THE KANSAS PACIFIC RAILWAY
v
AND ITS
RELATIONS
TO THE
UNION PACIFIC RAILROAD AND THE GOVERN¬
MENT OF THE UNITED STATES.
— —►——
To the Honorable the Secretary of the Interior of the United States,
Washington, D. C. :
Sir : Referring to our communication of April 21, 1877, the un¬
dersigned committee of first-mortgage bondholders of the Kansas
Pacific Railway respectfully ask permission to make a statement
additional thereto, and to submit a brief resume of facts regarding
the construction of said railway and its legal relations to the Union
Pacific Railroad and the Government of the United States.
At the time the original act of Congress to aid in the construction
of a railroad from the Missouri River to the Pacific Ocean was
passed—viz., July 1, 1862—there was one completed railway across
the State of Missouri (the Hannibal and St. Joseph) and another
(the Pacific Railway of Missouri) in course of construction with the
prospect of early completion to Kansas City. There were no other
railways reaching the Missouri River or within 200 miles of it, and
none under contract, the Chicago, Iowa, and Nebraska R.R. having
stopped at Cedar Rapids, the Mississippi and Missouri R.R. at Iowa
City, and the Burlington and Missouri River R.R. at or near Mount
Pleasant. The attention of Congress was accordingly fixed upon the
eastern border of Kansas as the starting point of the proposed rail¬
way to the Pacific. Kansas had been admitted to the Union as a
State, and Nebraska was yet under a territorial government. The
Leavenworth, Pawnee, and Western Railroad Company was an ex-
2
isting corporation chartered by the Legislature of Kansas, and em¬
powered to build a railroad from the Missouri River to the western
boundary of that State. The Pacilic Railroad bill, as originally
reported to the House of Representatives, provided that the Union
Pacific Railroad should commence on the western boundary of
Kansas, at the termination of the Leavenworth, Pawnee, and West¬
ern Railroad, whose initial point was fixed in the bill at the western
terminus of the Pacific Railroad of Missouri—viz., Kansas City.
The Leavenworth, Pawnee, and Western Company subsequently
took the name of the Union Pacific Railroad, Eastern Division, and
still later that of the Kansas Pacific.
The bill provided that there should also be built a branch road
from the western boundary of Iowa to connect with the Union Pacific
Railroad, on the western boundary of Kansas, at or near the 102d
meridian of longitude. It is a part of the history of the time that
when the bill was under discussion in the House of Representatives
Mr. Wilson of Iowa objected to the indefiniteness of the location of
the proposed starting point of the Union Pacific Railroad. This
was fixed at the western terminus of the Leavenworth, Pawnee, and
Western Railroad ; but the western terminus of this road had not
been definitely settled. Mr. Wilson accordingly offered an amend¬
ment to the bill authorizing the Union Pacific Railroad Company to
construct a branch road from the western boundary of Iowa to con¬
nect with the Kansas road at some point not more than 250 miles
from the place of commencement, and requiring said company to do
so under penalty of forfeiture of all its rights and franchises,
explaining that without this compulsory clause there was great
danger that the Iowa branch would not be built at all. The Kansas
branch, lie said, would doubtless be constructed, 44because it was,
the pivotal point on which the whole system depended." Mr. Wil¬
son's amendment was subsequently changed so as to require the
connection of the Iowa branch to be made with the main line on the
102d meridian of longitude, that being the western boundary of
Kansas, and in this form was adopted by the House.
When the bill came into the Senate it was determined, as a mat¬
ter of economy, to shorten the length of the Kansas and Iowa
branches by fixing the eastern terminus of the Union Pacific Rail¬
road at the 100tli instead of the 102d meridian, and as this raised a
question of constitutional right which was deemed by many Sena¬
tors a serious one—viz., the right of Congress to charter a railroad
corporation in a State—it was decided to carry the terminus north-
3
ward into the territory of Nebraska. It was accordingly fixed " on
the 100th meridian of longitude west from Greenwich, between the
south margin of the valley of the Republican River and the north
margin of the valley of the Platte River, in the territory of
Nebraska." These words were incorporated in the law to estab¬
lish the initial point of the Union Pacific Railroad. Throughout the
debates in Congress the idea is everywhere prominent that the
Union Pacific Railroad was to commence on the 100th meridian.
