Macon beacon. [volume] (Macon, Miss.) 1859-1995, 1888-01-28
PACIFIC RAILROADS
The President Transmits the Re.
port Of the Commission
To Congress In n Lengthy Message and
Asks That the Questions InvolyoI
be Settled by Legislative
Enactment.


q. - ~ " thA VI aAttAN ? : A WI ttt was tnESn(
authorizing the appointment OF three commits
st sicpers wha. ,hculd investigate the affairs II
Ia tueh railroads as have received aid from tho
= lhltcd States government.
~ Among other things, the coutemplated irveS
Ia tgaticn includsd y history OF the Constructor
u" OF these roads, their relations and Indebtedness
e. 10 tne government, and the question whether in
& the interest OF the United States any extension
l. Of the time for the performance of the ohliya.
u Tons OF said roads 10 the government should I've
!, granted, and if 50, the said commissioners were
l. directed 10 submit a scheme for such extension
Inc commisSlorcrS were further directed bv
said act TO report IN full 70 thr President unon
Z oil the matters submitted to them and he Mas
y by SAID act required TO forward said report 10
= congress, with such recommendations or com
Il tnents as he should see tit 10 make In the prem.
Uses.
i The commissioners Immediately atter their
: electlun, entered upon the discharge of their du.
VeS' ana have prosecuted their inquiries with
cenlmendablc industry, intelligence and thor,
= oughhess. A large amount o: testimony has
oetn taken, and all the facts have been deyel.
t oped which appears 10 be necessary for the con.
sideratlon Of the questions arising from the con.
dltion Of these aided railroads and their rela.
IONS 70 the government, The commissioners
, nave, however. been unable TO agree upon the
manner IN which the railroads should be treated
respecting their Indebtedness 70 tho limited
states or 20 unite upon the plan best cslcu.
lated to secure TIC payment Of such indebted
ness.
This disagreement has resulted in the preps.
ration OF iwOr reports, both OF which ere herewaih
submitted to the Congress,
These reports EXHIBIT such transactions and
schemes connected with the construction OF Inc
AGED roads and their management, and suggest
the invention OF such devices on the nart ot
those having them IN charge fJr the apparent
purpose OF defeating any chGuce for the govern
fneht $ reimbursement. that any adjustment or
plan OF settlement should be predicated upon
INC substantial interests OF the government
rather than any forbearance or generosity de.
served by the companies.
The wide puhlipo .gnp urb,1b h,r ,tN,, Al z..
given TO the substance OF the commissioners m.
port obvlates the necessity Of detailing IN this
communication the facts iou.d upon the inves.
ugatiOn,
The majority report, while condemning the
methods adopted by those who formerly had
charge OF the Union Pacific railroads declares
that since It's present management was inaugu-
rated, in lss4, its affairs have been fairly md
pruuenty conducted, ana thnt the present nd.
minlstratlon has devoted itself honestly and
intelligently TO the herculcGn task q rescuing
lhe Ihlon Pacitic railroad from tie Insolvency
which seriously threatened It at the i2rcptiOn
OF It's work; that it has devoted itself by rigid
economy, by intelligent management. and hy an
application Of every dollar of the earning capa.
elty OF the system to its improvement aud bet
lerinent' to place that company on a sound and
enduring financial foundation"
me condition of the present management OF
the mon racine company has an important
bearing upon ITS ability to comply with the
terms OF any settlement OF its indebtedness
when may be offered by the government,
me majority of the commission are in favor
OF an 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.
t~ecommends, both upon principal and 20 icy, the
institution OF proceedings for the forfeiture Of
the charters of the corporations and the wind.
ing up of their affairs.
| nave been furnished with & statement. or ar.
Ruinent, IN defense of the transactions con.
niSo WIN the construction Of the Central Pa
cine road and its branch lines from which # may
not be amiss to quote, for the purpose Of show.
ing now some OF the operations of the directors
OF such road, strongly condemned by the com.
missioherS. are defended By ;he directors them
selVeS. After speaking OF . contract for the
construction of one OF these branch line; nv a
corporation called the Contract and Finance
company, owned by certain directors of the
oEhltal Pacific railroad, this language is used:
may De SAID of this contract as of many {
others that were let TO the different constrIc-
tlion companies in which the directors of tho s
central Pacific have been Stockholders that )
,meN oullt the road with the moneys furnished i
hy 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 wa ted until such time ms thcv !
could develop sufficient business on the road I
nuilt' TO induce the public to buy the bonds or ,
lhc stock. If the country through which the q,
ROAD ran developed sufficient business. then The i
prolecl was n success; If il did not then the op- u
Grafton was a loss. Those gentlemen took ali '
the responsibility; any loss occurring was nee. ,
tsSarily theirs, and Of right the profit belonged i
10 lhem. But it is said that thev violated n u
wg.,Sn9%n rule OF equity in dealing with them /
serves IMAM they were trustees and that they |
were representing both sides of the contract a
The answer is that they did not find anybody :,
else TO deal with, They could not find any one h
Mno would take the chances Of building a roai
lhFough what was then an almost uninhabited h
country ana accept the bonds and stock of the r
ROAD IN payment. And when Il is said that they V
were uustecs, II they did occupy such relation, Il
~ M"s merely technical, for they represented b
uhiN thelr own interests on both sides. there r
noihE no one else concerned in the transaction.
hney became the lncorpOratOrs of the COMPANY
NAV was TO build the road, subscribed for its v
STOCK ana were the only subscribers. There. II
fore. IT is difficult TO see how gnv one was :.
