The herald. [microfilm reel] (Los Angeles [Calif.]) 1893-1900, 1895-02-13
Values intrusted to the Four IS, 600 10000
Deduct cost OF constructing
the Central Pacific and con-
solidated roads ............. 5s,3O1 ,s31.s5

the central racine ana con-
| soldated roads. ............. 5S,301 ,S3l. 80
Leaving in the hands of the
| -Four, December l, 1887. s. 26. sos, 16S. 10
But there are some transactions which
do not appear in these tables. Another
summary given by the commission shows
| the amounts paid by the -Four to them
selves as contractors for building seven
other roads, afterwards leased to the Cen
trail Pacific, and the actual cost of them
| as follows:
Paid for the seven roads .. .$S2, 756, 1856 90
Actual cost OF building them. E. 81, zig. OF
Leaving surplus belonging to
the c. P. Co, but stolen by the
Add to this remainder that Of
the preceding table. 1875, 69S, 1853 Is
Total value in the hands OF the
| Four Dec ], 1887, from origi-
nal gifts and construction
| contracts, but belonging to
the Z. r. road ,............. 81 81, 237, 723. ID
| The commission adds that there are
''also many instances of the exercise of
the power OF their votes as directors in
| discriminating other contracts beneficial
to themselves. They do not, however,
give either details or totals.
| 10 the amount lust above given should
be added the profits on the construction
| OF the eastern end of the Sunset Route, "
between the Rio Grande and New Orleans,
Northern California State line and Port
land, Ore, and of any other construction
| contracts with the Western Development
Company and the Pacific Improvement
Company from December 1, 1887, to the
| present time These figures are now
| forthcoming.
The computations given thus far include
the dealings of the -Four with the original
values intrusted to them for the Central
Pacific road, as to the construction con
tracts connected with that road and with
| the Southern Pacific. But there are other
| items.
The same system" says the commits
sion REPORT, p. S3) ''of determining
their benefits by their own votes obtained
in matters other than construction.
The instance they give is the agreement
made in October, 1869, between Wells,
Fargo & Co., the express concern, and
(nominally) the Central Pacific road. This
agreement provided that Wells, Fargo e.
Co. should have a monopoly of the ex-
| press business over the lines of the road
and should pay the road at certain speci-
fled rates. But it was also provided that
the capital stock of Wells, Fargo & Co.
| should be IS, 900, 600, and that of this sum
one third, being 81, 666, 666.66 should be
paid to the Pacific Express Company on
condition that that company should not
do business. Now this Pacific Express
Company had just been organized, with
the Four as four of it's six directors, and
threatened to ruin the business of Wells,
| Fargo d Co. The stock was transferred
accordingly, and one-sixth of it, being
| $277, 77777, was distributed to each direct
or Each of the Four, therefore, got this
| sum. AS the dividends of Wells, Fargo &
| Co. are per cent year, each of the -Four
| got an annual income of over so, 600 with
ont having paid a cent for it and without
having done a thing except to refrain
from the express business. The interest
| ing point is that, as directors of the Cen
! tral Pacific road, they used their votes to
make the road go into an agreement
which gave each of them personally over
$50, 900 year. This money, over $S8, 900
a year in all, properly belonged to the
| Central Pacific.
! And in general way, the commission
| says (Report p. 3D. that it is established
by the evidence that all the construction
contracts and all the important contracts
for materials and supplies were made be-
tween the Central Pacific Railroad Com
pany and companies controlled by Stan
ford, Huntington, Hopkins and Crocker.
| These four persons determined the terms
of all these contracts, and the result has
been that through the payments made by
| the Central Pacific Railroad they have re-
ceived as profit vast amount of stocks
and bonds"
Some other items, not coming under the
| head of construction contracts, are as fol-
| lows
| The net earnings of the Cen
| trail Pacific road were. 1868
| to 1886 Reports, etc. p. ..-.
Same, 1857 to 1894 testi- '|''''' .
mated. ...................... 2s.ooo,o 600 90
Total. ....,...... .......... $152.94O,013 81
The profits of the Oakland ferry are
calculated at 81 900, 600 year. This sum
goes to the Pacific Improvement Com
pany. This company consists of the Four.
| The total from this source cannot be less
than $15, 900, 000
The Pacific division of the Southern Pa
cific system pays about SIS, 600, 600 year
for coal. This coal is bought by the Four
as directors of the road from themselves
as the Pacific Improvement Company
which has the contract to furnish the
coal. The Four made on this contract an
annual profit of ~, 600, 900 to 80, 000, 900.
These four items, which come down to
a period later than the commission re-
port, are:
Wells. Fargo & Co. bargain .,.....
Income from same for Is years, s." " > -'NO
Net earnings Of Central Pacific
road to 1894 .................. 152940O13.S7
Oakland Ferry profits (esti-
Coal profits ,estimated) ..... 70, 900, 600, 90
Total. $211 ,35l 1874 95
Add previous total, .......... 1872, 237, 723 IL
Grand total. 1898, 2ss, s4s 90
This is the whole amount in cash.
stocks, bonds and property for which the
-Four ought to account to the Central Pa
cific Company. And this does not in
clude either the Central Pacific road itself
or the roads connected with it, or the
Southern Pacific system. Nor does it in
clude an unknown sum indicated in the
statement of the commission (Report, p.
84) that the -Four determined by their own
votes how much money they should make
on ''all the important contracts for ma
terials and supplies" Nor does it in
clude construction contracts for the seven
years. 1S88-94
1t is only just to the Four to explain
that in one point they seem to have been
perfectly honest. They have regularly
paid the interest on the 1927, 1856, 120 of the
first mortgage bonds of the road. This
interest amounts to $780, 1893, 216, which may
be deducted from the above grand total,
leaving the grand total for which the
Four should account $685., O95, 632. o. Let
the Four have full credit for paying this
$50, 193, 2l6-because they had to pay it.
A defalcation in this particular payment
at first would instantly have ruined all
their plans and could at any time have
exposed them in naked bankruptcy before
the whole financial world.
More such cases of diversion of profits
into the pockets of the -Four could be
specified in detail. But enough have
been displayed to serve the purpose of
this narrative. That purpose is to show
,4n1xr l.. I