m 
 
 
CORNELL 
 
 UNIVERSITY 
 
 LIBRARY 
 
 BOUGHT WITH THE INCOME 
 OF THE SAGE ENDOWMENT 
 FUND GIVEN IN 1891 BY 
 
 HENRY WILLIAMS SAGE 
 
Cornell University Library 
 HE2791 .C393 1887 
 
 The Central Pacific Railroad Company in 
 
 olin 
 
 3 1924 030 125 557 
 
The original of tiiis book is in 
 tine Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924030125557 
 
The km\ki Pacific Railroad Company 
 
 IN EQUITABLE ACCOUNT WITH 
 
 The Ui^ited States, 
 
 GROWING OUT OF THE 
 
 ISSUE OF SUBSIDY BONDS IN AID OF CONSTRUCTION. 
 
 A REVIEW OF THE TESTIMONY AND EXHIBITS 
 
 i 
 
 FREBENTBD BEFORE THE 
 
 PACIFIC RAILWAY COMMISSION, 
 
 APPOINTED ACCORDING TO THE 
 
 ACT OF CONGRESS, APPROVED MARCH 3d, 1887. 
 
 By ROSCOE CONKLING and 
 WILLIAM D. SHIPMAN, 
 Of Counsel for the Central Pacific R. B. Co. 
 
 |lefD-Sork: 
 
 HENRY BESSEY, PRINTER, 
 No. 47 Cedar Street. 
 
 1887. 
 

 s 
 
CONTENTS. 
 
 Page 
 I. The public policy that led to the passage of the Act of 
 
 Congress, approved July 1, 1862, entitled "An Act to aid 
 
 in the construction of a railroad and telegraph line from 
 
 the Missouri River to the Pacific Ocean, and to secure to 
 
 the Government the use of the same for postal, military 
 
 and other purposes," 5 to 19 
 
 II. Contract between the United States and the Central Pacific 
 Railroad Company, formed by the passage of the Act of 
 Congress of 1862, the acceptance of its terms and the 
 manner of its performance, 19 to 26 
 
 III. Change of Contract by the Act of Congress of 1864, . 37 
 
 IV. The diflBculty of construction and the great coat of the 
 Central Pacific Road, 28 to 41 
 
 V. Observance by the Central Pacific of its obligations to 
 
 the Government, . . 41 to 54 
 
 VI. Dividends, . 64 to 66 
 
 VII. Cost of the War in Utah 66, 67 
 
 VIII. Contracts let to Charles Crocker & Co., and the Contract 
 and Finance Company, for the construction of the Central 
 Pacific Railroad from Sacramento to Promontory, . . 67 to 72 
 
 f IX. Contract and Finance Company, . . 72 to 80 
 
X. The purchase and building of roads consolidated with 
 
 the Central Pacific of California, . . 81 to 86 
 
 XI. Purchase of the stock of the California Pacific Rail- 
 
 road .... 86,87 
 
 XII. Diverting traffic from aided to non-aided lines, • 88 to 95 
 
 XIII. Influencing legislation, . . .. 95 to 104 
 
 XIV. Disastrous effects of the " Thurman Bill" on the indebt- 
 edness of the Central Pacific to the Government, . 104 to 120 
 
 XV. The indebtedness of the Central Pacific to the United 
 
 States, ... 130 to 134 
 
To THE Commissioners appointed by the President 
 OF the United Stater under the provisions of the 
 Act of Congress, 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." 
 Approved March 3, 1887. 
 
 -"J 
 
 The Central Pacific Railroad Company submit this statement, 
 and ask that it may accompany your report to the President : 
 
 The public policy that led to the passage or the Act 
 OP Congress, appeotbd July 1, 1862, entitled "An Act to 
 
 " AID IN THE construction OF A RAILROAD AND TELEGRAPH LINE 
 
 " PROM THE Missouri River to the Pacific Ocean, and to 
 " secure to the Government the use op the same fob 
 " postal, military and other purposes." 
 
 The project of a road to connect the .Mississippi with the 
 Pacific Ocean was first brought into public notice by Mr. Asa 
 Whitney, who, from 1844 to 1860, agitated the scheme in 
 addresses to State Legislatures and popular meetings. His 
 proposition was to construct a road by the sale of the public 
 lands along its line, and he asked from Congress a free grant of 
 alternate sections for a width of thirty miles on each side to be 
 given to himself and his heirs and assigns for that purpose. 
 
 His design was to commence at Prairie du Chien, on the 
 Mississippi, crossing the Rocky Mountains at South Pass, and 
 fixing the principal Pacific terminus on Vancouver Sound, with a 
 branch from some convenient point west of the mountains to San 
 Francisco. Among the objects he desired to accomplish was, to 
 make the route of Asiatic commerce to Europe through the 
 United States. 
 2 
 
To that end, in the spring of 1844 he embarked from China 
 for New- York with the determination to devote his life to the 
 work of establishing a means of cheap and easy communication 
 across our continent between the European population on one si e 
 of us, and all Asia, with its seven hundred millions of people, on 
 the other. 
 
 To him, undoubtedly, belongs the credit of having first formu- 
 lated a practicable scheme for the construction of a trans-conti- 
 nental railway ; though, in 1836, John Plumbe, a Welshman by 
 birth, a civil engineer by profession, called, at Dubuque, Iowa, 
 the first public meeting foi- the purpose of agitating the subject 
 of building a trans-continental railway. 
 
 In 1837 Dr. Hartley Carver published, in the Neic-Tork Courier 
 and Enquirer, an article advocating the construction of a Pacific- 
 Railroad. 
 
 But it has been recently claimed by Mr. E. V. Smalley, in his 
 "History of the Northern Pacific Railroad," that as early as 1834, 
 (possibly 1833,) Dr. Samuel Bancroft Barlow, of Granville, Mass., 
 advocated the construction of a railroad from New-York to the 
 mouth of the Columbia River, by direct appropriations from the 
 Treasury of the United States. 
 
 In the Senate of the United States, in the Session of 1842-43, 
 in the consideration of the " Oregon question," Senator Servier 
 held that not only lands should be granted to settlers, and forts- 
 built and garrisoned for their protection, but, if necessary, a rail- 
 road should be made from the Missouri to the Columbia, over 
 which immigrants might be conveyed in two or three days. 
 
 Senator Linn spoke upon the facility with which travel and 
 transportation might be effected across the continent by means of 
 ordinary roads at present and by railroads hereafter. 
 
 Senator McDuffie opposed these projects for the encouragement 
 of settlers, and ridicided the idea that steam could ever be em- 
 ployed to facilitate communication across the continent between 
 the Columbia countries and the States of the Union. 
 
 When Mr. Whitney began his active work in connection with 
 the project, our Oregon possessions were all we controlled on the 
 Pacific Coast, and the location of the western terminus was lim- 
 ited accordingly. Later during his efforts we were in possession 
 of all the coast from the Straits of Fuca to San Diego. 
 
In the fall of 1849 a Pacific Railroad Convention met at St. 
 Louis, and was presided over by Stephen A. Douglas. 
 
 It condemned Whitney's project, although, at the second ses- 
 sion of the 28th Congress, in the winter of 1844-45, Mr. Douglas 
 reported favorably on a memorial in favor of a Pacific Railroad 
 presented by Mr. Whitney. 
 
 It will be remembered that a trans- continental railroad was for 
 many years earnestly advocated by Mr. Benton, of Missouri,, 
 both in his place in the Senate and in popular addresses. 
 
 The discovery, in 1847, of gold in California, and the conse- 
 quent settlement of that country by a large emigration from th& 
 Atlantic and Western States, from Europe and Australia, which 
 commenced in 1849, brought the matter more prominently before 
 the Government and hastened its action. 
 
 In 1851 Senator Gwin gave notice in the Senate of the United' 
 States of a bill for the construction of a Pacific Railroad, and iup 
 1852 Senator Douglas reported a bill on the same subject. 
 
 On May 1st, 1852, the Legislature of California passed "An 
 Act (/ranting the right of way to the United States for railroad' 
 purposes." The preamble to the Act is as follows : 
 
 Whereas, The interests of this State, as well as those of the whole nation,, 
 require the immediate action of the Government of the United States for the 
 construction of a national thoroughfare connecting the navigable waters of 
 the Atlantic and Pacific Ocean, for the purposes of national safety in the,- 
 event of war, and to promote the highest interests of the Republic. 
 
 In March, 1853, Congress made an appropriation of one hun- 
 dred and fifty thousand dollars, to defray the expense of the 
 necessary surveys ; and in that year six parties were organized 
 and sent out by the War Department. 
 
 In 1854, Congress made two more appropriations of forty 
 thousand dollars and one hundred and fifty thousand dollars 
 respectively, for deficiencies, and for continuing the work ; and 
 then three additional parties were organized. 
 
 The determination of the relative practicability of the several 
 routes of railroad was entrusted by the Honorable Jefferson Davis, 
 then Secretary of War, to Captain Humphreys, of the United 
 States Army, who made an elaborate report, which is on file in 
 the War Department. 
 
(See Report of Jefferson Davis, Secretary of War, to Congress, 
 February 2Vth, 1855.) 
 
 It will be seen in the review that is here presented, that the 
 passage of the Act of 1862 was not forced from an unwilling 
 Congress by the solicitation of the Union Pacific Railroad Com- 
 pany or the Central Pacific Railroad Company, or by any one on 
 their behalf. It was not a measure conceived in any sudden 
 •emergency ; although, no doubt, its passage was hastened by the 
 oonimencement of 'the civil war, the danger to our Pacific posses- 
 sions, and the necessities of the nation; but the whole subject had 
 been well considered for several years before that bill received 
 the sanction of Congress, and the approval of President Lincoln. 
 
 The attention of Congress had been called to the necessity of 
 aiding the construction of a trans-continental road, by messages 
 from three Presidents, Pierce, Buchanan and Lincoln. 
 
 Both the Republican and Democratic Conventions adopted 
 resolutions in their platforms of 1856, pledging the parties to aid 
 in appropriate legislation. The Democratic party, at their 
 National Convention, held at Charleston, South Carolina, April 
 23, 1860, adopted the following preamble and resolution : 
 
 Whereas, One of the greatest necessities of the age, in a political, com- 
 mercial, postal and military point of view, is the speedy communication 
 tetween the Pacific and Atlantic Oceans ; therefore. 
 
 Be it Resolved, That this party do hereby pledge themselves to use every 
 •means in their power to^procure the passage of some bill, to the extent of 
 •the Constitutional authority of Congress, for the construction of a Pacific 
 Railroad from the Missouri River to the Pacific Ocean, at the earliest prac- 
 iticable period. 
 
 On June 11th, 1860, the Convention at Chicago that nominated 
 Abraham Lincoln for the Presidency 
 
 Besohed, That a railroad to the Pacific Ocean is imperatively demanded 
 by the interests of the whole country. That the Federal Government ought 
 to render immediate and efficient aid in its construction, and that preliminary 
 ithereto a daily overland mail should be promptly established 
 
 Prior to 1860, the Legislatures of eighteen States had passed 
 a-esolutions in favor of a railroad to the Pacific. 
 
Apart from the question of preserving to the Union the 
 Pacific Coast States and Territories, and extending to the people 
 the protecting hand of the Government which had become neces- 
 sary from the events occurring in the early history of the war, 
 it was a matter of the highest statesmanship to furnish this 
 means of communication between the Missouri River and the 
 Pacific Ocean, and to open to civilization and settlement the 
 country between such points. 
 
 Mr. Whitney's original plan was, that the United States should! 
 furnish aid to build from the Mississippi River to the Pacific ; but 
 in the seven or eight years that had elapsed from the time that 
 he had first called attention to the enterprise to the passage of 
 the Act of 1862, private capital had been invested to furnish rail- 
 roads brtween the Mississippi and the Missouri. When the Union 
 Pacific Company commenced construction in the latter part of 
 1864, a railroad was in operation from Hannibal, in Missouri, to 
 Saint Joseph, on the Missouri River, and by means of such road 
 and by vessel from Saint Joseph to Omaha the Union Pacific re- 
 ceived the material for the construction of its first one hundred 
 miles. In IseVthe lines of the Chicago and North Western Com- 
 pany were completed to Council Bluffs. But beyond the Missouri, 
 and through that territory which forms the State of Nebraska, there 
 was a large amount of unoccupied land capable of the highest 
 cultivation. It will not be forgotten that one-half of the ter- 
 ritory of the United States is west of the Missouri, and that be- 
 tween that river and the Sacramento, a distance of 1,800 miles, 
 there is not a single navigable stream. All this territory east of 
 the Sierra Nevada Mountains was, before the laws aiding the 
 Pacific Railroads, totally unimproved and uninhabited save by 
 United States troops and Indians. 
 
 When the subject of the construction of a trans-continental 
 railway was first proposed, the Mississippi River practically con- 
 stituted our western frontier, and Texas was engaged in her war 
 of independence. The matter had been broached in Congress be- 
 fore that State had come into the Union. When Mr. Douglas 
 introduced his first bill for the construction of a railway, the war 
 with Mexico had not begun. When the Mexican war was closed 
 there was not a single mile of railroad west of the Mississippi ; 
 and it was not until 1859 that the railroad system of the country 
 
10 
 
 was connected with the Missouri River by the completion of the 
 Hannibal and St. Joseph Railroad. 
 
 The most interesting history of the events preceding the con- 
 struction of the Pacific Railroads is to be found in the " Report 
 on Trans-continental Railways, 1883," made by Col. O. M. Poe, 
 United States Engineer and Brevet Brigadier General, to General 
 W. T. Sherman, and we are indebted to Col. Poe for many of the 
 facts above stated. 
 
 Those who then controlled the legislation of the nation saw that 
 it would add to the strength of the United States as an exporter 
 of food to turn the lands of Nebraska into cornfields, and 
 to bring into use such portions of the country between the Mis- 
 souri River and the Sierra Nevada Mountains as were suitable for 
 agricultural or grazing purposes : that they were but helping 
 the destinies of the United States, that it might feed the manu- 
 facturing population of the Old World. They recognized 
 the truism that the nation that has food to sell is the most 
 independent and powerful. Having control of the bread and 
 meat required by the populations of England, France and 
 Germany, it could regulate the value of the manufactured goods 
 it was compelled to purchase from those countries, and they recog- 
 nized the authority of an eminent political economist, that money 
 expended by a nation in the construction of works of public utility 
 enrich the country. 
 
 It has been well and no doubt truthfully said, that if Rome 
 had been able to produce the food necessary to feed her legions, 
 the Cfflsars would still be governing the world. 
 
 The late Lord Beaconsfield, when, as Mr. Disraeli, he became 
 the leading statesman of England, saw great danger to the 
 people of Great Britain from depending upon the United 
 States for so large a portion of their food supply. He saw, 
 also, the jeopardy to its Asiatic possessions from the con- 
 tinual failure of the rice crops in India, and he resolved to en- 
 courage it to become a producer and. exporter of wheat. It was 
 one of his quaint sayings, that England was an Asiatic instead of 
 a European power. And so he brought his eminent abilities to 
 determine whether England could not obtain its bread from Hin- 
 dostan instead of America ; whether its millions of subjects in 
 Asia could not be guarded from the risks of famine in their de- 
 
11 
 
 pendence on one article of food, for whose matui'ity a scant rain- 
 fall was insufficient, by adding another more easily and certainly 
 produced, and containing elements that would improve the phy- 
 sique of the race, and so furnish to India an article that could be 
 readily used in exchange in the place of her silver. 
 
 To this end he consulted with and obtained the experience of 
 the Duke of Wellington, whose long residence in India peculiarly 
 fitted him to advise, and from the information so obtained, the 
 Government of England, of which the Earl of Derby was then 
 the Premier, and Mr. Disraeli, Chancellor of the Exchequer, in 
 conjunction with the aid and assistance derived from the house 
 of Rothschild, conceived and carried into effect the construction 
 of railroads to the higher altitudes in India, where wheat could 
 be cultivated. And to accomplish the end in view the English 
 Government guaranteed the interest at the rate of five per 
 centum on 6200,000,000, the contemplated cost of the railways 
 then designed. 
 
 However detrimental the result of Mr. Disraeli's plan has 
 proved to the farmers of this country, it is gratifying to Eng- 
 lishmen to remember that he lived some years after it had come 
 to its complete success ; for we see by returns made to Parlia- 
 ment, that in 1877 and 1878, the exports of wheat from India to 
 England were so large, as to materially reduce the demand on 
 this country. 
 
 Our legislators were also anxious to carry out what in reality 
 was the day dream of Mr. Benton, who said : 
 
 That he hoped he might live to see a train of cars thundering down the 
 Eastern slope of the Rocky Mountains, bearing in transit to Europe the teas, 
 the silks and spices of the Orient. 
 
 It may be added, that but for the construction of the Suez Canal, 
 the vision of the Missouri Senator would have been realized. 
 
 There were other causes that induced Congress to pass the Act 
 of 1862. 
 
 The first gun was fired on Sumter Friday, April 12, 1861, and 
 the fort was evacuated Sunday, April 14, 1861. 
 
 The battle of Bull Run was fought July 21, 1861. 
 
 On November 8, 1861, the Commander of the United States 
 Sloop San Jacinto arrested and took off the English Steamer 
 
12 
 
 Trent, on the high seas, Messrs. Mason and Slidell, who were then 
 the accredited ministers of the Confederate Government to the 
 respectiT!* courts of England and France. 
 
 Immediately after the last date, the Asiatic Fleet of Great 
 Britain found the Harbor of Victoria, Vancouver's Island, a 
 favorite place of rendezvous, and the fleets of Russia then in the 
 Pacific assembled at San Francisco, and the General commanding 
 the United States troops stationed at Benecia, the Presidio, Alca- 
 traz and Angel Island, in California, was superseded, his loyal 
 intent to the Government being questioned. 
 
 It will be seen there were two forces that threatened the 
 supremacy of the United States Government on the Pacific Coast ; 
 the danger of foreign invasion, and of civil commotion. 
 
 As was said by Mr. Campbell in the House of Representatives, 
 on April 8, 1862 : 
 
 In a recent imminent peril of a collision with a naval and commercial rival, 
 one that bears us no love, we ran the risk of losing, at least for a time, our 
 golden possessions on the Pacific for want of proper land transportation. 
 
 And Mr. Stevens, of Pennsylvania, said : 
 
 In case of a war with a foreign maritime power, the travel by the Gulf 
 and Isthmus of Panama would be impracticable. Any such European power 
 could throw troops and supplies into California much quicker than we could 
 by the present overland route. The enormous cost of supplying our army in 
 Utah may teach us that the whole wealth of the nation would not enable us 
 to supply a large army on the Pacific Coast. Our Western States must fall 
 a prey to the enemy without a speedy way of transporting our troops. 
 
 It is but history to say, that if at this time we had become in- 
 volved in a war with England, we could only have retained our 
 possessions on the Pacific by the friendship and aid of Russia. 
 
 It was of the utmost importance to the Treasury and the people 
 of the United States to retain the allegiance, trade and good 
 will of the people of the Pacific, and especially of California. 
 
 In 1854 the gold shipped to New- York was 146,289,000. This 
 shipment fell off year by year until 1859, when it was $39 831 000- 
 in 1860, $35,661,000 ; in 1861, $34,486,000 ; in 1862, $25,080 OOo' 
 
 Although the total shipment of gold from California in 1862 
 was $49,376,000, all over $25,080,000 was diverted from New- 
 York by shipments from San Francisco direct to England in 
 
13 
 
 consequence of the increasing risks of transportation caused by 
 Confederate cruisers, and the raising of insurance rates to five per 
 cent, to cover war risks. 
 
 In December, 1862, the "Ariel," from New-York to Aspinwall, 
 was captured by the Alabama and bonded. On her return, she 
 did not bring the specie awaiting her at Aspinwall, which was of 
 the value of about $550,000, but it was forwarded to New-York 
 by the United States gunboat " Connecticut." 
 
 All these causes led to the passage of the Act of 1862. 
 
 As evidencing the tone and temper of the nation, and of 
 Congress, towards this work, and the necessity for the legislation 
 then proposed, we quote briefly from the debates in the Senate. 
 
 We should say, in anticipation, that in 1860, General Samuel R. 
 Curtis, then Chairman of the Pacific Railroad Committee in the 
 House of Representatives, reported that the aggregate amount 
 which was paid by the Government for the transportation of 
 mails, military and naval stores from the Mississippi River to the 
 Pacific Ocean reached more than six million dollars per annum. 
 
 In 1862 Mr. Campbell, of Pennsylvania, then Chairman of the 
 House Committee on the Pacific Railroads, after having obtained 
 from the War, Navy, Indian and Postal Departments the amounts 
 which those Departments were paying for transportation across 
 the continent, reported the sum aggregated more than $7,300,000 
 per annum. 
 
 It was then anticipated by Congress that the amount of bonds 
 to be issued for the main line and certain branches at the 
 Missouri end would be about sixty-five million dollai-s, and that 
 the interest would be about three million eight hundred thou- 
 sand ; and, as one of the Senators said, subtract three million 
 eight hundred thousand from seven million five hundred thousand 
 and you have a remainder of three million seven hundred thou- 
 sand, which would go to make up a sinking fund for the repay- 
 ment by this Company of the principal of the bonds, besides 
 paying the actual interest on the bonds. 
 
 Why these anticipations were not fulfilled, we will hereafter 
 notice. ' 
 
 But to return to the debate in the Senate. On the lYth of 
 June, 1862, the bill being again under discussion, Mr. Wilson, of 
 Massachusetts, made the following remarks : 
 
14 
 
 I have little eonfidenee in the estimates made by Senators or members of 
 the House of Representatives as to the great profits which are to be made 
 and the immense business to be done by this road. I give no grudging vote 
 in giving away either money or land. I would sink one hundred milhona of 
 dollars to build the road, and do it most cheerfully, and think I had done a 
 great thing for my country if I could bring it about. What are seventy-five 
 or a hundred millions in opening a railroad across the central regions of this 
 continent, which will connect the people of the Pacific and the Atlantic and 
 bind them together f 
 
 And on the same day he used the following language : 
 
 As to the security the United States takes on this road, I would not give the 
 paper it is written on for the whole of it. I do not suppose it is ever to come back 
 in any form except in doing on the road the business we need, carrying our 
 mails and munitions of war. In my judgment we ought not to vote for the 
 hill with the expectation or with the underManding that the m,oney which we 
 advance for this road is ever to come back into the Treasury of the United 
 States. I vote for the bill with the expectation that all we get out of tlae 
 road (and I think that is a great deal) will be the mail carrying and the car- 
 rying of munitions of war and such things as the Government needs, and I 
 vote for it cheerfully with that view. I do not expect any of our money 
 back. I believe no man can examine the subject and believe that it will 
 <;ome back in any other way than is provided for in this bill ; and that pro- 
 vision is for the carrying of the mails and doing certain other work for the 
 Government. 
 
 Mr. Wilson but spoke the sentiments of the leading Senators and 
 Representatives who voted for that bill. The wishes of the people, 
 the perils of the Government, the carrying out of its purposes in 
 connecting the eastern and western sides of the continent, which it 
 was supposed at that time private capital was utterly unable and 
 unequal to accomplish, and the consequent facilities to the Gov- 
 ernment for the movement of the mails and munitions of war 
 and the pacification and control of the Indians, and the defence of 
 our Pacific possessions, was a sufficient inducement, if all the aid 
 granted to the Companies who were to co-operate with the Gov- 
 ernment in the building of the road, was never returned into the 
 Treasury in any other form. 
 
 On the same subject, Mr. Clark, of New Hampshire, said: 
 
 The Senator from Massachusetts may be entirely right, that the Govern- 
 ment may never receive back this money again ; audit may be that we make 
 ithe loan for the purpose of receiving the services. But it will be well to 
 
15 
 
 "take a mortgage, to secure the bnilding of the road through, and then to 
 ■secure the performance of those services •which we expect them to perform 
 in the transmission of mails and munitions of war after the road is built. I 
 think we had better adopt the amendment of the Cominittee. It will make 
 dt safer for the Government ; safer in this regard, that we shall have the 
 TOad built, and have the service performed. 
 
 Further on in the same debate, Mr. Clark used the following 
 language : 
 
 Whether I am right or not, I do not build the road because I think it is to 
 be a paying road. I build it as a political necessity, to bind the country 
 together and hold it together ; and I do not care whether it is to pay or not. 
 Here is the money of the Government to build it with. I want to hold a 
 portion of the money until we get through, and then let them have it all. 
 
 Mr. Ten Eyck, of New-Jersey, used the following language : 
 
 The great object of the Pacific Railroad Bill is to have a national means 
 of communication across the Continent. That is the idea which the public 
 have entertained for years past, and the only idea ; a great national measure 
 to cement the Union, to bind with a belt of iron the Atlantic and Pacific, 
 
 ***** This is the inducement which the old States have in 
 •doing what they believe will be for the benefit of the common country, to 
 the prejudice of the Treasury, so to speak, yet, the general returns may be 
 beneficial in the long run. 
 
 Mr. Collamer, of Vermont, said : 
 
 This bill carries the idea, and in this section provides for the repayment 
 of the loan, as gentlemen call it. In a subsequent section it is provided 
 that the payment shall be made in the carrying of the mail, supplies and 
 military stores for the Government, at fair prices, and also five per cent, of 
 the net proceeds or sums to be sut apart for the Government. That is all 
 the provision there is in the bill for repayment. 
 
 Mr. Latham, of California, in the course of the same debate, 
 said : 
 
 The loan of the public credit at six per cent, for thirty years for sixty-five 
 millions, with absolute security by lien, with stipulations by sinking fund 
 from profits for the liquidation of the principal, official reports and other 
 authoritative daita, show that the average annual cost, even in times of peace, 
 in transportation of troops, with munitions of war, subsistence and Quarter- 
 master supplies, may be set down at seven million three hundred thousand 
 dollars. The interest upon the credit loan of sixty-five millions will be 
 
annually three million nine hundred thousand dollars, leaving a net excess 
 of three million four hundred thousand dollars over the present cost, appeal- 
 ing with great force to the economy of the measure, and showing, beyond cavil 
 or controversy, that the Government will not have a dime to pay on account 
 of its credit, nor risk a dollar by authorizing the construction of this work. 
 
 Mr. McDouga], of California, said : 
 
 As I have had occasion before to remark, the Government is now paying- 
 over seven millions per annum for the services which this road is bound to 
 perform. That is about one hundred per cent, more than the maximum 
 interest upon the entire amount of bonds that will be issued by the United 
 States when the road is completed. The Government is to-day on a peace 
 establishment, without any war necessity, paying for the same services one 
 hundred per cent, more than the entire interest on the amount of bonds 
 called for by the bill. Besides that, it is provided that five per cent, of the 
 net proceeds shall be paid over to the Federal Government every year. 
 Now let me say, if this road is to be built, it is to be built not merely with 
 the money advanced by the Government, but by money out of the pockets 
 of private individuals. * * * * It is proposed that the Govern- 
 ment shall advance sixty millions, or rather their bonds at thirty years, as 
 the road is completed, in the course of a series of years ; that the interest at 
 no time can be equal to the service to be rendered by the road as it pro- 
 gresses ; and that the Government really requires no service except a com- 
 pliance on the part of the Company with the contract made. It was not 
 intended that there should be a judgment of foreclosure and a sale of this 
 road on a failure to pay. We wish it to be distinctly understood that the 
 bill is not framed with the intention to have a foreclosure. * * ♦ » 
 In case they failed to perform their contract, that is another thing. That is 
 a stipulation ; that is a forfeiture, in terms of law ; a very different thing 
 from a foreclosure for the non-payment of bonds. The calculation can be 
 simply made, that at the present amount of transportation over the road," 
 supposing the Government did no more business, that that alone would pay 
 the interest and the principal of the bonds in less than twenty years, making 
 it a direct piece of economy if the Government had to pay for them all. 
 However, I am not disposed to discuss this matter. I say it was not under- 
 stood that the Government wa*s to come in as a creditor and seize the road on 
 the non-payment of interest. It is the business of the Government to pay 
 the interest because we furnish the transportation. 
 
 Mr. Sargent, then a member of the House, in the course of 
 the debate there on this question, used the following language r 
 
 When the road is fully completed and we are experiencing all the security 
 and commercial advantages which it will afford, the annual interest will be 
 less than four millions, and that sum will be bat gradually reached year 
 
\1 
 
 ■after'year. The War Department has paid out, on an average, five millions 
 per y^r^for the last five years, for transportation to the Pacific Coast, and 
 the mails cost one million dollars more at their present reduced rates. The 
 fiaving to the Government would be two millions a year on these items alone. 
 
 Hereafter we will point out that the failure to realize the an- 
 ticipations of the Senators and Representatives who voted for 
 this bill cannot be ascribed to these corporations. We say, with 
 all due respect, that if the Government of the United States had 
 performed its part of the contract, it would have "been fully reim- 
 bursed for the amount of interest it has paid," and have had a 
 fund now in hand for the retirement of bonds loaned. 
 
 As illustrating the situation presented on the part of the Central 
 Pacific, and although we shall have occasion again to comment upon 
 the case of The United States against The Union Pacific Railroad 
 <IIompany, its inspiration, purposes, and the effect of its decision, 
 we call attention to the language of Mr. Justice Davis, who then 
 fipoke for the Supreme Court of the United States, reported in 
 1 Otto, 91 U. S., at page 79, (October, ISYS,) and following. Any 
 history of the Pacific Railroad would be incomplete without citing 
 the language of this great jurist : 
 
 Many of the provisions in the original Act of 1863 are outside of the usual 
 ■course of legislative action concerning grants to railroads, and cannot be 
 properly construed without reference to the circumstances which existed 
 when it was passed. The war of the Rebellion was in progress, and, owing 
 to complications with England, the country had become alarmed for the 
 safety of our Pacific possessions. The. loss of them was feared, in case those 
 ■complications should result in an open rupture ; but, even if this fear were 
 groundless, it was quite apparent that we were unable to furnish that degree 
 of protection to the people occupying them which every Government owes 
 to its citizens. It is true the threatened danger was happily averted, but 
 wisdom pointed out the necessity of making suitable provision for the future. 
 This could be done in no better way than by the construction of a railroad 
 ■across the continent. Such a road would bind together the widely separated 
 parts of our common country, and furnish a cheap and expeditious mode 
 for the transportation of troops and supplies. If it did nothing more than 
 afford the required protection to the Pacific States, it was felt that the 
 Government, in the performance of an imperative duty, could not justly 
 withhold the aid necessary to build it ; and so strong and pervading was this 
 opinion, that it is by no means certain that the people would not have 
 justified Congress if it had departed from the then settled policy of the 
 country regarding works of internal improvement, and charged the Govern- 
 ment itself with the direct execution of the enterprise. This enterprise was 
 
viewed as a national undertaking for national purposes ; and the publ 
 mind was directed to the end in view, rather than to the particular means 
 of securing it. Although this road was a military necessity, there were 
 other reasons active at the time in producing an opinion for its completion 
 besides the protection of an exposed frontier. There was a vast unpeoplea 
 territory lying between the Missouri and Sacramento Rivers, which was- 
 practically worthless without the facilities afforded by a railroad for the 
 transportation of persons and property. With its construction, the agricul- 
 tural and mineral resources of this territory could be developed, settlements 
 made where settlements were possible, and thereby the wealth and power of 
 the United States largely increased ; and there was also the pressing want, 
 in time of peace even, of an improved and cheaper method for the trans- 
 portation of the mails and of supplies for the army and the Indians. It was 
 in the presence of these facts that Congress undertook to deal with the 
 subject of this railroad. The difficulties in the way of building it were great, 
 and by many intelligent persons considered insurmountable. * * 
 Of necessity there were risks to be taken, in aiding with money or bonds an 
 enterprise unparalleled in the history of any free people, the completion of 
 which, if practicable at all, would require, as was supposed, twelve years ; 
 but these risks were common to both parties. Congress was obliged to 
 assume its share, and advance the bonds, or abandon the enterprise, for, 
 clearly, the grant of lands, however valuable after the road was finished, 
 could not be available as a resource for building it. 
 
 And as a matter of convenience for the argument, we cite 
 at this time the language of Mr. Justice Miller, in delivering 
 the opinion of the Supreme Court of the United States, in the 
 case of the United States vs. The Union Pacific Railroad Com- 
 pany et al., at the October term, 1878. (98 U. S. p. 619.) 
 
 There are many matters alleged in the bill in this case, and many points 
 ably presented in argument which have received our careful attention, but 
 of which we can take no special notice in this opinion. We have devoted 
 so much space to the more important matters that we can only say that under 
 the view which we take of the scope of the enabling statute, they furnish 
 no ground for relief in this suit. The liberal manner in which the Govern- 
 ment has aided this Company in money and land is much urged upon us as 
 a reason why the rights of the United States should be liberally construed. 
 This matter is fully considered in the opinion of the Court, already cited in 
 the case of the United States vs. The Union Pacific Railroad Company, (91 
 U. 8. 72,) in which it is shown that it was a wise liberality for which the 
 Government has received all the advantages for which it bargained and 
 more than it expected. In the feeble infancy of this child of its creation, 
 when its life and usefulness were very uncertain, the Government, fully 
 alive to its importance, did all that it could to strengthen, to support and to 
 sustain it. Since it has grown to a vigorous manhood it may not have dis- 
 
19 
 
 played the gratitude wliicli so much care called for. If this be so, it is hut 
 another instance of the absence of human affections which is said to charac- 
 terize all corporations. It must, however, he admitted that it has fulfilled 
 the purpose of its creation and realized the hopes which were then cherished, 
 and that the Government has found it a useful agent, enabling it to save 
 vast sums of money in the transportation of troops, mails and supplies, and 
 in the use of the telegraph. A Court of Justice is called on to inquire, not 
 into the balance of benefits and favors on each side of this controversy, hut 
 into the rights of the parties as established by law, as found in their 
 contracts, as recognized by the settled principles of equity, and to decide- 
 accordingly. 
 
