The Palatka daily news. (Palatka, Fla.) 1884-1888, 1888-01-18
SENDS A MESSAGE TO The SENATE
ON THE SUBJECT OF THE PACIFIC
RAILROADS.
He States His Views I'm . Plain, Straight
forward Manner that Admits No
Doubt af His Meaning.

| WASHINGTON, January 17.-The Presi-
dents message transmitting to Congress
the reports of the Pacific Railroad In
vestigation Commissioners says that:
Among other things contemplated the
investigation included the history of the
construction of these roads, their rela-
tons and indebtedness to the Govern
ment and the question whether in the
interest of the United States any extern
| sion of the time for the performance of
| the obligations of said roads to the Gov
ernment should be granted. The COM
missioners have been unable to agree
| upon the manner in which these rail-
! roads should be treated respecting their
indebtedness to the United States or to
unite upon a plan best calculated to
| secure the payment of such indebted
ness. This disagreement has resulted in
the preparation of two reports. both of
| which are herewith submitted to Con-
gress.
These reports exhibit such transac-
| tions and schemes connected with the
construction of the aided roads and their
management, and suggest the inventing
OF such devices on the part of those
| having them in charge for the apparent
purpose of defeating any chance for
Government reimbursement, and that
| any adjustment or plan of settlement
should be predicated upon the substan-
| tial interests of the Government rather
than any forbearance or generosity de
served by the companies.
A majority of the commission are in
| favor of an extension of the time for the
payment of the Government indebted
ness Of these companies upon certain
conditions. But the chairman of the
commission, presenting the minority re-
port. recommends, both upon principle
and policy, the institution of proceedings
for the forfeiture of the charters of the
corporations, and winding up their ae
4 fairs
/ / have been furnished with a state
/ ment or argument in defense of the
| transactions connected with the con-
struction of the Central Pacific Road and
| its branch lines, from which it may not
be amiss to quote for the purpose of
showing how some of the operations of
the directors of such roads strongly con-
demned by commissioners are defended
| by the directors themselves. After
| speaking of the contract for the
construction of one of these branch
lines by the corporations called
contract and finance companies owned
| by certain directors of the Central
Pacific Railroad, this language is
used: 1T may be said of this
contract, as of many others that were
/ let to different construction companies
i i'm which the directors of the Central Pa
| cific 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 bonds and stock
i of the railroad SO constructed and waited
/ until such time as they could develope
i sufficient business ON the road built to
induce the public to buy the bonds or
stocks. Ii the country through which
the railroad ran developed sufficient
business, then the project was a success.
i IL it did not then the peration was a loss.
/ These gentlemen took all the RESPONSE
biIity, any loss occurring was necessarily
| theirs and of right the profit belonged to
/ them. But it is said they violated well
/ known rule of equity iii dealing with
themselves. That they were trustees
| and that they were representing both
| sides of the contract Answer Is that
they did not find anybody else To deal
/ with. They could not find any one who
would take the chances of building the
road through what was then an almost
| uninhabited country and accept the
bonds and stock of the road in payment,
| but when it is said that they were trus-
| tees, if they did occupy such relation,
/ it was merely technical, for they repre-
| sented only their own interests on both
| sides. There being no one else con-
cerned in the Transaction they be-
came incorporators of the COM
pany that was to build the road
| subscribed Tor its stock and were 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 ma ters certainly did
\ Al. n
acting in their own interests and were
not charged with the duty of caring foI
others rights, there being no other per-
sons intrusted in the subject matter.
In view of this statement and fac s
developed in the commissioner reports,
| it seems proper to recall the grants and
benefits derived from the general Gov
ernment by both the Union and Central
Pacific Companies for the purpose of
aiding the construction of their roads. "
The President here quotes the act of
1862, granting aid to these roads and
says:
The liberal donations, advances
and privileges provided for in this law
Were granted by the gentr IL Govern
ment for the purpose of securing the
construction of these roads, which would
complete the connection between our
ca tern and western coasts. and they
were based upon the consideration of the
public benefits which would accrus to
| the entire country from such construc-
ton. But the projectors of these roads
were not content, and the sentiment
which then seemed To pervade Congress
had not reached the limit of Its
generosity.
Two wears after the passage of this
law it was supplemented and amended
in various important particulars in favor
of these companies by an act which pro
vided, among other things. that bonds al
a rate already specified should be de
| livered upon the completion of sections
of twenty miles in length instead OF
forty; that the lands to- be conveyed tC
said companies ON the completion OF
each section of said roads should be ter
sections per mile instead of five: that
only half of the charges for Transports
tion and service due from time to time
from the United States should be re
tanned and applied to the advances te
said companies by the Government
thus obliging the immediate payment t.
its debtor of the other half of said charges
and that the lien of the United States Il
secure reimbursement Of the AMOUNT all
vanced to said companies in bonds
which lien was declared by the law o
1862 to constitute a first mortgage upor
all property OF said companies, should
become a Junior lien and be subordinatet
to the mortgage which the companie-
were by the amendatory act authorizes
to execute to secure the bonds wlicl
they might from time to time issue II
sums not exceeding the amount OF tn