LIBRARY
• UREAU or RAILWAY ECONOA^iÇlS.
WASKI.VJGTOR. A
EAILEOAD FAEES IN CALIFOENIA.
i<
As the charges of railroads in this State has become a subject
of discussion and proposed legislative action, the following arti¬
cles relating thereto have been brought together and put in
pamphlet form, as a better means of understanding the points,
by The Compiler.
[From the Tirgiiiia Citv Daily Trc.Rpas.R, November 2.3,1SG7.]
Central Pacific Railroad Company.
It appears that the people of Placer and Nevada countie.s, in
California, arc petitioning the Legislature of that State to re¬
duce to one-tlfird of the present rates the fares and freights of
the Central Pacific Eailroad.
As we understand it, tlic general railroad law of that State
limits these charges on all railroads to ten cents per mile for
passengers, and fifteen cents per ton per mile for freight. These
rates have been charged for j-ears b}- the cheap valley roads,
without complaint, but arc now claimed to be exorbitant when
collected by the most expensive mountain railroad in the United
Statoij. The old stage rates were generally twenty cents per
mile per passenger, and from thirty cents to a dollar per ton per
mile for freight, by teams, according to the condition of the
roads. In the "Winter of 18G5-6, two cents per pound was jiaid
for .some time for the hauling of freight from Colfax to Dutch
Flat, a distance of only fifteen miles. The railroad does the
[ 2 ]
samJ service with regularity and dispatch, Winter and Summer,
foT about a tenth of a cent per pound. The Legislature of Cali-
fcrnia fixed these rates to induce capitalists to build railroads—
-rhich ar-o much needed. It said to railroad men, through the
laws, " Come and build railroads, any where in the State, and
you shall have the right to collect any rates you please, not
exceeding a certain amount."
Wen of enterprise have accepted this proposition, relying
upon the good faith of the State that when they had invested
their money the State would live up to her part of the bargain.
Several raih-oads have been built, but the result is, notwith¬
standing the rates allowed by law, not one of them has ever
been able to pay a dividend to its stockholders, and some have
not been able to pay even the interest on their bonded indebt¬
edness. If the State of California breaks its faith with railroads
—for it cannot reduce the rates on the Central Pacific without
reducing on all the others—then farewell to all future railroad
building in that State. Wo man with any senee will ever invest
another dollar in railroads there.
It is a serious question, whether the present rates are not a
contract, in the eye of the law, which the Legislature cannot
impair. At any rate, it is very much like attempts to regulate
steamboat and stage fares, the price of goods, and a thousand
other matters, which will not bear examination. Some may
think the railroad company will make money under the present
rates. It ought to make money, and it is to the interest of the
public that it should, as it will, induce others to build railroads.
It is but a short time since this enterjirise of building a railroad
over the mountains was regarded quite generally as extra haz¬
ardous, and it was confidently predicted that it could never be
done ; but the men who are building this road took all the risks,
and it is but just that they should enjoy the fruits of their
labor. The high grades and numerous curves on the Central
Pacific necessarily makes it an expensive road to operate. We
understand that it requires four locomotives to haul a freight
train up the mountain that is easily hauled over the valley por¬
tion by one, thus quadrupling the expense. This is an impor¬
tant consideration in this question of rates. We shall not be
surprised if these petitions are extensively signed; and the
[3 ]
only wcnder is at tho modesty of the petitioners in not aslíig
that the railroad company be compelled to carry them all fre.^.
As well ask this as to ask a redaction to one-third, which will
probably not pay expenses. It may be said that the company
receives large subsidies from the Government, therefore should
he compelled to work without profit. It receives 848,000 per
mile on its mountain road, in Government bonds, which hardly
realize to the company sixty cents on the dollar in coin—equal
to $39,000 per mile. This is a very small item towards paying
the enormous cost of the roacl. But to secure this, they were
limited in time, and were compelled to rush on the work régard-
less of expense. The rapidity with which the work has been
done has undoubtedly increased the cost fully thirty per cent.,
so that the Government subsidies will hardly cover the extra
expense. This aid has greatly helped the credit of the Com¬
pany, and in that way it has been benefited ; still, it forms no
just ground for taking away its chances of profit. [Besides, these
bonds are not a gift, but a mere loan.]
Railroads can not be built on the Pacific coast except the
money to build them can be obtained from Eastern or foreign
States, where money is cheaper and rates of interest lower.
The only security railroad companies can offer is the mortgaged
bonds of their proposed road. Their bonds are utterly unavail¬
able for that purpose unless they can also show to capitalists
that the business of the road, when it shall be built, at the rates
allowed by law, will enable them to pay operating expenses,
taxes, wear, and interest on its bonded debt, with a sufficient
amount annually placed in a sinking fund to pay the principal
of the bonded debt at maturity. "With the present scattered
population in the Pacific States, and the limited amount of
freight and passenger trafiSc, such a showing, it is believed,
could not he made if based on a less rate than is allowed by the
present laws of California. Even at the present legal rates, no
less than half a dozen railroad organizations in California have
become hopelessly bankrupt, because they were unable to make
such a showing of the future earnings of their roads as would
establish the value of their mortgage bonds in the Eastern
money market. •
[ 4 ].
j-From the Dfiily Evening Bnllettn, December24,1867.]
Central Pacific Railroad Charges.
/ Editor Bulletin :—In the Bulletin of last evening I find a
few errors relative to the Central Pacific Railway. The Bul¬
letin has ever been so just and generous, and withal so friendly
in its treatment of this great National road, that I am sure I
shall be allowed the use of its columns to correct these mis¬
statements—mis-statements evidently taken from the petition
of certain citizens of Placer county, recently presented to the
Legislature, praying for a large reduction of the rates now
charged on freight and passengers by the railway in question.
In the first place it is not true " that the construction of the road
really costs nothing, but is accomplished solely by the Govern¬
ment." The fiicts are, that up to the present time the outlay
on the Central Pacific,-all told, has been nearly §22,000,000, and
that the bonds issued by the Govei-nmeut therefor has been but
§7,500,000 [§6,000,000]—or about one-third its cost—the balance
having been raised by stock subscriptions in this State to the
amount of §4,000,000, and sales of the Company's First Mortgage
Bonds in New York and Europeto theamountof near§ll,000,000
m ore, every dollar of which, as well as all the profits accruing from
its business, has gone to further its construction. Neither is it true
that this Railroad Company refuses to pay any of the taxes
due on its property lying within Placer county. The Central
Pacific paid into the treasury of Placer county during the past
year more than §20,000 in taxes alone, to say nothing of the tax¬
able property it has created in that county, in establishing
towns and increasing its population. It is said that the present
rates on freight and passengers are extremely high—but so has
been the cost of the road thus far. In many places the cost per
mile has been over §200,000, or more than ttiree times the cost of
any other railway in the United States. High as are the rates
charged, the earnings per mile are not as large as those" of the
New York and Erie Railway, which has not paid a dividend for
years. It is far more profitable to run trains on level grades in
the Eastern States, charging passengers three cents per mile,
than it is for the Central Pacific to do for ten cents per mile, fbr
the reason that the number of passengers traveling over 'the
Atlantic roads averages ten times as many as those traveling
[5]
over the Central Pacific. It costs within a trifle as much to
run one passenger car as it does a dozen. By and by, when
this " road across the continent" is completed, a large reduction
in its tariffs will be made, as it will be for their interest to stim¬
ulate emigration into California from the East. But at the
present moment, when the Company is hard pressed for means
to carry on their work, the Directors think it a suicidal policy
to lower the rates, and thus cut off just so much of theiratready
but too scanty revenue. Besides, the rates are to a certain ex¬
tent regulated by Act of Congress, which provides that the
Pacific Eailroads receiving Government subsidies shall at no
time earn more than enough to pay ten per cent, dividends on
their capital stock ; that the rates shall be reduced as soon as
the earnings exceed that sum. Ten per cent, surely is not too
much interest for stockholders who have taken so many risks
in investing in these railroads when in their infancy. The Cen¬
tral Pacific has never yet earned ten per cent, on its cost, but
when its earnings exceed that sum they will be reduced imme¬
diately, without any action being necessary on the part of the
Legislature. E. C.
San Erancisco, December 24, 1867.
[From the Virginia City Daily Trespass, January 24,1868.]
Fare and Freight on the C. P. R. R.
The petition of citizens in Placer, El Dorado and Nevada
counties, asking the California Legislature to interfere to reduce
the fare and freight tariff rates of the Central Pacific road, has
been noticed. Parties are still working to compel the reduc¬
tion. More opposition is met than was looked for. It becomes
apparent, on going into the discussion, that the Central can not
be molested, by statute, as to its tariff, without affecting all the
other roads in the State—as the State Constitution provides
that a law governing railroads shall in all cases be general in
its effects. The other railroads have made but slender profits,
charging up to the full license of the law. These will, of course,
object to a cutting down, seeing that they have never been able
to declare dividends. None of them have contended, as has the
[ 6 ]
Central, in constructing, -with obstacles by many pronounced
insurmountable, and yet thmr full receipts are wanted to keep
them in repair. The Central is now in the mountains, making
unheard of efforts to overcome the obstacles interposed by
nature.
Every dollar received is accounted for in work on the road.
Every energy and every resource of ingenuity is strained to
prosecute the work of construction. The road is making profits
to be sure—large profits—^and the publication of the Company's
statement of profits is cogent argument in the Eastern cities,
where the mortgage bonds are offered for sale. The bonds will
be taken unless apprehension is aroused that California will, by
legislation, cut down the profits of the road.
The poetical has no attractions with men whose business is to
make their money bring in money. Thej^ care nothing for the
beautiful thought of spanning a continent with bands of iron
which shall bind our country in a closer Union, while we afford
a highway for the nation ! That is well enough, but they want
to see just what the Central is now advertising to them in the
Eastern cities. They want to see the per centum of profits on
the investments.
It seems to us that the people in that part of California bene¬
fited by the railroad passing through their territory might af¬
ford, for another year, to stand the tariff charged by the road,
for the good its construction will do them. A great deal of
property will be saved and more attracted to the sections
traversed by the road, and the prosperity induced where so
little hoj)e of it was harbored since the placers were worked
out, is a very fine return for the extra freight and passenger
charges. Of course, when once the road has been completed,
and through travel and freight come along, the rates will needs
be modified. Then, the amount of business to be done, and con¬
sidering the long stretch of the road, with so much way busi¬
ness, the Company can put prices as low as anyroad in tho
country.
The probability is, that for the present the Company will vol¬
untarily make some reduction in freight charges, as the clamor
now raised will not down without some such terms.
A great deal of damage having been done by the recent storm
[7]
the people along the California portion of the road may have
good reason for asking a concession like this whenever there is
a chance of obtaining it.
[Trom the San Francisco Bulletin, January 20, 1868.]
Reduction of Fares and Freights on the Central Pacific
Railroad.
Editok Bulletin.—A bill has been introduced into the Legis¬
lature having for its object a reduction of fares and freights upon
railroads in this State. Petitions have been circulated through
the counties of Placer and Nevada, praying the Legislature to
begin their system of reductions on the Central Pacific road, and
this bill is doubtless the result of the petitions referred to.
The question of reducing fares and freights upon railroads of
California, if seriously urged, may become one of grave moment^
when considered in connection with the best interests of the
State. No railroad within our borders has, as yet, been able to
pay a dividend to its stockholders ; and to a reasoning mind the
proposition will hardly be questioned, that the good faith of the
State is implied if not pledged, that such rates as were estab¬
lished at the inauguration of a railroad enterprise, should re¬
main unchanged until those wno invested their capital shall have
received some adequate return. Some of the railroads now in
operation in California, should their rates be reduced, would be
compelled to suspend operations entirely until the population,
now so sparse, shall be largely increased, so as to give the
requisite amount of business to enable them to work success¬
fully under the reduction. Other roads now projected would be
abandoned indefinitely, confidence to invest capital in kindred
enterprises at any established rates, with a business prospect
that would pay, would be so impaired as to prevent such invest¬
ments, by the manifestation of a spirit on the part of the State so
utterly hostile to railroads as would be evinced by a reduction
of rates before a dividend has been made upon a road in Cali¬
fornia. Railroads are needed^o develop the resources of Cali¬
fornia, and to accommodate the increasing business of the inte¬
rior, and steps should be taken to overcome the reluctance of
[ 8 ]
capital to invest in sucli enterprises ; bnt the attempt to inter¬
fere in their hnsiness, while the roads are in their infancy, would
add to this reluctance, and would seriously aifect railroad pro¬
jects all over the State.
As to the Central Pacific Company, the question arises, Is it
just or wise at this time to interfere with their established rates?
Stockholders in that company have had their money invested
several years without any return, and do not expect any until
the road is completed. So far as investors of capital are enti¬
tled to a fair return upon investments, they occupy the same
position as stockholders in other railroad couijjanies. But the
State has an immense interest in the sjieedy construction of the
Pacific Eailroad, and especially that the California Company
shall huild as much of it as possible, in order to infiuence trade
to this coast. Should the Eastern Company reach Salt Lake
before the Central Pacific Company, and advance this way, say
100 miles, the vast business of the Territories of Utah and Mon¬
tana would he diverted to the Atlantic States, while if the re¬
verse wore the case the State of California would reap the benefit
of this enormous traffic. At this time both companies are press¬
ing forward with their utmost vigor. Government aid, though
liberal, is obtainable only upon completion of sections of not less
than twenty miles. Por construction and all expenses incum¬
bent beyond a completed section, the means must be supplied
directly by the companies, from resources other than those de¬
rived from the Government. Thus the credit of the Companies
becomes their capital, utilized by the sale of their own mortgage
bonds. To enable them to sell these bonds at a fair price and
in sufficient quantities, the credit of the companies must be un¬
doubted, and to establish and maintain this credit it is abso¬
lutely necessary to show the ability to promptly pay the interest
on the bonds.
One of the chief arguments of the Central Pacific Company,
as is seen by the reports of their financial agents, to establish
this ability, is and has been, that though their business was
small in proportion to the cost of the road, yet the prices they
were able to charge would yield sufficient above their operating
expenses to pay the interest on their bonds and leave a hand¬
some balance to go to construction account. With this end in
[ 9 ]
view, and setting aside all consideration of the interests of stock¬
holders, can the State afford to do anything to impair this
credit? 'To what extent the credit of this Company must be
nsed will be seen in the fact that it is their proclaimed intention
to build not less than 300 miles of road during the present year.
To do this an enormous amount of material must be purchased
at an early day in the distant markets of the East, that it may
be constantly arriving to meet the requirements of the stupen¬
dous work. Not less than 30,000 tons of rails, 700,000 ties, with
rolling stock and other materials, Avill be required this season,
and 8uj)plies for 10,000 men and 1,000 horses, and this entire
outlay is to be met always in advance of Government aid. And
yet it is proposed to throw additional burdens upon the Com¬
pany that has this gigantic task before them by jeopardizing
that, without which they can do comparatively nothing, viz ;
their credit.
As to the argument that by reducing rates the receipts of the
Company would be increased, is hardly worthy of consideration.
To advance it, is to intimate that this company and other rail¬
road companies, whose business it is to study this question, do
not understand their own interests. The unsoundness of the
argument is readily demonstrated, however, by a consideration
of the facts, ilost of the business of the Central Pacific Eoad
goes over the mountains, and does not stop short of Virginia
City, and most of the traffic comes from or goes to the City of
San Francisco ; of the expenses of this trij) the railroad fare
forms but a small part, and if it were stricken out entirely,
would scarcely induce a single additional passenger to travel
the route or add a pound to the quantity of freight tran.sported.
A fair average for freight from Sacramento to Virginia City,
winter and summer, is about four cents a j)Ound, or 880 a ton.
Of this amount the railroad receives §14 for transporting it 92
miles, while §66 is paid to teamsters for carrying it 70 miles.
This illustration becomes stronger when considered in connec¬
tion with places beyond Virginia City. To Austin, the freight
in summer is never less than §120 per ton, and to Idaho it aver¬
ages during the same season more than §260 per ton.
On return fi-eight, and on goods that would not otherwise
bear transportation, the Company, as an inducement to business.
[ 10 ]
made deductions from their ordinary rates, thus showing that
the question of reasonable reductions to increase business has
not escaped their attention.
From the foregoing these premises may fairly be deduced :
First—Stockholders are entitled to charge such rates as shall
best enable them to derive a fair return for their investment.
Second—It is important that the California Company shall
build as much of the Pacific Kailroad as possible.
Third—That to carry out their plans it is absolutely necessary
that their credit should remain unimpaired.
Fourth—That to reduce their rates of fare and freight would
materially injure their credit; inasmuch, as those upon whom
they rely for the sale of bonds would argue, that if the State
was inclined to make such reductions, at the request of a few
who now enjoy great benefits from the road, while the stock¬
holders have no returns, and while the earnings and credit of
the Company are all requii'ed for its work, there can be no assu¬
rance that when the road is completed the rates may not be so
reduced as to leave no margin for profit.
