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

lutO II, OF get OUT Oh IT,, from Deitd up tue
canyon it still narrows. but between there and
the State line we come to chain of mountains
running east and west. There tunnels had to be
built and that made heavy work. There was
Delta, and that is a fact well to consider. When
we had reached Redding we had extended that
line as far north as il wonld pay to operate
or to build line for local business.
The Oregon and California Company was
chartered to build from Portland south, and
when We commenced to build north we ex
pected to meet them, That company failed and
we stopped work, because to build north OF
Redding would be of no avail. 1t would not
pay for local trade. There was nothing there
to operate road for 1t was in the mountains.
So we stopped. Mr. Willard came along and
started up their road pointing south, and we
started ours north vgain. The Oregon and Cali
fornia Railroad went into the hands of re-
ceiver. Now the Central Pacific main line and
these branches had lost the trade. We got none
Of the Oregon trade at San Franci.co. We had
lost the trade of the northern tier of counties
in the California mountains by reason of this
road We must get into Portland, must COM
plete the oregon road We had constructed the
southern Pacific and had made ii a certainty
that II the present MANAGERS lived twenty years
the Southern and Central Pacific roads would be
operated together, and that the development of
the country would make both immensely yalu-
able The oregon and California road, running
south, Was in the hands of receiver. Its
bonds. first and second mortgages, eferred
stock and common stock were scattered all over
the world. In order 10 finish the Oregon road
because we could do nothing beyond the State
line-and make it tributary to the Central, it
was necessary, at any cost, to obtain
CONTROL OF THE OREGON END.
Our road was finished to Delta, south los
miles from the State line. In a little squirt
which Mr.. Willard had made we had builta por-
ton of the road north of that but il was not
completed. 1t was partially graded. Then we
made a contract with the Pacific Improvement
Company. All of these contracts have really
been made between the same men, In fact, we
have never had any property that we could get
anybody else TO contract with us about. No
body would take a contract TO build the Central
Pacific road, except a few men in the start who
abandoned II because no men on earth, except
the projectors, believed that ii would ever be
finished across those mountains. The Judgment
Of the world was thatit was mpraeticabie. We
made contract then, the terms of which the
commissioners have entirely Inexperienced.
desire this committee to bear in mind that we
had road completed to Delta, and that for forty
miles that road was through the rocky canyons
0f the sacramento. with nearly as heavy work
rs was done upon the Central Paeifc's main
stem.
Senator Davis-The road was heading for
Portland, north, and for forty miles of it it was
Mr. Haymond-We had lost the trade OF Ore.
gon. If we could make the connection with
the Oregon road and bring that road into
our system we would have a line to Port
land. Now We made contract with the Pa
SiHC LII OOulpttlN ttldl II lUtN WOULD
construct that road from Delta north to the
Oregon State line, and would repay to the Cen
Iral Pacific all the money which it had paid 70
road in that territory, and would
secure the absolute control of the Oregon and
road and compete it so as to make
junction with our California and Oregon road
going north
Senator Davis-To lap on your incomple:ed
road?
Mr.. Haymond-Yes; then we would get the
southern Pacific Company to lease that road and
10 pay the interest upon the bonds which the Cen
raj Pacific had contracted to give us for build
ing for ninety-nine years, and to pay a dividend
Of two per cent. upon the Central Pacific stock
Tor n1nety-nine years, which the company has
contracted to give for building the road; that
The Pacific Improvement Company would com
plete the Oregon road and would make il a part
Of this eystem. / think the Commissioners did
all that men could do, but they were engaged
pretty well IN San Francisco. l do not know
what time they began their sessions in the
They were always in session when /
got up, and they wanted to sit all night, except
Mr.. Littler. They treat this agreement simply
rs contract to build that road, and say that the
Directors of the Central Pacific have done a
great wrong, when, in truth and fact, the Di-
rectors of the Central Pacific, who are the Pacific
improvement Company,
PLEDGED THEIR OWN PRIVATE FORTUNES
To carry out that contract, and it was one of the
most advantageous contracts which this COM
pany ever made. The Oregon and California
stock was scattered everywhere and its bonds
were scattered everywhere.