"rongcd by their action, The rule of equity in. D
voked' which has its origin in the Injunction, no Il
man can serve TWO masters, certainly did not S
apply 10 them, because they were acting in their
own interests, and were not charged with the
duty OF caring for others rights. there being no 5
olher persons interested in the subject matter" c
Ia Nc" % thls statement and the facts devel- 4
opeu IN the commissioners report il seems 4,
proper 10 recall the grants ana benefits derived II
RON the General government by both the Union s.
anu central Pacific companies fOr the purpose Il
OF aiding the construction of their roads. i,
by an act passed in 1856! 1t was provided that 4
mere should be advanced 10 said Companies by l.
me ,hlled states, TO aid in such construction, a
dnc pohus OF the government amounting to s16,- L
v loI every mile constructed as often as q sec. k
hA-A'F vi 0Nli lhul sDOlllu DC DIlI -
mat there should also be granted TO said com W
panles' upon this completion Of every section of q
lorty miles OF road, five entire sections OF public II
nnn LOT each mile SO built; that the entire "
tnarRes earned by said roads on account of "
transportation and service for the government
should be applied to the reimbursement of the n
nohus adyanced by she United States ard the
interest thereon; and thai To secure tho renav. -,
men. of the bonds so advanced and interest the I
issue ana delivery to said companies of said b
ponds should constitute q first mortgage on the
mnoic OF thelr roads, and Oh their rolling stock,
tion. :,
me liberal donations, advances and privi- :
.,Ecs PROVIDED Tor IN this law were granted by
sne General government Tor the purpose OF Sc
turing the construction Of these roads, which
would complete the connection between our n
eastern ana western coasts, and they were based II
upon q considerations o! the public benefits which =,
would accrue TO the entire country from such d
construction. But the projectors Of these roads "
were not content, and the sentiment which then n
seemed 10 prevade Congress had not reached =,
the limits OF its generosity. n
Two years after the passage Of this law n was "
supplemented and amended in various import. y
ant particulars in favor Of these companies, bv Il
an act which provided, among other things, that Z
ha v ,,ooDun,usa u, tne raie Already specified, should 9
uc ueilVered upon the completion OF ~sections OF Fl
twenty miles in length instead OF forty, that tho a
land 70 be conveyed to said companies on the .
complexion oil each section OF said roads should "
DC ten sections per nile instead of five. that h
only half OF the charges for TRANSFORMATION and n
service due from time to time from the United :.
otates should be retained and applied to the o
uuNahces made to said companies by the gov G.
erhment-thus obliging immediate payment of
lts ueDtor OF the other half ofsaid charccs-nnd =,
thht the len OF the United States % secure the y
announcement OF the amount advanced TO said l.
COMPANIES IN bonds, which lien was declared by
inc law OF lob2 TO constitute o first mortgage "a
upon oil the property OF said companies. should :,
become q lien and be subordinated to n mort. >
gage which the companies were, by the amend. ID
atory act, authorized TO execute to securc bonds n
winch they might from time 10 time issue in l.
sums not exceeding the amount Of the ITnited Y
States bonds which should be advanced 10 thorn U
me immense advantages to the companies of d
TINS amendatory act arc apparent; and In these
Gays we may well wonder that even the antici-
pateu public Importance OF the construction M
,nese roads induced what must now appear IN
De q rather reckless and unguarded appropria. ri
uon OF the public funds anG the public domain. n
onder the operation OF these laws the princi. l
gai OF the bonds which have advanced is Ri- "
ushol2, as given in the report OF the commits. @
sloners, the interest to November I, lS lie -
calculated TO be &c. OF, eO6. 81. making an arerc. 8
gate at the date named Of 81 i0,0i1. slS5s, The tt
interest calculated TO the maturity of the bonds M
added TO the principal produces an aggregate of h,
slIs,SSi1b9i9. Against these amounts there :.
ms oecn repaid by the companies the sum of u
t3l,9s5 81. q,
1t is almost needless TO state that the com. h,
panles have availed themselves to the utmost al
cNtent OF tho permission given them to issue o.
.neir ponds and to mortgage their property 10 III
secure tne payment OF the same by an encum. q,
Drahce having preference of the government'a N,
lien and nrprispty nnnaI a. q L. a.