from the manner of their construction and the nature of the society around them, treated with particular hostility, and, moreover, the practices complained of were by no means peculiar to the Union Pacific. There were well founded charges of favoritism shown toward one or two elevator and smelting interests. For instance, the minority report of 1887 states that the Omaha and Grant Smelting and Refining Company-which numbered among its stockholders Sidney Dillon and F. L. Ames, directors of the Union Pacific-received rebates amounting to $570,000 within three years, and was allowed free switching at its yards worth $15,000 a year; while rates were so adjusted as to greatly favor the points at which its works were located."1 The railway also engaged in quarrying stone, driving others out by charging them excessive rates. It mined and sold coal from Wyoming territory and gave a virtual monopoly of the Colorado business to a rebate-favored company. "In order that it might retain a complete monopoly of the coal traffic, it refused to lease any of its coal lands on royalty; and it acquired unlawfully, by private entry and by the use of the names of its employees, the ownership of the government coal lands adjoining its own property 1952 RELATIONS WITH OTHER RAILWAYS The relations of the Union Pacific with other railways were in not a few cases unfortunate. In the first place its attitude toward pro-rating with connecting lines caused much litigation and hostility. Section 12 of the act of 1862 and section 15 of the act of 1864 both provided that the various Pacific railways should be operated as one continuous line, yet as early as 1872 the Kansas Pacific found ground for complaint in that the Un 51 Sen. Exec. Docs., 1887-88, no. 51, p. 182. a Ibid., p. 184. Sen. Docs., 1872-73, no. 28 gives an account of a contract between the Union Pacific and the Wyoming Coal Company made in 1868. By this contract a monopoly was established along the line for fifteen years. The railway guaranteed at least 10 per cent. on the coal mined and agreed to purchase all the coal needed at exorbitant prices, though the coal company was not bound to furnish all the coal needed. A drawback of 25 per cent. on coal freight rates when for general consumption rendered the monopoly complete. The company was favored as to sidetracks. The Union Pacific held nine-tenths of the stock. which provided for a board of commissioners to fix rates over the Union Pacific and Central Pacific railways not to exceed double the rates on the trunk lines. Being referred in the Senate to the committee on the Pacific railroads, the resolution was not pressed and never passed. The railways reduced their rates after completion, and after 1880 competition compelled further reductions. The average receipts per passenger mile on the Union Pacific decreased from 3.34 cents in 1881 to 2.30 cents in 1887, and the ton mile receipts fell from 1.98 cents to 1.27 cents within the same period. The movement of rates on the Central Pacific was similar, freight rates being uniformly somewhat higher and passenger rates lower than on the Union Pacific.48 The later complaints concerning rates seem to have been directed against discrimination rather than extortion. It was charged that, while the law provided that the railways should transport for government at fair and reasonable rates not to exceed those charged private parties for like service, the government was discriminated against. The railways' own reports show a much higher average per passenger per mile from government sources than others.49 Also, to the extent that rebates were given, the government was discriminated against in common with all not receiving such concessions. In 1880 a Senate committee reported that such discrimination against the government as existed was usually of this character. 50 There was a great deal of complaint by individuals and companies; but it must be remembered that the Pacific roads were, 4 Rep. of Sec'y of Interior, 1886, 2: 586. 4 Union Pacific:-Average rates per passenger per mile by sources. from the manner of their construction and the nature of the society around them, treated with particular hostility, and, moreover, the practices complained of were by no means peculiar to the Union Pacific. There were well founded charges of favoritism shown toward one or two elevator and smelting interests. For instance, the minority report of 1887 states that the Omaha and Grant Smelting and Refining Company-which numbered among its stockholders Sidney Dillon and F. L. Ames, directors of the Union Pacific-received rebates amounting to $570,000 within three years, and was allowed free switching at its yards worth $15,000 a year; while rates were so adjusted as to greatly favor the points at which its works were located."1 The railway also engaged in quarrying stone, driving others out by charging them excessive rates. It mined and sold coal from Wyoming territory and gave a virtual monopoly of the Colorado business to a rebate-favored company. "In order that it might retain a complete monopoly of the coal traffic, it refused to lease any of its coal lands on royalty; and it acquired unlawfully, by private entry and by the use of the names of its employees, the ownership of the government coal lands adjoining its own property 7952 RELATIONS WITH OTHER RAILWAYS The relations of the Union Pacific with other