Chapter XXVII: Section 4: of the Interstate Commerce Law, and it was superseded by

other tariffs in April and May, 1887, by permission of the Interstate Commerce Commission. (Martin v. Southern Pacific Company, 2 I. C. C. R. I [1888].)

In later years transcontinental rates to interior points were not uniformly built by combination upon the terminals. In many cases, even in westbound rates, the terminal rates served as maxima beyond which intermediate rates were higher than to terminal points, but not by the full extent of the local back. Thus on the Central Pacific in 1902 the company named class rates to intermediate points which acted as maxima to all points, which meant that when the specified intermediate rate was less than the terminal plus the local back, the lower rate prevailed. Nor must the influence of the Interstate Commerce Commission in reducing intermediate rates be left out of account. Yet it was the conclusion of this same commission as late as 1902, that the point where the direct rate from the East was at least as high as the sum of the terminal rate and the local rate from terminal to intermediate destination, was on the average 300 miles east of the Pacific Coast, and in some instances several times that distance, a fact which is sufficient to characterize the system as a whole.

[398] Business Men’s League of St. Louis v. Atchison, Topeka and Santa Fé Railway Company, 9 I. C. C. R. 318 (1902). See also Rates on Asphaltum, etc., 33 I. C. C. R. 480 (1915).

[399] In so far as there is rail competition between transcontinental carriers, this rivalry also is keenest upon the Pacific Coast, and weakest in the intermediate territory.

[400] Report of Senate Judiciary Committee on Assembly Bill No. 10, 1884, testimony C. S. Stevens.

[401] Letter of Stanford to a committee of the San Francisco Chamber of Commerce, 1873.

[402] Railroad Commission of Nevada v. Southern Pacific Company, 19 I.C.C.R. 238 (1910).

[403] _San Francisco Bulletin_, March 26, 1892.

[404] _Ibid._, October 12, 1892.

[405] Huntington manuscript, pp. 27-28.

[406] Hearings before the Committee on Interstate and Foreign Commerce of the House of Representatives on H. R. 9928 (55th Congress, 2d Session, March 26 to April 2, 1918, pp. 84-85, testimony W. S. McCarthy).

[407] Hearings before House Committee on Interstate and Foreign Commerce, _sup. cit._, pp. 170-71, testimony, L. J. Spence.

[408] Business Men’s League of St. Louis v. Atchison, Topeka and Santa Fé, _sup. cit._

[409] Kindel v. Atchison, Topeka and Santa Fé Railway. 8 I. C. C. R. 608 (1900). In its first exercise of authority under the amended long-and short-haul clause, the Interstate Commerce Commission of 1911 prescribed the extent to which rates from eastern points of origin at and west of the Atlantic seaboard to Reno and other points upon the main line of the Central Pacific might exceed the rates to Pacific Coast terminals. (Railroad Commission of Nevada v. Southern Pacific. 21 I. C. C. R. 329 [1911].) _Cf._ Commodity Rates to Pacific Coast Terminals, 32 I. C. C. R. 611 (1915).

[410] Railroad Commission of Nevada v. Southern Pacific Company, 19 I.C.C.R. 238 (1910).

[411] Commodity Rates to Pacific Coast Terminals, 32 I. C. C. R. 611; 34 I. C. C. R. 13 (1915).

[412] Daggett, “The Panama Canal and Transcontinental Rates,” (in _Journal of Political Economy_, December, 1915); Rates on Asphaltum, etc., _sup. cit._

[413] Reopening Fourth Section Applications, 40 I. C. C. R. 35 (1916); Transcontinental Rates, 46 I. C. C. R. 236 (1917). See also Skinner and Eddy Corporation v. United States, 39 Supreme Court Report 375 (1919).

[414] Wheeler, “The Valley Road—A History of the Traffic Association of California, the League of Progress, the North American Navigation Company, the Merchants’ Shipping Association, and the San Francisco and San Joaquin Valley Railway” (San Francisco, 1896). See also Walker, “Pioneers of Prosperity” (San Francisco, 1895).

[415] United States v. 250 Kegs of Nails, 52 Fed. 231 (1892); 61 Fed. 410 (1894). See also _San Francisco Bulletin_, November 19, 1891.

[416] 27 United States Statutes 455 (1893). This bill was introduced by Senator Frye.

[417] Proceedings of the Merchants’ Convention (_San Francisco Bulletin_, October 19, 1891).

[418] The constitution of the Traffic Association is printed in full in the _San Francisco Bulletin_, November 4, 1891.

[419] _San Francisco Bulletin_, October 17, 1891.

[420] _San Francisco Examiner_, October 8, 1891.

[421] _San Francisco Bulletin_, October 17, 19, 1891; _San Francisco Chronicle_, October 18, 1891.

[422] _San Francisco Chronicle_, October 24, 1891.

[423] _San Francisco Bulletin_, November 4, 1891.

[424] It was the position of the executive committee of the Traffic Association, and in this they were supported by the traffic expert whom they employed, that it would be exceedingly bad policy for San Francisco to antagonize the interior by endeavoring to secure special advantages for itself. (_San Francisco Chronicle_, December 10, 1892.)

