The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1888-01-18

SCTlDoIS. 1ucIcAOEo, IL 10 ufHlculb W sec
how any one was wronged by their ac-
ton. The rule of equity invoked.
which has It's origin in tths Injunction
that no man can serve two masters,
certainly did not apply to them, be-
cause they were acting in their own
interests, 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 of facts
developed in the commissioners report,
it seems proper to recall the grants and
benefits derived from the general gov
eminent, by both the Union and the
| Central Pacific, for the purpose of aid
| ing the construction of these roads. By
an act passed in 1862, it was provided
! that there should be advanced to said
companies, the United STATES to AID
in the construction, bonds of the
government and lands from the
| public domain, and that TO Sc
cure the repayment of the bonds so
| advanced, the interest on said
bonds should constitute a. first mort
gage on the whole of their roads. and
on their property of every kind and de-
scripuon. rne liberal donations. ad-
yances and privileges provided for in
this law, were granted by the general
government for the purpose of secur
ing the construction of the road which
would complete connection between our
eastern and western coasts and they
were based upon the consideration of
the public benefit which would accrue
TO the entire country from such con
structlon. But the projectors of these
roads were hot Content, and the senti-
VI 70
Congress had not reached the limit OF
| its generosity. Two years after
the passage of this Law it was
supplemented and amended in various
important particulars, in favor of these
| companies, Oy an act which provided
among other things, that government
mortgage should become junior lien
and be snbJrdina.ed to the mortgage
which the companies were by the
amendatory act authorized to execute,
to secure the bonds which tney might
from time to time issue in sums not
exceeding the amount of the United
States bonds which shou d be advanced
to them. The immense advantages TO
the companies Of this amendatory act
are apparent, and in these GAYS we may
wei. wonder that even the anticipated
public Importance of the construction
of these roads induced what must
now appear to be a rather reck-
less and unguarded appropriation OF
public funds and the public domain.
1t is almost needless to state that the
companies have awaited themselves TO
the utmost extent of the permission
given them to issue their bonds and to
mortgage their property to secure the
payment of the same by an
encumbrance having preference over
governments lien, and precisely equal
to it in amount. When the relations
created between government and these
companies by the legislation referred to
is considered, IL is astonishing that the
claim should be made that the directors
of these roAde owed no duty except
to themselves, in their construction
that they need regard no interests
were justified in contracting with them
selves, and making such bargains as
resulted in conveying to their pockets
all the assets of the companies, as
lienorq Government was virtually in
terested i'll the amount of the mortgage
to which its security had been subor-
dinated, and it had the right to insist
that none of the bonds4> ecured by this
prior mortgage should be issued fradu-
lently or for the purposes of division
among the stockholders without con-
sideration The doctrine of complete
independence ON the part OF the dlrec-
tors of those companies and their free
dom from any obligation to care for
other interests than their own in the
construction OF these roads seem
to have developed the natural const-
quences of It's application, portrayed as
follows in the majority report of the
commissioners. Inc 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
is ues of bonds, stocks and the pay
ment of dividends voted by themselves.
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 illustrated the
profuse liberallty and generous surren
der of governments advantages which
it is hoped experience has corrected,
were nevertheless passed upon the
theory that the roads should be con-
structed according TO the coasmon rules
of business, fairness and duty, and that
bu6iI VdIQS dU1 lAotI " pay
their dvbts, should not be impaired by
unfair manipulation, and when govern
ment subordlna ed its lien to another,
it was in expectation that the prior lien
would represent in its amount only
such DoAds as should be neeeSs lily
issued by the companies for the con
egruction of their roads at fair prices
agreed upon in an honest way
between real and substantial parties.
Fur the purpose OF saving or i'm
proving the security afforded by it's
junior lien, government should nave
the right now to purge the paramount
lien of all that is fraudulent, fictitious
or unconscionabls. If the transfer to
innocent hands of boncs OF this charAc-
ter, secured oy such first mortgage, pre-
vsnts their cancellation, it might be
we'll TO seek remedy against those who
Issued and transferred them. If iegis-
iation is needed to secure such rem dy,
Congress can readily, supply it. l de-
sire TO call attention also to the fact
that if all that was to be done on the
part of COVE nment to fully vest In
these companies the grants and advaa :
tages contemplated by the acts passed
| - AZ