Chapter XXIV: Final Remarks (2)

[158] Main v. Central Pacific, argument of Harvey S. Brown, of counsel for the defendants, 1886.

[159] _San Francisco Chronicle_, August 16, 1874, statement Milton S. Latham. This was the bridge over which the California Pacific was entering Sacramento.

[160] Main v. Central Pacific. Statement of facts. The closing argument of L. E. Chittenden, of counsel for plaintiffs, 1886. See also _San Francisco Chronicle_, August 16, 1874, statement of Milton S. Latham.

[161] Opponents of the Central Pacific described the transaction in 1886 as follows: “Huntington, the incarnation of this hostility, whose name was an inspiration of personal aversion, entered the state on the 24th of June; and the suggestion is, that the Court shall believe that under these circumstances, the directors of the California Pacific loaded their staggering trust with a new debt of $1,600,000, on which interest should commence at once, to pay for a second track, not to be finished until about two years, at the small end of their railroad where there was no need of it, at a point where it was doubtful if one track would stand—and contracted with their hereditary enemies to do it—all without the remotest reference to any purchase of, or intended future control of the corporation!”

[162] Colton case, pp. 3214-15.

[163] _San Francisco Chronicle_, August 16, 1874. According to A. A. Cohen, a San Francisco lawyer one time in the employ of the Central Pacific and intimately acquainted with its policies, Stanford told Latham that he, Stanford, was extremely sorry that the Reese suit had been commenced, and that it would not have been if he had known anything at all about it. Cohen, however, made public the following letter, written by Stanford the day before the suit was brought, which puts an altogether different face upon the matter. Stanford wrote as follows:

“July 24th, 1874.

DEAR COHEN:

Regret on your own account that you are so ill. Send Mr. Yost over particularly to report, and carry this message. Michael Reese is willing to commence suit as stockholder. Please transfer to him 150 shares of your stock in the California Pacific. Hoping to hear a more favorable account of your health, I remain,

Yours truly,

STANFORD.”

The inference from this letter is, of course, that the Reese suit was brought at Stanford’s own instance.

[164] United States Pacific Railway Commission, pp. 3936-42, testimony L. E. Chittenden.

[165] United States Pacific Railway Commission, p. 3614, testimony Leland Stanford.

[166] On December 2, 1865. United States v. Southern Pacific, transcript of testimony, p. 1284. Hereafter referred to as “United States v. Southern Pacific.” This company was organized under the general California statute relating to incorporations approved May 20, 1861.

[167] 14 United States Statutes 292 (1866). An act granting lands to aid in the construction of railroad and telegraph line from the states of Missouri and Arkansas to the Pacific Ocean. The provisions of this act were promptly accepted by the Southern Pacific. See United States v. Southern Pacific, pp. 1672-73.

[168] 15 United States Statutes 187 (1868).

[169] _San Francisco Bulletin_, March 14, 1868.

[170] United States v. Southern Pacific, Defendant’s Exhibit No. 23. Neither Huntington nor Stanford signed the articles of association of 1870 as holders of stock of the consolidating companies. This may merely mean, however, that the stock of these companies was placed under other names for purposes of convenience.

[171] The change of route was authorized by Congressional resolution, dated June 28, 1870 (16 United States Statutes 382 [1870].) It should be observed that the so-called Mussel Slough “massacre” resulted from a dispute over the ownership of land south of Hanford, Tulare County, which lay along the line of railroad as designated in 1867, but not along that proposed in 1865. It appears that a number of persons settled upon and improved tracts near Hanford before the railroad applied for patent to land in this vicinity, but after the Southern Pacific had filed the map showing its intended route with the Commissioner of the General Land Office in 1867, and after lands along this route had been withdrawn.

When the railroad secured title it offered to sell this occupied land to the parties who had settled upon it, but at prices which were much above those current for unimproved farm land. That is to say, the railroad asked from $11 to $35 an acre, instead of the customary $2.50 to $5 an acre. The settlers understood from this that the company was trying to make them pay for improvements which they themselves had made, and resorted to active opposition. In 1876 the settlers petitioned Congress to restore a portion of the land grant in question to the public domain, on the ground that no railroad had ever been constructed along it.

In 1881 the railroad attempted to take forcible possession of two pieces of the disputed land. There was resistance, and in the shooting which followed, eight men were killed, including six settlers. This was the “massacre.” There seems to be no question but that the railroad possessed legal title to the Tulare County property. The weakness of its position lay in the fact that it was attempting to build a railroad in one place and to secure a land grant in another—a procedure never contemplated by Congress, and one not unlikely to lead to hostile legislation. Eventually the railroad title was sustained, and the land sold by the company, though at reduced prices.

[172] 16 United States Statutes 573 (1871).

[173] See on this matter Colton case, p. 1621, Crocker to Colton, February 12, 1875.

[174] Guinn, “A History of California,” pp. 254, 276.

[175] Ninth Census of the United States, 1870.

[176] Newmark, “Sixty Years in Southern California.” The Los Angeles and San Pedro was built to Wilmington only in 1869. It was not extended to San Pedro until 1881.

[177] Ranchers near Los Angeles feared lest the construction of the railroad would do away with horses and the demand for barley.

[178] “Illustrated History of Los Angeles County” (Chicago, 1889), p. 136.

