for the benefit of the whole country, whose business would be best accommodated by termini at many points widely separated on the Missouri River. To complete this system as contemplated and authorized by law, it seems to be necessary that the Central Branch Union Pacific should continue its road to a junction with the Union Pacific at the onehundreth meridian, and that company's claim, fortified as it is by the opinion of eminent lawyers, is, that they are justly entitled to all the subsidies and franchises for that extension of its line, granted by the acts of 1862 and 1864. In accordance with this claim the company filed a map in the Department of the Interior in September, 1871, but no final action was taken thereon. As to the rights of these branch roads, and of the Burlington and Missouri River Railroad in Nebraska in connection with them, to the use of the trunk-road of the Union Pacific Company, as one continuous line, with equal advantages and facilities without discrimination of any kind for or against either or any of them, and on the other hand, the right of the trunk-line to the use of the branch lines in the same way, special request has been made upon each of the companies concerned for information necessary to a full and fair examination of the question previous to report thereon, in accordance with the intention of Congress, as signified by the passage of Senate bill No. 1337, June 14, 1878.

THE CORPORATIONS TO WHICH LANDS ONLY HAVE BEEN GRANTED BY THE UNITED STATES.

Of these railroad companies, Nos. 7 to 15 in the appendix, List B, the Texas Pacific Railway Company rendered its customary report to the department on October 5, 1878. Upon the reference of the report to this office, explanations in regard to the same were called for, which it is understood will be furnished by the company; but the company was informed that the regular reports as requested under the law were still required to be made. The Southern Pacific Railroad Company of California has made no report to this office, but has referred the law and the requests made under it to the consideration of its law officers. The Northern Pacific Railroad Company has made and continues to make full and acceptable reports. The Saint Louis and San Francisco Railway Company of Missouri (purchaser of the Missouri portion of the Atlantic and Pacific Railroad), has complied with the law, and will render reports to the best of its ability. The Atlantic and Pacific Railroad Company does not operate that portion of its road which it still owns, extending from the western line of the State of Missouri to Vinita, in the Indian Territory, but it is operated by the Saint Louis and San Francisco Railway Company, at a considerable loss. The president of the Burlington and Missouri River Railroad Company in Nebraska at first complied with the request of this office under the law, but, acting under legal advice, he has referred further requests to the directors of the company for a final decision. The Oregon and California Railroad Company, and the Oregon Central Railroad Company, of Oregon, have both complied with the law as far as possible. The New Orleans, Baton Rouge and Vicksburg Railroad Company of Louisiana has not been heard from, but it is understood that none of its road has yet been built.

It will be observed by reference to Appendix C, that the conditions in regard to transportation for the United States, imposed upon these nine corporations by the land-grant acts, essentially differ. While the Saint Louis and San Francisco Railway Company of Missouri, is required to give the United States the use of its railroad from Saint Louis to Spring

field, Mo., as a highway "free from toll or other charge upon the transportation of any property or troops of the United States," and from Springfield to Vinita, at rates not higher than it charges "individuals for like transportation service"; and the Oregon and California Railroad Company of Oregon, and the California and Oregon branch of the Central Pacific Railroad Company of California, are required to transport property or troops of the United States "over said road at the cost, charge, and expense of the corporations or companies owning or operating the same, when so required by the Government of the United States"; the Oregon Central Railroad Company of Oregon, and the Burlington and Missouri River Railroad in Nebraska, have no conditions whatever imposed, and the remaining companies named in the list are authorized to receive full compensation from the United States for like services at fair and reasonable rates not to exceed the price paid by private parties, some of them subject to such restrictive regulations in regard to charges as Congress may impose, and others not.

THE RAILROAD COMPANIES WHICH HAVE RECEIVED GRANTS OF LANDS FROM THE UNITED STATES THROUGH STATE OR TERRITORIAL GOVERNMENTS.

Of these companies, Nos. 16 to 46 in Appendix B, the following have not rendered reports by reason of the interruption of business during the past four months owing to the prevalence of yellow fever in the Southwestern States, viz:

Memphis and Little Rock Railroad Company.

North Louisiana and Texas Railroad Company.

Managers of Morgan's Louisiana and Texas Railroad.

The following railroad companies have complied in a measure with the requests of this office, viz:

Hannibal and Saint Joseph Railroad Company.

Leavenworth, Lawrence and Galveston Railroad Company.

Missouri River, Fort Scott and Gulf Railroad Company.

North Wisconsin Railroad Company.

Winona and Saint Peter Railroad Company (through the Chicago and Northwestern Railway Company).

