Iowa County democrat. [volume] (Mineral Point, Wis.) 1877-1938, 1888-01-20
MESSAGE TO CONGRESS-
President Cleveland Transmits the
Pacific Railroad Reports.
MESSAGE NUMBER TWO.

e>N'ANN Nsau
MESSAGE NUMBER TWO.
Review Of What the President Has TO Say
and Recommend III Regard to the Pacific
Roads
WASHINGTON, Jan, 1.-THE president
sent to congress, TO day, a message tiaas-
| mittipg the Pacific railroad reports The
president said that the commissioners
have prosecuted their inquiries with
commendsble industry, intelligence and
thoroughuess. They 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 a plan
best calculated to secure the payment of
| such Indebtedness. This disagreement
has resulted in the preparation of two
reports. The reports exhibit such trans
actions and schemes connected with the
construction of the aided roads and their
management, and suggest the invention
of such devices su tt part or those hav
ing them in charge, for the apparent
purpose of defeating any chance for the
governments reimbursement, that any
| adjustment or plan of settlement should
be prsdicated upon the subs .antial inter
| ests of the government rather than any
forbearance or generosity deserved by
the companies.
THE MAJORITY REPORT,
while condemniDg the methods of those
wSo formerly had charge of the Union
| Pacific, declares that since its present
management was inaugurated in 1884, its
lS+f foYr hou So, Il H..
conducted and that the present admins
tration has devoted itself honestly aud
| intelligently to the heIculeau task of
rescuing the Union Pacific from the in
| solvency, which seriously threatened it
at the inception of it's work-that it has
! devoted itself by rigid economy, by in
| telligent management and by the appli
cation of every dollar of the earning
| capacity of the system to it's improve
meEt and betterment to place this com
| pany on sound and enduring financial
| foundation.
The condition Of the present manage
ment 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 offer
! ed by the government. | have been
| furnished with statement, or argu-
ment, in defense of the transactions con
necteG with the construction of the
| Central Pacific read ard its branch lines
! from which it may not be amiss to
| quote, for the purpose OF showing how
| some operations of the directors OF such
road, strongly condemned by the com
missiOners, are
| DEFENDED BY THE DIRECTORS THEMSELVES.
"after speaking of the contract for het
| construction of one of these branch lines
! by a corporation called the Contract and
| Finance company, owned by certain
| directors of the Central Pacific road, this
| language is used:
1t mag be said of this contract, as of
many others, that were it let to different
| construction companies III which the
| directors of the Central Pacific have been
| stockholders, that they built the road
| with money furnished by themselves, and
| had the road for their outlay. In other
words, they paid to the construction com
| panies the bonds and stock of the rail
| roads SO constructed, and waited until
| such time as they could develope suffi-
| cient business or have road enough built
| to induce the public to buy the bonds or
| stock. If the country through which the
! road ran developed sufficient business,
| then the project was a success: if it did
| not, then the operation was a loss. Any
| loss occurring was necessarily theirs and
of right the profit belonged to them.
Bat it is said they violated the well known
rule of equity in dealing with themselves
that they were trustees and that they
were representing both sides of the con
| tract
"The answer is that they did not find
| any body who would take
TIE CHANCES OF BUILDING THE ROAD
through what was then IN almost unin-
| habitable territory and accept the bonds
| and stock of the road in payment, and
when it is said they were the trustees if
they did occupy sGGh relation, it 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 incorpor-
ator. of the company that was TO build
| the road, subscribed for its stock and
were only subscribers. Therefore it
| is difficult to see how any
one was wronged by their
actions. The rule of equity invoked,
which has its origin in the injunction
that no man can serve two masters, GER
tainly did not apply to them because they
were acting in their own interests and
were not charged with the duties of car
| ing for others rights, there being no
| other persons interested il the subject
! matter.
| "In view of this statement and the facts
| developed in the commissioners report,
| II seems proper to recall the aid voted
| by the general government to both the
Union and Central Pacific for the pur-
| pose of aiding in the construction of
their roads"
"By an act passed in 1860, it was pro-
| yidsd there should be advanced to said
companies by the United States, to aid
in the construction, bonds of the gov
| eminent and lands from the public do
! main, and that, to secure the payment
of the bonds so advanced, said bonds
should constitute frat mortgage on the
| whole line of their roads and on their
| property of every kind and description.
| The liberal construction, advances and
privileges provided for in this law we're
! granted by the general government for
the purpose of securing the construction
| of these roads, which would com plete
| the connection between our eastern and
western coasts; and they were based upon
| the consideration of the public benefits
| W the tHbiE6 COUH
| try from such construction: but the pro-
| iectors of these roads
WERE NOT CONTENT
| and the sentiment which then seemed to
| pervade congress had not reached the
| limit of its generosity. Two years after
| the passage of this law il was supple
| mentes and amended in various i'm port
ant particulars in favor of these com
| panies by an act which provided. among
| other things, that the government. mort
cages should become E junior lien and
be subordinate TO the mortgage which
the companies were, By an amendatory
act, authorized to execute TO secure the
bonds which thsy might from time to
| time Issue IN sums not exceeding the
| amount of the United States bonds
| which should be advanced TO them. Tho
| immense advantages TO the con panies
| b. this amendstovy act are apparent,
and in these days We may well wonder