[179] Newmark, “Sixty Years in Southern California,” pp. 496-97.

[180] Articles of incorporation are printed in Colton case, pp. 5475-77, testimony F. S. Douty. See also _ibid._, pp. 2993-95, testimony Reynolds. The material and accounts for repairs possessed by the Contract and Finance Company were turned over to the Western Development Company at this time at a valuation of $431,530.53.

[181] Colton case, pp. 362-65, 7806-22, testimony F. S. Douty. The actual payments were, as the result of certain adjustments, slightly less.

[182] United Slates Railway Commission, p. 2701, testimony F. S. Douty.

[183] United States v. Southern Pacific, pp. 553-55, testimony Redington.

[184] _Ibid._, pp. 533-35, testimony Luckett.

[185] Colton case, p. 7637, Colton to Huntington.

[186] Colton case, pp. 231-32, testimony F. S. Douty; United States Pacific Railway Commission, pp. 3626–27, testimony F. S. Douty.

[187] United States Pacific Railway Commission, p. 2832, testimony Leland Stanford.

[188] United States Pacific Railway Commission, p. 2994, testimony C. F. Crocker.

[189] Colton case, pp. 7646-54, 1586.

[190] _Ibid._, pp. 9669-73, testimony Charles Crocker.

[191] _San Francisco Examiner_, October 8, 1889.

[192] Jay Gould once testified that Huntington had offered an interest in the Southern Pacific to himself and his Union Pacific associates, and that they had offered to take an interest, provided that Huntington would cut the Southern Pacific bonds outstanding from $40,000 to $25,000 per mile, and throw the stock in. Gould thought that $25,000 per mile was all that the road had cost. (Colton case, deposition Jay Gould, pp. 8, 23-24.)

It should be observed that a great deal of the mileage now owned by the Southern Pacific Railroad was not originally built by that company, but by or for small separate companies, most of them organized by the Huntington group, which were later consolidated with the parent corporation. The complete list of these consolidations is as follows:

October 12, 1870. Consolidation of the Southern Pacific Railroad Company, the San Francisco and San José Railroad Company, the Santa Clara and Pajaro Valley Railroad Company, and the California Southern Railroad Company.

August 19, 1873. Consolidation of the Southern Pacific Railroad Company and the Southern Pacific Branch Railroad Company.

December 18, 1874. Consolidation of the Southern Pacific Railroad Company and the Los Angeles and San Pedro Railroad Company.

May 14, 1888. Consolidation of the Southern Pacific Railroad Company, the San José and Almaden Railroad Company, the Pajaro and Santa Cruz Railroad Company, the Monterey Railroad Company, the Monterey Extension Railroad Company, the Southern Pacific Branch Railway Company, the San Pablo and Tulare Railroad Company, the San Pablo and Tulare Extension Railroad Company, the San Ramon Valley Railroad Company, the Stockton and Copperopolis Railroad Company, the Stockton and Tulare Railroad Company, the San Joaquin Valley and Yosemite Railroad Company, the Los Angeles and San Diego Railroad Company, the Los Angeles and Independence Railroad Company, the Long Beach, Whittier and Los Angeles County Railroad Company, the Long Beach Railroad Company, the Southern Pacific Railroad Extension Company, and the Ramona and San Bernardino Railroad Company.

April 13,1898. Consolidation of the Southern Pacific Railroad Company, the Northern Railway Company, the Northern California Railway Company, and the California Pacific Railroad Company.

March 7, 1902. Consolidation of the Southern Pacific Railroad Company (of California), the Southern Pacific Railroad Company (of Arizona), and the Southern Pacific Railroad Company of New Mexico.

[193] Colton case, pp. 1522-24, 1529.

[194] United States Pacific Railway Commission, pp. 2791-92, testimony Leland Stanford.

[195] Colton case, pp. 1524-29.

[196] _Ibid._, pp. 1510-13.

[197] United States Pacific Railway Commission, p. 3445, testimony E. H. Miller, Jr.

[198] For terms of leases see especially United States Pacific Railway Commission, pp. 3443-53, testimony of E. H. Miller. Jr.

[199] United States v. Southern Pacific, p. 708, testimony Julius Kruttschnitt. This was a case brought in 1915 before the District Court of the United States for the District of Utah in order to compel the separation of the Central Pacific from the Southern Pacific railroad. The suit was brought under the Anti-Trust Law of 1890, and in the course of the testimony the history of the Southern Pacific was very fully brought out.

[200] Colton case, pp. 814-26.

[201] Colton case, pp. 1643-44, Huntington to Colton, May 28, 1875.

[202] _Ibid._, pp. 1615-16, Huntington to Colton, December 10, 1874.

[203] United States v. Southern Pacific, p. 655, testimony Timothy Hopkins.

[204] United States v. Southern Pacific, pp. 1191-96, testimony James Speyer.

[205] _Ibid._, pp. 613-18, testimony George T. Klink.

[206] _Ibid._, p. 645, testimony George R. Jackson.

[207] _Ibid._, p. 1695, Defendant’s Exhibit No. 21.

[208] _Ibid._, p. 871, inventory of Charles Crocker estate, filed July 12, 1889.

[209] United States Pacific Railway Commission, p. 2657, testimony Leland Stanford.

