Check this out:
[C.P. Huntington testimony to the Pacific Railroad Commission.]
—Kyle
UNDER FOUR MEN'S HANDSINTERESTING BITS OF CENTRAL PACIFIC HISTORY.
C.P. HUNTINGTON ON THE VALUE AND COST OF "EXPLANATIONS," AND HIS THEORY OF RAILROADING.New York Times, April 28, 1887, Wednesday, Page 9
Mr. C.P. Huntington told a long story to the Pacific Railroad Commissioners yesterday. It was a history of his connection with the Central Pacific, and it took the witness and his examiners nearly four hours to work down from 1861 to 1885. ...
UNDER FOUR MEN'S HANDS
ReplyDeleteINTERESTING BITS OF CENTRAL PACIFIC HISTORY.
C.P. HUNTINGTON ON THE VALUE AND COST OF "EXPLANATIONS," AND HIS THEORY OF RAILROADING.
[New York Times, April 28, 1887, Wednesday, Page 9.]
Mr. C.P. Huntington told a long story to the Pacific Railroad Commissioners yesterday. It was a history of his connection with the Central Pacific, and it took the witness and his examiners nearly four hours to work down from 1861 to 1885.
The hearing was almost informal.
for Commissioners Pattison and Anderson and
their visitor sat around the same big table, while
the secretary was socially close to Mr. Huntington's
right hand. A great many well Known facts
were brought out by the examination, but there
were some other curious things, too, among
them being the amount of influence exercised
upon transcontinental railroad building and operation
by a quartet of capitalists, and a little
expert testimony on the amount of explanation
which has to be lavished upon statesmen when
they set to Washington and have to pass upon
the affairs of railroad corporations.
When Mr. Huntington walked into the Commissions'
rooms, at 10 Wall-street, yeaterday
noon, hee was accompanied, by C. H. Tweed, counsel
for the Central Pacific. The attorney settled
down just back of the Commissioners and his
client took possession of a big armchair on the
other side of the table. Mr. Huntington stood
the examination well. Once or twice he became
very earnest in his remarks about Washington
and once he quoted poetry, but for the rest of
the time he contented. himself with occasionally
shifting his heavy gold-headed cane from one
hand to the other. On his head. was a jaunty
black silk skullcap. He took the oath of a witness
and kissed, a Bible wlilch a messenger bad
found somewhere about the building.
"I have been Vice-President of the Central
Pacific since 1861 or 1862," said Mr. Huntington.
"I have given my attention principally to the
financial department in this city an to furnishing
materials for the construcction and maintenance
of the road. We never have had a full
set of our books here. They are kept in San
Francisco, where the Directors meet, and where
you will find the accountants, to whom have
been referred the memoranda I have sent West
from this city from time to time. None of the
road's reports is sent here, except the printed
annual reports. I think, though, that there is a
transfer ledger here."
Then Mr. Huntington said that the books of
the company are in the hauds of B. H. Miller of
San Francisco, who has had charge of them for
years and who has a record, of the resolutions
adopted at various times by the Directors.
After the organization of the company, under a
California charter, the witness testified, he
went to Washington to secure Government aid.
It was secured, but it had not proved as beneficial
to the road as it might have been. Before
the Government's assistance was obtained, work
on the line was begun and carried out from Sacramento
as far as Cisco, a distance of
92 miles. Materials, &c., were bought in
the East by the witness. At the beginning,
the work was let out to small
contractors, but the system worked badly, for
laborers were hard to get, and the contractors
got in one another's way. Then Charles Crocker
& Co. took the contract, and it was afterward
turned over to the Contract and Finance Company.
The first funds had come from cash subscriptions
to the stock, but the amount thus
realized was not great. The road's paper
was sold here and gold was bought, sometimes
at a very high premium. Then too, prices of
material varied greatly; locomotives, for instance,
going up to $32,000 from $8,000, and
insurance rates on Cape Horn freights getting
ruinously high during the war. ~ fthiis made
the buildins: of the road very costly. During
1867, 1868,sand up to Macy 10.1869-, the road
was built In Nevada and Utah. to the junction
point with the Union Pacific by the Contract
and Finance Company.
4 b We bad to form this company to people
in," said Mr. Huntington. I talked with D. 0.
