Democratic Sentinel, Volume 2, Number 11, Rensselaer, Jasper County, 26 April 1878 — SOUTHERN PACIFIC RAILROAD [ARTICLE]

SOUTHERN PACIFIC RAILROAD

Emphatic Condemnation of Subsidies. The Thirty-Second Parallel Bead Can be Constructed Without Pledging the Public Credit. The Texas and Pacific Hailroad. Synopsis of the Minority Report. The Pactfio Railroad Committee of the House having by a vote of seven to six agreed to report the Texas-Pacifio bill favorably—two or more of the seven expressing their desire to amend it, or defeat it on the floor—the minority members, Messrs. Morrison, Landers, Luttrdll, Blair, Rice and Hewitt, have stated their views in a report of which the following are the material portions: We ire unable to concur in the views of the majority of the committee, but desire the adoption by Congress of such measures as will secure the early construction of a trans-continen-tal railroad for the special use and development of the Southern and Southwestern States and Territories. We believe that this important object can be accomplished without subsidy from the Government, and submit the following views and the accompanying bill for the consideration of the House: THE PBESKNT CONDITION OF THHSOUTHEBN LINE. The Texas and Pacific Railway Company, a corporation of the State of Texas, in the year 1871 was authorized by Congress to construct its road and telegraph from Marshal), in Eastf<rn Texas, along and near the thirty-second parallel of north latitude through that State and the Territories of New Mexico and Arizona to San Diego, a small city on the Pacific coast, on the bay of the same name, supposed to be well adapted to commercial purposes, and having a population of 4,000 to 5,000 people. The distance from Marshall to San Diego is estimated at 1,574 miles by the authorities of the Texas and Pacific Company, while those of the Southern Pacific Company believe it to be about 100 miles greater. Failing to meet these provisions, the Texas and Pacific Company has obtained by construction and purchase and has now in operation 443 miles of road, which inclose a parallelogram in Northeastern Texas, having a base of 183 miles, extending from Marshall to Fort Worth, now the western terminus of the road, which only is a part of the trunk line. The remainder of the 443 miles is so located as to secure tfae more caluable lands granted by the State of Texas, probably because the pecuniary embarrassments of the company were such that its credit was based chiefly upon the granted lands. There is thus remaining of the trunk line between Fort Worth and Ban Diego a distance of 1,491 miles upon which nothing has been done. Of the tsn years allowed by the charter within which to complete this great w-wk only four remain, and a considerable portion of one of these must elapse before the enactment of the desired legislation is possible. Six-tenths of the time has been consumed in the construction of less than one-eighth of the trunk line, and that at the Easte 'ly terminus, in oloae connection with the great middle system of roads and the central belt of States, rather than with the Southern system of roads and the Southern States, The corporation has fa len thus far short of the performance of its undertaking, although it received from the State of Texas the munificent grant of the alternate sections of land for forty miles in width along each side of its line, or eighty miles in all. through the State of Texas, and the same from the United States through the Territories and in California, contingent upon its compliance with the conditions of the grant, THE SUBSIDY DESIBED MOBS THAN THE HOAD. The credit of the Texas and Pacific Company w r as seriously Impaired before the panic of 1873, and under its influence has still further declined. It admits its pecuniary inability, and assigns that as a reason for its failure to comply with the conditions Imposed upon it by law. In 1876 it applied to Congress for a subsidy of over $60,006,000, in addition to its land grant of 22,528.000 acres in Texas, and 18,000,000 in the Territories, being a money subsidy of twice the probabio cost of building and equipping its road. The application failed. It now changes the form rather than the substance of its request, and asks for a guaranty of interest on $25,000 a mile for the easier and $40,000 for the heavier portions of the road, amounting in all to $38,000,000 at S per cent, annually for fifty years. The bonds of the Government bearing 4% per cent, interest have recently been sold at par in refunding the national debt. If the public faith is kept and its credit unimpaired, the time is not remote when the Government will be able to effect loans at the rates of 3 and 3% per cent., as now paid by England. The difference between the interest on these 5-per-cent. Texas and Pacific bonds for fifty years and the ordinary rates which the Government will have to pay on the same amount fer the same time, if invested as it might be by the Government for the payment of its own debt,would amount to much more than the cost of the road, so so that the Government would be far better off to build the road and give it to the Texas and Pacific Company outright than to guarantee the interest on its 5-per-cent. fifty-year bonds, according to its request. The total amount of interest guaranteed by the Government would, if paid into a sinking fund, amount to more than $700,000,000 in fifty years, and we are called upon to guarantee the payment of this sum in addition