Delta and the Oregon State line are completed, and in the proportion
which the completed section shall bear to the whole length of the road between the
points last aforesaid :
In testimony whereof the parties hereunto have caused these presents to be signed
by their respective presidents and secretaries and their corporate seals to be hereunto
affixed. Done in triplicate the day and year first herein written.
LELAND STANFORD,
President of the Central Pacific Railroad Company.
[SEAL.] E. H. MILLER, JR.,
Secretary of the Central Pacific Eailroad Company.
LELAND STANFORD,
President of the Southern Pacific Company.
[SEAL.] E. H. MILLER, JR.,
Secretary of the Southern Pacific Company.
J. H. STROBRIDGE,
President of the Pacific Improvement Company.
[SEAL.] F. S. DOUTY,
Secretary of the Pacific Improvement Company.
(Indorsed on back :) Executed copy agreement between Central Pacific, Pacific Im-
provement Company, and Southern Pacific Company. Pacific Improvement Company
to finish construction of California and Oregon Extension. October 11, 1886.
" Exhibit No. 2, July 25, 1887."
EDWARD H. MILLER, JR. 2357
The WITNESS. I can furnish you with the printed copy of that, cer-
tified, if you wish it.
By Commissioner ANDERSON :
Q. We were so rejoiced to get hold of a copy of any paper that we
thought we would have it copied. Haveyou enumerated all the construc-
tion contracts that you recall? A. Yes, sir.
Q. They, then, represent substantially all the contracts under which
the aided portion of the Central Pacific was constructed ? A. Yes, sir ;
more than that.
Commissioner ANDERSON. That is, the Crocker contract, the Con-
tract and Finance Company contract, the Western Development Com-
pany contract, and the Pacific Improvement Company contract.
The WITNESS. Yes, sir.
Commissioner LITTLER. As I understand, the contract you found was
a subcontract between Crocker and somebody else, who built a few
miles of the road.
The WITNESS. No, sir ; you are referring now to one of the original
contracts'?
Commissioner LITTLER. Yes.
The WITNESS. I found one of the original contracts for 2 miles.
By Commissioner LITTLER :
Q. Where is that? A. I think Mr. Stevens has it. I will send forit.
REPORTS MADE BY STANFORD, HUNTINGTON, HOPKINS, AND CROCKER.
By Commissioner ANDERSON :
Q. Were Mr. Huntington, Governor Stanford, Mr. Crocker, and Mr.
Hopkins in the ha,bit of making reports to the company, from time to
time, of the transactions effected by them in their respective depart-
ments? A. I do not think Mr. Hopkins ever made a report. Yes, sir;
he did, too, as treasurer ; yes, sir ; they all did.
Q. Where are those reports? A. I have them, I think.
Q. How frequently were they made? A. Mr. Huntington's were
made in the form of a statement of accounts practically monthly.
Q. Have you all of these in your possession ? A. Yes, sir.
Q. Will you please produce them at the convenience of the Commis-
sion f A. Yes, sir ; I will do so. I beg to say that Mr. Stevens is
using them right along, however.
Q. Mr. Stevens has access to them? A. He has as he calls for
them.
Q. Do you mean to say^that Mr. Huntington has made monthly re-
ports always ? A. Practically, monthly, yes, sir, except for the very
first year or two.
Q. In the shape of statements of accounts ? A. Since 1865, as state-
ment of accounts, monthly.
Q. What subject did Governor Stanford report on ? A. Governor
Stanford did not make any report or statement of account. Governor
Stanford's habit was, when he was in San Francisco, to draw his checks
for anything and everything from his private account at the bank.
When at Sacramento he handed me his check book, and from that I
made up a statement of account, which I call his report.
Q. Explaining the application of these moneys ? A. Yes, sir.
Q. What was the subject of Mr. Crocker's reports f A. I do not re-
member that Mr. Crocker ever made a report.
Q. What was the subject of Mr. Hopkins's reports ? A. The business
of the treasurer.
2358 U. S. PACIFIC RAILWAY COMMISSION
PUECHASE OF SAN FRANCISCO AND SACRAMENTO STEAMERS.
Q. Do you recollect the fact that the Central Pacific made a purchase
of the steamers plying between San Francisco and Sacramento, I think
it was ?- A. Yes, sir.
Q. Was that purchase made by a contract ? A. No, sir ; I do not
think it was.
Q. How was it effected ? A. I think the negotiation was carried on
by Governor Stanford.
Q. And Mr. Huntington ? A. I do not think Mr. Huntington was
here at the time, but I presume he knew all about it, and was a part of
it, probably, but I do not think there was any written contract.
Q. Do you know how the price was negotiated ? A. No, sir ; I do
not.
Q. Do you know whether Mr. Stanford and Mr. Huntington were inter-
ested in those steamers before the Central Pacific acquired them ? A.
I have never understood that they were.
OWNED BY THE CALIFORNIA PACIFIC.
Q. Do you know whether they w^ere interested I mean Mr. Hunting-
ton and Governor Stanford in the stock of the corporation which
owned these steamers'? That was the California Pacific Eailroad Com-
pany, I think. A. Yes, sir ; I believe so.
Q. The California Pacific, it was called ? A. Yes, sir.
Q. They were stockholders? A. m Yes, sir.
THE MINUTES WILL SHOW THE PRICE PAID.
Q. Do the minutes of this company show how the price to be paid for
these steamers was determined ?
The WITNESS. The minutes of the Central Pacific ?
Commissioner ANDERSON. Yes.
The WITNESS. Is that Mr. Huntington's testimony.
Commissioner ANDERSON. Yes $ Mr. Huntington's testimony.
The WITNESS. The minutes may show that. The minutes possibly
show the price that was to be paid ; bat how that price was determined
is more than I think is in the minutes.
Q. Could it be determined in any way except by a vote of the direct-
ors f
The WITNESS. I beg pardon ; I had an idea that you meant how the
actual amount to be paid was determined the negotiations.
Commissioner ANDERSON. That is tf hat I mean. Whether they were
to pay $1,000,000 or $2,000,000 or $100,000 ? A. Yes, sir. I misappre-
hended the question.
Q. What is your answer? A. Yes, sir. The minutes of the books
will show it. The books of the company show the amount they paid.
Q. Do you know who was present and voted as to whether the price
should be approved or not? A. !Nb, sir; I do not remember that.
Q. Do you know whether Mr. Huntingtou voted in favor of paying
the price ? A. I do not remember.
Q. Or whether Governor Stanford did ? A. I do not remember. It
is easily ascertained.
Q. The minutes will show ? A. Yes, sir. That is, if it appears, the
minutes would show it.
Q. Do you know the price that was paid ? A. No, sir ; I do not re-
member exactly.
EDWARD H. MILLER, JR. 2359
PURCHASES OF OFFICERS SUBSEQUENTLY RATIFIED BY BOARD.
Q. Do you know whether the officers of the Central Pacific were in
the habit of making such purchases without any vote of the board of
directors, and of their own motion ? A. I think they frequently made
purchases to that extent, which were ratified by the board of directors
afterward, or assumed to be ratified.
Q. Of properties where they were stockholders in the selling com-
pany? A. No.
Commissioner ANDERSON. That is this case.
The WITNESS. Yes, sir ; that is this case ; but I did not gather that
from the form of your question. For instance, Mr. Huntington pur-
chases and has purchased from time to time large amounts of iron with-
out any action of the board of directors.
Q. And procured its ratification subsequently? A. No, sir; nevei
procured any ratification.
Q. Simply did -the business of his own accord ? A. Yes, sir.
Q. To very large amounts ? A. Very large amounts.
HUNTINGDON HAD FULL POWERS OF ATTORNEY.
Q. Who would then fix the price at which the iron was to be sold or
paid for? A. Mr. Huntiugton, I will add to that, however, that Mr.
Huntington had full power of attorney.
Q. From whom? A. From the company.
Q. Approved by the board ? A. Yes, sir ; adopted by the board.
By the CHAIRMAN :
Q. Did the company keep a copy of the power of attorney ? A. Yes,
'r.
Q. Have you a copy of it ? A. It is entered in the minutes. I pre-
sume I have a copy. I have the original, I presume. I have no doubt
I have.
Q. Will you produce the original ? A. Yes, sir.
BOOKS KEPT BY THE CENTRAL PACIFIC.
Commissioner ANDERSON. Please describe in general the set of books
which are now kept by the Central Pacific Company.
The WITNESS. You only mean the general books, of course ; not the
operative detail books.
Commissioner ANDERSON. Yes.
The WITNESS. They are the cash book, in the treasurer's office ; a
journal and ledger, in the secretary's office; and the minute book of the
company. The stock journal, the transfer book and ledger.
Q. Are they all kept under your supervision ? A. Yes, sir.
Q. How many clerks do you employ under you ? A. in that imme-
diate department there are seven. They are not employed now by the
Central Pacific. There is only one in employ of the Central Pacific.
Q. You have not named all the books, have you ? A. I have named
sir.
the general books.
GENERAL AUDITOR'S BOOKS .
Commissioner ANDERSON. I^ow, in regard to the books relating to the
operation of the road, the receipts for freight and passengers ?
The WITNESS. They are kept in the general auditor's office.
Q. What is the general auditor's name ? A. E. C. Wright.
2360 U. S. PACIFIC RAILWAY COMMISSION.
Q. Where are his books f A. They are now in room No. 1 of this
building.
Q. What books does he keep, describing them generally ? A. He
keeps a day-book and ledger and distribution book. That is about all
the regular books that are kept.
FREIGHT AUDITOR'S BOOKS.
Q. Does he keep all the operating accounts, both the receipts from
freight and passengers, and of operating expenses'? A. No, sir.
Q. Who keeps those? A. Those books are kept for the freight de-
partment by C. J. Wilder, the freight auditor, and for the passenger
department they are kept by A. G. W. McOullough.
Q. Where are these gentlemen ? A. They are here in this building.
Q. Take the freight department first. Is C. J. Wilder your freight
auditor ? A. Freight auditor.
Q. Does he keep all the accounts of the Central Pacific receipts for
freight? A. Yes, sir.
Q. The form of the business, as I now understand it, is that the Cen-
tral Pacific is leased to the Southern Pacific for the rent of its road, for
the actual receipts 1 A. Yes, sir.
Q. That is the amount they pay ? A. Well, a guaranty.
Q. Therefore the auditor keeps an account of the business done on
the Central Pacific, just as he did before the lease ? A. Yes, sir ; they
are kept in just the same way.
Q. Does Mr. Wright receive reports from all your freight agents at
different stations along your road ? A. No, sir.
Q. How does he get his receipts ? A. Mr. Wilder receives reports
from all the freight agents on the road.
REBATE AND REFUND BOOKS.
Q. Do you know whether Mr. Wilder keeps rebate books or refund
books ? A. No, sir ; they are not in his charge.
Q. In whose charge is that subject ? A. That is kept by the general
freight agent.
Q. What is his name ? A. His name is Richard Gray.
Q, Is he also in this building ? A. Yes, sir.
Q. And has he a book of the description I have mentioned, of refunds
or rebates? A. I do not know whether he has such a book or not, be-
cause those rebates are paid and go into the general auditor's office,
Mr. Wright's office. Mr. Wright mav have that book instead of Mr.
Gray.
Q. They are paid on regular vouchers or receipts ? A. Yes, sir.
Q. Who has the custody of those vouchers ? A. Mr. Wright, the
general auditor.
Q. Has Mr. Wright the general control of the whole subject as to
whether rebates shall be allowed, and how much? A. He has no con-
trol whatever.
Q. Who has control of that subject? A. Mr. Stubbs, the general
traffic manager, and Mr. Gray^ the freight agent.
THE DISTRIBUTION BOOK.
Q. Is Mr. Stubbs also in this building ? A. Yes, sir.
Q. Do you keep a register called the expense-voucher register ? A.
No -, no register called expense-voucher register, but there may be such
EDWARD H. MILLER, JR. 2361
a book kept in the general freight office. It will appear on the distri-
bution book in the general auditor's office, under the head of " expense
account," which I can explain.
Commissioner ANDERSON. Explain it.
The WITNESS. We have a very large book which we call the " distri-
bution book." Every item paid that goes into the account of the audi-
tor is entered under name, with the total amount. Then, if it is an ex-
pense, a portion of it, it is entered in the column of expense. If the
voucher contains two or three items they are distributed along through
the book under the various headings to which they belong. Instead of
keeping several books we keep one of that kind.
By Commissioner LITTLER :
Q. Were all those books prescribed by you as secretarv of the com-
pany? A. Yes, sir 5 practically.
Q. Are they all made up and approved by you, and under your di-
rection ? A. The blank books are. The voucher comes to me as audi-
tor of accounts and I allow it ; then it goes to the general auditor to be
entered on his books. When it is so entered it comes to the paymaster
to be paid, and the paymaster returns it to the general auditor, so that
he can get credit for that amount of money.
REBATES ON VOUCHERS SEPARATE AND DISTINCT.
i
By Commissioner ANDERSON :
Q. Is the refund or rebate made out on a voucher separately by
itself and without any necessity for following it in the distribution
book ? Can we recognize rebates simply from the voucher, or is the ac-
count mixed up with other payments ? A. No, sir ; the rebates will
appear on a voucher separate and distinct from anything else.
Q. Is there a separate book also ? A. No, sir ; I think not. There
may be a separate book kept in the general freight office.
Commissioner ANDERSON. We have the names and we will find them.
What we desire to see is a statement of the course pursued by this com-
pany in allowing rebates or refunds to any of the persons with whom
the company has dealt, and we will ask you to produce the book which
will most readily give us that information.
The WITNESS. The distribution book will ; you can have it.
RECEIPTS AND PAYMENTS OF POOL CONTRACTS.
Q. In what books do the receipts of the Central Pacific Kail way
Company and the payment by it on pool contracts appear ? A. They
all appear on the auditor's books.
Q. How many pool contracts had this company prior to the act of
last April, or, rather, of how many pools was it a member 1
The WITNESS. Just at that time, or altogether f There were various
pools from time to time.
Commissioner ANDERSON. Tell us of the various pools.
The WITNESS. I cannot do that. I do not know. There were sev-
eral, but I cannot give them all.
Q. Have you the pool contracts $ A. No, sir ; I do not think I have
all of them. I think some of them are in the general freight office.
Commissioner ANDERSON. Tell me what pool contracts you remem
ber.
2362 u. s; PACIFIC RAILWAY COMMISSION.
THE TRANSCONTINENTAL POOL.
The WITNESS. There is one that we call the Gould-Huutington con-
tract.
Commissioner ANDERSON. The Gould-Huntington pool ?
The WITNESS. Yes, sir. There was a contract with the Pacific I do
not know the name of it the Pacific Coast Steamship Company, I think.
Commissioner ANDERSON. The transcontinental pool ?
The WITNESS. Yes, sir ; there is one called the transcontinental pool.
But I am not familiar with those pools.
Q. Who is familiar wit-h them ? A. The general freight agent and
the general traffic manager.
Q. Mr. Wilder f A. No; Mr. Stubbs and Mr. Gray.
Q. Are those pool contracts in your possession ? A. I think I have
one, or perhaps all. I do not think I have, though.
LAND-ACCOUNT BOOKS.
Q. We will ask you to look for them. Who keeps your land accounts ?
A. William H. Mills is the land agent.
By Commissioner LITTLER :
Q. Does he keep the books ? A. They are kept under his charge.
By Commissioner ANDERSON:
Q. Where is his office? A. I forget the number of the room.
Q. It is in this building ? A. Yes, sir.
Q. Do you know anything of the number of books kept by him, and
what books they are ? A. Yes, sir.
Q. What books does he keep ? A. I cannot give you the details of
just what he does keep.
Q. You refer us to him for all the books relating to land? A. Yes,
sir.
LAND-GRANT MORTGAGES.
Q. Who is the trustee of your land-grant mortgage?
The WITNESS. At present ?
Commissioner ANDERSON. Yes.
A. William E. Brown and J. O ? B. Gunu.
Q. Where is Mr. Gunn ? A. He is in San Francisco.
Q. How many land-grant mortgages has your company made? A.
Two.
Q. Have you copies of those mortgages ? A. Yes, sir, We liave
printed copies, I think.
Q. Can you furnish us with a complete printed copy of ail the mort-
gages made by this company ? A. Yes, sir. I can have them printed
by type- writer. Possibly I may have them all.
Commissioner LITTLER. We supposed.you had them already.
The WITNESS. I think I have, but if I have not I can furnish them.
By the CHAIRMAN :
Q. Have you named all the books kept by the company in the ac-
counting department ? A. No, sir.
AUDITOR OF MOTIVE POWER AND MACHINERY.
By Commissioner ANDERSON :
Q. Please tell what you have omitted ? A, There is an auditor of
motive power and machinery.
EDWARD H. MILLER, JR. 2363
Q. What is his name ? A. His name is C. fl. Foster.
Q. He keeps the statistics relating to motive power and machinery $
A. Yes, sir.
By Commissioner LITTLER :
Q. Does that department include fuel ? A. Yes, sir.
THE TREASURER'S BOOKS.
By Commissioner ANDERSON :
Q. What other books are there, if any ? A. I mentioned the treasurer's
office. Those books are a part of the general books. They keep simply
a cash-book.
Commissioner ANDERSON. You mentioned that at the beginning.
The WITNESS. I think I mentioned that. I do not think of any
others; that is, any other general books. Of course the agents at each
shop have a set of books kept. They all come here for final collation.
LEASED LINES.
Q. Now in regard to leases : What companies have the Central Pa-
cific Eailroad Company operated under lease 9 A. The Stockton and
Copperopolis, the California Pacific, the Northern Railway, the San
Pablo and Tulare, the Southern Pacific of California, Southern Pacific of
Arizona, Southern Pacific of New Mexico, the Los Angeles and Inde-
pendence, the Los Angeles and San Diego, and the Amador branch.
Q. Up to what period were those roads leased to the Central Pacific?
A. The leases of all except the Stockton and Copperopolis were trans-
ferred to the Southern Pacific Company in October, 1886. I may be
mistaken as to the month, but it was about that no, they were not
transferred, but those leases were canceled.
Q. When? A. In October, 1886.
Q. Have you those leases ? A. Yes,sir.
Q. Will you plesse hunt them up and produce them to the Commis-
sion ? A. Yes, sir ; that is, the leases of the roads that were leased to
the Central Pacific.
LEASE OF CENTRAL BY SOUTHERN PACIFIC.
Q. Yes. When was the Central Pacific leased to the Southern Pa-
cific ? A. The date of the lease was in February, 1885, to take effect
April 1 9 1885.
Q. Will you furnish a copy of that lease 1 A. Yes, sir.
(The lease will be found in the testimony of E. H. Miller, jr., given
on August 16, 1887.)
CIRCULAR LETTER OF COMMISSION.
Q. Have you a copy of the circular letter issued by this Commission
to this company? A. Yes, sir.
Q. Have you prepared answers to the questions contained in that
letter ? A. Yes, sir ; I have prepared some. You mean the letter ad-
dressed to Governor Stanford ?
Commissioner ANDERSON. Yes.
The WITNESS. I have prepared answers to such as Governor Stan-
ford referred to me, but the answers are not complete. They are now
in the hands of the type- writers, to be printed.
Q. Have you received another circular letter calling for answers to
various other matters ? A. I have not got it here, but what you call
p R VOL in 3
2364 U. S. PACIFIC RAILWAY COMMISSION.
the circular was a letter addressed by the Commission to President
Stanford.
Commissioner LITTLER. I call that a letter directed to the company,
and not a circular letter.
The WITNESS. Yes, sir ; that is so.
Q. Was that the one you refer to? A. Yes, sir.
Q. You received another letter ? A. Yes. sir.
Q. Have you prepared answers to that? A. I have not, assuming
that the letter to Governor Stanford would take the place of the circu-
lar. They covered the same ground, as far as I understand it. This is
the one I referred to [producing the printed circular letter of the Com-
mission for public circulation]. This is practially a copy of the letter
sent to Governor Stanford. The previous one, I think, covered only
ten or eleven questions.
CONSTRUCTIVE MILEAGE ACCOUNT.
By the CHAIRMAN :
Q. Have you a constructive mileage account ? A. Yes, sir ; your ac-
countants are making it out. We had a constructive mileage account
only from 1880 to one or two months in 1883.
MINUTE-BOOKS OF BOARD OF DIRECTORS.
By Commissioner ANDERSON :
Q. Where are your books of minutes of the board of directors ? A.
They are in my office.
Q. How many books are there ? A. I think there are four.
Q. Will you inquire of the president of the company whether there is
any objection to our having them moved to the hotel for convenient ex-
. amination there this afternoon ? A. I will.
NO MINUTES KEPT BY EXECUTIVE COMMITTEE.
Q. Are there minutes of the meetings of the executive committee !
By Commissioner LITTLER :
Q. Are they kept in a regular book of minutes ? A. No, sir.
Q. Have you a different book of minutes of the executive commit-
tee ?-^-A. No, sir ; the executive committee never kept any minutes.
By the CHAIRMAN :
Q. How did they report to the general board ? A. They did not re-
port.
Q. How often did they meet ? A. Occasionally.
Q. How occasionally ; once in three or six months ? A. I do not
know.
PERSONNEL OF EXECUTIVE COMMITTEE.
By Commissioner ANDERSON :
Q. Who composed the executive committee ? A. Charles F. Crocker,
Timothy Hopkins, and S. T. Gage.
Commissioner ANDERSON. I do not remember Mr. Ga^e as being a
director.
The WITNESS. Yes, sir.
EDWARD H. MILLER, JR. 2365
INFORMAL VERBAL REPORTS TO BOARD OF DIRECTORS.
By the CHAIRMAN :
Q. How do the board of directors get information as to the work of
the executive committee ? A. I am sure 1 do not know that they got
any information from the executive committee, except as the individuals
of the executive committee at the meeting of the board stated.
Q. Who was chairman of the executive committee ? A. I do not
think they ever organized.
Q. Were you present at the meeting of the board of directors when
any individual of the executive committee reported ? A. Only as I
state, when they reported verbally.
Q. Did you take down the report as secretary? A. No, sir.
Q. Were you present when any action was ever taken on a report of
the executive committee ? A. There never was a report made by the
executive committee as an executive committee.
METHOD OF ACTING ON SUCH REPORTS.
Q. Ware you present when any action was taken on a report of any
individual member of the executive committee ? A. Yes, sir.
Q. How did the board act ? A. Sometimes they adopted the action
proposed by the executive committee, or by the members of the exec-
utive committee, to be adopted.
Q. How would the secretary of the board enter it upon the min-
utes ? A. He would enter it as the action of the board of directors.
Q. Would any intimation be given as to the report of an individual
member of the executive committee? A. No, sir.
Q. Then if they approved of the course of an individual member of
the executive committee, it would take the shape of a resolution of the
board of directors, would it ? A. No, sir.
Q. How would it appear on the directors' minutes ? A. The execu-
tive committee would not appear at all. As a member of the board of
directors one of them would perhaps offer a resolution that certain
things should be done in the board, and it was either adopted or not.
Q. Then where the individual members of the executive committee
appear in the meetings of the board of directors as offering a resolution,
and the board approved of it, that is the result of the action of an indi-
vidual member of the executive committee approved by the board ? A.
No, sir ; I do not understand that they appeared before the board as an
executive committee at all, but they appeared before the board as in-
dividual members of the board. If they, as members of the board,
offered a resolution, and if the board approved it, it is adopted. But as
an executive committee they never made any proposition to the board
of directors, or offered a resolution to be adopted.
Q. Did the board of directors ever act upon any action of the execu-
tive committee? A. I think not; no, sir.
Q. Was there ever any action on the part of the executive commit-
tee ? A. Not to my knowledge.
OBJECT OF THE EXECUTIVE COMMITTEE.
Q. What was the use of the executive committee ? A. I do not know,
really.
Q. Had it any purpose ? A. Yes, sir 5 I think it had this purpose,
that those three were to talk matters up and consult together, and then,
if they agreed upon a certain proposition, it would be presented to the
2366 U. S. PACIFIC EAILWAY COMMISSION.
board, not by the committee as an executive committee, but it would
be presented* to the board for its action.
Q. Would not that be the result of the executive committee, if they
agreed upon it? A. No, sir. They took no action. It was submitted
entirely and always to the board of directors for their action.
Q. Was it after consultation by the executive committee ? A. I do
not know about that.
Q. I understood you to say that after consultation the executive com-
mittee, reaching a point of agreement, then had one of the individual
members report, and then, if approved by the board of directors, it went
upon the minutes. Is that true ? A. No, sir ; I did not intend to be
understood in that way.
Q. Will you explain ? A. You asked me what was the use of the ex-
ecutive committee, and I explained it as well as I could, that they would
perhaps get together and consult among themselves on what action, if
any, in certain matters ought to be adopted by the company. When
they came before the board of directors they did not come at all as an
executive committee. They came just as individual members of the
board of directors would come, and offered such a resolution. It was
done in open board. If it was adopted, all right. It was the action of
the board of directors, the executive committee having taken no action
whatever on it ; only, as I take it, every resolution offered before the
board of directors of any company is always considered by somebody
before it is offered.
Q. What I want to know is, after having ascertained the views of a
member of the executive committee, and there having appeared on the
minutes a resolution with the approval of the board of directors, whether
that was the course of the executive committee as approved by the board
of directors ? A. No, sir ; it was not, in any case.
E. H. MILLEE, JR.
The Commission then adjourned to meet on Tuesday, July 26, 1887,
at 10 a. m.
OFFICES OF THE CENTRAL PACIFIC EAILROAD COMPANY,
San Francisco, Cal, Tuesday, July 26, 1887.
The Commission met pursuant to adjournment, all the Commissioners
being present.
EDWAKD H. MILLEE, JR., being further examined, testified as
follows :
The W JTNESS - I did not give you yesterday, by oversight, the index
to the minute books.
The CHAIRMAN. We would like to have that.
The WITNESS. It is a separate book, and I ought to have handed it to
you, but I overlooked it.
FURNISHING INFORMATION PREVIOUSLY CALLED FOR.
By Commissioner ANDERSON :
Question. Will you inform us what you have that we called for yester-
day ? Answer. Ail the articles of consolidation. I have not had time to
arrange them, but they are in this pile.
Charles Crocker's whereabouts I do not know anything about.
EDWARD H. MILLER, JR. 2367
I have the list of directors at the time of the Crocker contract. I
now furnish a complete list of the directors from the organization to the
present time, as you will see. As to the members of Crocker & Co., I
answered that yesterday.
Commissioner ANDERSON. You said you did not know.
The WITNESS. I did not know. As to Crocker's contracts, 1 and 2, 1
answered yesterday that they were missing. As to the contract with
Collins & Bro., I believe that is here, but I am not certain, I have been
in such a hurry to get them up.
As to the contracts with the Contract and Finance Company and the
Western Development Company, I answered yesterday that they were
missing.
The copy of contract with the Pacific Improvement Company the Com-
mission had yesterday.
Eeports of Messrs. Stanford, Huntington, and Hopkins are not all
here; but the reports of Mr. Stanford, so far as I have found them, and
of Mr. Huntington up to 1878, are here. Your accountants are using
the reports for 1879.
The reports of Mr. Hopkins, as treasurer, are all here, that I can find.
The powers of attorney to C. P. Huntington are here.
The refund book has not come in.
I have here the distribution book and books showing pool payments
and receipts, which will appear also upon the distribution book.
All pool agreements and leases are here that I have ever had in my
charge.
I believe copies of all mortgages are here.
Q. Including the one of February, 1886 ! A. Including the mort-
gage of February, 1886.
Commissioner ANDERSON. The mortgage that was given to secure
the last $10,000,000 issue. I think that is the date.
The WITNESS. That is the mortgage October, 1886, I think. That
is $16,000,000. They are all here, I think.
The minutes the Commission have.
PRODUCTION OF PAPERS.
The withess produced the following papers : Articles of association,
of amalgamation, and consolidation between the Western Pacific Rail-
road Company and the San Francisco Bay Eailroad Company, dated
October 28, 1869.
(It was marked Exhibit No. 1, July 26, 1887.")
The resolution agreeing to consolidate between the California and
Oregon Eailroad Company and the Yuba Railroad Company, dated De-
cember 15, 1869.
(It was marked "Exhibit No. 2, July 26, 1887")
Articles of consolidation between the Central Pacific Railroad Com-
pany and the Western Pacific Railroad Company, dated June 22, 1870.
(It was marked "Exhibit No. 3, July 26, 1887.")
Articles of consolidation between the San Francisco and Oakland
Railroad Company and the San Francisco and Alaineda Railroad Com-
pany, dated June 28, 1870.
(It was marked " Exhibit No. 4, July 26, 1887.")
Articles of consolidation between the Central Pacific Railroad Com-
pany, the California and Oregon Railroad Company, the San Francisco,
Oakland and Alameda Railroad Company, and the Joaquin Valley Rail-
road Company, dated August 20, 1870.
(It was marked "Exhibit No. 5, July 26, 1887.")
2368 U. S. PACIFIC RAILWAY COMMISSION.
ORGANIZATION OF CENTRAL PACIFIC.
Commissioner ANDERSON. It appears from the first article of Exhibit
5 of to-day that the four companies mentioned in the last-named articles
of consolidation became known by the corporate title of the Central Pa-
cific Railroad Company.
By Commissioner LITTLER :
Q. Was the first corporation, the Central Pacific Railroad Company,
organized under the statute of the State of California? A. Yes, sir.
Q. Under a special act? A. I think not.
Q. Was it under the general law ? A. I think it was under the gen-
eral law.
Q. Where is the certificate of incorporation of that company ? A. I
think I have it.
By Commissioner ANDERSON:
Q. That is filed here in your county clerk's office, and you have a cer-
tified eopy^ A. Yes, sir; filed in the office of the secretary of state, I
think.
ARTICLES OF INCORPORATION RECORDED IN MINUTE-BOOK.
By Commissioner LITTLER :
Q. Have you not in your minutes the record of the proceedings by
which you became a corporation ? A. I think the articles of incorpo-
ration are in there.
Q. In this first book of minutes ? A. I think so. I think they are
copied in there, but I am not sure of that. But I have a copy of it if
it is not here. [After examination.] No, sir ; I am mistaken.
Commissioner LITTLER. I wish you would furnish the date of the
certificate of organization of the Central Pacific Company ?
The WITNESS. I can get it now.
MORTGAGE OF JULY 5, 1865.
(The witness also produced a mortgage dated July 5, 1865, of the
Central Pacific Railroad Company, of California, to D. O. Mills and
William E. Barron, trustees. It was marked " Exhibit No. 6, Julv 26,
1887.")
By Commissioner ANDERSON :
Q. What was the amount of that mortgage of 1865 ? What was the
authorized issue? A. Series A, 3,000 bonds ; series B, 1,000 bonds.
By Commissioner LITTLER :
Q. What is the denomination ? A. $1,000 each. Series C, 1,000
bonds. Series D to be of bonds for f 1,000 each, and to include the re-
mainder of said bonds authorized to be issued on said portion of said
railroad line.
Q. How long do these bonds run, respectively, and what are they
payable in, and how much interest do they pay per annum ? A. They
were 6 per cent, thirty-year bonds.
Q. Each and all of them ? A. Yes, sir.
Q. What are they payable in, principal as well as interest? A. In
lawful money of the United States.
EDWARD H. MILLER, JR. 2369
AMOUNT OF BONDS OUTSTANDING.
By Commissioner ANDERSON:
Q. What is the amount now outstanding? A. The report of 1885
will tell. The amount of bonds to be issued was not definitely fixed by
the mortgage.
Q. But it was to be equal to the amount of Government bonds ? A.
Yes, sir.
By Commissioner LITTLER :
Q. Were all the bonds issued that were authorized by that mort-
gage ? A. Yes, sir.
Q, Are they all outstanding? A. No, sir. The amount outstand-
ing of Series A is $2,995,000; of Series B, $1,000,000: of Series C,
$1,000,000; of Series D, $1,383,000.
By Commissioner ANDERSON :
Q. Making a total of how much? A. Six million three hundred and
seventy-eight thousand dollars.
ANTICIPATED TERMS OF RENEWAL AT MATURITY.
Q. Those mature in 1895 ? A. They mature at different dates ; they
were issued at different dates.
Q. Between what years do they mature ? A. Series A matures July
1, 1895 ; Series B, C, and D mature July 1, 1896.
Q. From your knowledge of the financial markets, at what rate of
interest can that mortgage be renewed when it matures ? A. It de-
pends entirely upon the security.
Q. It is absolutely the first lien on your road, is it not? A. It is
now.
Q. Assuming that it so remains, what is your answer ? A. I think
3 J ; they would sell at par ; possibly at 3 per cent.
HOW SECURED.
By Commissioner LITTLER:
Q. How many miles of road stand as security for that indebtedness ?
A. About 125, 1 think.
Commissioner LITTLER. I wish you would give the number of miles.
The WITNESS. It is estimated here at 125 miles ; I cannot give it to
you exactly.
(The witness also produced a mortgage of the Central Pacific Bail-
road Company of California to D. O. Mills and William E. Barron,
trustees, dated January 1, 1867. It was marked " Exhibit No. 7, July
26, lbS7.)
MORTGAGE OF JANUARY 1, 1867.
By Commissioner ANDERSON :
Q. Please tell us the amount of that mortgage, and the rate of in-
terest and other particulars ? A. There was, by the mortgage, no spe-
cial number authorized ; but they were to cover the railroad line lying
eastwardly of the eastern boundary line of the State of California, and
to the extent and distance that the company might construct the said
railroad eastwardly of said eastern boundary liae.
Q. Is the amount per mile specified ? A. I do not think it is in dol-
lars and cents. It was to be to an amount equal to, but not exceeding,
2370 U. S. PACIFIC RAILWAY COMMISSION.
the amount of United States bonds which might be issued to said com-
pany under and in pursuance of said several acts of Congress hereto-
fore mentioned, and such acts of Congress as might thereafter be en-
acted.
BONDS ISSUED UNDER IT.
Q. That is sufficient. Please state from the report the amount of
bonds issued under that mortgage and the amount outstanding. A.
Series E, amount authorized, $4,000,000 ; amount outstanding,$3,997,000 ;
due January 1, 1897.
Series F, amount authorized, $4,000,000 ; amount outstanding,
$3,999,000 ; due January 1, 1898.
Series G, $4,000,000 authorized; $3,999,000 outstanding ; due Janu-
ary 1, 1898.
Series H, $4,000,000 authorized; amount outstanding, $3,999,000;
due January 1, 1898.
Series I, amount authorized, $3,525,000 ; amount outstanding,
$3,511,000; due January 3, 1898.
Commissioner ANDERSON. I notice you are giving these figures from
the report of 1885 ?
The WITNESS. Yes, sir.
Q. Has the report of 1886 not yet been printed? A. No, sir; it is in
the hands of the printer.
Q. Can you have it very shortly ? A. I think we will have it within
a few days.
Q. What is the total amount outstanding of these mortgages ? A.
$19,505,000.
ANTICIPATED TERMS OF RENEWAL AT MATURITY.
Q. Is this mortgage also an absolute first lien on that part of the
road east of California and extending to Ogden ? A. That is as I un-
derstand it.
Q. At what rate could that loan be renewed in 1898, when it ma-
tures ? A. On the same terms with the other one. Of course the time
of the bonds would make a difference.
Q. How do you mean ? A. The time for which the bonds were issued.
If they were 30-year bonds they would not sell for as much as they would
if they were 50 -year bonds.
NO DEFAULT IN PAYMENT OF INTEREST.
By Commissioner LITTLER :
Q. Has there been any default in the payment of the interest on these
series of bonds? A. No, sir.
Q. Is the interest all paid to date ? A. All that has been presented.
There are a few coupons always that do not come in at the time.
By Commissioner ANDERSON :
Q. They sell for about $113, do they not? A. I do not know.
(The witness also produced a trust mortgage, dated January 1, 1868,
of the California and Oregon Eailroad Company of California, to David
S. Dodge and Eugene Kelley, trustees. It was marked " Exhibit No.
8, July 26, 1887.")
MORTGAGE OF JANUARY 1, 1868.
Q. Please look at this mortgage and state the amount of bonds au-
thorized, the amount issued, the nature of the security, the period when
EDWARD H. MILLER, JR. 2371
due, and the rate of interest ? A. This is a mortgage made by the Cal-
ifornia and Oregon Eailroad Company. The amount authorized under it
is $6,000,000. The amount outstanding is $6,000,000. The maturity of
the bonds is January 1, 1888. The rate of interest is 6 per cent. It is
secured by a first mortgage executed by the California and Oregon Eail-
road Company upon the whole of its railroad from the Central Pacific
Eailroad in the Sacramento Valley in the State of California to the
southern boundary line of the State of Oregon.
O. That matures next January f A. Yes, sir.
Q. Has any provision been made for the renewal of that $6,000,000 1
A. No, sir $ not that I know of.
ANTICIPATED TERMS OF RENEWAL AT MATURITY.
Q. At what rate, in your judgment, can that loan be renewed, or the
amount borrowed on the same security? A. I could not give an
opinion on that.
Q. It is the first mortgage on the road, is it not ? A. Yes, sir ; there
are subsequent mortgages, though.
Q. Assuming that the mortgages Can be extended, is it your judg-
ment that they can be extended at 4 per cent., the security remaining
undisturbed and the term being as long as 30 years ? A. If they could
be; yes, sir.
LAND-GRANT MORTGAGE OF OCTOBER 1, 1870.
(The witness also produced a copy of the mortgage, dated October
1, 1870, by the Central Pacific Eailroad Company to Charles Crocker
and Silas W. Sanderson, trustees. It was marked " Exhibit No. 9, July
26, 1887.")
Q. Please look at this mortgage and state the amount of bonds
authorized, the amount outstanding, the nature of the security, the rate
of interest, and the period when due. A. The amount authorized was
$10,000,000; the amount outstanding, $4,630,000, as of December 31,
1885, and the date of maturity, October 1, 1890 ; the rate of interest,
6 per cent. The security is upon the lands granted to the Central Paci-
fic Eailroad Company, and also on the lands granted to the California
and Oregon Eailroad Company by the United States Government.
Q. As to the first land-grant mortgage, on which you state there is
still remaining due $4,630,000, as of December 31, 1885, do I under-
stand that the proceeds of all lands sold are applicable to the payment
of these bonds 1 A. Yes, sir.
Q. Is it your judgment that the amounts due on contracts for lands
sold, and the amounts to be collected for lands sold, will provide for
the amount of bonds outstanding between now and 1890, and the time
of their maturity ? A. Not in the form you put the question, I think
the lands already sold and the amounts coming from contracts.
Q. I mean will all the resources of the trustees pay those bonds -by
the time of their maturity ?
The WITNESS. The future sales of land, as well as those already
sold?
Commissioner ANDERSON. Yes.
A. I will have to make an estimate of that. It depends altogether
upon the future sales. There is not enough now in the hands of the
trustees, and amounts due on unpaid contracts, to take up the bonds
at maturity.
2372 U. S. PACIFIC RAILWAY COMMISSION.
By Commissioner LITTLER :
Q, Where do these trustees reside? A. Here in San Francisco. The
trustees have been changed by death. One of them, Mr. Sanderson, is
dead. Charles Crocker has resigned.
By Commissioner ANDERSON :
Q. Who are the present trustees ? A. William E. Brown and J. O ? B.
Gunn.
MORTGAGE OF JANUARY 1, 1872.
(The witness also produced a mortgage, dated January 1, 1872, made
by the Central Pacific Railroad Company to Eugene Kelley and Philo
C. Calhoun. It was marked " Exhibit No. 10, July 26, 1887.")
Q. Please look at this instrument and state the amount of bonds
authorized, the amount outstanding, the rate of interest, the date of
maturity, and the security. A. The amount of bonds authorized is
$7,200,000 ; the amount outstanding December 31, 1885, was $3,680,<iOO ;
it matures January 1, 1892 ; they bear interest at 6 per cent. These
bonds are secured or covered by the same security as the bonds of Jan-
uary 1, 1868.
CONFIRMATION BY CENTRAL PACIFC OF MORTGAGE MADE BY CALI-
FORNIA AND OREGON.
By Commissioner LITTLER :
Q. It is a second mortgage on the same property ? A. No, sir; it is not
exactly a second mortgage. The first mortgage provides, I think, for a
larger issue. This of January 1, 1872, is not exactly a mortgage. It is
confirmatory by the Central Pacific Eailroad Company of the mortgage
made by the California and Oregon Railroad. Company January 1, 1868.
Between the dates of January 1, 1868, and January 1, 1872, the California
and Oregon Eailroad Company was consolidated with the Central Pacific
Railroad Company. The California and Oregon Railroad having issued
$6,000,000 under the mortgage of January 1, 1868, the Central Pacific
confirmed that mortgage by an indorsement dated January 1, 1872, and
issued under that mortgage of January 1, 1868, so confirmed, the bonds
last spoken of as having been issued under the mortgage of January 1,
1872.
BUT ONE ISSUE UNDER MORTGAGE OF 1868.
By Commissioner ANDERSON :
Q, There is but one issue, then, under the mortgage of 1868? A.
Yes, sir. The whole issue was under the mortgage of January 1, 1868.
The amount heretofore given by me as having been authorized under
the mortgage of 1868, said amount having been stated at $6,000,000, was
not strictly accurate. By the provisions of the mortgage an issue at
$40,000 per mile was authorized. After the consolidation, the Central
Pacific having ratified the mortgage of 1868, and the event showing, by
the length of the line constructed, that the amount authorized, at the
rate of $40,000 per mile, would be about $13,000,000, the total authorized
issue under the mortgage of 1868, as ratified in 1872, was $13,200,000,
and the amount outstanding under that mortgage, bonds Series A and
B, was December 31, 1885, $9,680,000.
ANTICIPATED TERMS OF RENEWAL AT MATURITY.
Q. The security is the California and Oregon Railroad ? A. Yes, sir.
Q. Do you make the same answer as before in regard to the rate of
interest at which that loan could be renewed ? A. Yes, sir.
EDWARD H. MILLER, JR. 2373
Q. That you are unable to make an estimate? A. No.
Q. Why ? A. I did make an answer, after putting it hypothetically ,
that there is another mortgage, a greater mortgage, covering that same
line ; and consequently, if this was taken up a new mortgage could not
be given as a first mortgage.
Q. It could be extended, with the consent of the junior incumbrance,
could it not? A. If it could become a first mortgage
Commissioner ANDERSON. It is a first mortgage.
The WITNESS. Yes, sir ; but if the extension should be a first mort
gage, having a prior lien to every other claim, it probably could be
marketed at about 4 per cent.
BONDS PAID TO PACIFIC IMPROVEMENT COMPANY.
Q. Fas the amount varied since 1885, materially ? A. Yes, sir.
Q. How so? A. By an additional issue of bonds, Series B.
Q. Amounting to how much? A. I cannot tell without examining.
Q. So much as to exhaust the amount authorized ? A. No, sir 5 not
quite.
Q. Are those the bonds that have been paid to the Pacific Improve-
ment Company under their contract ? A. Yes, sir.
Q. Were there about $3,000,000? A. No, sir; I think not so much.
But it may be. I cannot carry those figures in my mind.
MORTGAGE OF OCTOBER 5, 1885.
(The witness also produced a mortgage, dated the th day of October,
1885, made by the Central Pacific Railroad Company to E. C. Wool worth
and S. M. Wilson. It was marked Exhibit No. 11, July 26, 1887.)
Q. Please examine this instrument and state the number of bonds
authorized, the amount outstanding, the rate of interest, the period of
maturity, and the security. A. This is the second land-grant mortgage,
dated October 1, 1885. The amount of bonds authorized under it is
$10,000,000; the amount of bonds outstanding, as of December 31, 1883,
is $5,000,000 ; it matures October 1, 1915 ; the rate of interest is 6 per
cent. The security is of a second mortgage on the land grant, subject
to the first mortgage of October 1, 1870. There are no bonds on this
mortgage outstanding at the present time.
CANCELED OF RECORD.
Q. The $5,000,000 have been retired? A. They have been retired.
There are some other things. If you desire it, I can make a statement.
By Commissioner LITTLER :
Q. Has this mortgage been canceled of record ? A. Yes, sir ; but
whether the cancellation has been recorded in all the counties in which
the mortgage has been recorded, I doubt.
Q. Has it been recorded in any county ? A. Yes, sir. The satisfac-
tion is out now, to be recorded in every county where the mortgage
had been recorded.
By Commissioner ANDERSON :
Q. The object is to cancel that mortgage, so that it will no longer form
a part of the obligations of this company, is it not? A. Yes, sir; it
has been done.
2374 U. 8. PACIFIC RAILWAY COMMISSION.
MORTGAGE OF OCTOBER 1, 1880.
(The witness also produced a mortgage made by the Central Pacific
Eailroad Company to William E. Brown and Frank S. Douty, trustees,
dated October 1, 1880. It was marked Exhibit No. 12, July 26, 1887.)
Q. Please look at this mortgage and state the amount of bonds au-
thorized, the amount outstanding, the rate of interest, the date of ma-
turity, and the security ? A. The amount authorized in the mortgage
is $16,000,000; the rate of interest is 6 per cent. ; the amount at pres-
ent outstanding, I will have to look at the books to ascertain.
Commissioner ANDERSON. We would like to know that.
The WITNESS. The amount outstanding is $7,063,000. The mortgage
runs fifty years.
Q. What is the security ? A. I can hardly give this without read
ing it in full.
SECOND MORTGAGE ON LAND GRANTS.
Q. Will you state generally ? A. It is a second mortgage on the
lands granted to the company.
Q. These are the branches west of Sacramento City, and the south-
ern branches. Is it a second mortgage on these f A. A second mort-
gage on the Central Pacific Railroad between Lathrop and Goshen, on
the California and Oregon Eailroad line.
Q. A second mortgage on the California and Oregon Eailroad line ?
A. Yes, sir ; and on the telegraph line of the company.
By Commissioner LITTLER :
Q. Is it a first mortgage on the telegraph line of the company ? A.
No, sir ; I think not. That is an individual opinion, however, that I
am giving. I suppose the first mortage covers the telegraph line. This
covers the telegraph line between Oakland Point and the town of Niles,
and between the towns of Lathrop and Goshen, and on the line of the
California and Oregon Eailroad Branch $ also all the rolling stock.
STEAMERS EMBRACED IN MORTGAGE.
By Commissioner ANDERSON :
Q. A second mortgage ? A. Yes, sir ; and the river steamers.
Q. Is it a second mortgage on the steamers, or do you not remember ?
A. I do not know whether any other mortgage covers the steamers or
not. It is upon certain tracts of lands in the county of Alameda, about
500 acres, also.
By Commissioner LITTLER:
Q. How many steamers are embraced in that mortgage ? A. There
are four ferry steamers and two river steamers.
By Commissioner ANDERSON :
Q. Does that include the big ferry boat ? A. There are more than
four ferry boats. There are two freight ferry boats that I did not in-
clude. There are six ferry boats and the transfer boat.
Q. It includes the big transfer boat? A. Yes, sir; the mortgage also
contains a list of miscellaneous land and property, the details of which
can be obtained from the mortgage.
PURPOSE TO WHICH BONDS WERE APPLIED.
Q. To what purpose were these $7,000,000 bonds applied, generally?
A. $5,000,000 were for taking up $5,000,000 of the previous second-
EDWARD H. MILLER, JR. 2375
mortgage bonds. Some of them were paid to the Pacific Improvement
Company on its contract. Some further amounts were for retiring some
bonds of previous issue.
Q. Is the balance of $8,000,000 or $9,000,000, which is authorized to
be issued by this mortgage, covered by the requirements of outstand-
ing contracts, or is it available for the general purposes of the com-
pany? A. 1 think there are no contracts that cover it all.
Q. Have you given a complete list of the mortgages ? A. I have
given all the mortgages of the Central Pacific.
Q. Audits branches?
The WITNESS. Is there a mortgage of the San Joaquin Valley .?
Commissioner ANDERSON. There is no mortgage of any railroad ex-
cept the Central Pacific and the California and Oregon.
The WITNESS. It is now the Central Pacific, between Lathrop and
Goshen.
Commissioner ANDERSON. We want a complete list of the mortgages.
MORTGAGE OF OCTOBER 1, 1870.
(The witness also produced a mortgage made by the Central Pacific
Eailroad Company to D. O. Mills and W. C. Ealston, trustees, dated
October 1, 1870. The paper is marked " Exhibit No. 13, July 26, 1887.")
Q. Please look at this instrument and state the number of bonds au-
thorized, the number outstanding, the rate of interest, the date of ma-
turity, and the security ? A. The amount authorized is $6,080,000 ; the
amount outstanding $6,080,000: due October 1,1900; interest, 6 per
cent. The security is the railroad line called the u San Joaquin Valley
Branch."
Q. Is it a first mortgage on that property? A. Yes, sir.
MORTGAGE OF OCTOBER 26, 1864.
(The witness also produced a mortgage by the Central Pacific Eail-
road Company to Edgar Mills and James A. Donahue, trustees, dated
the 26th day of October, 1864. It was marked " Exhibit No. 14, July
26, 1887.")
Q. Please look at this instrument and state the number of bonds
authorized, the number outstanding, the rate of interest, the date of
maturity and the security. A. The number of bonds authorized was
$1,500,000 ; the amount outstanding December 31 was $284,000. They
matured July 1, 1884. The rate of interest was 7 per cent. It was
secured on the railroad line of the company from Sacramento to the
eastern boundary line of the State, the fixtures, rolling stock, &c.
EXTENSION OF BONDS BY MR. HUNTINGTON.
Q. Can you explain why those bonds are outstanding at 7 per cent,
after maturity ? A. Yes, sir. They were extended by Mr. Hunting-
ton, some three or four hundred thousand dollars of them, with the
consent of the holders, for three years, I think."
Q. Do you know who the holders are, or the principal portion of
them ? A. No, sir; I do not know the holders of a single one.
Q. Were they extended with the consent of the Central Pacific Eail-
road Company ? A. No, sir ; not by any acts of the board of directors,
except Mr. Huntington's act as agent and attorney.
Q. Who would know the holders of those bonds? A. Mr. Hunting-
ton, probably,
2376 U. S. PACIFIC RAILWAY COMMISSION.
Q. Who pays the coupons ? A. Mr. Huntington arranges for them
to be paid by some bank in New York.
Q. Do yoii know whether he himself is the holder of bonds ? A. I
do not know positively, but I do not believe he is the owner of a single
one. I do not understand that he is.
MORTGAGE OF OCTOBER 23, 1865.
(The witness also produced a mortgage of the Western Pacific Rail-
road Company to George T. M. Davis, dated October 23, 1865. It was
marked "Exhibit No. 15, July 26, 1887.")
Q. Please look at this instrument and state the amount of bonds au-
thorized, the amount outstanding, the rate of interest, the time of ma-
turity, and the security. A. There are $111,000 outstanding; there
are $111,000 Western Pacific bonds, Series A, reserved by the company
to take up or exchange for these $111,000 bonds issued December 1,
1865.
MEANS PROVIDED TO TAKE UP THE $111,000 OUTSTANDING BONDS.
Q. Under the mortgage of what date? A. Under the mortgage of
December 1, 1865. It was an old issue, we call it. When the new
bonds were issued under another mortgage, they were all taken up
from time to time, except this $11 1,000. They become due December 1,
1895, and are drawing 6 percent, interest. The bonds to be exchanged
are also drawing 6 per cent, interest, and will be due July 1, 1899.
Q. Do I understand that the bonds to be exchanged under the mort-
gage of December 1, 1865, are included in the bonds which you have de-
scribed as outstanding under the mortgage of that date? A. No, sir :
under the mortgage of Decemb-. r 1, 1865, the only outstanding bonds
are $111,000. Under the mortgage of July 1, 1869, there are $111,000
retained by the company, to be exchanged at any time that the holders
of these $111,000 will exchange at par.
Q. My question is whether this amount of $111,000 is included among
the bonds issued under the mortgage of October 28, 1809, which you
have described as outstanding under that subsequent mortgage ? A.
No.
Q. As to the bonds which are retained for the purpose of being taken
up in exchange on the surrender of the $111,000 issued under the mort-
gage of 1865 1 ask you whether you describe those subsequent bonds as
a part of the outstanding issue of the subsequent mortgage or not. A.
No, sir.
Q. Those $111,000 are secured, then, by a mortgage of the Western
Pacific company ? A. Yes, sir.
MORTGAGE OF OCTOBER 28, 1869.
(The witness also produced a mortgage made by the Western Pacific
Eailroad Company toD. O. Mills and William E. Barrou, dated October
28, 1869. It was marked " Exhibit No. 16, July 26, 1887.")
Q. Please look at this instrument and state the amount of bonds au-
thorized, the amount outstanding, the rate of interest, the date of ma-
turity and the security? A. The amount authorized under that mort-
gage was $2,735,000 ; the amount outstanding is in two series ; the
amount outstanding is $2,624,000 ; it matures July 1, 1899 ; the mort-
gage covers the line of the Western Pacific Kailroad.
Q. What is the rate of interest ? A. The rate of interest is 6 per
cent.
EDWAED H. MILLER, JR. 2377
THE SAN FRANCISCO, OAKLAND AND ALAMEDA MORTGAGE.
Q. Have you now completed the list of mortgages ? A. These are all
the mortgages of the Central Pacific that I can find. There is one mort-
gage of the San Francisco, Oakland and Alameda line which I do not
find.
Q. Can you give the particulars of that mortgage? A. Yes, sir. The
amount authorized was $1,500,000; the amount issued was $587,000.
It matures July 1, 1890. The interest is at the rate of 8 per cent.
UNPAID TAXES.
Q. Are there any other liens of a nature different from mortgage on
the property of the company, such as judgments, mechanics' liens, or
special contracts? A. There are no judgments, no mechanics' liens.
There is a question about some unpaid taxes.
Q. Is there-a suit pending about them ? A. I do not know the status
of it.
Q. How much is involved ? A. I do not know that.
Q. Does the company deny its liability for the taxes ? A. Yes, sir.
By the CHAIRMAN :
Q. What taxes are they ? The taxes of the State and counties.
Q. For how many years ? A. There is a law now that I cannot ex-
plain that I do not comprehend.
By Commissioner ANDERSON :
Q. Who can give us the explanation ? A. The law department.
Q. What attorney shall we call on ? You have five or six attorneys.
A. Only one has had anything to do with it.
Q. Who is that ? A. Colonel Haymond.
Q. Is he now in the city? A. Yes, sir. He is sick. I think Mr. E.
B. Ryan, who has an office in this building, can give that information.
STOCK ISSUED AND UNISSUED.
Q. What is the total authorized issue of stock ? A. $100,000,000.
Q. What is the total stock outstanding to date ? A. $08,000,000.
Q. Where is the balance, $32,000,000 ? Is it unissued ? A. Unissued.
Q. Is the entire $68,000,000 outstanding ? A. No, sir ; there is about
$704,000 of it held in trust for the company, not actually sold or issued.
I do not like to state it from memory.
Commissioner ANDERSON. The amount, as appears from your report
of 1885, if I remember right, is $54,000,000 ?
The WITNESS. No, sir; it was $59,275,500.
Q. In the 'report of 1884, then, it was $54,000,000. To what purpose
was that issue of $5,000,000 applied ? A. That is something that I
cannot answer.
By the CHAIRMAN :
Q. Who can answer it? A. No living man.
Commissioner ANDERSON. Oh, I can answer it by and by.
The WITNESS. It is impossible. You may find out, to satisfy your-
self.
Q. Who was the last dead man that could have answered it ? A.
There never has been a man living that could answer it ; not for this
company or for any other. In 1884 the amount was $59,000,000.
2378 U. S. PACIFIC EAILWAY COMMISSION.
Commissioner ANDERSON. There were $4,000,000 or $5,000,000 in the
treasury.
The WITNESS. I think you are mistaken.
THE LAST ISSUE TO WHAT APPLIED.
Q. What was the last issue of your stock ? A. The last issue was
$8,000,000.
Q. What was the date of the issue ? A. The latter part of 1886, or
the first of 1887.
By Commissioner ANDERSON :
Q. Do you not know to what purpose that was applied ? A. Yes, sir.
Q. To what purpose was it applied? A. That was applied in pay-,
ment of or on account of the contract of the Pacific Improvement Com-
pany.
Q. Was it 80,000 shares of stock ? A. Yes, sir.
By the CHAJRMAN :
Q. What was the date of the prior issue ? A. I cannot tell you that
without getting the information.
Q. Did you ever make application to Congress for authority to issue
stock 1 A. No, sir ; not that I am aware of.
GUARANTEE OF BONDS OF BRANCH ROADS.
By Commissioner ANDERSON:
Q. Has the Central Pacific guaranteed the payment of any bonds
other than its own bonds'? I mean any bonds issued on any of its
branches ? A. Yes, sir. Oh, on any of its branches ?
Q. What bonds has it guaranteed the interest of, or the principal?
A. I think there is a statement in that report, or some report.
Q. Will you find it, please ? A. I doubt if it is in the annual re-
ports. It appears in the report made to the railroad commissioner, I
think, or the railroad auditor.
Q. In what year? A. In every year. I can ascertain that.
Q. Please make a memorandum, and ascertain the guarantees given
by the Central Pacific of the interest or principal of mortgages other
than those executed by itself? A. I will have to take time to ascertain
that.
The CHAIRMAN. You can give it at any time.
AMOUNT DUE SOUTHERN PACIFIC.
Q. Among other liabilities of this com pany, apart from the capital
stock and the funded debt and the Government bonds, I find, in your
balance-sheet of 1885, an amount due the Southern Pacific Company of
$3,550,574.76. Where can we find the account from which that balance
was derived ? A. From the books of the company.
Q. I mean, what account ? The account between the Central Pacific
and the Southern Pacific? A. The account headed the " Southern Pa-
cific Company." The ledger account.
Q. Can you state generally from what subject that indebtedness
arises ? A. fo, sir ; not without stating the account in full.
Q. It is an account of the transactions and the tra flic between those
two companies ? A. The transactions between those two companies.
EDWARD H. MILLER, JR. 2379
OUTSTANDING OBLIGATIONS.
By the CHAIRMAN :
Q. What obligations in the shape of notes has the company outstand:
ing for borrowed money 9 A. I think they have a note of $2,500 out-
standing ; a note to one of its former employe's.
Q. Are there any other obligations of that kind due-bills and notes
for borrowed money ? A. Except for the Southern Pacific Company,
I do not think there is anything else. There are two or three small
items, which do not amount in the aggregate to $250,000 now. This is
December 31, 1885, 1 understand the chairman to ask now.
Q. I ask of this date. A. December 31, 1885, in the account of the
old company, the operations of the old company had not been settled
up. They are in process of settlement, month by month, until now of
bills payable I think the only note out is $2,500. There may be another
one, possibly.
Commissioner ANDERSON. If you will furnish us a more recent bal-
ance-sheet than this we will be guided by it.
The WITNESS. I hoped to have the report of 1886 to-day.
Commissioner ANDERSON. Please proceed with the identification of
your papers.
LIST OF OFFICERS AND DIRECTORS HUNTINGTON POWERS OF ATTOR-
NEY, ETC.
The WITNESS. The next that I find that was asked for is a list of the
officers and directors.
(The witness produced a list of the officers and directors, commencing
with those elected April 30, 1861, and ending with those elected April
14, 1887. It was marked "Exhibit No. 17, July 26, 1887.")
Q. What is the next ? A. The powers of attorney granted to Mr.
Huntington. I think there are some more scattered among these papers.
(The witness produced nineteen powers of attorney from the Central
Pacific Railroad Company to C. P. Huntington. They were marked, re-
spectively, Exhibits 18 to 36, both inclusive, July 26, 1887.
The witness produced the original certificates of incorporation or
articles of association of the Central Pacific Railway Company, dated
June 28, 1861. It was marked " Exhibit No. 37, July 26, 1887.")
The WITNESS. I have here three overcharge and rebate books and
one distribution book, as samples.
CONSTRUCTION CONTRACT WITH CYRUS COLLINS & BROTHER.
(The witness also produced the construction contract for sections 19
and 20, between the Central Pacific Railroad Company and Cyrus Col-
lins & Brothers. It was marked " Exhibit No. 38, July 26, 1887.")
By Commissioner ANDERSON :
Q. Is this the general form of contract that was adopted with refer-
ence to the different small contracts made at the same time ? A. Yes,
sir.
Q. What is the date of that ! A.' It is dated September 26, 1863, at
Sacramento.
Q. Do you know whether the first contract with Crocker & Co. was of
that same form ? A. Yes, sir.
P B VOL iv 4:
2380 U. S. PACIFIC RAILWAY COMMISSION.
Q. Do you know whether the second contract with Crocker & Com
pany was of that general form I A. It was in this general form ; that
is, with that kind of specification attached ; but whether it was written
out in detail, as this one is, I do not remember. I think it was.
MODE OF PAYMENT OF CONTRACTS.
Q. Do you know whether the mode of payment, as to whether it was
to be money or in bonds or stock, was the same in the Crocker con-
tract ? A. This was a part for stock, I think.
Q. What is your answer ? A. I do not know, but I can easily ascer-
tain from the payments made, as they appear on the books.
Q. Do you know whether that general form of contract was also used
in the dealings between the Central Pacific and the Contract and Fi-
nance Company f A. I do not remember whether it was or not.
Q. Did you ever read that Contract and Finance Company contract ?
A. I suppose I did. I do not remember to have ever read it. I must
have read it, so I can say I did.
OTHER LEASES OF CENTRAL PACIFIC.
(The witness also produced twenty-two leases between various rail,
road companies and the Central Pacific Company. They were marked
respectively, Exhibits 39 to 60, both inclusive, July 26, 1887.)
The WITNESS. All of these leases are now canceled, except one,
possibly, the Stockton and Copperopolis. I do not remember whether
that was canceled or not.
POOL AGREEMENTS.
(The witness also produced a pooling agreement with the Atlantic
and Pacific Company, to take effect October 1, 1884, and to terminate
on ninety days' notice, indorsed, " Copy of notice, to terminate February
17, 1886." lib was marked Exhibit No. 61, July 26, 1887."
(The witness also produced a pooling agreement between the Central
Pacific, Southern Pacific, and South Pacific Companies, dated Decem-
ber 31, 1879. It was marked " Exhibit No. 62, July 26, 1887.")
By the CHAIRMAN:
Q. They are not all the pools; there are others that you cannot find?
A. No, sir; they are not all. There are other pooling agreements, but not
in my possession. I produce these as the only ones I found in my vault.
Commissioner ANDERSON. The Huntington pool is the one that I
have referred to, at page 527 of volume 1.
The WITNESS. Yes, sir; it is put in 'the minutes.
By Commissioner ANDERSON :
Q. Do you know whether the other pools that you have not found are
also entered at length on the minutes? A. No, sir; I do not think they
are. 1 did not remember that this one was.
By the CHAIRMAN :
Q. Who made your pool contracts? A. I think Mr. Stubbs, the gen-
eral traffic agent, usually does.
Q. Would he have a memorandum or knowledge of all the pools en-
tered into by the company? A. Yes, sir.
E. H. MILLER, JR.
The Commission then adjourned to Wednesday, July 27, 1887, at 10
o'clock a. m.
ALFRED A. COHEN. 2381
OFFICES OF THE CENTRAL PACIFIC EAILROAD COMPANY,
San Francisco, Cal., Wednesday, July 27, 1887.
The Commission met pursuant to adjournment, all the Commissioners
being present.
ALFEED A. COHEN", being duly sworn and examined, testified as
follows :
By Commissioner ANDERSON :
Question. What is your occupation? Answer. I have practiced law
for a great many years.
Q. In San Francisco ? A. In San Francisco ; yes, sir.
Q. Since when? A. From 1857, 1 think, until I was prevented by
sickness from continuing my practice.
Q. Where do you now reside ? A. I now reside in the city of New
York.
PROFESSIONAL EMPLOYMENT BY RAILROAD.
Q. Have you ever held office under the Central Pacific Railroad Com-
pany, or any of its branches ? A. I have not held any office that I re-
member ; but I have been retained by them in my profession from time
to time.
Q. Are you at present employed as counsel or attorney for the Cen-
tral Pacific Eailroad Company? A. Not for the Central Pacific Bail-
road Company, but I have had some business for the Southern Pacific
Company.
Q. Are you the general counsel for the Southern Pacific Company ?
A. No, sir; though my past relations with them are such as to prevent
my accepting any retainer against them.
LITIGATION AGAINST THE CENTRAL PACIFIC.
Q. With what litigation against the Central Pacific Eailroad Com-
pany have you been connected in the past ? A. 1 brought one or more
suits against the Central Pacific Eailroad Company some years ago on
behalf of some of the original stockholders, for an accounting.
Q. Will you please give the names of the stockholders ?
The WITNESS. Do you wish me to give the names of the plaintiffs?
Commissioner ANDERSON. Yes, sir.
The WITNESS. One was named John E. Eobinsou.
Q. Of San Francisco? Does he live here? A. Yes, sir. Another
was Anthony Coolot, of Sacramento. Then there was another man in
Sacramento whose name I have forgotten.
Q. Were there others ? A. There were others, but I cannot remem-
ber their names.
Q. Were there any suits brought by some of the counties of this
State ? A. Yes, sir ; there were several. I was attorney for the county
of San Joaquin in a suit which it brought against the Central Pacific
Eailroad Company.
Q. Had you any connection with the suit of Stewart vs. Huntington?
A. Yes, sir. On behalf of Evarts, Southmayd & Choate I took the
depositions that were taken in California,
THE ROBINSON SUIT.
Q. How far did this Eobinson litigation go? Was it tried? A. It
did not eonie to a final trial. It resulted in a compromise.
2382 U. S. PACIFIC RAILWAY COMMISSION.
Q, Was any evidence taken before a master or a referee ? A. Yes ;
evidence was taken under the provisions of the civil code of this State,
which provides for the examination of witnesses previous to trial.
Q. What was the name of that referee f A. 1 think that it was a no-
tary public named E. Y. Joice.
Q. Is that evidence on file with the records of the court, or is it in
your possession ? A. That I could not tell you.
SAN JOAQUIN COUNTY SUIT.
Q. As to these other suits, how far did they progress ?
The WITNESS. Do you have reference to the suit of the county of
San Joaquin ?
Commissioner ANDERSON. Yes, sir.
The WITNESS. That resulted in a compromise also.
Q. Was any evidence taken in that suit ? A. My impression is that
there was not. I did not bring that suit myself. It was brought by
other counsel. A demurrer had been filed to the complaint, and the de-
murrer had been overruled. The defendants had answered. When I
was employed, the first thing that I did was to examine the complaint,
and upon looking over it I concluded that it was not safe to go to trial
upon it. It would be a long and expensive trial ; and I found that there
were not the necessary parties to the suit, and I got leave to add the
necessary parties. Then the attorneys for the defendants demurred on
the part of the new parties, and I in substance confessed the demurrer,
wishing to get a chance to amend the complaint. I filed an amended
complaint, bringing in all such parties as I thought were necessary
parties defendant. I think that a new demurrer was filed, setting up
the statute of limitations and other defenses. The lower court sustained
the demurrer. I declined to amend, and judgment was rendered against
the county. Then we argued it in the supreme court of this State, and
there appearing to'be some difference of opinion there, a reargument
was ordered. Before the reargument took place, I made a settlement
of the case with the defendants.
OBJECT OF SUIT.
Q. What was the general object of the suit brought by the county of
San Joaquin against the Central Pacific Railroad Company ? A. The
county of San Joaquin, under an act of the legislature passed, I think,
in 1863, had subscribed for the stock of the Western Pacific Eailroad
Company, and had issued its bonds in payment of that stock. The act
authorizing the subscription provided that the stock should not be sold
unless the sale was ratified by the vote of the people, and it provided
further that three fourths of the voters should consent to it. The board
of supervisors of San Joaquiu County, without any submission to the
people, sold the stock to one Charles McLaughlin. Mr. McLaughlin
sold it to the Western Pacific Eailroad Company, I think, or to some of
the parties connected with the Western Pacific Company. No payment,
if I remember rightly, had been received by the county. Some of its
bonds, I think, had been deposited in escrow with a banker of Stockton.
WITNESS'S MEMORY IMPAIRED BY PARALYSIS.
Q. Do you mean that no payment had been made by McLaughlin to
the'county ? A. I think not. Right here I wish to say, in justice to my-
self, that I am giving you the benefit of my memory as to things which
ALFRED A. COHEN. 2383
are matters of record, and the record certaiiily would be the best evi-
dence; and, in addition to that, I am unfortunately laboring under the
disability which has resulted from an attack of paralysis, which has
somewhat impaired my memory and recollection as to details. After
that the Western Pacific was consolidated with the Central Pacific.
Then, again, the new corporation, known as the Central Pacific Rail-
road Company, was consolidated with the California and Oregon Railroad
Company, the San Joaquin Yalley Railroad Company, and the San Fran-
cisco, Oakland and Alameda Railroad Company. The county of San
Joaquin, after a change of government, concluded that it was entitled
to have its stock, or stock in the consolidated company, and brought a
suit to establish its right to this stock, and for an accounting for past
earnings ; that was the suit that I took hold of, and which I settled by
a compromise.
Q. Between what years did the litigation continue ? A. I think that
the county of San Joaquin brought its suit in 1877 or 1878. I think that
I was employed about 1880. I think that it ran for about two years or
more.
RECORD OF SAN JOAQUIN CITY SUIT.
Q. Is the record at the Supreme Court on appeal in print? A/ Yes,
sir ; the Supreme Court did not decide the case, and the record, so to
speak, was withdrawn.
Q. The record contains the pleadings ? A. Yes, sir.
Commissioner ANDERSON. The Commission would like a copy of it,
if you have one at your command.
The WITNESS. I do not know that I have it. If I have I will give it
to you. I have not paid much attention to these matters during the
past few years.
PLEADINGS IN THE ROBINSON CASE.
Q. Was the Robinson case the suit of a stockholder asking; for an ac-
counting of the earnings of the company substantially ? A. Yes, sir.
Q. Can you tell us where we can see the pleadings in that case? A.
No, sir ; I cannot.
Q. The pleadings are substantially a copy of the same pleadings that
were filed in the Brannan case, are they not?- A. Perhaps they same
with a few little changes. I perhaps may have varied the complaint
somewhat, as no two men ever did draw complaints alike.
Q. Can you tell us who the notary was who took this evidence in the
Robinson case? A. I think that it was Mr. Joice.
n Q. Residing here ? A. Residing in San Francisco.
Q. And you yourself do not know where that evidence now is? A.
I could not say" positively. It may have been filed or I may have it at
my office. I cannot tell which. It was settled a long time ago.
Q. Will not your register show where the evidence is? A. It may,
and I think perhaps it will. Inasmuch as the case did not come to
trial, however, I doubt whether the evidence was ever placed on file in
the court ; such evidence as was taken was simply in the form of dep-
ositions to be used if the parties were not present at the trial.
Q. Was evidence taken in any of these other litigations calling for
an accounting ? A. I cannot remember whether we took any evi-
dence in the^San Joaquin case or not; I should very much doubt
whether I did, the litigation being s confined to a demurrer, but still I
might have done so.
Commissioner ANDERSON. You have mentioned one or two other suits
brought by stockholders whose names you do not recall.
2384 U. S. PACIFIC RAILWAY COMMISSION.
The WITNESS. No, sir ; they were all in one suit.
Q. All in one suit ? A. Yes, sir.
Q. Were all of them included in what is known as the " Robinson
suit"? A. They were all brought in as stockholders ; the suit was
brought by Robinson and others on behalf of themselves, and all others
who might choose to come in.
Q. During what years did that litigation continue ? A, It did not
last very long.
Q. Was it prior to the San Joaquin County suit? A. Oh, yes ; it
was some years before that ; I was going to say that it is my impress-
ion that the suit was commenced in 1876 ; I do not think that it lasted
very long ; I think that it was settled in 1877.
CONTRACT WITH CONTRACT AND FINANCE COMPANY A SUBJECT OF
INQUIRY.
Q. Had you any connection at all with the Colton suit ? A. Yes, sir.
Q. On whose behalf did you act in the Golton suit? A. For the de-
fendants.
Q. In the course of any of these litigations was the contract known
as the contract of the Central Pacific Railroad Company with the Con-
tract and Finance Company a subject of examination? A. Yes, sir.
Q. Frequently? A. Yes, sir.
Q. Did you ever see that contract itself? A. I am pretty sure that
I did not.
Q. Did you ever see a copy of it? A. I think that I never did see it.
I never saw the contract or the books.
Q. Were the terms of that contract substantially disclosed, according
to your recollection? A. My impression is that at some time or other
I had an idea what the terms were, but if I did it was shown on the
record. I could not remember now. I think that I tried to find out
what they were, but never could find anybody who could tell me. The
only man that I perhaps might have got it from is now dead. I do not
remember that I ever examined him or that I could ever get him just at
the time that I wanted him. This was Mark Hopkins. I always ex-
pected to get it from him at some time or other, but I do not remember
that I ever got him on the witness stand.
ITS TERMS NOT KNOWN.
Q. Do you know who drew that contract ? A. I do not know any-
thing about it.
Q. The conclusion you reached as to its terms, from such evidence as
you took, would hardly appear in the record, though it might in the
briefs. Can you refer us to any paper which would have or contain such
conclusions ? A. I will say this from my recollection that I never did
know what the terms were. I have hunted for that contract, and have
endeavored to gain some information as to its terms as I have for many
matters of history. I think that the terms of that construction contract
with the Contract and Finance Company, like the name of the man with
the iron mask, are fated to go down to posterity without discovery. I
tried for years to learn something about that contract, and never could
succeed. I had something more than a professional interest in it. I
wanted to get it, but never did.
NEVER COULD PRODUCE ANYBODY WHO HAD SEEN IT.
Q. What officers of the company did you examine with reference to
it, or with whom did you converse regarding it? A. I think that I ex-
ALFRED A. COHEN. 2385
ainined Leland Stanford, C. P. Huntington, Charles Crocker, and E. H.
Miller, jr. I sat here yesterday and listened to your examination of Mr.
Miller, and it carried me back almost to my boyish days. I have been
examining him myself on those subjects ever since I was a young man.
Q. Was substantially the statement made then, that the paper was
missing or mislaid or could not be found, the same statement that you
have heard so many times? A. I never could produce anybody who
ever had seen it. I would say that my impression was that I came to
the conclusion before I got through that there never was any such pa-
per ; but that it was a verbal contract. I think that that was the con-
clusion which I came to at that time.
MR. HUNTINGDON'S STATEMENT IN REGARD TO IT.
Commissioner ANDERSON. Mr. Huntingdon's statement on examina-
tion in New York was that the terms of the contract called for substan-
tially $64,000 in bonds and about $36,000 in stock per mile.
The WITNESS. Was that in reply to the examination which I took ?
Q. It was in reply to the examination which we took in New York.
Does that substantially agree with the approximation which you
reached, according to your recollection ? A. I cannot tell you now.
Will you please read those figures again ?
Q. Sixty-four thousand dollars in bonds and $36,000 in stock per
mile ? A. I could not tell you about that.
CONTRACT WITH WESTERN DEVELOPMENT COMPANY A SUBJECT OF
INQUIRY.
Q. Did you have occasion, in the course of your litigations, to make
any examination with reference to the contract of the Western Devel-
opment Company ? A. I think that the Western Development Com-
pany was formed after my examination in the Robinson case ; and I
think that at the time I examined them in that case the Western De-
velopment Company could not have done much, if any, business, and
yet I might have asked them about it. It would have been better if
you had called my attention to the questions which you proposed to put
to me, and I would have prepared myself.
Q. The Western Development Company was formed in 1876, was it
not ? A. This Robinson suit was brought in 1876.
Q. Then your examination did not come down to the time of! the
Pacific Improvement Company that was subsequent to the Western
Development Company? A. I know nothing about the Pacific Im-
provement Company except such information as I got in the Col ton
case as counsel for the defendants.
SUBJECTS OF INVESTIGATION IN THE ROBINSON SUIT.
Q. Did the subject of the first construction of the California and Ore-
gon road between Rose ville and Bedding enter into any of these suits was
that a matter of investigation in the Robinson suit ? A. It is impossi-
ble for me to say. It might, or it might not ; I think not, though.
Q. What other subjects which are disclosed in the complaint refer-
ring to the Brannan complaint as the basis of the Robinson complaint
were the subjects of investigation in the Robinson suit as far as your
evidence went ? A. I started in to try and increase the value of the
stock of the plaintiffs in that case. I tried to prove what the road had
cost and what it should have cost, expecting to show the profit that
had been made in construction. The examination tended to that end.
2386 U. S. PACIFIC RAILWAY COMMISSION.
Q. Was the subject of the ownership of stock in the Contract and
Finance Company a matter of investigation in your suit? A. I think
that it was ; I am pretty sure that it was.
STOCKHOLDERS OF CENTRAL PACIFIC AND CONTRACT COMPANIES.
Q. And also the votes by which the transactions between the Central
Pacific Kailroad Company and the Contract and Finance Company were
determined ? Those votes must have been the subject of consideration,
must they not ?
The WITNESS. What votes ?
Commissioner ANDERSON. The votes of the board of directors in or-
der to determine whether the persons who voted the contracts were the
same persons who were members of the Contract and Finance Company,
and received all the benefit of them.
The WITNESS. It seemed to be admitted, I think, that the principal
stockholders of the Central Pacific were the principal stockholders of
the Contract and Finance Company. I never heard any dispute on that
point.
THE AGREEMENT BETWEEN THE COMPANIES.
Q. Did you ascertain by whom the agreement with the Contract and
Finance Company was signed on behalf of the Central Pacific Railroad
Company?
The WITNESS. You mean for the construction of the road f
Commissioner ANDERSON. Yes.
The WITNESS. No ; I never did. My impression is that there was no
such paper.
Q. You do not think that it was in writing at all ? A. My impres-
sion is that it was a matter of agreement shown on the minutes, or in
some similar mariner; but I know that I came to the conclusion from the
examination which I made from time to time and from what I per-
sonally knew of the way in which the business was done that it was a
matter of agreement. I say that is just the impression which it leaves
on my mind at this moment. As I have said before, Iwould not rely
in a matter in which I was not greatly interested on my memory. There
was a time, three years ago, when I had no memory and no speech.
My memory was all gone and my speech was all gone. That interferes
a great deal with me in my recollection of things that have taken place
in a great many years.
Commissioner ANDERSON. You appear to have greatly recovered,
OFFICERS OF CONTRACT AND FINANCE COMPANY.
The WITNESS. I am a great deal better than I ever expected to be.
Q. Did you ever examine any of the officers of the Contract and Fi-
nance Company with reference to their accounts I A. I examined Mr.
William E. Brown.
Q. He was the president of that company, was he not ! A. He was
the secretary, I think, and I examined him.
Q. What other gentlemen were connected with their books ? Was
Mr. Douty ? A. So. Mr. Douty was not connected with the Contract
and Finance Company, I think.
Q. Was he connected with the Western Development Company ?
A. I think that he was with the Western Development Company.
Q. Was Mr. Gunn connected with these matters ? A. Mr. Gunu was
at that time, I think, not connected with the Contract and Finance
ALFRED A. COHEN. 2387
Company. I think that be was cashier or secretary or something of
that kind with the California Pacific Railroad Company.
Q. Are there any other persons connected with the affairs of the
Central Pacific Railroad Company or of the Contract and Finance Com-
pany besides those whom you have named who, in your judgment,
would have any knowledge relating to this paper the contract between
the two companies or to the affairs of the Contract and Finance Com-
pany in connection with the Central Pacific Railroad Company ? A.
My recollection is that Mr. Brown had a staff of clerks, two or three of
them, and that they constituted pretty much the Contract and Finance
Company. I never was brought in contact with anybody else. Mr.
Brown appeared to be the manager of the concern the head and the
board of directors.
PAPERS, CONTRACTS, AND BOOKS.
Q. Were any of the papers or contracts or books of that company
produced on this trial ? A. No ; I think not. I do not think that I
ever saw a paper connected with the Contract and Finance Company.
Q. What answer was made in regard to the whereabouts of those
books and papers? A. I cannot say. Mr. Brown was the active custo-
dian of those papers, and sometime, I think in 1873 or 1874, Mr. Brown
went to Europe and he turned over, I think, all the papers and books
to his successor, and it is my information and belief that he never had
anything to do with that company after that time. I never was able to
get his successor on the stand in order to examine him. I tried to sub-
poena him in various ways, but I never could find him when I wanted
him.
Q. What was that gentleman's name? A. John Miller.
Q. Do you know where he resides now ? A. I do not.
NEVER COULD BE HAD.
Q. Have you any other information relating to these missing papers
of the Contract and Finance Company, and also to its contract with the
Central Pacific Railroad Company that you can give us for the purpose
of enabling us to attempt to discover the whereabouts of these papers ?
A. It would be impossible for anybody to have got that information.
I had interests to spur me on to get all this information for myself, if
anybody could have got it. I never was able to get it, and never could
get it. If these books and papers were in existence, I never could get
at them.
COUNSEL IN COLTON CASE.
Q. What other counsel in San Francisco have been interested in
similar suits, or in any suits that required the production of these
papers 1 A. A great many have been interested on the side of the de-
fendants, on the side of the railroad company, but I do not know of
anybody particularly who has been interested on the other side.
Q. How about Mr. Hayes ? A. He was interested in the Colton case.
In the Colton case there were Judge Stanley, Mr. Hayes, and Judge
Stoney, and also the late Chief Justice Wallace, a very active man.
Q. Is there anyone who was with him in his office who could give us
any information ? A. I am sure that I do not know. I was on the
other side of the Colton case.
Q. Those are the only other counsel you think of, then I A. There
were a great many counsel in that case. Mr. Delmas was one.
2388 U. S. PACIFIC RAILWAY COMMISSION.
Q. All were gentlemen who would be more or less active in the pur-
suit of papers ? A. Yes, sir. I think that Mr. Hayes was the principal
one. I remember that they applied to us for leave to examine all these
records, and they were thrown open to them. They had experts down
here for months, examining everything pertaining to the company;
nothing was kept back from them.
SUIT BY CHARLES MAIN AND OTHERS.
Q. Since the Colton case, has there been any litigation against the
Central Pacific Railroad Company involving any of these questions? A.
There was a suit brought by Charles Main and others, with respect to
the transactions that took place in the acquiring of the stock of the
California Pacific Eailroad Company. I believe that I brought that
suit. There was a demurrer interposed to the complaint and I argued
the demurrer. I then removed from here to New York and gave it up.
Q. Who took charge of the suit after you left ? A. Mr. E. J. Prin-
gle, and there was a very eminent counsel who came from New York
to argue it a Mr. L. E. Chittenden.
Q. Have you now stated all the counsel who, in your judgment,
would have any knowledge as to these papers? A. I do not know
what knowledge they have as to the papers.
Q. Or who have made any effort to find the papers ? A. I think that
I have. There may be others.
Q. Are there any other persons who may not have been lawyers in
these suits who would have any interest in getting at these facts, and
who made efforts to find these papers ? A. No, sir ; as I say, we had
experts from time to time. Those gentlemen all had experts ; and they
had just the same chance to go through the records and see what there
was.
NO ACCOUNTING REACHED SHOWING PROFITS OF CONSTRUCTION.
. Q. In none of these suits, if I understand you correctly, was any
accounting gone through with from which a result could be reached show-
ing whether the large stockholders in the Contract and Finance Com-
pany had or had not made large sums of money out of tjie Central Pa-
cific Eailroad Company ? A. No ; I do not think that they ever got to
that point. In the Epbiuson case, as far as I was concerned, the plaint-
iffs were offered a price which they were willing to take, and they took
it. In the San Joaquin case, I made up my mind that it was better for
the county to get what it could. There were so many dubious points of
law involved there that I did not like to refuse a good offer. The peo-
ple up there wanted a new court house, and they thought that they
could get money enough out of this suit to build it, and were very glad
to make a settlement.
THE LAMBARD AND BRANNAN SUITS.
Commissioner ANDERSON. The Brannan case and the Lambard case
were also settled, I believe.
The WITNESS. I had nothing to do with those cases. I believe that
I was defendant in both of them ; but I do not think that any papers
were ever served upon me.
Q. By reason of your connection with what? A. With the San
Francisco, Oakland and Alameda Eailroad Company.
Q. But was not the fact of the adjustment and settlement made in
the Lambard and Brannan suits entirely developed and proved in the
ALFRED A. COHEN. 2389
Stewart case, with which you were connected afterwards ? A. I was not
connected with the Stewart case, except to take the depositions to
which I have heretofore referred. When I went to New York, Messrs.
Choate and Evarts and Southmayd wished to employ me, but I declined.
Mr. Huntingdon then offered to employ me on the side of the defend-
ants, but I declined to do anything in the matter, as my health was such
that I could not take up any new business at that time.
SETTLEMENT IN ROBINSON CASE.
Q. What was the nature of the settlement in the Eobinson case?
A. They sold the stock and the suit was dismissed.
Q. I mean what were the terms of settlement unless you have some
reason for not stating them ? A. I have no reason at all. It would be
difficult to say what was paid for the stock and what was paid to coun-
sel. There were three counsel in the case on the side of plaintiffs.
Commissioner ANDERSON. I refer more especially to what defendants
paid, without any question as to the distribution.
The WITNESS. If I knew how many shares of stock there were I might
be able to tell.
Commissioner ANDERSON. I think that there were ten shares.
The WITNESS. There were more than that.
CommissionerANDERSON. There were thirty-two added afterwards.
The WITNESS. I was about to say that there were two very eminent
counsel engaged with me in that case. One had been governor of the
State, Mr. Haight, and the other was Delos Lake, a prominent judge
here for a number of years. They were associated with me in the case,
and in the settlement of that case I thought that the idea was to satisfy
them so that they would not take up any litigation against the Central
Pacific Eailroad Company afterwards. I recollect exactly what I got
out of it.
Q. Do you remember what the defendant paid ? A. I do not. I did
not get anything out of it. I gave the fee to the other counsel in the
case. I allowed them to take the fees.
RATE OF SETTLEMENT.
Q. Do you not remember, as matter of fact, that the rate of settle-
ment exceeded $500 per share for the stock ? A. I should think so ; yes,
sir. Mv impression is that that question was asked .of me in the trial
before, Judge Barrett in New York, and I made a memorandum and
gave it. Whatever it is you will find it there.
Q. That is in the Stewart case ? A. Yes, sir.
Commissioner ANDERSON. The records or books of the defendant
will probably show the amount paid f
The WITNESS. 1 do not know.
DATE AND TERMS OF COMPROMISE.
Q. Can you give us approximately the date of the compromise ? A.
It was in 1877.
Q. In regard to the settlement of the San Joaquin County suit : ' How
many shares of stock were involved in that suit ; is San Joaquin the
name of a county or the name of a place ? A. It is a county. The
county issued $250,000 in bonds in payment for 2,500 shares of stock.
Q. What were the terms of that compromise ? A. The county got
$300,000 for the 2,500 shares of stock, and a portion of the bonds re-
turned, I think. That is my impression.
2390 U. S. PACIFIC RAILWAY COMMISSION.
Commissioner ANDERSON. Please explain a little more definitely. It
was alleged that this stock had passed from the county to McLaughlin
and had not been paid for.
The WITNESS. Had you not better have the complaint ?
Commissioner ANDERSON. I would rather have it; but as you are
going away I want to ask you this much. You might suggest some-
thing which would be of value to us. I would prefer the record, of
course.
The WITNESS. It is stated in the complaint more artificially and will
give you all the facts if you can 'get a copy of it. I would rather de-
pend upon the contents of that document than upon my memory at this
time.
BASIS OF PAYMENT.
Q. Will you please state whether the amount paid as stated by you
$300,000 and a portion of the bonds returned was upon the basis that
no consideration had been received by the county, or was it upon the
basis that a consideration had been received f A. It was upon the basis
that no consideration had been received by the county, no consideration
having been received up to that time by the county. The county of
San Joaquin got $300,000, excepting that portion which the counsel
dextrously appropriated to themselves, and the return of some of the
bonds. Mr. Miller knows everything, perhaps, and he can tell you.
Q. Does Mr. Miller kno\? everything ? A. Yes, sir; he is the gen-
eral encyclopedia of California, and I do not want to give any general
statement unless indorsed by Miller.
Q. Is Mr. Haight living ? A. No, sir ; he is dead.
Q. Who was the other counsel that you mentioned? A. Judge
Lake.
Q. Is he living ? A. No, sir ; he is dead. I am the only one remain-
ing, and I shall probably be gone before this inquiry is finished.
Q. We will all be gone probably before the Government debt is paid.
Can you furnish us with any copies of briefs or papers which you can
conveniently find which will give us more accurate information as to
these points ? A. I shall be delighted to furnish you anything that I
have.
Q. Can I call at your office ? A. I have no office here. I moved my
office to New York. My son has an office here, and may have some of
those papers.
Q. Can you give me a note to him so that I can call on him ! A. I
will tell him about it.
SATISFACTORY TERMS MADE WITH COUNSEL.
Q. You mentioned a moment ago that the compromises in one or two
of these cases were made on such terms as to counsel that they would
be satisfied and probably would not undertake similar litigations there-
after. Was that made part of the understanding f A. My impression
is that Judge Lake told me that that was the understanding with him
in that settlement, that he would take no cases of a similar nature, that
he would not take any similar or any case* whatever I do not know
how that was. I remember that in that settlement he did not feel him-
self at liberty to take any litigation against the officers of the Central
Pacific Eailroad Company after that time*
ALFRED A. COHEN. 2391
COUNSEL IN THE BRANNAN SUIT.
Q. Do you remember who was counsel in the Brannan suit? Was
John B. Felton f A. John B. Felton started it. Oh, yes ; I remember
that. General Butler was also counsel.
Q. Did John B. Felton subsequently enter the service of the company
as counsel ? "A. Yes, sir.
Q. And did he remain in the service of the company until he died ?
A. Yes, sir.
Q. How is it as to Governor Haight 1 A. I believe that he accepted
a retainer ; not as a general retainer, but I think he was employed by
the company afterwards. Of this, however, I am not sure.
Q. As to yourself, did you feel at liberty to take any cases after the
settlement of the Eobinson case f A. Yes, sir; I received no fee in that
case.
Q. Have you personally been connected with any such litigations
since the San Joaquin case u ? A. No.
Q. Did I understand you to say that before you left practice you were
engaged in litigations for, and were retained as counsel by the Southern
Pacific Company ? A. I had one or two cases for the Southern Pacific
Company. No ; I think I had only one case for the Southern Pacific,
and that is still pending.
CONSOLIDATION OF SAN FRANCISCO AND OAKLAND WITH SAN FRAN-
CISCO AND ALAMEDA.
Q. Do you recall the facts relating to the consolidation of the San
Francisco and Oakland Eailroad Company with the San Francisco and
Alameda Eailroad Company! A. Yes; I remember that, I think I
signed that as president of one or the other of the roads. Yes ; I owned
the majority of the stock in the San Francisco and Oakland road.
Q. What circumstances brought that consolidation about? A. They
were roads built to connect with the ferries crossing the bay, and I think
that I had sold the stock of both railroad companies; I owned a major-
ity I think in both, if I remember rightly at any rate I owned the ma-
jority in the Oakland Company and a large portion in the Alameda
Company ; I sold my stock in the Oakland Company to E. B. Crocker
and Leland Stanford, and I sold my stock in the Alameda Company to
Leland Stanford and Mark Hopkins ; I think I made the trade with
them ; they wanted them consolidated into one corporation, and we did
it.
Q. Was your sale to these gentlemen made before the consolidation ?
A. Yes, sir; necessarily so.
Q. The certificates for the stock appear to have remained in your
name; how was that? A. My impression is that I sold the Oakland
road on a long credit, and I think that I kept the stock as security until
the money was paid.
SIGNING OF CONSOLIDATION PAPERS BY WITNESS.
Q. Were these consolidation papers signed by you at their request,
you remaining the equitable owner of the stock ? A. I remained the
legal owner; they had the equitable interest; I think I had the stock,
but I do not remember positively whether I had it as collateral to their
notes or not; I had their individual paper for the stock, and kept it for
a long time.
2392 U. S. PACIFIC RAILWAY COMMISSION.
Q. I call your attention to the fact that the consent to the amalgama-
tion signed by you as stockholder of the San Francisco and Oakland
Eailroad Company shows that you were a stockholder to the extent of
5,500 shares, while the consent on behali of the Alameda Company was
signed by Leland Stanford on behalf of such amalgamation for 14,9^0
shares. Do I understand that you had actually sold both of these
amounts at that time? A. I spoke of selling the Oakland road on
credit. The Alameda road was sold for cash, and undoubtedly the stock
had been transferred.
Q. Can you explain to us the relative merits of these two corpora-
tions, so far as their financial standing was concerned, so as to inform us
as to whether the terms of the consolidation were just as between the
parties ? A. I do not remember what they were.
TERMS OF CONSOLIDATION.
Commissioner ANDERSON. The terms of con solidation were dollar for
dollar, and the aggregate capital was made equal to the capital of the
two companies, so that each shareholder of the old company held an
equivalent amount of stock in the new one.
The WITNESS. The Oakland Railroad had, I think, about two or three
miles of track running from Oakland Point to San Antonio, as it was
then called the portion that is now run as the local ferry track of the
Central Pacific. The Alameda Eailroad had about sixteen or eighteen
miles of track, and both had long piers extending out into the bay, and
both had ferry-boats of great value. The stock of the Alameda Com-
pany appears to be about fifteen thousand shares and the stock of the
Oakland Company about six thousand shares. I should think that they
had material property to cover about that value at that time, as well as
their franchises, which were valuable. I suppose that must have been
a fair division at that time.
NO BONDED DEBT AT TIME OF CONSOLIDATION.
Q. Do you remember what their bonded debt was at that time ? A.
The Alaineda Company had no bonded debt, and the Oakland Company
had none. If I remember rightly I do not think that either of them
had a bonded debt. After the consolidation a bonded debt was put
upon the Oakland Company for the purpose of making improvements
and other things. I do not exactly remember the purpose for which it
was put on, but I remember that after the consolidation into the San
Francisco, Oakland and Alameda Eailroad Company was formed they
issued a bonded debt, and I think that I signed the bonds and that I
signed the mortgage as president of the new corporation.
DIVIDENDS.
Q. Had either of these corporations paid dividends before the con-
solidation ? A. Oh, yes. The Oakland Eailroad Company paid divi-
dends for some time. The Alameda Eailroad Company would have
paid dividends very shortly. She did not pay dividends as such. The
road was built on borrowed money, and she paid interest on her debt,
and her earnings were put into construction, extensions of the road, &c.
We never paid any dividends as such on the Alameda portion of the
road, but a great many dividends were paid on the Oakland portion.
Q. Do you know where the books of that particular branch are to be
found ? Are they with the Central Pacific Company ?- A. I suppose
so.
ALFRED A. COHEN. 2393
Q. Were they passed over at the time of the consolidation ? A. They
should have been.
STATEMENT OF CONSOLIDATIONS.
Q. This consolidated railroad was itself consolidated at a later date
with the Central Pacific, was it not ? A. Yes, sir. I will give you that
statement of consolidation if it is of any service to you. There were
several corporations that now enter into the present Central Pacific.
In the first place the Central Pacific of California was the first corpora-
tion. Then there was the Western Pacific. Then there was a corpora-
tion called the Bay Railroad Company. Then there was the San Fran-
cisco and Oakland Railroad Company, the San Francisco and Alameda
Railroad Company, the California and Oregon Railroad Company, and
the San Joaquin Valley Railroad Company.
Q. The first consolidation that took place was with the Yuba Rail-
road Company, was it not ? A. I don't think that went in.
Q. Did it not go in with the California and Oregon ? A. Oh, yes ; it
did. The first consolidation that took place was between the San Fran-
cisco Bay Railroad Company and the Western Pacific Railroad Com-
pany, and the consolidated company was called the Western Pacific
Railroad Company. Then, in June, 1870, there was a consolidation be-
tween the Western Pacific Railroad and the Central Pacific Railroad
Company of California, and that was called the Central Pacific Rail-
road Company. Then there was a consolidation in August of the same
year between the California and Oregon Railroad Company and this
Yuba Railroad Company.
THE CONSOLIDATION THAT FORMED THE CENTRAL PACIFIC.
Then, in the latter part of August, 1870, there was a consolidation
between the Central Pacific Railroad Company, the California and Ore-
gon Railroad Company, the San Joaquin Valley Railroad Company,
and the San Francisco, Oakland and Alameda Railroad Company, as
then consolidated, and that formed the Central Pacific Railroad Com-
pany, and that is the present corporation.
Q. How did it happen that these two latter consolidations occurred
so closely together the one being in June and the other in August ?
Was there a substantial addition to the road, or were there any exten-
sions of the property as it existed in June ? A. I do not remember,
but I think that it was a question for some time as to whether any con-
solidation had been legally made. I remember the subject being dis-
cussed as a question of law between Judge Sanderson, other counsel,
and myself probably Mr. Wilson or Mr. McAllister, or probably both
of them as to the powers of the consolidation under our statute at
that time. They were a little crude and indefinite and the matter was
kept in abeyance some time, and, finally, I remember that it was re-
solved to make the latter consolidation of August, 1870. I remember
that I was starting for New York at the time, and that I staid over
to sign the papers. The question came up, and I staid over until the
papers were ready for my signature.
Q. Were you interested solely as a stockholder at the time of the lat-
ter consolidation? A. I was interested simply as a stockholder in the
San Francisco, Oakland and Alameda Railroad "Company. I never have
been a stockholder in any of the other companies, except the California
Pacific, and I am a stockholder of that company now.
2394 U. S. PACIFIC RAILWAY COMMISSION.
FINANCIAL CONDITION OF CONSOLIDATED ROADS.
Q. As such stockholder, did you yourself make any examination of
the financial condition of the various roads which were being thus thrown
together, in order to determine whether the terms proposed were fair
and just to all the parties ?
The WITNESS. In the latter consolidation ?
Commissioner ANDERSON. Yes.
The WITNESS. I only thought at that time of the ability of the peo-
ple who bought my stock to pay for it. I was looking only at their fi-
nancial ability. I think I had the stock as security. I have no doubt
that I had some opinion on the subject at the time, but what it was I
could not now tell you. I was not personally interested.
THE LIENS.
Q. So you did not examine the status of the company, the amount of
liens and the financial condition generally, for that purpose ? A. The
liens were matters of record. Everybody in California knew all about
them of course.
ONLY SAN FRANCISCO AND OAKLAND STOCK VALUABLE AT CONSOLIDA-
TION.
Q. Was there a market price for these various stocks at the time of
the consolidation 1 A. I do not think that there was a market price
for any of the stocks, except that of the San Francisco and Oakland
Railroad Company. It had a market price and the stock was bought
and sold here, but there never was a market price for the others. They
never were worth anything until the road was fully developed. I would
not have been willing at the time the Central Pacific road was finished
to take a block of the stock as a gift and be liable for the debts as they
then existed. It turned out better afterwards.
By Commissioner LITTLER :
Q. Do you mean that none of these stocks were listed on the exchange ?
A. I mean at the time of the consolidation. At the time these roads
were consolidated there was no one who would touch a share of the
Central Pacific Kailroad stock if he had to pay anything for it.
NO MARKET VALUE TO CENTRAL PACIFIC STOCK TILL RESUMPTION OF
SPECIE PAYMENT.
By Commissioner ANDERSON :
Q. Still, you made no objection to the substitution of stock in the new
Central Pacific Kailroad Company for the stock which you had sold ?
A. No. My impression was that at the time the stock was surrendered
things were different. I sold my stock two years before that time. I
think that I surrendered the stock about that time. I never took any
new stock and never had any of it issued to me.
Q. Do you include the other stocks, except the Oakland stock, in
what you say about the stocks having no market value at that time?
A. There never was any market value to the Central Pacific stock, or
to any of the other stocks, until after the resumption of specie payments,
until after the boom of 1880 and 1881.
Q. How about the Western Pacific Eailroad stock 1 A. That never
has had any market value as Western Pacific stock. Of course, when
it got to be Central Pacific it was included in that.
ALFRED A. COHEN. 2395
Q. How about the California and Oregon ? A. That is Central Pacific
also.
Q. Had it any value before the consolidation f A. Oh, no ; it had no
market value.
Q. Had the San Joaquin Yalley stock any value? A. No, sir.
THE YUBA ROAD.
Q. What was this Yuba Railroad ? A. My impression is that it was
a road built by some intelligent gentleman up country to sell to the
Central Pacific. It has been a source of amusement for some parties
for some years to get up railroad companies and build little roads in
order to force the Central Pacific or the Southern Pacific to buy them.
Q. How many miles long is it ? A. I do not know. It is a small
road, if there is any of it built at all.
Q. Do you know whether the books of these various corporations,
showing their financial operations and standing, have all been passed
to the Central Pacific Railroad as each consolidation was made ? A.
They should have been, but I do not know it as a fact, however. The
Central Pacific is entitled to all the records of these various companies.
SAN FRANCISCO BAY COMPANY.
Q. What was this San Francisco Bay Company which was amalga-
mated with the Western Pacific f A. The purpose of forming that was
this: Under the act of Congress the Central Pacific Railroad termi-
nated at Sacramento. The Western Pacific road ran from San Fran-
cisco to San Jose. Then there was a road from San Jose to San Fran-
cisco, and it was supposed that the Central Pacific Railroad would
come into San Francisco in that way. It was found necessary to in-
corporate some 'company to build a road from Niles to Oakland. It was
found impracticable to approach San Francisco by way of San Jose, and
this road was chartered for the purpose of affording a franchise or means
of getting right of way, or condemning right of way from JSTiles to Oak-
land.
ITS STOCK HAD NO MARKET VALUE.
Q. Was this San Francisco Bay stock commonly bought and sold ?
A. I do not believe that they ever issued any stock. If they did, I never
heard of it. I do not believe that they ever built any road. I think
that they merely incorporated. However, I am not certain that they
did not build any road, perhaps they did. The stock had no market
value. I have forgotten now, but it may be that they built a piece of
road between Eiles and Oakland. I think it probable that the Bay
Railroad Company may have built a portion, and that it was finished
by the Western Pacific, or it may have been the other way ; I am not
sure which.
CENTRAL PACIFIC STOCK WORTH MORE AFTER CONSOLIDATION.
Q. Comparing the stock of the Central Pacific Railroad Company as
it existed before these consolidations in 1869 and 1870, and the stock of
the Central Pacific Railroad Company as it existed in August, 1870, the
consolidations being entirely completed, in your judgment was the ab-
sorption of these roads a benefit to the Central Pacific, or the reverse?
Of course we know your answer will be only an estimate. A. I have
always felt that the stock of the Central Pacific Railroad Company, after
p R VOL iv 5
2396 U. S. PACIFIC RAILWAY COMMISSION.
the consolidation of August, 1870, was worth a great deal more than it
was before.
THE EEASON.
Q. By reason of the completion of the through route and terminal
facilities ? A. Not only that, but because of the absorption of these
great highways through the State, and their franchises, thus fastening
to the Central Pacific so many valuable feeders. And then, again, re-
member that the Central Pacific Eailroad started with a capital of
$8,500,000. As the road progressed, it got more property, and increased
its capital stock to $20,000,000. Then when they got into Nevada, be-
fore the consolidation with the Western Pacific, they increased the cap-
ital stock to $100,000,000. They have taken in all these properties the
Bay Railroad, the Western Pacific, the California and Oregon, San
Joaquin Valley, the San Francisco, Oakland and Alameda, and all their
various rights and franchises, which were of great value, and the stock
of the Central Pacific has remained just the same as it was before those
properties went in.
AMOUNT OF STOCK ISSUED.
Q. They have issued enough of the $100,000,000 to equal the aggre-
gate of the stock of all the absorbed roads, in addition to their own,
have they not ? A. The nominal stock of the company has remained
the same through all these consolidations.
Commissioner ANDEESON. As I understand it, less than half of it was
originally issued.
The WITNESS. It was issued, I believe, only as they wanted it.
Q. The other half,*if subscribed for at par, would have increased the
assets of the company to the amount of the issued st&ck. In other
words, the real stock of the Central Pacific was but $50,000,000 before
the consolidation, though the nominal stock was $100,000,000,
EFFECT OF THE THUEMAN ACT.
The WITNESS. The stock of the Central Pacific Eailroad Company
of course would have had a very much greater value to day if it hail
been allowed to manage its business as any other corporation has been
allowed to manage its affairs. Instead of taking its earnings and im-
proving the value of the road, as it should have done, they have been
taken from it under the terms of the Thurman act and by other legislation.
Q. Has not the Central Pacific Company substantially managed its
affairs as it thought best for the last fifteen or twenty years'? A. No;
I do not think so. Then, in addition to that the Government subsidized
other roads that have all the time been setting up opposition to the
Central Pacific. The Government has all the time been tying the hands
of its debtor and giving aid and comfort to the people fighting it.
By Commissioner LITTLEE :
Q. What roads do you now refer to I A. I refer to the Northern Pa-
cific, to the Atlantic and Pacific and its various branches, and to the
advantages which are being given to the Canadian Pacific in order to
enable it to compete for the business of this coast. It looks very much
like the old system of imprisonment for a debt. If a man owes you
money and does not pay it, you put him in jail where he cannot possi-
bly pay it.
ALFRED A. COHEN. 2397
OPPOSITION LINES AIDED BY GOVERNMENT.