Mills and Commodore Garrison about our roaa,
but they said the risk was too big uud the times
were too unsettled. Then we formed the company.
E=Gov. Stanford. Crockor, Hopkins, aud
myself had most of its stock. Onr contract to
build the Hue extended from the California
State line to the junction. I have not a copy of
the contract. I don't know that I ever saw it.
W e were to take a certain amount, about $100,-
000 a mile, I think, In the securities of the road.
About; $64,000 was to be in bonds, the balance in
s ~OCJK."
Then Mr. Huniington told how the Western
Pacific started as a line between San .Francisco
and Sacramento, got into difficulties and passed
over to the Central Pacific. The consolidation
took pliico in 1869 or 1870. The witness has uo
copy of the consolidation articles, which will
have to be sent for from Sau Jb'rancisco. The
Mission Bay terminal facilities were acquired in.
1867 or 1868. Two years later the Central
Pacific built a line from i-iathrop to Goshen,
146 miles, all in California. The extension
was built to develop the country, which
romlsed great harvests of wheat. Mr.
guntinston thought that the Contract and.
finance Company built the line, but lie was not
mmiirlee.; nAosrp duidr hfer omre mBeimlesb etro t hOea kplraincde, L\l a4i do pre5r
miles, "was also built, probably by the same company.
A branch was constructed from Roseville
to the State line. and early in the 70's the
California Pacific was acquired. With it came
10 or 12 river steamers, which nominally
bwehloicnhg edw atos thboeu Cgahltif obryn ia MKra.v i! &a utlnotni nC~otmopnaa nnyd,.
others as individuals and which were
then sold to the. Central Pacific with the
California, Pacific. The price for the veseels
might .have been $800,000 or thereabout;
the witness couldn't tell with certainty. The
Central still operates the steamers, but the resulting
profit I s vary small. The steamers, however
are useful In preventing others front gobbling
up the river trade.
The California and Oregon Road had been
built to Tehama by a company having the same
name. Then, in 1870, it was coneolidated. with
the Central Pacific and has since been extended
to tthe State line. When a gap of 40 miles in Oreeon
is tilled in the road will connect San Pram
oisco and Portland. Tlic extension since the
consolidation from Reading to %ne S.tate line
w.18 built to the Pacific Improvement Company,
which rece f ved. 80,000 shares .of Central Pacific
stock and $2,100,000 in first mortgage bonds on
the lino as it wag built.
a Were Mr. Crocker and yourself ~tocbhulderfii
In the. Improvement Company 1" asked Mr. Anderson*
I think 80," said Mr. Huntington.
In the first organization, the witness said, there
were perhaps 100 suli~cribere from tohe public
for perhaps $1,000,000. All the other stock issued
w a ~un der construction contracts. For
ypars there was no public market for the stock.
The small contractors "were all paid in money
probably. Charles Crocker & Co. were given
cash, -with an Increased allowance for the more
difficult parts of the road. The ¥witnes sold the
Government bonds here and sent gold West. He
sold the bond8 for the company and not for the
contractors. Mr. Hoplnns in the West settled
with the contractors as Treasurer. Perhaps toward
the last the Crooker Company got stock d.1-
rectly.
Accordin to the annual report of the road,
issued in lb2, legal expenses tor the year were
$62,000. That and similar entries in succeeding
reports f urnishetl the liveliest Incidents for
the examination. Mr. Huntlngt.on testified that
in 1872 the principal counael for the road. was
S. W. Sanderson and Mr. Robinson, of San
Francisco; Harvey Brown. 53. M. Wilson, and
James A. Storrs in Now-York, and. Richard
Franchot in wasuin ¡ton
** Who audited thelegal bills V asked Commiseioner
Anderson, who conducted most of the
examination.
a Gov. Stanford on the Pacific coast. I here."
46 Where are vouchers for these to "be foinid'i"
In San Francisco. But Geu. Franchot, a8 a
general thing, didn't give vouchers. He was aEn
honorable main and I trusted him. After his
death, in 1878, his place was taken by Charles
H. Sherrlll. Gen. Franchot wag paid $20,000 a
eyxepara nssaelas ryw. heTnheevne rI %ae v ew hainmte dm oint.e y Htoer s mmaalyl
have got from $40,000 to $30,000 from me iu
that way. There are so many things t.hat have
to be explained In Washington. Substantially
the same course was pursued with regard to Mr.