[From the Sacramento Union.]
San Francisco Market Review,
San Fkancisco, January 23, 1868.
The most important subject of consideration among commer¬
cial men at pi'escnt, is the project before the State Legislature
to control and regulate the price of freight and fares on rail¬
roads. This is a matter of primal importance, not only to the
commercial and financial portion of the community, but to
manufacturers, farmers and miners. Like a great many other
measures carried through the Legislature by the influence of
"lobby," this project is disguised under such plausible pretexts
as to conceal its real intent from the people. If a law shall be
passed regulating the profits of this particular branch of enter¬
prise, can we expect capitalists to invest their money in building
such roads, which are imperatively requires ? I observe that
many of the papers published in the State contain well-written
articles in favor of appropriations to encourage the development
[ 11 ]
of the State's resources ; yet, strauge inconsistency, these same
papers favor this project for curtailing the profits of railroads—
the greatest possible means to retard such development—for
who will huild railroads, which, when built, the profits shall be
under the control of a partisan Legislature.
If the Legislature possesses the power to regulate the profits
of railroads—which I doubt, because the subject is directly con¬
nected with trade and commerce," the regulating of which is
vested exclusively in Congress—it must certainly also possess
the power to regulate the profits of all corporations. Suppose
it to possess such power, and to exercise it in regulating the
profits of some of our banking institutions, which are by no
means as useful in developing the State's resources as railroads,
while their profits are ten times larger, what an outcry such
legislation would raise.
In my opinion, this movement against the railroad interest
emanates from a certain powerful element, the settled purpose
of which is to concentrate and control the capital of the State.
Those who manipulate this element are afraid of losing their
head of the almost imperial power it gives them, should any
extensive interest he established that shall yield larger profits
than those yielded by usury—because it would divide their
power.
It must not bo forgotten that the most strenuous opposition
to the construction of the Central Pacific Eailroad has ever
been exhibited by the capitalists of this city, who have none of
their funds invested in the few railroads that have been built in
the State. It is notorious that these parties fear the growing
railroad power. It is exceedingly dangerous on the part of
their friends, in their efforts to crush this power, to contrast the
cost of freight by railroads in this State with that charged in
the Eastern and Western States, because the friends of railroads
may retort by contrasting the rates of interest on money here
and there. In a State isolated from the sources of supply of
the most important materials necessary in constructing roads;
and in which labor is at least fifty per cent, dearer than else¬
where, and traffic, owing to sparse population and want of man¬
ufactures, is exceedingly limited, there is infinitely more excuse
for railroads charging high prices, than there is for money-
[ 12 ]
lenders to exact higlier rates of interest here—where money is
produced and made—than is charged anywhere else. The rail¬
roads have greatly reduced the cost of freight wherever they
have been constructed; but the rates of interest are kept up,
notwithstanding money has increased nearly tenfold.
The fact that the railroad companies have received liberal
grants of land and money in constructing their lines, is not a
very good argument to advance in favor of restricting their
profits. The roads would never have been built without such
aid. Is it reasonable to take back what has been given under
such circumstances? As a rule, the railroads in the Atlantic
States and Eurojie have not been profitable to the stockholders
who built them. If wo can make an exception to this rule in
Caiifornia, wo shall encourage the construction of more roads,
and thus aid in developing the resources of this State. But if
by mischievous legislation, we restrict the legitimate profits of
the stockholders, we shall certainly prevent their construction.
Kailroads are not the worst monojjolies in the State. If it is
intended to wage a war against monopolies, let us begin with
the worst.
rrROH tub state capital reporter.]
Sacramento, January 20, 1868.
Editors Eeporter : Several petitions have recently been
presented in the Legislature from citizens of .Placer, Nevada
and El Dorado counties, asking for a reduction of fares on the
Central Pacific Railroad to "one-third the present rates charged,"
I have taken occasion to ascertain the truth of the statements
in these petitions, and am utterly astonished that rational men
should, without examination, have put their names to such
statements.
They state that the " residents of Placer county have given
to said railroad company a sum equal to about one-sixth of the
entire property of the county, to wit : six hundred and fifty
thousand dollars, to aid in the construction of said railroad."
Probablj^ it was the intention to state that tbe county of Placer
had given that amount, for no one imagines that the individual
" residents" of that county ever gave a dollar to that enterprise.
[ 13 ]
Upon inquiry at the office of the Eailroad Company, I learned
that the whole amount of capital stock subscribed residents
of Placer county is only $15,800, of which $10,300 remains
unpaid.
The county of Placer, after an overwhelming vote in its favor,
by the people, subscribed, not $650,000, but only $250,000 of
the stock, paying therefor, not dollar for dollar as other sub¬
scribers did, but in its bonds, which could not be sold for more
than sixty-five cents on the dollar in gold, amounting to only
about $162,600, or enough to build less than two average miles
of the one hundred miles of railroad in that county. This
amount, small as it is compared with the millions expended in
that county by the Company, was not given, but the full amount
of $250,000 of stock is held by the county. Why so glaring a
false statement, so readily exposed, should have been made, is
incomprehensible, except that its authors supposed the Legis¬
lature would never take the trouble to ascertain the truth.
Another statement equally false is, that the Company "refuse
to pay a dollar of tax on their property in the county." The
company show receipts in full for every dollar of tax assessed,
not only from Placer county but every other county in which
they have projiei-ty.
Equally untrue is the charge, that the people of that county
have submitted to "oppressive taxation caused by their liber¬
ality to said Company." The amount of the annual interest on
the county railroad bonds is $20,000. During the year .1867, the
Company paid into the County Treasury for the taxes of that
year, $18,889, nearly the amount of that annual interest. But,
besides this, the thousands of laborers and mechanics brought
into the county to build the road, paid into the County Treas¬
ury in poll taxes more than $25,000. A further sum of $1,125
was also paid on the horses, carts, tools, etc., used in building
the road—in all, over $45,000, Or more than double the interest
on the bonds.
This does not include an immense amount of property created
by the railroad, such as stone quarries, sawmills and town
property. The towns of Eoseville, Eocklin, Newcastle, Colfax,
Alta and Cisco are the product of the railroad. This increase
alone of the county assessment roll is probably sufficient to
[ 14 ]
realize taxes enough to pay the whole of this interest, and yet
they talk of oppressive taxation to pay this interest. I doubt
not the Kailroad Company would cheerfully pay this interest
and the §250,000 principal hereafter if the county would release
them from taxation.
But they urge that they are "illy able to pay "the fares of
the company. The rates charged are less than are allowed by law
—which have been established for years, and are cheerfully paid
to other companies. They are much less than were paid pre¬
vious to the construction of the railroad. The railroad charge
for passengers is about ten cents per mile, while the usual rate
for staging in the mountains is twenty cents per mile. The
gain in time is important. In the Summer, the people of Placer
county can start for Sacramento in' the morning, have several
hours there for business, and return home by night, thus doing
in one day with ease what formerly required two or three days
of rough riding.
The cost for freighting on the railroad is less than one-fifth
the average price by teams the year round. In Winter, the
roads were almost impassable. As an instance, during the
Winter of 1865-6, while the terminus of the railroad was at
Colfax, the merchants at Dutch Flat, only fifteen miles distant,
had to pay §50 per ton, while the railroad charge between the
same points is only $2 25 per ton. This is the " oppression "
complained of. It is easy to get rid of such oppression by
returning to stages and pack mules. But, they prefer the
cheaper and more expeditious railroad and the exercise of that
inalienable right of Americans to growl and grumble, and peti¬
tion for free fares. As to grievances, there is not a county in
the State that would not like to be " oppressed " in the same
way.
Another charge equally unfounded is, that "the construction
of the road has not, and will not cost them (the Company) a
dollar of their own money." More than eight millions of dollars
have been invested by the stockholders in the construction and
equipment of the road. I understand that the road has cost,
thus far, over §20,000,000, of which only a little more than
§6,000,000 have been in United States bonds, which have not
averaged more than seventy cents on the dollar in gold. The
[ 15 ]
greater part of the means have been derived from the sale of
Company bonds, which are largely held in the Atlantic States
and Europe. The national and other aid which the Company
have received, is less than one-third the cost of the work, which
is more than three times the cost per mile of any other railroad
in the State. Many suppose that the national bonds are a gift
to the Company, which is a mistake, as they are merely a loan
to he repaid to the Government, and to secure which a lien is
held on the property.
The obligations of the Company are large, and it requires
large receipts to meet the interest on its indebtedness to the
Government and its bondholders, and provide the proper sink¬
ing funds to meet the principal when due; and still larger
receipts to enable the stockholders to realize anything upon
their investment.
Having thus exposed a few of the gross mis-statements of
these petitions, the inquiry naturally is, how came sensible men
to sign them? I presume most of them never stopped to reflect.
They only knew that they would like to ride cheaply if they
could, and if the paper called for a legislative reduction of the
price of bread or meat they would have signed it with equal
readiness. The reduction they ask for, if granted, would not
pay running and other expenses, and the road and the whole
work would have to be stopped.
[from the state capital reportee, januart 28th.]
Hailroads and Railroad Fares.
Sacramento, January 27, 1868.
Editors Reporter: A few of the citizens of Placer and
Nevada counties are making a determined attack upon the Cen¬
tral Pacific Railroad, to induce the Legislature to reduce its
fares.
When the subject of building this road through those coun¬
ties was first agitated, they were enthusiastic in its favor. The
rates now fixed by law had been established long before, but no
word was said about reducing them. They have waited until
the Company, acting upon the presumption that they would be
[ 16 ]
allowed to collect those rates, has completed its road through
those counties and they feel secure of its benefits, to clamor for
a reduction.
The great point urged is that the Company are making a
profit on their investment, as though this was not the purpose
of those who built railroads. Instead of being an objection,
California ought to rejoice that she has one railroad that is
likely to be profitable, as it will induce the building of other
roads with the hope of XJi'ofit. Without that hope, no roads
would he built. With that hope, sanguine persons can be in¬
duced to engage in such works. Take away that hope by
reducing rates, and no one will build them. The Central Pacific
Eailfoad has been pushed forward with great energy, but it has
required vast sums of money to carry on the work. California
has not the capital to spare to build it, and its managers were
compelled to go East to raise the money. Capital is timid.
California was a great way off. Millions of dollars of Eastern
caintal had been sunk here in mines that never paid. It
required the clearest kind of proof that the railroad would pay
to get Eastern capitalists to buy the bonds and stock of the
Company, for it was upon their sale that they depended to raise
the money to build and furnish the road. The Company have
been able to show from actual receipts that it is not a losing
investment, that the parties are safe in advancing their capital,
and that they are sure of getting their money back with a fair
interest.
As an additional argument, the agents have been able to
point to the fair and liberal railroad laws of California, a State
that has never repudiated its obligations or committed a breach
of good faith, as a guaranty that those investing their money in
California railroads would be entitled to collect such rates as
would pay them. These rates have been established by law for
years; they were fixed for the very purpose of inducing capi¬
talists to build the roads so much needèd here.
These arguments have been successful, and the bonds of the
Company are now selling freely. We should rejoice that one
Company at least has been successful in procuring the invest¬
ment of Eastern capital in our public improvements. It is
what we have all been waiting for and anxious to see done.
[ 17 ]
The fact, tlierefore, that this railroad has been so managed as to
satisfy capitalists that our railroad enterprises can be made
profitable, instead of being an objection, is really one which
entitles the Company to great credit. Instead of being a reason
for reducing the rates, it is an argument in favor of letting them
stand. Eeduce the rates, and it will drive millions of capital
from the State to other places where Legislatures have a proper
regard for vested rights, where inducements are not held out
to invest in public improvements only to be sacrificed upon the
least appearance of success, and before a dollar profit has been
divided among the stockholders, whose millions of money have
been invested; JSlo sane man will help develop the resources of
a State under such circumstances. No taint of had faith should
be suffered to rest on our State. Men who have invested their
means on the faith of our public laws ought not to have their
rights destroyed, their property rendered valueless, by adverse
legislation, instigated by local public clamor. This is a ques¬
tion directly affecting the good faith of the State, which stands
virtually pledged against any change until the stockholders shall
have received a fair reward upon their investment.
The building of railroads is a public benefit, and even if their
charges were as high as by other modes of transportation,
they would still be of great value in the saving of time, and
their ability at all seasons to move persons and pr-operty in
large masses. But as the present established rates are only one
half to one fifth of former charges for slower service, it is no fair
argument to say that, because they are able to do this and make
a nrofit, therefore the prices should be cut down, the good faith
of the State sacrificed, the vested rights of property destroyed,
and capital driven from the State.
It is true that if any company should make any inordinate
profits, by declaring unreasonable dividends on their stock,
there might be some show of reason for legislative interven¬
tion; but even then the right would be doubtful as to companies
organized and constructing roads under existing law. But even
that plea does not exist in the present case. Not a railroad in
this State, outside of San Francisco, has ever returned a dollar in
the shape of dividends on their stock investment, and with many of
them there is little hope that they ever will. "Whether the
2
[ 18 ]
Central Pacific, when completed, will be able to make reason¬
able dividends on its capital stock is yet uncertain. If it or any
other company should ever divide an unreasonable amount on
their stock, it will then be time enough to raise the question of
a reduction of rates, if the Company should not of its own mo¬
tion reduce them. Until then the Legislature has no just right
to interfere. To reduce the rates now fixed for all railroads in
this State because one is found to be doing a profitable business
would be a death-blow to all the others, as well as all contem¬
plated roads. Not a dollar would bo invested in a State which
would thus show itself so regardless of the rights of property]
One of the main foundations of the prosperity of a State is the
security of property. The moment a person acquires more than
is required for his immediate necessities, he looks around for a
safe investment where it will bring him a profit. If legislative
action or the state of society renders investments insecure in
one place, he will go to another, where the public faith and a
healthy tone of public sentiment guarantee safety in his under¬
takings.
The effect of such a change would not be confined to railroads,
but would be felt in all corporate enterprises. If railroad in¬
vestments are not safe from the hand of the Legislature, then
no other corporate rights are safe.
The policy of our Constitution and laws is to encourage cor¬
porate organizations. Indeed, railroads are not permitted to
be built or operated except by corporations. No such powers
or rights are permitted to individuals or mere associations.
Corporations have been multiplied here to a wonderful extent.
No important enterprise is started except under a corporate or¬
ganization. Property to an immense amount is held by them,
and industry is greatly quickened. It is found to be the best
way to unite and associate capital. As railroad shares are only
one hundred dollars each, the smallest amount of surplus
can be thus invested. No evil can result from this so
long as thei'e is no mono^joly in the business ; so long as the
law leaves all our citizens free to organize and concentrate capi¬
tal in that way. A blow at these institutions would be de¬
structive of nearly all the important enterprises of the State.
Not a corporation in the State but could be rendered bankrupt
.[ 19 ]
by sucb legislative interference with its business. To-day rail¬
roads are attacked, to-morrow it will be ditch companies, next day
mining companies, then steamboat companies, and so on. A large
part of the industry of the State would be paralyzed.
An interference with the law, at this time, would be pecu¬
liarly disastrous to the State. We are just entering upon a
railroad era upon the Pacific coast. The construction of the
Central Pacific Kailroad and its success as a profitable enter¬
prise has awakened the railroad spirit in every part of the
State, and in every direction we hear of the organization of new
companies. Every county wants its railroad, and ought to have
it. But railroads are not easily built. The cheapest of them
require large outlaj^s of money in the purchase of iron and roll¬
ing stock. Our population is still sparse, the number of pas¬
sengers are comparatively few, and the amount of freight small,
so that business for railroads is light compared with roads in
populous countries ; prices, therefore, to be remunerative, must
be high as compared with Eastern roads, and even then profits
are very uncertain. No investment, even at present rates, is
more risky than railroads. If, under these circumstances, rates
are reduced, no sane man will risk his money in them. The
Central Pacific would hardly pay expenses from its local traffic,
notwithstanding it coifimands the trade of two of the best
counties in the State. It is the immense trade of the country
beyond the mountains that enables the Company to make any
profit. Most of this trade will, however, soon be local to the
road ; then it may or may not pay a profit for so long a line of
expensive road. All the other roads in the State depend en¬
tirely upon local traffic, and require present rates to even pay
expenses. Seduce these rates, as proposed, and many of them
must stop running. The result will be that all counties not
now supplied with roads must wait for many years and until
the country is more thickly populated, before they can expect
one. Yiator.
[ 20 ]
[From the Daily Bee, January 31, 1868.]
Pacific Railroad Fares.
Editors Bee :—Among all the great monuments of human
labor none equal those erected by the miners of California.