The Traffic Association was said to be, under its constitution and by-laws, a state institution, organized to promote the welfare of the whole state. The executive committee did not believe that San Francisco should be made the sole terminal even were this possible. The city would assume its proper and legitimate place not as the oppressor, but as the protector of every industry in the state, provided free competition and equally adjusted local rates could be secured. (_Ibid._, December 18, 1892.)

[425] _San Francisco Chronicle_, November 3, 1892.

[426] _Ibid._, December 7, 1892. The reply of the executive committee of the Traffic Association to this address is printed in the _San Francisco Examiner_, December 18, 1892.

[427] _Sacramento Union_, April 4, 1892.

[428] _Ibid._, May 13, 1892. San Francisco merchants declared that it was cheaper to send nails from San Francisco to Bakersfield via Los Angeles, water and rail, than to move them direct by rail over the floor of the San Joaquin Valley.

[429] _San Francisco Bulletin_, November 23, 1891. Mr. Leeds was given a two-year appointment, at a salary of $12,000 per annum.

[430] Walker, “Pioneers of Prosperity,” _sup. cit._, p. 46.

[431] The Merchants’ Shipping Association continued in active operation until January 1, 1894, when Grace and Company agreed to carry on the business on their own account. The first boat to arrive in San Francisco was the “Charles E. Moody,” of 1,915 tons. The next two were the “T. F. Oakes,” of 1,897 tons, and the “Emily Reed,” of 1,488 tons. Subsequently, still other vessels were added.

[432] _San Francisco Bulletin_, June 24, 1892.

[433] _San Francisco Chronicle_, August 6, 1892.

[434] _San Francisco Bulletin_, August 4, 1892.

[435] _San Francisco Examiner_, August 18, 1892.

[436] _San Francisco Bulletin_, January 5, 1893.

[437] Walker, “Pioneers of Prosperity,” _sup. cit._, p. 173.

[438] _San Francisco Bulletin_, August 31, 1892.

[439] _San Francisco Examiner_, January 9, 1894. _Cf._ statement by General John Newton, president Panama Railroad Company, _ibid._, November 29, 1892.

[440] Wheeler, “The Valley Road,” _sup. cit._

[441] Wheeler, “The Valley Road,” _sup. cit._

[442] _San Francisco Examiner_, January 21, 1893.

[443] _San Francisco Examiner_, February 28, March 5, 1893.

[444] _Ibid._, December 20, 28, 30, 31, 1893, and January 3, 1894.

[445] _San Francisco Examiner_, April 1, 1893.

[446] _San Francisco Examiner_, March 19, 1893.

[447] Wheeler, “The Valley Road,” _sup. cit._, pp. 32-33.

[448] _San Francisco Examiner_, January 10, 1894.

[449] _San Francisco Examiner_, September 21, 1893, statement by H. E. Huntington.

[450] _Ibid._, April 25, 1893, statement by Agent Hinton of the Panama Railroad.

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

[452] _San Francisco Examiner_, February 4, 1892.

[453] _San Francisco Bulletin_, August 20, 23, 1892. The League of Progress was an organization composed of the younger business men in San Francisco in sympathy with the policies of the Traffic Association.

[454] _San Francisco Bulletin_, October 12, 1892.

[455] _San Francisco Examiner_, December 23, 1892.

[456] _Ibid._, March 8, 1893. See also _ibid._, March 4, 1893. With respect to the whole project Mr. Huntington said to a reporter:

“As to building a railroad to Salt Lake, I certainly have no objection to other people doing it. I should very much dislike to do it myself. I do not believe it would be for the interest of San Francisco merchants to build it; hence I do not think it will be built. A good railroad from San Francisco to Salt Lake, with good terminals, as good a road as the Central Pacific, would cost at least $50,000,000. Of course, a road can be built for a much less sum, but such a road would not compete with the present line, for certainly the present rates are not as much as it would cost to haul the tonnage over a cheap line that could be built for much, if any, less than the figure named. When the Central Pacific Railroad was built I urged the moneyed men of San Francisco to take an interest with us on exactly the same basis as I and my associates hold our interests. But no one here would take an interest. If they would not take an interest then when every man, woman, and child in the State wanted a road so that they could go East and see the old folks at home, they would hardly be likely to take it now, with at least seven lines across the continent, charging rates of fare and freight very, very much less than they were when the first road was built, or than they expected these rates would be when the first road was inaugurated.” (_Ibid._, September 20, 1892.)

[457] _San Francisco Bulletin_, June 22, 1893.

[458] _Ibid._, July 17, 1893.

[459] _San Francisco Bulletin_, July 18, 1893.

[460] _Ibid._, July 10, 1893. The stock was to be issued in the name of nine trustees, and was to be voted by these gentlemen. The trustees were to have the right to cause the consolidation of the proposed corporation with another company. Possibly the railroad project suffered somewhat from the fact that a plan existed for the construction of a ship canal up the San Joaquin Valley to Bakersfield. Fresno people were particularly interested in this scheme, which contemplated the connection of Fresno with the navigable part of the San Joaquin River at Crowe’s Landing, or some other convenient point. (_San Francisco Examiner_, June 3, June 5, 1894.)

