Chapters on the History of the Southern PacificDaggett, Stuart
History
Chapters on the History of the Southern Pacific
Daggett, Stuart
Pacific railroads -- History; Railroads -- California -- History; Southern Pacific Company
Indeed, if the company had taken advantage of the time allowed by
Congress for the completion of the road, they could not only have sold
the government bonds at par, but could also have disposed of their own
first mortgage bonds at their face value, which would have been a net
gain, over and above what was actually received, of $7,120,074, the
interest on which for thirty years would have been $12,816,132, which
would make an aggregate saving on the government bonds and the bonds
issued by the company, principal and interest in round numbers, of
about $40,000,000.[518]
In the second place the Central Pacific insisted that there should be
credited to it a portion of the amount which the government saved in
the transportation of government employees and freight as a result of
the rapid construction of its railroad. Under the terms of the Acts
of 1862 and 1864, the Central Pacific and Union Pacific might have
delayed completion of their road until July, 1876. As a matter of fact
the through line from Sacramento to Ogden was opened in May, 1869. The
consequent saving to the government was estimated at $47,763,178, of
which the Central Pacific proportion was set at $21,971,062. A similar
calculation laid before the United States Pacific Railway Commission in
1886 reached the conclusion that the total saving to the government up
to January 1 of that year had reached the sum of $139,347,741 on the
Union and Central Pacific combined. The basis for these estimates was
found in a comparison of the rates which the government had paid for
rail movement and the rates which it would have had to pay for ox team
and mule team transportation.
Still a third claim was based upon an alleged loss of business
consequent upon government subsidies to other transcontinental roads.
The loss of earnings to the two roads from this cause was set at
$37,000,000, of which the Central Pacific share was put at 46 per cent,
or $17,000,000. Stanford did not deny that the government had a right
in its discretion to aid other lines of railroad, but he took the
position that if Congress found it in the interest of the country to do
something which deprived the Central Pacific of the means of paying
its debts, then it should compensate the Central Pacific for this
action.[519]
No Basis for Claims
These three principal claims for indemnity were set up by officials of
the Southern Pacific at one time or another as complete offsets to the
obligations laid upon the company by the Acts of 1862 and 1864. Among
minor equities should be mentioned also an alleged loss to the Southern
Pacific by reason of the government’s slowness in issuing patents to
land. Another claim was based on a loss in respect to sinking fund
investments of the company; and still another on the shipment of United
States mails by other than bond-aided lines when the use of the latter
was possible.
Public-domain text, read in full here on John Shaqi.
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