In addition to the road from Sioux City to Omaha, and for the purpose of getting all the land and money possible out of the government, the conspirators organized another company, under the laws of Nebraska, to-wit: The Fremont, Elkhorn, & Missouri Valley company, and built a road running from Missouri Valley to Fremont, in Nebraska—about fifty miles,—and these two roads, from Sioux City to Missouri Valley, and from Missouri Valley to Fremont, are now called the Sioux City & Pacific. We do not know who were the incorporators of the Fremont, Elkhorn, & Missouri Valley company, but we find among the present directors, John I. Blair, D. C. Blair, and ex-congressman John B. Alley. The two companies are consolidated. The grant of one hundred sections of land, and bonds to the amount of $16,000 per mile, with the privilege ofissuing first mortgage bonds to the amount of $16,000 per mile, altogether comprise one of the most remunerative jobs ever conceived and consummated by incorporating, stockholding and "direct"-ing congressmen in the companies receiving the aid. When it is remembered that the actual cost of the construction of the road was less than $30,000 per mile (as shown by theRailroad Manual), and that it is of no value to the government because of its course, save for carrying local mails (its entire earnings for government transportation being less than $1,000 per annum), it will not be uncharitable to conclude that thisfatlittle slice of the Pacific railroad job was put through congress, and nursed and petted by government for the exclusive benefit of congressmen, their friends and relatives.
We do not deny the right to congressmen to become and remain stockholders and directors in railroad corporations, but we do deny their right to vote lands and money to companies in which they are stockholders and directors. They are elected to represent the people, to attend to and protect the public interests. When they form themselves into companies and vote the lands and moneys of the people to themselves, they violate their trust, and instead of protecting the people, plunder them, and divide the spoils. To give these unjust practices some color of right, or in some manner to excuse themselves for thus appropriating the wealth of the country and dividing it with their friends, they assert in the laws thus enacted that it is done to aid in the construction of railroads, and "to secure the safe and speedy transmission of the mails, troops, munitions of war, and government supplies," &c. It is no part of the duties of congressmen to construct railroads, nor are the people under obligations to furnish them the means for that purpose. When members of congress form themselves into private companies, and to procure the means for prosecuting their private enterprises, agree to divide among themselves a part of the money and property belonging to the public, because the position they occupy enables them to do so, they manifest the same disregard for the rights of others, and the same disregard of law that is shown by the class of men who follow theft and robbery for a livelihood.
But let us follow still further the course of this Pacific railroad company. It would occupy too much space, and weary the reader were we to state in detail all the acts of congress passed in aid of this gigantic combination. In speaking of the Pacific railroad we are apt to look upon it as simply a line of road extending from the Missouri river to the Pacific ocean; to consider its great length; the character of the country through which it passes; the sparse settlements; the necessity for direct and speedy communication between the Atlantic and Pacific states, and we yield a ready assent to the action of congress in voting lands and subsidy bonds for its construction. But when we find that the charters of the Union Pacific and Central Pacific companies, and their various amendments, together with the several acts of congress making many other companies branches of the Pacific road, virtually consolidates all the railroads between the cities of St. Louis and St. Paul on the Mississippi river, and all the railroads running west from Chicago, into one vast corporation, uniting all in one track from Fort Kearney to the Pacific ocean, the people will begin to realize that while they thought congress was appropriating lands and moneys solely for the purpose of opening a highway across the territories, it was in fact aiding a combination of men and corporations in their attempt to control the commerce of the great west; and when we further learn that this great railroad interest is already virtually consolidated, and that the whole people are placed at the mercy of this great monopoly, we see at a glance the extent of the power vested in it by act of congress.
Among the railroad companies that are included in this combination are the following: Chicago & Northwestern; Iowa Falls & Sioux City; Cedar Rapids & Missouri River; Leavenworth, Atchinson, & Northwestern; Kansas Pacific; Union Pacific; Burlington & Missouri River; Sioux City & Pacific; Missouri River; Chicago, Iowa, & Nebraska; Hannibal & St. Joseph; and the St. Paul and Sioux City. Most of the above roads received grants of lands; some of them received subsidy bonds, ostensibly for the public benefit, but in reality for the purpose of combining in one the interests of all these combinations. Whatever may have beenthe intention of congress in granting exclusive privileges to these companies and permitting them to unite, the effect has been to fasten upon the great west a monopoly, that for all time to come will be an instrument of oppression. With its vast power and wealth it can but control the fortune of the laboring and producing classes inhabiting the richest portion of our common country. The further fact that this great corporate power is the particular pet of congressmen, and that among its directors and stockholders are members and ex-members of congress, render the hope of any change in favor of the people remote, if at all attainable. If the reader is desirous of learning who are the directors and managers of the Pacific railroad and branches, he has only to consultPoor's Railroad Manualfor 1872-3. He will find among the present directors the men who, in congress, voted the lands and subsidies to the companies in which they are now directors, and also, that some of these directors are now holding the office of congressmen and of United State's senators.
By the acts of congress granting and amending the charters of the Pacific railroad companies and branches, it is made the duty of the president of the United States to appoint five directors, "who shall be denominated directors on the part of the government," and these acts forbid such directors being stockholders in said Pacific railroad companies. It is made the duty of these government directors to exercise a general supervision of the Pacific road and branches, and to report its condition from time to time to the secretary of the interior. In contemplation of law they are to have no pecuniary interest in the companies or in the roads. The present government directors are B. F. Wade, of Ohio; Hiram Price, and J. F. Wilson, of Iowa; J. C. S. Harrison, of Indiana; and D. S. Ruddock, of Connecticut. By act of congress of June 2d, 1864, the Cedar Rapids & Missouri River railroad was authorized to connect with the Iowa branch of the Union Pacific road, and sections fifteen and sixteen of the acts of July 2d, 1864, place all roads connecting with the Union Pacific on an equality as to charges for freights and passengers, and permits them to consolidate if they elect so to do. The Cedar Rapids & Missouri River company has leased its road to the Chicago& Northwestern company, and it is operated in connection with the Union Pacific, uniting with it at Council Bluffs, and it virtually becomes a branch of the Union Pacific road. The reader can look over the list of directors, as shown in theRailroad Manualbefore referred to, and learn if any of the government directors of the Union Pacific are directors in the Cedar Rapids & Missouri River company. The reports made of the cost, condition, and other matters connected with Pacific railroad enterprises, disclose such utter disregard of the rights and interests of the people, and such a gross betrayal of the public good for the benefit of a ring (in part a congressional ring) as to leave it without precedent.
The fact that the men who formed this ring have become a powerful moneyed aristocracy, able by their votes and influence in congress to convert the public lands and money to their own use, and are now boldly taxing the people with the interest on the money appropriated to build up these oppressive monopolies, should arouse the country to a sense of its imminent peril.
