/'
THE
EXTRACT FROM ANNDAL REPORT.'
SECOND SESSION FORTY-FIFTH CONGRESS.
DECEMBER 3, 1877.
■ •
WASHINGTON:
GOVERNMENT PRINTING OFFICE.
1877.
SECRETARY OF THE INTERIOR .
ON
PACIFIC RAILROADS.
RAILWAYS.
The facts and figures herein set forth are compiled from the annual
reports of the companies.
The capital stock of the Union Pacific Railroad Company amounts to
$36,762,300, and has all been paid in. Certificates for full-paid stock
to the number of 367,450 shares, of $100 each, have been issued, and
are outstanding. The receipts for the year ending 30th June, 1877,
were, from transportation of passengers, $4,237,952.58; of freight,
$8,036,621.87; and from miscellaneous sources, $1,444,769.37; total,
$13,719,343.82. These figures include "the amounts earned from, but
withheld by, the United States, for transportation of its passengers,
freight, and mails." The expense of operating the road for the year, was
$5,402,252.24; leaving net earnings, $8,317,091.58. The construction-
accounts of the company, including some unsettled accounts with con¬
tractors, show the cost of the road at $117,334,256.10. The total funded
indebtedness (including the government loan of $27,236,512) of the
company is $78,733,712.
The amount of stock of the Central Pacific Railroad Company sub¬
scribed is $62,608,800, of which $54,275,500 has been paid. The receipts
for the year ending 30th June, 1877, from transportation of passengers,
were $5,563,870.07; and of freight, $10,095,349.87 ; total, $15,659,219.94.
The operating expenses of the road for the year were $8,326,614.21;
leaving net earnings to the amount of $7,332,605.73. At the close of
said year the indebtedness of the company amounted to $94,339,500.01;
of which $27,855,680 is due to the United States. This company em¬
braces, by consolidation, (besides the ofiginal Central Pacific Company,)
the Western Pacific, the California and Oregon, the San Francisco,
Oakland, and Alameda, and the San Joaquin Yalley Companies.
Stock of the Central Branch Union Pacific Railroad Company to the
amount of $1,000,000, has been subscribed, of which $980,600 has been paid.
The receipts for the year ending June 30,1877, were, from transportation
of passengers, $40,401.88; and of freight, $149,947.84; total, $190,349.72.
The amount expended in said year for running expenses and repairs,
was $180,467.72; leaving net earnings $9,882. The road and fixtures
have cost $3,763,700. The company's indebtedness, in addition to the
government loan, and first mortgage of $1,600,000, and interest unpaid,
is $60,000.
The amount of stock of the Kansas Pacific Railroad Company
allowed by law is $10,000,000. Of this $9,689,950 has been subscribed
and paid. The receipts for the year ending June 30,1877, were: From
transportation of passengers, $967,969.80; of freight, $2,032,361.36;
miscellaneous, $18,700.30; total, $3,019,031.46. Total expenses for the
year, $1,674,140.42; leaving net earnings, $1,344,891.04. The cost of
construction and equipment of 673 miles (main and branch line) is
$34,359,540.66. The funded debt of the company is $28,589,100, of
2
which $6,303,000 is due to the United States. There are other liabili¬
ties to the amouutof $3,115,698.79, making the entire debt $31,704,798.79.
The earnings and expenses, as given in this statement, from July 1,
1876, to November 20, 1876, are taken from the books of the company ;
those from November 21, 1876, to June 30, 1877, are taken from the
books of the receivers. The road went into the hands of receivers on the
20th November, 1876.
Stock of the Sioux City and Pacific Pail road Company to the amount
of $4,478,500 has been subscribed, of which $1,791,400 has been paid.
The receipts for the year ending 30th June, 1877, from transportation
of passengers, were $86,033.11; of freight, $205,898.36; from express,
$2,784.71; and from miscellaneous sources, $5,83L.21; total, $300,546.39.
The expenses of the road and fixtures duriug said year were $285,366.64,
leaving net earnings, $15,179.75. The bonded indebtedness of the com¬
pany is $3,256,320, of which $1,628,320 is due to the United States.
The floating debt is $69,955.29.
