, 1888-01-18
TO THE POINT.
President Cleveland's Message
to Congress
On the Reports OF the Pacific
Railway Commission.
Prompt and Efficient Action

The Pacific Railroad Reports.

UllR inc racine railroad reports to CON
gress:
TO he Senate and House of Repre-
SentdtireS: On the Bird day of March last
an act was passed authorizing the APP
pointment OF three commissioners who
should investigate the affairs of such
railroads as rave received aid from the
United States government. Among other
things contemplated, the investigation in
cluded the history and construction of
these roads; their relations and indebted
ness to the government, and the question
whether in the interest of the United
States any extension of time for the per-
Torrance of the obligations of said roads
to the government should be granted, and
if SO, said commissioners were directed to
submit a scheme for such extension. The
commissioners were further directed by
said act to report in full to the president
upon all matters submitted to them, and
he was by said act required to forward
said report to congress with such recon-
mendations or comments as he should see
fit to make in the premises.
The commissioners, Immediately after
their election, entered upon the discharge
OF their duties, and have prosecuted their
inquiries with c~ommendable industry, in
telligence and thoroughness. A large
amount of testimony has bsen taken and
all facts have been developed which ap-
pear to be necessary for the consideration
of questions arising from the condition of
these aided railroads and their relations to
the government. The commissioners
have, however, been unable to agree upon
the manner in which these railroads should
be treated respecting their indebtedness
to the United States or unite upon a plan
best calculated to secure the payment of
such Indebtedness.
This disagreement has resulted in the
preparation Of two reports, both of which
are herewith submitted to congress. These
reports exhibit such transactions and
schemes connected with the construction
of 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 reimburse
ment, that any adjustment or plan of set
Element should be predicated upon the
substantial interests of the government
rather than any fJrbearnnce or generosity
deserved by the companies. The wide
publication which has already been given
to the substance of the commissioners
reports obviates the necessity Of detailing
III lie communication llt luClS lOuLlu
upon investigation.
The majority report, while condemning
the methods adopted by those who for
mcrly had charge of the Union Pacific
raj lroad, declares that since its present
management was inaugurated in 1884 its
affairs have been fairly and prudently
conducted, and that the present admins
tration has devoted itself honestly and
intelligentlv to the hcrculean task of res,
cuing the Union Pacific railway from the
insolvency which seriously threatened it
at the inception of its work, that it has
devoted itself by rigid economy, by intel
llgentmanagement, and by the application
OF every dollar of the earning capacity of
the system to its improvement and bet
terment to place that company on a sound
and enduring financial foundation" The
condition OF the present management
OF the Union Pacific company has an i'm
portant 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 commission are in
favor of an extension of time for the pay
ment to the government of the indebted
ness OF these companies, upon certain
conditions, but the chairman of the COM
mission, presenting the minority report,
recommends, both upon principal and
policy, the institution of proceedings for the
forfeiture of the charters of the corpor-
atoms, and the winding up their affairs.
| have been furnished with a statement
or argument in defense of transactions
connected with the construction of the
Central 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 condemned by the commits
s%ioncrs, arc defended by the directors
themselves. Alter speaking Of a contract
for the construction of one of these
branch lines by a corporation called a con-
tract and finance company, owned by Ger
tain directors of the Central Pacific rail-
road, this language Is used: ut NAV be
said of this contract, rs of many others
that were let to different construction
companies, in which directors of the Cen
trail 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 company bonds and stocks of
the railroad so constructed and waited
until such time as they could develop suf.
fclent business IN such road built to in.
duce the public to buy 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. Those gentlemen
took all the responsibility, and the loss
occurring was necessarily theirs, and of a
right the profit belonged to them"
But it said hat 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 contract. The answer is that they
did not find anybody else to deal with.
They could not find anyone who would
take the chances of building a road
through what was then an almost unin-
habited country. and accept the bonds
and stock of that road in payment. And
when it is said that they were the trus-
tees, it they did occupy such relation, 1t
was merely technical, for they represent.
ed only their own interests on both sides,
fhara hnIp1 No a1Hn oananrnol - H.