to the proceeds of the land* grant in order to enable the Texas and Pacific Company to complete its road. We are opposed to all pecuniary subsidies and guarantees by the Government in whatever form for the benefit of railroads at this time, however desirable their construction. In time of peace private capital seeking profitable investment will generally promote commercial development quite as fast as is consistent with safety and permanent prosperity. If the men in charge of a meritorious enterprise command the confidence of capitalists, or even the too easily-won trust of the middle classes, there is no need of calling upon the nation for subsidies or guarantees. THE SOUTHEBN FAOIFIO BAILBOAD. The Southern Pacific Railroad Company is a corporation of the State of California. This corporation has constructed its road to Fort Yuma, on the easterly bank of the Colorado river, in the southwesterly corner of the Territory of Arizona, which it claims to be the authorized point of connection with the Texas and Pacific read, a distance of about 720 miles. Its track has been laid through and over extraordinary natural obstacles, at the expense of about S6O 000,000, and the 350 miles of its Southern portion passes through a desert, and for 164 miles nearest the Colorado without an oasis. This road, built to preserve the charter, is of little value except for its anticipated connections with the Southern States, from which, owing to the failure of the Texas and Pacific Company to comply with the requisitions of law, it is now more than 1,200 miles distant. The road is already there, with its millions of money invested over a sandy waste, upon the good faith of the Government that the Texas and Pacific road should be constructed so as to meet it .at the Colorado river; or, in the event of the failure of that corporation so to do, that Congress should take such measures as should enable it to connect with the eouiue.n states of the Unto*. POSITION OF THE SOUTHEBN PACIFIC COMPANY. The Southern Pacific railroad, by force of the absolute necessity of its securing Eastern connections as soon as possible, in order to preserve its capital, is the only party which has both the power and the disposition to build this road. The Southern Pacific Company interposed no opposition to the guarantee asked by the Texas and Pacific east of the Rio Grande; but, contemplating the contingency of the denial of guarantee of bonds to the Texas and Pacific Company, and the consequent total collapse of its undertaking, strongly insisted that justice required that they should not be held in check awaiting the result of continued applications by the Texas and Pacific Company for the money or credit of the nation with which to perform what the Southern Pacific was ready to do at once for the land grant alone. To this bill the Texas and Pacific Company objected. The only argument entitled to weight, in our opinion, was that the Southern Pacific, connecting with the ocean at San Francisco, and, having intimate business relations with the Central Pacific railroad, might enter into combinations with that corporation against the public interest, and that the advantages of competition, and of an occasional connection at San Diego, would then be lost. COMPETITION AND COMBINATION. We believe that any competition between rival parallel lines of railroad for the same business, which results in a loss to the companies, is ’ sure to end in one of two ways, either in a combination by which the public will lose far more than it has ever gained from competition, or, on the other hand, in the ruinous cutting of rates persisted in until the weaker corporation Is ruined, the public is left to the rapacity of the survivor. There is no real protection to the public but in the enforcement of the law of the land. Competition which takes from corporations just compensation is quite as ruinous as combination which gives them too much. No on can believe that the Texas and Pacific Company would, after constructing its line to the Pacific ocean, long compete with any rival to its own loss or even so as to produce any reduction of rates below the maximum to which the public would submit; or that it would fail to repair its losses or increase its gains whenever an opportunity might offer. We repeat that nothing but the law, and the enforcement of the law by the Government, can protect the public against the love of gain which is inherent in human nature. The truth is recognized by the bill of the Texas and Pacific Company reported by the majority of ftie committee, and stringent provisions are therein made to hold that corporation within the bounds of justice and law; veiy unusual safeguards bring provided for in consideration of the fact that the Government itself is really required by the bill to furnish the means necessary to build the road and give to the projectors an additional bonus of $60,000,000. Restrictions and conditions in a charter can be enforced by the machinery of the law against one corporation as well as another. WILL THE SOUTHEBN PACIFIC COMPANY BUILD THE BO AD? We submitthat it will work great wrong to the Southern Pacific Railroad Corporation, to the great South and Southwest, and to the whole country, to reject this bill and to enact the bill recommended by the majority of the committee in the interest of the Texas and Pacific Company, or to reject this bill under any circumstances. This measure does not antagonize, nor did the Southern Pacific railroad antagonize