Thus was opened the second route between the Pacific and the eastern states. In 1882 it became possible to journey from San Francisco, via the Southern Pacific, Texas and Pacific, and St. Louis and San Francisco lines, to St. Louis by rail.

And on October 15, of the same year (1882) the New Orleans branch of the Texas Pacific was opened, making through rail connection between New Orleans and San Francisco. The history of this New Orleans branch is extremely interesting, and is taken up at some length below.

The Texas and Pacific agreed to release its western lands to the Southern Pacific and the latter railway set up a claim to them; but in 1885 an act was passed declaring all lands granted to the Texas and Pacific under the act of March 3, 1871, and acts amendatory thereto forfeited, and restored to the public domain. The company's time for completing a railway from Marshall to San Diego had expired on May 2, 1882.

28

THE GALVESTON, HARRISBURG AND SAN ANTONIO

As stated above, the Texas and Pacific was behindhand and even upon reaching El Paso the Southern Pacific had found the former's line not yet in sight. It was at Sierra Blanca, 92 miles east of El Paso that the two actually met. These 92 miles were built for the Southern Pacific interests-nominally the Central Pacific-by the Galveston, Harrisburg and San Antonio, and were operated jointly with the Texas and Pacific, each paying half maintenance expenses and the Texas and Pacific paying in addition 6 per cent. on $10,000 per mile.

The Galveston road was the result of knitting together several Texas roads. Beginning with the 80 miles of the Buffalo Bayou, Brazos and Colorado railway, control over the Texas and New Orleans, and Louisiana Western roads was gained, extending the line from Houston to Vermillion. In 1883 Morgan's Louisiana and Texas railroad was acquired, giving access to New Orleans; and on February 1, 1883, this new route from El Paso to the mouth of the Mississippi was opened.

28 Statutes at Large, 23: 337.

By controlling the Galveston, Harrisburg and San Antonio the Southern Pacific not only got its own road to the Gulf and New Orleans, but also acquired the extensive steamship properties of Morgan's Louisiana and Texas railroad.

THE SOUTHERN PACIFIC COMPANY

The next great step in the evolution of the southern transcontinental situation was the formation of the Southern Pacific Company, a Kentucky corporation used as a securities holding company.29 This company was authorized to buy and hold the securities of any corporation and to make contracts with any railway, steamship, or other public service corporations concerning their ownership, lease, maintenance, or operation. Its authorized capital was $1,000,000, which might be increased, and it might begin business with only $50,000 subscribed and 10 per cent. paid in. Meetings of stockholders might be held in any state, and its offices also, merely the clerk or his assistant must reside in Kentucky. Taxation was practically nominal.

This corporation was formed in 1884 and took over controlling interests in the Southern Pacific companies of California, Arizona, and New Mexico,30 the Central Pacific, and the constituent corporations of the Galveston, Harrisburg and San Antonio. Needless to say, Stanford and Huntington were the guiding spirits.

In 1880 the Southern Pacific of California had been leased to the Central Pacific for a period of five years.31 Upon the formation of the company, however, the Central Pacific itself was leased to the company.

32

The Texas and Pacific did not yoke up with Southern Pacific interests. In 1883 a bill to authorize its consolidation with any company to form a continuous line from San Francisco to the lower Mississippi,33 i. e., practically with the Southern Pacific, failed; and the Southern Pacific at once obtained a New Orleans

The charter is appended to this chapter as Appendix A.

See above, p. 122.

31 For a copy of the lease see H. Exec. Docs., 1885-86; 30: no. 60, p. 2. Ibid., p. 3.

Cong. Rec., 1882-83, p. 1199.

extension of its own-the Galveston, Harrisburg and San Antonio. The Texas and Pacific became part of the Missouri Pacific system.

34

The formation of the Southern Pacific Company caused no appreciable stir in Congress. In January, 1886, however, a resolution of general inquiry was passed by the House, according to which the secretary of the interior was to furnish copies of the company's charter, of all contracts or leases between the company and any government-aided road found on file in the department; and of contracts between the Pacific Mail Steamship Company and any land-grant or subsidized railroad. In response thereto a document was submitted 35 which contained a copy of the lease of the Central Pacific to the Southern Pacific Company, and several very questionable agreements between the Pacific roads and the Pacific Mail Steamship Company; but no direct action was taken.36

THE NEW ORLEANS EXTENSION OF THE TEXAS AND PACIFIC

It will be remembered that the act of 1871 incorporating the Texas Pacific made a donation of lands for the purpose of connecting New Orleans with Marshall, the eastern terminus of the line. The recipient of this grant, the New Orleans, Baton Rouge and Vicksburg, was a Louisiana corporation formed in 1869 to extend from any point on the New Orleans, Jackson and Great Northern to Vicksburg, and so lying east of the Mississippi. In the year of the grant and in 1873 maps were filed by this company and land ordered withdrawn for it.