Before the result of their labor the pyramids of Egypt, the great
wall of China, and all others appear insignificant. In the pur¬
suit of the hidden treasures of the earth, rivers have been
turned from their beds and their channels scraped with assidu¬
ous care ; streams have been made to mount the tops of moun¬
tains, and in their descent, to wash the hills into the valleys,
until the mountains have literally met the sea. The hills have
been pei-forated with tunnels and riddled with shafts. The ce¬
mented spurs of the Sierras have been blown to pieces with pow¬
der to sift the golden sands from their embrace. The whole
stands as a wonderful monument of the skill and energy of Cali¬
fornia miners.
Next to this stands the Central Pacific Kailroad over the
Sierras. Again and again was it declared impracticable, or far
beyond the I'each of any reasonable amount of capital and laborj
but it is placed now among the accomplished facts—one of the
wonders of the world. The iron horse, in his daily round,
mounts skyward 6,000 feet, more than a mile straight up in the
air. As he stands every morning in our city ready for his daily
task, with " heart of fire, and ribs of iron and sinews of steel,"
he is one of the highest embodiments of human genius. The
time arrives, the bell sounds, and, obedient to the touch of his
driver, he starts on his wonderful journey. The plain is soon
crossed, the mountain slopes are soon reached, and he commences
that wonderful ascent. "Watch him as he rises over ridge and
hill, and mountain. He reaches the Alpine bights where the
Storm King of the Sierras has heretofore reigned supreme.
Armed with a snow plow he ñings the fleecy cloud from his
panting sides in a steady torrent far down the mountain side.
He plunges on amid the crags and clifis of the upper summits.
The tempest rages around him. The tall firs bend and writhe
before the blast, but he moves steadily on, confident in his
strength. His ponderous tread over the iron rock-founded way
echoes along the crags and clifis and from hill to valley. With
the shrill scream of his whistle, he laughs to scorn the fury of
[ 21 ]
the elements. Driven on by the Fire Fiend, coupled with his
gigantic progeny—steam—he drives the Storm King from his
throne, and the mountains, once so dreaded by the belated im¬
migrant, become the safe highway of the commerce of the world.
Europe boasts of its iron road over the Alps, through the Bren¬
ner pass, at an elevation of 4,770 feet, hut that sinks into insig¬
nificance before the 7,042 feet surmounted by the California loco¬
motive. We can boast with pride, that California runs the
highest railroad in the world—and this is done daily, hardly
attracting attention here, while in other parts of the world it is
the theme of wonder and astonishment.
Does any one suppose that all this has been accomplished by
chance? No, it is the grand result of a combination of capital
and labor, directed by skill and indomitable enei'gy—the careful
and accurate adaptation of means to the end. The exercise of
rare judgment in the selection of agents and men skilled in their
various professions—all, too, requiring a vast expenditure of
money. And yet, we find a few selfish persons desiring the
Legislature to cut down the earnings of this gigantic enterprise
to a sum which will not pay even the necessary expenses of the
Company carrying it on. While reaping the benefits of this
great internal improvement, in cheapness and quickened trans¬
portation, they would see it ruined, and its way made desolate,
in the hope of saving a few dimes to themselves.
The earnings of this Company are its life blood. So long as it
can show by them that investments in its bonds are safe and
certain of a profitable return, so long can they command the
means to extend the road as rapidly as labor can perform the
work. Strike down these earnings—show only receipts enough
to pay expenses, and the Company is powerless. Capitalists
care nothing for what the Company have or may receive by way
of aid ñ'om the State, or loans from the Government j all they
want to know is, lohether the business will pay. Of that they
must be fully satisfied or not a dollar will they invest. The re¬
duction of rates as asked, is therefore, the destruction of the
work, in which we all feel a pride.
Congress wisely placed the construction of this great national
highway in the hands of two companies, the Central and the
Union Pacific. The western end was placed in the hands of the
C 22 ]
former, and the eastern in those of the latter, and each was
authorized to keep on building until they should meet. Each
has been working vigorously, but the present year will witness
the most tremendous efforts of both to secure the trade of Utah
and Montana. If the Central shall succeed, California tvill secure
the f uture immense traffic of the Great Basin. If they fail it passes
over to Chicago and St. Louis. The Union Company boast that
they will lay four hundred miles of track in 1868, which will
bring them within one hundred miles of Salt Lake. They have
a population of thirty millions behind them to draw on for labor
and the largest railroad capitalists of the East to draw on for
money.
Our California Company have a population of but 500,000 to
look to for the army of laborers they must have—to the Atlantic
States for their iron and material, and to a credit and character
for skill and management, backed by large and increasing earn¬
ings of the road for the capital to build with. lYhile they have
600 miles yet to build to reach the lYahsatch mountains, they
make no boasts, but simply point to what they have done, a
permanent, well built road made in three years, where the most
sanguine prophesied it would require ten—to a tunnel built by
California labor aud nitro-glycerine, in one year, where some of
the best engineers predicted it would take at least three. In
fact, the speedy completion of this tunnel is what has aroused
the Eastern Company.
Both Companies are managed by bold and energetic men, and
while the Union has great advantages in the'command of capi¬
tal and labor, our California Company has that spirit, energy
and enterprise which is the growth of our wonderful mining in¬
dustry, and has established a credit which can command the
capital. If there is a work to be done quickly and well, which
requires the elements to be harnessed to do the task of man,
where will you find men equal to Californians ? But in this
great race for continental supremacy our California Company
needs the aid and support of all California. It should have the
good word and encouragement of all, for we are all interested in
its success. But above all, no obstacle of any kind should be
thrown in their way. Least of all, should the Legislature strike
a blow at its very heart—cut down its earnings and it is power-
[ 23 ]
less—the life blood of the enterprise is gone. In this great strug¬
gle hetween railroad giants we stand hy our own champion, the
California Company. Yindex.
[JEOII THE STATE CAPITAL KEPORTEK, Eebrnary 2, 1868.1
Central Pacific Railroad Charges.
Editor Eeporter : I intend to devote but a small portion of
this article in reply to your Auburn correspondent, " Justice,"
■whose communication appeared in your valuable journal this
morning. But few words are needed to effectually answer so
25rejudiced an individual. To all his charges hurled at the Cen¬
tral Pacific Directors, on account of their preferring that the
Supreme Court should decide and settle certain questions, in¬
stead of the interested taxjiayers along the road, no answer is
necessary. The Supreme Court is the prosier ]3lace for the final
settlement of all the vexed questions that have arisen relative
to " equalization of assessments and taxation." Every fair-
minded man must admit this.
Your corresjDondent, "Justice," does not attempt to deny that
the poll tax alone ]iaid into the treasury of Placer county by
the employes of the Central Pacific Eailroad amounted last
year to §25,000—a sum more than the entire interest paid to
the Comj)any on county bonds. In addition to this, he cannot
deny that the Com^iany has also piaid into Placer county treas¬
ury, during the jiast year, the sum of §18,889 10. But wonders,
I suppose, will never cease. Tour corresjiondent seriously finds
fault with the Eailway Company for employing Chinamen, who
have ñoeked to them from the mining regions, and thereby es¬
caped the State miners' tax of §48 per head. This is very cool,
indeed, in view of the fact that without Chinese labor this rail¬
road would never have heen built at all. Poor John Chinaman,
for leaving a few bankrupt mining regions, where he was starv¬
ing, and getting healthy and steady employment at §35 per
month, is mercilessly abused by certain individuals. What
right has a Gbinaman to help on this great national work ? says
in effect your learned corresjjondent. The question carries with
it its own answer. But if the Central Pacific Eaiiroad is to
[ 24]
be punished for employing the only cheap and suitable labor
they could obtain on this coast, the sooner the friends of that
corporation are informed of the fact the better.
And now, Mr. Editor, I desire to lay before your readers my
views on the several questions being discussed relative to and
growiug out of the bill to reduce railroad charges. And if I
express my opinions somewhat strongly, and write with more
than usual warmth of feeling, it is because I believe a great in¬
justice and dangerous innovation wiU soon be attempted by cer¬
tain members of the Legislature, and that they will vigorously
urge forward the same in hopes of making it an accomplished
fact.
It will be remembered that some years ago the Legislature,
as an extra inducement for the more speedy completion of the
Central Pacific and other railroads, enacted a law giving all
railroad corporations the right to charge passengers ten cents
per mile for traveling over their roads, and also fifteen cents per
ton a mile for all freight. Mow a strong movement is on foot,
originating in JSlevada and Placer counties, to reduce these rates
to a much lower figure. They claim that these rates are very
oppressive and exorbitant; to which I reply, then, do not pa¬
tronize the road ; you are not compelled in any way to put
money "in their purse." Mevada county, in which this move¬
ment is the strongest, never took a dollar's worth of either the
stock or bonds of the Company—and she has been immensely
benefited by it, both in a large increase of population and taxa¬
ble property—besides which the Company paid last year into
her county treasury some ?8,000 taxes, lighting the burdens of
her citizens just so much. And now, in the face of all these
facts, for her to turn around and demand this reduction is as
cool a specimen of insolence and ingratitude as I have ever seen.
Placer county, it is true, subscribed $250,000 for the Company's
stock, but this stock is ^good investment any way, and she re¬
ceives by way of taxes alone, to say nothing of other benefits,
more from this railroad than the interest amounts to on her
entire subscriptions. Eepublics are indeed ungrateful, if the
prayer of these counties is to be favorably answered by the
Legislature of California. I cannot learn that there are any
Other localities in the State that have taken any very decided
[ 25 3
interest in the matter thus far, and 1 do not helieve the Demo¬
cratic party is under such peculiar ohligations to Placer and
Nevada counties for voting—for alvays voting the Kadical
ticket—as will induce it to pay jDarticular attention to these
Gorham shriekers now. Counties that could vote, without hesi¬
tation, to place in power in this State a set of lobbyists and
tide-land swindlers, cannot expect that their motives will al¬
ways be viewed without suspicion by a Democratic Administra¬
tion. Even if they were suffering certain hardships now, it
would he hut a just i-etribution for their many deep-dyed jDoliti-
cal sins.
Of course, I am met here by the argument that the leading
Directors of the Central Pacific have been strong Eejjublicans,
and have done not a little in aid of that party. Admitted. But
when I affirm that the leading men of this great railroad are as
disgusted with Thad. Stevens and his infamous tariff laws and
other special legislation as any one can possibly he, I only state
facts, the inevitable conclusion of which is that, by a magnani¬
mous policy this Winter, on the part of our party, we shall soon
see that the powerful influence of that great corporation is not
at least used against the Democracy—the party which has, say
what they will, ever been the best friend of legitimate public
improvements.
But it is on grounds altogether higher than political that I
base my main objections to any legislative interference with this
railroad at the present time. I believe common honor demands
it. These rates, high as they are, were a part of the consider¬
ation named in the contract between the Company and the
State. The Company has thoroughly performed its part of the
agreement, and at a cost wholly unprecedented in railroad his¬
tory. Shall California, now that the work is done so far as this
State is concerned, repudiate her bond and take a mean advan¬
tage of the Company, simply because she has the power so to
do ? I cannot believe she will. Strong as is the Democratic
party, as now organized in this State, ü is not strong enough to
do a dishonorable act, even to its enemies. Legislative injuries to
the Central Pacific at this time would completely stop all sales of
their bonds in New York and in JEurope—and, therefore, stop the
work upon it,jicst where it is.
[ 26 ]
Every great corporation has its bitter enemies and trials, as
has every great railroad man. The moment a bill is introduced
to lower the Company's tariffs, and an important debate upon it
takes place, the fact will be telegraphed East, and made the
most of by the enemies of the road. The evil consequences of
such an act cannot be measured by money. To deaden all fu¬
ture operations on this railway, at its present stage of comple¬
tion, would be a State and national disaster. Every citizen of
California is injured just in proportion as you injure the railroad.
Money markets are the most sensitive things in the world, and
mere rumors are often sufficient to entirely stop the sale of rail¬
road securities. The Union Pacific Eailroad are and have been
trying to strangle the Central Company. They desire to make
and own the whole route themselves ; and nothing would more
completely play into their hands than the proposed legislation.
Every mile of this road made, owned and pushed eastward by
our home corporation is an inestimable blessing to California; for
all the earnings and profits thereon will be distributed here.
Every mile of road owned and pushed westward by the Union
Pacific is in the same ratio a loss to us, as nearly all its earn¬
ings and profits will go to swell the coffers of Eastern capital¬
ists. What short-sighted foolishness, what perfect suicide it is,
then, for any party at this time to place any impediment in the
way of the Central Pacific ! Besides, there are many other
railways in this State that in the future require to be built.
Establish a precedent that the rates of railroad earnings shall
be regulated by the Legislature, and what contractor would
ever dream of undertaking to build one ? If the California
Legislature has the right to cut down rates from ten cents per
mile to five cents, it has an equal right to lower it to one cent;
and it could thus bankrupt every railroad in the State by a
single Act. To pass such a bill at this time, when large nego¬
tiations are pending in Europe for moneys to build the balance
of the road to Salt Lake City, would be such an act of folly and
madness that I cannot see how any member can have the heart
to propose it. I contend, also, that, everything considered, the
present rates are not too high. I know something of railroad
earnings, both in Europe and America, and I am prepared to
prove that while the Central Pacific has thus far cost per mile
[ 27 ]
more than twice what any other road in the United States ever
has, its eai-nings are very much less per mile than many roads I
could mention. The Erie Railroad, for instance, earned last
year §20,000 per mile, and yet didn't pay a dividend j while the
Central Pacific, with its high rates, hut $15,000 per mile. There
is also about the same difference between the New York Cen¬
tral, Reading Railroad of Pennsylvania, and Michigan Central,
which is easily accounted for, though they charge in the East>
on an average, but three cents per mile for p)assenger travel.
Their engines never take less than eight or ten cars after them.
The Central Pacific finds one passenger car sufficient for its
patronage, though it costs within a trifle as much to run one car
as it does a dozen. There being this great difference between
railway passengers and freight revenue, therefore the Central
Pacific, did it arrange its own tariffs, could in reason make those
of passengers twenty-five cents per mile instead of ten.
Besides wood, labor and all necessary materials are much
more expensive on this side of the mountains than on the other.
But it is said by small minded, jealous people that this railroad
is a great monopoly ; but there never was a great corporation
that wasn't; in fact, it has to be, or it would get swindled by
private individuals and schemers on every hand. And it is also
said that it has received ruinous subsidies from Government. I
can show that the value of these subsidies have been much over¬
estimated, and that the Government will get it all back in the
end. As to the land donated to the Company, it has never yet
been able to realize $150,000 upon it—much of it is mountainous
and worthless. Much of it was taken up under the pre-emption
laws before Congress gave it to the Company, and they cannot
makeup elsewhere for the deficiencies. No! themain source
from which the Company has derived its means so far to build
the road, has been the sale of its bonds and from subscriptions
to its stock. The Directors individually have invested largely
in the road themselves, and to this day have, I am told, never
drawn a single penny for their laborious services, preferring to
use every dollar they could raise to advance the work.
I submit, under these circumstances, if it is right or just for
this Legislature to interfere with them in any way. This is
not a party question, but one which interests the whole State,
C 28 ]
and should be so regarded. If a bill like the one I have indi¬
cated is introduced, let it, by all means, come from the Eepub-
lican side of the House. Let the same party, that under the
leadership of Thad. Stevens and his Pennsylvania iron masters,
passed the absurd bill compelling the Pacific x-oads to purchase
all their iron from American manufacturers, thereby costing
them many millions of dollars more than it would otherwise
have done—lot, I repeat, the same party do the damaging, in its
most vital parts, to the Pacific road of this coast; and let other
Hepublicans also introduce resolutions reducing hotel bills,
stage fares, stock brokers commissions, doctors and lawyers fees,
etc.; it would be in exact keej)ing with the bill to reduce the
fares on the Central Pacific Railway. L. L. B.
[From the Alta California, Pebrnary 7,186S.]
Railroad Transportation Charges.
San Francisco, January 30,1868.
Editors Alta :—It seems from the recent debates in the
Legislature that some members of that body are opposed to
railroads, and, strange to say, they represent mountain counties.
It is not the intention of this communication to impugn the
motives of these gentlemen, in endeavoring to acquire for their
constituents a reduction of transportation fares on the railroads
leading through their counties, but to call their attention to the
injustice that would be indicted on other sections of the State,
not so fortunate in having a railroad to complain against. We
will concede to them all the credit that they may acquire from
their constituents by the advocacy of measures which they be¬
lieve to be a benefit to the inhabitants of Placer or El Dorado
counties, but we will respectfully protest against any change in
the Railroad Law, as touching the matter of charges for trans¬
portation, as being what we claim to be an injustice to other
sections of the State which have no railroads, and have been
for the last ten years endeavoring to build this, their greatest
necessity, for the reason that, with the present inducements of¬
fered in our Railroad Laws for the investment of capital, it is
scarcely possible to do anything in buUding railroads in this
[29 ]
State ; and we believe that if any of those inducements are
withdrawn, or in any manner curtailed, that we mayas well not
attempt to build any more railroads, as it will be an impossi¬
bility. The present railroad tariff is ten cents per ton per mile,
and ten cents for passengers j)6r mile—prices which cannot be
materially changed, with our sparse population, and the finan¬
cial condition in which our roads are at present, and must for
some time remain.
