The road on the 1st of July, 1867, was in operation to Julesburg, 377 miles, and receipts from all sources amounted to.... $1, 015, 195 29 And expenses to....

Leaving the net earnings...

658, S80 54

356,314 75

The receipts of the road from travel, emigration, and the business of the region tributary to it were greatly diminished in consequence of Indian difficulties. The rolling stock consists of 53 locomotives, 15 passenger and 875 other cars. The company express their intention to prosecute this enterprise with the vigor and efficiency that have thus far characterized its advancement.

On the 24th of October last you accepted, upon the report of the government commissioners, a section of twenty miles of the Central Pacific railroad of California, terminating at a point ninety-four miles distant from Sacramento.

On the 28th of January last, the vice-president of the company filed a map showing the definite location of said railroad from the Big Bend of the Truckee to Humboldt Wells. From the best information at my command, it appeared that this route possessed great advantages over all others, and I gave my "consent and approval" to the location, pursuant to the authority conferred by the second section of the act approved July 3, 1866, and forwarded the map to the Commissioner of the General Land Office, with directions to adjust the grant of lands upon the basis furnished by it.

On the 22d of July, 1867, this company forwarded to the department a map of a location from Humboldt Wells, via the north pass of Pequop and Toano mountains, the north point of the Ombe mountains, Red Dome Pass, and the north end of Salt Lake, to Weber river, a distance of two hundred and fourteen miles. The report of the chief engineer accompanying the map states that this line is the most direct and advantageous of the three that had been surveyed eastwardly from Humboldt Wells. It appears that the highest point is six thousand two hundred feet above the sea, and five hundred and eighty-five feet above Humboldt Wells, and is reached through a narrow valley with a grade of seventy feet per mile. From this height the line descends with a nearly uniform grade of six feet per mile for thirty-four miles through the north pass of the Pequop mountains, and along the slopes of the latter to the north pass of the Toano mountains. From thence it passes along a valley from one-eighth to a mile in width to the eastern base of those mountains, making the descent of seventeen miles with a grade ranging from sixty-two to seventy feet per mile. Seventy feet is the highest grade found on the line, and it occurs for short distances at two other places besides those mentioned. No very difficult or expensive rock cutting is required on this route. I informed the company that I was not prepared to approve this location.

A report upon this road, dated October 7, 1867, has been received from the government commissioners. They state that it crosses the Sierra Nevada mountains one hundred and five miles from Sacramento, at an elevation of seven thousand and forty-two feet above the sea. From the point where it was then built nine hundred and seventeen feet only must be overcome to reach the sum

mit, a distance of eleven miles. Between the 77th and 137th mile-posts there are fifteen tunnels of an aggregate length of five thousand one hundred and sixtysix feet. During the past year about fifty miles of road have been in progress of construction; the greater part lying on the eastern and western slopes of the Sierra Nevadas. Eighteen miles of the portion on the eastern slope are graded, and the track is being laid at the rate of about one-half mile per day. By the time these eighteen miles are laid, six more will probably be graded and ready for the track-layers, making in all twenty-four miles east of the summit. On the western slope a larger force of laborers is at work, and it is believed that with a favorable season the grading will be completed and the track laid over the summit before the snow occasions a suspension of work. The company have not been able, during the past season, to procure the requisite number of laborers, but it is expected that next season this difficulty will be removed. There is on hand iron sufficient to lay one hundred and ten miles of track, and enough more in transitu to lay fifty additional miles. In the snow belt the rails used weigh sixty-three pounds to the linear yard, and are put together with fish-joints instead of chairs. At Sacramento, the company have erected, along the river front, wharves and derricks capable of moving an immense freight from vessels to the cars. There are twenty-seven locomotives in use, and twenty more, with material for two hundred and fifty cars, are on the way from Atlantic ports. There is on hand material for seventy-five cars. Eight locomotives recently purchased are being set up. The company report to the commissioners that thirty-seven thousand seven hundred and thirty-eight acres of land, granted to aid in the construction of the road, had been sold for seventy-seven thousand five hundred and seventy dollars, ($77,570,) the greater part upon a credit of five years.

