Barbour County index. [volume] (Medicine Lodge, Kan.) 1880-current, 1881-07-07
FABULOUS FIGURES.
Some Staggering Statements Regard
ing the Profits of Pacific Railroad
RuiIdinC

ing the Profits of Pacific Railroad
Building.
The operations of the Contract and
Finance company of the Central Pacific
railroad have often been mentioned,
says the San Francisco Chronicle, in a
general way, and some attempts have
been made to show the enormous prof
its 1t made for its projectors. 1t has,
however, passed under new names and
the books have been DESTROYED, so that
the full truth will never be known.
The system, however. has been perpetu-
ated In Pacific coast railroad enterprise,
and pending proceeding in one of the
courts of San Francisco is throwing an
electric-light glare into its inner dark
ness Mark Hopkins, one of the four
projectors of these enterprises, died
about three years ago. One of his sur
viving brothers, becoming dissatisfied
with the management and the prospect
i've distribution of the estate, petitioned
the circuit court for the removal of the
administrative and for an accounting.
The survivors of the railroad quartet
grew very nervous at the prospect of a
judicial inquiry into their proceedings,
and offered the contentious relative
S45O,OOO in addition to the 100000
he had already received, nearly twice
what the administrative indicated
would be his share on final settlement,
if he would forego the legal proceed
ings. He insisted on terms too large
even for them to consider, worried us
they were, and the matter finally went
into court.
Testimony has been taken in the
matter at odd times for several weeks
past. The principal witnesses exam.
ined have been Charles Crocker, one of
the quartet; +. S. Douty, president of
the Western Development company and
secretary of the Pacific Improvement
company, the chronological successors
OF the Contract and Finance company,
the Pacific Improvement company
being the existing institution; and
Scion Pattee, an expert accountant,
paid 10y the Hopkins estate for examin-
ing the accounts and reporting thereon.
They have been unwilling witnesses.
with reluctant memories and convent
ent uncertainties, but the judicial
thumb-screws have extorted a part of
the truth from them, and the result is
a tale of millions which puts to the
blush the marvellous story of Aladdin
and his lamp. Messrs. Stanford, Hunt
ington, Hopkins, and Crocker, having
incorporated the Central Pacific rail-
road company, with themselves as
directors, obtained grants and subsidies
more than sufficient to build the road.
disposed of much of its capital stock.
and floated its bonds with government
guarantees behind them, and formed
themselves into a corporation known
as the Contract and Finance company,
with dummy directors. Its purposes
were, like that of its original, the Paris
Credit MObilier of 1928, of most
elastic character, comprehending bank
ing, the carrying on of con-
struction, manufacturing, mining,
mercantile, mechanical and commercial
business in all or any branches, and ac
quiring all things tributary there5o
They then proceeded to contract with
the railroad for everything appertain-
ing to the building of the road, and
being directors of both companies were
enabled to get contracts without any
of the disadvantages of competition.
How much they made on the operation
will, as before intimated, probably new
er be known, as there are none of the
books in existence, but it was enough
to induce them to continue the system.
and enabled them to undertake another
tranScOntinental road without subsidy.
Even after the road was completed, and
before another was begun, it was of
advantage, and has ever since been, as
a means of concealing the profits of
their roads, and thus heading off the de-
mand for cheaper rates of freights and
fares. The Contract and Finance COM
pany, after serving certain ends, disin-
corporated, and formed anew under the
name of the Western Development
company, the stock of which was
owned in equal shares by Stanford.
Huntington, Hopkins and Crocker. AS
directors of the Southern Pacific rail-
road they let contracts to themselves.
for the stockholders, to build the road
and furnish all the supplies. By the
latter part of 1873 the Southern Pa
cific had, under the operations of the
Western Development company, been
built to the Colorado. river. After the
death of Gen. Cotton and Mark Hop
kins, the survivors formed the Pacific
Improvement company as the successor
of the Western Development company,
and all the property of the former was
turned over to the latter. The "S. II.
II. and c." account (signifying Stan
ford, Huntington, Hopkins and Crock
err ran on all the time, the members of
that firm using their close corporation
as bank, paying in their loans, draw
ing on it on individual account, using
the funds for corporation as well as
private use, and drawing first 10, then
3, z, and since January / of this year
6 per cent per annum on their deposits
in addition TO the dividends. This is
the first glimpse obtained of the profits
of the close corporation, by means OF
which the directors of the Southern
Pacific built the road for the stock
holders, and in itself it is a pretty
good return on an investment, consid
ering the current rates Of interest
But there is more behind it. Early in
1878, it being necessary to settle up the
estate of the deceased member. a few
months before the transfer of tht
Western Development to the Pacific
improvement an entry was made OF
the books of the Western Development
company carrying $20,000,OO0 to tn,
account profit and loss. Douty said h,
was not certain about the date, but HI
thought this was done shortly after tn,
death of Mark Hopkins.
Under the suggestive questioning o.
the railroads attorney he said that /;
profit and loss account was opened fo
the purpose of closing out lot of deaC
accounts; it might just as well hav,
been called dead horse" account O
anything else, but profit and loss wa
the usual technical term. He was after