HOW CONGRESS BETRAYED THE PEOPLE.
In order to fully realize the great power of what is known as the
Pacific railroad companies, it will be necessary to look at the Central
Pacific company, and its control of the transportation of freights and
passengers from the Pacific country. This company, organized under the
laws of California, was, by acts of congress of July 1st, 1862, admitted
into the grand combination known as the Pacific roads, and granted equal
privileges with the Union Pacific and branches. The Central Pacific
extends from the Pacific ocean to Ogden, a distance of eight hundred and
eighty-one miles. The acts of congress of April 4th, 1864, and July 2d,
1864, granted to this company additional privileges and powers,
including the right of consolidating with all the companies on the
Pacific coast. In 1870 the following companies, to-wit: The Western
Pacific railroad company; the San Francisco, Oakland, & Alameda railroad
company; the San Joaquin railroad company; the California & Oregon
railroad companies were consolidated.
The state of California at that date had but one thousand and thirteen
miles of road within its borders. Of this number of miles, about
one-half became a part of the Central Pacific, by the consolidation as
above stated. All the roads pointing towards the east were combined in
this one great corporation, forming a solid body, with one common and
general object and interest, viz: a monopoly of the travel and traffic
with the eastern states. And congress, by appropriating lands and
subsidy bonds, and granting exclusive rights and privileges to this
monster monopoly, has given it the key not only to the overland commerce
of the country, but also to the commerce of our country with other
nations upon the Pacific ocean. This giant monopoly, by the aid of
congress, has obtained the absolute control of the best interests of
the whole people for all time to come--a control that is now being used,
and will continue to be used, to enrich its own members and stockholders
by oppressive levies for transportation over its roads.
To fully comprehend the cost to the country of these munificent gifts by
congress to the Union and Central Pacific corporations, let us examine
the expense somewhat in detail.
First. A grant is made of all the material needed in the construction of
the roads, found within ten miles of the line of said roads.
Second. A grant of thirty-five million acres of the public lands,
amounting, at $1.25 per acre, to $43,750,000. This vast amount of land
is taken from the people and given to companies by congressmen who in
some instances are members of the companies, and receive their _pro
rata_ share of the grants.
Third. Aid voted by congress in shape of subsidy bonds, $65,000,000,
payable in thirty years, with six per cent per annum. The theory was
that the companies would pay the interest as it matured (semi-annually)
and eventually the principal. But that this was not the intent of the
companies, nor of congress, is apparent from the different acts
regulating the matter, and as the case stands, the government is
actually paying the interest and collecting the amount from the people
in tariffs and excise taxes. The payment of the amount of these bonds,
with the interest according to their terms, will require about
$200,000,000. This amount, or nearly all of it, will be paid by the
people, and not by the companies. The report of the secretary of the
treasury shows that the amount of interest annually due on these subsidy
bonds is $3,875,000, of which the Pacific railroad companies have paid
about $750,000, and the government the balance, say $3,125,000. The
original charter of the companies provided that the charges for carrying
done for the government should be credited to the companies in
liquidation of these bonds, and also that five per cent of the net
earnings of the road should be applied to the same object. The secretary
of the treasury of the United States insisted that these companies
should be bound by this provision of their charters, refused to pay them
their earnings for government services, and also demanded the five per
cent, under the law. The companies refused to pay the five per cent of
their net earnings, and demanded pay for transportation. If we remember
that congress had already so amended the charters of these companies as
to permit them to issue $65,000,000 of their own bonds as "first
mortgage bonds," and provided that the subsidy bonds obtained from
government should be subordinate or junior to the bonds issued by the
companies, and also bear in mind that these amendments also provided
that whenever twenty miles of road was completed the patent for twenty
sections of land per mile was to issue to the companies, so that when
the roads were completed they would have title to all their lands, we
will see good reasons for the stand taken by the United States secretary
of the treasury.
The security which the United States had for the payment of the
principal and interest of the bonds, under the charter, was destroyed by
subsequent legislation, and unless the secretary could retain the
amounts due from government for transportation, and collect the five per
cent, the whole amount of the subsidy bonds, would be lost to the
government and the people. The facts of the case being well known to
congress, who are supposed to be the representatives of the people, and
to legislate in their interest and for their benefit, it would hardly be
supposed that an act would pass both branches, and receive the approval
of the president, compelling the secretary of the treasury to yield to
the demands of these corporations. Honest legislation, and a decent
regard for the public welfare, would seem to forbid any attempt on the
part of any one of the departments of the government to aid the
companies in their dishonest endeavor to avoid the provisions of a
charter which had been enacted for their special benefit. And when it is
remembered that at the time the application was made to congress (March,
1871) certain members were stockholders and directors in these same
companies, one would not think it possible that an act could be passed
relieving the companies from these requirements of their charters, or
only possible because of the practice being so long established for
congressmen to appropriate public lands and moneys to their own use,
that they had arrived at the point where they deemed the property and
money of the government lawful plunder, and that their first duty was
to provide for the rings and corporations in which they had a personal
interest. It seems to have required some strategy for the friends of
these corporations to grant them the aid they asked. Afraid to take
issue with the secretary of the treasury, and unwilling to hazard the
success of their scheme by an attempt to pass an act for the _relief_ of
these railroad companies independently of any other measure, to insure
the safe passage of the legislation and its approval by the president,
congress, by an amendment, tacked it to the army appropriation bill
(which passed March 3d, 1871), secured the relief asked for.