Sherrill. except that; his salary -was $10,000 a
At first his other expenses were about as
its F.r:mchot7~b, ut afterward they be
came lisliter."
how matters really stand and how the public
will bt3 beuefltcd. He takes his turn with Richard
Eoe and shows him the facts and explains
matters to him,''
*' Did Gen. Pranchot need more money when
Congress was in session than when it waa not 1"
"Yes. I think lie did. There were many expenses;
but I do not believe that he ever used a
dollar iu any wav in which the law would not
uphold him. I don't know how much he handled
alto~etlier.~~
bb One subject of the lucluiry ordered by Cougrcm
la whether :my luoney or valuable conslderation
was used to Influence legislatiou," expl-
ai ned one of tho Commissioners. Franchot was strictly honest." said Sir.
Hiin tin ton. " But he had to have help. I hahve
to pay or expl:iuntioiis,' lie said. That satiatied
me." ^
4b What. w:ts the cost of an explanationr?**
" I can't say."
- What were some of the objects sought ?I9 Well. we wanted. Goat Island for tlic use of
our road in Sail Francisco. We. wanted to explain
that it was of great value to us and of no
value to the Government. It was better for the
people for UR to reach deep water over the Island
than to build a loug pier out from the shore.
Tlie facts, you see, had to he explained."
How do you measure the cost of an explanation
?"
As in court, we pay our lawyer about what
he asks. Build a loug railroad and your enemies
will spring up and iittmk you everywhere.
You've m t t o explain and briug moral influence
to bear."
b6 Isn't it possible that champagne arid line
cigars and. expeiisive dinn era had something to
do with the moral influencet"
Possibly. Able men had. to be got t.o explain."
"Was anything paid for stocks or bonds of
other roads ?"
+ @ So. I don't think so."
From the annual reports the legal expense and.
tbe general and miscellaneous expense account
for the last few years were {riven in round nunbers
as followa:
Zegdcl General ami
>>arm Expenses. Miscellaneous.
1874.. ........................ .$b8 .a *,O OO. $240.000
1875. ......................... .10G.OOO 395,000
TS70..--.-. .................... 193,000 4G9.0UO
1877--. Ulj.000
F - ....................... 482,000
18 n>-. ......................... 190,000 :?94,000
1880. .......................... 155.000 :-i78.000
IS8 1.- -........................ 167,000 239,000
1w----m .-...-............218,000 ;W,OOO
1883.---------..-.---- - .--.- -2.1-3, 000 377,000
1884.. -........................ 246.000
i-
659,000
1880.. ........................ -112,000 389,000
Mr. Huntington further testified that millions
were spent at; Oakland Point and Mission Bay:
&ornothingw as laid out on the Oregon road aid
large amounts were invested in rolling stock.
The road I s now steel railed throughout, except
for perhaps 100 miles. The Government mortgagos
"woulfi not apply to Oakland and Mission i Bay. In 1872 the equipment was valued at $5.- 1
500,000; iu 1885 at $8,500,000 according to the
annual reports. Mr.Huntlngton had thought the
ipnuctr eoan.s ea envde nt f ee awtehro. le Neeqwu ipemngeinnte sin h afvaec tbheaen? !
been renewed. The Central now owns the finest '
railroad shops in the United States, according to
tho witness. In 1885 they were valued at
$1,229,000, and their machinery at $1,164,000.
Iu 1872 the figures were $813,000 and $466,000.
Government liens would apply to the shops
which are at Sacramento. Real esta-tein 1885
was valued at $1,516.000, as against $968,000
in. 1872. The increase may be in Oa.kland or
Sacramento. The witness could not say how
much of the real eatate is subject TO a Governwent
lieu.
"How about the sinking funds!" lie was
islcrd.
I don't knowabout them. Land grant bonds
to the amount of $6,000,000.h ate and convertible
bonds, have been paid off. My recollecttion
is that W. V. Huntiiigton and Timothy Hopkina
have charge of the sinking funds. Most of them
ire put In Southern Pacific."
" Who is responsible to make the fund8 good if
there be need of I t ?"