 II. 
 
 Contract between the United States and the Centeai, 
 Pacific Railroad Company, formed by the passage of 
 the Act of Congress of 1862, the acceptance of its 
 Teems, and the manner of its performance. 
 
 By the passage of the Act of 1862, and the acceptance of its 
 terras by the Central Pacific Railroad Company, a contract was 
 created between it and the Government, by which the Company 
 undertook to construct a railroad and telegraph line, from the 
 Pacific Coast, at or near San Francisco, or the navigable waters of 
 the Sacramento River to the eastern boundary of California, 
 provided that the said Company should reach the boundary be- 
 fore it met the line of the Union Pacific; the Union Pacific 
 being authorized, with the consent of the State of California, to 
 construct through California, until it met the track of the Central 
 Pacific, and if the Central Pacific should first arrive at the 
 boundary of said State, then it might continue the construction 
 of its railroad and telegraph line eastward, to such point as it 
 might connect with the Union Pacific. 
 
 In aid of such construction the United States agreed to donate 
 every alternate section of public land designated by odd numbers, 
 to the amount of five alternate sections per mile, on each side of 
 said road on the line thereof, within ten miles of each side of the 
 road not sold, reserved or otherwise disposed of ; the title of said 
 land to be vested in the Company when it should have completed 
 forty consecutive miles of railroad and telegraph ; and that on 
 completion of said section, the Secretary of the Treasury should 
 
20 
 
 issue to the Company bonds of the United States, payable thirty 
 years after date, bearing six per cent, per annum interest, payable 
 semi-annually, to the amount of sixteen of said bonds per mile, 
 but from the Western base of the Sierra Nevada Mountains, [such 
 point to be fixed by the President of the United States,] the 
 bonds to be issued should be at the rate of $48,000 per mile for 
 one hundred and fifty miles eastwardly ; and between the 
 mountainous sections at the rate of $32,000 per mile ; the 
 Central Pacific to complete fifty miles of said railroad and tele- 
 graph line within two years of filing their consent to the provi- 
 sions of this Act, and fifty miles each year thereafter; the entire 
 line between the Missouri River and the Sacramento to be com- 
 pleted so as to form a continuous line of railroad, and ready for 
 use by the first day of July, 1876. 
 
 The Act provides that the issue of said bonds and delivery to 
 the Company shall ipso facto constitute a first mortgage on the 
 whole line of the railroad and telegraph, together with the rolling 
 stock, fixtures, and property of every kind and description, and 
 in consideration of which, said bonds may be issued. 
 
 That the grants of the said lands and bonds are made upon 
 condition that said Company shall pay said bonds at maturity, 
 and shall keep its said railroad and telegraph line in repair and 
 use, and shall at all times transmit dispatches over said telegraph 
 line and transport mails, troops and munitions of war, supplies 
 and public stores on said i-ailroad for the Government whenever 
 required to do so by any department thereof ; and that the Govern- 
 ment shall at all times have the preference in the use of the same 
 for all the purposes aforesaid at fair and reasonable rates of com- 
 pensation, not to exceed the amount paid by private parties for 
 the same kind of service ; and all compensation for services 
 rendered for the Government shall be applied to the payment of 
 said bonds and interest until the whole amount is fully paid ; and 
 after said railroad is completed, until said bonds and interest are 
 paid, at least five per centum of the net earnings of said road 
 shall be annually applied in the payment thereof. 
 
 These are the express terras of the contract on the face 
 of the agreement. But there was an implied, if not an ex- 
 press understanding between the contracting parties, as voiced 
 in the various debates in both branches of Congress, that in ad- 
 
21 
 
 dition to the five per cent, of the net earnings to be paid annually 
 after the completion of the road, the Government would look 
 only to the performance of that portion of the contract by which 
 the Railroad Company undertook to do its telegraph business and 
 transport its mails, troops and munitions of war, and public 
 stores, for the repayment of the principal and interest of the 
 bonds. 
 
 From those debates, and especially from such portions which 
 we have heretofore referred to, it is evident that not a single vote 
 was cast in favor of the passage of this Act with any expectation 
 that the Government would receive from the Railroad Com- 
 panies iu re-imbursement one dollar in addition to the five per 
 cent., and the services rendered in such transportation. 
 
 It will be remembered that Senator Wilson, of Massachusetts, 
 said : 
 
 As to the security the United States takes in this road, I would 
 not give the paper it is written on for the whole of it. I do not sup- 
 pose it is ever to come back in any form except in doing on the road the 
 business we need, carrying our mails and munitions of war. We ought not 
 to vote for the bill with the expectation or with the understanding that the 
 money which we advance is ever to come back into the Treasury of the 
 United States. I vote for the bill with the expectation that all we get out 
 of the road (and I think that is a good deal) will be the mail carrying and 
 the carrying of munitions of war, and such things as the Government needs. 
 I believe no man can examine the subject and believe it will come back in 
 any other way than is provided for in this bill, and that provision is for the 
 carrying of the mails and doing certain other work for the Government. 
 
 Mr. Howard, of Michigan, the Chairman of the Senate Com- 
 mittee on Pacific Railroads, who reported the bill of 1862, said : 
 
 When the road shall have been completed, assuming the bonds issued to 
 be .'^62,880,000, the maximum estimate and the entire interest will be but 
 .'j;3,773,800 per annum. The present able Chairman of the House Committee 
 took occasion to inquire directly of the Government the exact cost to the 
 Government of the transportation provided for by this bill, and found it to 
 be $7,357,000, or about one hundred per cent, more than the full charge of 
 interest against the Government when the road shall have been completed. 
 I now call the attention of Senators to this consideration, or rather to this 
 pregnant fact, not to be ignored or avoided, that the difference between the 
 interest (|3, 773,800) and the present cost, ($7,357,000,) with the five per 
 cent, reserved to the Government by the bill, would necessarily pay the 
 Gomrnment bonds and interest years before the Government bonds would 
 mature. 
 3 
 
22 
 
 Mr. CoUamer said : 
 
 The bill carries the idea, and this section provides for the repaj-ment of 
 the loan, as gentlemen call it. In a subsequent section, it is provided that 
 the payment shall be made in the carrying of the mails, supplies and military 
 stores for the Government at fair prices, and also five per cent, of the net pro- 
 ceeds or sums to he set apart for the Oovernment. That is all the raovi- 
 
 BION THERE IS IN THE BILL FOR REPAYMENT. 
 
 Mr. Wade said : 
 
 Sir, your money will not be lost. In a pecuniary point of view, it will he a 
 gain to this Government, to make these facilities for settling this wilderness. 
 It will strengthen us in a military point of view. It will strengthen the 
 Union, which is more than all. It will do more for the country than we 
 have done for any number of years past. 
 
 In tlie House of Representatives, Mr. Campbell said : 
 
 I have shown that the army and navy transportation and postal service to 
 the Pacific Coast cost the Government annually $7,357,781. Take then the 
 annual interest from the annual expenditure, and we have left a sinking 
 fund of $3,465,701, a sum more than sufiBcient to extinguish the bonds before 
 they become due, or what is the same thing in efEect, saved to the Govern- 
 ment by cheapening expenditure in that direction. 
 
 Mr. Phelps, of California, said : 
 
 The gentleman from Pennsylvania has shown us by authentic figures that 
 the cost of transporting military and naval stores and the mails to the Pacific 
 Coast amounts to seven millions per annum, and that of this sum an amount 
 more than large enough to pay the interest on the bonds to be issued under 
 this bill would be saved by the construction of this road. 
 
 Mr. Kelly said : 
 
 Can there be any question that our country can bear such an augumenta- 
 tion of its annual expenditure, or will it harm, if posterity, being blessed by 
 this work, should, perchance, have to pay the principal of the credit 
 invested. 
 
 Mr. Sargent said : 
 
 The bonds will be issued slowly, few at a timfe, as the work progresses. It 
 will be probably two years before any bonds will be issued, for surveys have 
 to be made. » * * ip)jg -whole amount of interest to be paid up to 
 1806 will be but $168,000, and up to 1867, but $504,000 ; and when the road 
 is fully completed, and we are experiencing all the security and commercial 
 
23 
 
 .Advantages which it will afford, the annual interest will he less than 
 $4,000,000. The War Department has paid out, on an average, $5,000,000 
 per year for the past five years, for transportation to the Pacific Coast, and 
 the mails cost $1,000,000 more, at their present reduced rates. The saving 
 •of the Government would be two millions per year on these items alone. 
 ***** The Mormon war cost millions to the Government — 
 probably one-third the amount contemplated by this bill — and a very large 
 proportion of that cost was in the item of transportation, and much of it on 
 account of the necessary delay in military movements, without railroads over 
 such distance. That war never could have occurred, toith a railroad across 
 the continent. With such a road you would avoid Indian wars, which cost 
 millions to the Government, through the Territories traversed by it. 
 
 Mr. White, of Indiana, expressed the views certainly then en- 
 tertained by a majority of the Representatives. He said : 
 
 Now, sir, I contend, that although this bill provides for the repayment of 
 the money advanced by the Government, it is not expected that a cent of the 
 money will ever be repaid. If the Committee intended that it should be re- 
 paid, they would have required it to be paid out of the gross earnings of the 
 road, as is done with the roads in Missouri, Iowa and other States, and not 
 the net earnings. There is not, perhaps, one Company in a hundred, where 
 the roads are most prosperous, that has any net at all. I undertake to say 
 that not a cent of these advances will ever be repaid, nor do I think it desi- 
 rable that they should be repaid. The road is to be the highway of the 
 nation, and we ought to take care that the rates provided shall be moderate. 
 I think, therefore, that this will turn out a mere bonus to the Pacific Rail- 
 joad, as it ought to be. 
 
 The amount of bonds actually issued to the two corporations, 
 the Union and Central Pacific, was $55,092,192, but it was esti- 
 mated in these debates, as we have seen, that the amount required to 
 be issued would be about sixty-five millions ; and that several of the 
 speakers stated that the Government was then paying seven million 
 three hundred thousand dollars per annum for the service which the 
 TJnion and Central Pacific Railroad Companies were required by the 
 Act to perform ; and as about one-half of that sum would pay the 
 annual interest, there would be enough of the annual compensa- 
 tion remaining to pay off and discharge the principal of the bonds 
 within twenty years from the completion of the road. 
 
 The Central Pacific Railroad Company tried in good faith to 
 comply with the contracts it had entered into by accepting the 
 terms of the Act of 1862. 
 
24 
 
 In the debate on the amendment of 1864 Mr. Thaddeus Ste- 
 vens said : 
 
 Certain it is that upon the California side of the line they have gone to 
 work with excellent zeal. * * * The Company have raised already upon 
 that side of the mountains over fifteen millions of dollars. 
 
 It managed, by the sale of such portions of its stock as it could 
 dispose of, and by contracting debts on the individual credit of 
 its promoters, to build thirty-one miles of its road, from Sacra- 
 mento to Newcastle. But until the passage of the Act of July 
 2, 1864, it was unable to construct beyond that point for lack of 
 the necessary funds. 
 
 On the 8th day of January, 1863, it commenced the construc- 
 tion of its road at the City of Sacramento. 
 
 The City of San Francisco had been instructed by an Act of 
 the Legislature to subscribe for six hundred thousand dollars of 
 the stock of the Central Pacific, and to issue its bonds for that 
 amount in payment. 
 
 The City of Sacramento was authorized to subscribe for thi-ee 
 hundred thousand dollars of stock ; and the County of Placer 
 for two hundred and fifty thousand dollars. 
 
 The State of California had enacted that it would pay the 
 interest on one million five hundred thousand of the bonds issued 
 by the Central Pacific for the period of twenty years. 
 
 The citizens of San Francisco resisted the subscription author- 
 ized by the Legislature, and the contest which resulted in the 
 Courts, in addition to the cost of the litigation, besides causing 
 embarrassing and ruinous delay, seriously affected the financial 
 credit of the Central Pacific, and caused such a depreciation of 
 its stock as to render it unmarketable. 
 
 The people of San Francisco were afraid that the City would 
 become liable for a portion of the debt incurred by the Central 
 Pacific in the construction and equipment of its road, and although 
 the highest tribunal of the State sustained the validity of the 
 legislation by which the municipality was directed to subscribe 
 for and pay for the stock, and although various writs of mandamus 
 were issued commanding the officers of the City to subscribe for 
 and to issue the bonds in payment of the stock, the Railroad 
 Company found it for its interest to compromise the litigation by 
 accepting from the City a donation of four hundred thousand 
 
25 
 
 dollars of its bonds, and releasing it from its obligation to make 
 the directed subscription. 
 
 The litigious spirit manifested by the authorities of San Fran- 
 cisco had its effect on those controlling the finances of the other 
 Counties and of the State of California, and until the com- 
 promise had been made with the City, the promised aid from the 
 State and Counties of Sacramento and Placer was not available. 
 
 The promoters had used their own private credit in building 
 the thirty-one miles. They could not have the work of construc- 
 tion accepted by the United States until they had forty con- 
 secutive miles completed. The Company was therefore unable 
 to obtain the assistance, either in the way of bonds or lands 
 contemplated in the Act of 1862. The Government then held 
 the prior lien, and it was expected would take the property. 
 
 This delay, as shown in the testimony of Governor Stanford, 
 was fraught with most momentous results to the interests of the 
 corporation, as well as to the advancement of the City of San Fran- 
 cisco. If the aid that had been promised by the State of California 
 and the Counties of San Francisco, Sacramento and Placer had 
 been cheerfully yielded, after the necessary legislative authority 
 had been obtained, the Company could, in the winter of 1863-64, 
 have constructed several miles, of the most costly character, of its 
 work over the Sierra Nevadas. It was an unusually fine and open 
 winter, the temperature being mild and the fall of snow light. 
 The cost of the work that winter, in comparison with the 
 same work in the succeeding winter, would no doubt have 
 been from twenty to twenty-five per cent. less. And at this • 
 time the Union Pacific, not being able to find means to carry out 
 its contract, formed by its acceptance of the Act of 1862, had not 
 commenced the work ; and there can be no doubt, that if the 
 Central Pacific had been enabled to continue its construction 
 eastward, without any delay after it arrived at Newcastle, the 
 junction of the two roads would have been made nearly five hun- 
 dred miles further east than it was. 
 
 It is needless to describe what the financial condition of the 
 Central Pacific would have been under such circumstances, or how 
 much better able it would have found itself to respond to the 
 demand of the Government now made, which it did not anticipate 
 when it accepted the terms of the Act of 1862. 
 
 But this contest with the State and County authorities was not 
 
26 
 
 limited, as we have seen, to a mere deprivation of money to the 
 amount lost in the compromise, but, in addition to the evils of the 
 delay, it had the effect of raising a danger signal to all who might, 
 under other circumstances, have subscribed to the stock of the 
 Central Pacific Railroad Company, or aided in its work of con- 
 struction. 
 
 Not only the capitalists of California, but those of New- York, 
 Philadelphia and Boston, the last being most prominent at that 
 time in aiding the railroads, reasoned that if the City of San 
 Francisco, whose citizens and business men were so much 
 interested in the success of the construction of the Central 
 Pacific Railroad, and whose future prosperity would be so much 
 controlled by it, were not willing to subscribe to its stock, and 
 would rather pay a forfeit of four hundred thousand dollars than, 
 by the payment of two hundred thousand dollars more, becoming 
 the owner of six hundred thousand dollars worth of stock, subject 
 to the liabilities created by the Constitution and laws of California, 
 and to the future exigencies and engagements of the Company, 
 it was sufficient warning for others not so interested to avoid 
 subjecting themselves to the perils of stockholders in the corpo- 
 ration. 
 
 As a part of the history of the Central Pacific enterprise it will 
 be well to note here the language used by the Legislature of Cali- 
 fornia when, on April 4th, 1864, it passed an Act guaranteeing 
 the interest on 1,500 bonds of the Central Pacific : 
 
 Whereas war now exists, and is in immediate and vigorous prosecution 
 between the Government of the United States and certain States which have 
 rebelled against its authority ; and whereas the Congress of the United States 
 has for military and other purposes granted aid for the construction of the Cen- 
 tral Pacific Railroad, which aid is insufficient to complete the work as speed- 
 ily as is necessary ; and whereas it is important, in view of the present state 
 of war and the further (future) danger thereof, that the said railroad be con- 
 structed as soon as possible to repel invasion, suppress insurrection and 
 defend the State against its enemies, therefore the people of the State of 
 California, represented in Senate and Assembly, do enact as follows, etc., etc. 
 
27 
 
 III. 
 
 Change of Contract by the Act op Congress op 1864. 
 
 The Union Pacific found itself unable to construct any portion 
 of its road under the Act of 1862, and did not commence build- 
 ing until some time in the spring of 1865, and in that year 
 completed forty miles. It [numbered among its corporators 
 the most wealthy men of the nation, but the terms offered by 
 the Act of 1862 were not] sufSciently inviting. The Central 
 Pacific, although attempting to|comply with the Act of 1862, 
 found that in the tone and temper of capitalists it was impossible 
 to build their road even with the aid as therein granted ; and, 
 therefore, their contract was|changed by the passage of the Act of 
 1864, which permitted the Railroad Companies to issue their first 
 mortgage bonds on the respective railroad and telegraph lines to 
 an amount not exceeding the'amount of the bonds to be issued by 
 the United States, and of even tenor, date, time of maturity, rate 
 and character of interest, and that the lien of the United States 
 bonds should be subordinate to that of the bonds of said Com- 
 panies authorized to be issued on their respective roads, property 
 and equipments, except as to that provisioji of the Act of 1862, 
 relating to the transmission of dispatches and the transportation 
 of mails, troops, munitions of war, supplies and public stores for 
 the Government of the United States ; and that the aid provided 
 to be gi-anted by the Act of 1862, should be given upon the 
 completion of twenty consecutive miles instead of forty, and that 
 the Government should retain only one-half of the compensation 
 for services rendered to it by the Company to be applied in pay- 
 ment of the bonds issued instead of the whole ; and that the 
 Central Pacific should|be {required to complete only twenty miles 
 in one year in place of fifty. 
 
 With this increased aid, and the improved credit of its pro- 
 moters, the Central Pacific'was enabled to move out from New- 
 castle, eastward, and to build its road to Promontory Point, where 
 it made a connection with the Union Pacific, on May 10th, 1869, 
 nearly seven years and two^monthsjess than the time provided in 
 the contract. 
 
28 
 
 IV. 
 
 The Difficulty of Construction and the Geeat Cost of 
 THE Central Pacific Road. 
 
 The manner in which this construction was pei-formed, the 
 difficulty of its performance over and through the Sierra Nevada 
 Mountains, the obstacles encountered in its construction in the 
 winter months, the great cost of the work, the difficulty of ob- 
 taining supplies of men and machinery, and of water on the 
 desert lands in Nevada, is graphically told in the evidence 
 of Mr. Stanford, the President of the road, Mr. J. H. Stro- 
 bridge, the Superintendent of Construction, Mr. Arthur Brown, 
 the Superintendent of Bridges and Buildings, Mr. L. M. Clement, 
 the Assistant Chief Engineer in charge of the work, and of Mr. 
 Alfred E. Davis — all of which was taken before the United States 
 Pacific Railway Commission at San Francisco. 
 
 For convenience and by way of illustration we copy here a 
 portion of the testimony of these witnesses. 
 
 Mr. L. M. Clement, the engineer in charge of the work, said, 
 in a sworn statement : 
 
 At the beginning of the construction, the Company, knowing the political 
 and commercial necessities demanding the rapid completion of the railroad, 
 determined that nothing which was in their power to prevent should for a 
 single day arrest its progress. With this determination in view, all ener- 
 gies were bent, notwithstanding the physical obstacles and financial difficul- 
 ties to be overcome. 
 
 The financial difficulties were not lessened by the opinions then prevailing 
 to the effect that the obstacles were insurmountable, that the railroads then 
 constructed were bagatelles as compared with the difficulties to be met in 
 constructing the Centra] Pacific Railroad ; that not only was it impossible to 
 construct a railroad across the Sierras -via Donner Pass, but owing to the 
 great depth of snow, it would be impracticable to operate, and, if built, must 
 be closed to traffic in the winter months. 
 
 As the Company was confined to the use of American rails, the prices 
 raised 80 per cent., from 41 to 76 dollars per ton. The average prices dur- 
 ing the building of the road were $91.70 per ton at the Eastern rollingmills. 
 The rails had to be transported to San Francisco via Cape Horn or the 
 Isthmus, thence by schooners to Sacramento, the initial point of the road. 
 Shipments ma Panama as late as the year 1868 cost for transportation $51.97 
 per ton, making the cost at Sacramento $143.67, not including the cost of 
 
29 
 
 transfer from San Francisco. Delays and the losses of sliips made it neces- 
 sary to use the Isthmus route, and for locomotives transported by that route 
 the Company paid as freight as high as |8,100 for one locomotive. On a 
 shipment of 18 locomotives the transportation charges were $84,866.80, or 
 $4,692.50 each. The Company paid for two engines -170,753. The payment 
 was necessary to avoid delay. The first ten engines purchased cost upwards 
 of $190,000, the second ten upwards of $315,000. The demand for power 
 was great to overcome the high mountain gradients. Labor shared in the 
 advance in prices. California's laborers were mostly miners accustomed to 
 work in placer mines, which was more to their liking than the discipline of 
 railroad work. They were indifferent, independent, and the excitement of 
 the discovery of the Comstock lode was upoI^them, where any able bodied 
 man commanded four or more dollars per diem. There was not sufficient 
 labor then on the Pacific Coast to construct the Central Pacific, and such as 
 could be obtained could not be depended on. The first mining excitement 
 meant the complete stampede of every man and the abandonment of the 
 work. 
 
 Each day brought up propositions which must be solved without delay, 
 80 that the construction might advance. 
 
 As the snow line was reached, the depth of snow increased towards the 
 summit, from a few inches to over fifteen feet on a level from actual meas- 
 urement. The ground was kept bare for the graders by shovelling ; upwards 
 of one-half of the labor of the entire grading force being expended in remov- 
 ing snow. Not only was this necessary, but to make excavations, 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 em- 
 bankments would have caused serious settlements, which, on ascending 
 gradients, already of 105 and 116 feet per mile, would, in cases, increase the 
 gradient beyond the tractive power of the engine. It required an army of 
 men to clear away and keep clear after a storm for a small gang of graders. 
 Rock cutting could not be carried on under snow drifts, varying in depth 
 from 30 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 all rock 
 was removed. 
 
 Retaining walls in the canons were built in domes excavated in the snow, 
 the wall stones raised or lowered to their places in the dome through a shaft 
 in the snow. All the force, numbering thousands, could not be worked in 
 the tunnels and in 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 caSons of the Truckee River. 
 That no delay, even here, should result from the unfinished gap, twenty 
 miles of rails with their fastenings, a locomotive and cars sufficient for work- 
 ing were, by oxen and horses, hauled over the summit and down into the 
 canon of the Truckee River. 
 
 It was deemed wise to do some of the work in the lower mountains crossed 
 by the railroad in Utah, so that when the track reached those points there 
 
30 
 
 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. Every- 
 thing was expensive ; barley and oats ranged from $300 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 daring the 
 winter ; earthy material that could ordinarily be excavated by the pick and 
 shovel, were 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 condition for the trans- 
 portation of material to the front. 
 
 As early as it was possible in the following y ear to again attack the work 
 in the heavy snow belt region, the forces were returned to the granite clifEs 
 and caBons. This army of men shoveled off snow to gain time ; miles of 
 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 
 three miles of ordinary railroad at the present time. 
 
 During the winter months there was constant danger from avalanches, 
 and many laborers lost their lives. 
 
 When possible to reach the threatening combs of great masses of compact 
 snow leaning over the granite bluffs, they were removed by powder. 
 
 When the forces were concentrated, 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 the many 
 other improvements made for railroad construction purposes in the last 
 twenty years. 
 
 The Company, at the summit of the Sierras, Donner Pass, manufactured 
 nitro-glycerine, but it was too dangerous for general use. 
 
 Transportation of material, tools, etc., was then an important factor in 
 construction. There were then no such powerful engines as of the present 
 day, which can 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, had to come from the 
 Atlantic States, via the Isthmus or Cape Horn to San Francisco, there light- 
 ered 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. Trains returned empty. There was not one 
 inhabitant to ten miles between the east crossing of the Truckee 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. 
 
31 
 
 Water was scarce after leaving the Truckee and Humboldt Elvers, and 
 during the entire construction vras hauled for steam and general use of the 
 grading forces. 
 
 Thousands of dollars vpere expended in well boring. Tunnels were bored 
 into the mountains east of Wadsworth to develop small springs, and when 
 water was found it was carefully protected, so very precious was it, and 
 conveyed in some cases over eight miles in pipes to the line of the road. 
 
 There was not a tree that would make a board on over five hundred miles 
 of the route, nor 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 ma- 
 terials and supplies the entire length of the Central Pacific Railroad, or 740 
 miles. 
 
 Cars were transported on ships, in pieces, to San Francisco, and lightered 
 for Sacramento, and there put together. 
 
 California had no means of manufacturing for railroad building. Only 14 
 years priorto the beginning of the construction of this railroad was there any 
 considerable emigration directed to this coast. 
 
 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 enterprise, and means were furnished for constructing other trans- 
 continental roads ; and by the aid of machinery, powerful explosives, and 
 experience, they 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, materials, transportation and labor, were very 
 much cheaper. Bails averaged 51 per cent, less ; transportation, 63 per cent, 
 less. All elements excepting labor was a large per centage 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 
 Centra] 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 months, where mercury freezes, and in deep snows ; in fact, all the 
 advantages of seven additional years. 
 
 Mr. Strobridge, the Superintendent of Construction, stated on 
 oath : 
 
 The work was pushed with the utmost vigor; all the men were hired that 
 could be found, and no effort or expense was spared to complete the road aa 
 quickly as possible. In this way it was finished and in operation from Sac- 
 
32 
 
 ramento California, to Ogder., Utali, about seven years sooner than was 
 required by Act of Congress. 
 
 Very higb 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 1865-66 was a very wet one, making the roads on the clay 
 soils of the foothills 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 construction 
 camps. 
 
 As illustrating the iinpassability 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 mean- 
 time by saddle train, from the railroad at Colfax to Dutch Flat. 
 
 The building of the railroad during this time was prosecuted with energy, 
 but at much greater cost than would have been in the dry season. During 
 the winter of 1866-7 and also of 1867-8, there were unusually heavy snow- 
 falls in the upper Sierra Nevada, where the road was then under construc- 
 tion. 
 
 In many instances our camps were carried away by snow slides 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 mountains, and an average depth of ten or twelve feet of snow was 
 cleared away before grading could be commenced. The total snow fall of 
 the season was about forty feet ; and the depth of hard, settled snow in mid- 
 winter was eighteen feet on a level in Summit Valley and Donner Pass ; 
 over which we hauled on sleds, track material for forty miles of railroad, 
 three locomotives and forty cars, from Cisco to Donner Lake, where all was 
 reloaded on wagons and hauled over miry roads to Truckee, a total distance 
 of twenty-eight miles, at enormous cost. In this way the road was forced to 
 the east slope of the Sierra Nevadas. 
 
 In crossing the deserts east of the Truckee River, water for men and ani- 
 mals was hauled at times forty miles. It was necessary to have the heavy 
 work in the Palisade Canon done in advance of the main force ; and 3,000 
 men with 400 horses and carts were sent to that point, a distance of 300 miles in 
 advance of the track. Hay, grain and all supplies for these men and horses 
 had to be hauled by teams over the deserts for that great distance, there 
 being no supplies to be obtained on the entire route. 
 
 The winter of 1868-69 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 two and three feet, and material required blasting and treat- 
 ment 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 seventy per 
 cent, less than its actual cost, as it was built with rapidity of construction 
 
33 
 
 the main consideration, and without regard to any outlay that could hasten 
 its completion. 
 
 The railroad from Newcastle, on the west slope of the Sierras, to Wads- 
 worth, at the beginning of the Nevada deserts, 157 miles, was built between 
 February, 1865, and July, 1868, more than three years, with a force averag- 
 ing 11,000; and at times reaching 13,000 men. 
 
 The railroad from Wadsworth to Ogden, about 555 miles, was built between 
 July, 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 diflBculty as that between Wadsworth and Ogden and between 
 Ogden and Omaha, the labor that was put upon the Central Pacific Railroad 
 would have built it to a point far east of Omaha in the same time, the work 
 from the east slope of the Sierra Nevadas to Ogden being more than an ave- 
 rage of that from Ogden to Omaha. 
 
 Mr. Aethue Beown, Superintendent of Bridges and Build- 
 ings, set forth in his affidavit : 
 
 I submit a brief outline of the construction of the snow sheds over the 
 Sierra Nevada Mountains, on the line of the Central Pacific Bailroad, as 
 well as the conditions which made them a necessity. As Superintendent of 
 Bridges and Buildings, that work 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 forty miles, having its maximum depth near 
 the summit. The snow fall for the season has been known from actual 
 measurement to be nearly fifty 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 one-half of the time, and that mostly by means of 
 men and shovels, which required an army of men on hand all the time at 
 great expense. It was decided, after various discussions by the Directors, 
 that the only positive means of protecting the road was by means of snow 
 sheds and galleries, although the expense of building a. shed nearly forty 
 miles in length was appalling, and unprecedented as an extra in railroad con- 
 struction. In the summer of 1867 we built some experimental sheds. The 
 snow shed building was commenced in earnest in the spring of 1868. Owing 
 to the short season in which the work had to be done (less than five months) 
 it was decided to cover all the cuts, and the points where the road crossed 
 the great avalanches beyond the summit, with the idea that the high em- 
 bankment on the road could be kept clear of snow. As the road was then 
 rapidly progressing up the Valley of the Humboldt, it became » 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 be inter- 
 rupted, as the connection was to be made in the spring of 1868. We, there- 
 
34 
 
 fore, had to gather men from all quarters and pay kigh wages : carpenters, 
 $4.00 per day ; and suitable laborers about $2.50 to $3.00. We employed 
 about 2,500 men, with six trains with locomotives distributing material. 
 
 The expense was considerably increased by the fact, that we had to keep 
 the road clear for traflBc, 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 in the spring , to shovel from 
 six to eight feet of snow before we could put in foundations for sheds. In 
 the fall we continued until snow stopped us entirely, although we had been 
 shoveling snow for nearly two months. The expense of shoveling snow, 
 and the difficulty of getting men at reasonable wages to remain on the work, 
 owing to the snow, bad weather, &c. , added very much to the cost. As there 
 were not sufficient 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 great expense. The galleries are built along the side 
 of the mountains, where the slope of the roof conforms with that of the 
 mountains, so the snow can pass over easily. Some of these galleries run 
 back on the slope of the mountains several hundred feet from the centre 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 galleries were finished in the fall of 1869. In them was used 
 65,000,000 feet, B. M., of timber, and 900 tons of bolts, spikes, &c. The 
 total length of sheds and galleries, when finished, was about 37 miles, but 
 there were several pieces built afterwards, bringing it up to nearly forty 
 miles, at a cost of about $1,500,000. For several years the loss from fires 
 was considerable, as several miles were burned down, and had to be rebuilt. 
 Water trains are now constantly kept on hand for sprinkling down the sheds 
 twice a week, thus preventing their destruction 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. 
 
 1 am quite familiar with all the extraordinary exertions put forth in all 
 departments of this work, and especially the almost superhuman efforts put 
 forth by Mr. Strobridge, Superintendent 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. 
 
 I consider, from my experience, that, if time could have been spared to 
 take advantage of the proper seasons, it could probably be duplicated now 
 for less than forty per cent, of its original cost. 
 
 In the very able report on Trans-continental Railways, hereto- 
 fore noticed, made by Col. O. M. Poe, of the Engineers' Corps, 
 to General Sherman, he says of the construction of the Central 
 and Union Pacific : 
 
35 
 
 Literally an army of workmen were employed— 25,000 men and 6,000 
 teams — and tlie route presented a busy scene. The woods rang with the 
 strokes of the axe and the quarries with the click of steel. The streams 
 were bordered with lumbermen's camps and choked with floating logs, and 
 materials, supplies and equipment for the Central Pacific were scattered from 
 New- York, via Cape Horn and San Francisco, to the tery end of the track 
 advancing eastward. 
 
 Without undertaking in any way to detract from or underrate 
 the services performed by the Union Pacific in the accomplish- 
 ment of its contract, it will be remembered that the Central 
 Pacific labored under great disadvantages which were not shared 
 l>y the Union Pacific, and that the work of its construction 
 was much m.ore costly. At the time that the Union Pacific had 
 reached the one hundredth mile post, west of Omaha, it was in 
 direct railway communication with the rail mills and manufac- 
 tories of the Eastern States. Before that time its supplies were 
 shipped by rail from Chicago to Saint Joseph, and thence by the 
 Missouri River to Omaha. It could obtain its supplies daily, if it 
 wished, and in such quantities as it desired. But the Central Pacific 
 was separated by two oceans, and twenty thousand miles, from 
 the source of the materials required for the construction of its 
 road. It could not predict, within two months of the time, when 
 the rails it had ordered from the Eastern rolling mills would 
 reach the western end of its track ; and in addition, it was sub- 
 jected in the receipt of its supplies to the chances of shipwreck, 
 of vessels putting into way ports on the South Atlantic or South 
 Pacific for repairs. Its work of construction was attended with 
 drawbacks and disappointments, and great expenses that were 
 not shared by the Union Pacific Company. It had to pay war 
 rates of insurance, ranging from five to seventeen per cent., from 
 which tax the Union Pacific was free. And when pressed for 
 time, or to remedy a loss of material that had occurred in the 
 transit around Cape Horn from New- York, it was compelled to 
 send rails or locomotives across the isthmus of Panama. It was 
 subjected to burdens from which the Union Pacific was totally 
 free, as is shown by the testimony of Mr. Clement, Mr. Stro- 
 bridge and Mr. Brown, heretofore noticed. 
 