Stock of the Southern Pacific Railroad Company, of California, to the
amount of $38,122,000 has been subscribed, of which $36,763,900 has
been paid. The amount received for transportation of passengers for
the year ending 30th June, 1877, was $1,646,693.49 ; of freight, $1,883,*
900.46 ; total, $3,530,593.95. The expenses of the road and fixtures for
said year, wTere $1,724,174.41, leaving net earnings $1,806,419.54. The
bonded indebtedness of the company is $29,300,000. The construction
of additional portions of this road has steadily progressed since the
date of the company's last annual report. There have been constructed
and brought into operation during the year ending 30th June, 1877,
253.78 miles. This whole distance has been laid with steel rails, weigh¬
ing not less than 50 pounds per linear yard. The company now has in
operation 711-95 miles of road. On the 25th of January last, your pre¬
decessor accepted 20 miles of this road, beginuing at Goshen and run¬
ning in a westerly direction; on the 21st February last, he accepted an¬
other section of 20 miles, beginning at a point in the N. E. J of section 2,
T. 19 S., P. 20 E., Mount Diablo base and meridian, and running in a
southwesterly direction; and on the 2d March, he accepted 78.59 miles,
beginning at a point iu the N. W. ^ of section 3, T. 2 N., P. 15 W., San
Bernardino base and meridian, and running northerly.
The Northern Pacific Railroad Company was reorganized on the 29th of
September, 1875, under a plan which had been adopted by the holders of
the company's bonds, and under which the company's mortgage was fore¬
closed. On the 12th of August precedi ng, all the company's property and
franchises were sold under a decree of the United States district court for
the southern district of New York, and purchased by a committee of the
bondholders for the account of all the holders of the company's bonds and
stock, pursuant to the provisions of said plan. Thisplan of reorganization,
approved and confirmed by the said district court, provided for the con¬
version of the outstanding bonds of the compauy into " preferred stock,"
and its stock into "common stock." Up to June30,1877, there had been
3
issued of preferred stock to bondholders who had surrendered their bonds
for conversion, and also in settlement of claims and salaries, the amount
of $36,609,245.95. Of common stock, there had been issued, to the same
date, 139,453 shares, of $100 each. The company is operating 450 miles
of its road from Duluth, at the west end of Lake Superior, to Bismarck;
105 miles from Kalama to Tacoma, Washington Territory; and 17 miles
from Tacoma toward Wilkeson, 31 miles from Tacoma, to which point
it was expected that the road would be finished by the 20th October;
and which, the president of the company informs me, is now completed.
The road is definitely located from the mouth of Heart River, on the
Missouri, to the mouth of Glendive Creek, on the Yellowstone, a dis¬
tance of 205 miles. Between the last-named point and the junction of
the Deer Lodge and Little Blackfoot Rivers, Montana Territory, the
line has not been definitely fixed, though it will probably follow the
Yellowstone as far as the mouth of Porcupine Creek, a distance of 200
miles from the mouth of Glendive Creek. In Washington Territory the
branch and main line both terminate at Tacoma, on Puget Sound. The
cost of surveys during the year ending 30th June last was $11,785,
making the total cost of surveys $1,124,728.55. This includes the pur¬
chase of the right of way. The amount received from transportation
of passengers for the year ending 30th June, 1877, was $283,915.78;
of freight $663,203.05; from miscellaneous sources $63,930.60; total
$1,011,049.43. The operating expenses for the year were $477,451.40 ;
leaving net earnings $533,598.03. The total cost of construction and
equipment of the road to that date was $19,421,977.56. The company's
indebtedness to said date was $309,720.81. As an oifset to this debt
the eompany had bills receivable, balances due from other railroad and
transportation companies, and from the United States, $229,100.54;
leaving a net indebtedness of $80,620,27.
Stock of the Atlantic and Pacific Railroad Company to the amount of
$19,760,300 has been subscribed and paid. This compauy's railroad is
completed, with the telegraph line, from Pacific, Mo., to Yinita, Indian
Territory, a distance of 327J miles, and there has been no further con¬
struction of the company's line since its report of June 30, 1876. The
cost of the surveys of the road to June 30, 1877, is $323,927.36. That
portion of the road lying in the State of Missouri was, on the 8th of Sep¬
tember, 1876, sold to the Saint Louis and San Francisco Railway Com¬
pany, with all its franchises, equipments, and other property pertaining
thereto, by the foreclosure of the second mortgage thereon, and the latter
company has been operating the part of said road lying west of the
State of Missouri since that time. Hence there have been no receipts
from passengers or freight by s^id Atlantic and Pacific Railroad Com¬
pany to report. The cost of the road and fixtures is $3 . ,368,789.64.
