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THE SELECT COMMITTEE
HOUSE OF REPRESENTATIVES,
APPOINTED UNDER THE
RESOLUTION OF JANUARY 6, 1873,
TO MAKE INQUIRY IN RELATION TO
THE AFFAIRS OF THE UNION PACIFIC RAILROAD COMPANY, THE
TO SAID COMMITTEE.
GOVERNMENT PRINTING OFFICE.
AFFAIRS OF THE UNION PACIFIC RAILROAD COMPANY.
FEBRUARY 20, 1873.--Ordered to be printed and recommitted.
Mr. JEREMIAH M. WILSON, from the Select Committee (No. 2) on the
Credit Mobilier, &c., made the following
The select committee appointed under the resolution of the House of Jan
uary 6, 1873, to make inquiry in relation to the affairs of the Union Pacific Railroad Company, the Credit Mobilier of America, and other matters specified in said resolution and in other resolutions referred to said committee, now submit to the House the following report as to a portion of the matters therein :
By the statutes of July 1, 1862, and July 2, 1864, which, for most of the purposes of this discussion, may be treated as a single act, Congress created a corporation to be known as the Union Pacific Railroad Company, with authority to construct and maintain a railroad and telegraph from a point on the one hundredth meridian of longitude west from Greenwich to the western boundary of Nevada Territory, upon a route and on the terms specified, there to connect with another road largely endowed by the Government, so as to form a continuous line of railroad from the Missouri River to the navigable waters of the Sacramento River in California, and thereby to unite the railroad system of the Eastern States with that of California, strengthen the bonds of union between the Atlantic and Pacific coasts, develop the immense resources of the great central portion of the North American continent, and create a new route for commerce from the Atlantic and Europe to the Pacific and Asia. By an act passed July 3, 1866, the company was authorized to locate and construct its road from Omaha, in Nebraska, without reference to the original initial point at the one hundredth meridian. To aid in accomplishing these vast results, the corporation was clothed by the Government with a proportionally vast endowment. The right of way through the public land, the Government undertaking to remove ail Indian titles, for a space of two hundred feet in width on each side of its entire route; the right of eminent domain to appropriate necessary private land-space for depots, turnouts, &c.; public lands to the amount of ten alternate sections per mile within the limits of twenty miles on each side of said road, were given to this corporation.
It was further provided that upon the certificate of three commissiopers, appointed by the President, of the completion and equipment of every section of twenty consecutive miles of said railroad and telegraph in accordance with the provisions of the act, the Secretary of the Treasury should issue to the corporation bonds of the United States of $1,000 each, payable in thirty years after date, with interest at the rate of 6 per cent. per annum, payable semi-annually, to the amount of $16,000 per mile for a portion thereof, and $32,000 per mile for a portion, and $48,000 per mile for a portion. These bonds were to be a loan to the corporation. To secure their repayment the act of 1862 provides that their issue shall, ipso facto, constitute a first mortgage on the whole property of the compaży. This lien was, by the act of 1864, subordinated to a mortgage executed by the corporation to secure its own bonds for an amount equal to the amount issued by the Government, as aforesaid. Pursuant to these provisions, the company has received from the Government bonds to the amount of $27,236,512, and has issued its own bonds to the amount of $27,213,000.' The corporation has also received, by patents issued, 654,419 acres of the public lands, leaving about 11,345,580 acres, not yet patented, embraced in the grant. It has issued bonds, called land-grant bonds, to the amount of $10,400,000. These land grant bonds are secured by a deed of trust executed to John Duff and Cyrus McCormick, covering all the lands embraced in the grant.
It has s also issued what are called income bonds to the amount of $9,355,000. These bonds are secured by a pledge of the income of the road to three trustees, Benjamin E. Bates, John R. Duff, and F. Gordon Dexter. It has also issued stock to the amount of $36,762,300. It has also taken possession of and is enjoying the land needed for its way, turnouts, stations, &c.
It will thus be seen that all that the Government stipulated to do in aid of this enterprise has been done.
The aid thus afforded by the Government was accompanied with precise directions as to the proceedings of those to whom it was intrusted, and Congress endeavored to provide sufficient safeguards to secure the faithful performance of their trust. It was provided that the capital stock should be paid in in money. In relation to this the act is emphatic and unmistakable. There were to be ten directors, each of whom must be the bona fide owner of five shares of the capital stock. The act of 1862 provided that the shares should be of the par value of $1,000 each, of which not more than two hundred should be owned by any one per
This was changed by the act of 1864, so that the shares might be held in small quantities, and the par value was fixed at one hundred instead of one thousand dollars. Both acts provided that the stock should be actually paid in full in money, in assessments of not less than 5 per cent., at such intervals, not to exceed six months, as should be determined by the directors.
The interests of the Government were to be especially protected by five Government directors appointed by the President, one of whom sliould be a member of every standing and special committee. Annual reports were required to be made to the Secretary of the Treasury, setting forth the names and residence of the stockholders and officers, the amount of stock subscribed, the amount of stock paid in, the indebtedness of the road, and its receipts. The claim of the Government to a reimbursement for the loan of its bonds was secured by a second mortgage or lien upon the road ; by the obligation to apply at least 5 per cent. of the net earnings after the road is finished thereto; and whenever the net earnings of the road amounted to 10 per cent. of the cost, Congress reserved the right to legislate for the reduction of the fares; and, if unreasonable in amount, to fix and establish the same by law; and further reserved the power, having due regard to the rights of the corporation, to add to, alter, amend, or repeal the act.
The purpose of the whole act was expressly declared to be “to promote the public interest and welfare by the construotion of said railroad