The following table gives the gross earuings and expenses for the years 1865 and 1866, and for 1867 up to September:

The net profit, therefore, over operating expenses in thirty-two months is the large sum of one million five hundred and fifty thousand six hundred and ninety six dollars and twenty-nine cents ($1,550,696 29.)

Since the commencement of business operations, the company represent that they have paid to the United States government for taxes, stamps, &c., the sum of two hundred and eighty-eight thousand dollars ($288,000.)

At the date of my last annual report the Union Pacific Railway Company, eastern division, had constructed its road to Fort Riley, one hundred and thirtyfive (135) miles west from the initial point on the line dividing the States of

Kansas and Missouri. Since that date this company has constructed one hundred and fifty (150) miles of its road, which you have accepted. The government commissioners are now examining an additional section of twenty miles, completing the road for a distance of three hundred and five (305) miles from said initial point. The company report the road as provided with round-houses, repair-shops, turn tables, water tanks, sidings, &c., sufficient to meet the immediate wants of business, and that the necessary warehouses and depot buildings have been erected at the stations for the accommodation of passengers and freight.

The equipment now in use consists of twenty-five (25) locomotives, eighteen (18) passenger and seven hundred and thirty-six (736) other cars. Contracts have been made for two locomotives, two passenger and one hundred and forty (140) other cars. Iron has been ordered sufficient to complete the road to the 335th mile, nearly all of which has been delivered.

The aggregate earnings of the company for ten months and fifteen days, from October 15, 1866, are represented to have been one million two hundred and twenty-six thousand four hundred and eighty-three dollars and eight cents, ($1,226,483 08) It is also represented that during the same period the business done for the government amounted to three hundred and fifty-eight thousand nine hundred and forty-nine dollars and forty-nine cents, ($358,949 49;) that the fifty per cent. retained therefrom is in excess of the interest paid by the government on the bonds issued to the company during ten months and fifteen days, six thousand one hundred and eighty-nine dollars and fifty-three cents ($6,189 53.)

A table is submitted showing that the amount retained by the United States Treasurer from that due the company on the government business, for the month of August last, is nearly eight per cent. per annum of the princicipal of the bonds issued to the company on account of the construction of the road. This would repay the principal at no distant period by the government business alone, should it be continued to the same extent. The payment of the bonds at maturity is therefore considered by the company to be fully assured, and the road as being built, so far as the government is concerned, simply by the loan of its credit for a term of years upon ample security, and without the actual expenditure of a single dollar from the public treasury. The company have organized and sent into the field, during the past year, three large surveying parties, and have already had careful instrumental examinations made, covering an aggregate distance of more than 1,300 miles. Two lines have been run from Fort Wallace to Denver, and an advantageous route discovered. One has been surveyed from Fort Wallace to the Arkansas river, and thence up the Purgatory valley, through the passes of the Raton mountains, to Fort Union, and with two lines thence, through the easternmost range of the Rocky mountains, to Albuquerque and Fort Craig, on the Rio Grande. Another has been examined up the valley of the Huerfano river, through the Sangre de Christo Pass, via Fort Garland, to the Rio Grande, and thence, via Santa Fé, to Albuquerque. Surveying parties, organized into two divisions, are now making a careful survey of two general routes from the Rio Grande to the Pacificone along the thirty-fifth parallel west from Albuquerque; the other from Fort

Craig, along the thirty-second parallel, by what is known as the Gila route. The surveys have met the most favorable anticipations. At no point will the grades exceed the maximum allowed by law for the Pacific railroad, and such grades will be for short distances, and at only two or three points between Fort Wallace and the Rio Grande. The highest altitude attained on this line is 7,846 feet above tide-water. The company express the conviction that had the work not been delayed by unexpected difficulties with the Indians, the road would have been finished to Fort Wallace by the end of the present year, and they have every reason to expect that it will reach a point 335 miles west from the Missouri river by the 31st proximo.

Forty miles of the road of the Central Branch Union Pacific Railroad Company have been accepted since the date of my last annual report, and the government commissioners are now engaged in examining another section of twenty miles.