The bonded indebtedness for which the company remains liable is the
first-mortgage railroad and land-grant bonds.
Stock of the Texas and Pacific Railway Company to the amount of
4
$50,000,000 is authorized by law, of which $7,483,400 has beeu issued.
The receipts for the year ending 30th June, 1877, were, from transporta¬
tion of passengers, $531,385.27; of freight $1,468,694.63 ; from express
$20,323.37; mail $31,035; telegraph $14,494.32; miscellaneous $4,706;
total $2,070,638.59. The expenses for said year were, for conducting
transportation $442,170; motive power $310,476.44; maintenance of
way $444,105.96; maintenance of cars $135,484.79; general expenses
$49,749.37; total $1,381,986.56; leaving net earnings $688,652.03. The
entire indebtedness of the company is $19,264,684.99. There are 443.86
miles of the main line of this road in operation, (and 36.94 miles of
sidings,) 111 miles of which has been completed since the date of their
last report. On the 8th March last you accepted 127 miles of this com¬
pany's road.
Denver Pacific Railroad stock to the amount of $4,000,000 has been
subscribed and paid, being the total amount authorized by law. The
receipts for the year ending 30th June, 1877, were, for transportation of
passengers, $161,722.96; of freight, $171,165,29; miscellaneous, $2,880,65;
total, $335,768.90. The expenses for said year were $189,370.20; leav¬
ing net earnings $146,398.70. The cost of construction and equipment
of the road (106 miles) has been $6,495,350. The indebtedness of the
company is $2,595,829.91.
INDEBTEDNESS OF THE "RAILROAD COMPANIES TO THE UNITED STATES.
Under the act of 1st July, 1862, and 2d July, 1864, subsidy bonds were
issued by the United States to six railway companies (Central Pacific,
Kansas Pacific, Union Pacific, Central Branch Union Pacific, Western
Pacific, and Sioux City and Pacific) to the amount of $64,623,512. These
bonds, having thirty years from date to run, will mature, some in 1896,
others in 1897, and others in 1898. The semi-annual interest paid on
them will amount, at maturity of the bonds, to $116,322,321.60 at simple
interest, and to $316,112,571.79 if compounded, or, the principal added
thereto, $180,945,833.60 and $380,736,083.79 respectively.
WHAT THE PACIFIC RAILROAD COMPANIES HAVE PAID THE GOVERN¬
MENT.
Section 6 of the act approved July 1,1862, provides that "all compen¬
sation for services rendered for the government shall be applied to the
payment of said bonds and interest until the whole amount is fully paid."
This, however, was amended by section 5 of the act approved July 2,
1864, which provides that " only one-half of the compensation for services
rendered for the government by said companies shall be required to be
applied to the payment of the bonds issued by the government in aid of
the construction of said roads;" which amendment was confirmed by
section 9 of the act approved March 3, 1871, enacting " that the Secre¬
tary of the Treasury is hereby directed to pay over in money to the Pa¬
cific railroad companies * * * one-half of the compensation * * *
for # # # services heretofore or hereafter rendered."
