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MARCH 24, 1888. THE ARGONAUT. 3

[Rail]way, the possibilities of that were demonstrated. It opened up the development of a country greater in extent than that conquered by Cæsar in Europe, and all at a very small expense, so small that, from the time of the completion of the road in 1869 up to 1876, at which time the contract required that the road should be completed, the government saved during that time more money than it had loaned the company, the road being completed seven years ahead of the contract time.

I do not take into consideration, at all, what the government saved by the building of the road as regards the stopping of Indian wars. I do not say anything about that. I am speaking simply of the transportation of the government and the amount saved, according to the government's own reports.

All this is in the testimony, proven clearly and indisputably. The Pacific Railroad Commission has published all that testimony, and have submitted it to you; not only has the government made this important saving, but practically, the whole country was developed by the building of the road, and the advantages in that way to the government can not be fully estimated. The construction of this road also demonstrated the possibility of constructing other railroads across the continent. Before this road was built it was generally supposed there was no coal along its line. Geologists had stated that the country was one where coal could not be expected to be found, and that was supposed to be one of the difficulties in operating the road. I don't know that, today, except for the discovery of coal along the line, the road could be maintained for commercial purposes; but the discovery of these coal-beds helped the road at once. Large beds of coal were developed upon the line of the Union Pacific, which made the operation of the road practicable, and permitted great profits, and the road was a success. It was earning money largely, and could have paid off the government loan without difficulty had not its business been diverted; but, as soon as there was a competing line of railroad, it not only divided the business, but rates were reduced. The value of the road through this barren country, without competition, was such that the company could fix substantially its own rates, according to its own judgment of what it should charge to transact business.

Senator Davis - What competing line do you refer to?

Mr. Stanford - The first competing line was the Atchison, Topeka, and Santa Fé, which connected with the Southern Pacific Road at Deming. As soon as that was done, there was a competing line which divided the business and cut down the rates. Then the Northern Pacific Road was built, and the Short Line of the Union Pacific Company up into Idaho and Montana toward Oregon, that took from the Central Pacific Railway a very large portion of its business, because that road ran from the East. Most of the supplies of that country came from the East originally, but before that time they were bought at San Francisco, and then had to be carried back on our line into Idaho, Montana, Washington Territory, and Oregon. There are now, perhaps, seven hundred thousand people, all of whom, when we commenced building, we expected to supply, and did supply for a time, but the construction by the Union Pacific Railroad of that line, brought supplies for all that section of the country from the East, and the Central Pacific Road was cut off from that source of revenue. Our whole population in California west of the Rocky Mountains did not, at that time, exceed one million five hundred thousand people. That affected the Central Pacific Road seriously. Now, then, we say that, while we do not deny that the government had a right, in its discretion, to aid other lines of road, it was not expected at the time we entered into the contract with the government that other lines of road would be built, and they were built very slowly. A last, in 1864, the government provided for aid to the Northern Pacific lines. That was after we had entered into our contract with the government. However, the contract with the government was entered into under the Act of 1862, and we built the road under that act and the Amendatory Act of 1864; but we say this, that if the government has derived such great benefit from the construction of this road, which has developed its country and has given it facilities of transportation such as were hardly supposed possible - for it was not thought that this road could be operated as it has been operated - this constitutes an equitable proposition entitled to great consideration.

The first forty miles of the road were completed with our own means; we had iron enough to build fifty miles, entirely from our own means. We do not complain that the government has aided other railroads, but we do say that it is a circumstance to be considered by the government in settling with us that their aiding other roads diverted business from us to the extent, which is shown in the testimony, of many millions of dollars. The injuries we received through competition, which cut down our rates, can hardly be estimated. We were making money very rapidly, and were preparing a sinking fund by which to pay off this government loan before the competition commenced, and before the Thurman Act was passed.

We felt the Montana business going entirely from us, and even the Union Pacific Road, by constructing through its influence a line from Ogden, U. T., up toward Montana, stopped the business that usually came from the East, and it does not go over our road at all now. While we rendered a great deal better service, the government has never paid the rates for carrying the mails that it used to pay to the stage lines. It paid to Wells, Fargo & Co. one million seven hundred and fifty thousand dollars per annum for carrying the mails, with a maximum not to exceed one thousand pounds. As soon as our railroad was completed they required us to construct a special car, according to the directions of the government, to carry eighteen tons of mail-matter and two messengers. They had that car under their contract, whether they filled it or not with mail-matter. Oftentimes, when the Chinese, Japanese, and Australian mails are being sent across the road an extra car is required. I have known of two extra cars being used to carry the mails across the continent, and yet the government has never paid to this company quite a million dollars per annum for that service, although it was paying the large sum I mention to Wells, Fargo & Co.