Southern Minnesota Railway Company.

Saint Paul and Duluth Railroad Company.

The following railroad companies are preparing to comply with the requests of this office, viz:

Little Rock and Fort Smith Railway Company.

Memphis and Little Rock Railroad Company.

Atchison, Topeka and Santa Fé Railroad Company.

Chicago, Rock Island and Pacific Railroad Company.

Missouri Pacific Railroad Company.

Of the remaining companies some have not been heard from, others have the question of compliance under consideration, and still others have through their law officers absolutely refused.

As the law provides among the duties of this office "to see that the laws relating to said companies are enforced," it will be my duty to certify all cases of neglect or refusal under the law to the Secretary for the institution of the proceedings necessary to judicially enforce the forfeitures therein provided.

The conditions imposed upon all these land-grant railroad companies (those that received their grants through State or Territorial governinent as well as those receiving grants directly to corporations) may be

divided into three classes, viz: 1st. Transportation for the government without charge whatever; 2d. Transportation for the government at fair and reasonable rates,-ordinary tariff charges; and 3d. Use of the road as a public highway, free from toll or other charge upon the transportation of any property or troops of the United States. By these conditions some companies have had an onerous tax imposed upon them without having realized much benefit from the land-grant; others, with large and profitable grants, have been left to make what charges they choose, and have had comparatively little to do for the government, other than mail transportation; while others, and much the larger number, have been saddled with an uncertain obligation, which, in the early years of the late war, became so burdensome that relief was granted to some of them by Congress. Under an arrangement entered into between the War Department and these railroad companies, in 1861, the accounts of these companies for freight and transportation of troops for that department were up to June, 1874, settled by a deduction of thirtythree and one-third per cent. from their regular tariff rates. In 1865, the Committee on the Judiciary of the House of Representatives having been instructed by resolution to inquire into this question of transportation for the United States over such roads, and correlative questions, and having made a full inquiry thereon, reported the following resolution and recommended its adoption:

Resolved, That the several railroad companies which have received from States grants of public lands, made to such States by acts of Congress, for the purpose of aiding in the construction of the roads of such companies, respectively, are required to transport the property and troops of the United States over their roads free of toll or other charge whatsoever.

Presuming that the regular rates are charged in all cases, it is possible that the deduction of 333 per cent. does not give the government its just rights under the grant in some cases, and that in other cases it may work harshly and arbitrarily against the railroad companies. The question, however, as to what the government is entitled to, has been decided by the Supreme Court of the United States in the case 3 Otto, p. 442, Lake Superior and Mississippi Railroad Company vs. The United States; and Atchison, Topeka and Santa Fé Railroad Company vs. United States, in the following language: "That the reservation in question secures to the government only a free use of the railroads concerned, and that it does not entitle the government to have troops or property transported by the companies over their respective roads free of charge for transporting the same"; and the court awarded to these companies "compensation for all transportation performed by them respectively of troops and property of the government (excepting the mails), subject to a fair deduction for the use of their respective railroads." In order to ascertain what that "fair deduction" is worth to the government, and inasmuch as the arrangement made with the companies by the War Department in 1861 was more of a temporary expedient rather than a final settlement of the question, to a full and proper discussion of which the accounts and operations of each railroad affected ought to be examined and made the basis of the settlement, a statement has been prepared in this office (Appendix L) showing the amount to be deducted under various formulas. By this statement it will be seen that, leaving out of the calculation all charges for "maintenance of way," and reimbursing the railroad companies with the proportionate amount of transportation expenses," and giving the companies in addition thereto a rental for the use of equipment and an additional profit of 10 per cent. upon the amount of these two items, the average deduction, as applied to all the railroads

6.

in the United States, would be 44.38 per cent. The same rule applied to the Pennsylvania Railroad (probably the highest standard railroad in the United States, both as to its condition and the economy of its oper ation), gives a deduction of 44.74 per cent.; applied to other railroads the percentage of deduction will be seen to vary from 65.32 per cent. in the case of the Union Pacific Railroad to 24.36 per cent. in the case of the Erie Railway, the lowest percentage found, 6.84 per cent., in the case of the Atlantic and Great Western Railroad, being exceptional.

There are strong reasons why the conditions imposed by these landgrant acts should be repealed: 1st, that they operate unequally as between the railroad companies, both as to the amount of transportation and also as to the charge for the same; 2d, that but one department of the government, the War Department, is entitled to much benefit; 3d, that where the grant of land has proved much more valuable comparatively than elsewhere, the burden of the condition has been much lighter in the former case than in the latter; 4th, that any settlement as to the amount of deduction to which the government is entitled under the decision of the Supreme Court, upon one fixed rate, must be inequitable; 5th, that a settlement upon the basis of the operations of each individual company, while in itself neither difficult nor unjust, would probably delay payments and become tedious to the companies, whose compensation for such service should be just as promptly paid as that for the mail service or for the service of any private person.

