Crawford avalanche. (Grayling, Mich.) 1879-19??, 1888-01-26
A Message from President 0leve-
land to Congress on the
Subject.
Astonishing Features of the Admins
tration of the Affairs of the
Companies.
The Governments Rights-Sug-
gestions as to Necessary
Legislation.
The Cancellation Of Unpatented Land
Grants Is Urged Upon
Congress,

Congress.
Tho following is the Presidents message
transmitting the Pacific Railroad reports TO
Congress:
To the Senate and House OF Representatives:
On March last an act was passed authorz-
ing the appointment Of three Commissioners
who should investigate such railroads as have
received aid from the United States Gov ern-
ment Among other things, the contemplated
investigation included a history of the con-
struction OF these roads, their relations and in
debtedness to the Government, and the ques-
tion whether in the interest OF the United
Statos any extension of the time for the per-
formance Of the obligations OF said roads to the
Government should be granted and IL so, the
said Commissioners were directed to submit a
scheme for such extension The Commission
ers were further directed by said act to report
In full to the President upon all the 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 ht To make in the premises.
The commissioners, Immediately after their
selection, entered upon the disc harge OF their
duties and have prosecuted their inquiries
with commendable industry, intelligence and
thoroughness. large amount of testimony
has been taken, and all the facts have been
developed which appear to be necessary for
the consideration OF the questions arising from
the condition Of these aided railroads and their
relations to the Government. The commits
sioners have however, been unable to agree
upon the manner in which these railroads
should be treated respecting their indebt dness
to sscGre t6S r paynett ttS 81 i
indebtedness. This disagreement has
suited in the preparation OF two reports,
both Of which are herewith submitted to the
Congress. These reports exhibit such transac-
tions and schemes connect q with the construc-
on 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 reimbursement, that any ad-
justment or plan Of settlement should be pred
faA fIFnY fhn aIcfan nj tY.far 81
Government rather than any forDearance or
generosity deserved by the companies. The
wide publication which has already been given
TO the substance OF the COMMISSIONER reports
obviates the necessity OF detailing in this COM
munication the facts found upon the investiga-
tion.
The majority report, while condemning the
methods adopted by those who formerly had
charge of the Union Pacific Railroad declares
that since its present management was inauga-
rated in 1884 its affairs have been fairly and
Irudently conducted, and that the present ad-
ministration has devoted itself honestly and
tntelligently TO the herculean task of rescuing
the Union Pacific Railway from the insolvency
which seriously threatened it at the inception
OF its work that 1t has devoted itself, by rigid
economy by intelligent management, and by
an applicaton OF every dollaE Of, tbA eAJnin4
betterment, to pace that company ON a sound
and enduring financial foundation.
The condition of the present management of
the Union Pacific Company has an important
bearing upon its ability TO comply with the
terms of any settlement Of its Indebtedness
which may be offered by the Government.
The majority OF the commissioners are in favor
Of an extension of the time for the payment Of
the Government indebtedness OF these
companies upon certain conditions. But
tho chairman Of the commission, presenting
the minority report, recommends, both upon
principle and policy, the institution of pro-
ceedings for the forfeiture of the charters
OF the corporations, and the winding up of their
affairs. have been furnished with n state
ment, or argument. in defense of the transac-
tions connected with the construction of the
Union 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 road, strongly con-
demned by the Commissioners, are defended
by the Directors themselves After speaking
OF n contract for the construction OF one OF
these branch lines by a corporation called the
Contract and Finance Company, owned by GER
tain Directors OF the Central Pacific Railroad,
this language Is used:
1t may q said of this contract, OF many
others that were let to the different construc-
ton companies in which the directors Of the
Central Pacific were stockholders, tnat they
luilt the roads 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 tho railroad so
constructed, Gnd.waiteduntil such time as 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
project was a success; II it did not then the
operation was loss. These gentlemen took
all the responsibility any loss occurring was
necessarily theirs % and o. @ right the profit be,
well-known rule Of equity in dealing with
them selves, that they were trustees, and that
they were representing both sides Of the con; col !;
anybody else to deal with They could
not find anyone who would take
the chance OF building a road through
what was then an almost uninhabited country
and accept the bonds and stocks Of the road in
| payment. And when it Is said that they are
trustees, IL they did occupy such relation it was
r0Dr0aonted
| their own interests on both sides, there being
| no one else concerned in the transaction. They
| Iecalne the incorporators of the company that
| was TO build the road, subscribed for ITS Stock
| and were the only subscribers. Therefore, 1t is
difficult to see how anyone was wronged by
| their action. The rule OF equity invoked, 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 in.
terests, 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 iacts devel-
| oped in the commssioners report. IL seems
proper to recall the grants and benefits
| derived from the General Government by
both the Union and Central Pacific
tie construction of their roads, BY an act
passed in 1862, 1t 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 $4,000 for every
mile constructed. as often as q section of forty
miles Of said roads should be built; that there
| tie completion Of every said 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 TRANSPORTS
tion and service for the Government should be
applied to the reimbursement Of the bonds ad-
| vanced by the United States and the interest
thereon and that to secure the repayment OF
| bonds advanced and interest the
issue and delivery Of said bonds should consti-
| tute n first mortgage on the whole line of their
roads, and ON their rolling-stock, fixtures, and
| property Of every kind and description. The
| liberal donations, advances, and privileges Tro-
| yided for in this law granted by the Gen
| ernl Government for the purpose OF securing the
construction OF these roads, which would com.
| plete Il o connection between our eastern and
western coast, and they were based upon a
consideration of the public benefits which
would accrue TO the entire country from such
construction. But the projectors Of these roa1s
| were not content and the sentiment which then
seemed TO pervade tho Congress had not
reached the limit of its generosity. Two years
after the passage Of this law IL was supple
mented and amend d In various important par
ticulars in favor of these companies by an
act which provided among other things
that the bonds at the rate already
speciied should be delivered upon tho
completion Of sections Of twenty miles in length
instend Of forty; that the lands TO be conveyed
| TO sad companies on tho completion of each
section Of said roads should be ten sections
| per mile instead OF Ave that only half q the
charges for transportation and service due
from time TO time from the United States
should bo retained and applied TO the advanceI
made TO said companies by the Government
| tHr = obliging immediate payment 10 its debtor