The counties of Placer and El Dorado may have a local griev¬
ance in exorbitant railroad fares and freights, (which I do not
believe, and which I do not think the people themselves believe).
The residents of these two counties, and pai'ticularly the mem¬
bers advocating a reduction of charges, ought to recollect that
in 1860 and previous, when that section of country was advo¬
cated for the location of the Central Pacific Eailroad by their
local press in opposition to the claims of other locations which
had at least as good a natural location as was claimed for Dutch
Plat or the Placerville route, that the entire press and people,
individually and collectively. Were loud in their promises what
they would do if the Pacific Eailroad was located through that
section, and proclaimed to the world the advantages of their
location, etc., as far exceeding that of any other section of the
State. Now that they have got eighty-five miles of the Pacific
Railroad, and nearly fifty miles of other railroad in their county
they are dissatisfied with the rates of charges for transportation.
These rates were established by law when they voted to tax the
county to assist in the construction of that road, and have been
found to be absolutely necessary to induce capitalists to advance
money on this kind of property. '
They cannot now, with any degree of consistency, plead that
the railroad men have increased the charges without their
knowledge or contrary to their bargain. The county, by a large
majority, voted to tax themselves to aid in the construction of
the road, with all the facts before them, as plainly visible then
as now. It seems to railroad men in other parts of the State
that this newly discovered attempt at retrenchment is instigated
more from a motive of hostility to the C. P. R. R. Company
than for any sincere desire to benefit the people of Placer or El
Dorado counties. It may be that these counties have a local
[ 30 ]
grievance that is jnst—in the charges for railroad transporta¬
tion. If such is the case, I respectfully suggest that the most
effectual way to stop such abuse of a local necessity is, not hy
legislation, but by discontinuing the use of the road. They
have their county roads that were so much praised in 1859-'60 ;
they have, or can procure, teams to do their transportation just
as well now as then, and they can as effectually shut themselves
up in their mountain fastnesses now as in the early days of
California.
But, while they can ever exercise their judgment in the
choice between a first class railroad, or go on foot, I, as a rail,
road man, do respectfully suggest that it is unjust for these
counties, now supplied with first-class means of transportation^
to throw any obstacle in the way of other counties in the State
endeavoring to place themselves in a like position. Because
Placer county has 134 miles of railroad running through her
territory in such a manner that her whole population can almost
hear the whistle of the locomotive, I do not think she should hy
the acts df her people, or her representatives, try to inaugurate
any unfriendly legislation towards railroads elsewhere on ac¬
count of any private grudge she may have against the C. P. E.E.
The advocates of a reduction of fares and freights to the extent
indicated by her orators, or to any other extent, must be ruinous
to the railroad interests in this State.
It is well known by those who have been trying for fourteen
years to build up a railroad interest in the State of California—
the difficulty of procuring money for that purpose. This diffi¬
culty is best proven by the fact that of the sixteen millions of
money in railroads in the State of California scarcely five millions
can be claimed as California capital.
Under the old railroad law of the State it was found utterly
impossible to get any foreign capital here for that purj)ose,
hence the change in the laws in 1858 to 1861. With ourjJresent
tariffs, even, it is with extreme difficulty that money can be
procured for this purpose from abroad, and none can be procured
here. It js the universal cry from all j)arts of California, that
they want cheap and ready transportation. This can only be
effected by offering more inducements to foreign capitalists, and
it is certainly not an inducement to cut down the present tariffs
C 31 ]
to a point below wbat is now established. There is some pros¬
pect of procuring capital for our railroads if the present rates
are continued a few years, and the management of railroads left
to railroad men, who understand, or are supposed to understand
the best moans of encouraging this, the.greatest auxiliary to our
development.
It will be readily admitted that we can employ profitably,
1,000 miles of railroad! in this State, and it is also well known
that money cannot be procured in California to build them. One
of the strongest inducements that we can offer is that our tariffs
for freights and fares are regulated and established by law, so
that capitalists can see a possibility of getting at least a legal
interest for their money.
Among the many disadvantages we have had to labor under
is that of a small population scattered over a vast extent of ter¬
ritory, which if once opened by ready transportation will soon
become more like the Atlantic States, and then a reduction of
fares could take place without any material detriment to this
growing interest, without which it is impossible that our inte¬
rior valleys can e ver be successfully settled up.
If any change is made on tariffs of transportation on our rail¬
roads, it would necessarily be by a general law, and would
reach all alike. This action, in my humble opinion, would ruin
the present favorable prospects for the construction of railroads
in the State of California for the next ten years, at least. It
scarcely can bo the desire or intention of any body of men,
whether legislators or others, who will for one moment look into
the history of the construction of our railroads and the present
necessity for their extension, to seriously attempt to destroy
what little enterprise there has been exhibited in their construc¬
tion in the State of California ; and, for the sake of argument, I
will call the attention of those gentlemen who are advocates of
reduction, to the rates of fare established in several countries,
both in the United States and Europe. In Eussia, where money
can be had from 2} to 4 per cent, per annum, the rates for
transportation are, for passengers, from 3 to 8 cents per mile.
In Erance, where money can be procured for not to exceed 4
per cent, per annum, rates of fares are from 3 to 5 cents per
mile. In the Eastern States, where the ruling interest may be
[32]
for this kind of securities, put at from 7 to 9 per cent, per an¬
num, the rates of transportation are about 5 cents, while in the
State of California, if money can be procured at all for the pur¬
poses of railroad construction, it cannot be pi-ocured for less than
20 per cent, per annum.
In all those countries above mentioned railroad securities are
mostly negotiated at par at a small discount, while the securities
of California railroads have to be subjected in most cases to dis¬
counts from 30 to 50 per cent, of their face and interests paid
on the full par value of the bond. It is believed these and
other equally good reasons can he given why no reduction can
he made in the rates of our railroad transportation without se¬
riously impeding the construction of the only means of commu¬
nication between the interior and the seaboard—at least it
seems that the interior counties of this State should be the last
to attempt any opposition in having ample communication from
their sections to the centers of trade. W". S. W.
[From the Daily Record, February 8, 1868.]
Prices of Subscription and Advertisements of the " Sac¬
ramento Union."
The question of cheap living, cheap traveling, and cheap read¬
ing, is agitating the public mind to an unusual degree, and we
feel that the Legislature should at once take the matter in hand,
and where the State is vitally interested per se it should act at
once. The State does not of itself travel, nor does it eat or
drink, but it does buy the Sacramento Union, and pay an abom¬
inable price for it too ; and we ask that the Legislature shall at
once, by solemn enactment, reduce that price to a reasonable
standard. The counties of El Dorado, Placer and ISlevada, the
inhabitants of which have contributed largely to make the Sac¬
ramento Union the wealthy institution that it is, are interested
in this matter, and several thousand names could he obtained
in those counties to petition the Legislature for relief from this
heavy tax upon literature. These high prices would answer
very well some years ago, when half dollars were easily obtain¬
able ; but now that money is scarce, the twenty-six dollars per
[ 33 ]
year necessary to pay for this paper is a tax very hard to be
borne. It cannot be denied that in the Atlantic cities, papers
more than twice as large, and kept np at five times the expense,
are sold at less than one-half the rates of this money making
sheet. Newspapers are usually started with two objects in
view, to make money and to promote the public welfare ; to ac¬
complish the latter, of course the subscription list must be made
as long as possible. It may be argued that the Union proprie¬
tors know their own business and know what to charge for ad¬
vertisements and subscriptions, but they do not; for what
plainer proposition could be advanced than this ; reduce your
price one-half, and your list of subscribers would be quadrupled,
and you would make more money than before. The reading
public understand this thing, and they can fix it up, if let alone,
so as to benefit the owners of the Union, while they get their
paper at half price. Nothing could be plainer—nothing more
simple. It has been urged by some that the proprietors of news¬
papers have souls. This is a mistake—they " have no souls."
Strange as it may seem, self interest is constantly prompting
them in all they do. They start in for power, they get a little,
and then they want more power, yet, however much they may
got they still grasp with untiring constancy after power, power,
power. The journal in question, fattening upon the enormous
subsidies received from the State and Nation, for publishing
Post office' lists and Thanksgiving proclamations—its coffers pie.
thoric with the proceeds of advertisements, setting forth the
merits of " quick cures," " moderate charges," and " Eadway's
Ready Relief"—this journal, we say, has the audacity to charge
the State " four bits " a week for papers furnished to its legisla¬
tors, when papers equally good are supplied to the Legislatures
of New York and New Jersey at about one quarter of that sum.
There may be comfort in the assurance that the benefits de¬
rived from this princely outlay are commensurate with the ex¬
penditure ; but upon this point, doctors differ, and all we require
is, that the public shall decide. Powerful as the Union now is,
its best friends will confess that in the remote period of its his¬
tory, say in 1854-5, it was a slow coach. It only cost, how¬
ever, in those extravagant times, "four bits" a week, though
many thought, plentiful as coin was, it would have been dear at
3
[ 34 ]
half the money. Still, with the heats and colds and floods of
fifteen years heaped upon its venerable head, it charges the same
old "four bits" a week. With all the improvement in machin¬
ery, with all the reduction in the prices of. labor and materials,
with all its facilities for obtaining cheap news—any poor family
in the counties of El Dorado, Placer and Nevada, or any other
county, must pay their little " four bits " a week or be deprived
of the effulgent light which emanates from the Sacramento
Union. The idea is monstrous, and the representatives of the
people should meet the issue in a square stand up fight. The
paper of which we are writing has been fearfully dangerous and
mischievous in its meddlings with State politics. Indebted, as
it is, to the Union party of the counties of El Dorado, Placer
and Nevada, as well as other portions of the State, for its suc¬
cess—nay, for its very existence, to turn upon and rend it, that
it might accomplish the defeat of men who were honorable, able
and loyal, but who, unfortunately, were not of their particular
stripe. It had its gubernatorial candidate, who received one
vote in some counties, while in others he received none, and if
these votes did not elect him it was no fault of the Sacramento
Union, which sounded his praises, in tiresome columns of edito¬
rial, leaded and displayed in all the panoply of dish water logic.
A newspaper is a good thing to have, but it is well to remember
its antecedents, and to watch its tergiversations, particularly if
it has been the creature and pet of a party once powerful, but
now discomfited in a measure by the rantipole utterances of the
journal in question. In earlier years the Union was allowed
often times to take the reins of power into its own hands, and
it was apprehended that great danger would follow if it was al¬
lowed to go on untramrneled in its selfish career. The fears of
Union men in this regard have been realized in party defeat,
and now they ask a conscientious Legislature to cut down the
rates of subscription and advertising of this journal and thereby
induce pœans of praise from the thousands who are bled by its
exorbitant charges, in the counties of B1 Dorado, Placer and
Nevada. Justice.
[ 35 ]
[From the Commercial Herald, February 10th, 1S68.]
Central Pacific Railroad.
We observe that an effort is being made, through petitions to
the Legislature, to procure a rijduction of the fares and freights
upon the Central Pacific Eailroad—a bill directed to this end
having been already introduced into that body. This, we fear,
is, at this particular juncture, a movement of doubtful policy.
We speak of its effects on the interests of the public, though,
doubtless, the rights of the Company in the premises'should
also be considered. Prom no one cause is California suffering
so much at this time as from the want of railroads. More es¬
pecially does she feel the necessity that the Central Pacific
Eoad should be pushed to completion. It is the overshadowing
want of the State—indispensable—vital to her every interest.
Now, this Company have a gigantic work to perform, the ac¬
complishment of which will tax their resources and energies to
the very utmost. Their current expenditures are enormous.
With a force of ten thousand men and one thousand horses in
their employ ; with shiploads of material constantly arriving,
which has afterwards to be freighted over the mountains and
far out upon the deserts ; wirh the purpose of constructing three
hundred miles of road within the present year, it is evident that
the Company will require all the revenues that it can legiti¬
mately command. But what this Company might lose, or a
few individuals gain, through the reduction of prices asked, is
not so much to be considered as the spirit which this measure
would seem to evince, and the damaging effect it would be
likely to have upon railroad enterprises hereafter.
If, at a time when we are suffering so grievously from the
lack of these improvements, and when wo are importuning cap¬
ital to come to our relief, we are found ready to cripple the
means of a Company the moment their earnings begin, and long
before any dividends have been or are likely to be made, it will
indicate a want of good faith, if not an absolute indifference to
right, that it may justly be apprehended will tend greatly to
■deter investment in these and similar enterprises hereafter. In
the present attitude of affairs, it is not so much what the Com¬
pany can stand as what the public can afford to do.
Already the Central Pacific Eoad, completed to the summit
[ 36 ]
of the Sierra, has done much towards reducing prices of freight
and travel across the mountains, to say nothing of gains effected
in time, safety and comfort. But for this work, communication
during the present Winter would, have been almost entirely cut
off between California and points east of the Siorx-a Nevada;
whereas passengers and goods, being now taken by rail over the
worst part of the route, make the transit with nearly the same
expedition and ease as in Summei".
The average cost of freighting from Sacramento to Yirginia
City, Nevada, a distance of 162 miles, is about $70 per ton, of
which the teamster receives $53 for cariying it seventy miles,
and the railroad $14 for carrying it ninety-two miles ; or, in
other words, the latter is paid only one-fifth as much as the foi'-
xner for a service which it performs not only quicker, but in
eveiy respect better. And hex-e, it may be observed, that the
railx'oad has to move the freight going east, which constitutes
ninety per cent, of all now carried, over the most diíñcxxlt part
of the route, taking it from the tide-water and delivei-ing it to
the wagoner on the top of the moixntahxs. The Eailroad Com¬
pany have already so x'educed the prices of freight coming west
as to give encoux-agexuent to the shipping of ox'es this way, and
we believe these xvates are satisfixctoxy to pax-ties most interested.
With these facts befox-e us, we fail to see just grounds for com¬
plaint, and mxxch question the expediency of any law being
passed at this time providing for a reduction of rates on this
road.
rmOM THE STATE CAPITAL REPORTEE, Eebruary 12, 1868.]
Railroad Fares.
Editor Eeporter : In the discussion of the reduction of rail¬
road fares, the number of the petitions from Placer, Nevada and
El Dorado is referred to as a good reason for striking a death
blow at our young and gi-owing railroad system, on the success
of which our future prosperity so materially depends. It is true
that these petitions are aimed at the Central Pacific Com¬
pany, but their request cannot be granted without a change of
the general railroad law, by which the present x-ates have been
established for yeax-s, and thxxs every railroad, especially those
«
[ 37 ]
proposed to be built, will be struck down. It is not surprising
that such petitions are numerous. Let the merchants of those
counties, who are active in this movement, get up similar peti¬
tions to reduce the charges of the express company, of our
stage lines and steamboats, and the Sacramento prices of the
merchandise in which they deal, and they can secure signatures
by the thousand. Ask anybody if he wants to ride on a rail¬
road free, or at mere cost, and he will sign a dozen petitions to
accomplish it, especially if there is no money to pay. The fact
that numerous interested persons ask that the property and interests of
others be sacrificed for their personal benefit, is a very poor argument
to adduce in favor of the proposition.
It is not correct to say that the Central Pacific charge the
maximum rates allowed by law. Such articles as grain, flour, pig
iron, coal and the like, are transported up the grade at greatly
reduced rates, and lumber, lime, granite, wood, ores and the like,
at prices but little above cost, the result of which has been to
wonderfully develop the resources of the counties through which
the ^ad runs. A reduction on passengers and merchandise will com¬
pel the Company to raise the rates on these important products, to
make up the loss, aud thus seriously injure those new and growing
branches of trade.
Some seem to fear that the Califoimia rates will be charged
on that portion of the line east of the State, and urge that as a
reason for reduction. But it so happens that California cannot
control the rates beyond its own borders. This fear that high
rates will be charged on the level and cheaper portions of the
line east of the mountains, is an idle one. It is astonishing the
facility with which some men advise others how to manage their
own business, especially if the adviser knows nothing about it.
The more ignorant, the more positive the advice. It is amus¬
ing to hear the arguments of those who seek to stab the Pa¬
cific RaUroad under the fifth rib, that it is all for the benefit of
the Company. The managers of that Company have never been
accused of a lack of shrewdness and ability, and if the interests
of the Company would be benefited by a reduction of rates, who
will so soon see it as they ? And as corporations are accused of
being governed solely by "self interest" (which, by the way,
wiU apply pretty generally to individuals), when it is for their
p
í 38 ]
interest to reduce the rates, they will undoubtedly do it. The
fact that they have done so on the cheaper class of products
proves this.