5
The amount of one-half of transportation-accounts for carrying mails,
troops, supplies, &c., which has not been paid to the companies, but
which has been applied by the government to the payment of their
indebtedness, and covered into the Treasury for that purpose, to October
31, 1877, is as follows, viz:
Union Pacific Railroad Company $3,657,139 95
Central Pacific Railroad Company 1,423, 555 74
Kansas Pacific Railroad Company 1, 307, 044 31
Western Pacific Railroad Company 9,365 75
Sioux City and Pacific Railroad Company 34,391 46
Central Branch, Union Pacific Railroad Company 39,700 13
Total 6,471,197 34
The amount of one-half of the same accounts, which has not been
paid to the companies, but withheld under provision of section 2 of the
act approved March 3, 1873, whereby the Secretary of the Treasury
was directed to withhold all payments, &c., and also under a stipula¬
tion entered into as regards the Union Pacific Railroad Company,
whereby the judgment against the United States in case No. 571, Oc¬
tober term, 1875, of the Supreme Court, was not to be collected until
after final judgment in the suit to recover sums claimed to be due to
the United States as the five per cent, of net earnings, and which has
been applied by#the government to the payment of their indebtedness
and covered into the Treasury for that purpose, is as follows, viz:
Union Pacific Railroad Company $1,299,652 00
Central Pacific Railroad Company 708, 611 62
Kansas Pacific Railroad Company 224,635 75
Western Pacific Railroad Company. 1 25
Sioux City and Pacific Railroad Company 31,267 34
Central Branch, Union Pacific Railroad Company 21,048 22
Total 2,285,216 18
Total amount covered into the Treasury 8,756,413 52
In addition to this sum, the amount of transportation-accounts ren¬
dered by the companies for services performed, and which remained un¬
paid October 31, 1877, for lack of proper appropriations or for reason
that they were in process of settlement, is quite large, and, from the
best information to be obtained3 is as follows, viz:
Union Pacific Railroad Company $1,600, 000
Central Pacific Railroad Company 450,000
Kansas Pacific Railroad Company 400,000
Western Pacific Railroad Company
Sioux City and Pacific Railroad Company 12,000
Central Branch, Union Pacific Railroad Company 3,000
Total 1 2,465,000
Total amount paid and to be paid as one-half of transportation-ac¬
counts to October 31, 1877, is, on above basis, $7,703,697.34.
The indebtedness of the companies to the government to October 31,
1877, is as follows, viz:
6
Railroad company.
Principal. Interest.
Total,
"Union Pacific...
Central Pacific .
Kansas Pacific..
"Western Pacific
$•27. 236, 512 00 $10, 740, 648 38 $37, 977,160 38
25, 885, 120 00 12, 519, 447 11 38, 404, 567 11
6, 303, 000 00 2, 454, 633 03 8, 757, 633 03
1, 970, 560 00 988, 891 54 2, 959, 451 54
1, 628, 320 00 845, 009 89 2, 473, 329 89
1, 600, 000 00 945, 059 91 2, 545, 059 91
Sioux City and Pacific
Central Branch, Union Pacific
Total
64, 623, 512 00 28, 493, 685 86 93,117,197 86
These amounts are subject to increase or decrease as to total indebt¬
edness by the application of the $2,285,216.18 and the $2,465,000 before
stated, as the Supreme Court may decide in the suits now pending.
The Supreme Court of the United States, at the October term, 1875,
held, in the case of The United States vs. The Union Pacific Railroad
Company, (1 Otto, 72,) that the companies cannot be required to pay the
interest on the bonds until the maturity of the principal. This decision
of the court of last resort leaves the United States powerless, under pres¬
ent laws, to obtain, before the maturity of the bonds, any return for the
large sums advanced and to be advanced to the companies, except the
one-half compensation for services rendered to the government, and the
5 per cent, of the net earnings of the roads after completion.
These sources are so entirely inadequate to reimburse the United
States, that various measures have been suggested for securing pay¬
ment at the maturity of the bonds. The president of the Union Pacific
Company, in a letter addressed to the Secretary of the Treasury on the
9th February, 1875, proposed the establishment of a sinking-fund by
the annual payment of $500,000 for twenty years, and of $750,000 there¬
after. This proposition was afterward modified so as to offer to pay
$500,000 for ten years, $750,000 for ten years, and $1,000,000 beginning
1st July, 1895. These sums include the charges against the govern¬
ment for transportation and mail-service. The Central Pacific Com¬
pany shortly afterward made propositions on the same subject.
What is known as the Lawrence bill, which passed the House of Rep¬
resentatives at the first session of the Forty-fourth Congress, requires the
Union Pacific Company to pay semi annually the sum of $994,731, which
sum, according to the statement of the Judiciary Committee of the
House of Representatives, is necessary to meet the principal and inter¬
est due at the maturity of the bonds. Other sums are required by said
bill to be paid by the other companies. The proceeds from transporta¬
tion and mail-service, and 5 per cent, of net earnings, are not included
in these sums.