[461] _San Francisco Bulletin_, September 27, 1894.

[462] _San Francisco Examiner_, January 18, 1895.

[463] _San Francisco Examiner_, February 9, 1895.

[464] _Ibid._, January 30, 1895.

[465] Statement of J. S. Leeds in the _San Francisco Bulletin_, October 1, 1894, and in the _San Francisco Examiner_, January 27, 1895.

[466] _San Francisco Examiner_, March 6, 1895.

[467] _San Francisco Examiner_, January 31, 1895. As a matter of fact, the bulk of the subscriptions came from a very few sources.

[468] _San Francisco Bulletin_, March 1, 1895.

[469] _San Francisco Examiner_, April 27, 1895.

[470] The question as to what the valley towns would do for the new enterprise was repeatedly asked, and received a reasonably satisfactory reply. Depot sites and rights-of-way were freely offered, and subscriptions to stock were talked about, if not often pledged in any binding way. The Spreckels group tried to encourage donations of all lands, and to play one town against another where this was possible. It refused to say, for example, whether the new road would begin at Stockton, as once proposed, or even whether the new route would not run through San José. Stockton organized a committee to present her claims. San José did the same. Mass meetings were held in both places, that in San José being marked by a procession, with transparencies and a band. Stockton merchants agreed to give to the San Francisco and San Joaquin Valley Railway rights-of-way 100 feet wide along the adopted survey for the railroad from the city of Stockton through San Joaquin County to the boundary line between San Joaquin and Stanislaus counties. They further agreed to convey to the railway company certain specified parcels of land in the city of Stockton, to aid the company in obtaining franchises and rights-of-way in Stockton, and to obtain subscriptions to the capital stock of the company to the amount of $100,000. (_San Francisco Examiner_, May 3, 1895.)

The San José delegation which came to San Francisco in March said that $148,000 had already been secured for the new road in their district, that $200,000 was in sight, and that $300,000 in subscriptions could be obtained with a guaranty of shipments by the new route from the large fruit packers, business men, farmers, and horticulturists. They added that rights-of-way, 75 per cent of which would be free of cost to the company, and also terminal facilities in San José would be provided. (_Ibid._, March 27, 1895.)

It is of some interest to recall that when the decision was made in favor of Stockton, her representatives had difficulty in making their promises good. It was remarked at one time that apparently one of the things most needed to help on the era of progress in California was a number of judiciously selected funerals—presumably of opponents to the new developments.

[471] See address of Robert Watt at Bakersfield, _San Francisco Examiner_, April 29, 1895.

[472] _San Francisco Examiner_, January 30, 1895.

[473] Letter from the Spreckels’ Committee to San Francisco Bankers, _San Francisco Examiner_, February 3, 1895.

[474] _San Francisco Examiner_, March 26, 1895.

[475] _Ibid._, April 6, 1895.

[476] _San Francisco Bulletin_, April 6, 1895.

[477] Laws of California, 1878, Ch. 219.

[478] _San Francisco Examiner_, March 9, 1895.

[479] _Ibid._, March 11. 1895.

[480] This was the proposal of Mr. Powers, of San Francisco. See Journal of the Assembly, 31st Session, March 8, 1895, p. 904.

[481] Reid amendment, Journal of the Assembly, 31st Session, March 11, pp. 961-62.

[482] Laws of California, 1895, Ch. 171.

[483] Indenture dated July 8, 1895. The lease was to expire May 1, 1945. Five years after the lease was signed, however, the State Harbor Commission declared it terminated because of the failure of the railway company to make agreed improvements. A new indenture was then signed by the parties under date of November 21, 1900. By this document the state slightly increased the area leased to the railway company, and extended the term to December 1, 1950. For its part, the railway agreed to construct a definite length of sea-wall along the front of the leased property, and to spend $50,000 annually for six years on improvements. It is interesting to observe that while the new lease, like the old, was non-assignable, the restriction in the indenture of 1900 did not apply to any assignment or transfer that might occur at the expiration of the Valley company’s corporate life through foreclosure of its bonded indebtedness, nor to any sale, transfer, or assignment to the Atchison, Topeka and Santa Fé Railway Company. The Santa Fé road, successor to the San Francisco and San Joaquin Valley Railway, purchased additional property adjacent to and south of China Basin, but its terminals are still on the land leased from the state. This includes the company’s freight ferry lands, its freight houses, and most of its yard tracks in San Francisco. See on this matter the annual reports of the Atchison, Topeka and Santa Fé Railroad, and also the _San Francisco Examiner_, November 15, 1898.

