The herald. [microfilm reel] (Los Angeles [Calif.]) 1893-1900, 1895-02-13
|aON DEBT WAS INCURRED
Union Pacific Ways of Financial
Wrecking
THOSE SEVENTY MILLIONS
low the "Big Four" Built the Union
Pacific Railway
New York's Share in Defeating Huntington's
Rounding Bill in congrcss-Racy
Bits Of Old History
THOSE SEVENTY MILLIONS
FROM THE NEW YORK WORLD.


Railroad. The present purpose is, there
lore, only to give summary of the sub
iect for comparison with the preceding
accounts of the industrial and political
operations Of the road.
be Central Pacific Railroad, as at first
1T, was begun February % 1863 and
Ia completed May 10, 1869. 1t extended
F2n Sacramento, in California, to near
Y fen, in Utah, where it Joined the
" fon Pacific road. Its length was 500
pes. In 1870 it was consolidated with
Western Pacific road, 1906 miles
AZ, from Sacramento, southwark and
~ 2stward to San Jose. This consol-
Ned road 066 miles long, is the road
Is aided by the United States, which
pas lien on it accordingly. Since that
Htime it has been variously enlarged but
the engagements are not subject to that
lien. This road was built and has been
Y wrecked by Messrs. G. p. Huntington, l..
4 Stanford G. Croker and NJ. Hopkins, who
are often called the Big Four and who
4 will, for shortness, be called in this paper
the -Four. 1t is the road whose debt of
not less than $70,0O0000 to the United
| States began to be due January Is of this
year. The payment of the debt will be
n postponed for fifty or a hundred years,
and Undoubtedly avoided altogether if Mr..
Huntington can fool or persuade or bride
his rounding bill through Congress. An
outline of the financial history of this
road can be given in very small space:
-Four men Huntington, Crocker, Stan
ford and Hopkihs) built the road. They
received, in trust, for this purpose and to
pay its debts from the United States,
California and four counties in it, over
$ls5, 900. 900 in money and property. They
Z were allowed twelve years to build the
road and thirty years to pay the debts
The thirty years are beginning to expire
The four OF their estates are worth I'M
known amounts, variously estimated at
from $50, OOO 900 to 500, 600, 900 each.
This money they took from the Central
Pacific road. BY using the money of that
road they have also built a new road, cal
culated to take away the business of the
Central Pacific road which new road
they own. They have made no effort to
pay the debts of the Central Pacific, and
the road is bankrupt, and now they are
asking the United States to take this
bankrupt road off their hands; to lose all
its advances to the road and to pay the
debts of the road besides.
The steps of this remarkable wrecking
operation extend over more than thirty
years, beginning in 1862 The story in IA
somewhat fuller form is as follows:
The wrecking machinery is very simple.
1t consists of an arrangement by the Four
to be three parties at once-a wrecking
trinity so to speak. They arranged to be
0) the stockholders and owners of the
road ca the directors of the road: CD
the contractors for building the road. AS
contractors they appeared successfully
under four names, VIZ: Charles Crocker
4 Co., organized December rs, 1862; the
Contract and Finance Company, organ
lied December, 1867; the Western Devel-
Inrt v.aI ,1,.,r
1874, and the Pacific Improvement Com
pany, organized Novem Der 2, 1878 which
last is still in operation.
The transparent nature of the pretense
that these machines were really separate
companies is sufficiently shown by one
fact No money was paid in as capital to
any OF them; when money was needed the
four stockholders either advanced the
cash or Endorsed for the machine to the
required amount.
The first tlirty-one miles of the road
eastward from Sacramento were built by
several outside contractors before the
wrecking trinity was invented On De-
cember 26, 1862 the machine was first set
up. Two days before Mr.. Croker re-
signed from the board of directors and
organized the contracting firm of G.
Crocker & Co. The other three of the
four (the five dummies who were for
time nominally directors along with
them need not be even named) on this
18th of December voted to award the
new firm the, contract to build sections
Chat is, miles, thirty-two to fifty -four,
of the road. Now, the new firm of
Crocker & Co consisted of the -Four. All
the profit, therefore, which as contractors
they made on the work they received
into their pockets as individuals, and the
, more extravagant the prices, which, as
directors, they paid to themselves as con-
tractors. the more money they made as
1 individuals the more the Central Pacific
Railroad lost.
Two years after this, on July 1, 1864, the
act of Congress amending the original
charter of She road was passed. 1t doub-
led the land grant to the road, permitted
the company to issue its own bonds to an
amount equal to that of the Government
bonds allowed the company's bonds to be
secured by first mortgage on the road
While the Government accepted second
mortgage; and halved the length of the
road, which must be completed before
each new supply of bonds was issued
Roughly speaking, this act doubled the
current resources Of the road, and put it
4 into SO strong position financially that
it quickly began to loan its surplus money
and to receive interest on it, Not a cent was
ever assessed on stockholders of the Cen
trial Pacific to build the road or for any
other purpose. They never invested cent
in the road. Like the work of the Amer
lean Board of Commissioners for Foreign
faith 1t was built entirely from the
means advanced by the United States, and
by Others who believed in the road and
its managers.
To begin with, the four received state
and county aid in California as follows:
From Sacramento County county
bonds loaned .......... "t..... $780, 900
From Placer County, county bonds
From San Joaquin County. county OO0
bonds loaned ,,........... ESQ, 600
From san Francisco, gifts ....,....., 100000
From California, interest for25 years
att per cent. on 81, 100000 com
pany bonds. ........ .............. 2 ,625 900
Which foated the bonds at once. . +. 100000
Total ..................... IS, 1925 900
\ comfortable sum to start on. These
first thirty -one miles did not cost more
than $500, 900, being less than the out-and-
out gift from San Francisco along with
counties.
On JuEe 5, 1865, the Four voted to
award to themselves las Croker Il Coz
the contract to build the road for the rest
OF the distance to the state line, being
"a miles, at the same price as before. The
whole distance is 1873 miles, of which
"Crocker e. Coz built 107 miles The
amount paid by the Four to thems elves
Tor this work was as follows:
Cash. .................. is, 53b, O1EA6
Bonds ........., ... ............. 100, 10000
Stock worth in cash). s.......... l5,12l ,6O9.27
Total. ACKNOWLEDGEMENTS 13, 757, 624.73