The government directors of the Union Pacific Company, in their last
annual report, express the opinion that a semi-annual payment of
$500,000, compounded at 6 per cent., together with the one-half of the
charges for transportation and the 5 per cent, of the net earnings, will
suffice to meet all the liabilities of said company to the United States at
SINKING-FUND
7
the maturity of its bonds. According to their figures, these three items
would amount to nearly two millions of dollars a year, and on their es¬
timate of the amount that would be received from the one-half transpor¬
tation and 5 per cent, of net earnings, the sum-total received would vary
but little from that named in the Lawrence bill.
As this important subject is already receiving in Congress that earn¬
est attention which the magnitude of the interests involved deserves, I
deem it unnecessary to go into an elaborate discussion of any of the
plans proposed. That the law contemplates, and the public interest de¬
mands, the full reimbursement to the United States of the whole amount,
principal and interest, advanced for the railroad companies, is unques¬
tionable, and I beg leave to offer the following presentation of the
ability of the Pacific Railroad Companies to discharge their indebted¬
ness to the government.
THE ABILITY OF THE PACIFIC RAILROAD COMPANIES TO PAY.
In addition to the one-half of transportation accounts for services ren¬
dered, the amount of which has been withheld and applied upon the
indebtedness of the companies, the act approved July 1, 1862, section
six, requires " that, 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."
The following approximation is made of the amount due from the com¬
panies on this account, exclusive of interest accrued by reason of non¬
payment annually, to October 31, 1877, viz :
Company.
Road com¬
pleted.
Years.
Gross
earnings.
Operating-
expenses.
Net earnings.
Five per
cent, of
net earn¬
ings.
U. P. R.R
C. P. R. R ...... ...
K P. R. R
W. P. R. R+
Nov. 6,1869
July 16,1869
Nov. 2,1868
Jan. 22,1870
March 3, 1869
Jan. 20,1868
8
81
9
8f
n
*$85, 000, 000
175, 000, 000
27, 000, 000
$40, 000, 000
33, 000, 000
15, 500, 000
$45, 000, 000
42, 000, 000
11, 500, 000
$2, 250, 000
2, 100, 000
575, 000
S. C. & P. R. R
C.B., U.P. R.R
2, 600, 000
1, 300, 000
2,100, 000
1, 500, 000
500, 000
$ Deficit 200, 000
25,000
Total
190, 900, 000
92,100, 000
99, 000, 000
4, 950, 003
* Including Omaha bridge earnings and operating-expenses, which are omitted from the published
reports of the company.
t Upon the basis of of the total earnings and expenses, which is subject, however, to investiga¬
tion as to the actual earnings and expenses of the remaining portion of the road.
I Consolidated with C. P. R. R. June 22, 1870.
§ An inquiry into this deficit is in progress.
Interest at the rate of 6 per cent, per annum being added to this
sura of $4,950,000, from the time when the annual applications thereof
should have been made,-will increase it to more than $6,000,000, which
is the amount immediately involved in the pending "Five-per-cent."
suits.
The ability of the Union Pacific and Central Pacific Railroad Compa-
8
nies to pay the above sums is fully demonstrated by the following facts,
figures, aud comparisons:
Omitting the Union Pacific and Central Pacific Railroad Companies
from the enumeration, there were at the close of the year 1876, eight
hundred and nine (809) railroad companies in operation in the United
States, owning 76,258 miles of road. Of these, 181 only paid dividends;
30 paid 8 per cent., 36 paid over 8 per cent., 115 paid under 8 per cent.,
and 628 paid no dividends. Of these 809 companies, the earnings of 31
were insufficient to pay " operating-expenses,77 the earnings of 170 were
insufficient to pay " operating-expenses77 and " interest,77 and 216 de¬
faulted on their " bond-interest.77
The Union Pacific Railroad Company, and the Central Pacific Railroad
Company, did better than ever before in the year 1876, notwithstanding
the fact that all other railroad companies suffered from the great de¬
pression of trade and industrial enterprise. (See pages XV and XYI
of Poor's Manual, 1877.)
Gross earnings $31,033,803
Operating-expenses 14,000,286
Net earnings 17,033,517
Bonded interest, paid $6, 612,815
Eight per cent, dividend on stock 7,299,000
Excepting these two companies from the calculation, but 34 J per cent,
of the capital stock invested in railroads pays a dividend; the average
rate per cent, of dividends paid is but 2^^; but 68J per cent, of the
bonded investment in railroads receives interest, and the average rate
„ of interest is but Per cent. The two railroads named pay 8 per
cent, dividends on capital stock, and 6T2J^ per cent, interest on their
bonded debt.