By Commissioner ANDERSON :
Q. You mentioned something about the subsidizing of other roads ;
what roads do you refer to ? A. The Northern Pacific and the Atlantic
and Pacific.
Commissioner ANDERSON. But you spoke about the Canadian Pa-
cific.
The WITNESS. I spoke of the facilities given now to the Canadian
Pacific to do business and of privileges given to it to bond goods through
our territory, and setting them up in opposition to the road that owes
the Government so much money. It seems to me that no business man
would treat his debtor in that way if he wanted his debts paid.
Q. What are the facilities that you refer to as being given by the
Government to the Canadian Pacific ? A. The right to run cars in bond
to compete with our ports here, the port of San Francisco, for the busi-
ness which naturally belongs to the Central Pacific Railroad. Hereto-
fore large quantities of tea and silk have been brought to this country
by steamers connected with the Central Pacific and Union Pacific com-
panies, and this traffic has formed a very large portion of the business of
those companies, Under the new order of things, the Canadian Pacific
comes in with its steamers and its line of road and seriously cuts into
this business which has heretofore belonged to our own lines, and the
Government, by permitting that company to carry its goods in bond
through our territory and to points within our territory, assists it in its
endeavor to filch this business from the lines which are so largely in
debt to the Government of the United States. That is what I mean
when I say that the Government gives aid and comfort to the Canadian
Pacific.
Q. Are there any other subsidized roads which compete with the
Central Pacific than those which you have mentioned ? A. No ; I do
not remember that there are.
GOVERNMENT TRAFFIC ON OTHER ROADS.
Q. Do you know anything of the amount of the traffic given by the
United States Government to other roads in the matter of transporting
troops and mails ? A. I do not. I know this, however : From my read-
ing and studies on this subject I am very well satisfied that the United
States paid for carrying mails and for the movement of troops between
1850 and 1860 a great deal more than it ever allowed the Central Pa-
cific and the Union Pacific from 1869 to the present time.
TRANSPORTATION CHEAPER SINCE COMPLETION OF RAILROADS.
Q. Is it not true that it costs all the citizens of this country a great
deal less to move about from place to place at the present time than it
did before the railroads were completed ? A. Of course ; that is one of
the advantages that the Government and people derived from the build-
ing of these two roads. Prior to 1869 we had to go to New York by way of
the Pacific Mail, which charged us $300 for the passage, and pretty much
everything was charged extra. The time consumed in the journey was
from twenty-four to twenty-eight days, and the passengers had to take
the risk of contracting the Panama fever and the malaria of the tropics,
and the numberless ills to which people are subject in crossing such a
place as the Isthmus of Panama. We are benefited, of course, by the
railroad in this respect ; the travel is not only more comfortable in
2398 U. S. PACIFIC RAILWAY COMMISSION.
every way, but it is cheaper. The rail rate is now less than $100, and
the time consumed less than seven days.
Q. Has that circumstance, in your judgment, anything whatever to
do with the payment of a debt for which a consideration was given and
for which the obligation remains ? A. I think that it has a great deal
to do with it.
Commissioner ANDERSON. We would be very glad to hear from you
in what respect it affects the question.
CONDITION OF COUNTRY PRIOR TO CONSTRUCTION OF ROAD.
The WITNESS. Before going into that question, of course it' becomes
necessary to consider the language of the law authorizing the building
of these roads, and the condition of the country before and during their
construction. Before these roads were built, the country was engaged
in a great war for its existence. The credit of the Government was at
a low ebb ; materials and supplies of all kinds could be procured only
at abnormally high prices. Wages were high and laborers scarce. It
cost as much money to build a mile of road then as 3 miles could have
been built for five years before or five years afterwards. The credit of
the Government was very poor; very little was realized from the sale of
the bonds which the Government loaned to these roads. They had to
be sold at a big discount to provide money to build the road. In addi-
tion to this, the Government was all the time pushing these people to
greater exertion and greater diligence, and* I think that all of these
things should be considered in any inquiry of this sort. When you es-
timate the present rate of interest, the amounts realized by these people
from the sale of their securities and the cost of materials, you will find
that the rate of interest upon this loan by the Government will amount
to more than 12 per cent, per annum on the money realized. It seems
to me that all these things should be taken into consideration in any
report which is made to Congress by you.
GOLD VALUE OF BONDS.
By Commissioner LITTLER :
Q. Can you state what these bonds netted the railroad company in
gold ? A. I will say this : In gold they did not net on an average for
all the bonds given more than 60 per cent. This is according to my
recollection and information. I do not believe that the company got 60
per cent, in gold for these bonds. I remember that when they were
very hard pushed trying to get money to get over these mountains, I
tried to borrow money for them here in San Francisco, putting two
bonds in for one, but our capitalists would not lend the money.
Q. Were the contracts for construction payable in gold f A. That I
do not know; some of those made in the East were undoubtedly payable
in currency ; but all those made on this coast were payable in gold of
the latest standard and fineness.
THE ROAD NOT WORTH ITS BONDED DEBT.
By Commissioner ANDERSON:
Q. Do not you know that many of these payments were made in bonds
and stock 9 A. if so, they were at a corresponding value.
Q. Made to meet the real value of the articles sold to the company ?
A. It was just this way, Mr. Anderson. When this Central Pacific Eail-
road was finished it was not worth its bonded debt. It is not worth its
ALFRED A. COHEN. 2399
bonded debt to-day. You cannot sell it for its bonded debt. Nobody
in the world would take this road mortgaged to the Government and
make the money out of it due to the bondholders and the Government.
Q. You mean the two first mortgages ? A. I mean the road respon-
sible for the bonds issued under the acts of 1862 and 1864 ; and the way
that the Government is treating this company renders the property of
less value every day.
DIVIDENDS.
By the CHAIRMAN :
Q. What did the road do with the eighteen millions declared in the
shape of dividends to stockholders between 1877 and 1884 ? A. I do
not suppose that the road did anything. I suppose that the directors
who owned the stock did something.
Q. What effect would it have had on the Central Pacific Eailroad prop-
erty if, instead of dividing this $18,000,000 among its stockholders, it
had applied it to bettering the condition of its road and extending its
earning capacity ? Do you not think that if this had been done the
road would have been in better shape to repay its debt to the Govern-
ment than it is now ? A. A great deal of money went into this road
besides that which the Government lent. Money was procured from all
available sources. The bonds of the company were issued and sold for
such sums as were possible. In many markets of the world at that time
you could not sell a bond. All this is now changed. The bonds of the
Central Pacific Railroad Company are now away above par. You gen-
tlemen are men of the world, of great financial as well as legal experi-
ence, and you know perfectly well that you could not organize a railroad
and go to any market in the world and sell a bond unless you had some
security for the money which you asked. In addition to your bonds,
you would have to give a portion of your title deeds or your stock as a
bonus ; and this was what the Central Pacific Railroad had to do.
RESULT IF MONEY HAD BEEN APPLIED TO IMPROVEMENT OF ROAD.
Q. If this money declared in dividends to the stockholders had been
applied to the improvement of the railroad property, would not the
security of the Government have been better to-day than it is? A.
Undoubtedly, if all the earnings of the road had been used to redeem
its liabilities instead of giving anything to its stockholders, and if this
could have been done without any bad effects I might answer your
question in the affirmative 5 but you must remember that a great many
people hold shares of this stock, people whose money went in to dis-
charge the obligations of the company incurred for tbe construction of
its road. At the time this road was finished I do not know but what
perhaps I may be telling you gentlemen something you do not wish to
hear, but I presume that you are acting in a judicial capacity, and that
you would like to hear both sides of the question.
Commissioner ANDERSON. Oh, yes ; we want to know everything.
FINANCIAL CONDITION OF DIRECTORS ON COMPLETION OF ROAD.
The WITNESS. When this road was finished every one of these di-
rectors was mortgaged up to all that his credit would carry. Their
notes were out everywhere. They were scattered all over this State
and in New York, Boston, and Philadelphia, many of them bearing
from 12 to 15 per cent, per annum interest. They had to sell stock to
redeem their personal obligations incurred for the benefit of this road,
stock which they had taken in payment for the building of t he road. At
2400 U. S. PACIFIC RAILWAY COMMISSION.
the time this contract with the Contract and Finance Company was
made, there was not a capitalist on the face of the earth that was willing
to take hold of it. I have seen Mr. Huntington trudging about in New
York trying to get people to lend him money and take an interest in
the construction of the road upon the same terms that it was let to the
Contract and Finance Company. For months, almost for a year, if not
for more, he was traveling at night between Washington and Boston
trying to raise money to send to California. They were put to terrible
straits to get money to get over these mountains. I have sat here in
bank parlors in San Francisco and heard the bankers and capitalists
say, "Don't you have anything to do with those men, Stanford, Hunt-
ington, and Hopkins ; don't you put any money into their schemes.
They are bound to come to grief. Nobody in the world can get that
road through." There are two sides to this story, of course. You, Mr.
Anderson, with your great legal experience, know that it is very easy
to frame an indictment, but I know and you know that there never was
a case to which there was not some defense.
ABILITY OF COMPANY TO PAY ITS GOVERNMENT INDEBTEDNESS.
By Commissioner LITTLER :
Q. Have you considered the subject as to the ability of this company
to pay its indebtedness to the Government ?
The WITNESS. I have no doubt that this company is composed of
men who will pay whatever they will undertake to pay, and do what-
ever they undertake to do, no matter where it comes from. They are
good for anything they nndertake. There is no question about that.
Commissioner LITTLER. I am speaking of the corporation, independ-
ent of the personal responsibility of these men.
The WITNESS. I will say this, you cannot sell the mortgaged property
to-day for the lien that is on it.
PLAN OF SETTLEMENT.
Q. What suggestions have you to give to this Commission, if any, as
to the terms upon which the settlement of the indebtedness between this
company and the Government can be made? A. The suggestion that
I would make to this Commission is the same that I would give to any
business firm or corporation who would consult me as to what it should
do with a debtor under similar circumstances. I would look at the
property in its present condition. I would look at the condition of the
property when it came into existence. I would have regard for the
physical condition of the country through which it was built, which
made necessary its great cost. I would look at the condition of the na-
tion at the time the road was constructed, at the manner in which the
people were urging this company to complete the road. I would look
at the great advantages which the Government obtained from such com-
pletion, and the great convenience which it has been to the people of the
United States, and the enormous amount of money which the Govern-
ment has saved by its construction, and the failure of the Government
to keep its part of the contract as outlined in the debates preceding the
passage of the act of 1862. Then I would give full and fair considera-
tion to any application which might be made for an extension of the
time of payment, and I would give it upon fair and equitable terms.
That is what any business man would give to his debtor under like cir-
cumstances.
ALFRED A. COHEN. 2401
EARNING CAPACITY OF ROAD VERY MUCH REDUCED.
Q. Have you considered the subject sufficiently to indicate to this
Commission the terms of the settlement which ought to be proposed f
A. I have not. I am not prepared to make any positive suggestion on
that subject. I am speaking on general principles as to what ought to
be done under the circumstances.
Q. Have you any intimate knowledge of the earning capacity of this
property as it stands to-day ? A, No ; but I did have some years ago.
I have been out of business for some time, but I know that within the
last few years its earning capacity has been very much reduced. I am
now speaking of the mortgaged property, and not of the whole South-
ern Pacific property.
Q. You say that you know that its earning power has been very
much reduced ; how do you know this ? A. I know this from my
knowledge of the affairs of the company, and from my knowledge of the
business which is being done by rival lines. I also consider that the ill-
considered legislation adopted by Congress towards these two roads,
the Central Pacific and the Union Pacific, has been such that they have
not had a fair chance to compete with other roads for the business ol
the country.
EARNING CAPACITY CONTROLS ITS MARKET VALUE.
Q. In determining the terms which the Government should adopt,
would you take into account only the value of the property as it stands
to-day in the markets of the world, or would you consider in addition
thereto the earning capacity of the property? A. The earning capac-
ity of the property and its ability to maintain those earnings necessa-
rily control the market value.
Q. Is it not true that in railroad circles the value of a property is de-
termined more by its earning capacity than by the amount of money
which it may owe f A. Hardly so. The earning capacity of course has
reference to the charges that will come upon those earnings. If the
earnings are to be absorbed in paying interest on a large bonded in-
debtedness so as to leave nothing to the stockholders, the road itself
will have very little market value, except to its creditors.
ITS NET EARNINGS FOR 1886.
Commissioner LITTLER. The net earnings of this road for 1886, as I
remember them, were about nine million of dollars, and the gross earn-
ings were between seventeen and eighteen millions.
Commissioner ANDERSON. Including all the leased lines.
The WITNESS. 1 am speaking of the mortgaged property. I see very
well where the mortgaged property will be left if it is separated from
the other property which has been acquired and which is at present
somewhat free from competition.
Q. Is it not true that at least some of these branch lines have been
acquired with moneys earned by the Central Pacific road ? A. That is
a mere question of calculation which I have not been able to make. I
notice that almost every time a new property has been acquired, there
has been some lien placed upon it.
Q. Have you any interest in the stock or bonds of the Central Pacific
Railroad Company ? A. No, sir ; not a cent, and I never did have.
Commissioner LITTLER. You seem to be a competent witness.
2402 U. S. PACIFIC EAILWAY COMMISSION.
The WITNESS. I ain merely giving you my opinion. 1 think that if
you gentlemen would come to my views on this subject the Govern-
ment and the people of the United States would make more out of this
road than by any other course which could possibly be adopted.
LOSS OF TRAFFIC CAUSED BY AIDED LINES.
Q. Have you any knowledge of the amount of the decrease of traffic
of this company arising from the construction and operation of the
competing lines to which you have referred ? A. I made some kind of
a calculation once, but do not know how true it is. I have talked with
some of the people whom I thought to be familiar on the subject, and
my impression is, from the best information obtainable, that tlie loss to
the Central Pacific and its leased lines caused by the building of the
other subsidized roads the Northern Pacific and the Atlantic and
Pacific and the loss caused by the construction of the Canadian Pacific,
together with the earnings which have been taken from it by the At-
chison, Topeka and Santa Fe Company, which, of course, works the
subsidized line of the Atlantic and Pacific, will amount to something
over thirty millions of dollars, probably nearer forty millions.
By Commissioner ANDERSON:
Q. From what period of time ? A. That would be about five years,
I think. The business that has been taken away from your debtor by
the roads which you have subsidized and by the roads which you have
aided in various ways has certainly amounted to somewhere between
thirty millions and forty millions of dollars, and to this extent you have
impaired the means of your debtor and reduced its ability, so far, to pay
its debt.
THE CANADIAN PACIFIC.
By Commissioner LITTLER :
Q. Does this Canadian Pacific Company, through the bonding system
which you mention, take a large part of the traffic which would other-
wise go to the Central Pacific 1 A. Yes, sir; the very idea of the Cana-
dian Pacific seems to be to take everything that is in sight, and the
Government seems to be willing to afford the foreign company every
facility and means for doing it.
Q. Is that done under any statute of the United States ? A. No ; I
do not think it is. I think this is done under a Treasury regulation.
THE NORTHERN PACIFIC.
Q. How does the Northern Pacific connect itself with the business of
this region? A. The Central Pacific, before the completion of the
Northern Pacific, got all the freight for Oregon and the territory north.
Now the Northern Pacific gets all of that business, and in addition to
that it has a line of steamers plying between San Francisco and Oregon
and takes a large slice of the business which naturally belongs to the
Central Pacific line.
By Commissioner ANDERSON :
Q. Is not this carrying the doctrine of taking care of a debtor rather
far ? It could hardly be expected that the builders of the Central Pa-
cific Railroad should have a monopoly of the carrying of traffic across
the United States. A. That is so. I am merely speaking of things as
they exist, and how contrary they are to the anticipations indulged in
ALFRED A. COHEN. 2403
by Senators and members of Congress and by the railroad companies
before the construction of the roads.
BENEFICIAL EFFECT OF COMPETITION OF SOUTHERN PACIFIC.
Q. How about the effect of the competition of the Southern Pacific
on the Central Pacific traffic I A. Instead of hurting, I think that it
has greatly benefited the business of the Central Pacific Kailroad. The
Southern Pacific undoubtedly has been the means of saving to Cali-
fornia a great deal of its business. It has built a line through Arizona,
New Mexico, and Texas, and has opened up these markets to the mer-
chants of California. It has also built a line into Mexico and has given
our merchants a chance to compete for the business of that country.
But for this, all the business of these Territories and of Mexico would
be done by Eastern merchants, and California would get none of the
benefits from that traffic. As it is, California supplies the largest por-
tion of the goods consumed in these sections, and all of this business
contributes directly or indirectly to the prosperity of the Central Pacific
road. The Southern Pacific is the only line by which you can get
freight rapidly from San Francisco to New York and from New York to
San Francisco. It is the only concern which can make a through rate.
You can go to a man in New York and he can tell you exactly what he
can do for you and the time within which he can do it,
Q. That is on freight ? A. Yes, sir. If you want to ship any freight
from New York to San Francisco you have not got to await the conven-
ience of the New York Central, or of any other of those Eastern trunk
roads, and you have not got to be bothered and annoyed with the delay
which always occurs at Chicago. According to my experience, it used
to take a week or ten days to get freight through Chicago. I do not
know how it is now.
SOUTHERN PACIFIC PROTECTS CENTRAL FROM COMPETITION WITH
GOULD'S LINES.
Q. What effect has the construction of the Southern Pacific and the
establishment of a through line had on the earnings of the Central Pa-
cific ? A. I do not think that it has any but a good effect. If the South-
ern Pacific had not started its road and protected the Central Pacific's
through business, this business would have been done by the Texas and
Pacific and Mr. Gould's lines.
Q. What do you mean by " protected the Central Pacific " ? A. If
the Southern Pacific had not been built, and if the Sunset route had not
been established, the Central Pacific, of course, would have had a com-
petitor from the south," which would have taken a large share of the
business, reduced the rates for traffic, and more or less demoralized the
Central and Union Pacific Companies, and business would have been
done without profit. With the construction of the Southern Pacific and
the building of a road which worked in harmony with the Central Pacific,
rates were maintained and the earning capacity of both roads increased.
While the Central Pacifi c operated the Southern Pacific under lease it,
of course, received the tolls upon business done by the Southern Pa-
cific. The business of the Southern Pacific, under any circumstances,
must come over the lines of the Central Pacific, and must pay terminal
charges and ferriage to the Central Pacific. If the Southern Pacific
road were owned by the Pennsylvania Central, as originally intended
by Tom Scott, or if it had been built by the Texas and Pacific people
under Mr. Gould, the earnings of the Central Pacific would not have
been as great as now.
2404 U. S. PACIFIC RAILWAY COMMISSION.
TERMS OF LEASE OF CENTRAL TO SOUTHERN PACIFIC.
Q. Have you examined the lease of the Central Pacific to the South-
ern Pacific Company, and are you familiar with its terms'? A. I have
not seen it.
Q. Do you know how the rental of $1,200,000 per annum, which the
Southern Pacific agreed to pay, was fixed I -A. I did know, but I have
forgotten. I do not remember now.
Commissioner ANDERSON. I presume that we can get that from the
auditor's office.
The WITNESS. I think that you can get it from the record.
HOSTILE LEGISLATION.
By the CHAIRMAN :
Q. What legislation on the part of Congress interfered with the de-
velopment of the Central Pacific ? A. I think the Thurman bill and
all the various little things that have been passed since then ; and not only
that, but the general hostility that has been shown by Congress to the
Central Pacihc Railroad have very seriously interfered with the devel-
opment of the Central Pacific Railroad. Although the company has
complied with the terms of the various acts of Congress and of the
Thurman act, there has been money due by the different Departments
to the Central Pacific Railroad Company, and the Secretaries have re-
ported session after session that the amoiint was due, and it has been
put into the appropriation bills, but every time some patriot would rise
up and have it stricken out. Although these claims have been consid-
ered by the Court of Claims, and have been passed upon by the Su-
preme Court of the United States, the company has been unable to get
its money, and there has been a very large amount of hostility shown
by somebody towards the management of this road.
PROSPERITY MEASURED BY EARNING POWER.
Q. Would you measure the prosperity of a road by its dividends!
A. 1 measure the prosperity of any material property by the amount
of its earnings. Of course this would apply as well to a railroad as to
a brewery.
Q. Do the dividends of the Central Pacific Railroad Company repre-
sent the earnings of the road? A. No well-regulated corporation
ought to pay dividends except from earnings.
Q. Do you know whether the dividends of the Central Pacific repre-
sent the earnings of the Central Pacific ? A. All that I know about it
is that at the time they were declaring those dividends, their annual
reports, as published in Poor's Manual, and in the " manual" contain-
ing the reports of its officers, showed that they earned enough to pay
those dividends.
Q. Is it not true that more dividends have been declared since the
passage of the Thurman act than at any time prior thereto ? A. The
Thurman act was passed in 1878 ; I think that the road commenced to
pay dividends in 1873 or 1874, and then they stopped fora while. After
they resumed, I think they paid up to 1882.
The CHAIRMAN. They paid up to 1884.
Commissioner ANDERSON. I think it was 1883.
The CHAIRMAN. A dividend was declared February 1, 1884.
The WITNESS. It is a mistake to say that they declared any dividend
for 1884.
ALFRED A. COtiEN. 2405
The CHAIRMAN. February 1, 1884, a dividend of $1,778,265 was de-
clared.
The WITNESS. That is a mistake. They did not declare any divi-
dends in 1884.
The CHAIRMAN. 1 have it from the reports.
The WITNESS. It must be a mistake, for I think no dividends were
declared in 1884.
Commissioner ANDERSON. Look at the report of 1884 and see what it
says.
NO DIVIDENDS DECLARED FOR FOUR YEARS.
The WITNESS. It says that a dividend was paid February 1, 1884.
That is, paid from the earnings of 1883. I know that they were not
earning dividends in 1884.
Q. If that be true, is it a just conclusion that the prosperity of the
road, so far as its financial standard is indicated by the payment of div-
idends, has been interrupted by the passage of the Thurman act ? A.
This dividend to which you refer me was paid from the earnings of four
years ago. The company has declared no dividends for four years, and
then you must remember they had income from the non-aided and leased
lines.
Q. They declared dividends in 1883, 1882, 1881, and 1880, did they
not? A. Yes. But in 1884, 1885, 1886, and 1887 no dividends were
declared.
EFFECT OF THURMAN ACT ON EARNING CAPACITY.
Q. I am taking the periods prior to the passage of the Thurman act
and subsequent thereto. If the declaration of dividends is an indica-
tion of the financial prosperity of the road, can you conclude that the
passage of the Thurman act has interfered with the earning capacity of
the road? A. I cannot say that I have been sufficiently in the confi-
dence of the directors to enable me to say why the dividends were de-
clared; but it may have been that at the time the stock began to be
put upon the market they commenced to pay dividends to help its sales.
I am very well satisfied that the property of the road and its earning
power, and everything else pertaining to its success, were very much
impaired by the legislation contained, in what is known as the u Thur-
man act." It is a little too voluminous a subject to discuss in answer
to one question. But if you will take the traffic reports and the mode
of distributing the earnings, and what they paid the Government, and
compare it with the distribution of their earnings for years before, you
will find my conclusion to be correct.
VALUE OF BONDS OF SOUTHERN PACIFIC.
Q Was not the " Thurman act" a mere preparation for the maturity
of the bonds ? A. These men had started, as I understand, to make a
sinking fund of the bonds of the Southern Pacific Railroad Company of
California at ninety cents on the dollar. Those bonds to-day are worth
one hundred and fifteen, paying interest right along, and will, no doubt,
be worth one hundred and twenty in a little while, and will have to be
redeemed at one hundred and twenty, if redeemed before maturity.
Instead of allowing them to handle a sinking fund as any other solvent
man would be allowed to handle it; instead of allowing them to put in
the liens of their own road at a low rate, as they proposed to do, you force
them to pay money in, which was taken out of their earnings from time
to time, and which was invested in some bonds of the Government which
2406 U. S. PACIFIC RAILWAY COMMISSION.
had to be purchased in the open market at a high premium, so that the
money put into the sinking fund is less to-day by three quarters of a
million, according to my recollection, than the amount of money paid in.
You took the earnings from them, and exhausted three quarters of a
million of them in buying your own bonds to create your own sinking
fund. I want to call your attention, as business men, and as intelligent
men really as a matter of business to the way in which these men
have been treated; and to the unintelligent way in which their business
has been handled by those having Government control. I know that I
would not treat any debtor of mine in that way if I expected him to
pay me.
EFFECT OF CONSTRUCTION OF SOUTHERN PACIFIC ON UNION PACIFIC.
Q. What effect had the construction of the Southern Pacific road
upon the Union Pacific? A. Well, the Southern Pacific undoubtedly
takes some business which might otherwise go by the Union Pacific; or,
if not by the Union Pacific, by the Atlantic and Pacific, or by the Texas
and Pacific. I wish to state to the Commission, however, that when
the Southern Pacific was started, recognizing the fact that these roads
were intended to be operated as one, and having due regard to the in-
terests of the Government as a creditor .of the Union Pacific, an offer
was made to the Union Pacific people Mr. Dillon and Mr. Gould to
let them in on the construction of the Southern Pacific upon equal terms,
dollar for dollar, without any bonus, and that they refused. They did
not believe that the Southern Pacific could hurt the Union Pacific. I
think that you should bear this in mind : If the owners of the Central
Pacific had not the control of the Southern Pacific, if the control of the
latter road had been in adverse hands, the condition of the Central Pa-
cific would have been very much worse to-day than it is, and the posi-
tion of the Government would have been a great deal worse. The same
is true of the Union Pacific. It has had its share of all the business
which the Southern Pacific has thrown into the hands of the Central
Pacific.
EFFECT OF CONSOLIDATION OF CENTRAL AND SOUTHERN ON UNION
PACIFIC.
Q. Has not the effect of the union of the Central and Southern Pacific
been to divert a large portion of the traffic from the Union Pacific over to
the Southern Pacific f A. I have fully explained what I mean in this
regard. Some of it has been diverted, but not so much so as would have
been the case had the Southern Pacific been in any other hands than
those of the managers of the Central Pacific. I am about used up, gen-
tlemen. I have given you all the time I can very well afford this morn-
ing.
Commissioner ANDERSON. We will be here thirty days. Will you be
back within that time u ?
The WITNESS. Oh, yes ; but if you want anything more I will give
you any time you want in New York. I shall be in New York the 1st
of October. Or, if you want me here to-morrow, I am willing to come.
If not, I will read this over and see what I want to correct.
Commissioner ANDERSON. We hope to ask our last question before
the 1st of October.
The CHAIRMAN. Can we hear you to-morrow at some hour?
The WITNESS. I can be here to-morrow at 10.30. 1 want to go away
Saturday.
ALFEED A. COHEN.
ARTICLES OF CONSOLIDATION. 2407
ABSTRACTS OF VARIOUS ARTICES OF CONSOLIDATION.
Commissioner ANDERSON. Mr. Miller has left with me the different
articles of consolidation produced yesterday, from which we will take
extracts.
The following are extracts from the various articles of consolidation :
Articles of consolidatian between the Western Pacific Railroad Company and the San Fran-
cisco Bay Railroad Company, dated October 28, 1869, containing a recital of the organi-
zation and construction of these two railroads, of their conclusion to consolidate.
They contain six articles.
The effect of these articles is to consolidate all the capital stock and all of the prop-
erty and franchises of the respective corporations into a new corporation, which is
declared to be the Western Pacific Railroad Company.
The terms of the consolidation are that the respective stockholders in each of the
constituent companies shall hold equivalent amounts of stock in the new corpora-
tion.
The stock of the new corporation is fixed at $10,400,000, and the length of the. con-
solidated road is stated to be about 223 miles.
The new corporation assumes all liabilities of the constituent companies.
The articles of consolidation are signed by Leland Stanford as president and E. H.
Miller, jr., as secretary of the Western Pacific Railroad Company, and by Leland
Stanford as president and by E. H. Miller, jr., as secretary of the San Francisco Bay
Rai Iroad Company.
The consent of iriore than three-fourths in value of the stockholders in the respective
companies is annexed and the signatures thereto are as follows :
nance Company, by C. Crocker, president ; C. H. Cuminings.
The stockholders of the San Francisco Bay Railroad Company are as follows : Le-
land Stanford; C. Crocker; E. B. Crocker, by C. Crocker, attorney in fact ; Mark Hop-
kins ; C. P. Huntington, by Mark Hopkins, attorney in fact ; E. H. Miller, jr.; Con-
tract and Finance Company, by C. Crocker, president ; Jerome Madden; B. B. Red-
ding ; W. E. Brown, and D. A. Bender.
The articles of consolidation between the California and Oregon Railroad Company and the
Tuba Railroad Company bear date the loth day of December, 1869.
The terms of the consolidation are to the effect that the shareholders of each of the
constituent companies shall receive a number of shares in the consolidated company
equal to the number of shares held by them, respectively^ in the old companies.
The stock of the new corporation is fixed at $15, 000,000, and its term of existence at
fifty years.
The new company succeeds to all the property and franchises of the old companies
and assumes all of their obligations.
The first board of directors of the new company is declared to consist of the follow-
ing persons: Lelaud Stanford, -C. P. Huntington, Mark Hopkins, E. B. Crocker,
Charles Crocker, E. H. Miller, jr., and A. P. Stanford.
The articles are signed by E. H. Miller, jr., as secretary of the California and Ore-
gon Railroad Company. A corresponding instrument is executed by the Yuba Rail-
road Company.
Articles of association betiveen the Central Pacific Railroad Company of California and tht
Western Pacific Railroad Company bear date June 22, 1870.
The articles contain a recital of the organization, construction, and operation of the
constituent roads and of the preceding consolidation between the Western Pacific and
the San Francisco Bay Railroad Company, and the articles of consolidation provide,
substantially, that the new corporation shall succeed to all the property and franchises
of the constituent corporations and shall assume all of their obligations ; that the
stockholders in the new corporation shall hold an equivalent amount of stock to that
which they held in the constituent companies ; and that the new corporation shall be
known as the Central Pacific Railroad, which shall exist for fifty years.
The first board of directors is declared to consist of Leland Stanford, C. P. Hun-
tington, Mark Hopkins, Charles Crocker, E. B. Crocker, E. H. Miller, jr., and A. P.
Stanford.
2408 U. S. PACIFIC RAILWAY COMMISSION.
The length of the road is stated to be about 1,000 miles, and its capital stock is fixed
at $100,000,000.
The articles are signed by Leland Stanford, president, and E. H. Miller, jr., secre-
tary, for the Central Pacific Railroad Company of California, and by the same parties
as president and secretary, respectively, of the Western Pacific Railroad Company.
Annexed to the articles are the consents of more than three-fourths of all the stock-
holders of the respective companies.
The stockholders of the Central Pacific Railroad of California, whose names are ap-
pended to the consent, are as follows : Leland Stanford, Charles Stanford, by Leland
Stanford, attorney in fact ; Mark Hopkins, C. P. Huntington, by Mark Hopkins, at-
torney in fact; C. Crocker, E. B. Crocker, by C. Crocker, attorney in fact ; E. H. Mil-
ler, jr., C. L. Scndder, A. P. Stanford, by Leland Stanford, attorney in fact; B. R.
Crocker, D. O. Mills & Co., Albert Gallatin, W. R. S. Foye, C. H. Cummings, J. E.
Hollister, Julius Wetzlar, J. S. Friend, Friend & Terry, W. E. Terry.
The stockholders of the Western Pacific Railroad Company, whose names appear
subscribed to the consent, are as follows : Leland Stanford, Mark Hopkins, C. P.
Huntington, by Mark Hopkins, attorney in fact; C. Crocker, E. B. Crocker, by C.
Crocker, attorney in fact: E. H. Miller, jr., A. P. Stanford, by Leland Staufordj at-
torney in fact, and C. H. Cummings.
Articles of association between the San Francisco and Oakland Railroad Company and the
San Francisco andAlameda Railroad Company bear date June 28, 1870.
They recite the organization, construction, and operation of the respective roads.
The articles are substantially that the new company shall succeed to all the property
and franchises, and shall assume all the obligations of the old companies. The stock
of the new company is fixed at $2,000,000.
The stockholders of the old companies are declared to be entitled to receive amounts
of stock in the new company equal to the amounts held by them in the old compa-
nies. Tho name of the new company is declared to be the San Francisco, Oakland
and Alameda Railroad Company.
The length of the road of the new company is declared to be about 25 miles.
The articles of association are signed by the boards of directors of the respective
companies, and are: Alfred A. Cohen, president; D. O. Mills, W. C. Ralston, F. D.
Atherton, and D. P. Barstow, directors of tfce San Francisco and Oakland Railroad
Company ; and by F. D. Atherton, John Hewston, jr., E. B. Mastick, and Alfred A. Co-
hen, as directors of the San Francisco and Ala.meda Railroad Company.
The consents of more than three^fourths of the stockholders are annexed, being for
the San Francisco and Oakland Railroad Company: A. A. Cohen, D. O. Mills, W. C.
Ralston, F. D. Atherton, D. P. Barstow ; and by the following as stockholders of the
San Francisco and Alameda Railroad Company : F. D. Atherton, A. A. Cohen, E. B.
Mastick, John Hewstou, jr., and Leland Stanford.
The four parties first named signed for 5 shares 'each, and the last named for
14,985 shares.
Articles of association betioeen the Central Pacific Railroad Company, the California and
Oregon Railroad Company, the San Francisco, Oakland and Alemeda Railroad Company
and the San Joaquin Valley Railroad Company bear date August 20, 1870.
These articles recite the organization, construction, and operation of the constit-
uent roads and contain articles of association as follows :
The new company is declared to be the Central Pacific Railroad Company.
It succeeds to all tiie property and franchises and assumes all the obligations of the
constituent companies.
The board of directors was declared to consist of the following-named persons :
Leland Stanford, William E. Brown, Mark Hopkins, C. P. Huntiugton, Charles
Crocker, Edward H. Miller, jr., and Charles H. Cummings.
The capital stock is declared to be $100,000,000, and the company is to exist for fifty
years. Each stockholder of each of the constituent companies shall have the same
number of shares of the capital stock of the new corporation which he holds of the
capital stock of the respective companies.
The articles are signed by Leland Stanford, as president, and E. H. Miller, jr., as sec-
retary, of the Central Pacific Railroad; by Leland Stanford, president, and E. H.
Miller, jr., secretary, of the California and Oregon Railroad Company ; by Alfred A.
Cohen, president, and H. Lacy, secretary, of the San Francisco, Oakland and Alameda
Railroad Company ; by Leland Stanford, president, and E. H. Miller, jr., secretary,
of the San Joaquin Valley Railroad Company.
The consents of more that three-fourths of the stockholders of the respective
companies are attached.
WILLIAM H. MILLS. 2409
The stockholders of the Central Pacific Railroad Company are as follows : Leland
Stanford, Mark Hopkins, C. P. Huntington, by Mark Hopkins, attorney in fact ; C.
Crocker, E. B. Crocker, by C. Crocker, attorney in fact ; W. E. Brown, E. H. Miller,
jr., and C. H. Cummings.
The stockholders of the California and Oregon Railroad Company, whose signatures
are attached to the consent, areas follows: Leland Stanford, Mark Hopkins, C. P.
Knntington, by Mark Hopkins, attorney in fact ; C. Crocker, E. B. Crocker, by C.
Crocker, attorney in factfE. H. Miller, jr., and B. B. Redding.
The stockholders of the San Francisco, Oakland and Alameda Railroad Company
whose names are attached to its consent are : Alfred A. Cohen, D. O. Mills, F. D.
Atherton, D.P. Barstow, and W. C. Ralston.
The stockholders of the San Joaquin Valley Railroad Company whose names are
attached to its consent are: Leland Stanford, Mark Hopkins, C. P. Huntingtou, by
Mark Hopkins, attorney in fact ; C. Crocker, E. B. Crocker, by C. Crocker, attorney
in fact; E. H. Miller, jr., B. B. Redding, and C. H. Cummings.
OFFICES OF THE CENTRAL PACIFIC RAILROAD COMPANY,
San Francisco, CaL, Wednesday, July 27, 3 887.
Afternoon session.
WILLIAM H. MILLS, being duly sworn and examined, testified as
follows :
By the CHAIRMAN :
Question. What is your business ? Answer. As connected with the
road, I am the land agent.
Q. How long have you been connected with the road ? A. I was ap-
pointed land agent on the 1st day of January, 1883.
Q. What relations did you hold with the road prior to 1883 ? A. Ko
relation with the road as an employe.
DUTIES OF LAND AGENT.
Q. How long were you connected with the road prior to 1883 ? A. I
was not connected with it as an employe' prior to that time, nor in any
other way.
Q. Was the date of 1883 your first connection with the road in any
capacity ? A. Yes, sir.
Q. What were your duties at that time, and what are they now ?
The WITNESS. As laud agent 1 ?
The CHAIRMAN. As land agent?
The WITNESS. I have general charge and supervision of the lands
granted by the Government in aid of the construction of the road.
B. B. REDDING'S ADMINISTRATION.
Q. Who was your predecessor in office ? A. Mr. B. B. Eedding.
Q. How long was he connected with the land department ? -A. Mr.
B. B. Bedding's connection with the land department, I think, dated
from the very beginning of the grant. I think it was about 1866. That
is only from recollection, of course. I was not in a position to know or
to answer that question really anyhow.
Q. Where is Mr. Bedding now? A. Mr. Bedding is dead.
Q. How long has he been dead? A. Mr. Bedding died in the sum-
mer of 1882, some time, I think, in June or July of 1882. t
Q. Were you appointed or selected to fill the vacancy caused by his
death? A. Yes, sir; there was an interregnum in the office of land
2410 U. S. PACIFIC RAILWAY COMMISSION.
agent from that date until the date of my appointment from the date
of his death to the date of my appointment the office being conducted
by clerks and a deputy who had been in the office since the beginning
of the administration of the office.
Q. What are you paid by the company ? A. I am paid a salary.
Q. What is the salary? A. The salary is $7,000 a year.
Q. How many clerks have you? A. Six clerks besides the field
agents.
BOOKS OF LAND DEPARTMENT.
Q. What books do you keep?
The WITNESS. Personally, do you mean?
The CHAIRMAN. Yes, sir.
The WITNESS. None whatever.
Q. What books does your department keep impersonally I am speak-
ing, altogether?
The WITNESS. Oh, you are speaking of the department?
The CHAIRMAN. Yes.
The WITNESS. We keep the tract books, which exhibit the lauds
granted. We keep all the maps and all the delineations of the land
grant. We keep the plots of townships, the accounts of sales and of
leases, the accounts of sales of timber lands, of lands where the timber
is granted and the land is not granted, which is the case within ten
miles of the road if the land is mineral. We keep accounts of all mat-
ters and things relating to the land department and to the lands granted.
I also keep all accounts between the Government and the railroad com-
pany in the way of lists of selections.
Q. Have you named all the books which your department keeps? A.
Yes 5 I guess that would include all that is, in categories I have not
named the specific books in which the accounts are kept. But we keep
all books which are necessary to be kept relating to leases, and all books
necessary to be kept relating to sales, and to the balance of the prin-
cipal due upon lands sold upon credit, and all the tract books which ex-
hibit the lands granted, showing the tracts of lands.
AMOUNT OF LAND PATENTED AND DISPOSED OF. '
Q. How many acres of land has the company patented to date ? A.
My recollection is that on the line of the Central Pacific Eailroad 1,039,-
710.59 ; and on the line of the California and Oregon there are, 1 think,
1,340,000 to 1,350,000 acres patented to the company. There are some
odd figures besides.
Q. How many acres of patented land has the company disposed of?
A. On the Central Pacific there are patented and for sale to-day I
am speaking merely from recollection now 345,000 acres ; on the Cali-
fornia and Oregon there are about 275,000 acres. My general recollec-
tion is that there are patented and for sale in the two grants, in round
numbers, 600,000 acres.
Q. And the difference between 600,000 acres and the number of acres
patented have been disposed of? A. Would represent the sales ; yes,
sir.
AMOUNT APPLIED FOR AND UNPATENTED.
Q. Upon how many acres of land has the company applied for pat-
ents for survey ?
The WITNESS. Applied for altogether, do you mean I
The CHAIRMAN. Yes, sir.
WILLIAM H, MILLS. 2411
The WITNESS. On the main line ?
The CHAIRMAN. On the main line I speak of specially now.
The WITNESS. On the main line the excess of applications over the
patents is 622,000 acres and some hundreds. I do not remember the
hundreds, I only remember the even thousands. On the California and
Oregon line the ex cess of applications over the patents amounts to 400,000
acres, perhaps a little more. I know that the aggregate of applications
by the company for patents in excess of the response of the Government
is a little over a million of acres.
HOW APPLICATIONS ARE MADE.
Q. How long have the applications been on file in the Department?
A. That question cannot be answered, Mr. Chairman, in the manner,
perhaps, that you think it can. I will give you the information and
then you will see the difficulty of answering the question. Applica-
tions are made for patents by listings, that is, a list of selections is
made. The company must first select the land, claiming that it was
granted. Those lists of selections are examined by the registers and
receivers in the land district in which the land is located. That exam-
ination results in making what is called a clear list, or clearing the land
to the company. When the registers and receivers have decided that
the land is clear to the company the company pays the costs of the sur-
veying, selecting, and conveying, as required by law, and the list is for-
warded by the register and receiver, it having been properly certified
by the surveyor-general of the State that the fees have been paid to
the General Land Office at Washington. From these lists clear lists are
made in the General Land Office at Washington, and there has scarcely
been a list sent from which there has not been some suspensions from
the very first, for further examination, which examination has not in
all cases been made.
SUSPENSIONS.
Now, when you ask the question, How long have these lists been be-
fore the Department at Washington for examination ? it is quite probable
that from the very earliest selections some suspensions were made for
further examination, and that final decision in those cases has not yet
been rendered. For* illustration, a list made early in 1882, prior to my
administration of the department, comprised 126,000 acres. From that
list 65,000 acres were suspended for further examination. That ex-
amination has been made in part by special agents of the Land Office at
Washington, but patents have not been issued for it yet. Now, as to
that list of 65,000 acres the figures of the acreage are on the books,
and I speak generally, but that is about the proportion that land has
not yet been patented. Therefore, as to that list, we might say that
about 65,000 acres had been before the Department since May, 1882.
And still behind that list there might be parts of lists of selections
upon which the costs of surveying, selecting, and conveying had been
paid and to which no response from the Government has been made in
the way of patents.
EFFECT OF FAILURE TO MAKE SURVEY.
Q. Does the failure to make the survey retard the company in mak-
ing the selections ? A. Oh, yes, sir ; very greatly.
Q. Why? A. It is because the application for the land, which is
notice from settlers that they wish to settle upon the land and buy it ?
p B YOL iv 6
2412 U.'S. PACIFIC RAILWAY COMMISSION.
has been acted upon by us and we have directed our attention in all
cases to dealing with such tracts as the settlers wish themselves to buy.
You will understand that there is a very large quantity of un paten ted
land in the possession of settlers who are very anxious to obtain their
titles. They cannot borrow money on their holdings, and they cannot
proceed with their improvements until they have a title that will an
swer for collateral security, and they are very anxious to get titles.
Now, to meet the requirements of settlers, we "have always addressed
our attention and 1 see from the records of our department that that
has been our custom from the first to obtain title to such land as
people wish at once to occupy and improve and settle upon. The delay
in making surveys, then, if people want to enter upon a particular sec-
tion of country, is a drawback. People begin to notify us that they
want to buy that land, and if that land is unsurveyed, of course we can-
not give them a title to it.
METHOD OF MAKING SELECTIONS.
Q. Do you wait until you get a notice from a settler before you attempt
to make any selection of the land ? A. Oh, no, sir ; the selections have
been made generally with a view of meeting and encouraging settle-
ments. The difficulty in obtaining patents from the Government has
been, from the first, such that there was no encouragement to urge upon
the attention of the Department at Washington lists of selections, since
those already before it had not been patented ; and therefore the effort
has generally been made in the direction where settlement was pro-
ceeding, because to make lists of selections would be to facilitate its
improvement. If it was just generally to simply open the country
where there was no evidence of settlement, or no desire on the part of
anybody to take possession of the land, we would interpose those lists
between lists of land where we really desired to get patents ; that is,
where the people desired that we should get patents.
POLICY OF COMPANY IN REGARD TO APPLICATIONS.
Q. Is not the effect of such a policy and failure to patent lands, espe-
cially in settled counties, to avoid on the part of the company the local
taxation in counties f
The WITNESS. You speak now of a motive on the part of the com-
pany?
The CHAIRMAN. Of a policy of administration.
The WITNESS. If there had been such a policy in the minds of the
directors I would have been notified of that policy. I have never been
notified of the policy of withholding the applications. On the contrary,
it has been urged upon me continually to get title to all the land we
can ; that is, all the land that we can get in before the Department.
Q. Is not the effect, however, to place the tax on the land upon the
settler at once, without subjecting the company to the local tax ?
TO URGE THE ISSUANCE OF PATENTS.
The WITNESS. You mean, has that been the policy of the company?
The CHAIRMAN. Is not the effect of the policy which the company pur-
sues with reference to the land what I stated ?
The WITNESS. The policy of the company has been to urge upon the
Government the issuing of patents. That has been its uniform policy.
I cannot say what the effect of the policy would be> The effect of tlie
WILLIAM H. MILLS. 2413
policy of the Government in delaying to issue the patents has been to
keep the people who occupy the land out of their titles and in a very
unsettled and uncertain condition.
Q. Is not the effect of waiting for the settler to make application be-
fore the selection of land is made to place the local tax at once upon the
settler by giving him the immediate title instead of the company taking
the title'?
COMPANY INTERESTED IN TRANSPORTATION SIDE OF ACCOUNT.
A. The effect of taking title where there is a probability of the early
use of the land is to accommodate L the settlement; the policy of mak-
ing a general application wherever applications might be made would
be to fill the Department at Washington with applications and lists of
selections to the exclusion of lists of selections where the land would
be likely to be needed by applicants for actual settlement. That would
be the effect of that policy, and that effect would be disastrous upon
the settlement of the lands and the opening up of the country imme-
diately along the line of the roads. The company, of course, is very
anxious to settle the land in such a way that there would be a large
amount of money to the transportation side of the account. Here is
an instance where the owner of the land is interested in the progress
of the settlement. The land pays the company, perhaps, much better
after it is settled than it does by the price of it. The income from a
settled piece of land is a continuing source of revenue to the road and
they are therefore very desirous of settling the land along the line of
the road.
WHEN TAXES ARE DUE ON PATENTED LANDS.
Q. When are the local taxes due upon the lands that are patented?
A. The taxes in California attach and become a lien on all property on
the first Monday of March of each year. If the patents were issued
prior to the first Monday of March in any year, it would be taxable.
However, you will understand me that we have also possessory rights
that in the State of Nevada possessory rights are taxable, and so they
are in California. And it has been held that a possessory right is a
taxable entity, as I understand it. I know it is so in Nevada.
LOCAL TAXATION THEREON.
Q. How much has the company paid upon patented lands in local
taxation in the several counties through which it passes ? A. The taxes
of this company are managed and controlled by a tax auditor. I have
no charge whatever of the taxation on land. There is a department
which has charge of that matter. I have no figures on the subject,
none whatever, nor have I any in my department.
Q. What is the name of the gentleman who has charge of that ! A.
Mr. E. B. Kyan.
Q. Is he subordinate to you or under your control ? A. No, sir; he
attends to all tax matters relating to the company, and of course attends
to the tax upon lands. And those figures can very readily be obtained
at his office.
By Commissioner ANDERSON :
Q. He attends to the tax on the lands ? A. Yes, sir; that is the only
matter connected with the land over which I have no jurisdiction at all,
I have no jurisdiction in that case at all,
2414 U. S. PACIFIC RAILWAY COMMISSION.
By the CHAIRMAN :
Q. Have you any tax accounts whatever connected with the land
granted by the Governmet? A. The lists of lands patented to the
company and subject to taxation are made up in my department each
year and sent to Mr. Ryan's office, and that is the last I know of them.
Q. He can furnish that list to the Commission, with the amount of
taxes paid to date ? A. Oh, yes, sir ; he keeps all those matters sepa-
rately.
AMOUNT OF ORIGINAL GRANT TO THE CENTRAL PACIFC.
Q. How many acres of land of the original grant are yet due to the
Central Pacific Company ? A. The grant to the Central Pacific Com-
pany at first, I find in the reports before I administered the department,
was theoretical in quantity. It was made up by assuming that there
was a grant of 12,800 acres to the mile. There having been a grant of
twenty sections to the mile of 640 acres each, the amount would be
12,800 acres per mile. The theoretical acreage was, therefore, deter-
mined by multiplying the whole number of miles by 12,800 ac res, be-
cause that would be the quantity that would be granted ; but by reason
of the sinuosities of the road there are a great many miles which get
no land. If we take, for instance, in the vicinity of the mountains,
where the road is very crooked, there may be 2 miles of road constructed
upon one tier of sections. You are only making progress east and west
in your land grant 1 mile to 2 miles of your road. The theoreticalq uan-
tity, according to my recollection, is 9,000,000 acres on the main line.
REDUCED BY GOVERNMENT DELINEATIONS.
Q. That is the total amount? A. Yes, sir; but when the Govern-
ment delineated the grant by fixing definite exterior limits, plats of
which I can furnish you, with the certificate of the General Land Office;
that is, the governmental delineation reduces the quantity to something
like 7,500,000 acres, and from that there is another deduction to obtain
the actual result. Now, we have dealt with the grant in California, and
know pretty well just what we will get; that is, we have the materials
upon which to form a judgment. Theoretically we obtained the result
by multiplying the mileage by 12,800 acres, and it gives 1 ,992,000 acres
for California. The Government delineation gives about 1,222,000 acres,
while the actual result is 774,000 acres. Now, out of a grant of 1,992,000
acres, theoretically, the company will receive about 774,000 acres of
patented land. That deduction arises from the fact that the delineation
of the Government does not take into account the crookedness of the
road ; it makes the general exterior limits almost straight ; that is, it
follows the general course of the road. Within that delineation made
by the Government there are about 1,222,000 acres.
By Commissioner ANDERSON :
Q. What would make the second deduction to 774, 000 acres ? A.
The second deductions are the subtractions from the grant, prior dis-
posal, mineral lands, and the lands generally excepted out of the grant.
The land was granted in categories.
By Commissioner LITTLER :
Q. Would you be allowed to go beyond the limits for the purpose of
making good that grant? A. No ? sir ; not upon the main line.
WILLIAM H. MILLS. 2415
THE CALIFORNIA AND OREGON GRANT.
If you are now referring to the California and Oregon grant, I will
say that that was a grant of quantity and not a grant in place. That was
a grantof 12,800 acres, to be found within 20 miles each side of the line,
and if there was land lost in the odd-numbered sections of the lands
granted, indemnifying lists were provided 10 miles on each side of the
land granted for the purpose of indemnifying them for the loss in the
granted limits. In that case below Redding, from Redding to Roseville,
the company never acquired the full amount granted ; that is to say, there
was not enough land in the odd-numbered sections both in the granted
limits and in the indemnity limits to make the 12,800 acres to the mile,
which was the quantity granted in that case. It was an absolute grant
of quantity, amounting to 12.800 acres to the mile, but there was not
enough undisposed of to satisfy the grant for that distance.
AMOUNT OF LAND DISPOSED OF.
By the CHAIRMAN :
Q. Will you please repeat how many acres of land, estimating to date,
on the main line, the company has disposed of? A. The company has
received on the main line
The CHAIRMAN. No; I say disposed of sold ?
The WITNESS. Well, I can only do that, Governor, by subtracting.
The company has received in patents on the main line 1,666,000 acres.
There remains patented and unsold on the main line about 345,000 acres.
If you will subtract one figure from the other you will see how much
has been disposed of. The difference must have been disposed of, of
course.
AMOUNT RECEIVED THEREFOR.
Q. How much money has the company received from the land dis-
posed of to that date? A. I could not answer that question without
examination ; that is, not anything like accurately. I might approxi-
mately.
Q. Will you approximate now, and then subsequently furnish the fig-
ures to the Commission ? A. Well, there were bonds for $10,000,000,
including the interest; there are several elements entering into the
question of reduction of the bonded indebtedness. There was the in-
terest account and the sale of stumpage, and there are various things
of that sort. What you wish to arrive at, I presume, is what the land
sold for.
The CHAIRMAN. I want to know how much money the Central Pacific
has received from land disposed of to date on the main line.
The WITNESS. Approximately I should think, altogether from all
sources on the main line?
The CHAIRMAN. Yes.
The WITNESS. Well, I would have to venture an opinion on that,
because a segregation would have to be made. The fund is all kept
as one. I would say $2,000,000.
Q. Will you furnish the Commission with an accurate statement of
the sum received from lands disposed of? A. With pleasure. I will
furnish the Commission any statistical facts derivable from my books,
if the Commission will give me a list of the things which they wish.
VALUE OF LAND REMAINING UNDISPOSED OF.
Q. What do you estimate, as the land agent of the Central Pacific, is
the value of the land on the main line undisposed off
2416 U. S. PACIFIC RAILWAY COMMISSION.
The WITNESS. Patented and unpateuted?
The CHAIRMAN. Yes ; patented, or yet to be taken up. Allowing for
the deductions which you have made, what do you, as the lanji agent,
estimate to be the value of the land undisposed of along the main line
of the Central Pacific ?
The WITNESS. That is, the land that can be disposed of, excluding
from that computation the money already obtained for the sale of land ?
The CHAIRMAN. Yes.
The WITNESS. Well, I should estimate it to be $4,000,000. That
estimate is very general. There will remain, after the present deduc-
tions, probably six millions of acres, or five and one-half millions of
acres, in that grant.
SETTLERS INVITED TO GO UPON UNPATENTED LANDS.
Q. When you make a selection of land at the suggestion of a settler,
do you allow him to go upon it at that time ? A. Oh, the company in-
vited settlers upon its lands from the very outset. That is, upon the
uupatented lands of the company. You will understand that within the
limits of the grant every alternate section granted would remain uuoc:
cupied if the grant itself would constitute an obstruction to its settle-
ment. To prevent the lands from being a displacement of settlement,
the company at once invited settlers upon the unoccupied lands of the
company. They invited them to take possession of the lands and cul-
tivate them and live upon them, and they have done so, and they are
doing so. There are scarcely any lands granted to the company that
are not in the use of somebody to-day, and that have not been free from
first.
LEASES OF UNPATENTED LANDS.
Q. Have you made leases with the persons using the lands ? A. Only
in a very few instances, and within the last eighteen months. Formerly
leases were not made at all, except upon patented lands suitable for cul-
tivation. Lands patented to the company and fit for cultivation were
leased, but we did not charge the settlers anything for occupying the
land.
Q. How many acres of land unpatented and selected by you have you
leased as the land agent ? A. Three or four hundred thousand acres,
perhaps.
INCOME DERIVED THEREFROM.
Q. What income does the company derive from the leased lands se-
lected and yet unpatented? A. Up to two years ago the company had
never derived any benefit from leases of that kind. About two years
ago I inaugurated a policy, owing to the destruction of the ranges in
Nevada ; this was chiefly a matter in Nevada and Utah ; we have
leased very little or no land in California. The sheep are very destruc-
tive to the pasture, and the cattlemen object very strongly to the lands
being occupied by them. We have leased the lands as much as possi-
ble to cattle men, preferring that class of stock upon the lands to sheen,
because sheep destroy the range. One lease was executed this year of
181,000 acres for $1,200 per annum, and there is a lease executed for 320
sections. These are the two largest leases, and comprise nearly all the
land that is under lease. There are 320 sections for $10 a section.
That is, $10 for 640 acres. The price is almost nominal ; $1,200 a year
for 181,000 acres of land would be a very small rate per acre. A gen-
eral lease was executed, and the entire territory of Utah embraced in
I
WILLIAM H. MILLS. 2417
it, to one individual, so as to distribute the leases among the people
over there. That was about three years ago. 1 think that was perhaps
the first lease of that kind that was made.
Q. What expense is the company put to either in taxation or the
maintenance of lands selected and unpatented ? A. The company is
not put to any expense, unless it is necessary to protect the timber from
depredations; in that case it is very expensive, 'in California the lands
left to the company now are chiefly timber lands.
MAP OF LAND GRANT IN NEVADA.
Q. Did you issue a map concerning grazing land a year or so ago?
A. We have issued a map of the whole grant in the State of Nevada ;
yes, sir.
Q. What was the character of the map ? A. Well, I will exhibit a
copy of it here.
Q. Will you produce a copy of it to the Commission? A. Yes, sir.
Q. Did you issue an order in connection with the map ? A. No, sir ;
I do not remember of any order. I have issued a notice several times,
requesting people to rent the lands, to lease the lands, so that they
might have possession of them.
Q. Could you produce a copy of the map here now I A. Yes, sir.
(The witness sent for the map.)
COMPANY'S TITLE TO UNPATENTED LANDS RIGHT OF POSSESSION.
Q. How do you get a sufficient title to the land to warrant you in
making your leases I
Commissioner LITTLER. That is, as to unpatented lands.
The CHAIRMAN. Unpatented lands.
The WITNESS. The court has decided recently in Utah that the right
of possession of unpatented lands is in the company. That question
arose in a case between the Promontory Stock Company as plaintiff
against Adams and Schilling.
Q. What title does such possession give you ? A. It gives us the
right of possession ; that is to say, the ground.
The CHAIRMAN. I want to know the effect of such a title.
The WITNESS. Well, the effect of the decision iu that case was to give
.judgment tor the restitution of the land. There was a quantity of un-
pateuted land in the possession of Adams and Schilling. The right to
that land was sold to the Promontory Stock Company, and they brought
suit for the restitution of the land for the right oi possession ; and the
court decided that they had the right of possession. I have the decis-
ion of the court up-stairs in that case, and the charge of the judge to
the jury, which sets forth the whole story.
Q. Will you produce that ? A. Yes, sir 5 I have it printed in a little
circular form.
- CONFIRMATION OF SALE TO PROMONTORY STOCK COMPANY.
Q. Do I understand you to say that the court in that case confirmed
the sale to the parties ? A. It confirmed the right of the company to
the possession of the land.
Q. What is the name of the company? A. The Promontory Stock
Company, but they were the grantees of the Central Pacific Railroad
Company, so that it was a confirmation of the right of possession iu
the Central Pacific Railroad Company,
2418 U. S. PACIFIC RAILWAY COMMISSION.
By Commissioner ANDERSON :
Q. And of the right to transfer that possession to the grantee'? A.
Yes, sir; and I wish to say in that respect that if patents could be ob-
tained with facility no measure of that sort would ever have been re-
sorted to. But the patented land of the company has been in the pos-
session of everybody without lease for years. We have 214,000 acres
patented in the State of Nevada that have been in the free use of the
people of that State for a great many years without rent.
TERMS OF LEASES.
By the CHAIRMAN :
Q. How long dp you make your leases ? A. The leases are made for
one year, with the privilege of sale. That is, they can be renewed from
year to year, if the lands are not sold in the mean time. The leases more
frequently than otherwise include patented lands. They include a large
range of country. If you saw that country as you came over it you will
be prepared to understand that it takes a large quantity of it to be useful
to a herdsman. It is leased in large ranges ; lands convenient to water.
Q. What is the length of the term of your large that leases you spoke
of two or three years f A. One year.
(The map already referred to was here produced.)
DIVISION OF NEVADA LANDS INTO GRAZING RANGES.
The WITNESS. Here is a map of the grant of lands in Nevada. There
is a good deal of green on the map.
The CHAIRMAN. I call your attention to the order signed by you dated
July 31, 1885, and printed upon this map, of u Lands granted by the
United States to the Central Pacific Railroad Company in the State of
Nevada." That order states :
Hereafter land belonging to the Central Pacific Railroad Company in Nevada
be sold only in grazing ranges. The grant -Las been divided into ranges as set forth
below. The ranges will be sold or leased to stockmen on easy terms. The attention
of stockmen in Texas and Wyoming is respectfully called to these ranges and the lib-
eral terms upon which they may be secured.
Will- you please state to the Commission why a special description and
division of the land was made by the company and by your order into
grazing ranges ?
THE REASON OF SUCH DIVISION.
The WITNESS. It was because the sale of land immediately contig-
uous to water destroys the use of the land lying behind that water. If
you look upon this map you will see that it is divided into ranges, that
is, approximating somewhat the water. There, for instance, is water
through that range, and here is some water in this range. The lands
granted to the company, if they are ever to find sale, must have the use
of water. To begin with, this land will find its highest use for hundreds
of years to come in grazing. It is distinctively grazing land. Nearly
all the land left now to the company is grazing land or timber land.
There is some foot-hill fruit land left. The former practice was to sell
land in 160 or 640 acre tracts. Some lands of the company were sold
along the margin of streams by 40-acre tracts. The order that you see
there, that is, the notice that you see on the map, was that all the land
used by a herdsman must be purchased by him. They used these
ranges. This whole territory is in free use now except as to the two in-
WILLIAM H. MILLS. ' 2419
stances of leases that I spoke of, one of them here in the eastern end of
the grant and the other about the middle of the grant, with some minor
exceptions, as for instance where a single section has been leased to a
herdsman. So the order was given that hereafter the lands would be
sold only in ranges, because in that way only can the lands be disposed
of. If the water necessary to the profitable use of the range is sold it
is the equivalent of conferring upon the purchaser of that water the per-
petual use of the land without purchase. This is just what the Gov-
ernment of the United States does all the time.
AREA OF RANGES, AND WHAT THEY ARE GOOD FOR.
Q. Are the numbers from 1 to 28 upon the map descriptive each of
range I A. Yes, sir. That is, they are intended to be generally descrip-
tive of a range. The whole grant was divided into ranges from 100,000
acres up, and some of them containing 200,000 acres.
The CHAIRMAN. I observe that the ranges grade from 30,000 acres
to 600,000 acres ?
The WITNESS. Yes.
Q. Is not the effect of that to virtually or entirely exclude from this
territory granted to you by the Government and designated by you as
grazing land, all settlers except those who are engaged in the grazing
business and able to purchase a range of from 30,000 to 600,000 acres ?
A. The class you speak of have been excluded since the settlement of
the country. They are excluded by the character of the country itself.
They are excluded from the fact that the most of that territory is at
such an altitude that there is frost every month in the year. The lowest
place on that grant is 3,300 feet above the level of the sea, while it rises
in some instances to nearly 6,000 feet. The annual rain-fall of the coun-
try, including the snow is 2J inches of water. It is therefore an arid
country, under a high altitude, with very cold winters. For the most
part, in the eastern portion of the grant, the thermometer goes down to
20 and 25 degrees below zero. It is not in any sense of the word an
agricultural country.
THE WATER " BODIED UP" UNDER LAW OF NEVADA.
That policy was also forced upon the company for another and a very
important reason. The State of Nevada had a grant of the sixteenth
and thirty-sixth sections for school purposes. The Government of the
United States took that grant back and issued in lieu thereof scrip to
the amount of 2,000,000 acres of laud, authorizing the State to dispose
of that land as it saw fit. The legislature of the State allows the land
to be taken in 40-acre tracts. The purchasers of that land purchased
the land lying contiguous to water. The State inaugurated a system
which, as they characterize it in that country, " bodied up " the water
in such a way as to give its exclusive use to the purchaser of lands ly-
ing contiguous to water. That policy, being pursued by the State of
Nevada, produced a corresponding policy upon the company, because
purchasers of lauds in that State could buy this floating scrip of the
State and could body up the water in that way. They " bodied up 77
the even sections within the limits of the railroad grant, and they
" bodied it " solid outside of the limits of the railroad grant. It was a
plain recognition upon the part of the land authorities of the State of
Nevada that the country was distinctively a grazing country. And
while agriculture has been prosecuted there, under irrigation, in the
lower part of the grant, from the Humboldt House particularly down,
2420 U. S. PACIFIC RAILWAY COMMISSION.
and while there are large quantities of laud in Hurnboldt County which,
if capital could be induced to take the water out, might be raised to a
very considerable state of productiveness and induce a very considera-
ble agricultural interest, yet there are other portions of the Pacific
coast so much more productive that capital is not likely to be attracted
that way.
BUT TWO LAEGE SALES MADE IK NEVADA.
Q. How many ranges designated on the map that you have produced
have -been disposed of by lease or otherwise ? A. There have been but
two large ranges sold in the State of Nevada. That is, in any consider-
able quantity. There was one of 30,000 acres and one of 31,000 acres.
Those two are the only sales I recall now there may be others. There
htove been two large leases executed in that State.
I wish to say to the Commission that these ranges are not arbitrary
by any means. An individual can buy all the land in the township.
The announcement there is simply the declaration that the old policy
of selling water, that is, selling 160 or 640 acres of land on the water,
would not be any longer pursued. It was a declaration that the man
must buy a sufficient quantity of land lying back of the water so that
he would divide the water (water being indispensable to the use of the
laud) into something like fair proportions, so that lands contiguous to
water would not be purchased in such a way as that the lands lying
behind it would be wholly unsalable. If the compauy was to ever real-
ize anything from its grant, that was the only policy to be pursued.
That 600,000 acre range is right there before Mr. Anderson, and com-
prises very largely the White Plains and Humboldt Desert, and 40
miles of desert, along through that region. We put it in a large tract
there because at least 550,000 acres of it has no grass on it.
SEEMING DISCREPANCY WITH REPORT FOR 1882.
Q. Will you please explain to the Commission the difference in your
statement, or the seeming difference in your explanation just made, and
the report furnished by you in the year 1882 ?
The WITNESS. 1883.
The CHAIRMAN. Memorandum relating to bond-aided roads. You
place the agricultural land in Nevada and Utah at 2,000,000 acres !
The WITNESS. Is that my report of 1883 ?
Mr. NORRIS. Report dated January 1, 1883, for 1882.
The WITNESS. I wish to state to you in regard to that report that I
came into the department, as I have already stated to you, on the 1st
of January, 1883. My predecessor had died during the year 1882. This
report was derived chiefly from statements made to me by the gentle-
men in charge of the office as to quantities of land and things of that
kind. Immediately after taking possession of this office I was sent to
Washington and New York by the company on other business, and I
did not return so as to resume my duties in the land office until the
1st of April. This report was written in June. They notified me that
I must make a report for the year 1882 of the office I had adminis-
tered. That is, taking it up to July, I never had administered any part
of the department for that year. You will observe I came into office,
I went to Washington, and I resumed business here on the 1st of April,
1883. When I was notified that a report of th at kind was to be made
I took the reports of former years that had been made by my predeces-
aor, called the gentlemen in who had been connected with the depart-
WILLIAM H. MILLS, 2421
ment from the first, and taking such general statements as might be
derived from their knowledge and recollection and having the general
pattern of the reports that theretofore had been made, I made the
statements that appear there. Now, following that, you will find that
all reports of my department are entirely devoid of any statement con-
cerning the segregation of that land into agricultural, grazing, or tim-
ber land.
NO DESCRIPTION OF LAND IN REPORTS.
Q. Did you attempt in your report of the subsequent year, or the year
1885, to make any description of the land ?
The WITNESS. My report is before you, is it not f
The CHAIRMAN. I am asking you the question. I ask you to look at
the report ibr the year 1885, and say whether you attempted any de-
scription of the land.
The WITNESS. It appears not, from this report.
Q. What other report can you produce, at any subsequent period, in
which you divide the number of acres of land into agricultural and min-
eral or otherwise in the lands granted by the Government ? A. I have
made no other report to the company than such as are published in its
annual reports.
VALUE OF UNSOLD LANDS ON MAIN LINE.
Q. I call your attention to the annual report of the Central Pacific
Eailroad Company for the year ending December 31, 1885, under the
heading of " Assets," and ask you to please explain the item, "Lands
unsold estimated value, $24,000,000," with the estimate of value that
you have given to the Commission, of $4,000,000. A. That was on the
main line, if you please. I made the estimate of $4,000,000 on the main
line and did not include the California and Oregon ; that is not in any
respect my work.
THE CALIFORNIA AND OREGON GRANT.
By Commissioner ANDERSON :
Q. What is your valuation of the California and Oregon, so that we can
gauge the difference between the two estimates ? A. The value of the
California and Oregon grant is much greater than that on the main line.
There are about 1,400,000 acres in suspension, north of Eedding Junc-
tion, awaiting adjustment. That is my general estimate. That land is
worth perhaps an average of $2 to $2.50 an acre. There are nearly
300,000 acres unsold in the California and Oregon grant. Some of that
land is quite valuable, as timber laud, and will become valuable as tim-
ber lands come to be demanded. It is worth perhaps $3 an acre now,
but the valuation upon these lands I have noticed 1 am speaking now
simply of what I have seen of the valuation in these reports is based
upon the price that the Government asks for lands within the limits
granted to the railroad companies. It is the double minimum which
the Government, fixes as the price of lands that alternate with lands
granted to a railroad. It is an estimate derived from multiplying the
whole number of acres by $2.50, I presume.
VALUE OF AGGREGATE GRANT.
Q. As tested by your judgment of what can ultimately be got for
these lands, do I understand that the estimate of $24,000.000 is entirely
2422 U. S. PACIFIC RAILWAY COMMISSION.
inaccurate ? A. My judgment is that the estimate of $24,000,000 is too
high, having been ascertained by multiplying $2.50 for every acre of
land within the grant. The 4,000,000 of acres of land in the^State of
Nevada are not salable at $2.50 an acre, and never will be.
By the CHAIRMAN :
Q. How much is the asset of $24,000,000 upon the page before you,
depreciated in comparison with the actual value of the same asset " land
unsold"? A. Well, 1 presume that the lands remaining to the com-
pany might be placed at ten or twelve millions of dollars, fairly $12,-
500,000, including the lands in Nevada and Utah.
Q. Then the asset of $24,000,000 is just $12,000,000 too much as an as-
set of the Central Pacific Eailroad Company, of "lands unsold?" A.
According to the rules of arithmetic.
ANNUAL REPORTS.
Q. Do you make annual reports f A. Yes, sir.
Q. To whom do you report $ A. To Governor Stanford, as president
of the company.
Q. Will you furnish the Commission with a copy of your reports dur-
ing your term of office and your predecessors 7 term ? A. Yes, sir ; if
I can find them. I can furnish you my own, I know. There are some
other statistical matters that have been referred to here that perhaps
ought to be tested by the actual facts. I have stated a great many
things from memory.
The CHAIRMAN. In each case I have for the present taken your esti-
mate, and will ask you to produce the actual figures in the form of a
statement. I only wanted to get the approximate figures at present.
I understand you to say that you have not in your department any tax
account I
The WITNESS. No, sir.
GOVERNMENT LAND GRANT THE ONLY ONE.
By Commissioner LITTLER :
Q. Did this company ever acquire additional lands from any other
source than the United States Government If A. No, sir.
Commissioner ANDERSON. You mean as a gift. They have purchased
land for terminal facilities.
Q. They have had no local land grants within the State ? A. No,
sir. The sovereignty of the soil over which they pass belongs to the
General Government.
Q. You mean their land has been derived from the Government ?
A. Of course. And the sovereignty of the soil is in the Government
in the States and Territories through which the line passes.
Q. I understand ; but in some cases the States have lands, and I did
not know but that the State of California had fooled away its grant in
that respect to the company. A. No, sir ; the State of California has
managed its land grant excellently well, in my judgment.
NO PURCHASES OF MINERAL LAND BY THE COMPANY.
By the CHAIRMAN :
Q. Have you purchased any mineral lands for the company ? A. No,
sir.
Q. Have any purchases been made, or have any entries upon mineral
lands in the names of individuals been made for the use of the com-
WILLIAM K. MILLS. 2423
pany? A. Not that I am aware of. Nothing of the kind has ever
been done through my department. Mineral lands are not a desirable
kind of land to own in this country.
TITLE TO WYOMING COAL LANDS.
By Commissioner LITTLER :
Q. How did the Central Pacific acquire title to its coal lands in Wy-
oming ? A. I have no knowledge upon the subject. By purchase, I
presume.
Q. To what sources can you refer us for information on that ques-
tion ? A. My judgment would be that Secretary Miller would be good
authority in that matter. Will you permit me to exhibit this map to
you before you ask me any further questions ?
Commissioner ANDERSON. Certainly.
DESCRIPTION OF THE LAND-GRANT MAP.
The WITNESS (referring to the map). There is the land grant in
California. All the lands in red have been disposed of by the com-
pany. All the lands in green have been disposed of by the Govern-
ment. These lands [indicating] were Spanish grants. You will see
that from Sacramento out, for a considerable distance, there was a very
small grant of land obtained. The lands marked yellow are mineral ;
that is, they are denominated " mineral" by the United States survey-
ors-general. All these checks on them have been applied for; that is
the cost of selecting and surveying have been paid and the lands are
before the Department at Washington to be patented. Lands with a
circle around them are unsurveyed, and therefore unavailable in any
way. The only part of the grant in the State of California that we
have not tried to get title to is a little spot there [indicating], embracing
about ten or twelve thousand acres. All these red lands are patented
and sold ; the blue lands are patented and for sale. All the lands col-
ored green were disposed of by the Government by homestead or pre-
emption or by prior appropriation, before the rights of the company at-
tached. Lands colored in yellow are mineral lands. All that remains
of this grant to be dealt with at all is a small space there [indicating] .
Q. A small place in the northeast ? A. "Yes, sir. Now it is from this
map that I obtain materials for my statement that the grant in Cali-
fornia will yield the company but 774,000 acres, and you can see that we
have here the data from which such an estimate- might be safely made.
I have made that estimate since the Commission has been in session
here the estimate of the number of acres that we can get.
MINERAL LAND.
By the CHAIRMAN :
Q. What effect would a selection of land, leased by you before it was
patented, have upon the discovery that it was mineral land and that
you were not entitled to it under the law? A. Well, if we had leased a
piece of land and we were not entitled to it, I suppose that the party
who had paid the lease money would be entitled to recover or entitled
to a rebate.
Q. Do you make any conditions upon selected lands, unpatented, for
any discovery in the future of minerals ? A. No, sir; that is not neces-
sary. We have never leased, that I know of, any land in the mineral
regions of California. We have made but very few leases, and those
2424 U. S. PACIFIC BAIL-WAY COMMISSION.
very small, in the State of California. The leases that I spoke of have
been in Utah and Nevada. The discovery of minerals has been one of
the sources of loss to the company by reason of the tardiness of the
Government to give us patents. The company was interested in getting
its title as early as possible in consequence of that. Your questions
have frequently gone to the general subject of a supposition that the
company has avoided taking title to its land to avoid taxation. The
one item alone of loss of lands in consequence of the discovery of min-
erals would have paid all the taxes that ever could have been assessed
against the company if the whole grant had been taxable from the start.
The decisions of the courts, upon lands patented to the company before
valuable mineral deposits are known to exist, are that the mineral passes
with the patented land, but if the mineral is discovered prior to the is-
suing of the patent the land is lost to the company, and that extension
of discovery has lost in value more to the company, a great deal more
than the taxes would have amounted to.
AVOIDANCE OF TAXATION ON LAND.
Q. As a business proposition, if you could have conveyed your title
at once upon the issuance of the patent, would you not, to that extent,
have avoided local taxation in the county in which the land was
located? A. If I understand the question it amounts to this, that if
the land was unpatented and not taxed we would have saved the tax.
The CHAIRMAN. Certainly.
The WITNESS. But if, by reason of failure to take the title, mineral
discovery should aifect the land we would lose the land.
The CHAIRMAN. I spoke of lands that you have patented, and not of
lands that are the subject of selection.
The WITNESS. Then I beg your pardon.
POLICY IN REGARD TO DISPOSAL OF LAND.
Q. I ask you, as a business proposition, whether it would not have
been better from a financial standpoint, in the handling of the lands of
the company, to pursue a policy of disposing of the land as quickly as
possible after patenting, in order to avoid the local taxation ? A. It
would as a business proposition. It has been the policy of the company
to dispose of its lands as soon as possible. It undertook to repay this
mortgage within a given time. It had to raise the money out of the
sales of land and it has pursued the policy continually of urging the
sale of its land. As a business proposition the land in the possession
of a settler is of the highest value to the road, on the transportation
side of the account, and there was, therefore, the strongest motive in the
mind of the company always in favor of disposing of the land, as
against holding it, if the land is not in the possession of any one dis-
posing of it.
FAILURE TO PATENT LANDS DUE TO TARDINESS OF GOVERNMENT.
Q. Have you failed to patent land for the purpose of avoiding local
taxation at any point along your line ? A. No, sir. Under my ad-
ministration of the land department I have urged upon the Department
at Washington continually the subject of survey. I have urged upon
their attention selections. I have written frequently, and personally
made complaints to the Commissioner of the General Land Office at
Washington, of the tardiness of the Government in making response.
WILLIAM H. MILLS. 2425
The Commissioner of the General Land Office in that interview promised
to give it his personal attention. I represented to him the tardiness of
the Government in making these examinations. The reports of the
Commissioners of the Land Office from 1881 to the present time show
conclusively that the Government is many years in arrears with its
work. Mr. Sparks reports 16,500,000 acres of selections before his de-
partment. He reports that he was able to examine and certify about
100,000 acres in one year. Mr. McFarlane, his predecessor in office, made
application to the Secretary of the Interior for one hundred additional
clerks and accommodations for them. Mr. Sparks renewed that appli-
cation when he came into office and approved of the recommendation,
or request, of his predecessor, and said that it was necessary. In 1862
Mr. Commissioner McFarlane reported to the Secretary of the Interior
that the railroad division was many years in arrears. There is no pro-
vision of the law whereby one company shall have a due proportion of
the patents that they are able to examine and certify to in a single year,
and we do not know what the fate of other companies in this respect
is. We have given passes to United States surveyors in order to induce
them to take contracts for surveys that the land might be patented.
LAND ENTEIES AND LOCATION OF LANDS.
Q. Can you furnish a statement showing the land entries paid for by
the company ,- and the location of the land ? A. Yes, sir; the location
of the land applied for will be shown on this map, so far as California is
concerned. All the land on this map with a blue check on it is applied
for, and the fees for the surveying is paid. The costs for the surveying
are paid. You see it is taken clear up to this point [indicating], I do
not know why that [indicating] was left out. My instructions were to
commence at that end and "clean it up," as we call it. That is, take
everything right straight on through the grant. You see that that
course has been followed here up to this point ; and why that has not
been done here I do not Imow. I am disposed to think that it is inter-
dicted mineral, which shuts oif our application.
Q. I understood you to say that you have paid for those entries ? A.
Yes, sir ; we have paid for those surveys. All the fees for surveying
have been paid on those lands.
WITNESS REFERS TO HIS DEPOSITION SUBMITTED WITH GOVERNOR
STANFORD'S EVIDENCE.
Q. What other statistics have you bearing upon that question ? A.
Well, I will state to the Commission that the questions which you pro-
pounded to Governor Stanford, as president of the road, were furnished
to me, and I answered to him, and yesterday a notary public appeared
at my office with iny answer. I answered in writing, and answered as
'fully and completely as it was in my power to do ; and a notary public
appeared and I verified that statement to Governor Stanford. I pre-
sume that Governor Stanford will hand it to you in connection with the
answers to the questions which you have propounded to him. In that
you will find a great many questions fully answered and accurately an-
swered from the books. The statistics concerning the amount for which
the lands were sold and the amount and quantity of lands sold, are being
made up in my office now.
THE LAND FUND.
Q. What control have you over the land fund I A. None whatever,
I pay it to the representative of the trustees of the land mortgage.
2426 U. S. PACIFIC RAILWAY COMMISSION.
Q. How often do you make settlements ? A. Every day. At tbe
close of business each day I pay to the treasurer of the Central PacitU-
Eailroad Company, who is the treasurer of the trustees of the laud-
mortgage fund, all money received that day.
Q. Does that end your control over the fund after the day's settle-
ment? A. Yes, sir. It is a trust fund, and it is paid to the trustees,
and they have control of it.
Q. Who are the trustees of the land-grant mortgage ? A. Mr. W. E.
Brown and J. O'B. Gunn.
NO LAND GRANT FROM CALIFORNIA.
By Commissioner ANDERSON:
Q. Mr. Mills, are you positive in your answer that this company has
not received land aid from the State of California or from any of the
counties'? A. It has not. That is the extent of my knowledge, at
least. I have been a citizen of this State for twenty-four years, and I
have taken part in the general discussion of these questions. I was
editor of a paper for a great many years, and I never heard of it if they
ever did. I am only speaking now from the absence, rather than the pres-
ence, of knowledge. There may have been some grants of terminal facil-
ities, for instance. There may have been a grant of water front, and
some for depot purposes, but not as a subsidy. That is, there is no such
thing in my office received as a subsidy.
Q. Who can tell us in regard to that f A. Mr. Gage could assist me
in answering that question.
GRANT OF TERMINAL FACILITIES AT MISSION BAY.
Q. Was there no land grant in connection with Mission Bay ? A.
Yes, sir ; there was land granted for terminal facilities here at Missiou
Bay. But what I understood your question to cover was the question
of inducement to construct the line. Of couFse this grant at Mission
Bay was given after the line was constructed.
WATER FRONT AT SACRAMENTO.
Q. Were there other grants of that character? A. I believe there
was some water front granted at Sacramento on condition that they
would construct wharves and put lifting works upon them. That was
after the road was completed, or after the line was completed.
Q. Are those matters in your department ? A. No, sir. My depart-
ment is confined strictly to the lands granted by the acts of 1862 and
1864, in aid of the construction of the road. These other matters are
generally in the hands of the various departments ; for instance, if a
shop were located upon the lands it would be in charge of the master
mechanic. If they were held for depot purposes they would be in
charge of the superintendent of the track department or the superin-
tendent of the right of way. Mr. Curtis would have charge of them.
These lands here, I suppose, are in charge of the company generally.
Q. That is the Mission Bay lands ? A. Yes, sir. The Mission Bay
lands must be in the charge of the directors or their representatives.
NO STATE LAND GRANT BEFORE CONSOLIDATION.
Q. Was there no State land grant to any of the roads which were con-
solidated together before the general consolidation of the Southern Pa-
WILLIAM H. MILLS. 2427
citic ? A. No, sir. There were no State lands to be granted. The State
had nothing but the sixteenth and thirty-sixth sections, and it lost all the
sixteenth and thirty-sixth sections in mineral belts, so that the State it-
self bad no lai)ds to grant. The State was not possessed of any land,
practically, at that time. The swamp lands of the State were very
largely disposed of prior to the time that this road was constructed, and
it could not have granted those. Congress granted, under the act of
1850, the swamp and overflowed lands to the State of California, but
none of those were granted to the railroad by the State. The State ex-
tended a credit, though that is a matter outside of anything I am per-
sonally cognizant of. It extended a credit, but it was not in the form
of a land grant.
CENTRAL PACIFIC vs. L. B. ADAMS.
Judge McKissick calls my attention to an error in my testimony.
You gentlemen are lawyers, and I do not know that it is of any im-
portance at all, but you will discover that this was not an action in eject-
ment. It was the Central Pacific Kailroad Company vs. L. B. Adams.
(The witness here handed to the Commission the- papers in the case
referred to, together with the charge of the judge to the jury.)
The WITNESS (continuing). The Promontory Stock Company I sup
posed had been a party to the action. There is the charge of the judge
to the jury that I referred to.
LESSEES OF LARGE RANGES.
By Commissioner LITTLER :
Q. Who was the lessee of the large ranges that you have spoken of?
A. Sparks and Tinnin are the lessees of it. 1). P. Tarpey is the
largest lessee in Utah, and George W. Crumm is the lessee of the 181,000
acres that I spoke of. George W. Crumm's address is Battle Mountain
and Sparks and Tinnin is Wells, Nev., and D. F. Tarpey's address is
Corinne, Utah.
Q. Who is the lessee of the Promontory Stock Company ? A. That
is sold. That is, the company's rights there are sold.
Q. To whom ? A. To the Promontory Stock Company.
Q. Who compose the Promontory Stock Company ? A. A gentleman
by the name of Buford and another by the name of Taylor and another
by the name of Crocker Taylor, Crocker, and Buford.
Q. What is Mr. Crocker's name? A. George Crocker.
Q. Is he the Mr. Crocker connected with the Central Pacific Railroad
Company ? A. He is a brother of Col. Fred Crocker.
Q. What connection have the other members of that company with
the Central Pacific ? A, Mr. Taylor is not connected with them in any
way. He was formerly superintendent of public instruction in this city
and he is an enterprising gentleman who has been engaged in specula-
tion with them. Mr. Buford's relations with the Central Pacific I have
never known. He is a lieutenant in the Navy, and he has no connec-
tion with this road that I know of.
WILLIAM H. MILLS.
P R VOL IV 7
2428
IT. S. PACIFIC RAILWAY COMMISSION.
The witness, William H. Mills, subsequently submitted the following
statement in connection with his testimony :
Table showing aggregate acres selected by and patented to the Central Pacific Eailroad Com-
pany, and the Central Pacific Railroad Company as successor to the California and Oregon
Eailroad Company, at the end of each half year, from the earliest date, to January 1, 1887,
and during the Jive months thence ensuing, ending June 1, 1887.
Date.
Selected by.
Patented to.
Acres.
55 259 09
Acres,
January 1 1866
July 1 1866 .
45 5JQ 54
January 1 1867 .
i"]3 153 gg
July 1 1867
156 204 95
190 7fiO I|A
161 755 67
144 386 63
July 1 1868
July 1 1 869
278 532 56
261 525 33
January 1 1871 .
296 910 21
July 1 1871
271 005 85
January 1 1872 .................................... ....
492 ggg gi
July 1 187 9 *
558 967 09
430 96 9 32
January 1 1873 -.
J.il\ 1 '1874 '
431 122 32
899 357 32
953 788 94
833 852 37
J'Hiuirv 1876
835 5S5 26
hil\ 1 IHTti
1 316 819 11
t.n'uirvl 1877
1 362 982 02
1 02 913 35
Inly 1 1877 .
1 376 548 38
1 234 0*9 27
Jaiju.irv 1. 1878
July 1 1878
1 259 667 07
1 838 112 62
July 1 187'. J
1 950 955.35
January 1, 1880 ,
2 048 788.57
1 657 557.77
Juh 1 1880
2 240 072 29
2 047 021.43
January 1 1881 .
July 1 1881 . .
2 059 593 94
January 1 1882 . .
July 1 1882 .
January 1 1883
2 366 031 57
July 1 1883
2 119 038 66
January 1 1884
2 397 234 85
2 143 553 15
July 1, 1884
2, 523, 602. 41
2, 176, 517. 83
January 1 1885 .
2 611 684 01
2 252 619 74
July 1 1885
2 651 533 52
2 272 514 83
January 1 1886
2 720 249 41
2 284 260 72
July 1/1886
3,350,739.61
2, 324, 955. 53
3, 480, 782. 16
2, 402, 384. 34
June 1, 1887
3, 581, 146. 22
Listed 3,581,146.22
Patented 2,402,384.34
Balance in the company's favor 1,178,761.88
OFFICES OF THE CENTRAL PACIFIC RAILROAD COMPANY,
San Francisco, Gal., Wednesday, July 27, 1887.
EDWAKD H. MILLEK, JR., being further examined, testified as
follows :
By Commissioner ANDERSON :
Question. Will you produce the books and minutes which ygu.
relating to branch roads? Answer. Yes, sir.
EDWARD C. WRIGHT. 2429
By the CHAIRMAN :
Q. And also the minutes of the board of directors of the branch roads ?
The WITNESS. That is, the roads that are consolidated with the Cen-
tral Pacific I
The CHAIRMAN. Yes.
The WITNESS. I can produce such as I can find. We never had them
all. Do you want them produced now ?
Commissioner ANDERSON. Yes ; so that we can take them up to the
hotel with us as soon as we adjourn.
. The WITNESS. I can get them all for you in an hour.
E. H. MILLER, JR.
OFFICES OF THE CENTRAL PACIFIC EAILROAD COMPANY,
San Francisco, Cal., Wednesday, July 27, 1887.
EDWARD C. WEIGHT, being duly sworn and examined, testified
as follows :
By Commissioner ANDERSON :
Question. What is your position in the Central Pacific Kailroad Com-
pany ? Answer. General auditor.
DUTIES OF GENERAL AUDITOR.
Q. How long have you been general auditor ? A. A year,
Q. One year ? A. About a year.
Q. Were you connected with the company before that time ? A. Yes,
sir ; I was with the company for seventeen years.
Q. State what positions you have held. A. I was assistant general
auditor before that, and before that I was a #lerk.
Q. Please state generally what are the duties of the general auditor.
A. We receive the daily reports from the ticket auditor and from the
freight auditor, in a condensed form, they receiving the reports from
agents. We receive also the daily statements of account from agents,
which we check against these other auditors' reports.
EARNINGS AND OPERATING EXPENSES.
Q. What you have stated then relates solely to the earnings? A.
Earnings and operating expenses. We make up reports of the operating
expenses also.
Q. From what sources do you receive the operating expenses I A.
From reports received from the different departments, such as the
motive power, and machinery department, bridges and building de-
partment, and track department.
Q. The two statements you have made, then, will cover the receipts
of the road, the earnings of the road, and the expenses of operation?
A. Yes, sir.
Q. Now, do any other of the accounts of the road pass through your
offices I A. Most all of the accounts representing the earnings and
operating expenses go through our office 5 we make up the monthly
statements.
CONSTRUCTION ACCOUNTS.
Q. Do charges for construction account pass through your office ?
A. Yes, sir ; a great many of them.
2430 U. S. PACIFIC RAILWAY COMMISSION.
Q. Do you audit all bills for construction ? A. Not all. Some of
them go to the secretary's office secretary and comptroller.
Q. Please state what makes the distinction as between items that go
to your office and those which go into the secretary's office? A. I
know very little about those that go to the secretary. The most of
them go through our office. Very seldom once in a while there
might be a trifling item of what is known as general expense, for which
they send the bill to the secretary's office.
Q. Does it first come to you and you send it to the secretary ? A. If
it should come to me I would send it to the secretary.
VOUCHERS FOR GENERAL EXPENSE.
Q. Why should you select such a bill for general expense and send it
to the secretary instead of auditing it as you would the general run of
bills ? A. I know they have such an item as general expense. It is a
matter of custom more than anything else.
Q. Is it 'because the object for which the money has been expended
dotes not appear upon the face of the voucher ? A. All the money al-
ways appears upon the face of the voucher.
Q. But you have stated that vouchers for general expense sometimes
go to the secretary's office ; do you refer to a form of voucher which
would disclose exactly what the nature of expense was, and still say that
you would send such a voucher as that to the secretary I A. It might
be something in the nature of a purchase bill for the particular use of
the secretary, that I would know nothing about, and I would send it up
there.
Q. Then the test would be that you would send vouchers which you
did not feel competent to pass upon yourself, from your own knowledge
of the requirements of the road, to the secretary for his judgment f A.
Yes, sir.
Q. And after the secretary disposes of them, would they come back
to your office? A. A voucher might come back to our office with in-
structions from the secretary to dispose of it there and charge it to a
certain item of operating expenses.
DISTRIBUTION OF ACCOUNTS.
Q. After you have audited a bill for any purpose which you have re-
ferred to, do you have anything to do with the distribution of it ? A.
Yes, sir ; as a rule I direct the distribution.
Q. And you have been engaged in this business either as assistant
or as principal for seventeen or eighteen years? A. Oh, no; not so
many years. I was in a subordinate position for some of this time in
other offices, and knew nothing about the distribution of the accounts.
Q. How long have you been engaged in this business ? A. About
ten years.
Q. Would you be able to furnish the Commission a statement year
by year for the ten years, showing the distribution of the items which
went to the construction account, to the equipment account, and to
operation? A. The way we dispose of construction items at present is
no I could furnish what is charged in bulk to operating expenses ;
it would take a long time to do it, though.
CONSTRUCTION BILLS AUDITED BY PACIFIC IMPROVEMENT COMPANY.
Q. To show you what I mean, can you take the construction account
of that portion of the California and Oregon that was done under the
EDWARD C. WRIGHT. 2431
contract with the Pacific Improvement Company anil explain the various
vouchers for payments made under that contract; as audited by you,
so as to show us from time to time how much road was constructed,
and how much in the shape of vouchers had been audited and approved
by you <?
The WITNESS. You mean work north of Delta ?
Commissioner ANDERSON. Yes.
A. I do not even audit those bills now. If a bill comes to me, I send
it in to the secretary of the Pacific Improvement Company.
Q. Why do you not audit those bills'? A. Because they are doing
the work.
Q. Who are doing the work ? A. The Pacific Improvement Com-
pany.
Q. But if your company is doing the paying, is it not proper that
your department should audit the bill before the payment should be
made ? A. The payments to the Pacific Improvement Company are
not made through our office.
Q. Through what office are the payments made ? A. I could not say,
unless it is through the secretary's.
Q. Is that not unusual ? A. I do not think so.
METHOD OF PAYMENTS AS TO OTHER CONTRACTS.
Q. What other large contracts have been paid through the secre-
tary's office without going through the auditor's office! A. You will
understand that all the vouchers that are audited in our office are al-
lowed by the secretary and comptroller.
Q. What is that? A. Most all of them are allowed by the secretary
and comptroller.
Q. So I understand. But my question is, what other large contracts
have been paid for by the company without being audited from your
office? A. The Western Union Telegraph Company's payments are
not made through our office, although the showing is in there.
Q. How about the payments made to the Contract and Finance Com-
pany ? Do you know about those ? A. That was before my time, and
I do not know how that was managed.
Q. Well, substantially, the bills of the Pacific Improvement Company
were audited directly by the secretary or by the board of directors ?
A. That I could not say. They are not paid through our office.
Q. Do you know what evidence the company receives of the perform-
ance of the work, and the justice or the propriety of the bilfin regard
to work, done by the Pacific Improvement Company ? A. Merely by
hearsay. I really do not know, of my own personal knowledge, any-
thing about it.
REPORTS OF EARNINGS OF LEASED LINES.
Q. Do you also receive in your office the reports of the earnings of
the leased lines as well as those of the Central Pacific Railroad di-
rectly ? A. We make up the earnings of those different lines composing
the system in our office.
Q. On what basis or with what material do you make up the earn-
ings of the leased lines'? A. We receive detailed statements. Say w^e
are distributing freight earnings, we receive a detailed statement from
the general freight office, showing the amount in dollars. We distribute
that over the line; it passes well, it is distributed right straight over
the line which it passes, on the basis of mileage.
2432 U. S. PACIFIC RAILWAY COMMISSION.
Q. So that in making up the earnings then for a given year, you have
to make up the earnings of the main line proper to make up the earn-
ings of all the different lines which were leased to the Central Pacific I
am speaking now of the period prior to the lease from the Central Pa-
cific to the Southern Pacific and you then distribute the learnings of the
interchanged traffic, as you have said, in accordance with mileage so as
to credit each road with its proper proportion ! A. Yes.
Q. And in that way you make up a complete statement for the year
of the earnings of the main line and of its branches ? A. Yes, sir.
CONSTRUCTIVE MILEAGE.
Q. Is it your custom in making distributions of the earnings inter-
changed between branches and the main line, to determine at times the
earnings of branches by the use of the constructive mileage factor?
A. No ; we are using the actual mileage, but there should be a large
constructive mileage, because these rates on. which these earnings are
based give different results. For instance, we will say from a point on
the Amador Branch to a point on the Central Pacific; the rate on the
Ama^or Branch is two or three times as heavy per mile as the Central
Pacific rate, but through some misunderstanding or mistake, we have
been using the actual mileage for the whole distance in the division.
Of course that gives the Central Pacific a much larger proportion than
its local rate would call for, or than it would be justly entitled to.
By the CHAIRMAN :
Q. What constructive mileage rates have you, and on what roads have
you those rates now? A. None at all, now.
Q. When did you have them ? A. They did give some of these small
lines constructive mileage in 1882, I think.
RATES OF CONSTRUCTIVE MILEAGE.
Q. What were the rates f A. The California Pacific, I believe, had
50 per cent.
By Commissioner ANDERSON :
Q. That is 1 J ? A. Yes, sir ; 1J ; and the Stockton and Copperopolis
had 100 per cent.
Q. That is 2 to 1? A. Yes, sir; and some of these small lines, the
Los Angeles and Independence Eailroad, and the Los Angeles and San
Diego, had, I think, 50 per cent. each. That is 1J to 1 for constructive
mileage and even at those rates they do not get anywheres near their
proportion that they are entitled to, as we have since discovered.
Q. Have you named them all? A. I think the Ainador Branch got
constructive mileage.
Q. At what rate? -A. I think 50 per cent.
Q. That is 1J to 1 ? A. I could verify those figures by the record.
Q. I would be obliged to you if you would verify it and give us a
statement of your constructive mileage ; on what roads it was allowed
and the rates allowed upon them. Why did you stop the allowance of
constructive mileage? A. I believe Auditor French objected to it when
he was out here.
CONSTRUCTIVE MILEAGE OBJECTED TO BY AUDITOR FRENCH.
Q. What Auditor French ? A. The Government auditor of railway
accounts. I believe that is his title.
EDWARD C. WRIGHT. 2433
Q. What objection did he make? A. I am speaking from hearsay
now. Mr. Miller could give that positively.
Q. Who directed you to stop ? A. Mr. Miller.
Q. Since the lease of the Central Pacific to the Southern Pacific, do
I understand your work to have altered or changed its form ? A. Yery
little that I can think of now. The details are improving all the time.
Q. What is the difference in the method of ascertaining the net earn-
ing of the railroad prior to the lease to the Southern Pacific and subse-
quent to the lease ? A. No difference in the method.
TO WHOM RETURNS ARE MADE.
Q. To whom do the earnings belong since the lease? A. That is a
matter that the secretary keeps. We make our returns to him showing
the earnings and the operating expenses of each line in the system
monthly, and we transfer from our books to the secretary's books the
accounts, so far as the earnings and expenses go.
Q. Do you make your returns to him as secretary of the Central Pa-
cific or as secretary of the Southern Pacific? A. Secretary of the
Southern Pacific Company.
Q. And before the lease the returns were made to him as secretary
of the Central Pacific? A. Yes, sir.
RENTALS.
Q. Does the rent reserved by the lease or to be paid to the Central
Pacific by the Southern Pacific pass through your office f A. No, sir ;
not now.
Q. You understand that the net earnings of the Central Pacific are
now determined by the amount of rent payable to it by the Southern
Pacific ? A. I understand so.
Q. All your accounts then are kept with the Southern Pacific at
present ? A. We have a small open account with the Central Pacific ;
some small unsettled matters. Our account current with the secretary
might not change for months and months, and it might change by a
slight charge or credit.
Q. Before the lease to the Southern Pacific, did the rentals that the
Central Pacific paid for the different leased lines pass through your
office as part of its operating expenses ? A. Yes ; most of them did at
one time.
REQUEST FOR STATEMENT OF NET EARNINGS.
Q. Can you prepare for the Commission a statement of the actual net
earnings of the Central Pacific from 1&80 to the date of the lease to the
Southern Pacific, and also a statement of the net earnings by way of
rentals since that lease to the present time, so that we can compare the
results of one operation with the results of the other? A. Yes, sir; I
think that can be done with very lifctle trouble. For how long a pe-
riod ?
Commissioner ANDERSON. From 1880 to the date of the lease and
from the date of the lease to the present time, five years before and two
years since.
The WITNESS. I think that can be done in a very short time.
EFFECT OF CENTRAL PACIFIC LEASE.
Q. What, in your judgment, is the effect of that lease? Does the
Central Pacific receive as much at present under the leases as it did be-
2434 U. S. PACIFIC RAILWAY COMMISSION.
fore? A. I have not given that much thought. I really do not know.
That question you asked me to make a statement about is a proper one
for Mr. Miller to answer.
Commissioner ANDERSON. You can confer with Mr. Miller, but the
figures are in your department. He would have to get them from your
department?
The WITNESS. Partially.
Q. Can you tell me whether, as to any of the leases which the Cen-
tral Pacific held prior to April 1, 1885, the rent paid by the Central Pa-
cific exceeded the net earnings derived from the leased roads? A. I
could not say without the records.
Commissioner LITTLER. The Central Pacific did not pay any rent.
It was the Southern Pacific which paid rent to the Central Pacific.
Commissioner ANDERSON. The Central Pacific held a number of roads
under lease prior to 1885.
The CHAIRMAN. What is your answer?
The WITNESS. I could not say without looking at the records.
Q. We would like that information also. In cases where the rent in
those leases is fixed on a basis of paying to the road its net earnings
simply, then I suppose that the net earnings would actually determine
the rent, and that there would be nothing else to pay. That is the
arrangement in some of these cases, is it not? A. That is a matter
that is arranged entirely in Mr. Miller's office; we have nothing to do
with that.
Q. Under these leases where you pay something in addition to net
earnings for the use of the roads, would not the bills for the payments
so to be made pass through your office? A. I do not think that; they
never have.
Q. Are you familiar with these leases ? Have you seen them ? A.
Yes, sir; but it is something that I do not handle.
Q. Can you furnish us with copies of the printed blanks in use in
your department ? A. Yes, sir.
LIST OF BOOKS KEPT IN AUDITOR'S OFFICE.
Q. Please do so. .Please state now a list of the books which are un-
der your control and kept in your office. A. We keep a disbursement
book, an auditor's ledger and journal, and we have the accounts of two
of the outside departments in the office, such as the bridge and building
department and track that is, the bridge and building department and
the track department. Of course they have a number of detail books
in each, in which they keep their records of time and material, from
which they compile a report, which is made in the form of a voucher
and entered in the auditor's journal and ledger.
Q. Are these all the books which you keep in your office ? A. Of
course there are a great many small books in the shape of memoranda.
Q. They belong to one of these different classes of books and are the
basis from which you post into the general ledger ? A. Yes, sir.
Q. Do you keep this book for the distribution of charges ?- Yes, sir ;
what I call a disbursement book is the book from which we distribute
these accounts that I speak of to the different items of operating ex-
penses and foreign roads, and private parties, and to sundry accounts.
METHOD OF AUDITING REBATES.
Q. Are any of the refunds or rebates that are made on freight charges
audited in your office? A. Yes, sir; most of them.
EDWARD C. WRIGHT. 2435
Q. Do they simply appear in these same ledgers, or have you a sepa-
rate book for that ? A. They appear in this disbursement book that I
speak of.
Q. In what form are such charges audited? A. As a rule they take
this course 5 the general freight agent will receive a claim inclosing a
bill of lading, an expense bill, and note demanding a refund, or asking
it. He will make up the voucher, knowing the details of the tariff and
classification. He will have it examined and compared with the way-
bill, to show that such a shipment actually went over the road, and he
will check the way-bill to prevent a future claim being presented on
duplicate papers. He will make up this voucher and certify to its being
correct. He will name the amount that should be refunded. That
voucher will go to a committee on allowance, and then usually it is
brought to our office. Sometimes it goes to our office first, and we send
it there.
COMMITTEE ON ALLOWANCE.
Q. Who is the committee on allowance? A. Mr. E. H. Miller, Mr.
G. L. Lansing, and Mr. S. T. Gage, I believe; other officers sometimes
allow vouchers, and they are passed through also.
Commissioner ANDERSON. I am only speaking now of rebate or re-
fund vouchers.
The WITNESS. As a rule, those are the only gentlemen who ever sign
those vouchers.
Q. Who determines the rate that is to be allowed? A. The general
traffic manager or the general freight agent.
Q. Is that generally done before shipment, or is it sometimes done
merely on application after shipments? A. They are the only officers
that should answer that question, because the vouchers are certified to
by them as being correct when they come to me. *
REBATE VOUCHERS ALLOWED BY THIS COMMITTEE.
Q. Is your duty, then, purely ministerial? A. No, sir; not altogether.
There are many vouchers, for the correctness of which I am responsi-
ble, before they are registered or audited.
Q. I am only speaking now of rebate vouchers. Have you anything
to do with the percentage of allowance, or with the person to whom it
shall be made ? A. No, sir ; I have never considered that I was respon-
sible for even a bad payment on such vouchers, for I am not conver-
sant with the tariff or classification.
Q. If it received the approval of the general traffic manager, or of
this committee, the voucher is thereupon audited by you ? A. Yes, sir.
FORM OF PAYMENT TO SHIPPERS.
Q. What is the form of making the payment to the shipper ? A. It
is recorded in our office, and sent by us to either the paymaster or the
treasurer or to an agent for payment.
Q. And there it is receipted for by the person to whom it is paid ?
A. Yes, sir ; and then he sends it back to us with a report. We keep
an account with those officers. We keep an account, for instance, with
the paymaster, charging him with all moneys received and crediting him
with all payments made.
Q. All these entries, I understand you, are made in your general
books, and are not made in a separate book by themselves ? A. All
2436 tJ. S. PACIFIC RAILWAY COMMISSION.
overcharge, loss and damage, and rebate vouchers are entered in a sep-
arate book, and at end of month transferred in bulk to the auditor's
ledger.
EARNINGS DERIVED FROM POOLS.
Q. What reports do you receive of earnings derived from pools ? A.
The vouchers for payments made to and receipts from pools are all ap-
proved in the same manner that I have described as to these others.
Q. Do you have any means of determining the correctness of the re-
port made to you, either by consulting the pool contract or by consult-
ing the report of the traffic done and administered under the pool $ A.
Yes, sir 5 I usually read the pool contracts, and generally have had a
copy of them. But I have not considered myself responsible for the
correctness of these vouchers.
