Stuart Daggett

[1] The statement in the text is sufficiently accurate as a preliminary generalization. As will appear later, the road between Sacramento and Oakland was not built by the Central Pacific, but by certain other companies of which the Western Pacific and the California Pacific were the most important. It may also be important for some purposes to observe that the Southern Pacific system enters Ogden over Union Pacific tracks, and New Orleans over the tracks of the Illinois Central Railroad Company.

[2] On the early history of the Central Pacific, see a document printed by order of the Nevada Senate, entitled “Evidence concerning projected railways across the Sierra Nevada Mountains from Pacific tide-water in California, etc., procured by the Committee on Railroads of the First Nevada Legislature” (Carson City, 1865). This document contains several valuable reports and some interesting testimony.

[3] Judah’s report of his mission to Washington as a delegate of the Pacific Railroad Convention is printed in full in the Sacramento Union for July 25, 1860.

[4] Testimony taken by the United States Pacific Railway Commission, appointed under an Act of Congress approved March 3, 1887, entitled, “An act authorizing an investigation of the books, accounts, and methods of railroads which have received aid from the United States, and other purposes.” (50th Congress, 1st Session, Senate Executive Document No. 51, pp. 2838-39, testimony D. W. Strong.) Hereafter referred to as United States Pacific Railway Commission.

[5] The expenses of this preliminary investigation were provided by small subscribers around Dutch Flat. A paper dated at Dutch Flat, June 26, 1860, contains 47 names, including that of D. W. Strong. No subscription was for over $15, and only nine were for as much as $10 apiece. (United States Pacific Railway Commission, p. 2959.)

[6] Judah manuscript, letter of Mrs. Anne Judah.

[7] Evidence concerning projected railways across the Sierra Nevada Mountains, sup cit., testimony L. L. Robinson.

[8] United States Pacific Railway Commission, pp. 2960-61, testimony D. W. Strong.

[9] Sacramento Union, January 9 and 10, 1861.

[10] Sacramento Union, January 4, 1861.

[11] Stanford’s election to the United States Senate was resented by Huntington, and led eventually to an open breach between the two men. It is not improbable, however, that Stanford’s friends, and not Stanford himself, were responsible for the latter’s candidacy. It would not have been difficult to persuade a man of Stanford’s temperament that he was performing a public service in allowing his name to be used.

[12] Crocker said of his own personal appearance during the sixties: “While I was building the road, I weighed nearly all the time 264-5 pounds; at one time, in China, I weighed about 274 pounds; the Chinaman who weighed me called me a 4-picul man—a ‘picul’ being 66? pounds.... While I was building the road, I weighed the first year, 244, which increased to 265, and when I finished the work, was weighing that. I am 5 feet 10¾ inches tall.” (Crocker manuscript, p. 63.)

[13] Huntington manuscript, p. 36. The Bancroft Library of the University of California possesses notes of interviews with a number of men prominent in California history collected by H. H. Bancroft or his representatives. In some cases these notes are very full and informing. They will be referred to in the present volume as “Huntington manuscript,” “Crocker manuscript,” etc. See also Redding, “Sketch of the Life of Mark Hopkins” (San Francisco, 1881).

[14] Huntington manuscript, pp. 9-10.

[15] Crocker manuscript, pp. 28-29. See also Hittell, “History of California,” Vol. 4.

[16] Report of a committee of the board of directors, Sacramento Valley Railroad Company, August 7, 1855.

[17] Articles of association and by-laws of the Sacramento Valley Railroad Company, together with an estimate of the gross receipts of the road when in operation, New York, 1853.

[18] Engineer’s report of a preliminary survey of the Stockton and Copperopolis Railroad with estimates of cost and traffic, October, 1862.

[19] Report of the chief engineer on the survey, cost of construction, and estimated revenue of the Placerville and Sacramento Valley Railroad of California, San Francisco, 1863.

[20] Report of President Moore to stockholders, 1873.

[21] Report of the chief engineer on the preliminary survey, cost of construction, and estimated revenue of the Central Pacific Railroad of California, etc., October 22, 1862; report of Acting Chief Engineer Montague, October 8, 1864. Reprinted in “Evidence concerning projected railways across the Sierra Nevada Mountains,” sup. cit.

[22] Report of the chief engineer on the preliminary survey, cost of construction, etc., October 22, 1862 (October 1, 1861), sup. cit.

