Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1888-03-31


of freight for nothing from san Francisco to
Ogden in order 10 try and get their trade back.
| am not complaining of that. The Union Pa
| cific was chartered to make money. and had
right to do it, but we f0resaw that that would
be the case.
Then the Union Pacific stretched out with its
1 Oregon Short Line and reached the waters of
the Pacific, so that they could run right into
San Francisco by way of water transportation.
EXPECTED COMPETITION.
| We knew the Northern Pacific would be COM
| pleted and would take the trade we used to
| have. The trade of Oregon was all then taken
| by the Short Line. The travel used to come over
| the Union Pacific and Central Pacific to San
Francisco, and then went to Oregon. We lost
all that say, by the completion Of the Oregon
our road, and besides they were in competition
| with us.
Then the Northern Pacific came right down to
San Francisco and opened its Offices and we
| lost not only the trade of Oregon Montana and
| Idaho, but we actually lost the trade of the
| northern tier OF the counties of California be-
cause our road north did not reach those coun-
| ties, and they could bring it cheaper the other
| way, so that IAN Francisco was vey much Grip
| pied and we were crippled in every direction:
have already said that we built those in
| terror lines to strengthen the aided line, and
| that then it. became the great central point
| around which all our connections revolyed;
that every one of them has been judicious and
beneficial; that they are just precisely what the
Commissioners say the Union Pacific should do,
just precisely what the Union Pacific claims the
\
! from doing. Now, then, the Directors of the
| Central Pacific and the Southern Pacific bring
substantially the same argument. Having
control of this line running from Ogden through
! to San Francisco, with branch to the Oregon
| State line nearly completed, and with a line of
road finished to New Orleans. in order that the
main line might be protected, and that these
two lines might be married and work in har-
mony, we made lease that runs for ninety nine
years.
| MAINTAINED AS A WHOLE.
1 T.,
this question, some means ought to be taken by
/ which, when this property, as in the natural or
der of things it will, falls into other hands, it
may still be worked as one whole.
five had never built that Southern line, if we
| had not built the Southern Pacific, the Central
Pacific would have lost all the trade of the
| South, all the trade of Southern California
which came over the line and fed right into the
/ Central. Now we made this lease
Senator Davis-That was the lease of the Cen
| trail Pacific to the Kentucky Company?
Mr.. Haymond-Yes it is not very long 1t
was made on the 18th day of February, 1885.
That lease not only brings these companies
together, but it reduces the expenses of the Cen
| trail Pacific. It no longer has a President no
| longer pays a Board of Directors, no longer
maintains a legal department, nor anything of
| that kind The whole business is brought into
one office, although the accounts are kept
| separately, just as separate as though it was a
| separate road, because the compensation of the
Central Pacific depends upon, except as to
81 100000 which is guaranteed, its receipts and
| its earnings.
| The Chairman-Can you not read the most
important parts of the lease, leaving out the
rest?
! DISCUSSING THE LEASE.
Mr.. Haymond-I was about to do that. When
| you come to consider this later you will see that
it IS so concise as to present the exact situation
better than the best statement l could make.
The lease recites that part of the business here
| tofore done by the Central Pacific Railroad from
| Ogden to the waters of the Pacific has been d.
verted by these various lines of road, among
| which are the Northern Pacific, the Atchison,
Topeka and Santa Fe and Oregon Short Line;
| that the Union Pacific has secured an outlet to
! the Pacific by the Oregon Short Line, in fact
| has paralleled our line of road, and therefore
| Instead of acting part of a transcontinental
| line, as was originally contemplated it was
merely rival route 1t recites that it is for the
| best interest of both of these companies that
| the Central should have outlet to the waters
| of the Atlantic; that we should make a thorough
| line commencing at Ogden, touching the Pacific,
and running to the waters of the Atlantic, not
| allowing the Central Pacific to be at the mercy
| of roads north and south; that itself should
| have an outlet to the Atlantic that it should
check encroachments on our territory by inyad-
! ing the territory of Others and by placing our
| selves in position TO say to the Union Pacific
| as business propositions
"a 1t is not to your interest to fight us here, but
| you must come in and let your freight go over
| our line so far as it is intended for our terri
| tory" Then the lease recites the necessity of
| conducting these two in harmony
| Now, then. comes in their report to you to tell
| you that if the Southern Pacific Company were
I
Pacific it would impair the value of that prop
erty greatly 1 state that correctly, do not?
| Commissioner Littler-That is correct
Mr.. Haymond-That vindicates by judgment
which goes after the fact the action of our peo-
pie. We go on then to lease the whole of the
Central Pacific line and all its roads up to Delta
| which is 105 miles south of the Oregon line and
was as far as they then had completed their
work.
