LIBRARY
p'jpFAU OF RAILWAY
V.'ASHiLU'fO •
THE
SUTRO TUNNEL CO.
WHAT CONGRESS HAS GIVEN IT,
AND
WHAT MORE IT ASKS CONGRESS TO GIVE IT.
♦
HEAR BOTH SIDES.
By THOMAS SUNDERLAND,
Counsel for the Miners.<
J add & Detweiler, Printers, corner Pa. ave. and 11th St., Washington.
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THE SUTRO TUNNEL COMPANY
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For the last six years Mr, Adolph Sutro has been before
Congress in various ways, asking aid to construct a tunnel
under the Comstock lode, in the State of Nevada. He alone
has been beard. No one has appeared to oppose bim until
now. We ask to be beard, very briefly, in behalf of the
men who own and work the mines; aud we ask particular
attention to what he has already obtained from Congress, as
well as to what be asks now.
WHAT THE SUTRO TUNNEL COMPANY PROPOSED TO DO WHEN IT
WAS FIRST ORGANIZED.
>
This company was organized solely for the purpose of con¬
structing a tunnel to drain the mines on the Comstock lode,
in the State of Nevada. The idea of ventilating the mines
through it was not then thought of. That is first mentioned
in Sutro's book, published in 1868.
Mr. Sutro, the originator of the project, was not a miner,
nor has be ever been interested in any mine on this lode.
The construction of the tunnel is simply a scheme for secur¬
ing a vast revenue from these mines without the consent of'
their owners, and without conferring any adequate benefits
in return. Tt is purely an experimental speculation on the
part of Mr. Sutro and his associates for their individual
benefit; and they are here asking Congress to furnish them
with three million dollars, without interest, and without secu¬
rity except upon what has already been given them with
which to construct the work, and obtain a lien upon the
products of all the mines on this lode forever. But we will
speak more fully on this point hereafter.
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WHAT CONGRESS HAS GIVEN THIS COMPANY.
Io February, 1865, the Legislature of Nevada granted to
Adolph Sutro a franchise giving him the exclusive right for
fifty years to run a tunnel to the Comstock lode from the
adjacent foot hills, leaving the questions as to charges and
rates to be paid by the mining companies open to negotia¬
tions. Subsequently the Sutro Tunnel Company was organ¬
ized, and Sutro's franchise transferred to it.
Contracts were then made between the Sutro Tunnel
Company and most of the mining companies on the Com¬
stock lode, hv which the Sutro company undertook to drain
the mines. The contract was gotten up by Sutro, and by
persistent boring, (he is a consummate master of that art,)
the officers of most of the leading mining companies were
induced to sign it.
This contract (for it was the same with all the companies)
provided, among other things, that Sutro and his associates
should have a royalty of two dollars per ton on all ores
taken out of the Comstock lode by the mining company,
after he got his tunnel constructed to a certain extent,
whether such ores were taken out through the tunnel or not,
and whether the mine was- actually drained by the tunnel or
not; that excavating the tunnel or a lateral drift to a point
within five hundred feet of the west wall, should be deemed
drainage of the mine, although there might be a thousand
feet of rock and earth between the tunnel and the mine.
There was, however, one protection for the miner in this
contract. Sutro was bound to procure subscriptions to the
capital stock of his company to the amount of three million
dollars, and to commence work on the tunnel and three
shafts on or before theirs* day of August, 1867, and expend
$400,000 during the first year thereafter. This he failed to
do, and his contracts would have fallen by their own provi¬
sions if it had not been for the legislation he afterwards pro¬
cured from Congress, in the act approved July 25, 1866,
8
That act grants to the Tunnel Company, as Sutro claims :
First. The right of way through the public domain for
seven miles, on or along the Comstock lode, or any other
lode which may be developed or discovered by the tunnel.
Second. The right to select 1,280 acres of land at the mouth
of the tunnel.
Third. The right or title to the mines for 2,000 feet on
each side of the tunnel, equal to 5,080 acres of mining land.
