Page images
PDF
EPUB

cial situation of the companies, or the public interest and welfare might require.

The act of Congress approved July 2, 1864 (U. S. Stat. at L., p. 356), passed in amendment of the act of 1862, did not alter or amend the section relative to reports, but in that respect merely increased the number of government directors to five, and specified more particularly what they were required to do.

The act of Congress approved July 2, 1864 (U. S. Stat. at L., p. 365), by which the Northern Pacific Railroad Company was chartered, provides that the directors of said company shall make an annual report of their proceedings and expenditures, verified by the affidavits of the president and at least six of the directors," but, by some omission, does not state when or to whom the reports are to be made.

The act of Congress approved July 27, 1866 (14 U. S. Stat. at L., p. 292), by which the Atlantic and Pacific Railroad Company was chartered, provides that the directors of said company shall make and publish an annual report of their proceedings and expenditures, verified by the affidavits of the president and at least six of the directors, a copy of which shall be deposited in the office of said Secretary of the Interior.” The peculiarity of this legislation is, that for the first time reports were required to be made to the Secretary of the Interior, while, at the same time, other subsidized Pacific Railroad Companies were required to render their reports annually to the Secretary of the Treasury.

Nearly two years after the passage of the last-named act, an important step was taken toward systematizing the business of reports from railroad companies. The act of Congress approved June 25, 1868 (15 U. S. Stat. at L., p. 79), entitled "An act relative to filing reports of railroad companies," altered the provisions of the act of July 1, 1862, and the other acts heretofore enumerated, by requiring the annual reports of all these Pacific Railroad Companies to be made “ to the Serretary of the Interior on or before the first day of October of each year," to furnish “ full and specific information upon the several points mentioned in the twentieth section of the said act of eighteen hundred and sixty-two,” and that “there shall also be furnished annually to the Secretary of the Interior all reports of engineers, superintendents, or other officers who make annual reports to any of said railroad companies”; the act also provided “that the Northern Pacific Railroad Company, the Atlantic and Pacific Railroad Company, and the Southern Pacific Railroad Company shall make reports to the Secretary of the Interior, on or before the first of October of each year, as are required to be made by the Union Pacific Railroad and branches, under the provisions of the first section of this act”; and as a penalty for non-compliance the act provided that “the issue of bonds or patents to the company in default shall be suspended until the requirements of this act shall be complied with by such company.” The fact of the passage of this act, embodying and bringing into some kind of order previous irregular legislation on the subject, together with the fact of compliance with its requirements on the part of the companies named therein—meager and negligent as it was—must be considered as confirmatory of the view that the requirements of the original acts, in this respect, were intended to be tempo. rary and to be altered or amended as Congress might from time to time determine.

Nearly three years after the passage of the act just alluded to, and the systemization in some degree of the method of reports, special legislation was had in regard to another Pacific railroad, without reference, however, to any particular order or system in the requirement of reports. The act of Congress approved March 3, 1871 (16 U. S. Stat. at L., p. 573), by which the Texas Pacific Railroad Company was chartered, provides " that the president of the company shall annually, by the first day of July, make a report and file it with the Secretary of the Interior, which report shall be under oath, exhibiting the financial situation of the company, the amount of money received and expended, and the number of miles of road constructed each year," and other matters similar to those required from the other Pacific Railroad Companies under the act of June 25, 1868. While the other railroad companies were required by law to report to the department annually, by the 1st day of October, the Texas Pacific Railroad Company is required to do so by the 1st day of July. This was done, doubtless, to accommodate the company, whose fiscal year ended on the last day of April, as the company requested permission from the Secretary of the Interior, in 1873, to make up their report so as to conform with that of the president of the company to the stockholders. The law requires the president of the company to report by the 1st day of July, at which time it is evidently impossible to report the operations for the year ending on the 30th of June; but the decision of the department, by letter of June 13, 1873, required the company to report by fiscal years ending June 30, and the company has been so reporting since that time, although their fiscal year has in the mean time been changed to the 31st of May.

On December 2, 1872, a resolution passed the House of Representatives, under which a special committee was appointed, composed of the Hon. Luke P. Poland, chairman, and the Hons. N. P. Banks, George W. McCrary, William E. Niblack, and William M. Merrick, to investigate certain matters connected with the Credit Mobilier. On January 6, 1873, another resolution passed the House, under which a select committee was appointed, composed of the Hon. Jeremiah M. Wilson, chairman, and the Hons. Samuel Shellabarger, George F. Hoar, H. W. Slocum, and Thomas Swann, to make an inquiry in relation to the affairs of the Union Pacific Railroad Company, the Credit Mobilier of America, and other matters connected therewith. These investigations, the facts exhibited in the testimony, the conclusions arrived at by the committees as embodied in their respective reports (Nos. 77 and 78, House of Representatives, Forty-second Congress, third session), and the expulsion of Messrs. Oakes Ames and James Brooks from the House of Representatives, mark an epoch in the railroad history of the country.