RESPONSIBILITY FOR CORRECTNESS OF POOL VOUCHERS.
Q. Who is responsible for the correctness of the pool vouchers f A.
Either the general freight agent or the general traffic manager.
Q. Does the approval of the general freight agent appear on all the
pool vouchers which are audited in your office? A, I think every one
of them or of the general traffic manager.
Q. That is Mr. Stubbs ! A. Yes, sir.
Q. How many pools do you know of prior to last April? A. Well,
the transcontinental pool I presume you would call one.
Commissioner ANDERSON. Yes.
The WITNESS. There were a half dozen or so.
Q. Can you furnish us with the names of them by referring to yeur
books? A. I don't think I could.
Q. Do you refer us to Mr. Miller for that $ A. No ; I would refer you
to the general traffic manager.
By the CHAIRMAN :
Q. Who is the custodian of those contracts ? A. He is familiar with
the contracts.
Q. Who keeps the contracts ? A. I think he does.
By Commissioner ANDERSON :
Q. Mr. Stubbs ! A. Yes, sir.
OTHER SOURCES OF REVENUE.
Q. From what other sources do you derive revenue besides from pas-
senger and freight traffic and pool earnings ? A. We receive rental
earnings.
Q. Are there express companies ? A. No ; also from property along
the line of the right of way, and from the sale of what they call " old
horse."
Q. Old material ? A. Yes, sir ; and from telegraph earnings, sleeping-
car earnings, and miscellaneous items.
EXPRESS BUSINESS.
Q. How has the express business been managed over your road ? A.
It comes to us in a condensed form= The freight auditor renders to us re-
ports, on which we make credits to express earnings, and send to our
treasurer for collection.
Q. Who does the express business ? A. Wells, Fargo & Co., I be-
lieve, do all of it.
EDWARD C. WRIGHT. 2437
Q. Have you the possession of the contract between Wells, Fargo &
Co. and the Central Pacific Company ? A. No, sir ; I have not.
ORIENTAL AND OCCIDENTAL STEAMSHIP COMPANY.
Q. What do you know about the earnings of the Oriental and Occiden-
tal Steamship Company ? A. I have nothing to do with that company.
Q. Do not the earnings pass through your department ? A. No, sir.
Q. Through what department do they pass ? A. They have a secre-
tary of their own, I believe. He keeps all the accounts, I think Mr. D.
D. Stubbs.
Q. Is that your Mr. Stubbs ? A. No sir ; that is another Mr. Stubbs.
Q. I mean through what department of the Central Pacific or the
Southern Pacific do payments from that steamship company pass ?
A. They do not pass through our office. Of course we may have a
small bill against that company the same as we do against private in-
dividuals, but we do not have anything to do with their business. I do
not know what contracts they have. I do not know how the Central
Pacific is connected with it.
Q. Is not the Central Pacific a large stockholder in that company ?
A. Not that I know of. I don't know anything about it.
REQUEST FOR COMPARATIVE STATEMENT OF ORDINARY BUSINESS AND
POOL BALANCES.
Q. Could you furnish us with a statement for the year 1884, showing
the passenger earnings derived from pools and the passenger earnings
derived from the ordinary business, and a similar statement as to freight
for the same year.
The WITNESS. Does this mean net ?
Commissioner ANDERSON. No; not net, but just for the gross. So
that we can compare the volume of the two businesses.
The WITNESS. Yes, sir ; 1 can furnish that. *
Commissioner ANDERSON. Will you do so for the year 1884 ?
The WITNESS. When you say " net," I want to know whether you
wish all rebates deducted I
Commissioner ANDERSON. I think it would be a fairer test after th#
rebates are taken out.
The WITNESS. Sometimes we have six thousand vouchers a month
right along, and there are so many miscellaneous vouchers.
The CHAIRMAN. We want to know how much of your business in a
year, taking the year 1884 as an example, is ordinary railroad business
incident to a railroad, and how much you derive in the same year from
pool balances or arrangements or settlements with other roads, as dis-
tinguished from ordinary business.
The WITNESS. I understand it.
AMOUNT OF BUSINESS POOLED.
By the CHAIRMAN :
Q. What proportion of the business is pooled and what remains un-
pooled of freight and passengers, taking the year 1884 as an example ? '
A. When I come to think that over, I cannot do it within a reasonable
time.
Q. How long would it take you? A. Well, to make a statement
covering a year it would take me a month or more.
The CHAIRMAN. That will do, if you will furnish it and forward it to
the Commission. How much of your business is in a year's pool?
2438 U. S. PACIFIC RAILWAY COMMISSION.
The WITNESS. We have not segregated our earnings in past years in
such a way that it can be done without a vast amount of work.
HOW POOL ACCOUNTS ARE KEPT.
Q. How do you keep your pool account ? A. We charge it right up.
If it is a payment we are making on account of pools, we deduct it from
the total freight earnings. If it is a receipt on account of the pool, we
credit freight earnings.
Q. Taking the amount of pool credits or balances in favor of the com-
pany, and contrasting that amount with the ordinary business of the
company not forming any part of the pool settlements, what would be
then the traffic of the company for 1884 ?
The WITNESS. That is the question ?
The CHAIRMAN. Yes.
The WITNESS. That was before I was handling much of that detail.
But my opinion is it would take a vast amount of work to get that in-
formation.
By Commissioner ANDERSON :
Q. How many entries of pool balances, either of credit or debit, would
you make in the course of a year? You did not settle more than
once a month, did you ? A. No, sir ; but a year's pooling business cov-
ers freight to all our terminals. There is a great deal of other freight
coming to the terminals, which is not pool business. In order to answer
that question I have got to get down to all this detail at those terminal
stations.
Q. Why ? If you have the total of your freight business for a year,
and you can ascertain from perhaps twenty-five entries that you had
received a certain amount of money from the settlement of pool bal-
ances during that year, and paid out other items, and then from that
derived the exact amount of pool business for the year, you will know
that all the rest of the freight business is derived from the other sources.
All you have to do to effect that result is to ascertain the amount of
pool business so that we can compare it with the total amount of the
business.
* The WITNESS. I would like to hear that question asked once more
by the stenographer.
(The question was repeated.)
The CHAIRMAN. This will make it easier. Can you give a statement
showing the amount of freight earnings derived from pools, and the
amount of ordinary business, for the year 1884 ? Can you give us also
a statement showing the amount of passenger earnings derived from
pool balances, and the amount derived from ordinary business, for the
year 1884?
The WITNESS. I can let you know to-morrow what^we can dp.
Commissioner ANDERSON. You can let us know to-morrow. My
explanation was only intended to show you that in taking the pool part
of it away the rest of it would answer itself. It seems to me so, though
I am not a railroad expert.
The WITNESS. It would be a very easy matter for me to deduct any
amount we may have credited to freight earnings on account of pools.
That is a very simple matter. But I do not get at the pith of the mat-
ter.
Commissioner ANDERSON. What we want to know is whether your
pool earnings figure in your business as a much greater quantity than
your ordinary business. We want to compare your pool earnings with
EDWARD C. WRIGHT. 2439
your entire earnings. All we need in order to make that comparison is
to get your entire earnings, which you have, and the pool earnings,
which cannot number many items.
The WITNESS. But for pool business there may be a great deal of
business that would be a loss.
COST OF CONSTRUCTION OF CALIFORNIA AND OREGON LINE.
Q. Very probably. We are not finding fault with the pooling, but
we want to know the result. Were any branch lines of this road con-
structed during your administration of the auditor's office ? A. A por-
tion of the California and Oregon was.
Q. The portion which you said did not pass through your office ; or
did some portion pass through your office ? A. Well, the portion north
of Delta, before the Pacific Improvement Company took charge of the
construction of that part of the line. The details mostly passed through
our office.
Q. Can you furnish a statement of the cost of that portion of the Cali-
fornia and Oregon which was audited in your office? A. Yes, sir. That
is, I can give you a statement of the entire amount which passed through
our office, charged to that account.
RESPONSIBILITY FOR ACCURACY OF VOUCHERS.
Q. As to those vouchers, do you consider your office responsible for
their accuracy ? A. Yes, sir. That is, all that I can think of at this
moment.
Q. On what report would you audit a voucher for work done on that
portion of the California and Oregon ?
The WITNESS. On what report ?
Commissioner ANDERSON. On what report, or what representation I
A. Well, I received some verbal authority at the time the work was
was going on.
Q. Would you receive an engineer's certificate that certain work had
been done, or a surveyor's report ? A. Oh, yes ; if the track depart-
ment should do any work in the nature of construction there, they
would turn in " time-books," and I would make up a statement and
send it to the superintendent of track to certify as to its correctness.
Then it would pass through the committee on allowance in the usual
way. Then it would be registered and charged to that account.
EXTENT OF CONSTRUCTION DONE DIRECTLY BY CENTRAL PACIFIC.
Q. At what northerly point did the construction done directly by the
Central Pacific Company commence ? A. 1 think they constructed it
all the way from Eoseville Junction ; bat I would not speak positively
with regard to it. It was before my time.
Q. Since your time between what points has the construction been
completed? A. What I am most familiar with is from Bedding to
Delta.
Q. How many miles is that ? A. It is about 40 miles.
Q. Have you been over that road ? A. Yes, sir ; I have not been to
the terminus.
Q. Have you been over the road from Delta to the north boundary of
California? A. No, sir; not all the way.
Q. What is the character of the country along the 40 or 60 miles of
road that you audited ? A. I went over it in the night, and I did not
see the country. I could not say much about it.
2440 U. S. PACIFIC KAILWAY COMMISSION.
GROSS RECEIPTS AS DISTINGUISHED FROM GROSS EARNINGS.
Q. Would your office show the gross receipts of the Central Pacific
Company, as distinguished from its gross earnings ?
The WITNESS. The gross receipts as distinguished from its gross
earnings ?
Commissioner ANDERSON. Yes ; by gross receipts I include all matters
that make up the receipts of the company by reason of the ownership
of stock or of different interests.
The WITNESS. No, sir ; my records would not show that.
Q. What records would show that? A. Mr. Miller's records would
show that.
REBATES.
Q. Are these rebates that we have spoken of matters of individual
arrangement in each case, or have you in your office rebate contracts f
A. We have not all the rebate contracts. We get most of them copies
of the contracts.
Q. How numerous are they I
The WITNESS. You are speaking of pools, are you, now ?
Commissioner ANDERSON. No; I am speaking of rebate allowances
to shippers.
The WITNESS. Oh, they are not all under contracts. There are all
sorts of rebates.
Q. That was my question, whether they were matters of individual
arrangements with shippers or whether there were contracts extending
over a fixed period of time. A. Those contracts that you speak of are
kept in the general freight office.
Q. You have none in your office ? A. No, sir.
Q. You refer us to Mr. Stubbs for that, do you ! A. Mr. Stubbs or
Mr. Gray.
ANNUAL ALLOWANCES FOR REBATES, ETC.
Q. Have you a book which shows the total of the allowances for re-
bates, refunds, returns, or overpayments made up annually? A. Yes,
sir ; we have.
Q. Can you give us the gross total of such allowances by the year
from the time you commenced ? A. Yes, sir.
Q. What year was it that you took charge 1881 ? A. I can show
that many years back.
Commissioner ANDERSON. Show us the full total of allowances for
rebates.
Commissioner LITTLER. If he has such a book, he can let us see the
book.
The WITNESS. By years, you mean ?
By Commissioner LITTLER :
Q. Do I understand that you have a book for rebates containing the
several items of rebates during the several years the company has been
in operation ? A. It is not kept altogether in one book. I can furnish
the amount.
Commissioner ANDERSON. I simply ask for the amount made up by
years.
GROSS RECEIPTS OVER GROSS EARNINGS.
By the CHAIRMAN :
Q. What does your department contribute to the gross receipts in
making up at the end of the year a statement for the company f A. We
EDWARD C. WRIGHT. 2441
close our showing of freight earnings, passenger earnings, and differ-
ent items of earnings, also the operating expenses, to the secretary's
books monthly ; and then we are through with it, so far as that goes.
Q. But who ascertains the gross earnings as distinguished from the
gross receipts ? A. We do.
Q. Then what figures do you use in order to ascertain your gross
earnings? A. We take, for instance, our station agent's returns of
freight receipts and ticket sales, baggage, &c., and then we may make
a refund to a man for an error in overcharging on a ticket, or an error
for overcharging on freight ; and we would charge that amount to that
item of earnings which should be charged. Of course that reduces it
to net freight earnings.
Q. Do you carry into the account your pool balances ? A. If we
should pay out any money on a freight pool, we would charge that to
the freight earnings; and if we received any money on a freight pool,
we would credit that to freight earnings.
Q. What else do you carry into the gross sum before you ascertain
your gross earnings ? A. We have express and telegraph, mail, rental,
and sleeping cars and extra baggage. I believe I named passenger and
freight, of course ; I believe that is all.
Q. Is the item of gross receipts taken off each year as a separate
item ? A. We made a monthly showing of gross receipts and operating
expenses, and then we show the net.
Q. Is the item of gross receipts for the year taken off as a separate
item as distinguished from gross earnings ? A. No, sir ; not that I
know of. That is made up by the secretary, anyhow. We transfer this
to him monthly, you know.
HOW THE GROSS EARNINGS ARE ASCERTAINED.
Q. What do you deduct from the gross receipts to ascertain your
gross earnings, before you make your return to the secretary ? A, We
deduct all these rebates that we have mentioned, from the gross re-
ceipts, and we still call that gross earnings, after that ; and then we
make up our operating expenses, and deduct that from these gross
earnings, and that leaves net earnings.
The CHAIRMAN. I understand that you have your gross receipts and
gross earnings, from which you deduct your operating expenses.
The WITNESS. I understand the gross receipts to be the gross earn-
ings.
Commissioner ANDERSON. We differ as to that. We use the phrase
" gross earnings " as including everything that the railroad gets from
every source, in addition to the earnings from its road. If it happens
to be the owner of stock in a gas company in New York, or it gets rent
from a house which has nothing to do with the railroad, that we call
gross earnings.
The CHAIRMAN. He deducts rebates and refunds and overcharges,
and railroad settlements come off.
The WITNESS. Yes. For instance, we sell a ticket from here to New
York, and our agent in San Francisco will report all that money as
ticket sales, and it goes into our passenger earnings. Now, we after-
wards pay out from that to the other roads interested, you see. That
still leaves what we call our gross earnings, after we have paid the
other roads.
The CHAIRMAN. Yes, I understand you. Now, will you furnish a
statement of the gross receipts from 1869 to 1886, or from the date of
2442 U. S. PACIFIC RAILWAY COMMISSION.
opening of your road, as distinguished from gross earnings, year by
year?
The WITNESS. It would make no showing at all, the gross receipts.
My education in railroad accounts has made the gross receipts the
gross earnings, and nothing else.
GROSS RECEIPTS AS DISTINGUISHED FROM GROSS EARNINGS.
t
The CHAIRMAN. Yes, as ordftiarily understood. I now speak of
gross receipts, which include everything received by the company, out
of which you make some deduction, such as rebates, overcharges, ter-
minal settlements, pool settlements, and all other settlements, and then
you would ascertain your gross earnings.
The WITNESS. I understand what you mean, but it would be a fool-
ish showing, because we sell a ticket here in San Francisco to New
York for $120, say. I don't know what the price is. We call that pas-
senger earnings. I do not call that gross receipts. It does not belong
to us. We know it, and know we have got to pay out to Eastern roads
most of the money. But you call that gross receipts.
Q. Do you take off the gross receipts every year, to ascertain and
make your deductions, in order to know just what you received before
you determine your gross earnings ? A. We do this monthly.
Q. Will you furnish to the Commission a statement from 1869, or from
the opening of the road, to 1886, showing the gross receipts I A. I
will do the best I can.
The CHAIRMAN. Very well. That is all you can do. Let us judge of
the foolishness of it.
CUSTODY OF CONSTRUCTION ACCOUNTS.
By Commissioner LITTLER :
Q. Who has custody of the books containing an account of the cost
of construction of the Central Pacific road ? A. I do not know. I
never have seen them.
Q. In whose charge ought they properly to be found ? A. That was
before my time, and I do not know anything about it.
Q. Are you sure they are not in the auditor's office? A. Yes, sir; I
know they are not in my office.
Q. Are there any vouchers in your office in respect to the construc-
tion of the road ? A. Not that I know of.
Q. To what date backward do your vouchers extend ? A. They ex-
tend away back to the beginning of the road.
THE AUDITOR'S OFFICE AN OPERATING OFFICE.
Q. Then they ought to embrace the cost of construction, ought they
not 9 A. Well, no ; that does not follow. Our office is an operating
office, and as a rule it might contain only charges to operating ex-
penses.
Q. Then you think your office only includes the vouchers for operat-
ing expenses from the time the road was opened ! A. No, sir ; I would
not say that. Well, as a rule, yes ; but we do occasionally, as an oper-
ating company, finish up work that the construction company has left
incomplete, and charge it to that construction company.
Q. Who has charge of the canceled checks on which the money was
paid out for the construction of this road I A. I should say the treas-
urer had. I really never saw them.
EDWARD C. WRIGHT. 2443
Q. The treasurer of the company really ought to have the custody of
these books containing the cost of the construction of the road, ought
he not ? A. That I could not express an opinion about.
Q. Do you know whether any of the books of this company, from its
organization to the present time, have been destroyed, by accident or
otherwise ? A. No, sir ; I do not know anything about it.
REFERRED TO CONSTRUCTION COMPANY FOR THE BOOKS.
Q. To whom can you refer us for the production of these books con-
taining the account of the construction? A. The Construction Company,
I should say.
Commissioner LITTLER. Although a construction company may have
constructed the road, there must be books in charge of this company
containing certain accounts or vouchers upon which the money of the
company was paid to the Construction Company for its services under
contract.
The WITNESS. I do not think that those accounts would necessarily
go through the auditor's office, which is, as a rule, an operating office.
Q. Through what office would they go, and where would these papers
be found ? A. I should think the secretary's office would be the proper
office. I should think so.
EXISTENCE OF THE COMMITTEE ON ALLOWANCE.
Q. How long has this committee on allowance, I believe you call it,
been in existence? A. Ever since I have known anything about these
vouchers.
Q. Does it date back. to the time of the construction of the road, and
did such a committee pass upon the vouchers for the payment of the
cost of construction ?
The WITNESS. I think they did oh, the cost of construction 1
Commissioner LITTLER. Yes.
A. Well, that I could not say. That I do not know anything about.
Q. Recurring to the question of gross receipts as distinguished from
gross earnings, as I understand you, in the statement of your accounts,
in order to ascertain gross receipts you deduct all rebates, all over-
charges, all moneys paid on account of pool contracts, and credit all
moneys received from other railroads in the interchange of business,
whether collected on freight or on tickets ? A. Yes, sir.
Q. What other deductions do you make from your gross receipts be-
fore you declare your gross earnings ? A. You have named them most
all.
EDWAED C. WEIGHT.
REPLIES BY LETTER TO UNANSWERED QUESTIONS.
The following letter was subsequently received from the witness, E.
C. Wright, in response to requests for information :
[Southern Pacific Company (Pacific System), office general auditor.]
SAN FRANCISCO, August 9, 1887.
SIR : Please find below the questions propounded to me by your Commission July
27, 1887, with answers to same in regular order :
Question. Give the names of the roads which had constructive mileage when divid-
ing the earnings; the amount of such mileage, and the period during which it was
added to the actual mileage.
P R VOL IV 8
2444
U. S. PACIFIC RAILWAY COMMISSION.
Answer. This information has been furnished in full by the president of our com-
pany in a statement presented to your Commission July 28, 1887.
Question. From 1880. inclusive to date of lease, and from date of lease to the pres-
ent time, prepare statements by years, of actual net earnings of Central Paciiic Rail-
road ; also statement of net earnings by way of rental since date of lease to the present
time.
Answer. I would respectfully refer you to the secretary of our company for state-
ments requested above, as some of the records required to make the statements are not
kept in this office.
Question. State whether as to any of the leases held by the Central Pacific Rail-
road, prior to April 1, 1885, tue rent paid by the Central Pacific Railroad exceeded
any earnings derived from leased roads.
Answer. Yes, in some instances, because such earnings were made up on a mileage
basis which did not give the leased lines their due propprtiou of earnings.
Question. Statement showing cost of that portion of the California and Oregon
Railroad which was audited in your office.
Answer. The records of my office show vouchers charged to the California and Oregon
construction, and these cover charges for construction north of Redding; but as I
transferred monthly the total amount of charges appearing on my books to the books
of the secretary, I cannot say that other charges were not made direct on his books
to the work, therefore it is impossible for me to give the actual cost of the work be-
tween any given points. I would respectfully rsfer you to the secretary for this in-
formation.
Question. Statement from 1869, or opening of the road, to 1886, showing gross re-
ceipts by years.
Answer. Statement requested is given below :
Statement of gross receipts of Central Pacific Railroad and leased lines from 1864 to 1885,
inclusive.
[No charges to earnings of any description have been considered. |
Years.
Amount.
Years.
Amount.
1864 (November and December)
$121 679 10
1876
$19 5 9 9 752 54
1865
356 806 94
1877 . .
18 735 795 15
1866
879 754 38
1878
19 338 318 14
1867
1 442,825.58
1879
20 169 573 87
1868
2 364 211. 18
1880
23 167 994 29
1869
7 503 2-7.60
1881
27 112 39 18
1870
9 010 261.89
1882
30 28' 352 56
1871
10 271 6^8 10
1883 4.
28 502 101 2S
1872
13 612 835.04
1884
28 977 877 14
1873
14 706 334.24
18o5
15 306 09 57
1874
15 433 590 37
1875
17, 811, 491. 01
324 636 955 15
Question. Statement showing amount of freight earnings derived from pools and
the amount derived from ordinary business for the year 1884.
Answer. The amount entered to credit of freight earnings in the year 1884, account
of pools, is $99,231.28 ; the amount charged to freight earnings in the year 1884,
account of pools, is $M),997.37 ; total, $110,766.09. Deduct this latter amount from
the gross freight earnings of 1884, or $13,043,034. 27 ; leaves amount derived from or-
dinary business, $12,932,268.18.
Question. Statement showing amount of passenger earnings derived from pools and
the amount derived from ordinary business in 1884.
Answer. The amount entered to credit of passenger earnings in year 1884, account
of pools, is $22,850.02; amount charged to passenger earnings in year 1884, account
of pools, is $623.47 ; total, $22,226.55. Deduct this latter amount from the gross pas-
senger earnings of 1884, or $7,226,570.94, leaves amount derived from ordinary busi-
ness $7,204,344.39.
I send you herewith a package containing samples of blanks in use in this office, as
per your request.
Very respectfully,
E. C. WRIGHT,
General Auditor.
Hon. ROBT. E. PATTISON,
Chairman of United States' Pacific Raihvay Commission,
Palace Hotel, San Francisco, Col.
EMMONS B. RYAN. 2445
OFFICES OF THE CENTRAL PACIFIC EAILROAD COMPANY,
San Francisco, Cal, Wednesday , July 27, 1887.
EMMONS 13. RYAN, being duly sworn and examined, testified as
follows :
By the CHAIRMAN :
Question. What position do you hold in the company 1 Answer. I
suppose you would call it the tax agent for the Central Pacific.
DUTIES OF TAX AGENT.
Q. What are your duties ? A. To see that the taxes are paid on the
property ; that it is not sold for taxes, and to protect it.
Q. How long have you been connected with that position? A.
About fifteen years, I think ; fourteen or fifteen years.
Q. Who did you succeed ? A. No one 5 I commenced when it was
very young, and I have kept with it ever since, sir.
Q, What kind of books do you keep ? A. Regular assessment rolls.
AMOUNT OF TAXES PAID UPON LANDS.
Q. Will you state to the Commission the amount of taxes paid by you
upon the lauds since the institution of your office, or since the grant by
the Government to the Central Pacific Company ? A. It is between
four hundred and four hundred and fifty thousand dollars, or about
four hundred and twenty thousand and some odd dollars.
By Commissioner ANDERSON :
Q. For what period ? A. That is since the first 18G9 ; somewhere
along there.
By the CHAIRMAN :
Q. Do you give the amount accurately or approximately ? A. I give
it within a few hundred dollars.
Q. Will you furnish to the Commission a statement showing the
amount of taxes paid upon the several land grants, by years and by
counties ? A. Yes, sir ; to a cent. That is, so far as my books show,
and they show correctly.
TAX RATES AND AMOUNT OF ACREAGE.
Q. Will you furnish a statement showing the tax rates of the several
counties ? A. Yes, sir. They vary each year. That is, in nearly every
case they vary each year.
Q. Will you include in the statement also the acreage that the
amount of taxes has been paid upon ? A.. That I can do also, because
that I have in my office.
Q. And will you also include the names of the counties J ? A. Yes,
sir.
Q. How soon can you give that statement ? A. I can give it to you
in forty-eight hours. And by the by, can I hazard one little bit of in-
formation ?
The CHAIRMAN. Yes ; and do not make it a hazard.
The WITNESS. The Central Pacific has paid over six million dollars
of taxes on its lands and its other property since I have been con-
nected with it.
Q. What i the other property I A. The roads, the plant, stations, frc.
2446
U. S. PACIFIC RAILWAY COMMISSION.
The CHAIRMAN. Well, we want the land grant.
The WITNESS. You shall have it, sir.
E. B. EYAN.
The Commission then adjourned to Thursday, July 28, 1887, at 10
a. m.
The witness, E. B. Ryan, subsequently submitted the following state-
ment in connection with his testimony :
Statement of taxes paid on lands by the Central Pacific Eailroad Company from 1868 to
1886, inclusive.
County.
Acres.
Value.
Pvate
per
$100.
Taxes.
School.*
Delinquents,
&c.*
Total.
1868.
El Dorado
t$82 88
Placer
1662. 38
tl, 702. 80
1869.
tl, 202. 08
t334. 18
1870.
Placer:
First district
5,294
24, 136
$6, 618
30, 170
$2.60
2.60
162. 47
784. 42
Second district . .
$9 60
Tuba
Nevada ' . ......... .
7, 380. 72
32,639
1,121
2,669
45, 579
45, 421
29, 748
2,022
3, 103
42, 769
54, 645
2,291
2,469
17, 960
27, 452
23, 560
1,004
2,872
38, 217
50, 627
21, 058
6, 058
58, 158
25, 094
33, 233
724
2,913
18, 451
48, 958
3,363
3, 336
56, 963
113, G02
44, 622
12, 880
7, 75G
106, 923
136, 614
3, 575
11,430
86, 208
41, 178
121, 757
7,060
7,058
95, 978
126, 568
67, 350
24, 398
255, 537
37, 640
137, 545
4,945
7,908
82, 651
124, 560
50, 510
2.00
2. 84. 2
1. 90. 2
1.85
1.85
2.10
2.85
1.28
1.35
1. 35
1.60
2.00
1.50
2.20
2.60
1.GO
1.90
1.05
1.05
1.00
2.50
1.80
2.00
2.55
1.70
1.45
1.50
1.50
1.80
2.60
369. 02
1, 392. 75
64.06
i
61.71
1, 053. 81
2, 385. 64
1, 272. 72
164. 86
104. 70
1, 444. 50
2, 185. 82
71.50
El Dorado .......
gutter
1871.
Placer :
First district . . .
Second district
Nevada
El Dorado
1872.
Sacramento ...
Placer :
First district . .
f
Second district ......
194 70
Nevada . ... ....
Yuba
gutter . .,
171.45
1, 896. 57
1,070.63
1, 948. 12
134. 14
74.10
1, 007. 76
2, 404. 79
1, 683. 75
439. 16
4, 510. 74
959. 85
2, 458. 27
71.70
118. 62
1, 239. 76
2, 242. 08
1, 313. 26
66.72
Butte
El Dorado .
Colusa . ....
1873.
28.50
Placer :
First district
gecond district
Yuba
S utter
Butte
|
El Dorado
Colnsa
1874
Placer :
First district
49, 824
15, 450
Vuba . .
* Cannot vouch for entire accuracy of succeeding school board and delinquents which appear in
these columns. KYAN.
t Paid previous to my taking tax department. KYAN.
EMMONS B. RYAN.
2447
Statement of taxes paid on lands ly the Central Pacific Railroad Company, ^c-r-Cont'd.
County.
Acres.
Value.
Rate.
$ I ioo.
Taxes.
School.
Delinquents,
&c.
Total.
1874.
Sutter
5,297
23, 061
28, 058
24, 893
1,680
$25, 232
89, 554
92, 374
37, 265
7,625
$1. 95
2.00
1.60
2. 29. 9
1.60
$723. 00
1, 791. 08
1, 477. 98
856. 70
122. 11
1, 847. 28
Butte
Colusa
El Dorado
Yolo
Colusa (paid under pro-
test) *.
1875.
Sacramento
987
5,545
43, 389
84, 041
132, 395
6,370
76,150
18, 031
156, 835
174, 967
37, 239
3,267
534, 727
2,330
33, 825
83, 950
127, 650
9,335
73, 285
114, 600
231, 925
16, 747
4, 032
565, 108
49, 102
2,495
29, 285
57, 154
115, 680
9,172
68, 265
15, 985
82, 892
213, 061
45, 926
748, 514
4, 024
66, 168
5, 300
10, 754
90, 803
50, 460
240, 000
3,005
25, 292
53, 688
110, 867
9,100
28, 370
19, 749
186, 285
305, 297
44, 800
181, 114
2, 232
1.30
1.30
1.30
1.70
2.36
2.60
1.52
1.80
1.95
1.65J
1.60
1.60
1.65
1.50
1.50
1.90
2.70
2.80
2.00
2.20
1.90
1.78
1.80
2.33
1.50
1.50
1.50
1.90
2.60
2.80
1.80
2.00
2.20
2.23
1.65
1.65
2. 17A
2.45
2.50
2.90
2.60
3.00
1.50
1.60
1.60
1.90
2.60
2.60
1.75
1.75
2.50
2.10
1.50
1.58
72.08
564. 05
1, 092. 53
2, 250. 71
150. 33
1, 979. 90
274. 07
2, 823. 03
3, 421. 84
616. 29
52.27
8, 555. 64
48.45
507. 37
1, 259. 25
2, 425. 35
252. 05
2, 051. 98
2, 292. 00
Placer :
First district
Second district
Nevada
52, 958
8,009
22, 382
4,558
59, 116
139, 974
24, 826
1,005
$90. 39
Yuba
Sutter
Butte
El Dorado
Yolo
139. 00
1876.
Sacramento . ...
753
13,530.
33, 580
51, 060
7,468
21, 500
53, 099
139, 776
5,130
1,008
115, 142
24, 551
1,580
11, 714
28, 577
46, 272
7,338
18, 829
4,999
46, 840
126, 926
22, 963
124, 775
1,006
33, 084
2,119
10, 754
90, 803
40, 368
96, 618
3,005
8,960
26, 843
44, 347
7,327
9,578
5, 764
65, 359
132, 088
22, 402
42, 6] 3
952
Placer :
Second district
Nevada
Sierra
Yuba
Butte
5, 102. 25
318. 20
71.77
10, 171. 83
Sutter
Yolo
El Dorado
1, 146. 52
37.42
439. 27
857. 31
1877.
Sacramento
Placer :
First district
67.00
2, 197. 92
238. 47
1,911.42
287. 73
1, 657. 84
4, 687. 35
1, 024. 15
12, 350. 48
66.40
1, 438. 83
129. 85
263. 85
2, 633. 28
1, 311. 96
7, 200. 00
45.07
404. 67
859. 00
2, 106. 48
236. 60
737. 62
345. 60
3, 259. 98
7, 632. 43
940. 80
2, 716. 71
35.27
Sierra
Yuba
Sutter
614. 75
Butte
Tehama ......
5.66
El Dorado
Colusa
1,117.76
7.98
Yolo
"Washoe
Lyon
Churchill
Humboldt
Lander
Elko
1878.
8.50
Placer :
First district
Second district
98.39
55.43
$4.55
Yuba
19.38
127.71
9.35
107. 12
Sutter
227. 89
340. 09
122. 88
Butto
El Dorado
68. 40
6.04
Yolo...
2448 U. S. PACIFIC RAILWAY COMMISSION.
Statement of taxes paid on lands ly the Central Pacific Railroad Company, #c. Cont'd.
County.
Acres.
Value.
Rate
per
$100.
Taxes.
School.
Delinquents,
&c.
Total.
1878.
"WlLShOQ
32, 891
2,119
10, 752
90, 175
37, 591
24, 046
97, 906
785
10, 677
26, 822
44, 208
9,686
7,278
5,959
61, 131
280, 176
21, 587
35,841
452
$65, 782
4,200
10, 752
99, 194
47, 000
19, 200
146, 859
2,530
26, 693
53, 644
110, 520
12, 110
21, 245
21, 582
175, 194
431, 106
43, 175
173, 457
2,232
$2.00
2.70
2.50
2.80
2.60
2.00
3.00
1.50
1.50
1.50
1.90
2.95
2.20
1.75
1.70
2.40
2.17
1.50
1.55
$1, 315. 64
113. 40
268. 80
2, 777. 43
1, 222. 00
384.00
4, 405. 77
37,95
400. 40
804. 66
2, 099. 88
357, 25
467. 39
377. 68
2, 978. 30
10, 346. 54
939. 05
2, 601. 86
34.60
$29. 19
$310. 80
Churchill
Humboldt
Elko
1879.
17 56
Placer :
First district
25.71
4.55
Nevada
63.17
Yuba
$34.05
63. 35
206. 83
56.03
27.07
59.16
37.37
9 54
gutter
Butte
Tehama
65.50
El Dorado
Colusa
287. 22
68.96
66.55
Yolo
Shasta
15.77
6.08
~W"ashoo
40, 042
7,387
2, 119
10, 755
92,910
40, 317
24, 048
97, 861
786
13, 456
22, 466
41, 403
9,746
31, 862
5,621
110, 003
335, 865
335, 865
115, 408
21, 335
33, 112
452
39, 732
2 r'l
80, 085
4,432
4,000
10, 755
139, 365
50, 000
19, 238
147, 000
5,880
33,640
54, 052
103, 530
12, 283
66, 430
21,718
296, 382
487, 517
388, 887
288, 243
42, 670
184, 653
2,896
1.80
3.55
2.35
2.60
2.60
2.25
1.75
1.50
1.35
1.45
1.45
1.75
2.90
2.30
1.52
1.65
1.90
J.90
2.35
2.24
1.45
1.55
1.70
2.57
2.53
2.75
2.60
3.55
2.00
2.70
1.70
1.40
1.40
1.70
2.90
2.47
2.40
1.62.
1.60
1.65
2.65
2.25*
1.40"
1, 441. 53
157. 34
94.00
279. 63
3, 623. 49
1, 125. 00
3:!6. 66
2, 205. 00
78.88
487. 78
783. 75
1,811.77
356. 20
1, 527. 89
330. 11
4, 890. 30
9, 311. 37
7, 388. 85
6, 773. 71
975. 49
2, 679. 04
60.24
1, 355. 18
102. 80
66.80
295. 62
4, 172. 48
3, 206. 54
385. 00
3, 882. 08
25.07
400. 16
813. 64
1, 682. 91
353. 36
96.58
2, 441. 28
230. 62
4, 900. 40
9, 186. 87
5, 843. 25
946. 08
3, 123. 41
Storey
Churchill
Humboldt
Lander
Eureka
Elko
1,764.00
4.08
1880.
Sacramento
Placer :
First district
32.40
28.81
60.45
Nevada .. ... ......
Yuba
24 42
Sutter
14 84
Butte
81 70
87 59
Do
250. 97
50 10
Shasta
El Dorado
25.84
816. 78
Yolo
TVashoe
3,299
91, 702
40, 325
24, 067
95, 854
469
11, 331
22, 164
39, 500
9,747
3,128
52, 172
4,205
203, 118
389, 640
176, 440
20, 973
30, 831
Eureka
Elko
1881.
Sacramento
1,475
28, 583
58,117
98, 995
12, 185
3,910
101, 720
14, 236
306, 275
556, 779
220, 501
41, 955
223, 100
5.00
Placer :
First district
10 00
Nevada
61.27
63.17
Yuba
11.00
18.25
Sutter
Butte
59.16
490.00
12.08
104. 17
El Dorado
664.83
317. 98
1,932.00
Yolo...
EMMONS B. RYAN. 2449
Statement of taxes paid on lands by the Central Pacific Railroad Company, $c. Cont'd.
County.
Acres.
Value.
Rate
per
$100.
Taxes.
School.
Delinquents,
&c.
Total.
1881.
TVashhoe
33, 861
3,039
2,121
10, 755
90, 633
40, 309
21, 883
97, 165
469
8,674
20, 160
35, 435
9,714
46, 807
4,204
188, 249
271, 108
162, 219
21,471
3,128
433
36, 061
33, 299
2,119
10, 755
3,058
90, 154
36, 593
19, 471
82, 632
350
3,504
18, 117
30, 595
9,665
5,704
40, 664
3,008
159, 272
219, 680
$67, 720
2,511
4,000
10, 755
158, 606
50, 386
19,250
145, 750
1,485
21, 650
50, 400
88, 580
12, 140
93, 360
14^ 078
456, 960
476, 432
199, 338
43, 020
3,910
2,265
269, 585
66, 000
4,000
10, 755
2,746
157, 770
45, 753
24, 340
103, 290
1,065
10, 512
54, 351
76, 260
14, 500
7,130
81,115
9,955
375, 794
404, 560
40, 456
143, 257
42, 786
262, 675
$2.30
4.90
3.30
2.80
2.60
3.90
2.50
2.70
1.70
1.60
1.60
1.75
2.80
2.60
1.75
1.50
1.65
2.60
2.14
2.50
1.42
1.40
2.25
3.05
2.80
4.90
2.60
3.90
2.60
2.75
1.30
1.55
1.55
2.10
2.80
2.75
2.55
1.50
1.50
1.50
1.50
3.25
2.08
1.45
1.45
1.25
2.00
3.05
2.80
2.90
2.60
3.90
2.55
2.75
1.05
1.35
1.35
2.40
2. 50
2.56
1.75
I. 00
1. 45
1, 557. 56
1 9 3 04
Storey
132. 00
301. 14
4, 123. 75
1, 965. 05
481. 25
3, 935. 25 '
25.24
346. 40
806. 40
1, 550. 15
339. 92
2, 427. 36
246. 36
6, 869. 50
7, 861. 12
5, 182. 78
920. 63
97.75
32. 16
3, 809. 71
1,485,00
122. 00
301.14
134. 58
4, 102. 02
Churchill
Humboldt
Jilko
1882.
Sacramento ....
$14. 35
101. 62
15.19
76.62
Placer :
First district
Second, district ... .
Yuba
$23. 85
24.43
14 84
S utter
Butte
97.44
521. 80
108. 97
17.92
81.70
352. 97
65.10
25.14
Tehama
Shasta
El Dorado
Yolo ..
Colusa
135. 24
405. 68
723. 72
Washoe .
I/yon . ....
Churchill
Storey
Humboldt
LiindiT
1, 784. 36
632. 84
2, 840. 47
13.85
162. 93
832. 44
1, 601. 46
406. 00
196. 07
2, 072. 47
149. 32
5,644.41
6, 068. 40
653. 02
4, 658. 30
889. 95
3, 847. 35
168. 82
22.01
1, 306. 00
122. 00
301. 28
68.15
3, 963. 70
1,710.35
496. 48
2, 791. 25
14.17
135. 77
660. 72
1, 420. 56
362. 50
237. 82
1,233.14
128. 39
^3, 646. 81
< 30. 00
Eureka
Elko
18.
Placer:
First district
::::::::
30.78
29. 23
65.34
::::::::::
Second district ......
Nevada .. . .......
Sierra . . .
Plumas . . .
Yuba
23.95
30.51
69 12
gutter
Butte
72. 13
424. 16
13.60
347. 77
Tehama
Tehama (10 per cent,
additional State board) .
Shasta
114, 606
21,314
26, 954
1,480
238
32, 905
2,119
10, 756
2,938
87, 113
35, 084
19,471
81, 204
217
2, 584
17, 346
23, 041
9,667
7,163
27, 8.38
2,879
128, 500
53.59
17 43
El Dorado
Colusa.... ...............
470. 69
1,116.74
276. 09
Do
Yolo
1,273
65, 300
4,000
10, 760
2,350
152, 450
43, 855
19, 470
101, 500
1,350
10, 057
48, 942
59, 190
14, 500
9, 289
70, 465
12, 839
C 251, 504
\ 2,075
Washoe
I, von ........
Churchill
Storey . .
Humboldt . .
Lander
Eureka . .
Elko
1884.
Sacramento
Placer :
First district
"~52.' 4i
7.80
125. 78
Second district
Nevada ......
Sierra ...... '
Plumas ......
Yuba
3.97
10.20
1 31.34
Sutter
19.91
W, 3 1
Butte
2450 U. S. PACIFIC RAILWAY COMMISSION.
Statement of taxes paid on lands ly the Central Pacific Bailroad Company, <fc.-Cont'd
County.
Acres.
Value.
Kate
$100.
Taxes.
Schoo
Delinquents,
&c.
Total.
1884.
Tehama
Shasta
119, 692
82, 844
35, 036
280
32, 933
2,938
2,220
10, 756
77, 999
33,J56
16, 748
72, 336
178
834
19, 028
27, 133
7,007
6,664
23, 642
2,518
120, 115
97, 863
68,177
31, 929
480
32, 133
2,938
2,120
10, 756
57, 357
33, 796
16, 748
68, 649
24, 265
18, 609
2,914
4C
1,015
18, 593
4,862
27, 231
6,907
6,824
14, 350
1,301
11, 472
91, 728
56, 628
30, 097
1,156
32, 061
2,779
2,121
10, 754
56, 363
32, 956
16, 989
64, 827
12,309
3,204
2,236
$200, 711
103, 251
70, 072
3,660
65, 865
3,000
4,000
10, 756
136, 499
41, 445
16, 748
90, 415
1,070
5,168
53, 240
77, 495
10, 510
8,330
57, 965
9,206
242, 035
157, 361
84, 693
63,858
3,780
40, 165
2,400
4,000
10, 756
86, 035
42, 245
16, 748
85, 811
16, 985
13, 030
3,642
$2.20
2.25
2.00
1.30
1.85
2.50
3.05
2.80
2.60
3.90
2.50
2.40
1.25
1.94
1.94
2.50
2.80
2.60
$4, 415. 65
2, 323. 15
1, 401. 44
43.68
1, 218. 50
75.00
122. 00
301. 14
3, 549. 00
1, 616. 35
418. 70
2, 169. 96
13.37
100. 25
1, 032. 85
1, 937. 37
294. 28
216. 58
1, 188. 34
105. 87
3, 751. 54
3, 147. 22
1, 905. 59
1, 226. 08
60.16
763. 15
69.60
110. 00
295. 75
2, 236. 91
1, 520. 82
427. 00
1, 844. 94
403. 88
.40
56.14
804. 57
82.90
1, 565. 61
279. 72
362. 99
1,451.16
44.31
3, 059. 03
2, 696. 06
1, 645. 10
1, 083. 51
117.54
741. 39
60.48
110. 00
295. 73
2, 198. 17
1. 483. 03
441. 71
1, 539. 63
103. 39
26.91
33.54
$208. 01
103 46
$136. 53
292. 71
12.43
340. 99
4.00
Colusa
Washoe
$480. 04
18.14
69.05
Storey
Lyon
Churchill
Humboldt
Lander
Eureka
Elko
1885.
Sacramento
Placer :
First district .
Second district
Nevada
Sierra.
Plunias
Yuba
45.62
76.85
7.56
Sutter
Butte
Tehama
Shasta
El Dorado
Colusa
Washoe
Storey
Lyon
Churchill..
Humboldt
2.05
1.15
1.55
2.00
2.25
1.92
1.35
1.90
2.90
2.75
2.75
2.60
3.60
2.55
2.15
1.20
1.20
1.20)
1.00
1.55
1.55
1.55
2.30
2.70
2.70
2.90
1.10
1.50
1.80
2.25
1.80
1.35
1.85
2.80
2.75
2.75
2.60
3.60
2.60
1.90
1.20
1.20
1.20
77.56
21.33
5.27
217. 63
177. 35
145. 87
73.83
10.85
4.08
3.97
273. 80
594.69
5.22
Lander
Eureka
Elko
Box Elder
Cache
Weber
1886.
Sacramento
Placer:
First district
Second district
Third district
Nevada
Sierra
Plumas
3,622
51, 908
5,349
68, 070
10, 360
13, 444
50, 040
4,029
203, 105
146, 933
70, 777
60, 195
7,740
40, 075
2,160
4,000
10, 754
84, 545
41, 195
16, 989
81, 033
8,616
2,243
2,795
4.86
68.40
120. 92
19. 74
68.40
4.58
8.37
Yuba
Sutter ,
Butte
Tehama
Shasta
El Dorado
138.00
99.83
5.23
61.13
14.48
2.00
436. 59
87. 56
436. 69
108. 68
67.40
22.33
150. 92
202. 02
12.36
88.45
Washoe
Storey
Lyon
Churchill
..!....
....".'.
....."..".'
Humboldt
Lander
Eureka
Elko
Box Elder
Cache
Weber
EMMONS B. BYAN.
2451
Statement of taxes paid on lands ty the Central Pacific Eailroad Company, $c. Cont'd.
RECAPITULATION.
Tear.
Amount.
Year.
Amount.
1868 to 1872
$20, 860. 09
1882
$44, 724. 47
1873 to 1874
25 504 63
1883
41 197 46
1875 to 1876
47-729 25
1884 .
27 168 81
1877
40 546 58
1885
24 392 99
1878
31 342 99
1886
22 711 96
1879
33 583 60
1880
52 399 86
Total
458 617 52
1881
46, 454. 83
To the honorable COMMISSIONERS :
I respectfully state that my books do not tally with vouchers in the office of the
secretary of the company for reasons :
(1) Many payments of school, road, and other taxes were paid which do not appeal*
on my books.
(2) Many payments appear on my books which do not tally with actual payments,
from the fact of tax collectors correcting errors in amounts due ; rebates on errors and
from other sources by tax collectors : delinquents paid in the interim between date
of publication and sale, and taxes paid by parties purchasing lands during the^iscal
year of such payments.
NOTE. The company returns for assessment all lands owned by it on the first
Monday in March of each year.
(3) I did not assume the duties of tax agent until 1870^ hence my books show from
that year only.
The body of the foregoing is hereby submitted as substantially in its showing.
I have the honor to be, your obedient servant,
E. B. RYAN.
OFFICES OF THE CENTRAL PACIFIC EAILROAD COMPANY,
San Francisco, July 28, 1887.
The Commission met pursuant to adjournment, all the Commissioners
being present.
The sergeant-at-arms of the Commission having been sent for Mr.
William E. Brown, reported that Mr. B rown could not be found . Mr.
S. T. Gage, having been requested to learn the whereabouts of Mr.
Brown, reported that Mr. Brown had been in the office all day yester-
day and at his hotel last evening, but that he had not yet arrived at
his office this morning. Mr. Gage further stated that Mr. Brown had
been sent for, and, if he could be found, would be on hand as soon as
possible.
The CHAIRMAN. We have sent our sergeaut-at-arms out for him. He
has been out some time.
Mr. GAGE. He has been sent for by messenger, and Colonel Crocker
has also telegraphed for him.
OFFICERS OF CENTRAL PACIFIC FAIL TO APPEAR.
The CHAIRMAN. The Commission has twice requested the presence
of Mr. Stanford before it.
Mr. GAGE. Governor Stanford has not known that.
The CHAIRMAN. He has not appeared. The Commission desires to
know whether a simple request for the attendance of the officers and
employes of the company, made upon some one in authority in the
company, will be sufficient. If not, then the Commission will issue
subpoenas to the officers and employe's of the company to secure their
presence and the production of their books.
2452 U. S. PACIFIC RAILWAY COMMISSION.
EXPLANATION OF MISUNDERSTANDING.
Mr. GAGE. I can assure you, Mr. Chairman, that Governor Stanford
has not received any such information. Your bailiff, or whatever he
may be, knocked at Governor Stanford's door, a short time ago, an hour
ago, probably, while I was in there with Governor Stanford, and in
quired for Mr. Brown. I went to Mr. Brown's room, understanding that
it was simply an inquiry for him, but he was not in. I came here now
for the purpose of saying to the Commission that Governor Stanford,
as president of the company, would like to appear before the Commission.
He has voluntered to do so, not having received any information that
he was wanted. Presuming that you would be in session, he volun-
tarily instructed me to say to the Commission that he would like to ap-
pear before the Commission at 1 o'clock to-day.
The CHAIRMAN. The Commission will hear Mr. Stanford to-day at
2 o'clock at Parlor A, Palace Hotel.
Mr. GAGKE. I will so report to him.
OFFICES OF THE CENTRAL PACIFIC RAILROAD COMPANY,
San Francisco, July 28 7 1887.
JOHN H. WALSH, being duly sworn and examined, testified as fol-
lows :
By the CHAIRMAN :
Question. Have you served a subpoena on William E. Brown ? An-
swer. I have not, sir. <
FAILURE TO SUBPCENA W. E. BROWN.
Q. Where did you go to find him ? A. I went to room 200, Palace
Hntel. I inquired also at the office of the hotel.
Q. What information did you get as to his whereabouts ? A. The.y
told me he was not in the room, and they did not know where he was
this morning.
Q. Where else did you go to find him? A. I went into a room ad-
joining, room 42, in this building.
Q. Is that his office ? A. I was told that it was.
Q. Was any one there ? A. Yes, sir.
Q. What answer did you receive *? A. They said Mr. Brown was not
about to-day.
READINESS OF GOVERNOR STANFORD TO APPEAR.
Mr. GAGE. Mr. Chairman, Governor Stanford will take pleasure in
meeting the Commission at two o'clock to-day at the place designated
parlor A, Palace Hotel.
The CHAIRMAN. We shall be glad to see him.
OFFICES OF THE CENTRAL PACIFIC RAILROAD COMPANY,
San Francisco, July 28, 1887.
E. H. MILLER, JR., being further examined, testified as follows:
The WITNESS. Before entering into any further answers, if agreeable,
I would like to make some explanation of uiy testimony given a few
days since.
Commissioner ANDERSON t Certainly, you may do so.
E. H. MILLER, JR. 2453
ESTIMATES OF ENGINEER.
The WITNESS. I think that there was a call the other day relating to
the examination of a contract, but if not, I would like to offer it. I have
found the estimates of the engineers as to the quantities of the several
contracts, with the prices put in by myself, which I desire to offer.
By Commissioner ANDERSON :
Question. Please state to what contracts they relate? Is it indorsed
here on the back? Answer. I do not think it is. This bundle [indicat-
ing a package] contains estimates for section 1 to section 54. This
second bundle contains engineer's estimates from section 55 to section
92, and this third bundle contains engineer's estimates from section 93
to section 141.
Q. Please explain exactly what the papers are which you present ?
A. I can only explain in general terms. They contain copies made by
myself of the estimates returned by the chief engineer of the company
of the quantities of work performed on the various sections from 1 to
141.
MEANING OF "SECTION."
Q. What is a section ? Is it of any definite length ? A. As I under-
stand it, it is not absolutely defined, but practically it is for 1 mile.
Sometimes there is a change made, as I understand, in the length of a
section on account of the character of the work to be done, and some-
times a particular section may be a mile and a quarter and the next one
perhaps may be three-quarters of a mile, but on the average they rep-
resent 1 mile. There is a specimen copy of one [handing document to
Commissioner Anderson]. In addition to that there is a statement made
up by myself of the quantities as appears upon that statement made by
the engineer, the price as I ascertained it under the contract, carried out
for each subdivision of the work, making a total amount of the esti-
mate to the various dates, with the prices given.
Commissioner ANDERSON. After you have completed your explana-
tion of one of these estimates I will ask you some questions about it, in
order to complete the matter.
The WITNESS. That is a sample of the estimates and prices as tiled
in my office.
Q. In whose handwriting are those estimates f A. In mine, those
two, and, I think, every one of them.
Q. When did you copy them ? A. I copied them at the time of the
dates, certainly within ten days.
Q. Who was the engineer ? A. S. S. Montague.
Q. Is he now-living $ A. He is not. In this connection, with refer-
ence to Mr. Montague, as I have mentioned his name, I wish to say
that no better man has ever lived. He was competent, honest, and
faithful.
EXPLANATION OF ESTIMATES.
Q. In the original paper prepared by him were the prices entered
and the amounts carried out, as well as the quantity of work ? A. No,
sir.
Q. Then the original contained simply the first column of quantities
and you entered the factors of price and the amount '? A. Excuse me.
2454 U. S. PACIFIC RAILWAY COMMISSION.
That is a copy a precise copy of an estimate furnished to ine by the
engineers.
Q. Then the engineer did enter the price and carry out the amount ?
A. No, sir ; I beg your pardon. I am mistaken in that. The engineer
did not return the prices, although it appears to be done on this copy
that I have made.
Q. As I understand it you took his estimate of quantities and in the
next column entered the factors of price and in the third column carried
out the amount in dollars ? A. Yes, sir.
HOW THE PRICES WERE ASCERTAINED.
Q. From what source did you ascertain the price! A. From the
contracts or from the orders of the board of directors, as they appeared
on the minutes of the company.
Q. In the marginal computations you took the total estimate which,
as I understand you, includes the total estimate of all the work done to
date, deducted preceding estimates, and then you obtain a sum which
you divide into two parts, making the " five-eighths cash " and the other
" three-eighths stock." Please state from what source you derive these
fractions? A. Either from the contract itself, if it was a contract, and,
it it was not a contract, I took it from the orders of the board of direct-
ors, making the price the same as appears on the minutes of the board.
HOW THE CONTRACTORS WERE PAID.
Q. And these amounts due to the contractors, whoever they were,
were paid in this manner ? A. They were not paid ; they were credited
upon my ledger to the contractor.
Q. And ultimately paid ? A. And ultimately paid, certainly.
Q. Does your ledger contain two accounts, to one of which you cred-
ited the cash payment and the other the stock payments ? A. It shows
plainly on the face of the ledger exactly what is shown there, that he
was entitled to receive on this estimate a certain amount in cash and a
certain other amount in stock.
Q. I ask you whether those amounts, the stock amount and the cash
amount, were entered in separate accounts, or whether they were all
merged in one account? A. There certainly would be one account for
the cash and one for the stock account, but not a separate account with
the contractor.
Q. Then the contractor, on this statement which I hold in my hand,
would be credited with $204,439.79 ? A. Yes; but he would be cred-
ited $127,774.87, payable to him in cash, and with $76,664.92 payable to
him in stock.
Q. Those two entries would be made as separate credits ? A. Yes,
sir.
Q. They would not be merged into one figure"? A. No; the entry
would appear on the face of the ledger as separate items under the same
heading.
Q. And when you came to balance that account you would figure up
how much stock was payable to that account and how much cash was
payable to that account, and you would balance the account by entering
the required amounts in stock and in cash ? A. When it was received
or paid to the contractors entries would be made in the manner you
suggest, or in the manner in which your question indicates.
E. H. MILLER, JR. 2455
CONTRACT WITH CROCKER & CO.
Q. What I want to know positively is whether, when estimating what
was paid on this contract with Crocker & Co., we may take all your
entries of cash and all your entries of stock, as appearing in these esti-
mates or as appearing on the face of your ledger, and conclude that the
consideration received by Crocker & Co. was the sum total of the cash
and the sum total of the stock ? A. Yes, sir.
Q. Will you please state to what contract these estimates refer, as far
as you can ? A. Yes, sir ; they referred in general or in detail to all the
contracts between sections 1 and 141 ; the various contractors between
those sections. For all of these sections, of course, there were various
contractors.
LOCATION OF SECTIONS.
Q. Give us the geographical location of those sections. Do they com
mence at the city of Sacramento ? A. Section No. 1 commenced at the
city of Sacramento and section 141 ended approximately 141 miles east
of Sacramento, varying perhaps three quarters of a mile.
Q. How near the State line would that be ? A. At the State line,
practically.
CONTRACT AND FINANCE COMPANY.
Q. That carries us to a point where the transactions with the Contract
and Finance Company commence? A. Yes.
Q. And embraces all the minor contracts and the two contracts with
Crocker & Co. f A. Yes, sir ; I think there are three contracts, how-
ever, with Crocker & Co.
Q. In whose handwriting are the monthly estimates ? A. The monthly
estimates of quantities are in the handwriting of some clerk in the en-
gineer's department, and the monthly estimates of prices and amounts
are in my own handwriting. From the estimates of quantities of work
done and the estimates of amounts payable, there is no difficulty in as-
certaining all of the terms of the contracts applicable to the sections
between 1 and 141.
I wish to state to the Commission that these papers were not in the
vault in my office, but in an outside room, in some pigeon-hole, and 1
found them yesterday while making a thorough overhauling of all my
papers.
HOW CONTRACTS WERE MADE.
Q. What other papers do you desire to produce besides these esti-
mates ? A. As I remember, 1 was asked under what arrangements
contracts were let and the circumstances in connection therewith. I
find on looking over the reports of Governor Stanford that reports were
made by committees at various times upon these matters. I have three
reports of a committee of which, I believe, Governor Stanford was one,
and in another case I was another. One is a report of a committee
upon the question of making a contract for the construction and grad-
ing of the railroad. It is dated May l), 1865. The report of another com-
mittee upon letting a contract, dated June 6, 18G5, is also here. Also
the report of the president and the acting chief engineer, dated January
5, 1867, upon the progress of construction, submitted to the board of
directors January 14, 1867, and ordered on file. With the permission
of the Commission, I would like to read these reports.
Commissioner ANDERSON. We will probably put them in our report
and we will read them this afternoon.
2456 U. S. PACIFIC RAILWAY COMMISSION.
The WITNESS. I would prefer to read them now if there is no objec-
tion.
The CHAIRMAN. It is not necessary to read them now.
REPORT FOR 1886.
The WITNESS. In my statement the other day as to the funded debt
of the .company I was very careful to state that my figures .wer.e given
as of the date December 31, 1885. I have before me a proof of the re-
port of the company up to December 31, 1886.
Commissioner LITTLER. Bead that.
The WITNESS. It is composed of tables. I will read it, and I would
like afterwards to submit our report containing them. This is our
proof, and it has nut been corrected; it will go back to the printer to-
day for correction.
Q. When are you going to let us have the proof of your report for
1886 ? A. There is the proof copy that came a few days ago and now
goes back for correction. There are a great many corrections in the
proof.
Commissioner ANDERSON. We ought to get it in a day or two 'I
The WITNESS. Yes, sir.
Commissioner ANDERSON. We will get your report, then, in a day or
two, and it is not necessary, therefore, to read that statement at the
present time.
STATEMENT AS TO GUARANTEES.
The WITNESS. My testimony should be corrected relative to those
accounts, though I was careful to state that the figures I gave were
those of December 1, 1885. With regard to the statement as to guar-
antees which I was asked to get out as to the bonds guaranteed by the
Central Pacific, I now submit it. It is a statement showing the bonds
of leased lines guaranteed by the Central Pacific. It is made in tabu-
lar form, showing the name of the road, miles of road, character of loan,
amount of bonds guaranteed, date of maturity of bonds, interest paya-
ble, &c, California Pacific, second mortgage, 6 per cent., $1,600,000,
due January 1, 1891, interest payable in January and July.
By the CHAIRMAN :
Q. What is the date of the guarantee f A. It bears date at the time
the lease was made.
Q. What was the date? A. I do not know.
By Commissioner ANDERSON :
Q. Cannot you tell us the year ? A. Not from memory.
The CHAIRMAN. It is very important that we should have the date
of the guarantee.
The WITNESS. There is no difficulty in ascertaining it from the pa-
pers in your possession.
Commissioner ANDERSON. There is no doubt about that, but we have
many things to ascertain, and we would like to have you get the infor-
mation for us.
The CHAIRMAN. Suppose you keep that paper and amend it by add-
ing the date of that guarantee.
The WITNESS. If you choose, I will pass that for the present.
Commissioner ANDERSON. The date of the guarantee is essential.
OBJECT OF INCREASED ISSUE OF STOCK.
The WITNESS. It is possible that there may be a correction necessary
in my testimony given the other day. 1 misapprehended one of the
E. H. MILLER, JR. 2457
questions, as reported by the reporters a question put by Mr. Ander-
son in relation to the purpose for which the $5,000,000 were issued.
Although that question is in the report, I do not remember it at all.
The question that I do recollect was, what was done with the $68,000,-
000. My answer fits both cases, because the $5,000,000 of bonds hav-
ing been sold for cash, that cash was deposited in various banks and
disposed of in sundry ways. It was impossible to tell exactly to what
various purposes the proceeds of the sale of those $5,000,000 were ap-
plied. They went into the general fund, and were used for the general
expenses of the company.
Commissioner ANDERSON. The question was, what the $5,000,000 of
stock which was issued (raising the amount of stock from $54,000,000
to $59,000,000) was. It was not bonds.
The WITNESS. I should have said stock; not bonds. It was impos-
sible for any man to tell to what particular purpose that money was
applied, unless it was kept entirely and distinctly by itself. The moneys
came in and went into the general fund, and they were applied to the
general purposes of the company, and it is impossible for me or for any
man to say to what particular purpose this particular money was ap-
plied.
DID PROCEEDS GO TO PAY DIVIDENDS ?
By the CHAIRMAN :
Q. Would you have used it to pay dividends ? A. If we paid any divi-
dends after that, unless this cash had been kept right sraight along sepa-
rated from all other cash, probably it would have gone towards the pay-
ment of dividends. 1 want to explain that. The actual and definite
proceeds, the individual money received from that $5,000,000 of stock,
were not segregated from the other moneys of the company, but went
into the general fund, and if the company was entitled to pay divi-
dends if it had the right and authority to pay dividends some of that
actual money may have been used in paying them.
WHEN AND WHY THE STOCK WAS INCREASED.
Commissioner ANDERSON. The stock was increased in 1880, and is
entered in the reports of the company as held in trust for the company.
It seems subsequently to have been sold, and my question is, when was
that stock sold, and what became of the money"?
The WITNESS. The annual reports will show that. They will show
the increase in the stock issued. I do not remember the year.
Commissioner ANDERSON. You will find it $54,000,000 in 1881, 1882,
and, I think, 1883. From your general report we cannot tell just when
this issue was made without tracing it up. This stock was sold from
time to time as occasion offered, and the cash entered in the miscella-
neous cash assets of the company. You mean to say that it is im-
possible to say that the dollars received from this stock went to any
special purpose, as I understand you.
The WITNESS. Precisely.
FLOATING DEBT.
Commissioner ANDERSON. But in taking the balance sheets of the
company and tracing from the year when the capital stock account was
increased $5,000,000, and tracing the increase on the other side of the
account, the construction account, or the equipment account, or any
other of the accounts which appear on that side, you may mean to say that
2458 U. S. PACIFIC RAILWAY COMMISSION.
the increase in the stock, together with the increase of the items the
bonds on that side have gone into the other moneys which appear
to have increased on the other side of the account.
The WITNESS. Yes, and I can add to that, generally, that the sale of
that stock was made for the purpose of getting money to pay off the
floating debt ; but whether that particular money received was used for
that purpose or not, I cannot say. I submit now a number of reports,
which I have found in my office. I have handed you all the papers,
except Leland Stanford's reports. I have here seven reports of Leland
Stanford.
REPORTS OF OFFICERS.
(The witness here produced seven reports of Lelaud Stanford, presi-
dent, as follows : A report dated July 13, 1865, to the stockholders at
their annual meeting. A report dated December 28, 1865, reporting
as to proceeds from sales of California Central Eailroad rolling stock, &c.
Three reports dated September 1, 1867. A report dated December 26,
1867. A report dated July 13, 1869, to the stockholders of the Central
Pacific Eailroad Company of California, at their annual meeting.
The witness also produced fifteen reports of Treasurer Mark Hopkins.
The witness also produced reports of C. P. Huntington, as follows :
Two reports lor 1863. Two reports for 1864. Thirteen reports for 1866.
Ten reports for 1867. Nine reports for 1868. Three reports, without the
date being noted on the back.)
Commissioner ANDERSON. That completes your papers, Mr. Miller,
does it ?
The WITNESS. Yes, sir ; I will say, however, that they are not all the
reports of Mr. Huntington. Your accountants are using the reports of
1869 and subsequent to that time. They have been taken out of the
files, and have been segregated from those papers.
REQUEST FOR HISTORY OF CONSTRUCTION OF ROAD.
Commissioner ANDERSON. Could you place before the Commission
in tabular form (you may take a reasonable time to prepare it) a state-
ment giving us, substantially, the history of the construction of this
road, starting with section 1 and coming down to the completion in
May, 1869, showing the cost of construction, the amount of cash, of stock,
and of bonds issued under the Crocker contract, the amounts under the
Contract and Finance Company's contracts and under the Western
Development Company's contracts, if that company had a contract dur-
ing those years ? My information is that the entire construction up to
May, 1869, covered miscellaneous contracts the Crocker & Co. con-
tracts with the Contract and Finance Company and what we would
like to know is how much it appears from your books this construction
cost in cash, bonds, and stock, to whom the same were issued, and to
what sections or miles of construction such payments were respectively
applicable, as they appear from the estimates of the engineers, in con-
nection with the issue of stock and bonds or payments in cash. In
other words, can you give us the story of the construction of this road
from its inception to its junction with the Union Pacific ? I do not ask
for the production of all the books, showing each individual payment,
but so that we can generalize. You may take a number of sections to-
gether and take the contracts together, and say that the Crocker con-
tract commenced at such and such a section, at such n date, and was
completed so many months or years afterwards, at such a section, and
that the entire consideration issued under that contract was so much in
E. II. MILLER, JR. 2450
money, so much ill stock, and so much in bonds, if bonds were used.
Then we would like to have the same thing, made out in the same way,
applied to the contracts of the Contract and Finance Company.
The WITNESS. Do you ask if I can give you these facts ?
Commissioner ANDERSON. Yes.
TIME REQUIRED TO PREPARE THE STATEMENT.
The WITNESS. I can do so, but it will take some time.
Commissioner ANDERSON. How long will it take you to prepare that
information ?
The WITNESS. Two or three days ; that is, I will not do it personally,
but I will have to have it done by my clerks.
Commissioner ANDERSON. You can have all the time necessary.
The WITNESS. It will take two or three days, but I will have it ready
for you within that time. I think, however, that your accountants are
getting this information in detail. So far as I have seen what they are
doing, I think that they will have full details of each contract with the
date of each payment.
The CHAIRMAN. I should like to ascertain who can tell us the story
of the construction of this road. ,
The WITNESS. I can tell that story without any difficulty.
The CHAIRMAN. I want it regularly and consecutively, whether on
the witness stand or by memorandum. It is indifferent to me whether
you write it out, or take the stand and tell it orally.
The WITNESS. I will write it out, and, if you desire, make an affidavit
to it.
The CHAIRMAN. As far as I am concerned, I would like to get the
facts. It is immaterial in what shape they come so long as we get them.
Commissioner ANDERSON. I move that Mr. Miller be requested to
prepare the statement indicated to him, and, when it is ready, that he
lay it before us.
The motion was agreed to.
VOUCHERS.
Commissioner LITTLER. Can you accompany that statement with the
vouchers backing it up ?
The WITNESS. I can.
Commissioner ANDERSON. We want first to get a plain statement of
when this road was built and how much they paid for it, and then the
detailed statement of vouchers or anything explanatory that can follow.
You have nothing to add respecting the other contracts such as that
with the Contract and Finance Company?
The WITNESS. No, sir ; only to say that I cannot possibly see any
important connection which those contracts have, whether lost or pres-
ent. You have, I think, every detail of those contracts among these
that I have submitted this morning.
Commissioner ANDERSON. In these estimates of sections Nos. 1 to 141 ?
The WITNESS. Yes, sir.
Commissioner ANDERSON. There are other things that we want to see.
We want to see the books of the Contract and Finance Company. We
want to know how much it cost that company to build this road, as well
as what the Central Pacific Company paid for it.
SUBPCENAS UNNECESSARY.
The CHAIRMAN. Is it necessary to serve you with a subpoena to be
iere and testify before this Commission?
P R VOL IV 9
2460 U. S. PACIFIC RAILWAY COMMISSION.
The WITNESS. No, sir ; it is not necessary to subpoena ine, or any
other person connected with the company.
The CHAIRMAN. Will it be necessary to serve a subpoena for the pro-
duction of the books 9
The WITNESS. No, sir. Every book that I have you can have with-
out a subpoena.
The CHAIRMAN. Then you will see that they are produced without
subpoenas 1
The WITNESS. Yes, sir.
E. H. MILLER, JR.
Afternoon session.
PARLOR A, PALACE HOTEL,
San Francisco, Cal, Thursday, July 28, 1887.
The Commission met as above, all the Commissioners being present,
the chair announcing that, until otherwise ordered, the sessions of the
Commission would be held at that place.
The CHAIRMAN. Mr. Leland Stanford is present, and I suppose we
had better proceed with his examination.
Mr. STANFORD. I received the Commission's printed circular contain-
ing some fifty-eight interrogatories, and I have carefully prepared an
answer to each interrogatory. I had expected to be ready whenever the
Commissioners should arrive in San Francisco, but there was some of the
information that I could not obtain in time. If you will allow me I will
read this.
The CHAIRMAN. Do you make this a portion of your testimony ?
Mr. STANFORD. I have made an affidavit as to the truth of the facts
stated in it, to the best of my knowledge.
The CHAIRMAN. At the bottom of this paper ?
Mr. STANFORD. The affidavit is at the bottom of another paper, but
this is a general statement preliminary to the answers that I have pre-
pared to the interrogatories. I presume you will remember that you sent
me a printed communication containing a number of interrogatories,
requesting me to prepare answers, which I have done.
The CHAIRMAN. Before going on with it I will swear you.
LELAND STANFORD, being duly sworn and examined, testified
as follows :
The WITNESS. Your communication dated New York, May 12, 1887,
requesting me to answer the interrogatories contained therein, was duly
received, has been carefully considered by me, and I submit herewith
my replies thereto :
I did not have personally the information necessary to answer some
of the interrogatories, and, agreeably to your request, referred them to
those persons who possessed such knowledge. Their reports, verified
by their affidavits, are attached as exhibits to, and are made part of, my
answers to your communication.
CONGRESS TO CONSIDER THE EQUITIES.
The creation of this Commission charged by Congress with the duty
of examining "into the workings and financial management of all rail-
LELAND STANFORD. 2461
roads that have received aid in bonds from the Government," was an
honest and candid admission by Congress that there were equities ex-
isting in favor of the railroads in question, which should be inquired
Into, and to the full benefit of which they are entitled. I know that
such equities do exist in favor of the roads I represent, and I am pleased
that an opportunity has at length been offered us by Congress to pre-
sent them in such form as to insure their full and impartial considera-
tion both by it and by the people at large.
EXAMINATION POSSIBLE ONLY BY CONSENT OF COMPANY.
It will be readily admitted that the examination contemplated by the
act, and with the making of which examination you have been charged,
could not be held without the consent of this company whose affairs it
was thus desired to examine.
The Central Pacific Railroad Company was organized on the 27th day
of June, 1861, under the laws of the State of California, and has ever
since been, and now is, carrying on and transacting its business under
and in accordance with the laws of this State. In this particular its re-
lations and obligations to the Government are entirely different from
those of the companies which were created by and under Federal stat-
utes. Congress has a control over such corporations, even to the ex-
tent, perhaps, of taking away their charters ; but as to the Central Pa-
cific, even though all the laws of Congress relating thereto, and under
which its relations to the National Government are defined, were re-
pealed, it would still exist as a legal corporation, and continue to do
business as such under and in accordance with the laws of the State re-
lating to railroad corporations. After diligent search I have been unable
to find anything in that contract which authorizes any investigation of
this kind to be made.
Hence, as I have before said, it will be readily admitted that the ex-
amination contemplated by the act of Congress cannot take place with-
out the assent of the company itself.
COMPANY CONSENTS TO EXAMINATION.
Notwithstanding all this, however, we meet you most cheerfully in
this matter. We shall furnish you a full and detailed answer to each
and every one of the fifty-eight propositions and interrogatories con-
tained in the communications hereinbefore mentioned.
AID FOR CONSTRUCTION OF ROAD URGED BY ALL.
The construction of the Pacific Eailroad to unite the Atlantic States
with the States and Territories of the Pacific was the leading topic of
public discussion from the termination of the Mexican war, until the
road was finally completed in May, 1869. This subject occupied the at-
tention of political conventions in neat- ly every State of the Union, and
Congress was overwhelmed with petitions and memorials urging the
extension of Government aid to the enterprise. Public sentiment com-
pelled the national conventions of both political parties to declare in
favor of the construction of the road, as a military and commercial
necessity.
EARLY SURVEYS AND ROUTES.
Prior to 1860, surveys and examinations were made by the War De-
partment, of various routes across the continent. The Southern route
2462 U. S. PACIFIC RAILWAY COMMISSION.
on the thirty-second parallel was regarded as the only one upon which
it was practicable to construct a trans-continental railroad. It was un-
derstood that the Northern and Central routes were impassable in winter
on account of the deep snows in that region, and besides, the mountains
themselves were represented as imposing insurmountable barriers to
the construction of a railroad. Pending the discussion of the question,
the civil war closed the Southern route and rendered it impossible for
the United States to avail itself of the advantages supposed to exist on
the thirty-second parallel. The Government had no option; if a road
was built, either the northern or central route must be adopted. The
war made it clear to every citizen that a road connecting the Pacific
with the Atlantic was a political necessity. The discussions which had
already taken place with respect to the several routes across the conti-
nent had impressed the financial world with the impracticability of con-
structing a railroad on the central line.
ACT OF 1862.
Congress, however, resolved that a road must be built, and to that
end, in 1862, passed an act in aid of its construction. The act pro-
vided for the organization of the Union Pacific Railroad Company to
construct the road from the Missouri River to the eastern line of Cali-
fornia, and authorized the Central Pacific Eailroad Company to con-
struct the balance of the road through that State.
BUSINESS FROM COMSTOCK LODE.
At the time of the organization of the Central Pacific in 1861, the
great Comstock Lode in Nevada was being rapidly developed, and a
vast amount of freight was being carried over the mountains by teams.
It was for the purpose of doing this business for which there was no
competition, except teams over the mountains, that the projectors of the
Central Pacific Eailroad 'organized that company. They would not
have attempted to scale the Sierra Nevada Mountains with a railroad
against other competition.
GOVERNMENT TRANSPORTATION PRIOR TO ROAD EIGHT MILLIONS A
YEAR.
On the line of the road across the continent for a term of years prior
to the passage of the act for the construction of the Pacific Eailroad,
the annual expenditures of the Government for the transportation of
supplies for the military and Indian service and carrying United States
mail had exceeded $8,000,000. This annual expenditure was assumed
as a basis for the compensation which would be paid to the railroad for
the service it would be called upon to perform for the Government.
It was understood that the Government service would be largely in-
creased by the construction of the road, and it was assumed that the
compensation would never be less. The act provided for both bonds
and lands to aid in the construction of the road. The bonds were to
draw 6 per cent., and to become due thirty years after the date of their
issue. It was also provided that the road should perform all Govern-
ment service required, and that the compensation therefor should be
credited upon the principal and interest of the bonds, and that the
Company should also pay to the Government 5 per cent, of its net
earnings to apply on the bonds.
LELAND STANFORD. 2463
UNITED STATES TRANSPORTATION CHARGES AND FIVE PER CENT.
OF NET EARNINGS TO PAY THE DEBT.
It was estimated that the eight millions per annum which it had pre-
viously cost the Government to transport supplies and carry the mail
would-be paid to the company for much better service, and that such
payment, together with the 5 per cent., would liquidate all the obliga-
tions of the company to the Government before the maturity of the
bonds. This would have been the case if the Government had not re-
duced the compensation of the Pacific Railroad for transportation ot
supplies and mail service to a mere nominal amount. The Government,
in fact, required the Pacific Railroad to perform mail service at a rate
not exceeding the usual allowance made to railroads passing through
the populous States of the East, making no allowance for the fact that
in the region where the road was constructed there was no competition,
very little local business, and the fact that the Government had been
relieved from the slow and inadequate service formerly performed by
teams and pack animals.
ACT OF 1862 NOT .ADEQUATE.
The Union Pacific Railroad was unable to enlist capital to. undertake
the construction of the road under the provisions of the act of 1862.
The public mind was so thoroughly impressed with the difficulties of
the construction of a railroad on the Central line that it could obtain
no money for that purpose. In addition to this, the war had destroyed
public confidence and added largely to the difficulties of the enterprise.
The Central Pacific was also unable to avail itself of the provisions of
the act. It was, however, a State corporation, and. continued to strug-
gle to construct a road over the Sierra Nevada Mountains. Some aid
was extended by the State of California by the guarantee of interest on a
million and a half in bonds, and bonds of several of the counties of the
State, all of which have been fully reimbursed, except the city and
county of San Francisco, which compromised its subscription of $600,000
to the stock of the company by paying $400,000 in the bonds of the
city after a long litigation.
ACT OF 1864.
With the private means of the corporation and the aid above men-
tioned, it commenced the work of construction in 1863, and continued
it until the road was completed in 1869. In 1864 Congress became sat-
isfied that the road could not be built on the terms and conditions pro-
vided in the act of 1862, and passed a supplementary act containing
important modifications, viz: It doubled the amount of the land grant;
it provided that the company might execute a first mortgage on the road
for an amount equal to the Government bonds ; and it confined the
payments required from the company to one-half the compensation due
from the Government, and the 5 per cent, of net earnings named in the
original act. It reserved a lien upon the road for the performance of
these obligations.
REASONS FOR MODIFIED TERMS.
The argument in favor of these modifications was that the road was
a political necessity and must be built at whatever cost ; and it was
contended that one-half of the compensation due from the Government
2464 U. S. PACIFIC RAILWAY COMMISSION.
for services, together with 5 per cent, of the net earnings, would pay the
bonds before maturity. This would have been the case, if upon the con-
struction of the road the compensation had not been reduced below
what was previously paid. The time limited by Congress for the con-
struction of the road extended to July, 1876, but a universal desire was
expressed by Congress and the country for an earlier date.
RAILROAD OVER SIERRA NEVADAS DECLARED IMPOSSIBLE.
As before remarked, the Central Pacific was compelled to build over
the Sierra Nevada Mountains, which had been pronounced impassable
for a railroad, not only by the public at large, but by many engineers.
This alone would have made the negotiation of its securities difficult ;
but added to this there was much local opposition.
ANTAGONISM OF OTHER INTERESTS.
The construction of the railroad antagonized the Telegraph Company,
the Sitka Ice Company, the California Steam Navigation Company, the
Pacific Mail Steamship Company, the various toll road companies, the
contractors for the Government, the Sacramento Valley Railroad Com-
pany, Wells, Fargo & Co., and all the various transportation interests,
because its construction would interfere with or practically destroy
their respective business organizations. These interests largely influ-
enced the public press of the Pacific coast, and made combinations to
destroy the credit of the company and prove to the world that its un-
dertaking was a fraud and a farce which must necessarily culminate
in failure. Under these circumstances the road across the Sierra Ne-
vada Mountains was* constructed, and the will and energy manifested
by the company attracted the attention of Congress and induced a
change in the law.
CENTRAL PACIFIC AUTHORIZED TO BUILD EASTWARD FROM CALI-
FORNIA.
It will be borne in mind that the original act conferred on the Central
Pacific the right to build to the east line of the State of California. In
1866 that limitation was removed, and it was provided that both the
Union and Central Pacific Eailroad Companies might continue to build
until a connection was made by a continuous line of railroad. At that
time the Central Pacific Company was surmounting the difficulties on
the Sierra Nevada Mountains which had hitherto been regarded as ob-
stacles which could not be overcome, while the Union Pacific Company
had scarcely made a commencement. The road of the latter company
was then constructed but a few miles west of the Missouri River, al
though it had a level plain for more than 500 miles west of Omaha.
ROAD COMPLETED MAY, 1869; SEVEN YEARS BEFORE TIME FIXED.
This act was passed to hasten the completion of the road, and it ac-
complished the purpose desired. The last spike was driven in May,
1869, seven years before the expiration of the time limited in the origi-
nal act. The companies very justly regarded this act as an indication
by Congress that a speedy construction of the road was demanded. To
meet this demand both companies made great sacrifices.
LELAND STANFORD. 2465
EXTRA COST BY EARLY COMPLETION.
The loss sustained by the Central Pacific in thus complying with the
manifest design of Congress for the speedy completion of the road was
very great. The company did not wait for a completion of a continuous
line to convey materials and supplies for the construction of the road;
on the contrary, by means of teams and pack mules, transported sup-
plies for hundreds of miles in advance of completed construction. It
even conveyed railroad iron, locomotives, and other materials by teams
in winter, over the deep snows on the Sierra Nevada Mountains, where
little but tunnel work could be done in that season of the year, for the
construction of the road beyond, and built many miles of road before a
connection was made therewith.
ADDITIONAL LOSS TO COMPANY BY EARLY COMPLETION.
I desire to call the attention of the Commission to some of the sacri-
fices made by the company in hurrying the work to its early comple-
tion. The bonds issued by the United States to the company were, on
account of the war, disposed of at a discount of over $7,000,000. This
discount, with the interest on the same until the maturity of the bonds,
will amount in ronnd numbers to $20,000,000. There was also a like
discount suffered on the first mortgage bonds issued by the company,
whereas if the full time allowed by Congress had been occupied in the
construction of the road, these bonds could have been sold at par. At
the time the road was constructed the prices of labor and materials in
California, Nevada, and Utah were enormously inflated, not only on ac-
count of the war prices which then prevailed and the war risks which
were incurred in transporting material from the East by sea, but also
by reason of the great mining excitement which prevailed in Nevada
and California and absorbed nearly all the available white labor. It
will be shown by the testimony of engineers who had charge of the con-
struction of the road and other competent witnesses, that the cost of
construction exceeded 50 per cent, more than it would have been if the
company had delayed its final completion until July, 1876.
PUBLIC BENEFITS REALIZED THROUGH CONSTRUCTION OF PACIFIC
RAILROAD.
The Pacific Eailroad has accomplished all the good, both local and
national, that was predicted by its most enthusiastic supporters. It
has demonstrated the possibility of the construction of a transconti-
nental road ; it has proved to the financial world that the great interior
abounds in resources ; it has made it possible for the construction of
other transcontinental roads, with numerous branches and feeders ; it
has shown how the national domain can be utilized; it has encouraged
the development of the natural resources of California, and shown that
its products of fruits and wines can be transported to the Atlantic,
States by rail. It was the first enterprise anywhere in the world which
made possible the habitation of regions of country far remote from nav-
igable waters, and has added untold millions of wealth to the nation.
It has performed the public service so faithfully and expeditiously as
almost to annihilate the distance between the Pacific and the Atlantic,
and bring the whole country into close and intimate political, social, and
commercial relations. It has performed the Government service in
transportation of mails, materials, and supplies, to the complete satis-
faction of all Government officers having charge of such business.
2466 U. S. PACIFIC RAILWAY COMMISSION.
INJURY TO COMPANY BY UNJUST LAWS.
While the company has been spending all its energies in furnishing
to the Government and the people every possible facility at the lowest
possible rate for transportation, Congress has at times, through a mis-
apprehension of the facts, appeared exacting and unjust. The act of
1878, known as the u Thurman act," has been injurious to the company.
While it was admitted that there was nothing due from the company
except one-half of its compensation for Government service and 5 per
cent, of its net earnings, until the maturity of the bonds, Congress
provided for a sinking fund ; it placed the management of that fund in
the hands of the Secretary of the Treasury. The sums required under
this act have been paid into the fund since 1878 and have been in-
vested in Government bonds issued for the construction of the Pacific
railroads, at a cost for premium of 34 per cent. These bonds, as we
have already seen, were originally disposed of by this company at a
discount, causing a loss on the principal alone of $7,000,000.
INVESTMENT OF SINKING FUND BY UNITED STATES.
The company is charged interest on these bonds at the rate of 6 per
cent, on their par value. The Secretary has invested the money which
the company has paid under the Thurman act in these bonds, paying
an average premium therefor of 34 per cent. There has been paid in
by the company to the sinking fund $3,168,600.50, the loss on which in
interest and premium up to the present time is $1 ; 612,966.72. In fact,
there is less money in the sinking fund to-day than the amount paid in
by the company by over half a million dollars.
BENEFITS TO BE CONSIDERED.
It was supposed when the company accepted the terms of the acts
and entered into the contracts with the Government that the United
States would take into consideration the circumstances under which
the road was constructed, the difficulties encountered in its construc-
tion, and the great benefits accruing to the Government'by its increased
facilities in mail service and transportation, and allow it a like com-
pensation to that formerly paid for the service when performed by
teams and pack animals. This company, instead of receiving four mill-
ions per annum, which would have been its reasonable proportion ac-
cording to the former rates of compensation, has, in fact, received not
more than one-eighth of that amount.
NO COMPETING LINES ANTICIPATED.
I also desire to call your attention to the fact that at the time of the
construction of the Pacific Eailroad no competing roads were antici-
pated. It was expected that the Pacific road, for which the Govern-
ment issued its bonds, would be the only transcontinental road until
its debt to the Government was fully liquidated. But soon after the
company entered into the contract with the United States for the con-
struction of the road, other parallel and competing roads were aided by
extensive land grants made to them by the United States. The land
grant to the Northern Pacific was many times in extent and value more
than the land grant of the Union and Central companies. The Atlantic
and Pacific, Texas and Pacific, and Atchison and Topeka are all compet-
LELAND STANFORD. 2467
ing roads to the Union and Central, and have all been aided by extensive
land grants made by the Government since the commencement of the
construction of the Central Pacific.
LOSS CAUSED BY COMPETING AIDED LINES.
There was certainly no competition available to the Government
with the Pacific Railroad from the time of its completion until 1881,
when the Atchison, Topeka and Santa Fe united with the Southern
Pacific at Deming, N. Mex. During all that period the Government?
was saved the full amount of the difference between what was paid by
the former mode of transportation and the actual amount paid after the
completion of the Pacific Railroad. This amounts to many millions of
dollars, as shown by the public reports. The local business for Utah
and Nevada is exceedingly small, as will appear from answers to your
questions which I shall hereafter make. The Central Pacific, outside
of its local business in California, mainly relies upon through business.
This has been diminished by the competing lines aided by the Govern-
ment by at least $17,000,000, as will be shown by the facts and figures
hereafter presented in answer to the proper interrogatories.
THE EQUITIES CONSIDERED BY CONGRESS.
The act of Congress, however, under which, your Commission is or-
ganized, recognizes the equities of the company and provides for an ex-
amination of all the circumstances attending the construction of the
road, such as : what was the cost of Government transportation and
mail service on the line of the road prior to its construction ; how much
more expensive was it to construct the road at the time than it would
have been five years earlier or fire years later; what discount was the
company forced to make in disposing of its bonds ; what loss has the
company sustained by competing lines subsidized by the Government.
This is the first opportunity the company has had to present in official
form these equitable considerations.
THE DEBT OF THE GOVERNMENT IN EXCESS OF THAT OF THE COM-
PANY.
I feel confident that when your Commission shall have concluded its
labors it will appear that upon an equitable adjustment between the
United States and the Central Pacific Company the company will owe
nothing to the Government, but, on the contrary, the Government will
be largely in debt to the company.
PRINCIPAL CLAIMS AGAINST THE UNITED STATES.
I will recapitulate the principal claims of the company against the
Government, which are :
(1) The loss and interest thereon which the company sustained by being forced to
sell the bonds received by it from the Government at a discount :
Loss $7,120,073.55
Interest to maturity 12,816,132.39
Total . 19,936,205.94
(2) The amount which the Government saved in its transportation on
the Central and Union Pacific line between the completion of the road
in May, 1869, and time when it might have been completed under the
contract, i. e., July 1, 1876, $47,763,178. This coini>any's proportion,
say 46 per cent - 21,971,062.00
2468 U. S. PACIFIC RAILWAY COMMISSION.
(3) The amount which the Government now owes the company upon
transportation, the legality of which claim has been sustained by the
Court of Claims and also the Supreme Court of the United States. This
amount is $1,853,323.15
(4) The amount of loss which the Company has directly sustained by
reason of the refusal of the Government to grant the company patents
for its lands as rapidly as called for, say 500, 000. 00
(5) The loss by the Sinking Fund investments in United States Treas-
ury ,. 1,612,966.72
(6) Loss by diversion of business from Central and Union Pacific to
other subsidized roads, $37, 000, 000. Central Pacific's proportion of
which, 46 per cent is, say 17,000,000.00
Total 62,873,557.81
I will now proceed to answer the questions submitted by you in their
order.
By the CHAIRMAN :
Question. Have you those answers in writing ? Answer. Yes, sir.
Q. Do you desire to read them ? A. Yes, sir ; but I suppose you
may sometimes desire to ask me questions as you go along. A little
explanation may occasionally be necessary, and it may save the Com-
mission's time.
Commissioner ANDERSON. I think the witness had better get through
all he desires to state and then we can ask him such questions as we
may desire.
The CHAIRMAN. We propose to take you up from the beginning, on
the examination, as to this road.
The WITNESS. I will be at your service as to anything you want.
The CHAIRMAN. And you can submit your papers.
The WITNESS. I do not believe there are any questions that you will
ask me but what will be cheerfully answered to the best of my ability.
We have never before had an opportunity to place the history of this
road before the public. This is the first time. There have been more
misrepresentations and more falsehoods told about this company than
one would ever conceive, unless one was familiar with its history.
THE BONDS WENT INTO THE CONSTRUCTION OF ROAD.
All of the $27,000,000 of bonds (none of which I ever saw) and every
one of our first-mortgage bonds went into the construction of the road.
I signed all of them and sent all of them East to be sold, and have
never seen one of them until this day. Yet they made us out as having
made a profit of some hundreds of millions of dollars or more. That
story was circulated all over the country. We only had twenty-
seven millions from the Government at the beginning, and those sold
at a discount of $7,000,000. And, by the way, those bonds are the only
ones that the Government ever parted with at par. All the rest, as you
know, were at a discount in gold, but these we are charged for at
par. While our credit was pretty good when the Government made
the contract with us, and we had great faith in the bonds, yet they
came to us at a time when we sold them, I think, at 40 cents in gold.
REASONS FOR RAPID CONSTRUCTION.
I do not know that I have explained to you all the reasons for this
rapid construction of our road, but there was more work performed on
the first 150 miles of the Central Pacific than would suffice to grade a
line of road from that point to Chicago, and that fact is very easily sue-
LELAND STANFORD. 2469
ceptible of substantial demonstration. We worked a much larger force
of men. For three years we worked more than double the force of men
on those mountains that we worked afterwards when we went 500 miles
in ten months (less 10 days). That rate of speed on the other portion of
the road would have carried us to Chicago. We worked with more than
double the force of men, and were aided on an average by five hundred
kegs of powder a day. I will tell you of a conversation that occurred
when we first went over the line, before there was a trail.
AT THE SUMMIT.
W T hen we were prospecting we got up about Donner Lake and had got
to the summit and looked down at the lake, 1,200 feet below us, and
looked up at the cliffs 2,000 feet above us, we meditated on the scene
not only for its beauty, but also for its practical relations to a railroad,
and we came to the conclusion that if a ship could start from San
Francisco and sail around Cape Horn and get in back there we could
not afford to build a road and meet that competition ; or if a ship could
sail from any Atlantic port around Cape Horn and get in there, we
could not afford to build the road and meet that competition. But we
knew that they could not, and the only competition, therefore, that we
were likely to have or could expect to meet,* was that of the ox-team
and the mule-team, and as the laws of the State of California allowed
15 cents a ton per mile, we concluded we could build it.
COMPELLED TO HASTEN CONSTRUCTION TO MEET UNION PACIFIC.
When Congress passed the bill which provided for the Union Pacific
Company to build west towards us, to form a connection, and allowing us
to build east towards them, we were compelled then to meet that road
out towards Salt Lake, or else we would have nothing but this terrific
mountain to operate and we would be entirely at the mercy of the Union
Pacific in bringing supplies from the East to Nevada. We were com-
pelled, therefore, to push our road through with all the speed in our
power to have anything of value. Although in passing the summit we
had done the greatest amount of our work, and had climbed up an ele-
vation of 7,000 feet in 103 miles (the most of which was done in about
80 miles), yet we made every sacrifice for speed. We economized our
means as far as possible, but we never hesitated at anything that
would give speed. Yoil must excuse me for branching off a little in
this way, but it is a part of the history of the construction of the road
and of the influences which led to its construction, which may not be
generally known. Now the first question you asked me is as follows :
DUTY OF COMMISSION.
" Question 1. That the duty of said Commission shall be to examine
into the working and financial management of all the railroads that
have received aid from the Government in bonds."
Answer 1. This interrogatory, being simply a recital of the duties of
the Commission, does not seem to require any answer from me.
The CHAIRMAN. Are you going to give us this manuscript?
Governor STANFORD. Yes, sir. I might ask the privilege of editing
it a little, because we have been hurried very much, and there are some
typographical and other little errors that have crept in.
The CHAIRMAN. There is no objection to that.
2470 IT. S. PACIFIC RAILWAY COMMISSION.
HAVE COMPANIES COMPLIED WITH ALL OBLIGATIONS!
u Question 2. To ascertain whether they have observed all the obli-
gations imposed upon them by the laws of the United States under
which they have received such aid, or which have been since passed in
reference thereto, and complied with all other obligations to the United
States."
THE CENTRAL PACIFIC HAS FULLY COMPLIED WITH THE LAWS.
Answer 2. The Central Pacific Railroad Company has always promptly
observed all the obligations imposed upon it by the laws of the United
States under which it received its aid in bonds, or which have since been
passed in reference thereto, and has also promptly complied with all
other obligations to the United States.
I have never heard, either from Congress or any other official source,
that the Central Pacific Railroad Company was not promptly discharg-
ing, as they accrued, each and every one of the obligations imposed
upon it by Congress. If there had been such complaints I should cer-
tainly have heard of them.
I was chosen president of the Central Pacific Railroad Company at
its organization, and have' held the position ever since. It has always
been the earnest desire and purpose of the company to meet and dis-
charge, and it has promptly met and discharged, as they accrued, all the
obligations imposed upon it by the laws of the United States ; such has
ever been and still is the policy of the company. I deem it unnecessary
to say more upon this point, but direct your attention to, and ask your
careful consideration of, the following extracts from the reports of the
Attorney-General and the Commissioners of Railroads; also to the affi-
davit of Mr. E. H. Miller, jr., the secretary of the company, hereto at-
tached, marked " Exhibit 1," and made part hereof.
STATEMENT OF ATTORNEY-GENERAL AS TO FULL COMPLIANCE.
The Attorney -General, in his report to the Senate of the United States,
at the first session of the Forty-eighth Congress, said : " First. The
Central Pacific Railroad Company has fully and promptly complied with
the requirements of said act," meaning the act of Congress generally
known as the Thurman act. (Ex. Doc. No. 121, p. 2.)
Again, at the same session, in answer to further inquiry, the Attorney-
General said:
In further reply to the inquiries of the Senate, I have the honor to state that I ani
informed by the Secretary of the Interior that the Central Pacific Company has met
and paid the demands of the Commissioner of Railroads, reserving all rights. (Ex.
Doc. No. 124, p. 3.)
STATEMENT IN 1882 OF UNITED STATES COMMISSIONER OF RAIL-
ROADS.
W. H. Armstrong, United States Commissioner of Railroads, in his
report for 1882, says :
Able and expert accountants of this office have investigated and reported upon the
business, financial condition, and proportion of net earnings due the Government for
the past year. The results are shown in detail under the proper headings hereafter.
Free access has been accorded to the books and accounts of the several subsidized
roads whenever requested. Detailed statements of the earnings and expenses, finan
JLELAND STANFORD. 2471
cial condition, and physical characteristics of the various laiid-graut railroads have
been compiled from examination and returns made, and are submitted herewith. As
a rule, the accounts of the road are kept in a thoroughly comprehensive and business-
like manner. Reports to this office are not always made as promptly as required,
but the desire is expressed by the dilferent companies to fully and promptly comply
with the lawful demands of the Bureau. (Report 1882, p. 5.)
Again he says :
Under the act of May 7, 1878, the book-keeper of this office checked the books and
accounts of the company (the Central Pacific Railroad Company) in San Francisco
with a view to the ascertainment of 25 per cent, of the net earnings for the year end-
ing December 31, 1881. Twenty-live per cent, of the net earnings of the subsidized
portion of the road was found to amount to $1,038,935.24. The transportation for
the Government during the year amounts to $959,785.33, leaving a balance due the
United States of $79,149.91. Statement was rendered and payment demanded Octo-
ber 20, 1882. A check for the amount was sent to the Treasurer of the United States
by the vice-president of the company October 23, 1882. The company has therefore
paid to the Government all its accrued indebtedness to date. (Ibid., p. 26.)
STATEMENT IN 1883 OF COMMISSIONER OF RAILROADS.
In his report for the following year, 1833, Railroad Commissioner
Armstrong says :
In accordance with the act of May 7, 1878, the books and accounts of this company
(Central Pacific Railroad Company) were checked by the book-keepers of this Bu-
reau in San Francisco, Cal., with a view to the ascertainment of 25 per centum of the
net earnings of that portion of the road (800.66 miles) subsidized with the bonds of
the United States for the year ending December 31, 1S82. The amount, found due
was $792,920.24, against which the company had performed transportation services
on aided and non-aided lines, all of which had been retained by the Government,
amounting to $1,051,862.46, leaving a balance due the company that year of $258,942.22.
The Central Pacific Railroad Company has paid promptly all balances found to be
due to the United States, after statements have been rendered by this office. (U. S.
Com. of R. R. Report 1883, p. 42.)
STATEMENT OF SAME OFFICIAL IN 1884.
In his report for 1884 Commissioner Armstrong says :
The property and accounts of the several railroads have been examined, the com-
panies (Pacific railroads) having freely accorded all proper facilities for the inspec-
tion of their properties and the examination of their books. (U. S. Com. of R., 1884,
p. 3.)
STATEMENT IN 1885.
General Joseph E. Johnston, United States Commissioner of Bail-
roads, in his report for 1885, says :
The lease (to the Southern Pacific company) has not affected the obligations of the
Central Pacific Railroad Company to the United States, of course. The accounts of
the company were examined in San Francisco. The property of thecom-
pany was also examined and found to be in good condition ; its principal work-shops at
Sacramento are thoroughly equipped, and capable of making all the engines and cars
required by the whole system. The surface of the road is excellent, the ditches
ample, and the road-bod well raised and bridges sound.- (Rep. 1885, p. 17.)
Again, in the same report, the Commissioner says :
The accounts of the companies under the supervision of this office have been care-
fully examined, especially those of tho companies that were aided with the bonds of
the United States. Their officers readily furnished all necessary facilities. The
property inspected, including railroads, rolling-stock, and work-shops, was in good
working order. * * * The portion of this road (Central Pacific) between West
Oakland and Roseville Junction, 159 miles, was found to be in the usual good con-
dition so characteristic of this company's railroads. (Rep. 1885, pp. 3 and 42.)
2472 U. S. PACIFIC RAILWAY COMMISSION.
STATEMENT OF THEOPHILUS FRENCH.
Theophilus French, United States Auditor of .Railroad Accounts, in
bis report for 1879, says :
This company (Central Pacific Railroad Company) lias rendered such reports ae
li.ive been required, and submitted its books and accounts to examination. * * *
The engineer's report shows in considerable detail the condition of the property cov-
ered by the lien of the United States. * * The equipment on the road is in
good condition and ample. The ferry service between Oakland and San
Francisco * * * is to be commended. The passenger service on this road is un-
exceptiouably good. (Auditor's Report, 1879, pp. 34-7.)
The above extracts from reports made by the persons selected by Con-
gress from time to time and authorized to examine the books of the
company show that it has always faithfully and promptly complied
with the laws passed by Congress, and has, as I before said, promptly
discharged all its obligations to the Government.
In this connection I direct your attention to the fact that the amount
found due the company for the year ending December 21, 1882, as re-
ported by the Commissioner, namely, $258,942.22, has not yet been paid.
DO BOOKS SHOW NET EARNINGS OF AIDED ROADS.
u Question 3. And whether their books are and have been so kept
as to show the net earnings of the aided roads, and what said books
actually show in regard thereto, arid what have been in fact said earn-
ings."
Answer 3. This interrogatory contains three independent proposi-
tions :
(a) Have the books been so kept and are they now so kept as to show
the net earnings of the aided roads ? (b) What do said books actually
show in regard thereto*? (c) What have been, in fact, said net earn-
ings I To avoid confusion, I shall answer each proposition separately :
CENTRAL PACIFIC RAILROAD BOOKS SO KEPT AS TO SHOW NET EARN-
INGS OF AIDED ROADS.
(a) The books of the Central Pacific Railroad Company have been
and are so kept as to show the net earnings of the aided roads.
The original acts of Congress passed in 18G2 and 1804, respectively,
make no provision for the examination by any officer of the books of
the companies therein referred to. After the roads were constructed
and commenced business difficulties and controversies arose between
the companies and the representatives of the United States in the mat-
ter of the settlement of the " net earnings," which, of course, had to
be determined before the amount due the Government could be ascer-
tained.
OFFICE OF AUDITOR OF RAILROAD ACCOUNTS CREATED IN 1878.
Congress, recognizing this defect in the acts of 1862, 1864, and 1878,
by a special act (June 19, 1878) created the office of Auditor of Railroad
Accounts, which act took effect on July 1, 1878. The designation of
this office was by the act of March 3, 1881, changed to United States
Commissioner of Railroads, being a change in title only, the duties and
powers remaining the same. The first auditor of Railroad Accounts
appointed under the act of 1878 visited the office of the Central Pacific
Railway Company in San Francisco in 4879 and made a thorough ex-
LELAND STANFORD. 2473
animation of tbe accounts and books and vouchers of the company
from the date of its organization down to the date of his examination.
He was given every facility for examination of the books, &c., and upon
his report the amount then claimed to be due from the company was
promptly paid, and the amounts found due in all subsequent examina-
tions by the Auditor and Commissioner have also been promptly paid.
SUGGESTIONS ADOPTED.
He also made some suggestions in his report that the books of the
company had not been so kept as to show readily the earnings of the aided
and non-aided roads. The company at the beginning of the next fiscal
year Janury 1, 1880 changed its system of book-keeping at consid-
erable expense of time and money, to meet his suggestions. Ever since
then the books have been and are now so kept as to show the u net earn-
ings," according to his requirements.
NET EARNINGS SHOWN.
(&) The books actually show the u net earnings " from the comple-
tion of the road to the last settlement reported by the Eailroad Com-
missioner of the United States, dated December 31, 1886.
(c) Such earnings amount to $59,276,387.54, from the completion of
the road to December 31, 1886.
Now, if you will observe, under the Thurman bill we paid in one mil-
lion and thirty-eight thousand dollars. That was in 1881, which was
the first time that we had a competing line of road, and you will see
that we never were able to pay as much in afterwards. At that time,
in 1881, the Atchison, Topeka and Santa Fe Eailroad Company made a
connection with the Southern Pacific at Deming, and of course opened a
competing line of the road.
Question 4 relates to constructive mileage. I think I can give you a
little explanation here that will make you easily understand this con-
structive mileage. In the operation of the transcontinental line of roads
there has always been constructive mileage allowed to the Central Pa-
cific because of its difficulties in operating. To illustrate (and you will
see how fair that is), in going up the Sierra Nevada Mountains a train of
45 cacs, say, which any engine can haul over the level plain from Sacra-
mento, has to be broken into five divisions of 9 cars to each division,
which, of course, requires five engines to get to the summit, and, when
there, one engine goes on and four engines return, making an engine
service of 9 miles for each 1 mile of actual engine service. Each one
of these engines burns more fuel, although coming back empty, than one
engine would burn hauling that whole load on a level plain. You will
see, therefore, that a road of that kind is fairly entitled to constructive
mileage. In our own case, as between our main road and most of the
little roads, I do not think there has been constructive mileage in more
than a few cases, and then the road has been very small.
By Commissioner LITTLER :
Q. Is this constructive mileage awarded your road by the Uuion Pa-
cific ? A. I do not remember whether they have allowed it or not, but
the eastern roads allow it, and I think that they allow the Union Pacific
constructive mileage also. I believe they put us on an equal basis.
NET EARNINGS FROM BEGINNING TO JULY 1, 1878.
The following statement shows the earnings, expenses, and net earn-
ings of the aided road, as ascertaj-uecl by the United States Auditor of
2474
U. S. PACIFIC RAILWAY COMMISSION.
Eailroad Accounts, for each year from the completion of the road to the
commencement of the operation of the Thurrnaii act, July 1, 1878. It
covers a period of eight years and about 8 months. The average an-
nual amount of net earnings for this period was $4,327,000, 5 per cent,
of which was paid into the United States Treasury under the contract
acts of 1862 and 1864.
Earnings and expenses of Central Pacific Eailroad Company, aided line (860.66 miles),
from November 6, 1869, to June 30, 1878.
[As ascertained by the TJ. S. Commissioners of Railroads.]
Period.
Gross earn-
ings.
Expenses and
taxes.
Net earnings.