[210] United States v. Southern Pacific, pp. 615, 645, testimony George T. Klink.

[211] United States v. Southern Pacific, p. 666, testimony Timothy Hopkins.

[212] United States v. Southern Pacific, pp. 1688-1702, Defendant’s Exhibit No. 21.

[213] United States v. Southern Pacific, pp. 621-22, testimony George T. Klink. It has been suggested that Huntington had the charter of the Southern Pacific Company taken out in Kentucky, in order to enable the company to conduct its suits in California in the federal and not in the state courts.

[214] J. M. Bassett said of the action of Kentucky in granting a charter to the Southern Pacific Company, that it amounted to granting a letter of marque to that company on the condition that it make no reprisals in Kentucky. He argued that the lease of the Central Pacific was defective because its duration was to be greater than the life of the Central Pacific under its articles of incorporation, because the liability of Southern Pacific stockholders was not unlimited as in the case of California corporations, and because the rule of comity under which foreign corporations operated in California could not be expected to apply to a corporation which was forbidden to do business in the state of its nativity. None of these objections, however, proved to have any practical importance.

[215] United States Pacific Railway Commission, pp. 2812-13, testimony Leland Stanford.

[216] The following table shows the result of operation under the lease for each year from 1885 to 1893:

NET PROFITS AND RENTALS CENTRAL PACIFIC RAILROAD, 1885-93

Net Profit Rental Paid to Excess of
Central Pacific Central Pacific Rental over
Period Railroad Company Railroad Company Net Profit
April to December, 1885 $1,482,033 $1,482,033 ..........
1886 1,324,998 1,324,998 ..........
1887 1,086,733 1,200,000 $113,267
1888 962,830 1,360,000 397,170
1889 1,035,418 1,360,000 324,582
1890 999,223 1,360,000 360,777
1891 2,144,425 2,144,425 ..........
1892 861,874 1,360,000 498,127
1893 784,717 1,360,000 575,283
—————————— —————————— —————————
Totals $10,682,251 $12,951,456 $2,269,206
══════════ ══════════ ═════════

Brice Report, 53d Congress, 3d Session, January 28, 1895 (Senate Report, No. 830, Serial No. 3288).

[217] Colton case, pp. 8839-42, testimony Charles Crocker. A discussion of the relations between Colton and the Huntington group which differs from that given in the text is presented in Russell, “Stories of the Great Railroads,” 1914.

[218] Colton case, pp. 2446-50, testimony Mrs. Colton.

[219] _Ibid._, pp. 172-73, deposition C. P. Huntington.

[220] Colton case, pp. 5872-74. See also Colton manuscript, pp. 36-40. It was stipulated that either party might cancel the agreement at any time within two years, upon which stock and promissory note were to be mutually returned, and the parties placed in the same position relative to each other as before the agreement was made.

[221] Colton case, pp. 7018-19.

[222] _Ibid._, p. 6529, testimony H. K. White.

[223] Colton case, p. 8869, testimony Charles Crocker.

[224] _Ibid_., pp. 1058, 1064-66, testimony E. H. Miller, Jr.; p. 8957, testimony Charles Crocker.

[225] Colton case, pp. 2711-12, 478-81, testimony F. S. Douty.

[226] Newell Beeman, superintendent of the Rocky Mountain Coal and Iron Company, says that Colton knew nothing about the practical working of the mine. (Colton case, pp. 3849-50, testimony Newell Beeman.)

[227] Colton case, pp. 7612-13, Colton to Huntington, January 31, 1878.

[228] Colton case, p. 8915, testimony Charles Crocker.

[229] United States Pacific Railway Commission, p. 3255, testimony F. S. Douty; Colton case, pp. 423-24, testimony F. S. Douty.

[230] Colton case, pp. 8883, 8887, testimony Charles Crocker.

[231] Colton case, pp. 8881-82, testimony Charles Crocker; pp. 36-37, deposition C. P. Huntington.

[232] Colton case, pp. 2335-46, testimony Gunn; pp. 3127-29, 3227, testimony W. G. Fullerton.

[233] Colton case, pp. 7187-92, testimony Madden; pp. 7217-24, testimony N. T. Smith.

[234] Colton case, pp. 2436-39, Huntington to Mrs. Colton, November 15, 1878, and November 21, 1878.

[235] _Ibid._, pp. 2485-92, testimony Mrs. Colton; pp. 8892-99; testimony Charles Crocker.

[236] Colton case, pp. 16-32, deposition S. N. Wilson.

[237] Colton case, pp. 8931-32, testimony Charles Crocker.

[238] In the case of the Central Pacific claims, the qualification “so far as known at the time” was introduced.

[239] Colton case, pp. 2815-16, testimony Mrs. Colton; pp. 8943-44, testimony Charles Crocker.

[240] Crocker manuscript, pp. 40-41.

[241] Colton case, p. 248, testimony Douty; United States Pacific Railway Commission, p. 3494, testimony D. O. Mills.

[242] Colton case, p. 1662, Huntington to Colton, May 1, 1875.

[243] _Ibid._, pp. 1720-31, Huntington to Colton, June 24, 1875; pp. 1743-45, Huntington to Colton, December 4, 1875.

[244] _Ibid._, miscellaneous depositions, p. 41, depositions S. H. Thayer.