In order to fully realize the great power of what is known as the Pacific railroad companies, it will be necessary to look at the Central Pacific company, and its control of the transportation of freights and passengers from the Pacific country. This company, organized under the laws of California, was, by acts of congress of July 1st, 1862, admitted into the grand combination known as the Pacific roads, and granted equal privileges with the Union Pacific and branches. The Central Pacific extends from the Pacific ocean to Ogden, a distance of eight hundred and eighty-one miles. The acts of congress of April 4th, 1864, and July 2d, 1864, granted to this company additional privileges and powers, including the right of consolidating with all the companies on the Pacific coast. In 1870 the following companies, to-wit: The Western Pacific railroad company; the San Francisco, Oakland, & Alameda railroad company; the San Joaquin railroad company; the California & Oregon railroad companies were consolidated.
The state of California at that date had but one thousand and thirteen miles of road within its borders. Of this number of miles, about one-half became a part of the Central Pacific, by the consolidation as above stated. All the roads pointing towards the east were combined in this one great corporation, forming a solid body, with one common and general object and interest, viz: a monopoly of the travel and traffic with the eastern states. And congress, by appropriating lands and subsidy bonds, and granting exclusive rights and privileges to this monster monopoly, has given it the key not only to the overland commerce of the country, but also to the commerce of our country with other nations upon the Pacific ocean. This giant monopoly, by the aid of congress, has obtained the absolute control of the best interests of the whole people for all time to come—a control that is now being used, and will continue to be used, to enrich its own members and stockholders by oppressive levies for transportation over its roads.
To fully comprehend the cost to the country of these munificent gifts by congress to the Union and Central Pacific corporations, let us examine the expense somewhat in detail.
First. A grant is made of all the material needed in the construction of the roads, found within ten miles of the line of said roads.
Second. A grant of thirty-five million acres of the public lands, amounting, at $1.25 per acre, to $43,750,000. This vast amount of land is taken from the people and given to companies by congressmen who in some instances are members of the companies, and receive theirpro ratashare of the grants.
Third. Aid voted by congress in shape of subsidy bonds, $65,000,000, payable in thirty years, with six per cent per annum. The theory was that the companies would pay the interest as it matured (semi-annually) and eventually the principal. But that this was not the intent of the companies, nor of congress, is apparent from the different acts regulating the matter, and as the case stands, the government is actually paying the interest and collecting the amount from the people in tariffs and excise taxes. The payment of the amount of these bonds, with the interest according to their terms, will require about $200,000,000. This amount, or nearly all of it, will be paid by the people, and not by the companies. The report of the secretary of the treasury shows that the amount of interest annually due on these subsidy bonds is $3,875,000, of which the Pacific railroad companies have paid about $750,000, and the government the balance, say $3,125,000. The original charter of the companies provided that the charges for carrying done for the government should be credited to the companies in liquidation of these bonds, and also that five per cent of the net earnings of the road should be applied to the same object. The secretary of the treasury of the United States insisted that these companies should be bound by this provision of their charters, refused to pay them their earnings for government services, and also demanded the five per cent,under the law. The companies refused to pay the five per cent of their net earnings, and demanded pay for transportation. If we remember that congress had already so amended the charters of these companies as to permit them to issue $65,000,000 of their own bonds as "first mortgage bonds," and provided that the subsidy bonds obtained from government should be subordinate or junior to the bonds issued by the companies, and also bear in mind that these amendments also provided that whenever twenty miles of road was completed the patent for twenty sections of land per mile was to issue to the companies, so that when the roads were completed they would have title to all their lands, we will see good reasons for the stand taken by the United States secretary of the treasury.
The security which the United States had for the payment of the principal and interest of the bonds, under the charter, was destroyed by subsequent legislation, and unless the secretary could retain the amounts due from government for transportation, and collect the five per cent, the whole amount of the subsidy bonds, would be lost to the government and the people. The facts of the case being well known to congress, who are supposed to be the representatives of the people, and to legislate in their interest and for their benefit, it would hardly be supposed that an act would pass both branches, and receive the approval of the president, compelling the secretary of the treasury to yield to the demands of these corporations. Honest legislation, and a decent regard for the public welfare, would seem to forbid any attempt on the part of any one of the departments of the government to aid the companies in their dishonest endeavor to avoid the provisions of a charter which had been enacted for their special benefit. And when it is remembered that at the time the application was made to congress (March, 1871) certain members were stockholders and directors in these same companies, one would not think it possible that an act could be passed relieving the companies from these requirements of their charters, or only possible because of the practice being so long established for congressmen to appropriate public lands and moneys to their own use, that they had arrived at the point where they deemed the property and money of the government lawful plunder, and thattheir first duty was to provide for the rings and corporations in which they had a personal interest. It seems to have required some strategy for the friends of these corporations to grant them the aid they asked. Afraid to take issue with the secretary of the treasury, and unwilling to hazard the success of their scheme by an attempt to pass an act for thereliefof these railroad companies independently of any other measure, to insure the safe passage of the legislation and its approval by the president, congress, by an amendment, tacked it to the army appropriation bill (which passed March 3d, 1871), secured the relief asked for.
Section nine of the army appropriation bill reads as follows: "That, in accordance with the fifth section of the act approved July 2, 1864, entitled 'An act to amend an act to aid in the construction of a railroad and telegraph line from the Missouri river to the Pacific ocean, and to secure the same for postal, military, and other purposes, approved July 1, 1862,' the secretary of the treasury is hereby directed to pay over in money to the Pacific railroad companies mentioned in said act, and performing services for the United States, one-half of the compensation, at the rate provided by law for such services heretofore or hereafter to be rendered:Provided, that this section shall not be construed to affect the legal rights of the government or the obligations of the companies, except as herein specifically provided."
This act was approved by the president, and the question at issue between the secretary of the treasury and the companies was settled by congress in favor of the latter—absolutely relieving them from the payment of any part of the $65,000,000 of subsidy bonds, except such sums as may be paid by allowing the government to retain one-half of the earnings of the roads for carrying mails, etc., which sums, as shown by the companies themselves, amount to less than one-fourth of the annual interest accruing on the bonds. The people must pay all the balance, principal and interest. These companies have received, in lands and bonds, from the general government, about $109,000,000, to aid in the construction of their roads, and all that government receives in return is one-half of the fare levied on government transportation over these roads, "atthe price fixed by law." The only provision as to price is, that after having donated to the companies sufficient to pay the entire cost of the construction of the roads, government shall pay such reasonable prices as may be agreed upon, not exceeding the rate the companies charge to other parties. When we say "the entire cost," we do not mean the full cost claimed by the companies, for it is not policy for them to make a correct showing in this matter; we mean the real actual cost. We cannot find a statement of the cost of the Union Pacific, and do not know what the company claim to be its cost per mile, or the aggregate cost. The Central Pacific puts the cost of its roads at $120,000,000, or about $136,000 per mile. It shows a paid-up capital stock of $54,000,000, and a funded debt of about $82,000,000, making its indebtedness about $16,000,000 more than the entire cost of its road, including rolling stock and equipments. Making a liberal margin for the value of these last named items, and allowing the Central Pacific to cost nearly double the ordinary cost of other roads, and the reader must conclude that there has been, in this case, a watering of stock and an excessive issue of bonds for the benefit of the company and at the expense of the people. The statement of the capital stock and funded debt of the Union Pacific shows about the same condition for its road as to indebtedness; but the estimated cost of the road is not given.