This idea was engrafted upon the bill in several places, and enacted
into the law of 1862, and re-enacted into the law of 1864.
The initial point in longitude having been thus fixed, an attempt
was made in the act of 1864 to fix the point in latitude also. This
was partially accomplished by providing that if the Union Pacific
Railroad Company should not be actually, and in good faith, build¬
ing "said railroad "—to wit, the railroad commencing on the 100th
meridian—at the time the Kansas branch road should have reached
said meridian, then the Kansas Company should be entitled to build
the Union Pacific Railroad through to the point of junction with the
Central Pacific Railroad of California. The two companies, the one
building the Kansas branch and the other building the Iowa branch,
were thus put in the attitude of competitors for the privilege of
building the trunk line commencing on the 100th meridian. But in
order to give both the opportunity to use the most favorable route
open to them, without prejudice to their rights as equal branches of
the main line, whatever that line might be, it was provided in the
ninth section of the act that either of them might join the Union
Pacific Railroad at any point west of the 100th meridian, if found
more practicable or desirable. This was in fact a necessary part of
the new arrangement to fix the point in latitude for commencing the
Union Pacific Railroad ; for if the Kansas road should arrive at the
100th meridian first, the company constructing the Iowa branch, and
following the most practicable and desirable route for its line, might,
upon reaching the 100th meridian, find itself one or two hundred
miles distant from what would then be the Union Pacific Railroad,
and be left hanging in the air. So, if the latter company should ar¬
rive at the 100th meridian first, the same dilemma would be pre¬
sented to the former, unless provision were made for effecting a
junction westwardly of the 100th meridian, the cost of the addi¬
tional mileage to be borne wholly by the company making it.
For various reasons, but principally by reason of the favorable
nature of the ground in the valley of the Platte River, which re-
4
quired very little grading to prepare the road-bed, the company
constructing the Iowa branch were enabled to make more rapid pro¬
gress in track-laying than the Kansas company. This fact became
evident in the year 1866 to the two companies and to Congress. An
act was accordingly passed in that year authorizing the Kansas
Company to make its connection with the Union Pacific Railroad at
a point not more than fifty miles westwardly from the meridian of
Denver, Colorado.
By the act of 1864 the company constructing any part of its road
westwardly from the 100th meridian, as authorized, without a sub¬
sidy of bonds from the Government, was entitled to a land-grant of
the same number of acres per mile as on any other portion of its
road. This act and the amendatory act of 1866 gave to the Kansas
Conqjany a land-grant of ten alternate sections per mile on each side
of its proposed line, from the lOOtli meridian to a point of junction
with the Union Pacific Railroad not more than fifty miles west of
the meridian of Denver. In order, however, to expedite the con¬
struction of railroads to Denver, Colorado, Congress, in the year
1869, authorized the Kansas Company to make a contract with the
Denver Pacific Railway and Telegraph Company for the construc¬
tion of that part of its line between Denver and the point of junc¬
tion with the Union Pacific Railroad, which point was fixed at
Cheyenne. This act authorized the Kansas Company to transfer to
the Denver Pacific Railway and Telegraph Company all its rights
and privileges, including its land-granl, subject to all its obliga¬
tions, in pursuance of such contract. It also required the Kansas
Company to extend its railroad to Denver, so as to form with that
part of its line authorized to be constructed by the Denver Pacific
Railroad and Telegraph Company a continuous line from Kansas
City, by way of Denver, to Cheyenne, and provided that all the pro¬
visions of law for the operation of the Union Pacific Railroad, its
branches and connections, as a continuous line, without discrimina¬
tion, should apply the same as if the road from Denver to Chey¬
enne had been constructed by the Kansas Company itself.