[245] Colton case, p. 33, deposition D. O. Mills.

[246] _Ibid._, p. 45, deposition S. H. Thayer.

[247] Colton case, pp. 1684-85, Huntington to Colton, November 13, 1875.

[248] _Ibid._, pp. 1747-48, Huntington to Colton, December 20, 1876.

[249] Colton case, pp. 1746-47, Huntington to Colton, December 8, 1870.

[250] _Ibid._, pp. 1768-70, Huntington to Colton, May 6, 1877.

[251] _Ibid._, pp. 1772-73, Huntington to Colton, May 9, 1877.

[252] _Ibid._, pp. 7517-18, Colton to Huntington, August 24, 1877.

[253] _Ibid._, p. 7523, Colton to Huntington, September 28, 1877.

[254] Colton case, pp. 7625-26, Colton to Huntington, March 13, 1878.

It is extraordinary that a man in Colton’s position with his intimate knowledge of the precarious condition of Central Pacific finance should have allowed that railroad to declare a 4 per cent dividend in October, 1877, great though his personal necessities may have been. This was, however, done. In reply to a letter from Huntington criticizing this action, Colton later wrote:

“I never had the least intimation of objecting to the dividend until some time after it was declared. Governor Stanford informed me that you had telegraphed him, advising relative to this October dividend. We discussed it some time afterward in the Board meeting and found the whole matter of dividend had been written up in the books, and had gone so far before it had been brought before the Board that it was considered best to let the matter stand as it was.... I did not give the matter any attention outside of the Board meeting, for I felt it was a matter that Governor Stanford was personally attending to.

“I do not, however, see the matter in just the light you do, and think so few will know of it that it cannot hurt us in Washington, for if you who are one of the largest stockholders, have not found it out, I do not see much show for outsiders. That there were ample surplus earnings to declare it there is no doubt. So it was a question of policy.... I would think in a business way the Government would be glad to see us doing well and prosperous, and evincing ability to pay dividends and _all_ of our _debts_.” (Colton case, pp. 7533-34, Colton to Huntington, November 24, 1877.)

[255] Colton case, pp. 7608-14, Colton to Huntington, January 31, 1878.

[256] In 1885 the Central Pacific directors authorized the issue of $10,000,000 in bonds to pay off the floating debt. (United States Pacific Railway Commission, p. 3019, testimony C. F. Crocker.) There is some reason to suspect that Stanford was individually embarrassed in 1878, as a result of the financial stringency in California. Huntington telegraphed Colton in September of that year to let him know Stanford’s financial condition as near as he could ascertain it, and proposed to have the Western Development Company assume Stanford’s indebtedness, taking Southern Pacific bonds from Stanford in exchange, at 65. Colton replied that the Western Development Company would have to take about $3,000,000 in Southern Pacific bonds under such an arrangement to cover Stanford’s obligations. The French bank in San Francisco had just closed its doors, and he, Colton, was anxious about Stanford’s collaterals. He thought that Stanford had $800,000 of United States bonds in that institution. Michael Reese’s executors were calling for money. It does not appear what conclusion was finally reached.

[257] Colton case, pp. 704-705.

[258] Colton case, p. 112, deposition J. D. Probst.

[259] _Ibid._, pp. 146-47, deposition A. L. Thompson.

[260] Laws of California, 1875-76, Ch. 515. For a readable account of the history of the California Railroad Commission up to 1895, see Moffet, “The Railroad Commission of California—A Study in Irresponsible Government,” (Annals of the American Academy of Political and Social Science, March, 1895).

[261] Report of the Board of Commissioners of Transportation to the Legislature of the State of California, December, 1877.

[262] Laws of California, 1877-78, Ch. 641.

[263] Laws of California, 1877-78, Ch. 490.

[264] Colton case, p. 7646, Colton to Huntington, May 23, 1878.

[265] Laws of California, 1880, Ch. 59. Under the view that a clause in the Constitution merely amounted to a mandate to the legislature, an enactment such as that of 1880 was obviously necessary. It should be said, however, that in later years this conception has somewhat changed, and constitutional provisions have been held to be self-executing. This was not the case in 1870. (McMurray, “Some Tendencies in Constitution Making,” in _California Law Review_, March, 1914.)

[266] City and County of San Francisco v. L. Stanford, Charles Crocker, _et al_, argument in the Circuit Court of the United States, 9th Circuit, District of California.

[267] The _Visalia Delta_ said of Stoneman, with unconscious humor: “France has her Napoleon; Italy her Garibaldi; America her Washington; Ireland her O’Connell; and the state of California her Stoneman.”

[268] Arguments and statements before the Committee on Commerce, House of Representatives, 47th Congress, 1st Session, 1882, House Misc. Doc. 55, p. 262, Serial No. 2047.

[269] Report of the Committee on Corporations, 1883, testimony W. R. Andros, secretary to the commission (in appendix to journals of the Senate and Assembly of the Legislature of California, 25th Session, 1883).

[270] Report of the Committee on Corporations, 1883, p. 48, testimony C. J. Beerstecher.

[271] This schedule was prepared under the direction of Stoneman and was approved by Beerstecher on the understanding that the railroad companies were to be asked to show cause why it should not be adopted. (Report of the Committee on Corporations, 1883, testimony C. J. Beerstecher.)

