The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1895-03-22
AN OBJECT LESSON.

The history of the construction and op-
Grafton of the South Pacific Coast Railroad
prior to the year 1887 and of its transfer
and subsequent manipulation furnishes an
| instructive object lesson 10 those who are
| interested in the subject of competing rail-
roads.
The work of building the South Pacific
| Coast Railroad was begun in 1876 by cor
poration controlled by directorate of men
who were independent of the Southern Pa
| citic Company and who furnished finances
| for the first work on the road. Between
1876 and 1886 the labor of construction
went on until it was practically completed
in the latter year.
During this period OF construction and
operation the officers of the corporation
rendered annual reports, at first to the
| Commissioners of Transportation, and
later to the Railroad Commission, as to the
| cost of the road and of its equipment, and
as to the earnings from its operation while
the work OF construction proceeded. These
OFFICIAL reports are exact and lucid. They
disclose simply and truthfully what this
railroad cost and earned during the decade
of its construction and operation as COM
peting road through one of the most popu-
lous and productive portions of the State.
Let us examine briefly these figures,
drawn from their official sources, as the
| first chapter of our object lesson. The
biennial report of the Commissioner OF
Transportation for the year 1877 shows
that the South Pacific Coast Railroad Com
pany had constructed its line from Dunn
barton Point across the Santa Clara Valley
to Los Gatos, distance of nearly thirty
miles. The cost of this portion of the road
was $627, $40. The cost of its equipment
was $50, 800, making the total outlay requi-
site to prepare the road for operation
SOS, 800, or $23, $50 per mile.
With the construction of this railroad
through the Santa Clara Valley, and with
its opening to operation in the year 1877,
an era of active, earnest competition for
the transportation of the people and prod
ucts of that section of the State began, and
| thereafter continued for the next ten
years. During that period the South Pa
| cific Coast Railroad was completed, and
| including certain small leased lines, it ex-
| tended from San Francisco to Santa Cruz,
with branches to New Almaden and
Boulder. In all it had about 100 miles Of
track. The report OF the officers of the
road to the Railroad Commission adds the
second chapter to our object lesson.
1t shows that the total cost of construc-
ton and equipments of the South Pacific
Coast Railroad was $1,000, All %, and that
there was net outstanding indebtedness
of $1,945, 1893 "a. 1t further disclosed that
the railroad during the period of its opera
ton had earned in net profits 81 SOB, AL 81
| TO- DC nd hot fIa ~,
the midst of the difficulties attending its
construction, and under the fire of an active
and bitter competition, had been most
profitable venture for its projectors.
During the year 1887 James G. Fair
! gained control of the South Pacific Coast
Railroad Company and soon opened nego-
tiations for its sale to the Southern Pacific
Railroad Company. As a result the road
was transferred to the latter corporation
for the purchase price of SIS, 500, 900 in bonds,
upon which per cent interest Per annum
was guaranteed. The corporation was
straightwayr or rather vas super
seeded by new corporation. The report OF
this new corporation to the Railroad Com
mission supplies the third and last chapter
TO this object lesson before its moral is APP
piled. 1t then appeared that, while the cap
ital stock of the old corporation was 81, 000,-
600, the capital stock of the new one was
5000, 900; that the debt against the road
was increased from 81 600, 900 to S., 500, 900,
which was the amount of the Fair bonds,
and upon which there accrued annually
interest amounting to 1920, 1000. This
interest has been regularly paid out of the
earnings of the road. Since 1887 the South
Pacific Coast Railroad Company has been
part of the system of the Southern Pacific
Company, and has been operated under a
lease to that corporation by which the net
income from the operation of the road is
applied to the payment OF the interest on
its bonds, with possibly modicum OF
profit to the lessee.
| What moral may be drawn from these