THE LEASED LINEs
Senator Dawes-Were all tle lateral roads
| leased?
Mr. Haymond-Al the roads which they own
and all the other roads which had been leased
And it was provided that the Southern Pacific
Company should, as a consideration for that
lease, guarantee, if called upon to do so. but
should at any rate pay off and discharge all the
interest upon the bonded debt.
Senator Dawes-I wish you would read that
part of the lease.
Mr. Haymond-It is very hard to state IL
better than the lease does. or in fewer words l
do not know but what had better read it to
you.
Senator Dawes-We will assume that it is
a lease for ninety-nine years. Read the rest
of it.
Mr.. Raymond (reading)-" The said Southern
| Pacific Company agrees to and with the said
Central Pacific Railroad that it will keep and
maintain the property her eby leased in good or
der, condition and repair, operate and main
tain, add to and better the same at their own
expense; 10 pay all the taxes legally assessed
against or levied thereon, and will, at the ter
mination of this lease, return the same to said
Central Pacific Railroad Company or to its sue
cessors or assigns with the additions and bet
terments) in as good condition and repair as it
was at the date hereof And the said Southern
Pacific Company hereby agrees to and with the
said Central Pacific Railroad Company, that it
hereby assumes and will discharge all the liza
bllities and obligations of every kind Including
its obligations on leases now held by it)"-the
Central had leased some other roads, of the
said railroad company, excepting the obligation
to pay the principal of the said railroad
Indebtedness, known as its floating debt
(Which has since been pretty much paid Off,
land except the obligation to pay the princi-
pal of the Indebtedness of the said road known
as its bonded Indebtedness new outstanding Sc
cured by mortgage or deed of trust, or which
may be hereafter incurred under the provisions
of any existing mortgage or deed OF trust, or of
any mortgage or deed of trust hereafter made,
with the consent of the Southern Pacific Com
pany; and except the principal of all indebted
ness, the payment of which has heretofore been
guaranteed by the Central Pacific Company: and
except the principal of the Indebtedness of the
said Central Pacific Railway Company evil
denced by the bonds of the United States, here
tofore by the Government thereof loaned to the
said Central Pacific Railway Company. That as
to such excepted Indebtedness the said Southern
Pacific Company will pay on and discharge at
maturity the interest upon the same except the
interest upon the bonds of the United States,
loaned as aforesaid; that as to such bonos and
the interest thereon. the said Southern Pacific
Company viii discharge the annual obligations
imposed upon said Central Pacific Railway Con-
pany by the existing Acts of Congress, and will,
during the continuance of this sgreement, fully
comply with the terms of, and perform the
duties prescribed in, and discharge all the obi
cations imposed upon, the said Central Pacific
Railway Company by the Act OF Congress COM
monty known as the Thurman Act"
THE THURMAN ACT.
Now, the substance of that was simply this !:
That the Southern Pacific should pay off and
discharge all of the present yearly accruing in
debtedness for interest and would faithfully dis
I charge all of the obligations of the Thurman
Act.
Senator Dawes-How long that after the
Thurman Act was passed?
Mr.. Haymond-That was in 1855. The Thur
man Act was passed IN 1875
Senator Dawes-1he Supreme Court held that
the interest was not payable until legs.
Mr.. HaymoDd-That is what they held.
Senator Dawes Was there any stipulation as
to paying off the interest?
Mr.. Haymond-No, sir; that is the exception.
We do not pay the interest, but we perform the
obligations of the Thurman Att That at least,
clears the Central Pacific of sill Indebtedness. 1t
is no longer to be charged with any expenses Tor
repairs or betterments no longer to be charged
with any expenses for the payment of the in
terest of its debt bonded or otherwise. 1t is no
longer to be at any expense in complying with
the Thurman Act.
Senator Dawes-The substance of it was that
the Southern Pacific agreed to carry out the
| Thurman Act.
MIR. Haymond-Yes-
Senator Dawes-As between yourselves and
| them. That was all the obligation there was?
THE CENTRAIis INCOME