 Being at such a distance from its base of supplies, it was com- 
 pelled to keep material for nearly a year's construction constantly 
 in transit. It had upon the ocean for the greater part of the 
 
36 
 
 time it was engaged in the construction of its road, materials 
 valued at from one to three millions of dollars, upon which 
 it was incurring an interest account, ranging for most of the time 
 from twelve to fifteen per cent, per annum. We have it in evi- 
 dence before the Commission, that the rails used in this work cost 
 at the point of production from $74 to $115 in cash per ton. 500 
 tons were purchased at $262 in Central Pacific stock, with $5 addi- 
 tional added for delivery in New-York or Boston ; and that the ave- 
 rage price paid in New- York during the entire work was $80 a ton. 
 The freight from New- York to San Francisco, around Cape Horn, 
 averaged $17.50 per ton ; insurance was from five and a half to 
 seventeen per cent. It will therefore be seen, that the cost to the 
 Central Pacific of rails in San Francisco, at the lowest rate of insur- 
 ance, without interest, was $101.50 per ton. To this must be joined 
 the cost of transportation from San Francisco to the western end 
 of the Central Pacific, vs^hich averaged two dollars per ton ; and 
 the cost of moving to the point of construction being added, 
 makes it entirely safe to calculate that the average cost of the 
 rails used on the Central Pacific was not less than $125 per ton 
 laid in the track. 
 
 These enormous prices and expenses, added to the general 
 character of the country through which the Central Pacific was 
 built, and the difficulty of obtaining fuel, and the long distance 
 over which water was transported for the use of the engines en- 
 gaged in construction and of men employed, is one of the reasons 
 why, joined to others discussed hereafter, this Company exhausted 
 the proceeds of all the aid granted to it in bonds by the United 
 States, and such portion of the lands as it had sold at the com- 
 pletion of the road to Promontory, and the proceeds of the first 
 mortgage bonds which it had issued, and all the aid which it 
 received from the counties of California, and the proceeds of its 
 bonds, the interest on which for twenty years was guaranteed by 
 the State of California, and the moneys received from the sale 
 of the stock of the Central Pacific, in the construction and equip- 
 ment of the aided road between Sacramento and Promontory 
 Point, and the purchase from the "Union Pacific of the road 
 between Promontory and Ogden, so as to comply with the Act 
 of Congress, that the common terminus and point of junction 
 should be fixed at Ogden, and that at the completion of such 
 
37 
 
 construction and purchase it was several millions of dollars in 
 debt. 
 
 The charge, so often made, that the promoters of the Central 
 Pacific made great profits in the construction of the road, is 
 utterly refuted. When it was finished they could not have 
 paid their dehts from the assets then remaining. The Secretary 
 of the Company has shown the faithful expenditure of every 
 dollar received prior to the completion of the road — that it was 
 all consumed in construction and equipment. 
 
 'So one who reads the evidence given before the United States 
 Pacific Railway Commission will deny that the promoters of 
 the Central Pacific enterprise labored earnestly and manfully 
 not only to fulfill their contract with the Government, but to 
 comply with its wishes for an earlier completion of the road; and 
 they did it without regard to their own pecuniary advantage, be- 
 lieving that the Government would treat them equitably in the 
 premises. 
 
 The Government and the people were very anxious for the 
 fruition of the scheme that had so long held a prominent place in 
 the public mind. The early events of the war had shown the 
 peril of not having frequent and rapid communication between 
 the Atlantic and Pacific States ; and the Companies having the 
 work in charge did all that lay in their power to gratify the pop- 
 ular desire for its early completion, without regard to the cost to 
 themselves. 
 
 Before the roads were fully finished the Government com- 
 menced to realize benefits from the partial fulfillment of the con- 
 tract, in its facilities for transportation of mails, and of troops and 
 munitions of war to its various forts, and by its opportunity of 
 communicating with the commanding officers by telegraph. 
 
 These benefits and advantages to the Government increased 
 with the further progress of the road, until it was finished. 
 
 When the Union and Central Pacific connected their tracks 
 they had performed all their part of the contract to the best of 
 their ability. They had accomplished the great work that had 
 filled so large a space in the public thought ; and they put the 
 easements and facilities which their lines afforded at the disposi- 
 tion of the Government, to the great advantage of the nation, 
 and the protection of its territory. 
 
 The " glad tidings " that were telegraphed from Promontory by 
 4 
 
38 
 
 the Presidents of these two Companies, on the 10th day of May, 
 1869, to the victorious General of our Armies, at that time Presi- 
 dent of the United States — 
 
 We have performed our contract with the Government, and there is now 
 continuous connection by rail from the Missouri River to the Sacramento, 
 and from the Atlantic Ocean to the Pacific — 
 
 vcas second only in its importance to the pregnant message sent 
 from Appomatox by this same gallant soldier to President Lincoln, 
 when the unity of the nation was assured by the surrender of 
 General Lee arid his army. 
 
 They had done the work that was given them to do ; and in 
 spite of all criticism to the contrary, they had done it well. 
 But from that moment, when the Government was notified of 
 the performance of the contract, when the advantages so hope- 
 fully anticipated by the Senators and Representatives who voted 
 for the passage of the Act of 1862, and the amendment of 1864, 
 were at the disposition of the Government, it commenced to dis- 
 regard all its obligations under the contract, and to lay its heavy 
 hand on the corporations who had accomplished this gi-eat na- 
 tional work. 
 
 This is a statement that can only be made with shame and 
 mortification by a citizen respecting his Government ; but it is 
 the truth ; and justice in behalf of those whom the Government 
 is oppressing requires that it should be said. 
 
 It is this persistent and willful disregard of all its contract ob- 
 ligations on the part of the Government in its dealings with the 
 Central Pacific, that gives this Company the right to come to the 
 people's representatives assembled in Congress, to make known 
 its grievances, to present its equities, and to demand appropriate 
 relief. 
 
 As the Central Pacific had been true in all its obligations to 
 the Government in the construction of its part of the national 
 highway, so it has continued faithfully to observe all the obliga- 
 tions it entered into when it filed its acceptance of the terms of 
 the Acts of 1862 and of 1864. 
 
 In July, 1864, on the very day the contract between the Govern- 
 ment and the Union and Central Pacific was amended, Congress 
 passed an Act subsidizing the Northern Pacific Road, the effect of 
 which was necessarily to take from the Central Pacific the busi- 
 
39 
 
 ness north of California. And in July, 1866, while the construc- 
 tors of the Central Pacific were bending all their energies, as we 
 have heretofore shown, and seeking every aid within human reach 
 to tunnel the rocks of the Sierra Nevada Mountains, to remove the 
 masses of compact snow, to cut down the timber and clear a suitable 
 bed for their rails, the Government subsidized still another road, the 
 Southern Pacific, the building of which could only result in taking 
 away from the Central a large portion of the trans-continental traffic 
 intended for California, and which the construction of the Union 
 and Central was intended to control, and to compel the Central 
 Pacific, for its own protection, to purchase it, and to limit its 
 ability to respond to the demands of the Government, and to de- 
 •crease the amount of the net earnings which, under its contract, 
 it was obligated to render to the Government. 
 
 It will not, of course, be contended that if Congress, acting for 
 the best interests of the nation, thought it wise to subsidize these 
 roads, it should have refrained, because of the contract it had 
 made with the Central and Union Pacific ; but its action in this 
 respect certainly does raise many equitable considerations, which 
 should be considered and determined in the settlement of the 
 questions now existing between it and the corporations. 
 
 And such would appear to be the view adopted by Congress 
 in the passage of the Act of March 3, 1887, authorizing the ap- 
 pointment of a Commission to investigate the books, accounts 
 and methods of railroads which have received aid from the United 
 States, and directing the Commissioners — 
 
 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 forbuilding competing parallel 
 railroads, and if so, how many said roads, and to what extent such compet- 
 ing lines have impaired the earning capacity of the Pacific Railroads. 
 
 The testimony taken by the Commission to enable it to answer 
 this inquiry, shows a loss to the Central Pacific from 1881 to 1886 
 of about $17,000,000. We will refer to this testimony hereafter. 
 
 The people of the United States have benefited by the com- 
 petitive rates from which this loss resulted. The profits of the 
 Central Pacific on its through traffic have been almost totally 
 •destroyed, and its ability to meet its pecuniary engagements to 
 the Government greatly lessened. The action of the Government 
 
40 
 
 in creating these factors to share the overland business m.ust be 
 considered a violation of the contract of 1862, made in the public 
 interest, for which the Central Pacific is entitled to compensation,, 
 commensurate with the damage. 
 
 An impartial judgment on the acts and motives of the men 
 who constructed the Central Pacific is difficult to be obtained 
 from those who were not familiar with the peculiar trials, draw- 
 backs and hardships to which they were subjected during the 
 term of such construction. . 
 
 After the lapse of time we are apt to underrate the obstacles 
 that attended an effort successfully accomplished. 
 
 Even seven years after the road was completed, the embarrass- 
 ments of its constructors had partially faded from the public 
 mind, as we learn from the following extract from the letter of 
 Mr. Huntington, dated April 3, 1876, to Senator Edmunds^ which 
 was printed by order of the Senate : 
 
 The relations between the Government and the Pacific Railroad Compa- 
 nies, growing out of the Acts of 1863 and 1864, whereby the United States, 
 in time of war, advanced its bonds, in order to insure and hasten the con- 
 struction of a railroad and telegraph line between certain points on the Mis- 
 souri River and the Pacific Ocean, and especially the pecuniary obligations 
 created thereby, have again been pressed upon the attention of Congress and 
 of your Committee. 
 
 The spirit and aim of those Acts, it is well known, was to establish, with- 
 out the direct agency of the nation, railroad communication across the Con- 
 tinent, and this object has been attained under the terms and conditions then, 
 made, but years ahead of the allotted time. Commonplace as the achievement 
 may seem now, at the time of its inception it was deemed a work so novel, so 
 hold and vast, that tut few believed in its success, while there was a general 
 apprehension, both in tJie public mind, and among their representatives, that it 
 might be long delayed or fail altogether. 
 
 A Committee room in the Capitol, or the Chamber of either 
 branch of Congress, is not conducive to a just decision of any 
 controversy between the Central Pacific and the Government. It 
 should have been heard on the Sierra Nevada Mountains in the 
 winters of 1865-66, 1866-6'7, or 1867-68, during the times when,^ 
 according to the testimony of Civil Engineer Clement, Construc- 
 tor Strobridge, and Bridge-builder Brown, it seemed that the 
 efforts of man to construct a track over these mountains was 
 apparently being successfully resisted by the determined force of 
 the elements. 
 
41 
 
 The physical and financial energy and ability so auspiciously 
 •displayed to overcome the impediments encountered, can scarcely 
 be well considered or determined under the dome of the Capitol. 
 
 V. 
 
 Observance by the Central Pacific op its Obligations to 
 THE Government. 
 
 But it is now said that the Central Pacific Railroad Company 
 has not been mindful of the obligations imposed upon it by the 
 laws of -the United States under which it received aid for the 
 construction of its road. 
 
 It will be difficult certainly for the most avowed enemy of this 
 Company to substantiate the proposition. 
 
 In what have its managers failed ? They constructed their road, 
 as we have heretofore shown, without any regard to their ultimate 
 profit. They constructed it as if they were performing a national 
 instead of a private work, and were more anxious for the interests 
 of the nation than their own. 
 
 No matter what a thing cost, no matter what amount 
 could be saved by delay, they pushed along, in season and 
 out of season, (as the testimony before the Commission shows,) 
 to insure the final completion of the work, and to open it for the 
 public use as soon as human aid could render it possible. 
 
 If they had kept to the rigid terms of their contract, and had 
 opened the road, as its letter required them to do, on the first 
 day of July, 1876, instead of on the 10th of May, 1869 ; if they 
 had availed themselves of their opportunities of buying in the 
 cheapest market at a favorable time, instead of exhausting all 
 their resources, as they did, and when the first through train was 
 run over the road, owing a debt they could not have met 
 if they had been pressed to pay it, they would, out of the sum of 
 more than fifty millions in gold which they expended in the con- 
 struction of the road from San Jos6 to Promontory, have saved 
 at least twenty millions. 
 
 Is there any evidence in this of their being unmindful of their 
 obligations to the Government? They sacrificed the immense 
 sum they might have saved to show the practicability of 
 
4-2 
 
 the work which had received the assent of Congress, and to 
 demonstrate that, contrary to the opinions of the most able en- 
 gineers of England, France, Germany and Austria, they were 
 enabled to do their part in the construction of a road over the 
 Sierra Nevada Mountains, and over the desert lands between 
 those mountains and the Missouri River in an incredibly short 
 space of time, and to successfully operate the same to the ad- 
 vantage of the public, the benefit of the nation, and to render 
 it a commercial success. 
 
 It may be that those who read this statement will remember 
 the criticisms of the leading London journals, that no other 
 people but those of the United States would ever have conceived 
 of so wild a project as the building of a road to connect the 
 frontier of the Atlantic States with the Pacific Ocean ; and here 
 it may be said, that their success in showing the practicability 
 of a road over and through the mountain passes and the 
 desert lands in one-half of the territory of the United States, was 
 of much greater benefit and advantage to the nation than all the 
 aid which the Government rendered to them. The result of their 
 efforts is shown in there being five trans-continental roads in 
 successful operation at the present time. 
 
 In what other respect have these Companies failed in their 
 obligations to the Government ? 
 
 Have not the United States all that they bargained for ? 
 
 It was avowed in the debates prior to the passage of the bill 
 of 1862, and declared in the bill itself, that the aid granted to 
 the Companies was made upon condition — • 
 
 That the said railroad and telegraph line shall be kept in repair and in use, 
 and the said Company shall at all times transmit dispatches over said tele- 
 graph line, and transport mails, troops, munitions of war, supplies and 
 public stores upon said railroad for the Government, whenever required to 
 do so by any department thereof ; and that the Government shall, at all 
 times, have preference in the use of the same for the purposes aforesaid, at 
 fair and reasonable rates of compensation, not to exceed the amounts paid 
 by private parties for the same kind of service. 
 
 Has not the Government the benefit of this condition to the 
 fullest extent whenever it chooses to use the railroad, instead of 
 seeking for a cheaper mode of transit around Cape Horn or over 
 the Isthmus of Panama ? Has there been any failure of the 
 Company in its obligations in this respect ? 
 
43 
 
 The purpose stated in the title of the bill is, 
 
 To secure to the Government the use of the same for postal, military and 
 other purposes. 
 
 The road and all its equipment has-been at all limes open to 
 the use of the Government whenever its sense of economy would 
 enable it to pay the same rates as were paid by private citizens 
 for the same services, instead of sending its business around Cape, 
 Horn, or through foreign countries, in defiance of the terms 
 of its contract with the Company. 
 
 It stipulated for the payment of five per cent, from the time 
 of the completion of the road. When the last section of the 
 road was provisionally accepted by the Government this debt 
 ridden corporation, the Central Pacific, asked for the bonds and 
 lands that were due to it in accordance with the terms of the 
 contract. The answer was. No. Your road is not completed. 
 We have a report of the Board of Civil Engineers that we 
 have appointed, who say you must spend nearly five millions 
 of dollars to finish the road in the manner we require ; 
 and until it is so completed you cannot have the balance 
 of the aid that is promised ; and in addition to that we 
 insist, as security that the road will be completed to the entire 
 satisfaction of the Government, that you deposit with the Secre- 
 tary of the Treasury four millions of your first mortgage bonds, 
 and we will retain, in addition, as further security, all the 
 lands which you are entitled to under the Act of 1864. But, 
 nevertheless, in the meantime, although your road is not com- 
 pleted so as to entitle you to payment, you must still render to 
 us five per cent, on the net earnings from the time that you run 
 the first train over the road, from the time we have the full use 
 of it in every respect. 
 
 The Central and Union Pacific demurred to this arrangement. 
 But when the Supreme Court of the United States, differing as 
 it did from the views expressed by the Court of Claims, and by 
 the Circuit Court for the Northern District of California, re- 
 versed the judgment, and held that the United States was techni- 
 cally correct, and could, if it chose, persist in its inequitable de- 
 mand, the Central Pacific at once obeyed the law and paid to the 
 Government the amount which it claimed as five per cent, upon 
 the net earnings from the time the last spike was driven. 
 
44 
 
 And so when the contract was changed by the passage of the 
 so-called Thurman Act, which the Central Pacific believed violated 
 every principle of the law of contracts, it being advised and believ- 
 ing that the alteration of the original contract by the legislative 
 department was beyond its- authority, and that the Act was in- 
 valid, submitted the matter to the Courts, and when, against what 
 might be said to have been the indignant protest of Mr. Jus- 
 tice Strong, Mr. Justice Bradley and Mr. Justice Field, the 
 Court sustained the validity of the Act ; the Central Pacific 
 complied with it, and is still complying with it, although 
 to the great detriment of the corporation and the Government, 
 whose anticipations of benefit have not been realized, because the 
 change was not based on sound principles. 
 
 Where is the evidence that the Central Pacific corporation has 
 not kept its part of the contract, or that it has in any way failed 
 to comply with any of its obligations to the Government ? It has 
 rendered to the Government all that was demanded in the con- 
 tract, the building of the road, and in about one-half the time 
 that the law allotted. 
 
 Whenever the rights of the United States have been ascer- 
 tained, the Central Pacific has accorded those rights, and has 
 cheerfully and promptly yielded to the demands of the Treasury 
 upon it. 
 
 It is the merest perversion of language to say that this Com- 
 pany has in any way failed in its obligations towards the Govern- 
 ment. 
 
 But while there is no evidence to sustain such a charge against 
 the Central Pacific Railroad Company or its officers, we find 
 abundant evidence in the Executive departments of the Govern- 
 ment to refute it. 
 
 The Attorney-General, in his report to the Senate at the first 
 session of the 48th Congress, said : 
 
 Mrst. The Central Pacific Railroad Company lias fully and promptly com- 
 plied with the requirements of said Act. (Meaning the Act of Congress 
 generally known as the Thurman Act.) (See Ex. Doc. No. 131, p. 2.) 
 
 At the same session, in answer to further inquiry, the Attorney- 
 General said : 
 
 In further reply to the inquiry of the Senate, I have the honor to state 
 
45 
 
 that I am informed by the Secretary of the Interior that the Central Pacific 
 has met and paid the demands of the Commissioners of Railroads, reserving 
 all its rights. (Ex. Doc. 134, p. 3.) 
 
 William H. Armstrong, United States Commissioner of Rail- 
 roads, in his report for 1882, says : 
 
 Able and expert accountants of this oflBce have investigated and reported 
 upon the business, financial condition, and the proportion of net earnings 
 due to the Government for the past year. The results are shown in detail 
 tinder the proper headings. Free access has been accorded to the books and 
 accounts of the several subsidized roads whenever requested. Detailed 
 statements of the earnings and expenses, financial condition and physical 
 character of the various land grant roads have been compiled from examina- 
 tion of the returns made, and are herewith submitted. As a rule, the ac- 
 counts of the road are kept in a thoroughly comprehensive and business-like 
 manner. (Report of 1882, p. 5.) 
 
 Again, he says : 
 
 Under the Act of May 7, 1878, the bookkeeper of this ofiice checked the 
 books and accounts of the Company (The Central Pacific Railroad Company) 
 in San Francisco, with a view to the ascertainment of the twenty-five per 
 cent, 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 |1, 038,935.34. The transportation for the Government 
 during the year amounts to $959,785.33, leaving a balance due the United 
 States of 179,149.91. A statement was rendered, and payment demanded 
 October 30, 1883. A check for th6 amount was sent to the Treasurer of the 
 United States, by the Vice-President of the Company, October 30, 1883. 
 The Company has therefore paid to the Government all its accrued indebted- 
 ness to this date. (Same Report, p. 36.) 
 
 The same Commissioner, in his report for the year 1883, says : 
 
 In accordance vrith the Act of May 7, 1878, the books and accounts of this 
 Company (The Central Pacific Railroad Company) were checked by the 
 bookkeepers of this Bureau, in San Francisco, California, with a view to the 
 ascertainment of twenty-five per cent, of the net earnings of that portion of 
 the road, 860.66 miles, subsidized with the bonds of the United States, for 
 the year ending December 31, 1883. The amount founddue was |793,930.34 ; 
 against which the Company have performed transportation services on aided 
 and non-aided lines, all of which have been retained by the Government, 
 amounting to $1,051,863.46, leaving a balance due the Company that year of 
 $358,943.23. The Central Pacific Railroad Company has promptly paid all 
 balances found to be due to the United States, after statements have been 
 rendered by this oflSce. (Report of 1883, p. 43.) 
 
46 
 
 The same Commissioner, iu his report for 1884, says : 
 
 The property and accounts of the several railroads have been examined. 
 The Companies (the Pacific Railroad Companies) have freely accorded all 
 proper facilities for the inspection of their property, and the examination of 
 their books. (Report of 1884, p. 8.) 
 
 General Joseph E. Johnston, Commissioner of Railroads, 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 the Company was also examined, and found to be in good 
 condition. The principal workshops at Sacramento are thoroughly equipped, 
 and capable of making all the engines required by the whole system. The 
 service of the road is excellent, ditches ample, road bed well raised, and 
 bridges sound. (Report of 1885, p. 1.) 
 
 And again, in the same report : 
 
 The accounts of the Companies, under the supervision of this office, have 
 been carefully examined, especially those of the Companies that were 
 aided with the bonds of the United States, and the officers readily furnished 
 all necessary facilities. The property, including railroad, rolling stock, 
 workshops, is in good working order. The portion of this road, (the Central 
 Pacific, between West Oakland and Roseville Junction, 159 miles, was found 
 to be in the usual good condition, so characteristic of this Company's railroads. 
 (Report of 1885, pages 3 and 43.) 
 
 Theophilus French, United States Auditor of Railroad Accounts, 
 in his report for 1879, says : 
 
 This Company (the Central Pacific Railroad Company) has rendered such 
 reports as have been required, and submitted its books and accounts for 
 examination. * * * The engineer's report shows, in considerable detail, 
 the condition of the property covered by the lieu of the United States. * * 
 * The equipment of the road is iu good condition, and ample. * * » * • 
 The ferry service between Oakland and San Francisco * * * is to be com- 
 mended. The passenger service on the road is unexceptionably good. 
 (Auditor's Report, 1879, pages 34 to 37. ) 
 
 It is in order to refer here to the current testimony of the time 
 for the impression made, even upon those who were not favorable 
 to the owners of the Union and Central Pacific Roads, by the 
 manner in which the managers of those Companies had performed 
 their contract with the Government. 
 
47 
 
 When the Act of May V, 1878, was before the Senate, the Act 
 known as the " Thurman Bill," by which the contracts between 
 the Government and the Union and Central Paciiic Railroad 
 Companies were changed, without the consent and against the 
 pi-otest of the contracting parties, who, in reliance on the good 
 faith of the Government, had built this national highway ; Mr. 
 Bogy, the Senator from Missouri, who favored this violation of 
 the rights of the Railroad Companies, was compelled to yield the 
 following tribute. He said : 
 
 I look upon the building of the railroad from, the waters of the Missouri to the 
 Pacific Ocean, at the time particularly in which it was built, during the war, 
 as perhaps the greatest achievement of the human race on the earth. lam old 
 enough to remember when the scheme of a railroad from the waters of the 
 Missouri to the Pacific Ocean was looked upon as a wild dream, as a thing 
 nearly impossible, if not entirely impossible of accomplishment. Yet it toas 
 accomplished. And, in truth and in fact, it was accomplished at a compara- 
 tively small cost to the Government. The lands donated to the road were not 
 wortJi a cent without a railroad. The Government had an empire lying west, 
 between the waters of the Missouri and the Pacific Ocean — an empire which has 
 sprung into great States and Territories from that day — a country which has 
 become of great advantage, and which would have been utterly worthless without 
 the railroad. It has bound to this portion of the confederacy the Pacific Coast 
 with bands of iron, and no one can tell what might have been the destiny of that 
 section during the war, if it had not been for the railroad. * * I give to the 
 men who originated and carried through this great enterprise all possible credit 
 for doing a great thing, at the critical moment, in a very short space of time. 
 
 That the Company has been more than mindful of its obli- 
 gation to the Government is proved by its reception to the Com- 
 missioners appointed under the Act of March 3, 1887. The 
 President of the Company and its officers were advised, previously 
 to the arrival of the Commissioners at San Francisco, that they 
 owed no duty to the Government which was involved in the inspec- 
 tion of their books and accounts by these Commissioners. They 
 were then advised by counsel, as has since been determined by the 
 opinions of Mr. Justice Field and of Judge Sawyer, Circuit Judge 
 of the United States for the Northern District of California, and 
 of District Judge Sabin, that they were under no legal obliga- 
 tions to submit "their books and papers, accounts and methods " 
 to the inspection of this Commission, or to submit themselves 
 or their employees to oral examination. But so anxious were they 
 
48 
 
 not to subject -themselves to the charge of being wanting in any 
 obligations to the Government, and being willing that the various 
 Departments, both executive and legislative, might see that they did 
 not shrink from any investigation into its affairs, that they have 
 placed all the records of the aided Companies, and of all others that 
 they control, within the inspection of the Commissioners and their 
 large number of experts and accountants, and have answered all 
 questions, irrespective of the laws and rules of evidence which it 
 pleased the Commissioners to propound to them, until it came to 
 the point of exposing their confidential relations with their at- 
 torneys and agents, the answers to which would not have con- 
 cerned the Government, or borne in any way upon its pecuniary 
 interests in the premises, as we will hereafter more fully show. 
 They have submitted to this demand upon them rather than 
 be thought to conceal any portion of their affairs from their 
 creditor. 
 
 Senator Stanford, the President of the Central Pacific Railroad 
 Company, in the testimony given before the Commission says, in 
 substance, that during his administration as President of the 
 Central Pacific Railroad Company, from its incorporation to the 
 present time, there has never been any desire or intention, or any 
 act done, permitted or suffered, with his knowledge, by which it 
 has be^n intended to disregard the rights of the United States as a 
 contracting party with the Central Pacific, and that in his judg- 
 ment no such result has obtained from any act done by the Com- 
 pany whi<ih could in the ordinary course of business have been 
 prevented. • 
 
 Mr. Miller, Secretary of the Company, who has been connected 
 with its affairs from 1862, says : 
 
 Not in any single instance during my twenty-five years' connection with, 
 the affairs of the Central Pacific has its business been so handled, or its 
 property managed, with the intent on the part of its directors or officers to 
 infringe or impair the interests of the United States. 
 
 And Mr. Crocker and Mr. Huntington have testified to the same 
 effect. 
 
 We might close our remarks on this branch of the inquiry at this 
 point. But it becomes necessary, with reference to determining 
 the true position between the Government and the Central Pacific, 
 
4y 
 
 and the maintenance of those equities which are claimed by the 
 Company, to examine how far the United States has performed 
 its part of the contract. 
 
 It was certainly no part of its terms that the United States 
 should subsidize another trans-continental line in 1864, or still 
 another in 1866. 
 
 The effect of this departure from the spirit of the contract we 
 will notice more fully hereafter. For it necessarily results, that 
 from the building of those lines, the five per cent, and twenty-five 
 per cent, of its net earnings which the Central Pacific is required 
 now to pay annually into the treasury is not sufficient by nearly 
 half a million to meet the annual interest on the bonds issued by 
 the Government. 
 
 When the Act of 1862 was passed, it was the expectation of 
 both parties to the contract, that the business which the Govern- 
 ment would give to the Companies would be sufficient, not only 
 to discharge the interest upon the bonds, but to create a sinking 
 fund for the discharge of the principal within twenty years. 
 And when the amendment to the contract was passed in 1864, 
 one-half the compensation was to be used, so far as would suffice, 
 for the same purpose. 
 
 It was part of the contract, as formed by the passage of the 
 Act of 1864, that the Central Pacific should receive in cash one- 
 half of the compensation for work done for the Government ; 
 that it should not be required to surrender any portion of its 
 earnings, other than the five per cent, of the net receipts, until 
 the maturity of the bonds, if at all. 
 
 But from a reading of the Act of 1862, although perhaps it is 
 somewhat immaterial to state the proposition at this time, the Gov- 
 ernment never expected to demand any payment from the Company 
 for the discharge of either principal or interest of the bonds, ex- 
 cepting the performance of the services described in that Act. 
 There was not the slightest expectation on the part of either the 
 Government or the Company that any portion of the earnings of 
 the Companies would be rendered to the GoYernmeut, excepting 
 the compensation for the transportation done for it. 
 
 But it would seem, by the evidence taken before the Commis- 
 sion, that the Government has withheld the transportation, 
 which, by the Act of 1862, and the Act of 1864, it contracted to 
 employ the Central and Union Pacific to do. 
 
50 
 
 Disregarding its obligations to those Companies, it has chosen 
 other routes of transit, often paying more for the service in cash. 
 As is shown in the evidence of Mr. Gray, the General Freight 
 Agent, and of Mr. Miller, the Secretary, it has sent the public 
 stores and supplies around Cape Horn and across the Isthmus of 
 Panama, and of late a portion of its business between points in 
 the Atlantic States and points in the Pacific States has been done 
 for some distance by a foreign corporation, the Canadian Pacific 
 Railroad. 
 
 It is not straining the testimony to say, that the proof shows 
 that the United States has not of late given any of its transpor- 
 tation business to the Union or Central Pacific, excepting to local 
 points on those lines, but has diverted its business to the lines 
 competing with the Union and Central. 
 
 We wish we might stop here with the illustrations of the bad 
 faith exhibited by the Government to the Central Pacific Railroad 
 Company. Not only has the Government refused to perform its 
 contract, in giving its business of transportation to the Central 
 Pacific, as that contract required it to do, at the same price that 
 it paid to other and competing lines, but it has absolutely refused 
 to send it by the Central Pacific, an aided line, when its rates 
 Were the lowest it could obtain. 
 
 On this subject, the United States Auditor of Railway Accounts 
 says : 
 
 The Qoverument lias taken away business across the State of Nevada, and 
 has also given transportation to the Northern Pacific, the Southern Pacific, 
 the Achison, Topeka and Santa Fe, 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 Central Pacific. 
 
 The effect of this departure by the Government from the plain 
 terms of the contract, may be best understood, when it is stated 
 that the action of the Government in the subsidizing of rival lines 
 and transferring the business of the Government to them, has re- 
 sulted to the present time in decreasing the receipts of the Cen- 
 tral Pacific over seventeen millions of dollars, within three mil- 
 lion dollars of the entire amount of aid derived by the Company 
 from the loan of the bonds of the Government ; and this conse- 
 quence is an equity to be considered and allowed in stating the 
 account between the Government and this Company. 
 
51 
 
 It is shown hy the books of the Central Pacific, that all the 
 business done for the Government by that Company, in the 
 transportation of freight, for the sixteen years between 1870 and 
 1885, inclusive, amounts to but $1,098,047. That the cost for the 
 same service which would have been paid, at the rates charged to 
 the United States prior to the completion of the Central Pacific 
 Railroad, would have been $10,721,218. 
 
 And by a table annexed to the deposition of Mr. Miller, the 
 Secretary of the Central Pacific, it appears, that in addition to 
 tlie $1,098,047 paid to the Central Pacific, the total amount paid 
 to the Union Pacific for the same sixteen years was $4,f)42,706, 
 making the payment to both Companies $5,740,753. That at the 
 rate formerly paid by the United States for such services, the 
 charge would have been $61,161,703, making a saving to the 
 United States during those sixteen years by the construction of 
 the Union and Central Pacific Railroads of $55,421,554, which is 
 $411,362 more than the principal of the bonds issued by the United 
 States to the Union Pacific, the Central Pacific and the Western 
 Pacific. 
 
 But, in addition to this saving in the transportation of freight 
 for the same sixteen years mentioned above, the United Stales 
 paid to the Central and Union Pacific for the transportation of 
 troops and passengers moving on the business of the Government 
 $4,616,053. 
 
 Taking the reports made to the War Department by various 
 Quartermasters, it is shown that for the services rendered, 
 included in the last mentioned figures, there would have been 
 paid by the United States before the construction of the railroad 
 $49,178,967, making a saving to the Government of $44,562,914, 
 which, added to the amount saved on transportation of freight, 
 leaves in the Treasury of the United States over one hundred 
 millions of dollars, between the amount paid to the Railroad 
 Companies and the amount it would have paid for like services 
 if the railroad had not been built. 
 
 But this does not state the entire financial benefit to the United 
 States. On the 21st of October, 1868, the Post Office Depart- 
 ment contracted with Wells, Fargo & Co. for the transportation 
 of the United States mails between the western terminus of the 
 Union Pacific and the eastern terminus of the Central Pacific, for 
 the term of one year, from October 1st, 1868, until the two 
 
52 
 
 railroads should meet, at the rate of $1, 750,000 per annum, sub- 
 ject to reduction pro rata for every section of fifty miles of rail- 
 road completed. This contract expired on the 9th day of May, 
 1869, when the Union and Central effected a junction. 
 