[272] _Ibid._, p. 11, testimony G. B. Stoneman. Mr. Cone says that the freight schedule was not fully prepared till March, 1881.

[273] _Ibid._, testimony J. S. Cone.

[274] Report of the Committee on Corporations, 1883, testimony C. J. Beerstecher.

[275] When Beerstecher came up for re-election in 1882, the opposition press asserted that a railroad official handed every employee of the railroad in Beerstecher’s district a Republican ticket with Beerstecher’s name printed on it, with orders to vote it. (_Mussel Slough Delta_, May 12, 1882.)

[276] Report of the Committee on Corporations, 1883, testimony J. S. Cone.

[277] Letter to Senate Committee on Corporations, California Legislature, January 22, 1874; _San Francisco Chronicle_, January 23, 1874.

[278] Testimony before Senate Committee on Corporations, February 16, 1874 (in appendix to journals of Senate and Assembly, 20th Session California Legislature, Vol. 4); _San Francisco Chronicle_, February 17, 1874.

[279] Letter to Committee of the New York Chamber of Commerce, January 20, 1881.

[280] The following interview with Charles Crocker, reported in the _Placerville Democrat_ for March 3, 1883, suggests how the doctrine described in the text was concretely applied:

“A gentleman of Placerville called upon Mr. Charles Crocker, of the railroad company, in San Francisco last Saturday, to ascertain just what we might calculate upon in reference to the extension of the railroad from Shingle Springs to Placerville. He reports that Mr. Crocker conversed freely on the subject, and with an appearance of perfect candor. He said emphatically that his company would not build or extend any branch roads under existing conditions as to uncertainty of action by the Railroad Commission, and the apparent state of public opinion as manifested in the Legislature and portions of the public press. He says that if the Commission intends to make sweeping reductions on the branch roads, such action would make these roads valueless, and he is not disposed to build roads to be thus destroyed. In answer to a direct question, with a full understanding that it was to be reported to our people, he said that if the Robinson suit were settled, and the position of the Commission ascertained as disposed to non-interference with the branch roads, his company was anxious to and would immediately extend the road to this place.”

[281] Colton case, pp. 1717-19, Huntington to Colton, April 27, 1876.

[282] _Ibid._, p. 1754, Huntington to Colton, January 22, 1877.

[283] _Ibid._, p. 1814, Huntington to Colton, December 7, 1875.

[284] _Ibid._, pp. 1684-85, Huntington to Colton, November 13, 1875.

[285] Cotton case, pp. 1642-43, Huntington to Colton, April 26, 1875.

[286] _Ibid._, pp. 1676-77, Huntington to Colton, October 19, 1875.

[287] _Ibid._, pp. 1624-25, Crocker to Colton, February 8, 1875.

[288] Tom Scott was president of the Pennsylvania Railroad at one time and an active opponent of Huntington before Congress.

[289] Cotton case, p. 1735, Huntington to Colton, July 26, 1876.

[290] _Ibid._, pp. 1736-37, Huntington to Colton, August 7, 1876.

[291] _Ibid._, pp. 1756-58, Huntington to Colton, March 7, 1877.

[292] _Ibid._, pp. 1763-65, Huntington to Colton, March 31, 1877.

[293] _Ibid._, pp. 1776-77, Huntington to Colton, May 15, 1877.

[294] Huntington manuscript, p. 17.

[295] Colton case, pp. 1622-23, Huntington to Colton, March 3, 1875.

[296] Colton case, p. 1728, Huntington to Colton, June 21, 1876.

[297] _Ibid._, pp. 1731-32, Huntington to Colton, July 16, 1876.

[298] _Ibid._, p. 7669, Huntington to Colton, August 1, 1876.

[299] Colton case, p. 1756, Huntington to Colton, March 7, 1877.

[300] _Ibid._, p. 1758, Huntington to Colton, March 14, 1877; pp. 1812-13, Huntington to Colton, December 5, 1877.

[301] _Ibid._, pp. 7776-77, Huntington to Colton, January 11, 1878.

[302] _Ibid._, pp. 1847-48, Huntington to Colton, February 9, 1878.

[303] _Ibid._, p. 1833, Huntington to Colton, New York, June 15, 1878.

[304] Colton case, pp. 833-34, Huntington to Colton, New York, June 20, 1878.

[305] _Ibid._, p. 1822, Huntington to Colton, New York, April 19, 1878.

[306] _Ibid._, pp., 1823-24, Huntington to Colton, New York, April 23, 1878.

[307] Colton case, pp. 1828-29, Huntington to Colton, New York, May 24, 1878.

[308] Colton case, pp. 1673-74, Huntington to Colton, October 9, 1875.

[309] _Ibid._, pp. 1679-81, Huntington to Colton, October 29, 1875.

[310] _Ibid._, pp. 1669-70, Huntington to Colton, September 27, 1875.

[311] United States Pacific Railway Commission, p. 3276, testimony S. T. Gage.

[312] _Ibid._, pp. 3287-88, testimony S. T. Gage.

[313] _Ibid._, pp. 4174-75, testimony Leland Stanford.

[314] Huntington manuscript, p. 80.

[315] Colton Case, pp. 1802-3, Huntington to Colton, November 9, 1877.