A broad and equitable view of this whole question in relation to the conditions imposed upon land-grant railroads would seem to indicate that at some early day the repeal of these conditions should be considered by Congress. In order that the whole country may receive some beneficial and proportionate return for these valuable land-grants-in cases where they have absolutely proved valuable, and where the company is receiving considerable and increasing profits from the proceeds of sales of landit may not be too much to ask of them that the mails of the United States be carried over their roads at some merely nominal charge. This would operate equitably to all of the companies, the work would not be too burdensome, but would grow with their growth, it would be a great and continuous public benefit, and it would afford some relief to the mailservice appropriations. Appendix N shows how much is annually paid for the transportation of the mail to these land-grant companies. Appendix O shows the quantity of public lands certified to States and corporations for railroads by years.

RECOMMENDATIONS IN REGARD TO LEGISLATION.

The following recommendations are respectfully submitted in regard to legislation which seems to be required in order to promote the prosperity of the railroads in which the government is more immediately interested, and to remedy defects in present laws:

First. That section 3 of the Pacific Railroad act, approved July 1, 1862, be amended by the addition of the following words: "Provided all of the lands belonging to the United States of the alternate sections adjoining the sections granted to the railroad companies have been sold, pre-empted, or otherwise disposed of." In explanation and support of this recommendation, it may be stated that the railroad companies claim that any reduction by them of the price of their remaining lands would not increase their sales or the settlement of the country; that the general depression for some years past has kept the tide of migration back; that just so much of these lands can be disposed of annually and no

more so long as the Indians are permitted to make raids and onslaughts on the settlers; and that the companies could have disposed of these lands to their interest creditors or stockholders at nominal prices, but have considered it right and proper to retain them as a general asset.

Second. That the several departments of the government having stores or supplies for shipment to the Pacific States and Territories be directed by resolution of Congress, or otherwise, to forward the same over the Pacific Railroads via the most direct branch road at the lowest rates at which contracts have been made by any or all of said companies with any private person, transportation company, or other corporation, which freight shall be forwarded over all of said roads as one continous line without discrimination of any kind whatsoever. The companies complain of the withholding and diverting of freights by the government, for which the government has to pay money out of the Treasury and take the risk of long ocean voyages. Such a direction on the part of Congress would put to practical test, by the government itself, the vexed question of continous use of these roads as one line without discrimination, being a somewhat different one from that of general discrimination as to rates only.

Third. That the United States courts be requested or directed by resolution of Congress, or otherwise, that whenever a receiver is required for any of the railroad companies to which the United States have granted any subsidy in bonds or lands, to appoint no officer, director, stockholder, or creditor to such receivership; and in case the railroad company is indebted to the United States, that such receivership continue until the indebtedness to the United States is paid or permamently provided for. The difficulty in the receivership of the Kansas Pacific Railway Company, in which charges and countercharges by one of the receivers against the other have been made and heard in the proper court, and the discharge of both, and the appointment of another made, are facts which show the necessity of some enactment of this kind.

Fourth. That by a resolution of Congress the Central Branch Union Pacific Railroad Company, if such resolution be necessary, be authorized to continue its road to a junction with the Union Pacific Railroad at or near the one hundredth meridian, in order to complete the Pacific Railroad system as originally contemplated; and that the said railroad company, in lieu of the loan of credit and grant of lands to which it may be entitled, under the Pacific Railroad acts of July 1, 1862, and July 2, 1864, shall be entitled to a grant of $- per mile of road so constructed, which grant shall not be repaid by the said company, but in lieu of repayment that the mails of the United States shall be forever carried over said road free of all charge whatsoever by said company or its successors. The question of the continuation of this road has been frequently brought by this company to the attention of the executive and legislative branches of the government. The improbability of the repayment by this company of its present indebtedness to the United States, which the company claims grows out of the legislation which located them in the woods, and the hardship thereby endured, seem to be just grounds for a rectification of this matter.

Fifth. That neither money nor public lands be granted to any corporation to aid in the construction of a railroad hereafter; that in any and every case where the line of railroad for which grants have been made is in process of construction, the time of completion be extended; and that all grants of land for railroads be declared forfeited in every case where the line of said roads has not been located, surveyed, and