Year ending November 5, 1870 :
Coin
$3 980 106 91
$2 575 239 99
$1 404 866 92
2 703 298 96
1 612 615 15
1 00 683 81
6, 683, 405. 87
4, 187, 855. 14
2, 495, 550. 73
Year ending November 5, 1871 :
3 995 350 72
2 673 242 93
1 32 107 79
3 585 445 91
2 147 517 17
1 437 928 74
7, 580, 796. 63
4, 820, 760. 10
2, 760, 036. 53
Year ending November 5. 1872 :
Coin . ...
5 235 711 03
3 168 870 55
2 066 831 48
4 142 783 45
2 322 266 9 6
1 8^0 517 19
9, 378, 494. 48
5, 491, 145. 81
3, 887, 348. 67
Year ending November 5, 1873 :,
5 230 251 25
3 305 999 35
1 834 051 90
Currency
4 908 428 05
2 579 462 38
2 328 9G5 67
10, 138, 679. 30
5, 974, 761. 73
4, 163, 917. 57
Year ending November 5, 1874 :
5 480 842 81
2 332 631 93
3 148 210 87
4* 98l' 012 23
2 182 809 06
2 798 203 18
10,461,855.04
4, 515, 440. 99
5, 946, 414. 05
Year ending November 5, 1875 :
Coin
6 Oil 738 68
3 435 107 26
2 576 631 42
6 249 438 68
3 283 762 67
2 965 676 01
12, 261, 177. 36
6, 718, 869. 93
5, 542, 307. 43
Year ending November 5, 1876 :
6, 266, 377. 23
3, 633, 350. 02
2, 633, 027. 21
6 386 487.86
3 415 618.98
2 970 868 88
12, 652, 805. 09
7, 048, 9G9. 00
5, G03, 896. 09
Year ending November 5, 1877 :
4, 811, 515. 02
3, 315, 421. F6
1 49G 003. 16
6, 708, 736. 33
2, 955, 335. 40
2 753 400.93
10, 520, 251. 35
6, 270, 757. 26
4, 249, 494. 09
Period ending June 30, 1878 :
Coin
2, 977, 445. 23
1, 744, 049. 94
1,233,395.29
3, 223, 544. 48
1, 677, 296. 00
1,546,248.48
6, 200, 989. 71
3, 421, 345. 94
2,779,643.77
85, 878, 514. 83
48, 449, 905. 90
37, 4 9 8 608. 93
9, 928, 152. 00
5, 601, 145. 19
4, 327, 000. 81
NET EARNINGS JULY 1, 1878, TO DECEMBER 31, 1886.
The following statement shows the annual net earnings as ascertained
by the United States Commissioners of Railroads from July 1,1878,-
the commencement of operation of the Thurmau act,, to December. 3.1,,
1886.
LELAND STANFORD.
2475
In order to show the requirements which are actually payable before
payments can be made into the sinking fund in the United States Treas-
ury, the sums paid into the sinking fund of the company in the com-
pany's treasury according to the terms of the first mortgages, which are
prior in lien to the United States bonds, is deducted from the net earn-
ings. The balance shown is the extreme annual amount which can be
paid by the company on its debt to the Government, as it is the entire
net earnings of all the road included in the Government's lien after de-
ducting the requirements of the prior lien.
NET EARNINGS REDUCED BY COMPETING LINES.
It will be noticed that the net earnings prior to 1882 amounted to
about $4,000,000 per annum. In 1882 there was a decrease of $1,000,000.
This is the year in which competition commenced with other transcon-
tinental lines which were aided in their construction by United States
land grants. This decrease continued as new land-grant lines were
completed till 1884 and 1885, for each of which years the net earnings
amounted to about $860,000, and the available balance to about $740,000.
The net earnings of the aided line hereafter cannot be prudently cal-
culated to exceed this annual amount of $740,000, as the overland busi-
ness will continue to be divided, and the aided road is chiefly in Nevada
and Utah, where there is very little local traffic.
The temporary slight improvement shown for the year 1886 is chiefly
owing to an unusually small amount of betterments, additions, and re-
pairs charged in that year. Were these items of the usual amount the
increase of earnings which was made at cut rates would have been ac-
companied by an equal or greater increase of expenses.
The annual accruing interest on the United States bonds issued to
the Central Pacific is $1,671,340.80. The net earnings of $740,000 lacks
$930,000 a year of meeting the accruing interest, even if every available
dollar should be taken for that purpose.
Earnings and expenses of Central Pacific Railroad Company, aided line (860.66 miles),
from July 1, 1878, to December 31, 1886.
[As ascertained under the requirements of the Thurman act.]
1878.
(July-Dec.)
1879.
1880.
Gross earnings aided lino . ...........
$5, 483. 930. 37
$10,058 332.35
$9 953 246 78
Opera tin 0" expenses and taxes ..... ...
2, 503, 772. 66
4,788 536.67
4 135 955 66
Betterments and additions ...
138, 350. 18
143 352.66
209 216 70
Interest paid on first-mortgage bonds, having prior-
ity of lien over United States bonds
834, 990. 00
1 671 540.00
1 668 390 00
3 477 112. 84
6 603 429 33
C 013 56 f ^ 36
2 006,817.53
3 454 903 02
3 939 684 42
Sinking funds payable from income for redemption of
first-mortgage bonds, having priority of lien over
United States bonds :
Central Pacific Railroad, $100,000 per annnum)
Western Pacific Railroad (83.31 per cent, of >
$25,000), $20,827.50 per annum. >
60, 413. 75
120, 827. 50
120, 827. 50
1, 946, 403. 78
3, 334,075. 52
3. 818. 856. 92
P R VOL IV-
-10
2476 U. S. PACIFIC RAILWAY COMMISSION.
Earnings aud expenses of Central Pacific Railroad Company, <$-c. Continued.
1881.
1882.
1883.
$10 271 563 71
$9 580 615 94
$8 861 4 9 5 15
Operating expenses and taxes
4 444 127 74
4 734 994.99
4 538 392 39
Betterments and additions
150 856 28
273 164.50
299 396. 16
Interest paid on first-mortgage bonds, having prior-
ity of lien over United States bonds
1 671 695.00
1, 673, 940, 00
1, 676, 910. 00
Total expenses ... .. ........
6 266 679.02
6, 682, 099. 49
6, 514, 698. 55
4 004 884 69
2 898 516 45
2 346 726 60
Sinking funds payable from income for redemption
of first-mortgage bonds, having priority of lien
over United States bonds :
Central Pacific Railroad, $100,000 per annum )
"Western Pacific Railroad (83.31 per cent, of >
$25,000), $20,827.50 per annum. )
120, 827. 50
120, 827. 50
120, 827. 50
3, 884, 057. 19
2, 777, 688. 95
2, 225, 899. 10
1884.
1885.
1886.
Gross earnings aided line
$7 300 780 67
$5 949 214.73
$6, 522, 909. 33
Operating expenses and taxes
4 416 624 22
3, 167, 081. 76
3 355,555.18
Betterments and additions
351 371 80
247, 404. 00
24, 631. 87
Interest paid on first-mortgage bonds, having prior-
itv of lien over United States bonds
1 671 630 00
1, 671, 180. 00
1, 671, 180. 00
Total expenses
6 439 626.02
5, 085, 665. 76
5, 051, 367. 05
Net earnings so ascertained
861 154.65
863, 548. 97
1, 471, 542. 28
Sinking funds payable from income for redemption
of first-mortgage bonds, having priority of lien
over United States bonds :
Central Pacific Railroad, $100,000 per annum)
Western Pacific Railroad (83.31 per cent, of >
$25,000), $20,827.50 per annum. >
120, 827. 50
120, 827. 50
120, 827. 50
740, 327. 15
742, 721. 47
1, 350, 714. 78
CONSTRUCTIVE MILEAGE ALLOWANCES.
u Question 4. Or whether there has been a diversion of earnings of
aided roads to less productive branches, through constructive mileage
allowances, or average mileage allowances between aided and non-aided
roads, or otherwise."
Answer 4. There has been no diversion of earnings of aided roads to
less productive branches through constructive mileage allowances, or
average mileage allowances between aided and non-aided roads, or oth-
erwise, except in the instances noted elsewhere and during the period
between January, 1880^ and February, 1883, inclusive.
ALLOWANCES MADE BY CENTRAL PACIFIC RAILROAD COMPANY HAVE
BENEFITED AIDED ROAD.
Such allowance was in accordance with the usual custom throughout
the United States and was in every instance to the benefit of the aided
road. Its continuance, however, was a frequent source of criticism by
those not familiar with the details of railway operation and the sur-
rounding necessities controlling rates. Experience proved that the
amounts involved were not large. To promote complete harmony, there-
fore, with the Government and the officers appointed by it to enforce the
acts affecting the Pacific railroads, constructive mileage allowances were
discontinued and have not since been used.
AVERAGE MILEAGE ALLOWANCES FAVORED AIDED ROAD.
Average mileage allowances were made in ascertaining the net earn-
ings of the aided line by the United States auditor from November 6,
LELAND STANFORD.
2477
1869, to December 31, 1879, inclusive, but such allowances did not effect
a diversion of earnings from the aided line. The rules prescribed by
the United States auditor allowed only the mileage between Ogden and
San Francisco in prorating through earnings, over 95 per cent, of which
was by this means given to the aided line. The local earnings were
then prorated to all lines oj>erated on the average mileage basis. These
rules, under which the net earnings of the aided line were ascertained
for the above period, favored the aided at the expense of the non-aided
road, the earnings from local business being greater per mile of road in
California, where the non-aided roads are located, than in the sparsely
settled territory in Nevada and Utah, thro ngh which the aided line
alone runs.
Equal mileage has always been made on mail earnings, the rate on
mails being fixed by the Post-Office Department on an equal mileage
basis.
CONSTRUCTIVE MILEAGE AS ALLOWED FAVORED THE AIDED ROAD.
Constructive mileage was allowed in the division of earnings to the
several roads to certain less productive branches between January 1,
1880, and February 28, 1883. The constructive mileage allowed was
not sufficient to give such branches their proper proportion of the earn-
ings from traffic interchanged between them and the main line. On
less productive branches higher rates always prevail, other things be-
ing equal, than on more productive branches. This is chiefly because
the volume of traffic is much less, or because the expense of operation
is greater. In either case the cost of the service per ton per mile or
per passenger per mile is greater. In dividing the earnings from joint
traffic with the main line then the less productive line may fairly de-
mand more than its mileage proportion of the amount. The common
practice throughout the country in similar cases is for the unproductive
line to demand its local rate as its proportion of through earnings.
Were the several roads operated in connection with the Central Pacific
managed by different companies, the unproductive branch lines would
demand and receive a division of earnings on traffic interchanged greater
than they did receive by the constructive mileage allowance. There
was, therefore, no diversion of earnings from the aided line by such al-
lowances, but, on the contrary, the aided line received in the division a
larger proportion of the earnings from joint traffic than it was justly
entitled to. This fact appears from the following statement in detail of
the allowances made.
ILLUSTRATIONS OF CONSTRUCTIVE MILEAGE ALLOWANCES.
AMADOR BRANCH RAILROAD.
Constructive mileage of 100 per cent, allowed from January, 1880, to
February, 1883, inclusive. The principal joint traffic with this branch is
between San Francisco and lone.
Actual mileage.
Constructive
mileage.
Gait-Tone, Amador Branch
San Francisco-Tracy, leased . . .
Tracy-Gait aided line
Miles.
27
83
41
Percent.
17.9
55.0
27.1
Ainador Brunch
Miles.
54
83
41
Percent.
30.3
46.6
23.1
Leased lines
Aided lino
Total
Total ...
151
100
178
100
2478 U. S. PACIFIC RAILWAY COMMISSION.
For each dollar then received on joint business between Sun Francisco
and lone the aided line would receive on an equal mileage basis 27.1
cents and on the constructive mileage basis 23.1 cents. It should have
received but 18.3 cents, which is its percentage of the combined local
rates, as follows :
The average freight rates on classes 1 to 5, inclusive, are
Miles.
Cents.
Per cent.
Atnador Branch . .. - ..........
27
55
44.7
83
451
37
41
22i
18.3
. '
151
123
100
On each dollar of this joint business the amount allowed by the con-
structive mileage basis thus resulted in giving the aided line 4.8 per
cent, more than it was fairly entitled to.
LOS ANGELES AND INDEPENDENCE RAILROAD.
This road received constructive mileage of 100 per cent, from Janu-
ary 1, 1880, to February 28, 1883. This is a branch road running from
Los Angeles to Santa Monica, and interchanged no business which
affected the earnings of the aided line.
LOS ANGELES AND SAN DIEGO RAILROAD.
This road received constructive mileage of 100 per cent, from Jan-
uary 1, 1880, to February 28, 1883. This is also a branch running oat
of Los Angeles, and interchanged no traffic with the aided line.
SAN PABLO AND TULARE RAILROAD.
Line from Tracy to Martinez, 47 miles. Constructive mileage of 50
per cent, was allowed for the year 1880. Practically the only portion
of the aided line affected by this allowance was that between Tracy and
Lathrop, a distance of 11 miles, for the traffic between San Francisco
and points on the Southern Pacific Kailroad. The traffic between San
Francisco and Los Angeles fairly represents the average of this busi-
ness. The total distance is 482 miles. The aided line proportion of the
traffic is thus but 2^ per cent. The Southern Pacific and Texas Kail-
road distance is 47 miles, being 9,96 per cent, of the total mileage. The
constructive mileage allowance is thus chargeable almost wholly to the
remaining 87.79 per cent, of the distance, which is a non-aided ancl leased
road. Though this road has a short haul, it has no terminal expenses,
as it formed part of the through Southern Pacific line shortly after its
construction. Constructive mileage was allowed only for one year.
SOUTHERN PACIFIC RAILROAD.
Constructive mileage of 50 per cent, was allowed on this line as it
was built southward from Goshen, from January 1, 1880, to February
28, 1883. The extension of this line was at first in an undeveloped
country with but little business. From Goshen southward the road
was difficult to construct and expensive to operate. It crosses the
mountains where there are short curves and heavy grades, and to gain
the summit at Tehachapi Pass the line doubles on itself, forming the
well known "Loop," since celebrated as an engineering feat. After
crossing the Mojave Desert, the road, to reach the valley of Los Ange-
les, passes through the San Fernando tunnel of over a mile in length.
Practically all the joint traffic with this route affecting the aided line
LELAND STANFORD.
2479
was that from San Francisco. This traffic north of Goshen is carried
over level grades easy of construction and operation and on lines hav-
ing a larger traffic and lower average rates than the line south of Goshen.
The cost per mile on the latter line being much greater, a higher charge
per mile was just and reasonable, and would doubtless have been de-
manded had the road been operated by a separate company. The ef-
fect of the constructive mileage allowance on the line may be shown by
the traffic between San Francisco and Los Angeles. This formed the
greater portion of the joint business at the time the constructive mile-
age was allowed, and fairly illustrates the result for the whole.
Actual mileage.
Constructive
mileage.
San Francisco-Tracy leased ...
Miles.
83
147
11
241
Per cent.
17.2
30.5
2.3
50.0
Leased
Miles.
83
147
11
361
Per cent.
13.8
24.4
1.8
60.0
Lathrop-Goshen non-aided .
Non-aided
Tracy-Lathrop aided
Aided
Goshen-Los Angeles, Southern
Pacific Railroad
Southern Pacific Railroad
Total
Total
482
100.0
602
100.0
For each dollar, then, received on joint business, the aided line would
receive on an equal mileage basis 2.3 cents, and on the constructive-
mileage basis 1.8 cents ; while on the basis of the combined local rates,
which would be used where the roads operated by different companies,
the aided line would receive .but 1.1 cents. By the constructive-mileage
allowance, therefore, the aided line has received more than its proper
and just proportion of these through earnings. This is shown by com-
paring the following proportions based on combined local freight rates,
with those given above based on the constructive-mileage allowance:
Combined local freight charges between San Francisco and Los Angeles.
Miles.
Cents.
Per cent
11
1.4
1 i
San Francisco-Tracy leased
83
11
147
49.8
241
69 6
Total non-aided lines ...... - . ... ....................... ...
471
130 4
98 9
Total aided and non-aided ..... ........ ... ..................
482
131 8
100
STOCKTON AND COPPEROPOLIS RAILROAD.
Constructive mileage of 50 per cent, was allowed on this branch for
the year 1880, and 100 per cent, from January, 1881, to February, 1883,
inclusive. The principal business interchanged is that between San
Francisco and Milton. The operation in this case with the largest al-
lowance is as follows :
Actual mileage.
Constructive
mileage at 100
per cent.
San Francisco-Tracy, leased
Tracy-Stockton, aided
Miles.
S3
20
29
Per cent.
62.9
15.1
22.0
Miles.
83
20
58
161
Per cent.
51.0
12.4
3C.
Aided
Stockton-Milton, Stockton and
Copperopolia Railroad
Stockton and Copperopolis Rail-
road
Total
Total
132
100.0
100.0
2480
U. S. PACIFIC RAILWAY COMMISSION.
By this allowance the Stockton and Copperopolis Railroad receives
36 per cent, of the through rate as against the 22 per cent, by the even-
mileage division. It should receive more than this. The proper pro-
portion to each line is shown by adding the local rates and ascertaining
the percentage of each to the sum. The freight rates, classes one to
five, inclusive, between San Francisco and Stockton average 12J cents
per 100 pounds; between Stockton and Milton, 8^ cents. The division
of these locals gives the following percentages :
Miles.
Cents.
Per cent.
Leased...
83
10
47. G
Aided
20
2J
11.9
29
8k
40 5
Total
132
21
100.0
It will be seen by comparison with the statement showing construc-
tive-mileage percentages above, that the Stockton and Copperopolis
Railroad was allowed in the division of this traffic thirty-six per cent.,
while it should have received on the basis of the local percentages 40.}
per cent. Had this road been operated independently, therefore, it
would have received fully 4.J per cent, more from earnings of joint traffic
than it was given by the highest constructive-mileage allowance.
AIDED ROAD HAS RECEIVED MORE THAN FAIR PROPORTION OF EARN-
INGS.
The aided line received by the constructive-mileage allowance 12.4
per cent, on the division of such joint rates, while it should have re-
ceived on the proper basis of combined local rates but 11.9 per cent. It
will be seen from the foregoing that wherever constructive-mileage al-
lowances have been made by this company, such allowances have not
constituted a diversion of earnings from the aided line, but, on the other
hand, the aided line has, notwithstanding such allowances, received
more than its fair proportion in the division of joint earnings.
A DOUBLE ALLOWANCE TO NEVADA ROADS.
I would say further that we allowed small connecting roads over in
Nevada twice as much for the same distance, or even more than that,
in comparison with what we charged ourselves. They were mere
branch lines to feed us, and whatever they brought us was so much
gained. They could not afford to carry the short distance, with their
limited business, for the same rates that we could afford to haul over
the main trunk line for a long distance. I suppose that you will under-
stand in this connection that the through rate might well be propor-
tionately less per mile than the local, and if a small company demands
its local it gets a much larger division, and that is often done.
ALLOWANCE OF CONSTRUCTIVE MILEAGE OPTIONAL WITH EASTERN
ROADS.
I give elsewhere a detail of the different lines of road connected with
the main line which we control. You will notice, gentlemen, that in
LELAND STANFORD.
2481
the matter of the allowance to us of constructive mileage by the Eastern
roads it was entirely optional with those roads. As we could not send
freight any other way it was only their sense of justice that made them
allow it to us.
IS CONSTRUCTIVE MILEAGE FAIR AND USUAL 1 ?
" Question 5. And also whether such system of constructive mileage
allowance is fair and usual, and, in practical operation, has resulted ad-
versely or otherwise to the aided roads and the interest of the United
States.' 7
ALLOWANCES HAVE RESULTED FAVORABLY TO UNITED STATES.
Answer 5. Such constructive mileage allowances are fair and usual
and in practical operation have resulted favorably to the aided roads
and the interest of the United States.
It is customary and fair to allow constructive mileage to less pro-
ductive roads which are not branches, but form part of through routes.
Such roads are less productive because they have but a small amount
of traffic, or are expensive to operate, or both. In either case the cost
of the service per ton per mile or per passenger per mile is greater on
such roads, and this increase in cost is the basis of the constructive
mileage allowance. Constructive mileage should always be allowed.
It depends upon such circumstances as grades, curves, amount of busi-
ness, length of roads, &c. The character of the business is also to be
considered, for instance, as to whether it is a coarse grade of freight or
costly merchandise that is hauled. Climatic influence should also go
to determine a fair mileage rate. A rate that is sufficient on one road
might be entirely insufficient for another. The allowances made, ac-
cording to rules prescribed by the United States Auditor of Railroad
Accounts, worked adversely to the non-aided and leased roads. The
aided road received thereby a greater amount of net earnings than was
properly its due, as more fully appears from accompanying statements.
ILLUSTRATIONS OF USUAL CUSTOM AS TO CONSTRUCTIVE MILEAGE.
The following cases, taken at random, of rates in force with connect-
ing lines which are not operated or controlled by this company, will
serve to illustrate the usual custom :
Northern California Railroad and Central Pacific Kail-road.
Miles.
Kates
through.
Equal mile-
age division
would be
142
$5 10
$5 93
28
2.00
1.17
Total
170
7.10
7.10
2482
U. S. PACIFIC RAILWAY COMMISSION.
Constructive mileage allowances of 100 per cent, to the Northern Cal-
ifornia Eailroad shows :
Miles.
Per cent.
Bate.
Central Pacific Railroad ...
142
71 7
$5 10
Northern California Railroad ....... .............
56
28 3
2 00
Total
198
100
7 10
In this case the California Northern Eailroad demanded and received
100 per cent, constructive mileage.
Carson and Colorado Eailroad and Central Pacific Eailroad.
Miles.
Rate
through.
Equal mile-
age division
would be
San Francisco to Reno Central Pacific Railroad
244
$12 05
$15 10
Reno to Lone Pine Carson and Colorado Railroad . . .
322
23 00
19 95
Total
566
35 05
35 05
In this instance the division of the through rates amount to a construct-
ive allowance of about 50 per cent, to the Carson and Colorado Kailroad,
and this notwithstanding that road has the longer haul.
Eureka and Palisade Eailroad and Central Pacific Railroad.
Miles.
Miles
through.
Equal mile-
age division
would be
San Francisco-Palisade Central Pacific Railroad
625
$33. 05
$35 02
Palisade Eureka Eureka and Palisade Railroad .......
90
8.00
6 03
Total ,
615
41.05
41.05
The less productive branch road in this case receives in the division
of the through rate an amount equal to about 50 per cent, constructive
mileage.
AIDED LINES ALLOWED CONSTRUCTIVE MILEAGE BY OTHER ROADS.
NEW YORK TO SAN FRANCISCO.
A further illustration, which in the present connection is more strik-
ing and suggestive than with the branch lines, is the allowance made to
the Central Pacific and Union Pacific by the roads east of the Missouri
River on transcontinental traffic. The Central and Union Pacific lines
having less traffic per mile of road, and in the case of the Central Pa-
cific particularly, an expensive road to maintain and operate across the
Sierra Nevada Mountains, the average cost of service per ton per mile
is greater than with their connections east of Omaha.
A higher rate per mile is therefore considered fair and has always
been allowed in the division of through rates. The through passenger
rates from New York to San Francisco which were in force during the
LELAND STANFORD.
2483
time constructive mileage allowances were made to branch lines by the
Central Pacific, the proportions allowed each line, and the proportions
each would have received had no constructive mileage allowance been
made to the Central and Union Pacific line are shown by the following
table :
Through rates and divisions, 1880, between New York and San Francisco.
KATES AND DIVISIONS AS ALLOWED.
Class.
Through
rate.
Divisions.
C. B.
transfer.
C. P.
U. P.
C. B.-Chi.
CM.-N. Y.
$138. 30
105. 00
65. 00
100. 00
Cts.
50
50
50
50
Pro.
$46. 00
34.50
20. 70
33. 26
Cents
per
mile.
5.22
3.91
2.35
3.77
Pro.
$54. 00
40.50
24.30
38.94
Cents
per
mile.
5. 22
'A. 91
2.35
3.77
Pro.
$14.55
12.50
6.81
10.50
Cents
per
mile.
2.97
2.55
1.39
1.95
Pro.
$23. 25
17. 00
12.69
16.80
Cents
per
mile.
2. 55
1.86
1.39
1.95
Third ^
Coin....,
RATES AND DIVISIONS HAD NO CONSTRUCTIVE MILEAGE BEEN ALLOWED.
Unlimited
138. 30
50
36.69
*4. 15
42.92
4.15
20.34
4.15
37. 85
4.15
Second
105. 00
50
27.81
3.15
32.54
3.15
15.44
3.15
28. 71
3.15
Third
65.00
50
17.13
1.94
20.04
1.94
9.51
1.91
17. 82
1.94
Coin . ....
100. 00
50
26. 49'
3. OO 1
31.00
3.00
14.70
3.00
27.31
3.00
It will be noticed that in the unlimited rate the Pacific roads were
allowed 5.22 cents per mile, while the roads between New York and
Chicago received but 2.55, the former in this case receiving over 100 per
cent, per mile more than the latter.
The mileage of the route is: East of Missouri River, 1,402 miles;
west, 1,916 miles. Applying the constructive mileage system to the
sum of the rates for the several classes shows that the Central and
Union Pacific received a constructive mileage allowance of over 85 per
cent.
PROFIT TO AIDED
ROADS BY SYSTEM OF CONSTRUCTIVE MILEAGE
ALLOWANCES.
This through traffic was very large and comprised a considerable
portion of the income of the aided line. The constructive mileage al-
lowance was also for a long haul the whole length of the road. The
difference therefore to the Central Pacific whether it did or did not re-
ceive 'the constructive mileage allowance was of the greatest impor-
tance, and the practice has added to the earnings of the aided line amounts
aggregating millions of dollars^
HAVE EARNINGS BEEN DIVERTED TO WRONGFUL OR IMPROPER PUR-
POSES ?
* Question G. Or whether there has been a diversion of earnings of
aided roads to wrongful or improper purposes, and if so, to what ex-
tent."
2484 tr. s. PACIFIC RAILWAY COMMISSION.
EARNINGS USED EXCLUSIVELY FOR BENEFIT OF CENTRAL PACIFIC
RAILROAD COMPANY.
Answer 6. In answer to interrogatory No. 6, I have to say : That
the earnings of the company have been expended and applied exclu-
sively to the benefit of the company. No portion of them, has been ap-
plied in construction of any other road. The company is willing and
desirous of making a full and complete statement to the Commission of
all matters in which the Government can possibly have any concern.
I assume that it is unnecessary to go into statements of matters affect-
ing the interests of the company in which the Government has not
and cannot have any possible interest.
In determining the amount of the net earnings of the company, in
which only the Government is interested, the company do not propose
to make any charge or claim that would diminish or affect the amount
of such net earnings, for which it will not furnish entirely satisfactory
documentary evidence. All items of expenditure for which such satis-
factory evidence shall not be furnished shall be charged against the
company exclusively. I will merely add, however, that the disposition
made of these earnings of the company, in which the Government has
no interest, has met with the approval of the board of directors of the
company and its stockholders, on repeated occasions.
The aided line does not run into San Francisco, but from Sacramento
to San Jose. In violation of the.principles of interstate law, the Gov-
ernment gives the Canadian Pacific the right to bond goods here and
take them from San Francisco around up through Canada to Chicago,
thereby carrying them for nearly 5,000 miles, for the same or a less rate
than we carry them across the continent, which is a violation of the
interstate commerce principle. The Government does that for the ben-
efit of the Canadian Pacific road. I will hardly say it is done for that
purpose, but that is what is done, and that is the effect which it has.
DISCRIMINATION IN RATES AGrAINST AIDED ROADS.
" Question 7. Whether there is a discrimination of rates in favor of un-
aided against aided roads."
NO DISCRIMINATION EXCEPT THAT MADE BY THE UNITED STATES.
Answer 7. There is no discrimination of rates in favor of unaided as
against aided roads, except that made by the Post-Office Department.
The rates for transportation of United States mails are fixed by the
Post-Office Department in accordance with the general laws upon the
subject. The basis of the rate is the average daily number of pounds
carried over the whole route. The overland Central Pacific route .is
from Ogden to San Francisco via the aided road to Sacramento, and
thence to San Francisco via Benecia over unaided roads. The aided
line does not run into San Francisco ; the business must go over un-
aided lines. The generalv business follows the line designated by the
Government between Sacramento and San Francisco, which is the
shortest possible line 87 miles by one route and 137 by the other. The
weight of mails in either case would be the same, and the rate per mile
would be the same. The shorter route, therefore, carries the mails for
about one-third less than the longer route. This is in effect a discrimi-
nation in, favor of the unaided against the aided road. Not only has the
Post-Office Department thus discriminated against our line, but it and
LELAND STANFORD. 2485
the War Department and other Departments of the Government have
given preference to other transcontinental lines that have not been aided
in bonds, thus diverting traffic that the Central Pacific could have done.
Upon this subject the United States Auditor of Eailway Accounts says :
Government has taken away business across the State of Nevada, and has also given
transportation to the Northern Pacific, the Southern Pacific, the Atchison, Topeka
and Santa F6, the Atlantic and Pacific, and the Canadian Pacific, all rival roads, and
is paying them full rates, when they could get it done for less rates by the aided Cen-
tral Pacific.
This matter, with its embarrassing results to the company, will be
found more fully set forth in answer to interrogatory No. 54.
IS ANY MONEY DUE TO UNITED STATES FOB ERRONEOUS ACCOUNTS 1
u Question 8. Whether any, and if so, how much, money is due and
owing to the United States on account of mistaken or erroneous ac-
counts, reports, or settlements made by said roads."
MONEY IS DUE TO COMPANY FROM UNITED STATES.
Answer 8. No money is due and owing to the United States on ac-
count of mistaken or erroneous accounts, reports, or settlements made
by our road. On the contrary, there is a balance due the Central Pa-
cific for transportation services on non-aided and leased lines of
$1,853,323.15, which is withheld in the face of a unanimous decision by
the Court of Claims in our favor, confirmed by the Supreme Court of the
United States.
ANNUAL SETTLEMENTS BY UNITED STATES COMMISSIONER".
Settlements have been annually made by the Central Pacific Eailroad
Company with the authorized officers of the Government for the amounts
due the Government under the several acts of Congres. All amounts
involved in such settlements have been promptly paid by the company
when due. Payments were in every case made for the amounts as
claimed by the United States Commissioner of Eailroads, though they
were not always believed to be justly due. The items of new construc-
tion and new equipment were not currently allowed by the Commis-
sioner, and payments were made for the requirements as stated by him.
The courts, however, in 1885, decided these items to be proper deductions
in ascertaining the net earnings. (See Eep. U. S. Com. E. E. 1885, p.
7.) The erroneous accounts were restated by the Commissioner in his
report for 186G, page 35.
The Central Pacific Eailroad Company has overpaid the United States
on account of these mistaken and erroneous accounts the sum of
$321,152.72. This sum is still held by the Government, and is due the
company in cash, though repeated demands have been made for it by
the company.
TRAFFIC DIVERTED TO NON- AIDED ROADS.
" Question 9. Whether any traffic or business which could or should be
done on the aided lines of said companies has been diverted to the line
of any other company or to unaided lines."
Answer 9. This question will be fully answered under interrogatory
No. 54. Such discrimination and diversion is made only by the Gov-
2486 U. S. PACIFIC RAILWAY COMMISSION.
eminent. I refer also to report of General Manager A. 1ST. Towne, here-
with submitted, and marked " Exhibit 2," also report of General Super-
intendent J. A. Fillmore, marked " Exhibit 3."
DEDUCTIONS FROM GROSS EARNINGS BY REBATES, POOLS, ETC.
"Question 10. And what amounts have been deducted from the gross
earnings of any of said railroad companies by their general freight and
passenger agents or auditors, by way of rebate, percentage of business
done, constructive mileage, monthly or other payments on any pooling
or rate arrangement, contract, or agreement."
SUCH ARRANGEMENTS HAVE ADDEp TO EARNINGS OF AIDED ROAD.
Answer 10. There have been rebates and pooling arrangements, there
sometimes being a balance against us and sometimes a balance in our
favor. Rebates were made for the purpose of securing business, and
pooling arrangements for maintaining rates, and these always favored
the aided road.
The question of differentials, pools, &c., is more fully treated in sup-
port of the answer to interrogatory !No. 39. See the report of J. C.
Stubbs, general traffic manager, verified by his oath, marked " Exhibit
7," and referred to in the answer to that interrogatory, from which it
will appear that whatever has been done in this direction is fully justi-
fied by the results.
ASSETS OF COMPANIES.
" Question 11. And also inquire into, ascertain, and report as to the
kind, character, and amount of the assets of said companies."
ASSETS OF CENTRAL PACIFIC RAILROAD COMPANY.
Answer 11. In reply to your interrogatory No. 11, 1 respectfully sub-
mit the following statement, prepared by Mr. E. H. Miller, jr., the sec-
retary of the company :
Assets, July 1, 1887.
Railroad and telegraph lines as follows, between
Milea.
San Jose* and Niles 17. 54
Niles and Brighton 103. 83
Sacramento and near Ogden 737.50
Total aided road . . 858. 87
Sacramento and Ogden (non-aided) .95
Niles and Oakland Wharf 26.51
Oakland and Alameda, local lines (including 7.72 miles double track) . . 17. 31
Lathrop and Goshen 146. 08
Roseville and Coles . . 295. 30
Total non-aided road 486. 15
Total miles of road 1,345.02
Also right of way, sidings, turn-outs, switches, turn-tables, depots,
stations and other buildings, round-houses, shops, and machinery, tools,
safes, furniture, wharves, slips, engines, cars, and other equipment prop-
erty and appurtenances belonging on the foregoing railroad and tele-
graph lines.
LELAND STANFORD. 2487
Steamers and barges as follows :
Ferry steamers of the San Francisco Bay : Alameda, Amador, Capitol,
El Capitau, Julia, Oakland, Piedmont, Transit, and Thoroughfare.
Sacramento Eiver steamers : Apache and Modoc ; barges, Ace of
Spades and Yolo.
Stocks and bonds of other companies owned, cost $1,074,360.07.
Sinking fund of the company in the treasury of the company, consist-
ing of railroad bonds of the par value of $10,356,000, cost $9,601,617.50.
Sinking fund of the company in the United States Treasury June 1,
1887, bonds of the par value of $2,557,000, and cash, $39,137.32 ; cost
of bonds and cash, $3,168,600.50 ; cost for interest lost on investments,
$1,040,503.54; total cost in excess of par value of bonds, $1,612,966.72.
Land contracts, deferred payments on time sales, $1 ,142,084.86. Cash
on hand, $13,768.49.
Undivided half of sixty acres in Mission Bay, San Francisco ; 500
acres of water front in Oakland, Cal. ; about 140 acres of water front
Sacramento.
Land granted by the United States to the Central Pacific Eailroad
Company, of California, and to the California and Oregon Railroad
Company, less amount sold therefrom and lost from mineral lands, prior
claims, &c.
APPRAISEMENT OF COMPANY'S PROPERTY. .
Any valuation which may be placed on the assets of the company
must, at best, be an estimate. I understand that the commission have
delegated the duty of making an appraisement of the value of the rail-
road and other property of the company to a board of engineers, which
makes it unnecessary for any such estimate to be made in this place.
Much of the information I have given in answer to thi question is
contained in our annual report, but it is given a little more in detail
here.
Commissioner ANDERSON. You understand that the report does not
profess to give the value of the property $
The WITNESS. It gives only estimated values.
Commissioner ANDERSON. For instance, take the construction ac-
count, which represents $130,000,000 or $140,000,000. It does not even
pretend to give the actual value of the assets.
The WITNESS. No. That represents the cash and stock used. The
stock, of course, stands on the books as if at par, but in reality it was
not worth much of anything.
Commissioner ANDERSON. The question here is with reference to as-
certaining the actual value of your assets, in order to determine the
value of the United States lien.
The WITNESS. Most of these things are given at what they cost. Dur-
ing the time that we were constructing the road, I remember that we
paid $65,000 for two engines. That is the highest we ever paid. Of
course, there is no such value to them now. . We could put them on the
road now for probably $13,500.
Commissioner ANDERSON. We have had a special officer, Colonel
Morgan, making an examination, and I presume his report will contain
an answer to that question, which we can rely on.
Commissioner LITTLER. His name is Eichard T. Morgan, jr.
The WITNESS. Our road is well equipped, and everything, I think, is
in good order.
2488 U. S. PACIFIC RAILWAY COMMISSION.
ASSETS SUBJECT TO UNITED STATES LIENS.
"Question 12. And what assets of each company are now subject to
the lien of the Government and the value thereof! "
Answer 12. The assets of the company now subject to the lien of the
Government, are as follows :
ASSETS SUBJECT TO UNITED STATES LIEN.
Aided line assets, July I, 1887.
Railroad and telegraph lines between
Miles.
San Jose" and Niles 17.54
Niles and Brighton 103.83
Sacramento and Ogden 737.50
Total operated road 858.87
Also the right of way, sidings, turn-outs, switches, turn-tables, depots,
station and other buildings, round-houses, shops, machinery, tools,
safes, furniture, engines, cars and other equipment, property and appur-
tenances belonging to the foregoing railroad and telegraph lines.
As to the value of the different items of property referred to in this
statement, I am personally unable to give it. I understand the Com-
mission has appointed experts to make appraisement of it, and there-
fore this omission will be thus supplied.
The CHAIRMAN. You do not refer there to the question of how far
the lien of the Government extends over the property and to what
property it attaches.
The WITNESS. The assets of the company subject to the lien of the
Government are as I have read. Now, the lien, like the first mortgage
bonds, is on the road from Ogden to San Jos6 ; but by our laws of con-
solidation the entire property of all the companies consolidated becomes
liable for the debts of the institution, just as a man's property is liable
for his debts over and above the mortgaged property. The mortgage,
first, is a lien upon so much, but all his property is liable. So all the
unaided lines of our road, as well as the aided, are liable for the general
liabilities of the company, but there is no lien upon them to the Gov-
ernment.
The CHAIRMAN. The whole property, however, is subject to execu
tion?
The WITNESS. Oh, yes, sir.
DIVIDENDS PAID.
" Question 13. And also whether any dividends have been unlawfully
declared by the directors or paid to the stockholders of said company ;
and if so, to what extent."
NO DIVIDENDS UNLAWFULLY DECLARED BY THE CENTRAL PACIFIC
RAILROAD COMPANY.
Answer 13. No dividends have been unlawfully declared by the direc-
tors or paid to the stockholders of the Central Pacific Eailroad Company.
Section 6 of the act of Congress of May 7, 1878 (the Thurman act),
provides that no dividends shall be voted, made, or paid at any time
when the company shall be in default in the payment of either of the
LELAND STANFORD. 2489
sums required to be paid into tlie sinking fund, or in the payment of
the 5 per centum of the net earnings, or interest on any debt the lien
of which or of the debt on which it may accrue is paramount to that of
the United States.
The Central Pacific Eailroad Company has not at any time been in
default in respect of the payment of any of the sums required under
the provisions of the act above quoted.
The Central Pacific Kailroad Company, as heretofore stated, was or-
ganized under the laws of this State, and is now carrying on its busi-
ness in accordance with the provisions thereof. Section 309 of the
Civil Code of California prohibits railroad corporations from making div-
idends, except from the surplus profits arising from the business thereof.
As required by this section all dividends have been made from the net
earnings. The road has been in operation for over twenty-three years
for more or less of its extent.
AVERAGE DIVIDENDS 2.65 PER CENT.
The total sum of these dividends amounts to 61 percent. The amounts
paid therefore equal the annual rate of 2.65 per cent., and but for the
completion of the Government-aided competing lines, and but for the
Government's failure to pay to the company the money for transporta-
tion as determined by the Supreme Court of the United States, the
company would still be paying the dividends. For the information of
the Commission, and the evidence of the fact that the dividends de-
clared by the company were not illegal, we submit herewith, and ask
your consideration of a report by Mr. E. H. Miller, jr., secretary of the
company, marked Exhibit 4, and made a part hereof.
By Commissioner ANDERSON :
DIVIDENDS PAID OUT OF NET EARNINGS.
Q. Does your report contain a statement of the net earnings actually
applicable to the years in which dividends were declared ? A. No, sir ;
I think not. We carried net earnings along for a good while, and when
we commenced declaring dividends it was with the supposition that we
would be able to continue. For a time the road earned a good deal
more than a 6 per cent, dividend annually, over and above the necessary
expenses. But the opening of competing business and the immense
falling off of the business in Nevada, a great falling off and the gradual
interference with our business in Wyoming, Montana, and Idaho have
made a change. We used to have business in Wyoming, not very
much, but still some, and a good deal in Montana and Idaho, but the
opening and pushing out of other roads spoiled all that business for us.
It was a very profitable business, as we were able to fix our own
rates, free of competition. Then came the opening up of these com-
peting lines, and our business fell off very much, although the gen-
eral business of the country was increasing. The prices paid to us were
very much reduced. As a result, from 1884 we have been not able to
earn any dividends. We have always earned something over expenses.
We have always kept up the Thurman fund and made something over
expenses. Under the lease of the Central Pacific to the Southern Pa-
cific Company it is guaranteed $1,200,000 a year, net, over and above
all expenses and the interest account and the sinking fund under the
Thurman act,
2490 U. S. PACIFIC RAILWAY COMMISSION.
Q. I understand all that, but my question was whether the actual
earnings of the road between 1872, the time of your first dividend, and
your last dividend, declared in February, 1884/will show that the divi-
dends paid were earned $ A. Yes, sir ; the dividends were all earned ;
not in that time, however. We had quite an accumulation of net on
hand when we commenced the dividends, but all the dividends were
paid out of net earnings.
By the CHAIRMAN :
Q. Did you ever borrow money with which to pay a dividend ? A.
We never borrowed a dollar to pay a dividend.
DIVIDENDS.
" Question 14. And whether the amount thereof may not be recov-
ered from the directors unlawfully declaring the same or persons who
unlawfully receive the same."
Answer 14. I beg to state that as there have never been dividends
wrongfully or unlawfully declared by the company there remains noth-
ing liable to recovery.
HAVE TRUST FUNDS BEEN DIVERTED*?
u Question 15. Whether the proceeds of any trust funds or lands
loaned, advanced, or granted have been diverted from their lawful
uses."
NO FUNDS DIVERTED.
Answer 15. No proceeds of any trust funds or lands loaned, advanced,
or granted have been diverted from their lawful uses. The only trust
fund that the company has ever had in its treasury has been the sink-
ing fund. This fund now amounts to about $9,000*000. In addition to
this we have paid $1,216,000 of what was known as the State aid loan.
The convertible loan also aggregated $1,500,000. The trust funds have
been invested in sinking funds at interest in the company's treasury for
the final redemption of bonds of the company. That fund, of course,
did reduce the general indebtedness of the Central Pacific Railroad
Company. It is not all for the aided line, but it is some for that line
and some for the others. There are sinking funds for all of the compa-
nies which are now part of the Central Pacific, and they are growing very
rapidly.
SINKING FUNDS.
By Commissioner ANDERSON :
Q. The sinking fund does not apply to the United States bonds at
all I A. No, sir ; it goes to the first-mortgage bonds the bonds that
are a prior lien to that of the Government.
Q. It goes to all your mortgages, as I understand it ? A. Yes ; each
mortgage has its own sinking fund. They are all, of course, in the
hands of the Central Pacific Kailroad Company. These companies have
been consolidated, and the Central Pacific has assumed these liabilities.
THE LAW OF CALIFORNIA REGARDING SINKING FUNDS.
Q. Will you tell me what the requirement of the law of California is
in regard to permitted investments in sinking funds? A, That the
money shall be loaned.
LELAND STANFORD. 2491
Q. Is there no limitation ? A. I think there is none.
Mr. BERGIN. There is no limitation.
Commissioner ANDERSON. Can they loan it to anybody ?
Mr. BERGIN. It is in the discretion of the board of directors of the
corporation. The law does require of railroad companies organized
under its provisions, that at the time of the creation of a liability by
the company secured by a bond and mortgage, it shall also provide a
sinking fund for the ultimate liquidation of the liability, but as to the
manner of investing the fund, that is left to the discretion of the board
of directors.
DUTIES OF TRUSTEES AS TO INVESTMENT OF A SINKING- FUND.
Commissioner ANDERSON. May I ask whether there has been any de-
cision upholding, for instance, a loan of money in a sinking fund by a
corporation to itself ?
Mr. BERGIN. No, sir ; the question of the manner of investment has
never yet been judicially passed upon by the courts.
Q. In your opinion, would the trustees of a sinking fund amounting
to many millions of dollars be justified in taking a note of the corpora-
tion itself and then putting it back in the general assets ? A. The gen-
eral trustees ; not the company. The company itself is not necessarily
the trustee, or not the trustee at all.
Q. I am asking you whether the trustees would be justified under the
laws of California in putting the money which they hold in the sinking
fund into the vaults of the corporation itself for its general purposes
and taking as its evidence of the sinking-fund moneys the note of the
corporation? A. That might be under some circumstances. I do not
know now. My attention has not been called lately to the duties of
trustees, but I think under our laws that a trustee may do with it as any
good business man might do. I do not think there is any restraint be-
yond that, is there, Mr. Bergin ?
Mr. BERGIN. No, sir.
EXCHANGE OF BONDS.
Q. The point of my question is this : Have you not in fact surrendered
over three million dollars of first-mortgage bonds of the Southern Pa-
cific belonging to your sinking fund and accepted in lieu thereof the
bonds of the Central Pacific issued under its second or third mortgage
made in October, 1886? A. I do not know how much we have done.
The trustees have often exchanged bonds at a premium for bonds which,
to our knowledge, were just as good as the bonds in the fund, but which,
not having an established market price, would have commanded less,
and so far would have been a benefit or profit to the sinking fund.
Q. What are those bonds quoted at, the bonds under the mortgage of
October, 1886 ? A. I do not think they are quoted on the market. They
sell here. We have been offered for them par in this market. I think
that we could sell large quantities of them here at par. They are 6 per
cent, bonds and they are secured by a second mortgage on the road.
The mortgage is on the unaided portion of the company's property and
is not a lien upon the aided portions.
HAVE STOCKS OR BONDS BEEN UNLAWFULLY ISSUED?
" Question 16. Whether any new stock or bonds have been issued, or
any guarantees or pledges made contrary to, or without authority of
law."
P R VOL iv 11
2492 U. S. PACIFIC RAILWAY COMMISSION.
NO ISSUES OB PLEDGES BY CENTRAL PACIFIC CONTRARY TO LAW.
Answer 16. No new stocks or bonds have been issued, or any guar-
antees or pledges made contrary to, or without authority of the law.
The WITNESS. Stock has been issued to aid in the construction and
secure a through line to Oregon. The valuable properties of the Cen-
tral Pacific to-day are the unaided lines.
By the CHAIRMAN :
Q. Have you not made guarantees of bonds of other roads since the
passage of the act of Congress of 1873? A. I cannot call to mind that
the Central Pacific has made any. I do not think it has. If Mr. Miller
were here he could tell. I do not think the Central Pacific has ever
guaranteed any bonds.
GUARANTEE OF BONDS OF CALIFORNIA PACIFIC.
Q. How is it about the California Pacific bonds? A. The California
Pacific is a short line of road between here and Sacramento, and it was
a competing line to our 137 miles, and in the process of time it passed
into and under our control. We bought stock in the road. After op-
erating it for a time we saw that it could not pay the interest on the
bonded indebtedness. The road did not do well. It was washed out,
and was unable to meet its requirements. Upon the Central Pacific
agreeing to guarantee the interest, the bonded indebtedness was veiy
much reduced, and a lower rate of interest was accepted. I cannot give
you the exact amount, but the interest on the remaining bonds was
reduced so as to make it much more easy to handle.
Q. What was the date of the guarantee ; what was the year ? A. I
cannot give you the year, but it was some years ago.
DIRECTORS AND EMPLOYES' INTEREST IN OTHER COMPANIES.
"Question 17. Whether any of the directors, officers, or employe's
of said companies, respectively, have been, or are now, directly or indi-
rectly interested, and to what amount or extent, in any other railroad,
steamship, telegraph, express, mining, construction, or other business,
company, or corporation, and with which any agreements, undertak-
ings, or leases have been made or entered into."
INTEREST OWNED IN OTHER COMPANIES BY PRESIDENT STANFORD.
Answer 17. I may state that I have been and am interested in the
following-named companies, and to the extent set opposite the respect-
ive name of each company. I know that some of the other directors
of the company have been interested in some of these companies 5 and
I believe, but do not know, that they are interested in all of them, the
extent of their interest in which I am not prepared to state, as there is
no joint ownership of the stock. As to the absolute correctness of the
list that I am about to read, I am not prepared to say, because it was
only furnished just as I was coming away, and I have not been over it,
but I presume that it is correct, inasmuch as it has been furnished by
the secretary.
1. California Pacific Eailroad. I have 24,755 shares of stock in this
company.
LELAND STANFORD. 2493
2. Southern Pacific of California. I bad 70,936 shares of stock in this
company until December 8, 1884, when I transferred it to the Southern
Pacific Company in exchange for 42,561.6 shares of its stock.
3. Southern Pacific of Arizona. I had 49,987 shares of stock in this
company until December 8, 1884, when T transferred it to the Southern
Pacific Company in exchange for 29,992.2 shares of its stock.
4. Southern Pacific of New Mexico. I had 16,722 shares of stock in
this company until December 8, 1884, when I transferred it to the South t -
ern Pacific Company in exchange for 10,033.2 shares of its stock.
5. Southern Pacific of Kentucky. I have 150,233.3 shares of stock in
this company.
6^ Stockton and Copperopolis Eailroad Company. I have 586 shares
of stock in this company.
7. Berkeley Branch Eailroad. I have 231 shares of stock in this com-
pany.
8. Amador Branch Eailroad. I have 1,560 shares of stock in this com-
pany.
9. Los Angeles and San Diego Eailroad. I have 370 shares of stock
in this company.
10. California and Oregon Eailroad. I had stock in this company,
and took Central Pacific stock for it when it was consolidated with that
company. Do not remember the number of shares.
11. San Joaquin Valley Eailroad. Same answer as No. 10.
12. San Francisco, Oakland and Alameda. Same answer as No. 10.
13. Western Pacific Eailroad. Same answer as No. 10,
14. Contract and Finance Company. I had 12,500 shares of stock in
this<company when it was disincorporated in 1874.
15. Wells, Fargo and Company. I have 86 shares of stock in this
company. Have had a larger number of shares, but do not remember
how many.
16. Occidental and Oriental Steamship Company. I have 9,995 shares
of stock in this company.
17. Western Development Company. I have 10,000 shares of stock
in this company.
18. Pacific Improvement Company. I have 12,500 shares of stock in
this company.
19. lone Coal and Iron Company. I have 8,000 shares of stock in
this company.
20. Eocky Mountain Coal and Iron Company. I have 1,817 shares
of stock in this company.
21. Carbon Hill Coal Company. I have no stock in this company,
but have an interest in it through my holding of Pacific Improvement
stock, to which company this mine belongs.
LOANS TO OTHER COMPANIES.
" Question 18. What amounts of money or credit have been or are
now loaned by any of said companies to any person or corporation f >
MONEY LOANED BY CENTRAL PACIFIC RAILROAD COMPANY.
Answer 18. The amount loaned any company, corporation, or indi-
vidual by the Central Pacific Eailroad Company, being the amount
owing to the company June 30, 1887, is as follows :
Stockton and Copperopolis Railroad Company $115, 653. 80
U. H. Giddings, New York , ,.. 93.13
2494 U. S. PACIFIC RAILWAY COMMISSION.
B. E. Smith : $100,000.00
T. J. Edmondson : 8,000.00
J. H. Flagg 2,000.00
J. W. Young 35,16f\34
Coos Bay Coal Company 4,048.30
Total : 264,960.62
This statement gives only the present amount. The amounts in detail
from the organization would be very voluminous. The accountants of
the Commission are uow examining the books of the company ; if any
statement in detail of amounts which have been loaned is desired, they
will doubtless make it.
LOANS FROM OTHERS.
" Question 19. What amounts of money or credit have been or now
are borrowed by any of said companies, giving names of lenders and
the purposes for which said sums have been and now are required."
MONEY BORROWED BY CENTRAL PACIFIC RAILROAD.
Answer 19. The amounts of money or credit borrowed by the Cen-
tral Pacific Eailroad Company, being amount owing by the company
June 30, 1887, is as follows :
C. J.Torbert, note $2,500.00
Southern Pacific Company balance of account 793, 293. 88
Company's operating ledger balance of account 5, 630. 87
Trustees land grant mortgage 1, 508, 549. 26
Land suspense account being payments made on lands sold, not yet con-
veyed 6,754.80
Total 2,316,719.81
This gives only the present amount ; the amounts in detail from the
organization would be very voluminous. The accountants of the Com-
mission are examining the books of the company ; if any statement in
detail of amounts which have been borrowed is desired, they will doubt-
less make it up.
PAYMENTS WITHOUT SUFFICIENT VOUCHERS.
"Question 20. What amounts of money or other valuable considera-
tion, such as stocks, bonds, passes, and so forth, have been expended or
paid out by said companies, whether for lawful or unlawful purposes,
but for which sufficient and detailed vouchers have not been given or
filed with the records of said companies T 7
PAYMENTS APPROVED BY DIRECTORS AND STOCKHOLDERS.
Answer 20. In answer to interrogatory No. 20 I have to say that
the company in its settlement with the Government proposes to claim
nothing as expenses in determining the amount of net earnings in which
the Government has an interest for which the company does not fur-
nish full and satisfactory vouchers. It is entirely immaterial to the
Government and the Government can have no interest in knowing what
amount of money may have been expended for which the vouchers on
file are not sufficient in detail or otherwise. I wouldj however, remark
LELAND STANFORD. 2495
that all items of expenditure for which detailed vouchers are not on file
have from time to time been approved by the directors and stockholders
of the company.
INFLUENCING LEGISLATION.
" Question 21. And further, to inquire and report whether said com-
panies, or either of them, or their officers or agents, have paid any
money or other valuable consideration, or done any other act or thing
for the purpose of influencing legislation."
Answer 21. In answer to interrogatory No. 21, I have to say in be-
half of the Central Pacific Eailroad Company that no deduction will be
made from that portion of the net earnings belonging to the United
States on account of any expenditure for which detailed and satisfactory
vouchers are not furnished. We will account to the Government as if
no such expenditures had been made.
By the CHAIRMAN :
Q. Do you omit entirely the question of legislation ! A. I have given
my answer to that question.
CONSOLIDATION OF UNION PACIFIC RAILWAY.
" Question 22. And to investigate and report all the facts relating
to an alleged consolidation of the Union Pacific Eailroad Company, the
Kansas Pacific Eailroad Company, and the Denver Pacific and Tele-
graph Company, into an alleged corporation known as the Union Pa-
cific Eailway Company. Said investigation shall include the alleged
sale of the stock of the Kansas Pacific Eailroad Company to the Union
Pacific Eailroad Company, and all the circumstances and particulars
pertaining to the said alleged sale."
Answer 22. This interrogatory relates to other corporations and re-
quires no answer from me.
ASSETS AND OTHER ENTERPRISES.
" Question 23. And whether any of the Pacific railroad corporations
which obtained bonds from the United States to aid in the construction
of their railroads have expended any of their money or other assets in
the construction, or to aid in the construction of other railroads, or in-
vested of their moneys or other assets in the stocks or bonds of any
manufacturing, mining, or commercial companies or corporations, or of
other railroad corporations."
Answer 23. The Central Pacific Eailroad Company has expended no
money or assets in the construction or to aid in the construction of other
railroads. It never had any interest in other roads except in the way
of lease, or by consolidation. The company has invested a very limited
amount of money in bonds and stocks of other corporations, the extent
and character of which will be shown in my answer to the next ques-
tion.
EXTENT OF INVESTED ASSETS.
u Question 24, And if any such expenditures or investments have been
made, the extent and character thereof made by each of said corpora-
tions shall be inquired into."
2496
U. S. PACIFIC KAILWAY COMMISSION.
Answer 24. The extent and character of such expenditures and in-
vestments are as follows :
Description.
Date of
ownership.
Value.
Disposition.
Remaining
on hand
December
31, 1886.
Daily American Ha ", newspaper
1864
$5 000 00
Charged to expense ac-
stock.
1866
48, 937. 50 )
count, Dec. 10, 1866.
July 29 1868 sold for
pany bonds i
1867
28, 738. 37 V
$5, 766. 37.
f j ^
Georgetown Wa^on Road stock
1867
1 000.00
Charged to profit and
Austin and Reise River Transpor-
Feb. 8, 1872
1, 000. 00
loss account, Aug. 31,
1868.
Nov. 18, 1873, sold for
tation Company stock, 40 shares.
C. P. R. R. first mortgage bonds, 21 .
S J Valley R R. bonds 1
June 14, 1873
Mar. 10, 1874
21 735.001
775. 00 !
$600; dividends, 600;
charged to profit and
loss account, $200. .
Transferred to sinking
S J Valley R. R bonds, 1
Feb. 14, 1876
9'>0. 00 [
funds An" 1 19 1879.
W P R R. bonds 1
Feb. 11,1875
852. 50 J
Green Point Dairy and Transporta-
June 12, 1874
1, 500. 00
May 17, 1877, sold for
tion Company stock, 30 shares.
Nevada Company Narrow Gauge
Mar. 1,1877
6, 300. 00
$765; construction ac-
count, $735.
Dec., 1878, sold for $6, 300.
Railroad bonds, 7.
Coos Bay Coal Company :
34 495 shares stock .
Oct. 30, 1875
136 871 30
With assessments &c
400 acres land ....
1876
19 578 98
With expenses .......
$156 4^0 8
Wells, Fargo & Co., stock, 8,250
shares.
Sold for
Sept. 30, 1879
825, 000. 00
216 015 67
Sold June 30 1880
Do 4
132 1 9 4 51
Sold Dec 31 1880
Do
85 554 50
Sold May 12 1881 .
Do
507 101 90
Sold June 13 1881
Sacramento Transportation Com- ?
June 30, 1882
940, 796. 58
C 75,000.00?
80, 000. 00
Notes of Fisk & Hatch (see note
830 665 46
below).
Secured by Chesapeake and
June 14, 1875
Ohio Railroad bonds.
Changed to :
Chesapeake and Ohio
bonds, 7 percent., 1,344.
Chesapeake and Ohio
stock, first preferred, 255
June 26, 1884
June 26, 1884
> 830, 655. 40
shares.
Chesapeake and Ohio
stock, second preferred,
11,586 shares.
Chesapeake and Ohio
June 26, 1884
Sept. 3, 1884
J
3, 325. 60
stock, second preferred
405 shares.
Scrip 1887
833, 891. 06
Sold Sept 3 1884
833 872 19
Forest Hill Commercial and Toll (
Nov. 20,1884
2, 000. 00 I
4 000 00
Road Company stock J
June 20, 1885
Last received
2, 000. 00 3
l'-*0 00
120 00
remaining unsold.
Central Pacific Railroad capital
Jan. 18,1872
Dec 31 1886
724 500. 00
724 500 60
stock, held in trust for company
by C. P. Huntington, agent.
1, 798, 942. 47
SETTLEMENTS WITH FISK & HATCH.
Fisk & Hatch, bankers of New York, acted as financial agents of the
company, and at the time of their failure in 1874 gave their notes,
amounting to $830,665.46, in settlement of account, with bonds of Chesa-
peake and Ohio Railroad, amounting to $1,457,000, as security. Fisk
& Hatch suspended payment again iu 1884, and in settlement for amount
LELAND STANFORD. 2497
of notes and interest the Central Pacific Eailroad Company took Chesa-
peake and Ohio securities, as above shown, June 26, 1884. The 1,344
bonds were exchanged January 28, 1887, for 16,800 shares of stock of
the Newport News and Mississippi Valley Eailroad Company.
By Commissioner LITTLER:
Q. What is the total amount? A. One million seven hundred and
eighty-eight thousand nine hundred and forty-two dollars. The prin-
cipal amount of that comes through the failure of Fisk & Hatch. On
their failure, some years ago, they were indebted to our company. They
were pur financial agents at New York, and they gave us their note
with the balance of securities. Then they failed again, and again we
settled with them, and took what they had. Among other things we
took these securities, and that Fisk & Hatch transaction makes the
larger portion of this amount.
Q. Do you mean to say that you acquired all the securities mentioned
on that paper in that way? A. No, sir ; but we so acquired the princi-
pal portion of them.
COOS BAY COAL COMPANY.
We became interested in the Coos Bay Coal Companies because we
were largely at the mercy of the coal dealers, and had to pay extraor-
dinary prices. For instance, we paid as high as $8 per ton for local
coal which can now be bought for $4.50 per ton. In order to be inde-
pendent we got this mine, and by so doing have been able to bring
down the prices of outside coal. In this way we have secured a very
large saving to the company.
We used to be very much at the mercy of the coal dealers at times.
We buy coal in England, Australia, and in the British possessions.
INTEREST IN AUXILIARY ROADS.
" Question 25. And also the present interests of any of said corpora-
tions in the railroads auxiliary to their respective railroads."
Answer 25. The Central Pacific Eailroad Company has no present
interest in the railroads auxiliary to its lines, and never has had ex-
cept through consolidations and leases, like the San Joaquin Valley,
the California and Oregon, and the Oakland and Alameda connections,
&c., which constitute the most valuable portions of the Company's prop-
erty. The roads consolidated with the Central Pacific Eailroad Com-
pany and those that have been leased by it are shown at length in the
following statement :
THE CENTRAL PACIFIC RAILROAD COMPANY.
CONSOLIDATIONS.
California and Oregon Railroad Company and Marysville Railroad Company, Jan-
uary 16, 1868. Name, California and Oregon Railroad Company.
California and Oregon Railroad Company and Yuba Railroad Company, December
18, 1869. Name, California and Oregon Railroad Company.
The San Francisco aiid Alameda Railroad Company, and the San Francisco, Stock-
ton and Alameda Railroad Company, October 15, 1868. Name, The San Francisco
and Alameda Railroad Company.
The Western Pacific Railroad Company and San Francisco Bay Railroad Company,
November 2, 1859. Name, The Western Pacific Railroad Company.
The Central Pacific Railroad Company of California and The Western Pacific Rail-
road Company, June 23, 1870. Name, Central Pacific Railroad Company.
2498 U. S. PACIFIC RAILWAY COMMISSION.
The San Francisco and Oakland Railroad Company and The San Francisco ami
Aiameda Railroad Company, June 29, 1870. Name, San Francisco, Oakland and Ala-
meda Railroad Company.
Central Pacific Railroad Company, The California and Oregon Railroad Company,
The San Francisco, Oakland and Aiameda Railroad Company, and The San Joaquin
Valley Railroad Company, August 22, 1870. Name, Central Pacific Railroad Com-
pany the present name of the company under the above consolidations.
LEASES.
Roads once leased by the Central Pacific Railroad Company now leased by the South-
ern Pacific Company :
Berkeley Branch Railroad.
Northern Railway.
Stockton and Copperopolis Railroad.
San Pablo and Tulare Railroad.
Amador Branch Railroad.
California Pacific Railroad.
Southern Pacific Railroad (of California).
Southern Pacific Railroad (of Arizona).
Southern Pacific Railroad (of New Mexico).
Los Angeles and San Diego Railroad.
Los Angeles and Independence Railroad.
NAMES OF STOCKHOLDERS.
" Question 26. And said Commission shall also ascertain and report the
names of all the stockholders in each of said companies from its organi-
zation to the date of the investigation herein provided for, as they ap-
pear upon the books of said companies at the date of its annual meet-
ing in each year, and the amount of stock held by each."
Answer 26. In reply to this interrogatory I would say the account-
ants appointed by the Commission have in their possession the books
of the company containing this information and are preparing the state-
ment called for.
WHAT STOCKHOLDERS PAID FOR STOCK.
"Question 27. What consideration, if any, was paid by each stock-
holder to said company for his stock, and when and in what property
such payment was made."
Answer 27. In answer to this question, the statement of Mr. E. H.
Miller, jr., secretary of the company, marked " Exhibit 5," is submitted
hereto, and made a part hereof, showing the consideration paid the
company by each stockholder receiving stock, and when an I in what
property such payment was made. The dates of payment given in the
subjoined list are the dates when the amounts subscribed were fully
paid up. When the stock was transferred or forfeited, the date of the
last payment of the person holding the stock is given.
DATE WHEN EACH STOCKHOLDER BECAME SUCH.
"Question 28. The date when each stockholder so appearing on the
books became such."
Answer 28. This question has been fully answered in the answer to
interrogatory No. 27.
By Commissioner ANDERSON :
Q. Does Mr. Miller's report represent that the stock has all been paid
for' in full ? A. I think that all the stock has been paid for in full. At
the beginning there was stock where the payments were not made in
LELAND STANFORD. 2499
full. We levied assessments and some of those assessments were never
paid.
Q. I mean does Mr. Miller's report show stock issued to construction
companies directly and consider that as a payment in full ? A. I pre-
sume so. I have never looked over the report.
Q. Have you his report here ? A. Yes, sir.
Q. And that is submitted with your paper ? A. Yes ; and I presume
that will show all that. The greater part of the stock was issued for
construction purposes. We managed to obtain a subscription for ten
shares here in San Francisco after our books had been open for some
weeks and that was all. Money at that time was here worth from two
to two and a half per cent, per month, and outside of ourselves there
was hardly anybody who had faith in the ultimate success of the enter-
prise. They did not care to invest their money, which was worth two to
two and a half per cent, in an enterprise in which they had no confi-
dence and where, of course, there could be no returns until its comple-
tion.
STOCK HELD IN TRUST.
a Question 29. And whether stock is now held or has heretofore been
held in the name of any person in trust for the benefit of any other, and
the names of all such persons."
Answer 29. In answer to this interrogatory I will state that I am
unable to say what stock has been held in trust, but the books being
in the possession of, and under examination by, accountants appointed
by the Commission, their report will undoubtedly contain the desired
information.
TOTAL AMOUNT OF STOCK.
" Question 30. The* total amount of stock in each company J 9
Answer 30. The total amount of stock in the Central Pacific Railroad
Company is $100,000,000, of which $68,000,000 has been issued. This
includes the Western Pacific as well as all other railroads consolidated
with the Central Pacific. An analysis and distribution byroads of the
capital stock will be found under question No. 27.
Q. You have skipped interrogatory 28. A. That has been answered
in answer to No. 27. You will remember what that answer is. I will
state that we were organized under the laws of this State to build our
railroad to the State line. At that time the estimate was $8,500,000,
probable cost, and the stock was made out accordingly. There is a law
in our State, however, which provides that we cannot issue bonds to a
greater amount than the capital stock of the company. We found, as
we proceeded, that it would cost more than $8,500,000 to build over the
mountains, and that the Government aid and the first-mortgage bonds
would amount to a great deal more. We therefore increased the capital
stock to twenty millions which would be about the estimated cost.
After that, when Congress passed a law allowing us to build east until
we should meet the Union Pacific, we again increased the capital stock,
not knowing where .we would meet that road. We then made it a hun-
dred millions. That accounts for the increase of capital stock from
time to time.
By Commissioner LITTLER :
Q. In that connection let me ask you where is the residue of that
stock ? A. It has never been issued. When we got through, nobody
wanted that stock 5 but it was wonderful how the country developed,
2500
U. S. PACIFIC RAILWAY COMMISSION.
for a time, especially in Nevada. If the promises of those early years
had been continued we would have had a great property over there.
INCREASE OF STOCK.
" Question 31. Ancl the dates and amount of any increase of such
stock, and the reason for such increase."
Answer 31. The organization of the Central Pacific of California pro-
vided for $8,500,000 of stock. It was soon ascertained that the road
would cost more than that. Then upon the estimated cost the capital
was increased to twenty millions, the principal reason being that under
the laws of California the bonded indebtedness could not exceed the
capital stock. Afterwards, by the act of Congress of July 3, 1866, it
was provided that the Central Pacific might build eastward until it
should meet the Union Pacific, and not knowing where that might be,
the capital stock was again increased to one hundred millions.
SALARIES OVER $5,000.
"Question 32. And the amount of the annual salaries or compensa
tion that are now, or at any prior time have been paid to any officer or
employe" of said company, when such salary or compensation amounts
to $5,000 or more per annum."
Answer 32. In reply to this interrogatory, I submit a tabulated state-
ment of annual salaries amounting to $5,000 or more, paid by the Cen-
tral Pacific Railroad Company since its organization to any officer or
employe, and all bonuses or donations which have been given or paid
to any such person.
The tabulated statement of annual salaries contains only the names
of those employed and giving all of their time to the company. Those
persons who have been employed by the comparft, giving their services
only from time to time as they may be called upon by the company, are
not included. Upon the consummation of the lease of the Central Pa-
cific to the Southern Pacific Company, the services of the most of the
employe's were transferred to the Southern Pacific Company.
Statement of annual salaries amounting to $5,000 or more paid by Central Pacific Eailroad
Company since its organization, to any officer or employe, and all bonuses or donations
which have been given or paid to any such, person.
Office.
Name of officer.
Annual
salary.
From
To
President
Iceland Stanford ....
$10, 000. 00
June 28, 1861
Mar. 31 1885
Vice-president . .
C P Huntington sal-
12 500.00
June 28, 1861
July 1, 1863
Financial agent and attorney
Treasurer
ary and services.
C... .do
1C. P. Huntington, sal-
ary.
Mark Hopkins
25, 000. 00
10, 000. 00
10, 000. 00
July 1,1863
July 1,1864
July 1,1863
July 1, 1864
Mar. 31,1885
Mar. 31,1878
Agent and attorney
E B Crocker
10,000.00
Jan. 1,1864
Dec. 31,1869
Secretary and agent
James Bailey .........
10, 000. 00
Jan. 1, 1861
July 1, 1863
Superintendent and second vice-pres-
Chief engineer
Secretary ;
Charles Crocker
T.D.Judah
E H. Miller, ir
10,000.00
10, 000. 00
10, 000. 00
Jan. 1,1866
June 28, 1861
Jan. 1, 1867
Mar. 31,1885
Nov. 2, 1863
July 1, 1878
Do...... 1
13, 000. 00
July 1,1878
Mar. 31,1885
Assistant secretary
E S Miller
5, 000. 00
May 1, 1882
Mar. 31, 1885
Financial director .
D D Colton
10, 000. 00
Oct. 1, 1874
Oct. 4, 1878
Treasurer
E W Hopkins
5, 000. 00
Aug. 1, 1878
Dec. 31, 1882
Treasurer
Timothy Hopkins
5, 000. 00
Jan. 1, 1883
Mar. 31,1865
S S Montague
5, 000. 00
Jan. 1, 1869
Dec. 31, 1869
Do
6, 000. 00
Jan. 1, 1870
Dec. 31,1871
Do...
8, 000. 00
Jan. 1,1872
Sept. 30, 1883
LELAND STANFORD. 2501
Statement of annual salaries amounting to $5,000 or more paid by, #c. Continued.
Office.
Name of officer.
Annual
salary.
From
To
General solicitor
S W Sanderson*
$12 000 00
Jan 10 1870
Dec 31 1870
Do ..
18, 000. 00
Jan 1 1871
Au" 30* 1875
Do
24, 000. 00
Sept 1 1875
Mar 31* 1885
Attorney
6 000 00
Jan 1 1869
Dec 31 1871
Do.
8, 000. 00
Jan. 1 1872
Dec 31 1874
Do
10, 000. 00
Jan 1 1875
Sept 30 1881
Attorney
H S Brown
5 000 00
Jan 1 1873
Aug 3l' 1875
Do
8, 000. 00
Sept. 1 1875
Mar 31 188")
Dot
4. 500. 00
Sept. 1 1875
Mar 31 1885
Assistant general solicitor
15 000 00
May 3 1881
Mar 31 188**
L D Mclkisick
6 000 00
Sept l' 1882
Dec 3l' 1883
Do
8, 000. 00
Jan. 1 1884
Mar 31* 1885
Dot
1, 000. 00
Jan. 1 1884
Dec 31 1885
Agent and assistant to president
S. T. Gage
Do
$6, 000. 00
8, 000. 00
Aug. 1,1871
Nov. 1 1882
Oct. 31, 1882
Mar 31 1885
B B Redding
6 000 00
Jan 1 1871
Apr 30 1873
Do
6, 000. 00
Feb. l' 1874
Au" 31 1882
Attorney
C H Tweed
13 333 33
Jan 12 1883
Mar 31 1885
C H Sherril
20 000 00
Mar 1 1876
Mar 31 1885
10 000 00
July 1 1867
Oct 30 1882
6 000 00
Apr 1 1882
Mar 31 1885
20 000 00
Jan 1* 1868
Mar' 4* 1875
Laud agent
W.H. Mills
Do
5, 000. 00
7, 000. 00
Jan. 1, 1883
July 1, 1883
June 30,1883
June 30 1887
10, 000. 00
Sept. 30 1871
Sept 30 1876
Consulting engineer .
George E. Gray
10, 000. 00
Mar. 1, 1867
Nov 30 1870
General superintendent and general
A. N. Towne
13, 000. 00
Sept. 1, 1869
July 31 1879
manager.
Do ..
18, 000. 00
Au<*. 1 1879
Apr 30 1882
Do
25, 000. 00
May 1, 1882
Mar 31 1885
Assistant general superintendent . . -
John Corningt
5, 000. 00
Aug. 1,1871
Au<r. 31, 1871
Do .
6, 000. 00
Sept. 1, 1871
Nov 30 1873
Do
8, 000. 00
DPC. 1 1873
July 31 1878
Division superintendent, assistant
general superintendent.
E.G. Fellows
Do
5, 000. 00
8, 000. 00
Oct. 1, 1873
Dec. 1 1878
Nov. 30,1878
Dec 31 1873
Do
6 000. 00
Jan. 1 1879
Auo- 31 1879
Do
7, 000. 00
Sept. 1 1879
July 31 1880
General freight agent . . .*
C. W. Smith
Do
5, 000. 00
6 000. 00
Aug. 1,1870
Sept. 1 1871
Aug. 31,1871
Nov 30 1871
Master of transportation
J. A. Filimore
5 400. 00
Dec. 1 1878
July 31 1880
Assistant general superintendent
do
6 000. 00
Au" 1 . 1 18SO
Apr 30 1882
do
8 400.00
May 1 1882
Mar 31 1885
General freight a^ent
J. C. Stubbs
5 400.00
Au\ 1 1878
Aug 31 1879
Freight traffic manager
do
6 000.00
Sept. 1 1879
Apr 30 1882
Do
8 400 00
May 1 1882
Sept 30* 1884
General traffic manager
do
10 000.00
Oct 1 1884
Mar 31 1885
General freight a^ent
Richard Gray
6, 000 00
Jan. 1 1885
Mar 31 1885
Assistant general superintendent . . .
Superintendent of track
R. H. Pratt
L. M. Clement
5, 400. 00
5, 400. 00
Jan. 1, 1884
July 1,1877
Mar- 31,1885
Apr. 15 1881
Arthur Brown
6 000 00
Oct 1 1379
Mar 31 1885
ing.
W H Porter
6 000 00
Jan 1 1882
Mar 31 1885
W H Moore
6 000 00
Au"~ 1 1874
Feb 28 1880
Agent Sacramento steamers .....
6, 000. 00
Aug. 1 1874
Nov 30 1874
Master mechanic
5, 100. 00
June 1 1877
Dec 31 1883
Do
5 400 00
Jan 1 1884
Mar 31 1885
Agent . . - ......
R. p. Hammond
6, 000. 00
Oct. 1 1877
June 3o 1884
* $10,000 allowance for extra services Nov. 13, 1886. t Extra allowance.
+$2, 355. 52 donation to Mrs. Corning services, August 1. 1878, to November 16, 1878. $1, 000 allow-
ance to Mrs. Corning for one and one-half months' salary after decease.
As to this list I can say that the salaries of the principal directors
and officers were fixed at an early day at $10,000 apiece and continued
until this time or until the lease to the Southern Pacific. Since that
time the principal officers have had no salaries. There are others whose
salaries in some cases amount to a much larger sum. The principal
counsel, Judge Silas W. Sanderson, now deceased, received as high as
$24,000. The next one to that is Mr. Towne, the general manager, who
received $25,000. I think those are all. In some cases some of our em-
ployes who had bad luck may have received something, or, in case of
2502 ti. S. PACIFIC RAILWAY COMMISSION.
their death, contributions may have been made to their widows and
families.
" Question 33. And the names of the persons now receiving or who
have heretofore received such salaries or compensation."
Answer 33. This interrogatory will be found fully answered in reply
to the preceding question.
BONUSES AND DONATIONS.
" Question 34. And all the bonuses or donations which may have been
given or paid to any such person."
Answer 34. ~$o bonuses or donations have been given or paid to any
person except such as are stated in answer to question No. 32.
LEGAL EXPENSES.
"Question 35. And all payments made under the head of legal ex-
penses, to whom made, and the amount paid to each, and for what spe-
cific services such payments were made."
Answer 35. The expert of the Commission, Mr. Stevens, has been
given the books of the company, and he will prepare an answer to this
interrogatory.
CONDITION OF COUNTRY AT COMMENCEMENT OF ROAD.
Now, as to question 36, it is a very broad question. When we com-
menced building our road there was but one white man between the
Truckee and Bear Eivers, and he was a man that ventured to conduct
a cattle ranch up there on the mountains. There was scarcely any set-
tlement from the Missouri Kiver to Utah except in Salt Lake City. It
was a wilderness. All that country has been developed since. The
railroad was not across Iowa until the Union Pacific commenced, and
they did not commence until two years after we did on this side.
By Commissioner LITTLER :
Q. Do you undertake to answer that question? A. Yes. I answer
it, but its scope was so great that we could hardly embrace it. That
question is :
INTERESTS OF COMMUNITIES.
" Question 36. Said Commission shall also inquire in to and report upon
the relations of said railroads to the interests of the communities through
which they pass."
TESTIMONY OF PROMINENT CITIZENS.
Answer 36. The relations of the Central Pacific Eailroad to the com-
munities through which it passes is most intimate and important ; one
is indispensable to the other. As to these relations, I give the follow-
ing testimony of prominent citizens of this State upon this subject,
which is instructive and valuable :
VIEWS OF F. F. STROTHER.
City and County Auditor F. F. Strother, who came to San Francisco
in 18G4, and has been prominent in legal and political circles ever since,
says:
I am generally considered an anti-railroad man, and so I am in the general accept-
ance of the term. I mean by this that I give the railroad no praise or credit to which
LELAND STANFORD. 2503
they care not plainly entitled. While this is true I can but agree with the great ma-
jority of the leading business men of the city that the remarkable era of prosperity
which dawned on California and the Pacific Coast in 1869 was the direct result of the
completion of the trans-continental railroad, known as the Central and Union Pacific.
My knowledge of the benefits and advantages which have followed to the western
country in general, and to California in particular, has been obtained more from a
close observation of the growth and development going on everywhere around me
than from actual commercial experience. The fact is, that but for the indomitable
energy of the projectors of this great railroad enterprise, the condition of California
would be pretty much the same to-day as it was in the sixties, for the final and suc-
cessful consummation of this gigantic undertaking, operated as an incentive to other
railroad builders and the other trans-continental lines are the result. I firmly be-
lieve that if the Union and Central Pacific people had failed or given up this work
they had in hand, this State, to-day, would be without eastern railroad connection
and our men of commerce and trade would still be shipping hides, wool, tallow, and
wheat (the only commodities which was then possible for them to handle) to New
York via Cape Horn with clipper ships.
ADVANTAGE TO CALIFORNIA.
The development of the State which set in immediately after the connection of the
two roads was phenomenal. The people then saw for the first time that there was
something else to California besides wool, hides, and wheat. Here was a market for
their fruits and wines, and what was then an almost unknown industry *began to ex-
pand until to-day it leads all others on the coast. Then came prosperity, commercial
and otherwise, and who can say where it will end. Branch lines of road, "feeders"
I think they are called, have been built from end to end of the State, developing
agricultural, viticultural and mining interests in localities where before they could
not be carried on profitably. And all this, we may say, is the result of the enterprise
of the pioneer railroad builders ; it is the legitimate child of their courageous labors.
VIEWS OF JOHN H. WISE.
John H. Wise, one of San Francisco's principal business men, and
who has been identified with h^r leading commercial interests for over
thirty years, has this to say regarding the actual benefits which have
resulted from the construction of the Union Pacific and Central Pacific
Railroads :
The building of these roads has benefited this city, the State, and the whole coast
to an almost incalculable extent. When the scheme of putting through to this coast
a line of railroad to connect us with the East was first broached, it was regarded by
the great majority of our leading commercial men, myself included, to be next to im-
possible ; that is, it was an enterprise of such gigantic proportions, with such seem-
ingly insurmountable barriers in its way, that we had little hope of its successful
consummation. The primitive surveys of the engineers clearly showed that success
in carrying out the scheme demanded not only an outlay of a sum so vast as to at once
dampen the hopes of the projectors, but a degree of skill, perseverance, and pluck as
well, which had never been applied to a similar enterprise in this or any other coun-
try. The lively desire of the people of this coast, however, to bring about a more de-
sirable condition of things as regarded our commercial facilities led us to hope almost
against fate. Our commercial situation prior to the completion of these roads was
unpromising and altogether unsatisfactory. Our only facility for handling freights
to and from England, Germany, and eastern American ports was the clipper line of
ships, and about the only articles of merchandise we could export were whe^t, wool,
hides, aud tallow. Of course the shipping of any kind of fruit by a route which it
required, under the most favorable conditions, six months to traverse, was altogether
out of the question. The growing of fruits on the Pacific coast for any other purpose
than home consumption was, therefore, never thought of. The vast area of excellent
fruit and vineyard lands remained uncultivated, and the country remained undevel-
oped, with no hope of improvement.
REVOLUTIONARY EFFECT OF RAILROAD CONNECTION.
The railroad connection, when it was finally made, brought about a revolution.
The clipper ships were abandoned, and the volume of business began increasing at a
)0<momenal rate; emigrants began to pour in, towns began to grow and new ones to
2504 U. S. PACIFIC RAILWAY COMMISSION.
spring up, ranchers began cultivating the soil and planting vineyards, and for the
first time markets were established in Chicago and New York for California fruits.
A new era set in, and from that time dates the rapid development of the Pacific coast.
I consider that the best stroke of business done by San Franciscans (and San Fran-
cisco was then pretty much all there was to California) was when they gave their
mite of encouragement and aid toward the construction of this line of railroad. This
mite was small indeed, almost inappreciable in fact, because, as I have said, there
was so little faith in the ability of the builders to successfully surmount the many
and great impediments in their way, and complete the work. Had there been a
greater outlook for the enterprise, I do not doubt but that substantial aid would have
been given.
VIEWS OF MAYOR POND.
Mayor Pond gives the following impression of his views regarding
the development of the Pacific coast and the cause thereof:
I consider the connection of the Union and Central Pacific Railroads, which first
gave California a through line to the East, as having been the prime factor in bring-
ing about the rapid development of the country and the subsequent prosperity this
coast now enjoys. Prior to that time, you know, California, while her reputation as
a section of unlimited possibilities bad spread far and wide, was regarded almost as
a foreign country. Immigration into the State had been limited, the whole volume
of it being confined to the influx of the adventurous mining horde attracted by the
gold fever of '49, and the 50's. These early pioneers were looked upon as explorers
of a far-away and next to inaccessible country, and it was in those days considered
that a man had seen a great deal of the world who had returned to his Eastern home
in safety from a trip to California.
REVOLUTIONARY EFFECT OF RAILROAD CONNECTION.
Our commercial facilities were equally as bad, our dealings being confined to less
than half a dozen articles of merchandise, because of the time required to reach mar-
keting points. The effect of the final railroad completion was an instantaneous and
complete revolution of everything. I cannot say that the immediate effect on the
city of San Francisco was beneficial, though some hold that it was. Previously, you
know, we had the handling of every article of merchandise destined to coast points.
San Francisco and California had been synonymous terms with the railroad company.
However, a new modus operandi was instituted, and freight and passengers were de-
livered directly to their respective destinations, leaving San Francisco to survive on
her own merits. What little we lost in the way of transient patronage, however, was
made up a thousand fold by the State and coast at large.
The truth is, the railroad builders made it possible for the outside points through-
out the coast to enjoy the benefits of their own. advantageous conditions of soil and
climate without dividing up the profit with San Francisco.
" How much substantial encouragement did the railroad builders re-
ceive from the people of the coast?" the mayor was asked.
None at all ; that is, none that I have heard of. You see we did not have much
faith in the enterprise, and while we hoped for its success, it was generally a case of
hands off, as far as contributions of money were concerned. My idea is [said the
mayor in conclusion] that but for the perseverance of those who had this gigantic
scheme in hand California and the Pacific coast would to-day be just about where
they were fifteen years ago.
VIEWS OF WILLIAM T. COLEMAN.
Willliam T, Coleman, the organized head and front of San Francisco
commercial business, one of the earliest pioneers who has been identified
with the growth and development of the commerce of the city, State,
and coast since 1849, voices the sentiments already expressed by the
leading men of the city, that the construction of tfce Union Pacific and
Central Pacific Eailroads was the cause of which the general prosperity
of the coast is the direct effect.
When you ask me [said he to a gentleman in his office on July 9j to
some of the benefits wh,ich have flown from the final completion oi i.Ve hrst
LELAND STANFORD. 2505
railroad line between the East and the West, I can only point you to the evidence of
the unequaled prosperity of the Pacific coast, and tell you that all this is comprised in
the benefits brought about by the building of that railroad line. Before, we had next
to nothing ; now we have well-nigh everything that can be desired.
The project was a mammoth one, requiring an outlay of hundreds of millions of
dollars. The capital controlled by the projectors was known to be comparatively in-
significant, and no one could see how the enterprise could possibly succeed. We failed
to calculate, however, on their capital of perseverance and pluck, and this it was that
built the road.
LITTLE AID RECEIVED FROM THE PEOPLE.
" How much assistance did the road receive from the people ? "
Next to none at all. That is, the contribution was so slight, and it was manipu-
lated in such a way that costly litigation ensued, and it proved more of a shackle on
the hands of the railroad builders than anything else. Some people call me an anti-
railroad man, and perhaps I am partially deserving of the name, but while I am ready
to plead guilty to having scored the railroad in general at ditfereut times when they
seemed to merit it, I have generally been inclined to make an exception of the Union
and Central Pacific, which roads are, to my mind, richly entitled to much more than
they have ever received from the Government or the public.
VIEWS OF SENATOR L. J. ROSE.
Senator L. J. Bose, of Los Angeles, was at the Palace Hotel on Sun-
day, July 17. In conversation with a reporter regarding the develop-
ment of tbe southern section of the State he said :
The railroads have made Southern California what it is to-day. Before the com-
pletion of the through line formed by the joining of the Union and Central Pacific
roads the southern half of California, which is now famous the world over as the
most favored quarter in America in point of climate and soil conditions, was no more
nor less than a barren sheep pasture. In truth it hardly rose to the dignity of a past-
ure at all, for the whole country was almost as destitute of vegetation as a desert.
There were no vineyards, no orchards, no agriculture nothing. The only industries
which any effort was made to prosecute were cattle and sheep raising, with here and
there a sort of experiment in the way of growing cereals, mostly for home consump-
tion. True, this last-nained industry grew to some proportions after the institution
of the clipper-ship line, by means of which wheat was sent to foreign and Eastern
ports via Cape Horn ; but the leading industries of to-day were not dreamed of, inas-
much as San Francisco was the only market known to us. Wine-making and fruit-
raising for other than local consumption were out of the question entirely.
INDUSTRIAL REVOLUTION PRODUCED.
Our redemption came in 1869, when the railroad people completed that gigantic
and wonderful work the actual laying of a line of steel over, under, and through the
granite Rockies, giving California a direct rail connection with the East. I say our
redemption came then ; so it did. The effect was marvelous and immediate. There
was an industrial revolution. We beheld ourselves in a day, as it were, surrounded
by possibilities which made us a new and different people, in a new and completely
changed land. That day fortune smiled upon us, and the unequaled prosperity which
teems on every hand to-day is the result. The desert indeed " blossomed as the rose ; "
where there had been barren and neglected wastes there sprang up orchards and vine-
yards as if by the hand of magic. Cattle and sheep ranges were transformed into
fertile and productive farms and ranches. Hamlets sprang into villages, villages into
towns, towns into cities. Life and activity took the place of indolence and sloth.
Our reputation began to spread, and a different and better class of people began to
settle among us. Our growth and development have been phenomenal during our life
of thirty years ; for wo consider that we were born on the day the through railroad
was completed. And to-day there is no more prosperous section on the face of the
globe. Who can doubt that the railroads brought us all this prosperity which ex-
tends throughout the Pacific coast ? And who can say that the dauntless projectors
of tbo great enterprise which first gave HS communication with the world are not en-
titled to all praise and all support f
INCREASE OF WEALTH CAUSED BY RAILROAD.
In connection with this subject there is one feature of the relation of
the community through which it passes that I feel should not be over-
2506
U. S. PACIFIC RAILWAY COMMISSION.
looked. I refer to the wealth- creating power of railroads. The potency
of its influence has nowhere been better shown than in California.
INCREASE OF TAXABLE PROPERTY.
In 1870 the tax-roll of Los Angeles County showed the aggregate
taxable property to be less than seven millions of dollars. In 1883 the
tax roll of that county was twenty-seven millions and one-half, an in-
crease in twelve years of nearly 300 per cent., and the figures show that
the larger per cent, of this increase should be credited to the past five
years during which that county has had railroad facilities.
The same gratifying result is obtained by a comparison of the tax-
rolls of other counties in this State, as will be shown by the following
tabulation from the report of the State controller :
Counties.
1860.
1870.
1883.
$3 650 330
$6 918 074
$ 9 7 584 01
417 238
1 20 9 48 9
5 679 0' J
4 938 400
7 880 220
34 769 332
Merced
i 116 9y*
3 202 455
8 096 170
969 870
3 423 808
14 562 262
931 000
3 219 230
10 604 538
1 589 529
3 456 766
8 306 476
No record.
1 974 S56
5 005 095
Total
13 613 361
31 277 891
114 606 905
The increase from 1863 to 1870 was much less than the increase from
1870 to 1883. The taxable property of these eight counties in 1860 ag-
gregated but thirteen and one-half millions of dollars, or nearly fourteen
millions less than the taxable property in Los Angeles County to-day.
The aggregate taxable property of these counties in 1870 amounted to
less than thirty-one and one-half millions, while the present aggregate
value of the taxable property in the same counties foots up $114, (506,905,
an increase of about 270 per cent. These counties hav.e gained since
1870, $83,329,014, the increase being nearly three times the amount of
the taxable property in 1870. Taking the counties composing the San
Joaquin Valley, and I find that prior to the construction of the railroad
most of the land was used for sheep-grazing and was practically of no
value, whereas at the present time it is worth at least $125,000,000, so"
that there has been an increase of at least a hundred million dollars in
the value of the property in the San Joaquin Valley alone by the con-
struction of the road.
Now, I would like to show you the effect which transportation has
had upon this country. At that time the clipper ships were charging
$17 per ton and upward for freight from here to Liverpool. The year
that the Southern Pacific was completed it immediately dropped to
$10 a ton, and I think it has never been above that point since. On the
contrary, it has generally been a little below. That year we raised in
this State about 1,000,000 tons of wheat for export, and the saving to
the farmers in freight alone was the difference between $10 and $17 a
ton. For first-class passage the Pacific Mail Steamship Company was
charging $300 by way of the Isthmus. When the road was completed
it immediately dropped and came down to a reasonable figure.
TAXES.
"Question 37. To all questions concerning the payment of taxes, es-
pecially upon lands granted by Congress."
LELAND STANFORD. 2507
NO TAXES DUE ON LANDS.
Answer 37. There are no taxes due to the United States or upon
lands granted by Congress.
Upon the subject of taxation I desire to submit the following state-
ment from Mr. E. B. Ryan, our tax agent :
CENTRAL PACIFIC RAILROAD TAXES.
STATEMENT OF E. B. RYAN. The Central Pacific Railroad Company of California
was incorporated June 28, 1861. The Western Pacific Railroad was incorporated De-
cember 13, 1862. These two companies were consolidated June 23, 1870, under the
name of the Central Pacific Railroad Company. From the date of their respective
incorporations, and after their consolidation down to the year 1880, the Central Pa-
cific Railroad Company paid as taxes in the State of California the sum of $1,936,666.49.
The same Company paid in taxes in the same time in the State of Nevada the sum
of $1,316,587.26, and in the Territory of Utah the sum of $130,984.88, making a total
of $3,384,238.63. Prior to 1880 the county assessors assessed railroad property the
same as property of individuals in their respective counties and boards of supervisors
constituted boards of equalization for their respective counties. During this time
there had never been any litigation, refusal, or delay in regard to tax matters, except
in isolated cases where prejudice or mistake had through the action of the assessor or
the county board of equalization raised the assessment in some county or counties
out of all proportion to the assessment for valuation in other counties through
which the railroad passed, and in one instance where several of the counties, in-
stead of assessing the railroad at its cash value, as required by law, took into ac-
count its collections and the uses to which it was put thereby, fictitiously increas-
ing the valuation. In all cases, however, where the payment of taxes was resisted
both the Central and Western Pacific Railroad Companies, after judgment was ren-
dered in their favor, paid the usual and just amount of taxes due from them.
HISTORY OF THE TAX LITIGATION.
The question of taxation is this State has been one of peculiar condition for several
years past, involving a controversy between the transportation companies and the
revenue department of the State government, and for the full understanding of the
question by the Commission it will be necessary to review the origin, history, and
present condition of this controversy at some length. The old constitution under
which this cornpany was organized provided, section 13 of article 11, that all taxa-
tion shall be equal and ubiform throughout the State. "All property in this State
shall be taxed in proportion to its value, to be ascertained as directed by law ; but
assessors and collectors of town, county, and State taxes shall be elected by the quali-
fied electors of the district, county, or town in which the property taxed for State,
county, or town purposes is situated."
EQUALITY OF OLD CONSTITUTION.
Equality and uniformity are the controlling principles to this section of the old con-
stitution, and the laws passed by the legislature under the wise and judicious limit-
ations therein contained were equal and uniform in their operation upon all persons
and property in the State, including the property of railroads operated in more than
one county. The property of railroads operated in more than one county of the State
was assessed by the same assessor that assessed all other property in his assessment
district. The taxes thereon were equalized by the same board and collected by the
same collector that equalized and collected the taxes on all other property situated
within the jurisdiction of such board and collector. Under this fair and uniform law
there never was any difficulty between the railroad company and the people upon the
subject of taxation, except in one or two isolated cases, due to purely local causes.
ASSESSMENTS TO RAILROADS PROMPTLY PAID WHEN ASSESSED AS
OTHER PROPERTY.
Prior to that time, as already said, the Central Pacific RailroaM Company and the
lines operated by it paid fully and promptly, without protest or contest, all taxes as
assessed ; assessments then being made upon railroads in the same way as upon all
other private property. I say private property, because if railroad property is not
private property it is not subject to taxation.
P R YOL IV- 12
2508 U. S. PACIFIC KAILWAY COMMISSION.
TAX PROVISION OF NEW CONSTITUTION.
In 1879 a new constitution was adopted in California, under which was created a
State board of equalization. In this new constitution the framers omitted the prin-
ciples of equality and uniformity which form the basis of all taxation under the old
instrument, and* inserted in lieu thereof the following :
''All property in the State shall be taxed in proportion to its value, to be ascer-
tained as provided by law." (Sec. 1, Art. XIII, Cons.)
Section 4 of the same article among other things provides :
"A mortgage, deed of trust, contract, or other obligation by which a debt is secured
shall, for the purposes of assessment and taxation, be deemed and treated as an inter-
est in the property affected thereby ; except as to railroads and other quasi-public cor-
porations, in case of debts so secured, the value of the property affected by such
mortgage, deed of trust, contract or obligation, less the value of such security, shall
be assessed and taxed to the owner thereof in the county, city, or district in which
the property affected thereby is situated."
INEQUALITY OF NEW CONSTITUTION.
In other words, the owners of all kinds of property in this State except railroads
and other quasi-public corporations have to pay only upon the value of their interest
therein after deducting .therefrom the value of the mortgages, &c., if any thereon,
whereas the owners of railroad property have to pay taxes upon the full value
thereof and are not allowed to make any deductions for the value of the mortgages,
&.c., thereon. By the same instrument, sec. 9, county boards of equalization were
created with power to correct and equalize the entire assessment roll, to increase or
lower it, or any assessment contained therein, so as to equalize the assessment of the
property contained in said assessment-roll and make it uniform to the true value in
money of the property so assessed ; this board being a tribunal to which an appeal
could be taken from the judgment and decision of the assessors. It was intended
not only as a check against incompetency and dishonesty on the part of the assessor,
but also, to give every property-owner his day in court, if ho suffered in any way by
the action or determination of the assessors. This beneficial and just provision of the
constitution applies only to the owners of property as assessed by the county assessor,
and does not apply to nor affect the owners of railroads operated in more than one
county of the State. The owners of such property, if they have been ever assessed or
wronged in any other manner in the assessment of property, have no board or officer
to whom they can appeal or before whom they may appear to have their assessments
equalized or their wrongs righted. The remedy provided % for every other property-
owner in the State is denied to them.
A SEPARATE SYSTEM OF ASSESSMENT FOR RAILROADS.
the new constitution, by section 10 of article 13, makes provision for an independent
and separate system of assessment for railroads operated in more than one county in
the State. They are assessed, not by the assessor, who assesses all other property, in-
cluding railroads operated in one county, but by the State board of equalization.
The operation of this law is discriminative against railroads operated in more coun-
ties than one, being burdensome and unjust and unequal. It is self-executing; it
enables the board to assess the property at any place, at any time at which it in its
pleasure may elect to meet without any notice given of any kind to any person to be
affected by its action, and without an opportunity to be heard after its action ; and
its decision is declared to be final. The board may assess those at $100,000 per mile,
or it may assess them at $1 per mile. Its action being final and conclusive, neither
the railroad companies on one hand, even if power is excercised to confiscation, nor
the people on the other hand, if the board should assess the property at $1 per mile,
could obtain relief.
ASSESSED MORE THAN ELSEWHERE IN UNITED STATES.
In the exercise of this power, the first State board of equalization made an assess-
ment of railroad property. The valuations placed by this board upon a single-track
railroad running chiefly through the thinly settled counties, many of which roads had
never earned or paid a dividend, was more than double that placed upon any railroad
of similar character within the United States. The locomotives of these roads, some
of which had been in service nearly a quarter of a century, were assessed at 80 per
LELAND STANFORD. 2509
cent, more than new locomotives of the same pattern could be purchased for and
placed upon the road, and this, too, in face of the fact that the value of the standard
locomotive was certain and easy of ascertainment.
EFFORTS TO GET JUDGMENT ON THE MERITS OF THE CASE.
In the proceedings which have been had to determine the validity of this special
system of taxation, in no case has the company for a moment endeavored to delay a
final judgment. To determine this question as early as 1881 an action was com-
menced in the circuit court of the United States, in which the whole matter at issue
between the companies and the State could be finally determined. The State took a
technical objection to the jurisdiction of the court, and the case went off upon that
ground and without reference to its merits. In 1882 the companies commenced pro-
ceedings in the superior court of San Francisco, on the equity side, to determine the
question at issue, and tendered into court, without prejudice, CO per cent, of the tax
claimed, and offered to litigate the balance.
TECHNICAL .OBJECTIONS BY STATE.
Again the State interposed technical objections, refused to receive part payment or
let the question be heard upon the merits. The State then commenced suit to recover
taxes. Those cases were taken to the Federal courts, which courts alone could finally
determine the question at issue, and ari agreed case known as the'*' San Mateo Case"
was made up between the State and the company.
SAN MATEO TEST CASE.
This case was taken to the Supreme Court, advanced in the calendar, argued, and
submitted for decision. In the meantime an election had occurred and a change in
the State administration. It was asserted by the press and many able lawyers that
the case was not a fair one. This was pressed upon the Supreme Court of the United
States, and that tribunal directed that enough cases should be tried upon their merits
to present all the questions, and that when such cases were brought up they would
advance them in the calendar and hear them at once. This fact was publicly an-
nounced by the court at the commencement of the circuit court, last August, 18d6.
In pursuance of that announcement six cases were tried, but one of which has yet
been appealed. The case was taken up and a motion made to advance it. The court
refused.
PENDING: LITIGATION CO PER CENT. TENDERED.
It will be borne in mind that the companies, although denying their legal liability,
tendered, on account, 60 per cent, of the amount claimed, which would make the tax
very much greater than that ever levied upon any such property in the United States.
The State board of equalization in 1882 reduced the assessments upon railroad prop-
erty, Cleaving it yet largely in excess of that levied upon such property in any other
State in the Union.
STATE BOARD ADMITS OVER- ASSESSMENT.
It was stated by the chairman of the board, at the time of this reduction, that the
assessment of 1880 had been made in advance of the assessment of other property, and
at a time when the board believed it had the full power to raise individual assess-
ments up to the standard of value which they fixed upon railroad property, and they
intended to do so, but owing to a decision of the supreme court of the State that
power was deniad them, and that the railroad property was left standing at its full
value, while other property in the State had not been assessed at more than 44
per cent. This was a concession by the very tribunal to which the framers of the
constitution had encrusted the power of valuation that the valuations of 1880 and
1881 were wrong.
FULL AMOUNT OF TAXES OFFERED TO STATE.
In view of the fact that the finances of the different counties had been disarranged
by the non-payment of those taxes in October, 1883, the railroad companies proposed
to the governor of the State to pay the taxes, although they still believed them to be
too high, for the three years upon the basis of the assesmont of 1882. This proposal
2510 U. S. PACIFIC RAILWAY COMMISSION.
was refused by the governor in November, not upon the ground that it was not just,
but upon the ground that he had no power to accept it. In the meantime the State
authorities had the Spring Valley Water Company and the San Francisco Gas Com-
pany settled upon the basis of the tax as assessed, 'without interest or attorney's fees,
although as against one or both companies the State had prevailed in litigation. The
Southern Pacific Eailroad Company made similar propositions to settle, which were
rejected. Against this adjustment with the water and gas companies, which was a
final one, and beyond which no power can go, no cry of unfairness was raised by any
one ; and from that hour to this, so far as I am advised, no one has questioned the
propriety or justice of the settlement, although it is conceded that the property of
the water company will sell in open market for 100 per cent, more than the assess-
ment, while it is doubtful if the railroad company would bring in the market within
10 or 15 per cent, of the assessment.
STATEMENT ADVOCATED BY SAN FRANCISCO CHRONICLE.
After the refusal of the Governor to adjust matters with the railroad company, and
after the settlement was made with the water company and the gas company on the
12th and 13th of November, the San Francisco Chronicle, in an article commenting on
the railroad's proposition, took the ground that the governor had done right, but
maintained -that a fair settlement of the whole matter would be for the companies to
pay the taxes "flat," as the water and gas companies had done. That paper claimed,
with a great deal of force, that to satisfy the people that it was dealing fairly, and
only wanted the principle decided, the railroad company could afford to pay the dif-
ference, which, taken in connection with the local tax levied upon ferry steamers,
workshops, stations, houses, &c., on the Central Pacific main trunk line, amounts
to $351 per mile, a tax beyond the power of any single track railroad to pay.
STATE CONTROLLER REFUSED TO RECEIVE MONEY ON ACCOUNT.
Notwithstanding this, long before that tax became delinquent, the companies tend-
ered to the State controller, who had been made the tax collector, 60 per cent, of the
amount, with a stipulation in writing that the receipt by the controller of that sum
should not affect any local rights of the State or counties to proceed for the balance.
The controller refused to receive the money, and commenced suit against the com-
pany for the whole amount. The company has tendered the 60 per cent, of the amount
claimed in open court without prejudice to any right to recover the balance, and by
reason of the moral obligations resting upon it, offered to pay into the State and
county treasuries nearly two million dollars in money.
TAXES PAID 1SS1-'S6 AFTER JUDGMENT DECLARING IT VOID.
The Central Pacific Railroad Company for the years 1880, 1881, 1882, 1883, 1884,
1885, and 1886, in the State of California, paid for State, county, and municipal taxes
$1,408,299.91. The greater part of this sum was in litigation and was voluntarily
paid by the company after judgment had been rendered declaring the tax void. The
Supreme Court of the United States, when these cases came up before it, in each case
affirmed the decision *of the circuit court in favor of the company and against the
legality of the tax.
TAXES PAID, OVER SIX MILLIONS.
The Central Pacific has paid in taxes in the
State of California $3,355,095.75
State of Nevada 2,411,227.60
Territory of Utah 264,316.38
Total 6,030,639.73
CENTRAL PACIFIC PAID MORE THAN ANY OTHER ROAD IN THE UNITED
STATES.
It is my firm belief, and I think the facts herewith submitted will substantiate the
statement, that since 1880 the Central Pacific Railroad Company has paid more taxes
tban any other company in the United States upon the same number of miles of road.
In substantiation of this I submit the following table, which shows the facts regard-
ing taxes in those States from which I have been able to gather the necessary data.
The inequality of the railroad tax in California and Nevada, compared with the re-
LELAND STANFORD.