[316] _Ibid._, pp. 1843-45, Huntington to Colton, January 28, 1878. J. M. Bassett declared that Huntington paid out $1,700,000 to prevent Scott from securing a subsidy for the Atlantic and Pacific Railroad.

[317] _Ibid._, p. 1840, Huntington to Colton, January 12, 1878.

[318] Colton case, p. 1803, Huntington to Colton, November 15, 1877.

[319] _Ibid._, pp. 1700-1, Huntington to Colton, January 14, 1876.

[320] _Ibid._, pp. 1712-13, Huntington to Colton, March 23, 1876.

[321] United States Pacific Railway Commission, p. 3738, testimony C. P. Huntington.

[322] United States Pacific Railway Commission, pp. 35-36, testimony C. P. Huntington.

[323] _Ibid._, p. 3869, testimony I. E. Gates.

[324] _Ibid._, p. 3697, testimony C. P. Huntington.

[325] _Ibid._, pp. 2995-99, testimony C. F. Crocker; p. 3200, testimony Leland Stanford.

[326] _Ibid._, pp. 4174-75, testimony Leland Stanford.

[327] Most of the so-called “Dear Pard letters” from which the above is taken, appeared in the _San Francisco Daily Report_ after November, 1892. In the majority of cases the letters were printed in the Saturday edition. The correspondence continued with varying frequency until Bassett’s death in 1903. It was credited with a considerable share in preventing the refunding of the Central Pacific indebtedness to the United States government on terms favorable to the corporation, and Bassett himself believed that his “exposures” had seriously injured Southern Pacific credit in the financial markets.

[328] Colton case, p. 1661, Huntington to Colton, May 1, 1875.

[329] United States Pacific Railway Commission, p. 3721, testimony C. P. Huntington.

[330] Colton case, pp. 1726-27, Huntington to Colton, June 7, 1876.

[331] _Ibid._, pp. 1740-41, Huntington to Colton, November 11, 1876.

[332] _Ibid._, pp. 1765-66, Huntington to Colton, April 3, 1877.

[333] It has also been asserted that the failure of Mr. and Mrs. Stanford to attend one of the Huntington weddings was sharply resented by Mr. Huntington. J. M. Bassett, at one time secretary to Mr. Stanford, says that the latter came to regard Huntington as an individual of shady characteristics, and was not inclined to trust him further than he could throw Trinity Church up the side of Mt. Shasta. For his part, Huntington spoke of Stanford as a “blanked old fool.” (_San Francisco Daily Report_, July 21, 1894.)

[334] _San Francisco Examiner_, April 10, 1890.

[335] _San Francisco Examiner_, April 10, 1890.

[336] _Ibid._, April 13, 1890; April 18, 1890.

[337] United States Pacific Railway Commission, pp. 3697-98, testimony C. P. Huntington.

[338] Colton case, p. 1729, Huntington to Colton, June 24, 1876.

[339] Report of the chief engineer upon the preliminary survey, revenue, and cost of construction of the San Francisco and Sacramento Railroad, 1856.

[340] Biennial Report of the Commissioner of Transportation of the State of California for the years ending December 31, 1877 and 1878.

[341] Hittell, “The Commerce and Industries of the Pacific Coast of North America,” 1882, Ch. XI; Sheppard. “F. F. Low, Ninth Governor of California” (in University of California _Chronicle_, April, 1917); _San Francisco Argonaut_, June 22, 1878.

[342] _Sacramento Union_, December 19, 1860.

[343] In 1869 a committee of the California legislature estimated the volume of California products annually arriving at and exported from the port of San Francisco as follows (in appendix to journal of Senate and Assembly, 18th session, California Legislature, Vol 2):

Products Annual Receipts Annual Exports

Wheat 225,000 tons 200,000 tons
Barley 30,000 ” 10,000 ”
Oats 15,000 ” 2,500 ”
Corn 5,000 ” 1,000 ”
Hay 40,000 ” 1,000 ”
Potatoes 37,500 ” 10,000 ”
Beans 3,600 ” 1,000 ”
Hops and broom corn 3,600 ” 1,000 ”
Beets, carrots, tomatoes,
parsnips, peas, cabbages,
melons, squashes, etc. 40,000 ” 500 ”
Butter and cheese 10,000 ” 500 ”
Brandy and wine 6,000,000 gals. 4,000,000 gals.
Fruits, dried and fresh 20,000 tons 500 tons
Beef, mutton, and pork 6,000 ” .........
Poultry and eggs 12,000 ” .........
Wool 7,500 ” 4,000 ”
Hides 168,000 ” one-half

[344] Hittell, “Commerce and Industries on the Pacific Coast,” Ch. 11.

[345] United States Pacific Railway Commission, p. 3576, testimony Richard Gray, general freight agent, Central Pacific Railroad.

[346] United States Pacific Railway Commission, p. 2924, testimony Leland Stanford.

[347] Colton case, pp. 981-83.

[348] Colton case, pp. 981-83, Huntington to Colton, November 9, 1874.

[349] _Ibid._, pp. 466, 495-96, testimony F. S. Douty.

[350] Hittell, “Commerce and Industries of the Pacific Coast,” Ch. 11.

[351] United States Pacific Railway Commission, p. 2924, testimony Leland Stanford.