[23] United States Pacific Railway Commission, p. 3774, testimony C. P. Huntington.

[24] Complaint of Samuel Brannan, June 21, 1870. Filed in the case of Brannan v. Central Pacific Railroad, in the District Court of the Fifteenth Judicial District of the State of California.

[25] Bancroft, “History of California,” Vol. 7. p. 545, note. The assessed value of the associates’ property in Sacramento County in 1861 was $118,035.

[26] United States Pacific Railway Commission Report, p. 87.

[27] United States Pacific Railway Commission, p. 3421, testimony M. D. Boruck.

[28] Crocker manuscript, p. 32.

[29] United States Pacific Railway Commission, pp. 2630-31, testimony Leland Stanford.

[30] Ibid., p. 2652. testimony Leland Stanford. Stanford and his associates bought stock in 1871 for which they paid $400 or $500 a share, but Stanford says that this was to quiet litigation which he described as blackmail.

[31] Ellen M. Colton v. Leland Stanford et al., in the Superior Court of the State of California in and for the County of Sonoma, 1883. Hereafter referred to as “Colton case.” The record in this proceeding contains much valuable information relative to the history of the Southern Pacific and the activities of the Huntington-Stanford group.

[32] United States Pacific Railway Commission, p. 3493, testimony D. O. Mills.

[33] Crocker manuscript, pp. 29-30.

[34] United States Pacific Railway Commission, p. 2731, testimony Leland Stanford.

[35] Ibid., p. 2399, testimony A. Cohen; p. 2767, testimony Leland Stanford.

[36] Colton case, pp. 948-49, Huntington to Colton, October 8, 1874.

[37] Tinkham, “History of Stockton,” p. 356; San Francisco Chronicle, June 13, 1874.

[38] Laws of California, 1852, Ch. 77.

[39] Ibid., 1857, Ch. 243.

[40] Ibid., 1858, Ch. 300.

[41] Ibid., 1859, Ch. 241.

[42] Ibid., 1859, Ch. 263, 264.

[43] Ibid., 1859, Ch. 262.

[44] Laws of California, 1863, Ch. 77

[45] Ibid., 1863, Ch. 125.

[46] Ibid., 1863, Ch. 207.

[47] Ibid., 1863, Ch. 310.

[48] Ibid., 1863, Ch. 209. The value of these privileges has been estimated at $200,000.

[49] Ibid., 1863, Ch. 291.

[50] Ibid., 1863, Ch. 314.

[51] Ibid., 1864, Ch. 320. Twenty years later the quarries were still undelivered.

[52] Constitution of the State of California, Arts. VIII, XI, Sec. 10.

[53] People v. Pacheco, 27 Cal., 176 (1865).

[54] Angel. “History of Placer County,” 1882, p. 280.

[55] “The Great Dutch Flat Swindle!—An address to the Board of Supervisors, Officers and People of San Francisco,” 1864.

[56] French v. Teschemaker, 24 Cal. 518 (1864).

[57] Laws of California, 1864, Ch. 344.

[58] California Supreme Court Records, Vol. 38, case of People v. Coon.

[59] California Supreme Court Records, Vol. 38, p. 98, sup. cit.

[60] People v. Coon, 25 Cal. 635 (1864).

[61] People v. Supervisors, 27 Cal. 655 (1865).

[62] United States Pacific Railway Commission, pp. 3610-11, testimony Leland Stanford.

[63] Ibid., p. 3464, testimony E. H. Miller.

[64] Angel, “History of Placer County,” pp. 158-65.

[65] Fankhauser, “Financial History of California,” p. 299 ff.

[66] Report of the chief engineer upon recent surveys, progress of construction, and an approximate estimate of cost of first division of 50 miles of the Central Pacific Railroad of California, July 1, 1863.

[67] Letter of L. L. Robinson, chief engineer, to Chas. A. Sumner and Henry Epstein, Chairmen Committees on Railroads, Legislature of Nevada, Sacramento, February 3, 1865. Printed in a pamphlet entitled “Evidence concerning projected railways across the Sierra Nevada Mountains,” sup. cit.

[68] Stanislaus, Merced, Fresno, Tulare, and Kern counties. In Kern County the bond issue was limited to $480,000 and in Stanislaus to $180,000.

[69] Letters of Governor Haight, on the constitutional power of the legislature to authorize cities and counties to donate bonds to railroad corporations, Sacramento, 1870.