Section nine of the army appropriation bill reads as follows: "That, in
accordance with the fifth section of the act approved July 2, 1864,
entitled 'An act to amend an act to aid in the construction of a
railroad and telegraph line from the Missouri river to the Pacific
ocean, and to secure the same for postal, military, and other purposes,
approved July 1, 1862,' the secretary of the treasury is hereby directed
to pay over in money to the Pacific railroad companies mentioned in said
act, and performing services for the United States, one-half of the
compensation, at the rate provided by law for such services heretofore
or hereafter to be rendered: _Provided_, that this section shall not be
construed to affect the legal rights of the government or the
obligations of the companies, except as herein specifically provided."
This act was approved by the president, and the question at issue
between the secretary of the treasury and the companies was settled by
congress in favor of the latter--absolutely relieving them from the
payment of any part of the $65,000,000 of subsidy bonds, except such
sums as may be paid by allowing the government to retain one-half of the
earnings of the roads for carrying mails, etc., which sums, as shown by
the companies themselves, amount to less than one-fourth of the annual
interest accruing on the bonds. The people must pay all the balance,
principal and interest. These companies have received, in lands and
bonds, from the general government, about $109,000,000, to aid in the
construction of their roads, and all that government receives in return
is one-half of the fare levied on government transportation over these
roads, "at the price fixed by law." The only provision as to price is,
that after having donated to the companies sufficient to pay the entire
cost of the construction of the roads, government shall pay such
reasonable prices as may be agreed upon, not exceeding the rate the
companies charge to other parties. When we say "the entire cost," we do
not mean the full cost claimed by the companies, for it is not policy
for them to make a correct showing in this matter; we mean the real
actual cost. We cannot find a statement of the cost of the Union
Pacific, and do not know what the company claim to be its cost per mile,
or the aggregate cost. The Central Pacific puts the cost of its roads at
$120,000,000, or about $136,000 per mile. It shows a paid-up capital
stock of $54,000,000, and a funded debt of about $82,000,000, making its
indebtedness about $16,000,000 more than the entire cost of its road,
including rolling stock and equipments. Making a liberal margin for the
value of these last named items, and allowing the Central Pacific to
cost nearly double the ordinary cost of other roads, and the reader must
conclude that there has been, in this case, a watering of stock and an
excessive issue of bonds for the benefit of the company and at the
expense of the people. The statement of the capital stock and funded
debt of the Union Pacific shows about the same condition for its road as
to indebtedness; but the estimated cost of the road is not given.
For proof that we are not mistaken in our estimated cost of these roads,
and that the companies have received from the government a sum more than
sufficient to defray the entire expense of their construction, we turn
to reports of the cost of railroads generally, in the country, made by
men who are in sympathy with our present railroad system. These men say
that the cost of railroads in this country, from their first
introduction, is about $50,000 per mile, and that those constructed
recently will average about $30,000 per mile. We are apt to think that
the cost of the Pacific roads would exceed that of most other roads.
Such is not the fact. On the contrary, taking the entire road into
consideration, the line was more favorable than any other in the
country. It is thus described in the Railroad Manual, before referred
to:--
"The route for the eastern portion of the line is up the valley of the
Platte, which has a course nearly due east from the base of the
mountains. Till these are reached, this valley presents, probably, the
finest line ever adopted for such a work for an equal distance. It is
not only straight, but its slope is very nearly uniform towards the
Missouri, at the rate of about ten feet to the mile. The soil on the
greater part of the line forms an admirable road bed. The road, after
leaving the mountains, has very few affluents, the only constructed
bridges for the distance being one over the Loup Fork and the North
Platte. The base of the mountains is assumed to be at Cheyenne, five
hundred and seventeen miles from the Missouri river. This part is
elevated six thousand and sixty-two feet above the sea, and five
thousand and ninety-five feet above Omaha. From Cheyenne to the summit
of the mountains, which is elevated eight thousand two hundred and
forty-two feet above the sea, the distance is thirty-two miles. The
grades for reaching the summit do not exceed eighty feet to the mile.
The elevation of the vast plain from which the Rocky mountains arise, is
so great, that the mountains, when they are reached, present no
obstacles so formidable as those offered by the Allegheny ranges to
several lines of railroads which cross them. * * * The line of the
railroad up the eastern slope of the Rocky mountains is not so difficult
as those upon which several great works have been constructed in the
eastern states. After crossing the eastern crest of the mountains, the
line traverses an elevated table land for about four hundred miles, to
the western crest of the mountains, which forms the eastern rim of the
Salt Lake basin, and which has an elevation of seven thousand five
hundred and fifty feet above the sea. Upon this elevated table land is a
succession of extensive plains, which present great facility for the
construction of the road. The whole line is a very favorable one, when
its immense length is considered. More than one-half of it is
practically level, while the mountain ranges are surmounted by grades
not in any case exceeding those now worked upon some of our most
successful roads."