2511
maiuing States, is suggested by the ratio shown in tho last two columns between the
taxes per miles of railroad and the population :
Assessments of railroads in the following States.
State.
Miles of
railroad.
Assessed
value, 1883.
Amount
taxes, 1883.
Assessed
value per
mile.
Tax per
mile.
Population
to square
mile.
4 305 80
$37 000 000
$333 000 00
$8 604 67
$77 33
31 55
l' 865 00
17 764 6 9
204 744 00
9 5''5 26
109 77
24 50
1 465 CO
15 2 9 7 000
10 393 85
33 00
2 910 00
19 972 134
6 863 27
1 87
Ohio
7 518 00
92 325 966
1 445 355 00
12 387 00
192 25
78 46
Arkansas -..
1, 525. 00
5, 392, 270
86 276.32
3, 535. 91
56.57
15.13
Kansfl 3
3, 877. 09
27, 280, 219
7, 036. 42
12.19
1 953 25
26 891 867
866 367 76
13 767 75
443 55
2 9 1 78
5 300 00
54 000 000
540 000 00
10 188 68
101 88
55 09
Illinois
7, 900. 00
61, 304, OoO
1, 760! 00
54.96
Tennessee -
2,035.61
31, 197, 200
218 380 40
15, 325. 00
107. 28
36 94
Oregon
961.40 "
5, 715, 500
100 592.80
5, 944. 80
104. 63
1. 85
"West Virginia
812. 59
148 800.00
183. 11
25 09
Iowa . .-
6, 800. 00
28, 000, 000
870, 000. 00
4 117 64
327.91
29 29
Mississippi
1 002.00
75 "745. 68
75.59
24 42
Virginia
2, 270. 00
37. 70
Texas ..............
5 610.00
39 630 518
7 064.56
6 07
Florida
1, 233. OC
133 180 43
108. 01
4 97
Louisiana
950. 00
4 000 800
48 009. 60
4 211 36
50.53
20 69
N cvada
450. 27
5 911 680
157 960 00
13 079 00
350. 82
S2 00
California
2 187. 59
41 297 184
734 579 05
18 877 94
335 57
C. P. E. K.
5 54
TAXES PAID ON LANDS.
In reference to the latter clause of this question I herewith submit a statement of
amounts paid by the Central Pacific Railroad Company in each year for taxes on lands
granted by Congress, the date of each payment and the year for which such payment
was made.
Location.
Date of pay-
State.
County.
ment.
1868
California
El Dorado
Nov 14 1868
Tear '68 '69
*O9 QQ
Do
Placer .
Nov. 14 1868
tHP 38
Do
El Dorado
May 25 1869
456 75
1869
Do
Nov. 11 1869
Year '69 '70
334 18
Do
Placer (District No. 2)
Nov. 27 1869
765 51
Do
El Dorado
Dec. 1 1869
594 7Q
Do
do
Dec. 1 1369
74 40
Do
do '
Dec 18 1869
82 35
Do
do
Dec 3 1869
564 60
1870
Do ..
Placer :
Distriet No. 1
Nov. 9,1869
236 57
Do
District No 1
Nov 16 1870
Year '70 '71
172 07
Do
Nov 18 1870
369 04
1871
Do
Placer :
District No. 2
Nov. 18, 1870
784 41
Do
District No 1
Nov 16 1871
Year '71 '7' ?
(il 71
Do
District No. 2
Dec. 11, 1871
1 054 81
Do
Nevada ...'
Oct. 31 1871
2 385 64
Do
El Dorado
Nov. 13 1871
1 271 80
1872
Do
do
Dec. 11, 1872
Year '72 73
1 070 63
Do
Dec. 13 1872
2 185 83
Do
Placer:
D istrict No. 1
Dec. 24 1872
104 69
Do
District No. 2
Dec. 31 1872
1 639 20
Do
Butte
Dec. 18 1872
1 896 57
Do
Sutter
Dec. 31 1872
7 20
Do
Do
Do.. .
do
do
do
Dec. 31, 1872
Dec. 31, 1872
Dec. 31, 1872
28.80
171. 45
30 72
Do
Dec. 31 1872
139 00
Do ..
do
Dec, 31, 1872
155 20
Do
do
Dec. 31, 1872
32 80
Do...
Yuba...
Dec. 13, 1872
35. 75
2512
U. S. PACIFIC RAILWAY COMMISSION.
Taxes paid on lands Continued.
Location.
Date of pay-
'
Year.
State.
County.
ment.
Jrenod.
Amount.
1873
California
El Dorado
Dec 31 1873
Year '73-74
$959 85
Do
Nevada
Dec 31 1873
'2 404. 00
Do
Placer :
District No. 1 .
Dec 31 1873
74.11
Do
District No 2
Dec 31 1873
1 007 77
Do
Butte
Dec 31 1873
...............
4 510 74
Do
Sutter
Dec 31 1873
...............
439 16
Do
Yuba
Dec 31 1873
1, 686. 75
Do
Colusa ,. .
Dec 31 1873
Paid in '74
1874
Do
Sacremento
Dec 31 1873
162.64
Do
Colusa
Dec 31 1873
i $2 338 27
Do
do
Feb' 21* 1874
) 5 p.0., 16.71
2, 454. 98
Do
do
Dec 28 1874
Year '74-' 75
1, 477. 98
Do
El Dorado
Dec 28 1874
856 70
Do
Nevada
Dec 28 1874
2 242 08
Do...
Placer :
District No. 1 .
Dec 31 1874
1, 239. 76
,
Do
District No. 2
Dec 31 1874
118.62
Do
Butte
Dec 30 1874
1, 791. 08
Do
gutter
Dec 9 9 1874
Year '74-'75
497 02
Do
Yuba
Dec 28 1874
1 040 50
Do
Sacramento
Dec* 3l' 1874
71 70
1875
Do
ElDorado
Dec 23 1875
Year '75-'76
616. 31
To
Sierra
Dec 23 1875
240 75
Do
Nevada
Dec 27 1875
2 250.71
Do
Yuba
Dec 24 1875
1 979 90
Do
Yolo
Dec' 17* 1875
52 27
Do
Colusa
Dec* 23* 1875
8 555 64
Do
Sutter
Dec 24 1875
274. 07
Do
Butte
Dec 30 1875
2 823.03
Do
Placer :
District No 1
Dec 31 1875
)
Do
District No 2
Dec 31 1875
> 1 670.69
Do
Tehama
Dec* 30* 1875
3 411.85
1876
Do...
El Dorado
Dec 26 1876
Year '76-77
1, 146. 52
Do
Colusa
Dec 26 1876
10 171.83
Do
Yolo
Dec 26 1876
71.77
Do
Sierra
Dec 26 1876
225. 04
Do
Nevada.
Dec 28 1876
2 425. 35
Do...
Placer :
District No. 1
Dec 28 1876
507. 37
Do
District No. 2
Dec 28 1876
1, 259. 25
Do
Do
Butte
Tehama
Dec. 27, 1876
Dec 27 1876
2, 291. 98
5, 102. 35
Do.
Sacramento
Dec. 30 1876
49.10
1877
Do
Placer
Feb 26 1877
Miscs $0 67
Do
Colusa
Feb 27 1877
Miscs 21 67
Do .
Yolo . .
Feb 27 1877
Miscs 7 98
Do ... .
Sutter .
Feb 28 1877
Miscs 44 08
Do
do
Mar 1 1877
Miscs 858 40
Do .
Tehama
Mar 6 1877
Miscs 5 66
938. 46
Do
Sierra . '
Dec 31 1877
Years 77 78
237. 47
Do
Colusa ...
Dec 31* 3877
1, 117. 76
Do ...
do
Dec 31 1877
$10 114.96
Do
Less taxes paid under protest
Sept 13 1875
8, 063. 61
Do
Sutter. .
Dec 31 1877
$2 051 35
287. 73
Do
El Dorado
Dec 31 1877
1,024.15
Do ,
Tehama .
Dec 31 1877
4, 687. 34
Do
Butte
Dec 31 1877
1, 657. 84
Do
Yuba
Dec 31 1877
1, 911. 42
Do...
Placer:
District No. 1
Dec 31 1877
439. 27
Do
District No 2
Dec 31 1877
857. 31
Do
Yolo
Dec 31 1877
66.40
Do...
Nevada .
Dec 31 1877
2,197.92
Do
Dec 31 1877
37.92
Nevada
Churchill
Nov 6 1877
258. 85
Do
Do
Elko
Lander
Nov. 14, 1877
Nov. 14 1877
Years"'77-78
7, 200. 00
1,311.96
Do
Nov 14 1877
9 633 28
Do
Lyon
Nov 14 1877
' 129. 85
Do
'V\/"ashoe
Nov 14 1877
1 438.33
1878
California
Sutter
Jan 15 1878
Miscs. $49. 50
Do
Tehama
Feb 21 1878
Miscs. 2. 30
Do
Butte ..
Feb 23 1878
Miscs. 340. 09
Do
Yolo
Feb 26 1878
Miscs. 6. 04
Do
' Sacramento
Mar 5 1878
Miscs 3 65
Nevada
Washoe
Mar. 25 1878
Miscs. 29.19
430. 77
LELAND STANFORD.
Taxes paid on lands Continued.
2513
Location.
Date of pay-
State.
County.
ment.
irenott.
Amount.
1878
Nevada
Lander
Nov 12 1878
"V"par '78 '7Q
*1 O9O 00
Do
Churchill
Nov 13 1878
265 77
Do
Elko
Nov 14 1878
4 405 77
i
Do
Humboldt
Nov 14 1878
2 777 43
Do
Wash oe
Nov 15 1878
1 315 64
Do
Do
do
Nov. 19, 1878
Nov 12 1878
310. 80
004. oft
California
Sutler
Dec 30 1878
..............
345 60
Do
Sierra
Dec 30 1878
236 60
Do
Butte
Dec 31 1878
.............
3 259 98
Do
Colusa
Dec 31 1878
2 716 61
Do
El Dorado
Dec 31* 1878
940 80
Do
Dec 31 1878
7 632 42
Do
Yuba
Dec 31 1878
..............
737 62
Do
Dec' 3l' 1878
2 iGi 91
Do
Placer :
District No. 1
Dec 31 1878
358 27
Do
District No. 2
Dec 31 1878
859 01
Do
Yolo
Dec 31 1878
35 27
Do
Sacramento .. . .... .........
Dec 31 1878
45 07
1879
Nevada
Churchill
Nov 1 1879
Years '79-'80
279 63
Do
Nov 10 1879
94 00
Do
Eureka .. . ......
Nov 10 1879
336 67
Do
Storey
Nov 11 1879
157 34
Do
Elko
Nov 11 1870
3 969 00
Do
Nov 12 1879
3 623 49
Do
"Washoe
Nov 12 1879
1*447 61
Do
Nov 10 1879
2 025 00
California
Butte
Dec 29 1879
2 978 29
Do
Sutter
Dec 29 1879
377 69
Do
Dec 29 1879
1 486 58
Do .. ..
do
Dec 29 1879
1 096 08
Do
El Dorado
Dec 29 1879
939 06
Do
Yuba
Dec* 30* 1879
53i 12
Do .
Yolo
Dec 30 3879
34 66
Do
Dec 31 1879
2 099 88
Do
Placer :
District No 1
Dec 31 1879
400 40
Do
District No 2
Dec 31 1879
Years '79-'80
804 CO
Do
Tehama ................
Dec 31 1879
10 346 54
Do
Dec 31 1879
Miscs. $19. 20
Do
Dec 31 J879
Miscs. 37.90
Do
Sutter
Feb 20 1879
Miscs. 16.25
Do
Tehaina ........
Feb 24 1879
Miscs. 65.50
Do....
Feb 27 1879
Miscs 20. 66
159 51
Do...
Dec 26 1879
Years '79-'80
357.24
1880
Do . .
El Dorado
Jan 28 1880
Miscs. $9.54
Do
Sutter
Feb 14 1880
Miscs 9 82
Do
Butte
Feb 14 1880
Miscs. 9. 35
Do
Feb 14 1880
Miscs 8 50
Do
Yuba
Feb 16 1880
Miscs 119.38
Do
Feb 17 1880
Miscs 8 21
Do
Feb 18 1880
Miscs 66 55
Do
Shista
Feb 21 1880
Miscs 15 77
Do
Yuba
Feb 24 1880
Miscs 34 05
Do
Nevada .....................
Feb. 25 1880
Miscs. 4. 55
Do
Sutter
Feb. 28, 1880
Miscs. 206. 83
Do
Placer .
June 4 1880
Miscs. 25.71
Less credit of ...............
June 2 1880
Miscs. 518. 26
Miscs. 206. 80
311 46
Nevada
Churchill
Nov. 1 1880
Years '80-'81
295 84
Do
Eureka
Nov. 6 1880
385 07
Do
Elko
Nov. 9 1880
3 882 08
Do
Humboldt .
Nov. 9 1880
4 172 44
Do
"Washoe
Nov. 9 1880
1 350 90
Do
Lyon . ...............
Nov. 9 1880
102 70
Do...
Storey .-
Nov. 9 1880
67 30
Do
Zumwalt School District
Nov. 19 1880
8.65
California. . .
Butte
Dec. 15 1880
4 890.30
Do
El Dorado
Dec. 15 1880
975. 49
Do
Nevada . .................
Dec. 15 1880
1 811.77
Do...
Placer :
DistrictNo.l
Dec. 15 1880
587. 78
Do...
District No. 2 ..
Dec. 15. 1880
812. 56
2514
U. S. PACIFIC RAILWAY COMMISSION.
Taxes paid on lands Continued.
Location.
Date of pay-
State.
County.
ment.
1880
California
Shasta
Dec 15 1880
$6 773 71
Do
Sierra
Dec 15 1880
353 30
Do
Yuba
Dec 15 1880
1 5 l >7 89
Do .
Colusa
Dec 16 1880
1 487 32
Do
do
Dec 16 1880
1 194 62
Do
Sacramento .
Dec 16 1880
82 96
Do
Tehama
Dec 16 1880
9 311 37
Do
Yolo . ..
Dec 16 1880
60 24
1881
Do
Butte
Feb 16 1881
Miscs. $59. 16
Do
Colusa
Feb 16 1881
Miscs. 32.30
Do
do
Oct 21 1881
Miscs. 285. 68
Do
do
Dec 23 1881
Miscs. 16.06
393. 20
Do.,.
Nevada
Feb 18 1881
Miscs. 63.17
Do ..
Yuba
Feb 19 1881
Miscs. 18.25
Do
Tehama . .'
Mar 4 1881
Miscs. 24.05
Do
do
Mar 10 1881
Miscs. 66. 80
Do ..
do
Mar 23 1881
Miscs. 13.32
Do ..
Yolo
Dec 8 1881
Miscs. 43.23
Do
Zumwalt School District
Dec 22 1881
Miscs. 19.32
248 14
.
Do...
Yolo
Dec 8 1881
Yeara '81-'82
43.23
Do .
Sacramento . . .........
Dec 10 1881
52 28
Do
Colusa . ...........
Dec 10 1881
3 748 11
Do
El Dorado
Dec. 10 1881
946 10
Do .
Shasta . .
Dec 12 1881
5 843 28
Do....
Si erra
Dec. 14 1881
353 36
Do .
gutter . .
Deo 14 1881
230. 62
Do
Tehama ......
Dec 15 1881
9 203. T9
Do
Nevada -
Dec. 15 1881
1 724 56
Do...
Placer :
District No 1 .
Dec 19 1881
400. 16
Do ..
District No 2
Dec 19 1881
S13. 64
Do . ..
Plum as
Dec 19 1881
96 58
Do
Yuba . .
Dec 19 1881
2 452.80
Do
Butte
Dec. 19 1881
4 903.60
Nevada
Churchill
Nov 3 1881
301. 14
Do
Eureka
Nov 10 1881
481. 25
Do
Do
Lyon
Storey
Nov. 10, 1881
Nov 10 1881
132. 00
123. 04
,
Do
"Fumboldt ...
Nov 11 1881
4, 123. 78
Do
Do
Elko
"Washoe
Nov. 11, 1881
Nov 11 1881
3, 935. 25
1, 557. 56
1882
California
Tehama
Feb. 3 1882
Miscs. $20. 79
Do ...
Butte
Feb. 11 1882
Miscs. 81. 70
Do
Nevada
Feb. 11 1882
Miscs. 60.45
Do
El Dorado
Feb. 11, 1882
Miscs. 25.84
Do
gutter
Feb. 11 1882
Miscs. 14. 84
Do
Yuba
Feb. 13, 1882
Miscs. 24.43
Do
Colusa
Feb. 14, 1882
Miscs. 387. 66
Do
do ....
Feb. 21, 1882
Miscs. 202. 29
Do
do
Mar. 31, 1882
Miscs. 91.48
Do
do
Feb. 16, 1882
Miscs. 42.84
Do
Placer ..
Feb. 18, 1882
Miscs. 9. 99
Do
do
Feb. 27, 1882
Miscs. 5. 20
Do
Tehama
Feb. 27, 1882
Miscs. 20.63
Do
do .
Mar. 27, 1882
Miscs. 425. 30
Do
do
Mar. 27, 1882
Miscs. 56.93
Do
Nevada
Feb. 27, 1882
Miscs. 16.17
1, 486. 54
Do
Dec. 13 18b2
Years '82-'S3
25 23
Do
Placer (District No 1)
Dec. 15 1882
346 40
Do
do
Dec. 15, 1882
Years '82-'83
806 40
Do
Dec. 13 1882
1,550. 15
Do
Sierra ....
Nov: 27, 1882
339. i>2
Do
Yuba
Dec. 13, 1882
2, 424. 76
Do
Sutter
Dec. 19, 1882
226. 38
Do
Butte
Dec. 29, 1882
6, 773. 55
Do
Tehama
Dec. 23, 1882
7, 861. 13
Do
Shasta
Dec. 26, 1882
5, 182. 79
Do
El Dorado
Nov. 29, 1882
920. 63
Do
Colusa
Dec. 13, 1882
3, 774. 18
Do
Yolo
Nov. 21, 1882
22.16
Nevada ,
\Vasho e
Nov. 20, 1882
1. 485. 00
Do....
Do...
Lyon
Churchill ..
Nov. 13, 1882
Nov. 6,1882
122. 00
301. 14
LELAND STANFORD.
Taxes paid on lands Continued.
2515
TTftar
Location.
Date of pay
State.
County.
ment.
Period.
Amount.
1882
Nevada
Storey
Nov 15 1882
JK194 7R
Do
Humbo 7 dt
Nov 15 1882
40 SO t\.t
Do
Lander
Nov 16 1882
1784. 40
Do
Eureka
Nov 16 188'-*
..... . .......
Do
Elko
Nov 15 1882
*
1883
California . .
Placer
Feb 2 1882
Miscs $10 00
Do..
Feb 10 1882
MJSCS 65 01
Do
do
Mar 4, 1882
Miscs 308 60
Do
do
Mar 20 1882
Miscs 97 08
Do
Nevada
Feb 16 1882
Miscs 65 34
Do
Sacramento
Feb 17 1882
Miscs 14 35
Do
El Dorado
Feb 27 1882
Miscs 5 00
Do
Yuba .
Mar 1 1882
Miscs 30 51
Do
Placer
Mar 2 1882
Miscs 29 23
Do,
Bntte
Mar 20 1882
Miscs 13 60
coo 70
Do
Sacramento
Dec 31 1882
Years '83 '84
14 08
Do
Placer :
District No 1
Dec 31 188**
-|f!9 Q"
Do
District No. 2
Dec 31 188 9
84 9 44
Do
Nevada
Dec 31 1882
1 601 46
Do
Sierra
Dec 81, 1882
...... .....
405 91
Do....
Plumas
Dec 31 1882
196 07
. Do
Ynba
Dec. 31 1882
2 068 43
Do
Sntter
Dec. 31 1882
218 44
Do....
Butte
Dec 31 1882
5 636 91
Do .
Tehama
Dec 31 1882
G 49 56
Do
Shasta
Dec 31* 1882
4 G55 85
Do..
El Dorado
Dec 31 1882
889 94
Do
Colusa
Dec.' 3l' 1882
3 928 15
Do
Yolo
Dec 31 ' 1882
22 03
Nevada...
Washoe
Dec 31 1882
1 300 00
Do
Nov 20 188 9
J2 00
Do
Churchill
Nov* 2o' 188^
...............
301 16
Do
Storev
Nov 20 1883
Years '83-'84
68 15
Do
Humboldt
Nov 20 1883
3 963 70
Do
Lander
Nov 20 1883
1 710 34
Do
Eureka
Nov 20 1883
496 61
Do
Elko
Nov. 20 1883
2 791.38
1884
California
ElDorado
Jan. 26 1884
Miscs. $12. 92
Do
Placer
Jan. 26 1884
Miscs. 52.41
Do
Butte .....
Jan. 26, 1884
Miscs. 31.34
Do
Shasta
Jan. 26 1884
Miscs. 53.30
Do
Colusa .
Feb. 23 1884
Miscs. 70.23
Do
El Dorado
Feb. 28 1884
Miscs. 12.43
Do
Zumwalt School District
Feb. 29 1884
Miscs. 5. 21
Do
Tehama
Mar. 4 1884
Miscs. 208 01
Do
do
Mar. 27 1884
Miscs. 139. 76
Do
Colusa
Mar 10 1884
Miscs 168.82
Do
do
Mar. 18 1884
Miscs 37 04
Do....
Yolo
Mar. 14 1884
Miscs 4 04
Do....
Shasta
Mar 15 1884
Miscs 239 12
Do
do
Apr. 10, '1884
Miscs. 5H. 59
Do
Yuba .
Apr. 22, 1884
Misos. 19.91
Do
Placer
Aug. 8, 1884
Miscs. 20.78
Nevada
Washoe
Nov. 26, 1884
Miscs. 4. 00
1 132.91
Do...
Eureka .. .............
Nov. 17, 1884
Years '84-'85
418 70
Do
Elko .
Nov. 14, 1884
2 169 96
Do
Humboldt
Nov. 15, 1884
3 548 97
Do
Lander .........
Nov. 16, 1884
1 616 35
Do
Lvon
Nov. 15, 1884
122. 00
Do
Storey . ..... .
Nov. ]5, 1884
75 00
Do
Washoe ....
Nov. 15, 1884
1 218 50
California ..
Butte
Dec. 31, 1884
3 676 75
Do
Dec. 31, 1884
CO 48
Do
El Dorado . ...
Dec. 31, 1884
1 401.44
Do
Nevada
Dec. 31, 1884
1 420.80
Do..
Placer
Dec. 31, 1884
786. 50
Do
Plnmas .........
Dec. 31, 1884
237. 79
Do
Sacramento ....... .....
Dec. 31 1884
14. 18
Do
Sierra . ...........
Dec 31, 1884
362. 50
Do
Sutler ...........
Dec. 31, 1884
138. 59
Do
Shasta
Dec. 31, 1884
2, 323. 15
Do
Tehama .. . ..........
Dec, 31, 1884
4, 014. 00
Do......
Yuba
Dec. 31 1884
1, 127. 52
1885
Do
Feb 26 1885
Miscs $9 60
Do
...do...
Mar. 4.1885
Miscs. 1. 25
2516
U. S. PACIFIC KAILWAY COMMISSION.
Taxes paid on lands Continued.
Location.
Date of pay-
State.
County.
ment.
Period.
Amount.
1885
California
Colusa and Tehama
May 11 1885
Miscs $61 36
Do
Teliarua
Mar 5 1885
Miscs 44 85
Do
do
Mar 24 1885
Miscs 74 51
;
Do
do ..
Apr. 1 1885
Miscs 23 36
Do
do ..
Apr 9 18 Q 5
Miscs. 2 50
Do
do
Apr 9 1885
Miscs 18 48
Do
Placer
Feb. 19 1885
Miscs 69 05
1885
Do
Placer
Mar 31 1885
304. 96
Miscs. 7 80
Do
El Dorado
Mar 9 1885
Miscs 5 22
Do
Nevada
Mar 11 1885
Miscs. 7 56
Do
Shasta
Mar 24 1885
Miscs. 54 26
Do
do
Apr 8 1885
Miscs 15 00
Do...
do
June 30 1885
Miscs 8 30
Do
Bntte
Mar 27 1885
Miscs 217 62
Do
Tuba
May 1 1885
Miscs 3 97
$624 69
Utah . .
Cache
Oct. 7 1885
Year '85-'86
156 30
Do
Weber
Oct 7* 1885
43 71
Nevada
Churchill
Nov lo' 18^5
295 79
Do
"Washoe
Nov 20 1885
767 23
Do
Lyon
Nov 20* 188*1
110 00
Do
Storey >
Nov 20 1885
69 60
Do
Eureka
Nov 20* 1885
427 07
Do
Elko
Nov 20 1885
1 844 93
Do
Humboldt
Nov. 20* 1885
2, 236. 91
Do
Lander
Nov 27 1885
1 520 82
California
Placer
Dec 21 1885
1 133 11
Do
El Dorado
Dec 21 1885
1 226 08
Do
Yuba
Dec 23 188*5
1 188 34
Do
Tehama
Dec 23 1885
3 322 22
Do ..
Nevada
Dec. 23 1885
1, 937. 37
Do
Sierra
Dec 28 1885
294 28
Do
Butte
Dec 28* 1885
3 751 54
Do
Shasta
Dec 28 1885
1 953 55
Do...
Plumas ,
Dec. 30 1885
216.58
Do
Colusa
Dec 30 1885
58 91
Do ..
Sutter
Dec. 3l' 1885
111. 14
Do
Sacramento
Dec. 31 3885
13.37
1886
Do .
El Dorado...... .
Jan. 13 1886
Miscs. 27. 11
Do
do
Feb. 13 1886
Miscs. 60. 04
Do ..
do
Mar. 3 1886
Miscs. 21. 53
Do .
Bntte
Feb. 1 1886
Miscs. 37.29
Do
do
Feb. 11 1886
Miscs. 3. 75
Do ..
do .
Feb. 13 1886
Miscs. 19.62
Do
... do. . . ...
June 1 1886
Miscs. 77.34
Do
Colusa ... ..
Feb. 13 1886
Miscs. 12.78
Do
Tehama
Feb. 13 1886
Miscs. 287. 56
Do
Placer
Feb. 17 1886
Miscs. 4. 58
Do -
Shasta
Feb. 23 1886
Miscs. 5. 23
Do
Nevada
Mar. 1 1886
Miscs. 8. 87
Nevada
"Washoe
June 22 1886
Miscs. $9.45
575 15
Utah .
"Weber
Oct. 11, 1886
Year '86-'87
33.54
Do
Box Elder
Oct. 12 1886
280. 82
Do
Cache
Oct. 14, 1886
29.70
Nevada
Churchill . -
Nov. 8, 1886
295. 73
Do...
Lyon
Nov. 15, 1886
110. 00
Do....
Storey .......
Nov. 15, 1886
60.48
Do ...
"Washoe
Nov. 15, 1886
741. 39
Do....
Humboldt
Nov. 15, 1886
1, 198. 17
Do
Elko
Nov. 17, 1886
1, 539. 63
Do...
Eureka .. .........
Nov. 18, 1886
441. 71
Do
Lander
Nov. 18, 1886
1,483.03
California ..
Yuba
Dec. 11, 1886
1, 451. 16
Do
Sierra ........
Dec. 13, 1886
279. 72
Do
Shasta
Dec. 13, 1886
1,645.10
Do
Tehama
Dec. 15, 1886
2, 996. 06
Do.
El Dorado
Dec. 15 1886
1 083. 51
Do
Nevada
Dec. 15 1886
1 565.61
Do ..
Placer:
District No 3
Dec. 16 1886
82.90
Do
District No 1
Dec. 18 1886
56. 14
Do
District No 2
Dec. 16, 1886
804. 54
Do...
Colusa
Dec. 17, 1886
117. 54
Do...
Butte ...
Dec. 17, 1886
30.30
LELAND STANFORD.
Taxes paid on lands Continued,
2517
Location.
Date of pay-
Year.
State.
County.
ment.
Per. od.
1886
California
IPluniRs
Dec 17 1886
$309 53
Do
Sutter
Dec. 22 1886
46 49
Do
Tehama
Dec 30 1886
80 41
Do
Butle
Dec 31 1886
3 028 73
1887
Do
Colusa
Feb 21 1886
Miscs $67 40
Do
Tuba
Feb 28 1886
Miscs 22 33
Do
Butte
Mar 5 1886
Miscs 89 69
Do
Shasta
Mar 9 1886
Miscs 3 50
Do
Placer
Mar. 9 1886
Miscs 61.56
Do
El Dorado
Mar. 14 1886
Miscs. 22 32
Do
do
Mar 14 1886
Miscs 66 13
Do
Nevada
Mar. 14 1886
Miscs. 4 86
Do
Shasta
Mar. 21 1886
Miscs 7 50
Do
do
Mar. 30 1886
Miscs 436 39
Do
Butte
Mar. 25 1886
Miscs 120 92
Do
Placer
Mar. 28 1886
Miscs. 68 40
Do .
Sierra .......................
Mar. 30 1886
Miscs. 10 92
Do
Yuba . . . ....
Apr. 6 1886
Miscs 14 48
Do
Tehama
Apr 15 1886
Miscs. 121 61
1 118 01
Total to June
30 1887
420 743.67
Respec&ully submitted.
E. JB. RYAN,
Tax Agent.
VOLUNTARY PAYMENT OE TAXES.
By the CHAIRMAN :
The sum of $3,000,000 estimated there for payment of taxes was not
paid upon land granted by Congress ? A. No ; that was but a small
portion of the railroad property. There is one thing to which I desire
to call the particular attention of the Commission with regard to these
facts; and that is, that after judgment had been rendered in our favor,
and where there was no legal liability, we paid over a million dollars
in taxes. We have always paid our taxes. Even after judgment in
our favor we paid a fair amount.
O
By Commissioner LITTLER :
Q. Who determined that question of fairness ? A. Where there was
no legal liability we paid as we had been accustomed to pay, and even
then we paid a great deal more than any other railroad in the United
States.. I think that our assessment was over three times as much per
mile as the "New York Central assessment. I do not believe there is
another example like it to be found anywhere, of a company, after a de-
cision in its favor, paying over a million dollars voluntarily. I only
allude to it here particularly to show that we have been willing to pay
fair taxes.
DELAYS IN PATENTS FOE LANDS.
" Question 38. And the delay of said companies in taking out patents
for such lands."
Answer 38. We have never been derelict in taking out patents for
such lands. We have not received our patents properly, and at the
present time there are applications for over one million acres of land
pending before the United States Land Department.
2518 U. S. PACIFIC RAILWAY COMMISSION.
INJURY TO COMPANY BY INABILITY TO GET PATENTS.
It has been charged that we do not take out patents because we do
not want to pay taxes thereon, but this is not so. We could never get
out patents fast enough and have suffered in consequence. The inabil-
ity of the company to obtain patents promptly upon application has
caused us great loss, not merely in the sales of lauds, but more particu-
larly in the business that would have arisen in their occupancy, as will
be more fully shown in the report of Mr. W. H. Mills, land agent of the
company, hereto attached and made part hereof, marked " Exhibit No.
6."
RATES AND CHARGES.
"Question 39. The rates of fare and freight charged, discriminations,
differentials, pools, and other devices."
LOW RATES ON CENTRAL PACIFIC, CONSIDERING THE CIRCUMSTANCES.
Answer 39. Taking into account all the elements which have to be
considered in determining the rates at which passengers and freight
can be moved, such as amount of business done, the cost of doing it,
c., the cheapest railroading in the world is done on the Central Pacific.
Taking the business between the State lines of Nevada as an instance,
the local business is almost nothing. It would not maintain the run-
ning expenses. The maintenance of that portion of the road is from
the business that originates outside of those boundaries and passes
through - } and through freight is materially affected, both in volume and
rates, by competing lines of road subsidized by the Government.
For a more detailed answer I refer to the exhibit made by Mr. J. C.
Stubbs, the traffic manager of the road, marked " Exhibit No. 7," at-
tached hereto and made a part hereof.
FACILITIES FURNISHED, AND EFFECT ON COMMUNITIES OF SETTLE-
MENT FOR DEBT.
"Question 40. And the facilities and accommodations furnished to
the patrons of such roac(& ; and their report shall embrace a considera-
tion of the interests and "fights of said communities as affected by what-
ever plan of settlement or payment of the existing debt may be pro-
posed."
FACILITIES FIRST CLASS.
Answer 40. The facilities and accommodations furnished to 'patrons
of these roads are first class. There is a sufficiency of passenger and
freight trains for the accommodation and convenience of the traffic.
The speed and frequency of these trains are ample. The rolling stock
is up to the standard and excellent in its quality and condition. Sta-
tions, station-houses, warehouse facilities, and sidings are provided at
all necessary points. The character of the service generally will com-
pare favorable with the most thoroughly equipped and best served in
the country.
SETTLEMENT PROPOSED SHOULD NOT BURDEN COUNTRY ALONG LINE,
In any scheme of extension or adjustment that may be made between
the Government and the company, the Government should not forget
LELAND STANFORD. 2519
the policy in which the measure had its origin, that is, the public inter-
est. Travel and transportation should not be so burdened as to cripple
the road, jeopardize its efficiency, and retard the development of the
country.
The Commission then adjourned to Friday, July 29, 1887, at 10 a. m.
PALACE HOTEL, SAN FRANCISCO, CAL.,
Friday, July 29, 1887.
LELAND STAKFOKD, being further examined, testified as follows:
The WITNESS. The next question in your circular was :
EXTENSION OF TIME FOR PAYMENT.
" Question 41. Said Commissioners shall also consider and report
whether the interests of the United States require any extension of
the time for performance of the obligations to the United States of said
companies, or any of them, and the facts and circumstances upon which
said opinion is based.' 7
SECURITY HELD BY UNITED STATES.
" Question 42. Including the security held by the United States for
the performance of such obligations, and the value thereof."
SUCH A SCHEME FOR EXTENSION AS SHALL NOT AFFECT THE SERVICE.
a Question 45. And if, in their opinion, such extension shall be re-
quired by the interests of the United States, they shall submit a scheme
for such extension which shall secure to the United States full pay-
ment of all debts due them from said companies, with a reasonable rate
of interest in such time as the Commissioners shall propose, having due
regard to the financial ability of said companies and the proper conduct
of their business in such manner as shall afford efficient service to the
public."
THE EQUITIES CONSIDERED.
Answer. Questions 41, 42, and 45 relate to the policy that shall be
adopted with reference to the payment by the company of the debt due
the Government, and therefore I shall consider them together. I have
heretofore stated that the appointment of this Commission by Congress,
and the authority and instructions given to it to ascertain what the com-
pany had lost upon the one hand, and what the Government had gained
upon the other, by the construction of the road, was a candid admis-
sion on the part of Congress that this company had equities which
Congress desired to adjust and allow. We believe that Congress was
not actuated by any mere idle curiosity in creating this Commission to
examine into and report concerning the foregoing matters. We have
therefore shown among other things :
LOSS ON SALE OF GOVERNMENT BONDS.
(1) That the company had to sell the Government bonds at a discount,
and thereby sustained a loss of $7,120,073.55 ; and interest on this loss
to maturity, $12,816,132.59.
2520 U. S. PACIFIC RAILWAY COMMISSION.
AMOUNT SAVED TO GOVERNMENT ON TRANSPORTATION.
(2) That the Government saved $47,763,178 in transportation between
the time when the line was completed and the time when it might have
been completed according to the contract, this company's proportion of
which was, say, 40 per cent, or $21,971,062.
AMOUNT DUE BY GOVERNMENT.
(3) That the Government now owes the company $1,853,323.15 for
transportation on unaided roads, the justness and legality of which
claim has been decided by the Supreme Court of the United States.
1 wish to say here that this matter was brought before Congress at
various times ; that the Departments both the Postal Department and
the War Department sent down word that they needed so much money
to meet these expenses ; but Congress did not make appropriations.
By Commissioner ANDERSON :
Q. Can you refer us to the case in which the figure you have given
was declared to be the figure that you were entitled to receive, $1,853,-
323,15? A. There is no dispute as to the amount. It arose on these
non-aided roads. The question was whether it should belong to the
sinking funds as the earnings of the aided road.
Commissioner ANDERSON. I am speaking more especially as to the
accuracy of the figures to which you refer, because the difference as to
the rate to be charged for different kinds of transportation, which was
the subject of litigation for many years, and the difference as to the
amounts ultimately awarded by the court and the amounts claimed by
the company is very important; so that if you can refer us to the de-
cision, we would like to see it.
The WITNESS. There is no dispute as to the amount between the
Departments and the companies. The whole question with the De-
partments was whether or not we were entitled to take the earnings,
and the Court of Claims decided unanimously that we were entitled to
take them, and on appeal to the Supreme Court of the United States
that court unanimously decided the same way.
Commissioner ANDERSON. That is the case to which we want you to
refer.
The WITNESS. I will give you the reference.
By Commissioner LITTLER:
Q. Is there any dispute between this company and the Government
as to other sums of money? A. Not as to that particular sum now.
Q. Have you any controversy with the Government now ? A. There
are some sums of a long time ago, concerning which I spoke yesterday,
that have never been settled. They have not been allowed. I think
that they would amount to three hundred thousand and odd dollars.
INTEREST LOST BY COMPANY.
(1) The amount of interest the company has lost upon the money
which it would have received from the sale of its lands, if the Land
Office of the Government had issued patents as fast as called for by
the company. This amount can be approximately determined.
LOSS ON ACCOUNT OF SINKING-FUND PROVISION.
(5) That the company has lost $1,612,966.72 in being forced to pay into
a sinking fund established by Congress large amounts of money for
LELAND STANFORD. 2521
which it not only has not received any interest, but the company has
not so much money now as it paid therein by. over $500,000. In other
words, it has not only lost the interest on this money by reason of mis-
management of the fund, but has even lost a portion of the principal,
and at the same time has been compelled to pay 6 per cent, per annum
on this very amount so lost to it by reason of the purchase of the bonds
placed in the sinking fund at a premium.
DIVERSION OF BUSINESS.
(6) The diversion of business to other lines, of which this company's
proportion amounts to about $17,000,000.
AMOUNT OF EQUITIES EXCEED AMOUNT DUE GOVERNMENT.
There can be no question in the mind of any candid person but what
this company is entitled to have the foregoing specified equities al-
lowed by the Government. If they are allowed, then all questions rela-
tive to the extension of time in which to pay the debt becomes immate-
rial, because the amount of these equities exceed very largely the amount
of debt now due from the company to the Government. If, on the other
hand, the Government is not willing to allow these claims, it will be
exceedingly difficult to determine the conditions which should be im-
posed upon the company concerning the payment of the indebtedness.
The ability of the company to pay must always be determined by the
amount of business it does. This depends largely upon conditions
changing from day to day, and over which the company has no control.
As we have hereinbefore stated, the net earnings from local business
of the State of Nevada amounts to nothing, and if the departments of
the Government having control of Government transportation divert
from this road and give to foreign and competing roads the busi-
ness which this road is fairly entitled to, ifc is impossible to tell when
the company can meet its obligations. About the only thing that can
be done at this time will be to fix the rate of interest which the Gov-
ernment should charge. This should not be in any case more than the
Government would have to pay for the use of the money, to wit, any
more than 2 per cent, per annum.
There should be taken into consideration the amounts saved the Gov-
ernment in transportation, that is, based upon the business before the
completion of the railroad. Since the completion of the road the effi-
ciency of the service has been increased beyond comparison, of whicb
we make no estimate. Probably thousands of millions of values were
created by the construction of the road in the development of the coun-
try and making it suitable for homes. That and other benefits to the
United States were anticipated at the passage of the law, and I be-
lieve in no single instance have the people or the Government been dis-
appointed. If the Government does not allow the company the com-
pensation for services contemplated by Congress at the time of the
passage of the bill, and if they are not to be allowed for the diversion of
business consequent upon the Government subsidizing competing roads,
then the ability of the company to pay is manifestly unequal to the
burden imposed.
LIQUIDATION OF DEBT ANTICIPATED BY PAYMENTS WHICH HAVE BEEN
MADE UNDER ORIGINAL LAWS.
I deem it, however, proper to suggest to the Commission that it was
originally contemplated by Congress that the liabilities of the company
2522 U. S. PACIFIC RAILWAY COMMISSION.
were to be discharged by the compensation to be made by the Govern-
ment to it for the services it might be called upon to perform for the
Government, and the 5 per cent, of its net earnings reserved by law.
The lien was only intended to secure such performance. In other words,
it was contemplated that the services of the company, together with the
5 per cent., would liquidate its liabilities to the Government.
i
PROPERTY NOT SUBJECT TO UNITED STATES LIEN.
" Question 43. And the value of the property of such companies, and
either of them, not included in such security V
Answer 43. The Government lien only covers the Central Pacific
from Ogden to Sacramento, and the Western Pacific from Sacramento
to San Jose. No other property of the company is covered by the Gov-
ernment lien. As to the value of the property of the company not so
covered by the Government lien, I am unable to estimate, but am in-
formed that the engineers appointed by the Commission are making an
estimate of all the property of the company, which will include ttiis in-
formation.
A statement of these assets is given in the foregoing reply to inter-
rogatories 11 and 12.
FURTHER SECURITY FOR UNITED STATES.
" Question 44. And what further security is it expedient that said
companies shall be required to give?"
UNITED STATES HAS NO RIGHT TO CHANGE ITS CONTRACT.
Answer 44. In answer to question 44, I respectfully submit that the
Government has no right to change its contract with the company and
demand other security than that fixed in the original acts of Congress
of 1862 and 1864. Nor is it expedient for the Government to ask further
security. On the contrary, the best security that the Government can
have will be a fair consideration of the equities we have already enumer-
ated, and a fair and liberal settlement with the company upon the basis
originally contemplated by Congress, to the end that the company may
be able to discharge all its obligations and be able to assist in the de-
velopment of the country and promote the general interests of the people.
It should be borne in mind that the burden upon the company other
than its obligations to the Government were vastly increased by the
rapid completion of the road, both on account of the ruinous discount
suffered in selling its first mortgage bonds, and the high price of
material and great disadvantages under which the road was constructed
in a country where a large portion of the transportation was necessary
by teams, it being impossible to advance the constructed line of road
on account of snow blockades in the Sierra Nevada Mountains, and the
unequal character of the country through which the road passed ne-
cessitated transportation of supplies and of men frequently hundreds of
miles.
DIFFICULTIES IN CROSSING- THE MOUNTAINS.
The difficulties which we experienced in crossing those mountains
can hardly be appreciated. We worked along in the heavy snow, and
our supplies and material for the men and the horses had to be packed
to them. We had to shovel snow, and in some places to pick it with
LELAND STANFORD. 2523
a pick for 75 feet deep in order to get to a place on which to put our
embankments. Snow fell there one winter 63 feet in depth since we
have been operating. Not that you would find that in a measure-
ment by taking the falls of twenty-four hours and adding them to-
gether, but you would find drifts and places where 63 feet of snow
was pressed down, perhaps, into not more than 18 feet, but packed as
hard as ice, and requiring the pick and powder to make a passage.
Then, in building the road out over that desert from Truckee to the
Humboldt, for 40 miles, we had to haul water for our men and horses
to drink, and we had to go some distance up to Humboldt before we
struck water which was even fit to be used. We sent over three thou-
sand men and four hundred horses in advance of our building lines to
work up in the canons of the Humboldt those three canons there
and all their food and supplies had to be hauled there. The springs
were all a good ways from the road. Now we can get along very well,
because water is brought there from springs, but at that time we had
even to hunt for water. We laid the track of a little over 500 miles
in five days less than ten months, and we laid a little over 10 miles in
one day. There were a great many curves and a great many unforeseen
difficulties which had to be surmounted.
A RACE WITH THE UNION PACIFIC.
By Commissioner LITTLER :
Q. There was a race between you and the Union Pacific, was there
not, governor ? A. Well, yes. When we were working on the mount-
ains our work was so tremendous that they thought we could not get
over the mountains by two years as early as we did, and they were go-
ing to meet us at the end of the eastern side of the mountains. Of
course our road would not be worth anything in that case. It was a
difficult road to operate, and they could bring goods from the east and
would be cutting off all our business over there. So we were forced to
make the most extraordinary efforts in order to get out to Salt Lake
and have something to say with regard to the future business and the
supplies that might go into Nevada. After we got over the mountains
we swarmed men along that mountain side, and we went over there
faster than any one believed could be possible, aiding the men with a
liberal use of powder. AVe hauled the iron for 40 miles over the mount-
ains and built down on the Truckee in the winter season 40 miles of
road, and hauled iron and engines and everything over, besides all our
supplies. I paid 13 cents a pound for freight from the Summit out to
Salt Lake City. Then we had to haul it out on the line of the road and
then we paid 2 cents more. We accomplished 180 miles there with such
help as we could get. Hay was worth $100 a ton, and oats, I think,
about fourteen or fifteen cents a pound. Everything was up in price;
'and thos^ little teams over there would not haul much more than a
wheel-barrow full of dirt.
Commissioner LITTLER. The first time I was at Leadville hay was
worth there $180 a ton.
The WITNESS. I sold one potato for $2.50.
COMMISSIONERS TO REPORT BY DECEMBER 1, 1887?
" Question 46. And the said Commission shall report in full in re-
gard to all such matters aforesaid, and in regard to any other matters
which may be ascertained or come to their knowledge in regard to said
p R VOL iv 13
2524 U. S. PACIFIC RAILWAY COMMISSION.
companies respectively', on or before December 1, 1887, to the President
of the United States, who shall forward said report to Congress, with
such recommendations or comments as he may see fit to make in the
premises."
Answer 4( This question, relating as it does entirely to the duties of
the Commission, does not require any answer from me.
COST OF UNITED STATES TRANSPORTATION PRIOR TO ROAD.
u Question 47. The Commission shall also ascertain the average cost
per annum of Government transportation in the region now traversed
by the Pacific railroads between the year 1850 and the completion of
said roads."
UNITED STATES TRANSPORTATION $8,000,000 A YEAR.
Answer 47. The average cost to the Government per annum for
transportation in the region now traversed by the Pacific railroads,
between the year 1850 and the completion of the road, was over $8,000,000.
This does not include the cost of maintenance of Government forts and
military encampments and a large number of troops necessary to pro-
tect the border against the hostile Indians, which disappeared with the
advent of the railroad. Nor does it include the expense incident to
the carrying of the mails, munitions of war, and other matters required
in the region beyond the line of the road, as in northern Montana, Da-
kota, Washington Territory, and other points now reached by railroads.
The difference in the character of the service and other matters of
interest will be found more fully set forth in the reply to question 52,
which has, in a measure, to be treated in connection with this question.
SAVINO TO UNITED STATES TO 1886 $139,347,741.
The saving to the United States by the Central-Union line, in the item
of transportation, has amounted to January 1, 1886, to the sum of
$139,347,741.
COST OF UNITED STATES TRANSPORTATION SINCE COMPLETION.
ONE-TENTH OF FORMER COST.
" Question 48. And also the average cost per annum since such com-
pletion."
Answer 48. As shown by the books of this company and the records
of the Government, it appears that the average cost per annum for
Government transportation over said roads is about one-tenth of the
amount formerly paid, with a very superior service, all of which will be
found set forth in detail in the answer to question 52.
ADDITIONAL FACILITIES FURNISHED BY ROADS.
" Question 49. And what additional facilities have been furnished to
the Government and the people by said roads."
COST IN *TIME AND MONEY OF FORMER METHODS OF TRANSPORTA-
TION.
Answer 49. It is difficult to definitely state or to specifically point out
oach additional facility which lias been furnished to the Gove rumen t and
LELAND STANFORD. 2525
the people 'by the railroads. It is a matter of history that before the
construction of the Central Pacific Bailroad, all transportation between
San Francisco and New York was done by water. The local trans-
portation was done either by water or by wagons. The average time
between New York and San Francisco was about six mouths by sail-
ing vessel and from 30 to 40 days by steamer. The cost of transporta-
tion by any method in use, before the completion of the road, was very
much more expensive in the direct charge than charges have ever been
since the completion of the road. The absence of a railroad to connect
with the Atlantic States of the American Union with the Pacific ef-
fected a loss to the people of the whole country, in time, in property,
and in money, which each year equaled the annual expense of the Fed-
eral Government a loss that in two years would, according to the
figures of Eepreseutative James A. McDougall, cover the cost of a com-
pleted railroad to the Pacific. This was a tax upon the industry and
enterprise of the people of every State of the Union. The old system
of transportation was marked by two great features of disadvantage;
one of them was prejudicial to the merchant, in that he was required to
possess a larger command of capital, in order to have a sufficient quan-
tity of stock on hand for his operations, while he waited for the long-com-
ing ship to arrive, whose cargo also called for money to purchase. The
other operated to the detriment of consumers, inasmuch as opportuni-
ties were afforded to persons having a ready command of money to buy
up the whole stock of a necessary commodity existing in the market,
for the purpose of creating a monopoly therein, and demanding a higher
price therefor. Before the establishment of railway facilities, this was
repeatedly accomplished with perfect safety to the speculator.
Two-thirds of the territory of the United States lies west of the Mis-
sissippi Eiver, the greater portion of which at the time of the commence-
ment of this road was wilderness. It has been opened up into settle-
ments, into homes and general development. The values are not to be
measured by hundreds of millions.
DISCOUNT ON UNITED STATES BONDS.
" Question 50. Also to inquire what discount the Pacific Bailroad and
its several branches were forced to make in disposing of the bonds guar-
anteed by the Government to obtain the gold coin which was the cur-
rency of the country through which the greater part of said roads pass."
COST OF ROAD PAID IN GOLD.
Answer 50. The Central and Western Pacific Railroads were com-
pelled to pay gold coin during the progress of construction for all wages,
supplies, fuel, materials, and contracts which were payable on the Pa-
cific Coast, the gold always having been the currency of this region.
CURRENCY BONDS ISSUED BY UNITED STATES.
The bonds issued by the United States to aid the construction of the
Pacific railroads were made payable thirty years from date with inter-
est at 6 per cent., payable semi-annual ly, the principal and interest made
payable in lawful money. This during the time of the construction of
the road and for some years afterwards was United States currency.
From these facts the bonds have always been known as " Currency
Sixes," and they were the only bonds issued by the Government which
could not be redeemed by it, at its option, at any time before maturity
thereof. I have been informed, and 1 believe it to be true, that these
2526 U. S. PACIFIC RAILWAY COMMISSION.
are the only bonds which the Government issued during the civil war
upon which they did not sustain a discount. We direct your attention
especially to the irredeemable character of the bonds, because, as we will
hereinafter show, the company, on account of this character of bonds,
has sustained a very great loss in being compelled to pay into the sink-
ing fund a large sum of money from which it has received no interest
whatever, and at the same time is compelled to pay interest on these
outstanding bonds.
CENTRAL PACIFIC CHARGED WITH TWENTY MILLIONS FOR WHICH
IT RECEIVED NOTHING.
During the time the company was constructing its road, and at a time
when it was experiencing the greatest difficulty in getting the money to
meet its obligations, the Government securities were very much depre-
ciated because of the existence of the civil war. For example, the com-
pany was compelled to dispose of the bonds issued to it by the Govern-
ment at a loss of $7,120,073.55. The company is paying 6 per cent, on
the bonds issued by the Government, so that at the maturity of the
bonds the company will have to pay in round numbers $20,000,000, for
which it never received one farthing. This is one item which must be
taken into consideration in estimating the cost of the road, and one
which is rarely recognized. Again, the company in selling its own first -
mortgage bonds was compelled, by reason of the impaired value of the
Government securities, to sell its own bonds at about the same rate that
it got for the Government bonds.
DEPRECIATED GOVERNMENT SECURITIES.
Commissioner ANDERSON. I do not understand your statement about
the depreciation due to the war, especially in connection with this loss
of $7,000,000.
The WITNESS. There was a time when the Government securities
were down to 40 ; but at the completion of the road the Government
credit had been restored and its bonds were a little above par
Commissioner ANDERSON (interrupting). I do not understand your
statement that the bonds were depreciated by the war. I do not under-
stand that any bonds were issued to the Central Pacific and Western
Pacific Companies until two years after the close of the civil war.
The WITNESS. Yes ; there were some issued in 1863.
Commissioner ANDERSON. But you got no bonds from the Govern-
ment.
The WITNESS. Oh, yes; we got the bonds; we got those bonds. I do
not know what time exactly, but it was during the war.
Commissioner ANDERSON. It was in 1866 when the first bonds were
issued.
The WITNESS. In 1866 !
Commissioner ANDERSON. Yes, sir.
The WITNESS. I think that you are mistaken.
Commissioner ANDERSON. We have got the United States reports.
The WITNESS. There is no chance for a dispute as to what year these
bonds were issued. We got the bonds, I know ; and they were sold in
the market at the time, and we sold them for all that they were worth
ill the market.
Commissioner ANDERSON. I was only referring to your statement
that they were depreciated by reason of the war.
The CHAIRMAN. The war was virtually over when you commenced,
was it not ?
LELAND STANFORD. 2527
SUPPLIES HAD TO BE ORDERED A YEAR IN ADVANCE.
The WITNESS. Not with us entirely. Our supplies had to be ordered
fully a year in advance of their use. Supplies and materials required
in the construction of the road had to be purchased at least a year be-
fore we needed them. We commenced the grading of the work, and
work was going on in 1863, and at that time our orders were out in the
East for everything that we required for a long time ahead, so that we
could continue our work with as little interruption as possible.
Commissioner ANDERSON. I am talking abo'it the depreciation in the
bonds, and not about the commencement of the road.
The WITNESS. We sold those bonds at that depreciation. We had
until 1876, by the contract, to complete the road. Had we waited for
the expiration of the contract time before finishing the road, instead of
building it seven years earlier than that time, we would not have had
to suffer this loss. Had we waited, we would have had the advantage
of the bonds at par, together with the premium at which they were sell-
ing, and as our own first mortgage bonds were depending very largely
upon the assistance which the Government gave, they would have been
above par also. By this rapid construction and completion of the road
before the time required by the act of Congress, the depreciation was
not merely on the Government bonds, but upon our own first mortgage
bonds, so that what we were forced to lose in the sale of the two classes
of bonds made a depreciation of $7,000,000 on each class, and the in-
terest on them from that time until maturity amounts to about $40,000,000,
which we will have to pay at maturity more than we would have had
to pay otherwise had we realized par.
BONDS ISSUED.
The bonds issued to the Central and Western Pacific Eailroads were,
at their par value, as follows :
Central Pacific $25,885,120
Western Pacific 1,970,560
Total currency bonds 27, 855, 680
These bonds were issued as sections of the constructed road were ac-
cepted by the President of the United States, and so bore different dates
from the years 1865 to 1869, inclusive, with the exception of a small
number dated in 1870. During all this period the currency was greatly
depreciated, sometimes selling as low as 42.66 cents on the dollar in
January, 1865, to 83.68 cents on the dollar in December, 1869.
AVERAGE AMOUNT RECEIVED FOR EACH B?)ND, $744.44.
In order to get the coin to pay for their construction, labor, and sup-
plies the Central and Western Pacific Companies were forced to dispose
of the currency bonds received from the Government at an average rate
for gold of 1.34J. The amount received by the company for each bond
of $1,000 was therefore $744.44. For the $27,855,680 in United States
bonds these companies received $20,735,606.45. The discount they were
forced to make was thus $7,120,073.55. Interest is charged the compa-
nies on the full amount to the maturity of the bonds. The interest on
the $7,120,073,55 discount which the companies were forced to make is
for thirty years, at 6 per cent., $12,816,132.39.
2528
U. S. PACIFIC RAILWAY COMMISSION.
LOSS FROM DISCOUNT, $19,936,205.
The total principal and interest for discount lost by the companies is
therefore $19,936,205.94.
The following table shows, the amounts and dates of the currency
bonds issued to these companies, and the market value of currency at
the current average premium on gold :
Statement showing dnie* and anwunls of United States bonds, issued to Central and Western
Pacific Railroad Ctnnfmnun (kti me tt nxcurrrncy sixes}, with value of same in United States
gold at current average w/es of premium for United Stales currency.
To what company
Central Pacific Hail~o:id ('oiinmny ..]
Western Pacific Railroad Company
Date issued
Interest
commenced.
Amount
of bonds.
Premium
on gold,
average
rate.
Value of
bonds in
United States
gold.
May l-\ 18G5
Jan. 16, 1865
$1, 258, 000
1.32
$953, 030. 30
An- U, 1865
Aug. 14. 1865
384, 000
1.42
270, 422. 53
Oct. If, 1865
Oct. 16,1865
256, 000
1.45
176, 551. 72
D.-c. il. 186-')
Nov. 29, 1805
464, 000
1.45
320, 000. 00
M:ir. (i. li
Mar. 6, 1866
640, 000
1.33
481, 203. 00
Inlv 10. 18<>0
July 10,1866
640, 000
1.50
426, 666. 66
Oct. :<!. 18<><>
Oct. 29, 1866
320, 000
1.46
219,178.10
J.in. M. l,-'07
Jan. 14, 1867
640, 000
1.35
474, 074. 07
' ><-t. 25, 1867
Oct. 25, 1867
320, 000
1.42
225, 352. 11
Dec. 12,1867
Dec. 11, 1867
1, 152, 000
1.34
859. 701. 49
.J::n. 10, I8C8
June 9,1868
946, 000
1.40
675, 714. 28
h.lv 11.1808
July 10,1808
320, 000
1.40
228,571.43
An-. 5.1868
An jr. 4, I'-GS
640, 000
1.48
432, 432. 43
An ST. 14, 18C8
Aug. 13, 1868
1,184,000
1.47
805. 442. 18
Sept.]?, 1808
Sept, 11, 1868
1,280,000
1.44
888, 888 88
S pt.'JO, 1808
Sept. 19, 1868
1, 120, 000
1.44
777, 777. 77
Oct. !.'{. 1808
Oct. 12,1868
1, 280, 000
1.38
927. 536. 23
Oct. '28. 1868
Oct. 26,1868
640, 000
1.34
477,611.94
Nor. f>. 1SH8
Nov. 3,1868
640, 000
1.32
484, 848. 48
Nov. 12, 18(58
Nov. 11, 1868
640,'000
1.34
477, 611. 94
Doc. 5. 1808
Dec. 5,1868
640, 000
1.36
470, 588. 24
Dec. 7.1808
Dec. 7,1868
640, 000
1.36
470, 588. 24
Doc. 30. 18K8
Dec. 29, 1868
640, 000
1.34
477, 611. 94
Jan. 13, 1809
Jan. 13, 1869
640, 000
1.36
470, 588. 24
Jan. 29, 1809
Jan. 28,1869
540, 000
1.37
467, 153. 29
Feb. 17,1800
Feb. 17, 1809
640, 000
1.35
474, 074. 07
Mar. 2,1809
Feb. 17,1809
1,066,000
1.32
807, 575. 76
Mar. 3, 1809
Mar. 2, 1809
1,333,000
1.32
1,009,848.48
May 28, 1809
May 27. 1869
1, 786, 000
1.40
1, 275, 714. 28
July 15,1809
May 27, 1869
1,314,000
1.37
959, 124. 09
July 15, 1869
July 15; 1869
268, 000
1.37
195, 620. 44
Dec. 31, 1869
July 16, 1869
1, 510, 000
1.20
1, 258, 333. 33
Jan. 2, 1872
Nov. 28, 1868
4, 120
1.09
3, 779. 81
Jan. 24, 1867
Jan. 26,1867
320, 000
1.34
238, 805. 97
Sept. 1,1869
Sept. 3,1869
320, 000
1.33
240, 601. 50
Oct. 29,1869
Oct. 28,1869
1, 008, 000
1.29
781, 395. 35
Jan. 27,1870
Jan. 22,1870
3"22, 000
1.22
263, 934. 42
Jan. 8, 1872
Jan. 22, 1872
560
1.09
513. 76
27, 855, 680
20, 448, 406. 75
The bonds were s^ld by the companies to some extent for a premium
in currency, so that the above value of bonds in gold is not quite as
much as the amount received by the companies, namely :
Total value of currency bonds $27, 855, 630. 00
Value in United States gold $20,448,466.75
Premium added .- 287,139.70
20,735,606.45
Discount company was forced to make in disposing of the bonds, being
loss to company on principal 7, 120, 073. 55
Interest thirty years at 6 per cent 12, 816, 132. 39
Total amount on bonds Central Pacific Eailroad Company is required
to pay to the Government, for which it received nothing 19,936,205.94
LELAND STANFORD. 2529
BONDS BOUGHT FOB SINKING FUND.
Under the provisions of the act of May 7, 1878, the company has been
forced to pay for these same bonds for the sinking fund in the United
States Treasury a premium of about 35 per cent. It has thus suffered
a loss in premium on the redemption of the bonds of an equal rate to
the loss in discount on their issue. The sinking fund of the Central
Pacific Railroad Company in the United States Treasury on June 1,
1887, contained $2,548,000 United States Pacific Eailroad bonds (cur-
rency sixes) and $9,000 Central Pacific Railroad first-mortgage bonds ;
total, $2,557,000.
PREMIUM AVERAGED 34.21 PER CENT.
To secure these bonds the Secretary of the Treasury, under the pro-
visions of the acts of May 7, 1878, and March 3, 1887, has paid a pre-
mium averaging 34.21 per cent., or for each bond of $1,000 he has paid
$1,342.10. As these bonds must be held in the fund till the maturity
of the debt, when they will be redeemed by the Government at par,
the premium paid is wholly lost.
LOSS RESULTING FROM PREMIUMS AND DISCOUNTS.
The resulting loss on account of premiums and discount for this
$2,548,000 in the sinking fund is as follows :
Received by Central Pacific Railroad Company in coin for $2,548,000
United States currency bonds, at $744.40 per $1,000 $1, 896, 731. 20
Paid by Secretary of Treasury in coin belonging to Central Pacific
Railroad Company for $2,548,000 United States currency bonds, at
$1,342.10 , 3,419,670.80
Cost of $2,543,000 bonds in excess of amount received by Central Pa-
cific Railroad Company v 1,522,939.60
The foregoing facts may be summarized as follows :
For each currency bond of $1,000 issued the company received in coin $744.40
And is required to pay :
For principal for those in sinking fund $1, 342. 10
For interest on all for 30 years at 6 per cent., 180 per cent 1, 800. 00
3, 142. 10
Thus for $1,000 received in coin from the United States bonds the Central
Pacific Railroad Company is charged with 4,220.76
LOSS ON BONDS AND INTEREST BY EARLY COMPLETION OF ROAD,
FORTY MILLIONS.
As before stated the road was completed seven years before the ex-
piration of the term limited by Congress. If the company had taken
advantage of the time allowed by Congress for the completion of the
road, they could not only have sold the Government bonds at par, but
could also have disposed of their own first-mortgage bonds at their face
value, which would have been a net gain, over and above what was
actually received, of 87,120,073.55, the interest on which for thirty years
would have been $12,816,132.39, which would make an aggregate saving
on the Government bonds and the bonds issued by the company, prin-
cipal and interest, in round numbers, of about $40,000,000. The sacri-
fice was made to comply with the urgent demands of the United States
2530 U. S. PACIFIC RAILWAY COMMISSION.
and people generally, for the early completion of tlie road, with the
general understanding that the Government would make due allowance
for the extra exertion put forth by the company.
RELATIVE PURCHASING POWER OF GOLD AND BONDS.
By Commissioner ANDERSON :
Q. Allow me to ask : Do you claim the purchasing power of your
gold was any less than the purchasing power of your bonds ?
The WITNESS. Dollar for dollar!
Commissioner ANDERSON. No, not dollar for dollar. Would the gold
buy any more or less labor than the bonds would have bought ?
The WITNESS. The gold would buy more labor than the bonds, be-
cause the bonds were not par in gold.
Q. Were not the twenty millions in gold worth just as much as
the bonds were to the same amount? A. No, sir; twenty millions in
gold were worth as much as twenty-five or twenty-seven millions in
Government bonds. If the bonds had been worth par when we re-
ceived them we would have received $27,000,000 for them ; whereas we
received only twenty millions. It was with our company as it was with
the Government all through the war. The Government sold its bonds
at a low rate. At one time they ran as low as 40 cents, I think. I re-
member that there was a time when it took $3 in greenbacks to buy $1
in gold.
Q. What is the first date of the issue of bonds in the table ? A.
May 12, 1865.
CONSTRUCTION DONE BY CONTRACT AND FINANCE COMPANY.
Q. What company was referred to where you used the word "com-
pany"; was it the Central Pacific Railroad Company, or the Contract
and Finance Companv ? A. I have been speaking always of the Cen-
tral Pacific Railroad Company.
Q. Do I not understand that all this construction was done by the
Contract and Finance Company ? A. Yes, sir. But the Central Pacific
Eailroad Company had an interest. The expenses of that contract were
a necessary part of the burden of the Central Pacific.
Q. But were not those prices fixed when the contract was entered
into in 1867 f
The WITNESS. What prices ?
Commissioner ANDERSON. The prices to be paid per mile for the con-
struction of the road.
The WITNESS. Yes, sir.
Q. So that these alterations referred to in your statement and tables
would not affect these prices, would they ? The contract with the Con-
tract and Finance Company was made in 1807, and I presume that the
value of your securities was considered when this contract was fixed
at a specific sum per mile. If that was so, the circumstance alluded to
does not affect the Central Pacific. The additional cost of labor and
the cost of transportation by teams and the other circumstances could
only have affected the profits of the Contract and Finance Company
and could not have affected the Central Pacific Eailroad Company.
A. Oh, yes; because these circumstances were all well known, and were
fully considered at the time the contract was made.
Q. How could you have known all these things which happened after-
wards ? A. Currency did not reach par, or at least these bonds did
LELAND STANFORD. 2531
not until about the time of (or after) the completion of the road. We
received some bonds after the completion of the road and sold them
some time afterwards, and those bonds, I think, were above par.
Q. I am speaking of the specialties of that work, the use of teams for
sending out supplies in order to have the work done, and the other ex-
penses which you have enumerated. What I want to know is, how they
would affect the price to the Central Pacific if that price had been al-
ready determined ? A. We took the prices into consideration at the
time these contracts were made.
Q. In 1867 f A. Yes, sir.
Commissioner ANDERSON. But these things occurred in 1868 and 1869.
The WITNESS. What time was that contract made?
Commissioner ANDERSON. October, 1867, according to the miuutes of
the company.
SACRIFICE OF BONDS ISSUED ON MOUNTAIN PORTION.
The WITNESS. It was based on the condition of things then. The
great sacrifice was on the mountains. We received the largest amount
from the Government for the line over the mountains, and we were al-
lowed under the law to issue our own bonds a hundred miles in advance
of completion. All those bonds were issued at that time and disposed of
at a sacrifice. The sacrifice on these bonds was on the then existing
prices.
Q. Was the mountain work done under the Crocker contract or under
the Contract and Finance Company's contract? A. A portion of the
work was done under the Crocker contract and a portion was done under
the Contract and Finance contract.
COST OF CONSTRUCTION.
" Question 51. Also to ascertain the comparative cost of construction
of said roads as compared to what they would have cost with the prices
of labor and commodities prevailing five years preceding or five years
subsequent to the completion of said roads. 77
Answer 51. Absolute accuracy of statement as to the cost of com-
pleting the road as early as 1869, as compared with what would have
been the cost if it had been completed five years later, cannot perhaps
be made ; but by comparing prices of labor and material at the time
the road was completed with the prevailing prices seven years later
(the time allowed for completion), and taking into consideration the
obstacles encountered and sacrifices made for rapid construction, an
approximation can be made.
THE CENTRAL PACIFIC COST MORE THAN DOUBLE BY EARLY COM-
PLETION.
It is safe to say that the road cost more than double what it would
have cost if the company had taken the time allowed by the acts of
Congress for its completion, by reason of the difference in price of labor
and material, added to the sacrifices made by the company to hurry
the completion of the road. All supplies had to be purchased in the
East nearly a year in advance of the time when they would be needed,
in order to get them here when required. The company also, by reason
of the great demand that was made upon them by the Government and
the people, sent parties ahead 3f the construction train, in order that
2532 U. S. PACIFIC RAILWAY COMMISSION.
the road might be in course of construction in several different places
at the same period of time. Of course, in all these cases where parties
were organized and sent out in advance of the construction trains,
everything used by them in the construction of the road or in supply
ing food and clothing for the men and food for the teams had to be
hauled in wagons, sometimes as far as 350 miles or more, at a very great
expense to the company. In many instances the company even had to
build the wagon-roads before their teams could reach their destination,
and in some cases they were compelled to haul water for the men and
teams over 40 miles.
For the actual cost of the road, as compared to what it would have
been had the road been constructed five years earlier or five years later,
I would refer you to the reports of L. M. Clement, assistant engineer j
William Hood, chief engineer ; J. H. Strobridge, superintendent of con-
struction; and Arthur Brown, superintendent of bridges and buildings,
numbered, respectively, Exhibits 8, 9, 10, and 11.
BEFORE COMPLETION OF ROAD PACIFIC MAIL STOCK WORTH $330.
The WITNESS. Here I will say something that may be of interest.
Before this road was completed the Pacific Mail stock was selling for
$330 a share. After the completion of the road it went down rapidly,
and reached as Iowa figure, I think, as $30. They, therefore, had some
reason to oppose us and throw in our way all the obstacles that they
could.
Commissioner ANDERSON. Perhaps that company will put in some
claim against the Government for compensation because of the loss in
flicted by your competition.
The WITNESS. Perhaps so ; but I am inclined to think that the Gov-
ernment would not feel disposed to recognize any such claim.
By the CHAIRMAN :
Q. Are these gentlemen you have just named in San Francisco I A.
They are either here or off attending to their business ; but any of them
can be had at any time.
BENEFIT TO UNITED STATES BY EARLY COMPLETION OF ROAD.
"Question 52. Also to inquire whether or not the Pacific Railroad
was completed in less time than was allowed by law, and, if so, how
much less time, and if the United States was benefited thereby."
ROAD COMPLETED SEVEN YEARS BEFORE TIME FIXED.
Answer 52. The act required that the road should be completed July
1, 1876 ; the road was in fact completed May 9, 1869, more than seven
years in advance of the time allowed by law. In thus hastening its
completion its cost largely exceeded what it would have been if it had
not been constructed so rapidly, and by this completion the Govern-
ment has been largely benefited.
THE GOVERNMENT BENEFITED FORTY-SEVEN MILLION.
Before the expiration of the time allowed for the construction of the
Central and Union Pacific roads by contract the Government had been
directly benefited to the extent of more than $47,000,000 saved upon
freights, mails, and transportation of troops alone.
LELAND STANFORD. 2533
PAYMENTS TINDER ORIGINAL ACTS TO LIQUIDATE DEBT AND INTEREST.
At the time CoDgress made the loan to aid in the construction of the
roads every one expected that the transportation furnished by the Gov-
ernment to the road would much more than pay the interest on the
bonds and probably furnish a sinking fund sufficient to extinguish the
debt at maturity. This conclusion was reached by taking the cost to
the Government of transportation at the time the loans were made as
the basis of computation. Since the railroads were constructed the
amount of Government transportation has very largely exceeded the
calculations of the promoters of the enterprise, but the service has been
performed at so greatly reduced cost, that the receipts from this source
have fallen far below what it was expected they would be. This has
been disappointing to us, but a great gain to the Government. ,
TESTIMONY OF UNITED STATES COMMISSIONER OF RAILROADS.
Aside from what the Government saved directly in the cost of trans-
portation of mails, supplies, and troops, it has also saved an enormous
amount indirectly in various ways, as will be seen by reference to the
report of the United States Commissioner of Eailroads for 1883, an ex-
tract from which I herewith submit. The Commissioner, at page 16 of
said report, says :
The construction of these roads has been pronounced by the Supreme Court of the
United States to have been a national necessity so urgent as to admit of no delay,
and confessedly involving the integrity of the Union. The energy with which they
were built is well illustrated in the fact that they were completed in seven years less
time than the limit established by law, and at a time when the currency bonds issued
to the companies realized an average of only about 75 per cent, in gold. And they
must be repaid at par. It was doubtless expected that the compensation for Govern-
ment transportation would equal the current interest ; that it has not, has been a
disappointmeiit as well to the companies as to the Government, but had the charges
for transportation continued at the rate prior to their construction it would greatly
have exceeded the interest. The Government has the advantage, and is entitled to
it, of the reduced expenses of transportation which has resulted from their construc-
tion, and in this view the saving to the Government has greatly exceeded the cur-
rent interest it has paid. It is also fairly to be considered that the national purposes
have all been more than realized in the increased sales of public lands, the extension
of civilization, the suppression of Indian wars and the consequent great diminution,
of expenses, the establishment of States, and the strengthening of the ties which
have bound the States of the Pacific coast indissolubly to the Union.
PUBLIC BENEFITS.
But the benefits to the public are even greater than those to the Gov-
ernment. When we began to build the railroad the merchants of San
Francisco had absolute control over the other merchants of this coast,
and they could, and frequently did, combine to arbitrarily increase the
price of provisions and all other articles of commerce. Sometimes they
would advance the price of a single article 100 per cent, in a single day.
They kept a record of all in-bound vessels with their cargoes, and when-
ever they found that there was a limited supply of any given commod-
ity in the market, they went out and bought up all in the market and
all in transitu, and no further supplies could be furnished until orders
from here could be filled in the Bast, which would take fully six months.
TRADE MONOPOLIES PRIOR TO ROAD.
In the mean time these men who had secured all there was of the
article on which they wished to create a monopoly fixed on it their own
2534 U. S. PACIFIC RAILWAY COMMISSION.
price. It was DO uncommon thing to have a necessary of life advance
100 per cent, in a day. The construction of the railroad prevented all
this, and is so far a direct benefit to the consumer. Again, under the
old system, when all merchandise had to be brought in ships around
Cape Horn, every merchant, every importer, every business man, and
every jobber, had to carry at least six months' stock in his store and
an equal amount afloat, involving in the transaction of his business a
very large capital, idle for the most of the time, the interest on which
became a burden on the people. Now, one or two months 7 stock is suf-
ficient, and a man can do as much business with $50,000 capital as he
could under the old condition of things with half a million. The car-
rying trade then was largely in the han'ds of foreigners, and a large per
centage of the moneys paid for freight was sent to Europe. S nee the
construction of these roads over 65 per cent, of the money received by us
has been paid out in California and adjacent regions in operating and
other expenses, and a large proportion of the balance not required to be
sent abroad to pay the interest upon the bonds has been invested here
in developing the resources of the State and in making it productive.
The railroad company ha } paid out along the line of its road in this State
in wages alone more than $100,000,000, most of which would have gone
out of the country if the road had not been constructed.
The benefit to the Government by the early completion of the line is
more fully shown by the report of E. H. Miller, jr., secretary of this
company, upon the subject, which report is attached hereto, marked
Exhibit No. 11J. The report, in reply to other questions, also shows the
saving in transportation charges by the construction of the road, as
well as other information collateral to this general subject, all of which
is compiled from official documents.
SAVING TO UNITED STATES IN TRANSPORTATION IN SEVEN YEARS,
FORTY-SEVEN MILLIONS.
By reference to this report it will be seen that the United States has
saved in transportation charges alone by the completion of the Central
Union Pacific line
To June 30, 1876 $47,763,178.00
To December 31, 1885 139,347,741.25
At the same rate, continued to the maturity of the bonds, the Govern-
ment will have saved 259,040,430.00
That was not such a very bad investment upon the part of the Gov-
ernment after all.
ANTAGONISTIC LEGISLATION.
" Question 53. Also to inquire if either of the Pacific Railroad Com-
panies has been embarrassed audits earning capacity impaired by an-
tagonistic local or State legislation "P
Answer 53. The Central Pacific Railroad Company has been embar-
rassed and its earning capacity impaired by antagonistic local and State
legislation. While we were trying to make financial negotiations, one
claim that we made was based upon the fact that the State of Cali-
fornia allowed us 15 cents a ton per mile. Another was that the United
States laws allowed us to charge any rate we pleased up to 10 per cent,
dividends, then only interfering in case our rates were extortionate.
When the agitation against rates commenced we had only 31 miles of
road built, and efforts were made in the legislature to pass bills materi-
ally affecting our rates. This damaged us before the public. It not
LELAND STANFORD. 2535
only indicated that we might have to reduce our rates, but made the
future very uncertain.
CENTRAL PACIFIC ANTAGONIZED FROM THE FIRST.
From the very first we were strongly antagonized. Congress required
that we should build a telegraph line as well as a railroad. The con-
sequence was that we encountered the antagonism of the existing tele-
graph companies. We were to build a railroad to San Francisco, con-
sequently we encountered the antagonism of the Steam Navigation
Company and clipper-ship owners. We were to build a railroad across
the mountains, and so antagonized the Pacific Mail Steamship Company
and the Sacramento Valley Railway Company, which operated a railroad
from Sacramento eastward about 40 miles. Upon the construction of
the road their stock sustained a serious injury. A line across the conti-
nent was also antagonized by the stage companies and express com-
panies. The pony-express line and the toll roads, all of which had to
give way before it, also opposed us. It also seriously affected contract-
ors for the Government at the various posts and Indian agencies, and
antagonized many other interests of wealth, power, and influence.
POLITICAL OPPOSITION BY CONFLICTING INTERESTS.
All these interests combined and influenced the press and politicians,
and antagonized us in the money centers of the East, Germany, France,
and England, with a view of injuring our credit and preventing the
fruition of our hopes. As there was a feeling extant not only in Eu-
rope, but in this country as well, that the effort to cross the Sierra
Nevada Mountains by a practical railroad would prove a failure, these
influences did injure us to a very great extent. Even the Sitka Ice
Company, which was charging the people of San Francisco 5 cents a
pound for ice, antagonized us from a selfish motive, as we saved the peo-
ple in this direction alone, $600,000 a year. The Overland Stage Com-
pany, which received from the Government .of the United States
$1,800,000 per annum for carrying the mail, brought their influence to
bear against us. All these interests combined to influence legislative
bodies against us to injure our credit, and, as the journals of all the
legislatures would indicate, anuoyed and hampered us in every possible
manner.
CONTINUED HOSTILE LEGISLATION PROPOSED.
Hostile legislation has been proposed at every session of the legisla-
ture since the commencement of the road. It has~asSuined various
forms and often of so serious a character that if successful it would
have been impossible to operate the road under its restrictions.
CALIFORNIA RAILROAD COMMISSION UNDER NEW CONSTITUTION.
By the CHAIRMAN :
Q. Has any actual, local or general, hostile or antagonistic legislation
been enacted ? A.. All those bills we were able to defeat. Every one
of them helped to defeat itself. They were generally gotten up in ma-
lignity and by men who did not understand the subject, and wherever
we could get such bills before a committee composed of fair-minded men,
to whom we could explain the true nature and the necessary effect of
such legislation, the bills helped to defeat themselves. Finally, how-
2536 U. S. PACIFIC RAILWAY COMMISSION.
ever, there was a new constitution adopted by the people of this State,
which created a board of railroad commissioners with absolute powers,
executive, judicial, and legislative, and without appeal. If they were
so inclined they could make rates that would practically confiscate
the property of the company, under this constitution, and we could not
help ourselves. Our redress, of course, would be to go to the Supreme
Court of the United States for a final decision of the question in the
event of any such action by this board. My idea is that the whole
thing is unconstitutional, inasmuch as it vests those three powers in one
body, and it would not be sustained by the United States courts if the
subject ever goes before them. We have not cared, however, to raise
the question, but have got along the best that we could. At the same
time this new constitution has interfered a good deal with the company.
It will not allow us to charge less, for instance, to Los Angeles, which
is a competitive point, than to intermediate non-competitive points.
The result is that we cannot make a rate from here to Los Angeles
which will compete successfully with the coast steamers and along the
rivers. This legislation, under the new constitution, interferes with the
companies in a good many ways, but the commissioneis have not done
all the damage that is in their power.
HOSTILE SENTIMENT DURING GRANGER EXCITEMENT.
Q. What was the general character of the hostile legislation intro-
duced? A. It was generally in the shape of bills "providing for the re-
duction of freights and fares. I think that every one of the bills, if
carried into effect, would have rendered us unable to operate the roads.
Q. Was there a general sentiment in the State in favor of such bills ?
A. The noisy and demagogic element was very strong at one tim^, and
influenced others. The feeling engendered by these men existed very
largely in the State at one time, and made the people think that we
were actually overcharging them for fares and freights, but gradually
we haye been able to explain, until to-day I think that the feeling iii
the State is as good towards us as could be expected, we doing business
with so many people. The general public has a good deal of confidence
in this State, and I think that we have been able to satisfy them that
we are doing and have always done all in our power to develop its
resources. It was only for a little time that the interests adverse to us
were able to swing things their own way. At about that time you will
remember that there was a general howl all over the country against
railroads. It was during the time of the Granger excitement, which
you will remember existed so generally in your own country.
AVERAGE FREIGHT LOWER THAN IN 1878 AND 1879.
By Commissioner ANDERSON :
Q. How does your average rate per ton per mile compare to-day with
the rate in 1878 and 1879 ? A. It is very much less. We are now doing
a class of business which requires lower rates. While we were allowed
15 cents per ton per mile by the law, I think that there was scarcely 1
per cent, of our business which was done at that rate, and that rate was
charged only upon very high-class goods in very small quantities. For
instance, we might charge that for short haul from the end of Oakland
wharf into Oakland, a distance, say, of 3 miles, and 45 cents per ton,
which is the highest we could charge, did not pay lor the handling. We
alsp charged high rates on some costly articles, and upon certain classes
LELAND STANFORD. 2537
of machinery, for instance, which were carried to Nevada in the early
days. Some of this machinery was large and heavy, and one piece
would frequently occupy a whole car. In some instances we had to
build cars especially for such machine^, and perhaps they woald be
required only occasionally. On such shipments we charged 15 cents a
ton per mile, and even this would not pay, chiefly from the fact that we
had such little use for such a car. It was only at such times and under
such circumstances that we charged the maximum rate of 15 cents per
ton per mile.
REDUCTION OF NEVADA AND UTAH THROUGH FREIGHTS.
Q. The rates, then, have been largely reduced ? A. Yes, sir; I think
that our last report will show it. The serious thing to us was the reduction
in the through freights that passed through Nevada and Utah. As you
came across that country you saw that there was no local business
there. There is not a station business in that country which amounts
to enough to sustain business. We depended upon the business origi-
nating in California and east of Salt Lake, which passed to and through
Nevada and Utah, and when these other lines of railroads not only
cut down the rates, but divided the business with us, the rates went
so low and the business fell off so much that it has not paid. The value
of that road was from the through, business and the good rates which
it could command. There being no competition, such prices were fixed
as were remunerative, and which were fair as between the shipper and
the carrier.
EXTREME LEGISLATION DEFEATING ITSELF.
By the CHAIRMAN:
Q. I understand you, then, to say that at no time has there been any
hostile local or State legislation ? A. Excepting the State constitution.
There have been many efforts at hostile legislation made. For instance,
the law taxing our railroad. You saw yesterday a statement showing
the extraordinary burden placed upon us in that way. All other very
obnoxious propositions, however, were defeated.
Q. Were these bills largely supported in the legislature ? A. Yes ;
at one time there was a legislature very largely elected because of its
hostility to the railroad, and on that account we paid no particular at-
tention to it. I made up my mind that in a legislature forty men would
be fair, and out of the forty there will be always twenty men who would
be reasonable and just, and these twenty men would be able to defeat
extreme legislation. If the legislation had not been so very extreme
it is very likely that they would have passed some of it ; but the ex-
treme measures proposed defeated themselves.
THE ANTI-RAILROAD SENTIMENT.
Q. Did the members elected to the legislature largely represent the
prevailing sentiment of the people throughout the State at that time ?
A. I am not sure of that. The anti-railroad sentiment was very
noisy and very clamorous. I remember that at the elections a well-
known railroad man and a friend of the railroad ran away ahead of his
ticket. I know a man who was a candidate for controller who was
known as the bosom friend of the railroad, and who believed in rail-
roads, and he ran ahead of his entire ticket. And in the senate, the
railroad men, as they used to be called, were, as a rule, a good class of
2538 U. S. PACIFIC RAILWAY COMMISSION.
men and they were the strongest. My impression is that the anti-rail-
road sentiment of the State which appeared to have existed at one time
syas more on the surface than otherwise.
THE SO-CALLED u DUTCH FLAT SWINDLE."
Q. What year was that ? A. I cannot tell the date. I am not very
good at remembering dates. It was a good while ago; I think about
1870 or 1872. During the early days we had a great deal of antagonism
from the various interests opposed to this road. At one time we found
it necessary, in order to carry on our work with the greatest speed and
economy, to build a wagon road over the mountains, beginning at a
place called Dutch Flat, and our opponents represented that we were
building this railroad for the benefit of the wagon road, and the whole
thing was called the " Dutch Flat Swindle," because the wagon road
commenced at Dutch Flat. The local business at that time was very
good. It was in the midst of the excitement in Nevada, the great min-
ing excitement of that State, and a vast amount of machinery and sup-
plies was constantly going forward, and the earnings from that source
cut a very important figure in our earnings.
INJURY BY COMPETING AIDED ALINES.
" Question 54. Also to inquire if the United States, since the Union
and Central Pacific Railroad Companies accepted the terms proposed by
Congress for the construction of the Pacific railroads, has granted aid in
lands for building competing parallel railroads to said Pacific railroads,
and, if so, how many such roads, and to what extent such competing
lines have impaired the earning capacity of the Pacific railroads."
EARNINGS OF PACIFIC RAILROADS IMPAIRED BY UNITED STATES AID
TO OTHER LINES $37,000,000.
Answer 54. Congress has granted aid in lands for building competing
parallel roads to the Pacific railroads. The number of which and the
extent to which such competing lines have impaired the earning capac-
ity of said Pacific railroads is hereinafter fully set out in the statement
of J. C. Stubbs, general traffic manager, annexed hereto, marked u Ex-
hibit 12," and made part hereof; the actual business diverted being
upwards of $37,000,000.
SERVICE OF NON-AIDED ROADS REMAINING UNPAID.
" Question 55. Also to inquire if the United States have contracts with
branch roads controlled by either of said Pacific roads for carrying United
States mails, and, if so, what service has been performed by them, and
what money, if any, has been paid for such service, and what remains
due and unpaid."
i
PAYMENT ON LEASED LINES WITHHELD BY UNITED STATES.
Answer 55. The United States Government had contracts with branch
roads controlled by the Central Pacific railroads for carrying United
States mail. The Central Pacific Railroad Company controlled by lease a
number of branch lines prior to April 1, 1885, from which date the lines
were leased to the Southern Pacific Company. Mails were carried by these
LELAND STANFORD. 2539
lines for the United States under the rules and orders of the Post-Office
Department. No payments have been made for such service since 1883,
at which time but partial payments were made. The payments were
withheld prior to April 1, 1885, because the Central Pacific Railroad
Company leased the lines, and they have been withheld since that date
because the Central Pacific Railroad Company had formerly leased the
lines.
CASH DUE UNDER SUPREME COURT DECISION $1,853,323.15.
The United States Supreme Court has decided that compensation for
transportation on non-aided and leased lines was payable to the com-
pany in cash. From and including the year 1882 to the present time
there has been annually a balance due the non-aided lines for transpor-
tation services performed. The amount thus due from the Government
in cash in excess of all requirements of law to December 31, 1886, is
$1,853,323.15. The service that has been performed, the amount of
money which has been paid for such service, and what remains unpaid
are fully shown by the reports of Mr. E. H. Miller, jr., secretary of the
company, hereto attached, marked " Exhibit 13," and made part hereof.
By Commissioner ANDERSON :
Q. Does that report contain any statement from the office of the
Commissioner of Eailroads, or from the United States Treasury Depart-
ment, showing any agreement on that figure? A. Yes, sir; Mr. Mil-
ler's report gives such a reference. Each of these statements you will
find sustained by the reports of the United States officers, and by the
reports of the Kailroad Commissioners.
EMBARRASSMENT TO COMPANIES BY UNITED STATES NOT PAYING
AMOUNTS DUE.
"Question 56. And if the United States, by failing to pay for such
mail services, has embarrassed said railroad companies, or either of
them, in paying their indebtedness to the United States."
PRESENT ANNUAL INJURY ON THIS ACCOUNT, $560,000.
Answer 56. The United States, by failing to pay for such mail service
and other transportation, has caused an expenditure to the Central Pa-
cific Kailroad Company of amounts equal to interest on the sums re-
tained at the rate of 6 per cent, per annum ; that being the rate of
interest paid during the period on floating debt of the company, which
debt would have been decreased by the payment of the sums clue from
the United States. The annual interest on this balance due the roads
in question to December 31, 1886, of $1,853,323.15, at 6 percent, is
$111,199.39. This is the present annual injury to the roads by the
Government on account of the item of transportation charges unpaid.
The current charges also, in excess of the requirements, amount, as
shown by the foregoing statement, to about $450,000 a year. This
amount with the interest on the balance makes the accruing annual sum
of $560 000 due for transportation on non-aided lines and remaining un-
paid.
HAVE ROADS COMPLIED WITH THE LAWS f
"Question 57. Also to inquire if the several Pacific railroad compa-
nies have complied with the provisions of 'An act to alter and amend
p R VOL iv 14
2540 U. S. PACIFIC RAILWAY COMMISSION.
the act entitled "An act to aid in the construction of a railroad and tel-
egraph line from the Missouri Kiver to the Pacific Ocean, and to secure
to the Government the use of the same for postal, military, and other
purposes," approved July 1, 1862, and also to alter and amend the act
of Congress, approved July 2, 1864, in amendment of said first-named
act,' commonly known as the 4 Thurman act,' and, if not, in what par-
ticulars they have failed to comply."
CENTRAL PACIFIC HAS FULLY COMPLIED WITH THE ACTS.
Answer 57. The Central Pacific Eailroad Company has complied with
all the acts enumerated in this interrogatory in letter and in spirit, to
the satisfaction of the officers heretofore appointed under the several
acts of Congress to examine into the affairs of this company. The first
examination was made in 1879, and included everything from the com-
pletion of the road up to the date of that examination. Since that time
annual examinations have been made and reported upon. In every case
the report shows that the company has complied with all the obliga-
tions imposed upon it by Congress. All this fully appears in detail in
my answer to interrogatory No. 2.
WHAT CAN BE PAID WITHOUT INJURY TO COUNTRY ALONGr THE
LINES.
" Question 58. Also to inquire what sums the Pacific railroads and their
branches can severally pay annually on account their indebtedness to
the United States without imposing such burdens upon the people, and
practically upon the localities through which the roads pass, as to re-
tard the development of the country."
INJURY TO NEVADA AND UTAH BY DEMANDING EARLY PAYMENT.
Answer 58. It has been shown in answer to interrogatory No. 3 (c),
that the present net earnings of the aided lines, over which the Gov-
ernment lien extends, after paying the current charges which are prior
in lien to -that of the United States, amount to about $740,000 per an-
num. The annual accruing interest on the United States bonds is
$1,671,340.80. The whole amount of net earnings therefore lacks
$930,000 of meeting the accruing interest, even if every available dol-
lar were used for that purpose. The net earnings of the aided road are
alone available for the payment of the debt to the Government. Thus
the available funds can only be increased by increasing these earnings.
This can only be done by increasing the rates through Nevada and
Utah, and so fixing the burden of the debt upon the communities
through which the road runs. To whatever extent this means should
be employed, it would retard the development of the country and im-
pose a burden upon a comparatively few people along its line, for bene-
fits which have been shared by the country at large and particularly
by the several Departments of the Government. The local rates would
wholly have to stand such a charge ; as, on account of competition of
other 'trans-continental lines which were also aided in their construction
by United States land grants, through rates cannot be raised. The
earning from local traffic for the aided line during the month of May,
1886,* was
Freight $161,310.08
Passenger - 87,366. 10
Total ,-...- -- . 248,676,18
LELAND STANFORD. 2541
This month is a fair average for the year, and would give an annual
amount of $2,984,000. A considerable amount of these earnings is from
traffic, the rates on which are controlled by competition, although it is
local. This is the case with most of that over the aided line in Cali-
fornia. In case the rates should be raised then to pay the Government
bonds, the burden would fall almost entirely on the communities in
Nevada and Utah.
INCREASE OF LOCAL RATES REQUIRED.
To pay the balance of $930,000 necessary to meet the accruing inter-
est on the United States bonds, without making any provision what-
ever for the principal, would require an increase in local rates in Ne-
vada and Utah of over 33 per cent.
The foregoing statements, together with the exhibits herewith pre-
sented in connection therewith, substantiate the averment made on
pages 20 and 21 hereof, that an equitable adjustment of the accounts
bet ween this company and the United States would allow the company's
claims against the Government to the amount of $62,873,557.81.
All of which is respectfully submitted.
LELAND STANFORD,
President.
STATE OF CALIFORNIA,
City and County of San Francisco, ss :
Leland Stanford, being duly sworn, deposes and says, that the facts
stated in the foregoing answers to the 58 interrogatories propounded to
him by the United States Pacific Bail way Commissioners are true, to
the best of his knowledge and belief.
LELAND STANFOED.
Subscribed and sworn to before me this 28th day of Julj-, A. D. 1887.
E. B. RYAN,
Notary Public in and for said City and County of
San Francisco, State of California.
EXHIBIT No. 1. Affidavit of E. H. Miller, jr., secretary, that the Central Pacific Rail-
road Company has complied with all obligations of the laws.
E. H. Miller, jr., being duly sworn, deposes and says :
I am a citizen of the United States and of the State of California, over twenty-one
years of age, and am competent to testify in this matter.
On the '29th day of September, 1863, I was elected secretary of the Central Pacific
Railroad Company, and ever since then have been and now am the duly appointed
and .acting secretary of said company; that as snch secretary I have had charge of
and have kept, and now have charge of and keep, all the books, of account, papers,
and vouchers pertaining to its business; that as such secretary I have had occasion
to and have examined all the laws of the United States heretofore passed with refer-
ence to aiding said company with bonds ; that as such secretary I have had occasion
to and familiarized myself with the obligations of such laws, so far as they relate to
the Central Pacific Railroad Company, and the company has promptly observed all
such obligations to the best of my knowledge and belief.
E. H. MILLEE, JR.
Subscribed and sworn to before me this 26th day of July, A. D. 1887,
[SEAL.] E. B. RYAN,
Notary Public in and for the City and County of San Francisco, Cal,
2542 U. S. PACIFIC RAILWAY COMMISSION.
EXHIBIT No. 2. Statement of A. N. Towne, general manager, relative to diversion ofbusi-
ness to non-aided lines.
SAN FRANCISCO, July 5, 1887.
Hon. LELAND STANFORD,
President Central Pacific Railroad Co. :
DEAR SIR : In obedience to your instructions, I beg eave to report with respect to
the question (No. 9) asked by the Pacific Railroad Commission, created by the act of
Congress approved March 3, 1887 : " Whether any traffic or business which could or
should be done on the aided lines of said company has been diverted to the lines of
any other company or to non-aided lines," as follows:
. DIVERSIONS TO THE LINES OF OTHER COMPANIES.
(1) Through traffic. It is a matter of public knowledge that there are now several
transcontinental lines. It is unnecessary to name them. All except the original Central
and Union Pacific line have been completed since 1880. Each of those constructed
since 18SO has diverted more or less traffic from the original Union and Central Pa-
cific line. The aggregate of these diversions is equal to more than 50 per cent, of the
total through freight and passenger traffic for the five years and nine mouths ending
with December 31, 1886, the period which has elapsed since the opening of the first
line competing with the Central and Union Pacific line for through traffic.
The responsibility for the construction of these opposing lines rests, in my judgment,
with the Government of the United States. It follows that the United States Gov-
ernment is the instrumentality through which said diversions of through traffic from
the Union and Central Pacific roads to the other later-built transcontinental lines
was accomplished.
A part of each of said other lines received large grants of land from the United
States Government, the grant being in each case, 1 believe, double the grant of lands
made to the Union and Central Pacific companies. It was the Government grant of
land which induced the building of these roads at least it, if not the sole cause of
their construction, was the inducement which facilitated their construction and
caused their early completion. In each case the building of these roads has been in
advance of the settlement of the country through which they run. In nearly every
case the country has been settled since the completion of the road, in the main through
the advertising agencies of the railroad managers whose motives were not only to
develop traffic but to sell their lands. There has been no time when the original line
made by the Union and Central Pacific roads could not and would not have provided
facilities for and amply accommodated all the through traffic carried by the other
lines; hence, the conclusion is inevitable that the United States Government, by
granting large land subsidies in aid of roads which have been built, and which, since
their completion, have competed for and taken a larger share of the through traffic
from the Central and Union Pacific line, is directly responsible for the diversion of
said traffic and the consequent loss in earnings to the Central Pacific Company and
the Union Pacific Company. This loss would have been very much greater, but for-
tunately the Southern Pacific Railroad Conipauy, organized in 1865 under the laws
of California to build a railroad from San Francisco to San Diego, thence east to the
boundary of the California State line, there to connect with railroads to be built to
the Mississippi River, passed in 1870 under the control of the men who controlled the
Central Pacific. The control of the Southern Pacific by the Central Pacific ownera
delayed the extensions of the former road, and after its extensions were made to con-
nections with lines building westward from the Mississippi River, secured co-opera-
tion and harmony in working the traffic which was common to both the Central Pa-
cific and Southern Pacific lines that would have been impossible under separate con-
trol, and which was of great advantage to the original or Central Pacific line.
There can be little questioning, in the minds of practical railroad men, of the pro-
position, that had the railroads following the 32d and 35th parallel routes, respect-
ively, been wholly constructed and operated by men who wer.e not interested in the
Central Pacific line, the diversion of traffic to those lines would not only have been
more rapid and greater in degree, but that the revenue of the Central Pacific and
Union Pacific line would have been diminished in much greater ratio.
The extent of the damage to the Central and Union Pacific line by diversion of traffic
to these other through trans-continental lines will be shown approximately by the
general traffic manager in answer to the Commission's inquiry No. 54.
(2j Local traffic. The traffic between San Francisco and other bay points, on the
one hand, and the cities of Stockton, Sacremerito, and Marysville, Cal., respect-
ively, is shared by other carriers. This, however, scarcely comes under the bead of
a diversion from the Central Pacific aided lines. The other carriers sharing this traf-
fic are, (a) vessels navigating the bays, Sacramento River, San Joaquin River, and
Feather River, respectively routes which were open and employed before the Gen'
LELAttD STANFORD. 2543
tral Pacific line was built; (&) the California Pacific road, which was completed and
in operation before the western division of the Central Pacific. Therefore, whatever
amount of this business has been done via the western division of the Central Pa-
cific is, in fact, a diversion from the other carriers named.
DIVERSIONS TO NON-AIDED LINES.
While the roads to which the diversions treated under this heading have been mad j
were built and are owned by other companies than the Central Pacific, yet as they
are controlled by those who have also controlled and managed the Central Pacific, I
presume they illustrate the diversions to non-aided lines referred to in the Commis-
sion's interrogatory.
Traffic to and from points south of Lathrop interchanged with San Francisco and
Oakland has, since the completion of the San Pablo and Tulare road, Tracy to Oakland
via Martinez, been carried over that road instead of being carried via Niles and Liv-
ermore. The road from Tracy to Oakland, via Martinez, is 11 miles longer than the
road from Tracy to Oakland via Livermore, but the former is a practically level road,
its maximum grade being 10 feet to the mile, over which an ordinary engine can draw
50 cars, loaded with from 10 to 12 tons each, while the latter crosses the Contra Costa
Range with a maximum grade of over 52 feet to the mile, which would require three
engines to haul the same train. The longer line does not lose appreciably, if at all,
in the matter of time when compared with the Livermore line, while it gains greatly
in the matter of cost of operating.
Traffic on the western division of the Central Pacific east of Lathrop, to and from
San Francisco and Oakland, has also been diverted from the "aided" line between
Tracy and Niles in like manner and for the same reason as the traffic to and from
points south of Lathrop.
Traffic interchanged by points east of Sacramento and north of Roseville Junction,
with San Francisco and Oakland, has been diverted at Sacramento from the " aided"
line, between Sacramento and Niles, to the California Pacific and Northern Railway,
a non-aided line. The reasons for this diversion are
(1) Public convenience. The passenger train time between San Francisco and Sacra-
mento, via the California Pacific line, is four hours against six hours via the Central
Pacific, Stockton, and Livermore route. The public demands and is entitled to the
best service we can give. We should be unable to justify sending passengers or
even freight over the long and heavy line via Stockton against the shorter, easier,
and much more attractive line via Beuicia. Especially is this true of the through or
trans-continental traffic, which is taken in competition with other trans-continental
lines. The weight of this consideration with those whom the company serves is well
illustrated by the fact that the United States Government chooses the short line for
the transportation of its mails in consideration of (a) public convenience, (&) and the
fact that it pays for the transportation of mails by the mile. By so doing it expe-
dites the mails and saves money, secures the beat service at the least expense to the
Government.
(2) Economy in operating. The line from Sacramento to Oakland wharf, via Stock-
ton and Niles, is 136 miles, and crosses, as I have before explained, the Contra Costa
Range at a maximum grade of over 52 feet to the mile, while the California Pacific
line via Benicia makes but 86 miles between Sacramento and Oakland wharf, and is
practically a level line. If we were to equate the two lines that is to say, reduce
the grades and curves of both lines to their equivalent in straight level lines, we
would find the Stockton route to be more than double the length of the Benicia line.
There is fully that difference in the cost of handling the traffic over the two routes,
in view of which it would have been inexcusable to use the longer and more expen-
sive route.
The Government did not assume the responsibility of constructing the Central Pa-
cific road. It contributed thereto by a grant of land and a loan of credit, but its
motives were selfish. It was not moved by a desire to benefit or enrich the promoters
of these enterprises. The result, as will doubtless be shown before the Commission,
has amply justified the wisdom of Congress in granting the aid. No government; or
individual ever made a better investment, or, if I may be allowed the expression,
ever engaged in a more successful venture, even if it transpires that neither the prin-
cipal nor the interest of the loan is ever repaid. Neither did the Government assume
the responsibility of operating the road when it was completed. It was left in the
control and management of its owners, and we must assume that this was the purpose
of Congress. We may also fairly assume that Congress expected the road to Ue man-
aged by practical business men upon established business principles, of itself a val-
uable promise, affording the best guaranty that sooner or later the company would
be able to discharge its obligations to the Government. These shareholders found
themselves engaged with the problem of making a support for nearly a thousand
miles of road through a sparsely settled territory, which, for the most part at the time,
2544 U. S. PACIFIC RAILWAY COMMISSION.
was regarded as incapable of producing anything in tlio way of traffic which a carrier
could move with profit. It was a link in a trans-continental line connecting the At-
lantic and Pacific coasts. California was the cbief State on the Pacific coast, having a
population in 1870, of but little over 560,000. It was known only as a mining State.
Its agricultural resources were not only undeveloped but unknown, even undreamed
of by the most sanguine. The chief value of the road was its value to the Government
as a military road, as a strategic line, but the government assumed no responsibility for
its management, provided no guaranty of earnings, no means of support. The owners
of the road were left to their own resources and devices to develop traffic, and to make
a support for it. The occasion called for the greatest skill and sagacity, untiring in-
dustry, and the utmost economy on the part of the owners and the agents they
employed to assist in conducting the affairs of the company. The Government,
which 1 here put in the place of the public, certainly understood this. It cannot
be that at the time there was any warrant for interfering with the management of
the road, or any thought of questioning the propriety of anything which the man-
agers of the road might or should legally do in pursuit of the interest of the rail
road company. Its interest was to secure the maximum of traffic and to move
it at the minimum of cost. It is not to be supposed that the circumstances I have
described ever (until after the passage of the Thnrman act) suggested to the man-
agers of the road, to its patrons, to Government officials, or to Representatives
in Congress, that the question whether the company should or should not be re-
strained from adopting any method of conducting its traffic or any measure of econ-
omy in operating the road, or any device to conserve, increase, or promote its traffic,
should turn upon the point whether or not it affected the earnings of a particu
lar " aided" or "non-aided" portion of the road, so long as the method, measure,
or device was lawful, and had for its object the welfare of the company. On the
contrary, it is fair to assume that these circumstances not only warranted but re-
quired the employment of every measure of economy, every lawful device to defeat
or meet competition, every means to increase the traffic and enlarge the revenue of
the company, regardless of special considerations for a part of its road, whether
"aided" or " non-aided," so long as the communities on every portion of the road
were afforded reasonable service at a fair price.
Were we to examine into the ultimate cause which led to the acquirement or build-
ing of the "non-aided" lines to which traffic may be said to have been diverted, it
will be found in every case to have had for its object the strengthening and protec-
tion of the Central Pacific line. They are all feeders of the main line. They occupy
territory which sooner or later would have been seized by other railroad companies.
They have developed the resources of that Territory and made it tributary to the
main line of the Central Pacific. I venture to say that in each case the gain to the
Central Pacific Company from contributions of traffic, the reduction of competition,
the saving in cost of handling traffic by the acquirement of these " non-aided " com-
petitive and tributary lines has more than equaled their cost. As a single example,
take the California Pacific road. Suppose it had continued under separate and in-
dependent control from the Central Pacific, what its extensions might and would
have been to the damage of the Central Pacific iii its most productive territory is
scarcely a matter of conjecture. It certainly would have been extended through the
Sacramento Valley, and probably would have been constructed east and formed an-
other through line. The control of the California Pacific was necessary to the Central
Pacific. Having it, a reasonable regard for the public interest, as well as economy in
conducting the traffic, compelled the Central Pacific managers to handle the traffic in
the manner I have described. I need only suggest these considerations. They have
doubtless been thought of and debated in your own mind to far greater length than
in mine or than I would be authorized to treat them in this communication.