Fourth. It makes all the mines of the Comstock lode, or
any other lode benefited by the tunnel tributary to the same,
and compels the owners of all those mines to pay to the
Tunnel Company the same rates of charges as agreed upon
in the above-mentioned contracts, and makes their title subject
to that condition. \
So much Mr. Sutro admits Congress has already given his
company. This admission is made in a pamphlet of 31 pages,
entitled "The Sutro Tunnel to the Comstock Lode, in the
State of Nevada. Importance of its Construction and Rev¬
enue to be Derived Therefrom. By A. Sutro. New York,
September 1st, 1866."
Now, how much are these gifts worth ? We let Mr. Sutro
answer this question, by quoting again from his pamphlet of
September 1st, 1866, at page 31, where he recapitulates the
estimated cost of the tunnel and its probable revenue.
RECAPITULATION.
Cost of tunnel.
Construction of main tunnel, as per specifica¬
tions in chief engineers report $1,983,616
Estimated revenue derived from various
sources during construction of main tun¬
nel 500,000
Actual amount of capital required. ... $1,483,616
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Revenue from contracts with the Comstock lode: First,
taking the present extraction of fifteen hundred tons per day
as a basis of revenue for the future, we get a dailv revenue
7 O 1/
for—
Drainage, 1,500 tons, at $2 $3,000
Transportation of ore, 1,500 tons, at $1 1,500
Transportation of men, 3,000, at 50 cents.. . 1,500
Do of waste rock, 1,000 tons, at
$1 1,000
Do of timber, &c., &c 200
Revenue per day $7,200
Or per annum of 300 days $2,160,000
Revenue from the sale of water.. . . 200,000
Total $2,360,000
Second : Assuming the daily extraction to increase to five
thousand tons after completion of the tunnel:
Drainage, 5,000 tons, at $2 $10,000
Transportation of ore, 5,000 tons, at $1 5,000
Do of men, 6,000, at 50 cents.. . 3,000
Do of waste rock, 2,000 tons, at
$1 2,000
Do of timber, &c., &c 300
Revenue per day $20,300
Or per annum of 300 days $6,090,000
Revenue from the sale of water.. . . 200,000
Total $6,290,000
From the sale of land the proceeds are esti¬
mated at $3,000,000
The revenue arising from the discovery and development
of mines on the tunnel route cannot be estimated.
N. 13. All estimates on cost and revenue are on a gold
basis.
p*
o
We ask Senators and Representatives to consider this
statement carefully before voting three million dollars to
This Tunnel company.
Mr. Sutro here tells us that the construction of the main
tunnel will-cost, deducting estimated revenue during its con¬
struction, $1,483,616, and that the revenue to be derived,
from the present product of the mines, to his company, will
be $2,360,000 per annum, thus paying the entire cost of the
tunnel and giving the company $876,384 profits in a single
year, and that the first year after the tunnel is completed!
But this is not all. He tells us the increased production of
the mines will increase the revenue of the tunnel to the mon¬
strous sum of $6,290,000 a year, and he expects to realize
$3,000,000 from the sale of the land Congress has given him
at the mouth of the tunnel, while the revenue arising from
the discovery and development of mines on the tunnel route
cannot be estimated.
And yet he asks for more ! Surely, with such magnificent
prospects before them, this company ought to do something
more than merely superintend the construction of this work.
After so much has been given them they should at least ex¬
cavate the tunnel at their own expense. But no. They now
ask Congress to furnish them with not merely the mone}T
necessary to construct the tunnel, but with more than twice
that amount—they want three million dollars in money
directly from the Treasury, and they coolly ask Congress to
advance that sum in instalments of fifty thousand dollars
each as the work progresses, and take as security a lien upon
the tunnel, engines, buildings, and appurtenances thereunto
belonging. And they propose to repay this loan of three
million dollars, without interest, after the tunnel is completed,
by paying to the United States Treasury semi-annually twenty-
five per cent, of their net profits!
The loan is to be made without interest and without secur¬
ity, except a nominal mortgage upon a part of what has been
given the company by the Government, and the company
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is hot to be bound to repay the loan at all except from
twenty-five per cent, of their net profits! Verily, this would
be magnificent financiering on the part of the Government!