before us any railroad project, branch, or connection east of the Rio Grande. It simply asks to build 600 miles of railroad, half way from the Colorado to Fort Worth, the present westerly terminus of the Texas and Pacific Company, and ninety additional miles in California, to complete the San Diego connection, without any public aid and subject to all reasonable restrictions in the public interest. True, it desires the land grant, but we do not recommend it, because we believe that this corporation will build the road without. Should the representatives of that portion of the country chiefly to be benefited, not by the subsidy, but by the road, defeat this measure. It is difficult for us to see how they can reasonably expect the rest of the country to consent to burden the taxpayer and embarass our policy with the most dangerous precedent, which would exhaust the treasury with hundreds of subsidies throughout the unlimited future of the nation. It would seem impossible for any man to justify himself to bls constituency and to bis country**

large In * course which depletes the treasury when .11 that is desired is attainable without expense to the people. VIEWS or MESSBS. LUTTKXLL AMD BLAIB. Both the act and its amendments required as a condition precedent that the work should be prosecuted simultaneously from the eastern and western termini. By the act of 1872 there were required to be completed not lees than 500 miles on the main line in Texas and not lees than 110 miles in California by May 3,1878, whereas, in fact, fees than M 0 miles of the main line have been completed westerly from the Marshall termifius iff Teias, and not one mile or even a foot, from San Diego easterly. There has been a marked failure oh the part bf the company to comply with the terms. bn which the lands and franchises were granted. This contingency of failure was, by the caution of Congress, foreseen and provided for In both acts, a proviso that—- " Upon failure to so complete it, Congress may adopt such measures as it may deem necessary and proper to secure its speedy completion.” In this attitude of affairs if represents that it would be a great hardship to be compelled to wait indefinitely upon a disabled company for a connecting road from the East, and asks of us the privilege of continuing its road eastward through the Territories to the Rio Grande and as much farther as might be necessary to meet the Texas roads within six years. Such is the desire for an outlet to tbe East, which shall admit it to participation in through overland traffic, that it offers that, if its request be granted to construct a line to San Diego harbor in addition to its present ocean termini, and to prorate on through business with all Eastern connections to San Francisco or other points, and to allow Congress to impose the rates and fares on the line between its Eastern and Western termini at Pacific ports, although asking no aid of the United States which it is not its advantage for Congress to grant. This is rather more than it is within the power of the other company to offer. No good and satisfactory reason 1b found why this proposition should not be promptly and cheerfully accepted. FBOM A BUSINESS STANDPOINT. Two propositions are before us looking to that end. One of them, the Texas and Pacific, seeks to retain its land grant from the United States, amounting to 18,000,000 acres, to obtain two years’ additional time, and n special and extraordinary grant of the credit of the nation in the form of an indorsement upon $38,750,000 of the company’s bonds, pledging it to the payment of 5 per cent, gold interest for fifty years. The other, the Southern Pacific, asks only our ranction to continue its road eastward across the Territories within the same time, but without any other or further assistance than the contiguous grant of lands now at the disposal of Congress. Which of these two propositions as guardians of the public Interest oan we adopt? Which of these two candidates, as practical business men, ought we to intrust with this Undertaking ? Wo should select the proposition most favorable to the good of the people. It would seem that by the charter the grant of land along the thirty-second parallel line in the Territories was made double that of the pioneer line by the forty-first parallel, as if in lieu of future aid in money or credit. Were we administering our own private business could we for a moment hesitate between these offers, one of which, besides being undeserved favor, involves grave responsibilities, dangerous precedent and great risks, while the other avoids all commitments, all doubtful policy, and insures all its proffered benefits within the same time without the risk of a dollar of tbe people’s money or credit? We conceive we are not here as the almoners of the bounty of the Government to its citizens or corporations, but as guardians of the public welfare and trustees of its property and credit of the nation, sworn to obey the constitution and protect the best interests of the people, and in this view we cannot concur in the report of tbe majority, which proposes to grant a subsidy or guaranty of $38,750,000 of the people’s money or credit to a corporation. ANTI-SUBSIDY VIEWS OF MB. MOBBIBON. The Texas and Pacific Roil road Company seek to obtain the guarantee of the United States for the payment of the interest on $38,750,000 of fifty-year 5 per cent, bonds, to be issued by said railroad company, and used by it in building and extending