[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

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.