 But the Government did not deal so liberally with the Railroad 
 Companies. The entire distance of the services, performed by 
 Wells, Fargo & Co., was 1,095 miles ; but for the neavly 1,900 
 miles over which the Union and Central carried the mails of a very 
 much larger bulk than that moved by Wells, Fargo <fc Co., and 
 which has been and is constantly increasing, the Government has 
 paid to the Union and Central from July 1st, 1868, to December 
 31st, 1885, as compiled from the reports of the Postmaster-Gen- 
 eral for the several years, $10,606,507.22. At the rate paid for 
 the tardy service, and the small volume of mails transported for 
 the same length of time prior to the completion of the roads, the 
 Government paid $49,970,780.49, leaving a saving to the Post 
 Office Department of $39,364,273.29, making the entire saving to 
 the United States for the sixteen years following the completion 
 of the road, an amount exceeding one hundred and thirty-nine 
 millions of dollars. And this saving was effected in one-half the 
 time that the bonds loaned to these Companies had to run, or, in 
 other words, leaving fourteen years to run before the maturity of 
 these bonds. Computing at the same rate, the entire saving to 
 the Government at that time will be about $260,000,000. The 
 Commissioner of Railroads, in his Report for 1883, says : 
 
 " The saving to the Government has greatly exceeded the 
 current interest it has paid." 
 
 Shall it be said, in view of such an enormous financial benefit 
 to the Government, and its failure to accord to those who con- 
 tracted with it, and who have been the factors to produce this 
 result, the benefits that were promised from its transportation 
 and business, that there are no equities to be considered in de- 
 termining the present relation of tlie Central Pacific Railroad 
 Company and the Uiiited States ? As the Commissioner hereto- 
 fore quoted from said, in his Report for 1883 : 
 
 " All these considerations appeal with great force to the liberality 
 of Congress" and we add, but more to its sense of justice. 
 
53 
 
 There should be no unkind feeling on the part of the 
 Government or any of its departments towards the men and the 
 corporations causing this saving to its Treasury. 
 
 These men should not be met with vituperation or disdain ; there 
 are equities in their position which it would be infamous in the 
 Government to disregard. They should be treated with justice. 
 
 The United States invited these men, using the language of 
 Mr. Justice Davie, to aid them in performing a national work. 
 They have done more than their part ; but the Government has 
 failed in the most valuable part of its engagement. 
 
 Not only this, but it has changed the contract by the mere 
 might of its legislative power, compelling these men to meet an 
 obligation before it was due. It does not afEord these men even 
 the advantage of a respectful or impartial hearing. They are 
 met by the Government and its organs with aspersion and con- 
 temptuous abuse. 
 
 In addition to retaining all the earnings of the Company 
 from Government transportation upon the aided road, the Gov- 
 ernment has refused to pay for the services rendered on connecting 
 railroads built by private capital, now amounting to about two 
 millions, the loss of which and payment of interest, and the 
 pledging of securities to borrow an equal amount, subjects the 
 Company to great embarrassment. 
 
 The question as to the liability of the Government to pay the 
 Company the money earned on the unaided roads has been de- 
 termined by the Court of Claims, and the judgment of that Court 
 has been affirmed by the Supreme Court of the United States. 
 The Court, in that case, speaking through Mr. Justice Woods, 
 said : 
 
 The subsidy bonds granted to the Company being granted only in respect 
 to the original road, are a lien on that portion only ; and the five per cent. 
 of net earnings is only demanded on the net earnings of said portion. 
 
 And, citing from the opinion of Mr. Justice Bradley in a pre- 
 vious case, the following : 
 
 With this decision in view, it would be impossible to hold with any show 
 of reason that the compensation for services rendered the United States, 
 which, by the same section, is required to be applied to the payment of the 
 same bonds, included compensation for services rendered by a road the con- 
 struction of which had not been aided by the issue to the Company of Gov- 
 5 
 
54 
 
 ernment bonds. As the contract between tlie United States and the Bail- 
 road Company, contained in the Acts of July 1, 1862, and July 2, 1864, has 
 been interpreted by this Court to authorize the retention by the Government 
 of compensation for services only on the road which the United States aided 
 in building, the construction which the appellant seeks to put upon the 
 second section of the Act of May 8, 1878, would not only render that section 
 a breach of faith on the part of the United States, but an invasion of the 
 constitutional rights of the appellee. We. are bound, if possible, to so construe 
 the law as to lay it open to neither of these objections. The construction 
 contended for by the appellee preserves the good faith of the Government. 
 
 But notwithstanding that decision, although rendered at the 
 October term of 1885, the Government still refuses to make pay- 
 ment to the Company for the services performed on the unaided 
 road, and still retains in its Treasury nearly $2,000,000, on which 
 the Company is losing the same rate of interest it is charged by 
 the Government, $120,000 per annum. 
 
 There is no reasonable pretext for the Government refusing to 
 obey the judgment of the highest Court. 
 
 It has drawn from the Central Pacific every dollar which it is 
 by law authorized to receive, and its refusal to accord to the 
 Central Pacific its rights, as declared by the highest tribunal, of 
 the country, is an act unworthy of any civilized government. It 
 has used its power to make a forced loan, and to retain the pro- 
 perty of a citizen ; as was said by Mr. Justice Bradley, it has as- 
 serted the principle that might makes right, and is guilty of acts 
 of oppression that we should condemn, but not wonder at if per- 
 formed by the authorities of a petty Central American State or by 
 a ruler in Algiers. 
 
 VI. 
 
 Dividends. 
 
 The Commissioners are charged to inquire whether any di- 
 vidends have been unlawfully declared by the Directors, or paid 
 to the stockholders of such Company, and if so, to what extent, 
 and whether the amount thereof may not be recovered from the 
 Directors unlawfully declaring the same, or the persons who have 
 unlawfully received the same. 
 
 As an original proposition, it would seem as if this was a 
 
matter that rested between the stockholders and the corporation, 
 and not between the Government and the Company. 
 
 But the opinions of the Supreme Court of the United States, 
 in the case of the United States vs. The Union Pacific Railroad 
 and others, (98 U. S., p. 569,) decides : 
 
 That tlie United States has two distinct relations to the Railroad Company, 
 viz. : the legislative and visitorial' power of the Government creating the 
 corporation, and the relation growing out of the contract formed on the 
 charter and its amendments. 
 
 The suit in that case was brought under the statute of March 
 3, 1873, and asked for a decree in favor of the Union Pacific 
 Railroad Company, for money due for capital stock, for money 
 or property received from it on fraudulent contracts, and for 
 money or property which ought, in equity, to belong to the 
 Company. 
 
 It was held that the bill exhibits no right to relief on the part of the 
 United States, founded on the charter contract ; that the Company has con- 
 structed its road to completion, keeps it in running order, and carries for the 
 Government all that is required of it. It owes the Government nothing that 
 is due, and the Government has the security which by law is provided. 
 
 Such is the position of the Central Pacific Railroad Company 
 towards the Government at this time. In its relation of debtor 
 and creditor, the United States has that security upon the prop- 
 erty of the Company which it demanded. Nothing is now due 
 or payable ; and it has no concern with the disbursement of the 
 earnings of the road, until some default occurs in the payments 
 which are fixed by the contract, or in the forced changes thereto 
 made by statutes. 
 
 It will be remembered that the Central Pacific Railroad Com- 
 pany was not completed on the proceeds of the bonds furnished 
 by the Government. That aid, granted by the passage of the 
 Act of 1864, if disposed of at that time, the price of gold being 
 2.90, would have yielded but $9,605,407 ; but, as after the close 
 of the war, the credit of the Govei-nment improved, and by 
 selling the bonds to the best advantage that the haste in which 
 the road was constructed enabled it to do, something over 
 twenty millions was realized, which was less than two-fifths of 
 the cost of the road from Sacramento to Ogden. But, after all, 
 
56 
 
 the assets which the Central Pacific had for the completion of 
 the aided road, including the proceeds of such portion of its 
 stock which had been sold, were, as we have heretofore shown, 
 entirely insufiicient ; it was heavily in debt, which it could not 
 have retired if it had been pressed to do so at that time. 
 
 In the course of the investigation a witness was asked by one 
 of the Commissioners : What effect would it have had on the 
 Central Pacific Railroad Company's property, if, instead of 
 dividing eighteen millions, between 1871 and 1884, among its 
 stockholders, it had been applied 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 Government than it is now ? That 
 is the position assumed by the Commission on behalf of the 
 Government, and may be answered here : The Central Pacific has 
 discharged all its financial obligations to the Government as they 
 arose. It is not in default. It has rendered to the Government 
 everything the contract required in keeping its road in good 
 condition, in yielding it to the use of the Government whenever 
 demanded. It has paid the Government all that it agreed to pay, 
 all that has been extorted from it by legislative hostility in adding 
 to its contract burden ; and the Government having provided the 
 manner in which the principal and interest of the bonds should 
 be paid, must take its satisfaction in that way. The mortgage, 
 which the Act of 1862, Sec. 5, says should ipso f ado exist in favor 
 of the United States on the issue and delivery of the bonds to the 
 Company, is not upon the tolls, income, rents or profits of the 
 Company, except to the extent of five per cent, of its net earnings, 
 but is " on the whole line of railroad and telegraph, together with 
 the rolling stock, fixtures and property of every kind and descrip- 
 tion, and in consideration of which said bonds may be issued." 
 
 In the mean time, the road belonging to the corporation, it has 
 a right to divide from time to time among its stockholders all its 
 surplus earnings — all the earnings not required for the performance 
 of its contract, or the law which impairs that contract ; and the 
 Act of 1862 recognized this right, up to ten per cent, per annum, 
 as a remuneration to the stockholders. 
 
 But the Central Pacific Railroad Company, from its incorpora- 
 tion to 1884, paid more than the amount mentioned by the Examin- 
 ing Commissioner. The total payments were $34,308,055, or about 
 
57 
 
 2.65 per cent, per annum. Of this amount, ten millions were 
 earned from a profit on leased lines, and about four millions from 
 other non-aided roads not included in the leases, and about twenty 
 millions from the aided roads during the mining prosperity in 
 Nevada, and before its earnings were crippled and interfered with 
 by the competitive lines subsidized by the United States, and 
 during the time that the Government was unable to divert its 
 business fi'om it to an unaided line. But for those lines, one of 
 which the Central owners, for their own protection, were forced to 
 purchase and complete, the financial ability of the Central Pacific 
 to comply with the demands of the Government would have been 
 essentially different from what they are now. 
 
 It will not be denied that those who put their money into this 
 enterprise were entitled to large dividends for the risk that was 
 incurred. 
 
 He would have been a bold man who had predicted, when Sher- 
 man was crossing Georgia, and when the Central Pacific was 
 trying to scale the Sierra Nevada Mountains, that any person who 
 invested in the stock of the Central Pacific would ever again 
 see his money, leaving out of question the risk which each 
 subscriber or purchaser took of being liable for the debts con- 
 tracted by the Company to aid in the construction prior to the 
 receipt of the bonds of the Government, or the sale of its own 
 bonds. 
 
 As was said by Senator Trumbull, in the debate preceding the 
 passage of the Act of 1864 : 
 
 All that Congress proposes to do is to do enough and only enough to induce 
 capitalists to build this Pacific Railway. We shall be indebted to them when 
 they do that. » * * ^11 we want is to obtain the construction of 
 this road ; that is what is of national importance. « * * gjj.^ 
 this is not an ordinary enterprise. The Senator says large inducements are 
 held out. Why, sir, it is a great undertaking. It is for the building of a 
 railroad through a wilderness country and over mountains where, unless 
 there is some inducement, capitalists will not be likely to construct the road. 
 * * * It is a great enterprise. It is great, certainly, in one par- 
 ticular. It is great in the hazards which are run by those who may embark 
 in it. 
 
 Mr. Wilson said : 
 
 I want to be a liberal in money. * * * If<by the liberality of 
 this Government, either by money or land, we can induce capitalists to put in 
 
58 
 
 the money necessary to complete the road, we shall have acJiieved something 
 for the country. 
 
 Mr. "Washburne said, in the House of Rej^resentatives : 
 
 I do not believe there is one man in five hundred who vrill invest his 
 money and engage in building this road as the law now stands, and we must, 
 therefore, hold out inducements for them to join in the undertaking. We 
 must grant the facilities which are needed. * * * We want 
 
 this road, stretching from the granite hills of New-England to the golden 
 sands of California. When completed, it will far outshine in grandeur and 
 usefulness the famed Appian Way. It will be the greatest and most useful 
 work done by man. 
 
 The $2.65 per annum, which the dividends to stockholders 
 averaged, does not cover the vehole time in which their money 
 was invested, and it is entirely fair to calculate that the average 
 returns would not be over two per cent, per annum. 
 
 But can the Government with any reason complain of the re- 
 turns made to the stockholders, when contrasted with its own 
 dividends upon the bonds which it has advanced to the Company 
 and the interest that it has paid ? 
 
 The advances to the Central and Union Pacific Railroad Com- 
 panies are of the par value of . . . $55,092,192 00 
 It has paid for interest up to the first of January, 
 1886, for the Union Pacific, $29,043,327 21 
 For the Central and Western, 29,299,156 21 
 
 58,342,483 42 
 
 $113,434,675 42 
 
 It has received from the Central Pacific, for 
 five per cent, of the net earnings, from 1869 
 to June 30, 1878, 1,871,430 00 
 
 It has received one-half transportation charges 
 on aided lines of the Central Pacific, from 
 18G7 to June 30, 1878, .... 1,745,59847 
 
 And since the last mentioned date the pay- 
 ments under the Thurman Act require- 
 ments have been sufficient to increase the 
 amount to 10,427,238 11 
 
 And this amount is increased by the two millions due to the 
 Company for services on unaided lines, which, as the debtor is ex- 
 
69 
 
 ecution proof, may, for the purpose of this statement, be reckoned 
 as a payment. 
 
 It has saved, as previously shown, in the transportation of 
 freight, troops and passengers, over one hundred million dollars. 
 
 Saved in transportation of United States Mails for the same 
 sixteen years, $39,364,2'73.25 — making a total of $154,586,885.78. 
 
 In addition to this saving of money it has, by the building of 
 these roads, pacified the Indians along the line, so that some of its 
 forts have been abandoned and its troops withdrawn ; and what 
 is of more consequence than the amount that has been received or 
 retained, or will be retained in the Federal Treasury is, that the 
 settler can now sow and reap without incurring the risk of an attack 
 from hostile Indians, and can return from his day's labor without 
 finding his home in ashes and his wife or children murdered or bru- 
 tally outraged ; and the lives of the young men previously sent to 
 garrison the frontier forts are no longer the prey of the tomahawk 
 or bullet of the savage. And in addition, when occasion arises for 
 moving the troops of the United States, instead of marching 
 twenty miles a day, they are now moved five hundred miles in 
 the same time. 
 
 Quoting the language of General Sherman, in his report for 
 1883, p. 46 : 
 
 These roads enable us to send soldiers to threatened points at the rate of 
 five hundred miles a day, thus overcoming the space in one day which used 
 to require a full month of painful marching. 
 
 And by the building of these roads and those feeders concerning 
 which so much fault has been found, joined to its eastern connec- 
 tions, the entire ai-my of the United States can be moved to any 
 point within its territory inside of a week of the time that the 
 order for its transportation is given. 
 
 If we review the histcry of the world, if we read Creasy's ac- 
 count of the fifteen decisive battles, from Marathon to Waterloo, and 
 learn how the destinies of nations have been affected, and civiliza- 
 tion advanced or retrograded, and maps changed by delay in the 
 movement of armies, can we imagine that any nation, ancient or 
 modern, would have grudged the little aid loaned by the United 
 States to these subsidized roads to produce such a result, and 
 
60 
 
 which has been repaid one and one-half times within twenty-one 
 years ? 
 
 In the chronicles of the reign of Elizabeth, we are told that 
 when her Council met to determine how the attack of the Spanish 
 Arraada should be repulsed, it was proposed to prevent the land- 
 ing of the troops of the King of Spain by a muster of all the in- 
 habitants of England at a given point. Sir Walter Raleigh, who 
 took part in that discussion, said that such a measure was not 
 feasible ; that if the fleet composing the Armada appeared off the 
 Lizard, and it was feared that their landing was to be prevented 
 at that point, they could, in six hours sailing, make a landing off 
 Portland, but it would take six days marching to move troops 
 between those points. 
 
 In the last report made by General Sherman, as General of the 
 Army, (Report of 1883, p. 5, et seq.,) he says : 
 
 I now regard tlie Indian as substantially eliminated from the problem of 
 tte army. There may be spasmodic or temporary alarms, but such Indian 
 ■wars as have heretofore 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 the lands vacated by the aborigines, has been largely instru- 
 mental to that end. But the railroad, (the italics are the General'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 leave to emphasize much which I have spoken and written 
 heretofore. The recent completion of the last of the four great trans-conti- 
 nental lines of railway has settled forever the Indian question, the army 
 question, and 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 they account fully for the peace and good order 
 which now prevails throughout our country. A vast domain, equal to two- 
 thirds of the whole United States, has been thus made accessible to the immi- 
 grant, and in a military sense, our troops may be assembled at strategic points, 
 and sent promptly to the place of disturbance, checking disorders in the bud. 
 
 General Grant, when Acting Secretary of War in 1867, said in 
 his Report for the fiscal year 1867-68 : 
 
 During the last summer and summer before, I caused inspections to be 
 made of the various routes of travel and supplies through the territory be- 
 tween the Missouri River and the Pacific Coast. The cost of maintaining 
 
troops in that section was so enormous that I desired, if possible, to reduce 
 it. This I was 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 com- 
 pletion of the railroads to the Pacific will materially reduce the cost, as well 
 as the number of men to be kept there. T?ie completion of these roads will 
 also gofa/r toward a permanent settlement of our Indian difficulties. There is 
 good reason to hope that negotiations now going on with the hostile tribes of 
 Indians will result, if not in permanent peace, at least in a suspension of hos- 
 tilities until the railroads are pushed through that portion of the Indian ter- 
 ritory where they are giving the most trouble. (Report of Secretary of 
 War, 1867-68, Vol. I., p. 3.) 
 
 Quartermaster-General Meigs, in his report, dated November 
 8, 1865, (see Report of the 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 — 
 
 12.79 at Fort Riley. 
 
 9. 44 at Fort Union. 
 
 5.03 at Fort Kearney. 
 
 9.26 at Fort Laramie. 
 10.05 at Denver. 
 17.00 at Salt Lake City. 
 
 He states that — 
 
 The cost of transportation for military stores westward across the Plains 
 by contract during the fiscal year ending June 30, 1865, amount to 
 $6,338,856.37. 
 
 "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, subsistence, lumber, or any other necessary of the 
 troops, from the base of supplies at Fort Leavenworth, was as 
 follows : 
 
 To 
 
 Fort Riley, per pound, . 
 
 2.46 
 
 cents 
 
 
 Fort Union, " 
 
 . 14.35 
 
 
 
 Fort Kearney, " 
 
 6.44 
 
 
 
 Fort Laramie, " 
 
 . 14.10 
 
 
 
 Denver, " 
 
 . 15.53 
 
 
 
 Salt Lake City, " 
 
 . 27.84 
 
 
62 
 
 Supplies in those days had to be carried with the troops, and 
 could not be obtained 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, enabled 
 the army to purchase its supplies near at hand, at a cost in which 
 transportation bore no material part. 
 
 The cost of the transportation of grain alone, used by the army 
 on the Plains in 1865, was $3,323,829.37. (See Report of Colonel 
 S. L. Brown, Division of Regular Supplies, in Report of Secretary 
 of War, 1865, Vol. I, p. 251.) 
 
 The Quartermaster-General, in his report for 1866, page 302, 
 states, on this subject : 
 
 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 
 Eocky Mountains, had reached an enormous price. The cost of foraging one 
 horse equalled the cost of feeding a dozen animals in the States. 
 
 The record kept in the Comptroller's Department of the Cen- 
 tral Pacific shows that 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, made the following statement on this 
 subject : 
 
 What is the cost of our Indian wars as compared with the cost of the Pa- 
 cific Railways, which will speedily end the Indian wars? A compilation 
 from the official records of the Government shows that these wars for the 
 last thirty-seven years have cost the nation twenty thousand lives and more 
 than $750,000,000. In the years 1864-65 the Quartermaster's Department 
 spent $38,374,288 for 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 one million 
 dollars a week — $144,000 a day. (40th Congress, 3d Session, Senate Rep. 
 Com. 219.) 
 
 The statesmanship that incurred the liability to induce the 
 Pacific Railroad Companies to build the highway that has saved 
 80 many lives and so much treasure needs no defence. 
 
 The men who voted to use the lands and credit of the G-overn- 
 
63 
 
 raent for tliis purpose were worthy successors of those who 
 pledged the resources of the nation for its independence ; but 
 the Iiistorian who shall relate the wisdom shown by the people's 
 representatives ip obtaining this highway, resulting so much to 
 the grandeur and dignity of the nation, will have to fortify with 
 incontrovertible evidence his further statement that the whole 
 power of the Executive and Legislative branch of the Govern- 
 ment was used within a few years after the completion of this 
 great work to persecute and harass the men who, in the language 
 of the Senator from Missouri, "had performed the greatest 
 achievement of the human race on the earth." 
 
 While Generals Grant and Sherman were convincing our 
 bretliren of the South that successful resistance to the perpetuity 
 of this Union was impossible, these railroad builders were at the 
 same time bending their matchless energy to cement the fruits of 
 the victories of these generals, by uniting the remote sections 
 of our continent, and subduing to the purposes of civilization 
 vast ranges that had been trodden only by the savage and the 
 buffalo. Look westward of the Missouri, and you see the 
 wilderness receding fast before the advancing tide of life and 
 civilization, vast harvests waving round the blackened stumps of 
 a pathless forest, and cottages, barns and mills rising amidst the 
 haunts of the wolf and the bear. 
 
 By their subsequent efforts in building railroads, running 
 north and south, they have brought the people of the Northern 
 and Southern States into closer and more fraternal relations than 
 they ever before knew. 
 
 But at the time of which we were speaking, when they were 
 serving the political purposes of the Government, in connecting 
 the Missouri with the Pacific, and making one-half of the territory 
 of the United States habitable, they were also solving the 
 engineering doubts, so often expressed, as to the physical ability 
 of constructing a railroad over the Sierra Nevada Mountains. 
 
 They were opening a safe and speedy highway across this 
 continent, that might be used between the Old World and the 
 Empire of China, with India, Japan, New-Zealand, the continent 
 of Australasia,, and the many fertile isles of the South Pacific. 
 
 Some of the fruits of their peaceful victories maybe seen at the 
 wharves of San Fianci^co, on the arrival of one of the huge 
 
64 
 
 steamers that ply between that port and Hong Kong or Yokohama. 
 You will see, alighting from such vessels, men bearing authority 
 from the Emperor of China to represent his interests with the 
 Governments of Washington, London or Paris. You will see 
 British diplomats, who in fifteen days will be in conference with 
 chiefs in London on the affairs of the English Colonies in the 
 Pacific. 
 
 You will see oificers of the French and German navies, who 
 have been summoned by their respective Ministers of Marine to 
 report at headquarters. You see unlading from the steamers the 
 products of China and Japan — tea, silks and various manufac- 
 tures of Asiatic labor — to be distributed between San Francisco 
 and the Mississippi. All these results, emanating from the in- 
 domitable courage and perseverance of these men, who were not 
 slothful in business, but were fervent in the spirit of their great 
 works — serving the Lord by their grand achievement. 
 
 But if you would know more of the benefits that have been 
 derived from the construction of this first overland road, you 
 must pass over it. 
 
 You will see trains of cars carrying emigrants who are seeking 
 homes on the fertile lands of the Far West. 
 
 You will see that these travellers are well cared for, and are 
 contented, that the railroad companies have devised a car in 
 which they may journey to their destination in health and com- 
 fort, and then contrast their lot with those of the emigrant 
 crossing the same country for the twenty years preceding the 
 completion of these roads. 
 
 As Mr. Sargent so graphically said from his place in the House 
 of Representatives : 
 
 " With such a road you avoid Indian wars. You would save the lives of 
 citizens, who now take their weary way across the Territories, falling victims 
 to savage onslaught. You can follow the emigrant trail from Missouri to 
 California and never lose your way, for the route is Iroadly marked with the 
 hones of men and beasts, of broken wagons and abandoned property." 
 
 The " Tragedies of the Plains," as they were termed by early 
 California writers, may be referred to in describing the hardships 
 and cruel treatment of emigrants from the frontier States to 
 California before the construction of these railroads. 
 
 One case was reported of a party, including women and chil- 
 
(55 
 
 dren, whose mules had been poisoned by the Indians, and who 
 were slowly toiling westward, carying such stores as they could 
 pack, until they were rescued by the wagons and teams of other 
 emigrants overtaking them. 
 
 Another, of an entire party being killed by the Indians, except 
 a mother, and son of about ten years of age ; she ended her life 
 with a pistol shot to avoid a worse fate, the boy escaping to tell 
 the story. 
 
 Another, of the destruction of an entire family, except two 
 women, mother and daughter, who were taken and kept prisoners 
 for several years, when they escaped to the trail, and were brought 
 into one of the California settlements, both having during their 
 imprisonment borne children to their captors. 
 
 Instances of shocking events of this character were of such 
 frequent occurrence, that it will take more space than we can 
 spare to enumerate even a small portion of them. 
 
 Disease wasted the lives of many of these unfortunate emi- 
 grants ; scarcity of water, food of poor quality and insufficient in 
 quantity, tending to fill many graves. Families might be seen 
 camped in and under their wagons, all laid low with fever, and 
 having but a scant supply of water to cool their heated bodies. 
 
 A touching story was told in Sacramento in 1850. An emigrant 
 wagon was being used as a place of shelter by a man and 
 woman on the levee of that city, their team being picketed near 
 by; a fire had been made .to cook their evening meal; the 
 woman sat by the fire, and the tears were trickling down her 
 cheeks ; in answer to an inquiry as to the cause of her grief, she 
 replied : " When we left Missouri we were four, but two little 
 graves on the Humboldt contain my two little girls — my only 
 children." 
 
 The condition of emigrants, then and now, would be sufficient 
 warrant for the Government aid, loaned or given, to accomplish 
 such a result, and which some of the legislators who voted for the 
 bill predicted. Shortly after the road commenced to be operated 
 as a trans-continental line, a passenger on the train of the Central 
 Pacific, going eastward through the Humboldt Valley, might 
 have been seen sitting on the platform of a car. The ' day was 
 hot and the road very dusty, so that he was soon covered with the 
 alkaline soil of that region. Still, for some hours, he kept his 
 place, and, being asked the reason, said : " In the last three hours 
 
66 
 
 I have ridden over a space that some years ago, when on my way 
 to California, I traversed with my wagon and poor tired mules in 
 three weeks. Some days," he said, " we did not move at all, and 
 generally not more than four miles in a day. We were trying to 
 get the animals in condition that they might pull the wagons over 
 the * Sierra Nevada.' " 
 
 Are not the men whose energy has accomplished so much, who 
 performed this great work in so short a time, as if by magic, who 
 have thus conduced to the convenience, safety and commercial 
 advantage of all the world, and more especially of our own 
 citizens, entitled to some favorable consideration at the hands of 
 the people's representatives in the determination of the present 
 controversy ? And are they not entitled to such dividends or 
 pecuniary reward as results from their skill in handling the en- 
 terprise ? ' 
 
 They will receive no more in the way of dividends ; the com- 
 petitive lines aided by the Government will prevent that. 
 
 VII. 
 
 Cost op the Wab in Utah. 
 
 The cost of the war in Utah was frequently alluded to in the 
 debates preceding both the passage of the Act of 1862 and of 
 1864. 
 
 A search of the records of the War Department does not dis- 
 close any tabulated statement giving the amount actually paid 
 out, but a recent letter from the Acting Secretary of War states 
 that the following articles were furnished by the United States 
 for the use of the expedition to Utah : 
 
 33 Ambulances. 
 
 39 Light Wagons. 
 
 988 Baggage Wagons. 
 
 6,447 Mules. 
 
 354 Horses, in addition to the horses furnished for the mounted corps, and 
 for the transportation of supplies for the army. 
 
 And for tlie depots at Fort Kearney and Fort Laramie, on the route, 3,938 
 wagons, 33 mules and 49,896 oxen. 
 
 The contract of Messrs. Russell, Majors & Waddell, dated 
 January 16, 1858, shows the following rates per 100 pounds per 
 
67 
 
 1 00 miles, for the transportation by them of freight for the 
 United States, varying with the season of the year : 
 
 January and February, . $4 00. 
 
 March, . . . . 3 90. 
 
 April to September, . 1 80. 
 
 September, . . . 3 20. 
 
 October, . . . . 3 00. 
 
 November and December, 4 50. 
 
 Freight not exceeding 10,000,000 pounds, and an increase of 25 per cent, 
 to be allowed on freight from 10,000,000 to 15,000,000 pounds, and 35 per 
 cent, for quantity beyond 15,000,000 pounds. 
 
 It will not be of practical utility to make a detailed estimate 
 of the value of the outfit above mentioned, nor have we suffi- 
 cient information to state the total amount paid for transportation. 
 Soon after the termination of the campaign it was estimated at 
 from twelve to fifteen millions of dollars, and army circles have re- 
 ceived as true the statement that the entire expense to the 
 Government was not much less than thirty million dollars more 
 than the amount of bonds loaned to the Central and Western 
 Pacific. 
 
 This expedition made the fortunes of the Mormons ; they sold 
 for the use of the troops their spare agricultural products at 
 enormous prices, and acquired the outfit of the expedition with 
 but small outlay. The financial result to the Mormons induced 
 Brigham Young to say that he had made war successfully on the 
 United States. 
 
 At this time, of course, such an expedition is entirely unneces- 
 sary, but without the building of the Pacific Railroads the control 
 of the Mormons would have been as costly as of the Indians. 
 
 VIII. 
 
 CONTEACTS LET TO ChAELES CeOOKEE & Co. AND THE CONTRACT 
 
 AND Finance Company fob the Consteuction of the Cen- 
 tral Pacific Raileoad feom Saceamento to Peomontoet. 
 
 The officers of the Central Pacific Railroad Company have 
 been unsparingly denounced for their action in letting these con- 
 tracts ; but it will be seen, on a fair review of their situation at 
 that time, it was the wisest and most advantageous thing that 
 
could be done for the interests of the corporation and the Gov- 
 ernment, and that it was the only practical way in which the road 
 could then have been built. 
 
 The immigration to California commenced in 1849, and for the 
 succeeding five years it was peopled with a rapidity unknown in 
 history. California became a State on the 9th of September, 
 1850, so that at the time of the passage of the Act of Congress 
 of 1862, it had been within the Union a little short of twelve 
 years. 
 
 The promoters of the Central Pacific were, speaking compara- 
 tively, old residents, in a country which had had an American 
 population for less than thirteen years. Large fortunes at that 
 time had not been accumulated, and they were acquainted with all 
 the men in California who had money to invest or to loan. The 
 banking capital, of course, could not be great. There were not a 
 great many men who had any surplus not required for daily use 
 in their business. The directors would willingly have let the 
 contract to parties not interested in their corporation if such per- 
 sons could have been found. Or the corporation would have 
 constructed the road within its own organization if it could have 
 commanded the necessary funds. For the lack of finding these, 
 Mr. Crocker proposed to take a contract for the construction of 
 the first eighteen miles of the road, and for that purpose resigned 
 his seat in the Board of Directors, to which he had been elected 
 at its organization, he believing, and the directors agreeing, that 
 he would be more useful to the purposes of the Company in the 
 speedy construction of the road, as a contractor than as a 
 director. 
 
 But from the handling of the first shovelful of earth at the 
 City of Sacramento until Mr. Crocker completed his labor as a 
 contractor, at or near the eastern boundary of the State of Cali- 
 fornia, it was not contemplated that any profits should be made 
 in the work of construction. The idea was to get the road 
 through in the quickest possible time, so as to give the Govern- 
 ment its use as early as possible, and that the promoters should, 
 if possible, retain their interest in the corporation at the time 
 the work was completed. 
 
 It is in evidence that the firm of Charles Crocker & Co. was 
 formed, but at such formation Mr. Crocker had no partner. His 
 intention was, as he proceeded with the work and demonstrated 
 
69 
 
 its practicability, to invite others to join Mm ; but in this he ap- 
 pears to have been disappointed. His financial position as con- 
 tractor was not sufficiently inviting to attract an associate with 
 •capital. 
 
 When the work on the mountains commenced, when, in the 
 language of the Superintendent of Bridges, the snow had to be 
 removed to a depth of twenty to thirty feet, so as to find a rest- 
 ing place for the timbers used for trestle and bridge purposes, 
 that they might be stored upon the ground that had been cleared 
 from snow and not be liable to be washed away by a thaw, Mr. 
 Crocker found that he had probably assumed a task beyond his 
 ■financial strength. So we find him complaining of his burien to 
 the directors. It would seem that the work of grubbing and clear- 
 ing the line of track, removing trees and stumps at a cost of 
 from two to five thousand dollars a mile, so that the embankment 
 ■of the railroad could be made upon it, threatened to engulf him. 
 And we can imagine his cry to the other promoters of the road : 
 ^' save me, or I perish." 
 
 Mr. Stanford testifies : 
 
 But it very soon became apparent that no ordinary rules that would gov- 
 ern between contractors would answer the purpose of the rapid construction 
 of the road ; that sacrifices must be made which the Company could afford. 
 Taut a contractor, looking to profits out of his contract, could not. Mr. 
 ^Drocker become^apprehensive about his personal liabilities. 
 
