The herald. [microfilm reel] (Los Angeles [Calif.]) 1893-1900, 1894-10-12

compiled from the reports oil the United
States Pacific railway commission, APP
pointed by President Cleveland under
the act of congress of March 3. 1887.
The history will be published in the
HERALD. the following being the third
installment:
METHODS OF CONSTRUCTION.
The methods of construction adopted
by the managers OF the Pacific railroad
companies, as will be seen from the
more detailed statements given below.
were. in all cases, substantially the
came. All the roads were constructed
and equipped under contracts, allowing
extravagant compensation, made by the
directors of the several companies with
auxiliary construction companies, IN
which the directors were themselves the
sole parties in interest; or-leaving out
of view the fiction Of intervening corpo'
.ations-uuder contracts made by the
directors with themselves. under which
their compensation was fixed at extra
VACANT rates.
The general result is thus described
by the commissioners:
1.-THE explanation of the constant and
has for years pervaded congress. the
press, and is may be said the whole
people OF the country, in relation to
these Pacific companies, is certainly due
to the fact that there exists a settled
conviction that, by the application of
ingeniously contrived devices in the
construction and operation of these rail-
ways, the bounty OF the government,
intended for the support, development
and insurance of the financial strength
of these corporations, has been slowly
but surely filtered into the pockets OF a
few favored officers and managers, who
have not scrupled to use their powers as
directors and trustees for their own per-
sonal advantage.
ut was the purpose OF congress, in all
this, to provide for something more than
mere gift of 80 much land, and loan
OF 80 many bonds on the one side, and
the construction and equipment OF so
many miles of railroad and telegraph on
the other. The United States was not
mere creditor, loaning q sum OF money
upon mortgages. The railroad corpora
ton was not mere contractor. bound
to furnish a specified structure, and
nothing more. The law created body
polite and corporate, bound as a trustee
SO to manage this great public franchise
and endowment that not only the &c.
curity for the great debt due to the
United States should not be impaired,
but 80 that there should be ample re-
sources to perform its great public du-
ties in time OF commercial disasters
and in time of war;" Up. 49,
"The conclusion reached by this COM
mission, based upon their own examina.
tons CT the officers of tho respective
companies, upon the examination OF the
accounts of the companies by the ex-
perts OF the commission. and upon the
report of the inspecting engineer of the
com mission, 10 that, with single OK
ception, to be presently noted, Che
Union Pacific, since the spring OF 1880,
all OF the duties and obligations above
referred to have been constantly and
persistenty disregarded. The result is
that those who have controlled and di-
rected the construction and development
Of these companies have become pos.
seseed of their surplus assets through
issues OF bonds, stocks and payments OF
dividends voted by themselves, while
the great creditor, the United States,
finds itself substantially without Hecur-
ity for the payment of its loans" %. SOY.
These observations are fully substan-
tiated by the ACCOUNTS OF the methods of
construction pursued by the managers
of the several companies, as detailed in
the report, which are as follows:
Construction OF the Central Pacific
railroad and branches.-The manage
ment of this company has continued I'M
changed throughout its history, except
of late years by the death OF members
of it, and the substitution OF their per-
sonal representatives. 1t consisted OF
Stanford, Crocker, Hopkins and Hunt
ington, who, with five others, represent
ing them, were directors of the Central
Pacific Railroad company,
Main line, Sacramento to Ogden. Opp.
6S 76).-The portion of this line from
Sacramento to the eastern boundary of
the state was constructed by Charles
Crocker & Co., in which Stamford,
Crocker, Hopkins and Huntington were
equally represented. Under the con-
struction contracts, payments were to be-
made, fve-eighths in cash. and three
eighths in stock. at 30 cents on the
dollar, or by a subsequent modification
at 80 cents on the dollar.
From the state line to its terminus,
five miles west OF Ogden, with the ex-
ception of q email section of the road
purchased from the Union Pacific Rail-
road company, the railroad was con-
structed by corporation known as the
Contract and Finance company, which
had succeeded Croker q Co., and in
which the sole parties in interest were
the four directors named, and one +. B.
Crocker, whose interest was subse-
quently assigned to the four other par
ties. The terms of the contract were
substantially $3.50 900 per mile, one-half
payable in cash, the other one half pay
able in stock, for the construction and
equipment OF the road. "Undor this
contract the road was constructed be.
tween the points indicated, total dis
lance of 552 miles. at q cost of $23, 1885,
O0D in stock and $23 zee. 600 in gold"
The effoTta OF the commission TO
ascertain the actual cost OF construction
of the railroad to the Contract and FL
nance company were much obStrui ted
by the loss OF the books OF the company,
and Of Croker & Co.; which, sin the
opinion OF the commission. were pur-
posely Destroyed by direction of Stan
ford, Huntington. Hopkins and Croker.
The evidence on this point, they say
appears to be- conclusive"
In their judgment, however-which
they regard as being very near the truth
-"the actual cost OF construction OF
the Central Pacific railroad, from Sacra-
mento TO Promontory Point, and the
purchase from the Union Pacific Rail-
road company OF AK miles, a total dis
tanca of 1877 90 miles, did not exceed
the sum OF 1856, COO, 000."