The majority report of the Commissioners
says THE consideration for the construction
of these l03 miles of railroad and of the equip
ment, as stated in the contract, was so 900 shares
of the stock of the Central Pacific Railroad
Company, SS,000,000 and S4500,000 of the bonds
of the Central Pacific Railroad Company, part
of which bonds were issued under mortgage
of the California and Oregon Railroad. and part
issued under mortgage of the Central Pacific
Railroad Company, dated October l, 1886. The
to. I.alf
contract the bonds as the work progressed
The stock was accordingly delivered in
October. 1886. All the bonds have been de-
livered except $4,000. The amount received
is sufficient 10 cover the cost of the completion
of the contract. The average market value of
the Central Pacific stock, taken from the actual
quotations of the New York Stock Exchange
during the month of October 1886, was 49,
Now right here let me call your attention to
the fact that the Central Pacific stock was never
like the Union Pacific, an active stock upon the
market. There has probably been no time from
the construction of the road down to the present
day, not even when that stock was selling or
quoted at any price on the market, that if one of
our Directors had offered 10000 shares it w.uld
hot have dropped out of sight so that these
quotations amount to nothing. You eould have
worked off small lots of stock, but there is pro-
vision in the constitutional law of California
which makes a stakeholder liable for the indebt-
edness of the company, in proportion to the
shares of stock he holds and for that reason
people have never liked to touch the stock
They have never been what are called active
stocks, and no large amount could be sold. as
the testimony shows, at any time without
breaking the market entirely. 1t is only worth
about % or % cents.
The report goes on: "At this date the IS. 0oO.-
900 of stock was worth in cash So $40 0O0 The
pany were worth par" That is true. "They
were accepted by the Central Pacific Railroad
Company from the Pacific Improvement Com
pany in payment of a loan due by them to the
(Nnrtfr al Dlnff ef nlvtr
cash value, was then paid TO the Pacific I'm
pTovement Company for the construction from
Delta to the State line and for the eluipment."
See how far short they fall from properly con-
STRUNG this contract In stock So, $40 600; in
bonds, s., 100000; total, SS310,000. That makes
IS $40 900, as the Commissioners state for the
construction of 103 miles of railway, probably
as heavy work as appears on any railroad in the
United States. / think they thought so too
The books of the Pacific Improvement Com
paDy showing the actual cost of this construc-
ton, and of the equipment, were examined by
Mr.. Stevens and this cost exclusive of the I'M
finished work, which Mr.. Douty testified would
not exceed the S3i7 GOO bonds which have been
retained. was $685. 500 80. Now. of course
that makes a very bad showing. We have re-
ceived S. 900, 900 and we have paid ont So lS COO
to construct the road as far as it was then con-
Strncted.
The Chairman-The implication is that you
gentlemen pocketed the difference.
Dir. MISUNDERSTANDING, that is the implica-
ton. See how easy it is tor people to be mis-
taken that have not estimated the cot at all
That was only the money expended by the Pa
cific Improvement Company up to that date and
the estimated amount which il would take to
complete 1t. But before
THE PACIFIC IMPROVEMENT COMPANY
Began work on that section the Central Pacific
had done large amount of work, and very ex-
pepsiTe work. and out of these bonds and stocks
we were to pay the Central Pacific the cost of
their work there, which would amount to a
great many hundred thousand dollars, if not a
million.
statement of the work done by the Central Pa
cifc?
Mr. Haymond-I don't know that it is in. but
the contract shows it. Now, saw that it is not
strange that these gentlemen make these mis-
takes, and with the best of intentions What did
the Central Pacific buy? The central Pacific
bought and the Pacific improvement Company
unde. took the work; ana | was present at the
Council Board of three Directors day after day
aud week after week when Governor Stanford
and all of them discussed this proposition. He
said am too old q man to undertake 10 lisk
my fortune in carrying out thai ntracs,'' and
it was with the greatest reluctance that he
made il. What did they undertake to do To
build this road for The purpose OF making this
connection, and to make valuable forty miles of
worthless road which the Central Pacific
already had They undertook that the Southern
Pacific should come in and lease that road, and
that the Southern Pacific Tor Dine.y-nne years
should pay all the interest upon these bonds.
In fact these bonds cost the Central Pacific
nothing because for ninety-Iine years, as long
as that debt shall stand, the Southern Pacific
pays the interest upon it The stock was then
worth. they say, As cents but it was only worth
80 We agreed to pay > per cent upon that
stock, so that not one man who held share OF
Central Pacific stock before tn at time was is
sued shall be affected. That was the equivalent
Af,t1 fg~rl fnb ,l.-