The labor world., 1921-09-24
Government Lost Heavily.

When the. government subsidized
the Pacific railroads in an amount
only about one-eighth the sum pro-
posed to be loaned in the Townsend-
Winslow bill now pending in the sen.
ate, it was secured by a. secod mort.
gage on the properties. The govern
ment agitated and legislated for years
in an attempt to make the roads pay,
only to lose practically all of the funds
advanced to these private interests.
A brief review Of some of the high
points in that transaction might en-
tighten members of congress and the
people as to the possibilities of repay
ment. In the Library Of Congress are
scores of printed public documents
and books dealing with the subject
and it makes very interesting reading
for those who want to know what pri-
vate railroad managers do when they
get their grab-hooks fastened on thu
United States treasury
Grant of the Pacific Roads. :,
In 1887 congress passed an act "au-
thorizing an investigation of the
books, accounts and methods of rail-
roads which have received aid from
the United States, and for other pur-
poses" 1t provides for the appoint
ment by the President of commits
sion of three members with instruc-
tions to examine into the working
and financial management of all the
railroads that have received aid from
the government in bonds; to ascertain
whether they have observed all the
obligations imposed upon them by the
laws of the United States under which
they received such aid, and whether
their books and accounts are or have
been SO kept as to show the net earn
ings of the aided roads" ETC.
President Cleveland named as mem-
bers of this commission, Hon. Robert
E. Pattison, of Pennsylvania, chair
man; Hon. E. Ellery Anderson, CT
New York, and Hon. David T. Littler,
|of Illinois. They held rearings in New
York, Boston, Omaha and San Fran
cisco, covering period of over a year,
and the testimony was printed as A
public document of eight volumes.
These volumes contain a record CT
robbery and stock jobbing in which
the peoples money was used to en-
rich few that should have forever
prevented the government from again
going into any sort of partnership
with private railroad manipulators.
Issue of Bond Subsidies.
The Pacific roads to which aid was
given in the form of United States
bonds bearing per cent interest were
as follows:
Union Pacific .$27.236.512
Kansas Pacific ......... 6,303,000
Central Branch U. P...... 100000
Central Pacific .......... 25,s85,120
Western Pacific ......... 1,s70,500
Total bonds $64, 623, ,513
On these bonds the government
paid annual interest to the amount OF
$3,S77.510.72, which the commission
reported was an additional advantage
worth $199,790,250 at the time.
The government made land grants
to these Pacific roads totaling 26,O29.-
534 acres, upon which valuation Of
$1.25 per acre was placed at the time.
equivalent to $32,536,918:
The companies organized to buiId
| these roads made millions by letting
| contracts to dummies and then taking
them over themselves. Thus in the
| three contracts let to construct the
Union Pacific from Omaha to Ogden,
a distance of 1929 miles, the books
show that it cost the company a total
of $93, ,2S7.2S, whereas the actual
contract price was only $50,720,95S.94,
leaving snug profit of $42,S25,328
to the contractors inside the company,
Officers and Managers Unscrupulolls.
In the report to the President tho
com mission, after completing it's in
vestigation, said of this construction
work legerdemain.
There exists a settled conviction
that by the application of ingeniously
contrived devices in the construction
and operation of these railways, the
bounty of the government, intended
for the support, development and in.
surance of financial strength of thess
corporations, has been surely but
slowly filtered into the pockets of 4
few favored officers and managers,
| who have not scrupled to use their
powers as directors and Trustees for
! their own personal advantage"
In commenting upon the manner in
| which the Pacific railroad officials
ignored the laws enacted by congress
for observance in building the roads,
! the commission said in its report: l..
The conclusions reached by this
commission, based upon their own ex-
aminations of officers of the respec-
tie companies, by the experts Of ths
commission and upon the report Of
the inspecting engineer of the com.
mission, is that with one exception all
! of the duties and obligations imposed
upon them (by act of congerss) ha"s
been constantly and consistently dis.
regarded.
"The result is that those who hava
| controlled and directed the construc-
ton and development of these COM.
panies have become possessed Of
their surplus assets through issues ol
Continued son Pase two.)