Very respectfully,
A. N. TOWNE.
SAN FRANCISCO, July 8, 1887.
Hon. LELAND STANFORD,
President Central Pacific Railroad Co.:
DEAR SIR : In addition to what I said in my letter of the 5th relative to the diver-
sion of business and the difficulty in operating the aided line between San Francisco
and Sacramento as compared with the level and shorter line by the non-aided roads,
I desire to call your attention to another important factor entering into the question,
showing still further reasons why the company will not be able to meet its obligations
t& the Government at maturity, or even for many years to come.
Of the H55 miles (in round numbers) of the aided line between San Jose" and the
point of junction with the Union Pacific, 5 miles west of Ogden, 586 miles, or 67
per cent., is located in Nevada and Utah, through a section almost wholly devoid of
the first element of prosperity in a country, namely, agricultural. All this vast re-
gion offers little inducement to the farmer in fa/st, the country through which the
LELAND STANFORD.
2545
toad passes is a vast area of unoccupied land, and the settlements along the road are
small and unimportant, with few exceptions. I find in looking over the earnings for
that portion of the line within the State of Nevada for the month of August, 1878
(which month showed the largest earnings of any month th;tt year), it shows the en-
tire receipts from both freighc and passengers collected from our patrons for the pro
rata proportion of the road operated within that State to have been as follows :
Freight forwarded from points in Nevada $48, 620. 64
Freight received at points in Nevada 74, 715. 06
Passengers both ways 27,974.00
Total 151,309.70
On the other hand, for this same month the taxes and amounts actually paid out to
our own men, residents of that State, amounted to $63,347.97 ; and we may add to this
amount the cost of all such as rails, fastenings, timber, lumber and material for shops,
fuel, &c., used in that State, which are not included in the above figure, together
with proportion of interest, salaries, and other expenses; and we would find out that
the amount so paid out was greater than the proportionate amount of earnings re-
ceived from all traffic within the boundaries of that State.
There being no timber and but little cultivation, this vast territory may be classed
as grazing and mineral lands, and the contributions to the road in the way of traffic
are small and of far less value now than in the past, as will be seen by the following
comparative statement of freight traffic to and from points in Nevada during the
years 1876 and 1886 :
'
18
76.
181
%
Pounds.
Earnings.
Pounds.
Earnings.
From Nevada.' points
121 712 030
$5i9 780.60
160 909 650
$649 237 60
381 211 690
2 789 9244
131 958 100
1 021 363 10
Total
3 339 710 00
1 670 600 70
Which shows for the "out" freight a gain in charges of 15 per cent, over 1876, and
for " in " freight it shows a loss in charges in 1886, as against 1876, of over 63 per cent.
On the total "in" and "out" it shows a loss in 1886, as compared with 1876, of
$1,669,109.30, or about 50 per cent.
The live-stock shipments are light, for the reason that the cattle-men drive much of
their stock north through a good grazing country to shipping points for the East by
the Union Pacific and Northern Pacific roads. And the great mining industries of
Nevada, which once contributed a large and remunerative traffic to the road, now
give us but a very limited amount.
From the Nevada State line westward, 138 miles, the road is constructed over the
Sierra Nevada range of mountains, reaching an elevation of nearly 7,000 feet, where
the traffic is light and the expense of operating very heavy. And since it is proper
to judge all things by a standard of comparison, I may perhaps be permitted to point
out a few of the difficulties incident to constructing and operating tho Central Pa-
cific road over this mountainous and sparsely-settled section as compared with the
roads of the Eastern and Northwestern States ; the latter were easily built, having
straight lines, running through level and populous sections, many of them over inex-
haustible beds of coal, with grades so favorable that eighty cars and upwards can be
taken with safety in a train, while on the other hand, on the mountain section of tho
Central Pacific above mentioned, six cars is the limit for a train with a ten-wheel
engine, with 18 by 24-inch cylinders, more than six cars requiring a second engine,
and more than twelve or thirteen a third engine, or the train must be divided ; this
is on the portion of the road where we have to overcome an elevation of nearly 7,000
feet.
In passing, and in this connection, I will add that the nature of the country through
which this road runs between San Francisco and Ogden is such that there is nearly
15,000 feet of ascending and nearly 11,000 of descending grades ; making a total of
about 26,000 feet. The total curvature is 45,000 degrees, equal to 125 complete circles,
or to a 52-degree curve for the whole distance, thus necessitating a material increase
of locomotive power.
Again referring to that portion of the line between the Nevada State boundary
and Sacramento, I should not fail to remind you of the large and unavoidable ex-
2546 U. S. PACIFIC RAILWAY COMMISSION.
pense in the construction and maintenance of snow sheds and galleries, in extent
nearly forty miles, made necessary as a protection against the storms of the winter
months in that region ; then there is great cost in the maintenance and operation of
the enormous snow plows, with a large force of men to work them, which force in
the summer season has to be kept on water trains, fully equipped, to extinguish fires
in the sheds and galleries. This is an expense that no other railroad in this country,
or perhaps in the world, is subjected to.
All this is necessary to keep the line open for the movement of the traffic promptly
and satisfactorily ; and further, it is all-important that the line be ever kept open in
order to meet the wants of the Government, as provided in the act requiring us to be
prepared at all times to transport the mails, troops, munitions of war, supplies, and
public stores whenever required to do so by any department of the Government, as
they are to have preference in the use of the roa"d in all cases and under all circum-
stances.
The line from Sacramento to San Jose" is, in round n-umbers, 140 lineal miles ; be-
tween Sacramento and San Joaquin River, 68 miles, the country is good, and devoted
to agriculture and horticulture, the soil is productive and the traffic profitable to the
road, although at Sacramento and Stockton we have active competition from the riv-
ers, which makes traffic to and from those cities less desirable and profitable than we
could wish.
From the San Joaquin River over the inner coast range of mountains to Livermore,
31 miles, is a section which pays little tribute to the road, but from Livermore to
San Jose" the line runs through a fine productive section of agriculture and horticult-
ure, although that portion of it between Niles and San Jose", 17 miles, is subject to
active competition from the South Pacific Coast Railroad, which not only divides up
the traffic, but compels this company to take the remainder at very low rates.
Further competition from this source is, however, happily now avoided by the ac-
quisition of that company's property by the Southern Pacific Company.
In conclusion, I will add that notwithstanding the light traffic, the facilities and
accommodations furnished our patrons are in all respects first class.
Yours, truly,
A. N. TOWNE.
EXHIBIT No. 3. Statement of J. A. Fillmore, general superintendent, relative to cost of
operating mountain divisions.
SAN FRANCISCO, July 25, 1887.
Hon. LELAND STANFORD,
President Central Pacific Railroad Company :
DEAR SIR: As requested in yours of even date, I submit the following relative to
the difficulties of and the difference in cost of operating the mountain division of the
Central Pacific Railroad as compared with a road of ordinary grade :
(1) The engine service alone is nine times greater. For example, one engine can
take a train of forty -five cars in the valley from Sacramento to Rocklin, from which
point it requires fi,ve engines of the same class 1o take the same train over the mount-
ain division. On the return these engines, not being required to pull the trains, are
virtually "dead-headed," with the exception of one.
(2) The total cost of engine service per mile was much greater. Using the same
fuel, wood, at the same price per cord, the cost per mile on the 'mountain division is
33f ^, cents ; on a road of ordinary grade, 23$$, cents, an increase of 42^ per cent.
(3) On account of the increased number of trains over the mountain division (five
trains being required to do the work of one in the valley) there is a corresponding
increase of expenses in the way of stations, telegraph operators, track- walkers, watch-
men, wood-pilers, &c.
(4) The cost of keeping the mountain division open in heavy weather, especially
during the winter months, is something beyond comparison with any other division
or with any other road. I had charge of that division, as division superintendent,
during the winter of 1873-4. The total fail of snow that winter was 63 feet. At
times it was necessary to run five snow-plows, and nine engines were required to
each plow, to insure against blockade. In addition to this we had to employ be-
tween four and five hundred shovelers during the storms, and most of them were re-
quired between tho storms to shovel back the snow preparatory to another storm.
During that winter, and indeed during every winter when we are troubled with snow
in the mountains, all freight trains are put on sidings outside the snow-belt, their en-
gines are placed on the snow-plows, and we only attempt to run passenger trains.
We have had as many as thirteen engines on one passenger train of six cars. On that
portion of the mountain division where the snow sheds are located, we have expended
for repairs of the sheds in the nine years from 1878 to 1886, inclusive, $384,274.23, an
LELAND STANFORD.
2547
average of $42,697.23 per year. This is for ordinary repairs, and doesn't include bet-
terments. In addition to the above expenses on repairs of the snow sheds, in order
to guard against fire, we have three fire trains under steam day and night, ready to
move at a moment's notice when an alarm of fire in the sheds is turned in. As a
further precaution against fire, the sheds are watered twice a week for a distance of
about 36 miles,
(5) We have over the Central Pacific Railroad one through express train each way
per day, and during the summer months, for about six months of the year, for about
two-thirds of the time, these trains are run in two sections, being too long and too
heavy to be run as one solid train. Over the same road there is an average of three
through freight trains per day each way ; this is about the same daily number that
have been run during my entire connection with the road, which began in 1871. It
is only within the last few years, however, that second sections during the summer
months have become of almost daily occurrence.
(6) Relative to where the business comes from that would maintain a road from the
State of California through Nevada and Utah, will say : East-bound through freight
originates in California, nearly all of it, and mostly west of the Sierra Nevada Mount-
ains. Nearly all west-bound through freight originates east and south of Ogden,
Utah.
Yours, &c.,
J. A. FILLMORE,
General Superintendent.
STATE OF CALIFORNIA,
City and County of San Francisco, 88 :
J. A. Fillmore, being first duly sworn, saith : That he has read the foregoing state-
ment ; that the matter and things therein stated are true of his knowledge and belief,
except as to those matters stated on his information and belief, and as to those he be-
lieves it to be true.
J. A. FILLMORE.
Subscribed and sworn to before me this 26th day of July, A. D. 1387.
[SEAL.] E. B. RYAN,
Notary Public in and for said City and County.
EXHIBIT No. 4. Statement of E. H. Miller, jr., secretary, relative to dividends paid.
Number.
Date.
Kate, per
cent.
Amount.
1
Sept 13 1873
3
$1 68 265
2
Aii 4 1874
5
2 713 775
3
April 1 1875
6
3 256 530
4
Oct 1, 1875
4
2 171 >;>
5
April 3* 1876
4
2 171 >;>
6
Oct. 2,' 1876
4
2, 171 9
7
April 2, 1877
4
2 17' O'^O
8
Oct. , 1877
4
2 171 O'>0
9
Feb. , 1880
3
i 68 205
10
Aug. , 1880
3
] 778 26.">
11
Feb". 1881
3
1 778 265
12
Aug. , 1881
3
1 778 265
13
Feb. , 1882
y
1 778 265
14
Aug. 1882
3
1 77 2(55
15
Feb. 1883
3
1 778 205
16
Aug. 1, 1883
3
1 778 265
17
Jan. 15 1884
3
1,778 265
34. 308. 055
U. S. PACIFIC RAILWAY COMMISSION.
Central Pacific Railroad Company. Statement showing surplus profits available for dividends
from organization to December 31, 1884.
1864 to June 30, 1878.
Income receipts $124,283,017.46
Land receipts to redeem bonds 1, 136, 000. 00
Interest on sinking funds 790,207.43
$126, 209, 224. 89
Expenses, &c 98,582,084.43
Sinking funds of company 3,072,557.43
United States Government :
One-half transportation charges retained prior to
1873 758,639.69
One-half transportation to June 30, 1878 1,021,289.85
Five per cent, of net earnings to June 30, 1878. . 1, 871, 430. 00
Land bonds redeemed 1,136,000.00
106,442,001.40
Surplus profits to date 19,767,223.49
Dividends Nos. 1 to 8, inclusive, September, 1873, to October, 1877. . 18, 453, 670. 00
Balance surplus profits 1,313,553.49
July 1 to December 31, 1878.
Receipts:
Earnings $9,798,477.33
Lands 1,151,000.00
Interest on sinking funds 118, 702. 29
11,068,179.62
Expenditures:
Expenses, &c 7,916,723.13
Land bonds redeemed 1,151,000.00
Sinking funds of company 223,702.29
United States requirement, 25 per cent, of net
earnings 536,291.93
9,827,717.35 '1,240,462.27
For the year 1879.
Receipts :
Earnings 17,250,971.02
Lands 433,000.00
Interest on sinking funds 233,903. 18
17,917,874.20
Expendi tures :
Expenses, &c 14,860,262.54
Land bonds redeemed 433,000.00
Sinking funds of company 772, 403. 18
United States requirement, 25 per cent 899, 563. 92
16,965,229.64
952,644.56
Balance surplus profits to date 3,506,660.32
For the year 1880.
Receipts :
Earnings 20,911,108.58
Lands.. 200,000.00
Interest on sinking funds - 254, 617. 08
21,365,725.66
tELAND STANFORD.
2549
Expenditures :
Expenses, &c $16,588,934.81
Laud bouds redeemed 200,000.00
Sinking funds of company 1,008,117.08
United States requirement 1, 037, 225. 28
18, 834, 277. 17
$2,531,448.49
Surplus profits to date 6,038,108.81
Dividends Nos. 9 and 10 3,406,530.00
Receipts : For the year 1881. 2, 631, 578. 81
Earnings $24,094,100.95
From investments 612,656.40
From lands 420,000.00
Interest on sinking funds 262, 500. 00
25,389,257.35
Disbursements :
Expenses, &c 18,087,719.98
Laud bonds redeemed 420,000.00
Sinking funds of company 1,016,000.00
United States requirements 1, 038, 935. 24
20, 562, 655. 22
4, 826, 602. 13
Surplus profits to date 7,458,180.94
Dividends Nos. 11 and 12 3,556,530.00
Balance surplus profits 3, 901, 650. 94
Receipts : For the year 1882.
Earnings $25,683,242.41
Lands 711,000.00
Interest on sinking funds 281, 260. 00
26,675,502,41
Expenditures :
Expenses, &c 20,545,180.24
Land bonds redeemed 711,000.00
Sinking funds of company 1,034,760.00
United States requirement 792, 920, 24
23, 083, 860. 48
3,591,641.93
Surplus profits to date 7,493.292.87
Dividends Nos. 13 and 14 3,556,530.00
Balance surplus profits 3, 936, 762. 87
Receipts : For the year 1883.
Earnings $24,751,657.75
Lands 574.000.00
Interest on sinking funds 335, 125. 00
25,660,782.75
Expenditures :
Expenses, &c 20,196,863.42
Land bonds redeemed 574, 000. 00
Sinking funds of company 1, 088, 625. 00
United States requirement 661, 530. 69
22, 521, 019. 1 1 3, 139, 763. 64
Surplus profits to date 7,076,526.51
Dividends Nos. 15 and 16 3,556,530.00
Balance surplus profits 3, 519, 996. 51
2550
U. S. PACIFIC RAILWAY COMMISSION.
For the year 1884.
Receipts :
Earnings $'22,162,030.86
Lands 472,000.00
Interest on sinking funds 373,000.00
Miscellaneous 234,211.83
23,261,242.79
Expenditures :
Expenses, &c : 21,238,166.03
Lan d bonds redeemed 472, 000. 00
Sinking funds of company 1 , 126, 500. 00
United States requirement 538, 851. 52 Deficit.
23,375,517.55 $114,274.76
Surplus profits to date
Dividend No. 17
Balance surplus profits to date
3,405,721.75
1,778,265.00
1,627,456.75
E. H. MILLER, JR.,
Secretary.
STATE OF CALIFORNIA,
City and County of San Francisco, 88 :
E. H. Miller, jr., being first duly sworn, saith : That he has read the forgoing state-
ment consisting of the pages next preceding, marked " Exhibit No. 4," and knows the
contents thereof; that the facts therein stated are true except as to those matters
stated on his information or belief, and as to those he believes it to be truf.
E. H. MILLER, JR.
Subscribed and sworn to before me this 26th day of July, A. D. 1887.
[SEAL.] E. B. RYAN,
Notary Public in and for the City and County of San Francisco, State of California.
EXHIBIT No. 5. Statement of the consideration paid the company by each stockholder
receiving stock, and when and in ivhat property such payment was made.*
[The dates of payment herein given are the dates when amount subscribed was fully paid up. "When
stock was transferred or forfeited, the date of last payment by party holding stock is given.]
Names of stockholders.
No. of
.shares.
Dates of pay-
ment.
Amount
paid.
In what property.
Transferred, &c.
Central Pacific Rail-
road Company.
1
Oct 10 1864
$100 00
Cash
1
Oct 10 1864
100 00
Cash
2
Dec 1 1862
20 00
Cash
To Chas Crocker.
Mar 21 1870
180 00
Cash
Adams C W
10
Mar 11 1864
1 000 00
Cash
Brickell B
20
Apr 30* 1861
' 200. 00
Cash ..
To C. C.
Crocker C
Mar 21, 1870
1 800 00
Cash
Brickell E J
40
Apr 30 1861
400 00
Cash
To C. C.
Crocker C
Mar 21* 1870
3 600 00
Cash
Booth L A
10
Jan 17 1867
1 000.00
Cash
Bradley & Co E L
''5
Apr 30 1861
250. 00
Cash
Forfeited.
Beans T E
10
Apr 3o' 1861
100 00
Cash,
Forfeited
Bowstead & Co
10
Apr 30* 1861
100 00
Cash
To D "W "Welfcv
Welty, D. W
To C. C.
Crocker, C
June 21 1870
900. 00
Cash
Bailey, James
Stanford, A. P
150
Apr. 30, 1861
Sept 28 1863
1, 500. 00
Cash
To A. P. Stanford.
To Leland Stanford.
Stanford, Leland
Apr 4 1870
13 500.00
Cash...
Blanchard U" W
10
Apr 30 1861
100 00
Cash
To C. C.
Crocker C
Dec 14 1866
900 00
Construction
Burnham "W. C
10
Feb" 12* 1864
1 000 00
Cash
Burt B
5
Feb 18 1864
500 00
Cash
i
Bell T
2
Nov 5' 1862
20 00
Cash
To C. C.
Crocker, C
June 21* 1870
180 00
Cash
Bruner. Joset)h . .
2
Ffib. 9' 1863
40.00
Cash...
ToC.C.
* See answer to questions 27, 28, and 30.
LELAND STANFORD.
2551
EXHIBIT No. 5. Statement of the consideration paid the company by each stockholder
receiving stock, <f c. Continued.
Names of stockholders.
No. of
shares.
Dates of pay-
ment.
Amount
paid.
In what property.
Transferred, &c.
Central Pacific Rail-
road Company Con'd.
Crocker C
June 21, 1870
Nov. 6,1862
Nov. 20, 1862
June 2 1,1870
Nov. 20, 1862
June 21, 1870
Dec. 31,1864
Mar. 30, 18G3
June 21, 1870
Dec. 12, 1862
June 21, 1870
Nov. 15,1864
Apr. 14,1864
Dec. 15, 1862
Dec. 18,1862
June 21, 1870
Feb. 21,1863
Apr. 22, 1863
Jan. 4, 1866
July 4, 1863
Sept. 5,1864
Nov. 30, 1864
Apr. 4, 1870
Sept. 8,1864
July 1, 1863
Nov. 9,1864
May 6,1863
Sept. 22, 1870
Mav 1,1862
Sept, 5,1864
Dec. 1, 1864
Jan. 4, 1864
Apr. 14, 1863
Jan. 6, 1864
Oct. 31,1862
June 21, 1870
Feb. 27,1864
Nov. 5,1862
Dec. 3,1864
Mar. 12, 1863
June 21, 1870
Mai. 12, 1863
June 21, 1870
Nov. 10, 1862
Mar. 1,1868
Feb. 10,1864
May 6,1863
Sept. 22, 1870
Dec. 23,1865
Dec. 31,1863
May 9,1863
June 10, 1865
Dec. 14.1866
Jan. 6, 1863
June 2 1, 187C
Feb. 3, 1864
Jan. 7, 1864
May 12,1864
May 10,1861
May 30, 1864
Oct. 10,1864
Juno 2,1864
July 26, 1867
Dec. 11,1862
June 21, 1870
May 10,1864
May 10, 1864
Dec. 13,1862
May 1, 1861
Aug. 17, 1864
Feb. 11,1864
Mar. 3,1864
Feb. 21,1864
Oct. 22,1866
Dec. 14,1866
$160. 00
10.00
20. 00
180. 00
20.00
180. 00
2, 000. 00
150.00
350. 00
50. 00
450. 00
300. 00
500. 00
10.00
100. 00
900. 00
500. 00
Cash...
Forfeited.
To C. C.
To C. C.
ToC.C.
To C. C.
Forfeited.
To C. C.
To L. S.
ToC.C.
To A. P. S.
To L. S.
To C. P. Huntington.
To L. TJpson.
Forfeited.
ToC.C.
Forfeited.
To C. C.
ToC.C.
Forfeited.
To C. P. H
To J. Bithell.
ToC.C.
ToC.C.
To C. C.
To C. C.
Forfeited.
Forfeited.
To C. C,
Brown Daniel ....
1
2
Cash
Bowman Ida ...
Cash
Cash
Bowman, William J. . .
Crocker C
2
Cash
Cash
Bit hell Jacues
20
5
Cash
Blum E
Cash
Crocker C
Cash
Beck Robert
5
Cash
Crocker C
Cash .. .....
Bcllmer & Co J
3
5
1
10
Cash
Banquier, Joseph
Birnes Charles
Cash
Cash
Brown R X
Cash
Cash
25
Cash
Crocker C
2, 000. 00
5, 000. 00
20, 000. 00
5, 000. 00
16, 000. 00
4, 000. 00
3, 000. 00
2, 000. 00
1, 000. 00
400. 00
600. 00
100.00
900. 00
15, 000. 00
1, 000. 00
60.00
100. 00
100. 00
900. 00
1, 000. 00
10.00
200. 00
30. 00
70.00
30.00
70.00
10. 00
500. 00
500. 00
600. 00
900. 00
100. 00
900. 00
500. 00
800. 00
500
Stanford A P
Cash
Cash
r,ragg&Co., H. W....
Bassett, George A
Cross Samuel . .. ..
30
20
10
10
""io
Cash
Services
Services and cash
Cash
Iluntington, C. P
Callahan D E
Cash
Cash
Services
Crocker Charles
150
10
2
1
10
Cash
Cuminings, C. H
Culver J H
Cash
Cash
Coffin C S
Cash
Cochran, Martha T. . . .
Crocker C
Cash
Cash - ..
10
1
2
1
Cash
Cash >
Chevalier, F .1..
Cash
Cash
Cash
1
Crocker C
Cash
Converse C. H
1
5
5
15
Cash
Cook T.H
Cash
Coolot A
Cash
Cole Cornelius
Cash
Hnntinion C. P
Cash
Crocker, E. B
Crocker H. S
10
5
20
Cash
Services
Cash
dimming^, William...
Bithell J
Cash
Crocker C
i, 266. 66
100. 00
900. 00
5, 000. 00
5, 000. 00
45, OUO. 00
25, 000. 00
500. 00
500. 00
500. 00
210.00
90.00
50.00
450. 00
100. 00
4, 000. 00
10.00
100.00
200. 00
2, 000. 00
100. 00
1, 000. 00
100. 00
200, 00
Construction . ..'
Cash . .
Clark D. W
10
Crocker C
Cash
Crocker, B. R
C roc ker. C harles
50
500
250
5
5
5
3
Cash . . .
Cash
Construction ...
Cash ...
Chamberlain, O. L
Drew N. L
Cash .. .
Dein (r li
Cash
Duffy Barnes A
Casli
Davis, E
Cash
Crocker C .
Construction ..
Cash
Drehor W . .
5
Crocker, C
Cash
Drew,D. K
1
40
1
10
2
20
1
10
3
Cash
Drew & Co., N. L
Don "lasS. W. J
Cash
Cash
English, W. G .
Cash
Evt'na, J. R
Cash
Ebner, C. & F
Cash
Esl, A.
Earl.D. A.v ..
Casli
Cash
Evertt, W. L
Cash
C rocker, C -
Construction . .
2552
U. S. PACIFIC RAILWAY COMMISSION.
EXHIBIT No. 5. Statement of the consideration paid the company by each stockholder
receiving stock } <j-c. Continued.
Names of stockholders.
No. of
shares.
Dates of pay-
ment.
Amount
paid.
In what property.
Transferred, <fec.
Central Pacific Sail-
road Company Con'd.
Fbidley, Tliomas W..
Crocker C
10
Nov. 1,1864
Dec. 14,1866
Oct. 22,1862
Dec. 14,1866
May 21, 1864
July 15, 1863
Dec. 14,1866
May 22, 1863
June 2 1,1 870
July 1,1863
Aug. 8,1864
May 1,1861
$100. 00
900. 00
100. 00
900. 00
500. 00
500. 00
500. 00
60.00
140. 00
40. CO
2, 000. 00
100. 00
Cash
To C. C.
To C. C.
To C. C.
To C. C.
Forfeited.
L. H. Foote.
Forfeited.
To L. Upson.
To J. M. Frey.
ToC.C.
To C. C.
Forfeited.
To C. C.
To C. C.
To Dr. D. W. Whitmore.
ToC.C.
To C. C.
Forfeited.
To C. C.
To C. C.
Forfeited.
To C. C.
To C. C.
To C. C.
To C. C.
ToC. C.
Forfeited.
To E. H. Miller, jr
To C. C.
Forfeited.
To C. C.
To C. C.
Construction ...
Cash
Forbes J. F. H
10
Crocker C
Construction . . .
Cash
Frederick & Kerebs . . .
Foye, W.R.S
5
10
Cash
Crocker, C
Construction ...
Cash
Franklin, P
2
Floburg J S
1
20
10
Friend & Terry
Cash
Milliken Brothers
Foote L H
Cash
Forney, J- W
Griffin' g, Frederick....
20
10
July 1,1863
May 1,1861
Sept. 5,1804
May 1,1861
Apr. 27, 1870
June 23, 1865
Mar. 30, 1862
June 21, 1870
July 15, 1863
Dec. 14,1866
Feb. 8, 1864
May 30, 186'i
Mar. 17, 1863
June 2 1, 1870
Mar. 31,1864.
May 29, 1863
June 21, 1870
Dec. 17,1862
Dec. 13, 1866
Jan. 7, 1863
June 21, 1870
Jan. 7, 1863
June 21, 1870
Jan. 21,1864
July 30, 1863
July 1,1863
May 1,1861
June 21, 1870
Dec. 31, 1865
Dec. 31, 1865
Mar. 15, 1864
Mar. 27, 1864
Feb. 16,1864
Mar. 17, 1863
June 21, 1870
Nov. 5,1862
Dec. 17, 1863
June 21, 1870
Sept. 4,1862
Dec. 14, 1866
Dec. 11,1862
Dec. 14,1866
Dec. 11, 1862
Mar. 13, 1867
July 6,1865
Dec. 12. 1862
Dec. 14,1866
Apr. 21, 1863
Jan. 13,1863
Apr. 29, 1863
July 20, 1867
July 26, 1867
Jan. 31,1863
Dec. 31,1865
Dec. 31, 1865
July 1,1863
Apr. 26, 1864
Sept. 22, 1863
Dec. 20, 1863
Mar. 20, 1868
Fob. 2, 1863
June 21, 1870
Jan. 30,1864
2, 000. 00
100.00
900. 00
100. 00
900. 00
5, 000. 00
300. 00
700. 00
500. 00
500. 00
300. 00
30.00
100. 00
400. 00
500. 00
200. 00
300. 00
100. 00
900. 00
50.00
450. 00
50.00
450. 00
1, 000. 00
500. 00
2, 500. 00
100. 00
900. 00
15, 000. 00
15, 000. 00
400. 00
200. 00
1, 000. 00
80.00
320. 00
10.00
600. 00
400. 00
500. 00
500. 00
50.00
450. 00
20.00
180. 00
500. 00
230.00
1, 800. 00
60.00
50.00
3, 000. 00
Services
Cash
Gass J H
10
""56
10
Cash
Frey, J. M
Gilli " John
Cash
Gardner Robert .
Cash
Crocker C . -
Cash
Gallatin Albert .
10
Cash
Crocker C
Construction ...
Cash
Greenlaw A . S
3
1
5
Gotthold, Gustave
Gaxort Eugene .......
Cash
Cash
Crocker C
Cash
Gossmer B
5
5
Cash
Greenbaum, William..
Crocker C.....
Cash
Cash
Gates Justin
10
Cash
Whitmore Dr. D. "W..
Cash
Gruhler, Christian
Crocker C
5
Cash
Cash
Gruhler Elias
5
Cash .
Crocker, C ............
Cash
Gr abler J
10
10
25
10
Cash
Grimm C. H
Cash
Goodman, Ira
Services
Hooker C. G
Cash . .
Crocker, C
Cash ..
Hopkins, Mark
150
150
4
2
10
4
Cash
Huntingdon C P
Cash
Hill William H
Cash
Harbison, J. S
Hurley, MissM.E....
liar till an G F
Cash
Cash
Crocker C
Cash
1
10
Heilbrou fe Bro., A
Crocker C
Cash
Cash
Hunt, W. B. (for E.
Hunt.)
Crocker C . .. .....
10
Cash
Cash
Holmes H.T
5
Cash
Crocker C
Construction ...
Cash
Henkel William
2
Crocker, C
Construction . . .
Cash
Heinrich, Charles .....
5
20
Harmon, A. KL. P.. .
Cash
Crocker C
Construction ..
Cash
Hoppe Jacob
2
5
100
Hoimes E
Hull & Lehman .....
Cash
Miller jr., E. H .
Crocker, C
z, ooo. oo
20.00
50, 000. 00
50, 000. 00
2, 500. 00
500. 00
1,516.77
12,816.55
' 666. 68
500. 00
40.00
160. 00
200. 00
Construction ...
Cash
Cash . ....
Hcisch, August .
2
500
500
25
5
150
Hopkins, Mark ........
Huntington, C. P
Hepburn, George
Irwin Jarcd
Cash
Services
Cash
Judah T D
Services
Construction . . .
Crocker C .... .
Jolly Samuel
5
2
Jacobs N. M
Cash
Johnson, Peter
2
Cash ,..,
Li. LAND STANFORD.
2553
EXHIBIT No. .",. Si
vj tin; consideration paid the company by each stockholder
receiving stock, <Jrc. Continued.
Names of stockholders
No. of
shares.
Dates of pay-
ment.
Amount
paid.
In what property
Transferred, &c.
Central Pacific Rail-
road Company Con'd.
Jacobs Elias
10
Dec. 17 1862
$100 00
Cash
To C C
Crocker C
June 21 1870
900 00
Cash
Judah T. D
450
July 1 1863
45 000 00
Kelly Mott & Co
10
May 1 1861
100 00
persons and
charged to
construction.
Cash
ToC. C
Crocker C . ...
Dec. 14 1866
900 00
Knox W. F
5
Apr 28 1864
500 00
Klink & Martfeld
5
June 30 1863
500 00
Cash
Kohler H
Nov. 3 1862
50 00
Cash
To C C
Crocker C
June 21 1870
450 00
Cash
Kahl J B
5
Nov 5 1862
50 00
Cash
ToC C
Crocker C
June 21 1870
450 00
Cash
Krambach, L
3
Nov. 30, 1863
150. 00
Cash ...... ......
Forfeited.
Kraies, Edward
10
Dec. 3, 1864
1, 000. 00
Cash
Kimball E
<5
Dec 16 1863
500 00
Cash
Keller, Frank
5
July 11, 1866
500. 00
Cash
t
Kendall, David
5
Oct. 20, 1868
500. 00
Cash
Kadel Tobias
5
Dec 11 1862
50 00
Cash
Forfeited
Kremble E C
10
July 1 1863
1 000 00
Lindley T M
10
May 1 1861
100 00
Cash
L TJpson
TJpson, Li
Sept. 5 1864
900. 00
Services . .
Lord, Holbrook & Co..
10
Aug. 10 1864
1 000.00
Cash
Loutzinhiser, W^
5
May 1 1861
50.00
Cash
To C. C.
Crocker C
Dec. 14 1866
450. 00
Construction
Lindoy, W. K
10
Feb 10 1864
1 000 00
Cash
Larkin, H. W ,.
50
Feb 16 1864
5 000.00
Cash
Loomis E. J ........
1
Apr 24 1863
30 00
Cash
Forfeited.
Littleton M
2
Feb 16 1864
200 00
Cash
Lewis Isaac
1
Apr 21 1864
100 00
Cash
Linton C. B .
1
Apr 24 1863
30 00
Cash
Forfeited.
Lyon & Son
10
July 12 1865
1 000 00
Cash
Locke & Lavenson
5
Aug 22 1865
500 00
Cash
Lecompt M
10
June 18* 1863
500 00
Cash
To C. C.
Crocker C
June 22 1868
500 00
Construction
Lindley, T. M
50
July 11, 1865
5, 000. 00
Cash .. ......
Lord J D
20
Aug 10 1864
2 000 00
Cash
Marsh, Charles
50
Sept. 5 1864
3, 000. 00
Cash...
Forfeited.
Morse, John F
5
Feb. 29 1864
500. 00
Cash
Moore, B. F
10
Feb. 2 1863
200. 00
Cash
Forfeited.
McLaughlin, E
10
May 1 1861
100. 00
Cash
To C. C.
Crocker, C
Dec. 14 1866
900. 00
Construction . . .
Mathewson J. T
5
Feb. 2 1863
100.00
Cash
To C. C.
Crocker, C '
Dec. 14 1866
400 00
Construction .
TVTnr.sp, John F
15
Feb. 29 1864
1 500. 00
Cash
Tvf ofruiffl James
5
Jan. 15 1863
100. 00
Cash
To C. C.
Crocker C . . .
June 21 1870
400. 00
Cash
Mier F ..
10
May 20 1864
1 000. 00
Cash
Mayer Conrad
j
Nov 5 1862
30. (>0
Cash
Forfeited.
Mahlenfels F H
2
Nov 5 1862
20.00
Cash ...
Forfeited.
Mosier Samuel
5
Nov 7 1862
50.00
Cash
Forfeited.
Meister John
2
Nov 8 1862
20. 00
Cash
Forfeited.
Marvin W W
10
May 10 1864
1 000. 00
Cash
McNeil John
5
Sept 5 1868
500. 00
Cash
McDonald K H
20
June 8 1868
2 ono.oo
Cash
Myers H
5
Dec 3 1864
500. 00
Cash .....
Mott jr. E B
10
Feb 5 1866
1 000.00
Cash...... ...
Moore George R
10
Feb 25 1865
1 000. 00
Cash
Mangan P F
1
Feb 15 1864
100 00
Cash
Moore D Z
25
June 19 1865
2 250.00
Cash...
To C C
Crocker, C
June 21, 1870
250. 00
Cash
Mills & Co., D.O
Mahou D "VV
50
5
Mar. 1,1864
July 1 1863
5, 000. 00
500. 00
Cash
Services .
Nichols N. S
10
Dec 16* 1863
1 000.00
Cash....
Newbaur &. Co A.
3
Nov 5 1862
30.00
Cash ......
To C C
Crocker C
June 21 1870
270. 00
Cash
O'Neil, James
2
Oct 25 1862
20 00
Cash. ....
To C C
Crocker, C
June 21 1870
180. 00
Cash
Oatman, Ira.
10
Nov l' 1862
100. 00
Cash
Forfeited
Ochs, George . . .
2
Nov 7 1862
20.00
Cash
To C C
Crocker, C
June 21 1870
180 00
Cash...
Oettl, F
10
Dec 11 1862
100.00
Cash
Forfeited
Pond, J. S
2
Jan 30 1863
40. 00
Cash
To C C
Crocker, C
June 21 1870
160. 00
Cash. .....
Pike, J.F
20
Mar 20 1865
2 000.00
Cash
Kussell, P. H
5
June 19 1865
500. 00
Cash
Rice.C...
10
Anril 6. 1863
300. 00
Cash...
To C. C.
2554
U. S. PACIFIC RAILWAY COMMISSION.
EXHIBIT No. 5. Statement of the consideration paid the company by each stockholder
receiving stock, $c. Continued.
Names of stockholders.
No. of
shares.
Dates of pay-
ment.
Amount
paid.
In what property.
Transferred, <fcc.
Central Pacific Rail-
road Company Con'd.
Crocker C
June 21, 1870
April 11, 1863
June 21, 1870
July 11, 1866
April 28, 1864
Oct. 31,1862
June 21, 1870
June 17, 1863
June 21, 1870
June 19, 1865
Feb. 4, 1863
July 5,1864
Mar. 19, 1864
Feb. 13,1863
May 9,1863
June 8, 1863
Dec. 14, 1866
Jan. 4, 1863
July 1,1863
July 1,1863
Sept. 5,1864
June 21, 1870
May 1, 1861
June 21, 1870
May l, 1861
May 1, 1861
Dec. 31, 1865
Mar. 11, 1864
Feb. 21,1863
Jan. 26,1864
Nov. 1,1862
June 21, 1870
Jan. 19,1864
Nov. 4,1862
Dec. 14, 1866
Feb. 15, 1864
June 2,1804
June 21, 1870
April 5, 1864
Jan. 26, 1864
Mar. 9,1864
Mar. 9,1864
April 15, 1863
Dec. 11, 1862
June 21, 1870
Dec. 11,1862
June 21, 1870
Dec. 3,1864
May 17, 1864
Jan. 30,1863
June 21, 1870
Feb. 10, 1864
Aug. 12, 1865
Feb. 27,1863
June 21, 1870
Oct. 21,1865
Nov. 30, 1864
Jan. 22,1870
July 1, 1863
July 1,1863
July 1,1863
Nov. 5,1862
May 5, 1861
Feb. 20,1864
Sept. 22, 1866
Dec. 11,1862
June 21, 1870
Dec. 11, 1862
June 21, 1870
Sept. 5,1864
Oct. 23,1862
Jan. 17,1864
May 1, 1861
Dec. 14,1866
May 1, 1861
Feb. 29, 1864
$700. 00
200. 00
800. 00
1, 000. 00
500. 00
50.00
450. 00
50.00
50.00
1, 000. 00
20.00
300. 00
500. 00
40.00
160. 00
150. 00
300. 00
700. 00
1, 000. 00
1, 000. 00
5, 000. 00
3, 900. 00
1, 100. 00
200. 00
1, 800. 00
100. 00
50.00
15, 000. 00
100. 00
20. 00
1, 000. 00
20.00
180. 00
500. 00
40.00
360. 00
100. 00
140. 00
60.00
300. 00
1, 000. 00
500. 00
100. 00
90.00
10.00
90.00
50.00
450. 00
1, 000. 00
1, 000. 00
60.00
240. 00
1, 000. 00
500. 00
400. 00
1, 600. 00
500. 00
50, 000. 00
1, 000. 00
2. 000. 00
2, 000. 00
500. 00
50.00
100. 00
500. 00
1, 000. 00
30.00
270. 00
30.00
270. 00
1, 000. 00
20.00
2, 000. 00
100. 00
900. 00
50. 00
300. 00
Cash
ToC.C.
ToC.C.
ToC.C.
Forfeited.
Forfeited.
ToC.C.
To C. C.
To C. C.
Forfeited.
Forfeited.
Forfeited.
To C. C.
ToC.C.
To C. C.
Forfeited.
ToC.C.
To C. C.
ToC.C.
ToC.C.
Forfeited.
Forfeited.
ToC.C.
To C. C.
Forfeited.
To C. C.
Ross Thomas
10
Cash
Crocker C
Cash
Renaud G
10
5
5
Ready, W. B. and B. F.
Crocker C
Ross Frank C
1
Cash
Crocker C
Cash
Russell.P.H
10
1
3
5
2
5
10
Cash
Robbins S B
Cash
. Rausich Martin
Cash
Reeves J W
Cash
Redding B B
Cash
Rice H B
Salary
Cash
Rowland Geo
Cash
Crocker C
Construction ...
Cash
Rad cliff W M
10
10
50
50
Robinson Jno E
Services
Ryan Jas T
Services
Strong.D. W.i
Crocker C
Cash
Cash
Stockton E
20
Cash
Crocker C
Cash
Sargent A. A
10
5
150
1
1
10
2
Cash
Smith C. W
Cash
Stanford Leland
Cash
Seaman, J. A
Smith, John
Schild Philip
Cash
Cash
Cash
Strowbridge, F. W
Crocker C ...
Cash
Cash
Scott Mary.
5
4
Cash
Soule E
Cash
Crocker C
Construction . . .
Cash
Schaefer Louis
1
2
Sellin^er Chas
Cash
Crocker C
Cash
Schade, John
Scheld Philip
3
10
5
3
1
Cash
Cash .
Stanton P
Cash
Stevens Joseph
Cash
Schroeder H
Cash ...
Schroer S. H
Cash
Crocker C
Cash
Stremming C
5
Cash
Crocker C ..
Cash
Strutz, Julius
Stewart, Geo. "W . .
10
10
3
Cash
Cash
Stanley, Lee .... .
Cash
Crocker, C .. ..... ..
Cash
Strong, W. R
10
5
20
Cash
Schineiser, Geo
Cash
Spaulding, Wm. H
Crocker C
Cash
Cash
Swinerton, Geo. H
Stanford Leland
5
500
10
20
20
5
5
10
5
10
3
Cash
Cash
Stanford A P
Cash
Shaw W. B
Cash
Sturgeon E B
Cash
Sherman R. N
Cash
Sutter, Chas
Cash
Turner, I. N
Cash . ...
Truchler, Henry
Cash
Turon, S
Cash .
Thirlbahr, H..
Cash
Crocker, C
Cash
Thirlbahr, Dores
(J rocker C
3
Cash
Cash
Upson L
10
2
20
10
Cash
Van Heusen, G. K
Van Winkle, I. S
Williams, John
Crocker, C
Cash
Cash
Cash
Construction ...
Cash
Waite, E.G
Welty, D. W. (for Mrs.
Baldwin).
5
3
Cash .. .
LELAND STANFORD. 2555
EXHIBIT No. 5. Statement of the consideration paid the company by each stockholder
receiving stock, #c. Continued.
Names of stockholders
No. of
shares.
Dates of pay-
ment.
Amount
paid.
In what property
Transferred, &c.
Central Pacific Rail-
road Company Con'd.
Wheeler, O. C. (in trust
Wetzlar, Julius
3
10
25
5
Nov. 23, 1866
Dec. 3, 1864
Feb. 26,1864
Jan. 6, 1863
June 21, 1870
Feb. 25,1864
Sept. 5,1863
Oct. 18,1865
Feb. 6,1863
Nov. 15, 1864
Nov. 12, 1864
May 16, 1864
Dec. 11, 1862
Jan. 10,1863
June 21, 1870
Jan. 10,1863
1865
$300. 00
800. OG
2, 500. 00
50.00
450. 00
100. 00
20.00
2, 500. 00
40.00
160. 00
500. 00
500. 00
10.00
10.00
90.00
10.00
1, 000. 00
100. 00
100.00
900. 00
150. 00
50.00
Cash
Forfeited.
To C.C.
Forfeited.
To J. Bellmer & Co.
Forfeited.
To C.C.
Forfeited.
To C. C.
Forfeited.
Forfeited.
To C.C.
Cash
Williams, J. C
Cash
Wachhorst H
Cash
Crocker C
Cash
Zumwalt, D. K
1
2
25
2
Cash
Shew, J acob
Cash
Wheeler, Cyrus T
Menke A. ...... . ..
Cash
Cash
Bellmer & Co., J
Cash
Rippon &Hill
5
5
1
1
Cash
Ly tie, Geo. J
Cash
Pitzpatrick, M
Cash
Cash
Crocker, 5
Cash
Lages, C
1
10
1
10
Cash
Jacob, Enoch
Cash
Stewart, Thos. K
Jan. 8, 1864
Dec. 8,1862
Dec. 14,1866
Sept. 5,1863
Sept. 5,1863
e, 6,392, at....
Cash
Jenks, C.C
Cash
Crocker, C
Construction ..
Cash
Dumant, Alphonsine..
Rond. J.P.C
Total number of shares
I?ii(l in eis &IJOYO
15
5
Cash
6,392
as abov
619, 340. 00
Cash .
639, 200. 00
619, 340. 00
267 shares were declared forfeited, June 13,
1870, on which there had been paid $6,840,
which was
19, 860. 00
6, 840. 00
Credited to profit and 1
Deduct 267, leaves 6.12E
Burke, E
oss accot
shares,
D
3
3
1
1
10
10
10
3,000
2,500
500
600
500
int
26, 700. 00
at$100
612, 500. 00
500. 00
300. 00
300. 00
100. 00
100.00
1, 00. 000
1, 000. 00
1, 000. 00
300, 000
250,000
50, 000
60, 000
25, 000
25, 000
500
3,000
1,000
1,000
700
5,000
100
500
500
100
100
300
7,600
11, 600
65, 800
5,500
4,500
300
100
500
Mar. 24, 1864
Aug. 16, 1864
Aug. 16, 1864
Mar. 15, 1864
Mar. 15, 1864
Dec. 29,1865
Aug. 8,1865
Aug. 10, 1863
Jan. 25,1864
Jan. 12,1864
Aug. 4,1863
Aug. 4,1863
July 1,1863
Sept. 22, 1863
July 20, 1863
July 27, 1863
July 27, 1863
July 27, 1863
July 27, 1863
Dec. 12,1863
Dec. 12,1863
Dec. 12,1863
Dec. 12,1863
Dec. 14,1863
Dec. 15,1863
Jan. 14,1864
Apr. 30, 1864
Dec. 1, 1864
Sept. 24, 1864
Apr. 26, 1864
Apr. 28, 1864
Feb. 29, 1864
June 17, 1865
Apr. 28, 1804
Weil, C
Cash
Seeger, R .... .
Cash
Hill, W.H., for Jane E.
Hill, W.H., for Isabella
Miller, jr., E.H ..
Godchauer Bros. & Co .
McClatchy, J
Cash
Cash
Cash
Cash
Services
Sacramento County . . .
Placer County
Bonds
Bonds
Lombarde, C. A
Lombarde C. A.
Construction;
materials.
Construction;
materials.
Services
Judah T.D
Crocker C
Salarv
Palmer C
5
10
10
10
7
50
1
5
5
1
1
3
76
116
658
55
45
3
1
5
Cash
Williams, Mrs. E.L.M.
Glidden, Mrs. C.C ....
Glidden, Mrs. E.M....
Lynch, P..
Construction;
materials.
Construction;
materials.
Construction;
materials.
Cash ...
Rogers, J. J
Advertising and
printing.
Cash... ..
Johnson, Joel. ........
Boruck, M. D
Services . .
Chase, C.M
Services .
French, Walter H
Coates, William
Cash
Right of way;
release.
Construction ...
Construction . . .
Construction
Construction
Construction ...
Construction ...
Real estate
Cash..
Collins & Bro., C
Smith S. D
Crocker, C ..
Crocker, C .. .....
Bates, C. D
Turton, Knox & Ryan .
Sanders, Lewis
Domingos, John
Turtou, William
Cash...
r R VOL iv-
2556
U. S. PACIFIC RAILWAY COMMISSION.
EXHIBIT No. 5. Statement of the consideration paid the company l)y each stockholder
receiving stock, #c. Continued.
Name of stockholders.
No. of
shares.
Dates of pay-
ment.
Amount
paid.
In what property.
Transferred, &c.
Central Pacific Rail-
road Company Con'd.
Foster F
1
22
360
2
200
202
40
3
3,377
13
3
20
200
10
30
65
141
5,041
6,584
2,717
55
1,005
2,210
1,158
2,109
50
1,901
25
20
4, 334
5,749
45
6,785
4,316
50
20
5 595
Apr. 30, 1864
Apr. 30, 1864
Sept. 20, 1864
Nov. 9,1864
Dec. 1,1864
Dec. 31,1864
Feb. 25, 1865
Apr. 7,1865
June 24, 1865
June 24, 1865
June 30, 1865
June 30, 1865
Aug. 26, 1865
Nov. 10, 1865
Dec. 23,1865
Dec. 23,1865
Dec. 23, 1865
Dec. 12,1865
Dec. 12,1865
Dec. 15,1865
Jan. 4,1866
Jan. 12,1866
Fob. 12,1866
Mar. 7,1866
Mar. 9,1866
Mar. 9,1866
Apr. 19.1866
May , 1866
June 5,3866
May 18, 1866
June 8,1866
June 21, 1806
July 14, 1866
Aug. 14, 1866
Aug. 20, I860
Aug. 31, 1866
Sept. 24, 1866
Dec. 7, 1866
Dec. 7. 1866
Dec. 7, 1866
Dec. 7, 1866
Dec. 12,1866
Dec. 31,1886
Feb. 22.1867
Feb. 22,1867
Feb. 22,1867
Mar. 13, 1867
Mar. 22, 1867
Apr. 3, 1867
Apr. 3,1867
July 4,1867
July 16,1867
July 26, 1867
July 30, 1807
Oct. 1, 18S7
Oct. 14,1867
Dec. 4,1867
Dec. 24,1867
Feb. 3, 1868
June 4,1868
June 16, 1868
July 2,1868
Aug. 22, 1868
Sept. 25, 1868
V/>v. !\ 1f8
DI.-U 14, J8U8
Jan. 5, 1869
Feb. 18,1869
Oct. 1, 1869
$100
2,200
36, 000
200
20, 000
20, 200
4,000
300
337, 700
1,300
300
2,000
20, 000
1,000
3,000
6, 500
14, 100
504, 100
658, 400
271, 700
5,500
100, 500
221, 000
115, 800
210, 900
5, 000
190, 100
2,500
2,000
433, 400
57-4. HO
4,500
678, 500
431,600
5,000
2,000
559, 500
13, 000
2,000
9,500
29, 500
1, 477, 700
142, 900
20, 000
60, 500
29, 500
199,600
161, 700
5,000
700
3,000
694, 000
1,097,600
2, 182, 200
912, 500
500
729, 900
176, 100
1,000
5,000
400
860, 000
5, 500
7, 396, 000
500
1,488,100
200
8, 600, 000
6, 880, 000
Stationery and
printing.
Car trucks
Paid for materi-
als.
Services and
cash.
Rolling stock...
Construction . . .
Services
'
Mason Mfg. Co
Huntington, C. P., agt .
Ross Samuel .......
Bran u an S ........
C rocker C ..........
Moore George R......
Parker J. E
Real estate
Construction ...
Real estate
Services
Crocker Charles ......
Ames Henry .
Estee M M
Haskell D. H
Services
Huntington, C. P., agt .
Robinson Robert .....
Sold for cash . . .
Services ........
Huntingtou, U. P
Crocker E. B
Salary
Salary
Crocker C
Construction ...
Construction ...
Construction ...
Salary
Crocker C
Crocker C ............
C rocker C ....... ..
Construction ...
Construction ...
Construction ...
Construction ...
Paid to sundry
persons and
charged ex-
pense.
Construction ...
Expense
Crocker C...
Crocker C
Huntington, C. P., agt .
Huntington, C. P., agt.
Huntington, C. P., agt.
Crocker C
Expense
Construction ...
Construction ...
Sold for cash . . .
Construction . . .
Construction ...
Expense .
Crocker C
Huntington, C. P., agt.
Crocker C.... ........
Crocker C.... ........
Huntington, C. P., agt.
Huutington, C. P., agt.
Expense
Construction ...
Expense. . . .
Huntington, C. P., agt.
Huntington, C. P., agt.
Huntington, C. P., agt.
Huntington, C. P., agt.
Crocker C
130
20
95
295
14, 777
3,429
200
605
295
1,996
1,617
50
7
30
6,940
10, 976
21, 822
9,125
5
7,299
1,761
10
50
4
8,600
55
73, 900
14, 80 1
2
86, 000
68, 800
Sold for cash. . . .
Sold for cash . . .
Expense .....
Construction
Construction
Sold for cash
Sold for cash...
Expense ....
Crocker C
Huntington, C. P., agt.
Huntingtou, C. P., agt .
Huntingtou, C. P., agt .
Construction
Construction
Sold for cash. . .
Sold for cash. . .
Expense
Huntiugton, C. P., agt.
Huntington, C. P., agt .
Huntington, C. P., agt .
Crocker C
Construction. . .
Construction
Construction. .
Construction..
Sold for cash. .
Construction..
Construction..
Cash .
Crocker C
Crocker C
Crocker C
Huntington, C.P., agt.
Crocker, C . .......
Crocker, C
McClatchy, James
Buntington, C. P., agt.
Huntington, C. P., agt .
Contract & Finance Co.
Huntington, C. P., agt.
Contract & Finance Co
McDonald, R. H
Crocker, C
Paid sundry per-
s o n s and
charged to ex-
pense.
Expense as above
Construction
Expense
Construction
Real estate
Construction....
Expense .
Huntington, C. P., agt.
Contract & Finance Co.
Contract & Finance Co
Construction
Construction....
LELAND STANFORD.
2557
EXHIBIT No. 5. Statement of the consideration paid the company by each stockholder
receiving stock, <fc. Continued.
Names of stockholders.
No. of
shares.
Dates of pay-
ment.
Amount
paid.
In what property.
. Transferred, &c.
Central Pacific Rail-
road Company Con'd.
Huntington, C.P.,agt.
50
Nov. 4,1869
$5 000
Expense ......
Crocker, Charles
4,000
Apr. 6, 1870
400 000
\jash
Huntington, C. P., agt.
50
May 19, 1870
5 000
Western Pacific Kail-
road Company (79,000).
Santa Clara County ....
Stanford A P
1,500
10
June 30, 1870
June 30 1870
150, 000
1 000
Consolidation of
June 30, 1870.
(See supple-
mentary state-
ment W. P. R.
R.)
Stanford Leland
15 484
June 30 1870
1 548 400
Crocker, Charles
15, 499
June 30, 1870
1 549 900
Crocker E B
15 499
June 30 1870
1 549 900
Hopkins, Mark
15,499
June 30, 1870
1 549 900
Huntington, C . P. .....
15, 499
June 30, 1870
1- 549 900
Miller, E.H., jr
5
June 30, 1870
500
5
June 30 1870
500
California and Oregon
Railroad Company
(18,383).
Crocker E B
3,659
Aug. 22 1870
365 900
Consolidation of
Hopkins Mark
3 658
Auo- 22 1870
365 800
Aug. 22, 1870.
Stanford Leland......
3 661
AUO- 22 1870
366 100
Stanford A. P
5
Aug 22* 1870
500
Miller E. H jr .
3
Auor 22* 1870
300
Redding B. B ...
5
Aug 22 1870
500
Cummin o-s C. 31 . ....
5
Auo- 22* 1870
500
Crocker Charles
3 659
Aug 22 1870
365 900
Huntin r ton C. P
3 658
Aug 22* 1870
'565 800
Madden Jerome
5
Auo- 22 1870
500
Scudder C. L
5
Au- 22 1870
500
Stanford A. P
Aug 22 1870
Mint James P
20
Aug 22* 1870
2 000
L^ider P. C
20
Auo- 22 1870
2 000
Dana Charles
20
Au- 22* 1870
2 000
San Joaquin Valley R.
Consolidation of
R. Co. (3,050).
Crocker E. B
Huntington, C. P
600
600
Aug. 22, 1870
Auo- 22 1870
60, 000
60 000
Aug. 22, 1870.
Hopkins, Mark
600
Aug 22 1870
60 000
Miller, jr., E. H
Crocker, C
10
600
Aug. 22, 1870
Auo- 22 1870
1,000
60 000
Bender D A
10
An " 22 1870
1 000
Cummings, C. H
Redding, B. B
10
10
Aug. 22! 1870
Aug. 22 1870
1,000
1 000
Stanford Leland
600
Aug 2 9 1870
60 000
Madden, Jerome
10
Aug' 22* 1870
1 000
San Francisco, O a If-
Consolidation of
land and Alameda
R. R. Co. (7,603).
Blake, G. M
2
Aug 22 1870
200
Aug. 22, 1870.
Blanchard, Win
20
Au- 22 1870
2 000
Brooks, T. W
20
Aug 22 1870
2 000
Browne J M
10
Auo- 22 1870
1 000
Brayton, Mrs. J. H...
Can non, Adam
Garratt, W. T
5
105
16
Aug! 22,' 1870
Aug. 22, 1870
Aug 22 1870
"500
10, 500
1 600
Hays, J. C
5
Aug' 22* 1870
500
Hardy, M. C
3
Auo- 22* 1870
300
Muller, H. ...
1
Au" 22* 1870
100
Mac ken, James
35
Aug 22* 1870
3 500
Jtadovich, L
|
Aug 22 1870
500
Scotchler. J. B
5
Aug 27 1870
600
Taylor, C
2
Auo- 22, 1870
200
Tubbs, Hiram
238
Auo- 22 1870
23 800
Tubbs, Hiram, trustee.
15
Aug. 22, 1870
1,500
2558 tr. s. PACIFIC RAILWAY COMMISSION.
EXHIBIT No. 5. Statement of the consideration paid the company by each stockholder
receiving stock, $c. Continued.
Names of stockholders.
No. of
shares.
Dates of pay-
ment.
Amount
paid.
In what propert y.
Transferred, &c.
San Francisco, Oak-
land and Alameda
JZ. B. Co. Cont'd.
"Woods, Samuel <,
10
Aug 22 1870
$1 000
Stanford, Lei and, etal.)
Auo 1 . 22 1870
Cohen, A. A
6 106
Aug. 22 1870
610 600
Crocker, Chas
200
Au" 1 . 22 1870
20 000
Crocker, E. B
200
Auf. 22 1870
20 000
Hopkins, Mark
00
Aug. 22 1870
20 000
Huntington, C. P
Stanford, Leland . .
200
200
Aug. 22, 1870
Aug. 22 1870
20,000
20 000
Contract & Finance Co
Contract & Finance Co
12, 815
20, 000
Feb. 24, 1871
Apr. 29. 1871
1, 281, 500
2, 000, 000
Construction.
Construction.
545 585
54 558 500
Deduct forfeited stock
85
8 500
25 C.&O.div'n stock,
60 Old Tuba R. R.
545 500
54 550 000
Deduct
2 745
274- 500
Stock s u r r e n-
542 755
54 275 500
1870 S J V R
Pacific Improvem'tCo.
Stanford Lel'd trustee
80, 000
Dec. 31, 1886
June 5 1871
8, 000. 000
R.Co.
Construction, C.
& O. division.
In trust for Co
Stanford Lel'd trustee
Feb. 28 1873
53,333 shares.
In trust for Co
Sold to various parties.
Surrendered to Co
50, 000
Jan. 29,1880
Apr. 27 1887
C 3, 600, 000
i 1, 400, 000
30,000 shares.
Cash.
Charged to con-
struction.
26 088 shares
To Huntington, C. P..
7,245
Apr. 27, 1887
724, 500
In trust for Co.
680, 000
68, 000, 000
E. H. MILLER, JR., Secretary.
STATE OF CALIFORNIA,
City and County of San Francisco, ss : 4
E. H. Miller, jr., being first duly sworn, saith that lie has read the foregoing state-
ment, consisting of the pages next preceding, marked " Exhibit No. 5," and knows
the contents thereof; that the facts therein stated arc true except as to those matters
stated on his information or belief, and as to those ho believes it to be true.
E. H. MILLER, JR.
Subscribed and sworn to before ine this 26th day of July, A. D. 1887.
E. B. RYAN,
[SEAL OF NOTARY.] Notary Public in and for said City and County.
EXHIBIT No. 6. Relative to lands of Central Pacific Railroad Company, l)ij William H.
Mills, land agent.*
OFFICE LAND DEPARTMENT,
CENTRAL PACIFIC RAILROAD COMPANY,
San Francisco, June 20, 1887.
Hon. LELAND STANFORD,
President Central Pacific Railroad Company :
MY DEAR SIR: Answering the inquiries transmitted by you to this department of
the Board of Commissioners to examine into the affairs of the Central Pacific Railroad
Company, and touching the land grant to said railroad company, I have to respect-
fully report to you as follows: That the act of 1862 granted to the company for the
purpose of aiding in the construction of a railroad and telegraph line:
"Every alternate section of public land designated by odd numbers to the amount
of five sections per mile on each side of the said road on the line thereof, au.d within
* See answer to question No. 38.
LELAND STANFORD. 2559
the limits of ten miles on each side of said road, not already sold, reserved or other-
wise disposed of by the United States, and to which a homestead or pre-emption claim
may not have attached at the time the line of said road is definitely fixed."
The act further excepted from the operation of the grant all mineral lands, but
where the same contained timber the timber thereon was granted. The provision re-
lating to this subject is found in section 3 of the act approved July 1, 1862. By the
passage of the act of 1864, entitled "An act to amend an act entitled: 'An act to aid
in the construction of a railroad and telegraph line from the Missouri River to the
Pacific Ocean, &c.,'" the third section of the act of 1862, above summarized and
quoted, was amended by striking out the word "five" where it occurs and inserting
in lieu thereof the word "ten," and by striking out the word " ten" where it occurs
in the original section and inserting in lieu thereof the word "twenty."
Thus amended, the granting acts gave land in odd-numbered sections to the amount
of twenty sections per mile on each side of the line of road.
The act approved July, 1864, amended and modified the mineral reservation by de-
claring that the term ' mineral land," wherever the same occurs in the act, should not
be construed to include coal and iron land. These provisions are found in section 4
of the act of 1864. The rights of the company under the grants of 1862 and 1864 at-
tached to the land granted coincident with the time of the definite location of the
road, and the filing of the map of definite location with the Secretary of the Interior.
It should be observed that the date of the filing of the map of definite location of th.e
road identifies the land granted, and initiates the definite rights of the company, sus-
pending the operation of -the homestead and pre-emption Jaws of the United States;
but that.the right of the company to select lands by lists of selections for the purpose
of obtaining record title to the land by way of patents issued by the Government of
the United States, accrued only at the date of the acceptance by the President of the
United States of the road or section of the road when completed, to wit, November,
1874.
The provision of law above referred to is found in section 4 of the act of 1862,
which reads:
"Whenever the said company shall have completed 40 consecutive miles of said
railroad and telegraph line, ready for the service contemplated by this act, the Presi-
dent of the United States shall appoint three commissioners to examine the same and
report to him in relation thereto ; and if it shall appear to him that 40 consecutive
miles of said railroad and telegraph line have been completed and equipped in all re-
spects as required by this act, then upon the certificate of said commissioners to that
effect, patents shall issue conveying the right and title to said lands to the company
on each side of said road as far as the same is completed."
The right, then, of the company to select the laud granted accrued on the date
when the commissioners referred to in the law filed their certificate of acceptance by
the President with fche Interior Department of the Government. The date of the ac-
ceptance of the first 50 miles eastward from Sacramento is September 8, 1864, and the
road between Promontory and Ogden was accepted by the President July 15, 1869,
and the whole finally accepted in November, 1874.
It will be observed that the right of the company to select lands for the purpose
of receiving record evidence of title by way of patents from the Government did not
accrue prior to the dates above referred to, that it was a right which could not tte
exercised until the lands were surveyed and the plottings of surveys properly exe-
cuted and filed in the local land offices of the United States, after first having been
approved by the surveyors-general of the respective States and Territories through
which the line runs. In addition to this, by rule of the Department, no selections
are permitted until ninety days have expired after the date of filing and approval of
the township plats by the surveyor-general. At the time the right of the company
to ask for patents accrued by the acceptance of the various sections of the road by
the President of the United States, but a very small proportion of tho lauds within
the granted limits w r ero surveyed and a still smaller proportion properly platted and
the plats filed in the offices of the surveyors-general. An examination of the offi-
cial plats reveals the fact that between the dates of the surveys and the dates of their
final approval by the surveyors-general there is frequently a period of two or more years.
The act of 1864 added five alternate odd-numb; red sections on each side of the
road, and attached a new and important condition precedent to acquirement of rec-
ord title. Section 12 of the act of 1864 provides :
"That before any land granted by this act shall be conveyed to any company or
party entitled thereto under this act there shall first be paid into the Treasury of the
United States the cost of surveying, selecting, and conveying the same by the said
company or party in interest, as the title shall be required by the said company."
By this provision a new condition was imposed not found in the act of 1862, to wit,
that requiring the company to pay the costs of surveying, selecting, and conveying
the land. This new condition entailed a large additional expenditure of money by
the cost of the items mentioned ; but it, at the same time, defined the right of the
company as to when sucli costs should be paid, In unequivocal language it declared
2560 U. S. PACIFIC RAILWAY COMMISSION.
that the costs of surveying, selecting, and conveying the land should he paid by the
company as the title should be required by it, thus vesting in the company the right
of election as to when these fees should bo paid and the record title obtained. The
early occupancy and settlement of the region through which the railroad passed was
obviously consistent with the highest interests of the company, that the Congress of
the United States evidently depended upon this most obvious interest alone for the
early disposition of the land. The subsequent action of the company proves that in
entertaining this opinion the Congress of the United States was not mistaken. From
the very outset the company inaugurated the policy of taking title to the lauds as
rapidl3 r as such record evidence of title could be obtained from the Government, and
even before the completion of the first section of 50 miles eastward from Sacramento,
and in anticipation of its early completion, yourself as president of the Central Pacific
Railroad Company, addressed a letter to Hon. John P. Usher, Secretary of the Interior,
dated Sacramento, Cal., February 19, 1864, from which, as plainly showing forth the
disposition of the company under this head, the following quotation is made :
AN URGENT LETTER.
" We expect to have 31 miles of railroad from Sacramento to Newcastle Gap com-
pleted and in running order about the 1st of April next, and it would be a great aid
to the enterprise if the survey of 10 miles on each side of the road were completed im-
mediately thereafter, as contemplated by the act of Congress."
Herein you urge upon the attention of the honorable Secretary the importance to
the company of an early completion of the surveys of the lands granted to it. The
records of the Land Office will show that upon the date at which your letter was
written but six townships lying within the limits of the grant and opposite the 31
miles of road subject of your letter were surveyed, and of these six townships, embrac-
ing only about 70,000 acres of land prima facie granted to the company, there was but
ii small portion not accepted out of the grant by the operation of the homestead and
pre-emption rights,reservations of mineral lands and land granted to the State as swamp
and overflowed. Indeed, at the date of the grant itself approximately but 104,000
acres of the grant made to the road in California were surveyed, while the grant lying
within the boundaries of the State of California was approximately 1,500,000 acres.
It was presumably evident to your mind, as the chief executive officer of the com-
pany, that your company would exercise its right to select the land at the earliest
possible moment, and your letter to the honorable Secretary of the Interior, even be-
fore the completion of the first section, urging the completion of the surveys is indis-
putable evidence of the very earliest disposition of your company in the premises.
Whatever may have been the motive, however, in influencing the enactment of the
provision above referred to, it is unequivocally provided in the terms of the granting
act that the time of payment of the costs of surveying, selecting, and conveying the land
should be a condition precedent to the receipt of record title and that the time of such
payment and the formation of lists of selections should be left to tbjo election of the
company, or, to repeat the language of the act, should be paid, u as the company
should require the title.'' In seeking for an interpretation of these words there is no
ambiguity of language which leaves doubt as to their meaning. The cost of survey-
ing, selecting, and conveying the land, and the issue of patents to follow the payment
6f such costs and selections were not made referable to or dependent upon the exi-
gencies of State, county, or municipal government, but was relegated solely to the com-
pany itself. Notwithstanding, however, the absence of all legal requirements as to
the time when the company should apply for and receive title to the lands granted, it
from the first inaugurated the policy of paying the costs required by law of acquiring
at the earliest practicable moment record evidence of title, and of promoting by every
means in its power the settlement of the country through which its roads passed.
As already indicated, the right of the company to" acquire title did not mature until
the various sections of the road had been examined and reported upon by the com-
missioners appointed by the President of the United States, and the road accepted by
the President in pursuance of the recommendation contained in the report of such
commissioners. The date at which the road was finally accepted is indicated by a let-
ter from the Department of the Interior to the Commissioner of the General LandOffice,
dated Washington, November 3, 1869, in which the honorable Secretary informs the
commissioners that the road has been accepted. Early in the year 1869 the Depart-
ment of the Interior ordered an absolute suspension of the issuance of patents, as the
following letter will show :
DEPARTMENT OF THE INTERIOR,
Washington, D. C.. March 22, 18G9.
SIR : You will withhold all action toward the issue of patents of lands to the Cen-
tral Pacific Railroad Company of California and the Western Pacific Railroad Com-
pany until further advice from this Department.
Very respectfully, your obedient servant, J. D. COX,
IIo. JOSEPH S. WILSON,
Commissioner of the General Land Office,
LELAND STANFORD. 2561
This suspension of patents placed an absolute embargo upon transactions under
that head, an embargo which was not removed until March 26, 1870, a period of one
year and four days. However, on the 3d day of November, the honorable Secretary
of the Interior addressed the following letter to Hon. Joseph S. Wilson, Commissioner
of the General Land Office :
DEPARTMENT OF THE INTERIOR,
Washington, D. C., November 3, 1869.
SIR : The Commission to examine the Union Pacific and Central Pacific Railroads
having reported, and its report being accepted and made the basis of adjustment of
the accounts between the United States and said railroad companies, you are hereby-
authorized to commence the patenting of such lands to the said companies under
grants made by Congress, as follows : In addition to the bonds retained by the United
States as security for the completion of said roads in the matters reported deficient or
not up to the standard by the said Commission, one-half of the lands ready for pat-
enting to the Unjon Pacific will have patents suspended until further direction from
this Department. The other half may bo patented to said company as fast as sur-
veys and other preliminaries are completed that is to say, beginning at Omaha and
running westward Sections 1, 5, 9, &e., will be patented, there being no valid claim
found, and sections 3, 7, &c., will be withheld until further directions as above stated.
Patents to the Central Pacific Railroad may, in like manner, issue, beginning at Sac-
ramento and working eastward. It is my desire that the work be so systematized
that it may be pushed forward as rapidly as possible.
Very respectfully, your obedient servant,
J. D. COX,
Secretary.
Hon. JOSEPH S. WILSON,
Commissioner of the General Land Office.
Under the instructions contained in the foregoing, lists of selections were made.
Some of these failed to observe the instructions of the Secretary of the Interior to
omit one-half of the land in any township from, the list of selections made. These
lists having reached the Department of the Interior, the honorable Secretary, J. D.
Cox, under date of March 8, 1870, in a letter addressed to the honorable Commissioner
of the General Land Office, says :
" Under date of the 3d of November last you were directed to prepare for patenting
one-half of the lands inuring to said company, namely : Sections 1, 5, 9, &c., and sec-
tions 3, 7, &c., should be withheld. I find that the lands thus to be withheld are in
this list ; therefore return the list, that a new one may be prepared, omitting those
sections that are to be withheld from patenting."
Mr. Beard, attorney for the company at Washington, urged the issue of patents for
the list, which embraced 116,000 acres, and in a letter addressed to Hon. Joseph S.
Wilson, used the following language :
" In view of the fact that there has been patented heretofore to the company only
144,686 acres out of 1,700,000 acres, the surveys of odd-numbered sections along the
130 miles of road in California, in five years, this course appears to be but just."
Herein your attorney at Washington on the 26th day of March, 1870, was forced to
plead the small number of acres listed and patented in the Central Pacific grant as
an argument in favor of the issue of further patents.
It is plain from this plea of your attorney that there existed a strong desire on the
part of the Government to withhold patents from the company, and an equally strong
desire on the part of the company to urge the patenting of its lands as rapidly as that
process could be achieved.
Certified copies of all the letters above set forth from the Interior Department at
Washington are in possession of the land department of your company, to be exhibited
when called for.
The road was, however, not finally accepted until late in the year 1874. The com-
missioners appointed to make the final examination were Eugene L. Sullivan, Calvin
Brown, and J. W. Dwyer, and the report of these commissioners is dated Ogden, Utah,
November 2, 1874. This report was certified by C. Delano, Secretary of the Interior,
to the President, under date of the 12th of November, 1874 ; and at that date it may
be said that the road was finally accepted. The time, then, at which the right to
receive patents for lauds granted may be placed approximately at January 1, 1875,
at which date the company had applied for 304,196.38 acres, and had received patents
for 271,165.85 acres.
At the very outset the adjustment of the grant to the Central Pacific Railroad was
beset with difficulties and embarrassments unknown to the eastern division of the
line connecting the Missouri River with the Pacific Ocean. The lands were not
granted in specific sections. The sections could be identified only after the map of
definite location of the line had been filed with the Secretary of the Interior. The
limits of the grant could not then be delineated, Lauds in tlie odd-uuwbereci sections
2562
U. S. PACIFIC RAILWAY COMMISSION.
within such limits were granted by categories only. Lands in certain other catego-
ries or relation with respect of the title of the Government were excepted, and among
the latter mineral land was mentioned as an exception. The line of road from Sacra-
mento eastward intersects at right angles the great mineral belt on the western flanks
of the Sierra Nevada Mountains, and rules of practice in the General Land Office
had to be established whereby the mineral or non-mineral character of the land could
be ascertained. Decisions of questions of this character necessarily involve delay.
The granting act did not specifically establish any court vested with power to hear
and determine questions growing out of the physical facts by which lands granted
or lands excepted out of the grant were to be identified. The act was turned over to
the Executive Department of the Government for executive and ministerial admin-
istration, and the rules of practice by which determination was to be reached as to
whether specific lands were granted or excepted were established by the Interior De-
partment of the Government.
LISTS OF SELECTIONS FILED.
The first list of selections, completed May 19, 1865, and officially known as list No.
1, Marysville, embracing the listing of 55,259 acres. The first patent to the company
granted in pursuance of this list of selections is dated January 4, 1866, and covered
but 45,510 acres of lands listed in the original list, thus suspending for future examin-
ation 9,784 acres. This first list of selections, in the amount of 55,259 acres was,
therefore, before the General Laud Office at Washington eight months before any pat-
ents were issued. At the close of the year 1865 there was therefore due the company
upon lists of selections of unpatented land the amount of 55,259 acres. The second
list of selections is dated August 27, 1866, and embraced 41,804 acres. It is officially
known as list No. 2, Marysville; and the third list, embracing 36,059 acres, known as
list No. 3, Marysville, is dated November 0, 1866, and the receipt of patents to lands
selected by this list is dated June 22, 1867, a period of seven months after the date of
the listing. In each instance of lists of selections some of the land claimed by the
company was suspended for further examination, an examination which, I regret to
say, has not been made up to the present time.
Accompanying this letter to you will be found a tabulated statement.
This table shows the dates at which the listings were completed, and the date at
which the patents in pursuance of such lists were received, and from it may be de-
rived a full and complete exhibit of the status of the account between the Govern-
ment and the company at any particular date. The tabulated summary of this state-
ment is here introduced. This statement exhibits the total amount of acres for which
the company had made application, and which applications were before the depart-
ment at the end of each year the number of acres patented in pursuance of such
lists of selections and the balance of acres listed and unpatented at the end of each
year, from the end of the year 1865 to June 1, 1887. This table shows the smallest
number of acres listed and unpatented before the General Laud Office for examination
to be at the end of the year 1^75, and that they aggregated 17,131.97 acres, and also
shows the largest balance of land listed and unpatented to be on the 1st day of June.,
1887, and that they aggregate 622,612.54 acres. The tabular statement is subjoined,
and its careful analysis is respectfully urged upon your thoughtful attention:
End of year.
Fees paid.
Acres listed.
Acres patented.
Balance of acres
listed, unpat-
ented.
1865
$4 061 00
55 259 09
55 9 59 09
1866
9 780 08
133 153 66
87 596 03
4'~ 557 G'>
1867 .. ..
10 177 65
161 755 67
144 386 63
17 369 04
1869
13 354 31
278 532 56
144 386 63
134 145 93
1870
14 863 88
296 910 21
261 525 33
35 384 88
1874
15 443.24
304 196.38
271 165 85
33 030 53
1875
18 961.84
358, 628. 00
341 496 03
17 131 97
1876
42 668.34
721,658. 17
528 854 12
192 804 05
1877
43 543 is
735 2 -;> 4 53
694 158 99
41 065 54
1879
44 286 18
745 GG4 45
708* 86 9 17
36 802 "S
1882
51 546 35
871 623 73
71 434 68
150 189 05
1883
52 485 34
887 7'->8 12
780 879 40
If6 84^ 72
1884
63 440 01
1 077 727 50
889 945 99
187 781 51
1885
69 830 79
1 19 9 , 262 87
Q->1 586 97
270 675 90
1886
90 484 17
1, 566 519. 07
1 039*710 59
5 9 G 808 48
95 468 64
1, 162, 323. 13
1 039 710 59
62 61 9 54
LELAND STANFORD. ' 2563
DUE DILIGENCE TO SECURE PATENTS.
Your attention is respectfully called to the very significant fact that at the end of
the year 1869, the date at which the road was completed, the company had made list
application for 278,532 acres, all of which was made prior to the completion of the road
itself, and that the Government had responded by issuing patents for but 144,386 acres,
leaving a balance of acres listed and unpatented of 134,145. Thus, at the date of the
completion of the road, the company was a petitioner for 134,145 acres of land in ex-
cess of the response of the Government to its petitions by way of patent. Your at-
tention is further called to the fact that at the end of the year 1876, the approximate
date at which under the act the company was to have completed the road, it had made
application for 721,658 acres, to which the Government had responded by issuing pat-
ents for but 528,854, leaving a balance of acres listed and unpateuted of 192,804. Fol-
lowing the table down to the close of the year 1883, a most significant exhibit should
not escape your attention. At the close of that year the company had applied from
the date of the first listing in 1865 to the last listing completed in 1883, for 887,728
acres. From the acres so listed the Government had patented to the company 780,879
acres, leaving a balance of acres listed and unpatented of 106,848 acres. From the
close of the year 1883 to the 1st of June of the current year the company has made ap-
plication for 774,595 acres, an amount nearly equal in the three years and six months
under observation to the gross amount of lands applied for in the twelve years pre-
ceding that period. The policy of increased activity in the application for patents
was inaugurated in the hope that a corresponding activity in the examination of lists
would be manifested by the Government. This, unfortunately, has not been the case,
as the table herein above clearly exhibits. The only effect has been to increase dis-
proportionately the figures in the column headed "Balance of acres listed and uu-
patented." Of the 887,728 acres in the aggregate listed at the close of the year 1883,
but 106,808 acres remained nnpateuted ; that is to say, about 13 per cent, of the acres
presented to the Land Department at Washington in the lists of selections remained
unpatented, while, on the other hand, of the 1,662,323 in the aggregate listed on July
1, 1887, 622,612 acres remained unpateuted, the unpatented land bearing the percent-
age relation to the whole number of acres selected of about 38 per cent. Thus the
percentage of the balance of acres listed and unpatented has increased since the close
of the year 1883 from 13 per cent, to 38 per cent. The significance of this exhibit, as
plainly tending to discourage the activity of the company in making lists of selections,
will not escape the attention of any candid mind. The simple exhibit of facts them-
selves forces upon the company the conclusion that increased activity in the way of
making lists of selections of lands for which patent is asked has not been met by a
corresponding activity on the part of the Government in responding to the petitions
of the company, but, on the contrary, has served only to increase disproportionately
the balance of acres listed and unpatented. Your attention is called to the fact that
the aggregate fees paid on account of lands selected by the company amount to $95,468.
Of this sum 38 per cent., or a sum in excess of $37,000, was paid upon the lands for
which patent is still withheld. The balance in favor of the company at the close of
the business of 1883, which had been paid upon the lands selected and unpatented,
was but slightly in excess of $6,000. Increased activity in meeting the requirements
of the granting act, by paying the costs of surveying, selecting, and conveying the
land, has therefore resulted in the payment into the Treasury of the United States of
a large sum of money, of the use of which the company is deprived, and which, by
reason of the failure" of the Government to respond with patents, lies useless in its
Treasury. These facts present only discouraging features well calculated to deter the
company from the policy of increased activity in the way of making lists of selection
of the land granted.
The exhibit also shows clearly that from the date of the inauguration of the re-
lations between the Government and the company under this head there has been no
time at which the company has not had on deposit with the Treasury of the United
States a considerable sura of money on account of the payment of the cost of survey-
ing, selecting, and conveying the lands ; that at all times from the date of the first
list of selections to June 1, 1887, the Government itself has been the party delinquent,
and that lists of selections upon which the fees had been paid largely in excess of the
response of the Government by way of patents have been at all times and at all dates
since the first list of selections was completed before the Land Department of the
Government for examination.
THE GOVERNMENT FAILS TO SURVEY THE LAND.
Notwithstanding the requirement that the company shall pay the costs of surveys,
the right to determine when such surveys may be made is vested by law in the Gov-
ernment of the United States. During the past two years the rates allowed by the
Commissioner of the General Land Office for surveying have been so low as to almost
2564 U. S. PACIFIC RAILWAY COMMISSION.
wholly arrest the progress of surveys within the limits of the grant. As fully illus-
trating the disposition of the existing administration in the premises, it may be hero
related that during the year 1886 the surveyor-general for the State of Nevada adver-
tised for bids for surveys relating to three hundred and forty-five townships of land
wholly within the limits of the grant to your company in that State. These three
hundred and forty-five townships, embracing about one-half the area of the lauds
granted to your company in the State of Nevada, are still unsurveyed. Specifications
for these surveys and the amount which would be allowed as fees for the surveys were
advertised, and the bids were to have been opened, according to the advertisement,
on the 1st day of November in that year. Upon the date at which these bids were to bo
opened not one bid had been received. Ttie proposals had been rejected in their en-
tirety by the surveyors. A like result has attended the offers of the Government for
the completion of the surveys of land in California, and on the 1st of July, 1886, the
surveyor-general of California returned to the Treasury of the United States the
entire amount of the appropriation which had been made by Congress for the com-
pletion of the surveys of laud in this State, notifying the Commissioner of the Gen-
eral Land Office at the same time that no responsible surveyor would enter into a
contract for the completion of the surveys ; that the rate of compensation ottered by
the honorable Commissioner of the General Land Office was entirely too low. In
the Territory of Utah the efforts of the Commissioner to secure the completion of the
surveys have been attended with a larger share of success, but there still remains in
that Territory within the limits of your grant a very large area of unsurveyed land,
while of the lands surveyed in that Territory within the limits of the grant, more
than half of the surveys have been completed since the year 1880. According to the
statements furnished by the honorable commission appointed to investigate the affairs
of your road under this head, there was granted an aggregate of 8,000,000 of acres of
land to your road. A very small proportion of this area was surveyed prior to 1860.
Between the years 1870 and 1880 surveys were prosecuted very tardily. From 1880
to 1883 an increased activity in the surveys was observable, but even at the present
date about one-half of the lauds granted are still uusurveyed, but owing to the policy
inaugurated and persisted in by the present honorable Commissioner of the General
Land Office, surveying for the past two years has been almost wholly suspended.
DISCOURAGING AND UNREASONABLE REQUIREMENTS.
In addition to all the discouragements herein set forth, within the past three
months, and in the exercise of his discretion, the honorable Commissioner of the
General Land Office has departed from all the precedents established by his predeces-
sors in offi e, and has attached to the requirements for disapproving the mineral char-
acter of land onerous and, to my mind, unreasonable rules of practice. These new
rules are made applicable to the lists of selections which have been before the De-
partment for more than two years. Among these rules may be mentioned that of
requiring non-mineral affidavits as to land returned and denominated by the United
States surveyors as agricultural. Heretofore such return by the surveyor was ac<-
cepted as prima facie evidence of the agricultural character of the land. Under the
existing regulations of the Land Department, which regulations have been announced
only within the past three months, and made to relate to lists of selections which
have been before the Department for more than two years, it is now required that
an affidavit shall be made as relates to each 40 acres of laud embraced within such
list of selections by an individual "who has frequently passed over " each subdivision
of 40 acres, and is therefore competent to testify that there are no mineral indications
found upon the 40-acre tract subject of the affidavit ; that the affidavit shall be made
separately and specifically as relates to each particular 40 acres, and that a single
affidavit embracing a number of these small Governmental subdivisions will not be
competent ; and that the individual who makes the affidavit shall be specifically
authorized in each particular case to make such affidavit. This requirement is made
to relate to large areas of grazing land in the State of Nevada and the Territory of
Utah, notoriously free from all mineral indication. It is well known to you that
large areas of lands, fit only for grazing purposes, in the State of Nevada and the
Territory of Utah, are located in very sparsely settled regions, and that it will be
most difficult, if not wholly impossible, to find individuals who have frequently
passed over each particular and separate 40-acre tract embraced within the limit of
your grant, and who therefore possess the necessary knowledge to qualify them to
make the required affidavits in this behalf.
OBSTRUCTIVE MEASURES.
As to land interdicted as mineral by the field-notes of the United States surveyors,
new, onerous, and to my mind, unreasonable requirements, are made in the recently
adopted rules of pr&ctice, Under the rules of practice obtaining in 1865 and up to
LELAND STANFORD. 2565
the 1st of March, 1887, disproof as to the mineral character of land interdicted as
mineral could he initiated upon lands unselected. This was obviously a reasonable
rule. The lists of selections must first he submitted to the registers and receivers of
the local land offices of the district wherein the lands are located. Upon lists so pre-
sented registers and receivers must first hear and determine upon all questions relat-
ing to the mineral character of the land before they can certify that it is agricultural
in character, and therefore clear of the company, and subject to the terms of the
grant. The practice has uniformly been to initiate proceedings prior to selections to
disprove the mineral character of the land, which proof has been submitted under
the rules established by the Interior Department itself for registers and receivers, and
under the direction of these officers with re*spect to advertising the hearings of such
testimony in disproof. Upon the testimony so presented, registers and receivers have
determined the mineral or agricultural character of the land in question. The agri-
cultural character of the land being established, it became subject to selection by the
company, and land so selected could be certified as clear to the company by the reg-
isters and receivers of the district land office to the Commissioner of the General Land
Office. In pursuance of this rule of practice, which was established by the Interior
Department, and which had been maintained by all the Secretaries of the Interior
until within the past few mouths, disproof as to the mineral character of the land
was taken as relates to a large area of acreage. The proceeding is in the very nature
of things costly, and after this cost had been borne by the company, &c., so much of
the land as had been decided by the registers and receivers of the district land offices
to be agricultural had been selected, the Commissioner of the General Land Office dis-
missed all the proceedings with reference to the non-mineral character of the land,
not because of any allegation of irregularity of proceedings under the rules of prac-
tice which have obtained for the last twenty years, but upon the technical plea" that
the grant to the company does not of itself establish such right in the company with
respect of lauds selected as would entitle it to inaugurate proceedings in disproof,
but that its rights to the laud must first be inaugurated by a, selection, and that dis-
proof as to the mineral must follow and not preclude such selection. The order of
the honorable Commissioner does not raise any question as to the adequacy of the
proofs submitted. It simply declares that the proof, however adequate, was taken
prior to the selection, and forces upon the company the expensive duty of reopening
the proceedings in disproof, which are objected to not because of inadequacy, but
solely on account of having been taken prior to selection.
By this ruling lists of selections long since completed were relegated to a condition
of very indefinite delay as to the issue of patents. The extent to which the require-
rnent relating to affidavits of non-mineral indication on each forty-acre tract of agri-
cultural land within the limit of your grant will delay the future operations of the
company in obtaining record title to its lands will readily be perceived. It should he
remembered that at the date of the passage of the act the territory to be intersected
by the line of road between the Missouri River and tide-water at the city of Sacra-
mento was, with the exception of a small portion at the western terminus near the
Missouri River, almost entirely uninhabited. The presumption was most natural
that the construction of the road would be conducive to the settlement of this \ast
territory. At the date of the grant less than 5 per cent, of the lands granted were
surveyed. No applications for patents could be made with respect to lands unur-
veyed, and while one-half of the costs of the survey within the limits of the grant
were chargeable to the company, the other half of the costs would have to be borne
by the Government itself. The grant to the entire line from the Missouri River to
the Pacific Ocean embraced approximately 20,000,000 acres of laud, being at the date
of the grant an unsurveyed and unappropriated portion of the national domain. The
administrative task of surveying the lands was Avith the Government itself, a task
which, after the lapse of a quarter of a century from the date of the granting act, is
now only partially accomplished. The hearing and determination of evidence aris-
ing out of questions as to whether lands applied for were granted or excepted out of
the grant added materially to. the embarrassment of producing record evidence of
title as rapidly as would meet the requirements of the company. As already noted,
this embarrassment was further complicated by the exception of mineral land from
the operations of the grant. There has never, therefore, been a time in the history of
this transaction when the Government was able to meet the requirements of the com-
pany promptly by the issue of patents as rapidly as asked for.
GOVERNMENT UNABLE TO MEET THE DEMANDS OF THE COMPANY.
The Government has never been at any time, and it is not now, in a position to pat-
ent more than a small proportion of the land granted. The payment of the costs of
surveying, selecting, and conveying, being a condition precedent to the issue of pat-
ents, would involve a largo expenditure on the part of the company upon each list of
2566 U. S. PACIFIC RAILWAY COMMISSION.
selections made. In the aggregate a very large sum of the company's money is now
tied up by these payments, and in view of the tardiness of the governmental response
to the demands of the company for patents, a delinquency which is clearly set forth
in the accompanying documents, there is nothing to encourage, but rather everything
to discourage, activity under this head. During every period of the administration of
the land department of the company it has been apparent that the augmentation of
lists of selections retarded rather than promoted the issuing of patents, and the com-
pletion of these lists and their presentation to the General Land Office at Washington
involved a large expenditure of the company's money, which, while the company was
deprived of its use, remained idle and usejess in the Government Treasury.
The task of completing the surveys of the vast area of uusurveyed land, and the
cost of making such surveys, which must be borne by the Government itself, were all
difficulties which confronted the Government, and to which is referable the policy of
vesting the company with the right to make demand for patent only as prompted by
its own requirements, or the progress of settlement and consequent occupation and
absorption of the lands granted. The provision of the granting act herein referred to
was clearly suggested to the Congressional mind in the interest of the Government
itself, and exactly supplemented the rights, conveniences, and interests of both the
grantor and the grantee. In practice, however, it has conserved the interests of the
Government more than those of the company. In all cases the delay in the issue of
patents to the company has been a loss to the company's treasury. It has retarded
the growth and development of the country tributary to the line of transportation
constructed, and it has subjected the settler upon lands granted to the railroad com-
pany to inconvenience and loss arising out of delayin receiving title to his land. It
has delayed the payment of money to the company for the purchase of such lands,
and, beyond all this, it has been the occasion of much loss by reason of the extension
of the discovery of mineral within the granted limits. This latter feature deserves
more than passing notice. Under the decisions of the Supreme Court, lands patented
to the company, and not known to be mineral at the time of the issuance of patents,*
pass the mineral with the title conveyed, while the discovery of valuable mineral de-
posits in the lands prior to the issue of patents excepts the land in which such min-
eral is discovered from the operation of the grant. Within a large section of the
granted limits search for valuable mineral deposits has been arduous and constant.
Mineral discoveries, therefore, have been constantly extending, and as they are ex-
tended, they operate to except out of the grant large quantities of valuable land
which would have been patented by reason of the absence of mineral indications and
mineral discoveries at the time application was made. Ascertainment of the quan-
tity of land thus listed to the company would be a very tedious task. Approxima-
tions, however, have been made, and the result of such approximations justify the
statement that at least 200,000 acres of land have been lost to the company in this
way.
GOVERNMENTAL POLICY.
The policy of the Government with respect of the disposition of the even-num-
bered sections within the granted limits has been very injurious to the interests of
your company. As soon as the granting act was passed the price fixed upon the even-
numbered sections within the granted limits was raised to double minimum valuation,
thus discouraging the operation of the pre-emption laws within the granted limits.
The effect of the land policy of the Government as compared with the land policy of
the railroad company is clearly shown by the fact that in townships of land where
patents could be obtained, and where settlement has been made, settlement was
begun and prosecuted upon railroad land alone. Recently prepared statistics con-
cerning the disposition of the Government and railroad lands within the better set-
tled portions of the grant show that more than twice the quantity of railroad land is
being cultivated by actual settlers than of Government land within the same bound-
aries. Your company has addressed itself assiduously to the task of inducing set-
tlement upon its lands, and by a liberal policy, embracing in its features low prices,
long extensions of credit at low rates of interest, has largely accomplished its great
mission of extending settlement and civilization along its line of road. On tho con-
trary, the policy of the Government relating to the disposition of its lands, inter-
spersed with the lands granted, has been rigid and many of its requirements not
adapted to the development of the country. The unwisdom of its policy is particu-
larly noticeable in the grazing areas of the great uplifted plateau lying between the
Rocky and Sierra Nevada ranges of mountains. The limitations of acquiring only
160 acres to each actual settler, applicable only to such agricultural land as by reason
of fertility makes that quantity suited to the industry of a single occupant, is not ap-
plicable to grazing lands. The general result of this has already been stated. Set-
tlement has been chiefly upon lands granted to the railroad,
LELAND STANFORD. 25G7
A SUMMARY OF POINTS.
To summarize briefly the points herein presented, it has been clearly shown :
(1) That by the terms of the granting act itself the cost of surveying, selecting, and
conveying the land was made a condition precedent to the issue of patents, and that
such cost was to be paid only as a title was required by the grantee.
(2) That the company has used due diligence in the payment of the costs of sur-
veying, selecting, and conveying the lands, and that its diligence in this regard has
resulted in a demand largely in excess of the response of the Government at every
period in the history of this transaction.
(3) That all the apparent delay in the issue of record title to the lands granted to
the Central Pacific Kailroad Company is chargeable to the tardiness of the Govern-
ment and not to the company.
(4) That the Government has at no time been in a position to grant patents con-
veying the title to large granted areas by reason of the absence of surveys and the
unavoidable delays in determining questions of law and fact as to whether lands ap-
plied for were granted or excepted out of the grant.
(5) That the company has been subjected to great pecuniary loss growing out of
the payment of costs of surveys and other attendant fees upon large lists of lands for
which no patents have been granted and the loss of the use of moneys which would
have been paid by the purchasers of lands had the response of the Government been
commensurate with the legitimate demands of the company.
(6) That arbitrary and obstructive rules of practice have recently been devised,
nullifying the efforts of the company to facilitate the completion of lists of selections
and unnecessarily complicating the perfecting of such lists, whereby even greater
tardiness in the response of the Government to the demands of the company than has
heretofore been exhibited- may be expected.
(7) That the delinquency of the Government and its tardiness in responding to the
requirements of the company have at all times acted as discouragements to applica-
tions for patents ; and
Generally. The exhibits presented prove conclusively that the grantee has been a
party observant of all the duties made incumbent upon it by the terms of the grant
itself, and that there has been no delinquency in contravention of the true intent and
meaning of the granting act, except such as is chargeable to the grantor.
GENERAL LAND OFFICE HOPELESSLY IN ARREARS WITH WORK.
This statement would be incomplete without some consideration being given to the
subject as to whether the Land Department of the Government is in position to ex-
amine the claims presented, and pass upon them with greater promptness than it has
manifested in the past. The railroad division of the General Land Office is charged
with the adjustment of the grants for railroads, wagon roads, and canals, and with
the adjudication of claims of settlers and others within the limits of the grant. Under
date of October 11, 1882, Hon. N. S. McFarland, Commissioner of the General Land
Office, reported to Hon. Henry M. Teller, Secretary of the Interior, for the fiscal year
ending June 30, 1882, that t*he work of the railroad division of his department was
several years in arrears. As illustrating the difficulties with which that division is
beset, it may be noted in the same report that Mr. McFarland declares that during the
year 1882, 5,564 cases were presented for adjustment in the way of claims of settlers
and others within the limits of the grants to railroads, and of this large number but
617 cases had received attention. Three thousand nine hundred and forty-seven,
therefore, constituted the accumulation of the year. In the same report Commis-
sioner McFarland submits a supplemental estimate in which he asks for 100 additional
clerks and sufficient additional room for their accommodation.
Each successive administration has called attention to the delinquency of the vari-
ous divisions of the Land Department. The present honorable Commissioner, W. A. J.
Sparks, repeats the suggestions of his predecessor, Commissioner McFarland, and
urges upon the attention of the Secretary of the Interior the importance of authoriz-
ing additional clerical force in the department. The volume of business in tho rail-
road division, and the relative capacity of the division to pass upon the lists of selec-
tions presented, and the inadequacy of the force at hand of the Commissioner of the
General Land Office, are most clearly illustrated in the following exhibit :
In 1882 lists of selections presented to the railroad division for patent by the land-
grant railroads to the United States aggregated 1,958,392 acres. In 1883 the amount
had risen to 3,070,453 acres. In 1884 the lists of selections had accumulated and ag-
gregated in that year 11,861,608 acres. In 1885 the accumulation of business repre-
sented 14,273,057 ;wres. In 1886 the acres before the department awaiting its action
worn 16,571,299. Thus, in five years, the number of acres before the department
awaiting its action had risen from 2,000,000 to over 16,000,000. The foregoing state-
2568 IT. S. PACIFIC RAILWAY COMMISSION.
ments are derived from the official reports over the signatures of the Commissioners
themselves.
As more fully illustrating the extent of this incapacity of the department to examine
and certify for patents lands before it for examination, the significance of the follow-
ing statement will be apparent :
The railroad division of the General Land Office in 1881 examined 949,446 acres, and
certified that quantity for patents. In 1882 it examined and certified for patents
176,406 acres ; in 1883, 477,740 acres; in 1884, 647, 162 acres; in 1885, 1,153,950 ; in 1886,
100,823 acres. The business transacted from June 30, 1885, to June 30, 1886, was the
only full year under the administration of Commissioner Sparks ; with 16,570,299 acres
before the railroad division under his administration awaiting examination and de-
termination by the division, it was able to examine and certify for patents b,\t 100,000
acres. For the six years reported, to wit, from June 30, 1881, to June 30, 1686, there
were examined and certified for patents 3,505,527 acres, being an average of 584.254
acres per annum, or, in round numbers, a half million acres per annum. If, therefore,
no further lists of selections are presented to the department, and the average amount
of business can be transacted in the railroad division in the future as in the past, as
shown by the above exhibit, it will require thirty-two years to complete the exami-
nation of the land already selected by lists of selections now before the department
for examination.
ONE HUNDRED AND SIXTY YEARS.
If, however, the volume of business transacted by the railroad division in the year
1886, the only full year under the existing administration, is to betaken as a criterion
of the capacity of that department for the examination of the selections before it, one
hundred and sixty years will be required to examine the selections now made and sub-
mitted. The capacity of the department under the existing administration having
been tested by a full year of administrative effort, and found to be equal to the task
of examining and certifying 100,000 acres per annum, the lists of selections now before
the department from the Central Pacific Railroad alone will require six years in their
examination should the department devote itself entirely to the business submitted
by your company to the exclusion of all other lists. There is, of course, not the slight?
est reason to hope that the business of your company will receive this exclusive at-
tention, and receipt of patents for lands now applied "for is, therefore, relegated to the
indefinite future. In the mean time settlers and occupants who have in good faith
taken possession of the lands granted to your company and established homes thereon
are clamorous for title. This delay with titles serves to obstruct and hinder the set-
tlement and occupancy of the company's lands, and the result consequent is a loss oa
the transportation side of the account" The granting of patents upon the selections
now before the department would place your company in a position to make lists of
selections covering 1,000,000 acres within the next year and the sale of lands along the
line of your road would augment the business of the line in the most signal manner.
THE USELESSNESS OF FURTHER SELECTIONS.
In view of the condition of things as reported by the Commissioner of the General
Land Office, and of the further view of the manner in which lists of selections have
been treated by the Government, the uselessness of making further lists of selections,
and of devoting further sums of money to that purpose until the lists now before the
Interior Department are disposed of, is altogether apparent. It is not the province
of this report to you, nor within the purview of answers to the questions propounded,
to suggest remedies for this state of things. It is, however, plain to the most casual
glance that the Land Department of the Government is most hopelessly in arrears
with its business, and to such an, extent as to make it entirely beyond its power to
extricate itself from existing complications. The department charged with the ad-
justment of these land grants and the ultimate final adjudication is vastly inadequate.
The remedy is self-suggestive. Subsidiary departments in each State and Territory
wherein these land grants are located should be vested with the power of hearing and
of final determination of these cases. Their position on the ground would connect
their knowledge more immediately with the nature of the question in controversy,
and enable them to reach final determination with greater facility, and also to reacli
an adjudication of the various cases more nearly in accordance with the equities in-
volved. With 16,500,000 acres before the department at Washington for examina-
tion, and the tested capacity to hear and determine as to but 100,000 acres per annum,
it may be said with reason that the progress of the adjudication is practically
arrested. If it is ever to be proceeded with in a manner consistent with the rights
and interests of both the grantor and grantee, it is now plainly apparent ttat at least
one hundred times the force at the command of the Commissioner of the General Laud
Office will be necessary to meet the requirements under this h ead. It is unreason*
LELAND STANFORD. 2569
able, if not wholly absurd, to suppose, in view of the existing tate of things, that a
single department of the Government, controlled and directed by a single head, can
hear and determine within a reasonable time the vast number of cases submitted for
its attention. In his report to the Secretary of the Interior, Commissioner Sparks
declares that the number of contested cases awaiting final action at the close of the
fiscal year was 6,331. Of these 1,227 had received some attention, but not final action,
and 5,104 had received no attention and no action whatever. Of the exparte cases
before the department there remained for final action at the close of business 4,540,
and of these 923 had received some attention, leaving 3,617 exparte cases which had
not been reached for examination.
CASES BEFORE THE DEPARTMENT.
At the close of the year, therefore, there were 8,721 cases before the department
which had received no attention whatever. At the close of the business of the ad-
ministration preceding the present one, viz, June 30, 1882, the aggregate of cases
which had not been reached for examination was 3,947. In a period of four years,
therefore, there has been an increase of 4,477 cases which had not been reached for
examination, proving clearly that the arrears of the department under this head are
constantly augmenting instead of diminishing. With the lapse of each fiscal year
the reports of the Commissioner show that under every head the department is becom-
ing more hopelessly and inextricably in arrears with its business.
In view of these facts the land department of the company is confronted with hope-
less and discouraging circumstances that call loudly for remedial legislation at the
hands of the national Congress.
RECENT AMENDMENTS TO THE LAW.
Frequent reference has been made in this report to section 21 of the act of 1864,
which declared that before any land granted by the act should be conveyed, there
should first be paid into the Treasury of the United States the cost of surveying, select-
ing, &c., as the title should be" required by the company. In the foregoing, it has
been clearly set forth that, notwithstanding the right was vested in the company to
pay the cost of surveys, and to make lists of selections, as the title should be required
by it, yet the company has at all times importuned the Government for the issue of
patents. Your attention is now called to the fact that, by an act approved July 10,
1886, entitled "An" act to provide for taxation of railroad land grants and for other
purposes," section 21 of the act of 1864 was amended. The amendment is found in
section 4 of- the act of July 10, 1886, and reads as follows :
"SEC. 4. That section 21, chapter 216, approved July 2, 1864, is hereby amended
so that the cost of surveying, selecting, and conveying therein required to be paid,
shall become due and payable on demand therefor made by the Secretary of the
Interior, as provided in section 2 of this act."
Notwithstanding the act last above quoted was approved July 10, 1886, no demand
has been made on the company by the Secretary of the Interior, and until such.demuml
is made the company cannot be delinquent or in default with respect of the payment
of costs of surveying, selecting, and conveying, or the making of lists of selections.
CONCLUSION THE LAND-GRANT MORTGAGE.
In conclusion, permit me to call your attention to the strictures that have been
made upon the mortgage or trust deed, executed by the company on the 1st day of
October, 1870, upon the lands granted in aid of the construction of the line. It has
been contended that the mortgage was placed upon the land in evasion of a provis-
ion found in section 3 of the act of 1862. That provision reads as follows :
"And all such lands so granted by this section, which shall not be sold or disposed
of by the said company within three years after the entire road shall have been com-
pleted, shall be subject to settlement and pre-emption like other lands at a price not
exceeding $1.25 per acre, to bo paid to said company."
The trust deed, however, was decided by the Supreme Court of the United States
to be a disposition of the land within the meaning of the grant.
But even if the trust deed above alluded to had not been executed the proceeds of
the land grant would have passed to the company under the operation of this clause
of section 3, which, in effect, would have established in the company a perpetual right
to receive the proceeds of the sale of the laud. The lands would thus have reverted
to the public domain, and the proceeds of their sale would have been payable to the
company. As Government laud they would necessarily have been exempt from taxa-
tion by States, counties, and municipalities, but the proceeds of their sale would
have been the property of the company. The execution of the trust deed, therefore,
2570 IT. S. PACIFIC RAILWAY COMMISSION.
operated to create taxable property. Criticisms which have been made upon the ex-
ecution of the trust deed have generally proceeded upon the theory that if such trust
deed had not been executed, the lands "would have reverted to the Government abso-
lutely, and the rights of the company therein would have ceased and determined.
The erroneous nature of this view is clearly shown by the words of the granting act.
WM. H. MILLS.