Many well meaning men, in the Legislature and elsewhere, are
liable to be deceived by this treacherous plea, that it is for the
" interest " of the Company. They overlook the fact that the
speedy completion of the road depends upon the rapid sale of
its bonds, and this depends upon the exhibit the Company is able
to make of large monthly net earnings, showing the ability of
the Company to meet the large demands to pay the semi-annual
interest on the bonds and provide a sinking fund for the pay.
ment of the principal when due. With such a showing they will
buy freely. Without it they will not invest a dollar. Strike at
these earnings and you strike a death blow at the enterprise—
the whole is paralyzed. Such advice at this time is not friendly
—the bitterest enemy could not urge a more fatal course upon the
Legislature. The man that does it, under pretense of friendship
to the enterprise, is either a secret enemy or a deluded friend.
When the road shall be completed, the managers, who ar^ not
wanting in common sense and business tact, will undoubtedly
regulate their rates so as to secure the most business for the road,
for it is their " interest " to do it. If, when that time comes,
they shall maintain unreasonable rates, or shall make exorbitant
dividends on their stock—if those dividends should even ap¬
proximate to those made by the Pacific Mail Steamship Com¬
pany, or the Steam Navigation Company, or the Telegraph Com¬
pany, or Wells, Pargo & Co., or the Bank of California, or even
the merchants of Placer and Nevada who want to travel and
have their goods carried below cost, then it will be time enough
to take the matter in hand. But so long as the stockholders of this
and all the other railroads in this State have not received a dollar on
their investments, it is hardly just to single out non-dividend pay ing
railroads and let all the dividend paying corporations go scot free. It
is hardly fair to belabor the poor railroads and let the rich compa¬
nies escape.
But it is urged that the United States, the State, and some
counties have aided the Pacific Eailroad, therefore the Company
should be compelled to do business at cost, and let their bond¬
holders whistle for their money. Why was this aid granted ?
C 39 ]
Simply because the enormous amount of money which would
have to be sunk—-actually lost—in building the road over the
Sierras and the deserts beyond, was so great that no Company
of individuals could alone bear it, and the public, who were to
receive the greatest benefits must, through Congress and the
State, step in and sustain a part of this dead loss. It was neces¬
sary to incur this enormous expense, because the road was a
military, postal and commercial necessity. It must be had re¬
gardless of the expense, and as individuals would not take the
whole burden and risk on themselves the nation and State had
to step in and bear a part of it. Before the present Company
took the work in charge, it was generally conceded that the
public, yea, that this State alone should extend aid of not less
than $15,000,000 towards it, and it was conclusively shown that
the State would make money by it. The Company has received
for building the road over the Sierras, from Sacramento to the
present terminus, about $6,000,000 Government bonds, and the
payment by the State of the interest on $1,500,000 of their bonds.
The Government hands are a mere loan, and stand as a lien and
burden upon the road. But count it $7,600,000 and it is only about
one fourth of the cost of the road. Besides the State and the
United States required as a condition of the aid that the road
should be built within such a limited time that it has cost the
Company in the increased expense of construction, caused by
this haste required, fully the amount of aid received. If the
Company had been allowed to take its own time, the work could
have been done fully twenty-five per cent, cheaper than it has
been, and thus the whole amount of aid received has had to be
expended in rushing the work through regardless of cost. Every
man acquainted with such work will bear testimony to this.
This national and State aid has, therefore, been burdened with
such conditions as to render it of but little value beyond the
credit and standing which it has given to the Company among
capitalists. The aid thus received is, therefore, no good reason
for reducing the rates. As to the public lands granted, they are
not the least aid in building the road, though they will undoubt¬
edly help to redeem the bonds when due. All the lands sold thus
far would not build a mile of the road. This grant of lands is
not peculiar to this work. It is the settled policy of Congress
[ 40 ]
to make such grants to all important roads through the public
domain, for it brings the remaining lands rapidly into market at
prices equal to that demanded for the whole.
Those who advocate a reduction of fares have finally to resort
to the mad-dog cry of " monster corporations," " without souls,"
" corruption," etc., etc. Corporations have just the amount of
honesty and as much soul as the individuals who manage them.
We are not aware that the managers of the thousands of corpo¬
rations which have grown up under the general corporation laws
of this State are any more corrupt, or any more " soulless,"
than the rest of the community. If they are as corrupt as
charged then we are in a pitiable condition, for there is hardly
a man of any energy, enteiqjrise or business tact in this State
that is not more or less interested in our corporations. Drive
them out of the State, as too " corrupt to live in it," and there
would be a beggarly show of empty houses.
But this favorite cry of " monster corporations." It is true
that the Central Pacific Company has a large capital stock, for
the road could not be built without it. If a road costing over
$20,000,000 could have been built by a " little corporation " of
say $100,000 capital, I doubt not the managers of its affairs
would have preferred it ; and if those using this senseless cry
will only show how it could be done, they will be entitled to a
large premium, and to the highest seat in the arithmetic class.
But as great works require large combinations of capital, and
as this—the grandest work of this or any other age—required
a oorresponding amount of capital to give it life and vigor, it
affords no just ground for intei'ference on the part of the Legis¬
lature to render this large investment of capital valueless. As
this great work is principally carried on with Eastern capital,
though controlled by our own citizens, such a course will crush
out the last hope of securing investments from the same source,
and as we must rely almost entirely upon Eastern capital to
build the railroads we so much need, it will result in postponing
their construction for at least another generation, when a new
race shall have sprung up, who will have a proper regard for
the rights of those who build our railroads.
But some charge that corporations mingle in polities. Many
unsuccessful ofiice-seekers, and they are a numerous body, instead
[ 41 ]
of ascribing their defeat to the lack of a proper appreciation of
their merits by the public, find it very convenient to saddle it
upon some corporation, which is too busily engaged with its own
business to heed their clamor, and which it is popular to de¬
nounce.
There is no doubt that the stockholders of corporations have
political opinions like others, and that they freely express them
and live up to them ; that is a right which they have in common
with all American citizens. A man does not forfeit those rights
by taking stock in a corporation ; stockholders are but men,
and as men they are liable to stand by their friends. It is
hardly to be exj)ected that they have such an excess ef the
Christian virtues as to support their enemies or those who seek
office to destroy them, and give their friends the cold shoulder.
If they did, in the present state of civilization, they would soon
have no friends. But these charges of mixing in politics have
their foundation generally more in the imagination than in real¬
ity. Defeated candidates always rush to this idea to heal their
political sores.
Some who are overburdened with timidity express fears that a
single corporation will be more powerful than the State, and
Camden and Amboy is harped upon. How happens it that that
Company has so great an influence in New Jersey. The an¬
swer is simple : In its first organization it was required to j)ay
into the State Treasury a certain amount of the fare received
from those passing over its road from New York to Bhüadel-
phia, and were allowed to chax-ge rates accordingly. It Was
supposed, probably, that this was imposing a hurden upon the
Company, when it was in reality only a burden upon the trav¬
eling public. In time the receipts of the State Treasury from
this source became very large, and, as it relieved the people of
the State from that amount of taxes, the Company has ever
been popular with the people, and exercised a corresponding in¬
fluence, while the people of other States, on whom the burden
fell, have never ceased to express their indignation at the impo¬
sition. That is the secret of their power ; but no railroad in
this State has that power. They have no more influence than
the same number of individuals possess. But even if it existed,
it is a very poor reason for destroying their business, and mak-
[ 42 ]
ing it unprofitable. If such, terrible dangers arc to be appre¬
hended from a single railroad corporation, what will it be when
our State is covered with a net-work of railroads ? It may be a
good argument for preventing any more such companies being organ¬
ized, but none for taking away vested rights.
Eut it is urged that this Company is likely to help build a
good many railroads in this State, and therefore it is best to
cripple them now, and thus prevent it. This would be a splen¬
did f)oiut, if the State did not want any more railroads; forcer-
tain it is, if the fares are reduced, neither this Company nor any
other will build any more railroads during this generation. For if
reduced this season, they will be liable to further reduction next,
and so on as each Legislature meets. Such things destroy all
confidence in railway investments here, and will paralyze every
effort. Eastern capitalists will say they prefer to keep their
money in their own States, where their rights are respected.
But as railroads are wanted all over the State, it is the better
policy to encourage such investments of capital from abroad by
maintaining rates which have been long established by law, and
assuring capitalists that their rights, which have become vested
under the law, will be respected by the Legislature. Confidence,
is the soul of enterprise. Give to capital which seeks our State
the confidence that it shall have a sure return, and that it shall
be safe, and millions more, in addition to that put in the Pacific
Eoad, will flow to our glorious State. Destroy that confidence,
that t?-ust in the honor and good, faith of the State, render valueless
the millions of private capital invested in the Pacific Railroad, and
every holder of its stock or its bonds, will cry out over all the land
against the injustice, and the millions noio coming here will be stayed,
and loill seek other channels and improve other lands.
Enquieer.
[From the Marysville Appeal, Febniary 12th.]
Low Freight.
The following, from the Downieville Messenger, comes so near
expressing our sentiments that we endorse it:
Parties in Nevada county have petitioned the Legislature to
[ 43 ]
reduce the fare on the Pacific Railroad to three and a third cents
per mile. Probably these same parties are very anxious that
San Francisco capitalists should invest largely in enterprises for
the development of the interior of the State, and look upon such
capitalists as will not do it as the most sordid of men. A few
years ago these grumblers were paying for ireights about four
times the price they now pay, and had to wait weeks for trans¬
portation at that, and the rate for jJ^ssage was greater than
now, besides the dilference in comfort by the change. Their
property has also been greatly enhanced in value, while the
stockholders of the road have, as yet, received not the value of
a cent in dividends. Upon this showing there would be little
encouragement for the investment of capital in the interior.
The rates would be much too high were the road compileted, but
at present, we doubt if the rates of freight and fare on the Pacific
are such as to justify legislative interference—at least to the
extent pi-ayed for.
[From the Daily Decord, February 1-ith.]
Pacific Railroacl Rates.
Editors Record :—It has always been the policy of this State
to hold out liberal inducements to all who desired to build rail¬
roads; among which is an allowance of a reasonable jirofit on
such investments. A brief review of the legislation upon
this subject may not be uninteresting.
The first law was passed in 1850, and provided that the Leg¬
islature might, " from time to time, alter or reduce the rate of
tolls, fare or other profits upon each road," but not without the
consent of the corporation, so as to produce, with the profits,
" less than thirty per centum per annum on the capital actually
paid in." In 1851 the law was amended, so that the Legisla¬
ture should not, without the consent of the corporation, reduce
the rates so " as to produce less than thirty-five per cent, jier
annum on the capital stock, and the actual amount expended in
improving and in keeping said road in repair up to the time of
the reduction of such fare and freight." In 1853 the rates were
fixed at twenty cents per mile for each passenger and sixty
C 44 ]
cents per mile for each ton of freight ; but in 1854 the law was
amended, and the present rates of ten cents per mile for pas¬
sengers, and fifteen cents per mile for each ton of freight were
established, and have continued in force for fourteen years up to
this date, without change.
All the railroads in the State have been built since these rates
werefestablished. While chese rates may be considered fair and
just, they have failed to induce capitalists to build many roads,
and what have been built have nçt as yet paid a dividend. As
they are far below the usual rates of land transportation, and
as railroads running under them have failed to realize any sur¬
plus profits, they cannot be considered exorbitant or oppressive.
The roads afford cheaper and more expeditious facilities than
before existed, and are therefore a great benefit to the people.
Our population is still sparse and supplies but few travelers,
and as they are largely engaged in mining, the products of
which afford no freight to a railroad, the business of our rail¬
roads is comparatively light, and must continue so until the
population is more dense, and our products afford more freight¬
age. Now a miner can carry in his pocket the result of a year's
labor, but when our State is filled with farmers and manufactu¬
rers, railroads will have plenty of freight, and they will then
pay better. An increase of population is one of our necessities.
How can we get it as rapidly as we need ? Only by the early
completion of the Pacific Eailroad. The people of the Western
States bordering on the Mississippi and Missouri, are an emi¬
grating class, When the road is completed thousands of fami¬
lies will come here as soon as possible, and it will be for the inter¬
est of the railroad companies to bring them here, as it makes cus¬
tomers for them and increases their business. We shall see
emigrant trains by the mile rolling into our State.
But some one says they cannot afford to come here at the
present rates, and therefore they will not come. If that is so,
then the railroad companies will have to reduce the rates so as
to bring them here, and that they will do so voluntarily is cer¬
tain, because it is to their interest to do so. We can safely rely
upon corporations as well as individuals doing what is for their
interest. While the emigrant and his family are brought here
on cheap trains at low fares, those who travel on business or
[ 45 ]
pleasure, in fine cars, at high rates of speed, should pay a fair
price for it. The Legislature can only fix the maximum rates
and it would be unjust to reduce this maximum to a proper
charge for cheap emigrant trains. They should be such as will
compensate the company for using fast trains of palace cars,
over high grades and a costly road, leaving the companies free
to regulate the cheaper fares.
But the princijjle of fixing rates by the Legislature is wrong
in itself. All other classes of corporations are left free to regu¬
late their own charges, and the same rule should apj)ly to rail¬
roads. There is just as much reason for regulating the prices
of water sold by ditch companies, the fares of steamboats and
stages, and the charges of express and telegraph companies, as
railroads. Eailroads cannot run a train until they have expend¬
ed large sums to lay the track and procure rolling stock. The
expense of getting up a stage or freight team is comparatively
light. Let competition and the laws of trade regulate the rates
of each, as in all other kinds of business. There is not the least
reason why this kind of business should be an exception.
The true principle is that which prevails in England and most
of the Atlantic States, and which prevailed here originally ; that
is, to leave the companies free to regulate their own charges,
but limit the dividends on their capital stock to a reasonable
amount. Under the law the capital stock represents the cost
of the road, fixtures and rolling stock, and the stockholders
should be allowed to receive reasonable dividends on their in¬
vestment. In England, where money is cheap, this limit is fixed
at ten per cent, and that is the common rule. All it requires is
a simple provision allowing the compianies to regulate their
toUs, fares and charges, hut so that their dividends on their
capital stock shall not exceed a fixed amount ; and when their
earnings exceed that amount they must reduce or reserve to the
Legislature the right to reduce them.
The adjustment of this limit requires some care. It should he
high enough to induce the building of railroads and to cover the
great risk of failure to pay at all, and not so high as to make the
dividends extravagant or unreasonable. As interest is high here
probably it should be at least twelve per cent.; probably fifteen
[ 46 ]
per cent, per annum would be better and more certain to secure
the building of our roads.
If this principle is not adopted the question then arises,
ought the present established rates to be reduced ? It is a ques¬
tion whether the companies now organized have not a vested
right to collect the present rates. The State, by its general
railroad law, has proposed to all who would invest their money
in railroads that they should be entitled to collect and receive
certain fixed rates. Man}- have accepted this proposition, and
have organized and invested their money accordingly. It has
thus become a contract between the State and these companies,
and the State has no right to step in after the comj)anies have
fulfilled their side of the bargain, and violate its own agreement.
The (Jonstitution of the United States declares that " no State
shall pass any law impairing the obligation of contracts," and it
has been frequently decided by the United States Supreme
Court that this applies to contracts made by a State the same as
to contracts made by individuals. If the Act of 1861, which is
the general railroad law now in force, had reserved to the Legis¬
lature the right to alter or change the law in this respect, an¬
other question would have been raised ; but as it does not, it is
clear that the Legislature cannot change the law so as to affect
existing railroad companies, because it would impair the con¬
tract made by the State with them. Such a law could only af¬
fect future organizutions. But to reduce, as to them, will stop
all railroad building—a result we would all deplore. Better
leave well enough alone. Amicus.
[Extract from the Correspondence of the Daily Evening Bulletin.]
Something of Interest to California and the Pacific
Coast.
Cisco, February 6, 1868.
It is exceedingly desirable for the interest of our coast that
the California Company should have control of the line to Salt
Lake and as much further as possible. If the Atlantic Company
should pass to the westward of Salt Lake, or the point at which
will bo distributed the trade of that valley, so much as one mile,
[ 47 ]
they will be able to so arrange their tariflf of charges as to
greatly discriminate against San Francisco merchants. Their
interests being all on the Atlantic side, they will naturally de¬
sire to see the Salt Lake trade go to New York, Chicago or St.
Louis, and can, if they please, so shape the policy of the road as
to bring it about. The next year will determine the matter.
The Eastern Company will soon pierce the Black Hills, and then
they are nearer to the place of victory than are our people, and
the race will be determined almost before the great public of this
coast knows that it has commenced. The Eastern Company have
the advantage of operating in a community where, I suspect,
there is less jealousy entertained against them by the people
than is the case in California.
I have never fully forgiven Stanford & Co. for stealing a march
upon our jjeople in getting possession of the franchise, and not
until the last week, when f have been over the work, have I
fully yielded the notion that the whole thing would stop at the
point of junction with the Dutch Flat wagon road.