 He was then told to go on with the work without regard to the 
 terms of the contract, and that the directors would " see him 
 through." Some portions of the road on the western side of the 
 mountains had been let to small contractors. Some had per- 
 formed their contracts ; some had not. Mr. Crocker assumed 
 the contracts of those who were derelict, and did the woi'k at the 
 price at which it had been let. But it was evidently impossible 
 to obtain contracts from responsible people for building over the 
 mountains ; and if such contracts had been let, it would simply 
 have resulted in delay and expense to the corporation ; for the 
 contractors could not have performed their agreement. It was a 
 new work. Nothing like it had been seen in this country, or, I 
 may say, in any other. The great railroad building over the 
 Mount Cenis route in Switzerland, and over the Tyrol in Austria, 
 great feats of engineering, as they were claimed to be, and as 
 
70 
 
 they undoubtedly were ; sink into utter insignificance in com- 
 parison with the construction of a road over, or I may say 
 through, the Sierra Nevada Mountains. On the Swiss or Aus- 
 trian roads they are not protected by miles of snow-sheds and 
 galleries ; nor are their mountains terraced from the base to 
 nearly the apex with a series of retaining walls to prevent the 
 avalanches of snow demolishing the snow-sheds, or proving 
 graves for the builders ; for the tracks upon those lines have no 
 such protection. They were but few who believed in the prac- 
 ticability of the work, or who thought it could be successfully 
 carried to completion. 
 
 It would have been utterly futile to have attempted to bind 
 any contractor, not interested in the future of the Company, to 
 perform that work. The corporation was not in a position to 
 agree to make payments at fixed dates. Mr. Crocker understood 
 its position. He undertook the work, knowing that he would 
 get his pay just when the corporation could raise it, and not be- 
 fore. No other solvent contractor would have made any such 
 arrangement, nor could any solvent contractor have been obtained 
 to accept the contract which Mr. Crocker undertook. 
 
 From sections one to eighteen, that is, from the levee at the 
 City of Sacramento to the 18th mile post, Mr. Crocker undertook 
 to perform the work for $400,000 ; $250,000 in cash, $100,000 in 
 the bonds of the Company, and $50,000 in stock. 
 
 Those who are familiar with the condition of Sacramento in 
 1862 and 1863, know that the construction of the road for that 
 eighteen miles was very expensive. The testimony of Mr. Davis, 
 an old resident of California, and of late years the President of a 
 Railroad Company, shows what had to be done to build an em- 
 bankment for the track, and to prevent its being washed away by 
 the overflow of the Sacramento River, after it was built. 
 
 The grades of the City of Sacramento, for some distance from 
 the Sacramento River, have been raised about nine feet, so as to 
 bring them on a level with the altitude, of the Central Pacific 
 track, which it was found necessary to adopt to keep it above 
 the reach of the high water of the Sacramento River, in the rainy 
 season. In addition, the approaches to the American River had 
 to be protected, so that by the overflow of that river, the abut- 
 ments of the railroad bridge should not be endangered. So that 
 this eighteen miles could not be constructed from the amount 
 
71 
 
 that was allowed in the contract made with Mr. Crocker ; and it 
 is certain that if he escaped from its performance without loss, 
 he took no profit. 
 
 But it is claimed that Mr. Crocker and the directors of the 
 Central Pacific made large pi-ofits in building the road over the 
 mountains. It must be admitted that ultimately, after many 
 years of waiting, they did realize some profit from the retention 
 of the stock, which Mr. Crocker took in part payment of his 
 work ; but to make that "stock of value they had to spend years 
 to develop business on the road, and to build at their own cost 
 and risk branch roads to bring traflic to the main line. 
 
 For the 106 miles, from section 32 to 138, which means from 
 Newcastle to the Truckee River, near the State line, there was 
 paid to Mr. Crocker, as is shown by the books of the corporation, 
 $8,227,980, which is at the rate of $77,622 per mile ; and there was 
 also paid to him $14,657,996 in stock of the Company. 
 
 So far as the stock payment was concerned, it cut no figure at 
 the time as an asset for building the road. It could not be sold, 
 it could not be bartered, and was useless as a collateral. 
 
 We have it from the evidence of Mr. Stanford, that when the 
 road had been constructed to the State line, the Company had 
 spent all its available resources, and all the securities that could be 
 issued on that part of the work, including the bonds loaned by 
 the Government, and were in debt for obligations incurred upon 
 that portion of the work, and the same result is proved by refer- 
 ence to the statistics now on file in the Treasury Department in 
 relation to the construction of this road. 
 
 It is very certain, from the information we have as to the cost 
 and character of the work, the rapidity, and the consequent want 
 of economy with which it was done, that the sum of $8,227,980 
 did not cover the entire outlay. The balance was assumed by 
 Charles Crocker and the directors who came to his rescue. The 
 estimate has been made by Mr. Stanford, and no doubt correctly, 
 that thecost of the work done between the 31st and 138th miles 
 for the reception of the track equalled, in day's work, the whole 
 cost of grading a railroad from Truckee to Chicago, a distance of 
 nearly twenty-one hundred miles. 
 
 It undoubtedly was the intention, when this contract from New- 
 castle to the 138th mile was let to Mr. Crocker, that the directors 
 should not be interested in it ; but they were forced to assume 
 
72 
 
 the position they did, and to share with Mr. Crocker what was 
 at that time thought to be a loss on the work. It is gratifying 
 to know that 'their courageous attitude resulted in their being 
 rewarded with a profit, instead of meeting a deficiency. But 
 when Mr. Crocker's labors were concluded, he and his associates 
 were face to face with a position that called for the assumption 
 of a large amount of indebtedness, which could not at that time 
 be met with the stock of the Company which they held, or with 
 any quantity of such stock. "' 
 
 After the completion of the road, Mr. Crocker deposited the 
 stock which he had received from his various contracts, with the 
 Contract and Finance Company, and it was divided among the 
 stockholders of that Company, subject to the debts he had 
 incurred. 
 
 IX. 
 
 Contract and Finance Company. 
 
 The extreme financial pressure, under which the work entrusted 
 to Charles Crocker So Co. was performed, and the difiiculty of in- 
 ducing people of means to become members of a private partner- 
 ship, led to the formation of the Contract and Finance Company. 
 
 It was supposed by the Directors of the Central Pacific, that 
 by granting the contract to a corporation, upon liberal terms, to 
 complete the road from the State line to the connection with the 
 Union Pacific ; the owners of capital in the eastern cities might 
 be induced to become stockholders in such corporation, and, in 
 this way, to insure the completion of the work, of which, at that 
 time, the Directors of the Central Pacific had very grave doubts. 
 
 It was not, as Mr. Stanford says, a matter of profit to the pro- 
 moters of the Contract and Finance Company ; it was a plan to 
 prevent, if possible, the utter failure of the enterprise. 
 
 Mr. Huntington testifies, that in his correspondence with Mr. 
 Hopkins, when the latter asked him how much of the stock in 
 the Contract and Finance Company they should take, he replied : 
 " Take as much as you are forced to, and as little as you must." 
 
 At that time, if it could have been done, the promoters of the 
 Central Pacific were entirely willing to yield their interest in the 
 work, if other or more responsible parties would undertake it. 
 
73 
 
 and comply with the terms of the contract made between the 
 corporation and the Government. It was with them more a 
 matter of pride, that the undertaking should not fail by reason 
 of their financial weakness, than any question of profit. It 
 was their last hope, their last resort to invite capitalists to 
 aid in the work ; and it may be truthfully said, that the 
 formation of this Construction Company was quite as much in 
 the interests of the Government as of its promoters ; for, as is 
 shown, the cash payments made to the Contract and Finance 
 Company did not enable it to perform its contract to construct 
 the road from the eastern boundary of California to Promontory 
 by about three and a half millions of dollars. 
 
 The Central Pacific Railroad Company could not give to the 
 Contract and Finance Company anything more than it had. It 
 could not in any way injure or militate against the interests of 
 the Government. The Contract and Finance Company must 
 complete a section of twenty consecutive miles or the Central 
 Pacific could not receive the proceeds of the Government bonds 
 for that distance, nor could the corporation issue its own bonds 
 in advance of such completion, beyond the terms of the Act of 
 1865. 
 
 It was bound to return value within the terms of the contract 
 to the Central Pacific, for what was paid to it. But, notwith- 
 standing this contract with which so much fault has been found, 
 it is seen that not the owner of a single dollar was willing to risk 
 it in assuming the responsibility of sharing its supposed profits. 
 
 Three of the capitalists of California of that day have given 
 their views and their experience, Mr. D. O. Mills, Mr. Lloyd 
 Tevis and Mr. Horace W. Carpentier. They were all oifered an 
 interest in that contract, but they declined, because they did not 
 believe that there was any profit in it, or that the railroad would 
 pay when it was constructed, and because they feared to assume 
 a position that would make them liable for the debts of the rail- 
 road corporation as owner of its stock. The feelings of capital- 
 ists to the men engaged on this work is expressed in a homely 
 way by Mi\ A. E. Davis, himself a railroad builder, that they 
 were thought to be insane. " We thought they were a little off. 
 Yes, sir ; that is what we all thought." 
 
 Mr. Huntington states, and as he is supported by the evi- 
 dence of Mr. Stanford, Mr. D. O. Mills and others, it was im- 
 
74 
 
 possible to induce the capitalists of the money centres of the 
 Atlantic to become interested in that contract. Money was at 
 that time in such great demand that its use commanded high 
 rates. The currency of the country was during the entire time 
 of the construction of this road in a very inflated condition. 
 
 The Government was a great borrower. When the Amended 
 Act of 1864 was passed, General Grant had been repulsed at Cold 
 Harbor, and it took 2.90 of the Government paper to buy a dollar 
 in gold ; and at the end of the same year the price of gold was 
 $2.43^. The bonds of the Government issued before the war, 
 which it sold at 22 premium, were selling at about 80. The 
 public debt at the time of the passage of the Act of 1864 was 
 $1,740,690,489.48, and there was still authority in the Secretary 
 of the Treasury, under the various Acts of Congress, passed up to 
 that time, to borrow a further amount of $622,284,625. 
 
 In California, where the promoters of the Central Pacific had 
 to raise money for the work of construction, money was in great 
 demand. The bonds issued by the State of California, bearing 
 seven per cent, interest, which was promptly paid in gold, were 
 selling at 'Jl^, a discount of 28^ per cent. 
 
 The Central Pacific was compelled to pay for all its labor and 
 supplies, purchased in California, in gold. It needed a large 
 amount. Money borrowed from the Atlantic Cities was of neces- 
 sity in currency. Gold had to be purchased- and drawn for from 
 California, thus materially increasing the financial burdens of the 
 Central Pacific. These causes rendered uncertain in the minds of 
 the owners of capital what they would receive in re-imbursement 
 for their investment. 
 
 Added to all this was the doubt, that at this time so generally 
 prevailed, whether, if the road was constructed, it could be 
 commercially operated — the doubt as to the existence of fuel 
 along its line. It was known that there was not a single 
 navigable stream from the Missouri to the Sacramento, and for 
 stretches of hundreds of miles there was some question as to 
 whether water could be obtained sufficient and suitable to gene- 
 rate steam on the locomotives. 
 
 Futile as was the effort of letting the contract to Charles 
 Crocker & Co., and to the Contract and Finance Company, to 
 relieve the financial pressure on the Central Pacific, it would have 
 been ciiminally negligent on the part of the directors of that 
 
V5 
 
 Company, if they had not resorted to these devices ; especially 
 is this true of the formation of the Contract and Finance Com- 
 pany. 
 
 At the end of 1866, as appears in a report made by the Depart- 
 ment of the Interior to the House Committee on Pacific Railroads, 
 the Central Pacific had expended in the construction of its road 
 $12,000,000. 
 
 At that time, 1i miles of its road had been accepted by the 
 President, and it received bonds from the Treasury on 
 
 1 miles @ $16,000, $112,000 
 
 67 " " 48,000, 3,216,000 
 
 $3,328,000 
 It had issued its own bonds to the same amount, net- 
 ting 3,328,000 
 
 $6,656,000 
 
 These bonds being estimated at 70 cents, the average 
 
 of the entire issue produced $4,659,200 
 
 The bonds issued by it, on which the State of Cali- 
 fornia guaranteed the interest, had netted . . 980,000 
 
 The bonds received from the City of San Francisco 
 
 had produced 300,000 
 
 The bonds from Sacramento, ..... 190,000 
 
 Bonds from Placer, 160,000 
 
 $6,289,200 
 
 Leaving the balance between this amount and $12,000,000 to 
 be carried by Charles Crocker and his associates. 
 
 On the 25th of October, of that year, there had been 
 issued to the Central Pacific of the aid-bonds, . $4,922,000 
 
 Which had been sold for 3,546,478 
 
 An equal amount of first mortgage bonds had been 
 
 issued by the Company, netting .... 3,546,478 
 
 All the money had been spent on the work, and the Company 
 and contractors were heavily in debt. Besides there was a large 
 amount of material on the ocean, in transit from New- York ; 
 
76 
 
 probably averaging at that time not less than $2,000,000, and the 
 situation is well expressed by Mr. Miller, the Secretary of th& 
 Central Pacific, when he said : 
 
 When the road was completed to the State line, the Company had ex- 
 pended the proceeds of all the United States bonds it had received, and all 
 the proceeds of all the County bonds, and of all its own bonds it was au- 
 thorized to issue up to that point, and had a floating debt of over five million 
 dollars. 
 
 It may seem at this time a very unimportant announcement 
 to say that this corporation is carrying a floating debt of five 
 millions, but it was a very serious position to be in when it was 
 laying its track along the Truckee River, with its available assets 
 entirely exhausted. 
 
 The Contract and Finance Company was incorporated in No- 
 vember, 1867. 
 
 An impartial review of the management of the Central Pacific 
 during the construction of its road, and the doings of its pro- 
 moters and contractors, must concede that the engineering talent, 
 so well and skillfully exhibited, was equalled by the great finan- 
 cial ability displayed in borrowing and contriving the necessary 
 funds for prosecution of the work without delay, and its comple- 
 tion. The figures just presented account, without further ex- 
 planation, for the imperative necessity of incorporating the Con- 
 tract and Finance Company. 
 
 It was supposed that the terms of this contract would leave a 
 large profit to the Construction Company, but such anticipations 
 were not realized. We have before us its outcome, and we see that 
 the caution of those to whom an interest in that contract was 
 offered was well founded. For Mr. Brown, the Manager and 
 Secretary of the Contract and Finance Company, tells us that 
 after the Company had fulfilled its contract in the construction 
 of the road to Promontory it had spent all its cash assets ; that it 
 was in debt exceeding three and a half millions of dollars, and 
 that the only remaining asset was twenty-three millions of the 
 stock of the Central Pacific Railroad Company. 
 
 It is very certain from all the evidence we have that no 
 market could be found for it, and that no considerable portion 
 of it could have been sold for ten cents on the dollar. There- 
 fore, if the Contract and Finance Company had been com- 
 
pelled at that time to meet its indebtedness, it was bankrupt. 
 If a market had been found for this stock at ten cents on the 
 dollar, it would still have been owing about a million and a half 
 of dollars, without any assets of any kind to have met such 
 indebtedness. 
 
 Such is the outcome of those contracts which maybe said to be 
 historic ; it shows that the corporation and the individuals who 
 are supposed to have gutted, destroyed and crippled the Central 
 Pacific Railroad Company, brought themselves beyond the verge 
 of bankruptcy in fulfilling their conditions. 
 
 It is equally true of this contract, as I said before with respect 
 to the contract let to Charles Crocker & Co., that after years of 
 patient waiting in the one case, from 1866 to 1881, and in the other 
 from 1869 to 1881, after from twelve to fifteen years of anxiety and 
 embarrassment, after bearing the burden of millions of dollars of 
 debt without any present means of liquidating in times of bank- 
 ruptcy or disaster, the stockholders of this Construction Company 
 did realize some profit. But, as actions speak louder than words, 
 and as men's views are expressed in their acts, we have indubitable 
 evidence of what was the value set upon the stock of this cor- 
 poration in 1871, two years after the Central Pacific Railroad 
 Company had been completed and had been in active operation. 
 For, at this time, when other roads had been consolidated with 
 the aided roads ; when the Central Pacific, by consolidation, was 
 the owner, in addition to the road between Ogden and San Jose, 
 of a branch and profitable line to Oakland ; of the Oakland and 
 Alameda ferries ; of several hundred miles of the California and 
 Oregon Road, and of the San Joaquin Valley Road from the 
 connection on the line of the Central Pacific at Lathrop to 
 Goshen, we find that the stock owned by Mr. Charles and Mr. E. 
 B. Crocker was sold to Huntington, Hopkins and Stanford, at 
 twelve cents on the dollar, and was sold, not for cash, but on a 
 long credit. 
 
 Now the stock belonging to the Contract and Finance Com- 
 pany, twenty-three millions, sold at this time at twelve cents on 
 the dollar, two years after it had completed its contract, would 
 not have sufiiced to pay its debt of three and a half millions and 
 the two years' interest which had accrued. But in 1873, two 
 years after this sale and four years after the completion of the 
 road, the purchasers were compelled to return to Mr. Crocker the 
 
stock they had bought from him, because they could not pay for 
 it. It was not, in their estimation, for their interest to endeavor 
 to borrow the money and keep the stock which they had bought 
 at twelve cents on the dollar, even with the anticipation of the 
 dividend of three per cent., which was declared on September 13, 
 18'74. 
 
 But we may be answered, that in the mean time, these gentlemen 
 had put a higher estimate on the stock of that Company, by 
 acquiring the stock that was represented in the suit brought by 
 Lambard and others, and in the suit brought by Brannan, for which 
 it is alleged they paid several hundred dollars per share. The 
 settlement with those represented in the Lambard suit was agreed 
 upon in the year 1870, Hhortly after the completion of the road, 
 and the price was fixed for the stock of Brannan at the same time. 
 By reason of litigation that prevented settlement, it was not paid 
 until some time later. 
 
 The plaintiffs in those suits were stockholders in the Central 
 Pacific, and undoubtedly had a right to an accounting. And 
 we may say it was unfortunate for the interests of the directors 
 of the Central Pacific that it was not then made. That it 
 was not, was because the directors could not afEord, in 
 view of their then financial embarrassment, to render an 
 account. They had but one thing to conceal at that time : Not 
 their wealth, not any money that they had made in the perform- 
 ance of their duties as directors or trustees ; but, in view of their 
 great indebtedness at that time, they could not afford to show 
 their poverty. It was the current belief, that out of the twenty- 
 seven millions of bonds which had been issued by the Govern- 
 ment, that out of the grants of land which, as Mr. Bogy, of Mis- 
 souri, said were not worth a cent without a railroad, that out of 
 bonds issued by the corporation, secured by a first mortgage upon 
 its property, and from the aid granted by the counties along its 
 main line in California, the directors had made enormous fortunes. 
 And it was this popular delusion that gave them credit, and per- 
 mitted them, without security, to float and carry the many millions 
 which they then owed. They could not afford to open their 
 books to complaining stockholders. It would have been ruin to 
 them to have then disclosed to their creditors, that to meet the 
 indebtedness they had been compelled to incur or to assume, 
 for what the road had cost above the proceeds of their own 
 
79 
 
 bonds, and of the bonds in aid of the work, they had only the 
 unavailable assets of the stock of the Central Pacific, which they 
 could not sell, to realize the amount of such indebtedness. Such 
 exposure would have resulted in their undoing ; and, therefore, 
 it was wisdom on their part to incur further indebtedness for 
 the moneys required to settle the demands of these stockholders. 
 
 But, certainly, the Government is in no condition to com- 
 plain of these contracts, or of the stock that was issued in their 
 performance. As we have said before, the Government has all 
 that it bargained for. It has the road as security for the debt 
 due to it, if there is any, subject to the lien agreed upon in the 
 amended contract of 1864. It has had the use of the road, and 
 has already saved by its completion up to the present time fifty 
 per cent, more than it will be required to pay in the discharge of 
 principal and interest at the time of the maturity of the bonds. It 
 had no concern with the stock of the Company. It found the Cen- 
 tral Pacific an existing corporation.* It enlisted its aid for the per- 
 formance of a national undertaking. There never was any doubt 
 but at the completion of that undertaking the property of the 
 corporation would be owned by its stockholders, subject to its 
 indebtedness. 
 
 And that is just the position to-day. The promoters of the 
 road were enabled to sell but little stock. Most of the stock that 
 was subscribed and paid for was by them. The few who came in 
 to help them, who faltered by the way, and who were ready to 
 lay down their bui'den, were relieved by these promoters ; so that 
 when the road was finished, with the exception of the stock 
 owned by Lambard and others, much of which, it may be said, 
 was traded for services, and did not bring a dollar into the coffers 
 of the corporation, the promoters and directors of the Company 
 were the owners of all its stock. There has not been a share of 
 stock illegally issued, nor a single share for which the corpora- 
 tion did not receive full commercial value at the time it was 
 issued. 
 
 But it may be further said, that these men, being the owners of 
 all the stock, and, as such, the owners of all the property of the 
 corporation, it could make no difference to any one whether the 
 symbol of their ownership was expressed by the issue of certificates 
 for one thousand shares, or for a hundred thousand shares, or for 
 a million. Those who dealt with them in relation to the transfer of 
 
80 
 
 such stock would determine how much property was represented, 
 and how much each share was worth. So we find, under the Act 
 of 1862, theUnion Pacific was authorized to issue a certain number 
 of shares, of the par value of one thousand dollars each ; but by 
 the Amendment of 1864, they were authorized to issue the stock 
 in shares of one hundred dollars each, instead of one thousand, and 
 that the shares should be one million in number, instead of one 
 hundred thousand. 
 
 The number of shares of stock issued by a corporation, with 
 the sanction of those who are its owners, cannot make any more 
 difference than if a man bought a thousand acres of land, and 
 desired to have the title transferred to him by one hundred deeds, 
 each conveying ten acres, instead of by one deed for a thousand 
 acres. 
 
 But, as was said by Mr. Justice Miller in The TJnited States vs. 
 The Union Pacific Railroad Company, (98 IT. S., 619 :) 
 
 It is difficult to see any right which the Government has as a creditor, to in- 
 terfere between the corporation and those with whom it deals. It has been 
 careful to look out for itself in the making of the contract. It has the 
 rights which that contract gives. What more can it ask ? * * * 
 
 The Government made its contract, and bargained for its security. It had 
 a first lien on the road by the original Act of Incorporation, which would 
 have made its lien safe in any event. But in its anxiety to secure the con- 
 struction of the road, an end more important to the Government than any 
 one else, and still anore important to the people whom it represented, it 
 postponed this lien to another mortgage, that means might be raised to com- 
 plete it. 
 
 The Government surely cannot sustain any wrong by the num- 
 ber of shares of stock issued. The corporators were entitled to 
 all the surplus earnings of the Company, and whether it is divided 
 into ten, one hundred or one thousand parts, certainly does no 
 harm to the creditors, who do not share in the distribution. 
 But if it should be found, that after allowing the equities claimed 
 by the Central Pacific, concerning which Congress has directed 
 the Commission to examine and report, that any material sum is 
 due to the Government, and it should pay off the original lien and 
 become the owner of the property, the stock not being entitled 
 to its protection, would in no way determine or interfere with 
 its right to the ownership of the property. 
 
81 
 
 The Purchase at5d Building of Roads Consolidated with 
 THE Oknteal Pacific, op California. 
 
 The Central Pacific, with the assent of Congress, assigned its 
 right to construct all that portion of the aided road, from the City 
 of San Jos6 to the City of Sacramento ; but the assignees were 
 unable to perform the work, and after there had been several fail- 
 ures of contractors, the promoters of the Central Pacific arranged 
 with the assignees to turn the organization over to them, and they 
 finished and equipped the road in accordance with the require- 
 ments of the Act of Congress. 
 
 At the time of the connection with the Union Pacific, the aided 
 road consisted of a line from the City of San Jose, fifty miles 
 south of San Francisco, to Promontory. 
 
 The trans-continental business, both in freight and passengers, 
 ■could reach San Francisco by a transfer at the City of Sacramento 
 to the steamboats then plying the waters of the Sacramento, 
 and owned by the corporation known as the California Steam 
 Navigation Company ; or, being carried to San Jose, they could 
 be transferred to the San Francisco and San Jose Railroad 
 Company, and would reach San Francisco, a distance of 1 77 miles, 
 which route, from San Jos6 to San Francisco, was impeded by a 
 grade of H2 feet to the mile. 
 
 To utilize the construction of the Western Pacific, it became 
 necessary to connect it with the City of Oakland, and from there 
 use the ferry to San Francisco. 
 
 The distance from Niles to San Francisco, 30. '2 miles, makes 
 the transit in this way, 139.57 miles, against the distance by way 
 of San Jose, 177 miles, making a saving by this route over that 
 by San Jose, of thirty-six and a half miles, and avoiding the 
 heavy grades on the latter. To accomplish this result, and avoid 
 paying ferriage on the business of the aided road, it was necessary 
 •to purchase the lines of the San Francisco and Oakland, and the 
 San Francisco and Alameda Railroads and their ferries. 
 
 When the main line was finished, it afforded but little conveni- 
 ence to people, either in the northern or southern parts of the 
 State of California; to afford the proper accommodation, to 
 
82 
 
 increase its revenue, and to invite immigration and settlement, it 
 was necessary that feeders should be constructed. Accordingly 
 the promoters and stockholders of the Central Pacific organized 
 the Company called the San Joaquin Valley Company, for the 
 purpose of building a line of railroad from Lathrop, a point on the 
 Western Pacific Railroad, about eight miles south of Stockton, to 
 Goshen, in the County of Tulare, a distance of 146.3 miles. 
 
 This road was built by the Contract and Finance Company with 
 money furnished by the stockholders of that Company, and was 
 paid for in the bonds and stock of said Railroad Company. 
 
 It may be said of this contract as of many others that were let 
 to the different construction companies in which the Directors of 
 the Central Pacific have been stockholders, that they built the 
 road with moneys furnished by themselves, and had the road for 
 their outlay. In other words, they paid to the Construction 
 Company the bonds and stock of the railroad so constructed, and 
 waited until such time as they could develop sufficient business 
 on the road built, to induce the public to buy the bonds or the 
 stock. If the country through which the railroad ran developed 
 sufficient business, then the project was a success ; if it did not, 
 then the operation was a loss. These gentlemen took all the re- 
 sponsibility ; any loss occurring was necessarily theirs, and of 
 right the profits belonged to them. 
 
 But it is said that they violated a well known rule of equity in 
 dealing with themselves, that they were trustees, and that they 
 were representing both sides of the contract. 
 
 The answer is, that they did not find anybody else to deal with. 
 They could not find any one who would take the chances of build- 
 ing a road through what was then an almost uninhabited country, 
 and accept the bonds and. stock of the road in payment. And 
 when it is said they were trustees, if they did occupy such rela- 
 tion, it was merely technical, for they represented only their own 
 interests on both sides, there being no one else concerned in the 
 transaction. They became the incorporators of the Company that 
 was to build the road, subscribed for its stock, and were the only 
 subscribers. Therefore it is difficult to see how any one was 
 wronged by their action. The rule of equity invoked, which has 
 its origin in the injunction, no man can serve two masters, cer- 
 tainly did not apply to them, because they were acting in their own 
 interest, and were not charged with the duty of caring for others' 
 
83 
 
 rights, there being no other persons interested in tlie subject 
 matter. 
 
 To perfect the railroad system of the West Coast, for military 
 and postal uses, to serve the people in the northern part of the 
 State, and to make a connection at Portland, which became neces- 
 sary for the protection of the Central Pacific after aid had been 
 given to the Northern Pacific, the promoters of the Central 
 Pacific incorporated the California and Oregon, to run from a 
 point on the main line of the Central Pacific, known as Rose- 
 ville, to the northern boundary of the State of California, with 
 such extension into the State of Oregon as its directors might 
 afterwards deem proper. 
 
 By an Act of Congress, entitled '' An Act to grant lands to 
 " aid in the construction of a railroad and telegraph line from 
 " the Central Pacific in California to Portland in Oregon," there 
 was granted to this Company, to secure the safe and speedy 
 transmission of the mails, troops and munitions of war and public 
 stores over said line of railroad, every alternate section of public 
 land, not mineral, designated by odd numbers, to the amount of 
 twenty alternate sections per mile, ten on each side of said rail- 
 road line. 
 
 The directors of this Company proceeded with the work of 
 construction to the State line, expecting to connect with the road 
 of the " Oregon and California Company," which was commenced 
 at the City of Portland, and was intended to connect with the Cen- 
 tral Pacific at the California line ; but owing to the failure of the 
 original promoters and their successors it was not completed until 
 it came into its present ownership. This work of enormous diffi- 
 culty and cost has at last been achieved, thus giving connection 
 by rail between the Cities of San Francisco and Portland, and 
 direct railroad communication between Puget Sound and the 
 City of Mexico. 
 
 We do not want to interrupt this branch of the argument by 
 indulging at this moment in reflection on the benefit and ad- 
 vantage of the efibrts of these men to the United States. It is 
 just twenty-five years since the passage of the Act of 1862, when 
 thinking and intelligent men scofied at the idea that a road could 
 be constructed or operated over the wastes between the Missouri 
 and the Sacramento. But the eflforts of these men demonstrated 
 
84 
 
 that such a thing was practicable ; and there are now live separate 
 lines connecling the Athnilio with the Pacific. ' 
 
 But in addition, the effortss of the same men have served to con- 
 nect our great forests and ship building facilities of the Northern 
 Pacific with the lormer capital of the Aztecs. The efforts of these 
 men have brought the Capital of the Nation very close to the 
 Territory of Alaska, and proved the wisdom of the purchase recom- 
 mended by that foremost statesman of our time, Governor Seward ; 
 and we can now visit, explore and enjoy that wonderful country 
 which, less than ten years ago, we deemed to be a terra incognita, 
 and add to our wealth by engaging in its fisheries or the deVelop- 
 ■ment of its mines. 
 
 We do not think we go beyond the limits of our position, 
 when we inquire whether the i'evr aged men, who have produced 
 this result, are not woi'thy of some greater recognition than the 
 persecution they seem to have been subjected to at the hands of 
 the Executive and Legislative Departments of this Nation, ever 
 since it became apparent that they would succeed in the full per- 
 Ibrmance of their contract made with the United States, to con- 
 nect, by a railroad, the waters of the Missouri with those of the 
 Pacific. 
 
 The road between Niles and Oakland, already spoken of, was 
 consolidated with the Western Pacific. The Western Pacific and 
 the Central Pacific wcie then consolidated into a new corporation, 
 and with the new corporation there was consolidated the San 
 Francisco, Oakland and Alameda Railroad Company, which had 
 been formed by the amalgamation of the San Francisco and 
 O^ikland and the San Francisco and Alameda — and the San 
 Joaquin Valley Kailroad Company and the California and Oregon 
 Railroad Company, under the name of The Central Pacific Rail- 
 road Company, 
 
 The stock of the original Central Pacific Railroad Company of 
 California, of the Western Pacific, of the San Francisco Bay 
 Railroad Company, of the San Francisco, Oakland and Alameda 
 Railroad Company, of the San Joaquin Valley Railroad Company, 
 and of the California and Oregon Railroad Company, were retired 
 -and exchanged for $51,373,700 of the stock of the new Central 
 Pacific Railroad Company : 
 
85 
 
 For the stock of the Central Pacific of California, . $40,570,100 
 
 For the stock of the Western Pacific, . . . 7,900,000 
 
 For the stock of the California and Oregon, . . 1,838,300 
 
 For the stock of the San Joaquin Valley, . . 305,000 
 For the stock of the San Francisco, Oakland and 
 
 Alameda, 760,300 
 
 The entire capital stock of the last mentioned consolidated 
 Company being the same as that of the Central Pacific Railroad 
 Company of California, one hundred millions. 
 
 None of the roads consolidated with the Central Pacific of 
 California have ever been a burden on the earnings of the main 
 line ; and the policy of consolidation, to put them all under one 
 management, and run them all in one system, was certainly wise 
 management in saving cost of superintendence, and, to some ex- 
 tent, of motive power and equipment. 
 
 If we may judge from the questions put by the Commissioners to 
 witnesses that appeared before them, they were under the impres- 
 sion that these different lines were represented by too much of the 
 capital stock. As we have heretofore said, that is a matter which 
 concerned only the stockholders, and no bona fide stockholder has 
 been heard to complain. All those who own stock at present, 
 bought in view and with the full knowledge of what had been 
 issued, and the purposes for which it had been issued. And cer- 
 tainly, from the position that the Government occupies in this 
 matter, it has no cause of complaint. 
 
 The surplus earnings were divided among the stockholders, and 
 whether those earnings were divided upon the basis of an issue of 
 fifty millions instead of five millions, does not in any way inter- 
 fere with the rights or the security of the G-overnment. 
 
 After this consolidation various roads were built by the di- 
 rectors of the Central Pacific, thi-ough one or other of the Con- 
 struction Companies. Many of them were leased to the Central 
 Pacific, but as the result shows, as heretofore stated, at a net 
 profit of something over ten millions. • All such roads have been 
 feeders to the main line or aided road. So that, in this respect, as 
 iu all the other acts of the Company, the position of the Govern 
 ment has not been damaged. 
 
 The only work undertaken by ^the directors of the Central 
 Pacific which has in any way withdrawn any of the revenues 
 7 
 
86 
 
 from the aided road has been the construction of the Southern 
 Pacific, which they were forced to undertake in consequence of 
 the legislation of Congress providing for such a road, and which, 
 if they had not undertaken it, would have resulted much more 
 ^disastrously to the revenues of the Central Pacific, as we state 
 hereafter, and as the testimony before the Commission shows, that 
 unless the directors of the Central Pacific Road had concluded to 
 undertake its construction for the purpose of protecting the 
 earnings of the Central, the Government would have guaranteed 
 or endorsed eighty or one hundred million of the bonds of the 
 -corporation represented by the late Thomas A. Scott, to be used 
 in such construction. 
 
 XI. 
 
 Purchase of the Stock of the California Pacific Railroad. 
 