[484] _San Francisco Examiner_, October 27, 1898. Another point of view with respect to the consolidation of the San Francisco and San Joaquin Valley Railway with the Santa Fé is presented by W. B. Storey, chief engineer and general superintendent of the Valley line from 1895 to 1900 and now president of the Santa Fé. Mr. Storey writes:

“My views do not coincide with yours in regard to the reasons actuating the promoters of the railroad. Popular opinion in California believed that the domination of one railroad greatly retarded the progress of the state and it was the feeling that the prosperity of the state would be very greatly increased if competition could be provided. As a possible means of obtaining such competition resort was made to water competition and a steamship line was organized to handle freight via the Isthmus. This line was maintained until the money raised had been absorbed and it had been practically demonstrated that such a line could not pay. The public was, therefore, eager for any other competition that might present itself. It was the thought of the projectors that a local line should be built which might ultimately, if opportunity offered, become part of a transcontinental line. The Santa Fé, however, was not in a position to do anything, as it was at that time in a Receiver’s hands. It was, however, the nearest railroad and it, therefore, seemed wise in projecting a new road branching from San Francisco to so locate it that it could later become part of the Santa Fé if that road desired an entrance to San Francisco. Most of the people who subscribed did so with the idea of providing competition and not with the idea of making money out of the investment.... By the time the road reached Bakersfield it became evident to the Directors that the road could not successfully compete with the Southern Pacific, because while for the time the people in the valley were giving the road all the freight that came from San Francisco, they were not able to turn the freight coming from the east over the Valley Road, the Southern Pacific refusing to make joint rates. The consequence was that the Valley Road had to depend exclusively on local business, and it was felt that in time even this would drop off materially by reason of the competitive methods of the Southern Pacific. Mr. Spreckels expressed the case in the following manner: It was not possible for the Valley Road to exist unless it became a transcontinental road and California could not raise money enough to make it such. The Santa Fé, by an extension to Bakersfield, could make it a transcontinental road and offered to buy a controlling interest.”

[485] See especially a letter written by John T. Doyle under date of September 29, 1898, and published in the _San Francisco Bulletin_, October 5, 1898. The whole matter was extensively discussed in the columns of the San Francisco press in October, 1898.

[486] _San Francisco Examiner_, October 27, 1898.

[487] Biennial Report of the Board of Railroad Commissioners of the State of California for the years 1895 and 1896.

[488] _San Francisco Examiner_, September 19, 1896.

[489] _Ibid._, June 28, 1898.

[490] _San Francisco Examiner_, August 23, 1896.

[491] _Ibid._, June 4, 1898.

[492] _Ibid._, July 18, 1896.

[493] _Ibid._, September 15, 1897.

[494] _Ibid._, June 4, 1898.

[495] In order to make possible its low San Francisco rate, the San Francisco and San Joaquin Valley Railway concluded an arrangement with the California Navigation and Improvement Company by which the latter agreed to run two steamers a day each way between Stockton and San Francisco, and to handle all wheat shipments to Port Costa, Benicia, Vallejo, and San Francisco which were delivered to it by the Valley road. The same rate was to be charged from Stockton to all the points named. (_San Francisco Examiner_, July 9, 1896.)

[496] _Ibid._, August 23, 1896.

[497] The relations between the Southern Pacific Company and the proprietary companies were governed by what was known as the “omnibus” lease, under which the Southern Pacific agreed to operate and to maintain the properties of the proprietary companies, to pay all fixed and other charges, including interest on bonds and floating debt, and to divide the surplus net profits between the parties to the agreement in stipulated proportions. In 1896 the percentages for division of profits were as follows: Southern Pacific Railroad of California, 44 per cent; Southern Pacific Railroad of Arizona, 10 per cent; Southern Pacific Railroad of New Mexico, 6 per cent; Louisiana Western Railroad Company, 7 per cent; Morgan’s Louisiana and Texas Railroad Company, 23 per cent; Southern Pacific Company, 10 per cent.

[498] In later years the lumber business of the Southern Pacific developed, but the coal business has always remained small.

[499] _Cf._ Annual Report of United States Commissioner of Railroads, 1883-84.

[500] Report on the Internal Commerce of the United States (Treasury Department, 1884), _sup. cit._

[501] United States v. Southern Pacific, p. 155, testimony of Schumacher; p. 942, testimony of Chambers; pp. 1028-29. testimony of Spence.

[502] _San Francisco Examiner_, October 24, 1895.

[503] _San Francisco Examiner_, February 25, 1896.

[504] United States v. Southern Pacific, pp. 328, 338, testimony of Connor.

[505] _Ibid._, p. 199, testimony of Sproule.

[506] _Ibid._, p. 1034, testimony of Spence.

[507] _Ibid._, p. 290, testimony of Lovett.

[508] _Ibid._, p. 305, testimony of De Friest; p. 311, testimony of Johnson; p. 312, testimony of Hall.

[509] _Ibid._, p. 219, testimony of Sproule; p. 152, testimony of Schumacher; p. 827, testimony of Kruttschnitt.

[510] United States Pacific Railway Commission, p. 2150, testimony of Shelby.

[511] United States Pacific Railway Commission, pp. 3304-6, 3362, testimony of Stubbs; pp. 3572-73, testimony of Gray.

[512] Frye-Davis Report (51st Congress, 1st Session, February 17, 1890, Senate Report No. 293, Serial No. 2703).

