The true northerner. [volume] (Paw Paw, Mich.) 1855-1920, 1888-01-25
Nearly Hundred and Eighty Millions
Advanced to the Roads by Unc,e
So Samuel.
Directors of the Companies Now Bxcus-
ing Their Course in Absorbing Most
of the Assets
Congress Advised TO Take the Case In
Hand and Compel Settle.
ment.

To the Senate and House OF Representatives
On March last an net was passed authoriz-
ing the appointment Of three Commits siCners
who should Investigate such railroads as have
received aid from tho United States Gov orn-
ment Among other things, the contemplated
investigation included history OF the con
struction OF these roads, their relations and in-
debtedness TO the Government, and the ques-
ton whether in the interest of the United
states any ext nsion of the time for the per-
Torrance of the obligations of said roads b the
Government should be granted and IL So the
said Commissioners Were directed to submit n
scheme for such extension The Commissions
ers were further directed by said act TO report
in full To the resident upon all the matters
submitted to them, and he was, by said act,
required Co forward raid report TO Congress,
with such recommendations or comments as he
should see 1T 10 make in the promises.
The commissioners Immediately after their
selection, entered upon the discharge Of their
dut es, and have prosecuted their inquiries
with commend able industry. intelligence and
thoroughness. large amount OF testimony
has been taken, and all the facts have been
developed which appear TO he necessary for
the consideration of the questions arising from
the condition of those aided railroads and their
relations to the Government The commits
sioners have, however, been unable TO agree
upon the manner in which these railroads
should be treated respecting their indebtc dine SIS
TO the United States, or to unite upon the plan
best calculated to secure the payment OF such
indebtedness. This disagreement has re-
suited in the preparation OF two reports,
both OF which are herewith submitted to the
Congress. These reports exhibit such transac-
lions and schemes connect Il with the construc-
on OF the aided roads and their management,
and suggest the invention OF such devices on
the part of those having them in charge for the
apparent purpose of defeating any chance for
the Governments nbursement, that any adj
Iustment or plan of settlement should bo pred
icated upon the substantial interests of the
Government rather than any forDearance or
generosity deserved " tho companies. The
wide publication which has already been given
to the substance OF the Commissioners s reports
obviates the necessity of failing in this COM
munication the facts found upon the investiga-
tion
The majority report while condemning the
methods adopted by those who formerly had
charge of the Union Pacific Railroad declares
that since its present management was inaupa-
rated in 1884 its affairs have been fairly and
Irudontly conducted, and that the present adj
lninistration has devoted itself honestly and
intclligeutly TO the herculean task Of rescu .ng
the Union Pacific Railway from the insolvency
which seriously threatened it at the inception
OF its work that 1t has devoted itself, by rigid
economy, by intelligent management, and by
an application OF every dollar of the earning
capacity of the system t. its improvement and
betterment to placo that company on sound
and enduring financial foundation.
The condition of the present management Of
the Union Tactic Company has an important
bearing upon its ability to comply with the
terms of any settlement II its Indebtedness
which may be offered by tho Government.
The majority of the commissioners arc in favor
of an extension of the time for the payment of
the Government indebtedness of these
companies upon certain conditions But
the chairman of the commission. presenting
the minority report, recommends both upon
principle and policy, the institution of pro-
ceedings for tho forfeiture of the charters
OF the corporations, and the winding up of their
affairs have been furnished with state
ment, or argum ent, in defense OF the transac-
tons connected with the construction of tho
Union Pacific Road and its branch lines. from
which il may not DO Gmiss 10 quote, for the
purpose OF showing how some OF the operations
Of the Directors OF such road, strongly con-
demned by the Commissioners, are defended
by the Directors themselves. After speaking
OF contract for the construction of one OF
these branch lines 10y corporation called tho
Contract and Finance Company, owned by GER
tain Directors of the Central Pacific Railroad,
this language Is used
1T may De said of this contract, as OF many
others that were let to the different construc-
ton companies in which the directors of the
Central Pacific We're stockholders that TIA ey
built the roads with the 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 wateduntl such time as they
could develop sufficient business the road
built to induce the public to buy the bon ds or
the stock. II the country through which the
road ran developed sufficient business then the
project was success; IL il did not then the
operation was n loss. These gentlemen took
all the responsibility any loss occurring was
necessarily theirs and of right the profit be-
longed 10 them. But il is said they violated n
well-known rule Of equity in dealing with
themselves, that they were trustees, and that
they were representing both sides of the con-
tract. The answer is that they did not find
anybody else to deal with. They could
the chance of building road through
what was then an almost uninhabited country
and accept the bonds and stocks Of the road in
payment. And when it is said that they are
trustees, il they did occupy such relation 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 tho only subscribers. Therefore, it is
difficult TO see how anyone was wronged by
their action. The rule of equity invoked, VIII oh
has its origin in the Injunction, No man can
serve two masters, certainly did not apply 70
them, because they were acting in their own in
terests and were not charged with tho duty Of
caring for others rights, there being no other
persons Interested in the subject matter.
In view OF this statement and the acts deve-
oped in the commissioners report. IL seems
proper to recall the grants aud benefits
derived from the General Government by
both the Union and Central Pacific
companies for the purpose Of aiding
the construction Of their roads BY an act
passed in 1862, it was provided that there should
DO advanced TO said companies by the United
States to aid in such construction the bonds Of
the Government amounting TO SIC 900 for every
mile constructed, rs often as n section Of forty
miles Of said roads should be built that there
should also be granted TO said companies upon
the completion 81 oyory said section OF forty
miles of road five entire sections Of pub ic land
for each mile so built: that the entire charges
earned by said roads on account of transporta-
ton aud service for the Government should be
applied to the endorsement of She bonds ad-
yanced by tho United States and the interest
thereon and that to secure the repayment Of
bonds advanced and I'M erost the
issue and delivery of said bonds should consti-
tute Il first mortgage on the whole line of their
roads, and on their roll ng-stock, fixtures and
property Of every kind and description. The
liberal donations, advances, and privileges pro-
yided for in this law were granted by the Gen
eral Government for the purpose OF securing the
construction OF these ronds. which would COM
plete Il connection between our eastern and
cons Iteration of the public benefits which
would accrue to the entire country from such
construction But the projectors OF these road
were not content, and the sentiment which then
seemed to porvGdo tho Congress had not
reached the limit Of its generosity. Two years
after the passage Of this law 10 was supple
mentcd and amend a in various important par
ticulars in favor Of these companies by an
act which provided, among other things
that the bonds Mt the rate already
specified should be delivered upon the
completion Of sections OF twenty miles in length
instead Of forty that the lands TO be nyeyed
10 said companies ON the completion OF each
section OF said roads should be ten sections
por mile instead of Ave; that only haf Of tho
charges for transportation and service duo
from time TO time from the United States
should be retained and applied to tho advances
made 10 said companies by tire Government
thus obliging immediate payment TO its debtor
OF tho other half OF said charges-and that the
lien OF the United States TO secure the reiu-
bursement OF the amount advanced 20 said
companies in bonds, which lien was declared
by tho law of 1852 to COugtitutQ first mort