Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1888-01-18
WHOLE NO. il, ,467.

, between the Government and these COM
panles by the legislation referred to arc
considered it is astonishing that the claim
should be made that the Directors of those
roads owed no duty except to themselves
3 III ihelF construction; ihal they need regard
no interest but their Own, and THAI thew
| were justified III contracting with them
selves and making such bargains as resulted
! IN conveying to their pocket all the assets
OF the companies. As the liener, the Gov
eminent was yita!ly interested in the
amount OF the mortgage to which its Sc
/ cnrlty has been suboIdinated, and it had
the right to insist that none of the bonds
secured by this prior mortgage should be
issued iraudulenty or for tht purpose of
DIVISION among the stockholders, without
| consideration.
:, For the porposs of saving or improving
the security afforded by its iuuior lien the
Government should have the right 10 puroe
! thls paramount lien Of all that is fraudu-
, lent, nctlcicus or unconscionable. If fbe
transfer TO innocent bands of bonds of this
character, secured by such first mortgage.
! prevents their cancellation, it might be
well 10 seek remedy against those who
issued ana transferred them. If legislation
Is needed TO secure such remedy, Congress
can readily supply il.
desire to call attention also to tie fact
that all that was to be done on the mart of
| The Government to fully vest in these com
pahles grants and advantages contenl plated
by the Acts passed in their interests has
not yet been perfected, and if the failure of
such companies to perform in good faith
Their part of the contracts justified such
course power rests with Congress to with
noiu iurtner performance on the part of
! lrnUlrTl M lrtr I Il 1
yet granted 10 these companies. and if
their violation OF contract and duty are
such as III justice and morals forfeit their
rights to such lands, Congressional action
snouid intervene to prevent further con-
summation. The Executive power must
be exercised according to existing laws.
and Executive discretion is probably not
broad enough TO reach such difficulties.
Inc California and Oregon Railroad is
now part OF the Central Pacific system, and
Is land grant road Its construction has
been carried with the same features and
incidents which have characterized other
constructions OF this system, as is made
apparent IN the report of the majority of
the Commissioners
L have in my hands for approval the re-
port OF the Commissioners appointed to ex-
anime TWO complete sections of this road.
upon such approval the company or Cen
tral Pacific Company will be entitled to
patents Tor large quantity of public lands.
especially commend to the attention of
congress this condition of affairs in order
tnal II may determine whether or not they
SHOULD intervene to save these lands for
settlers II such course is justifable.
Ihe doctrine of complete independence
en- the part of the Directors of these com
panies and their freedom from any obliga-
lon 10 care tor other interests than their
own III the construction of these roads,
seem to have developed the natural conse-
quences in It's application, portrayed as fol-
lows IN the majority report of the Commits
sloners: The result is that those who have
controlled and directed the construction
and development of these companies have
become possessed of their surplus assets
through the issue of bonds and stocks and
| the payment of dividends voted by them
selves, while the great creditor, the United
States, finds itself substantially without
adequate security for the repayment of its
loans. The laws enacted in aid of these
roads, while they illustrate q profUse liber-
ality and generous surrender of the Govern
ment advantages, which, it is hoped, expe-
rlence has corrected, were nevertheless
passed upon the theory that the road should
be constructed according to common rules
of business, fairness and duty, and that
their value and their ability to paw their
| debts should not be impaired by unfair ma
| nlpulauons, and when the Government
subordlnated It's lien TO another, it was in
| expectation that lhe prior lien would rep
resent in its amount only such bonds as
! should be necessarily issued by the conpa-
MES for the construction of their roads at
! tar prices a2re,t 4 upon, and in an honest
way between real and substantial parties"
IL IS quite ti;le ;hat the troublesome COM
piIcations surrounding this entire subject,
winch has been transmitted to us as a leg
| acy from former days, should be settled
NO one, think, expects that the railroad
companies will Re able 70 pay their indebt-
ednesS TO the Government at maturity
ANY proceeding or arrangement that would
result nov or at any other time in putting
these roads or any portion of them in pos.
session or control of the Government is. in
my opinion, to be rejected, certainly as long
as there Is any chance for decentralization
! througn any other means. l suppose we
are hardly justified IN indulging the irrita-
tioh aud mitigation naturally arising
from the contemplation of malfeasarce 10
such an extent as to lead 70 the useless
destruction OF these roads, or of the loss of
the advances made by the Government
beleVe that our efforts should be III a
more pracica! direction, and should tend
with no conformation of wrong-doing. to the
collection by the Government, on behalf of
the people OF The public money now in
jeopardy. While the plan presented by the
majority OF The Commission appears 10 be
well advised, and gives at least a partial
promise of the results sought the fact will
be well not to escape attention, that its sue
cess depends upon its acceptance by the
companies and their ability 10 perform its
conditions after acceptance. II is exceed
lngly important that any adjustment now
made should be final and effective
These consideraii, rs suggest the possibil-
ity that the remedy proposed in the majority
report might be well apl lied to part only Of
these aided railroad companies settlement.
The determination of the questions in
volved are peculiarly within the province
OF Congress and the subject has been made
quite familiar one by Congressional con
cesSions. This is now supplemented in q
valuable manner by the facts presented in
reports herewith submitted. and the public
interest urges prompt and efficient action
GROVER CLEYELAHD
Ezecuu7e Mansion, January II, 1888.