But, that there may be no ground of complaint that we
are treating Mr. Sutro's project unfairly, let us analyze his
bill and see exactly what its provisions are.
The first section authorizes and directs the Secretary of the
Treasury to set apart as a special fund, to be known as " the
mineral land fund," all moneys received by the United States
from the sale of mineral lands, to be used in fostering the
mining interest, as Congress may hereafter direct.
The second section provides that whenever the Sutro Tun¬
nel Company shall have completed five hundred lineal feet,
in the aggregate, of its tunnel, its shafts or branches, the
Secretary of the Treasury, upon application to him by said
company, shall from the aforesaid fund, or, if insufficient,
from any money in the Treasury not otherwise appropriated, pay
over to said company fifty thousand dollars; and in like man¬
ner shall pay over to said company a like sum upon the com¬
pletion by said company of each and every additional five
hundred feet of said tunnel, shafts, or branches, as herein¬
after specified.
Section three authorizes the President to appoint a board
of three commissioners to examine the tunnel whenever the
company shall claim that five hundred lineal feet in the ag¬
gregate, of said tunnel, shafts or branches have been completed,
and such eommisioners shall make such examination, andif
they find the same completed in conformity with this act,
shall file their report thereof with the Secretary of the Inte¬
rior, who shall notify the Secretary of the Treasury that said
Tunnel Company has become entitled to $50,000 under section
two of this act, and the Secretary of the Treasury shall there¬
upon pay over to the company the sum of mo hey to which it
is entitled.
Section four provides that to secure to the United States
the re-payment by said company of the sums so advanced,
7
and the expenses of said commissioners, the payment of said
sums shall ipso facto constitute a first mortgage lien on the
whole of said tunnel, together with all the engines, build¬
ings, and appurtenances thereunto belonging. And after
the completion of said main tunnel to its intersection with
the Comsfock lode, twenty-five per centum of the net amount
collected for tolls, drainage, transportation of ore, rock, and
material, or in any other manner, after deducting the neces¬
sary expenses, shall on the first day of January, and on the
first day of July in each year, be paid by said company into
the Treasury of the United States, for repayment of the
sums so advanced, until the whole amount shall be repaid;
and on failure or refusal of said company to pay over said
sums of money or any part of them, when required so to do
by the Secretary of the Treasury in accordance with the pro¬
visions of this act, said Secretary may take possession of the
tunnel and its appurtenances for the use and benefit of the
United States, as hereinafter provided.
Section five prescribes the conditions upon which aid shall
be extended to the work, as follows:
First, The aggregate amount to be advanced under this
act shall not exceed three million dollars; and the work
shall be completed within five years.
Secondly. The tunnel shall extend from its initial point
in the foot hills near Carson river, in a westerl}7 direction,
four miles, more or less to the easterly limit of the Comstock
lode, and branches shall be constructed northerly and south¬
erly to such extent as the company may deem profitable.
Thirdly. The main tunnel throughout its entire length,
shall have an area of at least one hundred square feet, and
be provided with all necessary timber supports, double rail¬
road tracks and shafts, and be subject to the approval of the
board of commissioners herein provided for,
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Fourthly. Before any moneys shall be advanced, the com¬
pany shall tile with the Secretary of the Treasury an acceptr
ance of this act, and a declaration that said company consents
to be bound by its conditions.
Section six provides for taking possession of the tunnel
by the Government for a failure to complete the1 tunnel in
time, or to keep it in repair when completed, until the Gov¬
ernment is repaid.
Some provisions of this bill cannot fail to arrest the atten¬
tion of the most casual reader. Why is it necessary to set
apart the proceeds of the sale of mineral lands as a " special
fund," to foster the mining interest? Simply to induce the
belief that some considerable portion of the S3,000,000 ap¬
propriated directly from the Treasury to aid a private enter¬
prise, would be realized from the sale of mineral lands. Mr.
Sutro seems to think that money received for mineral lands
is less valuable in the Treasurv than other monev, or that
»./ tj '
he has a special property in the mineral lands and their pro¬
ceeds that Congress will recognize at once, by setting them
apart for his special benefit.
