St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1888-01-18
THE PACIFIC ROADS.
The President Transmits the Re-
ports of the Commissioners to

| w ASiIlNGTON, Jan. l1.-Ine Hollow
ing is the presidents message transmit
ting the Pacific railroad reports to con-
| greSS:
To the Senate and House of Repre-
| SentativeS: On the Sd day of March
last an act was passed authorizing the
appointment of three commissioners
who should investigate the affairs of
such railroads as have received aid
| from the United States government.
Among other things the contemplated
investigation included q history f the
construction of these roads, their Iela-
| lions 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
eminent should be granted; and If so
| the said commissioners were directed to
| submit a scheme for such extension.
The commissioners We're further di-
rected by said act to report in full to the
president upon all matters submitted to
them, and he was by said act required
to forward said report to congress with
such recommendations or comments as
he should see fit to made i'll the prem
| iSeS. The commissioners Immediately
| after their election entered upon the
| discharge of their duties, and have pros
ecuted their inquiries with cOmmendable
industry, intelligence and thOroughnesS.
| A large amount of testimony has been
| taken, and all the facts have been
| developed which appear to be nee
esSary for the consideration of
the questions arising from the condition
of these aided railroads and their rela-
| tons 20 the government. The commits
SionerS have, however. been unable to
agree upon the manner in which these
railroads should be treated respecting
their Indebtedness to the United States
or to unite upon the plan best calculated
to secure the payment Of such indebt-
edneSS. This disagreement has resulted
in the preparation 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
those having them in charge for the
apparent purpose of defeating any
chance for the governments reimburse
ment, that any adjustment or plan of
settlement should be predicated upon
the substantial interests of the govern
ment rather than any fOrbearance or
generosity deserved by the companies.
The wide publication which has already
been given to the substance of the conf
miSSionerS' reports Obviates the neceS-
Sity of detailing in this communication
the facts found upon the inveStiga-
ton. The majority report, while con-
demning the methods adopted by those
who formerly had charge of the Union
Pacific railroad, declares that since its
present management was inaugurated
in 1884, its affairs have been
FAIRLY AND PRUDENTLY CONDUCTED.
and that the present administration
''haS devoted itself honestly and intelli-
gently to the herculean task of reScuing
the Union Pacific railway from the in
Solvency which seriously threatened it
at the inception of its work; that is has
devoted itself by rigid economy, by in
telligent management and by an appll-
cation of every dollar of the earning
capacity OF the system to its improve
ment and betterment, to place that com
pany on sound and enduring financial
foundation" The condition of the
present management of the Union Pa
cific company has an important bearing
upon its ability to comply with the
terms of any settlement of its indebted
ness which may be offered by the gov
eminent. The majority of the commits
SiOu are 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 mi
nority report, recommends, both upon
principle and policy, the institution of
proceedings for the forfeiture of the
charters of the corporations and the
winding up of their affairs.
/ have been furnished with 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 the road, strongly con-
demned by the commissioners are de-
Tended by the directors themselves.
After speaking of a contract for the
construction OF one of these branch
lines by corporation. called the Con-
tract and Finance company, owned by
certain directors of the Central Pacific
railroad, this language is used:
cit may be said of this contract as of
many others that they were let to the
different construction companies in
which the directors of the Central Pa
cific have been stockholders, and they
built the roads with the money fur
nished by themselves and had the road
for their outlet. In other words, they
paid to the construction company the
bonds and stock of the railIoad 50 con-
structed and waited until such time as
they could develop sufficient business
OIL the road built, to induce the public
to buy the bonds or the stock. If the
country through which the road ran de-
velOped sufficient business then the
project was success; if it did not then
the operation was loss. Those gentle
men took all the responsibility; any loss
accruing was necessarily theirs, and
of right the profit belonged to them.
But it is said that they
VIOLATED A WELL KNOWN RULE
of equity in dealing with themselves,
that they were trustees and that they
were representing both sides of the
contract. The answer is that they did
not find any one who would take the
chances of building road through what
was then an uninhabited country and
accept the bonds and stock of the road
in payment. And when it is said that
they were trustees, if they did occupy
such relation, it was merely technical,
for they represented only their own in
terests 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. Therefore it is diff
cult to see how any one was wrOnged
by their action. The rule of equity in
vOked which has its origin in the in
junction, no man can have two masters,
certainly did not apply to them, because
they were acting in eheir 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 developed in the commission
ers' report it 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