The Californians have had much the hardest and worst por¬
tion of the work to do, and a part which was especially discom'ag-
ing in its commencing. With enterprise quite equal if not su¬
perior to that displayed by the Eastern end, they have been only
able to accomplish 100 miles or so, while the others have built
near 600 miles of railroad. There is at this moment a struggle
going on for supremacy between the rival Companies, in which
I suspect our people have more interest than they now know of.
And if I am right in my notion, might it not be a good idea for
the people, the press, and the Legislature of the State, instead of
clamoring against the management, and throwing obstacles in
the way of the Central Pacific Eailrord Company to examine
into the matter, and take hold and help them along, or at least
let them alone for another year, when perhaps the dangerous
crisis will be past. I know the feeling of distress which na¬
turally comes over us at seeing others have a good thing, in
which we have no direct interest. I have often felt the sensation.
But after all, if we can't help it, is it not better to let the good
thing go ? Beside, is it quite sure that Stanford & Co. have such
a good thing ? True, they say so themselves ; but may there not
bo a strong reason for this ? It appears that the Company is,
[ 48 ]
by a carious accident, placed between two fires. It is necessary
for it to sell its bonds at the East to get money to go on with the
work. In order to do this to the best advantage, the managers
of the Company are obliged to make and publish a statement of
the assets, privileges, and the like, to exhibit to the capitalists
of the Atlantic States.
How, I do not say, nor do I think that the Company have
" cooked," as it is sometimes called, their accounts, in order to
show a better state of facts than actually exist, but judging from
well settled rules governing human nature, it may be depended
upon that they have, at least, put the very best possible face
upon the whole subject. In this way every one knows that the
financial condition of a Company can always be made to look
exceedingly inviting. Especially can this be done with regard
to the earnings of a railroad in course of construction. Items of
a doubtful character may be charged to construction account,
which, upon a road completed, would go to the cost of operating
the road. It would often prove that such matters would be suf¬
ficient to make a great diffei-ence in the actual, as against the
exhibited gains of such an enterprise. But however that may
be, certain it is that the pamphlets published by the Central
Railroad Company in Hew York, for the pui-pose of selling
the bonds, have been seized upon by people on this side and
used as an argument for a wholesale onslaught upon the privi¬
leges of the Company, as they now stand in this State. Pares
and freights must bo straightway cut down, taxes must be made
more exacting, new concessions must be watched with greater
care. Stanford & Co. are getting rich. "Well, I suspect they arc,
and I certainly hope so ; and as soon as the road is completed, I
am in favor of a thorough overhauling of the whole matter and
a revision of the subject of fares, freights and everything pertain¬
ing to the road. But I am in favor of going a little slow for an¬
other year, even at the risk of their getting as rich as John
Jacob Astor; for if it . should happen that they are not doing
quite as well as they try to make the holders of Eastern money
bags believe, any embarrassment from this side might put back
the completion of the road for years. One thing is certain; they
do not dare to say that they are not getting rich, for the bonds
would cease to sell, while if they admit they are heaping up a
[ 49 ]
fortune, then the enemies in the rear, that is to say, theirneigh-
bors in California, get up a shout that they must be pulled
down.
The Pacific Eailroad appears now to be going on with all the
vigor that can possibly be brought to bear upon it. That is the
thing which, of all other matters, the people of this coast desire;
What effect unfriendly legislation in this State would have upon
the enterprise we cannot tell. This we know, that things are in
such a predicament that they would be obliged to assert, what¬
ever the fact may be, that they are so rich, so independent and
so prosperous that nothing can injure or impede them. Why
thej^ should assert this we also know; they must sell bonds.
Probably they are doing as well as they tell the New York peo¬
ple. But as there is a possibility that they may not be, and that
hostile action may be more important than they can afford to ad¬
mit, let us go slow for another year or two, and get the road
built a little further along before we let our jealousy of the grow¬
ing wealth of our neighbors drive us to an act. which may prove
in the end injurious to us all.
[From the San Jose Mercory, February loth, 1868.]
The Central Pacific.
A bill is before the Legislature which contemplates the reduc¬
tion of the rates of fare upon that portion of the Central Pa¬
cific Railroad now in operation between Sacramento and Vir¬
ginia City. There seem to us an undue haste in this matter of
redticing the fare upon this road. It is well known that the
cost of the work over the Sierras is immense. It will require
all of the Government subsidy, State aid, mortgage bonds and
personal credit of the Company to carry forward the enterprise
to its completion. The earnings of the road are all required to
pay the interest on their mortgage bonds. It will be many
years before the Company can realize their first dividend—not
at least before the completion of the road. It will be time
enough then to agitate the question of low fares. In fact, the
Company will be compelled to reduce their rates of through
fare to the very lowest possible figure, in order to compete with
4
[ 50 ]
the steamship companies. In the meantime, they ought not to
be embarrassed in the construction of the road by any legisla¬
tive tinkering with their fares. Ten cents per mile is little
enough at present to carry a man with his baggage over the
JNevada mountains. We believe there is no complaint because
of these rates except by the residents of those counties which
have derived the largest immediate benefits from the road. We
hope the hill will receive its quietus, as it ought.
frrom the FoUom Telegraph, February loth, 1868.]
The Central Pacific Railroad.
It is a well known fact that railroad fares in this State are
generally considered exorbitant ; to this the public alone look,
because it diroctlj^ affects them in their individual interest. Be¬
yond what effects them at the present time the majority seldom
look—what is actual they feel. The past they care nothing
about, and to the future they rarely look, and often it is wrongly
judged of by the past. The business of all companies and cor¬
porations must be managed as all private business matters are,
to make the business successful. To make any business what¬
ever successful, a certain amount of ready capital must be in
daily use to carry it on. It must be had, or the business of the
individual or corporation becomes hampered and disorganized,
and difficulties, delays and obstructions at once arise, involving
immediate trouble, difficulty and a general languishing of enter¬
prise. At this time the Union Bacific Raih'oad Company are
running toward Salt Lake from Missouri, and the Central Pacific
from California. They, are both making the most gigantic
efforts in their power, with time, capital, material and work¬
men. Every cent each Company can raise—all the material
and all the men they can advantageously employ—is placed on
the works; and each Company is shoveling snow on their re¬
spective routes, to gr-ade the ground and lay the tracks, to see
which Company shall first reach Webber Canon, forty miles
east of Great Salt Lake City. This is the point they each are
bending all their energies to reach. This point reached by
either Company first will command the entire trade of Salt Lake
[ 51 ]
Yalley, worth millions a year. If the Central Pacific reaches
it first, this trade will come to California, and be of great benefit
to this State. If not, it will continue to flow, as it now does, to
the East. It is the prize each Company is fighting for; hence
the contest. It is not a contest for time alone, but an ac¬
tual struggle for dollars and cents. The question narrows itself
down to the single proposition : Shall California receive this trade
or not? Every man in business knows that California has been
for years past, as far as general business is concerned (except
farming for two years past), at a stand still or retrograding.
It is true, San Francisco appeared to flourish; but what other
portion of the State has, particularly the northern part ?
Everybody eomj)lains of dull times, and no better can be prom¬
ised from any future enterprise, outside of the universal wish
for the early completion of the Pacific liailroad. Even San
Francisco, with all its capital, and San Jose, with all its liberal¬
ity, will not furnish sufficient capital to start a silk mill; and
so it has been in other portions of the State. Many enterprises
have been broached, but their realization has ended in the light¬
est vapor. At this time the bonds of both of these great rail¬
road companies stand on an equality in the market, and so each
will remain as long as the same energy is displayed. But let
anything occur to curtail their capital—to delay or hinder the
progress of the roads—then down will go their bonds in mar¬
ket, and the Company whose stock remains the highest will at
once outstrip the other, and either the East or California will
eventually receive the greatest benefit. Many a great enter¬
prise has been broken when it appeared the strongest by cap¬
tious and also well intended action. So it may be with the
Central Pacific Kailroad, if their rates of fa^e are cut down at
this time and their revenues decreased, reducing their working
capital far below what is daily required for the actual construc¬
tion of this road. The present rates of fare can easily he en¬
dured for a year or two longer, if the State and the people are
to be the gainers by its earliest possible completion, which it will
not be denied will be the case.
We all know that great corporations incline to grasping
power and wealth ; but at the same time the building of the
road is the greatest enterprise the world ever saw, and its early
[ 52 ]
completion an actual necessity to California. Very few can be¬
gin to imagine the revolution it will create in the business of
the world, the living impetus and sudden start it will give to
California, and to every branch of industry and business in the
State. Capital and population will flow to the shores of the
Paciñc in a steady stream. Manufacturing of all kinds will be
started ; and where one ship now sails from San Francisco, en¬
gaged in the Paciñc and Asiatic trade, twenty will sail. Mining-
will revive, and where one dollar is now taken from the quartz
ledges, fifty per cent, will quickly be added to it. Let the road
goon; give it every encouragement. Let it be completed as soon
as possible, and with its completion will come the realization of
lively times and a return of prosperity to every branch of busi¬
ness the people of this State are engaged in.
[From the Spirit of the Times, February 15th.]
Central Pacific Railroad Charges.
The papers of the day have teemed with editorials and com¬
munications relative to a proposed reduction of the rates now
charged by the Central Pacific Railroad Company, by the Leg¬
islature. Of course the burden of all is, that the Railroad Com¬
pany is a soulless corporation ; that it is grinding down the
energies of the people ; and that now, when its benefits are be¬
ginning to be felt and appreciated, its back should be brok.en by
adverse legislation at the verj'- time when it requires all the as¬
sistance that can be given it in order to hasten along the link
which is to bind us to the East. Forgetting that a strong oppo¬
nent is at work on the other side of the continent, and that,
should its advance reach Salt Lake before that of our Company,
and that all the trade of the great country beyond Yirginia City
would thus be divei-ted from California to enrich the marts al¬
ready teeming with wealth on the Eastern Slope, efforts are
being made to throw the greatest obstacle in the way of the
work in hand by reducing the revenue at a time when one dollar
is of far more importance in the construction of the road than
five would be in four years from now. For years a demand had
gone up, heard far above the surrounding strife in the game of
C 53 ]
life, for the construction of the Pacific Kaih-oad; and for years
longer it would have gone up unanswered had not the enter¬
prising projectors of the road we are now speaking of responded
with their time, energj', influence and means, and bravely went
to work against the combined opposition of almost the entire
wealth of the State. The leading commercial city of California
refused at first to have anything whatever to do with the enter¬
prise, and when the people were called upon to vote on .the
proposition of extending aid to the Company, every efibrt was
made to defeat a x^roper expression of oj)inion. But all that is
of the past and we have now to deal with the present.
Without discussing the injurious bearing which any intei'fer-
ence on the jjart of the Legislature might have with the jdi'o-
gress of the Company in the action contemplated and which
calls forth this, we contend that the Legislature has no legal
right whatever to reduce or raise the tarifl", either for passen¬
gers or freight, on the Central Pacifie Bailroad, for the reason
that it is a national institution, adoj)ted by the Govei-nment
and susceptible entirely to rules and regulations adojjted by
Congress, and thus, as we have said before, nationalizing it.
The Central Pacific Eailroad Comfiany was given life under
the provisions of an Act passed by Congress July 1, 1862, enti¬
tled " An Act to aid in the consoruction of a Eailroad and Tele¬
graph Line from the Missouri river to the Pacific Ocean, and to
secure the Government the use of the same for postal, military,
and other purposes." The very title of the Act indicates the
road to be constructed under its provisions was a Government
road, and was to be used for Government purposes. Again, in
sections 17 and 18, the whole gist of the character of the road
is given. Section 17 jDrovides that, in the event of the failure of
the Central Pacific, or the Union Pacific Eailroad Companies, or
either or both of them, to comply with the conditions of the Act
providing for the construction of the road. Congress may take
entire charge of the same, even to the disbursement of the in¬
come for the requirements of the work j and if a continuous line
of railroad, from the Missouri river to the navigable waters of
the Sacramento, is not completed by July, 1876, then the whole
road and property, of whatsoever kind it may he, is forfeited to
the Government—being further proof that it was, and always
[ 54 ]
has been, looked upon as an undertaking of the Government,
with the workings of which the laws of no State were intended
to be permitted to come in contact. And now, in regard to the
matter of rates of faro : Section 18 clearly defines that " when¬
ever it appears that the net earnings of the entire Road and Tele¬
graph Line, including the amount allowed for services rendered
the United States, after deducting all expenditures, including
repairs and the furnishing, running and managing of said Road,
shall exceed two fier centum upon its cost, exclusive of the five
per centum to be paid to the United States, Congress may reduce
the rates of fare thereon, if unreasonable in amount, and may fix and
establish the same by law." In the same section Congress reserves
to itself the right to " add to, alter, amend or repeal this Act."
It seems to us that no further argument need be adduced, or
statements made, to show that any law passed by the Legisla¬
ture, relative to the tariff now in force by the Central Pacific
Railroad Company, would be in direct conflict with the law of
Congress in respect to the matter, and would therefore become
nugatory and of no practical effect. The rates cannot be in¬
creased or decreased without Congressional sanction, and all
the laws Avhich State Legislatures may pass in regard to the
subject will amount to nothing. The Railroad in question
crosses the line of several States and Territories, from not one
of which was permission first obtained to secure such a privilege,
but the right came through the law of Congress, and therefore
no such permission was necessary. x\s well might Nevada,
Utah, and other sections of the country through which the road
passes, existing under State or Territorial governments, set up
a tariff aceording to their idea, which should guide the Central
Pacific Railroad Company in its charges for passengers and
freight. Were such a state of affairs allowed to exist the road
would very soon become inoperative ; and it was to avoid just
such difficulties that Congress framed the law incorporating the
Central Pacific Railroad Company, reserving to itself the right
to govern and control all such matters. The Government de¬
sired from the inception of the enterprise to assist it in every
way, knowing full well that in the end it must as a necessity be
the gainer. It now costs the Government, annually, for mail
service overland and by the steamers, upwards of one million
[ 55 ]
two hundred and fifty thousand dollars; on the railroad the
same service would be performed, according to the rates now
paid at the East, for two hundred and fifty thousand dollars,
being a saving of one million of dollars in one item; and then
the transportation of men, munitions of war, Government stores,
supplies, etc., which now require throe weeks in transportation,
would be done in four days, at a saving to the Government of at
least two million dollars per annum, making a total of three
million dollars, just the amount of interest which the Govern¬
ment will be called upon to pay on the fifty million dollars worth
of bonds loaned, not given to the Company ; and which the Com¬
pany at the end of thirty years will be compelled to pay or give
the road back to the Government, to whom it belongs. Abso¬
lutely, Leland Stanford, and the gentlemen combined with him,
are building a road for the Government, and no other phase can
be represented in connection with it.
It seems a little remarkable that efforts should be made to im¬
pair the usefulness of the road by such antagonisms as the move¬
ment now on foot to cripple the resources of the Company. We
well recollect when the progress to the summit was watched
with eager eyes, and with feelings of pride aroused on the part
of the people of this coast, and particularly of those of Califor¬
nia, as well as those of the Eastern Slope. A distinguished En¬
gineer, in a letter to the Legislature of Nevada, said ; " I have
had much experience—some twenty-five years connection with
railways—as an Engineer, have examined, personally, all the
engineering works of importance in Europe and the United
States; have constructed railways where the graduation cost
over §100,000 per mile for five consecutive miles, and 1 must
confess all my ideas of physical obstacles in the construction of
railways were so completely below the difficulties to be encoun¬
tered on the route of the Central Pacific Eailroad that 1 could
not conceive any set of men looidd seriously undertake to construct a
railway over such a country."
In the same letter the same distinguished Engineer says, that
" from Illinoistown to Dutch Flat any railway must encounter
work 80 costly, and so long a time must be required to construct
it as to weaken the hopes of finding capital and patience sufficient to
[ 56 ]
build it. Prom Dutch Flat to the summit it is still heavier, and
from the summit to the Truekee is worse than all."
It was in the face of such a damaging obstacle as this letter
that the Company had to work, and which, as we have said be¬
fore, and aroused the fears of the people that the road could not
by any possibility be constructed in any reasonable time, or
with the aid of any reasonable amount of capital, particularly
as the same distinguished (?) Engineer said it would take at
least fifteen years to build the road across the summit, if it ever
could be constructed at all. This letter was dated February 3,
1865, and to prove the deep knowledge and distinguished engi¬
neering abilities of the author, the road was, in December, 1867,
constructed across the summit, through six tunnels, the largest
1,659 feet in length, the whole of the heaviest work being done
in ELEVEN MONTHS from the time the fii'st pick was driven into
this part of the work, and in eourteen years and one month
sooner than the distinguished Engineer thought it could be done.