For proof that we are not mistaken in our estimated cost of these roads, and that the companies have received from the government a sum more than sufficient to defray the entire expense of their construction, we turn to reports of the cost of railroads generally, in the country, made by men who are in sympathy with our present railroad system. These men say that the cost of railroads in this country, from their first introduction, is about $50,000 per mile, and that those constructed recently will average about $30,000 per mile. We are apt to think that the cost of the Pacific roads would exceed that of most other roads. Such is not the fact. On the contrary, taking the entire road into consideration, the line was more favorable than any other in the country. It is thus described in the Railroad Manual, before referred to:—
"The route for the eastern portion of the line is up the valley of the Platte, which has a course nearly due east from the base of the mountains. Till these are reached, this valley presents, probably, the finest line ever adopted for such a work for an equal distance. It is not only straight, but its slope is very nearly uniform towards the Missouri, at the rate of about ten feet to the mile. The soil on the greater part of the line forms an admirable road bed. The road, after leaving the mountains, has very few affluents, the only constructed bridges for the distance being one over the Loup Fork and the North Platte. The base of the mountains is assumed to be at Cheyenne, five hundred and seventeen miles from the Missouri river. This part is elevated six thousand and sixty-two feet above the sea, and five thousand and ninety-five feet above Omaha. From Cheyenne to the summit of the mountains, which is elevated eight thousand two hundred and forty-two feet above the sea, the distance is thirty-two miles. The grades for reaching the summit do not exceed eighty feet to the mile. The elevation of the vast plain from which the Rocky mountains arise, is so great, that the mountains, when they are reached, present no obstacles so formidable as those offered by the Allegheny ranges to several lines of railroads which cross them. * * * The line of the railroad up the eastern slope of the Rocky mountains is not so difficult as those upon which several great works have been constructed in the eastern states. After crossing the eastern crest of the mountains, the line traverses an elevated table land for about four hundred miles, to the western crest of the mountains, which forms the eastern rim of the Salt Lake basin, and which has an elevation of seven thousand five hundred and fifty feet above the sea. Upon this elevated table land is a succession of extensive plains, which present great facility for the construction of the road. The whole line is a very favorable one, when its immense length is considered. More than one-half of it is practically level, while the mountain ranges are surmounted by grades not in any case exceeding those now worked upon some of our most successful roads."
The description of the line of the Central Pacific, or western six hundred and sixty-seven miles, from Ogden to Sacramento, will not vary much from that given of the Union Pacific. Itis not quite so favorable. Taking the character of the route as given, with the facilities for building the road, and it is not probable that the actual cost of construction averaged more than $30,000 per mile, or $57,000,000 for the whole line. Taking the highest rate, as given, viz: $50,000, and apply it to the whole road, the entire cost would be $94,000,000.
To aid in the construction of this road, the government issued subsidy bonds at the rate of $48,000 per mile for three hundred miles, $32,000 per mile for nine hundred and four miles, and $16,000 per mile for the balance of the main road and branches. The funded debt of the companies owning and operating the road (not including the debts of the branches), after deducting the amount of bonds they received from the government, to-wit: $65,000,000, is, as shown by their own report, $93,000,000. How much their floating debt amounts to we cannot tell. The stock on their road cannot cover one-tenth of the amount of their debts. The companies report a paid up capital stock of $91,028,190. The statement of account would be about as follows:—
CREDIT ACCOUNT.Paid up capital$91,028,190Bonds from government65,000,000Funded debt93,000,000——————Total invested$249,028,190CONTRA.Actual cost of construction$94,000,000——————Balance$155,028,190Deduct, for 37,500,000 acres of land at $1.25 per acre46,875,000——————Balance against road$108,153,190
Thus, after placing the land received from the government to the credit of the road, still a small balance of more than $108,000,000 has disappeared, and the companies are not able to pay the interest on the government bonds. The reports ofthese companies show, for the year 1871, that the net earnings of their roads (over and above all expenses, including taxes, repairs, damages to property and persons, cost of snow sheds, and all other items of expense) amounted to about $9,000,000, and yet, because these companies asked it, congress released them from the payment of the interest on the subsidy bonds.
The conclusion to be drawn from the facts of the case, as they develop themselves, is, that these Pacific railroad companies have used the federal offices, and the public moneys, and lands, for enriching themselves; that a company of men, in congress, and out of it, have combined and confederated together for the purpose of robbing the people, and controlling the government. We have selected the Union and Central Pacific companies for illustrations, and attempted to state the facts in their case, not because of any exception that they present to the general rule, but to show the manner in which the people are duped and defrauded by congressmen voting government aid to railroad companies, under the pretext of developing the country, and the equally false necessity of providing speedy and secure transportation for the mails, troops, supplies, and munitions of war.
One peculiar feature about the whole matter is, that congressmen have deemed it necessary for the accomplishment of their object, to become personally interested in their own legislation by subscribing stock, and becoming directors in the companies to which they voted these aids. We can name congressmen who, if they were not stockholders in these Pacific roads, at the time the bonds and lands were voted, certainly were stockholders and directors when these companies were relieved from the payment of the interest on the bonds issued to them by the government, to-wit: Oakes Ames and James Brooks. How many more held stock we cannot tell; but the fact that members were stockholders and directors must have been known to the different departments, for, under the charter of these companies, the directors, and especially the government directors, are required to report in detail the condition of the companies, and the names of the directors once each year to the secretary of the interior, at Washington. If the reader would know the extent of congressionallegislation in favor of the rings, and combinations of men, plundering the people, he need only look over the different acts of congress passed directly for their benefit during the last twelve years. He will arise from their perusal feeling that the chief duty of the government is to foster, protect, and enrich these rings at the expense of the people.