On the " one-hundred miles basis77 a comparison between all other
roads in the United States and these two roads for the year 1876, is as
follows, viz:
13,911,815
Surplus
3,121,702
Items.
Union Pacific
All other and Central
roads. Pacific Kail-
roads.
Locomotives used
Passenger-cars used
Freight-cars used
Capital stock
onded debt
Cost of road and equipment
Passenger-earnings
Freight-earnings
Total earnings, including mails, &c
Operating-expenses
Net earnings
.bond-interest paid
Dividends on capital stock
21
2C
510
17
20
319
$2, 912, 919
2, 793, 355
5,170, 322
184, 859
397, 754
686, 214
436, 604
249, 610
129, 087
90,180
$4, 652,112
7,180, 342
11,453, 038
453, 795
806, 054
1, 378, 465
*621, 867
756, 598
293, 725
324, 208
""Construction, new equipment, and improvements evidently enter largely into this amount for
"operating-expenses."
9
To illustrate still more fully the ability of the Uuiou Pacific and Cen¬
tral Pacific Railroad Companies to earn money, and with a proper dis¬
posal of their earnings in due time to pay off all of their indebtedness
to the government, the following statement is made. The figures are
believed to be nearly correct, having in this and the previous statement
been taken largely from " Poor's Manual of the Railroads of the United
States."
Items.
Union Pacific Railroad.
Central Pacific Kail-
road.
Total of both.
New York Central.
Railroads reporting in
Massachusetts.
All railroads in United
States reporting, ex¬
cept Union Pacific
and Central Pacific
Railroads.
Miles of road operated...
Cost of road .......
1, 038|
1,219
2, 257!
1,000
2, 479
67, 355
$114, 000, 000
6, 000, 000
2, 714, 588
®.l 3-2 685 389S246. 685. 389
$77, 243,162
17, 349, 449
3, 230,199
$140, 947,113
16, 590, 505
11, 541, 434
Cost of equipment
Cost of other property...
Total amount of invest¬
ment
Cost per mile
Capital stock
Bonded debt
United States subsidy
bonds....
7, 494, 209
2, 450, 684
13, 494, 209
5,165, 270
122, 714, 588
142, 630, 282
265, 344, 870
97, 822, 810
169, 079, 052 $3, 828, 808, 307
118, 000
117, 500
117, 852
98, 000
68, 204
56, 845
36, 762, 300
51,104, 000
27, 236, 512
54, 275, 500
55, 457, 000
27, 855,-680
91. 037, 800
106, 561, 000
55, 092,192
89, 428, 300
39, 844, 733
118,179, 615
51, 620, 374
2,157,120, 875
2, 058, 580, 368
9, 531, 320
Total general liability.
Passenger-earnings
Freight-earnings
Miscellaneous, mail, &c.,
earnings
Gross earnings
Operating-expenses
Net earnings
Taxes paid
Interest paid, (bonded) ..
General expenses, &c
Dividends
Surplus
Deficit ..........
115,102, 812
137, 589,180
252, 690, 992
129, 273, 033
169, 799, 989
4, 225, 232, 563
4, 410, 000
7, 710, 000
1, 400, 000
5, 908, 821
10, 773,618
1, 464, 504
10,318, 821
18, 483, 618
2, 864, 504
6, 672, 966
17, 593, 264
3, 780, 356
14,260,815
13, 644, 278
3,102, 353
124, 512, 264
267, 907, 030
69, 780, 432
13, 520, 000
5, 220, 000
18,146, 943
8, 732, 074
31, 666, 943
13, 952, 074
28, 046, 588
16,124, 172
31, 007, 446
21, 460, 627
462,199, 726
294, 074, 813
8, 300, 000
9, 414, 869
17, 714, 869
11, 922, 416
9, 546, 819
168,124, 913
307, 195
3, 675, 000
750, 000
2, 939, 600
378, 986
3, 498, 331
1, 043, 186
4, 832, 690
686,181
7,173, 331
1, 793,186
7, 772, 290
"2," 791," 629
1,917,711
7,139, 528
1, 353, 685
3, 704, 698
5, 858, 509
19,144, 041
86, 946, 758
60, 740, 668
628, 205
338, 324
289,881
73, 548
"l, 370," 273
1, 293, 446
Miles run by passenger-
traius
Miles run by freight-trains
Total passenger-mileage.