 The California Pacific Railroad formed the shortest line from 
 Sacramento to San Francisco. It was a distance of eighty-five 
 miles, as compared with 137, the route of the Western Pacific via 
 Oakland, and as against 177 miles on the Western Pacific, by way 
 of San Jos6, with the impediment on this line of a grade of mnety- 
 two feet to the mile, a short distance south of San Francisco. 
 
 The testimony of Mr. Jackson, the former Pj-esident of the Cali- 
 fornia Pacific, shows that passengers coming from points east of 
 Sacramento, ticketed to San Francisco by the Western Pacific, 
 would abandon the coupons for transportation from Sacramento, 
 and would buy tickets over the California Pacific, thereby saving 
 about three hours time, and about fifty miles in distance. 
 
 The California Pacific, as Mr. Jackson also tells us, was engaged 
 in the year 1871 in seeking aid of prominent capitalists in London 
 and Frankfort, to incorporate a Company, and furnish means to 
 build irom Marysville,a point on its line, by way of the Beokwith 
 Pass, to a connection with the Union Pacific. It was from these 
 circumstances that the promoters and directors of the Central 
 Pacific thought it to their interests, and to the interests of their 
 creditors, and among them the Government of the United States, 
 to secure the control of this line. 
 
 They did not use any money belonging to the Government for 
 such purpose. They did not in any way impair the lien of the 
 
87 
 
 Government upon the aided road. The public had already adopted 
 that line as the most convenient and satisfactory mode of 
 transit between the political and the financial capital of the State; 
 and, apart from the danger to the financial success of the entire 
 main line aided by the Government, it was the part of wisdom to 
 control the shorter transit, to give those who came from points 
 east of Sacramento the benefit of the shorter route to their desti- 
 nation, San Francisco. 
 
 At the time of this purchase, passengers over the California 
 Pacific were taken by rail to Vallejo, and from there to San Fran- 
 cisco by steamer. The directors of the Central Pacific improved 
 this route, by building a branch line to Benecia, using a ferry from 
 that point to the shores of Contra Costa County, and by rail to 
 Oakland, so as to make the transportation from Ogden to Oakland 
 without change of cars, decreasing the time of travel over one 
 hour. 
 
 These accommodations and the saving of time resulted, as do all 
 such improvements of travel, in an increase of business, and in that 
 way the aided lines were benefited. Certainly they did not 
 sustain any damage. 
 
 This road was leased to the Central Pacific, certainly not to 
 the disadvantage of the Government, if we are to give any cre- 
 dence to the wailings and lamentations of the owners of a minority 
 of the stock. Tiie lease was a financial benefit to the Central 
 Pacific corporation, while it was just and fair to the lessors. 
 
 The advantages of this course will be further illustrated,' if 
 another trans-continental road should enter California to compete 
 for through business to San Francisco. Even so far as the 
 Atchison, Topeka and Santa Fe has penetrated into California, 
 running cars as it does by arrangement with the Southern Pacific 
 to Oakland, the advantages of controlling the California Pacific in 
 the saving of time are already manifest. The Government, by its 
 actions, has testified to the wisdom of this purchase, by its very 
 properly directing that the mails tor San Francisco be transported 
 over the California Pacific, instead of by the longer route over the 
 aided Western Pacific. 
 
88 
 
 XII. 
 
 Diverting Traffic from aided to non-aidbd Linbs. 
 
 It is said that traffic has been diverted from the aided to the 
 Don-aided roads. That is true only in one case, and for that the 
 Government, and not the directors, is responsible. 
 
 As to the roads built in California that are not included in 
 the system of the Southern Pacific Railroad Company, all have 
 tended to increase the earnings of the aided line ; and this is also 
 true of such business as the Southern Pacific gathers in California, 
 and delivers to the Central Pacific at Goshen. 
 
 But, as we say, the diversion of the through business from the 
 aided line to the Southern Pacific is not the fault of the Central 
 Pacific. The Government forced this property on the promoters 
 of the Central Pacific. It subsidized the line, provided it was 
 built within a certain time, and it must have known that if two 
 roads were to do the transportation business for the limited 
 population upon the Pacific coast, the one would necessarily 
 divert patronage from the other. 
 
 We say, that the Government forced this road upon the Central 
 Pacific. When the Central Pacific was first completed from 
 Sacramento to Ogden, it was in a crippled financial condition. It 
 had, from the great difficulties of construction, and from the con- 
 dition of the markets for labor and material-s at the time at which 
 it was constructed, and from the unparalleled haste of such con- 
 struction, spent enough money in said construction to have paid 
 for the building of two such roads. 
 
 The testimony of the contractors and employees who did the 
 work of construction from Newcastle to Ogden is, that that 
 road could have been constructed five years after its completion 
 for about thirty per cent, of the money that it cost. Seventy 
 cents out of every dollar expended was the cost of the great 
 speed with which it was built, and of the war prices of material 
 and the Government tax thereon. 
 
 The Central Pacific could not avail itself of the cheaper markets 
 of the world. It could not buy its iron in Wales or Belgium. 
 It could not ship its material to San Francisco under a foreign 
 flag. It was forced to purchase American rails at an average of 
 
89 
 
 over eighty dollars per ton, instead of English rails at an average, 
 including duty, ot fifty dollars a ton. It was forced to pay $17.50 
 freight from New-York to San Francisco, when it could have 
 shipped for less than $10 from Cardiff to San Francisco. It was 
 forced to pay a war insurance for goods shipped under the American 
 flag as high as 17 per cent., when it could have obtained the same 
 guarantee for goods shipped under the English flag for less than 
 three per cent. It paid to the Government on many of the locomo- 
 tives purchased, a war tax of $960. It paid for two engines that it 
 was forced to buy in an emergency, so that the work of construc- 
 tion might not be delayed, $70,752. The first ten engines that it 
 bought cost upward of $191,000; the second ten upward of 
 $215,000. 
 
 The freight via Cape Horn on the first locomotive purchased 
 by the Company was $2,282.25. By reason of certain material 
 being delayed in coming around Cape Horn it was compelled to ship 
 some locomotives across tlie Isthmus of Panama. It paid freight 
 on one locomotive $8,100. On a shipment of eighteen locomotives 
 by the same route it paid as transportation charges, $84,886.80, 
 being $4,692 each. 
 
 Such examples might be continued indefinitely, but they are 
 sufficient to show why the Central Pacific was, as I have stated, 
 financially crippled when its last spike was driven. 
 
 If the California Pacific had proceeded unchecked with its 
 scheme to connect with the Union Pacific by way of Beckwith 
 Pass, it would have made such connection certainly for less than 
 fifty cents on the dollar of the bonded and aided debt of the 
 Central Pacific. And it was this knowledge, joined to the ad- 
 vantages the Central Pacific expected to derive in its local traffic 
 Irom acquisition of a majority of the capital stock of that Com- 
 pany, that induced the promoters of the Central Pacific to ac- 
 quire it. 
 
 And so with the Southern Pacific. With the easier grades upon 
 that route, the aided roads were in no condition to stand the con- 
 test with the Southern Pacific Railroad in adverse possession, nor 
 could they take the risk of allowing it to be built by Mr. Scott, 
 or others in the interest of the Pennsylvania Railroad, with 
 moneys furnished by the Government. 
 
 It was not a choice for the Central Pacific, whether it would 
 construct this channel for the diversion of business from the 
 
90 
 
 Central Pacific. Had it not done so, it would have been con- 
 structed by the Pennsylvania Road or its allies. 
 
 In evidence of our statement, that the Central Pacific was 
 financially crippled, we refer to the debate that took place before 
 the House Committee on Pacific Railroads, during the session of 
 18V5. Thomas A. Scott, then President of the Pennsylvania 
 Railroad Company, appeared before that Committee, seeking 
 further aid for the Texas Pacific, so that it might build its road 
 into California. Mr. Huntington, on behalf of the Central Pacific, 
 opposed this project, and told the Committee that the Central 
 Pacific was bound to build this road for its own protection. Mr. 
 Scott retorted, that they could not build it, that their finances 
 were in a desperate condition, that they were carrying a floating 
 debt of fourteen millions. 
 
 Although Mr. Scott's statement was somewhat extravagant, it 
 was so near the truth as to be far from pleasant to those who were 
 representing the Central Pacific. 
 
 If the Southern Pacific had been operated as a rival road from 
 the time of its completion, there would n6t have been any net 
 earnings of the Central Pacific. 
 
 With such a competitor, it is more than doubtful whether the 
 Central Pacific would pay operating expenses and fixed charges. 
 
 But by the course adopted, the Central Pacific has controlled 
 this great element of danger, and has kept the aided roads in good 
 condition, financially and physically, and they never were in better 
 condition than they are to-day to perform the contract with the 
 Government under which aid was obtained, keeping its road in a 
 state of usefulness, at all times ready to yield all the service to the 
 Government in the transportation of troops, munitions of war, 
 public stores and the mails, whenever the Government felt that it 
 could aflford to pay for the services of a first-class road, instead of 
 sending its business around Cape Horn or through a foreign terri- 
 tory. 
 
 The Commissioner of Railroads, in his report dated September 
 13th, 1887, says : 
 
 I inspected the road and its principal branches in June and July. This 
 property, including track, road-bed, bridges, culverts, station buildings, 
 ■workshops and tools, was in excellent condition. The ditches are ample, 
 road-bed well raised, and ties and rails accurately and firmly laid. In the 
 extensive and well equipped shops at Sacramento any work can be done that 
 
91 
 
 a first class railroad can require, and those at Carlln and Wadsworth are 
 placed and equipped to make repairs becoming necessary on the road. 
 There is a good library at each station. 
 
 We leave this branch of the inquiry by saying, that in every act 
 of the directors of the Central Pacific, whether in connection with 
 the business of that Company directly, or whether as promoters 
 or directors of local lines, they have not been the cause in any 
 way of diverting business from the aided line, or in any way in- 
 juring the position of the Government. 
 
 And we say further, without fear of successful contradiction, that 
 every invasion of the contract made between that Company and 
 the Government, whether we review the contract by the terms of 
 the Act of 1862, or the Amended Act of 1864, or by the spoliation 
 of the Company under the Act of May 7th, 1878, known as the 
 Thurman bill — every departure from the terms of that contract, 
 whether implied or expressed, has been on the part of the Govern- 
 ment of the United States. 
 
 It granted in aid of the construction of the road the land spe- 
 cified in the Act of 1864 ; but it has prevented the Company from 
 enjoying the benefit of the grant, by refusing to issue patents for 
 the land, and the Company is now claiming that it has been dam- 
 aged by such refusal to the extent of at least $500,000. It kept 
 back a considerable amount of the aid-bonds after the road was 
 being operated as a through line, on the ground that it was not 
 completed according to the terms of the contract ; but it forced 
 the Company to pay it five per cent, on its net earnings, though 
 by the terms of the Act of 1862 such per centage was not paya- 
 ble until after the i-oad was completed. By retaining these bonds 
 it forced the Company to borrow money to the amount that such 
 bonds would have produced, and to pay for such loans interest 
 ranging from twelve to fifteen per cent, per annum. 
 
 It has refused its transportation to the Company, and has ac- 
 tually paid more for the service than the amount at which it 
 would have been performed by the Company. It has had its 
 mails, troops, munitions of war and public stores transported over 
 non-aided lines within the control of the Central Pacific Railroad 
 Company, and has refused to pay for such service even after the 
 Supreme Judicial Tribunal of the nation has pronounced that the 
 Company^was entitled to such payment. 
 
92 
 
 We do not know tliat tlie limes are propitious to obtain a fair or 
 equitable consti-\iction of this contract by any of the departments 
 of the Govei'nment, otlier than the judicial. And it becomes 
 eveiy citizen of the United States to congratulate himself, that 
 there is one department of his Government upon which he can 
 rely ; that there is one tribunal that is governed by certain fixed 
 principles, and is not swayed by the political passions or interests 
 of the hour; although it may I'equire an amendment to the Consti- 
 tution to force the other Departments of the Government to yield 
 obedience to its mandates. 
 
 If the relations that exist between these railroad companies 
 and the Government are to be used by the party in power 
 to perpetuate itself, or by the party out of power to dis- 
 possess its opponent, then no decisive result will ever be ob- 
 tained, no satisfactory solution will ever be arrived at in any dis- 
 cussion of the question between the Executive and Legislative 
 Departments of the Government and its contractors, the Union 
 and the Central Pacific Railroad Companies. 
 
 In all the testimony gathered by the various examining officers 
 of the Government, derived either from the books and accounts of 
 these lailroad companies, or by oral examination of their friends 
 or enemies, and in all that may be reported from the unauthor- 
 ized and illegal inquiry under the auspices of the Commission 
 appointed by the President, in pursuance of the Act of March 3d, 
 3 887, not one tittle of evidence has been introduced, or will be 
 found, to impeach the correctness of the conduct of either of these 
 Companies in their relations toward tlie Government. 
 
 We go further, and say on behalf of the Central Pacific, that you 
 cannot charge the managers of this road with any act that would 
 not be sustained by the Courts, in the conduct of a guardian 
 towards his ward. 
 
 The characteis of the presiding officers of the Union and Central 
 Pacific Railroad Companies are the equals of those of any citizen. 
 There are no two men, in their public and private life, more actu- 
 ated by lionest and worthy motives, tlian Charles Francis Adams 
 and Leland Stanford; and if ever their acts and intentions are 
 weighed by any impartial tribunal, they will be found to be in ac- 
 cord with the high character they bear. 
 
 Mr. Stanford was the first Republican Governor of California. 
 He was its " war" Governor. And he did more than any other man 
 
93 
 
 ■within the Slate of California, by his firm, intelligent and wise ac- 
 tion as Governor, in preventing strife and bloodshed during the 
 €arly days of the rebellion, and keeping the State true to the 
 Union. As was said by Mr. Campbell, of Pennsylvania: 
 " Thanks to the loyal people of Calif ornia, Oregon and Washing- 
 ton, loe have not been called upon to quell rebellion on the shores 
 of the Pacific^ 
 
 The opinion of the Legislature of California, as to the services 
 and character of Mr. Stanford, was expressed after his terra of 
 oflBce as Governor had expiied, in the following resolution, 
 adopted by both houses of the Legislature by unanimous concur- 
 rence : 
 
 " JVo. 3. Concurrent resolution, adopted December 15th, 1863: 
 " Hesolved, By the Assembly, the Senate concurring, that the 
 " thanks of the people are merited and are hereby tendered to Le- 
 " land Stanford, for the able, upright and faithftd manner in 
 *' which he has discharged the duties of the office of Governor of 
 " the State of California for the past two years." (Statutes of 
 California, 1863-64, p. 542.) 
 
 When the men who are controlling these two Companies come 
 to Congress with the statement, that in a contract they have 
 made with the Government they have been wronged, that there 
 are equities in their favor which should be considered : when they 
 say they entered into a contract with the Government, in which 
 certain things were expressed, and that between the lines of that 
 contract more was implied, and that effect should be given to the 
 implied as well as the express terms of the contract, they are, at 
 least, entitled to a respectful and impartial hearing by the repre- 
 sentatives of the people. They should not have the doors of the 
 inquiry chamber closed in their faces. They should not be made 
 the victims of unreasonable or unconstitutional legislation. 
 
 The legislative department has not been ordained by our Con- 
 stitution, or by any principle of natural right or justice, to con- 
 strue a contract to which the Government is a party. 
 
 As was said by Mr. Hamilton in his celebrated communication 
 to the Senate, under date of January 20th, 1795 : 
 
 When the Government enters into a contract with an individual it deposes, 
 as to the matter of the contract, its constitutional authority, and exchanges 
 
94 
 
 the character of le^slator for that of a moral agent, with the same rights 
 and obligations as an individual. 
 
 Its promises may be justly considered as excepted out of its power to legis- 
 late, unless in aid of them. It is in theory impossible to reconcile the idea 
 of a promise which obliges, with a power to make a law which shall vary 
 the effect of it. (3d Hamilton's Works, pages 518, 519.) 
 
 Our fathers, and they were wise men in their generation, left 
 the contests between the governing power and the governed to 
 the calm, placid and mediating equity of the courts provided by 
 the Constitution. 
 
 The constructors of the Central Pacific say: We entered into 
 a contract to assist in the performance of a national undertaking, 
 which was supposed and declared at the time to be an impossi- 
 bility ; we risked the results of our labors for two score or more 
 of years in aiding the Government to reclaim the territory between 
 the Missouri and the Sacramento and to more effectually guard it8 
 Pacific possessions ; we put into it our worldly substance and 
 risked our lives by exposure to the elements amidst the rigorous 
 winters of the Sierra Nevadas, to carry out in good faith the 
 contract we had made, and to do it in half the time allotted. 
 We come now and say to you that in making that contract we re- 
 lied on your statement, that you would give to these two roads the 
 patronage of the Government, which had averaged for many years 
 not less than $7,300,000, and which you expected would largely 
 increase in the future j and that the revenue from this source we 
 expected, and as you expected, and as was so announced in 
 the debates in Congress, would cover the credit which you ad- 
 vanced to us, and the interest that you were to pay for our use of 
 such credit; and we say that you have so far fallen short in your 
 coTitract with us as to render to us your business amounting to 
 but one-tenth part of the promised compensation, and although 
 you agreed to pay us for doing all your business reasonable 
 and lair compensation, and the same rates paid to us by our other 
 pati'ons, yet that you have so far disregarded your obligations in the 
 premises as to keep from us all the transportation you controlled 
 which you could ship by any other line, not even giving to 
 us the preference at the same prices ; and we show you that by 
 our efforts and the use of our capital you have already saved by 
 the performance of our contract, and retained in your Treasury 
 over $139,000,000; and in the language of the General comr 
 
95 
 
 manding your armies, the Indian as a problem has been ob- 
 literated from army tactics, by I'eason of opening the vast ter- 
 ritory between the Missouri and the Sacramento to settlement 
 and civilization ; all of which has been accomplished by the due 
 fulfillment of our part of the contract entered into with you. 
 
 When we come to you, as the governing power of the nation, 
 to represent these facts, and the advantages which you enjoy, and 
 will continue to enjoy, we say they are matters which should 
 engage your earnest attention, and we ought not to be met 
 ■with vituperation or invective. 
 
 XIII. 
 
 Inpluencing Legislation. 
 
 The Commission appointed under the Act of Congress of March 
 3d, 1887, were charged to inquire — 
 
 What amount of money or other valuable consideration, such as stock, 
 bonds, passes, &c., have been expended or paid out by said Companies, 
 whether for lawful or unlawful purposes, but for which suflBcient and de- 
 tailed vouchers have not been given or filed with the records of said 
 Company ? 
 
 This branch of the inquiry forms question No. 20, which the 
 Commissioners printed and sent to the officers of Companies which 
 had received aid from the United States. 
 
 Mr. Stanford, President of the Central Pacific, made answer in 
 writing, as follows : 
 
 In answer to interrogatory No. 30, I have to say, that the Company, in its 
 settlement with the Government, proposes to claim nothing as expenses in 
 determining the net earnings in which the Government has an interest, for 
 which the Company does not famish full and satisfactory vouchers. It is 
 entirely immaterial to the Government, and the Government can have no 
 interest in knowing what amount of money has been expended for which the 
 vouchers on file are not suflBcient in detail or otherwise. I would, however, 
 remark, 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. 
 
 Question 21 of the printed questions reads: 
 
 Further to inquire and report whether said Companies, or either of them, or 
 
96 
 
 their oflBcers or agents, have paid any money or other valuable consideration, 
 or done any other act or thing for the purpose of influencing legislation. 
 
 Mr. Stanford answered the question as follows : 
 
 In ansvrer to interrogatory No. 31, I have to say, in behalf of the Central 
 Pacific Railroad Company, that no deduction vrill be made from that portion 
 of the net earnings belonging to the United States, on account of any expen- 
 diture for which detailed and satisfactory vouchers are not furnished. We 
 will account to the Government as if no suck expenditures had been made. 
 
 On the oral examination of Mr. Stanford by the Commission, 
 vouchers for money paid to him by the Company were shown to 
 him, and he was aslied by the Chairman of the Commission to 
 explain. 
 
 The examination took the following form : 
 
 " Q. Mr. Stanford, will you please look at the voucher, and ex- 
 plain to the Commission, in detail, the character of the expendi- 
 ture covered by the amount named in the bill ?" 
 
 this voucher was February 7th, 1876, and it was 
 for general expenses to December 31st, 1875.] 
 
 Mr. Stanford examined the voucher for some time, and was 
 asked by his counsel : 
 
 Q. Have you any recollection of the contents of that voucher? 
 
 A. No, sir; I don't remember. I presume it is made up of a 
 great many items, but I have no recollection of this particular 
 voucher. 
 
 The Chairman. — Q. How did you make up that sum? 
 
 A. Well, except they have my voucher, I could not tell, because 
 I don't remember. But I used to pay out money for the Com- 
 pany, one way and the other, and after a time I would pass in 
 my accounts, or rather, my vouchers, and it would be made up by 
 somebody connected with the office, presented and allowed to me ; 
 and I presume this is one of that kind. 
 
 Q. Have you any accounts, showing any detailed statement, 
 from which you took that sum of money, in order to give a 
 voucher to the Company ? 
 
 A. None at all. 
 
 Q. For what purpose would you make expenditures ? 
 
 A. Well, I can tell you generally. Our accounting offices for 
 a long time were at Sacramento, and I used to be in San Fran- 
 cisco doing business for the Company, a great deal of the time. 
 In those days I borrowed money, paid out interest, renewed notes, 
 and sometimes paid commissions for large amounts. Everything 
 I paid out for the interest of the Company would be made up 
 and presented, and I would be credited for the aggregate. 
 
97 
 
 Q. Did you make any explanation to the Company, at the time 
 that you presented tlie voucher ? 
 
 A. I have no doubt that I did. 
 
 Q. What explanation did you give to the Company ? 
 
 A. Well, as I don't remember the items of the voucher, I can- 
 not remember, of course, the explanation I may have given to the 
 Company. I don't think I went into details. I think I said I 
 found it necessary to expend, in the general interest of the Com- 
 pany, so much, and I do not think that they ever questioned me 
 particularly as to the wisdom of the expenditures. 
 
 Q. Was any part of the $171,000, the sum named in this bill 
 that I have handed to you, and which you have paid, expended 
 for the purpose of influencing legislation ? 
 
 Mr. Cohen, of counsel for the Central Pacific, said : " We object 
 to the question, for the reason that the witness says he does not 
 remember what constituted the items composing this voucher. 
 For that reason, we advise him to decline answering further ques- 
 tions with respect lo this voucher. Our advice is also founded 
 upon the fact, that the Company is willing to account to the Gov- 
 ernment for its proportion of any voucher that is produced, or any 
 entry upon the books that is unexpl.iined, and, therefore, we can- 
 not see that it will make any difference what the Company did 
 with the money, whether it threw it into the sea, or wasted it in 
 any manner or form ; and speaking for myself, as counsel, and be- 
 lieving that I express the views of my clients, I say that I regard 
 these questions as simply seeking to pander to a public scandal, 
 and that they cannot have any bearing upon the purposeH or ob- 
 jects entrusted to this Commission." 
 
 liy the Chairman : 
 
 Q. I repeat my question : Was any part of the sum named in 
 the voucher submitted to you paid to any agent or individual for 
 the purpose of influencing legislation ? 
 
 Before the witness made answer, the Chairman said : 
 
 " If you don't know it you can answer the question." 
 
 A. I told you, I don't know anything about this ; but then I 
 shall act upon the advice of my counsel. I do not suppose it can 
 make any possible difference so long as we account for the money. 
 The Government cannot have any more than the money, and the 
 Company is willing to account for that, if you are not satisfied 
 with the vouchers. 
 
 Q. Do you decline to answer my question ? 
 
 A. Under the advice of counsel, I do, any further than I have 
 answered it. 
 
 The witness further said : 
 
 " I state that I never corrupted or sought to corrupt any mem- 
 
98 
 
 ber of any Legislature, or any member of Congress, or any public 
 official, nor have I ever authorized or allowed any agent ot mine 
 80 to do." 
 
 It is in evidence before the Oommission, that all the expendi- 
 tures made by Mr. Stanford, for which there are no detailed 
 vouchers, have been approved by the Board of Directors and 
 ' atified by the stockholders. 
 
 Now it will be seen, that the witness, being examined twelve 
 years after the money had been expended, having no recollection 
 of the purpose of the expenditure, was, by the action ot this 
 Board, pretending to exercise judicial functions, forced into the 
 position of being compelled, under the advice of his counsel, to 
 decline further reply. 
 
 It may be said, that it appeared when the matter was sub- 
 mitted to the Circuit Court of the United States, upon the appli- 
 cation of the Commission to compel the witness to answer, that 
 this particular voucher had already been scrutinized by the 
 Government Auditor of Railroad Accounts ; that he had refused 
 to allow it as a proper deduction from the gross earnings of the 
 Company, and that in settling with the Government the amount 
 of this voucher was treated as money on hand, and the United 
 States received its proportion, which was covered into the Federal 
 Treasury in the manner provided by law. 
 
 The questions put by the Commission were calculated to put 
 this witness in a false position. He had sworn he could not re- 
 collect the purposes for which the sum of money, or any part of it, 
 represented by this voucher, had been expended, and when, disre- 
 garding the truthfulness of his reply, he was asked whether any por- 
 tion of it had been spent for the purpose of influencing legislation, 
 the counsel representing him would have been untrue to their 
 duty if they had not assumed the responsibility and advised him 
 to decline to answer further. 
 
 But an answer to the question which the counsel advised this 
 witness not to make was really contained in his first reply, that 
 he did not remember the purposes for which this money had been 
 expended. 
 
 " Influencing legislation " has a wide and diverse meaning. 
 Every American, who cares for his birthright, and who under- 
 
takes to perform the duties of citizenship, influences legislation 
 when he declares his preference for one candidate for a legislative 
 office above another. His neighbor, who goes forth to represent 
 him in the local Legislature or in Congress, to whom he has stated 
 his views on the current questions of the day, which will form 
 the subject of enactment, is influenced in his course by such ex- 
 pression, and in this way, every voter for a successful candidate 
 may be said to influence legislation. 
 
 It is the right and the duty of every citizen to influence legisla- 
 tion ; and the more interested he is in the subject matter, the 
 higher becomes the duty to use his influence to obtain such laws 
 as his necessities justly demand. The duly of determining upon 
 the propriety of a proposed statute, is with the legislative body. 
 
 As the necessities arise for interfering in legislative acts, the 
 purpose of which is not announced before a Legislature meets, 
 and as the persons interested in such subject may be distant 
 from the State House, or from ihe National Capital, it is proper 
 to employ agents, who reside at the Capital of the Slate or of 
 the Nation, to represent those who may be interested in the 
 enactments proposed. 
 
 The payment of money to influence legislation may be made 
 with the most perfect propriety. ' Effective service by intelligent 
 agents, cannot be procured gratuitously before a legislative de- 
 partment more than before the judicial department. 
 
 In England the business of parliamentary agents is recognized 
 and respected. Those having business with the Legislature of 
 Great Britain are represented by agents, just as suitors in Court 
 are represented by counsel ; and although the business of agents 
 of this character in this country is not as highly esteemed as in 
 England, it would be better for the community if it were so. 
 
 There is no more valid reason why one should not properly 
 employ an agent to promote the passage or defeat of a pending 
 measure than that he should be debarred from the employment of 
 counsel to prosecute or defend in a Court of justice. 
 
 It is said that the Central Pacific has disbursed a large sum 
 for such service. 
 
 It was proved before the Commission that the parliamentary cost 
 of explaining to Committees and obtaining the neessary legislation 
 for the Brighton Railway averaged over . £4,800 per mile. 
 Of the Manchester and Birmingham, . . 5,000 " " 
 
100 
 
 Of the Blackwall Railway, .... £14,400 per mile. 
 That the solicitors' bills for the Southeastern 
 
 Railway was a total of ... • £240,000 
 
 The expenditures of the Central Pacific are insignificant, as 
 compared with the cost of the same services required for obtaining 
 the necessary legislation from the English Parliament But what- 
 ever amount has been spent by the Central Pacific for the purpose 
 of influencing legislation, the Government is the responsible cause 
 for the largest portion of such expenditure. Long before the last 
 rail was laid, and continuously since, this Company has been 
 subjected to the most nagging and ceaseless persecution at the 
 hands of the officers of the various Departments and of Congress. 
 And it has been to ward off the hostile effects of such adverse 
 action that this Company has been compelled to employ agents 
 and attorneys to explain their true position to officers of the 
 Departments and to members of Congress, and the necessity for 
 such expenditure has recurred with every change in the incumbents 
 of the difierent Departments and their subordinates, and with the 
 election of each Congress. 
 
 Take the case in hand. The witness, Mr. Stanford, is President 
 of a railroad system extending from Portland, Oregon, to the Salt 
 Lake Valley, and from the City of San Francisco to the City of 
 New-Orleans, covering a distance of nearly five thousand miles. 
 
 The interests of the corporations he represents are liable to be 
 the subject of legislative enactments in the States of Oregon, 
 California and Nevada, and in the Territories of Utah, Arizona 
 and New-Mexico, and the States of Texas and Louisiana; and the 
 net earnings of the whole system are liable to be controlled by 
 the by-laws, resolutions and ordinances passed in every county 
 and every municipality in each one of those States and Territories 
 through which any portion of this railroad system may penetrate, 
 and the interests of all such corporations, and especially of the 
 Central Pacific, are liable to be seriously affected by the legislation 
 in Congress and by the rules adopted for the government of the 
 difierent executive Departments with which these Railroad Com- 
 panies have business. 
 
 It therefore becomes the duty of the President or managers of 
 such Companies to watch and to influence the legislation of all 
 
101 
 
 these tribunals, that the corporate interests may not be adversely 
 affected. 
 
 It is just as much the duty of the managers or directors of a 
 corporation to do this, as it is to defend any action that may be 
 brought against it, and for such purpose to employ and pay for 
 the services of intelligent agents, to protect it against hostile 
 legislation, as it would be to employ and pay for the services of 
 counsel, learned in the law, to protect it against an unjust judg- 
 ment. 
 
 To defeat proposed unjust and hostile legislation, a resort must 
 be had to the services of those who are not known to be in the 
 employment of the corporation whose interests they guard. 
 
 The plans and purposes of the authors of drastic measures 
 would not become known to the directors of the corporation, if 
 their agents heralded their employment. 
 
 Corporations, like governments, must work with secret agents, 
 and when the business of such an agent becomes public, his use- 
 fulness is at an end. 
 
 To have informed the Commission of all the agents employed 
 by the corporation under the management of this witness, would 
 have put in peril the further prosecution of its business, both 
 physical and financial. 
 
 Some portions of the road, operated by the Central and South- 
 ern Companies, are run through districts where the safe passage 
 of a train is subject to the same risk of interference as a stage 
 used to be on our frontier lines. There are men banded together 
 in the territories to rob the mails and treasure in transit. We 
 c^3uld not, with any safety, name the men employed in the pre- 
 vention or detection of these acts. 
 
 We have agents also to guarantee to us the faithfulness 
 and to warn us of the unfaithfulness of various classes of em- 
 ployees. Their discharge from our service must necessarily 
 follow the rendering of their names. The most important in- 
 formatioa that all corporations of this character receive must 
 of necessity come through secret agents. The names of the 
 attorneys who appear before Committees or Courts are well 
 known, but it is not with that class that the Commission were 
 concerned. 
 
 To accomplish these results there must be in the employ 
 of the corporation well trained special agents, and money must 
 8^ 
 
102 
 
 be disbursed for their remuneration. In the conduct of public 
 affairs a fund for this purpose is usually provided by the Legisla- 
 tive Department to be used by the Executive. 
 
 Such a fund has been entrusted to the Chief Magistrate of the 
 Nation, and to the Governor of every State since the formation of 
 our Government ; and the man who controls the operation of the 
 ■millions of capital represented by four or five thousand miles of 
 railroad and the financial interests of its owners must have a like 
 fund. It is in the interest not only of the stockholders of such 
 •corporations, but of the public, to confide it to him. 
 
 It is not out of place to say that the man whose honor was 
 fiought to be impugned possesses without regard to political parties 
 the confidence of the people of the State of California, of which 
 he has been Governor, and which he is now representing as a 
 Senator in Congress. 
 
 We have heretofore shown in the course of this argument that 
 the people of his State and of the Nation trusted him in perilous 
 times, and that be perlormed his high and arduous duties so as to 
 ■meet the approbation of the people and receive the thanks of the 
 ^Legislature. It is not claiming too much that every presumption 
 goes with him in the supposition that he expended any fund en- 
 trusted to him without violating any law of the State of which 
 he had been Chief Executive, or any Federal law which, as 
 ■Senator as well as citizen, it is his duty to uphold and protect. 
 
 In the history of our country quite unseemly exhibitions have 
 been witnessed before. The President of Congress was chal- 
 lenged to declare how much of the secret service fund had been 
 -expended in enabling Mr. Franklin to make a loan from the 
 French Government (or the use of the United States. 
 
 In England a faction of the House of Commons, following the 
 lead of an opposition paper, brought disgrace upon themselves 
 by challenging the Government to say how much of the secret 
 service fund had been used to aid Mr. Canning in his mission on 
 behalf of the Government to Portugal. 
 
 It will not do to assume, when a witness (of such a character as 
 this worthy Governor has shown himself to be) refuses to answer 
 a question, that such refusal is made to conceal improper or un- 
 worthy motives or actions. 
 
 When Sir John Cam pbell, afterwards Chief Justice of England, 
 and then Lord Chancellor, was defending Lord Melbourne, the 
 
103 
 
 Prime Minister, from the charge .of maintaining improper rela- 
 tions with Mrs. Norton, he said, it would be unfortunate if the 
 public mind became so debased as to imagine that when a man 
 and a woman came together, with the opportunity for misbe- 
 havior, they had availed themselves of the occasion. And so it 
 may be said, that it is to be hoped that the public intelligence of this 
 country will not be so low as to believe that when the managers 
 ot an immense corporation are forced to employ agents, or expend 
 money to prevent hostile legislation, they have made such expen- 
 diture in an unlawful or corrupt manner. 
 