[352] United States v. Union Pacific Railroad, pp. 3316-20.

[353] Message from the President of the United States to the House of Representatives transmitting copies of contracts and leases entered into by the Southern Pacific Company, etc., February 4, 1886. 49th Congress, 1st Session, House Exec. Doc. No. 60, Serial No. 2398.

[354] United States v. Union Pacific, pp. 3321-25.

[355] United States Pacific Railway Commission, pp. 4276-77.

[356] Report on the internal commerce of the United States, by Joseph Nimmo, Jr., Chief of the Bureau of Statistics, Treasury Department, 1884, Serial No. 2295.

[357] Exception should be made of the period between December 16, 1900, and June 11, 1902, when there was no agreement between the Pacific Mail and the Panama Railroad. (United States v. Union Pacific, p. 2911, testimony Conner.)

[358] Bancroft, “Chronicles of the Builders,” Vol. 5. Ch. 6; _San Francisco Chronicle_, November 10, 1878.

[359] _California Mail Bag_, August, 1874.

[360] _San Francisco Examiner_, May 1, 1894. Discrimination was easy because rates were not published. Freight schedules were considered to be for the information of employees and not for general publication.

[361] Report of California Commissioners of Transportation, 1877, table 1, pp. 34-38.

[362] Report of the Senate Committee on Constitutional Amendments, relative to constitutional amendment No. 8, abrogating provisions of constitution as to railroad commission (in appendix to journals of the Senate and Assembly of the Legislature of the State of California, 30th Session, Vol. 8, 1893.)

[363] _San Francisco Examiner_, October 27, 1893. Even in the case of through rates more than one classification was used. It appeared in a case brought before the Interstate Commerce Commission in 1887 that while the Western classification governed shipments from San Francisco to Denver, another classification, known as the Pacific Coast eastbound classification, was used in connection with freight moving from San Francisco to the Missouri River. (Martin v. Southern Pacific Company, 2 I. C. R. 1 [1888].)

[364] United States Pacific Railway Commission, pp. 2536-37, testimony Leland Stanford.

[365] Report of California Commissioners of Transportation, 1877.

[366] Statement of J. S. Leeds, submitted to the State Railroad Commission (_San Francisco Bulletin_, April 4, 1892).

[367] United States Pacific Railway Commission, p. 3344, testimony J. C. Stubbs.

[368] Letter of Stanford to Committee of San Francisco Chamber of Commerce, December 1, 1873.

[369] United States Pacific Railway Commission, pp. 3292-93, testimony J. C. Stubbs.

[370] _San Francisco Examiner_, December 30, 1892, October 29, 1894; _San Francisco Bulletin_, January 31, 1893.

[371] _San Francisco Examiner_, October 30, 1894.

[372] United States Pacific Railway Commission, pp. 3299, 3300, testimony J. C. Stubbs.

[373] Railroad Commission of Nevada v. Southern Pacific Company, 21, I. C. C. R. 329, 349 (1911).

[374] A copy of this contract is printed in the _San Francisco Chronicle_ of May 7, 1879.

[375] _San Francisco Call_, August 1, 1878.

[376] Report of the Committee on Corporations of the Assembly of California, 1883, _sup. cit._ See also testimony taken before the Senate Judiciary Committee of the legislature of California in considering Assembly Bill No. 10 concerning the Regulation of Railroads, 1884 (in Appendix to the journals of the Senate and Assembly of the Legislature of the State of California, 25th Session, Extra).

[377] Railroad Commission of Nevada v. Southern Pacific Company, 21 I. C. C. R. 329, 346 (1911).

[378] Letter written by John T. Doyle and printed in the _Nation_, December 8, 1881.

[379] United States Pacific Railway Commission, pp. 3333-34, 3358-59, testimony J. C. Stubbs.

[380] The special contract system had the bad effect of repressing complaints from shippers. Mr. Overheiser, member of the State Grange, farmer, and resident of California since 1849, testified in 1884 before a committee of the California Senate as follows:

“_Q._ Are you sufficiently acquainted with the commercial community of Stockton to know whether they have any reluctance in making complaint ... before any Court of justice, or in going before the Railroad Commissioners, or an investigating committee? _A._ All I know about it is the impressions I have drawn from what I have heard.

“_Q._ To what effect? _A._ I would be very reluctant to come before this body and state what firm I belong to, or represent, for fear that the railroad might chastise me for it, or my firm.

“_Q._ Is that opinion generally shared among the merchants? _A._ As I understand it, that is the general opinion.

“_Q._ What do you mean by the word ‘chastise’? _A._ They might take our contracts away from us.”

This testimony was corroborated by at least one well-established merchant in San Francisco, who declared before the same Senate committee that business men in San Francisco were afraid to testify against the railroad for fear that their contracts might be broken. (Testimony before the Senate Judiciary Committee of the Legislature on Assembly Bill No. 10, 1884.)