These Pacific companies are required, by their charters, to construct telegraph lines along the route of their roads, and to transmit messages for the government at such rates as they charge other parties. The appropriations by congress show that $40,000 have been voted annually to pay for telegraphic dispatches, between the Atlantic and Pacific, but there is nothing to show that any such sum was due from the government for telegraphing. Among the appropriations is an item for the mileage of the government engineer for travel, from Cincinnati to Omaha, and from Omaha to Washington, and thence to New York; but the charters of the companies requiredthemto pay the expenses incurred on account of the services of persons appointed by the president to inspect these roads. Indeed, the action of congress is such as to induce the belief, that these roads, if not owned by the general government, are owned by congress, or congressmen, and that it is perfectly legitimate and proper for government to pay the cost of their construction, and of the telegraph lines, and also their running expenses. The energy and zeal manifested by congress, in aid of these corporations, and the great number and variety of acts passed for their benefit, demonstrate the fact that while the representatives of the people assemble at Washington ostensibly to legislate for the public generally, they devote their time to legislation for their own benefit, and that of the numerous corporations and companies of which they are members.
In scanning the names of the directors of the railroad corporations which have received large grants of lands, subsidies, and special and exclusive privileges, we find many ex-members of congress in whose terms of service these grants were voted. We also find members of congress who were directors at the time their relief and aid bills were passed. We find one member who is now a director in three of the companies receiving the largest sums from government, and which are considered the best of all, because of the opportunity they present toenterprisingmen of legislative and financial ability; and in order that proper provision should be made for his kindred, one of the brothers of this same congressman is a director in five of these land grant subsidy corporations. These jobs are "nice and fat," made so by the unjust legislation of congress, and being "nice and fat," the division and distribution of the spoils is made among these congressmen and their friends. The practice of voting the money and lands of the public to these corporations has become so common that it is considered legitimate to bribe or buy the votes and influence of certain congressmen in favor of certain grants. Large bribes have been offered, and perhaps accepted for these purposes. So common is the practice of lobbying these jobs through congress that it excites but little attention save in extraordinary cases, and elicits but little comment. The power and corrupting influence of these corporations have grown to such proportions that they and their friends in congress can disregard and defy public opinion, and compel all the departments of the government to yield to their demands. They plunder the people with impunity. They have transformed the government; while we are in name a republic, and theoretically the people govern, we are in fact an oligarchy, and corporations rule the country. If the reader has followed us thus far he will have seen that while the idea of public necessity has been put prominently forth as the excuse for the great donations made to railroad companies, and the apology for the special privileges granted to them, in fact, the real object has been to create by special charter a privileged class with facilities to amass fortunes, and by the power granted to this class of perpetual succession and exclusive right under the law, to compel the whole people to pay tribute to it. This power is so great at this time, that it controls the whole commerce of the country, and as we will hereafter demonstrate, it controls not only the financial, but also the judicial department, and reigns supreme in the general politics of the country. Looking at these charters the thought is presented to the mind, and the idea is incorporated in the charter, that the people of the whole country are petitioning congress to grant aid to these companies for the purpose of developing the country; that by a spontaneous movement on the part of the whole people congress is called upon to incorporate these different companies, and to grant lands and money to aid in the different enterprises as they are presented. To give color to this idea, the names of men from most of the states and territories are included among the incorporators, some fifteen or twenty of whom are named as provisional directors who are to hold their places until the first regular meeting of the company, and the election of officers. Congress fixes the time and place of meeting and the notice to be given to the stockholders, and to carry out the idea that it is to be a company in which all can participate, the charter provides that any person can subscribe stock and become a stockholder who desires to do so. In fact though, no petitions have been presented to congress, nor do any considerable number of the persons named as corporators know of the organization, or that their names have been used; nor is it intended that they should know; the fifteen or twenty interested parties who have formed their plan for a raid upon the treasury, are the only ones, besides their particular friends in congress, who are supposed to know anything about it. These fifteen or twenty men who have gotten up the scheme,meet and elect themselves directors, and are then ready for action. Having obtained their charters, and organized under them, the work of robbing the people begins. With their friends, and some of their directors in Congress, they have been able thus far to obtain all they have demanded. There is no authority for the assumption that the chartering of these companies is in obedience to the wish of the people, either expressed or implied. On the contrary, this action of congress has uniformly been in opposition to public opinion, and indeed it has excited popular remonstrance. None but the few who wish to get their hands into the public treasury have asked the interference of congress, or desired the government to aid in these enterprises. So great is their anxiety to aid in the development of the country that substantially the same companies undertake to construct all the roads for which congress will grant sufficient aid. All these railroad schemes which have received the special attention of congress were planned by a set of unscrupulous men, who combined to plunder the treasury.
The system of aiding in the construction of railroads by grants of land was inaugurated in 1850, by grants to the Illinois Central, and did not develop itself fully until 1862, when the plan of obtaining charters from congress, connected with grants of land and subsidies, was systematically adopted. Since the latter date, the practice has increased with fearful rapidity, and within the last four or five years it has assumed such immense proportions as to threaten the entire subversion of the government.
The greatest raid made upon congress for these grants and special charter privileges during any one term was at the session closing March 4th, 1868. When it is remembered that the public business did not require these roads, and that the people had not asked congress to aid in their construction, it seems incredible that in the fortieth congress representatives and senators should have introduced more thanone hundred and fifty bills and resolutionsto aid railroad companies. Yet such is the fact. A gentleman who spent much time in Washington, and examined into this matter writes as follows:
"The latest developments show that in the grandeur andnumber of their schemes of spoil and plunder, the congressional rings of railroad jobbers throw into the shade all other rings of the lengthy catalogue of confederate treasury robbers. * * * One hundred and fifty-nine railroad bills and resolutions have been introduced in the fortieth congress, and twice as many more are in preparation in the lobby; one hundred millions of acres of the public lands, and two hundred millions of United States bonds would not supply the demands of these cormorants. In other words, this stupendous budget of railway jobs would require sops and subsidies in lands and bonds, which, reduced to a money valuation, would swell up to the magnificent figure of half of the national debt!" He continues: "Among the jobs of this schedule is the Atchison & Pike's Peak railroad company, or Union Pacific Central branch, which, after having received government sops to the extent of six millions, puts in for seven millions more. Next comes the Denver Pacific and Telegraph company, which, having feathered its nest to the tune ofthirty-two millions, puts in for a little more, and this company is reported to be a mere gang of speculators without any known legal organization whatever—a set of mythical John Does and Richard Roes, who cannot be found when called for. Next, we have the Leavenworth, Pawnee, & Western railroad, now known as the Union Pacific, eastern division, chartered by the Kansas territorial legislature in 1855, subsidized with Delaware Indian Reserve lands in 1861, and then in 1862, by a rider on the Pacific railroad law, granted sixteen thousand dollars per mile in United States bonds and every alternate section of land within a certain limit on each side of the line of the road, and the privilege of a first mortgage (by subsequent amendment) to secure bonds issued by the company to the amount of sixteen thousand dollars per mile. It further appears that a clique of seceders from the old company illegally formed a new company, and having by force of arms taken possession of the road, are pocketing the spoils which legally belong to the old company. All this, too, with the consent of the president, the secretary of the treasury, and congress. From another source we learn that some half dozen Pacific branch or main stem railroads, northern and southern, are on the anvil, involving lands and bonds by tens and twenties and hundreds of millions; that Senator Pomeroy of Kansas, has seven of these jobs on the docket; Senator Ramsey of Minnesota, four; Senator Conners of California, five; and Senator Harlan of Iowa, four. Senator Pomeroy, however, distances all competitors in the number and extent of his jobs, for as it appears, they include a line from Kansas to Mexico, three bills for roads from Fort Scott to Santa Fe, in Texas, a South Carolina road through the Sea Island cotton section, two or three lines from the Mississippi river through to Texas, and a little private Atchison Pacific—one of the nicest and fattest speculations ever worked through. Is not this a magnificent budget, and is not the audacity of these railroad jobs and jobbers positively sublime?"