In the face of such enterprise and energy it would be criminal
to throw any impediment in the way of success, even by a me¬
morial to Congress, for in no other way, in our judgment, can
the matter of the reduction of tariff be reached. In 1870 the
road will have been completed, and a continuous line of ti-avel
opened from the Sacramento the Missouri rivei's ; then let the
people who are most interested, and those comprise the people
of the Nation, apply to Congress for relief in the premises ;
which, if legitimate, will doubtless be readily granted ; but
while the road is in process of construction, and while the atten¬
tion of those who are doing the work should be directed entirely
to the great enterj)rise in hand, let no distractions interfere
to prevent a successful termination of their labors, and particu¬
larly let not the people of California stand in an inimical posi¬
tion to the very undertaking that with the opening of its traffic
will make her the most brilliant in the galaxy of States that
compose the National diadem.
[ 57 ]
[From the Daily Recortl, February 18, 1S68.]
Pacific Railroad and the "Union."
The Union, in its blind rage against the Pacific Railroad, makes
the raonstroue statement that this State has guaranteed the pay¬
ment of " the interest of $12,000,000 of the bonds of the Com¬
pany, at 7 per cent, per year for twenty years," and that the State
has ''given away" to the Company the "vast sum of §16,800,000."
How that paper, with the remembrance that it once had a repu¬
tation for veracity, could make such false charges with the law
before it, can only he accounted for by its well-earned reputation
of sparing no effort at injuring those whom its proprietors per¬
sonally dislike, and by the suecess it attained at the late political
campaign in practical recognition of the Yankee proverb, "that
a lie will travel from Maine to Georgia, while truth is pulling on
his boots." If it has not the Statutes of California of 1863—4,
it could have borrowed them, and turned to page 344, when it
would have seen that instead of paying the interest on §12,000,-
000 it only pays the interest on §1,500,000—a pitiful sum com¬
pared with the great value of the road to the State. This state¬
ment is of the same character with the assertion that the Gov¬
ernment bonds are a gift to the Company, when they are merely
a loan, the principal and interest of which is a lien uj)on the
road, and has to be repaid in full by the Company. These false
statements have been iterated and reiterated by the enemies of
the road, until thousands really believe them to be true. The
Union is well informed on these matters. We fear that the sug¬
gestion that the Legislature reduce the enormous prices it
charges—more than four times that of Eastern papers—has dis¬
turbed its good nature, and caused it to be reckless in its mis¬
statements. The Union is also greatly exorcised for fear that
the Company may have some political influence in the State.
That paper has been trying its hand at that business for several
years, and attempted to be the dictator of the Union party with
a magnificent lack of success. It has failed to secure influence
with any party, and of course is sore on that subject, and with
the natural feeling of narrow minds, it is hardly strange that it
suspects others of the same failing.
[ 58 ]
[From the Sacramento Union, February 18,186s.]
Pacific Hailroad.
Messrs. Editors: It is astonishing the persistency with which
many persons who ought to know better continually assert that
the United States Government bonds received by the Pacific
Kailroad Companies are a gift or donation to them. There is not
the least foundation for this, as a reading of the law will show
These bonds are a mere loan to the Companies, every dollar of
which, principal and interest, has to be repaid by them to the
Government from their earnings; and, to secure the loan, the
Government has a lien upon the road, rolling stock, etc. Under
the first Act passed in 1862, this Government lien was made a
first incumbrance on the property, but finding that the Compa¬
nies could not build under it, in 1864 Congress autliorized them
to execute and issue their first mortgage bonds to an amount
equal to the Government bonds, and provided that the same
should be a prior lien upon their property to that of the Govern¬
ment. Thus the Government lien is a second mortgage upon
xhe road, but the Companies are required to reinburse the Govern¬
ment for all the interest paid on the bonds, and pay the principal
when due. The law provides that five per cent, of the net earn¬
ings of the road, after its completion, be paid to the United
States, to be applied to the payment of this principal and in¬
terest.
A very serious question arises here. The National Govern¬
ment has a large pecuniary interest in this work. It has invest¬
ed large amounts in it, and the road is required to pay back this
investment with interest. So also the law requires the Company
to transport the public mails, troops and munitions of war for
the United States; in fact, that was the main purpose of Con¬
gress in making the loan to the Company. If the State has a
right to reduce the rates twenty-five per cent, it can reduce them
eighty per cent., and below running expenses, so that the Com¬
pany will have to stop operating it. The result would be that
the transportntion of the Government mails, troops, etc., would
not be done, and the Company could not repay the loan. Re¬
ducing the rates is therefore a direct blow at the National Gov¬
ernment.
Congress foreseeing, probably, that State legislation might
[ 59 ]
take thifî course, provided that the rates might be regulated by
Congress. The road is a national vork, specially provided by
Congress for national purposes, and the States cannot defeat
that object. An}' attempt of the kind will be futile, as has been
often decided by the Courts. If any law reducing rates should
be passed, it would undoubtedly be held invalid by the Courts.
A conflict of this kind between the State and National Govern¬
ments should be avoided. There is no necessity for action now
or, in fact, until the road is completed. Then, if its earnings are
found exorbitant, or its charges excessive. Congress can exercise
its power over the subject. In fact, the matter is now before
Congress, and they may legislate upon it this session. If they
do, the State legislation will bo clearly invalid. If Congress
should not, it will probably be for good reasons and an unwill¬
ingness to embarrass the work while in progress. It is jDerfectly
safe to leave the matter in the hands of Congress, who alone can
control it. Lex.
[From the Shasta Courier, February 15, 1868.]
Hardly Fair.
Parties in Nevada county have petitioned the Legislature to
reduce the fare on the Pacific Eailroad to three and a third cents
a mile. Probably these same parties are extremely anxiottsthat
San Francisco capitalists should invest largely in enterprises for
the development of the interior of the State, and look upon such
capitalists as will not do it as the most sordid of men. A few
years ago these grumblers were paying for freights about four
times the price they now pay and had to wait weeks for trans¬
portation at that, and the rate for passage was much greater
than now, besides the difference in comfort by the change. Their
property has also been greatly enchanced in value, while the
stockholders of the road have, as yet, received not the value of
a cent, in dividends. Upon this showing there would be little
encouragement for the investment of capital in the interior.
The rates would be much too high were the road completed, but
at present, we doubt if the rates of freight and fare on the Pa¬
cific road is such as to justify legislative interference—at least
to the extent prayed for.
[ 60 ]
[From the Daily Bee, February 19th.]
Railroad Fares.
Editors Bde :—-The advocates of the Bill arbitrarily reducing
the rates of fares and charges for freight on the Central Pacific
Eailroad, give as one reason, that the present rates keep the
people and the business from the road. If this is so, no one is
injured but the owners of the road, and if they choose to destroy
their own business, why, let them.
jSTo one denies that the Directors and managers of the road
are keen, sharp business men, in fact their ojiponents say that
they are too sharp ; aud does any believe that they will keep
their prices so high as to injure and destroy their traffic ?
When the managers of the railroad find that the j)resent rates
injure their business or the country adjacent to their road, they
will reduce them, and until then it would seem but just and fair
to believe that no one is injured, and to allow them to manage
their affairs as to them seems best.
Leaving out of sight the legal question as to whether the
Legislature has the power to alter the rates, is it wise for this
State to retard in any manner the progress of an improvement
that, when completed, will do more to advance the interests of
California than even her gold fields ?
The boy that killed the goose that laid the egg of gold would
be aecüunted wise as Solomon in comparison with those that
would place an impediment in the pathway of the iron horse
that wo hope soon will be able to travel from the Atlantic to the
-Pacific.
The Directors of the road say that to interfere with their
present rates would injure them very materially ; let us at least
be charitable and believe them.
Our State is doing very well at present by allowing the mana-
agers of the road to manage their private affairs in their own
way, and to " let well enough alone " is a good motto for States
as well as individuals. . Pacific.
[ 61 ]
[From the Virginia City Daily Trespass, February 18.1868.]
Railroad Tariffs in California.
Senator Roberts of Nevada, has introduced in the California
Legislature a bill, made general for railroads in the State, fix¬
ing the fai'e and freight rates. The bill is produced in response
to petitions from citizens in Placer, Nevada and EI Dorado conn,
ties, asking a modification of the law of the State, which was
purposely made very liberal in its terms offered to cajDitalists who
should undertake the construction of railroads.
On account of the long distances between important settle¬
ments, the general mountainous character of the land, the chang.
ing character of the then most important interest and the popu¬
lation engaged in it, together with the consideration that the
State was so far from the large capital centers of the world, it
was deemed necessary to offer, through the law, extraordinary
inducements in tariff allowance, to offset these disadvantages,
and granted railroad corporations rates for service correspond¬
ing with the compensation of other services in the State. Now,
as the Central becomes a success, triumphing over unusual ob¬
stacles in nature, the demand is made for a reduction of its rates,
to correspond with reduced rates of other service in the State.
This is only natural. It is natural for people to seek the best
bargain they have any chance to get. We find in the Sacra¬
mento Union of yesterday morning a review of the bill niw be¬
fore thé Legislature.
It provides for a division of the road, on altitudes, with gradu¬
ated rates on that basis. It provides that every passenger train
shall run a second-class car, the fare on which shall be two-thirds
of that on the first-class cars. The rates of fare, in first-class
cars, to the altitude of four thousand feet—two miles above Alta
—are to be six cents per mile ; freight per ton over the same
part of the road, nine cents per mile; rates of fare from the al¬
titude of four thousand feet and upwards,seven anda half cents
per mile ; of freight, twelve cents per ton per mile. The pres¬
ent rate of fare is ten cents per mile, no distinction being made
in favor of the valley end of the road. The distance from this
place to the summit is 107 miles, so that the passenger charge
hence to the summit by present rates is 610 70. By Senator
Roberts' bill the fare from here to Alta will be 64 20 ; from Alta
[ 62 ]
to the summit—37 miles—§2 77 J ; total, $6 97 J ; or, say $7. The
proposed reduction, then, is about 34i per cent, of the charges
now exacted. The reduction proposed for freights is about the
same.
The Union favors the bill, and commends the author for the
care with which it is drawn. Says the rates are low enough for
the present, and probably as low as could be carried in either
House of the Legislature at this time. The Central Pacific is
doing a fair business, but not what it ought to for the long dis.
tances and expensive work lying in its present path and immedi¬
ately in front.
It is natural for people to strike for the best possible bargain;
but the question is whether it is not a better thing for the peo¬
ple of California and Hevada to bear something for the present,
more than they would after a while, in order to allow this work
to go forward with all the force that money and energy can
bring to its construction ? Of course, the Government has been
liberal. The corporators will grow very wealthy from the profits
of the road and the disposition of lands. We all want to sec it
come so. Our plan would be to make no reduction in fares on
the road until it has made its connection with the Union Pacific,
and commences receiving the benefits of the through freight and
passenger business.
No\%, the bonds are in market, and the Central is advertising
to capitalists that its profits are larger than those of any other
railroad in the Country. It is not wise to have it advertised on
the heels of this announcement that the State JjCgislature is cut¬
ting down these profits. The effect would be to produce doubt
as to the stability and certainty of the business. The chili to
the proposed sale of bonds would be greater than any probable
reduction would warrant; for any reduction at all would work
a blighting effect. The Central is putting every dollar of profits,
besides all proceeds from sale of bonds, into the work of con¬
struction; and by the time the California Legislature shall be in
its next session the connection at Salt Lake will have been made,
and the business so increased as to reasonably allow a reduction
of passenger and freight rates.
[ 63 ]
[From the Daily Record, February 22d,]
The Union's Railroad Fight.
The Union appears to have rolled up its sleeves and gone into
the mill with the Pacific Railroad in real pugilistic earnest.
The ground of quarrel with its old friends, whom it used to de¬
light to puff, seems to be that they refuse to reduce the freight
and fare on the road—the Union claiming to be entirely devoted
to the interest of the State in demanding the reduction. We
would be glad to believe this to be the true policy,for we are great¬
ly in favor of cheap fare ; but we are alsoin favor of encouraging
railroad building, and think it of more importance to the State
at large that other railroad enterprises should be encouraged
than that the fare of one already in operation should bereduced,
even if the attempt was not an interference with the law of
Congress, under which the present rates of.fare were estab¬
lished, because the road is profitable. This road is undoubtedly
a success, and its owners might afford, if they were so disposed,
to carry at the reduced rates, but it has immense resources
which other roads cannot exjrect to obtain ; and if their pro¬
jectors are told beforehand that they are not to be allowed to
charge remunerative rates they will be backward about invest¬
ing their money. The Union understands this as well as any
one, and we must be excused, therefore, from believing in the
theory they give for their antagonism to the railroad, and for
suspecting that there has been a refusal to come to terms on the
part of the Company, which has never been made public. It
looks that way, for there are other matters where it might bene¬
fit the State much more with less trouble and no danger of an
opposite effect.
[From the State Capital Reporter, February 21,1868.]
Central Pacific Railroad Charges.
Editor Reporter : In this my second article in the Reporter,
relative to the proposed legislation for reducing freight and pas¬
senger charges over the Central Pacific Railroad, I shall have
nothing to say on the political side of the question. I think I
showed conclusively in my article of February 2a, that it was
[ 64 ]
not the right policy for Democratic members to vote for a re¬
duction of fares at the present time. To-day I propose to an¬
swer the principal arguments urged by the opponents of the
road in their advocacy of lower rates. And right here, let it be
understood, that opposition to this corporation is no new thing.
Prom the day of its inception and organization the Central Pa¬
cific Bailroad has had to fight its wajj- inch by inch, and foot by
foot, over not only the greatest natural difficulties, but also over
bitter personal enemies and rivals. Whichever side of any ques¬
tion the Directors have taken, they have been mereilossly as¬
sailed by interested parties from some quarter—often to them a
most unexpected quarter. They have never yet been able to
please everybody. Like all other great enterprises, this railroad
is censured tor what it has done, or is doing, and blamed by oth¬
ers for what it haj not done.
" Yon will and yow wont,
You can and you can't ;
You'll be damned if you do,
And you'll be damned if 3-011 don't."
Take, for instance. Placer and Nevada counties; the counties
that are now making the war on this railroad. Why, it seems
to me that there never was exercised greater ingratitude by any
communities, than the violent and vituperative course pursued
by those two counties. Like the old man in the fable who took
the frozen snake into his bosom and warmed it into life again,
the Central Pacific took up the counties of Nevada and Placer
when they had sunk into decay and were near the verge of
bankruptcy, instilled new blood and a vigorous life into their ex¬
hausted towns, started the busy wheels of business, and once
more opened up new and almost unlimited fields for honest in¬
dustry and remunerative employment; yet notwithstanding all
these benefits—-benefits not to be measured by money—-that
have poured out from the Pacific road over these counties, like
sweet, genial showers over the parched earth, Nevada and Placer,
like that same ungrateful snake in the fable, are now trying to
sting to death their greatest benefactor.
But it is said that the Federal Government has nearly built
the road by its liberal donations. I protest against the word do¬
nation as applied in this case. If one person makes a gift to an¬
other, whereby the giver ultimately receives back much more
[ 65 ]
than he originally presented, 1 do not call it a donation, but a
good paying investment, which is just what the United States
Government has made in loaning its bonds to help build the Pa¬
cific Railroad, which 1 will proceed to prove : Four years ago it
cost the Government for every regiment stationed on the plains,
or in the Indian country, §2,000,000 per annum for its support.
Even now, with the Pacific road not yet half completed, it costs
bat about §500,000 or one quarter the sum to support the soldiers
that it did before, which will make a saving of at least §12,000,-
000 to the Government this year, or a sum nearly equal to the
entire amount of bonds issued to the two Pacific roads thus far.
When this road is completed, the saving will be much greater
still. As civilization and a white population will rapidly settle
up the country adjacent to the road, soldiers will no longer be
necessary to protect new settlements and emigrant trains.
The Pacific road cuts in two the most hostile Indian tribes. This
great highway in the wilderness pushes back the red man further
and further, and when completed but few soldiers will be need¬
ed on our frontiers. Besides, the overland mail service costs
nearly §1,500.000 at present. By the Pacific Railroad it will be
carried for more than §1,000,000 less, and the service, too, will
be performed in one fifth of the time it formerly took to trans¬
port the mails across the conthient. But if the Government re¬
ceived no benefit whatever from the Pacific Bailroad, both prin¬
cipal and interest of the United States bonds given it have to
be paid back on or bqfore thirty years from date, or the road is
forfeited, and will become the property of the Government. Five
per cent, of iis net earnings now have to be forwarded to the
Secretary of the Treasury, as a sinking fund for the redemption
of its bonds, besides pne half of all the road earns by conveying
Government stores and troops, mails, etc., is deducted and re¬
tained at Washington for the same purpose.