Now there is some doubt as to whether the New Orleans, Baton Rouge and Vicksburg-or the Backbone Company, as it was called seriously intended to build the railway. In any case at the expiration of five years it had done nothing, and by the terms of the grant, it thereby forfeited its right to the lands. In 1877 Louisiana repealed its charter. It would seem that a railway company without rails, lands or charter was certainly a shadow.

34 Ibid., 1885-86, pp. 897, 925.

33 H. Exec. Docs., 1885-86, 30: no. 60.

34 Must have influenced Interstate Commerce Act.

The interests concerned, however, were not ready to give up the lands, and there ensued as pretty a bit of wire-pulling, logrolling and high finance as one could wish to see. It was first necessary to maintain a legal existence. To do so suit was brought against the Backbone Company by a bondholder for $215,000. This was on June 4, 1877. On June 11, the company filed an exception alleging that the act of Louisiana repealing its charter was unconstitutional and void: On June 13, the exception was upheld by the court! A case of remarkably rapid justice!

The question involved complicated legal points. The state's charter had provided that the grants and engagements it contained should be a binding contract not to be modified or impaired without the company's petition and consent; while in her general law Louisiana reserved the right to repeal, and in her code (art. 447) was a provision that, for the public interest and upon abuse of privileges or refusal to accomplish its purposes, a corporation's charter might be revoked. The only exception. made applied to a repeal which would violate contracts imported in the act and on faith of which money or property had been advanced. Upon this exception and the provision in the charter hung the validity of the court's decision.

Under other circumstances it is probable that the court would have ruled that the charter itself was unconstitutional, in which case it would hardly seem that any contract imported in the charter was violated by the repeal. However that may be, the decision, though criticised, remained.

The question as to retaining the lands granted it by Congress also remained. These had not been declared forfeited; but the time limit had expired. Accordingly in 1877 the Backbone railroad began vigorous pressure to have its time extended. Here it met opposition as follows.

In 1875, a year before the Backbone Company's time expired, the New Orleans and Pacific Railroad Company was chartered by Louisiana to construct a railway to Shreveport or Marshall, Texas, and in a few years actually built to Shreveport. This company's route lay west of the Mississippi. The new road almost at once-if, indeed, it was not formed for that purpose

sought to have the Backbone Company's grant transferred to itself. Its president for several sessions between 1877 and 1880 vigorously denounced the Backbone Company's claims: the above suit was a sham; it was illegal and the company properly defunct.

Little progress was made by either company, and in 1881 came the inevitable,-an "agreement." The Backbone Company for a consideration of $1.00 sold its rights to the New Orleans and Pacific. President Wheelock of the New Orleans and Pacific got sufficient proxies from the other company's president to control a so-called meeting of its stockholders and ratified the sale, he himself voting the proxies which gave his company the lands. The deed was duly accepted by the grantee.

At this point it naturally occurs to one to inquire what was being done to validate the expired land grants, and one wonders at the colossal nerve of the man who could one year give the lie to the claims of a rival company and the next year fight for the same claims. Shortly before the "sale" the commissioner had written the president of the New Orleans, Baton Rouge and Vicksburg, saying, "There can be no doubt that when the president of the New Orleans and Pacific accepts said transfer, the company will be fully invested with all the right, title, and interests which the New Orleans, Baton Rouge and Vicksburg Company has in and to said grant," a quit claim, that was all. It was not until 1883 that the interior department, after long delay and under considerable pressure, recognized the validity of the New Orleans and Pacific's claim to ownership of the Backbone grant.

Then the question of forfeiting the grant was raised in Congress. It was argued that the line of the New Orleans and Pacific lay west of the Mississippi, whereas the grant had contemplated a road to the east of that river. Moreover it extended, in 1884, only to Shreveport, while Marshall was forty miles away. On these grounds it was maintained that the conditions of the grant had never been complied with. And the general rottenness and faithlessness of the whole deal favored the forfeiture.

On its part the New Orleans and Pacific came before Congress