[70] Persons who desire details of the controversies in Congress prior to the outbreak of the Civil War may consult Haney, “Congressional History of Railways,” or Davis “History of the Union Pacific.”

[71] Laws of California, 1852, p. 276. See also resolutions passed May 17, 1853 (Laws of 1853, p. 315); May 13, 1854 (Laws of 1854, p. 224); February 25, 1854 (Laws of 1854, p. 227); March 19, 1857 (Laws of 1854, p. 370); April 1, 1859 (Laws of 1859, p. 390); April 15, 1859 (Laws of 1859, p. 394). In 1859 the legislature adopted a memorial to the same general effect (Laws of 1859, p. 395).

[72] The proceedings of the Pacific Railroad Convention of 1859 were published in the San Francisco Alta, September 21-26, 1859, and in a special supplement of the same paper. See also The Pacific, October 6, 1859, and other California papers. The convention was attended by delegates from Oregon and Washington. It thought that the Pacific Railroad should run from the city of San Francisco through the counties of San Mateo, Santa Clara, and Alameda, to the city of Stockton, thence over the Sierras by a central route. It favored also a branch to Puget Sound. Resolutions were adopted contemplating an issue of $15,000,000 in bonds by the state of California to cover the cost of railroads within that state, and an issue of an unspecified amount, presumably $5,000,000 by the state of Oregon. In February, 1860, an adjourned meeting of the same convention was held at Sacramento. Considerable opposition developed at this meeting to the proposal to bond the state for The vote taken at San Francisco was reconsidered, and a new resolution passed, recommending state aid to a transcontinental railroad to the extent of not more than $15,000,000, but proposing that security be taken for the advances made so that the sum should not become a state charge. In other words, this idea of a loan was substituted for that of a donation. (Sacramento Union, February 7-11, 1860.)

[73] Report of the chief engineer of the Central Pacific Railroad Company of California, on his operations in the Atlantic states, Sacramento, 1862. It should be added that Huntington himself was in Washington while the Act of 1864 was being debated. Cornelius Cole, one time senator from California, says of Huntington’s activity at this time: “During the pendency of this legislation [Act of 1864], C. P. Huntington spent much of his time in Washington. Many of the amendments were suggested by him, and it gave me much satisfaction to forward his views. In former years in Sacramento we had been in close political fellowship, besides ... I had been associated with him and others in the organization of the Central Pacific Railroad Company....” (Cornelius Cole, Memoirs, pp. 179-80.)

[74] 12 United States Statutes 489 (1862).

[75] United States v. Southern Pacific Co., Record, pp. 1654-57.

[76] Report of chief engineer, Central Pacific Railroad of California, on his operations in the Atlantic states, 1862.

[77] 13 United States Statutes 356 (1864).

[78] For a full digest of the Acts of 1862 and 1864, and for an account of the Congressional history involved, the reader is referred to Haney, “A Congressional History of Railways.” Senator A. A. Sargent asserted in 1878 that he, Sargent, wrote the acts himself. (45th Congress, 2d Session, Congressional Record, Vol. 7. p. 2024.)

[79] Huntington manuscript, pp. 78-79. The act referred to appears in 14 United States Statutes 78-79.

[80] Report of the chief engineer on the preliminary survey of the Central Pacific Railroad, etc., October 22, 1862.

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

[82] 12 United States Statutes 489 (1862), Sec. 6.

[83] United States Pacific Railway Commission, p. 2562, testimony W. H. Mills.

[84] The Western Pacific had received in addition two patents conveying 27,505.93 acres, but these lands were assigned by the Central Pacific to outside parties.

[85] United States Pacific Railway Commission, pp. 3569-70.

[86] United States v. Southern Pacific Railroad Co., 146 U. S. 570, 593 (1892).

[87] Newhall v. Sanger, 92 U. S. 761 (1875).

[88] Kansas Pacific v. Dunmeyer, 113 U. S. 629 (1885).

[89] Hastings and D. R. Co. v. Whitney, 132 U. S. 357 (1889); Whitney v. Taylor, 158 U. S. 85, 92 (1895); Bardon v. Northern Pacific, 145 U. S. 535 (1892).

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

[91] Central Pacific Railroad case, 3 L. D. 264.

[92] 9 United States Statutes 631 (1851).

[93] United States Pacific Railway Commission, p. 2412, testimony W. H. Mills.