[513] The dividends declared by the Central Pacific Railroad Company from 1861 to 1898 were as follows:

Year Month Per Cent Amount

1873 September 3 $1,628,265
1874 August 5 2,713,775
1875 April 4 2,171,020
1875 October 6 3,256,530
1876 April 4 2,171,020
1876 October 4 2,171,020
1877 April 4 2,171,020
1877 October 4 2,171,020

1880 February 3 1,628,265
1880 August 3 1,778,265
1881 February 3 1,778,265
1881 August 3 1,778,265
1882 February 3 1,778,265
1882 August 3 1,778,265
1883 February 3 1,778,265
1883 August 3 1,778,265
1884 January 3 1,778,265

1888 February 1 672,755
1888 August 1 672,755
1889 February 1 672,755
1889 August 1 672,755
1890 February 1 672,755
1890 August 1 672,755
1891 February 1 672,755
1891 August 1 672,755
1892 February 1 672,755
1892 August 1 672,755
1893 February 1 672,755
1893 September 1 672,755

There were no dividends declared between September, 1893, and the reorganization of the Central Pacific in 1899.

[514] _San Francisco Bulletin_, November 20, 1894. Sir Rivers Wilson was ex-controller of the British National Debt Office.

[515] Testimony of Mr. Huntington before the California Railroad Commission, _San Francisco Examiner_, May 14, 1898.

[516] Huntington Manuscript, p. 91. On the general subject of the Thurman Act, see Davis, “History of the Union Pacific Railway,” Ch. 4.

[517] United States v. Union Pacific Railroad, 91 U. S. 72, 86 (1875).

[518] United States Pacific Railway Commission, p. 2529, testimony Leland Stanford. In order that the reader may have full data concerning the issue of the Government subsidy bonds, the following table of amounts and dates of issue is presented:

UNITED STATES SIX PER CENT CURRENCY BONDS ISSUED TO CENTRAL PACIFIC RAILROAD COMPANY

Maturity Interest
Date Issued of Bonds Commenced Amount

May 12, 1865 Jan. 16, 1895 Jan. 16, 1865 $1,258,000
Aug. 14, ” ” 16, ” Aug. 14, ” 384,000
Oct. 16, ” ” 16, ” Oct. 16, ” 256,000
Dec. 11, ” ” 16, ” Nov. 29, ” 464,000
Mar. 6, 1866 ” 1, 1896 Mar. 6, 1866 640,000
July 10, ” ” 1, ” July 10, ” 640,000
Oct. 31, ” ” 1, ” Oct. 29, ” 320,000
Jan. 15, 1867 ” 1, 1897 Jan. 14, 1867 640,000
Oct. 25, ” ” 1, ” Oct. 25, ” 320,000
Dec. 12, ” ” 1, ” Dec. 11, ” 1,152,000

June 10, 1868 ” 1, 1898 June 9, 1868 946,000
July 11, ” ” 1, ” July 10, ” 320,000
Aug. 5, ” ” 1, ” Aug. 4, ” 640,000
” 14, ” ” 1, ” ” 13, ” 1,184,000
Sep. 12, ” ” 1, ” Sep. 11, ” 1,280,000
” 21, ” ” 1, ” ” 19, ” 1,120,000
Oct. 13, ” ” 1, ” Oct. 12, ” 1,280,000
” 28, ” ” 1, ” ” 26, ” 640,000
Nov. 5, ” ” 1, ” Nov. 3, ” 640,000
” 12, ” ” 1, ” ” 11, ” 640,000
Dec. 5, ” ” 1, ” Dec. 5, ” 640,000
” 7, ” ” 1, ” ” 7, ” 640,000
” 30, ” ” 1, ” ” 29, ” 640,000

Jan. 15, 1869 ” 1, 1899 Jan. 13, 1869 640,000
” 29, ” ” 1, ” ” 28, ” 640,000
Feb. 17, ” ” 1, ” Feb. 17, ” 640,000
Mar. 2, ” ” 1, ” ” 17, ” 1,066,000
” 3, ” ” 1, ” Mar. 2, ” 1,333,000
May 28, ” ” 1, ” May 27, ” 1,786,000
July 15, ” ” 1, ” ” 27, ” 1,314,000
” 16, ” ” 1, ” July 15, ” 268,000
Dec. 7, ” ” 1, ” ” 16, ” 1,510,000
Jan. 2, 1872 ” 1, 1898 Nov. 28, 1868 4,120
———————————
Total $25,885,120

Jan. 24, 1867 Jan. 1, 1897 Jan. 26, 1867 320,000
Sept. 1, 1869 ” 1, 1899 Sept. 3, 1869 320,000
Oct. 29, ” ” 1, ” Oct. 28, ” 1,008,000
Jan. 27, 1870 ” 1, ” Jan. 22, 1870 322,000
” 8, 1872 ” 1, ” ” 22, 1872 560
——————————
Total $1,970,560

Undoubtedly many of the bonds listed were disposed of at a considerable discount. Subsidy bonds to the amount of $4,922,000 had been issued by the government to the Central Pacific by October 25, 1866, and had been sold for $3,546,478. The subsidy bonds (currency sixes) were listed on the New York Stock Exchange, but there were few, if any, sales until 1868. Not a single transaction in these bonds was recorded for the year 1867. In 1869, however, the bonds went above par, the average sale price for the year being 108⅛. (United States Pacific Railway Commission, pp. 4682-83.)