We do not vouch for the entire accuracy of the statements above quoted, but we know that much contained in them is absolutely true. If the congressional committee now investigating the alleged Credit Mobilier frauds, perform their duty honestly and faithfully, we will probably learn that the John Does and Richard Roes referred to, were Ames, Alley, and other distinguished persons in congress and out of it. Anexposeby this committee of the sum total voted to this eastern division of the Union Pacific, and the actual cost of the road and telegraph lines, would show a large margin for division, a goodly portion of which found its way into the pockets of members of congress. Can it be claimed that the needs of government required these large subsidies of lands and money? Had the people requested congress to make these grants? Has the development of this country returned to the people a tithe of the wealth thus recklessly given away by congress? The people are now groaning under the burdens imposed upon them by reckless or dishonest legislation at Washington. We might well stop and inquire, from what source the power for this kind of legislation is derived. Mr. Washburn of Illinois, now United States minister at Paris, in a speech in congress, in the winter of 1868, seems to have comprehended the situation, and in opposition to the system of plundering the public treasury spoke as follows:
"With the unreconstructed states admitted into the Union,with full and equal protection for all men, in all of the states, and with manhood suffrage secured by legislation or constitutional amendments, the minds of the people will turn to questions of finance, of taxes, of economy, of decreased expenditures, and honest and enlightened legislation—to questions of tariff, and to questions of railroads, telegraphs, and express monopolies which are sucking the very life-blood of the people—to the administration of the revenue laws and to the robberies and plunderings of the treasury by dishonest office holders. Already the eyes of the people of this country are upon congress. I may say they are upon the republican majority in congress, for that majority is now responsible before the country for the legislation of congress. It can make and unmake laws in defiance of executive vetoes. The republican party triumphed because it was pledged to honesty and economy, to the upholding of public faith and credit, and to the faithful execution of the laws. * * * The condition of the country, the vast public debt, the weight of taxation, the depreciated and fluctuating currency, the enormous expenditure of public money, mal-administration of the government, the extortion of monopolies press upon our attention with most crushing force. The people elected General Grant to the presidency, not only on account of the great and inestimable services he had rendered the country, in subduing the rebellion, not only on account of his devotion to the great principles of the republican party, but because they believed him to be emphatically an honest man, and an enlightened statesman who would faithfully administer the laws without fear, favor, or affection. The time has come when we are imperatively called upon to take a new departure. Added to the other terrible evils brought upon the country by the war for the suppression of the great rebellion, in the demoralization incident to all great wars, and to the expenditure of vast and unheard of amounts of public money; to the giving out of immense contracts, by which sudden and vast fortunes were made; the inflation of the currency, which engendered speculation, profligacy, extravagance, and corruption, by the intense desire to get suddenly rich out of the government and without labor, and the inventions and schemesgenerally to get money out of the treasury for the benefit of individuals without regard to the interest of the government. While the restless and unpausing energies of a patriotic and incorruptible people were devoted to the salvation of their government, and were pouring out their blood and treasure in its defence, there was a vast army of the base, the venal, and unpatriotic who rushed to take advantage of the misfortune of their country, and to plunder its treasury. The statute books are loaded with legislation which will impose burdens on future generations. Public land enough to make empires has been voted to private railroad corporations; subsidies of untold millions of bonds, for the same purposes, have become a charge upon the people, while the fetters of vast monopolies have been fastened closer and still closer upon the public. It is time that the representatives of the people were admonished that they are the servants of the people, and are paid by the people; that their constituents have confided to them the great trust of guarding their rights and protecting their interests; that their position and their power is to be used for the benefit of the people whom they represent, and not for their own benefit, and the benefit of the lobbyists, the gamblers, and the speculators who have come to Washington to make a raid upon the treasury."
The above shows the light in which Mr. Washburn, four years ago, viewed the matters of which we are now treating. Since the delivery of that speech act after act has been passed by congress in favor of these corporations, giving them greater privileges, releasing them from their obligations to government, discharging their liability to government for many millions of money, and to accomplish this, imposing upon the people additional burdens and taxes for which no equivalent has been or even will be given. The determination to plunder the government and people, seems to control not only the adventurers who go to Washington to lobby their schemes through congress, but also congressmen themselves, who become chiefs among this class of money and land grabbers. They vote to the corporations, of which they are a part, large sums in money and lands, and then use the means thus obtained for the purpose of bribing and corrupting their fellow members in favor of other and larger robberies.
The ostensible object in granting lands to railroad companies was to aid new and undeveloped portions of the country in procuring necessary railroad facilities for communication with the rest of the world; and to assist, by donations of alternate sections, in their development and settlement.
Whether these ends have been achieved is a matter of doubt. It is scarcely to be hoped that the people will ever be reimbursed for the vast extent of lands, and large amount of bonds, which have been so recklessly lavished upon so many railroad companies. When the proposition to grant lands to railroad companies was brought before congress, the right to donate them to private corporations was not admitted; the right of the states to have control of the lands was not questioned. Recognizing this latter right, the lands were granted to the states for the purpose of aiding in the construction of certain roads within their borders. It was not until 1862 that congress came to the front, created private railroad corporations, and endowed them with lands and money. Nor did these corporations commence their wholesale raid upon the public treasury until after congress went into the business of creating railroad companies. Is it true that the country has been benefited in proportion to the grants made? Are the people richer because of these grants? Has the country, as a general rule, been more rapidly settled and improved by this railroad legislation? We are aware that the idea is commonly entertained that the people receive an equivalent for these railroad grants in the increased facilities for travel and transportation of freights. Were it true that the roads receiving grants of land were more speedily constructed, or that transportationover them was less expensive, then we would admit that the benefits derived would in some degree be an equivalent for the aid afforded them. To ascertain the facts let us see how this legislation has affected the west, taking Iowa and Kansas as illustrations.