4 6 The President and Directors, I sunpose. The
bonds, probably are In vaults in San Francisco,
either our own or those of iii safe deposit corn-,
pil11y.'~
Have the sinking fund accounts been exam-
Ined and. verified ?"
So I understand. The Pacific Improvement
Company may nave. some of the money. I don't
know how much it is or how held. The Pacific
Improvement Company includes Hopkins, 8 tan- -
ford, Crocber, and myself amon I t s stockholdera.
The Government sinking f and is put at
$9,251,000. I have never examined it thoro0u0e(
jh,l'y-~ . The Government atlll o,wes us $2,500,- - -
Last of all Mr. Huntington told of the Southern
Pacific lease. It was his theory, he said, that
there should be only three or four transportation
companies In the country. Therefore lie
thought it a good thing to get all he could I oeether,
and BO he favored tlic lease. In both
Central Pa.cific, and Southern Pacific Messrs.
tanf ford, Hopkins. Crocker, and Huntington are
the big stockholders. When the lease was made
the matter of division of freight was left in the
hands of the General Manager. to whom such.
questions are intrusted almost ' entirely. But
there has been no pool. Each road gets Its earn-
Inpa and. the earnings are kept separate.
" WhatIs the nroportdon of through freight
carried, by tho Southern aiid Central?" was
That elided the question of the legal expenses
just then. but It up again later In the hearrtig
when the Itom in the 1874 aunual report was
fonnd to be $83.125.
fi I used to send a memorandum of money I
paid out to Ban Francisco every month or so,"
said tlie witnesa la auswer to a, question.
 ¥ What would the accounts withouti vouchers
amount to ?"
4 h Possibly as much as $200,00~a year."
Would you have paid out as much as $5,000
wi-t hout a, voucher 3'' Yes, to Fra.nchot."
& * Would you know how it was to be expuded
!"
a No; 1 kuew it was proper to let Gen. Franc
h t have it without knowing to whom it was to
go afterward. He was a thorougtily honest man,
aud I trusted him. And my theory id, as the old
song inns it:
* Trust all in all
Or truat not at till.'
asked.
" OS freight taken from tidewater on the Atlantic
coast* the Southern Pacific gets the big
share. All ehlpmeuts from west of the Alleghanies
are apt to go to the Central. The Morgan
~tenmers to New-Orleans connect mth the
Southern and. carry much of Its freight."
64 Has not this decreased the Central Pacific's
business 5''
Very possibly.
" Do you. and Messrs. Hopkius* Cracker, and.
Stanford control both the Southern Pacific and
the Central Pacific 1''
W e do, but we have nothing to do with controlling
the movements of freight. The rates
are axed by the General Managers and we do not
Interfere with them."
Sir. Huntingtonddid. not remember that the
lease "was submitted, to the stockholders or the
United States Government;. Many of the questions
asked him he said he was unable to
answer, because he was In BO sense of the "word
a bookkeeper and he never put hia head Into a
ledger it he could help it.
- -A -n d I generally manage. to keep it out," he added.
President Charles Francis Adams will testify
ttefore the Coinm~asioaerst o-day. He la in something
of a hurry, as he l a to take a trip to the
"West within a few days. Mr. Huntington will
be called upon again as BOOH as the board, lias
heard President Adams. He said yesterday that
he was going to be in the city for mme time, and
he -was entirely at the disposal of the investigators.
After the examinattion was over yesterday
Mr. Huntington cheerfully bade everybody
good. afternoon and went away. He had been.
cheerful through it all.
** That baa always been my principle, anti I
have been in business 50 years.*'
** What made the necessity tor such expend- :
itures 1"
-A man lu Washington will and everybody
afraid. and timid, and everything lias to be explained.
Geu. Franchot looked. out for our intercets
with all the departments and with Con*
gross. Moil that go 10 Wasbiugtou know t h a t
they can't always lutm Influence with others,
while a seuoud man may be able to explain thhga
satisfactorily."
a Will you put US a- ca~u," siiggnsted ex-Gov.
Pat tison.
" Well, say, here's Richard Roe, a. member of
Congresg. Perhaps I want to e~plaiu to him
eomething, but he is afraid, of me and will not
listen to me, although. I have no intention to improperly
iuliuence him. So I go to his chum,
John Uoo, whom I can approach. I show him