its railroad from Fort Worth, in Texas, to the Pacific ocean at San Diego, in California. The road to be constructed is 1,400 miles in length; the bonds to be issued amount to $27,678 per mile; and the interest guaranteed to be paid by the United States, used as a sinking fund, and invested in Government bonds bearing the same rate of interest, would pay $300,060,000 of ths public debt. POWKB OF OONGBEBS DOUBTFUL. Has Congress the power to authorize the coveted guarantee? If it has, then power has been conferred upon congress to make gifts of the public moneys and public property to private corporations and individuals. Has any such power been granted by the constitution, or is it necessary to the execution of any power that it is granted ? This railroad, when built, will be the private property of the shareholders. It will be a military and post-road in the same sense, and to the same extent, and none other, that all other railroads of the country over whicn the Government may transport its mails, troops or supplies for reasonable compensation, are military and post-roads. It is submitted that the power has not been conferred upon Congress to make the United States a party in such an enterprise by subscription to its capital stock; or more, to authorize the construction of 'he road out of the resources of the people to be made a gift to the railroad company. The attempt to derive such power, the power to build and give away a railroad from the power to stablish military and post roads, is, in the opinion if the undersigned, an attempt to prevent the obvious purpose of a power Intended for the public oad to private ends. The United States are •onnd to provide for the general defense, but it does not follow that they may construct or operate » railroad for the exclusive benefit of a private corporation, because they may ultimately and in some possible contingency want to use it for a military purpose, any more than they may go into partnership with a stock raiser because horses are necessary in war. The United States have power to regulate foreign commerce and commerce between the States, but it does not follow that they may indorse the notes of a shipbuilder or merchant by way of timulating and encouraging business. The unlerslgnod is unable to perceive any distinction in principle between these cates and the demand of the projectors of this railroad for a loan of the Government cedit to the extent of many millions, with which to prosecute private speculation. DANGEB OF SUBSIDIES. The railroad company which asks for this enormous appropriation of credit presents no claim upon the public which entitles it to exemption from the general rule. The enterprise is essentially a private one, and the company has already -eceived from the United States and the State of Texas a sufficient basis of credit to have built the road, had its assets been prudently managed. The undersigned is not unmindful of the fact at a later period a different rule of construction prevailed from that which In the earlier days of the republic, and which is now here insisted upon. Undelegated power is necessarily unregulated and unrestrained. Power usurped never was and never will be honestly administered. But it is submitted that this belief affords no sufficient justification for the guarantee end subsidy asked. For were it tendered, as it is not, that this enterprise is essentially of the Sairthern character with which it is attempted to be stamped, no reason can be built upon that fact which may not be urged with equal force as a reason why the Government should equalize between the lately contending sections all the losses resulting from “ our unfortunate civil disturbances.” BECORD OF THE DEMOCRATIC PARTY. The statement of the majority that the Government of the United States, in view of the quantity of lands given to it by the Southern States, has been unjust to the South in the bestowal of bounties, is believed to find its refutation in the character of the men who before the war represented that section. They were too sensitive as to the rights of their section to be satisfied with less than wasright- , f "” y qulred the franchise and right of way by which it is authorized to construct its railroad from Fort Worth to El Paso, in the State of Texas, whether by grant from the State of Texas or by purchase from, or consolidation with, the Mempl is, El Paso and Pacific Railroad Company, under the fourth section of the act of March 3, 1871, entitled, “An act to incorporate the Texas Pacific Railroad Company, and to aid in the construction of its road for other purposes.” In the case of Davis vs. Gray, 16 Wallace, page 203, United States Supreme Court decided that the Memphis, El Paso and Pacific was a surviving corporation, with all its property in possession, and all its faculties unimpaired. This franchise and right of way the company proposes to mortgage to indemnify the Government for its guarantee. It becomes a material fact, therefore, to know if it was ever acquired in either of the modes suggested, or otherwise, and whether it has been forfeited or lost with the Texas land grant. The undersigned expresses no opinion upon this question, which was not considered by the committee, but submits that due regard for the interests of the Government demands that before any guarantee is made, based in part on a mortgage of the said franchise and right of the way, the House should be informed and advised as to the title to what is proposed to be mortgaged.