The contract provided that the maximum amount should not exceed one thousand pounds. Now, the reports all show that the Central Pacific Road has lived up to its contracts in every respect. Neither the government nor the people of the country, in the construction of this road, have ever been disappointed in a single expectation. It was not supposed that the time allotted, which was until 1876, to build the road, was sufficient at the time of the passage of the bill, and it was so stated in Congress, but the reply was that if more was required it could be given. It has been said that the fact that we built the road so rapidly and at such extraordinary cost, is not to be considered by the government. I think that fact should be considered, as I have said that when we commenced to build this road we thought the local business and absence of competition, would unable us to charge substantially what we considered a fair price, and that the only competition would be that of ox and mule teams. At the time of the passage of the Act of 1864, the Union Pacific Road had made no progress whatever. The country from the summit of the Rocky Mountains through to Salt Lake was believed to be almost impassable, and it was thought it would take a long time to construct that part of the road. However, we proceeded with confidence, thinking that we should be able to reach Salt Lake before the UNion Pacific Road could possibly do so, but with the surveys which were made it was ascertained that the difficulties had been exaggerated; that, in fact, there were no great difficulties at all in constructing the road from Omaha to Salt Lake. The Union Pacific Road then sent over their engineers to see what kind of country we had to go through. When they got over the Sierra Nevada and saw what we were doing, saw the difficulties to be encountered there, they went home and reported that we could not possibly pass the Sierra Nevada as early as we did by at least two years. Then it was that they concluded to push on the building. By the construction of the Union Pacific Road we did actually lose the greater portion of that trade, except that immediately on our line of road. Now, consider that at the beginning we intended to build a road over the Sierra Nevada Mountains, because we could have no connection by water, and no competition of any kind, except that of mules and ox teams. But when the Union Pacific Road started and was liable to come in on us, we saw that it would be worse competition than to have had a vessel go round by Cape Horn, and it was a work of necessity, the act of Congress allowing two roads to build from opposite directions. It was not voluntary on our part, and we were compelled to make sacrifices in order to meet the Union Pacific Road in Utah. With the Union Pacific Road that was not the case. The extraordinary efforts they made were voluntary, and were made for the purpose of securing as much of the line as they could for themselves. There is a wide difference, therefore, between the two companies and the circumstances surrounding them in that respect.

Senator Hearst - You spoke a while ago of your end of the line, the Pacific end of the line, coming up to Utah and capturing the trade mostly of Washington Territory, Idaho, and Montana. How much of that trade was cut off by the Utah Northern and the Utah Southern Roads?

Mr. Stanford - Everything, so far as supplies were concerned, which naturally started from this side to go west. That was all lost to us. Aside from the competition caused by these competing lines of railroad, we should have had established our sinking fund; and except for the interference by the Thurman Bill it would have been ample to meet obligations, and up to the present time we have met every obligation. There has never been a claim against the Central Pacific which has not been promptly discharged. Every department of the government can certify that they have never had occasion to find fault with us in a single instance in that respect, and the government has received all the benefits it expected, and a great deal more. The agreement between the Central Pacific Railroad Company and the government constituted a contract. Each party to the contract covenanted to perform certain things. All those things which the government agreed to give the company, were to become the property of the company that built and maintained the road, held it subject to certain governmental uses, paid to the government five per cent. of the net proceeds, and allowed the government to retain one-half the value of the charges for government transportation. It fully performed its contract. If the company had given to charity all it received from the government, or had sunk it in the ocean, either would have been the right of the company as far as its relations with the government were concerned. All the government had the legal or moral right to claim was that the company should perform the obligations of the contract. That it has done. From the day of the organization of the Central Pacific Railroad Company down to this year, it has performed every obligation, public or private, which it ever undertook to perform. In regard to the savings of the government, it can easily be shown that the difference between what has actually been paid out for this much better service, and what they were paying out on an average from 1850 to the present time, is seven million dollars a year that they saved; and when you consider the benefit in the development of the country it has caused, it is impossible to overrate it. Besides this, we saved to the government in all other cases. It submitted to a discount in parting with its bonds, except to these railroads, and in their case the government has demanded the face of their paper, and are collecting six per cent. interest upon it, so that at the date of the maturity of the bonds, if we are called upon to pay, we shall pay twenty million dollars to the government for that which we never had one penny. That is the six per cent. interest on the seven million dollars, the difference between the value of the bonds the government loaned us and the amount we realized. At the end of thirty years, the date of the maturity of the bonds, this will amount to about twenty million dollars.