In the first place, for every acre of land given to railroads in these states the people have paid $1.25; inasmuch as they are charged $2.50 for the reserved alternate sections. Taking the land granted in Iowa, the amount charged to the people of this state is $9,009,841, or, taking the grants already certified to, the people are charged with $4,387,303. This sum, amounting to about $4.00 per head, has been taken from the people of Iowa and given to railroad companies, and must be charged against the benefits received. The construction of about eleven hundred miles of railroad in Iowa was aided by land grants. The cost, at $30,000 per mile, would be less than $33,000,000. The amount the people are obliged to pay into the public treasury for thereserved sections, in making up the account should be charged to the land grant roads, as also the increased price they are compelled to pay the companies for the donated lands, which range from $5.00 to $50.00 per acre; and this, too, of lands that under the general laws they could have entered at $1.25 per acre.
The amount taken from the people who settle in and improve the state and develop its resources, which they must pay to the government and these railroad companies before getting title to their lands, is about $25,000,000 more than would have been demanded of them but for these land grants. What have they received in return? The companies in Iowa receiving grants of land have not extended their lines across the state more rapidly than companies receiving no grants. In fact, roads built entirely with private means have been constructed more rapidly than these land grant roads. The companies receiving the grants did not keep pace with the settlement of the country; the people, as pioneers, were always in advance of the roads. It was only when the population of the country was sufficient to afford a paying business that the roads were extended. The excuse paraded by congress for making these grants was that the companies would advance their roads so as todraw after them an agricultural population. This has not been done. On the contrary, the lands outside of the boundaries of the railroad grants were the first settled, and the most rapidly developed. Has the result been different in Kansas? The number of miles of railroad in this state in 1870 was about seventeen hundred, of which nearly one thousand received grants of land, and the Kansas Pacific company $6,303,000 in subsidy bonds. Companies constructing these roads received land grants to the amount of 5,420,000 acres. At $1.25 per acre the grants amount to $6,775,000. This sum is charged upon the reserved sections as in Iowa, and must be paid by the people of Kansas. Add to this the $6,303,000 subsidy bonds, and the Kansas railroads have cost the people of that state and the public treasury $13,000,000, outside of the immense local aid voted to them by the different cities, towns and counties. The population of this state in 1860 was 107,206. In 1870 it was 362,872. Saying nothing about the increased prices to be paid to the railroad companies for the lands granted to them, or the large amount of subsidy bonds, and leaving out the immense amounts of local aid afforded to the different railroads, and the sum to be charged to the railroads for the extra price of the reserved sections is about $20.00 per head for the entire population. Looking at the facts as they are developed we conclude that the people have not been benefited by these grants of lands, that railroad companies are the only parties benefited, that the people are not richer because of these grants, but, on the contrary, they would have made money by giving to the railroad companies the actual cost of the roads.
Has the country been more rapidly settled and improved by reason of this special legislation? The leading idea advanced in favor of grants to railroad companies has been their necessity in developing the new states and territories. We are pointed to the new states of Iowa, Minnesota, Nebraska, Kansas, and Nevada, and the territories of Colorado, Utah, and Wyoming, and referred to the fact that these states have a population of 2,874,000, and 9,000 miles of railroad; and from this exhibit an argument is deduced in favor of these grants. The theory is that the population has followed the roads. Isthis theory correct? In 1850 Iowa had a population of 676,913, and in 1870 a population of 1,191,729. In 1860 there were 655 miles of railroad, about three-fourths of which had received grants of land. In 1870 the number of miles of railroad had increased to 2,668. Of this increase not more than one-third was aided by land grants, private enterprise having constructed at least two-thirds of it; and the same kind of enterprise is still at work, and since 1870 has increased the number of miles to 3,250. The land grants were nearly all made to Iowa in 1856, yet the energetic and rapid building of roads was not shown until after the close of the war, nor until the people had advanced beyond the roads, and their necessities demanded them. Kansas in 1860 had a population of 107,209; In 1870 it had increased to 364,400. Prior to 1864 it had no railroads. In 1870 it had 1,501 miles, all of which, save forty miles, was built in four years. Nearly all of the Kansas roads were aided by grants, and some of them by subsidy bonds. In 1870 there was one mile of railroad in Kansas for every 242 inhabitants. To construct these roads in Kansas, counties, cities, and towns have taxed themselves by vote to the amount of $4,400,000, or about $9.00 to each inhabitant. This debt must be charged to the railroad account, and a similarly voted indebtedness in Iowa to the amount of about $6,000,000. The valuation of property in Iowa in 1860 was $205,166,000, and in 1870 $302,515,000. Thus while the population of the state had nearly doubled, and the lines of railroad had more than quadrupled, the valuation had increased less than fifty per cent, and at least one-half of this increase was in the value of railroads. Deducting from the increased valuation of property in Kansas the value of railroads there, and about the same state of facts appears. The figures in these two states will show, that so far from the donations of land and money adding to their wealth the reverse is true. And this position is supported by the exhibit of other states. In Pennsylvania the population has increased since 1860, 600,000. The mileage of railroads has nearly doubled in this time, and the valuation of property has increased from $719,253,000 to $1,318,236,000. In that state, where no government aid has been voted to railroads, the wealth of the state has nearly doubled, while in the same timein the state of Iowa it has not increased fifty per cent, land grants included.
The population of Nebraska has increased from 7,000 to 42,000 in the last decade. This state has 593 miles of railroad, or one mile of railroad to each seventy of its population, nearly all aided by grants.
California had a population in 1860 of 380,000. In 1870 it had increased to 560,000.
Colorado in the last decade increased from 34,000 to 40,000. In this territory there are 392 miles of railroad, all built by grants of lands and bonds.
Of course the roads through the territories are the Pacific roads, but as the states and territories were both cited as illustrations of the wisdom of congress in making grants to companies for the construction of railroads, we have examined the matter somewhat in detail to show the weakness of the argument. If we take the census of 1860 and that of 1870, and observe the increase in population, wealth, and railroad building, we will discover that the laws of trade, of supply, and demand have controlled the whole matter, and that the growth of the country has not been increased because of these grants from government. In all cases where the construction of railroads has approached the frontier line of settlement, it has drawn but little population after it, aside from the employes of the road. The real pioneer immigration, that which opens and improves the country, is doing now what it has done for the last generation, moving steadily to the west, followed and surrounded by railroad sharks and jobbers, who, after getting all they can from government, prey upon the people; and the people of the new states, instead of being blessed with the means of adding to their wealth, find themselves burdened with debt and taxes, fastened upon them by the construction of railroads, many of which are of doubtful utility. As a necessary consequence of the railroad taxes upon their lands, and the excessive charges imposed for the transportation of their produce, their farms do not appreciate in value, and the anticipated rapid increase in population and wealth of the locality is not realized. From a view of the whole situation, regarding the benefits accruing to the people from these grants to railroad companies, with what the people have paid for them,the withholding of these railroad lands from market, and the high prices charged per acre by the companies, together with the unjust privileges granted to these corporations, we conclude that the people of the new states and territories have not received an equivalent for the grants made to railroad companies. We are aware that a different opinion prevails, and that our conclusions will be controverted; but when it is remembered that thousands of people have left Iowa, or, coming from the east, have refused to settle in Iowa, because of the fact that lands could only be had by purchase from railroad companies at extravagant prices, and that for this reason vast tracts of Iowa lands are yet unimproved which would now be settled upon and cultivated had they not thus been withdrawn from the market, it must be admitted that Iowa would have had a greater population, and greater wealth, had her railroad companies received no land grants. And what is true of Iowa is also true, as a general rule, of other states and territories. Perhaps an exception exists in the far western territories, whose gold and silver mines are in themselves an exception to the general rule, and where agriculture has but few followers.
