In the third place, the Southern Pacific Company leased the Central Pacific Railroad for ninety-nine years from the first of April, 1885, for a rental which might vary from $1,200,000 to $3,600,000 a year, according as the earnings of the Central Pacific and leased lines north of Goshen might be small or large. This substantially corresponded to the 2 per cent and the 6 per cent on the capital stock mentioned in the minutes of the associates. The Southern Pacific assumed all Central Pacific obligations except the payment of the principal of indebtedness incurred or guaranteed by that company, and various minor adjustments and assignments were made which it is not necessary to describe.[214] Mr. Stanford has testified that in fixing the rental of $1,200,000 the business of the previous years and the prospects of competition in the future were taken into account.[215] The United States Pacific Railway Commission approved the terms of the lease two years later. In 1888 the minimum rental was changed to $1,360,000 and the maximum to $4,080,000, in consequence of the extension of the Central Pacific from Delta, California, to a connection with the Oregon and California Railroad at the Oregon boundary. In 1893 the Southern Pacific complained that it was suffering very considerable losses under the lease and the terms were once more revised. Instead of a rental with a fixed minimum, the Southern Pacific now agreed to pay $10,000 a year for the leased property, plus all net earnings up to 6 per cent on the capital stock of the Central Pacific Railroad and one-half the excess over 6 per cent.[216] It was provided in the fourth article of the new lease that if the Southern Pacific should make any advances for payment on account of the Central Pacific, it should be entitled to receive interest on these advances at the rate of 6 per cent. On the 22d of March, 1894, this fourth article of the amended lease was again changed by inserting the words “lawful interest” instead of “interest at 6 per cent per annum” upon advances which might be made by the Southern Pacific Company. At the same time it was agreed between the Central Pacific and the Southern Pacific that if at any time it appeared that, by the operation of the agreement, either party was being benefited at the expense of the other, the agreement should be revised and changed. On the whole the earnings of the Central Pacific were less than were expected under the lease, particularly during the years 1888-93. Yet part of the difficulty arose from preferential solicitation of freight over the Sunset route, and for the rest the rental of the property was adjustable, as experience showed. CHAPTER IX THE CASE OF DAVID D. COLTON Meeting the Associates