[519] United States Pacific Railway Commission, p. 275, testimony Leland Stanford; Report, pp. 91-95.

[520] The Supreme Court later held that the Central Pacific and Union Pacific railroads were completed on the 6th of November, 1869, in the sense that the companies became liable to pay over 5 per cent of their net earnings from this date. (99 U. S. 402, 449 [1878].)

[521] The Central Pacific Railroad Company in equitable account with the United States. A review of the testimony and exhibits presented before the Pacific Railway Commission, appointed according to the Act of Congress, approved March 3, 1887, by Roscoe Conkling and William D. Shipman of Counsel for the Central Pacific R. R. Co., New York, 1887.

[522] Report of the Secretary of the Interior, 1877, p. xxviii.

[523] Report of Mr. Thurman from the Committee on the Judiciary (45th Congress, 2d Session, March 4, 1878, Senate Report No. 111, p. 8).

[524] 16 United States Statutes 225 (1871).

[525] 17 United States Statutes 485, 508 (1873).

[526] United States v. Union Pacific Railroad Company, 91 U. S. 72 (1875).

[527] _Ibid._, 98 U. S. 569 (1878).

[528] Union Pacific Railroad Company v. United States, 99 U. S. 402 (1878).

[529] The Congressional history of the Thurman bill is as follows: Introduced, October 16, 1877, and referred to the Senate Committee on Judiciary (45th Congress, 1st Session, Congressional Record, Vol. 6, p. 58); reported back from Committee March 4, 1878 (45th Congress, 2d Session, _ibid._, Vol. 7, p. 1445); debated in Senate March 12 to April 9 (_ibid._, pp. 1688-2384); passed by Senate April 9 (_ibid._, pp. 2779-90); approved by President, May 8 (_ibid._, p. 3257).

[530] Speech of Senator Thurman of Ohio (45th Congress, 2d Session, March 12, 1878, Congressional Record, Vol. 7, p. 1690).

[531] 20 United States Statutes 56 (1878).

[532] Report of Mr. Thurman from the Senate Committee on the Judiciary (45th Congress, 2d Session, March 4, 1878, Senate Report No. 111, Serial No. 1789).

[533] Annual Report of the Commissioner of Railroads, 1882, p. 440.

[534] Annual Report of the Commissioner of Railroads, 1883.

[535] See also the Brice Report (53d Congress, 3d Session, Senate Report No. 830, p. 17, Serial No. 3288).

[536] Annual Report of the Commissioner of Railroads, 1883.

[537] 24 United States Statutes 488 (1887).

[538] Annual Report of the Treasurer of the United States. 1887, p. 28.

Owing to the protests of the Pacific railroad companies at the low rates of interest earned by the sinking funds, considerable amounts remained uninvested between 1882 and 1886. The following table shows the cash uninvested in the Treasury to the credit of the Central Pacific Railroad Company for a series of years:

Date Amount

June 30, 1882 $527,886.53
” 30, 1883 844,652.13
” 30, 1884 1,089,159.75
” 30, 1885 2,020,900.13
Dec. 31, 1886 2,345,984.21
” 31, 1887 76,905.49
June 30, 1889 2,766.14

No interest was earned on these uninvested balances. After 1886, with the single exception of the year 1895, the uninvested portion of the sinking fund was negligible. (Annual Reports of the Commissioner of Railroads, 1882-89.)

[539] 20 United States Statutes 56 (1878). On June 19, 1878, another act established the office of an “Auditor of Railroad Accounts” with authority to prescribe reports from subsidized railroads west, north, or south of the Missouri River, to examine books, and to furnish information to various government departments as it might be required. (20 United States Statutes 169, [1878].) Name changed to “Commissioner of Railroads” in 1881. (21 United States Statutes 381, 409 [1881].)

[540] 45th Congress, 2d Session, Congressional Record, pp. 2384, 2790. The House vote as given does not include pairs.

[541] Colton case, p. 1770-71.

[542] _Ibid._, p. 1802, November 9, 1877.

[543] _Ibid._, argument of Hall McAllister, p. 248.

[544] Colton case, argument of Hall McAllister, p. 249. Huntington never forgave Congress for having passed the Thurman bill. Years afterward he inserted the following comments in an autobiographical statement which he gave to the California historian, H. H. Bancroft:

“Senator Ransom voted for the Thurman bill. He came out and said ‘Mr. Huntington, I voted for that bill. I knew I was wrong.’ He said, ‘I ought not to have done it.’ Said I, ‘Senator Ransom, I pity you.’ Said he, ‘What do you say?’ Said I, ‘Senator Ransom, I said and I repeat it for I do really pity you.’ I turned on my heel and left him. Now there are a great many men in just that kind of a way; they don’t dare to vote according to their convictions; they are afraid of what other people think of their acts....”

