The Ohio Democrat. (Logan, O. [Ohio]) 1886-1906, 1888-01-28
PACIFIC RAILROADS.
The President Transmits the Re-
port Of the Commission
To Congress in a Lengthy Message and
Asks That the Questions Involved
be Settled by Legislative
Enactment.

Enactment.
TIE LETTER.
WASHINGTON, Jan. 1s.--The following is
the Presidents message transmitting the
Pacific railroad reports to Congress:
To the Senate and House OF Representatives:
On the Sd day OF March last an act was passed
authorizing the appointment OF three commits
sioners who should investigate the affairs OF
such railroads rs have received aid from the
United States government.
Among other things, the contemplated inves
tigation included n history OF the construction
Of these roads, their relations and indebtedness
TO the government, aud the question whether in
the interest OF the United States any extension
OF the time for the performance OF the obliga-
tons OF said roads to the government should be
directed to submit scheme for such extension
The commissioners were further directed by
said act to report in full to the President upon
ali the matters submitted to them and he was
by said act required to forward said report TO
Congress. with such recommendations or com
nents as he should see fit TO make in the prem
The commissioners Immediately after their
election entered upon the discharge OF their du
ties, and have prosecuted their inquiries with
commendablc industry, intelligence and thor
oughness. A large amount of testimony has
been taken, and all the facts have been devel.
oped which appears to be necessary for the con-
sideration OF the questions arising from the con-
dition OF these aided railroads and their rela-
tions to the government. The commissioners
have, however, been unable to agree upon the
manner in which the railroads should be treated
respecting their Indebtedness to the United
States, or to unite upon the plan best calcu
lated to secure the payment OF such indebted
ness.
This disagreement has resulted in the prepa
ration OF Two reports, both Of which are herewith
submitted to the Congress.
these reports exhibit such transactions and
schemes connected with the construction OF the
aided roads and their management and suggest
the invention OF such devices on the part of
purpose Of defeating any chance for the govern
ments reimbursement. that any adjustment or
plan Of settlement should be predicatcd upon
the substantial interests OF the government
rather than any forbearance or generosity de-
served by the companies
The wide publication which has already been
given to the substance OF the commissioners re-
port obviates the necessity of detailing in this
communication the facts found upon the inves
The majority report. while condcmning the
methods adopted by those who formerly had
charge OF the Union Pacific railroads, declares
that since its present management was inaugu-
rated, in 1884, its Affairs have been fairly and
prudently conducted, and that the present ad;
ministratior "has devoted itself honestly and
intelligcntly to the herculean task of rescung
the Union Pacific railroad from the insolvency
which seriously threatened it at the inception
of Its work; that IL has devoted itself by rigid
economy, by intelligent management, and by an
application OF every dollar of the earning capa
city of the system to its improvement and bet
terment, to place that company on sound and
enduring financial foundation
The condition OF the present management of
the Union Pacific company has an important
terms OF any settlement OF its Indebtedness
which may be offered by the government.
The majority Of the commission are in favor
OF on extension of time for the payment OF the
government Indebtedness OF these companies
upon certain conditions. But the chairman OF
the commission, presenting the majority report,
institution OF proceedings for the forfeiture of
the charters Of the corporations and the wind
ing up of their affairs.
have been furnished with q statement, or ar
gument, in defense of the transactions con-
nected with the construction OF the Central Pa
cihc road and its branch lines from which 1t may
not be amiss to quote, for the purpose OF show
ing how some of the operations OF the directors
OF such road, strongly condemned by the COM
missoners. are defended by the directors them
selves. After speaking of q contract for the
construction OF one of these branch lines by
corporation called the Contract and Finance
Company, owned bv certain directors Of the
Central Pacific railroad, this language is used:
ut may be said OF this contract as Of many
others that were let to the different construc-
tion companies in which the directors OF the
Central Pacific have been stockholders. that
they built the road 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 waited until such time us they
could develop sufficient business on the road
built, to induce the public to buy the bonds or
the stock. II the country through which the
road ran developed sufficient business. then the
u
Grafton was u loss. Those gentlemen took all
the responsibility: any loss occurring was nee
essarily theirs, and of right the profit belonged
to them. But it is said that they violated
wel-known rule of equity in dealing with them
selves; than they We're trustees and that they
were representing both sides of the contract.
else to deal with They could not find any one
who would take the chances of building II roa
through what was then an almost uninhabited
country. and accept the bonds and stock OF the
road in payment. And when 1t is said that they
were trustees, II they did occupy such relation,
1t 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 the only subscribers. There
forr. 1t is difficult to see how any one was
wronged by their action. The rule of equity in
voked which has its origin in the Injunction, no
man can serve two masters, certainly did not
apply to them, because they were acting in their
own interests, and were not charged with the
duty Of caring for others rights, there being no
other persons interested in the subject matter"
In view OF this statement and the facts devel-
oped in the commissioners report 1t seems
proper to recall the grants and 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 be advanced to said companies by
the United States, to aid in such construction,
the bonds of the government amounting to 49,
QUO for every mile constructed as often rs u Sec
tion OF forty miles OF said load should be built;
that there should also be granted to said COM
panies, upon this completion Of every section OF
forty miles OF road five entire sections of public
land for each mile so built: that the entire
charges earned by, said roads on account of
transportation and service for the government
should be applied to the reimbursement of the
bonds advanced by the United States and the
interest thereon: and that to secure the repay
men. OF the bonds so advanced and interest, the
issue and delivery to said companies OF said
bonds should constitute a first mortgage on the
whole OF their roads, and on their rolling stock,
ftxvt, and mt,
tion.
The liberal donations, advances and privi-
leRes provided for in this law were granted by
the General government for the purpose of Sc
curing the construction OF these roads which
would complete the connection between
eastern ana western coasts. and they were based
upon consideration OF the public benefits which
construction. But the projectors of these roads
were not content, and the sentiment which then
seemed to prevade Congress had not reached
the limits of its generosity.
Two years after the passage OF this law 1t was
supplemented and amended in various import
ant particulars in favor OF these companies, by
an act which provided, among other things that
the bonds at the rate already specified should
be delivered upon the completion OF sections OF
twenty miles IN length instead OF forty, that the
land to be conveyed to said companies on the
completion OF each section of said roads should
be ten sections per mile instead OF Ave, that
only half OF the charges for transportation and
service due from time to time from the United
States should be retained and applied to the
ernment-thus obliging immediate payment OF
Its debtor OF the other half OF said charges-and
that the lien OF the United States o secure tho
reimbursement OF the amount advanced to said