 There is not a leading corporation in the country that has not 
 been forced to so protect itself. 
 
 There is not an intelligent person of mature age in this coun- 
 try who does not know that leading corporations, not only rail- 
 roads, but banks and insurers, would be severely mulcted by ad- 
 verse and ill-considered legislation, promoted by the worst class 
 in the community, who hang about legislative halls, unless effec- 
 tive measures were taken to prevent such results. 
 
 And, therefore, it is necessary to explain to members of Legis- 
 latures, the merits or demerits of any proposed bill before them, 
 seeking their sanction. Notwithstanding the vituperation, the 
 abuse, that it is the custom to heap upon our legislative representa- 
 tives with but few exceptions, they will be found disposed to act 
 in accordance with right and justice. Often because the measures 
 before them are not sufficiently explained, they are liable to come 
 to an erroneous conclusion. 
 
 The representatives of the people are a true reflex of those who 
 elect thera, and being informed of the merits of the case on which 
 their action is invited, may be trusted to reach as nearly a 
 right and intelligent solution as is possible for men called from 
 the various walks of life in dealing with subjects on which they 
 have had little or no experience. 
 
 It is a gross scandal on the American people, to assert that 
 money used to influence legislation finds its way into the pockets 
 of the men representing them in their Legislatures. 
 
 The present Executive of this nation, who performs his duties 
 BO much to the satisfaction of the people of the country, but a few 
 months ago declined to inform the Senate of his reasons lor 
 removing certain citizens from office. It would have been as 
 much out of character to have suspected him of unworthy motives. 
 
104 
 
 in making such removal, as it is to ascribe them to this witness, 
 whose services to the public in the official positions he has held 
 Bave been as truly and faithfully performed. 
 
 XIV. 
 
 DisASTEOTjs Effects of the " Thueman Bill " on the Inbbbt- 
 
 BDNBSS OF THE CeNTEAL PaCIFIC TO THE GOVEENMENT. 
 
 By Sections 5 and 6 of the Act of July 1, 1862, Congress pro- 
 vided for the payment to the Government of the indebtedness of 
 the Central and "Western Pacific Railroad Companies. 
 
 Section 5 reads : 
 
 To secure the repayment to the United States, as hereinafter promded, of 
 the amount of said bonds, so issued and delivered to said Company, together 
 with all interest thereon which shall be paid by the United States, the 
 issue of said bonds, and delivery to the Company shall ipso facto constitute a 
 first mortgage on the whole line of the railroad and telegraph, together with 
 the rolling stock, fixtures and property of every kind and description, and 
 in consideration of which said bonds may be issued. 
 
 Section 6 provides that : 
 
 The grants aforesaid are made upon condition that said Company shall 
 pay said bonds at maturity, and shall keep said railroad and telegraph line 
 in repair and use, and shall at all times transmit dispatches over said tele- 
 graph line, and transport mails, troops, munitions of war, supplies and 
 public stores upon said railroad for the Government whenever required to 
 do so by any Department thereof ; and that the Government shall, at all 
 times, have the preference of the use of the same for the purposes aforesaid, 
 at fair and reasonable rates of compensation, not to exceed the amount paid 
 by private parties for the same kind of service ; and all compensation for 
 services rendered for the Government shall be applied to the payment of 
 said bonds and interest, until the whole amount is fully paid, ***** 
 and after said road is completed, until said bonds and interest are paid, at 
 least five per centum of the net earnings of said road shall also be annually 
 applied to the payment thereof. 
 
 This reservation of payment was changed by the Act of July 
 2, 1864, which provided: 
 
 That only one-half of the compensation for the services rendered to the 
 Government by said Companies shall be required to be applied to the payment 
 of bonds issued by the Government in aid of the construction of said road. 
 
105 
 
 Prior to the passage of the Act of May V, IS'ZS, known as the 
 " Thurman Bill," it was contended by counsel for the Central 
 Pacific that the mortgage reserved by the Government under the 
 provisions of Section 5 of the Act of 1862, secui-ed to it the 
 building and completion of the road, it being kept in constant 
 repair for efficient service, and the rendering of its use to the 
 Government whenever required for. the transportation of its 
 mails, troops, munitions of war and public stores, and for the 
 payment of the indebtedness of the Company: first, under the 
 terms of the Act of 1862, by the amount of all the compensation 
 for services performed for the Government ; and, second, in the 
 manner provided by the change in the law of 1864, by the pay- 
 ment of one-half of the amount of compensation earned by such 
 service ; and, in both cases, by the payment of five per cent, of 
 the net earnings of the Company. 
 
 After the construction of the Union and Centi'al Pacific roads, 
 it was seen that both Congress and the Companies had been 
 mistaken in their calculation of the amount that the transportation 
 done by the Companies for the Government would produce. 
 Instead of, as was contended by the Senators and Representatives 
 in the debates that preceded the passage of the Act of 1 862, and 
 its amendment in 1864, such transportation producing an amount 
 that would not only satisfy the interest to be paid, but would leave 
 a considerable sum in each year to constitute a sinking fund for 
 the redemption of the principal, it was found, that whilst the 
 business increased in volume, yet the rate of compensation being 
 so greatly reduced from the prices the Government had to pay 
 before the construction of the roads, that the Companies could 
 not and did not in any one year perform sufficient service to meet 
 the annual payment for interest. 
 
 As we have heretofore shown, the Government was, of course, 
 a large gainer by this mistake of the parties in their anticipation 
 of the results of tlie construction of these roads. The Government 
 had all the service that it required, performed at about one-tenth 
 of the charges they had paid before the road was built. Instead 
 of paying to the Companies such rates of compensation as they 
 had anticipated, they covered the diflference into the Treasury, and 
 the Companies became its debtors for the difierence between the 
 rates of transportation allowed and the amounts paid for interest 
 on the bonds. 
 
106 
 
 An attempt was then made to force the Companies to repay to 
 the United States the interest on the bonds as the same was paid 
 by the Government, but the Supreme Court decided that the 
 Companies were under no obligation to refund to the United 
 States the interest paid before the maturity of the principal of the 
 bonds. . 
 
 The point does not seem to have been made or suggested, that 
 the payment by the Companies of the interest or the principal of 
 these bonds in money was an afterthought, and that by the terras 
 of the contract, contained either in the Act of 1862 or the amend- 
 ment of 1 864, they were obligated to pay only in services, and 
 without regard to time. 
 
 It became evident, from the transportation accounts between 
 the Companies and the Government, that the latter was paying in 
 ten years only about the amount they had anticipated paying in 
 one, and that such sums, joined to the five per cent, of the net 
 earnings, would never suffice to discharge the interest or principal 
 of said bonds, and that the total amount of such interest and 
 principal at the time the bonds matured would be far beyond the 
 ability of the Companies to pay. 
 
 It will not be forgotten, that during all the time, the only suf- 
 ferers were the Companies; the Government was losing nothing; 
 it was annually saving an amount sufficient to cover all the interest 
 it was paying, and enough more to cancel a portion of the bonds. 
 In other words, it was keeping to itself the money which, when it 
 made its contract with the Companies, it designed to pay them. 
 The Companies were keeping their contract with the Government 
 in good faitli, with the result of being year by year brought more 
 deeply in its debt. 
 
 But Congress saw only the increase of this debt. It did not 
 regard the fact that the Companies were doing all and more than 
 they had agreed ; that the United States were reaping the entire 
 benefit of the contract, as designed by the representatives of the 
 people when it was made — shut its eyes to the fact that nine- 
 tenths of the compensation which it had impliedly agreed to pay 
 to the Companies was being retained by the Treasury, and saw 
 only the science of its accounting officers in chalking up this tre- 
 mendous score against the other party to the contract. And so it 
 resolved, in defiance of law, contrary to the principles of quity 
 and fair dealing, ignoring the commonest rules of right and justi ce 
 
107 
 
 that it would construe a right reserved to it in the contract, ta 
 alter or amend it, to compel the Railroad Companies to pay the 
 principal and interest of these bonds in money instead of services,, 
 and that they should commence doing this years before the debt 
 matured, and so that act of spoliation, known as the " Thurman. 
 Bill," was added to the statute book on May 1, \%1%. 
 That Act provides : 
 
 That the net earnings mentioned in the Act of 1863 shall be ascertained 
 by deducting from the gross amount of earnings the necessary expenses 
 actually paid within the year in operating the same, and keeping the 
 same in a state of repair, and also the sum paid within the year in 
 the discharge of interest on first mortgage bonds, whose lien has pri- 
 ority over the lien of the United Slates, and excluding from consider- 
 ation all sums owing or paid by said Companies respectively for interest 
 upon any other portion of the said indebtedness ; that there shall be estab- 
 lished in the Treasury of the United States a sinking fund, which shall be 
 invested in bonds of the United States, and the semi-annual interest thereof 
 shall be in like manner, from time to time, invested, and the same shall ac- 
 cumulate and be disposed of as hereinafter mentioned. 
 
 It further provides that : 
 
 There shall be carried to the credit of said fund, on the first day of 
 February in each year, the one-half of the compensation for services ren- 
 dered for the Government by said Central Pacific Railroad Company, not 
 applied in liquidation of interest ; and in addition thereto, said Company 
 shall on said day in each year pay into the Treasury, to the credit of said 
 sinking fund, the sum of twelve hundred thousand dollars, or so much 
 thereof as may be necessary to make the five per cent, of the net earnings of 
 its road, payable to the United States under said Act of 1862, and the whole 
 sum earned by it as compensation for services rendered the United States, 
 together with the sum by this section required to be paid, amounting in the 
 aggregate to twenty-five per cent, of the whole net earnings of said railroad, 
 ascertained and defined as hereinafter provided, for the year ending on the 
 31st day of December next preceding ; that the said sinking fund so estab- 
 lished and accumulated shall, at the maturity of such bonds, so respectively 
 issued by the United States, be applied to the payment and satisfaction 
 thereof, ******* and of all interest paid by the United States 
 thereon, and not re-imbursed, subject to the provisions of the next section. 
 
 The next section being — 
 
 That said sinking fund, so established and accumulated, shall * * * be 
 held for the protection, security and benefit of the lawful and just holders of 
 the mortgage lien debts of said Companies lawfully paramount to the rights 
 of the United States, and for the claims of other creditors, if any, lawfully 
 chargeable upon the funds so required to be paid into said sinking fund. 
 
108 
 
 according to their respective lawful priorities, as well for the United States, 
 according to the principles of equity, to the end that all persons having any 
 claim upon said sinking fund may be entitled thereto in due order ; but the 
 provisions of this section shall not operate or be held to impair any existing 
 legal right, except in the manner in this Act provided, of any mortgage lien 
 or other creditor of any of said Companies respectively, nor to excuse any of 
 said Companies respectively from the duty of discharging out of their funds 
 its debts to any creditor except the United States. 
 
 It would seem that the construction to be given to the last 
 section of the Act ot May 1, 1818, is, that the Government has 
 changed the contract for the payment of the principal and interest 
 of the bonds, by providing a fund from which they shall be paid ; 
 and that, on compliance with the terms of this Act, the Company 
 is not required to furnish any other mode of payment, nor, without 
 any change in the law, can the Government demand it. 
 
 The Companies did not assent to this change in the contract, 
 and resisted its validity, but the Supreme Court of the United 
 States, speaking through the Chief Justice, held, that 
 
 This Act establishes a sinking fund for the payment of the debts when 
 they mature, but does not pay the debts. The original contracts of loan are 
 not changed. All that has been done is, to make it the duty of the Company 
 to lay up a portion of its current net income to meet the debts when they do 
 fall due. That it is a matter of no consequence that the Secretary of the 
 Treasury is made a sinking fund agent, and the Treasury of the United 
 States the depositary, or that the investment is to be made in the public 
 funds of the United States. This does not make the deposit a payment of 
 the debt due the United States. * * * * * Jt fakes nothing from the 
 corporation or the stockholders which actually belongs to them. It oppresses no 
 one, and inflicts no wrong. 
 
 Mr. Justice Strong, dissenting, said: 
 
 In my opinion, the Act of Congress of May 7, 1878, is plainly transgressive 
 of legislative power. * * * It is as much beyond the power of a Legisla- 
 ture, under any pretence, to alter a contract into which the Government has en- 
 tered with a private individual as it is for any other party to a contract to change 
 its terms without the consent of the person contracting vrith him. As to its 
 contracts, the Government, in all its departments, has laid aside its sove- 
 reignty, and it stands on the same footing with private contractors. 
 
 Speaking of the contracts made by the Acts of 1862 and 1864, 
 Mr. Justice Strong says : 
 
 It is manifest that by this contract the Government acquired a vested right 
 to payment at the time and in the mode specified, and the Company acquired 
 
109 
 
 ■a vested riglat to retain the consideration given for its assumption, that is, a 
 vested right to withhold payment until, by the terms of the Act, it became 
 •due. The contract implied an agreement not to call for payment, or ad- 
 ditional security, before that time. There is no technicality about vested 
 rights. Most of them grow out of contracts, and no matter how they arise, 
 they are all equally sacred, equally beyond the reach of legislative inter- 
 ference. »»**»* There are other provisions of this Act intended 
 "to enforce compliance with these newly added obligations imposed upon the 
 debtor. No one can deny that they materially change the contract of loan and 
 borrowing previously existing between the Government and the Railroad 
 ■Companies, and change it at the will of the creditor alone. 
 
 Mr. Justice Bradley, also dissenting, said : 
 
 I think that Congress had no power to pass the Act of May 7th, 1878. 
 The power of Congress, even over those subjects upon which it has the right 
 "to legislate, is not despotic, but is subject to certain Constitutional limita- 
 tions. One of these is, that no person shall be deprived of life, liberty or 
 property, without due process of law ; another is, that private property 
 shall not be taken for public use without j ust compensation ; and a third is, 
 that the judicial power of the United States is vested in the Supreme and 
 inferior Courts and not in Congress. It seems to me that the law in question 
 is violative of all these restrictions. 
 
 The contract between the Union and Central Pacific Railroad Companies 
 and the Government was an executed contract and a definite one. It was, in 
 effect, this : that the Government should loan the Companies certain moneys, 
 and that the Companies should have a certain period of time to repay the 
 amount, the loan resting on the security of the Companies' works. Congress, 
 by the law in question, without- any change of circumstances, and against the 
 protest of the Companies, declares that the money shall be paid at an earlier 
 -day, and that the contract shall be changed pro tanto. This is the substance 
 and effect of the law. Calling the money paid a sinking fund makes no 
 substantial difference. Congress takes up the question ea> parte, discusses 
 and decides it, passes judgment, and proposes to issue execution, and to 
 subject the Companies to heavy penalties if they do not comply. That is the 
 plain English of the law. In view of the limitations referred to, has Congress 
 the power to do this? In my judgment, it has not. 
 
 It will not do to say that the violation of the contract by the law in question 
 is not a taking of property. In the first place, it is literally a taking of 
 property. It compels the Companies to pay over to the Government, or its 
 •agents, money to which the Government is not entitled. That it will be 
 entitled by the contract to a like amount at some future time does not matter. 
 Time is a part of the contract. It is needless to refer to the importance to 
 the Companies of the time which the contract gives. If it be alleged that the 
 security of the Government requires this to be done in consequence of waste 
 ■or dissipation by the Companies of the mortgage security, that is a question 
 to be settled by judicial investigation, with opportunity of defence. A pre- 
 judgment of the question by the legislative department is a usurpation of the 
 
110 
 
 judicial power. * * » * The power reserved to alter, amend and repeal 
 the charter is not suflBcient to authorize the passage of the law in question. 
 
 I will only add further, that the initiation of this species of legislation by 
 Congress is well calculated to excite alarm. It has the effect of announcing 
 to the world, and gimng it to be understood, that this Government does not 
 consider itself bound by its engagements. It sets the example of repudiation of 
 Oovernment obligations. It strikes a blow at the public credit. It asserts the 
 principle that might makes right. It saps the foundations of public morality. 
 Perhaps, however, these are considerations more properly to be addressed to 
 the legislative discretion. But when forced upon the attention by what, in 
 my judgment, is an unconstitutional exercise of legislative power, they have 
 a more than ordinary weight and significance. 
 
 Mr. Justice Field said : 
 
 The decision will, in my opinion, create insecurity in the title to corporate 
 property in the country. It, in effect, determines that the General Govern- 
 ment, in its dealings with the Pacific Railroads, is under no obligation to 
 fulfill its contracts, and that whether it shall do so is a question of policy 
 and not of duty. The relation of the General Government to the Pacific 
 Companies is twofold : that of sovereign in its own territory, and that of con- 
 tractor. As sovereign, its power extends to the enforcement of such acts and 
 regulations by the Companies as will insure, in the management of their 
 roads and conduct of their ofBoers in its territory, the safety, convenience 
 and comfort of the public. As a contractor it is bound by its engagements 
 equally with a private individual ; it cannot be relieved from them by any 
 assertion of its sovereign authority. ********** The 
 proposition of the Government the Central Pacific accepted, and filed its ac- 
 ceptance as required, and thereupon the provisions of the Act became a con- 
 tract between it and the United States, as complete and perfect as it could be 
 made by the most formal instrument. 
 
 4^By the Act of 1878, additional security is required for the ultimate pay- 
 ment of its own bonds, and the subsidy bonds of the United States, by the 
 creation of what is termed a sinking fund, that is, by compelling the Com- 
 pany to deposit $1,200,000 a year in the Treasury of the United States. It 
 is not material, in the view that I take of the subject, whether the deposit of 
 this large sum in the Treasury of the creditor be termed a payment, or 
 something else. It is the exaction from the Company of money for which 
 the original contract did not stipulate, which constitutes the objectionable 
 feature of the Act of 1878. 
 
 I cannot assent to a doctrine which would ascribe to the Federal Govern- 
 ment a sovereign right to treat as it may choose corporations with which it 
 deals, and would exempt it from that great law of morality which should 
 bind all Governments as it binds all individuals, to do justice and keep faith. 
 
 In the case at bar the contract with the Central Pacific is changed in essen- 
 tial particulars. The Company is compelled to accept it in its changed form, 
 and by legislative decree, without the intervention of the Courts. * » 
 
Ill 
 
 * If the Government will not keep its faith, llttle|better can be 
 expected from the citizen. If contracts are not observed, no property will 
 in the end be respected ; and all history shows that rights of person are un- 
 safe where property is insecure. Protection to one goes with protection to 
 the other ; and there can be neither prosperity nor progress where this 
 foundation of all just government is unsettled. 
 
 The moment, said the elder Adams, the idea is admitted into society that 
 property is not as sacred as the laws of God, and that there is not a force of 
 law and public justice to protect it, anarchy and tyranny commence. 
 
 Under this law, which received such scathing denunciations 
 from three of the venerable and learned Judges of the Supreme 
 Court of the Uuited States, the Central Pacific has paid into the 
 United- States Treasury, up to December 31st, 1886, for the sink- 
 ing fund account, $3,168,650.50. 
 
 A portion of this sum has been invested by the Treasury, 
 against the earnest protest of the Central Pacific, in the purchase 
 of bonds issued in aid of the construction of the roads, known as 
 " Currency Sixes," at a premium of 34-j^ per cent. ; in other 
 words, the bonds -which the Central Pacific sold at a discount of 
 about 30 per cent., to obtain money for the construction of its 
 road, the Government has purchased at a premium of nearly 35 
 per cent. ; that is, for each bond for which the Central Pacific re- 
 ceived $744.40, the Government, against its protest, has purchased 
 for its account, paying therefor $1,842.10. 
 
 The total loss to the Central Pacific, from this mode of handling 
 the sinking fund, up to this time, may be stated as follows : 
 
 Amount paid into the sinking fund, $3,168,650 50 
 
 Premium paid on bonds, .... $947,222 40 
 
 Premium received on bonds, $54,752 50 
 
 Interest received, . . . 320,006 72 374,759 22 572,463 18 
 
 Balance in fund, bonds and cash, $2,596,187 32 
 
 Interest that would have been earned by the 
 
 Company's investments to June Ist, 3 887, . . $1,040,503 54 
 
 Balance of deficit to date by Government invest- 
 ment, 572,463 18 
 
 Loss to Central Pacific by United States sinking 
 
 fund investment, $1,612,966 72 
 
112 
 
 It the money paid into the sinking fund had been left with the 
 Central Pacific and allowed to earn, and it had been earning six 
 per cent, per annum, there would to-day be in the sinking fund 
 $1,612,966.72 more than there is. 
 
 There are no present obligations imposed on these Companies 
 by any law which are not now fulfilled. 
 
 But the Government does not appear to be at all uneasy about 
 the unfortunate position in which the finances of these roads 
 have been placed under the requirements of the Thurman Bill. 
 
 In the report of the Secretary of the Interior for the year 
 1880, which has annexed the report of the Auditor of Railroad 
 Accounts, dated November 1, 1880, the Auditor, at page 11, after 
 showing that the payments rendered by the Central Pacific to 
 the sinking fund, from July 1, 1878, to June 30, 1879, had 
 amounted to a grand total of $798,454.31, and that $512,200 of 
 that sum had been invested in bonds, of which $119,000 were the 
 bonds formerly issued to aid in building the road, and that upon 
 said $119,000 the Treasury had paid and charged to the Central 
 Pacific a premium of $57,285.73, says : 
 
 The amount of premium paid is so large that the Companies have pro- 
 tested against the investment at such heavy cost. * * * The Honorable 
 the Secretary of the Treasury, in 1879, and again in June, 1880, informed 
 Congress of the difllculties which lay in the way of making a just and 
 profitable investment of these moneys. 
 
 In the report of the Commissioner of Railroads for 1881, he 
 sa s, at page 10 : 
 
 The cash payments which have been required from the Central Pacific, 
 in addition to the detention of the entire compensation for services, is 
 $1,203,113.58, which amount it has deposited in the Treasury. 
 
 And he says, that 
 
 Up to the date of that report November 1, 1881, the Treasury had paid 
 out as premium on bonds purchased for the Central Pacific sinking fund, 
 $168,727.73. 
 
 He further says : 
 
 No investment has been made since April 6, 1881. 
 
 The Companies have repeatedly protested against the heavy cost of these 
 investments. 
 
 As high as 135 has been paid, as, for instance, $198,000 was invested by 
 the Treasurer in April 6, 1881,' in currency sixes at a premium of 35. 
 
113 
 
 He quotes from his last year's report, of the action takeu by the 
 Secretary of the Treasury, in informing Congress of the difficulties 
 which lay in the way of a just and profitable investment, and 
 says : 
 
 I renew this recommendation of my predecessor, and agree with him that 
 it is due to the Companies affected by the Act of May 7, 1878, that the 
 Secretary of the Treasury be given authority to credit the amounts covered 
 into the sinking fund, with interest at five or six per cent, per annum, 
 payable semi-annually, or, 1 will add, to invest the sinking fund in either 
 the Companies' first mortgage bonds or such bonds as have been issued to the 
 Companies by the United States. 
 
 The attention of Congress was likewise invited to this subject 
 by the Hon. Hugh McCuUoch, Secretary of the Treasury, in his 
 annual report submitted in December, 1884, ia which he concurs 
 in the views expressed by Secretary Sherman in December, 18Y9, 
 and in June, 1880. 
 
 In his report for 1882, the Commissioner of Railroads, after 
 stating the total cash payment from the Central Pacific to 
 December 31, 1881, was $1,282,264.44, which that Company had 
 deposited in the Treasury, says, (page 11 :) 
 
 The Central Pacific has to its credit in the sinking fund $1,534,614.36. 
 
 And again repeats : 
 
 The last investment was made April 6, 1881, at which time a premium of 
 thirty-five per cent, was paid, but repeated protests have been made by the 
 Companies against the heavy cost of these investments. 
 
 On June 30, 1883, the amount remaining in the Treasury uninvested was 
 as follows : 
 
 Credit Central Pacific $537,886 53 
 
 Union Pacific 407,441 99 
 
 $935,328 53 
 On which the above Companies are receiving no interest whatever. 
 
 And he adds : 
 
 Which amount has since been largely increased. 
 
 Tke fund has evidently not aeoompUshed the result anticipated, and since 
 April, 1881, may be regarded as having practically failed for want of suitable 
 investments. 
 
114 
 
 In his report for 1883, page 12, the Commissioner says: 
 
 On June 80, 1883, the Central Pacific had to its credit in the sinking fund, 
 $2,404,115.86, and the Union Pacific, $1,632,697.59, and on the same day 
 there was uninvested to the credit of the Central Pacific, $844,652.13. 
 
 The Commissioner again says : 
 
 That the sinking fund has not accomplished the result anticipated is quite 
 evident, and may be regarded as practically a failure for want of suitable 
 investments. * * * This is a manifest hardship to the Companies, as the 
 amount should be drawing a fair rate of interest, and correspondingly di- 
 minishes the available funds in the hands of the Government. 
 
 I therefore renew the recommendation, that if the sinking fund is to be 
 continued, the discretion of the Secretary should be enlarged as to the in- 
 vestment of the fund. 
 
 In the report for 1884, page 17, it was shown that on June 30, 
 1884, there was to the credit of the Central Pacific sinking fund, 
 uninvested, $1,089,159.75. 
 
 The Commissioner says, page 18 : 
 
 I again invite attention to the inadequacy of the present sinking fund 
 method of securing payment from the bonded railroads of the large and 
 rapidly increasing indebtedness. Experience has fully demonstrated that the 
 Act of May 7, 1878, for reasons which could not be anticipated when it was 
 passed, has failed to realize the expectations upon which it was based. In 
 my judgment it is clear that the Government will be best protected by the 
 reasonable extension of time, and by funding the whole remaining debt and 
 interest in obligations of fixed amounts and maturity. 
 
 In the report for 1884 the Commissioner shows to the credit of 
 the Central Pacific, uninvested, $2,020,909.13. 
 
 He says: 
 
 More than one-fourth of the sum now in the sinking fund is uninvested, 
 because, under the law, this fund can only be invested in Government 
 bonds, which charge high premium and pay low interest. 
 
 It larger discretion were allowed the Secretary of the Treasury, the whole 
 fund might be invested and at a higher rate of interest. 
 
 In the seven years since 1878, only the sum of $8,560,807.60 has been paid 
 into the sinking fund, which has produced in interest but $437,524.03. Thi* 
 prove$ that the law of 1878 cannot accomplish the object intended. 
 
115 
 In the Report for 1886, p. 34, the Commissioner shows — 
 
 That there had been invested by the Secretary of the Treasury 
 
 in the sinking fund for the Central Pacific, . . . $3,599,800 00 
 
 That there had been redeemed of three per cents, . . . 1,761,800 00 
 
 Leaving present principal, $838,000 00 
 
 Premium paid, .... ... 318,963 73 
 
 Total cost, ... . ... $1,056,963 73 
 
 which left a loss of a premium of about 35 per cent, on $838,000 of bonds. 
 
 That there remained in the United States Treasury uninvested on June 
 30, 1886, to the credit of the Central Pacific, $3,183,339.56. 
 
 He sayp, p. 36 : 
 
 In my previous reports it is remarked that the condition of the sinking 
 fund shows the law of 1878 is inadequate to the object for which it was 
 adopted, that of producing a sum sufficient to pay the debts that will be due 
 to the United States from the aided Railroad Companies. 
 
 The following statement proves conclusively that all existing laws for that 
 object are utterly insufficient, and that additional and judicious legislation 
 will be necessary to enable those Companies to discharge their obligations : 
 
 The total amount of interest paid by the United 
 States on account of the subsidy bonds up to 
 June 30, 1886, $70,854,325 62 
 
 There had been retained by the 
 Treasury Department and cred- 
 ited to interest account, . . $21,091,383 32 
 
 Sinking Fund account, . . 9,658,713 10 
 
 Total, 30,760,096 42 
 
 Excess of interest paid, $40,104,229 20 
 
 The report of the Commissioner, dated September 13, 1887, 
 page 19, shows that there remained in the Treasury, uninvested, 
 on December 31st, 1886, to the credit of the Central Pacific, 
 $2,345,984.21. 
 
 There probably never has been so obtuse, unjust and unintel- 
 ligent a mode of caring for the property of a debtor as that 
 exhibited in carrying out the terms of this Thurman Bill. The 
 responsibility of providing for the Company's indebtedness has 
 
116 
 
 been assumed by the Government. It rejected every plan which 
 the Company proposed. If any of the suggestions made by the 
 Company had received favorable consideration, the amount now 
 to be applied to the payment of its indebtedness would have 
 been increased by at least 33 per cent., without reference to the 
 proposed payment, by returning the lands donated, and this loss 
 has been incurred by the improvident manner in which Congress 
 and the Treasury officials have managed this sinking fund. 
 
 It cannot be charged that the Companies are in any way negligent 
 in the matter of providing for this emergency. In February, 1875,, 
 Mr. Sidney Dillon, of the Union Pacific Railway, and Mr. Hunting- 
 ton, for the Central Pacific, joined in a letter to the Secretary of 
 the Treasury, pointing out, that from the small amount earned 
 from Government transportation, in comparison with the amount 
 anticipated, and the anticipated decrease in receipts from the 
 completion of rival lines aided by the Government, the Com- 
 panies would be unable to meet the indebtedness at maturity, un- 
 less by some wise provision of law. This communication was duly 
 referred to Congress, but for years no action was taken upon it. 
 
 The Companies offered to transfer back their unsold lands at a 
 fair valuation, as part payment of the debt, and to set aside, from 
 the net earnings, a fixed sum semi-annually, to continue until the 
 debt was discharged. 
 
 In the 44th Congress, 1st Session, on April 3, 1876, a bill was 
 introduced in the Senate (S. B. 687) which provided that "the 
 lands granted to the Company in Nevada and Utah should be 
 returned to the United States, at the rate charged by the 
 Government for adjoining lands, and the amount so realized 
 should be carried to the credit of a sinking fund in the United 
 States Treasury. To the same fund the Secretary of the Treasury 
 was authorized to carry the amount due and to become due the 
 Company fdr transportation of mails, troops, supplies, &c., up to 
 December 31, 1875, which, if not amounting to $1,000,000, was 
 to be made up to that sum by the Company. To the same fund 
 the Company would pay, on the 1st days of April and October 
 in each year, such a sum as, with the interest thereon, would be 
 sufficient, when added to the other sums credited to the sinkino- 
 fund, to pay off and extinguish the Government bonds advanced, 
 with six per centum interest thereon. * * * Interest on all sums 
 
117 
 
 placed to the credit of the sinking fund to be credited and added 
 thereto, at the rate of six per cent, per annum." 
 
 Asimilar bill (H. R. 3,138) was introduced in the House on April 
 17, 1876, on behalf of the Union Pacific. Congress declined to 
 accept these propositions for the settlement of the debt. 
 
 On the day of the introduction of the Senate bill, Mr. Hunting- 
 ton, as Vice-President of the Central Pacific Railroad Company, 
 addressed a letter to the Hon. George F. Edmunds, Senator from 
 Vermont, in relation to its provisions. This letter was referred 
 to the Committee on Railroads, and ordered to be printed to ac- 
 company Senate Bill 687. 
 
 On May 15, 1876, Mr. Huntington, as such Vice-President, 
 answering a communication received from the Hon. J. Proctor 
 Knott, (now Governor of the State of Kentucky,) but then Chair- 
 man of the Committee on Judiciary of the House of Representa- 
 tives, requesting the Central Pacific to lay before the Committee 
 such proposition as would be agreed to by that Company as to 
 the creation of a sinking fund to meet the principal and interest 
 of the bonds advanced by the Government, gave his views at 
 some length as to the relations between that Company and the 
 Government, and although the financial position of the Central 
 Pacific has since that date been so much altered, yet that 
 letter ■so well expresses the various transactions between the 
 Company and the Government prior to the passage of the Thur- 
 man Bill, that it may be advantageously referred to by those 
 wishing to understand the true position of the parties. This 
 letter was appended to the Report presented by Mr. Hurd, of the 
 Committee on the Judiciary, May '24, 1876, on resolutions relat- 
 ing to the Pacific Railroad Companies, and was ordered by the 
 House of Representatives to be printed. (44th Congress, 1st 
 Session, Report 440, Part 2.) 
 
 It would seem that all efibrts of the Company to come to any 
 understanding with Congress as to the mode and manner of 
 establishing a sinking fund, or the extent of that fund, were 
 futile, and therefore, as the Commission have seen from the minute 
 book of the Central Pacific, its Board of Directors, on January 
 30, 1878, adopted a report submitted by its President, and passed 
 resolutions establishing a sinking fund in the treasury of the 
 Company which would positively provide for the payment of the 
 entire debt due the United States. 
 9 
 
118 
 
 The Act of May 1, 1878, provides, lliat the whole payment for 
 services performed for the Government by the Companies shall be 
 retained, and, in addition thereto, so much as, with the half- 
 transportation and the five per cent, required by the original Acts, 
 fihall, with the amount added by the amendment, make together 
 twenty-five per cent, of the net earnings. It also provides, that 
 half the transportation and five per cent, of the net earnings shall 
 be applied, as provided in the original Act, as a payment on^ the 
 bonds and interest; and the remainder shall be placed in a 
 sinking fund, under the direction ot the Secretary of the Treasury, 
 to be invested at interest, and to be used at the maturity of the 
 bonds to pay prior liens. 
 
 The Companies have paid into the Treasury all that has been 
 claimed under the Act. In fact, the Central Pacific has paid 
 more than its letter required. Mr. Miller, its Secretary, said he 
 has conceded the claims made by the accounting officers of the 
 Government even when they were beyond the liability ot the 
 Company, because he supposed that all such payments would be 
 at once deducted from the debt due the Government ; or that 
 when they were covered into the treasury, the interest on a simi- 
 lar amount would cease. 
 