[94] 1863 to 1913 “An Account of the Ceremonies Attending the Inauguration of the Work of Construction of the Central Pacific.” Interesting details of the course of construction of the Central and Union Pacific railroads are given in Carter, “When Railroads Were New,” and in Sabin, “Building the Pacific Railway.”

[95] Report of the chief engineer upon recent surveys of the Central Pacific Railroad of California, July, 1863.

[96] Ibid., December, 1865, and July, 1869.

[97] Ibid., October 8, 1864.

[98] Ibid., December, 1863.

[99] United States Pacific Railway Commission, pp. 2581-82, testimony Arthur Brown, superintendent of bridges and buildings.

[100] United States Pacific Railway Commission, p. 2579, statement William Hood; pp. 2580-81, 3150, statement J. H. Strobridge; pp. 2576-77, statement L. M. Clement; p. 3055, testimony E. H. Miller; pp. 2581-82, statement Arthur Brown.

[101] United States Pacific Railway Commission, p. 2523, testimony Leland Stanford. On the other hand, there were abundant supplies of timber along the line, and the price of machinery declined after the war.

[102] United States Pacific Railway Commission, pp. 3139-41, testimony J. H. Strobridge. The following table is prepared from Mr. Strobridge’s testimony:

Number of Men Employed in Central Pacific Construction, 1864-69, and Rate of Pay

Year	Number of Chinamen	Rate of pay	Number of White Men	Rate of pay
1864	Very few		1,200	$ 30 a month
1865	7,000	$ 30 a month	2,500	—30 ”—”——
1866	11,000	—30 ”—”——	2,500–3,000	—30 ”—”——
1867	11,000	—30 ”—”——	2,500–3,000
1868	5,000–6,000		2,000–3,000
1869	5,000		1,500–1,600

[103] Huntington was always openly in favor of unrestricted Chinese immigration. He said that exclusion deprived the United States of tractable and cheap labor, which was needed to build up the desert places of the country. He believed the fanatical hostility to the Chinese was limited to California, where, he asserted, the Irish Catholics swung the balance of power. (San Francisco Examiner, January 4, 1889.)

[104] United States Pacific Railway Commission, p. 3642, testimony Charles Crocker. A letter from Mr. Judah to Dr. Strong, dated July 10, 1863, suggests that it was Judah’s influence which prevented Crocker from building sections 19 to 30. Judah wrote: “I have had a big row and fight on the contract question, and although I had to fight alone, carried my point and prevented a certain gentleman from becoming a further contractor on the Central Pacific Railroad at present.” (Ibid., p. 2966, testimony Strong.) This was probably only one of a number of differences of opinion between the Stanford-Huntington group and the original promoters of the Central Pacific, led by Judah. It was only after Judah’s death that the first-named interests were able to dominate the situation completely.

[105] United States Pacific Railway Commission, p. 3769, testimony Collis P. Huntington.

[106] Ibid., pp. 2621-26, testimony Leland Stanford.

[107] United States Pacific Railway Commission, p. 3048, testimony E. H. Miller. For a general discussion of the relative advisability of construction by contract as opposed to construction by the Central Pacific itself, see an earlier report by Stanford, Hopkins, and Miller. (Ibid., pp. 3045-46.) This report made the point that the letting of contracts to a responsible contractor would raise the credit of the railroad.

[108] United States Pacific Railway Commission, p. 3436.

[109] Ibid., p. 3157, testimony J. H. Strobridge.

[110] The actual cost of the whole work to the Central Pacific depended upon Mr. Crocker’s reports upon the work which he did. There is no evidence that the company exercised any supervision over these reports, although it was to the advantage of the construction company to describe as much of the work as possible as heavy; but on the other hand, Mr. Crocker’s engineers testified that Crocker never attempted to influence them in their estimates. (United States Pacific Railway Commission, p. 3207, testimony L. Clement.)

[111] United States Pacific Railway Commission, p. 3511, testimony Richard F. Stevens.

[112] United States Pacific Railway Commission, p. 2636, testimony Leland Stanford.

[113] Ibid., p. 3661, testimony Charles Crocker.

[114] Colton case, pp. 266-68, deposition of Collis P. Huntington.

[115] United States Pacific Railway Commission, p. 2640, testimony Leland Stanford.

[116] Ibid., p. 3661, testimony Charles Crocker; p. 2637, testimony Leland Stanford.

[117] United States Pacific Railway Commission, pp. 3436-37.