The sum asked for to construct this tunnel is more than
twice as much as Mr. Sutro's estimate of its cost, deducting
the revenue to be received during its construction. The size
of the main tunnel, it should he remembered, is to be an
area of not less than one hundred square feet; but the size
of the branches and shafts is not fixed in the bill. The
tunnel company is to receive $50,000 for every 500 lineal
feet of tunnel, shafts, or branches constructed. This will
give them one dollar for every square foot of excavation, if
the shafts and branches are as large as the tunnel ; but they
will undoubtedly be much smaller; so the company will
receive considerable more than a dollar per square foot.
THE SECURITY OFFERED
is " a first mortgage lien on the whole of said tunnel, together
\
9
with all the engines, buildings, and appurtenances there¬
unto belonging," being a part of what the Government has
given the company, and as security for $3,000,000 is abso¬
lutely worthless to the Government.
The proposition is simply this :
The Government having granted to the tunnel company
land and franchises of great value, as Mr. Sutro alleges, the
company now asks the Government to advance three million
dollars to construct the work, thus assuming the entire risk
of failure, while the company risks nothing, but is sure to
have the tunnel and its revenues, if it proves a success.
DESTRUCTION OF PROPERTY.
"T Sutro, in his pamphlet above referred to, (page 22,) says,
that the towns of Virginia City and Gold Hill, the real
estate of which he estimates at about $7,000,000, will be de¬
stroyed by the completion of his tunnel. He also says, (page
23,) that the mills erected for the reduction of Comstock ores
cost between five and six millions, and that the construction
of the tunnel will necessitate the removal of all the mills to
the mouth of the tunnel.
It is safe to say that the removal of the mills will cost one-
*
half their value. Since the publication of this document by
Sutro, additional mills on the Carson river have been erected,
and old ones rebuilt and enlarged, at an expense of at least
one million of dollars.
LV addition", to this a railroad,'which was necessitated by
Sutro's failure to comply with his contracts, has been built
at a cost of $3,000,000 ; (all estimates in gold coin.) How,
this property, amounting, in the aggregate, to $13,500,000,
will be absolutely destroyed if Sutro's project, as claimed by
him, be carried out. Would Congress intervene between
the owners of this property and Sutro by legislation in any
shape to the extent of destroying this property to enrich
Sutro ? Will Congress commit an act of so great injustice
2s
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as to give him the monev to construct the tunnel by means
of which he is to ruin thousands of industrious men whose
accumulations for years will be thus swept away?
presumption of sutro.
It is claimed by Sutro that the men now in charge of the
mines on the Comstock as superintendents, and who have
been engaged in practical mining for twenty years, are too
ignorant to work the mines, and nothing hut his (Sutro's)
superior knowledge and skill can so enlighten them as to
enable them to work the mines intelligently.
The first, and it would seem to be a complete answer to
this proposition, is that the mines are ours, we have bought
and paid for them, have expended infinitely more money in
their development than the estimated cost of the Sutro tun¬
nel, and that we prefer to work them in our own way. For
a man like Sutro, who has no interest in the Comstock, to
undertake to instruct us against our wills, and against our
o " o
protest, is the very sublimity of impudence. It certainly
would be a new departure in legislation, for Congress to die
tate to the owners of the Comstock how it shall be worked.
If this be really a free country, and property is not robbery,
every man is at liberty to deal with or improve his own prop
erty as he, though ignorant, may thiuk best.
who is sutro ?
When Mr. Sutro sets himself up as an oracle in mining
matters, it is well to inquire who and what he is, and what
he has accomplished in the way of developing the mining
resources of the countrv. He was once interested in a hole
•j
in the ground in the neighborhood of the Comstock, but no
ore was ever found in it, and it was abandoned. He once
built a steam mill on the bank of the Carson river, in sight of
the mouth of his proposed tunnel, in which he had, as he
claimed, all the machinery and appliances known to science,
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for the redaction of ores and saving the precious metals, but
he so far failed to give satisfaction to the miners that his en¬
terprise proved a failure. This is the extent of his experience
in mining and milling. He has been, to some extent, a stock¬
jobber in the stocks of the Comstock. The capacity of Sutro
as a miner, and his integrity as a man, become especially im¬
portant to inquire into, when it is proposed to make him
superintendent and disbursing agent of the Government
during the construction of the tunnel ami bookkeeper and
treasurer after its completion.