 It is extremely inequitable that such payments were not 
 so dealt with. But the calculations which were made by Mr. 
 Thuiman and his supporters are found to fall I'ar short of the 
 requirements of the case. The twenty-five per cent, of the net 
 ■earnings is ibund to be inadequate to meet the accruing interest, 
 so that, were the roads to run for one hundred years, the debt 
 would increase for the whole period, by the addition to the 
 principal of a portion of each year's interest. Owing to the 
 ■construction of the other trans-continental roads affecting the 
 ■earnings of the aided roads, the requirements under the"Thurman 
 Act" have been steadily decreasing, and this Act must now be 
 admitted to have lailed in its purpose of providing for the 
 4ebt. 
 
 No doubt the supporters of this bill thought the funds could 
 be invested at about the same rate of interest borne by the 
 subsidy bonds, but by the fortunate growth of the financial 
 strength of the Government, the bonds bearing a high rate of 
 interest were called and refunded at lower rates, leaviu" out- 
 standing only the Pacific Railroad bonds or currency sixes. 
 
119 
 
 bearing so high a rate of interest as six per cent. This has saved 
 millions to the public treasury, but it has effected a loss to the 
 Railroad Companies amounting to more than all the interest on 
 the sums paid by them into the sinking fund. 
 
 Against the ruinous rate of thirty-five per cent, premium the 
 •Central Pacific protested, and, as a result of such protest, it 
 appears that there is now a large amount of cash which, with its 
 accumulations from payments by the Company and transportation 
 -charges withheld, is allowed to lie idle. The bonds purchased 
 must remain in the fund until their maturity, when they will, of 
 course, be worth only their face. The premium paid is therefore a 
 •complete loss to the Companies. 
 
 The low rate of interest at which the Government can borrow 
 lis a disadvantage to the Companies, because of the high rate of 
 premium on that class of bonds which the Secretary of the 
 Treasury is authorized to invest in. ThehC Pacific Railroad bonds 
 •should be treated by the Government as its other bonds. They 
 -should have been exchanged for three per cents; and the saving 
 to the Pacific Railroads for the fifteen ye^rs, from 1883 to 1898, 
 would have amounted to twenty-nine millions of dollars, or forty- 
 five per cent, of the total amount of the bonds. 
 
 It has been said that the Government did not reserve the right 
 40 call these bonds. That is hardly a valid excuse, as the same 
 .legislative power which sufficed to pass the " Thurman Bill" 
 •denounced by Mr. Justice Bradley as " a blow at the public 
 -credit,'''' and as " an assertion of the principle that might makes 
 .right,'" and as " sapping the foundations of public morality" 
 would have been equally effective to haye retired these bonds by 
 the issue of others bearing the same interest that the Government 
 •is paying on its other indebtedness. 
 
 In addition to the amount in the sinking funds in the United 
 :States Treasury, the several Pacific Railroad Companies have 
 paid to the Government, under the terras of the Act of Congress 
 ■of 1864, by payments retained for one-half of the transportation 
 services performed and five per cent, of the net earnings to June 
 30, 1885, the sum of $20,412,193.92. 
 
 The interest accruing on the Pacific Riilroad bonds is a for 
 midable item in the account between tlie Companies and the 
 •United States. The principal could easilyjbe provided for but 
 
120 
 
 the interest swells the amount beyond the earning power of the 
 bonded portion of the roads. 
 
 For instance, the net earnings of the bonded line of 860 miles 
 of the Central Pacific in 1884, ascertained by the provisions of 
 theThurman Bill, were $1,212,526.45, while the interest for the 
 same time on theUnited States bonds amounted to $1,671,340.80. 
 (See Etport United States Commissioner of Eaihoads, 1885, p. 20.) 
 And the difference is widening each year. The net earnings, 
 computed in the same way for 1885, were only $863,548.97. (See 
 Report of Commissioner ior 3S86, p. 27.) If these bonds had not, 
 by an apparent ovei sight o< the Tieasuiy Depaitment, been de- 
 barred Irom calling and refunding at a lower rate, there would 
 have bttn a saving in interest to the Pacific Railroad Companies 
 of about 820,000,000. 
 
 The difficulty of settlement between the railroads and the Gov- 
 ernment is constantly increasing, as it seems the present rate of 
 payment does not provide for the interest. The Commissioner of 
 Railroads states, that should the present sinking lund method be 
 continued, the approximate result would be, that at the maturity 
 ol the bonds the balance due the United States by the Central 
 Pacific would amount to $71,000,000. 
 
 XV. 
 
 The Indebtedness op the Centeal Pacific to the 
 United States. 
 
 We will first consider the question of indebtedness from the 
 standpoint necessarily assumed by the accounting officers of the 
 Government, without reference to the equitable rights of the 
 Central Pacific which are recognized by Congress in the passage 
 of the Act of March 3, 1887. 
 
 It would seem, irom the annual repoits made by the Commis- 
 sioner of Railroads to the Department of the Interior, that if the 
 requirements of the Thurman Act are complied with, and the 
 net earnings of the Central Pacific do not materially decrease 
 that, at the time the Government bonds mature, (averaging nearly 
 twelve years from this date,) the Central and Western Pacific 
 Railroad Conpanies will be indebted to the Government <or 
 principal and interest, over and above the amount deposited in 
 
121 
 
 the Treasury to the credit of those Companies, somewhere be- 
 tween forty-five and fifty millions of dollars ; but in view of the 
 fierce competition for througli business, it would probably largely 
 exceed that sum. The lien claimed by the United States as se- 
 curity for this indebtedness is on the aided road, and the equip- 
 ment thereon, and the telegraph line from Ogden, in Utah, to 
 San Jos6, in California, a distance of about SSO/j/'j- miles. 
 
 The prior lien upon this property, assuming the interest is 
 promptly paid in the next twelve years, is 627,853,000. The 
 amount of this prior lien represents to-day the full value of the 
 aided road as measured by the present cost of labor and material. 
 With the present experience, improvements of tools and appli- 
 ances required for construction, it could be built for this amount. 
 Therefore, not considering at this"]moment the changed relations 
 between the Company and the Government caused by the Act of 
 March 3, 1887, it would seem to be important for the debtor and 
 the creditor to consider what is the best mode of meeting this 
 indebtedness, unless]the Government]desires to have the property 
 surrendered to it _at thej maturity]of the bonds, subject to the 
 prior lien. 
 
 The Commissioner^of Railroads has, in several of his annual 
 reports, recommended that the entire indebtedness of principal 
 and interest be capitalized, and that the ^ascertained amount be 
 divided into one hundred semi-annual installments. 
 
 He says, in his report for 1883, page 15 : 
 
 Shoald the decrease in the earniags of the aided liaes continue to even an 
 approximate proportion to the decrease of the last year, it will be readily per- 
 ceived that the 35 per cent, of net earnings, to which the Government is 
 entitled, would be so reduced as to render this increase inadequate as re- 
 lated to the vast magnitude of the debt. 
 
 i |At the rate provided for in the Thurmau Act it woula require a century or 
 more to accumulate a fund sufficient to discharge this debt, and with strong 
 probability that by this method it cannot be done. Nor would it be practic- 
 able to increase the percentage without manifest detriment as well to the 
 Companies as to their patrons. The payment, by whatever mode it be col- 
 lected, must come from the earnings of the road. If the rates be too high, 
 the burden falls with onerous weight upon the business, and would work di- 
 rectly in the interest of non-aided competing lines. 
 
 It would seem to be of less consequence, whether the debt be paid in fifty 
 or sixty, or even a hundred years, if its ultimate payment be absolutely 
 assured, than that oppressive burdens be' imposed upon the commerce be- 
 
122 
 
 tween the Atlantic and Pacific coasts. A proper net compensation must 
 remain to the owners of the roads, if they are to receive the watchful care- 
 and necessary maintenance which safety and success demand. 
 
 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 ta 
 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 real- 
 ized 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 Government trans- 
 portation would equal the current interest ; that it has not, has been a disap- 
 pointment 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. 
 
 It will be seen that the Commissioner takes the same view as 
 we expressed in a previous chapter on the working of the Thur- 
 man Act. 
 
 The Companies have performed for the Government a much 
 larger volume of business than was required in the years preced- 
 ing the construction of the road ; but charging to the Government 
 on a part of the transportation only the same rate as charged tO' 
 private parties for like service, the compensation is from one- 
 eighth to one-tenth of the amount the Government paid for simi- 
 lar service prior to such construction ; but in the carriage of mails 
 the Government has fixed an arbitrary rate, which is less than 
 rates paid by other patrons of the road, and less than the service- 
 is fairly worth. 
 
 But various causes have arisen why the indebtedness resulting^ 
 irom the loan of the Government bonds should not now be de- 
 mnnded of the Central Pacific, and Congress, with a view of 
 determining the equities that exist in favor of the Company, has 
 directed the Commissioners appointed under the Act of March 3, 
 188*7, to ascertain — 
 
 The average cost per annum of Government transportation in the region 
 now traversed by the Pacific Eailroads between the year 1850 and the com- 
 pletion of said roads. IBfetJ'. '., 
 
 The average cost per annum since such completion. 
 F Whether or not the Pacific Eailroad 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. 
 
123 
 
 The answer to these three sources of inquiry are contained in 
 the testimony of Leland Stanford, and in the Exhibits appended 
 to his answer, prepared by E. H. Miller, Jr., Secretary of the 
 Central Pacific ; and are fortified by copious extracts from the 
 records of the War and Post OfKce Departments to attest their 
 correctness. 
 
 The contract between the United States and the Pacific Rail- 
 road Companies required that the roads should be completed by 
 the 1st of July, 1876, and the testimony of Leland Stanford and 
 Mr. Miller show they were completed on the 10th day of May, 1869. 
 
 That the United States were benefited in money by such early 
 completion in the sum of $47,763,178, which is explained as 
 follows : 
 
 Seven Ykaks to June 30, 1876. 
 
 Traffic. 
 
 Freight, 
 
 Troops, etc. , . 
 Mails, 
 
 Total $7,645,195 
 
 U. S. TranBporta- 
 tion Charges on 
 Central Union 
 Pacific. 
 
 $1,793,556 
 3,163,296 
 3,689,343 
 
 Coat to 0. S. at 
 rates paid prior 
 to Railroads. 
 
 $15,509,977 
 18,698,671 
 21,199,725 
 
 $55,408,373 
 
 Saving to U. S. 
 to June 30, 1876. 
 
 $13,716,431 
 16,536,375 
 17,510,383 
 
 $47,763,178 
 
 Of this sum so saved, the proportion of the Central Pacific is 
 $21,ii71,062. 
 
 That the difference between the cost of Government transpor- 
 tation in the region now traversed by the Pacific Railroad between 
 the year 1850 and the completion of said road, and 
 The average cost per annum since such completion 
 
 result in a saving to the United States of . . $139,347,741 25 
 which is more fully explained by the subjoined table : 
 
 Tkapmo. 
 
 U. S. Transporta- 
 tion Charges on 
 Central Union Pa- 
 ciflc. 
 
 Cost at rates paid 
 prior to Railroads. 
 
 Saving to U. S. 
 
 Freight, 
 
 $5,740,753 00 
 
 4,616,053 00 
 
 10,606,507 00 
 
 $61,161,307 00 
 49,178,967 00 
 49.970,780 47 
 
 $55,420,554 00 
 
 Troops, etc. , 
 
 44,562,914 00 
 
 Mails, 
 
 39,364,273 25 
 
 
 
 Total 
 
 $30,963,313 32 
 
 $160,311,054 47 
 
 $139,347,741 35 
 
 
 
124 
 
 Well might the Commissioner of Railroads, in his report for 
 1883, say: 
 
 The saving to the Government [Jias greatly exceeded the current interest it 
 has paid. 
 
 And he might have added, and the principal sum it will here- 
 after have to pay. 
 
 We can better show the equitable rights of the Central Pacific 
 by stating an account between it and the United States, as of 
 the 1st day of July, 1876, the day on which the contract re- 
 quired the Pacific Railroad to be completed. It would be more 
 equitable to the Company to state it annually after the completion 
 of the road, but the following is most favorable to the Govern- 
 ment : 
 
 The bonds issued to the Central Pacific amounted to $25,885,120 
 " " " Western Pacific " " IjO'i 0,560 
 
 $27,885,680 
 
 Interest accrued, less credits to July 1, 1 876, as shown 
 
 in the Public Debt statement of June 30, 1876, . 12,180,833 
 
 $40,066,518 
 Deduct Central Pacific proportion of the sum of 
 $47,763,178, saved to the United States between 
 May 10, 1869, and July 1, 1876, say 46 per cent., 21,971,062 
 
 Would leave due to the United States, for principal 
 
 and interest, July 1, 1876, $18,095,456 
 
 If the Central Pacific proportion of the saving to the United 
 States, prior to the 1st day of July, ls76, was the only deduction 
 to' be offset against the claim of the Government, then the 
 annual interest to be thereafter charged against the Company 
 would be only $1,085,727.36, instead of $1,553,107.20, now an- 
 nually booked against it, and the lesser sum would have been 
 annually cleared by the Government transportation, and the pay- 
 ments under the Thurman Bill ; but the Company is entitled to 
 other deductions. 
 
 If the above account had been stated, with annual deductions 
 of the amount saved by the Government, the balance due to it, 
 for principal and interest, on July 1, 1876, would be $13,583,887. 
 
125 
 
 There is another branch of inquiry which Congress has directed 
 tile Commissioners to pursue : 
 
 What discount the|]^Pacific Railroad and its several branches were forced 
 to make, in disposing of the bonds guaranteed by the Government, to obtain 
 the gold coin which was the currency of the country through which the 
 greater part of said roads pass. 
 
 Governor Stanford states the loss by discount at $7,120,07iH ob 
 And shows that the interest charged to the Com- 
 pany by the United States, on this discount, 
 would amount at the maturity of the bonds to 12,816,132 39 
 
 Making a total loss to the Company, if it was re- 
 quired to pay the principal and interest of the 
 Government bonds, of $19,936,205 94 
 
 But the loss to the Central Pacific is double that stated by 
 Governor Stanford ; for the same causes that induced the sale 
 of the aid-bonds forced the Company to realize on its own 
 bonds, secured by the first mortgage; and as the latter did not 
 ■realize any greater net price, the loss is double the amount stated 
 above. 
 
 If it is to be assumed that Congress directed this information 
 to be obtained for a practical end, and that it intended to re- 
 imburse the Central Pacific for the loss it had sustained in meet- 
 ing the demand of the Government for the undue haste with 
 which the road was constructed, then the proper mode of stating 
 the account to July 1, 1887, would be as follows: 
 
 Bonds issued to the Central and Western Pacific, . $27,885,680 
 Loss suffered by discount, 7,120,073 
 
 Total, $20,765,907 
 
 Interest on this sum, 6 per cent., less credits to July 
 
 1,1876 8,688,772 
 
 $29,454,379 
 Deduct Central Pacific proportion of the sura of 
 $47,763,178 saved to the United States, between 
 May 10, 1869, and July 1, 1376, say 46 percent., . 21,971,062 
 
 Would leave due to the United States, principal and 
 
 interest, July 1, 1876, $7,483,317 
 
126 
 
 By tliis mode of stating the account.the annual interest charge 
 would be $-148,899, instead of 81,553,107.20, a difference of 
 $1,104,208.20, and would have entailed only sucii burden as could 
 have been lifted by the charge for the public transportation. 
 
 But whichever mode is adopted of stating the amount to July 
 1, 1876, whether the balance of principal and interest then due is 
 $18,059,456 or $7,483,-317, makes little difference in the result, so 
 far as the indebtedness growing out of the advance of bonds is 
 concerned; for if we lake the larger sum, .... $18,095,456 
 And add the interest, at 6 per cent., to January 1, 
 
 18S6 10,;V24,099' 
 
 The balance due the United States, for principal and 
 
 interest, on January 1, 1886, would be .... $28, 419,555 
 
 But at this date we show a saving to 
 the United States, by the construc- 
 tion of the Union and Central roads of $139,317,741 
 
 Less the amount of saving, shown be- 
 tween May 10, 1869, and July 1, 
 1876, 47,763,178 
 
 $91,584,563 
 The Central Pacific's proportion, 43 per cent., is $42,128,898 
 
 Add to this the result of the further inquiry with whicii the 
 Commission is charged. 
 
 If the United States, since the Union and Central Paoifio Railroad Com- 
 panies accepted the terms proposed by Congress for the constructioQ of the- 
 Pacific Railroads, has granted aid in lands for building competing parallel 
 railroads to said Pacific ■Railroad, and if so, how many such roads, and ta 
 what extent such competing lines have impaired the earning capacity of thfr 
 Pacific Railroad ? 
 
 The answer of Governor Stanford, supported by the Exhibit 
 furnished by Mi-. Stubbs, the General Traffic Manager of the 
 Central Pacific, shows there are now eight trans-continental rail- 
 road lines in addition to the Union and Central, each of which 
 competes, in whole or in part, with the Union and Central for the 
 traffic between the Pacific and the territory east of the Rocky 
 
127 
 
 Mountains. All of these, except the Canadian Pacific, are ii» 
 United States teriitory, and were aided by the grant of lands, as- 
 may be seen in the lepovt of the Commissioner of Railroads for 
 1884, pages 226, 227. 
 
 Mr. Stubbs estimates that the loss resulting to the Union and 
 Central by the diversion of traffic to the aided roads was 
 $37,132,351.02, of which the Central Pacific's proportion is 46 
 per cent., $17,080,881.47. 
 
 A further question, which Congress have required the Com- 
 missioners to answer, is — 
 
 If the United States have contracts with branch roads, controlled by 
 either of the 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 ? 
 
 The evidence, given to the Commissioner, shows that unai<led 
 roads, under the control of the Central Pacific, have performed ser- 
 vice for the United States ; that the right of the Central Pacific to 
 collect for such service from the United States has been adjudicated 
 by the final judgment of the Supreme Court, but that the United 
 States has neglected and refused to pay, and that there is now 
 due for such service about the sum of $2,000,000. 
 
 The Senators and Representatives who voted for the Act of 
 Congress of 1862 and the Amendment of 1864 estimated, that 
 before the maturity of the bonds the United States would benefit 
 by the transportation performed by the Pacific Railroad to the 
 full amount of the bonds and interest. Mr. Howard, the Chairman 
 of the Senate Committee on- Pacific Railroads, predicted that the 
 public transportation, with the five per cent, reserved to the 
 Government, would pay the bonds and interest years before their 
 maturity. Mr. Howard prophesied truly, for the figures show, 
 that by its saving on transportation the Government had, at tiie 
 beginning of the year 1883, been made whole on the principal of the 
 bonds and the accrued interest; while, on the 1st day of January,^ 
 1886, the bonds advanced to the Union, Central andWestern Pacific, 
 and the accrued interest thereon, amounted to $113,434,675.42; 
 and between that sum and the amount saved at that date, as 
 heretofore shown, the balance in favor of the Government was 
 $25,913,065.83. And this balance does not include the transpor- 
 tation performed, or the moneys paid into the Treasury as five per 
 
128 
 
 cent, on thejnet.earninss^between July 1, 1876, and December 30, 
 1885, or any payraents"made under the [requirements of the 
 Thurman Act. 
 
 Mr. Miller has made an interesting calculation, which shows 
 that the entire saving to the Government at the maturity of the 
 
 bonds would be $259,040,430 
 
 That the balance then due by the Union and 
 Central, less credits for services and payments, 
 would be 104,39-7,370 
 
 Surplus saved, $154,643,060 
 
 Or, stating the entire debt, with interest at maturity, without 
 any deductions for payments or services by the Companies, as — 
 
 Principal of bonds, $55,092,192 
 
 Interest at 6 per cent., 9ajl65,945' 
 
 $154,258,137 
 
 Which deducted from total sum leaves . . $104,782,293 
 
 A net saving of which would have been realized by the Gov- 
 ernment, in excess of the whole amount of bonds and interest, 
 had the bonds been a donation, instead of a loan, to be repaid 
 with interest. 
 
 Governor Stanford, as President of the Central Pacific, has ad- 
 dressed to the United States Pacific Railway Commission, in 
 answer to its request for such suggestions as he desired to make, 
 his views of the situation, in the following language : 
 
 I desire to suggest that the Commission report in favor of the appointment 
 of a proper Court to consider the equities existing between the Government 
 and the Central Pacific Railroad Company, as inquired into in accordance 
 ■with the Act of Congress, approved March 3, 1887, and render final judgment 
 thereon. Then the question, what further legislation may be needed, can 
 be fairly considered. I consider that the Act of Congress directing inquiry 
 into_the equities erects a different standard by which to measure the relations 
 between the Railroad Company and the Government from the purely legal 
 relation theretofore existing. 
 
129 
 
 Such a report from the Commission, and the probable action 
 suggested by Governor Stanford, would appear to be the logical 
 consequence of the inquiries which Congress directed the Com- 
 missioners to make, and of the information elicited by such in- 
 quiry. There is no hardship whatever resulting to the financial 
 situation of the Government by following the course suggested by 
 Governor Stanford, or in giving efiect to those manifest equities 
 which clearly arise from the information that has been obtained ; 
 to disregard the equitable considerations, which, it is shown, the 
 Railroad Company is entitled to, and should have the benefit of, 
 would be to inflict gross and manifest hardship and injustice 
 upon it. 
 
 It would be the height of injustice to compel this corporation 
 to pay to the Government the face value of its bonds, and interest 
 thereon at the rate of six. per cent, per annum, in view of the fact 
 that the Company did not realize such face value by an amount 
 exceeding $7,120,000; and that such difference, with the in- 
 terest up to the time of the maturity of the bonds, will amount to 
 about $20,000,000. 
 
 The Government spurred the Company to make this loss. It 
 insisted on closing the gap between the western end of the Union 
 Pacific and the eastern end of the Central Pacific as speedily as 
 possible. To accomplish this result the Central Pacific was forced 
 to sell the Government bonds for the best price obtainable, and it 
 should not be held to sustain the loss. 
 
 To give effect to this desire of the Government for the early 
 completion of the road, the Central Pacifi& spent $25,000,000 
 more than would have been required if the road had not been 
 built with such haste. The Government had the use of the road 
 more than seven years before the time specified in the contract ; 
 and during such seven years, ending June 30, 1876, it saved 
 $47,763,178 ; the Central Pacific's portion of which is $21,971,062. 
 Now, is there any valid reason why, at the end of these seven 
 years, when the saving to the Government was ascertained, the 
 account should not be justly and equitably stated between the 
 Company and the Government. Is it not fair and equitable that 
 it should be? So far as the facilities furnished by the Central 
 Pacific were concerned, the Government had saved by their seven 
 years' use nearly $22,000,000. 
 
 It had cost that Company about $32,000,000 to complete its 
 
130 
 
 road so as to give the Government the opportunity for such 
 saving. 
 
 The money wliich at the end of the seven years was ascertained 
 to be saved should have been then deducted from the face of the 
 bonds, and tlie accrued interest ; and the Company should there- 
 after have been charged interest only on the balance. 
 
 Of course, we well understand that it was not any pecuniary 
 consideration that induced the Government to insist on the early 
 ■completion of the road. Every principle of good government 
 and statesmanship required that it make this demand. We have 
 heretofore shown on how loose a thread hung the Government's 
 title to its Pacific possessions. There were various matters of 
 foreign policy that might have led to war, the seat of which 
 would more than likely have been on the Pacific Coast, and until 
 the gap between these railroads was closed, there was always an 
 element of great danger if such contingency arose. 
 
 The public interest absolutely demanded that this highway for 
 the movement of troops and munitions of war should be com- 
 ;pleted as soon as might be. 
 
 Is it i-ight that the burden of complying with this demand and 
 securing the integrity of a valuable portion of this Republic 
 siiould i'all upon these Railroad Companies ? And more especially 
 when, in about sixteen years after the completion of the work, 
 the Government had been reimbursed for all it had paid or could 
 be called upon to pay, caused by the issue of its bonds in aid of 
 •tlie building of these roads. 
 
 This matter should be judged by the same rules of equity as a 
 'Court would apply to a transaction between citizens. If one 
 hires another to erect a building, and by the contract a specified 
 time is given to the builder to complete it ; but the owner comes 
 and says, " Since I made that contract I find my necessities re- 
 quire that I should have that structure just as speedily as is possible, 
 and I desire that you will complete it as early as you can, liavino- 
 no regard to cost of material or price of labor." If the contractor 
 met the wishes of the owner, would he not be entitled to an 
 increased sum beyond the ])rice mentioned in the contract, and 
 which was based upon such length of time to do the work as would 
 -enable him to accomplish it with economy and with profit to 
 himself? In such a case, the Chancellor would, among other 
 4,hings, inquire as to tiie value of the rents, income or profits of the 
 
131 
 
 ■building dunng tne ume t<i»- owner enjoyed it previous to the 
 ■contract date, and the resw.. would influence his decree. Should 
 not the same rule prevail n estimating the amount that should be 
 allowed by the United States to the Companies ? 
 
 Now, in the case of the Central Pacific ; it is beyond doubt the 
 promoters of that road would have saved a large portion of the 
 assets at their command, and have had much less fixed charges on 
 the earnings, if they had been permitted to occupy the fourteen 
 years allowed by the contract; but, instead of that, they spent all 
 those assets, and thereby increased their fixed charges, to antici- 
 pate the time set for opening the road, and came out seveial 
 millions of dollars in debt. 
 
 ******** 
 
 By giving effect to the information which Congress now has in 
 response to the inquiries directed by the Act of March 3,1887, and 
 in providing for the tribunal suggested by Governor Stanford to 
 settle the accounts between the Companies and the Government, 
 the true intent and spirit of the Act of 1862, and the amendment 
 •of 1864, will be eifectually and equitably carried out. 
 
 The intent was, that the Government should be reimbursed for 
 the principal and interest of the bonds loaned by the services of 
 the Companies, and five per cent, upon the net earnings ; it has 
 received such consideration in heaping measure, complete and 
 running over. For the services rendered to it by these roads it has 
 kept within its treasury more than the principal and interest of 
 the bonds constituting its loan to these Companies. 
 
 It is a maxim of equity often used in illustration, " that you 
 ■cannot eat your cake and have it ;" but that is the position in 
 which partisan advisers have placed the Government by their ill- 
 considered counsel. 
 
 The Central Pacific have already paid the Government in ser- 
 vices and monfy about $11,000,000 ; but, in addition to this and 
 the payments made by the Union Pacific ; at the time of the ma- 
 turity of these bonds, say in 1898, the Government will have 
 benefited in money by the building of the roads of these Compa- 
 nies nearly $105,000,000. 
 
 That the amount is not larger is due to the oversight of the 
 Treasury officials. The bonds issued in aid of these roads could 
 not be used as a deposit for national banking purposes ; and they 
 were not made redeemable before maturity, at the option of the 
 
132 
 
 Government; a provision vi^hich was a marked feature in all the 
 other loans issued at about the same period. If these bonds could 
 have been called ten years after their issuance, the rate of inter- 
 est would have been reduced fi'oni six per cent, to three, and the 
 accounts between the Companies and the Government would 
 have presented a different showing than they now do. 
 
 The benefits mentioned above that will accrue to the Govern- 
 ment at the maturity of the bonds represent only the money 
 saved on the business actually transported over the Union and 
 Central Pacific roads between the Missouri River and San Fran- 
 cisco ; but in this nothing is figured for the decreased estimates 
 of the army caused by the building of these roads. We have 
 heretofore cited the language of General Grant and of General 
 Sherman on this subject, and we now add the testimony of Pres- 
 ident Garfield at the time he was a member of the House of 
 Representatives. 
 
 In the Fortieth Congress, Second Session, Mr. Garfield, from the 
 Committee on Military Affairs, House of Representatives, made 
 the following report: 
 
 The Committee on Military Affairs, to whom was referred a letter from the 
 Secretary of War, enclosing a letter of Lieutenant-General Sherman, dated 
 March 4, 1868, recommending Government aid to extend the Union Pacific 
 Bail way , Eastern Division, as a " military necessity," and a measure of public 
 economy, beg leave to report : 
 
 That they have carefully considered the statements therein made, and have 
 found them confirmed by the following facts, drawn from official record : 
 
 The cost to the Government for transportation on the Union 
 Pacific Railway, Eastern Division, in 1867 was . . . $511,908 34 
 
 If the military supplies had been wagoned, and the mails 
 carried by stage, and the troops marched, (taking the ave- 
 rage rates at which the Government made its transportation 
 contracts for that year, as shown by certificates of the De- 
 partments of the Quartermaster-General and Postmaster- 
 General,) the cost would have been 1 353 291 06 
 
 Saving to the Government in 1867 |846 383 83 
 
 But there is another consideration of economy in the public expenditure 
 as the result of constructing the road. Lieutenant-General Sherman has 
 testified that one-half of the military force in New-Mexico could be dis- 
 pensed with if the road was constructed, owing to the greater mobility "of 
 
133 
 
 the remainder, and the growth of self-protecting settlements on the line of 
 tue road. As his estimate of the cost of maintaining the two regiments of 
 intantry and one of cavalry was about four millions of dollars a year, the 
 Committee find that an additional saving to the Government of two millions 
 annually would thus be effected by the road. This saving, added to the 
 saving m the transportation of the diminished military force that would be 
 left in New-Mexico, and of the supplies to maintain them, including the 
 carriage of the mails and Indian goods and supplies, would, in less than six 
 years, reimburse the entire loan necessary to extend the road from its present 
 terminus ^to the Eio Grande. The Committee have had satisfactory evi- 
 dence presented to them, that west of Albuquerque, and through Arizona 
 and Lower California, the same or even larger proportionate economy in the 
 public service would be effected by the substitution of railway for wagon 
 transportation, with the result of an equally certain payment of the interest 
 and extinction of the principal of the Government aid long prior to its 
 maturity. 
 
 The Committee have also had before them the written recommendation 
 of Major;Philip;:H. Sheridf.u, that the Government at once continue its aid 
 to the Kansas Pacific Railway, in the course of which he says : " It almost 
 ' ' substantially ends our Indian troubles, by the moral effect which it exer- 
 " cises over the Indians, and the facility which it gives to the military in 
 " controlling them. * » * » No one, unless he has personally visited 
 " this country, can appreciate the great assistance which this road gives to 
 " economy, security and effectiveness in the administration of military affairs 
 " in this Department." 
 
 As we have before stated, in the year 1864, when the Central 
 Pacific was completed to Newcastle, and in the year 1865, when 
 the Union Pacific commenced construction, the Quartermaster's 
 Department spent $28,374,228 for military service against the 
 Indians ; these two years being a portion of the thirty-seven years 
 in which Indian wars cost the nation twenty thousand lives and 
 more than $750,000,000 ; nor is anything reckoned for the saving 
 to the Government on account of the altered or more peaceable 
 disposition of the^Mormons in Utah. 
 
 It would be difficult to bring to a financial standpoint all the 
 benefits which the United States have derived from the building 
 of these roadsj; by their construction the people have been ad- 
 vanced in civilization, in comfort and in safety to their persons 
 and property; and^itslbenefit to the nation as a military necessity, 
 both of ofience and defence, cannot well be estimated either po- 
 litically or financially. 
 
 It remains now to be seen, whether the Government will avail 
 itself of the information which its Ootnmission has collected, in 
 10 
 
134 
 
 answer to the inquiries directed by Congress, and will proceed to 
 settle with the Central Pacific Railroad Company on the basis of 
 the equities which such information discloses. Such a course 
 would settle this controversy in a manner befitting the dignity of 
 a nation that has received so much benefit from the contract it 
 made with the Central Pacific Railroad Company. 
 
 If, however, disregarding that which appears i'rom all the tacts 
 and circumstances of the case to be its plain duty in the premises, 
 it shall use its power to scrape into its treasury other benefits and 
 other moneys, beyond what it has already received, it will spend 
 a century or more in oppressing and despoiling the inhabitants 
 of that arid and elevated territory lying between the Rocky 
 Mountains and the Sierra Nevadas, and in levying tribute on the 
 potatoes grown in the alkali lands of Nevada, on the wild hay 
 saved from the river banks of the Humboldt, and from^ cattle 
 that derive a precarious subsistence from the sage brush on the 
 line of the Central Pacific; for the completion of the seven lines 
 other than the Union and Central aided by the Government, and 
 of the Canadian Pacific, effectually prevents any profit being de- 
 rived by the Central from its tiirough or overland trafl&c. 
 
 The Central Pacific Railroad Company present this statement 
 as truthfully showing the history of its relations with the Gov- 
 'ernment, and proving that it has faithfully performed its part of 
 the contract, and has grievously suffered by the persistent dis- 
 regard of their obligations by the United States. 
 
 It now seeks the equitable settlement which the evidence taken • 
 by the " Commission," as directed by Congress, shows to be its 
 right, and asks that it be made without delay. 
 
 ROSCOE CONKLING, 
 WILLIAM D. SHIPMAN, 
 
 Of Counsel. 
 

 Date Due 
 
 
 M/ttUigB^ 
 
 mrrit 
 
 
 
 
 ' 
 
 
 
 MAi<::?^ 
 
 jO.Ui)) l»aia 
 
 
 
 
 '^^ 
 
 
 
 H4^«t^ 
 
 51i 
 
 
 
 
 
 
 
 fiGPPV 
 
 Hiniink 
 
 
 
 
 
 
 
 ■» 
 
 
 
 
 ^ ^m 
 
 'T^-^-mi 
 
 
 
 MAY 10 
 
 -ri-i I'ftffn 
 TTTOllr- 
 
 ? 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 PRINTED IN 
 
 U. S. A. 
 
 («J 
 
 NO. 23233