[118] United States Pacific Railway Commission, p. 2897, testimony W. E. Brown; p. 3062, testimony E. H. Miller; pp. 3511-20, testimony R. F. Stevens.

[119] United States Railway Commission, pp. 2712-17, testimony D. Z. Yost.

[120] Ibid., pp. 2875-92, testimony John Miller; pp. 3028-33, testimony N. Greene Curtis.

[121] There is some evidence that $6,000,000 of this cash was not strictly cash, but took the form of notes of the Central Pacific Railroad which were ultimately settled in land-grant bonds at $86.50. (United States Pacific Railway Commission Report, p. 75.) Mr. Crocker says that the interest on a portion of these bonds paid his expenses on a trip to Europe. (Ibid., p. 3668, testimony Charles Crocker.)

[122] United States Pacific Railway Commission Report, pp. 74-75.

[123] United States Pacific Railway Commission, pp. 2655-56, testimony Leland Stanford; p. 3668, testimony Charles Crocker. Mr. Huntington said in 1873 that he thought his dividend amounted to about $1,000,000, but in 1887 he admitted that he had earlier mistaken the facts. (Ibid., pp. 4026-28, testimony C. P. Huntington.)

[124] United States Pacific Railway Commission, pp. 2977-88, testimony W. E. Brown.

[125] An Account of the Ceremonies Attending the Inauguration of the Work of Constructing the Central Pacific. Scribner’s Magazine for August, 1892, contains an article describing the completion of the Central Pacific and also a reproduction of the well-known painting, “The Joining of the Central and Union Pacific” (“The Last Spike”).

[126] The indenture making this assignment, dated October 31, 1864, is printed in full in the appendix to the journals of the Senate and Assembly of the 20th Session of the Legislature of the State of California, Vol. 6 (1874), No. 2. pp. 27-29. It covers not only the right to build and operate a railroad between Sacramento and San JosÉ, but also “all the rights, grants, donations, rights-of-way, loan of the credit of the Government of the United States, or the bonds thereof.”

[127] United States Pacific Railway Commission, p. 2785, testimony Leland Stanford.

[128] Laws of California, 1852, Ch. 107.

[129] City of Oakland v. Oakland Water Front Company, transcript of testimony, p. 649, deposition Horace W. Carpentier; p. 1755, testimony A. J. Moon.

[130] City of Oakland v. Oakland Water Front Company, transcript of testimony, pp. 704-5, deposition Horace W. Carpentier; Wood, “History of Alameda County”; San Francisco Examiner, June 26, 1892, July 3, 1892.

[131] Moon, one of the trustees who approved the grant, was afterwards taken into Carpentier’s employ. Adams, another trustee, secured the property now known as the “Adams Wharf” to the east of the narrow-gauge bridge.

[132] City of Oakland v. Carpentier, 13 Cal. 540 (1859); 21 Cal. 642 (1863). The Oakland ordinances were ratified and confirmed by act of the California legislature passed May 15, 1861. (Laws of California, 1861, Ch. 377.)

[133] City of Oakland v. Oakland Water Front Company, transcript on appeal, pp. 652-54, deposition Horace W. Carpentier.

[134] Laws of California, 1868, Ch. 230.

[135] City of Oakland v. Oakland Water Front Company, transcript of testimony, sup. cit. pp. 976-80.

[136] City of Oakland v. Oakland Water Front Company, transcript of testimony, pp. 657-64, deposition Horace W. Carpentier.

[137] See the Ordinance of the City of Oakland, No. 302 (April 2, 1868). An excellent account of these transactions is given in an unpublished manuscript in the University of California Library, prepared by Stephen S. Barrows, one-time student in the University of California. It is of some interest to observe that among the direct beneficiaries of the agreements cited were Messrs. Carpentier, Felton, and Merritt, all three at one time or other mayors of Oakland. Mr. Merritt was mayor at the time ordinances Nos. 300, 301, and 302 were passed. The compromise described was effected under authority of an act of the California legislature dated March 21, 1868.

[138] By ordinance passed August 31, 1867, the Oakland City Council voted to pay Mr. Felton a fee equal to 15 per cent of all the property recovered by the city in the water-front litigation. (Transcript of testimony, sup. cit. p. 759.) Mr. Merritt was subsequently accused of having promoted the settlement between the city of Oakland and the Oakland Water Front Company in order to derive a pecuniary profit for himself. In 1869 the city council of Oakland authorized the appointment of a committee of three to ascertain by what title Mr. Merritt held certain water-front property near the foot of Broadway in Oakland. On report of the committee the council exonerated Mr. Merritt. (Ibid., pp. 1406-7, 1410-21.)