ADVANTAGES OF THE TUNNEL.
The tunnel cannot drain the mines of the Comstock, be¬
cause long before it can be completed ajl the principal shafts
will be far below the tunnel level. It cannot ventilate the
mines, as has been shown conclusively by the report of the
Sutro Tunnel Commissioners.—(See report, pp. 6, 7, and 8.)
The only remaining advantage claimed by Sutro for his
tunnel is that it would economize the mining and working
of ores. This economy is to be brought about by the erec¬
tion of a dam 155 feet high on the Carson river, and taking
the water from the dam to the mouth of the tunnel. This
river has a Tall of 255 feet, susceptible of appropriation for
propelling power. Of this fall, more than 200 feet have been
already utilized, and are now actually used, for the reduction
of the Comstock ores, and the mills now running on that
stream have ample capacity for the reduction of all the ores
produced by the Comstock. The fall which Sutro would
ffet at the mouth of his tunnel would be less than ninetv
O "
feet, which would not give power for the reduction of one-
half the same ores. Sutro knows, as every man in Western
Nevada knows, that all the available water power of the
Carson river has been for years appropriated, and the lands
on either side of the river have been patented by the United
States to the parties now owning and using the mills on the
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river. These parties are largely interested in the bona fide
ownership of the mines of the Comstock, and they will not
consent to be be robbed by Sutro or anybody else to carry
out any such wild scheme as that proposed. In fact, the
proposition of taking the water away from the mills already
erected on the river, and now valued at §2,000,000, is so ab¬
surd, that n6 one acquainted with the matter believes that
Sutro is in earnest about it.
With the adverse ownership of these mills, and the other
interests to be effected by the completion of the tunnel, it
may be regarded as certain that Sutro cannot, without fur¬
ther aid from Congress, purchase the present mill property
on the Carson river. To purchase that it will be necessary
to purchase the railroads to be destroyed by the tunnel, so
that the present appropriation is only the beginning of what
Congress will be asked to give.
On this subject of economy, the commissioners, in their
report, pp. 8 and 9, make the present cost of mining and
transportation of ore §700,000 per annum less than after the
completion of the tunnel, and its use for transportation.
The Sutro Tunnel Company, what is it f
It is a corporation formed in San Francisco, with a capital
of twelve millions of dollars of full-paid or unassessable stock.
On the 19th of August, 1871, there had been issued and dis¬
posed of over seven millions of this stock, and of the pro¬
ceeds of which forty-two thousand eight hundred dollars had
been expended on the tunnel up to July, 1871, and on the
former date there was in the treasury of the company thirty-
one thousand dollars. The remaining stock, less than $5,000,-
000, was set apart for the construction of the tunnel. What
has become of the balance of the §7,000,000 of stock already
disposed of? It is either in the hands of parties controlling
the company for speculative purposes, or it has been used to
manufacture and corrupt public opinion. It is easy to see
13
how this stock might be sent up to par with this appropria¬
tion of $3,000,000.
Then the manipulators of the scheme. could sell out and
quit the tunnel, if the prospect for making money by the
handling of the Government appropriation should not be
sufficiently attractive to induce them to continue as Govern¬
ment agents.
Will Congress further assist this company, which has never
spent a dollar of its own money, or a dollar of the money of
the corporators, to carry out this huge stock-jobbing opera¬
tion ?
In view of these facts the men who own and work the
mines have a right to insist, and they do insist, that the Gov¬
ernment of the United States shall not any further aid Sutro
and his company in destroying their property, or fastening
upon it a revenue of over six million dollars a year for the
benefit of this tunnel company.
If the tunnel company is to secure this immense revenue
from the miners' property, the company should at least be
compelled to furnish their own money to do the work, and
not to have that, too, as well as the franchises of which they
boast, given them by the Government.