While the more immediate result of these developments was prompt and vigorous legislation by Congress in regard to the railroad companies concerned, a far more important and wide-spread result was the rapid growth of a strong popular feeling against the granting of any further subsidies in money, lands, or bonds to transportation or other public companies, and that railroad corporations generally, and interstate and subsidized railroads in particular, should be made amenable to supervision, the former to that of the State and the latter to that of the national government. In fact this feeling became so intense, especially in the Western and Northwestern States, as to call for governmental reg. ulation of rates for freight and passenger transportation. The rise of the Granger associations, the legislation obtained by them in many of the States, the suits instituted against the railroad companies affected thereby, and the final decision of the Supreme Court of the United States, by which it is held that railroad corporations and their business are constitutionally subject to legislative control, have become matters of history.

On March 3, 1873, the act of Congress was approved (17 U. S. Stat. at Large, p. 508) by which the Secretary of the Treasury is directed to

withhold all payinents on account of freights, or transportation of any kind, to the amount of interest paid by the United States upon the bonds issued to any such company and not reimbursed, together with the five per cent, of net earnings due and unapplied ; and the companies are authorized to bring suit therefor in the Court of Claims, with right of appeal to the Supreme Court, both of which courts are directed to give such causes precedence of all other business; by the same act the Attorney. General was required to institute a suit in equity against the Union Pacific Railroad Company and other persons for the recovery of moneys and property alleged to have been wrongfully and illegally diverted from the uses and purposes for which they should have been expended; by the same act the books, records, correspondence, and all other documents of the Union Pacific Railroad Company are required to be at all times open to inspection by the Secretary of the Treasury, or such persons as he may delegate for that purpose; and finally, by the same act, other requirements are made in regard to dividends, stock, mortgages, directors, and officers, with certain penalties for non-compliance, and the proper circuit court of the United States is empowered with jurisdiction to hear and determine all cases of mandamus to coinpel the Union Pacific Railroad Company to operate its road as required by law. This act still remains in force, and has well served the purpose for which it was enacted; but some portions of it should be repealed as soon as the Supreme Court has decided the causes now pending between these companies and the government.

The Army appropriation act approved June 16, 1874 (18 U. S. Stat. at Large, p. 74), contains the following restriction in regard to land-grant railroads:

That no part of the money appropriated by this act shall be paid to any railroad company for the transportation of any property or troops of the United States over any railroad which, in whole or in part, was constructed by the aid of a grant of public land on the condition that such railroad should be “a public highway for the use of the Government of the United States, free from toll or other charge,” or upon any other conditions for the use of such road for such transportation; nor shall any allowance be made out of any money appropriated by this act for the transportation of officers of the Army over any such road when on duty and under orders as a military officer of the United States. But nothing herein contained shall be construed as preventing any such railroad from bringing a suit in the Court of Claims for the charges for such trangportation, and recovering for the same, if fonnd entitled thereto by virtue of the laws in force prior to the passage of this act.

This restriction was made still more absolute by a provision inserted in the Army appropriation act approved March 3, 1875 (18 U. S. Stat. at Large, p. 453), by which it was enacted :

That no money shall hereafter be paid to any railroad company for the transportation of any property or troops of the United States over any railroad which, in whole or in part, was constructed by the aid of a grant of public land on the condition that such railroad should be a public highway for the use of the Government of the United States, free from toll or other charge, or upon any other conditions for the use of such road for such transportation; nor shall any allowance be made for the transportation of officers of the Army over any such road when on duty and under orders as military officers of the United States. But nothing herein contained shall be construed as preventing any such railroad from bringing a suit in the Court of Claims for the charges for such transportation, and recovering for the same, if found entitled thereto by virtue of the laws in force prior to the passage of this act: Prorided, That the claim for such charges shall not have been barred by the statute of limitations at the time of bringing the suit, and either party shall have the power of appeal to the Supreme Court ot the United States: Aad provided further, That the foregoing provision shall not apply for the current fiscal year, nor thereafter, to roads where the sole condition of transportation is that the company shall not charge the government higher rates than they do individnals for like transportation, and when the Quartermaster-General shall be sat. ixtied that this condition has been faithfully complied with

These acts are still in force, and have well served the purpose for which they were passed-the protection of the government in its rights. As soon, however, as the Supreme Court shall have decided the important questions now pending in relation to the land-grant railroads there appears to be no reason why these laws should not be repealed, in order that the railroad companies may be enabled to receive their payment promptly for services performed for the government without the tedious and expensive resort to legal proceedings necessitated thereby.

During the Forty-third, Forty-fourth, and Forty-fifth Congresses much important legislation in regard to the Pacific railroads, other land-grant railroads, and railroad transportation in general was had and proposed. On March 26, 1874, bill No. 1385, “to regulate commerce by railroad among the several States," was passed by the House of Representatives. The bill was designed to regulate transportation rates through a board of nine railroad commissioners, who were to be empowered to adminis. ter oaths, take testimony, send for persons and papers, and require books and records to be produced by their own process, served by marshals of the United States, with penalties for non-compliance; and in order to ascertain what were reasonable rates of toll or compensation, a bureau of railway statistics was authorized to be opened and kept in the Department of the Interior, to which all railroad companies were to make returns. This bill did not pass the Senate.