[139] City of Oakland v. Oakland Water Front Company, 118 Cal. 160 (1897).

[140] Western Pacific Railway Company v. Southern Pacific Company, 151 Fed. 376 (1907). The court also pointed out in the decision that although the low-tide line was projected across the mouth of the estuary for the purpose of determining the boundary of Oakland, this should not be done in ascertaining the limit of the railroad grant.

[141] The boundaries are set forth in the San Francisco Times of March 7, 1868. As later amended and confined to the area north of Point Avisadero, they are described in the Daily Alta of March 14, 1868.

[142] Appendix to journals of Senate and Assembly of the California Legislature, 17th Session, Vol. 3, 1868.

[143] San Francisco Bulletin, March 7, 1868.

[144] Daily Alta California, March 10, 1868.

[145] San Francisco Times, March 13, 1868.

[146] See resolutions of a meeting of San Francisco business men in March, 1868, recommending that the legislature grant 150 acres each to the Central Pacific and Southern Pacific; and the admission of the Southern Pacific that it could get along with 250 acres.

[147] Laws of California, 1867-68, Ch. 543.

[148] Laws of California, 1867-68, Ch. 386. A lively account of the circumstances attending the passage of the Goat Island bill through the legislature was published by an old newspaper man, Sam Leake by name, in the San Francisco Bulletin, March 17 and 19, 1917. There is, however, no way of verifying this story, and it cannot be accepted on Mr. Leake’s authority alone.

[149] Laws of California, 1869-70, Ch. 381.

[150] Mr. Stanford has asserted that the whole trouble was caused by six gentlemen, three of whom had interests near Ravenswood, where it was thought that the Central Pacific might cross, and three of whom had interests in Sausalito. He says he was informed by a member of Congress that he could have had necessary legislation in Congress for $10,000. This refers to the campaign of 1875-76. (United States Pacific Railway Commission, pp. 3170-71, testimony Leland Stanford.)

[151] United States Pacific Railway Commission, pp. 3496-3500, testimony D. O. Mills.

[152] The California and Oregon Railroad Company was subsidized by Congress by Act of July 25, 1866, to build from a point on the Central Pacific Railroad to the Oregon boundary, where it was to meet a railroad coming south from Portland. Tracks reached Chico, July 2, 1870. In 1870, the California and Oregon was consolidated with the Central Pacific. In 1872 it reached Redding, and on October 5, 1887, the state line. The federal legislation relating to the California and Oregon Railroad is notable for the liberality of the land grant made.

[153] This branch was known as the San Joaquin Valley Railroad. The company bearing this name was incorporated in 1868. Stanford, Huntington, Hopkins, Charles, and E. B. Crocker were directors. In 1870 it was consolidated with the Central Pacific. Stanford declared in 1887 that the trunk lines up the San Joaquin and Sacramento valleys were the most important factors in the Central Pacific’s local business.

[154] United States Pacific Railway Commission, pp. 3628-29, testimony J. P. Jackson; p. 3613, testimony Leland Stanford.

[155] United States Pacific Railway Commission, pp. 3366-67, testimony J. C. Stubbs.

[156] Ibid., pp. 3628-29, testimony J. C. Jackson.

[157] San Francisco Bulletin, November 29, 1869.

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

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

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

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

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

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

“July 24th, 1874.

Dear Cohen:

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

Yours truly,

Stanford.”

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

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

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

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

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

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

[169] San Francisco Bulletin, March 14, 1868.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[184] Ibid., pp. 533-35, testimony Luckett.

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

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

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

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

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

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

[191] San Francisco Examiner, October 8, 1889.

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

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

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

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

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

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

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

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

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

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

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

[196] Ibid., pp. 1510-13.

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

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

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

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

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

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

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

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

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

[206] Ibid., p. 645, testimony George R. Jackson.

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

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

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

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

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

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

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

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

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

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

Net Profits and Rentals Central Pacific Railroad, 1885-93

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):

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

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

[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:

[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:

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

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 108?. (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:

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....”

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“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 NOTES:

—Obvious print and punctuation errors were corrected.

—The transcriber of this project created the book cover image using the title page of the original book. The image is placed in the public domain.