STATE OF CALIFORNIA,
City and County of San Francisco, ss :
William H. Mills, being first-duly sworn, saith that he has read the foregoing state-
ment consisting of pages next preceding, marked " Exhibit No. 6," and knows the con-
tents thereof; that the facts therein stated are true, except as to those matters stated
on his information or belief, and as to those he believes it to be true.
WM. H. MILLS.
Subscribed and sworn to before me this 26th day of July, A. D. 1887.
[SEAL.] E. B. EYAN,
Notary Public in and for the City and County of San Francisco, State of California.
EXHIBIT No. 7. Statement of J. C.Stubbs, general traffic manager, relative to differen-
tials, pools, #c. *
The rates of charge for freights and fares are just and reasonable. When consid-
ered in respect of circumstances and conditions affecting profit and loss, they af-
ford the cheapest transportation service in the country. Among the circumstances
and conditions affecting profit and loss are the physical characteristics of the road,
such as the gradients and curvatures, which very largely determine the cost of build-
ing and also the cost of operating the road, and the volume of business which deter-
mines the earning power of the road. These, and other, if not equally important,
certainly very important, circumstances and conditions, together with the rates of
charge on the Central Pacific line when compared with similar circumstances and
conditions of rates of charge on other railroad lines in the country, will inevitably
lead to the conclusion that there is no cheaper transportation service in the United
States.
RATES CHARGED.
The fare between San Jose" and Sacramento (128 miles), where there is practically
no competition, is at the rate of 2.6 cents per mile, and between intermediate stations
for short distances at the rate of 4 cents per mile.
The freight charges for this line range from ! cents on the lowest class, to 3f cents
per ton per mile on the highest class.
This line crosses the Contra Costa range of mountains, rising from 88 to 740 feet
above th.e sea-level in 25 miles, and has for 38 miles an average grade of 52.8 feet to
the mile.
During the year 1885 the total number of passengers taken up and laid down, either
or both, on this line was at the rate of 2,410 per mile.
The freight taken up and laid down, either or both, on this line during the year
1885, was at the rate of 3,197 tons per mile.
The rate of charge for fares between Sacramento and California State line (140
miles) is 5 cents per mile. The rates of charge for freights range from 1 cents on
lumber, to 14 cents per ton per mile on the highest class.
PHYSICAL LOCATION OF ROAD AND TRAFFIC DONE.
The number of passengers taken up and laid down, either or both, on this line, dur-
ing the year 1885, was at the rate of 534 per mile. The number of tons of freight
taken up and laid down, either or both, on this line during the year 1885, was at the
rate of 1,070 per mile. On this section the road crosses the Sierra Nevada Mountains,
rising from 30 feet to over 7,000 feet above the sea-level. In a distance of 87 miles
(between Eoseville and Summit) the rise is over 6,800 feet, the average grade being
over 80 feet to the mile, the maximum being 116 feet. Over 55 per cent, of the dis-
tance is curved line and about 40 miles of it is protected by snow sheds.
Between California-Nevada State line and Ogden (603 miles) the rate of fare lo-
cally for single trips is 7 cents per mile, and for round trips 5 cents per mile. The
freight charges range from less than seven-tenths of a cent per ton per mile on lumber
to 15 cents per ton per mile on the highest class of merchandise. ;
* See answer to question No. 10 and question No. 39.
LELAND STANFORD. 2571
For about 499 miles this line is through the comparatively desert and sparsely pop*
ulated State of Nevada, which contains 112,090 square miles of territory, and had
about 62,000 inhabitants in 1880, which declined to 58,000 in 1885, being about one in-
habitant to each two square miles. This area is nearly equal to that of New York
and the New England States (115,307 square miles), which in 1885 contained a popu-
lation of 9,744,385, or an average of 109 inhabitants to each two square miles a pop-
ulation 169 times greater than that of the State of Nevada.
The road through Eastern Nevada is heavy, having frequent grades, ranging from
52 to 79 feet to the mile.
In 1885, the number of passengers taken up and laid down, either or both, within
the State of Nevada, was at the rate of 77 to the mile ; and the number of tons of
freight was 237 to the mile j from which it will be seen that the local travel on that
line would not suffice to pay ordinary train expenses of one train per day. Except
on extraordinary occasions, one train per day each way amply accommodates all the
passenger travel, both through and local.
COMPARISON OF PASSENGER RATES WITH THOSE OF OTHER ROADS.
The fare bet ween San Francisco and Sacramento (140 miles, 110 miles of which belongs
to the bond-aided line) is $3. Compare this with the rate between New York and
Philadelphia (90 miles) which is $2.50 ; or with the rates between Chicago and Union
Grove, on the Chicago and Northwestern Railway, a distance of 128 miles, which is
$3.83, or at the rate of 3 cents a mile ; or the fare between Chicago and Kewanee, on
the Chicago, Burlington and Quincy Railroad, 131 miles, which is $3.93, or at the
rate of 3 cents per mile ; or with the fare between Chicago and Wyanet, on the
Chicago, Rock Island and Pacific Railway, 129 miles, which is $3.74, or at the rate of
2.9 cents a mile ; or with the fare between Chicago and Mount Carroll, on the Chi-
cago, Milwaukee and Saint Paul Railway, 128 miles, which is $3.83, or at the rate of
3 cents a mile ; or with the fare between Chicago and Columbia, on the Pittsburg,
Fort Wayne and Chicago Railway, 120 miles; 'or between Chicago and Sturges, on
the Lake Shore and Michigan Southern road, 132 miles ; or between Chicago and
Mattowa, on the Michigan Central road, 1,9 miles, which was $3.90, $3.90, and $3.65,
respectively, or at the rate of 3 cents per mile.
As I have said, volume of traffic is one of the most important factors in the earning
power of a road, and necessarily is a determining factor in the rate of charge. I have
no means of determining the volume of traffic of the Eastern roads nametl above in
comparison with the Central Pacific line, but from various statistical authority
principally the United States census report of 1880, cyclopedias, and standard geog-
raphies I have collated the following information which bears directly on the ques-
tion:
The line of the Chicago, Milwaukee and Saint Paul Railway, above referred to,
runs through the counties of Cook, Du Page, Kane, De Kalb, Ogle, and Carroll, in
Illinois.
The Chicago and Northwestern road runs through the counties of Cook, Du Page,
Kane, De Kalb, Lee, and Whiteside.
The Chicago, Burlington and Quincy road runs through the counties of Cook, Du
Page, Kendall, La Salle, and Bureau.
The Chicago, Rock Island and Pacific Railway runs through the counties of Cook,
Will, Grundy, La Sallo, and Bureau.
Of ilio counties through which the first-named (Chicago, Milwaukee and Saint
Paul Railway) runs, the population is 210 per square mile; 88.49 per cent, of the total
area is improved land ; the value of the products in 1879 was $4,661.44 per square mile ;
the value of manufactures in 1880 was $74,436.70 per square milo.
The
tion
ucts
$66,779.37 per square mile.
Of the counties through which the Chicago, Burlington and Quincy runs, the pop-
ulation is 210 per square mile; 87.82 per cent, of the land is improved; the value of
products in 1879 was $4,479.78 per square mile ; the value of manufactures in 1880 was
$73,928.49 per square mile.
Of the counties through which the Chicago, Rock Island and Pacific runs, the pop-
ulation is 188 per square mile; 88.19 per cent. of the laud is improved; the value of
products in 1879 was $4,309.54 per square mile ; the value of manufactures in 1880 was
$66,053.96 per square mile.
The line between San Jose* and Sacramento, Cal., runs through the counties of Ala-
meda, San Joaquin, Santa Clara, and Sacramento. The population per square mile
is 34; percentage of improved lands, 50.19 percent.; value of products in 1879,
V2,473.33; value of manufactures in 1860, $3,376.35 per square mile.
P R YOL 16
2572 u. s. PACIFIC RAILWAY COMMISSION.
* The Central Pacific line, between Sacramento and State line, runs through ibe
counties of Nevada, Placer, and Sacramento. The population to the square mile is
20; the percentage of improved lands, 20.25 per cent.; value of products, $993.13 ;
manufactures, $1,517.30.
The line of the Central Pacific road through Nevada runs through the counties of
Washoe, Storey, Churchill, Hnmboldt, Lander, Eureka, and Elko, having a popula-
tion of -0% P er square mile; -j 1 ^ of 1 per cent, of the land is improved ; the value of
products in 1879 was $32.56 ; and the value of manufactures in 1880 was $32.43.
The fare from San Josd to Reno (281 miles), or from San Francisco to Reno (294
miles), is $12.05. The fare between New York and Washington (236 miles) is $6.50.
The latter line is practically level, running between the metropolis and the capital
of the United States, through Philadelphia and Baltimore, the tracks crowded with
trains, and the trains crowded with passengers.
THROUGH RATES REGULATED BY COMPETITION.
The through rates of fare for business between California and points in the Eastern
States are regulated by competition.
For unlimited first-class travel the rate is 3 cents per mile ; for limited first-class 2|
cents per mile, and for third-class or emigrant If cents per mile.
The rate for first-class travel over the great lines between Chicago and Council
Bluffs is 2| cents per mile; between Chicago and Pittsburg, 2f cents per mile; be-
tween Chicago and Buffalo, 2.59 cents per mile; between Chicago and New York, 2
cents per mile. ,
.The rates between San Jos6 and Ogdeii, over the whole line, range from 1 cents on
the lowest class of freight (merchandise) to 5-fc cents per ton per mile on first-class,
while we have taken coke from Oakland to Ogden at one-half cent per ton per mile.
The legal maximum rates for California and Nevada are 10 cents per mile for pas-
sengers, and 15 cents per ton per mile for freight. Probably less than I per cent, of
the entire traffic has been carried at the maximum rate.
The through rates for freight between California and the Eastern States are gov-
erned by competition, and at present vary from day to day.
RATES IN CALIFORNIA APPROVED BY STATE BOARD.
Our freight and passenger charges in the State of California have been approved
and published by the California State board of railroad commissioners. In the State
of Nevada they are published and posted according to law. For interstate traffic
they have been duly published and posted in accordance with the requirements of
the interstate commerce act. They are by these means given a wider publicity, and
are so reasonable that it is seldom that complaints are made. As an evidence of this,
I beg leave to call your attention to the fact that in 1876 the legislature of California
enacted a law under which a board of railroad comrnissiocers was appointed by the
Governor. This commission was popularly regarded as representing the anti-rail-
road sentiment of the State. In their first report to the legislature, dated December
1, 1877, the commissioners say :
"In October, 1876, we issued a circular which was addressed to many hundred citi-
zens in various parts of the State whom we deemed likely to be able to furnish us
with information or suggestions of value in connection with the subject of railroad
transportation. A copy of it is as follows :
"BOARD OF RAILROAD COMMISSIONERS APPROVE THE MANAGEMENT.
"'SACRAMENTO, October, 1876.
"'Among the principal objects proposed by the legislature in creating the board
of transportation commissioners is the compilation of facts and statistics connected
with the building and operation of railroads in this State, and also the investigation
of their management, especially as it affects the interest of their patrons.
'It is believed that an impartial investigation of this subject will result in sub-
stantial advantage to all concerned, and to this end this board desires to receive
information and suggestions and statements from all who are interested.
"As your position has probably led you to give more than usual attention to the
subject, there may be matters to which, in your opinion, the attention of the board
should be called ; in which event it is requested that you will communicate them to
this board in writing.
" ' By order of the board.
(Signed) < WALTER M. PHILLIPS,
" Secretary.'
LELAND STANFORD. 2573
" This was transmitted to supervisors, county officers, members and ex-members
of the legislature, judges, prominent merchants, storekeepers, editors, hotel keepers,
patrons of husbandry, &c., and it led to some valuable communications, although
not to contributions of public opinion or information on the subject as full or as ex-
tensive as we might have reasonably looked for.
"We have deemed it our duty to visit and inspect, so far as such inspection can
be made in transitu, every part of every railroad in the State, in order to acquaint
ourselves so far as possible with the circumstances, local connections, situation, and
conditions of the various roads.
"Without entering into unnecessary detail on this subject, we observed that gen-
erally the railroads of the State are in good order and their management wise and
economical, and conducted with a view to the public convenience."
The communication addressed (as ab'ove stated bv the railroad commissioners) to
citizens of all classes and occupations, whose position was presumed to have led them
to give more than usual attention to the subject, was a bid for complaints, and
resulted in a report, by a certainly not friendly commission, that, as quoted above,
generally the railroads of California were in good order, their management wise and
economical, and conducted with a view to the public convenience.
Since the date of said report the State of California has had several diiferent boards
of railroad commissioners to which complaints regarding the charges of this com-
pany have been rare. In nearly every case they have proved to have been without
foundation or based on a misrepresentation of facts, and no case has failed of a satis-
factory adjustment.
CENTRAL PACIFIC INTEREST IN POOLS.
With respect to pools : The traffic over the line between San Jose" and Ogden, or
any part of it, is not, and has not been since April 5, 1887, subject to any pooling
contract. Previous to April 5th it was concerned with the Union Pacific and Denver
and Rio Grande Companies in a pool of Utah traffic, the object of which was to secure
uniform, reasonable, and stable rates of charge for freight to and from the Territory
of Utah ; conditions so necessary to successful trade as to be of equal value to both
the public and the carrier. The balances received and paid under that pool were
very small.
For several years previous to February, 1886, this line was also concerned with
others in a pooling contract which covered through rates between points east of 97th
meridian in the United States and the Pacific coast. The association of roads con-
cerned in this pool was termed the Trans-continental Association. The object of this
association was to make and maintain reasonable rates of transportation, afford mu-
tual protection to the interest of the associated roads, and to fairly distribute the
revenue from traffic which was naturally the subject of competition between them.
The pool was very beneficial to the Central Pacific line. It was discontinued Decem-
ber^!, 1885, with the expectation of renewing it, but the parties could not agree
upon the terms, so that on or about February 18, 1886, tho Trans-continental Associa-
tion was dissolved.
The result was a " war in rates" that was very destructive to revenue. Had the
trans-continental pool be.en maintained during 1H86 and the same amount of tonnage
carried at the rate per ton per mile earned by the associated roads in 1885, the earn-
ings of the Central Pacific line from freight subject to that pool during 188G would
have been increased by over a million dollars. It is only fair to say, however, in
this connection, that doubtless the very low rates that obtained in 1886 diverted
traffic from the water lines which would not have been carried by rail at the rates in
force in 1885, and it also doubtless moved other tonnage which would not have moved
at the rates of 1885. Nevertheless a continuation of tho trans-continental pool on
both freight and passengers would have benefited the Central Pacific line in a very
large sum.
PACIFIC MAIL AGREEMENTS.
For many years the Central Pacific line, in connection with the Union Pacific Rail-
way, was concerned in a contract with the Pacific Mail Steamship Company, where-
iimtor a certain amount of space in the vessels of said steamship company was pur-
chased by tho railroad companies for a given sum, which varied from time to time as
the contract was amended. Under the last contract the amount of space was 1,200
tons each way per month, and the sum paid was at tho rate of $95,000 per month.
This space was filled by such freight as could bo obtained for California at rates made
and controlled by the railroad companies. The arrangement was of the nature of a
joint purse arrangement, simply for the purpose of regulating the competition be-
tween tho steamship company and the railroad lines. It was beneficial to both by
securing stability and uniformity in rates, and was of great value to the public as
2574 U. S. PACIFIC EAILWAY COMMISSION.
well as to the carriers. Upou the organization of the Trans-continental Association
the roads joined in that organization assumed the obligations of the said contract
with the Pacific Mail Steamship Company. In March, 1886, this contract was termi-
nated by reason of the disorganization of the Trans-continental Association, since
which time there has been unrestrained competition between the steamship company
and the railroads, greatly to the detriment of both.
POOLS ARE PRODUCTIVE OF REASONABLE RATES AND BENEFICIAL.
The beneficial eifects of pooling contracts to the Central Pacific interest is demon-
strable by our experience and records.
No contracts to pool the earnings from traffic to which your companies have been
parties since my connection withtthem have permitted the charging of unreasonable
rates. On the other hand, they effected the minimum of discrimination, secured sta-
bility and uniformity in rates, and were of mutual benefit to the public and the car-
rier.
I take it that a reasonable rate is one which will, without diminution of the profits
to the carrier, permit and encourage the largest increase and development of traffic ;
that it would be unreasonable on the part of any carrier to impose a charge for its
service which would obstruct or dimmish remunerative traffic ; that it would be
equally unreasonable to require a carrier to increase its traffic at the expense or
diminution of profits. In other words, the law of supply and demand governs the
carrying trade as it rules all other commerce, and a reasonable rate is what a writer
on ''"The Natural Laws of Business " terms a " normal " rate, which he defines as
"that point above which demand falls off so rapidly that profits diminish, and below
which even a great increase of business would lessen them." The problem of railroad
management is to make the nearest approximation to this " normal" rate. In my
judgment this has been the constant aim and effort of the officers of your companies.
Rates have constantly tended downwards, and that tendency will inevitably con-
tinue.
The pooling contracts referred to have not prevented nor interrupted the downward
tendency of rates. They have simply regulated it by preventing a reckless compe-
tition which would have destroyed all profits. These pooling contracts have not
destroyed competition. When they were in force each carrier party thereto continued
in the field its soliciting and advertising agencies as active and earnest in the pursuit
of business as though it had no guarantee of revenue from the pool. Each party had
its own clientage, and was as jealous of the interests of that clientage as the shippers
themselves could be. All tariffs required unanimous consent, and all rates and rules
were uniform. The fact that these pools did not hinder the operation of the law of
supply and demand on the traffic; did not destroy the competition between the car-
riers, and did not diminish the traffic, is sufficient proof that they did not permit the
charging of unreasonable rates.
Again : It is seldom, if ever, that two or more carriers competing for the same traffic
are equal in respect to physical characteristics of the line, terminal facilities, connec-
tions, or those features which determine preferences upon the part of the traveling or
shipping public upon all the traffic pooled, and therefore their respective taking power
differs. Those carriers having few advantages to offer in these respects cannot compete
with others possessing numerous advantages upon equal terms ; hence their rates must
be lower. The better lines will not suffer the loss of business by permitting lower rates
to be made by others, except there is a mutual agreement fixing the relations of the
rates by the various routes. The result is the see-saw process, the working of one
line against the other by the shipper, which causes not only constantly varying rates
by the different lines but also different rates to different individuals. The pooling
contract produces uniformity in the rates by all lines or fixes the degree of difference
in the rates by the several lines, and by so doing effectually prevents the discrimina-
tion between individuals which invariably results from independent action. This
uniformity and unanimity of action in making tariffs prevents frequent changes and
requires changes, when made, to be duly considered and simultaneously published and
applied by all the carriers. It also requires a reasonable notice to the public, as each
carrier, jealous of the interests of its own patrons, insists upon time and opportunity
to acquaint its patrons with said changes, thus securing a stability in rates which
shippers as a rule regard as of the greatest value.
" DISCRIMINATIONS " AND " DIFFERENTIALS."
" Differential" rates as commonly used by practical railroad men, are not and have
not been in use on your line.
The general passenger agent and general freight agent, who are charged with tho
details of the passenger and freight business, respectively, report that there are no
unjust discriminations in the fares and freight charges of this company. I presume
LELAND STANFORD. 2575
it is understood that in transportation business discriminations areas necessary as in
all other business; that is to say, different rates of charge are made for different
chisscs of passengers, and for different classes and different quantities of freight.
The rates of charge on the valley portions of the road are lower than on the mountain
portion. The charges upon lines through comparatively thickly settled districts are
lower than those made through sparsely settled and desert territory. Such discrim-
inations, I believe, are recognized as necessary, legitimate, and judicious. Where
competition is encountered, rates necessary to meet that competition are made.
Where this competition is with water carriers, the charge is often lower for a longer
than for a shorter and immediate service, but in no case is a lower charge made for a
longer than for a shorter haul included in the longer except where competition- com-
pels it. There are not and have not been any discriminations in fares or freight
charges having for their object or effect the prosperity of one locality or community
against another locality or community, or the promotion of the interests of one per-
son or any number of persons against the interests of any other person or persons.
In this connection I beg leave to quote further from the report dated December 1,
1877, of the railroad commissioners to the legislature of California, namely :
" Some few complaints of inequality or unfairness of charges and of lack of proper
attention to the public convenience in the classification of goods and the charges for
freight have reached us. These have, in all cases, been first referred to the companies
concerned for remedy or explanation, and, in every instance, so far, the complaints
have been responded to as promptly as if we possessed legal authority to command
their answer or enforce redress. Some of the complaints made to us proved to be
w ithout foundation or made on a misapprehension of facts. In others, reasons for
the course pursued have been adduced, not before known to the parties complaining."
DISCRIMINATION BETWEEN INDIVIDUALS.
1 ' No instance of the occurrence of this abuse has been brought to our notice. There
are rumors of its existence, and it is even said that the sufferers by it fear to complain
lest they be punished by further and ruinous discrimination. Whilst it is possible
that there may be some foundation for these suggestions, it is also probable that the
instances, if they exist, are of rare occurrence, and in most, if not in all, cases ex-
plainable by circumstances unknown to or insufficiently considered by the parties who
have felt aggrieved."
Upon the subject of inflexible railroad rates the railroad commissioner of Michigan
says (Report, 1883) :
It is certain that no rates can be made of universal application to all roads alike
without working the grossest hardship and injustice. The consideration of cost of
doing the business enters largely into the question of rates, while the condition of
the road bed, gradients, and character of lino generally have so much influence in
determining that cos't on each individual road, that it is not at all certain that the
interests of the public and the corporations will not best be promoted by leaving the
great principle of supply and demand to regulate the price of railroad transportation
the same as it does that* of the commodities carried. If left to regulate itself as does
the question of rates on the high seas, only restricted by such reasonable limitations
to maximum charges as are incident to the fact that a railroad is a public use, and
the company that operates it in its corporate capacity derives its franchises upon such
conditions as the legislature may impose, I have no doubt that railroad tariffs would
soon become as uniform and rates as low throughout the country as the cost of build-
ing and operating, coupled with the amount of tonnage to bo carried would justify
commensurate with a fair return upon the capital invested ia the road.
So far as the productive industries in this State are concerned it can in truth bo
said that as between production and transportation there is little, if any, friction,
and that but for the fact of the question being a potent factor in politics we should
hear no complaint from the consumers who after all pay all the freight charges on
what is consumed.
STATE OF CALIFORNIA,
City and County of San Francisco, 88 :
J. C. Stubbs, being first duly sworn, saith that ho has read the foregoing statement
consisting of the pages next preceding, marked Exhibit No. 7, and knows the con-
tents thereof; that the facts therein stated are true, except as to those matters stated
on his information or belief, and as to those ho believes it to be true.
J. C. STUBBS.
Subscribed and sworn to before me this 26th day of July, A. D. 1887.
[SEAL.] E. B. RYAN,
Notary Public in and for eaid City and County.
2576 U. S. PACIFIC RAILWAY COMMISSION.
EXHIBIT No. 8. Statement of L. M. Clement, civil engineer, relative to cost of construction.*
SAN FRANCISCO, July 21, 1887.
HOD.LELAND STANFORD,
President Central Pacific Railroad Company :
DEAR SIR : At the beginning of the construction, the company, knowing the polit-
ical and commercial necessities demanding the rapid completion of the railroad, de-
termined that nothing which was in their power to prevent should for a single day
arrest its progress.
With this determination in view all energies were bent, fully realizing the physical
obstacles and financial difficulties to be overcome.
The financial difficulties were not lessened by the opinions circulated to the effect
that the obstacles were insurmountable ; that the railroads then constructed in Eu-
rope were as bagatelles compared with the difficulties to be met in constructing the
Central Pacific Railroad, and failure was clearly written on the rocky sides of the
canons and the\>old granite walls of the Sierra Nevada Mountains.
Not only was it impossible to construct a railroad across the Sierras via Dormer
Pass, but owing to the great depth of snow, some years reaching an aggregate fall of
nearly 50 feet, would be impracticable to operate, and if built must be closed to
traffic in the winter months, which would have been the case had not the road been
protected at great cost by snow sheds.
Against these utterances from men of railroad experience the company had to bat-
tle in financial circles, forcing them to show that they were not attempting an im-
possibility, though always realizing the great difficulties.
As soon as the company went into the American market for rail, for they were shut
out from the other markets of the world by their charter, the prices raised 80 per
cent., from $41.75 to $76.87 per ton, nearly three (3) times the price of steel rails two
years ago.
It must not be forgotten in discussing these questions that the Central Pacific Rail-
road was begun a quarter of a century ago and has been completed over eighteen (18)
years. We should consider the state of affairs, circumstances, and conditions then
existing. The average price of American iron rail during the building of the road
(no steel rail was then made and think none till the last year of its construction) was
$91.70 per ton at the rolling mills.
This rail had to be transported to San Francisco via Cape Horn or the Isthmus of
Panama, and lightered for transportation to Sacramento, Cal., the initial point of the
Central Pacific Railroad.
Shipments via the Isthmus, as late as the year 18(58, cost for transportation alone
on rail, $51.97 per ton, the rail costing, delivered at Sacramento, $143.67, not includ-
ing charges for transfer from ships at San Francisco to the lighter, nor for transpor-
tation up the Sacramento River. Delays and losses of ships and IJieir cargo of railroad
material via Cape Horn and unforeseen emergencies made it necessary to frequently
use the Isthmus route, that there should be no detention in the progress of the rail-
road eastward.
During construction, by reason of high war risks, transportation rates advanced
275 per cent, per ton.
Via the Isthmus, for freight alone, there was paid as high as $8,100 for one loco-
motive.
On a shipment by the latter route of eighteen locomotives the transportation
charges were $84,466.80, or $4.692.50 each.
For two engines, twenty-two years ago, there was paid $70,752 in the currency of
the United States. This was an extreme case, but the power was absolutely neces-
sary to supply materials needed for construction ; without these engines there would
be delay.
The first ten engines purchased by the Central Pacific Railroad Company cost up-
wards of $191,000 ; the second ten upwards of $215,000.
The demand for power after the first 25 miles of road were constructed was great
was great, as then were met the high mountain gradients.
The freight via Cape Horn to San Francisco only, on the first locomotive purchased
by the company, was $2,282.25.
Not only was all the material for railroad construction commanding high prices,
labor also shared in the advance in prices. California's laborers were mainly miners,
accustomed to work in placer mines or not, as it suited them. Mining was more to
their liking than the discipline of railroad work. They were indifferent, independ-
ent, and their labor high-priced, and to these difficulties the excitement of the .great
Comstock lode was upon us, where any able-bodied man commanded $4 or more
per diem.
* See answer to question No. 51.
LELAND STANFORD. 2577
Labor sufficient for the rapid construction of the Central Pacific Railroad was not
then on the coast, and the labor as it existed could not be depended upon the first
mining excitement meant a complete stampede of every man, and a consequent aban-
donment of all work. This labor question as well as others were serious ones. Each
day brought up propositions which must be solved without delay ; the construction
must advance.
As the snow line was reached the snow increased in depth toward the summit,
from a few inches to over 15 eet on a level, from actual measurements. The ground
was kept bare forthe graders by shoveling, upwards of one-half of the labor and, after
storms, the entire grading force being expended in removing snow. Not only was it
necessary to remove the snow to permit excavation, but the space to be occupied by
the embankments was cleared and kept clear of snow, otherwise the melting of the
snow under the broad bases of the high embankments would have caused serious set-
tlements, which, on ascending gradients already of 105 or 116 feet per mile, would in
cases increase the gradient beyond the tractive power of the engine. There was a
limit to this snow shoveling as the altitude increased, and this limit was reached when
it required an army of men to clear away and keep clear after each storm, for a small
gang of laborers. As we neared the summit of the Sierras winter was again upon us,
granite tunnels to bore, deep rock cuttings to make, and retaining walls to construct.
Rock cutting could not be carried on under snow drifts varying in depth from 20 to
100 feet. It was decided, no matter what the cost, that the remaining tunnels should
be bored during the winter. To reach the faces of the tunnels the snow drifts were
tunneled and through these snow tunnels all rock was removed. Retaining walls in
the canons were built in domes excavated in the snow the wall stones raised or low-
ered to their places into the dome through a shaft in the snow.
All the force, numbering thousands, could not be worked in the tunnels and on
the retaining walls. The surplus men with their tools, luggage, &c., were hauled
beyond the summit, skipping the line now covered with deep snow, and active work
begun in the canons of the Truckee River.
That no delay, even here, should result from the unfinished gap, 20 miles of rails
with their fastenings, a locomotive, and cars sufficient for working, were, by oxen and
horses, hauled over the summit and down into the canon of the Truckee River.
It was deemed important to reduce some of the work in the lower mountains
crossed by the railroad in Utah, so that when the track reached those points there
should be no delay. About one car-load of tools and material was wagoned from
Wadsworth to the Promontory Mountains, at a cost of $5,400. Everything was ex-
pensive ; barley and oats ranged from, $200 to $280 per ton; hay $120. All other
supplies in Utah in the same ratio. Along the Humboldt River much of the line was
constructed during the winter. Earthy material that could ordinarily be excavated
by the pick and shovel was frozen to such a depth as to require blasting. This frozen
material made expensive embankments, requiring constant attention when the frost
was leaving it, to maintain the roadway in a condition for the transportation of ma-
terial to the front. As early as it was possible, in the beginning of the following
year, to again attack the work in the heavy snow-belt region, the forces were re-
turned to the granite cliffs and canons. This army of men shoveled off the snow to
gain time ; miles of the line were thus made ready for the drill and powder $67,500
worth of powder in a single month being used, a sum sufficient to construct and
equip 8 miles of ordinary railroad at the present day. During the winter months
there was constant danger from avalanches, and many laborers lost their lives.
Where it was possible to reach the threatening combs of great masses of compact
snow leaning over, the granite bluffs they were removed by powder. To reach the
overhanging snow required courage and determination, and the call for volunteers
for this daring undertaking was always answered. When the forces were concen-
trated the progress in the solid granite ledges was slow but certain. The track was
kept close up to the grading forces and never lagged when it was possible to provide
track material, power, or rolling stock, either by steamships or sailing vessels.
For many days, owing to the hardness of the rock in the vicinity of Cisco, it seemed
impossible to drill into it a sufficient depth for blasting purposes; shot after shot fired
as if from a cannon. Perseverance alone conquered. That was before the powerful
explosives were invented and many other improvements made for railroad construc-
tion purposes in the last twenty years. The company at the summit of the Sierras,
Doniier Pass, manufactured nitro-giycerino, but it was too dangerous for general use.
Transportation of material, tools, &c., was then an important factor in construction;
there were then no such powerful engines as of the present day, which could haul
two of the then most powerful ones and their loads ; no cars to carry 50,000 pounds of
load.
All material for construction excepting timber, the greater portion of which came
from the Sierra Nevadas and some from the coast counties of California and from
Oregon, inus,t come from tfte Atlantic States, via. tlio Isthmus or Cape Horn to
2578 U. S. PACIFIC RAILWAY COMMISSION.
Francisco, there lightered for ascending the Sacramento River to Sacramento, and
thence hauled over the Central Pacific so far as completed, and when needed wagoned
beyond the end of the track. The trains returned empty no return loads ; there was
not one inhabitant to 10 miles between the last crossing of the Truckeo River and
Bear River in Utah.
With the exception of a few cords of stunted pine and juniper trees, all the fuel
was 'hauled from the Sierra Nevada Mountains. Not a coal bed on the line of the
Central was then known, and the only one yet discovered is a poor quality of brown
lignite.
Water was scarce after leaving the Truckee and Humboldt Rivers, and during the
entire construction was hauled for steam and general use of the grading forces.
Thousands of dollars without result were expended in well boring ; tunnels were
bored into the mountains east of Wadsworthto develop small springs, and when water
was found it was carefully protected and conveyed in some cases over 8 miles in
pipes to the line of the road.
There was not a tree that would make a board on over 500 miles of the route, no
satisfactory quality of building stone. The country afforded nothing entering into
the construction of the superstructure of a railroad which could be made available.
The maximum haul for ties was 600 miles, and of rails and other material and sup-
plies, the entire length of the Central Pacific Railroad, or 740 miles.
Cars were transported on ship, in pieces, to San Francisco, and lightered for Sac-
ramento, and there put together.
California had no means for manufacturing for railroads. Only fourteen years
prior to the beginning of the construction of this railroad was any considerable emi-
gration directed to this coast, either by wagon, requiring as many months as now
days from the Missouri River, by sailing vessels via Cape Horn, a long and tedious
voyage of months, or by steamship. Twenty-two days was a quick trip. It was a
country new, and only known as a mining region. A quarter of a century has made
great changes. Once the possibility of constructing a railroad across the mountain
ranges and deserts proven and emigration started west, capital was less timid of the
probable future of railroad enterprises, and means were furnished for constructing
other transcontinental roads. By the aid of machinery, powerful explosives, and ex-
perience, railroads can now be constructed at comparatively light cost.
It is probable that had the road been constructed during the five years preceding
it would not have cost more than 66 per cent, of what it actually did cost.
The principal elements material, transportation, and labor were very much
cheaper. Rails averaged 51 per cent, less; transportation 63 percent, less. Every
element, excepting labor, was a large percentage less.
If constructed five years subsequent, it would have cost about 75 per cent, of the
actual cost. Had the whole time allowed for construction of the Central Pacific
Railroad been used, it is not an easy problem to determine for how much less the road
could have been built.
Advantage of the markets could then have been taken; contractors would have
been willing to undertake the work if a reasonable time for completion were allowed,
so that they would not be required to perform any of the work during the winter
mo.nths where mercury freezes and in deep snows; in fact, all the advantages of
seven additional years.
Respectfully, yours,
LEWIS M. CLEMENT.
STATE OF CALIFORNIA,
City and County of San Francisco, 88 :
L. M. Clement, being first duly sworn, saith : That he has read the foregoing state-
ment, consisting of the pages next preceding, marked "Exhibit No. 8," and knows
the contents thereof; that the facts therein stated are true, except as to those mat-
ters stated on his information or belief, and as to those he believes it to be true.
LEWIS M. CLEMENT.
Subscribed and sworn to before me, this 26th day of July, A. D. 1887.
[SEAL. E. B. RYAN,
Notary Public in and for the City and County
of San Francisco, State of California.
LELAND STANFORD. 2579
EXHIBIT No. 9. Statement of Wm.Hood, chief engineer, relative to cost of construction.*
SAN FRANCISCO, CAL., July 23, 1887.
lion. LELAND STANFORD,
President Central Pacific Hailroad Company :
SIR: Referring to yonr letter of recent date in regard to the Central Pacific Rail-
road:
I was an assistant engineer on the road during the greater part of its construction,
and have been chief engineer since October 10, 1883, and ain familiar with its con-
struction and subsequent operation.
The entire road was completed in May, 1869, or about seven years sooner than was
required to comply with the act of Congress under which it was built.
This early completion of the railroad was accomplished only in the face of obstacles
of the most formidable nature and such as were perhaps unprecedented in railroad
construction. The Sierra Nevadas have a snowfall on the higher portions aud a rain-
fall nearer their basis such as would seem incredible to those not acquainted with the
facts; and these climatic features were enough to have caused the suspension of the
work each winter had attention been paid to cheapness of construction or to any con-
siderations except the completion of the road in the least possible time and in the
most substantial manner practicable with the available materials. Below the snow
line in the winter of 1865 and 1866 the roads were practically impassible for wagons ;
aud the large construction force was supplied mostly by pack trains, employing large
numbers of animals to transport supplies of all kinds to the required points on the
work.
The winter of L866 and 1867 and the winter of 1867 and 1S68 were long remem-
bered as having had a snowfall heavier than has since been known on the mountains,
and it was during these seasons that the railroad was built above the snow belt and
over the summit. The annual snowfall was about 40 feet, which gave as much as 18
feet of snow on a level near the summit of the railroad pass, and as late as March,
1867, the average level depth of snow in Summit Valley was between 15 and 16 feet.
These depths of snow, with the frequent storms, made any work except in tunnels
impracticable during the winters in the region of the summit, and it was decided to
send the force not engaged on tunnel work to build railroad in advance in Truckee
River Canon, where the less depth of snow rendered grading work possible. The
supplying of this force in the Truckee Canon, by means of sleds over the summit
through deep snows and blinding storms, was exceedingly expensive, as was also the
transportation by the same means of track material for 40 miles of road so built in
Truckee Canon aud 3 locomotives and 40 cars. In this way, by working tunnel force
in winter and moving back the remainder to do the outside work in summer, the sum-
rait worfc was finished, an incidental expense being the moving of from 10 to 12 feet
of packed show from the sites of the cuts and banks before grading could begin in the
spring. When the road over the summit to Truckee was done, the rapid progress
across the deserts began.
About 3,000 men were sent a distance of 300 miles in advance of the track to Palisade
Canon, and supplied by teams over the deserts, the haul without water being as much
as 40 miles in places, and the remaining force Drought up the work in advance of the
track. Ties were hauled from the Sierra Nevadas hundreds of miles into the deserts.
Rails for the rapid progress were brought by sail around Cape Horn, and when any
delay was possible through non-arrival of ships, track material was sent at heavy
expense by the quicker route via the Isthmus of Panama and steamers. In the
winter of 1868 and 1869 the weather was most severe, and the earth was often frozen
so deeply that it was blasted and handled as if rock, at considerable expense.
During the entire construction of this railroad all supplies were very high-priced.
Rails were nearly three times as expensive as they were a few years afterwards, and
freights via Cape Horn were high ; and after reaching San Francisco all track mate-
rial had to be rehaudled and sent up the river to Sacramento before it could be loaded
on the cars for the front. Tne same was true of all the rolling stock. With all these
causes of extra expense to increase cost of buildiug the road, it is my opinion that with
more time spent in building, with entirely legitimate reduction of force in winter
and in general with ordinary speed of construction, the entire road could have been
built for fully 75 per cent, less than its actual cost ; but in that case it would not have
been open for traffic for a long time after its actual date of completion.
The road was finished to Newcastle at less speed than afterward ruled. From
Newcastle to Wadsworth was built between February, 1865, and July, 1868, with a
force averaging fully 11,000 men and more than three years' time was required for
this 157 miles. From Wadsworth to Ogden was built between July, 1868, and May,
1869, with a force avera^ "
only to build this 555 mi
1869, with aforce averaging 5,000 men, and between nine and ten months were required
>5 miles. The work of buildiug from Wadsworth to Ogden is about
* See answer to question No. 51.
2580 U. S. PACIFIC RAILWAY COMMISSION.
comparable 011 an average to tliat from Ogden to Omaha ; and the work of building
the Central Pacific Railroad from Newcastle to Wads worth, only 157 miles, would have
easily built the entire road far east of Omaha, had this 157 miles been of the same
average cost as the road from Wadsworth to Omaha.
Respectfully submitted.
WILLIAM HOOD.
STATE OF CALIFORNIA,
City and County of San Francisco, 88 :
William Hood, being duly sworn, says he has read the foregoing statement ; that
the matters and things are true of his own knowledge except as to matters on his in-
formation and belief, and as to those he believes them to be true.
WM. HOOD.
Subscribed and sworn to before me this 25th day of July, A. D. 1887.
[SEAL.l E. B. RYAN,
Notary Public in and for said City and County.
EXHIBIT No. 10. Statement of J. H. Strobridge, superintendent of construction, relative
to the cost of construction.*
SAN FRANCISCO, CAL., July 23, 1887.
Hon. LELAND STANFORD,
President Central Pacific Railroad Company :
SIR : Referring to your letter of recent date, in regard to the construction of the
Central Pacific Railroad, I was superintendent of construction during the building of
the road. The work was pushed with the utmost vigor ; all the men were hired that
could be found, and no eifort or expense was spared to complete the road as quickly as
possible. Inthiswayit was finished and in operation from Sacramento, Cal., to Ogdeii,
Utah, about seven years sooner than was required by act of Congress. During con-
struction very high prices were paid for powder and all tools and supplies used on the
work, and nothing was spared that would hasten its completion, and the work was
pushed regardless of the season. The winter of 1865 and I860 was a very wet one,
making the roads on the clay soils of the foot-hills nearly impassable for vehicles.
Large numbers of pack animals had to be brought into use, and on them were carried
nearly all supplies, even hay and grain, over steep mountain trails, to the construc-
tion camps. As illustrating the irnpassability of the roads, the stage running from
end of track to Virginia City was stuck in the mud and left standing in the street at
Gold Run for six weeks, the passengers being carried in the meantime by saddle train
from the railroad at Colfax to Dutch Flat. The building of the railroad during thin
time was prosecuted with energy but at much greater cost than would have been the
case in the dry season. During the winter of 1866 and 1867 and the following winter
of 1867 and 1868 there were unusually heavy snowfalls in the upper Sierra Nevadas,
where the road was then under construction. The tunnels were got under way with
as large a force as could be used on them, and the remainder of the force was sent to
the Truckee Canon on the east slope of the Sierras, where the snowfall was not so
great as to entirely prevent grading during the winter, the total force being about
13,500 men at this time. The snows were so deep that it was impossible to keep the
tunnel approaches clear, and we were compelled to make tunnels through the snow
from the dump to the tunnel entrances. Snow tunnels were also required to get into
camp. In many instances our camps were carried away by snowslides, and men were
buried and many of them were not found until the snow melted the next summer. In
the spring of each year the men were taken back from the Truckee into the moun-
tains and an average depth of 10 or 12 feet of snow was cleared away before grading
could be commenced.
The total snowfall of the season was about 40 feet, and the depth of hard, settled
snow in midwinter was 18 feet on a level in Summit Valley and Donner Pass, over
which we hauled on sleds track material for 40 miles of railroad, 3 locomotives, and
40 cars from Cisco to Donner Lake, where all was reloaded on wagons and hauled over
miry roads to Truckee, a total distance of 28 miles, at enormous cost. In this way
the road was forced to the east slope of the Sierra Nevadas. In crossing the deserts
eastward from the Truckee River, water for men and animals was hauled at times 40
miles. It was necessary to have the heavy work in Palisade Canon done in advance
of the main force, and 3,000 men with 4oO horses and carts were sent to that point, a
distance of 300 miles, in advance of the track. Hay, grain, and all supplies for the
* See answer to question No, 51,
LELAND STANFORD. 2581
men and horses had to be hauled by teams over the deserts for that great distance,
there being no supplies to bo obtained on the entire route. The winter of 1808 and
1809 was one of severe cold. The construction was in progress in the upper Humboldt
Valley, where the ground was often frozen to a depth of 2 and 3 feet, and material re-
quired blasting and treatment like rock, which could have been cheaply moved in a
more favorable time. The entire cost of the railroad, had it been built with less speed
and as such railroads are usually constructed, would have been fully 70 per cent.
less than its actual cost, as it was built with rapidity of construction, and without
regard to any outlay that could hasten its completion. The railroad from Newcastle
on the west slope of the Sierras to Wadsworth at the beginning of the Nevada deserts,
157 miles, was built between February, 1865, and July, 1868, more than three years,
with a force averaging 11, COO men.
The railroad from Wadsworth to Ogden, about 555 miles, was built between Julj r ,
1868, and May, 1869, about ten months, with a force averaging 5,000 men. If the
country between Newcastle and Wadsworth had been of the same average difficulty
as that between Wadsworth and Ogden and between Ogden and Omaha, the labor
that was out upon the Central Pacific Railroad would have built it to a point far to
the eastward of Omaha in the same time, the work from the east slope of the Sierra
No'vadas to Ogden being more than an average of that from Ogden to Omaha.
Very respectfully,
J. H. STROBRIDGE.
STATE OF CALIFORNIA,
City and County of San Francisco, ss :
J. H. Strobridge, being duly sworn, says he has read the foregoing statement ; that
the matters and things therein stated are true of his own knowledge, except as to
matters on his information and belief, and as to those he believes them to be true.
J. H. STROBRIDGE.
Subscribed and sworn to before me this 25th day of July, A. D. 1887.
[SEAL.] E. B. RYAN,
Notary Public in and for said City and County.
EXHIBIT No. 11. Statement of Arthur Brown, superintendent of bridges and buildings,
relative to cost of construction.*
WEST OAKLAND, CAL., July 25, 1887.
Hon. LELAND STANFORD,
President Central Pacific Railroad Company :
DEAR SIR : In reply to your letter of the 23d inst., I herewith submit a brief outline
of the construction of the snow sheds over the Sierra Nevada Mountains, on the line
of the Central Pacific Railroad, as well as the conditions which made them a neces-
sity.
As superintendent of bridges and buildings the work of constructing those sheds
was assigned to myself. The excessive snow belt where the road crosses the Sierra
Nevada Mountains, extends from a point near Blue Canon, on the western slope, to
Cold Stream Canon on the east, a distance of about 40 miles, having its maximum
depth near the summit. The snowfall for the season has been known from actual
measurement to be nearly 50 feet.
In the fall of 1866 the road was opened to Cisco. The experience in keeping the
road open through the following winter led to the construction of the snow sheds.
Although every known appliance was used to keep the road clear from snow that
winter, including the largest and best snow plows then known, it was found impos-
sible to keep it open over half the time, and that mostly by the means of men and
shovels, which required an army of men on hand all the time at great expense.
It became evident from our experience then that the snow problem had become
serious, and it was decided, after various discussions on the subject by the directors
of the company, that the only positive means of protecting the road was by snow
sheds and galleries, although the expense of building a shed nearly 40 miles in length
was almost appalling and unprecedented in railroad construction, yet there seemed
to be no alternative but build the sheds. I was therefore instructed to make prepa-
rations and plans for such sheds as was deemed best, from our limited experience at
that time.
In the summer of 1867 we built some experimental sheds, which we had to modify
considerably. The snow-shed building in the spring of 1868 was commenced in ear-
*See answer to question No. 51.
2582 U. S. PACIFIC RAILWAY COMMISSION.
nest. Owing to the short season in which the work had to bo done (less than live
months) it was decided to cover all the cuts and the points where the roads crossed
the great avalanches beyond the summit, with the idea that the high embankments
on the road could be kept clear of snow.
As the road was then rapidly progressing up the valley of the Humboldt it became
a matter of the most vital importance that the sheds should be so far finished that
the supplies and building materials for construction ahead should not bo interrupted,
as the -connection was to be made in the spring of 1869. We therefore had to gather
men from all quarters and pay high wages carpenters $4 per day, and suitable la-
borers about $2.50 to $3. We employed about '2,500 men, with six trains with loco-
motives distributing material.
The expense was considerably increased by the fact that we had to keep the road
clear for the traffic, which was great, owing to the large amount of building material
forwarded to the front, and to avoid accident, which consumed about 30 per cent, of
the time, consequently increasing the cost in that proportion, besides, we had, by
commencing early in the spring, to shovel from 6 to 8 feet of snow before we could
put in foundations foi 4 sheds.
In the fall we continued until the snow stopped us entirely, although we had been
shoveling snow for nearly two months. The expense from the amount of snow that
had to be shoveled, spring and fall, and the difficulty of getting men at reasonable
wages to remain on the work owing to snow, bad weather, &c., added very much to
the cost. As there were not enough saw-mills to supply the necessary material, we
had to resort to round and hewn timber, which had to be got from the woods and
brought to the track at a great expense, as suitable men for that purpose were very
scarce.
The galleries are built along the side of the mountains, where the slope of the roof
conforms with that of the mountain, so' the snow can pass over easily. Some of thoso
galleries run back on the slope of the mountain several hundred feet from the center
line of the road. In other places massive masonry walls were built across ravines to
prevent the snow from striking the sheds at right angles. The snow sheds and gal-
leries were finished in the fall of 1869. In them was used 65,000,000 feet, B. M., of
timber, and 900 tons of bolts and spikes, &c. The total length of sheds and galleries
when finished was about 37 miles, at a cost of over $2,000,000.
For several years the loss from fires was considerable, as several miles were burned
down and had TO be rebuilt, and at the present time water trains are constantly kept
on hand for sprinkling down the sheds twice a week, thus preventing their destruc-
tion by fire. A number of the tunnels through the same mountains had to be timbered
at a great expense, as most of it had to be got out in the winter time, and, as it was
impossible to keep the roads open, we had to employ men and bring timber to the
tunnels on hand sleds.
I am quite familiar with the extraordinary exertions put forth in all departments
of this work, as I was constantly on the ground during all this construction, and es-
pecially the almost superhuman effort put forth by Mr. J. H. Strobridge. superin-
tendent of construction, in keeping the men at work on the rock work and tunnels,
and shoveling snow at great depth during the fall and winter, and contending against
mud and snow in getting supplies to the ground at great expense.
I consider, from my experience, that if time could have been spared to take advan-
tage of the proper seasons, it could probably be duplicated now for less than 40 per
cent, of its original cost.
Very respectfully,
ARTHUR BROWN,
Supt. B. and B. Dcpt.
STATE OF CALIFORNIA,
City and County of San Francisco, ss :
Arthur Brown, being first duly sworn, deposes and saith : That he has read the
foregoing statement, and knows the contents thereof ; that the same is true, except
as to matters there in stated on his information or belief, and as to those he believes
it to be true.
ARTHUR BROWN.
Subscribed and sworn to before me this 26th day of July, A. D. 1887.
[SEAL OF NOTARY.] E. B. RYAN,
Notary Public in and for said City and County.
LELANB STANFORD. 2583
EXHIBIT No. 11. Statement showing from official records the saving to the United Statesin
transportation of mails, troops, munitions of war, supplies, <fc., by the construction of the
Central Union Pacific Railroad.*
(By E. H. Miller, jr., secretary. )
The act of Congress authorizing an investigation of the books, accounts, and meth-
ods of railroads which have received aid from the United States (in bonds), and for
other purposes, approved March 3, 1887, requires, among other information, the fol-
lowing :
The average cost per annum of Government transportation in the region now
traversed by the Pacific railroads between the year 1850 and the completion of said
roads, and also the average cost per annum since such completion, and what addi-
tional facilities have been furnished to the Government and the people by said roads.
Also, to inquire whether or not the Pacific Railroad was completed in less time
than was allowed by .the law, and, if so, how much less time, and if the United States
was benefited thereby.
It is for the purpose of furnishing this information that the figures and facts stated
in the following pages have been collated. All the statements made are taken from
official sources, and reference in each case is made to the authority. Inquiry is made :
(1) As to the rates and cost of Government transportation prior to the construction
of the railroad, the rates and cost of service after its completion, and the difference,
being the saving in transportation charges resulting from the operation of the road
to the present time. This inquiry includes a comparison of the facilities furnished
the Government and the people before and after the construction of the road, and
furnishes the figures upon which the statements made in the subsequent inquiries are
based.
(2) As to the benefit to the Government resulting from the construction of the road
in less time than was allowed by the law.
(3) Inquiry is made as to the debt and interest at maturity of the bonds, less the
amounts applied as a credit thereon by transportation services and cash payments
under the existing laws, and the saving by the United States in transportation serv-
ices to the same time.
A comparison of the charges for transportation prior and subsequent to the construc-
tion of the road can best be obtained by separating the subject of inquiry into the
headings of freight transportation, including supplies, munitions of war, &c., pas-
sengers and troops, and transportation of United States mails, summarizing these
headings in conclusion.
UNITED STATES FREIGHT.
The greatest item of saving to the Government was in Army transportation. The
cost of this at former rates' was an item in the expense of the Army causing frequent
comment ; and one of the chief causes which led the Government to grant the loan of
subsidy bonds was that this expenditure might be reduced. In arriving at a compari-
son between these charges before and after the completion of the road, it has been
lound that more accurate results can be attained by considering separately the charges
on freight from these on passengers and troops. The following Trefers to freight traf-
fic:
ARMY TRANSPORTATION PRIOR TO RAILROAD.
Prior to the construction of the road supplies for the posts on the plains and in the
mountains were regularly carried by wagons. Contracts for this service were made
by routes, and abstracts of these contracts have been stated from time to time in the
reports of the Quartermaster-General. Most of the data for the following rates is
taken from these reports. The Army first seems to have availed itself of the road in
18o7. From that time the services rendered by the road became greater year by year
as the line was constructed from each end ; and as the roads were extended the wagon
routes were shortened and finally abandoned. A general idea of the former condition
of affairs, the routes and rates, may be gained from the following references:
WAR DEPARTMENT REPORTS AS TO RATES.
The Quartermaster-General of the Army, in his report to the Secretary of War for
1867, says:
"The Department has, during the fiscal year, for the first time been able to avail
itself of the Union Pacific Railroad in forwarding its supplies to posts on the plains
west of the Missouri River. At the close of the fiscal year the Omaha Branch of this
* This exhibit refers to questions Nos. 47, 48, 49, and 52.
2584 U. S. PACIFIC RAILWAY COMMISSION.
road transported the military store* as far as Fort Sedgwick, the branch from Kansas
City as far as Fort Harker, thus saving in the former case 398 miles, in the latter 215
miles, of wagon transportation. After inviting, by public advertisement, proposals
for the transportation of military stores by wagon transportation on the Western
frontier, the usual annual contracts were awarded as follows : April 4, on route No.
1, from the Omaha Branch of the Union Pacific Railroad and certain other named
points to posts and depots in Nebraska, west of longitude 102; in Montana, south of
latitude 46; in Dakota, west of longitude 104 ; in Idaho, south of latitude 44 and
east of longitude 114 ; and in the Territories of Utah and Colorado, north of latitude
40, to Wells, Fargo & Co., at the following rates: From April 1 to August 81, 1807,
inclusive, at $1.64 per 100 pounds per 100 miles; from September 1 to December 31,
1867. inclusive, at $1.99 per 100 pounds per 100 miles; and from January 1 to March
31, 1868, inclusive, at $2.50 per 100 pounds per 100 miles." (Report Secretary of War,
18b7-'68, vol.1, p. 533.)
Again, Quartermaster- General Dana, in his report dated October 10, 1868, of the
rates paid for transportation on tho plains, says :
"The field for the operation of wagon transportation lies almost exclusively be-
yond the Mississippi River. Supplies are conveyed to various posts on the plains by
this means in connection with the Pacific railroads. The principal routes are as fol-
lows, and contracts for the transportation of supplies, &c., on these routes, entered
into for the year ending March 31, 1869, are now in force:
11 Route No. 1. From Fort D. A. Russell, D. T., or such other posts as may be de-
termined upon during the year, on the Omaha Branch of the Union Pacific Railroad
west of Fort D. A. Russell, or at Fort Laramie, D. T., to posts in the State of Ne-
braska, Territories of Montana and Idaho, that part of the Territory of Dakota west
of the Missouri River and the northern part of Colorado.
" The contractors on this route are Samuel Black, Richard Kitchen and William A.
Martin, all of the city of Leavenworth, Kansas, composing the firm of Black, Kitchen
& Martin. The following are the rates per 100 pounds per 100 miles, viz : For April,
1868, $1.90; May, 1868, $1.75 ; June, July, and August, 1868, $1.60; for September and
October, 1868, $1.75; for November, 1868, $1.90; for December, 1868, $2; for Jan-
uary and February, 1869, $2.50; and for March, 1869, $3; and, on an average, are for
the. entire year the same as for the year previous." (Report Secretary of War, 1868,
part 1, p. 829.)
The next year the Quartermaster-General reports :
"The completion of the Pacific railroads has diminished the quantity and cost of
wagon and stage transportation, some of the important posts and depots being upon
the line of railroad. The posts north and south are supplied by wagon routes extend-
ing into the wilderness. Tho extension of the Pacific Railroad has occupied the
route No. 1, which has been supplied for many years by wagon transports, aud 110
contract has been made on this route for the year ending March 31, 1870." (Report
Secretary of War, 1869-70, vol. 1, p. 213.)
HIGH FREIGHT RATES. PRIOR TO RAILROAD.
These statements show the rates in force from the commencement of the Pacific
Railroad to its completion on the wagon route which was replaced by the railroad.
The highest rate given is $3 per 100 pounds per 100 miles, equal to 60 cents per ton
per mile ; and the 'lowest rate is $1.60 per 100 pounds per 100 miles, or 32 cents per
ton per mile, the difference in the rate depending chieliy on the difference in the
seasons, the lowest rates being in the summer and the highest in the winter or early
spring. The rates stated are about those in force for year after year just prior to
the completion of the road on the plains between the Missouri River and the Rocky
Mountains. But west of the Rocky Mountains, between the Great Salt Lake and the
Pacific Ocean, a greater cost was required for the service.
HIGHER RATES WEST OF SALT LAKE.
Of the rates on this Pacific coast teaming it is difficult to get any fair estimate, as
the transportation was chiefly performed by Government teams. Quartermaster-
General Meigs (Report Secretary of War, 1866-'67, p. 58), in October, 1866, says:
" There are some very costly routes in the military Division of the Pacific west of
the Rocky Mountains and in Arizona, by which supplies are transported from the Pa-
cific coast. Most of this work is done by United States trains, and its actual cost is
not reported. The expenses of the troops on that coast, in consequence of the diffi-
culty and cost of transportation, are very heavy."
LOWEST RATE TAKEN FOR THESE CALCULATIONS.
If then, in making an estimate of the saving to the Government in transportation
by the construction of the Pacific railroads, we take as an average for the rate for-
LELAND STANFORD.
2585
inerly paid by the United States the lowest of those given, we shall certainly err, if
at all, on the side of the Government. The actual average must of course be some-
what higher than the lowest rate; but, on the other hand, it is to be remembered that
the greater amount of transportation was performed at the summer or low rates, and
a comparatively small amount at the higher or winter and spring rates. We will use
then, as au average wagon rate, the lowest named above, $1.60 per 100 pounds per ICO
miles, or 32 cents per ton per mile.
The wagon rates on routes remaining in operation on either side of the Pacific Rail-
road after its completion were reduced somewhat, compared to the wagon rates in
force formerly, but that reduction was the result doubtless of the settlement and in-
creased security of the country from Indian depredations consequent upon the con-
struction of the railroad. This reduction is an additional saving in money to the
Government by the construction of the road, which is not shown in the following
calculation, as it is not possible to make an estimate of its amount which would be
satisfactory.
The average rate of freight charged the Government by the Pacific railroads has
not been ascertained for each of the years under consideration, but the average rate
charged on all freight carried, including Government and commercial, is shown in
the following table:
FREIGHT RATES ON CENTRAL AND UNION PACIFIC RAILROADS.
Average rate per ton per mile charged on all freight transported the several years shoivn.
Tears.
Central
Pacific.
Union
Pacific.
Years.
Central
Pacific.
Union
Pacific.
1870 ,
*5.95
4.26
1878 ...
2.75
2 27
1871
*3.80
2.70
1879
2.78
1 99
1872
3.66
2.67
1880
2.34
2 06
1873 .
3.60
2.47
1881
2 14
99
1874
2.85
2.16
1882
1.81
89
1875
3. 14
2.47
1883
1.92
73
1876
2.96
2.50
1884
1.96
51
1877 . -.
2.78
2.27
1885. .*
1.83
49
*Estimated.
RATES CHARGED UNITED STATES.
By the Pacific railroad act of 1862 it is provided (sec. 6) that the railroad compa-
nies shall at all times, whenever required to do so, transport mails, troops, munitions of
war, supplies, and public stores for the Government " at fair and reasonable rates of
compensation, not to exceed the rates paid by private parties for the same kind of serv-
ice." (12 Stat., 489.) From this it would seem that the average rate charged by the
Pacific railroads on all traffic would be a fair one to apply as an average on the traffic
for the United States. This view seems also to be corroborated by the Quartermaster-
General of the Army. In his report to the Secretary of War, dated September 30,
1884 (Rep. Sec'y of War, 1884-'85, p. 444), he states, in reply to charges, that lower
rates for army transportation on railroads might be secured by special contracts, in-
stead of accepting the regular rates ; that a thorough investigation of the subject-
matter had been made, and the result shown was that, " as a matter of fact, the
Quartermaster's Department secures as low, if not lower, rates of transportation than
tiny other shipper, and as an evidence thereof attention is invited to the compara-
tively small expenditure of money involved in the large movements incident to the
exchanges of stations of regiments hereinafter referred to." An important consid-
eration, however, prevents our accepting the average rate on all traffic as an average
rate on United States traffic, namely, the different character of the freight. On
wagon transportation there is but one rate on all classes of freight, so that is the
average for all. But with railroads different classes take different rates, and the aver-
age is reduced by the large shipments in car-loads of commodities carried at the lowest
rates, as, for instance, lumber, coal, grain, &c. The Government freight has not as
large a proportion of these low classes as is the case with commercial freight. As a
result, the average rate on the Government freight is somewhat higher than the
average for all. For a portion of the period under review we have actual figures for
Government rates, which prove to be in accord with the above expectation. The
Union Pacific Railroad Company, for the three years from 1872 to 1874 inclusive, has
figured out the exact rates charged on the transportation of Government freight.
This shows the average rate per ton per mile to be : For 1872, 3.G8 cents ; for 1873, 3.20
cents; for 1874, 3.13 cents. (Annual Reports, Union Pacific R. R., 1873-74.) These
2586
U. S. PACIFIC RAILWAY COMMISSION.
show the average for the Government freight to be .371 per cent, in excess of the
average on all traffic of the railroad. Applying this percentage throughout the period
shown, we have finally a very close approximation to the average rate for Government
freight for each year.
The application of the foregoing data gives the result shown in the following
tables:
Stalement showing charges to United States Government for transportation of freight, and
the cost of the same service at rates paid before the construction of the railroads.
Year.
Central Pacific Railroad.
Union Pacific Railroad.
Freight charges
to United States.
1
d
^6
w
1
M
Tons carried 1
mile.
Cost of same serv-
ice at rates form-
erly paid.
Freight charges
to United States.
1
$6
8,1
&
tJ
c
84
si
05
1
Cost of same serv-
ice at rates form-
erly paid.
1870
$19, 355
13,250
25, 257
19. 127
32, 396
55, 067
47, 145
94, 317
41, 719
118, 139
166, 185
251, 918
59, 929
47, 840
75, 334
31, 069
Cts.
5.42
5.21
5.02
4.94
3.91
4.30
4.06
3.81
3.77
3.81
3.21
2.93
2.48
2.63
2.69
2.51
357, 103
254, 319
503, 127
387, 186
828, 542
1, 280, 628
1,161,207
2, 475, 511
1, 106, 605
3,100,761
5, 177, 103
8, 597, 884
2,416,492
1,819,011
2, 800, 520
1, 237, 809
$114, 273
81. 382
161, 000
123, 900
265, 133
409, 801
371, 586
792, 164
354, 114
992, 244
1, 656, 673
2, 751, 323
773, 277
582, 083
896, 166
396, 099
$263, 220
213, 585
170, 158
219, 939
316, 840
234, 596
374, 387
362, 208
294, 414
401, 947
383, 147
390, 836
313, 853
338, 375
206, 115
159, 086
Cts.
5.84
3.70
3.68
3.20
3.13
3.39
3.43
3.11
3.11
2.73
2.82
2.73
2.59
2.37
2.07
2.04
4, 507, 190
5, 772, 568
4, 623, 859
6, 873, 094
10, 122, 684
6, 920. 236
10, 915, 073
11, 646, 559
9, 466, 688
14, 723, 333
33,586,773
14,316,337
12, 117, 876
14, 277, 426
9, 957, 246
7, 798, 333
$1,442,301
1, 847, 222
1, 479, 635
2, 199, 390
3, 239, 259
2, 214, 476
3, 492, 823
3, 726, 899
3, 029, 340
4,711,467
4, 347, 707
4, 581, 228
MTT/iL-O
4, 5C8, 776
3,186,319
2, 495, 467
1871
1872
1873
1874
1875
1876
1877
1878
1879
1880
1881
1882
1883
1884
1885
Total
1, 098, 047
33, 503, 808
10, 721, 218
4, 642, 706
157, 625, 275
50, 440, 089
Summary showing saving to United States in freight transportation.
1870 to 1885, inclusive.
Sixteen years, from
Year.
Freight charges hy railroads.
*;
ill
2^2
*8
Tgfcfl
6 SP
111
l*|
I'l'fl
' G C es
ii
Central
Pacific.
Union Pa-
cific.
Total.
1870
$19, 355
13, 250
25, 257
19, 127
32,396
55, 067
47, 145
94, 317
41, 719
118, 139
166, 185
251, 918
59, 929
47, 840
75, 334
31, 069
$263, 220
213, 585
170, 158
219, 939
316, 840
234, 596
374, 387
362, 208
294, 414
401, 947
383, 147
390, 836
313, 853
338, 375
206, 115
159, 086
$282, 575
226/835
195, 415
239, 066
349, 236
289, 663
421, 532
456, 525
336, 133
520, 086
549, 332
642, 754
373, 782
386, 215
281, 449
190, 155
$1, 556, 574
1, 928, 604
1, 640, 635
2, 323, 290
3, 504, 392
2, 624, 277
3, 864, 409
4, 519, 063
3, 383, 454
5, 703, 711
6, 004, 440
7, 332, 551
4, 650, 997
5, 150, 859
4, 082, 485
2, 891, 566
f 1, 273, C99
1, 701, 7(Jt)
1, 445, 220
2, 084, 224
3, 155, 15(i
2, 334, 014
3, 442, 877
4, 062, 538
3, 047, Jj21
5, 183, <i25
5, 455, 1< 8
6, 689, 7S7
4,277,215
4, 764, 644
3, 801, 036
2, 701, 411
1871
1872
1873
1874
1875
1876
1877
1878
1879
1880
1881
1882 ..
1883 "
1884
1885
1, 098, 047
4, 642, 706
5, 740, 753
61, 161, 307
55, 420, 554
It will be noticed that the tables include the years from 1870 to 1885, inclusive. The
line was opened through May 10, 186y, and prior to this date, as extensions were made
LELAND STANFORD. 2587
from the Missouri and Sacramento Rivers towards the center of the continent, the Gov-
ernment availed itself of such extensions and profited by their use. To bring the
statement down to date, the year 1886 should also be added to the table. The proper
statistics, however, for the periods prior to 1870 and for 1886 are not now at band, so
that for that time the statements fail to express the benefit to the Government. There
was a considerable amount saved by the use of the roads as they were extended from
point to point, and a further amount for the use of the line after its completion thus
omitted from the table. This should be taken into consideration in any mental esti-
mate which may be made of the case. With the exception of these omissions, the
tables show the following result :
Saving to United States in freight charges.
Transportation charges on Central Union Pacific line for United States
supplies, munitions of war, &c. , to January 1, 1886 $5, 740, 753
Same service would have cost at rates prior to railroad 61, 161, 307
Saving to Government in transportation charges on freight for period 55, 420, 554
SAVING ESTIMATED BY UNITED STATES ENGINEER.
The result arrived at from the foregoing review of the items in detail receives com-
plete corroboration in sn estimate made by probably the most thoroughly informed of
official authorities, and by profession and experience perhaps one of the best fitted to
form an intelligent and impartial opinion on the subject. By instructions from Gen-
eral Sherman, a history of the Pacific railroads, in their relation to the Army, was
prepared by Col. O. M. Poe, U. S. Engineers, and printed in the last report made by
General Sherman as General of the Army. (Report 1883, p. 213 et seq.)
After a careful consideration of the question of a saving to the United States in the
Army transportation by the construction of the railroads, Colonel Poe concludes as
follows :
"Taking the route from Fort Leavenworth to Fort Union for example, the average
cost by wagon per 100 pounds per 100 miles for the sixteen years from 1855 to 1870,
both inclusive, was $1.77, whilst by rail it is now less than a tenth of that amount.
This represents the relative cost of wagon and railway transportation, bearing in mind
that any variation is always such as to show more strongly the advantage of railway
transportation. In some cases transportation by wagon is twenty times more costly
than by railway."
It will be noticed that the charges for freight transportation to the United States
by the railroads shown in the above table is about 9| per cent, of the cost at the rates
formerly paid. This is the result shown from the carefully detailed figures. Colonel
Poe's estimate, after a thorough review of the subject, but without going into the
same summary of details, is that the relative cost of the railway and wagon transpor-
tation is as one to ten. The uniformity of these results is additional evidence of the
fairness of the foregoing conclusions, if any further evidence than the facts already
presented were needed.
UNITED STATES TROOPS AND PASSENGERS.
The cost to the United States for the transportation of troops before the completion
of the Pacific Railroad, compared with the cost after completion, is more difficult to
ascertain than in the case of freight. Before the road was built troops were in a few
cases carried by stages, but commonly were marched, a journey which is now accom-
plished in a few days then requiring as many months. The cost of marching troops
in this way through a country with few inhabitants save hostile Indians, and with
no supplies obtainable save those brought from long dis ances, must of necessity have
been very great. Some idea of the differences between the old order of affairs and the
new may be gained from the following facts :
COST OF MILITARY TRANSPORTATION PRIOR TO RAILROAD.
Quartermaster-General Meigs, in his report dated November 8, 1865 (Report Secretary
of War, 1865-'66, Vol. I, p. 113), commenting on the cost of transportation over the
plains, shows that a bushel of corn cost $2.79 at Fort Riley, $9.44 at Fort Union, $5.03
at Fort Kearney, $9.26 at Fort Laramie, $10.05 at Denver, and $17 at Salt Lake City.
He then states that the cost of transportation for military stores westward across
the plains by contract during the fiscal year ending June 30. 1865, amounted to
$6,388,856.37.
P R VOL IV 17
2588 U. S. PACIFIC RAILWAY COMMISSION.
"This expenditure [the Quartermaster-General continues] would be reduced by
the opening of railroads by a sum which would aid materially in paying interest
upon the cost of their construction."
At the same time the cost of transportation of a pound of corn, hay, clothing, sub-
sistence, lumber, or any other necessary of the troops from the base of supply at Fort
Leavenworth was as follows : To Fort Riley, per p'ound, 2AQ cents; to Fort Union,
per pound, 14.35 cents; to Fort Kearney, per pound, 6.44 cents ; to Fort Laramie,
per pound, 14.10 cents; to Denver, Colo., per pound, 15.43 cents ; to Salt Lake City,
per pound, 27.84 cents. (Ibid., p. 113.)
Supplies in those days had to be carried with the troops ; they could not be ob-
tained' on the line of march. The maintenance of marching bodies of men was thus
greatly increased as they continued westward. The settlement and development of
the West, consequent upon the completion of the railroad, gradually enabled the
Army to purchase its supplies near at hand at a cost in which transportation bore
The troops maintained on the plains were mostly cavalry, as this arm of the service
was much better adapted for following bands of marauding Indians and moving from
place to place in the protection of immigrant trains and isolated settlements. The
cost of forage for the horses was thus a necessary part of the expense of the trans-
portation of the troops. The Quartermaster-General, in his report for 1866 (p. 302),
states on this subject that, " The supply of the posts on the plains with forage has
always imposed a heavy financial burden upon this department. The Missouri River
has for years marked the limit of the cereal-producing region of the West, and grain
transported from that point when it reached the garrisons stationed near the Rocky
Mountains had reached an enormous price ; the cost of foraging one horse equaled
the cost of feeding a dozen animals in the States."
UNITED STATES WAGON TRAINS.
It has appeared above that the regular movement of supplies between posts was
affected by contractors. But all the transportation was not done by contract. It
was necessary for the Army to maintain a large number of trains, with their accom-
panying wagons, mules and horses, teamsters, blacksmiths, and mechanics. The
Quartermaster-General tells us that tf trains must be kept up at the principal posts to
meet emergencies and to accompany marching bodies of troops." (Report 1866, p. 57. )
The expense of these wagon trains"forms a part of the cost of transportation of troops
as performed before they were transported by railroad. The construction of the rail-
road canceled this item of expense for the territory covered by it.
SAVING IN SUPPLIES FOR THE ARMY.
Another item of economy to the United States in the cost of supplies for troops,
caused by the building of the Pacific Railroad, is mentioned by the Commissary- Gen-
eral of Subsistence in his report for 1867. ( Report Secretary of War, 1867-'68, Vol. I, p.
576.) Before the era of railroad transportation the supplies for military posts on the
plains had to be carried in the summer months, when the roads were to be depended
on ; and a supply sufficient for all possible wants for the coming year was laid in at
that time. Many of the supplies were of a nature that deteriorated or were destroyed
altogether by storage for so long a time, and much was stored in many cases in excess
of what was found to be the subsequent need, and was therefore wasted, as it could
not be kept for another season. In 1867 the Commissary-General says: tf The com-
pleted sections of the Pacific railroads already afford such facilities for reaching
several of the occupied posts as to make it unnecessary to place and keep thereat
such large quantities of stores as were requisite when they could be supplied only
by train of wagons dispatched at special seasons."
GENERAL GRANT'S VIEWS.
The expense of maintaining troops on the plains and the great cost of their trans-
portation was a subject of constant comment by officers of the Army. Every effort
was made and every plan tried to reduce the expense within reasonable limits. But
until the advent of the locomotive all efforts were of little effect. General Grant,
Acting Secretary of War in 1867, says :
u During the last summer and summer before I caused inspections to be made of the
various routes of travel and supply through the territory between the Missouri River
and the Pacific coast, The cost of maintaining troops in that section was so enor-
LELAND STANFORD.
2589
nions that I desired if possible to reduce it. This I have been enabled to do to some
extent from the information obtained by these inspections; but for the present the
military establishment between the lines designated must be maintained at a great
cost per man. The completion of the railroads to the Pacific will materially reduce
this cost, as well as the number of men to be kept there. The completion of these
roads will also go far toward a permanent settlement of our Indian difficulties. There
is good reason to hope that negotiations now going on with the hostile tribes of In-
dians will result, if not in permanent peace, at least a suspension of hostilities until
the railroads are pushed through that portion of the Indian territory where they are
giving the most trouble." (Rep. Secy, of War, 1867-'68, Vol. I, p. 3.)
RELATIVE SAVING IN TRANSPORTING TROOPS GREATER THAN WITH FREIGHT.
From the foregoing facts it is clear that the cost to the United States in the move-
ment of troops by marching or by stages, before the construction of the railroad,
bore a greater proportion to the cost of their transportation after its construction
than the transportation of freight before the railroad bore to its cost afterwards.
Probably a greater part of the expense of marching troops in former times was the
cost of carrying forage and rations. But in addition to the transportation of these
supplies there was the original cost of the supplies, or that part of them consumed
during the excess of time taken to march troops over the time taken to move them by
rail; and there was also 1he whole pay and expense of maintaining them for the
same excess of time. The average movement by rail may be taken at about 20 miles
an hour, or say 500 miles a day. Troops would not march for many consecutive days
at a greater average rate than 20 miles a day, or about 500 miles a month. But sup-
pose they doubled this rate and marched 40 miles a day, the ratio of time would be
still 500 to 40, or over twelve to one. The saving to the Government in favor of the
railroad as compared to wagons has been shown above to be as about one to ten.* 1
Thus the saving in passenger transportation by the construction of the railroad,
considered in any light, is in as great or greater ratio than in the case of freight.
Applying then, as an estimate, the same proportion of cost for the movement of troops
as we have shown existed in the transportation of freight, the result is as appears in
the following table.
Statement shoiving charges to United States Government for transportation of troops and
passengers, and the cost of same service at rates paid before the construction of the rail-
roads.
Year.
Central Pa-
cific.
Union Pa-
cific.
Total.
Estimated cost
at rates for
merly paid.
Saving.
1870
$41 735
$939 770
$331 505
1871
79 586
2^7 904
307 490
1872
107 368
303 154
410 5 9 2
1873
112 334
248 118
360 452
1874
47 612
250 702
298 314
1875 .. ..'
132,831
176, 213
300, 074
1876
66 265
223 614
289 879
1877
67, 173
293, 251
360, 424
1878
61, 232
223, 865
285, 097
1879 .
135, 002
150,965
285, 967
1880
128, 597
215,635
344, 232
1881 . . .
261, 674
185, 373
447, 047
1882
35, 988
133, 161
161), 149
1883
35, 117
109,654
144, 771
1884
98, 605
94, 479
193, 084
1885
12, 990
60, 056
79, 046
Total
1 424 109
3, 191, 944
4, 616, 053
$49, 178 967
$44 562 914
The result shown is that the United States has saved in the transportation of pas-
sengers and troops by the construction of the Pacific Railroad, up to the end of 1885,
the sum of $44,562,914 forty-four and a half million dollars.
*General Sherman says: ''These roads enable us to send soldiers to threatened
points at the rato of 500 miles a day, tlms overcoming the space in one day which
used to require a full month of painful marching." (Report 1883, p. 46.)
2590 U. S. PACIFIC EAILWAY COMMISSION.
FREIGHT AND PASSENGERS.
The foregoing statements show the saving to the Government in transportation
charges by the construction of the Pacific Railroad, from the commencement to Jan-
uary 1, 1886, to be in round sums :
On freight $55,500,000
On troops and passengers 44,500,000
Total freight and passengers 100,000,000
In these statements it has been assumed that an equal amount of traffic would have
been carried by wagons, or troops to an equal number would have been marched, had
not the railroad been built. The basis of the calculation is the service which has been
performed by the railroad since its completion, and the charge for this service is com-
pared with what the same service would have cost at former rates. It is uot, however,
a fair assumption that the same service has since been rendered for the Army as would
have been necessary had not the road been built. The transportation formerly nec-
essary was much greater since the construction of the road.
ENDING OF INDIAN WARS.
The Indian wars have been practically ended, thus precluding the necessity of the
frequent movement of troops on the plains from place to place to protect the scat-
tered settlements and follow marauding bands of hostile Indians. As the Indians
have fled into the British possessions on the north and into Mexico on the south, or
have been placed on reservations, the military posts have been abandoned and the
troops have been concentrated at general points, from which they can be rapidly sent
to any place required. Their supplies, which formerly were hauled long distances in
teams, are now procured near at hand at a price in which transportation forms, at
most, an unimportant factor.
INDIAN WARS FORMER COST.
The movement of troops and the teaming of supplies and munitions of war have
thus been greatly lessened by the building of the road, and the actual saving in this
respect would be more closely shown by deducting from the amounts formerly paid for
services on the plains the amount subse'quently charged by the railroad. The amounts
formerly paid varied greatly, as Indians were hostile or friendly at many or few points,
and the actual cost for the country contiguous to the Pacific Railroad is not now wholly
obtainable, the cost covering not only teaming done by contract, but by Government
trains and tho movement of marching troops. An idea of the former cost of this serv-
ice is given in the report of the Pacific Railroad Committee of the Senate, dated
February 19, 1869, in which it is stated that the Indian wars for the past thirty-seven
years have cost the nation 20,000 lives and $750,000,000, or about $20,000,000 a year.
In the years 1864 and 1865 the Quartermaster's Department spent $28, 574,228 for mili-
tary services against the Indians. (40 Congress, 3d session, Senate Rep. Com., 219.)
The cost of transportation of military stores westward across the plains, paid to
contractors alone, was over $6,000,000 annually. This amount stated for tho year
ending June 30, 1865, amounted to $3,388,856.37. (Report Secy. War, 1S85-'G6, Vol. I,
p. 113.) Using this last amount as the annual cost for freight transportation which
the Government would have been reqislred to pay from 1869 to 1885, had not the rail-
road been built
The sum for the sixteen years would have been $102,221,702
The charges made for fre'ight transportation by the railroad for the same
period amounted to 5, 740, 753
Showing a saving of 96,480,949
Compared with saving shown by foregoing table of 55, 4^0, 554
$100,000,000 A YEAR SAVED ON FREIGHT AND TROOPS.
From these considerations it will be seen that the result of the foregoing tables,
showing a saving to the Government in freight and passenger transportation charges
by the Pacific Railroad to January 1. 1886, of $100,000,000, as great as the amount
may seem, fails to fully state the actual sum. It certainly represents less than the
amount saved in any point of view from which the subject may be considered ; but
it is preferably used in these pages to prevent any charge of exaggeration, which the
least of these sums would be likely to suggest to one not familiar with the facts.
LELAND STANFORD. 2591
UNITED STATES MAILS.
All of the following facts as to the weights and ratQS of mails are taken from the
annual reports of the Postmaster-General for the several years :
The rates paid just before the completion of the railroad are shown in the report
for 1868 (pp. 7 and 8). The Department advertised March 9, 1868, inviting proposals
for conveying the mails from October, 1868, to June 30, 1870 : " On Route No. 16635,
from Cheyenne, Dak., or that point on the Union Pacific Railroad, to which the
mails might be conveyed when this service should go into operation, to Virginia City,
Nev., 1,095 miles and back, daily, the trip to be performed in nine days each way in
summer and twelve days in winter." Five bids on this route were received in re-
sponse to the advertisement. The lowest was accepted, but soon failed. The others
then successively failed or refused to undertake the service. Finally, the Postmaster-
General, with the Second Assistant Postmaster-General, repaired to New York City,
and consulted with Senators Morgan and Cole, Horace Greeley, Isaac Sherman, Post-
master Kelly, and other leading citizens, and under their advice accepted a proposi-
tion of Wells, Fargo & Co. to carry the mail between the termini of the Union Pacific
and the Central Pacific Railroads daily for the term of one year, at the rate of
$1,750,000 annually, subject to a reduction pro rata for every section of 50 miles of
railroad completed and reported to the Department ready to carry the mails. In his
report for 1869 (p. 9) the Postmaster-General makes the following statement concern-
ing the operation of this agreement :
"The contract of agreement entered into on the 21st of October, 1868, between the
Post-Office Department and Messrs. Wells, Fargo & Co., for the transportation of the
United States mails between the western terminus of the Union Pacific Railroad and
the eastern terminus of the Central Pacific, for the term of one year from October 1,
1868, or until the two railroads should meet, at the rate of $1,750, 000 per annum, sub-
ject to reduction pro rata for every section of 50 miles of railroad completed and re-
ported to the Department ready to carry the mails, expired on the 9th of May, 1869,
the railroad having eifected a junction, and reported ready to carry mails through
on the 10th. When the contract was entered into, it was estimated that the junction
would not be formed before the 31st of July, it being supposed that the severity ot
the weather would compel a suspension of work on the railroads during the months
of January, February, and March; and it was further estimated that the cost of the
mail service under Wells, Fargo &. Co.'s contract would amount to $670,144. The
weather proving unusually mild, however, and the progress of the roads being unin-
terrupted, their completion was accelerated nearly three months, and hence the cost
of the service under the contract with W'ells, Fargo & Co. was reduced $214,339.36
below the estimate. 7 *
FORMER AVERAGE WEIGHT OF MAILS.
From this we get the contract rate formerly paid for mail transportation. This
rate was for the mails which were then carried. The weight of these is stated by the
Postmaster-General in a communication to the House of Representatives, in answer
to a resolution of inquiry of that body (quoted in Report Government Directors U. P.
R. R., 1875), who says:
"The average amount of mail matter conveyed in the mails overland before the
completion of the railroads was less than 1,000 pounds daily."
From these facts we have the following : Annual amount paid for carrying mails
before the completion of the railroads, $1,750,000; distance carried, 1,095 miles; aver-
age daily weight, 1,000 pounds; rate, $1,598.17 per mile per annum. After the com-
pletion of the railroads the mails were largely increased in weight, and the service
was equally improved in " certainty, celerity, and security." By substituting a rail-
way postal car with all conveniences for agents in charge, and appliances for the
distribution of mails en route, in place of the stage-coach formerly used, the accommo-
dations were increased in value in excess of the increase of the weight of the mails.
WEIGHT INCREASED TWENTY TIMES.
Each of these items is allowed to be a fair consideration for the increase of pay by
the laws and the rules of the Post-Office Department. But as the stage service can-
not be compared with the railroad service as to certainty, celerity, and security or
accommodation, I will not attempt to place a moneyed price on the difference of values.
Weight is the principal basis of the law fixing the compensation to railroads for car-
rying the mails, and the weights carried by rail are more than twenty times greater
than those which were carried by stage. But as it may with truth be said that had
no railroad been built, an equal amount of mail matter would not have been sent,
and, if sent, would not have been carried by stage, as it would require several large
stages daily each way to haul the matter, we also omit from our estimate any allow-
ance for the difference in the weights.
The rates, weights, and amounts allowed by the Postmaster-General since the con-
struction of the railroad are shown in the following table :
2592
U. S. PACIFIC EAILWAY COMMISSION.
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LELAND STANFORD. 2593
SAVING IN MAIL TRANSPORTATION, $40,000,000.
The table shows that the amount allowed the railroad by the Postmaster- General for
carrying the mails from July 1, 1869, to December 31, 1885 a period of sixteen and a
half years was $10,606,507.22. This was for carrying the average daily weight at
the commencement of the period of about 5,000 pounds, which at the close of the period
had increased to about 30,000 pounds. The stage rate, we have seen, was $1,598.17
per mile. This for the 1,895 miles of aided road, and for the sixteen and a half years,
would amount to the sum of $49,970,780.47. The diiference representing the amount
saved by the Government in the transportation charges on United States mails is
$39,364,273.25.
IMPROVEMENT IN THE SERVICE.
An idea of the improvement in the service and a suggestion as to its value to the
Government and to the people may be gained from the following remarks relating to
the subject, made by the Postmaster-General at the end of the old regime and the
beginning of the new. In his report for 1867 (p. 8) the Postmaster-General says :
"No changes have been made in the overland California mail since the last annual
report, at which time the Department was having daily service from the ends of the
railroad by both the Smoky Hill and Platte routes as far as Denver, where the lines
united and formed a single daily route via Salt Lake City and Virginia City to the
Central Pacific Railroad connection. During the spring and summer months the com-
plaints as to the manner in which the service was being perfotmed, and the great
delay in the arrival of mail from the East at Denver and Salt Lake, were more numer-
ous and pressing than at any time since the present route has been in operation. It
was charged that the Indian troubles complained of by the contractor, and given by
his agents as an excuse for non-performance of service, were a pretense, and that there
was no reason why the mails should hot be conveyed regularly and within schedule
time. The official reports, however, of General Sherman and other officers of the
Army, referred by the Secretary of War to this Department, prove conclusively that
the most serious troubles did exist on the plains, and that there was no safety for
either passengers or mails except under ample military escort, which could not be
furnished daily. A special agent of the Department lately sent over the route for the
express purpose of reporting as to the manner in which the service had been performed
during the summer, and also as to its present condition, has, under date November 4,
1867, made his report, which is accompanied by the affidavits of the postmasters at
the principal offices on the route, and also by statements of several officers command-
ing military stations on the line. The burden of this proof is summed up as well,
perhaps, in the affidavit of the postmaster at Denver as in other papers submitted.
He says : ' On that portion of the route from Denver to Omaha City, or terminus of
railroad, Indian troubles of a serious nature commenced as early as February 16, and
notwithstanding the contractor, supported by the military, put forth every eifort in
his power to clear the road and keep it open, no mail was received at this office over
that route from February 23 to March 2. During the month of March our registers
show eighteen failures. From June 8 to September 1 regular trips were made on al-
ternate days, and from that to the present we have had daily service. I am reliably
informed that the delay was in many instances caused by loss of stock driven off by
hostile Indians at points where it was impossible to replace it without prolonged de-
lay. This was more especially the case on the route from Denver to Salt Lake City.
Late in the winter the Union Pacific Railroad was blockaded by snow, followed soon
by high water, which caused another delay of three weeks and the diversion of the
mail from the Platte to the Smoky Hill line.
" 'From the best information I can obtain the cause of all the detentions and ir-
regularities complained of were unavoidable on the part of the contractor, and of
such a character as to have precluded the possibility of any man or set of men making
regular trips over the route unless securely guarded by an armed force of considerable
magnitude.'
"From papers submitted by the contractor to the inspection division it would ap-
pear that from April 1 to August 15, 1867, the Indians robbed him of three hundred
and fifty head of stage stock, burning twelve of his stage stations with large amounts
of grain and hay, destroyed three coaches and express wagons, severely wounded
several of his passengers, and killed outright thirteen of his most reliable employe's.."
In contrast to this state of affairs, we find the condition of the service the first "year
after the Pacific Railroad was opened for through traffic, stated by the Postmaster-
General in his report for 1870, as follows (p. 12) :
"The through-mail tables herewith submitted make a favorable exhibit as to the
average speed and regularity with which the mails have been conveyed over the line,
3,307 miles long, between New York and San Francisco, during the year ending with
the month of September, 1870. * * * The average time going west was one hun-
2594
U. S. PACIFIC RAILWAY COMMISSION.
dred and seventy-five hours fifty-two minutes, or seven days seven hours and fifty-
two minutes; going east, one hundred and seventy-two hours forty-four minutes, or
seven days four hours and forty-four minutes. The records from which these tables
are compiled show that generally three mails a clay are dispatched from New York
for San Francisco, one in the morning and two in the afternoon ; the average schedule
time of the afternoon mails being nearly seven days, and of the morning mails nearly
seven and a half days, a single train a day being run west of the Missouri River, the
departure of which is arranged to connect with the train making the latest afternoon
departure from New York. From San Francisco but a single mail a day is dispatched
for New York, of which the average schedule time, allowing for the intermission of
Sunday service east of the Missouri River, is about seven days three and a half
hours, only one hour and fourteen minutes less than the time actually attained."
Although the value of this improved condition of affairs is not stated in money in
the foregoing comparison of rates and amounts, it should be borne in mind in con-
nection therewith. And it strengthens the force of the argument made by the figures
that the construction of this line has saved the United States in the transportation of
mails during the sixteen and a half years ending December 31, 1885, over $39,000,000.
SUMMARY FREIGHT, TROOPS, AND MAILS.
A summary of the foregoing shows the following result to January, 1866 .
United States trans-
portation charges on
Central Union Pa-
cific.
Cost at rates paid
prior to railroads.
Saving to United
States.
Freight
$5 740 753.00
$61, 161, 307. 00
$55 420 554 00
TrooDS &c
4 616 053.00
49,178 967.00
44 562 914 00
Mail : :
10 606,507.22
49, 970 780. 47
H9 364 273 ^5
Total
20 963 313.22
160 311 054.47
139 347 741 25
A saving in the expense of the Government of nearly one hundred and forty mill-
ions up to the end of 1885 in the item of transportation seems enormous to one not
accustomed to deal with accounts of Government expenditure. ret it no doubt falls
short of expressing the actual saving in this time; for many it e ms (of which some
have been noticed) cannot be satisfactory valued in money, and have been entirely
omitted from the calculations. A single Indian war has cost more than the whole
amount of bonds issued to the Pacific railroads. The Pacific Railroad Committee of
the Senate, in a report dated February 19, 1869, make the following statement on this
subject:
u What is the cost of our Indian wars as compared with the cost of the Pacific rail-
ways, which will speedily end the Indian wars? A compilation from the official
records of the Government shows that these wars for the last 37 years have cost
the nation 20,000 lives and more than $750,000,000. In the years 1864 and 1865 the
Quartermaster's Department spent $28, 374, 228 lor military service against the Indians.
* * .The chairman of the House Committee on Indian Affairs estimated recently
that the present current expenses of our warfare with the Indians was $1,000,000 a
week $144,000 a day." (40th Congress, 3d Session, Senate Rep. Com., 219.)
VIEWS OF GENERAL SHERMAN.
The effect of the Pacific railroads in ending the Indian wars is thus commented
upon by General Sherman in his last report as General of the Army : (Report 1883, p. 5.
et seq. )
"I now regard the Indians as substantially eliminated from the problem of the Army.
There may be spasmodic and temporary alarms, but such Indian wars as have hither-
to disturbed the public peace and tranquillity are not probable. The Army has been
a large factor in producing this result, but it is not the only one. Immigration and
the occupation, by industrious farmers and miners, of lands vacated by the aborigines
have been largely instrumental to that end ; but the railroad (the italics are the Gen-
eral's), which used to follow in the rear, now goes forward with the picket line in the
great battle of civilization with barbarism, and has become the greater cause. I have
in former reports for the past fifteen years treated of this matter, and now on the eve
of withdrawing from active participation in public affairs, I beg to emphasize much
which I have spoken and written heretofore. The recent completion of the last of the
four great transcontinental lines of railway has settled forever the Indian question,
LELAND STANFORD. 2595
the army question, aud many others which have heretofore troubled the country.
* * * I regard the building of these roads as the most important event of modern
times, and believe that they account fully for the peace and good order which now
prevail throughout onr country. * * * A vast domain, equal to two-thirds of the
whole surface of the United States, has thus been made accessible to the immigrant,
and, in a military sense, our troops maybe assembled at strategic points and sent
promptly to the places of disturbance, checkin bcdisorders in the bud."
The saving to the Government in mere money, which directly resulted from the aid
granted for the construction of the Central Union Pacific Railroad up to January 1,
1886, may then be fairly stated as $139,347,741, nearly $140,000,000. Such is the re-
turn received by the Government in the item of transportation. As an offset to this
are the bonds issued by the United States with interest accrued thereon, less the
amount of such interest which has been repaid by transportation charges withheld in
the Treasury Department and cash paid under the law. Tho statement and balance
of this account to December 31, 1885, is shown as follows :
To January 1, 1886.
Bonds issued by United States :
Union Pacific Railroad $27,236,512.00
Central and Western Pacific Railroads 27, 855, 680. 00
Total bonds :... 55,092,192.00
Interest accrued to January 1, 1886 :
Union Pacific $29,043,327.21
Central and Western Pacific Railroads 29, 299, 156. 21
58,342,483.42
113,434,675.42
Transportation charges and cash :
Union Pacific
* Transportation to June 30, 1885 $10, 647, 579. 36
t Cash to June 30, 18c5, 5 per cent 283, 162. 99
t Interest payment, 1885 560,017.05
$ Sinking fund in United States Treasury 6, 006, 033. 73
Total Union Pacific payments on bonded line (not including Kansas
Pacific) 17,496,793.13
|| Central and Western Pacific transportation charges and cash . . 9, 251, 974. 43
Total transportation charges on aided line and cash paid 26, 748, 767. 56
Balance accrued on debt to date (due in 1898) 86, 685, 907. 86
SAVING BY UNITED STATES THREE TIMES THE CASH VALUE OF THE DEBT AND
INTEREST.
This balance will not be payable till the maturity of the bonds at the average date
of, say, January 1, 1898. The present cash value of this sum, calculated at 6 per
cent, interest, payable semi-annually the same rate as borne by the bonds is
$42,647,795. The 'saving in money to the Government in transportation charges to
the same date amounts to $139,347,741. 25.
COMPLETION OF THE RAILROAD IN LESS TIME THAN ALLOWED BY THE LAW.
The last spike was driven in the Pacific Railroad at Promontory Point on May 10,
1869. From that date the Union and Central Pacific companies, forming a through
line between the Missouri River and the navigable waters of the Sacramento River
in California, have been in continuous use and operation for the transportation of
passengers, freight, and mails. By section 17 of the act of Congress of July 1, 1862
(12 U. S. Stat., 489), the railroad companies were required to complete the line, ready
for use in a reasonable time, and it was provided that if it were not so completed by
the 1st day of July, 1876, their properties should be forfeited to the United States,
upon which Congress might pass any act to insure their speedy completion.
The through line of railroad was thus actually opened for traffic over seven years
before the limit of time allowed by the law.
*U. S. Com. R. R. Rep., 1885, p. 1. \Ibid. \IUd., Rep., 1886, p. 6. Annual Re.
port U. P. Ry., 1885, p. 78. || Rep. C. P. R. R., 1885, p. 4.
2596
U. S. PACIFIC RAILWAY COMMISSION.
COST OF ROAD INCREASED BY EARLY COMPLETION.
Everything necessary to the construction of a railroad ; capital, labor, and mate-
rials, cost the companies much more on account of this early completion of the road,
than they would have cost had the companies consumed the full time allowed. But
the Government and the people were benefited by all the direct and incidental ad-
vantages connected with railroads as compared with the slower and more expensive
methods of transportation. To the public the saving in transportation has been many
times what it was to the Government ; and it has given to them all the material bene-
fits implied by the use of half the continent for seven years.
The direct saving in money to the Government is easily abstracted from the forego-
ing statements. In addition to this there was a benefit probably to an equal or greater
amount by the ending of Indian wars and the abandonment of many military posts
which the former frequent hostilities made necessary.
The amount saved to the Government by the use of the road for these seven years
ending June 30, 1876, is, as shown by the following tables, as follows :
Seven years t) June 30, 1876.
"' Traffic.
United States
transporta-
tion charges
on Central-
Union Pacific.
Cost to United
States at rates
paid prior to
railroad.
Saving to
United States
to June 30,
1876.
Freight -
$1, 793, 556
2, 162, 296
3, 689, 343
$15, 509, 977
18, 698, 671
21, 199, 725
$13, 716, 421
16, 536, 375
17, 510, 382
Mails
Total
7, 645, 165
55, 408, 373
47, 763, 178
The debt to the same date was as follows :
Bonds :
Union Pacific $27,236,512
Central and Western Pacific 27,855,680
Interest accrued less credits :*
Union Pacific 9,438,810
Central Western Pacific 12,180,838
$55, 092, 19*2
21, 619, 648
Balance of debt, due at maturity of bonds in 1898 76, 781, 840
The cash value of this debt on June 30, 1876, discounted at the same rate of inter-
est borne by the bonds, was $21,522,^74.
The amount saved by the Government for that period was, as above, $47,763,178.
So that in transportation charges alone the Government benefited by the use of the
road for seven years for which time it was finished before the limit allowed by the
law, the amount of $26,240,904 in excess of the cash value of the debt and interest
to that date.
DEBT AND INTEREST AT MATURITY COMPARED WITH SAVING IN TRANSPORTATION
CHARGES TO SAME DATE.
The United States Commissioner of Eailroads, in his report for 1883 (p. 13), esti-
mates the balance to become due on the debt of Central Union Pacific line ab matu-
rity as $71,000,000. Subsequent experience has shown that the balance will be greater
than this sum, as since the commissioner's estimate several competing transconti-
nental roads have been completed, thus reducing the net earnings of the original
line, and reducing also thereby the amounts of the annual payments to the Govern-
ment on account of the debt. In the following estimate the annual payments from
1886 to 1897 are based upon the requirements ascertained under the law since 1883.
* Public debt statement, June 30, 1876.
LELAND STANFORD.
2597
ESTIMATE OF DEBT AND INTEREST AT MATURITY.
Bonds, Central Union Pacific line $55,092,192
Interest, 30 years at 6 per cent 99, 165,945
Total, bonds and interest 154,258,137
PAYMENTS ON DEBT BY COMPANIES.
Central Western Pacific :
Transportation charges and cash to January 1, 1886* ... $9, 251, 974
Payments 1886 to 1897, estimated on average rate 1883-
1886, $478,000 per annumt 5,736,000
Union Pacific Railroad :
Credits to January 1, 1886* 17,496,793
Pavments 1886 to 1897, estimated on average rate of 1883-
1885, $1,448,000$ 17,376,000
14,987,974
34,872,793
Total payments 49,860,767
Balance on debt at maturity 104,397,370
As an offset to this balance the saving in transportation charges may be cited, as
that is a direct pecuniary benefit to the Government. The foregoing statements show
this saving up to January, 1886, to have been $139,347,741. Assuming this saving to
continue to the maturity of the debt at the same annual rate as it has been in the
past, the result would be as follows :
SAVING TO GOVERNMENT IN TRANSPORTATION CHARGES TO MATURITY OF THE DEBT.
Kind of service.
amount saved
by Govern-
ment.
Amount saved
in 30 years to
maturity debt.
Freight .
$3, 463, 785
$103, 913, 550
2, 785, 182
83, 555, 460
Mails
2, 385, 714
71,571,420
Total . ...
8, 634 ; 681
259 040 430
Balance on debt estimated to be due at maturity as above $104 , 397, 370
Saving to Government in transportation charges to same time 259, 040, 430
Surplus saved 154, 643, 060
The total debt stated above, with interest at maturity, without any deductions for
payments by the companies, amounts to
Principal of bonds $55,092,192
Interest at 6 per cent 99, 165, 945
Total 154,258,137
Deducting this amount from the sum saved above leaves $104,782,293 as the amount
of benefit which would have been realized by the Government in excess of the whole
amount of bonds and interest had they been a donation instead of a loan at interest.
At the time the granting acts were passed it was frequently stated in Congress that
in case the loan could never be directly repaid the saving to the Government in trans-
portation charges would more than equal the bonds and interest, and thus directly
offset the debt. The foregoing statements show that those predictions have been
more than realized.
* Annual Report of the Central Pacific Railroad, 1885, p. 4.
t Report of the United States Commissioner of Railroads, 1886, p. 35.
tSee preceding statement of January 1, 1886.
^Report of the United States Commissioner of Railroads, 1886, p. 35.
2598 U. S. PACIFIC RAILWAY COMMISSION.
STATE OF CALIFORNIA,
City and County of San Francisco, ss :
E. H. Miller, jr., being first duly sworn, saith : That he has read the foregoing
statement consisting of the pages next preceding, marked "Exhibit No. 1H," and
knows the contents thereof; that the facts therein stated are true, except as to those
matters stated on his information or belief, and as to those he believes it to be true.
E. H. MILLER, JR.
Subscribed and. sworn to before me this 26th day of July, A. D. 1887.
[SEAL.] E. B. RYAN,
Notary Public in and for tlie City and County of San Francisco,
State of California.
EXHIBIT No. 12. Relative to competing roads aided by Congress, by J. C. Stubbs, general
traffic manager.*
There are now eight trans-continental railroad lines in addition to the original
Union and Central Pacific line that is to say, there are eight other lines, each of
which competes in whole or in part with the original Union and Central Pacific line
for the traffic interchanged between the Pacific coast and the territory of the United
States and Canadas east of the Rocky Mountains. They are as follows :
(1) The original Union and Central Pacific line, opened for through traffic in May,
1889.
(2) The thirty-second parallel route, or Atchison, Topeka and Santa F6 and South-
ern Pacific line, via Deming, opened in March, 1881.
(3) The thirty-second parallel route, or Southern Pacific and Texas and Pacific line,
via El Paso, Tex., opened in January, 1882.
(4) The thirty-second parallel route, or Galveston, Harrisburg and San Antonio
Railway and Southern Pacific, via El Paso, Tex., opened in February, 1883.
(5) The Burlington and Missouri River Railroad and Denver and Rio Grande in
connection with Central Pacific, opened in May, 1883.
(6) The Northern Pacific Railroad, opened in September, 1883.
(7) The Atlantic and Pacific in connection with the Southern Pacific, opened in
October, 1883.
(H) The Oregon Short Line, the date of whose opening for business I am unable to
give.
(9) The Canadian Pacific, opened for business in July or August, 1886.
All of these roads, except the Canadian Pacific, are in United States territory.
In the report of the United States Commissioner of Railroads for 1884, pages 226
and 227, will be found a list of grants made by the United States in aid of the con-
struction of railroads, which gives the date of the act of Congress making the grants,
&c. By reference to the list it will be found that at least a portion of each of the
trans-continental lines above described, except the Canadian Pacific (which was heav-
ily subsidized in land and money by the Dominion Government), was aided by the
United States Government, and, I am informed (not having searched the matter my-
self), that in each of said cases there was a larger grant of land made than that to
the Union and Central Pacific line; that the grant to the latter line was for 12,800
acres per mile, less mineral lands and lands for which there were prior claims, while
the grants to the other lines were usually at the rate of 12,800 acres per mile in the
States and 25,6CO acres per mile in the Territories. It is supposed that the lands
granted to the Texas and Pacific, Atlantic and Pacific, Atchison, Topeka and Santa
F<6, and Northern Pacific Companies caused their construction. Certainly no one will
deny that they hastened their completion. Without the land grants the roads would
not have been built, and without these roads the traffic which has been carried by
them in competition with the Central and Union Pacific line would have gone over
the Central and Union Pacific lines, and contributed by so much to the earnings of
the Central and Union Pacific Companies.
To illustrate the extent to which the earning capacity of the Central and Union
Pacific Companies has been impaired by the completion of these roads, I have caused
to be prepared and beg to hand you herewith the following exhibits :
* See answer to question No. 54.
LELAND STANFOKD.
2599
EXHIBIT A. Comparative statement showing freight tonnage and charges on through traffic
and percentage of same done by each route for periods as noted.
Period.
Direction.
Via Central Pacific and
Union Pacific.
Via Central Pacific and
Denver & Klo Grande.
Via South'n Pac. and
Atlantic & Pacific.
Pounds.
Charges,
ds.
Charges.
Pounds.
Charges.
Jan. 1, 1874, to Mar.
31 1881
East.
West
940, 363, 990 $12, 565, 250. 30
1, 647, 899, 888 29, 991, 892. 90
2, 588, 263, 878
100
42, 557, 143. 20
100
Per cent
Apr. 1, to Dec. 31,
1881
East.
West
143,303,150
272, 455, 990
1, 928, 977. 40
4, 234, 726. 90
415, 759, 140
94.54
6, 163, 704. 30
94.50
Jan. 1, 1882, to Jan.
31 1883
East.
West
127, 141, 720
358, 452, 510
1, 650, 253. 30
5, 285, 101. 90
485, 594, 230
69.23
6, 935, 355. 20
72.37
Per cent
Feb. 1, to May 31,
1883
East.
West
21,447,710
107, 563, 550
281, 229. 20
1, 473, 145. 00
58, 730
$1, 298. 10
129, Oil, 260
57.77
1, 754, 374. 20
57.45
58, 730
.03
1, 298. 10
.04
Per cent
June 1, to Sept. 30,
1883
East.
West
56, 751, 140
79, 403, 880
808, 742. 50
1, 150, 336. 70
7, 842, 280
16, 396, 820
112,246.10
214, 107. 00
136, 155, 020
48. 76
1, 965, 079. 20
49. 71
24, 239, 100
8.68
326, 353. 10
8.26
Per cent
Oct. 1, 1883, to Sept.
