Los Angeles herald., 1891-02-16
The Pacific Railroad steal.

1t is reported from Washington that
action is about to be taken by the gov
ernment against the Pacific railroad
companies to recover large sums which
have been unlawfully held back by
them from the national treasury. The
supreme court has recently decided that
under the Thurman act the net earn
ings OF those lines must be ascertained
by deducting from the gross earnings
only the operating expenses, necessary
repairs made within the year, and inter-
est ON the first mortgage bonds. The
companies have hitherto deducted in
addition all sums paid for improve
ments, betterments, and new equip
ments. These unlawful allowances
have made a difference of more than
$2,000,000 for the Central Pacific and
nearly 81, ,000, 900 for the Union Pacific
in the computed amount of net earn
ings since the passage OF the Thurman
act, which authorized the government
to collect 25 per cent. Of the net earn
ings of the lines. According to this
reckoning the government of the United
States has been cheated out OF about
$2,250,000 by fraudulent method OF
bookkeeping at the same time that the
people have been swindled by excessive
charges for transportation service.
The decision OF the supreme court is
in accordance with the principles Of
justice as well as law. Betterments and
improvements of property, when paid
for, are additions to the working capital
OF q company or corporation. They may
be paid for out of net earnings if so pre-
ferred, but the latter are not thereby re-
duced-they are only used for definite
purpose. 1t is true the method of piling
up capital out of the earnings and then
alleging the latter to be small is not
confined to the Pacific lines, but it is or
has been resorted to only in cases where
it was designed to hoodwink the public
into paying charges that are really ex-
t0rtionate or to stave off creditors. No
honorable banker, merchant or manu-
facturer would stoop for moment to
the mean evasion by which the managers
of the Pacific railroads have been
swindling the government ever since
1868, while chiseling the people by ex-
tortionate rates, and putting q drag on
the development of commerce across the
continent by levying on it extravagant
tolls. 1t is strange that congress, being
fully aware Of the existence of this out
rage, should have allowed it to continue
so long. v
The steal here exposed is only part OF
q system by which the managers of
the Pacific lines have made themselves
enormously rich at the expense Of the
! government and the people, and are
now seeking to lessen the value of the
property so that they can let it lapse as
nearly worthless as may be when they
can hold on to it no longer. The gov
erpment should not only proceed to in
sist on strict accounting of net earn
ings, but If there is to be no change for
the better take immediate steps to en- ,
force its liens and take the roads from
out Of the hands of the men who have
so grossly abused the trust committed
to them. The lines should then be
leased to parties who can furnish good
and responsible guarantees that they
will carry freight and passengers at
reasonable rates, giving q service that
will aid in Building up the interior Of
the continent instead Of not simply
hindering it directly but furnishing an
excuse to the managers Of other lines to
levy commercial blackmail upon the
people. Perhaps 1t may be found pos
sible to devise satisfactory plan under
which the roads co0ld be operated as
well as owned by the gov eminent, and
If so It Hhould be adopted. But what
ever the outcome, the robbers who now
hold the Pacific lines ought to be de-
posed from fheir seats on the shoulders
Of the people, End made TO felease their
clutch, Wk3ch amounts TO little short Of
: nnss1 sssasA Il q ea1iviflatson az fha nu11jc
II a1dltiop e eng & gigap fic sfeal from
! th1 n6&iotl easurys The whole thing
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