Total freight-mileage
Passengers carried
Tons of freight carried..
1, 200, 000
3, 500, 000
1, 570, 435
3, 359, 107
2, 770, 435
6, 859,107
4, 743, 485
9, 278, 266
10, 439, 856
9, 464, 471
340, 000, 000
260, 000, 000
128, 032, 924
292, 002, 076
200, 000, 000
350, 000, 000
328, 032, 924
642, 002, 076
353, 136,145
1, 674, 447, 055
639, 592,115
628, 577,176
7, 000, 000, 000
21, 000, 000, 000
202, 648
900,000
789, 702
1,114, 086
992, 350
2, 014, 086
9, 281, 490
6, 803, 680
41,133, 229
11, 327, 502
200, 000, 000
197, 082, 000
The facts shown by this statement are so striking that a comparison
of percentages is quite unnecessary to demonstrate the great advantages
which these two Pacific railroads possess over all others in the two
principal elements of successful railroadiug—high tariffs and limited com¬
petition. That these companies are fully able to make sufficient provis¬
ion for a discharge of their whole indebtedness to the United States
seems, therefore, beyond question.
10
IMPROVEMENT REQUIRED IN THE SYSTEM OF ACCOUNTABILITY.
Under tlie provisions of section 20 of the act approved July 1, 1862,
section 13 of the act approved July 2, 1864, and those of the act ap¬
proved June 25, 1868, the Pacific Railroad Companies are required to
make certain annual reports to this department, and the government
directors are likewise required to communicate, from time to time, infor¬
mation in regard to the affairs of the companies, such as should be in
the possession of the department.
Reports have been made by the several companies from year to year;
but none of the reports rendered have given that full and specific infov
mation in regard to the receipts, expenditures, and indebtedness of the roads
which is called for by law, and which is necessary to a full knowledge
of their true condition.
The reports made annually by the government directors have fur¬
nished much valuable information in regard to the roads, and have inti¬
mated and suggested many things whereby the condition of the roads
could be improved.
Whether the laws now in force are repealed and new laws passed or
not, injustice to the gentlemen who are now filling the positions of gov¬
ernment directors, as well as to enable the government to utilize and
systematize matters connected with these railroads, in which there is so
much at stake, legislation looking to more practical methods of obtain¬
ing information seems to be absolutely required.
In order that the amount of net earnings be properly and accurately
ascertained, it is desirable that monthly reports, instead of annual ones,
be made to this department on proper forms to be prepared and fur¬
nished to all the Pacific rail road companies. The business of the two
main companies is assuming such large proportions that the annual re¬
port is too slow, and altogether of too summary a character to serve the
purpose for which it was intended. The government should receive its
information in regard to the business and condition of these roads just
as often and just as promptly as a board of directors or any officer of the
company. The companies should be required to keep their accounts in
such manner as to enable them to give promptly and with accuracy any
information required by the department.
One of the difficulties at present in the way of obtaining proper infor
mation is the fact that the companies put their own construction upon
the laws, as to what reports are required of them ; and whether they
report or not according to the construction of the department, there is
no penalty for non-compliance. There is no uniformity in the manner
of keeping their accounts or rendering reports to the government.
Not to go too much into detail, it may be stated, that while the law
requires that the reports called for shall contain " a statement of the in -
debtedness of said company, setting forth the various kinds thereof,"
11
the companies report the amount of their funded debt, leaving out their
floating debt—their entire indebtedness—or failing to give the details
thereof; so, with the required u statement of the expense of said road
and its fixtures," the entire annual expense of operating as well as the
amount invested in new property or improvements—fixtures—is evidently
required, but has never been furnished in such manner as to give an in¬
telligent idea as to its correctness. The reports of u engineers, superin¬
tendents, or other officers who make annual reports to said railroad com¬
panies " are required to be furnished, but have not been by all. Again,
in the case of the Central Pacific, it is necessary to a proper division of
its earnings and expenses, that a separate account and report be had as
to that part of the road known as subsidized, namely, 866 miles of its
1,219. The Union Pacific fails to report the earnings and expenses of
the Omaha Bridge, although decided in 1875 to be a part of their road.