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MARCH 24, 1888. THE ARGONAUT. 3

[Rail]way, the possibilities of that were demonstrated. It opened up the development of a country greater in extent than that conquered by Cæsar in Europe, and all at a very small expense, so small that, from the time of the completion of the road in 1869 up to 1876, at which time the contract required that the road should be completed, the government saved during that time more money than it had loaned the company, the road being completed seven years ahead of the contract time.

I do not take into consideration, at all, what the government saved by the building of the road as regards the stopping of Indian wars. I do not say anything about that. I am speaking simply of the transportation of the government and the amount saved, according to the government's own reports.

All this is in the testimony, proven clearly and indisputably. The Pacific Railroad Commission has published all that testimony, and have submitted it to you; not only has the government made this important saving, but practically, the whole country was developed by the building of the road, and the advantages in that way to the government can not be fully estimated. The construction of this road also demonstrated the possibility of constructing other railroads across the continent. Before this road was built it was generally supposed there was no coal along its line. Geologists had stated that the country was one where coal could not be expected to be found, and that was supposed to be one of the difficulties in operating the road. I don't know that, today, except for the discovery of coal along the line, the road could be maintained for commercial purposes; but the discovery of these coal-beds helped the road at once. Large beds of coal were developed upon the line of the Union Pacific, which made the operation of the road practicable, and permitted great profits, and the road was a success. It was earning money largely, and could have paid off the government loan without difficulty had not its business been diverted; but, as soon as there was a competing line of railroad, it not only divided the business, but rates were reduced. The value of the road through this barren country, without competition, was such that the company could fix substantially its own rates, according to its own judgment of what it should charge to transact business.

Senator Davis - What competing line do you refer to?

Mr. Stanford - The first competing line was the Atchison, Topeka, and Santa Fé, which connected with the Southern Pacific Road at Deming. As soon as that was done, there was a competing line which divided the business and cut down the rates. Then the Northern Pacific Road was built, and the Short Line of the Union Pacific Company up into Idaho and Montana toward Oregon, that took from the Central Pacific Railway a very large portion of its business, because that road ran from the East. Most of the supplies of that country came from the East originally, but before that time they were bought at San Francisco, and then had to be carried back on our line into Idaho, Montana, Washington Territory, and Oregon. There are now, perhaps, seven hundred thousand people, all of whom, when we commenced building, we expected to supply, and did supply for a time, but the construction by the Union Pacific Railroad of that line, brought supplies for all that section of the country from the East, and the Central Pacific Road was cut off from that source of revenue. Our whole population in California west of the Rocky Mountains did not, at that time, exceed one million five hundred thousand people. That affected the Central Pacific Road seriously. Now, then, we say that, while we do not deny that the government had a right, in its discretion, to aid other lines of road, it was not expected at the time we entered into the contract with the government that other lines of road would be built, and they were built very slowly. A last, in 1864, the government provided for aid to the Northern Pacific lines. That was after we had entered into our contract with the government. However, the contract with the government was entered into under the Act of 1862, and we built the road under that act and the Amendatory Act of 1864; but we say this, that if the government has derived such great benefit from the construction of this road, which has developed its country and has given it facilities of transportation such as were hardly supposed possible - for it was not thought that this road could be operated as it has been operated - this constitutes an equitable proposition entitled to great consideration.

The first forty miles of the road were completed with our own means; we had iron enough to build fifty miles, entirely from our own means. We do not complain that the government has aided other railroads, but we do say that it is a circumstance to be considered by the government in settling with us that their aiding other roads diverted business from us to the extent, which is shown in the testimony, of many millions of dollars. The injuries we received through competition, which cut down our rates, can hardly be estimated. We were making money very rapidly, and were preparing a sinking fund by which to pay off this government loan before the competition commenced, and before the Thurman Act was passed.

We felt the Montana business going entirely from us, and even the Union Pacific Road, by constructing through its influence a line from Ogden, U. T., up toward Montana, stopped the business that usually came from the East, and it does not go over our road at all now. While we rendered a great deal better service, the government has never paid the rates for carrying the mails that it used to pay to the stage lines. It paid to Wells, Fargo & Co. one million seven hundred and fifty thousand dollars per annum for carrying the mails, with a maximum not to exceed one thousand pounds. As soon as our railroad was completed they required us to construct a special car, according to the directions of the government, to carry eighteen tons of mail-matter and two messengers. They had that car under their contract, whether they filled it or not with mail-matter. Oftentimes, when the Chinese, Japanese, and Australian mails are being sent across the road an extra car is required. I have known of two extra cars being used to carry the mails across the continent, and yet the government has never paid to this company quite a million dollars per annum for that service, although it was paying the large sum I mention to Wells, Fargo & Co.

The contract provided that the maximum amount should not exceed one thousand pounds.

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