It appears from this historical sketch that the governing idea
of Congress throughout this legislation was a national road com¬
mencing on the 100th meridian, and going westward to a point of
junction with the Central Pacific Railroad of California, with an
Iowa branch and a Kansas branch, the two branches to enjoy the
same privileges, and the whole to be constructed by the aid of Gov¬
ernment bonds and lands. It appears to have been the common ex-
5
pectation at the time the enterprise was first projected that the Kan¬
sas Company, by reason of its facilities of communication with the
East, would become the Union Pacific Railroad Company, and it
was for this reason that the Union Pacific Company was not merely
authorized to build the Iowa branch, but was required to do so at a
certain rate of speed under heavy penalties. The requirement that
the several roads provided for in the law should be operated as one
continuous line, without discrimination as to rates, time, and trans¬
portation, runs through all the acts of Congress cited, and was con¬
ceived quite as much in the interest of the Iowa branch as of any
other branch, and must have been originally more in the interest of
that branch than of the Kansas branch, since the latter was then
expected to be the main line. The authorized deflection of the two
branches from the point of junction first contemplated on the 100th
meridian was likewise as much in the interest of the Iowa branch as
of the Kansas branch, and the fact that the Kansas branch alone
availed itself of the authorization impairs its rights in no manner
whatsoever.
«
It is contended on the part of the Kansas Pacific Railway
' Company that the continuous line of railway from Kansas City
ma Denver to the Pacific Ocean and intermediate stations should
be operated, as regards rates, time, and transportation facili¬
ties, in the^same way as other continuous lines of railway are
operated when under a single management, and that it is un¬
lawful for the Union Pacific Railway Company to charge higher
rates per mile on freight and passengers received from or delivered
to the Kansas Pacific and Denver Pacific Railways than the
proportionate mileage charge on similar business received from or
delivered to other persons and corporations. It was the clear intent
of the law to secure to the public equal facilities of travel and trans¬
portation by both routes ; or, in other words, to provide that traffic
going westward by way of Kansas City and Denver from New York,
Philadelphia, Baltimore, Cincinnati, and St. Louis, as well as from
Louisville, Memphis, Nashville, and all portions of the country
south, should pay the same and no greater rates per mile for car¬
riage upon the Union Pacific Railroad than like traffic going from
Boston, New York, Buffalo, and Chicago, by way of Omaha. This
intent having been defeated, as explained in our communication of
April 21, it is manifestly competent for Congress to supply defi¬
ciencies of legislation, if any exist.
In order to protect the rights of the first-mortgage bondholders of
0
the Kansas Pacific Railway, it became necessary to institute a suit
for foreclosure of the mortgage dated June 20, 1869, the same being
a first mortgage on the Western Division of the road, and 3,000,000
acres of land appurtenant thereto, and a third mortgage on the
Middle and Eastern Divisions. In this suit the United States of
America, as holding a second mortgage upon all the divisions, is
made a party defendant. No subsidy bonds were issued to the
Kansas Pacific Railway Company for the Western Division afore¬
said, but since the fifth section of the act of July 1, 1862, gave the
Government a lien upon the whole line of railway and telegraph for
which any subsidy bonds should be issued (except that part of any
road already constructed), the interest of the United States would
appear to be involved in the Western Division of the Kansas Pacific
Railway the same as in any other division thereof. This is the view
entertained by the Court of Claims in the case (No. 10,904) of the
"Denver Pacific Railway and Telegraph Company vs. the United
States," in which it was held that the Government mortgage would
have extended over the Denver Pacific Railway also, had it
not been severed by the Transfer Act of March 3, 1869. The title of
the suit above mentioned is " Adolphus Meier and John A. Stewart,
Plaintiffs, vs. The Kansas Pacific Railway Company, Matthew
Baird, Henry M. Alexander, B. W. Lewis, W. J. Lewis, C. B.
Burnham, J. P. Devereux, and the United States of America, De¬
fendants," and the same is now pending in the Circuit Court of the
United States for the District of Kansas.
Requesting the privilege of further hearing from time to time as
the rights of the bondholders and the interests of the Government
may justify, we remain your most obedient servants.
By order of the Committee of Nine of first-mortgage bondholders
of the Kansas Pacific Railway.
[Signed.] L. H. MEYER, Chairman.
ARTEMAS H. HOLMES, Secretary.
■ Dated New York, October.1, 1877.