Letters such as those quoted display the state of mind of the Central Pacific associates during the months when the Thurman bill was under discussion. It was perhaps natural that they should have opposed sinking fund legislation, for this cut into the surplus which the Central Pacific would otherwise have had for dividends, and depressed the price of the railroad’s securities. Nor, indeed, was it perfectly clear that the new legislation did not constitute a breach of the contract between the Pacific railroad companies and the government which could be deduced from the Acts of 1862 and 1864. The legislation in these acts had, it is true, reserved to subsequent Congresses the right of amendment and repeal, but it was uncertain, nevertheless, to what extent this right could properly be exercised. On this point a decision of the Supreme Court was had in 1878, upholding the constitutionality of the Thurman Law on broad grounds, but by a divided court.[545] Charge Against Railroad The unfortunate fact about the Thurman Act, however, was not that it excited the anger of representatives of the railroad companies to which it applied, but that it proved a failure in its primary purpose of providing for the eventual retirement of the subsidy bonds. But before summarizing the workings of the law in this respect, a word may be said regarding certain disputes which occurred in the course of its administration. In February, 1881, Thomas French, Auditor of Railroads, made the charge that the Central Pacific was diverting business from the subsidized portions of its line to its leased properties in order to lessen the payments required under the Thurman law. The basis for this charge, so far as reported, appeared to lie in the fact that the net earnings of the Central Pacific were decreasing, while those of the Union Pacific were going up. Mr. French suggested that the Pacific railroads be required to contribute up to 50 per cent of net earnings for retirement of the government debt, instead of up to 25 per cent as then required by the law.[546] Mr. French’s suggestion was not adopted, but the government subsequently advanced the claim that it had the right to retain all the compensation for service rendered to the government by the bond-aided companies without regard to the conditions of construction of particular sections of the road. The company took a different view of the matter, but in deference to an opinion of the Attorney-General on this point, the Secretary of the Treasury in 1884 withheld compensation on the entire mileage of the Pacific railroads pending an authoritative decision. The Supreme Court, however, ruled in favor of the companies,[547] and the sums withheld had to be paid over.