railways were in not a few cases unfortunate. In the first place its attitude toward pro-rating with connecting lines caused much litigation and hostility. Section 12 of the act of 1862 and section 15 of the act of 1864 both provided that the various Pacific railways should be operated as one continuous line, yet as early as 1872 the Kansas Pacific found ground for complaint in that the Un 51 Sen. Exec. Docs., 1887-88, no. 51, p. 182. Ibid., p. 184. Sen. Docs., 1872-73, no. 28 gives an account of a contract between the Union Pacific and the Wyoming Coal Company made in 1868. By this contract a monopoly was established along the line for fifteen years. The railway guaranteed at least 10 per cent. on the coal mined and agreed to purchase all the coal needed at exorbitant prices, though the coal company was not bound to furnish all the coal needed. A drawback of 25 per cent. on coal freight rates when for general consumption rendered the monopoly complete. The company was favored as to sidetracks. The Union Pacific held nine-tenths of the stock. ion Pacific refused to pro-rate and charged it local rates on passenger and freight for through traffic. 53 Apparently no trouble was experienced with the Central Pacific, that line being willing to pro-rate on the business of the Kansas Pacific as it I did with the Union Pacific.54 The Union Pacific's local passenger rate from Cheyennewhere the Kansas Pacific joined it-to Ogden was $46.50, first class; while its through rate from Omaha to Ogden was only $54.00. As Cheyenne lay about half way between these points the Kansas Pacific interests held that traffic between points on their line and Ogden should receive a rate of $27.00 (1⁄2 of $54.00) from Cheyenne to Ogden rather than the high local rate. The legislatures of Kansas and Illinois both petitioned Congress in opposition to the stand of the Union Pacific, on the ground that their agricultural and commercial interests suffered.55 Finally, in 1874, after many similar ones had been introduced, a bill was passed making additions to the fifteenth section of the act of 1864. It enacted that any officer or agent of the Pacific railways who should refuse to operate his road as one continuous line or to afford equal advantages and facilities as to rates, time, etc., should be guilty of a misdemeanor and liable to fine and imprisonment.56 . The passage of this act by no means remedied the situation, for when in 1876, the Kansas Pacific went into the hands of the receiver the failure was attributed largely to the fact that "the Union Pacific persistently refused to transfer passengers and freight in connection with the Kansas Pacific and Denver Pacific companies" as required by law.57 In 1878 the attorney general reported that the remedy was judicial and suggested more explicit legislation.58 The upshot of the matter was that the two lines were consolidated in 1880, the operation being attended by the injection of 53 See H. Misc., 1871-72, no. 82. 54 Sen. Misc., 1873-74, no. 54. 55 H. Misc., 1873-74, nos. 167, 244. 56 Cong. Globe, 1873-74, pp. 4434, 5022, 5315. 57 Exec. Docs., Rep. of Sec'y of Int., p. 35 (Serial no. 1800). See H. Rep., 1877-78, no. 430 for this whole subject. 58 Exec. Docs., 1877-78, no. 32. considerable "water" into the company's capitalization. The basis of the operation was an exchange of the stock of the Kansas Pacific and Denver Pacific lines at par for an equal amount of Union Pacific stock. As the former securities were of slight value, their price being far below "Union Pacific," the exchange resulted in excessive capitalization, and, incidentally, in large gain to the holders of Kansas Pacific, Jay Gould and his associates.59 Other roads than the Kansas Pacific were discriminated against: namely, the Sioux City and Pacific, the Missouri Pacific, and the Burlington and Missouri River. In December, 1876, a bill which would have compelled the Union Pacific to charge the same rates per mile on the latter's traffic from Ft. Kearney to Ogden as it charged between Omaha and Ogden, was debated in the House.60 Other inter-railway relations chiefly concern competition and pooling. In the early eighties competition became menacing to the earnings of the original Pacific lines, driving them to the construction or purchase of branches and feeders, the payment of subsidies, and the formation of pooling agreements. The Pacific Mail Steamship Company was subsidized to prevent ocean competition; various northern lines were paid for not entering certain territories; and, through the Transcontinental Pool, the Northern Pacific was induced by subsidy to keep out of San Francisco In the minority report of the Pacific Railway Commission of 1887 it was stated that the Union Pacific was a member of the following pools: between Denver and eastern points, Western Colorado Railway Association, Utah Traffic Association, Nebraska Traffic Agreement, Montana Traffic Agreement, Oregon Traffic Association, and the Transcontinental Pool.61 And there were other minor pooling agreements, notable among which was one with the Denver and Rio Grande concerning the traffic between Denver and Leadville. In fact all the bond-aided roads-as, indeed, most others were members of a great variety of pools, and after the passage of the Interstate Commerce Ibid., no. 151, pp. 56 ff., 110. 00 Cong. Rec., 1876-77, pp. 99, 173. 61 Exec. Docs., no. 51, p. 188. |