This company, after the Union Pacific Railway Company, Eastern Division had vacated its line along the Republican fork of the Kansas river, claimed that, under existing laws, they were entitled to extend their road from its intersection with such vacated line, and on the latter to the one hundredth meridian, and to receive, in aid of the construction thereof, the same subsidy in lands and bonds per mile as for the first hundred miles of their road. The department, February 19, 1867, rejected the claim upon the ground that the promised subsidy was confined to "one hundred miles in length next to the Missouri river."The lands on such vacated line, that had been originally withdrawn, were, therefore, restored to their original status.

It appears from the company's report, dated the 11th of October last, that the road has been definitely located for one hundred miles, and terminates in the valley of the Little Blue river, near the mouth of Coon creek, in township four, range six, east of the sixth principal meridian, in Marshall county, Kansas. The construction of bridges occasions a heavy expense. The most important is that across the Big Blue river, four hundred and thirty-four feet in length, and thirtyone feet above low water. The equipment of the road consists of six locomotives, two passenger and one hundred and forty-four other cars. A sub-tantial round-house, with stalls for six locomotives, a machine shop, and commodious depot buildings have been erected. Other buildings are in process of erection. A ferry, with a first-class side-wheel boat, has been established by the company on the Missouri river, at Atchison, for the accommodation of the road.

No report has been received from the Sioux City and Pacific Railroad Com.pany, and the department has not been advised of the construction of any portion of the road.

The first section of the Western Pacific Railroad Company, of California, twenty miles in length, was accepted on the 14th day of December last. work has since been prosecuted.

Commissioners examined the road of the San Francisco and San José Railroad Company, and reported, under date of February 9, 1866, that, in its construction and equipment, it fully attained the standard of exellence prescribed by the Pacific railroad acts. The company made claim to an acceptance by the

government of the road, and to bonds and lands. Their agent was verbally informed that an allowance of the claim, so far from being warranted, was, in the opinion of the department, positively forbidden by law. Subsequently, on the production of additional papers, I received a communication, in which the views of the company on the subject were presented. After full consideration, I was constrained to adhere to the conclusion previously announced. I stated, however, that if I had failed to recognize the just rights of the company, Congress would, no doubt, at its approaching session, furnish an appropriate remedy. The subject is submitted for consideration.

The seventh section of the act approved July 1, 1862, seems to require, upon a map being filed designating the route of the Union Pacific railroad, or any branch thereof, that all the lands situate within fifteen miles on each side of the route should be withdrawn from pre-emption, private entry and sale. This distance is increased to twenty-five miles by the amendatory act of July 2, 1864. One of my predecessors, however, directed that the order of withdrawal should not apply to the even-numbered sections reserved by the government. The present practice, in conformity with this precedent, therefore authorizes a settlement on such sections, and, if they were surveyed at the date of settlement, recognizes the right of the settler to enter his claim either under the pre-emption or homestead laws. Conflicting opinions have been entertained by my predecessors as to the applicability to these lands of other acts of Congress prescribing the price of the even-numbered or reserved sections within certain prescribed distances from railways. The practice in this regard has not been uniform. The settler is now required, on entering these lands, to pay therefor the double minimum price. The acts of 1862 and 1864 are silent on the subject, and I respectfully submit that the question should be determined by the authoritative action of Congress. In a recent pre-emption case, contested by the Central Pacific Railroad Company of California, it was decided by the department that the grant embraces the unsurveyed as well as the surveyed lands traversed by the route of these roads. An actual settler cannot, therefore, by settlement upon lands of either description which fall within the operation of the grant, inaugurate a valid preemption right thereto, after the local officers, pursuant to instructions, have withdrawn or withheld such lands. The proviso in the act of 1864, which declares that the grant shall not defeat or impair any pre-emption or other lawful claim, has exclusive reference to 'such claims as had lawful inception at the date when the right of the road attached.

The Northern Pacific Railroad Company report that two surveying parties from Lake Superior and two from the Pacific coast have been actively engaged in the field. Explorations have been made, and the company are of opinion. that a practicable route will be found. No portion of the road has been constructed.

The Atlantic and Pacific Railroad Company, by a resolution of its board of directors passed November 20, 1866, accepted the terms, conditions, and impo sitions of the act approved July 27, 1866, granting lands to aid in the construction of a railroad and telegraph line from the States of Missouri and Arkansas to