The expenditures for improvements, betterments, and for new construc¬
tion and equipment should be given in detail and verified by a competent
officer of the government, and the time of making up their annual state¬
ments should be June 30 of each year, conforming to the fiscal year of the
government. *
These constitute but a few of the shortcomings in the reports made by
the companies to this department.
For the supervising of the accounts of these railroads, the government
directors recommend that a special bureau should be established in this
department. With this recommendation I fully concur. Acompetentand
energetic officer in charge of such a bureau would enable this department
to act promptly and intelligently, whenever action on its part is required,
in regard to the great interests of the government in these railroads,
and to furnish valuable assistance to other departments of the govern¬
ment and to Congress in matters relating thereto.
The report of the government directors of the Union Pacific Railroad
Company, (the only one for which such directors are appointed,) for the
year euding 30th June last, is herewith transmitted. The act of 1st
July, 1862, provided for two such directors to be appointed by the Presi¬
dent. The number was increased to five by the act of 2d July, 1864,
which also provides that one of them shall be placed on each of the com¬
pany's standing committees, aud at least one on every special commit¬
tee. They are required to report from time to time to the Secretary of
the Interior in answer to auy inquiries he may make of them, touching
the condition, management, and progress of the work, and to communi¬
cate to him, at any time, such information as should be in his posses¬
sion. They are authorized to go over the road as often as may be neces¬
sary to a full knowledge of its condition and management.
Their reports embody much valuable information that would not other*
wise come into the possession of the General Government. The sugges¬
tions contained in their last report are well worthy of consideration by
Congress.
12
THE KANSAS PACIFIC RAILROAD.
The Kansas Pacific Poad was placed in the hands of a receiver 3d
November, 1876, in consequence of failure on the part of the company
to pay the interest on its first-mortgage bonds. In a printed paper ad¬
dressed to me, on the 21st of April last, by the chairman and secretary
of a committee of nine of first-mortgage bondholders, it is alleged that
said failure to pay interest was owing mainly to the fact that the Union
Pacific Bailroad Company has persistently refused to transport pas¬
sengers and freight in connection with the Kansas Pacific and Denver
Pacific companies on the terms and in the manner required by the acts
of 1st July, 1862, 2d July, 1864, 3d March, 1869, and 20th June, 1874;
that said- acts contemplated the Kansas Pacific and Denver Pacific
railroads as a part of the connected and continuous line between the
Missouri River and the Pacific Ocean, intersecting the Union Pacific at
Cheyenne, to be operated without any discrimination for or against said
roads; thht the Union Pacific company has wholly disregarded the re¬
peated requests of the Kansas Pacific and Denver Pacific companies to
observe the provisions of said acts, and has denied its obligations to
conform thereto, establishing and maintaining, in contravention of said
acts, discriminating rates of fare for passengers and freight for mer¬
chandise against the Kansas Pacific and Denver Pacific companies;
that the distance from Cheyenne to Ogden is 516 miles, one-half the
distance from Omaha to Ogden, and yet the Union Pacific Company
charges, in many cases, as much for transportation from Cheyenne to
Ogden as from Omaha to Ogden, and in all cases out of proportion to
the distance traversed, thereby compelling travelers and shippers to go
to Omaha as a starting-point, greatly to the damage of the Kansas
Pacific and Denver Pacific companies; that while the Kansas Pacific
company has made default in payment of interest, the Union Pacific
company, by means of the monopoly thus established, has paid 8 per
cent, dividends annually to its stockholders, besides paying the interest
on its debt, (other than that due the United States;) that the General
Government is interested in having said discrimination terminated, in
order that the sums advanced to the Kansas Pacific company by the
United States may not be utterly lost.
A list of some of the discriminating charges accompanies the paper.
That there is such discrimination is beyond dispute. That it is in direct
contravention of the letter and spirit of the Pacific railroad acts there
can scarcely be serious doubt. There seems to be no disposition on the
part of the Union Pacific company voluntarily to remedy this evil, bat
I am of the opinion that proper steps should be taken to enforce com¬
pliance with the acts of Congress.
O