The advocates of the railroad land grant and subsidy bond system for the settlement of a country have the following to say in its favor. We quote from theRailroad Manualbefore referred to: "One of the most remarkable things connected with the progress of this country is the construction of railroads in advance even of the lines of settlement of our people. Such result is largely due to the grants made by government of lands for the encouragement of these works. Never was a policy more wise or more beneficent." No instances can be shown where railroads have been built in advance of the line of settlement, save when the objective point could only be reached by passing over an unsettled country, as in the case of the road from the Atlantic to the Pacific states. In all other cases, railroad companies have awaited the settlement and development of the country, and followed, not led, our pioneer corps. Of the wisdom and beneficence of these grants the people can judge from their acquaintance with the workings of the system, and the wholesale robberies and frauds practiced by the companies, to some of which we have already referred. Again the author says: "The government has been greatly thegainer in a pecuniary point of view, as it was enabled to sell the land reserved at twice the established rate." It is not clearly seen how thisgainis made. The people, who are the government, give away one-half of their lands, and then pay into their treasury just money enough for the remaining half to make up the value of the lands they have given away. The only gain the government has made (and this is not a pecuniary one) is the reflection that the men who have received these large grants have become rich, while the people have been deprived of their lands at the original price; they must pay for one-half of them a double price, and for the residue just what they can buy it for from the corporations to whom their servants have donated it. This author says: "That the public has reaped the advantage of the construction of some ten thousand miles of railroads, that otherwise would not have been built." Is this true? In Iowa the land-grant roads were not built as fast as other roads having no grants, and the companies finally completed them because they were about to lose their lands by longer delay. And in other states and territories some of these land grant roads are dragging their slow length along, and are being constructed only as fast as the lines are settled with a sufficient number of inhabitants to make the business of the roads profitable. After showing that in certain states and territories there is now one mile of railroad for each three hundred inhabitants, the author adds: "This is certainly a most wonderful exhibit, and is one no other nation can display, and which in our case has only been secured by the wise, benevolent policy of our government, which in this way did more to give remunerative employment to the poorer classes than any other legislation could adopt." It is certainly a "most wonderful exhibit." It is one that "no other nation can display;" but its wisdom and benevolence are matters of grave doubt. If we add to this "wonderful exhibit" the $65,000,000 stolen from the people by corrupt men and interested legislation, with the $3,126,000 annual interest that the whole people are taxed to pay, because the Pacific railroad companies and the congressional Credit Mobilier have wrongfully appropriated this vast sum to their own use, it presents truly "amostwonderful exhibit," without a parallel in any country in the world, but its wisdom and benevolence are certainly wanting.
We now approach one of the grandest schemes for defrauding a people ever conceived in the breast of the speculator. Before considering the Credit Mobilier, and to show the utter rottenness of the policy of affording congressional aid to railroads, indulge us in a brief re-survey of the subsidy bonds issued to the Pacific railroad corporations. We may concede that at the date of the original charter of these companies, there were no congressman interested in the grand scheme, and that it was planned by outside combinations. The charter received various amendments, with additional aids and privileges after members of congress had became interested; these amendments were made while directors of, and contractors for, these Pacific roads were occupying seats in congress. Whether or not they voted for these amendments does not appear, but it is certain they did not oppose them. As we have already shown, the aid voted by congress was ample to build and equip these roads, taking the statements of the Railroad Manual upon the character of the country through which they pass, and the average cost of railroads, as the basis for our conclusion. The companies could have built the roads without using the capital stock they reported as paid up. The Union Pacific has made no public exhibit of the cost of its portion of the roads, and from this fact we are at liberty to infer that an honest exhibit would present a bad look. Facts enough have been disclosed to prove that the stockholders and directors of the Union Pacific company had formed a combination for the purpose of defrauding the government and the people. The letting of the contract for the construction of its division of the roads presents one of the most perfect combinations for private speculation at the expense of the public that was ever planned or executed. When this division was completed, according to the statements of the company it was indebted in the sum of $112,911,512. The cost of the whole line of road, at the highest price per mile given, to-wit, $50,000, would amount to less than one-half of the reported indebtedness of the company, including the paid-up capital reported as $37,000,000. To show what was done with the subsidy bonds issued to this company, we must look at the contract made by the directors with Oakes Ames for the construction of six hundred and sixty-seven miles of the road, and the subsequent transfer of this contract to the Credit Mobilier of America. Let us remember that, in addition to the bonds issued by government to the amount of $16,000 per mile for a part of the road, $32,000 per mile for a part, and $48,000 per mile for a part, congress, by a subsequent amendment to the charter, allowed the company to issue its own bonds, for a like amount per mile, as first mortgage bonds, and that at the time of making the contract now under consideration, the directors of the company, and of the Credit Mobilier were the same persons, some of whom were at that time and since members of congress. With these facts before us, we can see the reason for the excess of the debts over the cost of the road, as well as for many of the peculiar features of this singular contract. The executive committee of the company was composed of the following named persons: Oliver Ames (brother of Oakes Ames, contractor and member of congress), C. S. Bushnell, Springer Harbaugh, and Thomas C. Durant. The seven directors of the company who were made trustees, and who signed the transfer of the contract to the Credit Mobilier, were Thomas C. Durant, Oliver Ames, John B. Alley (a member of congress), Sidney Dillon, C. S. Bushnell, H. S. McComb, and Benjamin E. Bates; and the president of the Credit Mobilier was Sidney Dillon.