30 1884
East.
West
118, 244, 380
204, 365, 320
1,478,543.10
2, 827, 834. 30
25, 158, 880
33,015,840
314, 268. 60
440, 416. 70
22, 695, 450
43, 151, 750
$258, 794. 10
577, 067. 90
322, 609, 700
42. 45
4, 306, 377. 40
43. 23
58, 174, 720
7.05
754, 685. 30
7.57
65, 847, 200
8.66
835, 862. CO
8.39
Per cent . . .
Oct. 1, 1884, to Dec.
31 1885
East.
West
160, 939, SCO
173,124,650
1,920,418.10
2, 353, 273. 00
34, 340, 150
22, 632, 530
436, 440. 70
284, 530. 70
62, 647, 870
129, 909, 200
699,411.80
1,559,200.40
334, 064, 510
35. 29
4, 273, 691. 10
35.65
56, 972, 680
6.02
720, 971. 40
6.01
192, 557 070
2,258,612.20
18.84
Per cent.....
20. 34
Jan. 1, to Dec. 31,
1886
East-
West
175, 783, 490
193, 450, 600
1,492,955.00
1, 338, 468, 60
40, 745, 090
52, 001, 960
331,624.40
319, 472. 80
59, 254, 850
99, 8:20, 590
462, 541. 10
989, 241. 10
369, 234, 090
31.18
2, 831, 423. 60
32.36
92, 747, 050
7.83
651, 097. 20
7.44
159, 075, 440
13.43
1,451,782.20
16.59
Per cent
Total 5 yrs. 9 mos
2, 192, 427, 950
48.35
28, 230, 005. 00
52.46
232, 192, 280
5.12
2, 454, 405. 10
4.56
417, 479, 710
9.20
4, 546, 256. 40
8.45
Per cent.
Period.
Direction.
Via South'n Pacific and
A. T. & S. F.
Via South 'n Pac. and
Texas & Pac.
Via South'n Pac. and
Gr. H. & S. A.
Pounds.
Charges.
Pounds.
Charges.
Pounds.
Charges.
Apr. 1, to D%c. 31,
1881
East.
West
21,362,350
2, 663, 060
$305, 546. 70
53, 068. 50
24, 025, 410
5.46
358,615.20
5.50
Per cent
Jan.l, 1882, to Jan.
31, 1883
East.
West
50, 393, 500
54, 278, 820
721,230.00
766, 021. 40
91, 534, 360
13, 223, 860
$921, 285. 60
234, 796. 40
420, 3GO
$4, 501. 50
110, 672, 320
15.78
1,487,251.40
15.52
104, 758, 5:20
14. 93
1, 156, 082. 00
12.06
420, 360
.06
4, 501. 50
.05
Percent
Feb. 1, to May 31,
1883
East.
West
12, 847, 600
49, 494, 060
172, 954. 70
641, 752. 20
8,611,810
7, 055, 760
118, 4fiO. 80
122, 695. 60
5, 147, 610
11,093,7(50
64, 839. 40
177, 622. 20
62, 341, 660
27.92
814, 706. 90
26.67
15, 687, 570
7.01
241,156.40 16,241,370
7. 90 1 7. 27
242, 461. 60
7.94
2600 U. S. PACIFIC KAILWAY COMMISSION.
EXHIBIT A. Comparative statement showing freight tonnage, $*c. Continued.
Period.
|
5
Via South'n Pacific and
A.T.&S.E.
Via Sonth'n Pac. and
Tex. & Pac.
Via South'n Pac. and
G. H. & S. A.
Pounds.
Charges.
Pounds.
Charges.
Pounds.
Charges.
June 1, to Sept. 30,
1883
East.
West
13, 792, 950
30, 100, 000
$178, 392. 90
374,613.40
12. 704, 710
8, 113, 3oO
$164, 939. 40
120, 022. 10
22, 477, 880
31, 663, 130
$261, 766. 40
561,700.70
43, 892, 950
15.71
553, 006. 30
13.99
20, 818, 090
7.46
284, 961. 50
7.21
54,141,010
19.39
823, 467. 10
20.83
Per cent
Oct. 1,1883, to Sept.
30 1884
East.
West
17, 916, 560
48, 184, 820
215,477.30
505, 712. 10
35, 29.}, 160
38, 104, 060
410,407.10
459, 110. 80
35, 460, 850
56, 874, 990
454, 253. 40
983, 714. 00
66, 101, 380
8.69
721, 189. 40
7.24
73, 397, 220
9.66
8G9, 577. 90
8.73
92, 335, 840
12.14
1, 437, 967. 40
14.43
Per cent .........
Oct. 1, 1884, to Dec.
31,1885
East.
West
7, 396, flOO
254, 730
93, 884. 50
4, 406. 20
36, 437, 990
24, 649, 270
424, 778. 20
287, 921. 10
62, 363, 790
102, 173, 370
712,758.50
1, 610, 103. GO
7, 651, 630
.81
98, 290. 70
.82
61, 087, 260
6.46
712, 699. 30
5.95
164, 537, 160 2, 322, 862. 10
17. 39 19. 38
Jan. 1, to Dec. 31,
1886
East.
West
769, 200
41, 310
8, 000. 70
586. 50
34, 625, 300
23, 132, 570
303, 160. 30
184. 238. 00
152, 680, 04o| 895, 459. 20
191,969,4401,288,154.20
810, 510
.07
8, 587. 20
.10
57, 757, 870
4.88
487, 398. 30
5.58
344, 649, 480
29.09
2,183,613.40
24.96
Per cent
Total, 5 yrs. 9 mos..
315, 495, 860
6.95
4, 041, 647. 10
7.51
333, 486, 230
7.36
3,751,875.40
6.97
672, 325, 220
14.83
7, 014, 873. 10
13.03
Per cent
Period.
Direction.
Via North 'n Pacific and
O. E. and N. Co.
Via Oregon Short
Line.
Total
via all routes.
Pounds.
Charges.
Pounds.
Charges.
Pounds.
Charges.
Jan. 1, 1874, to Mar.
31 1881
2, 588, 263, 878
$42, 557, 143. 20
Apr. 1, to Dec. 31,
1881
439, 784, 550
6, 522, 319. 50
Jan. 1,1882, to Jan.
31 1883
=
701, 445, 130
9, 583, 190. 10
Feb. 1, to May 31,
1883
223, 320, 590
3, 053, 997. 20
June 1, to Sept 30,
1883
279, 246, 170
3, 952, 867. 20
Oct. 1, 1883, to Sept.
30 1884
81, 645, 044
10.75
$1, 036, 776. 08
10.41
760, 111, 104
9, 962, 435. 48
Per cent
Oct. 1, 1884, to Dec.
31, 1885... .
91, 605, 847
9.62
1, 143, 128. 66
9.53
38, 513, 114
4.07
$458, 160. 71
3.82
946, 449, 271
11,988,416.17
Per cent ....
Jan. 1. to Dec. 31.
1886
90, 666, 960
7.66
756, 457. 08
8.65
69,481,740
5.86
378, 222. 80
4.32
1, 184, 41.3, 140
8, 748, 581. 78
Per cent
Total, 5 yrs., 9 mos.
263, 377, 851
5.81
2, 936, 361. 82
5.46
107, 994, 854
2.38
836, 383. 51
1.56
4,534,779,9551 53,811,807.43
Percent
LELAND STANFOED. 2601
Exhibit A is a showing of the freight tonnage and charges on through traffic by
each route from January 1, 1874, to December 31, 1886, divided into periods, these
being marked by the dates of the completion of the several opposing lines.
For example :
From January 1, 1874, to March 31, 1881, there was but one line between the Mis-
souri Eiver and California, namely, the Union and Central Pacific. April 1, 1881, the
Atchison, Topeka and Santa Fe~ road was connected with the Southern Pacific at Dem-
ing, thus opening a new line the first new line to compete with the original Central
and Union Pacific line.
The date of the opening of this new line for business, namely, April 1, 1881, begins
a new period, which ends with the opening of the third line.
In January, 1882, the Texas and Pacific and Galveston, Harrisburg and San Antonio
roads were connected with the Southern Pacific at El Paso, making, for the period
from January 1, 1882, to January 31, 1883, four routes.
The Galveston, Harrisburg and San Antonio Railway, in connection with the South-
ern Pacific at El Paso, did very little business previous to February 1, 1883, when it
opened for business for New York City. Hence, a new period is begun, dating from
February 1, 1883, and running to May 31, 1883, during which there were still but
four lines, though during the last period the Galveston, Harrisburg and San An-
tonio line had been greatly strengthened as compared with the first preceding period.
In May, 1883, the Denver and Rio Grande and Burlington and Missouri River line
was connected with the Central Pacific at Ogden, making five lines for the period
from June 1, 18&3, to September 30, 1883, at which time the Atlantic and Pacific was
connected with the Southern Pacific, making six lines.
You will notice by Exhibit A that for the period from January 1, 1874, to March
31, 1881, there being but the one line (the Union and Central Pacific), the percentage
of trafiic carried by this line is represented by 100 per cent. ; that this percentage is
reduced in the second period to 94.54 per cent, in tonnage and 94.50 per cent, in earn-
ings; in the third period, to 69.23 per cent, in tonnage and 72.37 per cent, in earn-
ings; in the fourth period, to 57.77 per cent, in tonnage and 57.45 per cent, in earn-
conclusively that with the opening of each new line there was an additional loss in
tonnage and in earnings from through traffic to the Union and Central Pacific line.
The conclusion is inevitable that this loss was occasioned by the diversion of traffic to
the new lines. The difference between 100 per cent, and the percentages shown for
the period succeeding March 31, 1881, represented the loss to the Central and Union
Pacific line, the sole cause of which was the opening of new lines.
Exhibit B is the same as Exhibit A, with the exception that the entire tonnage
via the Central Pacific and Denver and Eio Grande and Burlington and Missouri
River line, and the Central Pacific proportion of charges west of Ogden for the same
line, are thrown in the first column under the head of Central and Union Pacific line.
It was necessary in making these statements to show "line" earnings. It would
have been impossible from any records we have to show the earnings of the indi-
vidual roads in each line except by going back to the original billing, which would
have required so much time and labor, that a report to be based upon information so
obtained could not have been reached in time for the next session of Congress.
The Denver and Rio Grande and Burlington and Missouri River roads made a line
by connection with the Central Pacific, just as the Union Pacific connected with the
Central Pacific ; hence the completion of the Denver and Rio Grande and Burlington
road only affected the Union Pacific road.
In Exhibit B the charges of the Denver and Rio Grande and Burlington and Mis-
souri River line east of Ogden are shown separate from the charges of the Central
Pacific, and will represent the loss to the Union Pacific by the diversion of traffic
caused by the opening of that line.
2602
U. S. PACIFIC KAILWAY COMMISSION.
EXHIBIT B. Comparative statement showing freight tonnage and charges on through traf-
fic by each route for periods as noted; also percentage of said traffic done by each route-
(charges east of Ogden, via Denver and Rio Grande, shown separately).
[The tonnage and charges for Central Pacific via Denver and Rio Grande are included in Central and
Union Pacific lines.]
Periods.
Direc-
tion.
Via Central Pacific and
Union Pacific.
Via Central Pacific and
Denver & Rio Grande.
Via Southern Pacific
md Atlantic & Pacific
Pounds.
Charges.
Pounds.
Charges.
Pounds.
Charges.
Jan. 1,1874, to Mar.
31, 1881.
East..
West.
940, 363, 990
, 647, 899, 888
$12, 565, 250. 30
29, 991, 81.2. 90
2, 588, 263, 878
100
42, 557, 143. 20
100
Apr. 1,1881, to Dec.
81, 1881.
East..
West.
143, 303, 150
272, 455, 990
$1,928,977.40
4, 234, 726. 90
415, 759, 140
94.54
6, 163, 704. 30
94.50
Jan. 1, 1882, to Jan.
31, 1883.
East..
West.
127,141,720
358, 452, 511
M50.253.30
5, 285, 101. 90
485, 594, 230
69.23
6, 935, 355. 20
72.37
Feb. 1,1883, to May
31, 1883.
East..
West.
=
21,447,710
107, 622, 280
281,229.20
1, 473, 843. 60
$599. 50
129, 069, 990
57.80
1, 755, 072. 80
57.47
599. 50
0.02
June 1, 1883, to
Sept. 30, 1883.
East..
West.
64, 593, 420
95, 800, 700
866, 827. 30
1, 256, 404. 00
54,161.30
114, 039. 70
160, 394, 120
57.44
2, 123, 231. 30
53.71
168 201.00'
4.26
Oct. 1, 1883, to
Sept. 30, 1884.
Per cent ...
East..
West.
143, 403, 260
237, 381, 160
1,637,052.10
3, 036, 139. 90
155, 759. 60
232, 111. 10
22, 695, 450
43,151,700
$J58,794.10
577, 067. 90
380, 784, 420
50.10
4, 673, 192. 00
46.91
387, 870. 70
3.89
65, 847, 200
8.66
835, 862. 00
8.39
Oct. 1,1884, to Dec.
31, 1885.
Per cent
East . .
West.
195,280,010
195, 757, 180
2, 141,1 62. 6C
2, 487, 504. OC
215.C96.20 62,647,870
150, 299. 70 129, 909, 200
699, 411. FO
1, 559, 200. 40
'....
391, 037, 190
41 31
4, 628, 660. 6C
38.61
365, 995. 90
3.05
192, 557, 070
20.34
2, 258, 612. 20
18.84
Jan. 1, 1886, to Dec.
31, 1886.
Per cent
East..
West .
216, 528, 580J 1, 659, 890. 1 C
245, 452, 5GO 1, 489, 614. 3C
164, 689. 30
168, 327. 10
59, 2o4, 850
99, 820, 590
462, 541. 10
989, 241. 10
461, 981, 140
39.01
3, 149, 504. 4C
36. OC
333, 016. 40
3.80
159, 075, 440
13.43
1,451,782.20
16.59
Total, 5 yrs. 9 mos .
Percent
2, 424, 620, 230
53.47
29, 428, 726. 6C
54. 6
1, 255, 683. 50
2.34
417, 479, 71C
9.20
4, 546, 256. 40
8.45
.
Period.
Dire<
tion
Via Southern Pacific
and A. T. & S. P.
Via Southern Pacific Via Southern Pacific
and Texas & Pacific. and G. H. & S. A.
Pounds.
Charges.
Pounds.
Charges. Pounds.
Charges.
Apr. 1, 1881, to Dec.
31, 1881.
East.. 21,632,350
West . 2, 663, 060
$305 546. 70 .
53 OG8.5b .
24 O*>R 11 n
358 615 ''O
5.46
5.50 .
LELAND STANFORD. 2603
EXHIBIT B. Comparative statement showing freight tonnage, #c. Continued.
Period.
Direc-
tion.
Via Southern Pacific
and A. T. & S. P.
Pounds. Charges.
Via Southern Pacific
and Texas & Pacific.
Pounds. Charges.
Via Southern Pacific
and G. H. & S. A.
Pounds. Charges.
East.
West
56, 393, 500
54, 278, 820
$721, 230. 00
766, 021. 04
91, 534, 360
13, 223, 860
$921, 285. 60
234, 796, 40
420, 360
$4, 501. 50
Jan. I, 1882, to Jan.
31, 1883.
Percent
110, 672, 320
15. T8
1, 487, 251. 40 104, 758, 220 1
15.52
14.93
East.
West
Feb. 1, 1883, to May
31, 1883.
Percent
12, 847, 600
49, 494, 060
62, 341, 660
27.92
172, 954. 70
641, 752. 20
8, 611, 810
7, 055, 760
814, 706. 90
26.67
15, 667, 570
7.01
., 156, 082. 00
12.06
~Il8, 460. 80
122, 695. 60
241, 156. 40
7.90
420, 360
0.06
4, 501. 50
0.05
5, 147, 610
11, 093, 760
16, 241, 370
7.27
64, 839. 40
177, 622. 20
East.
West
13, 792, 950
30, 100, 000
178, 392. 901 12, 704, 710
374, 613. 40 8, 113, 380
164, 939. 40
120,022.10
22, 477, 880
31, 663, 130
June 1, 1883, to Sept.
30, 1883.
Per cent
43, 892, 950
15.71
553, 006. 30
13.99
East .
West
17, 916, 560
48, 184, 820
215, 477. 30
505, 712. 10
Oct. 1, 1883, to Sept.
30, 1884.
Per cent
66, 101, 380
8.69
721, 189. 40
7.24
East.
West
7, 396, 900
254, 730
93, 884. 50
4, 406. 20
Oct. 1, 1884, to Dec.
31, 1885.
Per cent
7, 651, 630
0.81
98, 290. 70
0.82
East.
West
769, 200
41, 310
8, 000. 70
586. 50
Jan. 1, 1886, to Dec.
31, 1886.
Per cent . .
810, 510
0.07
8, 587. 20
0.10
Total, 5 yrs. 9 mos .
Per cent ..
315, 495, 860 4, 041, 647
6.95
7.51
20, 818, 090
7.46
284, 961. 50
7.21
54, 141, 010
19.39
35, 293, 160
38, 104, 060
410, 467. 101
459, 110. 80
35, 460, 850
56, 874, 990
261, 766. 40
561, 700. 70
823, 467. 10
20.83
454, 253740
983, 714. 00
73,397,220 869,577.90
9.66
36, 437, 990
24, 649, 270
8.73
424, 778. 20 1
287, 921. 10
92, 335, 840
12.14
62, 363. 790
102, 173, 370
712, 758. 58
1, 610, 103. 60
61,087,260 712,699.30
6. 46 5. 95
34,625,300! 303,160.30
23, 132, 570 184, 238. 00
57, 757, 870 487, 398. 30
4. 88 5. 58
10 333, 486, 230 3, 751, 875. 40
7. 36, 6. 97
164, 537, 160
17.39
152, 680, 040
191, 969, 440
2, 322, 862. 10
19.38
895, 459. 20
1, 288, 154. 20
344, 649, 480
29.09
672, 325, 220J
14. 83
2, 183, 613. 40
24.96
7, 014, 873. 10
13.03
Period.
Direc-
tion.
Via Northern Pacific
and O. R. & N. Co.
Pounds. Charges.
Via Oregon Short
Line.
Pounds. Charges
Total via all routes.
Pounds.
Charges.
Jan. 1,1874, to Mar.
31, 1881.
Apl. 1,1 881, to Dec.
31, 1881.
Jan. 1, 1882, to Jan.
31, 1883.
Feb. 1,1883, to May
31, 1883.
June 1, 1883, to
Sept. 30, 1883.
Oct. 1, 1883, to
Sept. 30, 1884.
Per cent
Oct. 1,1884, to Dec.
31,1885.
Per cent
Jan. 1, 1886, to Dec.
31, 1886.
Per cent ...
81,645,044
10.75
91, 065, 847
9.62
90, 666, 960
7.6G
$1, 036, 776. 08
10.41
1, 143, 128. 66
9.53
756, 457. 08
8.65
2, 588, 263, 878 $42, 557, 143. 20
439, 784, 550 6, 522, 319. 50
701, 445, 130 9, 533, 190. 10
223, 320, 590 3, 053, 997. 20
279, 246, 170 3, 952, 867. 20
760, 111, 104 9, 962, 435. 48
38, 513, 114
4.07
69, 481. 740
5.86
458,160.71
3.82
378, 222. 80
4.32
946, 449, 271
11,988,416.17
184, 423, 140
8, 748, 581. 78
Total, 5 yrs. 9raos.
Percent ...
263, 377, 851 2, 936, 361. 82 107. 994, 854
5.81
5.46
2.38
836, 383. 51 4, 534, 779, 955
1.56
53, 811, 807. 43
P R VOL IV-
-18
2604
U. S. PACIFIC RAILWAY COMMISSION.
EXHIBIT C. Statement allowing tonnage and charges lost to Central and Union Pacific
lines (including Central Pacific tonnage and charges via Denver and Rio Grande) on
through freight traffic for periods noted, on account of the opening of new lines.
Period.
Tons.
Charges.
Total tonnage and charges via all lines.
January 1 1874 to March 31 1881
1 294 131 939
$4 9 557 143 20
April 1 to December 31 1881
219 892 275
6 522 319 50
January 1 1882 to January 31 1883 . .
350 722 565
9 583 190 10
February 1 to May 31 3883
111 660 295
3 053 997 9
June 1 to September 30 1883
139 6 9 3 085
3 95 867
October 1 1883 to September 30 1884
380 055 552
9Ofi9 40;: 40
October l' 1884 to December 31 1885
473 224 635
11 988 416 17
January 1 to December 31, 1 886
592 211 570
8 748 581 78
Total 5 years 9 months
2 267 389 977
53 811 807 43
Tonnage and charges via Central and Union Pacific.
January 1 1874 to March 31 1881
1 294 131 939
42 557 143 20
April 1 to December 31 1881
' 207* 879 570
6 163 704 '30
January 1 1882 to January 31 1883
242* 797 J15
6 935 355 20
February 1 to May 31 1883 . ...
64 534 995
1 755 072 80
June 1 to September 30 1883 . . .
80 197 060
2 1 9 3 231 30
October 1 1883 to September 30 1884
190 399 210
4 673 19 9 00
October 1 1884 to December 31 1885 ....
195 518 595
4 6 9 8 666 60
January 1 to December 31 1886 ........
230* 990 570
3 149 504 40
Total 5 years 9 months ............... ... .......
1 212 310 115
29 4 9 8 726 60
Loss of tonnage and charges to Central and Union Pacific.
January 1, 1874, to March 31, 1881
April l*to December 31, 1881
12 012 705
35H 615 9
January 1 1882 to January 31 1883
. 107 9 9 5 450
2 647 834 90
February 1 to May 31 1883
47 125 300
1 298 9 9 4 40
June 1 to September 30, 1883
59 420 9 5
1 829 635 90
October 1, 1883, to September 30, 1884
189 663 342
5 289 243 48
October 1, 1884 to December 31, 1885
277 706 040
7 359 749 57
January 1 to December 31, 1886 ..
361 221 000
5 599 077 38
Total, 5 years 9 months
1 055 079 862
24 383 080 83
REDUCED TO ANNUAL RATES.
Period.
Annual tons.
Annual av-
erage rate.
Annual
charges.
Total via all lines.
January 1 1874 to March 31 1881
178 500 948
$3 288 50
$5 869 950 84
April 1'to December 31, 1881*
293 189.705
2 966 00
8 694 426 04
January 1, 1882, to January 31, 1883
323, 743. 908
2 732 40
8 846 021 64
February 1 to May 31, 1883
334, 980. 888
2 735 00
9 161 991 60
June 1 to September 30 1883
418 809 255
2 83] 10
11 858 601 60
October 1, 1883 to September 30 1884
380 055 552
2 6 9 1 30
9 96 > 435 48
October 1, 1884, to December 31 'l885
378 579 708
2 53 9 50
9 590 73 9 88
January 1 to December 31 1886
592 211 570
1 477 30
8 748 581 78
Total, 5 years 9 months ...
394 328 688
2 373 30
9 358 575 9 4
Via Central and Union Pacific.
January 1, 1874, to March 31, 1881
178, 500. 948
3 2-88 50
5 869 950 84
April 1 to December 31, 1881 .
277, 172. 765
2 965 00
8 218 272 36
January 1, 1882, to January 31, 1883
224, 120. 402
2, 856. 40
6 401 866 32
February 1 to May 31, 1883
193, 604. 982
2,716 50
5 259 248 40
June 1 to September 30, 1883
240, 591. 180
2, 647. 50
6 369 693 84
October 1, 1883, to September 30 1884
190 392 210
2 454 50
4 673 19 9 00
October 1, 1884, to December 31 1885
156 414. 876
2 367 30
3 702 933 i;) 4
January 1 to December 31, 1886
230 990. 570
1 363
3 149 504 40
Total, 5 years 9 months
210 836.544
2 4 9 7 00
5 118 039 36
Loss annually to Central and Union Pacific.
January 1, 1874, to March 31, 1881...
April 1 to December 31, 1881 ,
16, 016. 940
478 J 53. 68
LELAND STANFORD. 2605
EXHIBIT C. Statement shoiving tonnage and charges, fc. Continued.
Period.
Annual tons.
Annual av-
erage rate.
Annual
charges.
Loss annually to Central and Union Pacific Continued.
January 1, 1882, to January 31, 1883
99 623 496
$2 444 155 32
February 1 to May 31, 1883
141 375 906
3 902 773 20
June 1 to September 30 1883
178 278 075
5 488 907 76
October 1, 1883, to September 30 1884
189 663 342
5 289 243 48
October 1, 1884, to December 31, 1885
222 164 832
5 887 799 64
January 1 to December 31, 1886
311 064 9 9
4 204 757 49
Total, 5 years 9 months
183 492 144
4 240 535 88
The total loss (5 years 9 months) to Central and Union Pacific line = $24,383,080.83, or an annual loss
Of $4,240,535.88.
Of which the Central Pacific proportion is 46 per cent. = $11,216,217.18, or an annual loss of
$1,950,646.50.
Of which the Union Pacific proportion is 54 per cent. = $13,166,863.65, or an annual loss of $2, 289,889.38.
Exhibit C shows the tonnage and charges of all the lines compared with the ton-
nage and charges as given on Exhibit B for the Central and Union Pacific line, and
the difference in tons and dollars ; that is to say, according to Exhibit C the loss in
tonnage to the Central and Union Pacific line, by the diversion to other lines, from
April 1, 1881, to December 31, 1886, was 1,055,079 tons and $24, 383, 080.
Exhibit C also shows the charges and tonnage of each of the several periods re-
duced to an annual basis ; that is, if for each of the several periods the tons carried and
charges made had been at the same rate for twelve months, it shows what the annual
tonnage, charges, and loss would have been.
For example : take the second period, from April 1, to December 31, 1881, being
nine months. The tons carried during that nine mouths via all lines were 219,892 tons,
which at the same rate for twelve months would be 293,189 tons. The charges or
earnings for the nine months by all lines were $6, 522, 319, and for twelve months at
the same rate would have been $9,696,426. The tonnage and charges of the Central
and Union Pacific line for the nine months, at the same rate, would have been 277,172
tons and $8,218,272. The actual loss for the period to the Central and Union Pacific
line is represented by 12,012 tons, on which the charges were $358,615. For twelve
months, at the same rate, the loss would have been 16,016 and $478,153.
Exhibit C also totals the several periods beginning April 1, 1881, and ending De-
cember 31, 1886 (five years nine months), with the following result :
Total tonnage and charges via all lines 2,267,389 tons and $53,811,807.
The tonnage and charges via the Central and Union Pacific for the same period
were 1,212,310 tons and $29,428,726.
The loss in tonnage and charges to the Central and Union Pacific line, being the
difference between the tonnage and charges via all lines and the tonnage and charges
via the Central and Union Pacific line, as shown above, were 1,055,079 tons and
charges $24,383,060, which,rsduced to an annual basis, shows the loss for this period at
the annual rate of 183,492 tons and $4,240,535.
Exhibit C also shows the average annual rate per ton charged for freight. Dur
ing the first period, when there was but one line (Union and Central Pacific line),
from January 1, 1874, to March 31, 1881, you will note that the average annual rate
per ton was $32.88. By following down through, the several subsequent periods you
will notice a gradual reduction in the annual rate per ton until in 1886 the rate was
reduced to $14.77 per ton. Some of this difference in rate was chargeable to the
opening of competing lines ; in other words, take, for example, the year 1886 ; while
it is not reasonable to suppose that at the annual average rate which obtained in
1885 ($25.32 per ton) the same tonnage would have been moved as was moved in 1886
at a lower average rate ($14.77 per ton), yet it is true that the tonnage would have
been moved at a higher rate than the average earning during 1886. It is impossible
to say what would be the maximum rate at which the same tonnage would have
moved.
It is a matter of public knowledge that during a portion of that year (1886) rates
were unnecessarily low. I should estimate that an average rate of $20 per ton, being
a reduction of a little more than twenty per cent, from the average rate prevailing
from October 1, 1884, to December 31, 1885, would have given all needed stimulus to
the movement of traffic, and the difference between $14.77 and $20 $5.23 per ton-
would be a reasonable estimate oftUe effect of unreasonable competition between
2606
U. S. PACIFIC RAILWAY COMMISSION.
the railroads, which would fall below rather than above the real measure of the in-
fluence of that competition. Accordingly 311,064 tons extended at a rate of $5.23
per ton would represent a further loss to the Central and Union Pacific line by reason
of the diversion of traffic to other lines and the competition inaugurated by said
other lines of $1,626,864.
For all the competitive periods shown on Exhibit C the charges are extended at the
annual average rate. The effect of the competition of the other lines was something
more in each period than the mere diversion of traffic. It reduced rates ; that is to
say, had the other lines not been built, not only the entire traffic would have been
carried by the Union and Central Pacific lines, but it would have been carried at
higher rates. Hence the earnings upon the total traffic, if carried by the Union and
Central Pacific line without the competition of the other lines, would have been greater
than the earnings made by all the lines from the same traffic, so that the real loss in
freight earnings resulting from the building of other lines, if the exact facts could be
ascertained, would prove to be much more than $24, 383, 080, as shown on Exhibit C.
Exhibits A, B, and C relate only to freight traffic ; I also inclose herewith Exhibits
D and E.
Exhibit D shows the number of through passengers carried by each route, and the
earnings accruing therefrom west of Ogden, Mojave, Deming, and El Paso, the termini
of the Southern Pacific system.
Ogden is the terminus of the Central Pacific road.
Mojave is the point of junction of the Atlantic and Pacific with the Southern
Pacific.
Deming is the junction of the Atchison, Topeka and Santa F6 Railroad with the
Southern Pacific.
El Paso is the junction point of the Southern Pacific, Texas and Pacific, and Gal-
veston, Harrisburg and San Antonio Railroads, respectively.
Exhibit D and the other passenger statements shovr the earnings west of these re-
spective termini.
In the case of passengers, our records do not show the earnings of the connecting
lines as in the case of freight.
EXHIBIT D. Comparative statement allowing number of passengers carried by each route
on through traffic, and the earnings accruing west of Ogden, Mojave, Deming, and El
Paso , for periods as noted, also percentage of earnings by each route.
[The earnings via Northern Pacific, 0. E. & N. Co. and Oregon Short Line as shown are 46 per cent
of the through via those routes.]
Period.
ft
Via Ogden and Union Pa-
cific.
Via Ogden and Denver and
Rio Grande.
No.
Earnings.
Per cent.
No.
Earnings.
2
January 1, 1874 to March 31 1881
East..
West.
207, 717
359, 116
$5,948,323.94
9, 688, 287. 38
566, 833
15, 636, 611. 32
100
April 1 to December 31 1881
East..
West.
20, 574
32, 854
53, 428
573, 384. 51
856, 946. 57
1, 430, 331. 08
77.25
January 1, 1882, to January 31,1883.
February 1 to May 31, 1883
East..
West.
==
24, 321
41,170
683, 809. 28
1, 059, 765. 89
65, 491
1, 743, 575. 17
63.32
East..
West.
6,781
16,445
190, 925. 36
384, 796. 17
436
352
$14, 837. 22
7, 318. 18
23, 226
575, 721. 53
53.78
. 788
22, 155. 40
2.07
June 1 to September 30, 1883
East..
West.
9,445
17, 183
228,731.93
419, 683. 73
3,464
2,676
9-2, 478. 71
61, 957. 72
26, 628
648, 415. 66
61.10
6,140
154, 436. 43
14.55
Octoberl, 1883, to September 30, 1884.
East..
West.
19, 271
29, 033
484, 051. 58
708, 192. 05
5,886
4,839
165, 289. 34
128, 064. 45
48, 304
1, 192, 243. 63
42.43
10, 725
293, 353. 79
10.44
LELAND STANFORD. 2607
EXHIBIT D. Comparative statement showing the number of passengers, $-c. Continued.
Period.
Direction.
Via Ogden and Union Pa-
cific.
Via Ogden and Denver and
Bio Grande.
tfo.
Earnings.
Per cent
"Ho.
Earnings.
Per cent
October 1, 1884,|to December 31, 1885.
January 1 to December 31, 1886
East..
West.
21, 013
33, 304
$519, 642. 79
745, 564. 18
9,574
5,546
$251, 742. 18
143, 394. 40
41.25
54,318
1, 265, 206. 97
15, 120
395, 136. 58
12.88
East..
"West.
30, 157
38, 768
375, 253. 90
510, 028. 26
18, 804
15, 213
250, 893. 45
189, 547. 59
68, 925
885, 282. 16
38.51
34, 017
440, 441. 04
19.16
Total, 5 years 9 months
340, 320
7, 740, 776. 20
51.91
66, 790
1, 305, 533. 24
8.75
Period.
|
fi
Via Mojave and Atlantic
Pacific.
Via Deming and A. T. and
S.F.
Ko.
Earnings.
1
No.
Earnings.
Per cent.
April 1 to December 31, 1881
East..
5,354
8,652
$169, 114. 89
252, 201. 40
West.
14, 006
421, 316. 29
22. 75
January 1, 1882, to January 31, 1883
February 1 to May 31, 1883
East..
9,640
17, 967
296, 874. 80
518, 021. 11
West .
27, 607
814, 895. 91
29.60
East ..
3,105
8,918
94, 837. 93
238, 434. 46
West.
12, 023
333, 272. 39
31.14
June 1 to September 30, 1883
East
2,088
4,187
61, 171. 33
108, 174. 12
West.
6,275
169, 345. 45
15.96
Octoberl, 1883, to30, September 1884.
October 1, 1884, to December 31, 1885.
January 1 to December 31, 1886
East..
West.
2,463
4,789
$42, 580. 18
2, 246. 20
4,126
11,989
120, 244. 54
314, 364. 28
15.49
7,252
124, 826. 38
4.44
16, 115
434, 608. 82
East . .
West.
6,796
16, 849
60, 945. 85
130, 807. 15
3, 763
9,900
107, 969. 87
254, 417. 34
23,645
191, 753. 00
6.25
13, 663
362, 387. 21
11.81
East..
West .
8,262
22, 210
42, 462. 35
123, 839. 29
1,136
3,160
21,214.25
57, 134. 49
......
30, 472
166, 301. 64
7.23
4,296
78, 348. 74
3.41
Total, 5 years 9 months
61, 369
482, 881. 02
3.31
93, 985
2, 614, 174. 81
17.46
2608
U. S. PACIFIC RAILWAY COMMISSION.
EXHIBIT D. Comparative statement showing number of passengers, $c. Continued.
Period.
Direction.
Via El Paso and Texas and
Pacific.
Via El Paso and Ox. H. and
S.A.
No.
Earnings.
Per cent.
No.
Earnings.
Per cent.
January 1, 1882, to January 31, 1883
February 1 to May 31 1883
East..
West.
2,495
2,348
$80, 462. 02
114, 440. 48
6,843
194, 902. 50
7.08
East..
West.
1,318
2,266
32, 438. 10
55, 581. 23
455
952
$18, 610. 46
32, 652. 78
3,584
88, 019. 33
8.22
1,407
51, 263, 24
4.79
June 1 to September 30 1883
East . .
West.
813
1, 427
22, 765. 33
34. 428. 58
287
761
10, 503. 58
21, 382. 76
2,240
57, 193. 91
5.39
1,048
31, 886. 34
3.00
October 1, 1883, to September 30, 1884
October 1, 1884, to December 31, 1885
January 1 to December 31 1886
East..
West.
3,161
4,630
87, 853. 67
139,139.45
1,270
3,773
46, 677. 52
113, 703. 96
7,791
226,993.12
8.08
5,043
160, 381. 48
5.71
East..
West.
4,433
6,093
152, 573. 07
145, 072. 83
2,434
4,473
84, 329. 71
134, 399. 42
10, 526
267,645.90
8.72
6,907
218, 729. 13
7.13
East..
West.
7,011
7,342
93, 668. 30
132, 617. 72
1,675
5,781
30, 179. 49
106, 565. 27
14, 353
226, 286. 02
9-85
7,456
136, 744. 76
5.94
Total 5 years 9 months
45, 337
1, 061, 040. 78
7.13
21, 861
599, 004 95
4.02
Period.
Direction,
Via Northern Pacific and
O. R. and N. Co.
Via Union Pacific and
Northern Pacific.
No.
Earnings.
Per cent.
No.
Earnings.
Per cent.
October 1, 1883, to September 30, 1884
October 1, 1884, to December 31, 1885
January 1 to December 31 1886
12, 955
10,871
13, 896
$294, 796. 23
221, 150. 98
257, 474. 42
10.49
7.26
11.23
3,692
1,155
$82, 054. 90
24, 696. 82
2.92
0.80
Total 5 years 9 months
37, 722
773, 421. 63
5.18
4,847
106, 751. 72
1.52
Period.
Direction.
Via Oregon Short Line.
Total via all routes.
No.
Earnings.
Per cent.
No.
Earnings.
January 1, 1874, to March. 31, 1881
566, 833
67, 434
99, 941
41,028
42, 331
111, 877
141, 918
180, 210
$15, 636, 611. 32
1, 851, 647. 37
2, 753, 373. 58
1, 070, 431. 89
1, 061, 277. 79
2, 809, 258. 35
3, 066, 579. 02
2, 298, 395. 73
April 1 to December 31, 1881
Jannarv 1, 1882, to January 31, 1883
February 1 to May 31, 1883
June 1 to September 30 1883
October 1 1883, to September 30 1884
October 1 1884, to December 31 1885
5,713
6,795
$119, 872. 43
107, 516. 95
3.90
4.67
0.71
January 1 to December 31 1886
Total, 5 years 9 months
12, 508
227, 389. 38
684, 739
14, 910, 963. 73
LELAND STANFORD.
2609
EXHIBIT E. Statement showing number of passengers (through) and revenue lost to Cen-
tral Pacific road on account of opening of new lines ; also showing average rate per
passenger earned and loss annually for the periods as noted.
Period.
Total via all routes
west of C. P. and S. P.
terminals.
Total C. P. via
Ogden, including via
JD.fl.Gr.
Loss to Central Pacific
via Ogden.
No.
Earnings.
No.
Earnings.
No.
Earnings.
Per
cent.
Jan. 1, '74, to March 31, '81.. .
Average rate per passenger.
April 1, '81, to Dec. 31, '81
Average rate per passenger.
Jan. 1, '82, to Jan. 31, '83 ....
Average rate per passenger.
Feb. 1, '83, to May 31, '83 ....
Average rate per passenser.
June 1, '83, to Sept. 30, '83 ...
Average rate per passenger.
Oct. 1, '83, to Sept. 30, '84. ...
Average rate per passenger.
Oct. 1, '84, to Dec. 31, '85
Average rate per passenger.
Jan. 1, '86, to Dec. 31, '86 ....
Average rate per passenger.
Total five years nine months.
566, 833
$15,636,611.32
27.59
566, 833
$15,636,611.33
27.59
67, 434
1, 851, 647. 37
27.46
2, 753, 373. 58
27.55
1, 070, 431. 89
26.09
1, 061, 277. 79
25. 07
2, 809, 258. 35
25.11
3, 066, 579. 02
21.60
2, 298, 395. 73
12.75
53, 428
1, 430, 331. 08
26.77
1, 743, 575. 17
26. 62
597, 876. 93
24. 89
802, 852. 09
24.50
1, 485, 597. 42
25.17
1, 660, 343. 55
23. 77
1,325,723.20
12. 88
14, 006
$421, 316. 29
30.08
1, 009, 798. 41
29.02
472, 554. 96
27. 77
258, 425. 70
27.02
1, 323, 660. 93
25.05
1, 406, 235. 47
19.40
972, 672. 53
12.60
22.75
99, 941
65, 491
"24," Oli"
34, 450
36.65
41, 028
17, 014
44 14
42, 331
32, 768
9,563
'52,"848'
"72," 480 "
"77," 268'
24.35
111, 877
59, 029
47.12
iii, 9is
69, 438
45.85
180, 210
102, 942
42.32
684, 739
14, 910, 963. 73
407, 110
9, 146, 299. 44
277, 629
5, 864, 664. 29
39.33
Period.
Reduced to an annual basis.
Total via all routes.
Total via Ogden.
Annual loss to Central
Pacific.
No.
Earnings.
No.
Earnings.
No.
Earnings.
Per
cent.
Jan. 1, '74, to March 31, '81 ..
April 1, '81, to Dec. 31, '81
Jan. 1, '82, to Jan. 31, '83..
Feb. 1, '83, to May 31, '83 .
June 1, '83, to Sept. 30, '83
Oct. 1, '83, to Sept, 30, '84.
Oct.l, ? 84, to Dec. 31, '85|..
Jan. 1, '86, to Dec. 31, '86. .
Total five years nine months.
78, 180
89, 912
92, 256
i23, 084
126, 993
111, 877
121, 644
180, 210
$2, 156, 773. 92
78, 180
71, 237
60, 456
72, 048
98, 304
59, 029
59. 508
102, 942
$2, 156, 773. 92
2,468,863.36
2, 541, 575. 52
3,211,295.64
3, 183, 833. 37
2, 809, 258. 35
2, 628, 496. 32
2, 298, 395. 73
1, 907, 108. 11
1, 609, 453. 92
1, 793, 630. 76
2, 408, 556. 27
1, 485, 597. 42
1, 423, 151. 64
'1, 325, 723. 20
18, 675
31, 800
51, 036
28, 689
52, 848
62, 13fi
77, 268
$561,755.05
932, 121. 60
1, 417, 664. 88
775, 277. 10
1, 323, 660, 93
1, 205, 314. 68
972, 672. 53
22.75
36.68
44.14
24.35
47.12
45.S5
42.32
119, 076
2,593,211.40
70, 800
1, 573, 269. 36
48, 276
1, 019, 942. 04
39.33
NOTE. From April 1, 1881, to December 31, 1886 (five years nine months), during which time other
lines competed with the Central and Union Pacific line, the Central Pacific road suffered a total loss
of revenue amounting to $5,864,664.29, or 39.33 per cent, of the total through passenger traffic. Assum-
ing this loss based on 46 per cent, of total through, the Union Pacific has sustained a proportionate
loss of $6,884,605.90, making total loss for Central Pacific and Union Pacific line of $12,749,270.19. Re-
ducing this to an annual basis, the loss annually to the Central Pacific is $1,019,942.04, and to the Union
Pacific $1,197,323.26, or a total for the through line of $2,217,265.30.
Exhibit E is the same for passengers as Exhibit C for freight.
Both of the exhibits relating to the passenger traffic in the matter of division into
periods are the same as the exhibits for freight.
Exhibit D will show the number of through passengers forwarded by the original
Union and Central Pacific line from January 1, 1874, to March 31, 1881, amounting to
556,833, from which the Central Pacific earned $15,630,611, which represented 100 per
cent.
For the period (from April 1, 1881, to December 31, 1881) this percentage was re-
duced to 77.25 per cent.
For the third period (January 1, 1882, to January 31, 1883) it was reduced to 63.32
per cent.
For the fourth period (February 1, 1883, to May 31, 1883) it was reduced to 53.78 per
cent.
For the fifth period (June 1, 1883, to September 30, 1883) the reduction was only to
61,10 per cent, j that is to say, the opening of the Denver and Rio Grande and Bur-
2610
U. S. PACIFIC RAILWAY COMMISSION.
lington and Missouri River line contributed temporarily something to the earning
power of the Central Pacific, probably owing to the scenic attractions which the new
route would offer.
But in the sixth period (October 1, 1883, to September, 1884) the percentage fell off
to 42.43 per cent.
For the seventh period (October 1, 1884, to December 31, 1885) it was reduced to
41.25 per cent.
For the last period (January 1, 1886, to December 31, 1886) it was reduced to 38.51
per cent.
As in the case of freight, it will be observed with respect to passengers that the
opening of each new line, with the single exception of the short period immediately
succeeding the opening of the Denver and Rio Grande road, the Central Pacific line
suffered a loss ; and that loss resulted from no other cause than the opening of these
new lines.
Exhibit E shows the number of passengers carried by all routes and the Central
Pacific charges therein, with the loss in charges to the Central Pacific by diversion to
other routes for each period reduced to an annual basis..
The total loss to the Central Pacific by diversion for the period from April 1, 1881,
to December 31, 1886 (five years nine months), is shown to be 277,629 passengers and
$5,864,664, or an average annual rate of 48,276 passengers and $1,019,942.
It will be observed also that the average rate on passengers for each period shows
a less percentage of reduction than in the case of freight, though in the year 1886 the
average rate fell to $12.75, against an average rate of $27.59 during the first period,
from January 1. 1874, to March 31, 1881.
From October 1, 1884, to December 31, 1885, the average annual rate by all routes
was $21.60, and the number of passengers carried was at the rate of 121,644 per an-
num, as against a rate of $12.75 for the year 1886 and 180,210 passengers.
The large reduction in rate was incident to the war in rates which followed the
dissolution of the transcontinental pool. It was not compensated by increased traf-
fic, as all the rail lines earned less from the increased traffic than they earned the
year previous on a less amount of traffic. The conclusion necessarily follows that
while Exhibit E shows a loss for the year 1886 to the Central Pacific by diversion of
77,268 passengers and $972,672, it does not show the entire loss resulting to the Cen-
tral Pacific by reason of the competition of the other lines. The same number of
passengers could have been moved by the Central Pacific at a higher average rata
than was earned by all lines.
As has been explained, the passenger exhibits show only the earnings west of the
eastern termini of the Southern Pacific and Central Pacific Railroads, and show for
the entire period from April 1, 1861, to December 31, 1886, a total loss in revenue to
the Central Pacific road of $5,864,664, or 39.33 per cent, of the total through passen-
ger traffic.
In my judgment, it is fair to assume that the loss of the Central Pacific represents
46 per cent, of the loss to the Central and Union Pacific line, that being not only the
Central Pacific road's proportion of mileage, but also its percentage of the Central
and Union Pacific " line " rates. This is a very close approximation of what an in-
quiry for the purpose of ascertaining the exact loss would show. It is rather under
than over tjie loss. If we assume that the loss to the Central Pacific road is 46 per
cent, of the loss of the Central and Union Pacific line, we have a loss in revenue to
the Union Pacific and Central Pacific line of $12,749,270.19. Reducing this list to an
annual basis, the loss of revenue annually for the line would be $2,217,265. This es-
timate will govern Exhibit F, which combines the showings made by Exhibit C and
Exhibit E for freight and passengers respectively.
EXHIBIT F. Recapitulation of Exhibits E and C, showing combination of passenger and
freight traffic lost to the Central and Onion Pacific line for the period April 1, 1881, to
December 31, 18rf6 ; assuming that the results shown in Exhibit E (passenger) repre-
sent 46 per cent, of the through line earnings, the remaining 54 per cent, is added, show-
ing total loss to Central and Union Pacific line, as below.
Total
earnings via
all routes.
Earnings
via Central
and Union
Pacific.
Loss
to Central
and Union
Pacific.
Per cent,
earnings
lost.
Passenger ...... ................. ..
$32 415 138.54
$19, 665. 868. 35
$12, 749, 270. 19
39
53 811 807.43
29, 428, 726. 60
24,383,080.83
45
86, 226, 945. 97
49,094,594.95
37, 132, 351. 02
43
LELAND STANFORD.
2611
EXHIBIT F. Recapitulation of Exhibits E and C Continued.
Reduced to an annual basis.
Annual
earnings all
routes.
Annual earn-
ings Cent'l and
Union Pac.
Annual loss
of earnings to
C. P. & U. P.
Percent,
lost
annually.
$5, 637, 416. 10
9, 358, 575. 24
$3, 420, 150. 80
5, 118, 039. 36
$2, 217, 265. 30
4, 240, 535. 88
39
45
14, 995, 991. 34
8, 538, 190. 16
6, 457, 801. 18
43
The total loss on passengers and freight (five years nine months) to Central and Union Pacific line,
$37,132,351.02, or an annual loss of $6,457,801.18.
Of which the Central Pacific's proportion is 46 per cent. = $17,080,881.47, or an annual loss of
$2,970,588.54.
Of which the Union Pacific's proportion is 54 per cent. = $20,051,469.55, or an annual loss of
$3,487,212.64.
Exhibit F is a recapitulation of Exhibit E and Exhibit C, and shows that the total
earnings for the entire period from April 1, 1831, to December 31, 1886 (five years,
9 months), of all routes from through freight and passengers were $86,226,945.97 ; that
the earnings of the Central and Union Pacific line, ascertained as above explained,
for the same period were $49,094,594.95. The loss resulting to the Central and Union
Pacific line by diversion of traffic to other lines being the difference between the
above amounts was 137,132,351.02, or 43 per cent, of the total business. This reduced
to an annual basis shows an annual loss to the Central and Union Pacific line (since
April 1, 1881, the date of the opening of the first competing line), $6,457,801.18, 46 per
cent, of which, or $2,970,588.54, represents the loss of the Central Pacific Company.
There can be no question that the traffic carried by all routes during this period
could have been carried by the Union and Central Pacific lines. I do not think there
can be any doubt that had there been but one line, and that line had offered the same
rates (and these comparisons are based upon the rates actually charged), the same
amount of traffic would have been carried, and the earnings from it would have been
covered into the treasuries of the Central and Union Pacific Companies. Not only is
this true, but the same amount of traffic could have been carried, and doubtless
would have been carried, at an average rate of charge something higher than was
actually obtained, so that while the average annual loss to the Central and Union
Pacific line is shown by these statements to have been less than $6,500,000, I believe
that the actual damage to the Union and Central Pacific line, caused by the building
of the other lines, is not less than $7,000,000 per annum, or a total loss of over
$40,000,000 for the period between April 1, 1881, and December 31, 1886, 46 per cent,
of which represents the loss to the Central Pacific Railroad Company.
The facts and figures set forth in the inclosed exhibits are derived from our own
records ; first, being abstracts made from impression copies of the original way bills
covering the freight carried, and from the original tickets collected from the passen-
gers ; and, second, for the Oregon Short Line and Northern Pacific roads, which are
not connections of either the Central or Southern Pacific, from the records of the
Transcontinental Association for the period from October 1, 1883, to January 1, 1886,
and for the year 1886, from the records of the Northern Pacific and Uuion Pacific
Companies respectively.
In giving the dates of the opening of the several lines, I have not been governed
by the historical dates, but by the dates of the first billing or ticketing of through
business done by those lines.
Respectfully submitted.
J. C. STUBBS.
STATE OF CALIFORNIA,
City and County of San Francisco, ss :
J. C. Stubbs, being first duly sworn, saith : That he has read the foregoing state
inent consisting of the pages next preceding marked " Exhibit No. 12," and knows
the contents thereof; that the facts therein stated are true except as to those matters
stated on his information or belief, and as to those he believes it to be true.
J. C. STUBBS.
Subscribed and sworn to before me this 26th day of July, A. D. 1887.
[SEAL.] E.B.RYAN,
Notary Public in and for said City and County.
2612 tr. S.PACIFIC RAILWAY COMMISSION.
EXHIBIT No. 13. Statement of E. H. Miller, jr., secretary, relative to amounts due from
the United States for transportation on non-aided roads.*
The Central Pacific Railroad Company controlled by lease a number of branch lines
prior to April 1, 1885, from which date the lines were leased to the Southern Pacific
Company. Mails were carried by these lines for the United States under the rules
and orders of the Post-Office Department. No payments have been made for such serv-
ice since 1883, at which time but partial payments were made. The payments were
withheld prior-to April I, 1885, because the Central Pacific Railroad Company leased
the lines, and they have been withheld since that date because the Central Pacific
Railroad Company had formerly leased the lines.
The United States Supreme Court decidedjin U. S. vs. C. P. R. R. Co., October term,
1885, that compensation for transportation on non-aided and leased lines was due the
company in cash. (See U. S. Com. R. Rs., 1886, p. 27. )
To show the amount of this service for which payments have been withheld, state-
ments are submitted herewith as follows :
(A.) Mail transportation from January 1, 1882, to March 31, 1885, showing amounts
as allowed by Post-Office Department, $1,814,384.96, of which non-aided and leased
lines' proportion is $806,923.27 ; cash paid is $300,623.46 ; balance due and unpaid,
$501,299.81.
AMOUNT DUE FOR MAIL SERVICE IN CASH.
(B.) Mail transportation from April 1, 1885, to December 31, 1886, showing amounts
as allowed by Post-Office Department, $989,037.54, of which non-aided and leased lines'
proportion is $459,244.97, all of which latter sum remains due and unpaid.
The total amount thus remaining due and unpaid for transportation of mails to
December 31, 1886, on such non-aided and leased roads, is $960,544.78.
The transportation charges on non-aided lines were applied in settlement of the an-
nual requirements of the company under the provisions of the Thurman act. After
such applications there remained a balance due the Government on December 31, 1881,
of $79,149.91. This balance was paid by the company in cash October 23, 1882, thus
settling the accounts to the end of 1881. Of this the U. S. Commissioner of Railroads,
in his report for 1882 (p. 26), says:
" Under the act of May 7, 1878, the book-keeper of this office checked the books and
accounts of the company in San Francisco, with a view to the ascertainment of 25 per
cmt. of the net earnings' for the year ending December 31, 1881. Twenty-five per
cent, of the net earnings of the subsidized portion of the road was found to amount to
81,038,935.24. The transportation for the Government during the year amounts to
$359,785.33, leaving a balance due the United States of $79,149.91. Statement was
rendered and payment demanded October 20, 1882. A check for the amount was sent
to the Treasurer of the United States by the vice-president of the company, October
23, 1882. The company has therefore paid to the Government all of its accrued in-
debtedness to date.'"'
CASH DUE FOR ALL TRANSPORTATION SERVICE.
From and including the year 1882 to the present time there has been annually a
balance due the non-aided lines for transportation services performed. The amount
thus due from the Government in cash, in excess of all requirements of the law, 1o
December 31, 1886, is $1,853.323.15. This appears from statement C herewith, the
further details of which appear in the annual reports of U. S. Commissioner of Rail-
roads for the several years named.
The United States, by failing to pay for such mail service and other transportation,
has caused an expenditure to the Central Pacific Railroad Company of amounts equal
to interest on the sums retained at the rate of 6 per cent, per annum, that being the
rate of interest paid during the period on floating debt of the company, which debt
would have been decreased by the payment of the sums due from the United States.
The annual interest on this balance due the roads in cash to December 31, -1886, of
$1,853.323.15, at 6 per cent., is $111,199.39. This is the present annual injury to the
roads by the Government on account of the item of transportation charges unpaid.
Tbe current charges also, in excess of the requirements, amount, as shown by the
foregoing statement, to about $450,000 a year. This amount with the interest on the
balance make the accruing annual sum of $560,000 due for transportation on non-
aided lines and remaining unpaid.
* See answer to question No. 55.
LELAND STANFORD.
2613
t~t-c}iO"*oc5coaocot^ocooin:"3i-i>-
O OO O ^ r-t t- <M O <M T}> lO *H Ci CO t-t CO CO i-l
S8SSSSS8SS3SggSSSgSSSS
ilJlJJ; *i
2614
U. S. PACIFIC RAILWAY COMMISSION.
2,1 !
1*1
,8
?3 1 fit 85 5 S> ! 9
II
a
s
s*3s
IMS-
* a-s-3 s^slea * SF
SSffl^lgliiiSi.l^a^J,
LELAND STANFORD.
2615
STATEMENT C. Statement showing amounts due from United Slates Government in cash
to December 31, 1886, for transportation on non-aided and leased lines.
Year.
Requirement
under Thur-
man act.
United States transportation.
Balance due
and unpaid.
Aided lines.
Non-aided
lines.
Cash paid.
Total trans-
portation
less cash.
1882
$792, 920. 24
661,530.69
538, 851. 52
386, 118. 83
418,271.56
$403f| 754. 26
403,241.26
478, 225. 20
342, 941. 39
344, 694. 45
$648, 108. 20
515, 237. 00
481, 395. 51
514, 242. 16
504, 343. 41
$122, 754. 64
183, 564. 93
$929, 107. 82
734, 913. 33
959, 620. 71
857, 183. 55
849, 037. 86
$136, 187. 58
73, 382. 64
420, 769. 19
471,064.72
430, 766. 30
1883
1004
1883
-ICCfj
2, 797, 692. 84
1, 972, 856. 56
2, 663, 326. 28
306, 319. 57
4, 329, 863. 27
1, 532, 170. 43
The requirements from July 1, 1878, to December 31, 1884, were originally stated and
settled as above, but they have since been restated in conformity with the decision of
the Court of Claims (see U. S. Com. of R. R., 1885. p. 7), that new construction and
equipment on the aided line are proper deductions in ascertaining the net earnings.
These deductions, since made, make the annual requirements less than the amounts
on which settlements were currently effected, by the sum of $321, 152.72. This amount
is therefore due the compauy in addition to the sum stated above
Making balance of cash due and unpaid for transportation on non-aided roads to De-
cember 31, 1886
321, 152. 72
1, 853, 323. 15
STATE OP CALIFORNIA,
City and County of San Francisco, ss :
E. H. Miller, jr., being duly sworn, sayske has read the foregoing statement ; that the
matters and things therein stated are true of his own knowledge, except as to mat-
ters stated on his information and belief, and as to those he believes it to be true.
E. H. MILLER, JR.
Subscribed and sworn to before me this 20th day of July, 1887.
[SEAL.] E. B. RYAN,
Notary Public in and for said City and County.
By the CHAIRMAN:
Q. Have you any further statements to submit to the Commission ?
A. No, sir.
Q. Do you desire to say anything further in connection with the state-
ments already submitted ? A. No, except to explain them, if the Com-
mission desires.
WILLINGNESS TO GIVE INFORMATION.
Q. Are you ready to have your oral examination proceeded with ?
A. Yes, sir ; now or at any time. I would suggest, however, that it
might be better to postpone it for a day or two. I suppose that there
are a great many witnesses whom you wisb to examine, and if I am left
to the last there are some things which may develop in the course of
these examinations which I may be able to explain.
Commissioner ANDERSON. We will call you again. We shall be here
thirty days yet, and I have no doubt that we will nearly bother the life
out of you before we get through.
The WITNESS. It may ; but this thing is not new to us by any means.
Commissioner ANDERSON. I believe that. The Union Pacific people
say the same thing.
The WITNESS. We have had investigating committees after us all
the time since we began crawling up the mountains. We used to have
2616 U. S. PACIFIC KAIL WAY -COMMISSION.
annual sessions of the legislature, and there was scarcely one of them
but what we had to appear and defend ourselves against attack. We
used to appear before these legislative investigating committees regu-
larly and stand a general investigation of our affairs.
By Commissioner ANDERSON :
Q. Shall we proceed with you this morning ? A. Unless it is your
order of business I should like to be excused. I have some consider-
able work to do, and I am not feeling very well to-day.
Commissioner ANDERSON. We have no other witnesses. We excused
Mr. Brown because we expected that your examination would require
several days. If you can do so just as well as not we would prefer to
ask you a few questions now. When you get fatigued, if you will let
us know, we can stop.
EARLY BUSINESS CONNECTIONS.
Q. When did you first come to California ? A. In 1852.
Q. At that time San Francisco was just beginning to be a city of any
importance, was it not? A. It was a pretty small place at that time.
I think that when we commenced to build this road it had a population
not exceeding 60,000.
Q. What business did you follow here from 1852 to 1860 ? A. Mer-
chandising.
Q. Were you alone, or did you have a partner ? A. A portion of the
time I had a partner and a portion of the time I was alone.
Q. Who were your early partners? A. First, I had a partner by the
name of Smith, and my brothers had an interest with me. They had
a certain interest with me as a firm. I afterwards did business alone,
and used that firm name. Then I had a gentleman by the name of
Meeker in partnership with me.
PUBLIC LIFE.
Q. When did you enter public life? A. I can hardly say. I took
part in the formation of the Eepublican party.
Q. Please state what public offices you have held. A. I held office
once as justice of the peace. I was elected to that office up in the
mountains. The only other office that I have held is that of governor
of this State. From all that I can learn, I believe that I made a pretty
good justice of the peace.
Q. When were you elected governor of the State? A. In 1861.
Q. Did you serve more than one term ? A. I served one term only.
Q. How many years is the term? A. It was then two years.
Q. What other public offices have you ever filled? A. None other.
Q. Are you not a Senator of the United States? A. Oh, yes; I did
not think of that.
Q. When were you elected Senator of the United States ? A. Two
years ago last winter.
Q. When did you enter upon the discharge of your duties? A. I en-
tered upon the discharge of my duties at Washington at the time that
Mr. Cleveland was inaugurated President.
FIRST ACQUAINTANCE WITH CROCKER, HUNTINGDON, AND HOPKINS.
Q. When did you first form the acquaintance of Mr. Charles Crocker ?
A. I am not certain, but I think that I formed liis acquaintance about
1854,
LELAND STANFORD. 2617
Q. Here in San Francisco ? A. No, sir ; in Sacramento.
Q. What business was he in at that time? A. He was merchandis-
ing.
Q. Was he engaged in the same line of business that you were en-
gaged in ? A. No, sir.
Q. Was he alone or had he a partner ? I believe that the firm name
was Charles Crocker & Co. A. I think that he had a partner, but I am
not certain.
Q. Do you know who his partners were at any time between 1854
and 18C2 ? A. No, sir ; I do not know. If he had a partner I think
that it was a gentleman who lived in New York. I think that there
was some one in New York who had an interest with him in the firm.
Q. When did you become acquainted with Mr. Huntington ? A. In
1852.
Q. What was his business ? A. He was in the hardware business in
Sacramento.
Q. When did you become acquainted with Mark Hopkins? A.
About the same time.
Q. Also at Sacramento ? A. Yes, sir.
Q. What was Mr. Hopkius's business ? A. He had a general grocery
and provision store.
INCEPTION OF CENTRAL PACIFIC RAILROAD ENTERPRISE.
Q. Do you recall the circumstances under which the scheme of the
Central Pacific Railroad was first developed ? I mean when the bill
first passed the legislature of California, and the time when the first
idea of the road was developed. A. I will tell you the whole history,
if I can take time to refresh my memory, because I was a part of it at
the beginning. If you desire, however, I will now give you a brief
sketch.
ORIGINAL SURVEY MADE BY T. D. JUDAH.
Q. I wish that you would give us a brief sketch now, and at some
future time you can give us the complete history. A. In 1860 there
was a gentleman by the name of T. D. Judah, who was afterwards chief
engineer of the company, who had made surveys over the mountains
with reference to the building of a line of railroad connecting the
Atlantic and the Pacific. At first I had no personal acquaintance with
him. The first time that my attention was called to the question of the
construction of a railroad was by a gentleman by the name of James
Bailey, who was afterwards the secretary of the company. Mr. Bailey
came down to see me, told me of his acquaintance with Mr. Judah, and
informed me that Mr. Judah had discovered in the mountains a pass
over which a railroad could be built, and gave me such further infor-
mation on the subject as he possessed, and desired that I should see
Mr. Judah. I told him that I should be glad to see Mr. Judah, but did
not know that we would care to do anything in the matter. I told him,
however, that I would talk with Mr. Huntington and others about it.
We fell into conversation upon the subject, and the result was that we
agreed to have a meeting, and did have it the same evening at my
house. We then fully considered the subject, and discussed the matter
one way and another. We afterwards met again, when Mr. Hopkins
joined us, and the result of that was that we concluded that we would
make the acquaintance of Mr. Judah. Neither of us was acquainted
with him, and we invited him to meet us and make our acquaintance,
2618 U. S. PACIFIC RAILWAY COMMISSION.
He then came down with Mr. Bailey and we had a conversation. We
discussed the question thoroughly in all its bearings, and the more we
talked of it the better we liked it. Mr. Crocker then came in, together
with some other citizens, and between Crocker, Huntington, Hopkins,
Judah, Bailey, and myself we raised some money towards making ex-
plorations which we thought necessary before forming a company.
We awaited the result of those explorations and the reports made by
Mr. Judah before we concluded to form a company, which we did in
1861.
COMPANY FORMED AND ROUTE SELECTED.
We had routes surveyed over the mountains according to my recol-
lection there were five of them and finally determined which was the
best one as to the passes and grades. We took the one which had the
shortest snow line. At that point the ascent is very irregular. We
had 7,000 feet of ascent almost in 83 miles. After reaching the sum-
mit the descent was at the rate of 90 feet to the mile. Outside of this,
down the Truckee, there were a number of short grades and low sum-
mits, and a number of plateaus to cross. Altogether the route which
we selected was the most practicable, according to our ideas. Although
the snow falls as deep and even deeper on this line than it would have
fallen on other lines that could have been selected, yet this deep snow
line extends but a very short distance. We finished our explorations
and then looked over the country to see what business there would be
for a railroad line. At that time the business of Nevada was very
promising, and we had an idea, like everybody else on this side, that
most of the mountains in Nevada were filled with mineral wealth.
PROSPECTIVE BUSINESS FROM SILVER MINES.
Q. The Comstock lode was then being developed, was it not? A.
Yes, sir ; they were all making developments at that time and most of
them were very rich. The mines, however, did not have the depth
which the Comstock lode had. I speak now of the mines outside of
those upon the Comstock lode proper. I remember that while we were
making our explorations, we came to the summit, and at Donner Pass
we looked down on Donner Lake, 1,200 feet below us, and then looked
up at the drifts above us 2,000 feet, and I must confess that it looked
very formidable. We there and then discussed the question of the pay-
ing qualities of the enterprise, and we came to this conclusion : That if
there was a way by which a vessel could start from San Francisco or
from New York, and sail around Cape Horn, in behind those mountains,
we could not afford to compete ; or if a vessel could start from any of
the Atlantic ports and come there around Cape Horn, we could not com-
pete. If this could not be done, however, and if we had only the ox
and mule teams to compete with, we saw that we could obtain such a
rate for carrying freight and passengers that we could afford to build
the road with the prospect of further developments in Nevada.
GOVERNMENT AID.
Q. Was not your attention almost immediately turned to the subject
of obtaining aid from the Government f A. I do not think it was at
that time, but it was very soon afterwards. We drafted the bill in our
office which, I think, became the foundation of the act of Congress. Mr.
Judah and Mr. Bailey went to Washington to look after it. Mr. Judah
went before the railroad commission and the committees of Congress,
LELAND STANFORD. 2619
and bad his maps with him to explain everything. He did a great deal
towards the passage of that bill, because he understood the subject
better than any other man at that time. He understood the country
and the routes, and what was needed generally.
METHODS EMPLOYED IN OBTAINING IT.
Q. It appears from your minutes with reference to this visit of Mr.
Judah to Washington, that a resolution was passed authorizing the is-
sue of not to exceed $100,000 in full paid stock to be used by Mr. Judah
as agent for the company, in such manner as he might deem advisable,
in compensating agents and assistants who might perform service in
promoting the interests of the company, and. in furtherance of the ob-
jects of his mission. Do you remember that circumstance ? A. Yes,
sir ; I know that we gave him stock to be used to pay his expenses there,
and to secure such aids as he might need. He used but little of that
stock, however not very much of it. I do not remember how much he
did use, but it may be that the reports will show. I think, however,
that he brought back most of it.
Q. He was by profession an engineer, was he not ? A. Yes, sir.
Q. Who else accompanied him to Washington on behalf of the com-
pany ? A. Mr. James Bailey. He was the first secretary of the com-
pany.
Q. Had you at this time any acquaintance with J. 0. Stone, of Leaven-
worth, who was then present in Washington ? A. No, sir $ I did not
go on to Washington myself.
PASSAGE OF BILL BY CONGRESS.
Q. Proceed with your narrative. You were stating the inception of
the enterprise, and the ideas that you had about getting over the
mountains, and the object of Mr. Judah's trip to Washington ? A. Mr.
Judah remained in Washington some little time, and I do not know but
what Mr. Huntington was there with him, but I think not, however, at
that session. The bill was finally passed. After the passage of the
bill Mr. Judah came back here and went to San Francisco in the hope
that stock might be placed with the capitalists here in order to get
money to build the road. Except a subscription for one lot of ten shares,
we were not able to interest anybody in this city. The only thing we
were able to obtain was that one ten-share subscription. There was
some local feeling at Sacramento and some little stock was taken up
there. This failure compelled us to ask aid from the counties, particu-
larly the county of Placer, through which the road was to be construc-
ted, and it gave a subscription of $200,000 towards the stock, giving
the company its bonds for the same.
STOCK SUBSCRIPTIONS.
By the CHAIRMAN :
Q. Did you open books for the subscription of stock here f A. Yes,
sir.
Q. And also at Sacramento ? A. Yes, sir. And we went around
soliciting subscriptions but found it impossible to get them. At that
times everything here was high, and money was readily worth from 2
to 2 per cent, per mouth. All the objections to taking stock might be
crystallized into this one, that money was bringing from 2 to 2 J per cent,
P R VOL iv 19
2620 U. S. PACIFIC RAILWAY COMMISSION.
I
per month, arid capitalists could not afford to put it into an enterprise
which they considered at best as of doubtful character, where the return
would be only after the completion of the road. We were therefore
compelled to rely upon our own resources. We obtained $200,000 sub-
scriptions to stock from Placer County; $300,000, I think, from Sacra-
mento County, and $000,000 were to have been subscribed by San Fran
cisco, but the influential men and other influences here were such that
we could not obtain this last subscription, and after considerable litiga-
tion the city gave us $400,000 of their bonds and did not take any oi
our stock. It was the best that we could do, but it hurt the enterprise
very much. One of the principal things which operated against our
securing stock subscriptions was the fact of the existence of a personal
liability which attached to stock under the laws of this State. We
were forced to use our own individual credit to its fullest extent for the
purchase of supplies, at one time to the extent of $600,000. We went
on, however, and built the first 31 miles of road entirely from our own
means. We had not then obtained any county or State, aid. The State
paid the interest on a million and a half of our own bonds, we paying
the principal. We built 31 miles of the road, but we were not able un-
til we got this county aid to go further.
LOCAL CONTRACTORS.
By Commissioner ANDERSON :
Q. What 31 miles was this f A. The first 31 miles east of Sacra-
mento.
Q. The first 31 sections'? A. Yes, sir.
Q. By what company was that built? A. By the Central .Pacific
liailroad Company, without any outside aid.
Q. Was it built by 4ocal contractors who took certain small subdi
visions ? A. Yes, sir. We thought that was the most practicable way
of building the road at that time.
OBSTACLES TO BE OVERCOME.
By the CHAIRMAN :
Q. During what year was this? A. I think that it was in 1863. We
kept on building and doing what we were able to do until our means
were substantially exhausted. The principal drain at that time was in
the purchase of iron. We wanted to have on hand sufficient iron to
build fifty miles of road. We had considerable litigation to procure
right of way. In fact, we obtained hardly any without litigation. Par-
ties opposed to the construction of the road interfered with us, and we
had a great deal of trouble and considerable litigation. Finally the
courts decided in our favor, the counties gave us their bonds, and the
State paid the interest on a million and a half of our own bonds.
That was all that we had until we got aid from the Government.
CONTRACT WITH CHARLES CROCKER AND COMPANY.
By Commissioner ANDERSON :
Q. Please go back to the construction of the road. After several
contractors had proceeded with portions of the work, and you concluded
t hat it was best to make a change, what change did you make in the
form of construction ? A. We then made a contract with Charles
Crocker, in the name of Charles Crocker & Company, He had no part-
LELAND STANFORD. 2621
ner, but the contract was made out in the name of Crocker & Company
for the reason that we had hopes that he would be able to get capital-
ists interested with him. This was found to be impossible, however,
as every one regarded the enterprise as of too doubtful a character
to risk money in it. It was the general impression that it would be a
doubtful struggle at best, with the chances all against us.
Q. For how long was this matter discussed between all of you as to
the advisability of changing the method which you had pursued, and
instead of letting the work to smaller contractors giving it out in large
contracts ? A. It came up almost immediately.
OBJECTIONS TO SMALL CONTRACTS.
By Commissioner LITTLER :
Q. Immediately after the small contractors began 1 A. Yes, sir.
Labor was very scarce, and we pushed them very hard. We wanted
the work done as nearly as possible in consecutive order. We wanted
it done first at the point nearest the starting point, so that as each sec-
tion was completed we could utilize our capital to the greatest extent
possible. We often found, however, that the contractor the farthest
off would finish his work first. The others would be slow, and there
was constant trouble from this source. Considerable trouble also re-
sulted from the fact that labor, especially white labor, was very scarce.
Most of the men working on the road were merely working for a stake,
and when they got that they would go off to the mines, and we could
not hold them, except in rare instances, more than a very little while.
We could not get the necessary white men, and then we had to take
Chinaman.
By Commissioner ANDERSON :
Q. Had Mr. Crocker done any work of this character before that
time? A. I think not.
ADVANTAGES OF CONTRACT WITH CROCKER.
Q. What were the advantages known to you of selecting him as con-
tractor to do that work ? A. He joined us in the enterprise. He was
a man of a great deal of energy and force of character, and nobody
else hardly would touch the enterprise at all. We were left substan-
tially alone. Six or seven men who started with us left us to get
through the best that we could. After that it became practically an
individual enterprise. Then we made this contract, in the hope that we
would be able to get others in with us. I think that we made the con-
tract for a certain number of miles, which Mr. Crocker finished, and that
he then continued on working without any regular contract.
CROCKER'S RESIGNATION AS DIRECTOR.
Q. I would like to know something about the contract first. Do you
remember the fact that Charles Crocker resigned his office as director
of your company on the 24th day of December, 1862 ? A. I remember
the fact that he resigned, but I do not remember the date.
Q. Do you not connect that resignation with the fact that this con-
tract was about to be awarded to him f A. I do not remember that
fact, but very likely that was so. This contract, as I say, was awarded
to Mr. Crocker in order that he might get capital interested with him
in the matter. It had got to be a sort of individual enterprise, because
2622 U. S. PACIFIC RAILWAY COMMISSION.
nobody else would take hold, and it became a question with us how to
get on. We saw that we must control things, control the men and
control the work, if we were to succeed at all. I made great efforts,
and so did all of us, to get capitalists to take an interest in this con-
tract with Mr. Crocker, but we were unable to do so. This personal lia-
bility clause in our law had a great deal to do with it. We not only
tried to get capitalists interested with iis, but we were very anxious
that they should come in, even if we had to give them all the assets of
the company. Our failure in this matter led us to form the Contract
and Finance Company.
Q. That was formed some time later, some three years later, was it
not? A. Yes, sir.
REASON FOR HIS RESIGNATION.
Q. Mr. Crocker's proposal for construction under his contract appears
from your minutes to have been considered and awarded by your board
on the 26th of December, 1862, two days after his resignation. With-
out intending to criticise that resignation, is it not perfectly apparent
and well known to all of you that he resigned because the voting for
that contract or the awarding of that contract while he was a director
might raise questions as to its legality ? A. That may have been so.
Q. Was it not so, according to your best judgment ? A. I do not
know but that it was.
Q. Mr. Crocker resigned on the 24th and his proposal was acted
on on the 26th. Would that not seem to indicate that the reason
that I have suggested for his resignation is the correct one I A. That
may have been the case. I have stated the objections to the making
of small contracts, and in making a contract with Mr. Crocker it was done
with the idea that we knew that he would work with us, that he was
deeply interested with us, and that he would be at all times under
our control. We wanted his whole time devoted to the construction of
the road. We thought that he could do better service as a contractor
than as a director, and there may have been some question as to his oc-
cupying both positions. How far those influences went at that time,
however, I do not now remember, but it was a part of our general
scheme to build the road, and we knew that we had to rely upon our-
selves. Mr. Crocker went on with the contract, and kept on struggling
with the rest of us until our means were pretty well exhausted.
TERMS OF HIS CONTRACT.
Q. Now pass to his contract : Can you tell us what the terms of his con-
tract were f A. No, sir : not without examination. I know, however,
that we gave him so much a yard for material I think in cash, and so
much in stock. The stock at this time was not considered as of much,
if any, value. We did not attach much importance tt it. Long before
we got over the mountains it was not a financial problem. It was a
question of whether it was possible to construct the road.
Q. What I want to get at is, what is your recollection as to the terms
of the Crocker contract ; was payment to be made on the engineer's
statements of the quantity of work to be done, and not at so much per
mile? A. That is my recollection. We made estimates of prices for
the different classes of work, but those prices I do not remember. I
think that our books, if you have them, will show just what those con-
tracts were,
LELAND STANFORD. 2623
THE STOCK OF LITTLE VALUE.
Q. The minutes do not show the terms of the contract. Your books
show only large payments to Mr. Crocker during the years 1863> 1864,
and 1865, and the estimates produced yesterday by Mr. Miller show, as
preliminary to making the payments to Mr. Crocker, that schedules of
estimates of quantity and estimates of amounts were made out, stating
so many yards of excavation, so many feet of grading, so many ties
delivered, so much wrought iron, so much cast iron, the whole being com-
puted by the month, and then payments were made to Charles Crocker
& Co. at the rate of five-eights of the amount due in money and three-
eighths of the amount due in stock. Does that statement refresh your
recollection as to the nature of the (Crocker contract ? A. Iknow that the
contract was for specific prices, to be paid by the yard, and so much was
to be paid in cash, and so much was to be paid in stock. The stock
was not considered as amounting to very much value, but still we had
an idea that the stock of the company might be an inducement to cap-
italists to come in with Mr. Crocker, and if the enterprise was success-
ful they would have the benefit of it. None came iri, however ; but we
still continued on in the hope that at some time or another either this
stock or some other inducements could be given by which we could ob-
tain the necessary financial assistance to complete the road. As I have
said before, this became substantially an individual enterprise. The
whole weight rested upon us. We could not get anybody with us, and
it seemed, long before we got over the mountains, that something had to
be done or we would not be able to make it a success. The best thing
that we could do was, first, the making of this contract with Crocker &
Co., hoping for the best, and then the contract with the Contract and
Finance Company.
CHRONOLOGICAL HISTORY OF CONSTRUCTION.
Q. When did you make the contract with the Contract and Finance
Company ? A. That was made after the contracts with Crocker & Co.
Q. Before I ask any further questions in that respect I would like to
get an intelligent and chronological history of the construction of the
road from year to year. I would like the history of the building of
of the road, section by section. How many miles did the Crocker con-
tracts embrace before the contract was made with the Contract and Fi-
nance Company ? A. I think that this contract took us up to a place
called Dutch Flat, 60 miles from Sacramento, about 30 miles from New
Castle. Mr. Crocker then continued on building the road. I do not
know now whether there was any regular contract for this additional con-
struction or not, but I do not think that there was. I do not think that
we ever gave him a contract beyond Dutch Flat, because, as I say, we
were all oping to get some Eastern contractors and capitalists to come
out and take an interest in the work. We did not succeed in this, so
Mr. Crocker kept on doing the work. I do not know about the prices,
whether they were changed or not. I do not think that we cared, so
long as we got the work done. We kept building all the time, so far
as we could obtain money to go on with the work. We pushed it as
fast as our means would permit, and in order to do this it was necessary
that we should keep substantially the control of the whole thing in our
hands. I do not know whether there was ever any new contract, either
verbal or written. I do not think that there was. I think that it was
merely a general understanding.
2624 D. S. PACIFIC RAILWAY COMMISSION.
EXTENT OF WORK DONE BY CROCKER.
Q. Assuming that there was not, or that they were mere modifica-
tions of this original contract, up to what point did the Crocker work
extend, and where did the Contract and Finance Company begin f A.
The Crocker work continued merely to the State line, I think, before
the work of the Contract and Finance Company began. By this time,
I will say further, our means were very limited. Under the act of
Congress we had mortgaged the road and issued bonds 100 miles in
advance of construction, and they were all consumed, together with the
county aid and all the aid that we received, and it was doubtful if we
could possibly go on. Then I thought, and talked it over with the rest
of my associates, that if we made a contract and put in a sufficient
amount of the stock so that the con tractors could have substantially
what there was in it, we might induce Eastern men to come in, and pos-
sibly some of our own people. I tried to get some of the largest capi-
talists in this State to come in with us at that time, but it was the same
old story.
THE CONTRACT AND FINANCE COMPANY A FINANCIAL NECESSITY.
They were afraid to take any chances in what they considered a
doubtful enterprise, when they could lend their money out on good
security at high rates of interest. All the way through it was a ques-
tion of capital whether we would succeed or not. And we determined
to let contracts in the way in which they were let, thinking that in that
way we might get rid of this scare of the individual liability of stock-
holders under the California law. We thought that by forming the
Contract and Finance Company, and agreeing to give it the stock of the
company, that company might be able to interest capital. Of course
this was practically giving the contractors all the assets of the company,
but it was better for us to do that than to fail.
FAILURE TO INTEREST CAPITALISTS.
Mr. Huntington in Kew York tried to get capital interested, and I
tried here. At one time I had a good deal of hope that I might succeed
here by forming a syndicate of our wealthiest men and offering them
these inducements. We failed in all these endeavors, as we had failed
in all the previous ones. We finally managed to get through, but when
we did finish the work to Ogden our entire means were exhausted. The
Government bonds were all gone. I never saw one of these Government
bonds. Our first-mortgage bonds were exhausted. The aid received
from the counties had been used up. The money raised from the bonds
on which the State had guaranteed the interest had gone into the road,
and, to cap all, the company was considerably in debt.
ROAD COMPLETED TO STATE LINE.
Q. To come back to Mr. Crocker's work, I understand you to say,
then, that the construction actually effected, paid under those contracts,
extended from Sacramento City to the State line. Is that correct ? A.
Not by virtue of the contract, but because we continued the work for
the reason that there was no one else to do it.
Q. flow many miles was this east of Sacramento 141 ? A. About
that ; I think, though, that it was about 137.
LELAND STANFORD. 2625
Q. Can you give ine the exact location where your State line is, with
reference to Donner Lake Pass or the town of Truckee ? A. It is some
ways down from Truckee.
Q. After you pass the village ? A. Yes, sir.
Q. Was it not known as " Camp No. 24 " at that time f A. I cannot
say as to that.
Q. At what period was it that you reached this point on the State
line? A. I do not remember exactly.
Q. Take it this way. How long was it before the contract was made
with the Contract and Finance Company *? A. I think that it was in
the winter of 1866 and 1867. I know that in 1868 we were at the Sum-
mit. We built over the desert during the season of 1868 the winter
of 18C8->69.
COST OF CONSTRUCTION.
Q. What is your recollection as to the cost of the first portion of the
road ? What is your recollection as to the total amount paid under the
Crocker contracts for the work done by him from the thirty-first section
to the one hundred and forty first section f A. I cannot remember now.
I cannot tell you in dollars and cents 5 but I know that he had all the
money that we could put our hands on at that time, as well as the pro-
ceeds realized from the sale of our own bonds for one hundred miles in
advance of our construction, part of it at the rate of $40,000 a mile,
and the rest at the rate of $32,000 a mile. The Government, I think,
gave us bonds on the basis of two-thirds of the completed amount
of work, at the rate of $48,000 a mile. All that was gone, and every-
thing that we had from the county and State had gone in at that
time. The bonds given us by the city and county of San Francisco
bore interest at the rate of 7 per cent, per annum. Money here at that
time was very high, and I think that all we realized from the sale of
those bonds was at the rate of 73 cents on the dollar. The million and
a half of our own bonds, upon which the State had guaranteed the
interest, produced us but about $1,000,000 in cash. From the Sacra-
mento County bonds we realized but 65 cents on the dollar, and from
the Placer County bonds but 70 cents.
Q. Your statement is that all that the company had received, all of
its assets, except what had been paid to the small contractors for the
construction of the first thirty-one sections of the road, were used up
in paying for work done under the Crocker contract and the extension
of the Crocker contract? A. I think so. I may be in error a little,
but that is substantially the case. At that time I know that I was look-
ing after the finances here, and what I have given you is my recollection.
NECESSITY FOR COMPANY TO CONTROL CONTRACTORS.
Q. Do you remember the fact that Mr. Crocker first proposed, among
a number of other contractors, for a comparatively small section of work
between Sacramento and the California Central, and that it was sub-
sequently to that date that he made his larger contract ? A. Yes,
sir; subsequent to that. When we first commenced, we thought of
letting contracts to bidders before much work was done, but it soon
became apparent to us that we could not handle them and be success-
ful in building the road in that way. We saw that we must have them
under our own control, or practically so. We saw that we must have
contractors whom we could control, who could do the work when we had
the money to pay, and who would push it and be willing to make any
2626 U. S. PACIFIC EAILWAY COMMISSION.
kind of sacrifice that we might call upon them to make. We looked at
the work ourselves, and whenever there was a chance to push it by any
sacrifice, we did not hesitate. We used our money with the greatest
economy in every respect, except in the matter of speed, and theft we
never hesitated to make a sacrifice. The road could not have been built
under any other circumstances, and we could not have done anything
in the matter, except by pushing it as rapidly as possible, still exercis-
ing in everything the closest economy.
Q. Our object is to ascertain approximately, without disputing your
proposition, the terms upon which it was constructed. A. There is no
reason for concealing anything about this, or about anything else in
connection with the company. 1 take it that this committee is here to
see what is fair and right between the Government and the company,
and what is right all around. I am glad to give you all the information
in my power. We had great difficulties to overcome, and the only
wonder is that we ever did overcome them.
AMOUNT PAID TO CROCKER & CO.
Q. We find from the books of the company that the payments to
Crocker & Co. in 1865 amounted to $3,236,710.35; in 1866, $8,290,790.11;
and in 1867, $9,930,282.19. The payments that I have enumerated all
appear to have been made for the construction of the road from section
31 to section 141, both inclusive, one hundred and ten sections in all.
It would therefore appear that between $21,000,000 and $22,000,000
were paid in the form in which the payments were made, five-eighths
in cash and three-eighths in stock, to Mr. Crocker for his work to the
State line. If this is correct It would seem that for the construction of
the road between sections 31 and 141 Mr. Crocker received at the rate of
over $200,000 a mile. Is that the way you understand the work to have
been done and the payments to have been made, assuming these figures
to be correct ? A. I do not know about the figures. We did not give
him money any faster than he needed it, because we had great difficulty
in obtaining money at that time.
Q. Who can give an idea about this I A. I am coming to it.
MAGNITUDE OF THE WORK.
Q. Please describe the start at section 31 and extending to section
141, each of the sections being substantially equivalent to 1 mile, and
give us the character of the country over which this line passes. Give
the names of the towns, the names of the rivers, and tell us all you
can about the general character of the country. Give us a description
of the plain first, and then you can tell us about the mountains. A. I
was going to give you an idea about that work. We worked on that
mountain from ten to fifteen thousand men most of the time, and then
were oftentimes aided by five hundred kegs of powder a day. After
we passed the mountains we worked about half that number of men.
We were four years crawling up the mountains, and three of those years
we drew upon all the forces that we could get. After we passed the
mountains we built 500 miles of road in five days less than ten months.
Q. That is not under the Crocker contract. What I want to know is
all about the Crocker contract and the work done under it. We can
take up this other work afterwards. A. What I wanted to give yon
was an idea of the magnitude of the work.
LELAND STANFORD. 2627
Q. What I want to know first of all is the history of these first one hun-
dred and forty-one sections. A. If you will let me go on I will give
you something by which you can judge of the magnitude of that work.
GEOGRAPHY OF THE COUNTRY.
Commissioner ANDERSON. If you will describe the geography of the
country, and give the names of the towns, rivers, &c., as you go on, it
would be much more intelligent to me. If you say, for instance, sec-
tion 31 commenced east of such and such a place and passed over such
and such a river, going such and such a way, I could follow you more
intelligently.
The WITNESS. The maps of our engineers will show all of these de-
tails; although they will give you the names of a great many places
well known at the time the road was constructed, but which have since
disappeared.
Q. The rivers are there, are they not? A. The rivers are there ; yes,
sir. The contract with Crocker, I think, commenced at New Castle, 31
miles east of Sacramento. It was for a limited number of miles. My
impression was that it was for 20 miles. It may have been only to Col-
fax, 51 or 52 miles. I am not positive about that. After terminating
this contract, however, Mr. Crocker continued on with the work. I do
not think that we put the terms in writing, but still we may have done
so. At any rate I am not certain about it, and I do not see that it is
of any great importance. We were doing whatever we thought neces-
sary to complete that road, and we" went on and did the work, and
pushed it on as fast as possible with the means at our command. We
never had any surplus money.
Commissioner ANDERSON. Mr. Crocker seems to have had some sur-
plus money at some time or other in the course of his life.
DIFFICULTIES IN CROSSING THE SIERRA NEVADAS.
The WITNESS. I will give you something which will give you an idea
of the extent of the work and of its magnitude if you will let me. We
worked from ten to fifteen thousand men on that mountain, and after
we passed the mountain, with less than half the force, we built 500
miles in five days less than ten months and met the Union Pacific Bail-
road line at Promontory. The work on the Sierra Nevada Mountains
was exceedingly difficult, and was far more than the average of the
work from there to Chicago. The same rate of speed which we were
able to exhibit after we left the mountains with only half the men would,
if we had been able to have carried it out during all the time that we
were building, have carried us to Chicago. There never was any por-
tion of the work on either road so difficult as that which we had in climb-
ing the Sierra Nevada Mountains.
Q. Which side of Truckee? A. Partly beyond Truckee, say, for the
first 150 miles beyond the summit, carrying us beyond the State line.
It took more work upon our part to get us across these mountains than
would have sufficed to build a single track road from the other side of
the Sierra Nevadas to Chicago.
PREVIOUS INVESTIGATIONS.
By Commissioner LITTLER :
Q. Is not this work well described and well stated on your side of
the case in the report of >our superintendent of construction, which is
2628 TJ, S. PACIFIC RAILWAY* COMMISSION.
made an exhibit to your affidavit ? A. Yes, sir. This is twenty-six years
ago, during which time I have led a very busy life. From time to time
the papers have discussed all these questions, and they have been all
through these things. Legislative committees and the courts have fully
investigated all these matters, and numerous reports have been made
from time to time. I suppose that in one place and another an immense
quantity of matter can be found that would throw light on this subject,
but I cannot place my hand on it.
BASIS OF RAISING MONEY TO PAY CONTRACTOR.
By Commissioner ANDERSON:
Q. It appears from these figures, which I have read, that there was
paid to Mr. Crocker for the work done by him, part of which was in
money and part in stock, at the rate of $210,000 for each mile of road
constructed, and our inquiry is directed to the question whether the is-
sues of stock and the sales of bonds made for the purpose of raising
that money were not upon such a basis as to have contributed, in the
ultimate result, very largely to the present crippled condition of the
Central Pacific Eailroad Company? A. No, sir; it has not.
Commissioner ANDERSON. And on that point we would like any in-
formation that you can give us.
The WITNESS. The stock was not considered as valuable at the time,
and it did not turn out to be of any valuable assistance in the building of
tiie road. If it had any value at all it was wholly prospective. We
could not sell it and we could not hypothecate it. All the money that
we could get from any and every source went into the road.
Q. You mean it went into the Crocker contract? A. It went into
the construction of the road. Mr. Crocker did not have any profits
from it.
WHO CONTROLLED THE ENTERPRISE.
Commissioner ANDERSON. Excuse me ; but you are passing over the
whole question that we are so anxious to get light upon. If that ex-
pression, "Crocker did not get any profit out of it," is based upon fact
we will pass to the next section.
The WITNESS. We substantially controlled the whole of that work.
We knew all the work that we could do and all the money that we had
to push it through.
Q. Whom do you mean by "we," yourself and Crocker? A. I mean
the five men who devoted themselves to it from the beginning to the
end. We all worked on the best that we could, and did all we could
to accomplish the result.
Q. There were yourself, Mr. Crocker, Mr. Mark Hopkins, Mr. Hunt-
ington, and who else? A. E. B. Crocker.
Q. A brother of Charles Crocker ? A. Yes, sir. Mr. Judah died early
and Mr. Bailey retired.
Q. And E. B. Crocker is dead now? A. Yes, sir.
Q. Was his interest substantially the same as that of Charles Crocker ;
did they work together? A. No, sir. Charles Crocker was contractor;
but we all felt that we should fill our parts the best that we knew how
towards securing the construction of that road, and we did so.
Q. You say that you were all working together. Do I understand
you that you all contributed your time, attention, and credit, and gave
your best energies to the successful completion of these Crocker con-
tracts? -A, Yes, sir j that is substantially it.
LELAND STANFORD. 2629
WHO WOULD HAVE GOT THE PROFITS.
Q. Do I also understand that you were equally interested in any of
the profits, or were to share any of the losses that might arise under that
contract 1 A. No, sir ; not at that time.
Q. If there had been profits would they have gone to Mr. Crocker f
A. If there had been profits we would have let them go to him, as is
ordinarily the case in contracts, and Mr. Crocker would have enjoyed
them. We had to make great sacrifices, however, in order to make
time, and this cut off whatever profits he might otherwise have made.
Sometimes it was a question how far we could get money to keep things
going, and how to regulate expenses so as to be able to pay them.
RELATIONS OF CONTRACTORS WITH RAILROAD COMPANY.
Q. State on what you based your belief or conviction that you appear
to have that when Mr. Crocker had finished the one hundred and forty-
first section there was nothing left of the $22,000,000 in money and
stock which he had received ? A. Because the money passed through
our own hands, and the relations of Mr. Crocker and the Contract and
Finance Company with the railroad company was such that we knew
all the time about their expenses and their wants. We met their wants,
but did not go any further. The contract, at the time it was let to Mr.
Crocker, would not have been taken by anybody else. If there had
been a regular contract let to a regular contractor whom we could not
have absolutely controlled, we would have had more or less trouble.
We could not have afforded to have let him go on as contractors ordi-
narily go on with work, because of the difficulty which we experienced
in getting money. If we could have let him go on in this way, as other
contractors do work, he would have had a right to enjoy all the profits
that he could make; but we had to have control over him in order to
be able to do anything at all; and as he was interested with us in the
construction of the road, and as we were all working together for the
common end, we could of course do as we pleased with him.
INDIVIDUAL KNOWLEDGE OF EXPENSES.
Q. Did that control which you exercised over Mr. Crocker give you
such a knowledge of his doings as to enable you to tell when he ought
to have money, or did you take his word for it every time *? A. We
knew what he wanted and what he needed. We had reports of the
work that was being done, and we knew the work that was to be done.
We knew what it was costing, and we knew every dollar that was re-
quired to carry it on.
Q. Those reports made to you must have, been entered somewhere
upon your books, and ought to show the amounts paid to the different
contractors who did the work, ought they not ? A. I suppose so.
Q. You would not be liable to take his word for it whenever he needed
money, would you ? He would not come to you and say, " I want more
money to do more work," or " I want $5,000,000 to go on, as I have
spent all I had " ? A. Each one of us on the spot had his individual
knowledge as to the other's department, and we kept trace of it all the
time. We hardly slept, but did the best we could to get along, and I
may say now that I sometimes wonder that we ever did get through
at all.
2630 U. S. PACIFIC RAILWAY COMMISSION.
DISAPPEARANCE OF CONTRACTOR'S BOOKS.
Q. Who kept Charles Crocker's books? A. I think William E
Brown. Perhaps not at the beginning, but very soon afterwards, be-
fore the enterprise became of very great magnitude, William E. Brown
was in charge.
Q. Have you ever seen those books since this contract was finished
in 1867 ? A. 1 dp not know. I never have been over his books, but I
have seen books in his office lying open on his desk.
Q. Do you know whether they have been exhibited in any of the
various litigations in which these matters have been discussed! A.
Not to my knowledge.
Q. Do you know whether they are available to this Commission
now? A. I do not think that they are. I do not know where they
are, nor what became of them, but they have disappeared.
Q. They have disappeared ? A. Yes, sir.
Q. Do you know whether this has been the subject of litigation and
investigation, as have been the books of the Contract and Finance Com-
pany, which have been described as missing ? A. Yes, sir.
Q. And they have not been produced ? A. No, sir.
INTEREST OF COMMUNITY AS TO CAUSE OF CENTRAL PACIFIC'S
WEAKNESS.
Commissioner ANDERSON. I may as well say here that the subject, as
we understand it, assumes about this shape : The community is largely
interested in this matter, and it seems to be the general belief that the
present weak condition of the Central Pacific Railroad Company is due
to the fact that the contract with Crocker & Co., and the contract with
the Contract and Finance Company, and the contracts with the Western
Development Company, and the contracts with the Pacific Improvement
Company have drained the company of its resources ; that certain in-
dividuals have procured to be issued to themselves enormous quanti-
ties of stock and bonds of this company, and have paid dividends on
the stock, and have made the interest charge on the bonds exceedingly
heavy, and that the origin of its difficulties lies there entirely, and no-
where else. The Commission desires to afford a full opportunity to
have answers made in reference to that matter. To those subjects to
which you have been so fully devoting your time (and in the report you
handled them with great dexterity and ability), the community has had its
attention called so often that it is familiar with them 5 but the subject
of this issue of stock and bonds has always remained concealed, and all
proceedings brought to throw light upon it have been met with the as-
sertion that the books and the contracts have disappeared.
THE STOCK VALUELESS WHEN ISSUED.
The WITNESS. I thank you for your frankness. This opportunity is
what we want, and what we have desired for some time. We have
nothing in our transactions to conceal, and we are ready and willing
that the whole history shall be fully understood. The stock was sub-
stantially valueless. It had no value at the time it was issued, and it
had no value when the road was completed. Of course it afterwards
became valuable. Of the very few people who subscribed for stock at
the beginning, most all got out, and this included most of those who
had taken a little stock to help us along. Afterwards it went down,
and 1 myself bought, as an accommodation to a stockholder, 2,300
LELAND STANFORD. 263!
shares of it at 10 cents on the dollar, full paid stock. Finally, it was
not sold at all, as nobody would have it. In making these contracts
we did not count the stock even among ourselves as of any special
value, but we put it in in the hope that somebody or other, some capi-
talists, would be willing to take an interest with us, and there would be
the property as security.
MEANS EXHAUSTED UPON COMPLETION OF ROAD.
When the road was completed to Ogden, all of our money and all of
our means were exhausted. You will understand that our road was
mortgaged for 100 miles in advance of construction, and we had used
up all of this money crossing the mountains. We had graded the road
to Promontory, some 63 miles, I think, and there met the Union Pacific.
In the settlement, the Union Pacific took the entire aid from the Gov-
ernment for these G3 miles, which made a considerable inroad in the
amount received from the Government by the Central Pacific. Every-
thing was used up. The Contract and Finance Company itself was
somewhat in debt, and I think our books will show by this I mean the
Western Development Company books that when the Contract and
Finance Company went out of existence there was a great deal of prop-
erty which it was supposed by the general public to have, which really
had no existence. About that time there was a great deal of talk about
the Credit Mobilier matter of the Union Paific.
DISSOLUTION OF CONTRACT AND FINANCE COMPANY.
The people began to talk about the Contract and Finance Company;
and when we, after a while, got through, we concluded to let that com-
pany go. Its affairs were wound up, and under our laws here it was
dissolved. The indebtedness of the Contract and Finance Company
was assumed by Mr. Huntington, Mr. Crocker, Mr. Hopkins, and my-
self, according to my recollection, and its affairs were wound up.
DIVIDENDS.
Commissioner ANDERSON. I will say here that the assertion is made
that the Contract and Finance Company was in the condition which
you mentioned because, before presenting its petition to the court, it
had divided up enormous dividends of stock and bonds to the four gen-
tlemen you named.
The WITNESS. My impression is that the only dividends made were
of stock ; but Mr. Brown, when you come to him, will be able to tell
you specifically about that.
MONEY PAID TO CROCKER.
By the CHAIRMAN :
Q. Of what department did you have charge during the Crocker con
tract? A. I was president of the company, and had the general manage-
ment of its affairs on this side. I looked particularly after the financial
department until we were able to obtain aid from the Government. I
had to look after a great deal of the financial business of the company,
especially that which was transacted here.
Q. Was the sum of $22,000,000, or the different amounts named to
you as having been paid to him from 1864 to 1867, paid to Mr. Crocker
on his individual contract f A, As to the amount I cannot say, but
2632 U. S. PACIFIC KAILWAY COMMISSION.
of course Mr. Crocker received the money, whatever was paid for that
work from the end of the 31 miles until the Contract and Finance Com-
pany took hold of the construction. But as to the amounts I cannot
say anything. I only know this, that I was helping to raise money all
the time, and it was hard work to get it.
STOCK SUBSCRIPTIONS.
I will say further about this stock: The stock subscriptions by in-
dividuals were very small. At last we had some trouble about this
Contract and Finance Company, and got into the courts. We finally
bought up the stock, so that there was none of the stock owned by the
original shareholders in the market that we know of, and they have not
any interest in the railroad because of that stock. The present stock-
holders in the concern have no interest or concern at all in any business
or contracts prior to that date.
ACCOUNT BOOKS OF CHARLES CROCKER & CO.
By Commissioner ANDERSON :
Q. Before leaving the Crocker contracts can you refer us to any one
else besides William E. Brown and Charles Crocker who would "have
knowledge of the contents of the books of account of that firm, and
who can lay before us the figures showing what profits, if any, were
made out of that construction, so that we can reach an intelligent judg-
ment on that subject ? A. No ; I do not think that I can. I think that
Mr. Brown had a clerk or two with him ; but he kept the books, and he
would know. Mr. Crocker did not pay much more attention to the
books and to the accounts than the rest of us. He was supervising
construction, and spent most of the time at the front. He was a very
active man, and personally supervised the work of construction.
Q. Did he have any assistant ? A. Yes, sir ; his first assistant was
Mr. Strobridge.
Q. Is he living ? A. Yes, sir.
Q. Please give us his name in full. A. J. H. Strobridge.
Q. Please give us his address. Is he living in San Francisco ? A.
He lives across the bay, in Oakland.
Q. How can he be reached ? A. He may be reached at almost any
time upon a .day's notice.
Q. Did he make the subcontracts that Mr. Crocker made ? A. No,
sir.
Q. Was he employed by Mr. Crocker ? A. Yes, sir.
Q. Did he have the employment of any men ? A. Yes, sir ; under
Mr. Crocker he had the entire supervision of the work of construction.
Q. Did the Crocker contract include rails ? Did he furnish the rails f
A. 1 think that the contract included everything.
MATERIALS PURCHASED IN NAME OF CENTRAL PACIFIC.
Q. Where goods, materials, rails, &c., were purchased in the East to
be used in" these Crocker contracts, were they purchased in his name
or in the name of the Central Pacific ? A. I think they were purchased
in the name of the Central Pacific and charged by the Central Pacific
to Crocker & Co,
LELAND STANFORD. 2633
Q. The Central Pacific bought the rails aud charged them to the
Crocker contract? A. Yes, sir; I think that was the way.
PRICE OF BAILS AND ENGINES.
Q. Do you remember the price of rails at that time? A. They
varied, I think, from $70 to $80 a ton, and I believe at one time we paid
as high as $136 per ton.
Q. Does that mean iron or steel rails'? A. Iron; that was before the
days of steel. Everything was high. I think that we paid $65,000 or
$67,000 for two engines.
Commissioner LITTLER. Your engineer says that you paid $143.67
at one time per ton for rails delivered at Sacramento.
The WITNESS. Yes, sir; that was for a portion.
Q. Was it at that time very difficult to get rails ? A. Yes, sir. Does
that statement give the amount of rails that we bought at that time 1 ?
COST OF TRANSPORTATION VIA PANAMA.
Commissioner LITTLER. Eb, sir ; he says that shipments by way of
the Isthmus of Panama were made as late as 1868, and that the rails
alone cost $51.98 per ton ; and that with freight added the rails cost,
delivered at Sacramento, $143.67, not including the charges for transfer
from the ships at San Francisco to the schooners, or for transportation
up the Sacramento Eiver to the city of Sacramento.
The WITNESS. I remember that we had 10,000 tons of rails come by
way of the Isthmus, and I think that my impression is that they charged
us about $60 a ton for the freight. I know that we had quite a number
of engines come by way of the Isthmus, and it cost us something like
$3,000 an engine for freight by way of the Pacific Mail.
By Commissioner ANDERSON. I show you one of your estimates to
make up the amount coining due under this contract. Please explain
it. [Hands witness the document referred to.]
EXPLANATION OF ESTIMATES.
Q. Does the first column show the quality of work done for which
payment was to be made, the second column the price, and the third
column the figures ? A. I only know by what I see here ; but 1 presume
that it is correct. I have no reason to think otherwise.
Commissioner ANDERSON. I call your attention to the fact that the
items for work do not seem to include the rails.
The WITNESS. This seems not to include them.
Q. Does your memory serve you as to whether they were included in
the contract or not? A. I think that they were included in the contract,
but that would be a different charge. These are estimates made by the
engineers at the beginning of that contract. It was very carefully con-
sidered, and received as much attention as any other matter which came
before the company, because when Mr. Crocker made the contract he,
of course, hoped that he would make some money out of it ; and if we
had been able to push matters, he would have gone on in that way, and
would have made some money; but circumstances required us to make
all kinds of sacrifices for speed. At one time we had to pick out and dig
out snow to the depth of 75 feet to make an embankment. At times the
snow was very deep all along the mountains, and it was difficult to get
provisions aud materials to the front. At times the stage could not run,
owing to the depth of the mud. The horses would mire in the mud, and
2634 U. S. PACIFIC RAILWAY COMMISSION.
then we had to pack the goods to the front at great expense and with
a great deal of trouble. The snow fell during the winters that we were
on the mountain to an average depth of from 37 to 38 feet. Heavier falls
have taken place since, but we have been better prepared to meet them.
In the spring that snow would pack down to about from 14 to 16 feet,
and would be very hard. We worked throu 
