Idaho news. (Blackfoot, Idaho) 1887-1891, 1888-01-28
A SPECIAL MESSAGE SEMI 10 cONaaEss.
~ Comes FROM fhs I'resideat and Ras Refef-
eAee TO the Pacific HailtraBs.

~ Comes fio,i ths I'residet and Fias Refer
esee to the f'aeifio Sailsrags
WASHINGTON, Jan. 1.-THE president
sent to congress to-day message transmit
ting the Pacific railroad reports. The
president said that ''the commissioners
have prosecuted their inquiry with COM
mendable industry. intelligence, and thor
oughness They have, however, been an
able 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 Sc
cure the payment of such indebtedness. "
This disagreement has resulted in the prep
aration of two reports. The reports ex-
hibit such transactions aud schemes con-
neeted with the construction of the aided
roads and their management, and
suggest the Investigation of such
q eyicCs on the part of those having them
in charge for the apparent purpose Of de-
teating any choice for the governments re-
endorsement, thar any adjustment or plan
of settlement should be predicated upon
the substantial interests of the government
rather than any forhearance or generosity
deserved by the companies, The majority
report, while condemning the methods Of
those who formerly had charge OF the
Uuion Pacific, declares that since its pres
emit management was inaugurated III lssi
its affairs have been fairly aud piuieally
conducted, and that the present admins
tratioR has devoted itsalf honestly and
iutelligently to the herculean task
Of rescuing the Union Pacific
from the insolvency which seriously
threatened it at the inception of its work;
that it has devoted Itself by rigid economy,
by intelligent management, and by the APP
plication of every dollar of the earning ca
pacity Of the system to its improvement
and betteTment 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 it's ability TO comply
with the terms OF settlement of its indebt-
edness which may be offered by the govern
ment.
l have been furnished with statement,
or argument in defense of the transactions
connected with tue construction nf the
Central Pacific read and its branch lines,
from which il may not be amiss TO quote
for the purpose of showing how some opera
tions Of the directors OF such road, strongly
condemned by the commissioners, are de-
tended by the directors themselves. After
speaking of the contract for the construc-
tion OF one of these branch lines by the
corporations called contract and finance
company" owned by certain directors OF
the Central Pacific railroad, this language
is used:
1t may be said of this contract, as OF many
others that were let 10 different construction
cJmpanles In which the directors OF the Cen.
trail Pacific have been stockholders s, that they
built the road with monies furnished by
thrmss Ives, and had the road for their ont
lay. In other words, they paid TO the con
structiOn companies the bonds aud stock Of
the railroads so constructed, and waited uu-
til such time Us they could develop sufficient
business on the sOad built to Induce the pub
lie To buy the bonds or stock. III the country
through which the road ran developed sGih-
eient business, then the project was a success.
II L. did not, then the operatiVu
was n loss, any loss Occurring was necessarily
theirs, and OF right and profit belonged 10
them. But 1t is said they violated 4 well
known rule Of equity in dealing with them
selves; that they Were trustees, and that they
were representing both sides 81 the contract.
The answer is that they dld not find any body
who would take tile chances OF building a
road through what was then an almost t.HITt-
hablted country, ana accept the bonds ana
stock Of the road in payment, aud when IL
is seen they were trustees, II they
did occupy such a relation 1t was merely
technical. for they represented only their
own interests on 10th sides. there being no
one else concerned in the transaction. They
became inCOFpoTatOrs OF a company that WIS
to buIid the road, subscribed for It's stucN ana
were the only subscribers. Therefore IL is
difficult 70 sec how any one was wTlnged by
their action. TIE rule OF equity invoked.
" htch has its origin in the INJUNCTION that no
man can serve two masters, &C rtAHly dtd not
apply t. them, because they were acting IN
their own Interests, and were not charged
with the duties Of caring for others rights,
there being no persons Interested To- the sub
Ject matter.
In view of this statement and the facts
deS cloped in the commissioners report, il
seems proper to recall the grants and ben
eiits derived from the general government
by both the Union and Central Pacific for
the purpose Of aiding the construction OF
the roads. by the act passed in lsj2 it
was provided that there should he an all
vance to said companies by the United
States to aid in the construction Of bonds
of the government and lands from the pub-
lie domain. and that to secure the repay
uIent of the bonds so advanced said bonds
should constitute first mortgage on the
whole line oil their roads, and on their prop
erty Of every kind and description.
Literal donations, advances and privileges
provided for in this law were granted by
the general government for the purpose OF
securing the construction of these roads,
which would complete the construction
between our eastern and western coasts,
and they were based upon consideration Of
public benefits which would accrue to the
entire country from such construction.
But the projectors of these roads were not
certain, 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
mented and amended in various important
particulars in favor of these companies
by an act which provides among other
things that the governments mortgage
should become a junior lien, and be
subordinate to the mortgage which COM
panies were, by the ameudatory act,
authorized to execute TO secure the bonds
which they might from time TO time issue
in sums not exceeding the amount of the
United States bonds, which should be adj
yanCcd to them. The immense advan-
tages to the companies Of this amendatory
act are apparent, and in these days we
may well wonder that even the antici-
pated Importance of the construction Of
these roads induced what must now appear
to be rather reckless and unguarded ap-
preparation Of public funds and the public
domain.
Ii is almost needless to state that the
companies have ayailed 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 encumbrances having preference Of the
governments lien and precisely equal 10 IL
in amount. When the relations created
between the government and these COM
panies by the legislation referred to is con-
sidered, ii is astonishing that the claim
should be made that the directors of these