On April 14, 1874, a bill “ to establish a national railroad bureau and for the general government of railroads,” No. 698, was introduced in the Senate. This bill was designed to obtain statistical information in regard to railroads and to supervise their operations, through a board of three railroad commissioners, with suitable offices in the city of Washington, and the necessary clerical force. The commissioners were to prescribe a system of accounts and returns to be made by all railroads in the United States, to prepare tables and abstracts of statistics, to publish annually a book containing full information in regard to every railroad in the United States, and sectional and general railroad maps. The fiscal year of all railroads was to be required to end on June 30; the directors of each railroad were to be required to make an annual report under oath, before the first Wednesday of September, of their doings under their charters, upon forms prescribed and furnished by the board, with a pen. alty for non-compliance. The commissioners were to prescribe what should constitute “operating expenses," to compel any railroad company whose stock and debt largely exceeded the actual cost of construction and equipment to reduce its liabilities, and to regulate its tariff in accordance with such reduction, and to report to Congress, through the President, what legislation was necessary to carry out the objects for which the commission was created. No action was taken by Congress on this bill.

On June 20, 1874, the act of Corgress (18 U. S. Stat, at L., p. 11) was approved, by which the officers and agents of the companies authorized to construct the Pacific railroads under the acts of July 1, 1862, and July 2, 1864, who refuse to operate and use the roads under their control as one continuous line, without any discrimination of any kind, are deemed guilty of a misdemeanor and liable to fine and imprisonment. It is is also provided in the act

That for all the purposes of said act [that of July 1, 1862), and of the acts amendatory thereof, the railway of the Denver Pacific Railway and Telegraph Company shall be deemed and taken to be a part and extension of the road of the Kansas Pacific Railroad to the point of junction thereof with the road of the l’nion Pacific Railroad Company at Cheyemme, as provided in the act of March third, wighteen hundrell aud sixtypine.

This act is still in force, and seems to require the Denver Pacific Railway Company to apply five per cent. of their net earnings on the account of the Kansas Pacific Railway Company's indebtedness to the government.

The act of Congress approved June 22, 1874.(18 U. S. Stat. at L., p. 200), directs the Secretary of the Treasury to require payment of all sums of money due or to become due the United States for the 5 per centum of the net earnings provided for by the act of 1862; and in case of non-payment of the same within sixty days after demand therefor, the Secretary of the Treasury is required to certify that fact to the Attorney-General for the institution of suits and proceedings necessary to collect the same. None of the suits instituted under this act have yet been determined, but it is expected that the Supreme Court will decide the case of The United States vs. The Union Pacific Railroad Company during its present term.

During the first session of the Forty-fourth Congress a bill was introduced “To amend the act entitled “Ăn act relative to filing reports of railroad companies,' approved June twenty-fifth, eighteen hundred and sixty-eight,” by which it was proposed that the said corporations should annually make and file with the Secretary of the Treasury a full and true statement for the year ending June 30th prior thereto, sworn to by the president and treasurer of each corporation, showing all of their operations, receipts, expenditures, &c., in detail, upon blanks to be prepared and forwarded to the companies, with penalties and forfeitures for noncompliance. This bill, if passed, would have compelled the railroad companies to report annually to tuo departments of the government. The bill passed the House of Representatives March 1, 1876, but did not pass the Senate.

Among the important matters relating to railroads considered by the Forty-fourth Congress was the question of the indebtedness of the Pa. cific railroad companies to the government, and what legislation, if any, was necessary and just to secure indemnity to the United States, whether by sinking-funds to be established, or otherwise. The judiciary committees of both the Senate and the House of Representatives from time to time made careful inquiry and voluminous report upon this subject, in the preparation of which it was apparent that neither the executive departments nor Congress were in possession of such specific information in regard to the affairs of the companies as they should have been if the laws had been more explicit and the kind of reports to be rendered to the government had been determined. In House Report No. 440 (44th Congress, first session), submitted by the Hon. Wm. Lawrence, invaluable as the report is for the full and explicit information concerning these railroads therein given, it is in many instances acknowledged that correct statements of facts could not be obtained from the executive departments of the government. After obtaining, by the exercise of great labor and patience, all the facts necessary to an intelligent determination of the question submitted to them, and after hearing elaborate arguments by the able counsel employed by the Central Pacific and Union Pacific Railroad Companies against the proposition for a sinking-fund, the committee, after a fair and exhaustive argument, came to the conclusion that Congress had the power over the Pacific Railroad corporations to enable it to alter and amend the acts of 1862 and 1864, so as to provide a proper sinking-fund to pay at maturity the principal and interest of the bonds of the United States issued to the said companies, respectively, and also that it was both necessary and just to create such a sinking-fund. The

« PreviousContinue »