* * * * *

“I know old Thurman well. He expected to be President of the United States by passing the Thurman Act, but he was not honored of course. I don’t believe he was in earnest. I don’t believe he thought the Act was proper. It was a false contract. There was no warrant in law or equity. He turned demagogue for political purposes; ... I think Thurman is a pretty good liar; lying was his best forte. He is an impressive speaker; he always seems to be so in earnest.” (Huntington manuscript, p. 24-25, 76-77.)

It may throw some light upon the attitude of the Huntington group toward the Thurman Act to remember that the moneys in the sinking funds which the Central Pacific established for the retirement of its own mortgage securities were, at least in part, loaned to the Western Development Company, and used by this company in railroad building in southern California. This was, of course, an ideal arrangement from the point of view of Huntington and his friends.

[545] Sinking Fund Cases, 99 U. S. 700 (1878).

[546] Report of the Auditor of Railroad Accounts, 1881 (46th Congress, 3d Session, Exec. Doc. No. 87, Serial No. 1978). The same recommendation is contained in the Report of Commissioner of Railroads, 1894, p. 93.

[547] United States v. Central Pacific Railroad Company, 118 U. S. 235 (1886).

[548] 56th Congress, 2d Session, Senate Document No. 227, Serial No. 4043.

[549] United States v. Central Pacific Railroad Company, 138 U. S. 84 (1891). See also Annual Report of the Commissioner of Railroads, 1883, p. 428 _ff._

[550] 54th Congress, 2nd Session, January 11, 1897, Senate Document No. 52, Serial No. 3469.

[551] Annual Report of the Commissioner of Railroads, 1897.

[552] Annual Report of the Commissioner of Railroads, 1882, p. 440.

[553] United States Pacific Railway Commission Report, December 1, 1887 (50th Congress, 1st Session, Senate Executive Documents No. 51, Serial No. 2505).

[554] Frye-Davis Report (51st Congress, 1st Session, February 17, 1890. Senate Report No. 293, Serial No. 2703). See also speech by Senator Frye, _ibid._, Congressional Record, p. 1377 _ff_.

[555] Reilly Report (53d Congress, 2d Session, July 21, 1894. House Report No. 1290, Serial No. 3272).

[556] Powers Report (54th Congress, 1st Session, April 25, 1896. H. R. Report No. 1497. Serial No. 3462). The Powers bill also required the consent of the Southern Pacific to the appropriation for payment of Central Pacific indebtedness, of the sum of $2,409,818.20, which stood credited on the books of the United States Treasury to the Central Pacific for services on non-aided lines. The consent of the Southern Pacific was necessary for this appropriation because a considerable portion of the amount in question had been adjudged by the Court of Claims to be due to the Southern Pacific for the reason that the services for which the sums mentioned were credited had been in large part performed by that company.

[557] The Powers bill was finally defeated—yeas, 103; nays, 168; not voting, 84. (54th Congress, 2d Session, Congressional Record, p. 689.)

[558] Gear Report, 1896 (54th Congress, 1st Session, May 1, 1896, Senate Report No. 778, Serial No. 3365; The House bill was numbered H. R. 8189; the Senate bill S. 2894).

[559] United States Pacific Railway Commission, pp. 3589-90, letter from A. N. Towne.

[560] Frye-Davis Report (51st Congress, 1st Session, February 17, 1890, Senate Report No. 293, p. 76, Serial No. 2703).

[561] _San Francisco Examiner_, February 18 and March 15, 1890.

[562] Memorial of the committee of fifty appointed at the San Francisco mass meeting of December 7, 1895.

[563] _San Francisco Examiner_, September 21, 1894.

[564] Laws of California, 1897, p. 581. Joint Resolution, adopted January 8, 1897.

[565] 54th Congress, 2d Session, January 7, 1897, Congressional Record, p. 559.

[566] United States v. Stanford, 161 U. S. 412 (1896). The United States sued the Stanford estate in this case for $15,237,000.

[567] See Annual Report of the Commissioner of Railroads, 1892, p. 141.

[568] 12 United States Statutes 489 (1862).

[569] 13 United States Statutes 356 (1864).

[570] United States v. Kansas Pacific Railway Company, 99 U. S. 455 (1878). See also United States v. Denver Pacific Railway Company, 99 U. S. 460 (1878).

[571] 20 United States Statutes 56 (1878).

[572] 45th Congress, 2d Session, April 3, 1878, Congressional Record, p. 2229.

[573] Sinking Fund Cases, 99 U. S. 700, 721.

[574] United States v. Union Pacific Railway Company and Western Union Telegraph Company, 160 U. S. 1 (1895).

[575] Menotti v. Dillon, 167 U. S. 703 (1897).

[576] Union Pacific Railroad Company v. Mason City and Fort Dodge Railroad Company, 199 U. S. 160 (1905).

[577] United States v. Central Pacific Railroad Company, 118 U. S. 235 (1886).

[578] Gear Report, 1897, 55th Congress, 1st Session. April 8, 1897 (Senate Report No. 20, Serial No. 3569).

[579] Commercial and Financial Chronicle, Vol. 63, p. 1114.

[580] United States v. Southern Pacific Company, pp. 1200-1201, testimony James Speyer.