The description of the line of the Central Pacific, or western six
hundred and sixty-seven miles, from Ogden to Sacramento, will not vary
much from that given of the Union Pacific. It is not quite so
favorable. Taking the character of the route as given, with the
facilities for building the road, and it is not probable that the actual
cost of construction averaged more than $30,000 per mile, or $57,000,000
for the whole line. Taking the highest rate, as given, viz: $50,000, and
apply it to the whole road, the entire cost would be $94,000,000.
To aid in the construction of this road, the government issued subsidy
bonds at the rate of $48,000 per mile for three hundred miles, $32,000
per mile for nine hundred and four miles, and $16,000 per mile for the
balance of the main road and branches. The funded debt of the companies
owning and operating the road (not including the debts of the branches),
after deducting the amount of bonds they received from the government,
to-wit: $65,000,000, is, as shown by their own report, $93,000,000. How
much their floating debt amounts to we cannot tell. The stock on their
road cannot cover one-tenth of the amount of their debts. The companies
report a paid up capital stock of $91,028,190. The statement of account
would be about as follows:--
CREDIT ACCOUNT.
Paid up capital $91,028,190
Bonds from government 65,000,000
Funded debt 93,000,000
------------
Total invested $249,028,190
CONTRA.
Actual cost of construction $94,000,000
------------
Balance $155,028,190
Deduct, for 37,500,000 acres of land at $1.25 per acre 46,875,000
------------
Balance against road $108,153,190
Thus, after placing the land received from the government to the credit
of the road, still a small balance of more than $108,000,000 has
disappeared, and the companies are not able to pay the interest on the
government bonds. The reports of these companies show, for the year
1871, that the net earnings of their roads (over and above all expenses,
including taxes, repairs, damages to property and persons, cost of snow
sheds, and all other items of expense) amounted to about $9,000,000, and
yet, because these companies asked it, congress released them from the
payment of the interest on the subsidy bonds.
The conclusion to be drawn from the facts of the case, as they develop
themselves, is, that these Pacific railroad companies have used the
federal offices, and the public moneys, and lands, for enriching
themselves; that a company of men, in congress, and out of it, have
combined and confederated together for the purpose of robbing the
people, and controlling the government. We have selected the Union and
Central Pacific companies for illustrations, and attempted to state the
facts in their case, not because of any exception that they present to
the general rule, but to show the manner in which the people are duped
and defrauded by congressmen voting government aid to railroad
companies, under the pretext of developing the country, and the equally
false necessity of providing speedy and secure transportation for the
mails, troops, supplies, and munitions of war.
One peculiar feature about the whole matter is, that congressmen have
deemed it necessary for the accomplishment of their object, to become
personally interested in their own legislation by subscribing stock, and
becoming directors in the companies to which they voted these aids. We
can name congressmen who, if they were not stockholders in these Pacific
roads, at the time the bonds and lands were voted, certainly were
stockholders and directors when these companies were relieved from the
payment of the interest on the bonds issued to them by the government,
to-wit: Oakes Ames and James Brooks. How many more held stock we cannot
tell; but the fact that members were stockholders and directors must
have been known to the different departments, for, under the charter of
these companies, the directors, and especially the government directors,
are required to report in detail the condition of the companies, and the
names of the directors once each year to the secretary of the interior,
at Washington. If the reader would know the extent of congressional
legislation in favor of the rings, and combinations of men, plundering
the people, he need only look over the different acts of congress passed
directly for their benefit during the last twelve years. He will arise
from their perusal feeling that the chief duty of the government is to
foster, protect, and enrich these rings at the expense of the people.
These Pacific companies are required, by their charters, to construct
telegraph lines along the route of their roads, and to transmit messages
for the government at such rates as they charge other parties. The
appropriations by congress show that $40,000 have been voted annually to
pay for telegraphic dispatches, between the Atlantic and Pacific, but
there is nothing to show that any such sum was due from the government
for telegraphing. Among the appropriations is an item for the mileage of
the government engineer for travel, from Cincinnati to Omaha, and from
Omaha to Washington, and thence to New York; but the charters of the
companies required _them_ to pay the expenses incurred on account of the
services of persons appointed by the president to inspect these roads.
Indeed, the action of congress is such as to induce the belief, that
these roads, if not owned by the general government, are owned by
congress, or congressmen, and that it is perfectly legitimate and proper
for government to pay the cost of their construction, and of the
telegraph lines, and also their running expenses. The energy and zeal
manifested by congress, in aid of these corporations, and the great
number and variety of acts passed for their benefit, demonstrate the
fact that while the representatives of the people assemble at Washington
ostensibly to legislate for the public generally, they devote their time
to legislation for their own benefit, and that of the numerous
corporations and companies of which they are members.