The grant of lands and bonds was made to the railroad company, as well as the right to issue their first mortgage bonds. All of the contracting parties were directors in the railroad company, and in the Credit Mobilier. As a body they controlled the whole matter. If a desire to protect the best interests of the company, and to deal honestly with the public hadactuated these men, and not a determination to plunder the public, no reason can be shown for this strange contract; but if it was the intent of a combination of men to defraud the public and the government, then the contract and its assignments can easily be accounted for. All of the stockholders of the company, at the time the contract was made with Oakes Ames, by indorsement on the back of their certificates of stock, appointed the above named seven trustees, irrevocably to represent their stock at all business meetings and elections of directors, during the existence of the Ames contract. The following is a correct copy of the contract and assignments:
Agreement made this 16th day of August, 1867, between the Union Pacific railroad company, party of the first part, and Oakes Ames, party of the second part, witnesseth:
That the party of the first part agrees to let and contract, and the party of the second part agrees to contract, as follows, to-wit:
First.The party of the second part agrees and binds himself, his heirs, executors, administrators, and assigns to build and equip the following named portions of the railroad and telegraph line of the party of the first part, commencing at the one-hundredth meridian of longitude, upon the following terms and conditions, to-wit:
1. One hundred miles at and for the rate of $42,000 per mile.
2. One hundred and sixty-seven miles at and for the rate of $45,000 per mile.
3. One hundred miles at and for the rate of $96,000 per mile.
4. One hundred miles at and for the rate of $80,000 per mile.
5. One hundred miles at and for the rate of $90,000 per mile.
6. One hundred miles at and for the rate of $96,000 per mile.
Second.At least three hundred and fifty miles shall be, if possible, completed and ready for acceptance before the first day of January, 1868, provided the Union Pacific railroad company transport the material. The whole to be constructed in a good and workmanlike manner, upon the same general plan and specifications as adopted east of the one-hundredth meridian of longitude. The party of the second part shall erect all such necessary depots, machine shops, machinery, tanks, turn tables, and provide all necessary machinery and rolling stock at a cost of not less than $7,500 per mile, in cash, and shall construct all such necessary side tracks as may be required by the party of the first party, not exceeding six per cent of the length of the road constructed, and to be constructed under this contract. The kind of timber used for ties and in the bridges and in its preparation, shall be such as from time to time may be ordered or prescribed by the general agent, or the company, under the rules and regulations and standard as recommended by the secretary of the interior, of the date of February—, 1866.
Third.Whenever one of the above named sections of the road shall be finished, to the satisfaction and the acceptance of the government commissioners, the same shall be delivered into the possession of the party of the first part, and upon such portions of the road, as well as on that part east of the one-hundredth meridian now completed, the party of the first part shall transport, without delay, all men and material to be used in construction at a price to be agreed upon by the party of the second part, his heirs, executors, administrators or assigns, and the general agent, but not less than cost to the party of the first part.
Fourth.The party of the second part, his heirs, executors, administrators or assigns, shall have the right to enter upon all lands belonging to the company, or upon which the company may have any rights, and take therefrom any material used in the construction of the road, and may have the right to change the grade and curvature within the limits of the provisions of the act of congress for the temporary purpose of hastening the completion of the road; but the estimated cost of reducing the same to grade and curvatures, as establishedby the chief engineer, or as approved from time to time by the company, shall be deducted and retained by the party of the first part, until such grade and curvature is so reduced.
Fifth.The party of the second part, his heirs, executors, administrators, or assigns, is to receive from the company and enjoy the benefits of all existing contracts, and shall assure all such contracts and all liabilities of the company accrued or arising therefrom for work done or to be done, and material furnished or to be furnished, for or on account of the road west of the one-hundredth meridian, crediting, however, the party of the first part on this contract all moneys heretofore paid or expended on account thereof.
Sixth.The party of the second part, for himself, his heirs, executors, administrators, and assigns, stipulates and agrees that the work shall be prosecuted and completed with energy and all possible speed, so as to complete the same at the earliest practicable day, it being understood that the speed of construction and time of completion is the essence of this contract, and at the same time the road to be a first-class road, with equipments; and if the same, in the opinion of the chief engineer, is not so prosecuted, both as regards quality and dispatch, that then the said party of the first part shall and may, through its general agent or other officer detailed for that purpose, take charge of said work and carry the same on at proper cost and expense of the party of the second part.
Seventh.The grading, bridging, and superstructure to be completed under the supervision of the general agent of the company, to the satisfaction of the chief engineer, and to be of the same character as to the workmanship and materials as in the construction of the road east of the one-hundredth meridian.
It is, however, understood that all iron hereafter purchased or contracted for, shall be of the weight of not less than fifty-six pounds to the yard, and to be fish bar joints.
Eighth.All the expenses of the engineering are to be charged and paid by the party of the second part, except the pay and salary of the chief engineer and consulting engineer, and their immediate assistants, and the expenses of the general survey of the route.
Ninth.The depot buildings, machine shops, water tanks, and also bridges shall be of the most approved pattern, and they, as well as the kind of masonry and other material used, shall be previously approved by the general agent and chief engineer of the company, and all tunnels shall be arched with brick or stone, when necessary for the protection of the same.
Tenth.Payments to be made as the work progresses, upon the estimates of the chief engineer, in making which the engineer shall deduct from each section its proportion of the cost of equipment not then furnished, station buildings, superstructure, and cost of telegraph, but all materials delivered or in transit for the account of the company may be estimated for.
Eleventh.Payments hereon shall be made to the party of the second part, his heirs, executors, administrators, or assigns, in cash; but if the government bonds received by the company cannot be converted into money at their par value net, and the first mortgage bonds of the company at ninety cents on the dollar net, then the said party of the second part, his heirs, executors, administrators, and assigns shall be charged thereon the difference between the amount realized and the above-named rates; provided the first mortgage bonds are not sold for less than eighty cents on the dollar, and if there shall not be realized from the sale of such bonds an amount sufficient to pay the party of the second part, his heirs, executors, administrators, or assigns, for work, as stipulated in this contract, and according to the terms thereof, then such deficiency shall from time to time be subscribed by said party of the second part, his heirs, executors, administrators, or assigns, to the capital stock of said company, and proceeds of such subscriptions shall be paid to said party of the second part, his heirs, executors, administrators, or assigns, on this contract.
Twelfth.On the first one hundred miles on this contract, there shall be added to the equipment now provided for and intended to apply on this section as follows, viz: Six locomotives, fifty box cars, four passenger cars, two baggage cars, and a proportionate amount of equipment of like character be supplied to the second section of one hundred miles, after the same is completed.
Thirteenth.The amount provided to be expended for equipment, station buildings, &c., shall be expended under the direction of the party of the first part, and in such proportion for cars, locomotives, machine shops, station buildings, &c., and at such points as they may determine; the party of the first part to have the full benefit of such expenditures without profit to the contractor, or they may, in their option, purchase the equipment and expend any portion of said amount provided at any point on the road where they may deem the same most advantageous to the company, whether on the section on which said reservation occurs or not.