[581] United States v. Southern Pacific Company, p. 1201, testimony James Speyer.

[582] _Ibid._, p. 993, testimony John W. Griggs.

[583] United States v. Southern Pacific Company, p. 998, testimony John W. Griggs.

[584] 30 United States Statutes 652, 659 (1898).

[585] United States v. Southern Pacific Company, p. 994, testimony John W. Griggs.

[586] See Report of Attorney-General, 1897, pp. vi-vii; 1898, p. xv. The legislation described was inserted in the Deficiency Appropriation bill on motion of Mr. Gear. The provision requiring full payment within ten years was added on motion of Mr. White, of California. (55th Congress, 2d Session, June 29, 1898, Congressional Record, pp. 6464-65.)

[587] United States v. Southern Pacific Company, p. 1199, testimony James Speyer.

[588] The exact amount of 4 per cent bonds to be deposited as security was $58,820,000.

[589] United States v. Southern Pacific Company, p. 1000, testimony Griggs.

[590] 30 United States Statutes 1214, 1245 (1899).

[591] At his death in August, 1900, Huntington owned 37½ per cent of the stock of the Southern Pacific Company.

[592] Full information with respect to the Union Pacific-Southern Pacific merger case is to be found in the record and briefs submitted to the Supreme Court. The testimony and exhibits in this case fill thirteen volumes, and constitute an important addition to the source material on railroad transportation. The case is discussed in detail in Daggett, “The Decision on the Union Pacific Merger,” in _Quarterly Journal of Economics_, February, 1913, and in another article by the same author, entitled “Later Developments in the Union Pacific Merger Case” (_ibid._, August, 1914).

[593] This question of the diversion of business from the central route has been discussed in Chapter XX.

[594] United States v. Union Pacific Railroad Company, 226 U. S. 61, 470 (1912, 1913).

[595] Preferential subscription rights were given to Union Pacific and Oregon Short Line Railroad Company stockholders, on condition that these last-named individuals divest themselves of their ownership of Union Pacific and Oregon Short Line shares before actually receiving their Southern Pacific certificates. See Daggett, “Later Developments in the Union Pacific Merger Case,” _sup. cit._

[596] This was the second suit of the same nature. In July, 1894, Richard Olney, United States Attorney-General, filed a bill in the United States District Court at Los Angeles to dissolve the Southern Pacific combination. In 1894, as in 1915, it was charged that the consolidation of the Southern Pacific and the Central Pacific companies was illegal under the Sherman law. The Olney suit was later withdrawn.

[597] United States of America v. Southern Pacific Company. The record and briefs in the case of the United States v. the Southern Pacific are as extensive as those submitted in the Union Pacific merger case. No attempt will be made to give detailed references to accompany the summary account presented in the remainder of this chapter.

[598] United States v. Southern Pacific Company, 239 Fed. 998 (1917).

[599] Including the output of the Associated Oil Company.

[600] Third Annual Report of the State Oil and Gas Supervisor of California, 1917-18.

[601] For a full discussion of this and kindred subjects, see Lindley on Mines, ed. 3.

[602] Burke v. Southern Pacific, 234 U. S. 669 (1914).

[603] _Ibid._, pp. 691-92. See also Roberts v. Southern Pacific Company, 186 Fed. 934 (1911).

[604] Southern Pacific v. United States, in the United States Circuit Court of Appeals for the Ninth Circuit (Brief of United States, Appellee, pp. 364-65).

[605] _Ibid._, p. 363.

[606] United States v. Southern Pacific Company, 251 U. S. 1 (1919). The decision of the Circuit Court of Appeals, which was favorable to the railroad, is reported in 249 Fed. 785 (1918).

[607] United States v. Southern Pacific, 260 Fed. 511 (1919). See also _ibid._, 225 Fed. 197 (1915).

[608] The annual report of the Southern Pacific Company for the year ending December 31, 1920, contained the statement that Southern Pacific Company stockholders or their assigns had purchased an aggregate of 3,414,604 shares of Pacific Oil Company stock, thus leaving 85,395 shares still in possession of the company.

[609] 14 United States Statutes 239 (1866).

[610] 16 United States Statutes 47 (1869).

[611] See Joint Resolution No. 18, 35 United States Statutes 571 (1908), instructing the Attorney-General to institute certain suits.

[612] United States v. Oregon and California Railroad Company, 186 Fed. 861 (1911).

[613] Oregon and California Railroad Company v. United States, 238 U. S. 393 (1915).

[614] 39 United States Statutes 218, Ch. 137 (1916).

[615] Oregon and California Railroad Company v. United States, 243 U. S. 549 (1917). Suit was brought by the United States in 1917, in accordance with the law, seeking to offset against the compensation of $2.50 per acre due the company for the unsold lands, moneys received by the company, in excess of $2.50 per acre, by reason of past sales, leases, and otherwise, as well as taxes levied since the forfeiture decision and voluntarily paid by the federal government to the state of Oregon. This case was ready for trial in 1921 and will probably be soon heard and decided.

TRANSCRIBER’S NOTE:

—Obvious print and punctuation errors were corrected.