As to the land donated—Government donates half the land
along the line of the road, but doubles the price of the remaining
half in consequence of its accessibility to the railroad—which
just squares the transaction. Instead of selling 25,600 acres of
land at §1 25, Government sells 12,800 acres at §2 50, and
thereby receives the same for its land as it would have done by
retaining the whole, with this advantage—sales by the Land
[ 66 ]
Department are much more rapid near the railroad than they
would be were no railroad there. So this donation of Govern¬
ment land is reallj' a profitable transaction for Uncle Sam. As
to the lands transferred, and those to be transferred, from the
Government to the Company, their value has been greatly over¬
estimated. Much of it being mountains or desert waste, is en¬
tirely worthless, and much of it was pre-empted before the Gov¬
ernment withdrew the odd sections in favor of the Company,
and the Kailroad Company cannot make up for deficiencies else¬
where. In all the sales of their land thus far, running over
three years, not S150,000 has been realized—not enough even to
build one mile of their road across the Sierras.
But it is said that the earnings are very large per mile.
Granted that theyare or will be between here and Virginia
City ; but what will they be for the next five hundred miles east
of Virginia City? Over this portion of the route there will be
scarcely any earnings at all until the roads are c.ompleted ; for
there are no villages nor scai-cely any settlements on the Cen¬
tral Pacific route till it reaches Salt Lake. When, therefore,
the good earnings between Saci-amento and Virginia come to be
divided bj- six hundred miles instead of one hundred and fifty,
the revenue ])er mile will be very small indeed. The Company
has already obtained the cream of their business, and I venture
to predict that from Virginia to fifty miles this side of Salt Lake
the earnings of the Central Pacific Eailroad will not amount to
enough to paj^ for axle grease and fuel, saying nothing about
the numberless other expenses necessary to the running of
trains. Why, it takes four cords of seasoned wood to take a
locomotive up to Cisco now—a distance of only 92 miles. There
is no other equal distance of railroad in America that a train
cannot be sent over by the use of one-third of the same fuel.
How foolish, then, in the face of these ugly and expensive facts,
to talk about reducing the Company's charges until the road is
completed.
In reply to the charge that the Central Pacific is getting too
powerful, and will soon control all the railroads in the Slate, I
beg to say, so much the better for the State, for their's is the
only company on this coast that has never yet broken its
promises or failed in its undertakings. Everything around this
[ 67 ]
railroad company thrives and prospers, while about every other
kindred company has sunk into bankruptcy. And the more
profits that flow into this, the only really successful railroad
this side of the mountains, the more of our home territory will
be opened up, developed and brought into the markets. Gover¬
nor Stanford and his associates have, in addition to purchasing
and commencing to build the Western Pacific, recently incorpo¬
rated the San Joaquin Yalley Eailroad to Tulare Lake. They
will, I doubt not, soon send a part of their force into that region
for its construction and completion, and thus penetrate with the
iron horse, for 300 miles, one of the most fertile but hitherto al¬
most uninhabited regions of the State. Who does not rejoice at
any company's prosperity that uses its means for such noble pur¬
poses. He who would strike now a blow at this railroad because
it is getting, under these circumstances, so powerful and pros¬
perous, would be mean enough to tarnish, if he could, the im¬
mortal name of Peabody, because he too was rich and powerfuL
The power to do good and help on our beloved State can never
be too great. It falls like the dews of Heaven on the rich and
poor alike. While it may enrich he who possesses it, it j'et
blesses and prospers us all. Instead of showing a miserable,
narrow-minded jealousy towards them we should do all in our
power to assist so enterprising and able a Directory as is that
which controls the Central Pacific Hailway. L. L. B.
[From the Marysvillo Appeal, February 2l8t.)
Railroad Fares and Legislative Tyranny.
Senator Eoherts' bill regulating the rates of fares and freight
on the Central Pacific Railroad is a matter which the Legisla¬
ture should handle with great care and circumspection. The
right to meddle with its management is questionable ; and if
the authority is admitted, we question the policy. If the State
was the Pacific Railroad Company the Legislature might as¬
sume its management. If it is owned by individuals the State
would seem to have no more right to fix its fares, than to elect
its Superintendent and appoint its Directors. The Pacific Rail¬
road is a national work, and if subject to legislation. Congress
[ 68 ]
is the body possessing power to restrain or control its fares and
freight tariffs. Eoberts' bill not only proposes to fix the pi-ice
of passenger fare and freight tariff, but to dictate what kind of
cars shall be run over the road—providing for a second-class
train. If the Legislature of one State has the authority to do
this have not other States, through which the railroad passes
authority in tjie matter? What then will the State of Nevada
do? What price of fare will she establish ? Does Nevada ask
for second class cars, or will she demand a third class ? These
are pertinent questions, because if California has the right to fix
fares she has also unquestionably the right to assume the su¬
preme control of this railway and settle with the stockholders
at pleasure. And this assumption of power does not stop with
railroads. .The State can turn steamboat proprietor, banker,
insurer, toll gatherer on turnpikes, bridges and ferries. If Mr.
Roberts' bill passes, and is sustained by the Courts, we shall ex¬
pect to see a bill introduced next session fixing passage and
freight on the steamers of the Steam Navigation Company and
the Panama steamers; fixing the discount per cent, for the
Bank of California and appointing its President and Directors;
appointing a Commission to take charge of and run the Insur¬
ance Companies ; and appoint toll collectors on all turnpikes,
ferries and bridges. Why not ? The Roberts' bill is based on
the Agrarian plea of fro bono publico. Will not the public be
served by reducing steamers' fare and freight, the price of
money, the rate of insurance, and the price of tolls? .But the
friends of Roberts' railroad bill will reply, " these are private
enterprises in the hands and under the control of individuals
through legal franchises." So they are, and so is the Central
Pacific Railroad.
The Union, which is hawk-eyed in its surveillance of every¬
thing in which it has no sugar plums, advances the sagacious
and astute argument that because Congress is empowered to
legislate for the Pacific Railroad Company the Legislature of
California may. Then it follows, as a corollary, that all the
States may legislate for or against the Central Pacific Railroad,
or any other subject Congress may legislate on. The Congres¬
sional authority to legislate, says the Union, " by no means re¬
stricts California from taking the initiative." Therd's legal
[ 69 ]
learning which it will be well for the Justices of the Supreme
Court to consider. It is evident that Governor Haight made a
sad mistake by appointing J. B. Crockett instead of the editor
of the Union. Because California aided in the construction of
this railroad the Union claims it has a right to control it—abso¬
lutely manage its resources, which is nothing less than supreme
control. And Congress also has the right to legislate upon the
subject. If this is correct there may soon be a conflict. Sup¬
pose Roberts' bill, fi.xing fare at six cents a mile, becomes a law,
and Congress at the same time fixes its fare at eight cents a
mile, which law will the railroad Company observe? But this
is trifling with a plain and common sense question. Congress
has the sole and exclusive power to legislate for the Central
Pacific Railroad Company, and the Legislature of California has
no more to do with the matter than the price of silk made by
Mr. Provost, another State beneficiary. The State will pay a
premium for silk culture. By so doing will it gain the authority
to fix the price of mulberry trees, cocoons and silks ?
We have no knowledge of the views or intentions of the
stockholders of the Central Pacific Railroad Company in refer¬
ence to this bill if it should become a law. Pi-obably it will not
upset the " Dutch Flat monopoly." Unquestionably the Com¬
pany will proceed with its own business the same as if the Leg¬
islature had|not stuck its nose into it. The Courts will protect
the rights of the Company.
[From the Daily Eveaing Bulletin, February 25, 1868.J
Reduction of Railroad Fares.
A correspondent of the Bulletin argues with much earnestness
in this issue against the proposed reduction of rates on the Cen¬
tral Pacific Railroad. The subject is one that has attracted
considerable premature discussion. While there is no question
that the public interests will ultimately demand a modification
of railroad charges in this State, it would seem to be no more
than just to those who are putting through a costly enterprise
that legislative action be postponed for a year or two, until the
Pacific Railroad shall have been completed. It will be impossible
[ 70 ]
before then to adjust the tariff of charge.s according to a com¬
prehensive and equal standard, and by that time Congress will
insist upon such adjustment, whether this State shall interfere
or not. Meanwhile, the Companies building the road at either
end are devoting all the means they can obtain from any source
to its rapid construction. Their receipts from the working of the
road go to maintain their credit and enable them to procure
money on their bonds. If that credit is not impaired they will
build 1,000 miles of road this year, and finish the entire work
within eighteen months. For so long as their receipts, however
large, are to be expended for the public advantage, and what
is paid in high charges will be compensated a million-fold by the
immense general benefits to result from the speedy completion
of a great national highway.
railroad fares is california.
Editor Bulletin : Are raih-oad fares in this State unreason¬
able or exorbitant ? If they are not, then they ought not to be
changed. That thej- are not unreasonable is evident from the
fact that they are far below any other means of land trans¬
portation. This is proved by the fact that all other modes of
transit are abandoned as soon as a railway is built. No team or
stage attempts to transport persons or property between any
points or stations on a railroad. The railroad rates are so low
that they cannot possibly compete with them. This proves con¬
clusively that a railroad aifords the people along its line cheaper
as well as quicker facilities than they before enjoyed ; it is, there¬
fore a false assertion, that the public are injured or oppressed in
any way by a railroad. That the present rates are not exor¬
bitant is fully proved by the fact that the receipts of no railroad
are sufficient to enable it to pay a dividend, or even to justify
the investment of capital in their construction, with our present
sparseness of population and freight.
But it is said that California rates are higher than in other
countries. The same remark will apply to nearly everything
else. Labor is higher, so capital brings higher rates of interest.
Iron, and all the material which go into the construction of a
railroad, cost more. Higher prices have to he paid to all railroad
employees than in any other country. Railroad rates are no
[ 71 ]
higher in proportion than other things. In the Atlantic and
Mi.ssissippi Valley States, passenger fares vary from three to
seven cents per mile, averaging about five cents, and freight
charges vary from four to ten cents per ton per mile. The max¬
imum rates fixed by our laws are ten cents per mile for passen¬
gers and fifteen cents per ton per mile for freight, or about double
the Eastern rates, and this is about the proportion paid here for
labor, capital, interest, etc.—so that thej* cannot be said to be
exorbitant.
But when applied to such a road as the (Jentral Pacific, the
construction of which has cost about four times as much as any
other railroad in the United States, they will be found to be far
below what they ought to be. Then, too, the; high grades and
sharjy curves on this road make it four times as expensive to
operate as any other road in the State. This is proved by every
day's experience. It is a common thing for a single engine to
haul from Sacramento to Kocklin, at the foot of the high grade^
a train of freight cars, which requires four of the largest class of
freight engines to haul up the mountain. Each of these four en¬
gines and trains must have their full complement of conductors,
engineers, firemen, brakesmen, etc., thus quadrupling the cost.
This is done every day, and it corroborates the result of the ex¬
periments of the best engineers. To reach the summit these
cars have to be hauled up an incline plain, the higher end of
which is 7,000 feet above Sacramento, or one and one-third miles
straight up in the air.
Again, the using of such heavy locomotives, which are a neces¬
sity, is very destructive of engines, rails and ties. In ordinary
roads this wear and tear is estimated at about 10 per cent.; or,
in other words, the whole railroad—iron, ties and rolling stock—
has to be renewed every 10 years. On such a road as the Cen¬
tral Pacific this wear and tear is more than double that of ordi¬
nary roads. It will require that a sum equal to 20 per cent, of
the cost of superstructure and rolling stock be expended an¬
nually to renew them. Of course this has to be done out of the
earnings, in addition to that required to pay interest on bonds
of its own and Government, and dividends on the stock, or the
road cannot be run long. This every engineer knows. This
wear and tear is not confined to trains going up the mountain,
[ 72 ]
for it is full as great, if not greater, on down trains. The latter
require a constant application of the brakes, tvhieh is not only a
great strain on the rolling stock, but wearing on the rails.
Then, too, there is a heavy expense incurred in Winter, in
keeping the track clear of snow, as also the heavy cost of build¬
ing snow sheds over a large part of the road in the snow belt.
About ten of the largest locomotives, several expensive snow
plows, and a large force of laborers are kept all the time in the
Winter, ready for this work. These expenditures are a very
heavy item in the yearly expenses. But it has to be borne, for
the people of this State and IS evada would not consent for a
moment to have this great artery of commerce closed for a single
day. The Company has not hesitated to keep it open, regard¬
less of expense. Not for a single day has the locomotive ñiiled
to make its daily trip through the snow. True, the expense has
been enormous, but it had to be incurred.
When all these facts are taken into consideration, no reason¬
able person will say that the rates charged are unreasonable or
exorbitant. But it is said that the Company is earning large
sums. It is true that during the Summer and Fall months, when
there is no expense from snow, and all other expenses are light¬
est, and the trafSc is largest, the Company are able to make a
good show of earnings. Thus in June and July, 1867, their state¬
ment shows gross earnings amounting to $297,000—but in Jan¬
uary and February preceding they amounted to only $89,000.
Now by counting the pofitable months only, it is easy to get up
a great hue and cry about extravagent receipts, especially when
the small receipts of the Winter months are kejit out of sight.
Such a course is not fair or just, and the truth will always con¬
found those who resort to such a course of argument. At this
time the road is new, and the wear and tear of rolling stock and
rails is much less appearent than it will be in a few years, and
this accounts in some measure for the comparatively small ratio
of operating expenses ; but it is also greatly due to the fact that
the business of the road is conducted with prudence and rigid
economy. Such a result redounds to the credit of the Company,
and affords no just argument for a reduction of their rates, with
the necessary result of a great falling off in their receipts.
It is no answer to say that a reduction of rates would bring a
C 73 ]
corresponding increase of business, and thus no loss would en¬
sue. That will generally hold good in thickly settled agricul¬
tural and manufacturing countries, where there is a large popu¬
lation and heavy freights to draw business from. But even in
that case it requires several years to bring the earnings up to
the same point. It is of vital importance to the Central Pacific
to show large present earnings to give value to and procure a
ready sale for their bonds. Large earnings three or four years
hence will not help them Thej- need it now in their gigantic
efforts to secure to California the immense trade of the Great
Basin. If they fail this year for want of money the prize is
gone from us forever, for the Union Pacific will secure it for the
Eastern States. But we have not, nor has Nevada, the manu¬
factured or agricultural products to give the increase of business
necessary to make up the loss which would be incurred by a re¬
duction of rates. It is certain very few more goods would be
hauled, and lumber, ores, wood, etc., are already^ carried at the
lowest possible rates. Only business men travel now, and only
that class would travel at reduced rates. The Eailroad fares are
but a small portion of the expense of a trip from San Francisco
to Virginia City, which constitutes the bulk of the trade of the
road. A reduction of the railroad rates would not lessen those
expenses in the least. For instance, the fare from Sacramento
to Virginia City before the railroad was built was |25, and it is
the same to-day, although the railroad rates for the same dis¬
tance now are less than one-half the stage rates per mile. The
stage company manages to get all the benefit, and not the pub¬
lic. But this is not the fault of the railroad company. The
latter gets only $9 25 for taking a passenger 93 miles, while the
the stage company receives SI 5 75 for taking the same passen¬
ger only 75 miles.
If the railroad fare shonld be reduced to S6, tbe traveler
would get no benefit from it, for the stage company would
pocket the S3 25 and laugh over it. Soon, however, the track
will be laid near Virginia, and then the expense w'ill be reduced
from S25 to S12, and it is to be hoped that the public as well as
the railroad company will realize the benefits they are entitled
to.
It may be asked, why is it that under this state of facts such
[ "4 ]
a hue-and-ci-y has been raised in Placer and Nevada counties,
•ïvho are so largely benefited by the road? We think that is
easily explained. We doubt whether one in ten signing the
petitions from those counties have any business requiring them
to travel over the road once a year. It is easy at all times to
get up a mad dog cry against a corporation. No corporation
doing any business can possibly act so as to please everybody.
For instance, one man will want 81,000 for a right of way which
sworn commissioners appraise at only 8100; another wants to
put Chinamen at work, with the right to retain Sa per month
from their wages, which, of course, the Company will not allow;
another wants a conti-act at extravagant prices and don't get it
—and we might cite cases innumerable. All such become, of
course, the vindictive enemies of the Company, and will stoof>to
anything to accomplish their ends. It is popular to cry out for
cheap fares, and it costs but little to jn-int petitions and circu¬
late them. Men will sigli them who would scorn to ask a reduc¬
tion in the wages of individuals, but as it is only a corporation
they do it without compunction. The question is ; Will the
Legislature lend itself to this work ? While healthy men, able
in purse and body, thus ask to have the property of others sac¬
rificed for their benefit, the owners of that property—the stock¬
holders oí the Company, who consist largely of widows and
minors, the poor as well as the rich—claim protection against
this new form of agrarianism—this attempt to make one serve
another without fair and just compensation. They simply ask
the Legislature to protect their vested rights, grown up under the laws
of this State, whose good faith is involved in the issue.
Equity.