[381] Business Men’s League of St. Louis v. Atchison, Topeka and Santa Fé Railroad, 9 I. C. C. R. 318 (1902). The number of vessels with their tonnage which entered the port of San Francisco in the trade with the Atlantic ports of the United States by way of Cape Horn from 1867 to 1884 was as follows:

Year ended June 30 Number Tonnage

1867 103 110,721
1868 119 124,504
1869 139 153,784
1870 111 126,726
1871 53 66,289
1872 63 70,956
1873 87 104,586
1874 62 83,248
1875 75 110,071
1876 88 124,793
1877 86 124,746
1878 68 104,544
1879 57 92,683
1880 53 86,332
1881 55 89,097
1882 67 104,157
1883 71 118,494
1884 48 84,196

[382] Proceedings of the Transcontinental Association, 1885. The special contract system was strikingly similar to the system of “deferred rebates,” until recently in good repute among ocean steamship companies. The argument in defense of this last-named system shows how slowly an understanding of the advantages of equality in matters of transportation rates spreads in a community. It is the view of the writer that both the special contract and the deferred rebate systems were and are contrary, to sound public policy, whether applied on land or sea.

[383] A miner in Shasta County wrote to the _San Francisco Examiner_ in 1893:

“I will state some facts about the attempt that was made to ship ores from here. Up to 1887 little or no assorted gold ores had been shipped. It was so new an enterprise that it was not classified in freight rates of the railroad company. The company was asked to establish rates, which it did—at $50 per car from Redding to San Francisco. This was satisfactory to the miners. We commenced to ship, and in a few months were sending down over 100 tons per month and had hopes of building up a permanent business. All at once, without notice, the freight was increased to $73 per car, and in a short time it was again raised, this time to $95 per car, and lots of less than one car were raised from 48 cents to 76 cents per 100 pounds. I went to San Francisco to see why this was done, and after considerable trouble gained an audience with an official at Fourth and Townsend streets. I spoke to the official about the advance on ore freight rates. His reply was: ‘Why, you are sending down ore that would make a prince rich. We can’t pull high-grade ore on low-grade rates.’ I reminded him that it was billed at a valuation of $100 per ton and that the railroad company’s responsibility ended there, and that we wished rates on all grades of ore, as there were so many values we could not classify them.

“Then he made me the proposition that there be no regular rates established, but to ship to the smelter for one month and then bring my returns and he would take out what he might think a recompense for pulling these values over the road. For cheek as a business proposition I think this stands pre-eminent. Of course it was rejected, and I was given rates as follows: Anderson, $71; Redding, $73 per car.” (_San Francisco Examiner_, May 8, 1893.)

[384] United States Pacific Railway Commission, pp. 3319-20, testimony J. C. Stubbs.

[385] Proceedings of the Transcontinental Railway Association, 1885, pp. 17-18.

[386] Letter to the State Railroad Commission, February 20, 1883.

[387] _San Francisco Chronicle_, August 25, 1879. It appears that the fare from San Francisco to Sacramento by steamer had been $5 in pre-railroad days. When the California Pacific commenced operations in 1869, the fare fell to $4, and when the Western Pacific was opened, a $3 rate was put in. As far back as the fifties, rates were still higher. (A. A. Cohen, Letter to the State Railroad Commission, 1883.)

[388] Opinions and Orders of the Railroad Commission of California, 1916, Vol. 10, p. 354 ff.

[389] Declaration of Principles of the Anti-Monopoly Party of Tulare County (_Mussell Slough Delta_, February 24, 1882).

[390] _San Francisco Chronicle_, August 27, 1879.

[391] _Stockton Independent_, March 10, 1876.

[392] San Bernardino Board of Trade v. Atchison, Topeka and Santa Fé Railroad Company, 3 I. C. C. R. 138 (1890). The Circuit Court for the Southern District of California refused to enforce the decree of the Interstate Commerce Commission in this case. (Interstate Commerce Commission v. Atchison, Topeka, and Santa Fé Railroad Company, 50 Fed. 295 [1892].)

[393] Harbor City Wholesale Company of San Pedro, California, v. Southern Pacific Company, 19 I. C. C. R. 323 (1910).

[394] Commercial Club of Santa Barbara, California, v. Southern Pacific Company, 12 I. C. C. R. 495 (1907).

[395] Santa Rosa Traffic Association v. Southern Pacific Company, 24 I. C. C. R. 46 (1912); 29 I. C. C. R. 65 (1914); Transcontinental Commodity Rate to San José, Santa Clara and Marysville, California, 32 I. C. C. R. 449 (1914).

[396] In 1887 a steamer of the Pacific Coast Steamship Company left San Francisco weekly for Vancouver, where its freight was loaded upon cars of the Canadian Pacific Company and taken east across the mountains. The Canadian Pacific demanded, and in 1888 was conceded, the privilege of accepting freight from San Francisco to Chicago and points east at rates less than those charged by the other transcontinental lines. (Martin v. Southern Pacific Company, I. C. C. R. 1 [1888].)

[397] Business Men’s League of St. Louis v. Atchison, Topeka and Santa Fé Railway Company, 9 I. C. C. R. 318 (1902).

When the Interstate Commerce Act was passed in 1887 the transcontinental carriers agreed to grade eastbound rates back to the Pacific Coast. Under tariffs issued April 5, 1887, Missouri River rates were applied for about 350 miles west of the river, from which point they gradually decreased to Denver. The Denver rates were applied from Denver to a point near Green River, over 300 miles west from Cheyenne. From Green River the rates again decreased gradually to the Pacific Coast. The tariff of April 5 was published in order to comply with